Crain's Detroit Business, March 28, 2016 issue by Crain's Detroit Business

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Royal Oak City Hall plan is sons carrying out late father’s vision, PAGE 3

MARCH 28-APRIL 3, 2016

An image problem Flint water crisis threatens to put a damper on Pure Michigan campaign success By Lindsay VanHulle Crain’s Detroit Business/Bridge Magazine

LANSING — The Pure Michigan campaign, in many ways, is about water. The state’s pristine lakes — the Great and the inland kind — are the frequent stars of television ads that portray Michigan as a recreation lover’s paradise, a freshwater coastal destination. Lately, the popular state tourism brand name is being linked, particularly on social media, to water of a different sort — the corrosive Flint River and the lead-tainted drinking water that poisoned the blood of Flint kids in what has become a public health crisis. Bottom line: A company that relies heavily on water won’t think about setting up in Flint right

VEBA vital signs take turn for the better Better investment returns, new programs help By Jay Greene jgreene@crain.com

An improving investment picture and innovative benefit programs have brightened the financial picture for the $61 billion UAW Retiree Medical Benefits Trust. A projected long-term funding shortfall has been cut by more than a third to about $20 billion for the trust, which spends about $4 billion a year to cover the health care needs of more than 700,000 retired autoworkers and their dependents for decades to come. Better investment returns account for a huge part of that im-

provement. But the trust, the nation’s largest nongovernmental private payer of retiree health benefits, is also getting better at managing medical costs, using data to steer its beneficiaries into coverage that can save money, and even adding benefits that can keep people healthier and costs under control. “After five years (our programs) are starting to come into their own,” said Executive Director Fran Parker, who has headed up the UAW trust since it launched in 2010 as part of a 2007 collective bargaining agreement between the UAW and the Big SEE VEBA, PAGE 19

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Inside Efforts aim to counter lead crisis with positive message about Flint, Page 20

now, said Kate McEnroe, a Grosse Pointe native and president of Kate McEnroe Consulting , a corporate site selection firm with offices in Chicago and Atlanta. “There are other choices of places to go almost 100 percent of the time,” said McEnroe, who heard an NPR report about Flint while driving through rural Georgia. “Right now, people will wait until the dust settles, so to speak, and say, ‘I’m not risking it right now.’ “The question right now is: How long does ‘right now’ last?” The emergency in Flint has, for a time, been a knock against the award-winning brand that has shown up on TV, radio, print ads, billboards and even license

plates since it launched in 2006 during Gov. Jennifer Granholm’s administration. Under Gov. Rick Snyder, the state adopted the Pure Michigan slogan for use in its business marketing. So if the brand is tarnished for the long term, it affects corporate recruitment and other efforts. Economic development professionals say any damage done by the Flint crisis won’t be permanent. But in the meantime, they added, the state and its individual regions need to coalesce around a consistent message that Michigan remains open to business and tourists. “It is too early to tell how much impact the Flint water crisis will have on the state’s image. Certainly with our brand being Pure Michigan, it is more of an image problem,” said Doug Rothwell, president and CEO of Business Leaders for Michigan, the state’s business roundtable. SEE WATER, PAGE 20

SPECIAL REPORT: UNIVERSITY RESEARCH Michigan’s universities are spinning off innovative ventures,

K’zoo company takes first bite of success with spider venom By Tom Henderson thenderson@crain.com

like UM professor Jason Mars’ Clinc Inc., which is working on real-world applications for artificial intelligence (think Siri, but smarter). For more, and a guide to recent university spinoffs, see Pages 9-15

There’s a light at the end of the tunnel for Vestaron Corp. , a spinoff from the University of Connecticut recruited to Kalamazoo in 2007 to turn spider venom into bug-killing pesticides that are benign to people, pets, livestock and water sources. After 11 years of research and development, the company, which was founded in 2005, has received approval from the U.S. Food and Drug Administration to begin selling its first three pesticides and will bring the first one to market midyear and the other two next year, according to CEO John Sorenson.

Further, the company hopes to raise a venture capital round of at least $10 million this year to fund marketing and the development of more pesticides, bringing the total of equity capital it has raised since coming to Michigan to $34 million, most recently an oversubscribed round that closed late in 2014. Investors have included Ann Arbor Spark , the Grand Angels of Grand Rapids, the Grand Rapidsbased Michigan Accelerator Fund , Chicago-based Cultivian Sandbox Ventures , Boston-based Anterrra Capital and Vancouver, British Columbia-based Pangaea Ventures Ltd. The first pesticide will target such greenhouse pests as thrips, aphids and spider mites, which attack a wide range of flowers and vegetables.The second pesticide will target the Colorado potato beetle, regarded as SEE SPIDERS, PAGE 19

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MICHIGAN

BRIEFS Panel: State ‘fundamentally accountable’ for Flint crisis

The state of Michigan is “fundamentally accountable” for Flint’s lead-contaminated water crisis because of decisions made by its environmental regulators and state-appointed emergency managers who controlled the city, an investigatory task force has concluded. The Flint Water Advisory Task Force, appointed by Gov. Rick Snyder, said in a withering report last week that what happened in Flint is “a story of government failure, intransigence, unpreparedness, delay, inaction, and environmental injustice,” The Associated Press reported. “One of the biggest lessons we hope to impart in our report is the need for government leaders to listen to their constituents; in Flint that didn't happen,” said Chris Kolb, co-chairman of the five-member panel, which interviewed 66 people during its months-long investigation. Flint’s 2014 switch in drinking water sources led the supply to become contaminated when lead leached from old pipes into some homes. While the investigators primari-

ly blamed the state Department of Environmental Quality for the disaster — it did so in preliminary findings that led the agency’s director to resign — it faulted a host of other government offices and officials for contributing to the fiasco or delaying action to fix it. Those include the Michigan Department of Health and Human Services, the U.S. Environmental Protection Agency, the Genesee County Health Department, the

city of Flint and financial managers whom Snyder named to run the city. Meanwhile, much of Michigan’s water and sewer infrastructure has been neglected for years, threatening public health, and is in desperate need of repair, an undertaking experts say could cost $17.5 billion over the next two decades, says a report from Bridge Magazine. That price tag doesn’t include the cost of replacing lead service pipes, a peril exposed by the ongoing water crisis in Flint, the story said.

TC, Hamilton Anderson settle in splash-pad dispute Traverse City commissioners have accepted a $300,000 settle-

ment that figures to end a dispute with Detroit-based Hamilton Anderson Associates stemming from the $2.9 million renovation of a splash pad that rained sewage-contaminated water on children in 2013. Commissioners last week approved the settlement following a closed session without offering public comment or details, the Traverse City Record-Eagle reported. City officials said the renovation by Hamilton Anderson was plagued by multiple design flaws, the worst being a direct connection between the city sewer system and the splash pad that caused human waste-tainted water to flow from fountains at Clinch Park. “While HAA disagrees with the allegations that have been published, we remain committed to our work and to the success of Clinch Park,” Rainy Hamilton Jr., principal at Hamilton Anderson, said in a written statement sent to Crain’s.

MICH-CELLANEOUS n The state’s tourism agency is seeking new vendors for its popular Pure Michigan marketing campaign. Travel Michigan, which does tourism promotion on behalf of the Michigan Economic Development Corp., plans to issue requests for

proposals for companies to do travel marketing and advertising work and develop social media and public relations campaigns. Both contracts expire this year. The Birmingham office of McCann Erickson has worked on the creative end of the

Pure Michigan marketing campaign since it began in 2006. Sister ad agency Weber Shandwick has the PR and social media pact. Proposals for both RFPs are due May 4. n Spartan Motors will build a manufacturing plant on its campus in Charlotte next year — an expansion expected to create about 55 jobs, the Lansing State Journal reported. The 85,000-square-foot facility will manufacture and assemble diesel delivery trucks. n New figures show the Grand Rapids area is the fastest growing metro area in Michigan, AP reported. Numbers released by the U.S. Census Bureau show the Grand Rapids area, which includes Barry, Kent, Montcalm and Ottawa counties, showed 0.9 percent growth from July 2014 to July 2015. The Ann Arbor metro area grew 0.5 percent. Overall, Michigan’s population increased 0.06 percent to 9,922,576. Wayne County lost 6,673 residents, a 0.4 percent drop. n Consumers Energy said it’s on track to close its seven oldest Michigan coal-fired power plants this spring, AP reported. The unit of Jackson-based CMS Energy Corp. said the “Classic Seven” plants will be shut down by April 15. They include B.C. Cobb units 4 and 5 in Muskegon,

INSIDE THIS ISSUE

CALENDAR..........................................16 CLASSIFIED ADS................................ 17 DEALS & DETAILS..............................16 MARY KRAMER................................... 6 OPINION............................................... 6 OTHER VOICES.................................... 6 PEOPLE................................................16 RUMBLINGS....................................... 22 WEEK ON THE WEB.......................... 22

COMPANY INDEX: SEE PAGE 21 J.C. Weadock units 7 and 8 in Bay County’s Hampton Township, and J.R. Whiting units 1, 2 and 3 in Luna Pier. The shutdowns will leave Consumers, which said it plans to continue to invest in wind and other renewable energy sources, with five coal-fired plants in the state. n The Michigan Municipal League says Michigan is the only state in the nation to see an overall revenue drop for cities, townships and counties from 2002 to 2012, AP reported. The league said the state cut revenue sharing with cities, townships, villages and counties by $7.5 billion during that time, and that its cities saw an 8 percent drop in revenues that is tied to state laws. n

Correction n A story on Page 3 of the March 21 issue incorrectly spelled the last name of Atomic Chicken’s project director. Her name is Ashleigh Laabs.

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Hopeful Harvest to merge with SEED

“You’d think to put all the business on hold, but that’s not the way we were raised, and we were really focused on making sure our family was going to be OK.” Max Surnow,The Surnow Co.

By Sherri Welch swelch@crain.com

Nonprofit food rescue Forgotten Harvest plans to merge the for-profit Hopeful Harvest Foods Inc. subsidiary it launched less than two years ago into SEED , the food incubator/accelerator operated by Detroit’s Eastern Market Corp . and Garden Fresh founder Jack Aronson. The nonprofit’s board is set to vote on the merger Thursday. Hopeful Harvest grew unexpectedly quickly, said President Chris Nemeth, who is also senior director of social enterprise for Forgotten Harvest. With 10 employees, it’s now providing 35 food companies with services ranging from commercial kitchen space to processing, manufacturing and co-packing. The signs that growth would be more than Forgotten Harvest could handle came after it agreed to take on two bottling lines tied to SEED, or Startup Engine Entrepreneur Depot. The accelerator needed more space after Garden Fresh’s sale to Campbell Soup Co.

But that constrained Forgotten Harvest’s kitchen, freezer and warehouse space even more and required plumbing, electrical and structural upgrades, Nemeth said. “From Forgotten Harvest’s standpoint, the need is to make sure we focus on our core mission, which is rescuing food,” Nemeth said. Hopeful Harvest was a learning experience, said Forgotten Harvest CEO Kirk Mayes. “The risks we took to test this out and see if there was

Surnow brothers Max (left) and Sam are working to finish this renovation of Birmingham’s Wachler Building and start a proposed new city hall complex for Royal Oak (below). PHOTO BY JACOB LEWKOW

BUILT ON FAMILY By Kirk Pinho kpinho@crain.com

Sam Surnow has his hands in $107 million worth of new development projects in Royal Oak and Birmingham and a real estate ownership and management company with a portfolio valued at $275 million. But about a year ago, it was about $3,000 that was bothering him. “What the hell is this?” the 29-yearold president of The Surnow Co. remembered thinking when he received a bill shortly after his dad, Jeff Surnow, the founder and owner of the company, was struck and killed by an on-duty police officer on March 1, 2015, while bicycling in Hawaii. The bill wasn’t for funeral expenses. Nor was it for repairs to one of his Birmingham-based company’s tenant spaces or anything else real estate-related. The charge: A replica of a 180-

pound, 7.5-foot sailfish that Jeff, 63, had caught while vacationing with friends in Costa Rica in December 2014. A year after Sam opened the bill in the same Martin Street office downtown in which his father worked, he and his 26-yearold brother, Max, are putting the finishing

After father’s death, Surnow sons carry on key real estate projects touches on a pair of key projects. Those are a new $100 million mixed-use development with city hall space for Royal Oak to be ready for occupancy in the first quarter of 2018, and a $7 million redevelopment in Birmingham of the David Wachler & Sons jeweler building, expected to open with tenants including athletic retailer Gazelle Sports, in the third quarter. Those projects — started by Jeff but reeled back into the boat with Sam and Max’s help following the family patriarch’s death, which is still under investigation in Hawaii — were adrift when he died. But now the sons seemed to have worked out a number of kinks following the change in the family — and the family business. It wasn’t a foregone conclusion that Sam would take over The Surnow Co., or that he and his brothSEE SURNOW, PAGE 21

SEE HARVEST, PAGE 17

MUST READS OF THE WEEK

Port Authority goals: Change law, boost traffic Detroit-Wayne body backs effort to allow financing aid to private terminals By Bill Shea

New donations Ralph Wilson fund, Detroit Pistons kick in big funding for youth jobs program aiming to grow, Page 4

Amillion-student class OU professor Barbara Oakley teaches the nation’s most popular massive open online course: “Learning How to Learn,” Page 7

bshea@crain.com

The Detroit-Wayne County Port Authority is championing proposed legislation that would allow it to finance privately owned terminal improvements. The current law permits the state’s port authorities to finance only improvements to facilities they own. John Loftus, executive director of the port authority in Detroit, said allowing financing aid such as loans for private terminals will boost imports and exports from Michigan ports. “If we can change the law, that might open the door for me to do more to help these companies expand, maintain or improve their op-

erations,” he said. “We’re very, very limited. That’s a great frustration.” The Michigan House Commerce and Trade Committee had a study group working to draft the proposed legislation. Rep. Wendell Byrd, D-Detroit, is part of that group, and said the goal is to get the bills drafted in coming weeks and through the Legislature during this year’s session. “This is bipartisan, so I don’t see any obstacles,” he said. “This should create jobs.” Also part of the study group are Rep. Jason Sheppard, R-Monroe, the Commerce and Trade Committee’s majority vice chairman, and Holly Hughes, R-Muskegon.

The port authority already has the ability to act as a pass-through agency for economic development projects. For example, last year it was the needed pass-through for the state Department of Environmental Quality’s $2 million grant for the cleanup of the long-idle, 42.5-acre former McLouth Steel Corp. plant site in Gibraltar. The site is being renovated for $53 million into an automotive steel factory by Clevelandbased Ferrous Cal Co., Loftus said. The port authority isn’t pressing the Legislature to allow it to finance projects away from the waterfront, an initiative Loftus’ predecessor, John Jamian, pushed in the face of sharp SEE PORT, PAGE 18

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Wilson foundation, Pistons to aid city youth summer jobs initiative By Robert Snell rsnell@crain.com

The Ralph C. Wilson Jr. Foundation will pump $2 million into Grow De troit’s Young Talent, a public-private initiative providing summer jobs, Crain’s has learned. That money, and $100,000 from the Detroit Pistons , are the latest contributions to help 8,000 youths ages 14-24 enroll in a six-week summer employment program that combines work-readiness training and employer support. The program has raised more than $8 million but needs $10.5 million to employ 8,000 youths. So far, 150 employers have signed up to employ young workers this summer — up from 144 in 2015, the program’s inaugural year. The goal is to secure commitments from about 225, said Ed Duggan, the program’s chief recruitment officer for summer youth employment. He is also the son of Detroit Mayor Mike Duggan. Among the organizations helping recruit businesses to employ youths are the Detroit Regional Chamber , the Downtown Detroit

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Crain’s Detroit Business is a media sponsor and created a print and digital marketing plan for the initiative. “It’s all going in the right direction so far,” said Duggan, the program’s chief recruitment officer, youth summer employment. The program teams youths with employers for summer jobs and provides work readiness training, transportation and employer support services. Youths can apply for summer

Ed Duggan: Hopes to help 8,000 youths.

Dave Egner: Wilson aid will cover three years.

“It’s all going in the right direction so far.” Ed Duggan, Grow Detroit’s Young Talent

jobs through the website and receive free transportation on city buses to and from work. About 5,600 youths worked summer jobs last year. The Wilson foundation’s contribution will be spread over three years and help almost 30,000 youths become part of the next generation of workers in the region, said Dave Egner, the foundation’s president and CEO. “Providing work experience coupled with exposure to career pathways, soft skills and life skills training is a proven way to prepare young people for a future in work and/or post-secondary education,” Egner said in a statement. The foundation was funded with $1.2 billion from the irrevocable trust created by Wilson, the late founder and owner of the Buffalo Bills and Grosse Pointe Park-based investment firm Ralph Wilson Eq uity Fund LLC. He died in March 2014.

On Monday, the Pistons are expected to announce a $100,000 contribution from owner Tom Gores, Palace Sports & Entertainment Vice Chairman Arn Tellem and the Detroit Pistons Foundation . The money will pay for about 60 youths to have summer jobs. “Jobs teach kids responsibility, commitment and important lessons that will last a lifetime,” Gores said. “By creating these summer opportunities, we’re also providing a safe environment for kids to earn money, continue learning and develop new skills. Supporting Detroit’s youth is a core part of our effort to inspire positive change throughout the community.” The foundations are the latest charitable groups to contribute to the summer jobs program. The Detroit-based Skillman Foun dation has contributed about $600,000. The money has helped build the program’s infrastructure — such as streamlining payroll, training and orientation, said David McGhee, Skillman’s program officer, who manages the foundation’s youth development portfolio. “We’re focused on building the system so summer employment can be a reality for youths today and for people who desire summer youth employment in the future,” McGhee said. Other contributors include the city of Detroit, W.K. Kellogg Founda tion , D T E E n e r g y C o . , J . P . M o r g a n Chase NA , B a n k o f A m e r i c a C h a r i t a b l e Foundation, Wayne County, Detroit Wayne Mental Health Authority and the Marjorie S. Fisher Fund. 䡲 Robert Snell: (313) 446-1632 Twitter: @robertsnellnews

Michigan-China Innovation Center aims to link state with businesses, investors Intellectual Property | Litigation | Technology

By Dustin Walsh dwalsh@crain.com

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The Michigan Strategic Fund authorized $5 million last week to create the Michigan-China Innovation Center , a nonprofit designed to boost direct investment in the state from Chinese companies. Brian Connors, formerly the China business development manager for the Michigan Economic Development Corp. , will serve as the center’s executive director. Money from the 21st Century Jobs Fund will support operation of the center for five years, including startup costs, leasing of office space and travel, said Tony Vernaci, vice president of global business development for the MEDC. The center has yet to lease space, Vernaci said. “The center will focus on rela-

tionship development, management and identifying leads and getting them to the point of real opportunities (for investment),” Vernaci said. “They get the fish on the hook and then engage the MEDC so we can help with site selection and an incentive package.” The group will be led by a threeperson board that includes Connors; Antonio Luck, managing director of Detroit-based entrepreneur support firm Endeavor Detroit Inc. ; and Matt Roling, director of business development for Dan Gilbert’s Rock Ventures LLC. The center further enhances Gov. Rick Snyder’s goal of increasing foreign direct investment from China businesses and investors, Vernaci said. Snyder has made five trade missions to China as governor of the

state with the intention of visiting every year of his governorship. During his last trip in August, Snyder signed formal cooperative agreements with the provinces of Guangdong, Sichuan, Hubei and Zhejiang, as well as the city of Chongqing, which is independent of a province. Those regions already are home to auto companies and suppliers and support numerous connections to the state’s automotive industry. Those agreements are intended to support more of those connections, as well as cultural exchanges and tourism. The state is home to about 200 Chinese companies representing $3 billion in direct foreign investment. 䡲 Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh

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CRAIN’S DETROIT BUSINESS

OPINION Use tourism dollars to attract business H

ere’s the irony: As Lindsay VanHulle and Marti Benedetti report on Page 1, the Flint water crisis has diluted the Pure Michigan brand — but that’s temporary. And here’s the opportunity: Michigan still is a peninsula surrounded largely by water (oh, yes, there’s also Indiana and Ohio). Make that fresh water. The state needs a better way of promoting how it’s solving the Flint water crisis — to Michigan’s own residents and to the rest of the world. But it can still promote Michigan as a place with clean, fresh and inexpensive water to companies around the world — especially in water-starved parts of the United States. State officials should divert some tourism dollars to focus on business attraction.

Port plan deserves study Should state lawmakers expand the powers of the Detroit-Wayne County Port Authority to finance privately owned port facilities? The idea is worth serious study. As Bill Shea reports on Page 3, the port authority would like to extend its bonding ability to finance privately owned waterfront projects. The entire region can benefit from stronger port facilities, but there are a couple of big “ifs” in the mix. First is whether the Great Lakes shipping industry has a strong future. It’s dependent now on the largely outdated “Soo” locks at Sault Ste. Marie. That’s the big picture. The smaller picture is uniquely local. The authority — at the time politically controlled by now-disgraced Mayor Kwame Kilpatrick — struck a deal in 2005 that gave Ambassador Bridge owner Manuel “Matty” Moroun a 90-year concession on operating any future facilities developed and owned by the port. The expanded financing powers could be a workaround to that agreement that could allow other private operators a chance to invest and enhance economic opportunities for the port. That’s why the plan deserves serious study.

City contracts need due diligence And finally, another note about water. Mild alarm bells went off when Crain’s Robert Snell reported March 23 that Vargo Golf Co. owed more than $400,000 in past-due water bills for those courses. Before that debt became public, Vargo had somehow managed to reverse a City Council decision to award a contract to a competitor for a 10-year term. It’s clear that council members were unaware of the debt; due diligence on future contracts should cover tax liens and water bills. (We also encourage council members to visit Chandler Park before they decide on the next contract. The terrain can be soggy — or hard as concrete.) 䡲

It’s vital to expand access to public info water crisis might not have Flint’s hit the national news until late 2015, but using the state’s Freedom of Information Act, along with citizen and city sources in Flint, Flint Journal and MLive.com reporter Ron Fonger uncovered the problems months earlier. His use of the FOIA to gain access to records — when the first wave of complaints was anecdotal — demonstrates the importance of the FOIA to journalists and the public. Sadly, many in the state Legislature seem to prefer limiting FOIA access rather than promoting and increasing access and smoothing the way for Michigan’s residents to keep a close eye on their government at all levels. In late February, the House Natural Resources Committee adopted the H-9 substitute to House Bill 4540. This amendment to the state’s FOIA would change the current FOIA to add that records and information relating to the “confidentiality, integrity, or availability of information systems” are exempt. They would specifically state that cybersecurity plans, assessments and vulnerabilities are exempt. Although the provision also states these types of records and information are not exempt in certain circumstances, the bill would make it far harder for the public to gain access to important information. Giving private entities the legal power to hide in government records what could be vital information for the public is an abdication of the state’s fiduciary duty to its citizens. Yet the effort goes on and on, with only a small handful of groups, such as the Michigan Coalition for Open Government (MiCOG), actively opposing those efforts. The state Senate also is discussing Senate Bill 634, which would block public access to the video collected by police body cameras. The House has been discussing blocking access to police body camera videos in House Bill 4234 since early in 2015. MiCOG maintains that such recordings are no different than other types of police records, includ-

OTHER VOICES Jane Briggs-Bunting Briggs-Bunting is president of the Michigan Coalition for Open Government, former director of the Michigan State University School of Journalism and the journalism program at Oakland University, a media attorney and founding president of the Great Lakes Student Press Law Clinic. ing arrest reports. To exempt video recordings creates an undue and inappropriate level of government secrecy. And it directly contradicts the primary purpose and public policy of the state’s Freedom of Information Act: to provide the public with the ability to evaluate how government officials, in this case police officers, are performing their official, public duties. An appropriate level of transparency is essential in allowing public oversight of police activities. The public has a right to more — not less — accountability from their public safety personnel. There are many more determined efforts to limit FOIA than expand it. But there are some rare exceptions. Senate Bill 716 and House Bill 4283 would expand coverage of FOIA to include the governor as well as the Legislature. Currently these offices are exempt from the Michigan FOIA law. Celebrating FOI Day on March 16, 37 Republic and Democratic state House members introduced 10 bills to amend the state’s FOIA, expanding it to include the legislative branch. A 1988 state attorney general’s opinion had exempted the Legislature. House Bills 5469-5478 would expand and amend the Michigan Freedom of Information Act, creating the Legislative Open Records Act. Much of the enabling legislation duplicates the wording of the current FOIA. In addition, an 11th bipartisan bill was introduced on

March 16. With 18 bipartisan sponsors, House Bill 5488 proposes the creation of a nine-member Open Government Commission. In another bipartisan effort, the Student Free Press and Civics Readiness Act was introduced on March 8. Senate Bill 848 would restore openness and transparency in Michigan public high schools by protecting student journalists from censorship by school administrators unless the material was obscene or libelous. Censored stories by high school administrators have included major health issues potentially affecting their students (such as smoking, the HPV vaccine and underage drinking); criminal misdemeanors by student athletes and the occasional teacher or administrator; school millage elections; a fatal traffic accident involving students from the school; cafeteria health inspection reports; and even broadcasting on the Monday morning news show the Friday night football results if the team lost. None of these stories carried even a remote threat of disrupting the educational environment of the school or of being libelous or obscene. Senate Bill 848 balances the responsibility of public high school administrators to protect their student population from real harm while allowing them to serve their educational mission to educate young people about the importance of the Constitution and the benefits of being civically engaged through journalism. The intent of the FOIA when it was passed in 1976 was to guarantee access to the public to observe how effectively governments at the local, county and state levels were doing their jobs. But the FOIA also has a second benefit: accountability. If public officials know their bosses, the citizens, can (and do) check up on how well they are performing their public jobs and that they will be held accountable, then fewer corners will be cut, and employees will be more conscientious about doing their jobs well. Now more than ever, as evidenced by the Flint water crisis, FOIA is a vital tool for citizens to do exactly that.䡲

NAWBO president looks to add members, re-engage partners, host 2020 conference Paula Tutman is best known in Detroit as a reporter for WDIVChannel 4. But she has an entrepreneurial streak that has been fed recently by membership in the Detroit chapter of the National As sociation of Women Business Owners , or NAWBO. “I had been teaching my ‘Master Your Message’ communication course to nonprofits for 25 years,” Tutman says. After doing a workshop for NAWBO members, the veteran TV reporter says she was encouraged to promote the training to for-profit businesses. “Every time I teach the workshop, it makes me a better journalist, speaker, wife, mother and person because it reinforces the tools

MARY KRAMER: Publisher and skills I’ve learned to communicate for a living.” Tutman credits NAWBO President Tanya Allen for giving her the push. She’s now a dues-paying member, one of 150 in the Detroit NAWBO chapter. Allen is a long-standing entrepre-

neur, founder of ForeverFresh, which manufactures disposable undergarments for women, men and, more recently, children. They are sold online and through some Walgreen’s stores. In 2008, she and CPA Phil Pierce created a partnership, APU , that is part of joint ventures in restaurants and shops at Detroit Metropolitan Airport with an Atlanta-based partner. The national brands the team has brought to the airport include Michigan’s first Chick-fil-A outlet as well as a Bigalora , P.F. Chang’s and Qdoba restaurants. As NAWBO president, Allen wants to increase local membership, re-engage corporate partners and bid to host the national

NAWBO conference in Detroit in 2020. That would mark the first time since 2001, when Barbara Stanbridge of Detroit served as national NAWBO president. As is true with many volunteer organizations, NAWBO has had fluctuations in membership, but the vitality of the local chapter was center stage at the chapter’s annual Top 10 awards for women in business on March 17. (I was one of 10 honorees.) “Five people joined in one month,” Allen said. “I don’t remember that kind of influx before.” Dues are $360 a year for a voting membership or $240 for an introductory membership. Supporting members — which can include

men — are $480 a year. All levels can be billed annually or monthly. Top corporate supporters include Comerica Bank, General Motors Co. and the law firm Varnum, which is hosting a workshop on succession planning on April 19 at its Detroit office on West Fort Street. Information about that event — and the chapter’s annual meeting on June 23 — can be found at www.nawbogdc.org. 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.

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MOOC moves OU prof to top of the world in online classes By Candace Stuart cstuart@crain.com

With an investment of $5,000 in video supplies and free labor from family, Oakland University engineering professor Barbara Oakley became the most popular online instructor in the world, at least according to one measurement. Oakley is among educators who have used massive open online courses — Webbased, open-enrollment classes — to teach stuBarbara Oakley: dents across the Massive open online globe. To date, courses teach stumore than 550 dents across globe. universities worldwide host MOOCs on topics as varied as computer programming and Buddhism. According to Online Course Report, offerings have grown from a handful of courses in 2011 to north of 4,500 today. Oakley’s “Learning How to Learn” MOOC enrolled 1.2 million students by late 2015 after its August 2014 release, earning it the top spot in Online Course Report’s “50 Most Popular MOOCs of All Time” list. She’s not the only local MOOC superstar. An introductory finance course by two University of Michigan faculty members placed fourth, enrolling 846,654 students. Based on their successes, both educators are embarking on new projects this year, with one set to launch Monday. Their next steps also shine light on how the MOOC business model is evolving. “The best way to reach people, especially people who have difficulties with learning, is through video,” said Oakley, a professor at Rochester Hills-based OU and author of the New York Times bestseller A Mind for Numbers: How to Excel in Math and Science (Even if You Flunked Algebra). The book was inspired by her own educational path, which included a stint as a Russian translator on a Soviet trawler and then shifted to engineering. That required her to bone up on mathematics, beginning with remedial trigonometry. The book served as the foundation for the MOOC. She collaborated with co-lecturer Terrence Sejnowski, a neurologist and professor at the Salk Institute for Biological Studies in La Jolla, Calif., to produce the course, whose tagline is “Powerful Mental Tools to Help You Master Tough Subjects.” “These are complex scientific ideas, but you can bring them to life through metaphor, analogy, humor, emotion and videos so that it seems simple,” Oakley said. For instance, she used a pinball machine to depict the left-right functional operations of the brain. She didn’t shy away from wit, or “a little dollop of dopamine for neural refreshment,” as she put it, referring to the “feelgood” neurotransmitter.

Gautum Kaul, a finance professor at UM’s Ross School of Business, and his former student and now UM colleague Qin Lei, placed No. 4 for their “Introduction to Finance.” Both courses were offered through Coursera, a Mountain View, Calif.based education platform that offers 1,847 online courses. Coursera is the second-largest MOOC provider, OCR reported, trailing only Udemy, a platform based in San Francisco. UM approached Kaul about creating a MOOC and provided the facilities to produce it. He credited the broad applicability of the topic for its popularity. “Finance is the most powerful way of thinking about life,” he said. “I give a lot of problems and assignments that relate to you, both in your personal life and if you want to use it at work.” Based on feedback from MOOC students, Kaul decided to discontinue the initial course and revise it into four shorter classes that would range in complexity. Coursera is offering the new format, with two beginning Monday, under the umbrella of a specialization. Students who complete the four courses are eligible to do a fifth, capstone project. Students also can take “Learning How to Learn,” now offered with subtitles in a dozen languages, be-

ginning Monday. Oakley also is working on another book, Mind Shift: Ordinary and Extraordinary People Have Changed Their Lives Through Learning and You Can, Too, with a draft due to her publisher, Random House, at the end of June. She plans to construct another MOOC from material in the book. But popularity doesn’t necessarily beget profits with MOOCs. Coursera initially allowed students to enroll for free and charged a fee only if they completed the course and requested a certificate. The company split cash receipts in half with partnering universities (in Oakley’s case, Sejnowski’s institution, the Universi ty of California, San Diego), Coursera said by email. The course presenters then typically received a small portion of certificate fees. The average rate of people completing MOOCs is only 5 percent, though, according to OCR. Courses that focus on practical and business topics like Oakley’s and Kaul’s tend to have a higher rate, it noted. Students need to complete a course to qualify for a certificate. Coursera declined to say how many students who took these two popular classes actually received certification. This year, students must pay a fee at enrollment: $49 for “Learning How to Learn” and $455 for the fivecourse finance specialization, with

costs ranging from $79 to $99 for individual classes. Even without much remuneration, some MOOC educators and host universities see benefits. Oakley said the MOOC helped boost her book sales, for instance, and Kaul said he is a more focused teacher because of his MOOC experiences. As an early participant with Coursera,

UM gets top billing on its website. Oakley and Kaul also emphasized the educational impact of MOOCs. “Why not share resources?” Kaul said. “People are so eager to learn. What sometimes thrilled me the most was the idea of someone sitting at home, regardless of age, color or sex, getting so much value from learning.” 䡲

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WE’RE SHAPING MICHIGAN’S FUTURE BUSINESS LEADERS. Michigan’s Best Educational Value Bridge Magazine, December 2015, based on US government College Scorecard data

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Crain’s Detroit Business has added three veteran salespeople to its sales department. Katie Sullivan will serve as a senior account manager. Sullivan, 48, joins Crain’s after spending more than 11 years as an account manKatie Sullivan ager at The New York Times. Before that, she was vice president of the Lincoln account at Y&R. Diane Owen will serve as an account executive. Owen, 53, Diane Owen has 20 years of advertising and public relations experience. Most recently, Owen spent 10 years as Midwest territory manager at Dwell Media , a modern design Gerry Golinske and architecture media brand in San Francisco. Gerry Golinske, 57, will also be serving as an account executive. He comes to Crain’s from Meredith Corp. where he served as corporate director, working with clients in Southeast Michigan to develop integrated programs including print, digital and experiential events. 䡲

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Contact Brendan Best at bgbest@varnumlaw.com

Crain’s is still taking applications for its biennial Cool Places to Work in Michigan awards. The competition has two parts: one questionnaire for employers, another for employees. The combined, weighted results of the two will determine who qualifies for Cool Places designation. Best Companies Group of Harrisburg, Pa., supplies all participating companies — regardless of whether they win the Cool Places recognition — with an employee feedback report based on responses to a 72question survey. The report can help company executives identify strengths and weaknesses in their company culture and practices. To be considered for Cool Places to Work in Michigan, companies must register by April 8. Once registered, companies will be invited to participate in the surveys. Businesses and nonprofits can apply. Companies pay a fee based on company size to Best Companies to cover survey costs. Costs range from $610 to $895 for online surveying, and $765 to $1,660 for paper. Contact Crain’s Assistant Managing Editor Kristin Bull at (313) 4461608 or kbull@crain.com with questions on the nomination process. 䡲

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SPECIAL REPORT: UNIVERSITY RESEARCH TOM HENDERSON

WIRED

thenderson@crain.com Twitter: @thenderson2

UM researcher helps prove that Einstein was right

to win

n Feb. 11 came the news that the twin Laser Interferometer Gravitational-wave Observatory (LIGO) detectors in Livingston, La., and Hanford, Wash., had detected ripples in the fabric of space called gravitational waves, which came from the cataclysmic collision of two black holes about 1.3 billion light years away. It was the work of some 1,000 researchers around the world and the last prediction of Albert Einstein’s general theory of relativity in 1915 to be confirmed. Keith Riles, an astrophysicist and data analyst at the University of Michigan, who is on LIGO’s executive committee, talked to Crain’s reporter Tom Henderson about the big event.

UM professors, students lead startup with real-world uses for AI technology

Did you imagine as a kid you’d be part of a team making one of the great discoveries in the history of science? Actually, I

wanted to be a journalist. Until my senior year of high school, that was the plan. I grew up in Redondo Beach, Calif., and I was one of the editors on the school paper. But I was required to take a science class to graduate. I took a physics class, and when I read the first chapter of the book, I said, “This is cool.” And when I read the second chapter, I said, “This is really cool.” I went to college at Cal-Berkeley, and I was still undecided: Journalism or physics? I had to make the decision my sophomore year. I still have some regrets. When did you first hear something might be up? An hour after the waves were

detected, I got a message on my phone from a colleague at the University of Florida that there had been an interesting event. I assumed it was a false signal. I couldn’t believe nature was so kind to us, to give us such a strong signal so quickly. It meant having to go through data very systematically and gathering more data over the next weeks and months. It took us a while to say, “This is a stunningly meaningful event.” Were you optimistic you’d actually detect gravity waves? We were confident

we’d eventually see them. Most of us thought it would be a year or two, or three. We were surprised to see something in the first four months. Over the course of the next three years, we would expect to improve the sensitivity by another factor of three, which increases the volume we sample and the expected event rate by a factor of 27. Detection of black-hole mergers should be routine, perhaps happening every day or two. Not only are black holes more frequent than we thought they were, but they are much more massive.

Jason Mars, a University of Michigan professor, is president and CEO of Clinc Inc., which was

founded last July and has closed on its first round of funding.

PHOTO COURTESY CLINC INC.

By Tom Henderson thenderson@crain.com

There’s nothing artificial about the round of funding that has been raised by Clinc Inc., an Ann Arbor startup focusing on real-world applications for artificial intelligence. Clinc was co-founded last July by Jason Mars and Lingjia Tang, assistant professors of electrical engineering and computer science at the University of Michigan, and by Johann Hauswald and Michael Laurenzano, two doctoral students.

Mars is president and CEO, Tang is COO, Hauswald is vice president of engineering, and Laurenzano is chief technology officer. The company has closed on its first funding of $1.2 million, which was based on valuing the startup currently at a market value of $5 million. Ann Arbor-based Michigan eLab led the round, investing $1 million. It was joined by Chicago-based Hyde Park Venture Partners and Ann Arbor-based Cahoots Holdings LLC. Mars, 32, runs a lab at UM

called Clarity Lab, which, according to its website, stands for “cross-layer architectures and run times in 10 years.” Clinc was originally called Clarity Lab Inc. While at UM, Mars and his team developed an opensource digital person assistant akin to Siri, but smarter, they claimed, called Sirius. Mars said Apple wasn’t amused by the name, and not wanting to tangle with a company that has billions in cash on hand, Sirius became Lucida. In the sky, the star Sirius is

also known as the Dog Star. Lucida is Latin for the brightest star in a constellation. “Jason is a brilliant guy. Very charismatic and energetic,” said Guy Suter, one of Cahoots Holdings’ principals and CEO of Ann Arbor-based Notion AI Inc. While still an executive at Barracuda Networks in Ann Arbor in 2010, Suter co-founded Ann Arbor-based Nutshell Inc., which develops software to help companies with their customer-relationship management. SEE CLINC, PAGE 10

Laser tool company seeks right fit, Page 10 • Strength in video gaming, Page 11 • Trimaran boasts power trio, Page 12

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Laser tool company hopes to find right fit with machine maker By Tom Henderson thenderson@crain.com

There are customers, and then there are customers.

Micro-Laser Assisted Machining Technologies LLC (Micro-LAM), a spinoff from Western Michigan University that makes retrofitted la-

COURTESY MICRO-LAM

Deepak Ravindra is founder, president and CEO of Micro-LAM.

“It’s our longtime customers who are at the cutting edge of technology, and that they were impressed by Micro-LAM was critical for us,” he said. “This has the potential to be a game-changer in this industry, but it still needs some development, and it needs early adapters. “Silicon is very big for our customers, and there’s a potential for Micro-LAM to extend the life of devices that machine silicon. We want to show his technology and to open the door to using lasers to other manufacturing processes,” said Tanniru. “One other reason we decided to buy from Deepak is he’s very knowledgeable, very passionate. We wanted to help him out as an entrepreneur.” Ravindra has purchase orders

IS EVERYTHING.

ser-based tools to improve machining for ceramics, silicon and metal, has landed a crucial first customer, the kind that needs to be italicized. It’s the kind, says Deepak Ravindra, Micro-LAM’s founder, president and CEO, that will make it easier to finish the funding round of up to $700,000 he is raising. The customer is AMETEK Precitech Inc., a maker of large, ultraprecision machining equipment in Keene, N.H., that had one of Micro-LAM’s systems installed on a machine earlier this month. Mike Tanniru is Precitech’s business director. He said he didn’t buy the system to do any machining, per se, but to show customers how well Micro-LAM’s technology works, and how it can extend the life of cutting tools. And by showing customers and would-be customers a way to do better, faster and cheaper precision machining, he hopes his company can sell more of the big machines to which Micro-LAM’s retrofit laser tools bolt on. The lasers generate heat of about 1,800 degrees Fahrenheit at a tiny point a tenth the width of a

human hair, softening the target and greatly reducing cutting time and decreasing cutting tool wear. Tanniru said he first came into contact with Ravindra about two years ago when Ravindra called him looking for a used machining tool he could buy for his headquarters and lab in Battle Creek, a building owned by Battle Creek Unlimited, a nonprofit economic development organization. Battle Creek Unlimited loaned Ravindra the $150,000 he needed from its investment fund to eventually buy a used machine. “Deepak is such a motivated entrepreneur, it makes it easy to support him,” said Marie Briganti, president and CEO of Battle Creek Unlimited. His business really is world class. He’s a poster child for us.” Briganti said her organization will also be an investor in his current funding round. Precitech makes what it describes as multi-axis diamond turning, grinding, grooving and milling machines for industry. It was crucial for Ravindra to have a machine to experiment with as he refined his prototypes. Tanniru didn’t have a used machine to sell him but stayed in touch and watched Micro-LAM’s progress. And he said he followed industry reaction as Ravindra networked and showcased what he was trying to do. Finally, he said it was time to buy one of Ravindra’s systems.

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for two more laser devices that he’ll be installing soon. He says his systems cost between $150,000 and $170,000, depending on the customization customers need. He said his systems bolt on in 30 minutes and require only half a day of training, a limited down time for machine owners. Micro-LAM turned from R&D project in the College of Engineering at WMU into a business in 2012, when Ravindra licensed the technology and took space in Battle Creek. Early that year, he was accepted in the National Science Foundation’s I-Corps program at Stanford University, which came with a grant of $50,000 to do customer validation. “I talked to 127 prospective customers in three months,” said Ravindra. “If I didn’t see a viable business at that point, I would at

least have had someone pay me to see I had a failing idea.” The company has received $1.1 million in grant funding, including an NSF phase 1 Small Business Innovation Research grant of $150,000 in 2012 and a phase 2 SBIR grant of $650,000 from the NSF in 2013. It also received $150,000 from the Michigan Emerging Technology Fund. In 2014, Micro-LAM won $2,000 for the best new business idea at the annual Great Lakes Entrepreneur’s Quest’s ACE event in Livonia. At last November’s annual Accelerate Michigan Innovation competition in Detroit, Micro-LAM, which has two full-time and five part-time employees, won $25,000 for winning the next-generation-manufacturing category. n

CLINC

Mars and Tang were assistant professors at the University of California, San Diego. While still a Ph.D. student at the University of Virginia in 2008, Mars met a Google Inc. executive named Robert Hundt, who was in charge of the tools Google uses to track the performance of the company’s massive computing centers. Mars started spending his summers at Google, looking for ways to help it improve its computer efficiencies. In 2013, Mars, Hundt and Tang published a paper titled Optimizing Google’s Warehouse Scale Computers, which was presented at the 19th International Symposium on High-Performance Computer Architecture in Shenzhen, China. (Mars co-authored 18 publications between 2012-2015, with a partial list including An Open Endto-End Voice and Vision Personal Assistant and Its Implications for Future Warehouse Scale Computers; Adrenaline: Pinpointing and Reining in Tail Queries with Quick Voltage Boosting; HaPPy: Hyperthread-Aware Power Profiling Dynamically; and Enabling Fair Pricing on High Performance Computer Systems with Node Sharing.) The summers at Google aligned with Mars’ interest in artificial intelligence, and his work on making Google’s computing more efficient aligned with making artificial intelligence smarter and more intuitive. In December 2014, Mars and Tang were invited to talk about their work in artificial intelligence at the Institute of Computer Technology in Beijing. Mars said he wanted to go to UM because the school “is the best place in the world for the research I do.” He also has local ties. He lived briefly in Detroit and Southfield while growing up, and his father, Perry Mars, is a professor emeritus of political science at Wayne State University. n

FROM PAGE 9

Notion is his newest endeavor. It has released an app for Android and Apple devices that uses artificial intelligence to help organize email, learning from users over time what is or isn’t important. He isn’t just a passive investor in Clinc, but is a customer as well, using its research to improve Notion’s artificial intelligence capabilities. “Jason has been working on the theoretical side of artificial intelligence for years. This is a great relationship for us,” said Suter. “He can help Notion, and we can give him advice on how to run a startup.” “Jason and his team are some of the most creative leaders in artificial intelligence, and what I like about them is they are really swinging for the fences,” said Doug Neal, a managing partner at eLab. Neal said that Clinc’s work will be at the heart of the hottest sector in IT, the so-called Internet of Things where sensors will connect people with their devices, machines and appliances. “There’s a lot of opportunity in that space,” he said. Another early customer is Bankjoy, a Silicon Valley startup launched in 2014 to provide mobile banking applications for credit unions and small banks that until now haven’t been able to afford the quality of mobile banking that large banks can afford. Clinc is building app features for Bankjoy that learn from a customer’s spending habits or tailor what is offered based on his or her preferences. “We started in fintech (financial technology) because there’s a need for tech. There’s a void in that sector,” Mars said. “We’re shooting for intelligence that can say, ‘I’ve organized your life for you.’ ” Before arriving at UM in 2013,

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The “Tuebor” video game explores the post-apocalyptic future in a game by Michigan State University researcher Arend Hintze.

It thinks it’s so smart MSU-made ‘Tuebor’ aims to beat players at their own game

By Tom Henderson thenderson@crain.com

Video gaming is about to get a lot more interesting, thanks to a Michigan State University researcher and Strength in Numbers Studios Inc., the Lansing company he is working with. Arend Hintze, the researcher, is an assistant professor in integrative biology and computer science and engineering. His focus is artificial intelligence, and thanks to a contract signed with the school in December, Strength in Numbers is using his expertise on “Tuebor,” a new video game in the final stage of development. “Tuebor” uses artificial intelligence, also known as machine learning, to evolve tactics and moves based on how players improve over time as they play the game. The smarter the players get, the smarter the game gets, which forces players to either get even smarter, or die trying. Scott Reschke, Strength in Numbers’ CEO, raised $660,000 in a seed round for his company last March, and recently raised a second round of $300,000 for the finishing touches for the game, which is in a niche known as a massive multiplayer online game. Strength in Numbers, founded in 2014, was also one of the last Michigan companies to qualify for the Michigan Film Office’s digital media incentive before the program was shut down last July, getting just over $200,000. Reschke owned a cybercafé in East Lansing from 2003 to 2010, where he had an assortment of video games to keep customers occupied, and ordering. The bottom fell out of his business during

University of Michigan technology… fueling new ventures and business competitiveness for a brighter Michigan future

the recession and he briefly sold insurance before starting to raise money in 2013 for his dream of a more interactive video game. “Tuebor,” a post-apocalyptic game set in the year 7235, has been in the works since then, but Reschke said it needed Hintze’s expertise before it was smart enough for release, which is now planned for June 1. “I’d been trying to get Arend for a year,” he said. Hintze, who uses artificial intelligence in his study of the evolution of intelligence, is a game developer himself. He said he has developed about 30 games, 16 of them smartphone apps, includ-

ing “Loops of Zen,” “Alien Rampage,” “Entangled,” “Evolve and Conquer,” “Buddy Belly” and “DZOOP.” “With artificial intelligence, the game learns better strategies,” said Hintze. “It becomes an arms race between player and game. It’s Darwinian evolution.” “Tuebor” will be available on Steam, the online gaming store. Reschke said a basic version of the game will be available for free, but access to various heroes, levels and other chunks of the game will be available for varying purchase prices of $20, $30 or $40. n Tom Henderson: (313) 446-0337 Twitter: @TomHenderson2

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Trimaran attracts experienced execs By Tom Henderson thenderson@crain.com

It took serendipity and an old grade school connection but not much time for Detroit-based Trimaran Pharma Inc. to line up a heavyweight trio of experienced pharmaceutical executives to lead the company. Previously, the three were on development teams at pharmaceutical companies that launched such huge drug successes as Prozac, Lunesta, Lyrica and Cymbalta. In December, the Wayne State University board of governors approved a licensing agreement with company founder Aloke Dutta, a professor in the department of pharmaceutical sciences, to commercialize a class of drugs called triple reuptake inhibitors, which show promise in treating depression, post-traumatic stress syndrome and attention deficit hyperactivity disorder. Dutta, who has been granted four U.S. and two European patents, incorporated the company last September. His work has been funded so far with $1.9 million in grants from the National Institutes of Health.

Walter Piskorski: Aloke Dutta: Joined firm as CEO Incorporated company last and president. September.

Frank Bymaster: Timothy Hsu: Is Started career in chief medical drug development. officer at Trimaran.

In January, Walter Piskorski, who has nearly 40 years of experience in the pharmaceuticals industry, joined Trimaran as president and CEO. In 2005, he was in charge of manufacturing and distribution for Marlborough, Mass.based Sepracor Inc. when it launched Lunesta, an insomnia drug that was later named by Forbes Magazine as the fifth most successful launch in pharma history, eventually surpassing $1 billion in annual sales. Piskorski also has startup experience. From 2010-2015, he was at Neurovance Inc., a Cambridge, Mass.-based company that developed drugs to treat depression

and ADHD; and from 2007-2010 was VP of technical operations at another startup, La Jolla, Calif.-based Orexigen Therapeutics Inc. Piskorski, who oversaw venture capital fundraising for Neurovance, has already begun meeting with both local and national venture capitalists as he seeks to raise equity capital to fund upcoming animal studies and human trials. Joining the company as chief scientific officer is Frank Bymaster, who started his career in drug development for psychiatric diseases and disorders in 1970 at Eli Lilly and Co.

There, he was part of the teams

“Funding is now the priority on the agenda. ... With all due humility, we know how to do this. We just need the money.” Walter Piskorski, president and CEO, Trimaran

that developed two hugely successful antidepressant drugs, Prozac and Cymbalta. He has published more than 150 papers and received 25 U.S. patents. Timothy Hsu is chief medical officer. He was chief medical officer at Neurovance; previously worked at Pfizer Inc., where he was on the team that developed Lyrica, an anti-convulsant drug; and was on the psychiatry faculty at the University of Michigan Medical School. “The key to our team is we’re experienced in drug development and in this area. We’ve got 80 years of experience,” said Piskorski. “We’ve been there and done that.”

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Serendipity How did three such experienced pharmaceutical executives end up at a tiny startup so recently spun off from WSU? Hsu and Bruce Markham, a former Pfizer research fellow, mentor-in-residence in the tech-transfer office at UM, and president and CEO of Ann Arbor-based drug company called Diapin Therapeutics LLC, had stayed in touch since they were in grade school in Pontiac and went to high school together in the 1970 class of Pontiac Central. In 2014, Markham told Hsu there was this interesting work being done by Dutta at Wayne State in triple-reuptake inhibitors, a field Tsu had also specialized in. A year later, Markham told Hsu that Trimaran was being formed and in need of experienced executives to lead it, that Dutta wanted to continue to focus on his work at WSU. Hsu contacted his former boss, Piskorski, and soon all three were on board. For now, the company will operate as a virtual company, with upcoming research to be done by contract research organizations. Piskorski will remain for now in Nashua, N.H., with Bymaster in Indianapolis and Hsu in New York. Dutta published his first paper on triple-reuptake inhibitors in 2006. He’s done proof-of-concept studies in small mammals, narrowing down a wide range of compounds to a few that show the most promise. More animal studies are needed, including toxicity studies in animals that must be done before the company launches human trials. Piskorski said that in two years, the company wants to complete a successful U.S. Food and Drug Administration phase 1 study, which tests safety in humans of at least one compound. “That will take at least $6 million. At the end of the following two years, I’d like to finish a successful phase 2 study, which will cost at least $18 million,” said Piskorski. Once safety has been established, phase 2 studies show whether drugs actually work. For now, Piskorski is seeking a seed round of $600,000 to fund some pre-clinical and toxicology studies. “Funding is now the priority on the agenda,” he said. “I’ve communicated with more than 150 venture capitalists around the country already, and had one serious conversation recently. With all due humility, we know how to do this. We just need the money.” n Tom Henderson: (313) 446-0337 Twitter: @TomHenderson2

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SPECIAL REPORT: UNIVERSITY RESEARCH

MSU graduate returns home to run startup that treats jaundice By Tom Henderson thenderson@crain.com

Alexa Jones had the entrepreneurial bug. So, a year and a half into what promised to be a lucrative career with Goldman Sachs Group Inc., where she was a foreign-exchange analyst in Salt Lake City, Jones returned to East Lansing in December to become CEO of TheraB Medical Inc., which she had co-founded in 2014 with two fellow engineering students at Michigan State University. â&#x20AC;&#x153;I decided if I didnâ&#x20AC;&#x2122;t go for it now, I wouldnâ&#x20AC;&#x2122;t have the chance for a long time,â&#x20AC;? she said. TheraB began as a senior design project in the fall of 2013 for Jones, a biosystem engineering major, and her two co-founders, Oliver Bloom and Vu Hang, to figure out a better way to treat jaundice in newborns. Like Jones, after graduation in 2014, Bloom and Hang went on to start their careers apart from TheraB, which was run on an interim basis until Jonesâ&#x20AC;&#x2122; return by Ryan Jankovic, a former Stryker Corp. executive who is a CEO-in-resi-

COURTESY THERAB Alexa Jones returned to East Lansing in December to become CEO of TheraB Medical Inc., a company she had

co-founded in 2014.

dence at Spartan Innovations, an East Lansing nonprofit funded by the MSU Foundation to spur entrepreneurship.

Under its co-founders, TheraB developed a proof-of-concept blanket for treating infant jaundice that it called the SnugLit Portable Phototherapy Blanket, a blanket embedded with blue LED lights that can be wrapped around a baby. They have a provisional patent on the design. Jaundice is a disease affecting about 60 percent of newborn infants. A molecule in the babyâ&#x20AC;&#x2122;s blood, bilirubin, cannot be broken down by the infant's premature liver, and a toxic buildup shows as a yellow discoloration of the skin and eyes. Failure to treat jaundice can cause cerebral palsy and mental retardation. It is generally treated with large, bulky medical devices costing about $3,000 each that use blue-light phototherapy to break down the bilirubin. They also require trained personnel. The advantage of TheraBâ&#x20AC;&#x2122;s blanket is that trained personnel arenâ&#x20AC;&#x2122;t required and the baby doesnâ&#x20AC;&#x2122;t have to be separated from the mother at birth. It can even be treated while breast feeding. Stud-

UM spinoff Lycera starts anti-cancer drug trials By Tom Henderson thenderson@crain.com

Lycera Corp., a University of Michigan spinoff developing drugs that

target cancer and diseases of the immune system, has started human trials that could lead to the sale of the company next year. In December, the company finished a phase 1 U.S. Food and Drug Administration study that showed a compound with the working name of LYC-30937, which targets ulcerative colitis, is safe and well-tolerated by patients. A smaller phase 1b study began this year to assess absorption of the drug by patients. A phase 2 study of 120 patients at 60 sites nationally, to test for efficacy, is scheduled to begin in the next few months. Lycera also plans to begin a phase 1 study later this year of a class of compounds known as a RORy agonist, which targets solid tumors. Interestingly, the two drugs work in opposite ways. The first drug is an immune suppressor, causing the cells that cause immune-related diseases to lose their potency. The second compound is an immune activator, boosting the bodyâ&#x20AC;&#x2122;s ability to find and attack cancer cells. Depending on how those studies turn out, Summit, N.Y.-based Celgene Corp. can exercise its option to buy Lycera. â&#x20AC;&#x153;They will decide in the nottoo-distant future. Not years and years,â&#x20AC;? said Paul Sekhri, Lyceraâ&#x20AC;&#x2122;s

president and CEO, who joined the company in February 2015. â&#x20AC;&#x153;It could be 2017, depending on how well the compounds work.â&#x20AC;? Sekhri previously was senior vice president of integrated care for the French drug giant Sanofi S.A., and before that he had been vice president of global business development and chief strategy officer for Israel-based Teva Pharmaceutical Industries Ltd.

Last June, Lycera announced a licensing deal with Celgene, which got an exclusive option to license some of its compounds, including LYC-30937, in exchange for $82.5 million. The deal came with an option to buy the company. In January, Lycera said it had licensed another portfolio of cancer-fighting compounds to Celgene for $17.5 million, with an additional possible milestone payment of $5 million. Sekhri said the good news about those deals for Lycera was that the money was to fund drug development and was not in the form of equity. â&#x20AC;&#x153;It was nondilutive funding to move the company forward and then let Celgene decide whether to buy us or not,â&#x20AC;? he said. Sekhri said a sale price will be based on Lyceraâ&#x20AC;&#x2122;s market price at the time Celgene decides to proceed. â&#x20AC;&#x153;We each pick an investment bank to determine a price, and the average of the two will be what Celgene pays,â&#x20AC;? he said. Sekhri said that if Celgene decides not to buy the company, an

initial public offering would be a likely possibility. The market has been hot for pharmaceutical IPOs in recent years, with another Ann Arbor-based drug company, Esperion Therapeutics Inc., going public in 2013. â&#x20AC;&#x153;If weâ&#x20AC;&#x2122;re in the clinic with multiple compounds and having good results with one of them, an IPO would be a great option,â&#x20AC;? said Sekhri. Lycera was founded in 2006, based on the work of UM researcher Gary Glick. In 2009, it stunned the local investment community when, at the bottom of the recession, it raised a venture capital round of $36 million, one of the largest in state history at the time, which included funding from Ann Arbor-based EDF Ventures; Menlo Park, Calif.-based InterWest Partners LLC; Chicago-based ARCH Venture Partners; and Boston-based Clarus Ventures LLC. The company was housed in the Michigan Life Science and Innovation Center, an incubator in Plymouth Township. In 2011, Lycera got $12 million from Merck & Co. to license two classes of compounds. Subsequently, Lycera got back the rights to one of them; back; Merck still controls the other one. Lycera, which employs 40, is headquartered in a former Pfizer Inc. facility on UMâ&#x20AC;&#x2122;s north campus. n Tom Henderson: (313) 446-0337 Twitter: @TomHenderson2

ies by the American Academy of Pediatrics have shown that separation after birth leads to increased stress to the newborn. Before graduation, Jones and her co-founders entered several student and startup business plan competitions. In February 2014, they won The Hatching, a monthly contest hosted by Spartan Innovations, which came with $1,000 and marketing services, which was boosted by $10,000 when, at the end of the year, TheraB was named the best of all the monthly Hatching winners. In May 2014, TheraB won $8,000 for finishing fourth among more than 2,500 entrants at the International Business Model Competition at Brigham Young University. The company was also chosen to be a participant in the â&#x20AC;&#x153;Project Startup Live!â&#x20AC;? show on A&E,

which was filmed in Detroit in 2014. Last April, the company got $150,000 in seed funding from East Lansing-based Quantum Medical Concepts, a partnership of the Michigan State Medical Society and Lansing-based Common Wealth Enterprises, an investment firm that funds socially minded businesses in Michigan. It also got a convertible note of $200,000 from Spartan Innovations and is raising an angel funding round of $400,000 to get the blanket from prototype stage to market stage through a contract manufacturer and get approval from the U.S. Food and Drug Administration to begin selling. The blankets are expected to sell for at least $2,000. n Tom Henderson: (313) 446-0337 Twitter: @TomHenderson2

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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 // M a r c h 2 8 , 2 0 1 6

The path of the entrepreneur:

TIPS TO GROWING A BUSINESS There are infinite paths to growing a business. Hear from two entrepreneurs for ideas on getting your own company to the next level.

FREE WEBINAR Tuesday, Apr. 19 Noon-1 p.m.

Presented by:

SPECIAL REPORT: UNIVERSITY RESEARCH ONL receives federal designation for retinal drug ONL Therapeutics Inc., an Ann Arbor-based spinoff from the University of Michigan, has received a crucial orphan-drug designation from the U.S. Food and Drug Administration for its lead compound, which has the working name of ONL1204. The drug, expected to go into human trials this year, is used to limit the damage caused to patients who suffer retinal detachments. Even successful retinal reattachments often result in impaired vision. Animal trials show that ONL’s drug protects photoreceptors in the eye between the time of the detachment and surgery. Orphan-drug status is given to drugs that treat rare diseases or are for conditions that affect fewer than 200,000 in the U.S. The status makes it easier to get federal grants and tax credits, can lower regulatory fees and can extend market exclusivity following approval by the FDA to go to market. The designation is also expected to help make it easier for ONL, which has raised $1 million in seed funding, to complete a current round of venture-capital fundraising targeted at about $20 million.

ONL was founded in 2014 after getting $2 million in federal grants. The same year, it won $2,500 for having the best business plan for a startup at the annual MichBio Expo in Detroit.

Ex-GVSU professor gains second solar panels patent James Wolter, a retired physics professor at Grand Valley State University, has received a second U.S. patent for ways to improve energy storage and distribution involving solar photovoltaic panels. Wolter is managing partner of Energy Partners LLC, a research and production lab in GVSU’s Michigan Alternative Renewable Energy Company Center.

His first patent, granted in September 2015, was for batteries that store energy created during daylight for use after the sun sets. The second, granted in February, was for a cheaper way to mount photovoltaic panels. Two other patents are under examination by the U.S. Patent and Trademark Office, and two others are pending examination.

DTE Energy Foundation gives $300,000 to GVSU center The Detroit-based DTE Energy Foundation has donated $300,000 to Grand Valley State University’s Electromagnetic Compatibility Center in Grand Rapids. The center helps local businesses design and test electrical devices they hope to take to the marketplace. The 4,000-squarefoot center was renamed the DTE

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Energy Foundation Electromagnetic Compatibility Lab. The Federal Communications Commission requires that all devices

must be certified for electromagnetic compataibility before they can be sold, a process that can be costly. The center pairs entrepreneurs and businesses with engineering students to streamline the process and make it cheaper. Tom Henderson

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SPECIAL REPORT: UNIVERSITY RESEARCH

Spinoffs from Michigan universities CENTRAL MICHIGAN UNIVERSITY PicStir Mt. Pleasant Top executive: Al Wildey Founder: Al Wildey

PicStir produces Web-based software and a mobile applications that collate multiple images into one artistic rendering. CMU obtained the patent on systems and methods for automatically creating a composite image from a plurality in 2015. The company was funded by $25,000 in internal startup funds from the university.

Swarts Trehalose Analogs and Detection Mt. Pleasant Year created: 2014 Top executive: Benjamin Swarts Founders: Benjamin Swarts and Peter Woodruff from the University of Southern Maine

Swarts developed a general method to make labeled trehalose (nonreducing sugars formed from two glucose units) from existing labeled glucoses for research purposes and for companies that specialize in isotopes for medical imaging. CMU obtained the patent on chemoenzymatic synthesis of trehalose analogues in 2015. The company has received $420,085 in National Institutes of Health grants.

LAWRENCE TECHNOLOGICAL UNIVERSITY Blue Devil Statistics LLC Southfield Top executive: Matthew Cole Founder: Matthew Cole

Blue Devil offers biostatistical analysis, survey, administration ,evaluation and report writing by LTU MBA students and alumni. Services are available for corporate clients, nonprofits, grant principal investigators and grad students. Last year the company posted $10,000 in revenue and has also been funded by $5,000 from the Coleman Foundation.

MICHIGAN STATE UNIVERSITY CiBO Technologies Cambridge, Mass. Top executive: Ignacio Martinez Founder: Bruno Basso

CiBO produces an analytical software system that incorporates previous innovations in agricultural simulation alongside weather monitoring, remotely sensed imagery, spatial yield data and information gathered by unmanned aerial systems. This crop yield model system

Crain’s Detroit Business worked with the technology transfer departments of universities across Michigan to find companies that have been spun out of their research departments since winter 2014. The list includes information from companies that were identified by the universities and responded to

Crain’s requests, and also from company websites. Many companies have drawn grants and investments rather than earned revenue. The year the company was created is 2015, unless otherwise noted. To view a previous directory listing earlier spinoffs, go to crainsdetroit.com/spinoffs.

is founded on research conducted by MSU professor Bruno Basso

covery company developing internal discove2ry programs.

Hao Tech LLC

FlexDex Inc.

East Lansing

Brighton

Top executive: Tian Hao Founders: Tian Hao and Guoliang

Xing Hao Tech develops technology for smartphones to be used for contact-free sleep monitoring. The application uses a snore tracker that can be used from a nightstand and is being developed to work with smart-home equipment.

Treeborn Products East Lansing Top executive: Brian Polowniak Founders: Brian Polowniak, Roger

Blackwell and Dennis Fulbright Treeborn roasts chestnuts to be used in brewing. More than 40 breweries around the world partner with Treeborn including Dexterbased Jolly Pumpkin Brewery and Elk Rapids-based Short’s Brewing Co. For a detailed story on Treeborn go to crainsdetroit.com/treeborn.

MICHIGAN TECHNOLOGICAL UNIVERSITY InSight Technologies LLC Houghton Top executive: Keat Ghee Ong Founder: Keat Ghee Ong

InSight is a biomedical device company with a focus on sensor platforms related to orthopedic and surgical applications. The company is still in the process of acquiring funding.

UNIVERSITY OF MICHIGAN Argessin LLC Ann Arbor Top executive: Richard Neubig Founder: Richard Neubig, M.D.

Argessin’s technology, which targets Regulators of G-protein Signaling proteins (RGS), aims to improve the effects of many known drugs. Potential therapeutic indications include Parkinson’s disease and neuropathic pain. The company was self-funded, the amount undisclosed.

Confo Therapeutics Brussels, Belgium Top executive: Stephane van Rooi-

jen Founder: Roger Sunahara Confo Therapeutics is a drug-dis-

Year created: 2014 Top executive: Thomas Davison Founders: Shorya Awtar, James

Gieger and Gregory Bowles FlexDex develops minimally invasive mechanical surgery tools aimed at increasing dexterity and intuitiveness over previous tools at a price below robotic options. The company is planning to launch its first product in June. It was funded by about $1.5 million in National Science Foundation Small Business Innovation Research grants that were partially matched by the state and about $5.5 million from a group of individual investors.

Genomenon Inc. Ann Arbor Year Created: 2014 Top executive: Mark Kiel Founders: Mark Kiel,

Steve Schwartz, Kojo Elenitoba-Johnson and Megan Lim Genomenon develops genome sequencing software that automates clinical diagnosis and speeds genetic research, such as a tool that autonomously prioritizes data points. The company was funded by $200,000 in grants from UM and $900,000 in funding from angel groups and VC. For a detailed stor on Genomenon, go to crainsdetroit.com/genomenon.

allows students or any employee to analyze his or her current job and make revisions in sustainable and engaging ways. The company was self-funded; amounts were not disclosed.

Kura Oncology La Jolla, Calif. Top executive: Troy Wilson Founder: Jolanta Grembecka and

Tomasz Cierpicki Kura Oncology is a biopharmaceutical company developing precision medicine for treatment of solid cancer tumors and blood cancers.

Mountain Pass Solutions Inc. Ann Arbor Year created: 2014 Top executive: Chris King Founders: Debra Komorowski,

Dave Morin, Chris King Mountain Pass Solutions brings efficient faculty onboarding, appointment, evaluation, promotion and career event tracking to academic and medical schools. The SmartPath software platform streamlines the faculty position management process to save time and expenses, effectively staff and increase faculty data quality. It was funded by $51,500 in investments from state organizations.

Praktio LLC Ann Arbor Top executive: Michael Bloom Founder: Michael Bloom

Founders: David Ginsberg and Hongmin Sun This subsidiary of Nanova Inc. develops antibacterial compounds with a novel anti-virulence mechanism. The company was funded by approximately $1 million from Nanova Inc.

Praktio is an interactive, online tool for learning practical contract skills such as how to understand, analyze, write and negotiate contracts. The materials are self-paced and available on demand. The series of games and exercises gives feedback to help users learn skills through realistic activities. It was funded with $50,000 in the form of a Business Accelerator Fund grant from Ann Arbor Spark , a grant from the UM Office of Digital Education and Innovation and partially self-funded, both for an undisclosed amount.

JCE LLC

QuadMetrics Inc.

Ann Arbor

Ivogen Inc. Columbia, Mo. Top executives: Hao Li and David

Anderson

Top executive: Justin Berg Founders: Jane Dutton, Justin Berg of Stanford University and Amy Wrzesniewski of Yale University

JCE develops and markets its career planning software platform Job Crafting Exercise as well as accompanying workshops. The platform

Year created: 2014 Top executive: Wesley Huffstutter Founders: Mingyan Liu and Man-

ish Karir QuadMetrics is a cybersecurity risk measurement and analytics company that can quantify any organization’s security posture and

provide the probability of a breach within the next year. Its tools are used by insurance companies to determine risk when underwriting cyber insurance policies and by information security officers to manage their networks and their exposure to third-party vendors. The company is funded by a $586,000 subcontract of a U.S. De partment of Homeland Security grant; revenue was not disclosed.

WAYNE STATE UNIVERSITY Qurgen Inc. Detroit Top executive: Ming Guo Founders: Jianjun Wang, Qianqian

Li, Michael Chopp and Feng Jiang Qurgen, an early stage stem cell company, has in-licensed methodology related to virus free cellular reprogramming that can convert skin cells to other cell types. The company strategy is to develop the technology for research and clinical applications including oncology and cardiovascular disease The company was funded by $500,000 in pre-seed VC funding.

Seraph Biosciences LLC Detroit Top executive: Mark Trexler Founders: Greg Auner and Charles

Shanley Seraph develops biomedical platform technologies and is in the process of co-developing the foundation for a working prototype for Seraspec, a hand-held pathogen detection and identification device. It was funded by $200,000 in preseed VC funding.

WESTERN MICHIGAN UNIVERSITY CompTherapeutics Inc. Kalamazoo Year created: 2014 Top executive: C. Richard Spates Founders: C. Richard Spates and

Amy Naugle Comp Therapeutics’ focus is on online depression and PTSD counseling products that are based on therapies supported by clinical research. The company has generated $80,000 in grant funding.

Pressburg LLC Kalamazoo Year created: 2016 Top executive: Veronika Husovska Founder: Veronika Husovska

Pressburg is a specialty ink development company focused on novel and economical inks used in the electro fluorescent and printed electronics markets. It was funded by $100,000 in T3N postdoctoral funds. 䡲 Natalie Broda

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DEALS & DETAILS ACQUISITIONS & MERGERS

Rofin-Sinar Technologies Inc., a maker of high-performance lasers and laser components based in Plymouth and Hamburg, Germany, has agreed to be acquired by Coherent Inc., Santa Clara, Calif., a provider of lasers and laser-based technology for scientific, commercial and industrial customers. Coherent will acquire Rofin for $32.50 per share in cash, in a transaction valued at approximately $942 million. The transaction is slated to close within six to nine months.

THURSDAY MARCH 31

Visualizing Success: An Evening With Kirk Gibson. 6-9 p.m. Turnaround

Management Association Detroit Chapter. Detroit Tigers legend Gibson details his method of visualizing success by training the mind to focus on positive elements and avoiding negative thoughts. The event will benefit the Kirk Gibson Foundation, which awards scholarships to college students to further their education, and Parkinson’s disease research. Troy Marriott. $100 members; $150 guests. Contact: Sharon Kimble, phone: (734) 757-4689; email: skimble@ turnaround.org.

UPCOMING EVENTS

Inside the CEO Mind. 8-10 a.m. April 6. Detroit Regional Chamber. Kouhaila Hammer of Ghafari

Websites: rofin-inc.com, coherent.com.

Broglin Distribution LLC, Allen Park,

distributor of Michigan-made gourmet and specialty food items, acquired Hot Rod Bob’s Specialty Foods Inc., Shelby Township, maker of salad dressings and barbecue sauces. Websites: broglin.com, hotrodbobs.net.

CONTRACTS

Ulliance Inc., Troy, a provider of

human resources services, has been retained to provide its Life Advisor EAP service line to Adrian

Steel Co., Adrian;, Metaldyne Performance Group Inc., Southfield; Charles Stewart Mott Foundation, Flint; Nexteer Automotive Corp., Saginaw; and Stefanini Inc.,

Northville; Mexican Food Specialties Inc., Livonia; Midwest Linen & Uniform Service, Pontiac; Robert Kidd Gallery, Birmingham; and The Forefront, Birmingham.

Southfield. Website: ulliance.com.

Website: nearperfectmedia.com.

Aqaba Technologies Inc., Sterling

Solessence Lighting, Macomb

Heights, an Internet marketing agency, has been retained to provide search engine optimization services to Vintage House Banquet and Catering, Fraser, and Wax Liquidizer, Aurora, Colo. Website: aqabatech.com.

Township, provider of LED lighting, has added five new manufacturers to its lighting line: E-TechLED LLC, Oshkosh, Wis.; Espen Technology Inc., Santa Fe Springs, Calif.; Global Tech LED, Bonita Springs, Fla.; SigmaLuminous, Livonia; and Baylume Inc., Royal Oak. Website: solessence.co.

Near Perfect Media LLC,

Birmingham, a public relations firm, has been named the agency of record for 365 Retail Markets, Troy; Adore Nails & Spa, Birmingham; C.A.Y.A. Smokehouse Grill, Wolverine Lake; Darakjian Jewelers, Birmingham; Detroit Wing Co., Eastpointe; Joe Muer Seafood, Detroit; Justin Abdelkader of the Detroit Red Wings; La Strada Dolci e Caffe, Birmingham; Life Boost LLC,

CALENDAR

Associates will provide insight on

the company’s culture and best practices that led to its “Best and Brightest” status 10 years in a row. Dearborn Administrative Center. $55; $30 for chamber members. Contact: Marianne Alabastro, phone: (313) 596-0479; email: malabast@detroitchamber.com. Pancakes & Politics. 7:30-9:30 a.m. April 11. Michigan Chronicle. Gov. Rick Snyder will present an update

on the state and region. Detroit Athletic Club. $100. Phone: (313) 963-5522. Website: michiganchronicle.com/events. MichBusiness Explore Speaker Series Event. 8-9:30 a.m. April 12.

MichBusiness. Featuring

millennial entrepreneur Jesse Ford, managing director, The Work Inc. Macomb-OU Incubator, Sterling Heights. Free. Website: michbusiness.com/events. DEC Presents Peter Karmanos. 11:30 a.m.-1:30 p.m. April 14. Detroit

Economic Club. Karmanos is the principal owner/governor and CEO of the Carolina Hurricanes, as well as chairman and co-founder of MadDog Technology. The Townsend Hotel, Birmingham. $45 DEC members; $55 guests of DEC members; $75 nonmembers. Phone: (313) 963-8547; email: info@econclub.org. The Rise of Snapchat. 11:30 a.m.1:30 p.m. April 19. Adcraft Club of

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.

Detroit. Imran Khan, chief strategy officer for Snapchat, discusses the rise of Snapchat from its beginnings in 2011 to more than 7 billion daily video views in 2016. The Reserve, Birmingham. $50; $40 members; $25 junior and student members. Contact: Melanie Davis, phone: (313) 872-7850; email: mdavis@adcraft.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 Lions name VPs of partnerships, finance The Detroit Lions, who have been retooling their business operations for several months, have hired Green Bay Packers front office staffer Bill Hawker to oversee corporate partnerships. Hawker, 41, who spent the past 10 years as Packers manager of corporate sales, will be Lions vice president of partnerships. He replaced Wade Martin, Bill Hawker who left in December. Also, the Lions said Elliot Kessler

Elliot Kessler

has been promoted to vice president of finance, filling a role vacated when Allison Maki

was named CFO last year. Kessler, 31, joined the Lions in 2013 after handling the team’s audits with PricewaterhouseCoopers.

PrizeLogic names former ForeSee exec as first CFO Digital promotions company

PrizeLogic hired Jeff Blackman, a

veteran of the digital contest industry, as its first CFO. The company splits headquarters between Southfield and Scottsdale, Ariz. Blackman, 46, spent the past seven years as CFO of Ann Arbor analytics firm ForeSee Results Inc. and also was CFO at Pleasant Ridge digital marketing management giant ePrize Inc. (now HelloWorld Inc. in Southfield).

Cass Community Social Services tabs deputy head Detroit-based Cass Community Social Services named Kimberly Hudolin to the

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.

Jennifer L. Dale and Anthony Watkins Director of Program Expansion & Business Development, Director of Program Operations New Center Community Services Jennifer L. Dale joins New Center Community Services as Director of Program Expansion & Business Development. She has spent more than 20 years leading fund & business development operations as well as community relations, marketing, communications & partnerships. At NCCS she is responsible for identifying, evaluating, analyzing, developing & implementing new opportunities & partnerships. Jennifer is a Leadership Detroit XXXII graduate & was named 40 under 40 by Crain’s Detroit Business in 2009. Tony Watkins is now the Director of Program Operations at New Center Community Services, he was previously the Clinical Manager for the Medication Clinics at NCCS. He has been a clinician manager within non-profit and private mental health settings within the Detroit-Wayne County area for 15 years. Tony is a former Law Enforcement Officer with the United States Air Force. Tony earned graduate degrees in Professional Counseling and Social Work with a certificate in Child Play Therapy.

new position of deputy director. Hudolin, 55, a longtime volunteer at Cass, was an attorney at General Motors Co. for 19 years before joining the nonprofit. She chairs the Michigan Community Resources board.

Visteon hires Schupfner Visteon Corp. hired German auto technology executive Markus Schupfner as chief technology officer. Schupfner, 47, assumes the role, newly created for the Van Buren Townshipbased supplier of auto cockpit electronics, April 1 and will be based in Karisruhe, Germany. He had been executive vice president of operations at Elektrobit Automotive GmbH. n

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HARVEST

â&#x20AC;&#x153;We just didnâ&#x20AC;&#x2122;t have the staff and capability of doing it all with the second bottling line being there.â&#x20AC;?

FROM PAGE 3

even a real market for it revealed there is an incredibly passionate entrepreneur community ready to get into the food space.â&#x20AC;? â&#x20AC;&#x153;What weâ&#x20AC;&#x2122;ve discovered is this is not only a service thatâ&#x20AC;&#x2122;s needed â&#x20AC;&#x201D; there is a market for it.â&#x20AC;? According to its annual reports, the monetized value of food Forgotten Harvest rescued/received last year decreased by $15 million between fiscal 2014 and fiscal 2015, which ended May 31. Total revenue, including the value of food donations last year, was $75.8 million, compared with $91.2 million the year before. The food rescue, which has an operating budget of $8.5 million this year, collected 40.9 million pounds of food in fiscal 2015, about 8 million pounds less than the year before, John Owens, director of marketing and public relations, said in an email. For its part, Hopeful Harvest contributed $47,055 in revenue during its nonprofit parentâ&#x20AC;&#x2122;s fiscal 2015 ended May 31. Nemeth is projecting it will bring in $300,000-$325,000 its first full fiscal year of operation ending June 30.

Growing pains From the launch of the subsidiary in fall 2014, things grew quickly, Nemeth said. â&#x20AC;&#x153;We had a waiting list of people who wanted to come in.â&#x20AC;?

Chris Nemeth,Hopeful Harvest president

It got a whole lot more crowded following the Garden Fresh sale, given that the Ferndale building that housed SEED was part of the deal. SEEDâ&#x20AC;&#x2122;s operators asked Hopeful Harvest to take on a new, grantfunded bottling line, Nemeth said. It agreed and upgraded electrical and plumbing and constructed a modular building in the warehouse shared by the food rescue and subsidiary to house the new bottling line, which arrived in October. Hopeful Harvest was in the process of getting the line running when Aronson and his business partner, Dave Zilko, a Forgotten Harvest board member, late last October asked it to take receipt of another bottling line that was still housed in Ferndale and to assume contractual production of Zilkoâ&#x20AC;&#x2122;s Mucky Duck mustard and salad dressings, Nemeth said. The plan was for Hopeful Harvest to begin bottling at its Oak Park site and to assist the food companies that SEED had been working with, including Scotty Oâ&#x20AC;&#x2122;Hotty hot sauces, Jenâ&#x20AC;&#x2122;s Gourmet Dressings, and Mucky Duck. But Hopeful Harvest never began

the bottling operations or working with the SEED companies. â&#x20AC;&#x153;The reality was it was too much for us,â&#x20AC;? Nemeth said. â&#x20AC;&#x153;We just didnâ&#x20AC;&#x2122;t have the staff and capability of doing it all with the second bottling line being there.â&#x20AC;? Aronson and Zilko moved the first bottling line and a 100-gallon steam kettle back to the Campbellowned building, now a Campbell test kitchen, in January, after the Fortune 500 company agreed to donate the space. â&#x20AC;&#x153;I let the group at Forgotten Harvest know if they had overflow we were there and willing to help them,â&#x20AC;? Aronson said. But the Ferndale space is small. The plan being discussed for yearâ&#x20AC;&#x2122;s end, after Hopeful Harvest transitions to Eastern Market, is to shift food companies to the Detroit Kitchen Connect network of commercial kitchens in the region for the short term, Nemeth said. At the end of May, when Campbellâ&#x20AC;&#x2122;s lease of an 18,000-square-foot building in Inkster ends, Aronson said he will make that available for SEED and the companies itâ&#x20AC;&#x2122;s assisting. Those include startups like Chez Chloe , a lava cake company owned by a former Parisian; and second-

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stage companies like Slow Jams and McClary Bros . handcrafted drinking vinegars; and the Detroit Water Ice Factory, an Italian ice company Detroit Free Press columnist Mitch Albom launched to support the nonprofit S.A.Y. Detroit. The long-term goal, said Mike DiBernardo, Eastern Marketâ&#x20AC;&#x2122;s director of food innovation programs, is to develop space for SEED in a cityowned water building near Eastern Market, which is likely 18 months or more out. Forgotten Harvest and its board â&#x20AC;&#x153;are wrestling with a wicked opportunity wrapped in a challenge of success,â&#x20AC;? said Kyle Caldwell, executive director of the Dorothy A. Johnson Center for Philanthropy at Grand Valley State University in Grand Rapids. â&#x20AC;&#x153;Too often nonprofits experiment with new and joint ventures that realize marginal success or failure and try to learn what to do next.â&#x20AC;? Itâ&#x20AC;&#x2122;s much less frequent their boards have to decide to â&#x20AC;&#x153;graduateâ&#x20AC;? a prosperous experiment to empower it to go to scale, while fulfilling its mission, he said. Nonprofits, at their core, measure success in a very different way than for-profits, added Matthew Downey, the centerâ&#x20AC;&#x2122;s director of nonprofit services. â&#x20AC;&#x153;In the end, it has to be weighed against what success looks like for the (nonprofit) mission,â&#x20AC;? regardless of the revenue opportunities. äĄ˛

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top that in 2016. “Anything we can do to bring Origin: The Detroit-Wayne County people into the building, it’s a good Port Authority was created by the thing to utilize the structure and Legislature in 1978 to replace the generate some revenue,” he said. Detroit Wayne County Port District. While events brought 40,000 to the terminal facility last year, ship Governance: Its board consists of passengers and water taxi users two members appointed by the don’t spend time in the building. mayor of Detroit, two appointed by “That’s what is frustrating about the Wayne County Commission and this huge building: Even if used sucone by the governor. The board hires cessfully, people don’t spend much the executive director. time in the building itself,” Loftus said. Mission: Economic development on Passenger traffic through the terthe Detroit River and oversight of minal last year was 7,500 people. the city’s commercial trade port. “I think we can do better,” he said. The authority works to attract Great About the director Lakes cruise ships, along with novelName: John Loftus ty vessels such as warships and Age: 58 historic sailing vessels. The authority also continues Background: Retired in to study and test creating a water December 2012 as taxi service that would run from executive director of Cobo Center to Belle Isle, with the Lake County Port stops in between such as at the Authority northeast of Renaissance Center, Loftus said. Cleveland. It runs a similar service during Loftus is a 1980 John Loftus: the annual auto races each year University of Michigan Detroit-Wayne on Belle Isle. graduate, and he County Port Plans for a water taxi between worked as an intern Authority director Detroit and Windsor remain and aide to members stalled because the port authority terof Congress including Sen. Carl Levin minal doesn’t have the technology and U.S. Rep. John Dingell. U.S. customs officials said it needs for Contract: Three-year contract that passenger clearance, Loftus said. pays him $125,000 a year. “It’s kind of frustrating. Our building is not a port of entry. To get senger building, along with a $7.1 mil- it designated a port of entry like an airport, I have to put a whole slug of lion offshore wharf, opened in 2011. The building’s heating and main- money into it,” he said. That slug would be about tenance costs can eat up 15-20 percent of the authority’s annual budg- $200,000, or about 20 percent of the et, Loftus said. Last year, it cost authority’s annual budget. One issue remains a financial thorn $178,000 to run the building. “The option of selling it, leasing it, for the port authority. Loftus said modifying it, it’s always on the table,” there’s no action on the authority’s he said. A wrench in any sale would 2005 loan deal with Ambassador be federal approval, required because Bridge owner and trucking magnate Manuel “Matty” Moroun. federal money paid for the building. In exchange for paying off $2.1 “There’s no clear guidance from million in bond debt left by a termifeds on how you do that,” he said. Troy-based Continental Services nal owner, the defunct Detroit Marine has a contract with the authority to Terminals Inc., and reopening the facater events, such as weddings and cility, the Moroun-owned Ambas meetings, at the passenger termi- sador Port Co. got up to a 90-year nal. The authority gets a commis- concession on operating rights of sion on each event, which totaled future transportation facilities de$200,000 last year, Loftus said. veloped and owned by the port. He expects the commission to The terminal is now is run by stevedoring company Nicholson Terminal & Dock Co. in a deal with Ambassador Port and the authority. The authority has paid $1.3 million of the $2.1 million debt owed to Moroun, but interest, fees and penalties had increased the debt to $2.2 million by the end of 2014, Loftus said. The amount owed stands now at about $2.1 million, he said, and the authority doesn’t have revenue streams to make much of a dent in the amount owed — which drives some of the effort to finance projects, which can create revenue via fees. Loftus said Ambassador Port isn’t interested in changing the deal’s terms. Moroun’s organization would not comment. “I do not see an opportunity for paying off that debt. Basically, there’s no change. It still is as big an issue as it’s always been,” Loftus said. “There are no indications they’re interested in changing it. It was structured very favorably to their end. It’s a headache.” 䡲

About Port Authority

FROM PAGE 3

criticism from other economic development groups such as the Detroit Economic Growth Corp., which said the effort was unnecessary competition. “The objective is to see us as partners in development, not competition,” Loftus said. Economic development goals are long term for the port authority. In the short term, it’s preparing for the 2016 shipping season that got underway last week when the Soo Locks and the St. Lawrence Seaway both opened for the year. Loftus believes the port will see more commercial shipping and recreational vessel visits this year. The three primary port terminals saw 83 ships last season, the best since the port authority began keeping records in 2006, Loftus said. They delivered about 500,000 tons of imports last year, the vast majority being industrial steel for automotive and construction use. That’s the most general cargo since 2007, Loftus said. Additionally, there was an uptick in heavy industrial equipment imports, to 19,000 tons last year versus 1,500 in 2014, he said. He attributed the increase to the automakers investing in their plants. “We anticipate that happening again,” Loftus said. The privately owned terminals along the Detroit River, which fall under the port authority’s oversight but don’t directly provide ship or cargo data, typically do about 18 million tons of cargo annually. The port authority itself remains on a tight budget: It has $1.12 million earmarked for its current fiscal year, which ends Oct. 1. Of that, $250,000 comes each from the city and county, and the state provides nearly $500,000. The remainder is from fees. The authority has six full-time employees, one part-time employee, and one consultant on retainer, Loftus said. One cost-savings option the authority is considering is the sale of its passenger terminal. The $15 million, 21,000-square-foot ship terminal pas-

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VEBA FROM PAGE 1

Three automakers — General Motors Co., Ford Motor Co. and Chrysler LLC. “From 2011 to 2015, we started to perform. Now we are starting to transform,” Parker said. “We are at a good place in having the tools we need to help reach out to retirees to help manage their health, close gaps in care and improve their quality of life.” That requires juggling many variables. Since 2010, federal documents show that net assets and medical obligations for the UAW trust have risen and fallen based on the performance of the stock market, rising medical costs, new benefits and other factors. For example, the trust’s shortfall in 2010 was $26.9 billion. But the shortfall ballooned in 2011 to $33 billion partly because the stock market fell substantially and the trust lost money on investments. By the end of 2014, however, the long-term shortfall improved to $20 billion — 26 percent lower than five years earlier, according to financial forms filed with the U.S. Department of Labor. Data for 2015 is not yet available. Marick Masters, professor of business at Wayne State University, said the UAW trust’s 74 percent funded ratio is good compared with retiree health plans operated by many municipalities, states and private companies. The trust’s funded ratio range over the past several years has been 70 percent to 81 percent, he said. Between 2011 and 2014, the trust’s liability dropped by $5 billion and its assets increased by $8 billion, said UAW trust CFO Mary Beth Kuderik in a statement to Crain’s. She said this was accomplished by careful medical management and investment decisions.

SPIDERS FROM PAGE 1

the most destructive pest in the world, and the third will target caterpillars that eat fruits and vegetables. Sorenson said spider venom has about 1,000 peptides, some toxic to mammals and many not. Research showed that a peptide named GSomega/kappa-Hxtx-Hv1 is deadly to small bugs, either by contact or ingestion, but otherwise benign. Vestaron no longer needs actual spider venom, which had been purchased originally from an Australian company, for its upcoming products. It was able to synthesize the genes for the peptide it needed, inserted the genes into yeast, and yeast grows the peptide. Vestaron is headquartered in the Southwest Michigan Innovation Center, a building owned by Western Michigan University west of the main campus. Founded as Venomix Inc. and based on a family of patents granted the University of Connecticut, the company was founded with a small investment from the University of Con necticut Research & Development Corp.

The company began looking for a Series A round of venture capital, and got its best offer from the Life Science Fund of Southwest Michigan First, an economic development organization in Kalamazoo, contin-

A look inside the VEBA The UAW Retiree Medical Benefits Trust, which is also called a Voluntary Employee Beneficiary Association, is a health care plan that is an independent tax-exempt trust fund. It was created as part of the 2007 national collective bargaining agreement with the UAW, Ford Motor, General Motors and Chrysler. Some facts about the trust: Originally covering more than 840,000 retirees and their dependents, the trust now covers 720,397 members, including 288,447 in Michigan. More than 83 percent have chronic or complex diseases, including heart disease, diabetes, arthritis, high blood pressure, back pain, dementia and high cholesterol. These diseases represent about 99.3 percent of plan costs. In 2014, the trust spent $4.16 billion on health care costs, slightly lower than the previous year, when it spent about $4.41 billion. Some 40 percent of its total expenditures — about $1.5 billion — are for pharmacy, down from 50 percent in 2010. Reducing costs through generic drugs has been a major push by the trust. Now, 87 percent of medications are generic, up from 68 percent in 2010. The top five states for membership are Michigan, Ohio, Indiana, New York and Missouri. Jay Greene

However, liabilities increased in 2014 to $81 billion from $66 billion in 2013, Kuderik said. This $15 billion increase was due to increased costs for office visits and new dental and vision benefits, which accounted for $2.2 billion. An additional $3.5 billion was due to actuarial adjustments from new projections that indicate longer life spans and therefore increased future medical liabilities. But the largest change was due to the federally required discount rate — a percentage used to estimate future cash demands at present value — that added $9.3 billion in liabilities, Kuderik said. The rate, which goes up or down each year, changed in 2014 to 3.8 percent from 4.7 percent in 2013. “The variability (of medical liabilities) over the years depends on actuarial assumptions (of mortality rates and added benefits) and the discount rate,” which is fairly conservative, Masters said.

Still, over the trust’s five-year reporting period, total net assets available for benefits have increased 21 percent to $61 billion in 2014 while benefit obligations to cover the retirees increased by only 4.5 percent to $81 billion in the same period, federal reports show. “The trust has worked hard to maintain a balance between benefit levels and available assets,” Kuderik said. Each year the trust has met its benefit obligations “by being proactive, managing the plan well, and being a prudent purchaser,” she said. For example, from 2010 to 2014, the trust has paid out $21 billion in benefits while earning $28 billion in investment returns, she said. “Over the years, with our history, experience, and analysis, we have adapted to changes in health care and the market,” Kuderik said. “We are confident that we will be able to meet our long-term obligations.”

gent on moving to Michigan. The fund invested $2.25 million with the Michigan Pre-Seed Capital Fund, which is administered by Ann Arbor Spark, investing $250,000 and the Michigan Strategic Fund investing $1.8 million. Vestaron, which adopted that name in 2009, has other university ties. It rents other lab space from WMU, too, and John Sorenson: has research Left retirement to agreements with be CEO of Vestaron. several scientists at Michigan State University — John Wise and Zsofia Szendrei, who are experts on the Colorado potato beetle; Ke Dong, a snake venom expert; and Rufus Isaacs, who was involved in testing against spotted wing Drosophila, a fruit fly. “We found a treasure trove at Michigan State,” said Sorenson. Sorenson, who has a doctorate in developmental genetics from the University of South Carolina , headed Asgrow Seed Co. , a division of Kalamazoo-based Upjohn Co. After it was sold to Mexican investors in 1994, Sorenson moved to California to run the Rogers Seed Co., then a unit of Sandoz and later, through mergers, part of Novartis and then Syngenta. In 2007, Soren-

son retired as Syngenta’s president of biotechnology. Having worked in Kalamazoo for 14 years with Asgrow, he was recruited by a former Upjohn colleague to join the board at Vestaron in 2009, and he was named board chairman a year later, when the company was a semifinalist at the first Accelerate Michigan Innovation contest. In 2013, Sorenson agreed to come out of retirement to become CEO. “I’d fallen in love with this company. I had worked with big companies and all their bureaucracy and saw the chance to do something different,” he says. “I haven’t regretted it a day since.” Vestaron has 15 employees, with plans to hire two or three researchers, two or three for customer service and sales, and one to the production team. Laboratory-scale production is handled in-house. Commercial-scale production will be contracted out. Sorenson said the company plans eventually to return money and profits to investors, either by a sale to a large ag-chemical company — “we talk to them all the time; there are a number of them testing our products,” he said — by selling parts of the company to smaller chemical companies, or through an initial public offering. Tom Henderson: (313) 446-0337 Twitter: @TomHenderson2

But those investment returns have varied over the years. In 2014, investment income dropped to $2.5 billion from $8.1 billion recorded in both 2013 and 2012. In 2011, when the stock market tanked, the trust lost $2.6 billion, but earned $12 billion in 2010. “(The trust) has performed very well over the years,” said Masters, noting it earned a 14 percent return on investment in 2014. “I would anticipate they would meet their obligations well into the future.” Medical benefit payments have also varied over the years. They were $4.15 billion in 2010, increasing to $4.4 billion in 2013, and then dropping back to $4.16 billion in 2014. The trust declined to provide financial data for 2015. During the five-year reporting period, the trust has increased benefits and services to retirees, Parker said, adding dental coverage, vision care, urgent care, expanded office visits and such preventive care as colorectal cancer screening and diabetic eye exams and education. “We offer many services outside of (HMO) plans as not every state has strong HMOs. We have learned this approach is more efficient over time,” said Parker, adding that members appreciate the additional contacts ven-

19 dors make to encourage good health. Masters said the trust has been proactive to use its investment income to expand benefits for prevention that seeks to reduce long-term health care costs, driven by high hospital and emergency utilization. Because the UAW’s retirees worked in auto plants their whole lives, insurance contracts need to be structured to take care of specific health problems many retirees face. Retired autoworkers have a high prevalence of diabetes, smoking-related ailments like asthma, congestive heart failure and cardiac diseases. As a result, the trust recently collaborated with the Greater Detroit Area Health Council to add the Choosing Wisely program, which encourages members to talk with their doctors about various preventive and health screening tests based on their age and condition. In addition, the trust has been encouraging its members to switch from traditional Medicare to Medicare Advantage, which offers enhanced preventive care and other benefits. The trust now has more than 100,000 members enrolled in a Medicare Advantage plan. Jay Greene: (313) 446-0325 Twitter: @jaybgreene

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WATER FROM PAGE 1

“We worked so hard to have Detroit not be a negative issue,” Rothwell said. “Now, Flint puts a damper on it.” Corporate site selectors like McEnroe say they’re increasingly having to offer out-of-state companies more nuance about Michigan when answering questions about Flint, similar to how they explained the state several years ago as Detroit headed closer to, and eventually through, bankruptcy.

Business development The Michigan Economic Develop ment Corp., which manages the $33 million Pure Michigan campaign, said the number of potential business deals in its pipeline has been down since the fall, which is when news of the Flint drinking water crisis began to break. But that’s also the same time the MEDC cut its budget by 27 percent and laid off 65 employees due to a drop in tribal gaming revenue, which has contributed to fewer staff members working on company outreach. MEDC spokeswoman Emily Guerrant said deals now are generally smaller, more complicated and take longer to close; the state also has fewer resources available for large incentive packages. Taken together, she said, it’s difficult to pinpoint the Flint crisis as the reason for a drop in business prospects. On the tourism side, Guerrant said it’s too early to have any tangible data to show whether the Flint emergency is keeping some would-be vacationers away. The state won’t receive estimates on the economic impact of this year’s Pure Michigan campaign until next year, for one. But the winter season also suffered from lowerthan-typical snowfall levels. Steve Arwood, CEO of the MEDC and director of the new Michigan Department of Talent and Economic De velopment, said out of all the selling

efforts put forth by the MEDC through the years, nothing tops the Pure Michigan campaign. “It’s iconic and award-winning,” he said. “It has done more to market the state than anything we have done after that. It is the one thing that is continuing. “When you do something for 10 years without interruption, it becomes very deep-seated and immediately recognizable. It’s our brand in most of the U.S. and internationally.” Additionally, Arwood pointed to the success of the state with direct business marketing — the result of balanced budgets, improvements to workers’ compensation administration and a flat corporate tax. He said it is not hard to market Michigan as the automotive center of the country because few would question that it is. But newer industries are showing strength in the state as well, such as aerospace, natural resources, agriculture and high-end food products. He pointed to successes such as a Clemens Food Group pork processing facility in Coldwater that is under construction, a $325 million Arauco particleboard manufacturing facility in Grayling Township and the American Center for Mobility at Willow

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Promoters: Stay true to Pure Michigan Leisure tourism promoters say the state needs to continue to promote the Pure Michigan brand to stay ahead of other states that are adopting marketing campaigns of their own. They add that state tourism promoters also could better leverage social media to curate followers, or ambassadors, who could spread positive messages about Michigan to their own networks — thus widening their reach. Michigan State University faculty members who author Michigan’s annual tourism forecast say they don’t yet know how the Flint crisis will affect prospective leisure vacationers, though the topic could be addressed during a state tourism conference in April.

Steve Yencich, president and CEO of the Michigan Lodging and Tourism Association, said he hasn’t heard any concerns about weakened summer travel from the hotels and resorts he represents. “I’m much more concerned with economic conditions, gas prices and weather conditions,” Yencich said. “In light of what’s taking place in Michigan, this is a prime opportunity to step up promotion of everything else that this state has to offer — not just leisure travelers, but business travelers, conventioneers and people who are looking to relocate businesses.”

Crisis continues as discussion topic A task force formed by Gov. Rick Snyder to investigate the Flint water crisis last week released a report pinning the cause on state government failures, including a state-appointed emergency manager’s decision to switch drinking water sources from the Detroit system to the Flint River while the permanent Karegnondi Water Authority pipeline was constructed. A failure to treat the corrosive river water caused lead to leach from old pipes. Elevated levels of lead were found in children’s blood, which can cause permanent learning and behavioral problems. And the Detroit Regional Chamber likely will take up the Flint water emergency as a discussion topic at its annual policy conference on Mackinac Island after Memorial Day, President and CEO Sandy Baruah told Crain’s. Since October, lawmakers have approved more than $67 million in additional funding for Flint, though the cost of the crisis is expected to rise.

Run. This project plans to transform the former Ford Motor Co. B-24 bomber plant at Willow Run in Ypsilanti Township into the nation’s first autonomous vehicle testing site.

Other priorities But how much money and effort for damage control and positive branding is appropriate as the state continues to reel from Flint stories? Funding for the next round of economic development work has been on the table before when lawmakers faced large budget priorities. Last year, legislators in the House proposed diverting money from the MEDC to pay for a $1.2 billion road-funding plan; MEDC administrators warned that could limit the Pure Michigan campaign. That proposal didn’t wind up as part of the final package. This year, Flint and a proposed $720 million debt restructuring of Detroit Public Schools are dominating funding talks, though neither issue is expected to siphon money away from Pure Michigan, said state Rep. Al Pscholka, chairman of the House Appropriations Committee. Snyder’s executive budget proposed leaving Pure Michigan funding flat at $33 million in 2017. “I’m not advocating for any reduction to Pure Michigan,” Pscholka, R-Stevensville, told Crain’s. “Generally, I know in the House there’s a lot of support for Pure Michigan. A lot of it’s going to depend on fiscally where we’re at, because we do have some challenges.” Economic development agencies across Michigan say they have not noticed any real loss of business interest because of Flint, though in some cases they are working harder to sell the state to prospective companies. In Kalamazoo, where Ron

Kitchens’ team at Southwest Michi gan First can talk with as many as 230 site consultants over the course of a year, they now are making roughly three times as many phone calls to companies and site selectors telling them not to discount Michigan in their location search. Deals are in the pipeline, he said, but he doesn’t know how many will close. “We’re about selling the whole state. So when the water crisis broke, when the Detroit Public Schools hit the national news, there was a palpable gasp,” said Kitchens, CEO of the regional economic development organization. “I don’t think it’s any intentional redlining,” he said. “I just think when people are in crisis, states are in crisis or regions are in crisis, the human reaction is not to run to the fire.”

Marketing vs. sales Some economic development experts told Crain’s they’re concerned about the implications of using one brand to serve multiple types of marketing, especially in periods of negative attention, because the functions can’t easily be distinguished. Still others have suggested using recognized business leaders in Michigan to strengthen a corporate attraction campaign. Others say cuts to the MEDC, both in terms of dollars and staff, have had an impact. “For Michigan to be the place that we need it to be, it’s going to take a significant increase in the marketing and sales,” Kitchens said. “Pure Michigan is a good marketing plan, but it’s not a sales strategy. Sales strategies are people pounding the pavement, people who are at keyboards, looking at where companies are locating and how we can be more

competitive than those locations.” Mark Winter, president and a founding partner of Identity, a public relations and marketing firm in Bingham Farms, said the multipronged approach of Pure Michigan has an upside: It allows the MEDC to use its scant resources effectively. He added that such an interconnected strategy, despite the singlebrand risk, also helps the state engage companies that employ millennials, for whom the livework-play lines are blurred. That could be important in the Flint recovery, said McEnroe, the site selector. Besides manufacturing, which uses a lot of water, the city could have a challenging time recruiting companies that employ white-collar professionals and would have to discuss relocating to Flint, she said. “What are the implications here for a workforce in that area? Are people going to leave? Are they going to stay?” McEnroe said.

Positive messages Several people told Crain’s that one of the main messages being shared in defense of Michigan is that Flint, much like Detroit before it, is an isolated event that is not affecting other cities or regions in the state — while stressing that it does not downplay the severity of the water crisis. While at a restaurant in Atlanta a couple of weeks ago, “the waiter made a joke about the table water and referenced Flint,” Winter said. “The first thing I did was stand up and support our state and all the things we’re doing right,” Winter said. The Pure Michigan campaign this spring will release a TV commercial focusing on Detroit’s postbankruptcy momentum. It has been described as more visually edgy than most Pure Michigan ads, including recent spots depicting Michigan’s craft beer industry and farm-to-table restaurants. State tourism promoters waited to tell Detroit’s story until after the resolution of bankruptcy. They point to highlights such as improved city services, and construction of the M-1 Rail (now called QLine ) and Detroit Red Wings hockey development. Armed with the updated compelling messages, Dave Lorenz, vice president of state tourism agency Travel Michigan, said easing off the Pure Michigan throttle now would cause Michigan “to lose out on all that economic activity, and we would have then helped cause the problem that they’re currently dealing with.” “The day that we somehow look at scaling back is the day we’re going to slip back,” Lorenz said. “Social media has provided an opportunity for people to vent and to share their thoughts, but unfortunately, more times than not, it’s not balanced with the positive,” he said. “Every bad message in a marketplace is just helping create distractions for the good things we’re trying to say. “If that positive information outweighs the negative, then we’re going to be ahead of the game.”䡲 Lindsay VanHulle: (517) 657-2204 Twitter: @LindsayVanHulle Marti Benedetti contributed to this report.

Efforts aim to counter lead crisis with Flint positives LANSING — In Flint, residents and businesses are trying to counter the negative messages brought by lead poisoning with messages of resilience. Jocelyn Hagerman, the founder of a grassroots social media campaign called #FlintFwd, said she and others felt the city needed something that could show the outside world that Flint is more than just a bad headline. “There’s just this general consensus that: ‘Why go to Flint? There’s so little going on,’ ” said Hagerman, of Fenton, who with her husband, Phil, owns several businesses in the region, including a real estate firm and specialty pharmacy Diplomat Pharmacy. “I don’t want to make light of anything going on,” she said of the lead crisis, which spawned from a decision to switch drinking water sources from Detroit’s treated Lake Huron water to the Flint River. “(But) if we don’t move away from the negative, we’ll never move to anything positive.” The campaign started out as Hagerman’s idea, with T-shirts and bumper stickers. She said Ann Arbor-based marketing firm Phire Group agreed to get involved pro bono and teamed with Flint-based Digital Alchemy Films to help produce videos featuring residents and business owners talking about the city. “We see this as a long-term effort owned by the people of Flint — and we just helped create a platform for it to take place,” said Jim Hume, principal of Phire Group. The budget, if there was one, was small — maybe $10,000, Hagerman said — and she hasn’t developed any metrics for success, but said she would love the campaign to go national. Hagerman hopes residents will take ownership of the campaign now by sharing positive stories about the city on the #FlintFwd website and social media channels. On its website, #FlintFwd describes itself as “a movement inspired by the resilience of the people of Flint.” That message of resilience is influencing the counter-messaging being done through the Flint & Genesee Chamber of Commerce, where business promotion likely will be harder. Traffic is down at businesses and restaurants, which affects the city’s recent downtown development momentum, said George Wilkinson, a chamber group vice president. Hotel rates haven’t slid, despite concerns from people about visiting the city, Wilkinson said, which he attributes to large numbers of volunteers who are coming to work in Flint. The chamber said it is finalizing a contract with a public relations firm to help with its lead counter-messaging. Wilkinson said the chamber is working to secure local, state and federal resources for business owners, including microloans. “We’re taking actions to let everyone know that Flint is open for business.” 䡲 Lindsay VanHulle

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er would transition into new roles as relatively smoothly as they seem to have done. There were plenty of bumps along the way, he says. Development projects in the works when Jeff died — including the Royal Oak City Center development and the 18,000-squarefoot Wachler building project JeffSurnow: Was — were in peril. killed riding his bike Sam, who in Hawaii a year ago. spent four years in New York City with Pricewater houseCoopers LLP, most recently as a senior associate, handled some finance-related items and other work for the company after returning home a couple of years ago before his father’s death, but when it came to the nitty-gritty of being a landlord and developer, he knew he was still green. Among the challenges: Maintaining and strengthening relationships with longtime tenants across the Surnow portfolio, which is about 2 million square feet in some 60 or so buildings; asserting that he was, in fact, the new Surnow in charge; and fending off those looking to buy properties his father had put under contract before his death, for example. “While I had been working with my father day to day, I had only been exposed to certain areas of the business. I started to get very, very immersed, but I didn’t know the depth and the magnitude of the portfolio until I was actually able to come in and see the picture,” said Sam, a graduate of the University of Colorado, about 200 miles northeast of Aspen, where his family has a home on Cooper Street. Sam is the first to say that he has had help and guidance along the way, including from his younger brother. Max, who started Birminghambased Cooper Street Cookies LLC while in college at Michigan State University with a family recipe, has started taking on more responsibility in real estate, including property management, accounting and tenant relations for The Surnow Co., which employs about 30 people. “He doesn’t care what the task is,” Sam said of his brother. “It’s always

all hands on deck with him.” Lisa, their 23-year-old sister, handles social media for the cookie company, which had $80,000 in sales its first year in 2010 and has since grown into the “multimillions,” Max said. She does not currently do any work for The Surnow Co. Michael Surnow, Jeff’s brother and a longtime partner in real estate deals, has been “vital to our organization and is always there to offer help or guidance and support in any way possible,” Sam said.

Unlikely teaming When Ron Boji walks into a room, the atmosphere changes. Boji, the animated and passionate real estate developer who makes a daily commute from Orchard Lake to Lansing, where his Boji Group is headquartered, commands attention without asking for it through sheer force of personality. The Surnow brothers, by contrast, are assertive and gaining confidence in their real estate acumen, but largely quiet, reserved. So how did this unlikely group get together? Call it success arising from tragedy. Boji’s cousin, Randall Denha, is a Birmingham-based estate attorney whose firm is Denha & Associates PLLC . Also, the owner of RAD Devel opment Group, Denha had both Boji and Jeff Surnow on his client roster. When Jeff died, the Surnow brothers were considering backing away from Jeff’s plan to build a new mixeduse development with Royal Oak city government as a key tenant, Boji said. That’s when Denha stepped in, introducing the Surnow brothers to Boji, whose company specializes in public-private partnership developments, Boji said. Central Park Development Group LLC, of which Boji is majority owner,

was born, and a year later its project that would reshape the landscape of 11 Mile Road east of Main Street is speeding toward starting construction this year, Boji said. “Jeff approached us a couple years ago with some great ideas,” said Mayor Jim Ellison, who campaigned on the need to address the aging City Hall in 2003. “He passed and we were disappointed, but his sons picked up the ball and came back with a great plan.”

Details of the plan It’s still just a plan. The city could opt not to proceed with the develop-

INDEX TO COMPANIES These companies have significant mention in this week’s Crain’s Detroit Business: Argessin LLC.......................................................115 Blue Devil Statistics LLC ..................................115 21 Boji Group ...........................................................2 21 Central Park Development Group LLC ...........2 Clarkston Brandon Community Credit Union.....117 9 Clinc ......................................................................9 CompTherapeutics ...........................................115 3 David Wachler & Sons........................................3 4 Detroit Pistons....................................................4 3 Detroit-Wayne County Port Authority ............3 FlexDex................................................................115 3 Forgotten Harvest ..............................................3 Genomenon........................................................115 4 Grow Detroit’s Young Talent .............................4 Hao Tech .............................................................115 3 Hopeful Harvest Foods......................................3 InSight Technologies LLC .................................115 JCE LLC................................................................115 Lycera ..................................................................113 4 Michigan-China Innovation Center .................4

Micro-LaserAssisted Machining Technologies....110 Mountain Pass Solutions.................................115 Oakland University .............................................77 Pic Stir.................................................................115 Praktio.................................................................115 QuadMetrics ......................................................115 Qurgen.................................................................115 4 Ralph C. Wilson Jr. Foundation .........................4 3 SEED......................................................................3 Seraph Biosciences...........................................115 Strength in Numbers Studios ..........................111 3 The Surnow Co. ...................................................3 Swarts Trehalose Analogs and Detection .....115 TheraB Medical ..................................................113 20 Travel Michigan .................................................2 Treeborn Products ............................................115 Trimaran Pharma...............................................112 UAW Retiree Medical Benefits Trust ................11 University of Michigan........................................77 Vestaron................................................................11

ment and instead rehabilitate the existing building. An April 18 meeting is scheduled for 7 p.m. to present the plan to the public as proposed by Central Park Development Group, the entity formed for the development. The 190,000-square-foot building would include 30,000 square feet for city government operations and about 130,000 square feet of leasable office space with 20,000-square-foot floor plates. It would be completed in time for the city and other tenants to occupy the building by the early part of 2018, Boji said. The building would also include a rooftop garden terrace and event center, along with leasable space for a specialty grocery store and a restaurant with a liquor license, Boji said. Also included in the project plans are a 533-space, six-story aboveground parking deck, a park with an amphitheatre and playground, and new Royal Oak Police Department headquarters on the eastern edge of the site north of the existing 44th District Court building. It is expected to be financed with about $50 million from the city raised through the sale of bonds, and another $50 million from Central Park Development Group, including a construction loan secured by the development entity. Twelveyear property tax abatements are expected as part of the project financing, the overall package of which is expected to close Sept. 19, which would have been Jeff and his widow Elaine’s 32nd wedding anniversary.

Forging ahead It wasn’t until months after their father’s death that Sam and Max had time to absorb what happened. Real estate experts who have worked with the Surnows said the brothers rebounded admirably and, although there was a learning curve, have slipped into the family business as guiding forces for the 38year-old company. The Surnow Co. is perhaps best known for its redevelopment of the 19,000-square-foot former post office building at 320 Martin St. in downtown Birmingham; and the redevelopment of the 31,000-squarefoot former Birmingham Public Schools Board of Education building at 550 W. Merrill St. into office space. After Jeff died, “you’d think to put all the business on hold, but that’s not the way we were raised, and we were really focused on making sure our family was going to be OK,” Max said. Dave MacDonald, executive vice president in the Royal Oak office of Jones Lang LaSalle who has been tapped to lease out space in the Royal Oak City Center and Wachler building projects, said the two sons have taken over the family business with the same determination that Jeff had. “Their dad was a very seasoned real estate guy,” said MacDonald. “They are both very hard-working — there are different personalities, but there is the same drive to get these done.” Things could have gone far differently for the Surnow sons, said Pat O’Keefe, CEO of Bloomfield Hillsbased turnaround firm O’Keefe LLC, which has worked with a number of real estate companies in the past. “The family is lucky that they had

someone within it to step in, pick up the ball and run with it,” he said. “Not all siblings have an interest in doing that.” Matt Farrell is a real estate executive and friend of Jeff’s. “They both have done a very, very nice job of getting control of the organization,” said Farrell, who is CEO and cofounder of Bingham Farms-based Core Partners LLC, which was a tenant in the former post office building.

Finding a new home The Wachler jewelry building, which is expected to be rebranded as the Woodward Building when complete, is as much of an institution in Birmingham as Jeff Surnow was. David Wachler & Sons was founded nearly a century ago in 1922 and the third-generation business has called Birmingham, and that location, its home for 33 years. But after Jeff died and Sam took over The Surnow Co., what would happen with the jeweler was up in the air. Would owner Buzz Wachler be allowed to stay in his location at Maple Road and South Old Woodward? Or would he have to set up shop elsewhere due to the extensive reconstruction? The answer was two stores down, where Sam helped Wachler find and build out new space while construction was taking place. It’s in its new location at 112 S. Old Woodward Ave. that the jeweler will remain, Wachler said. “We like it here,” Wachler said of the site owned by Gwynn Building LLC. He knew of Jeff’s plans to remodel that Wachler building, but he thought there was a chance the construction would allow him to remain open in that space during it. “As I see what had to be done and the extensiveness of the construction, obviously there was no way,” Wachler said. “I accepted and understood that. I had a great relationship with Jeff, and I have a great relationship with Sam and Max. ... I’m fortunate in that regard.”

A father’s presence The grief remains palpable with Sam and Max. Sam, who married his longtime girlfriend just a few months before Jeff died, recalls an overjoyed father at his oldest son’s wedding. His eyes watered briefly when describing it, but no tears were shed; he choked them back. “We were all getting ready and drinking Scotch together, and his speech was incredible and my brother’s speech was incredible,” Sam said. Last week, Sam looked at photos throughout the office, now his. They paint a picture of a father who was loving and adventurous (he was an avid cyclist and climbed Mount McKinley), philanthropic and devoted to community. But most of all, he was devoted to them, his sons said. “I sit here,” Sam says, looking around his father’s former office, “and Max sits there,” looking out and pointing to the office area connected to his, separated from the rest of The Surnow Co. space by a door. Jeff’s name is still on it. 䡲 Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

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

REPORTERS Jay Greene, senior reporter Covers health care, insurance, energy, utilities and the environment. (313) 446-0325 or jgreene@crain.com Chad Halcom Covers litigation, the defense industry and education. (313) 446-6796 or chalcom@crain.com Tom Henderson Covers banking, finance, technology and biotechnology. (313) 446-0337 or thenderson@crain.com Kirk Pinho Covers real estate, Oakland and Macomb counties. (313) 446-0412 or kpinho@crain.com Bill Shea, enterprise editor Covers media, advertising and marketing, the business of sports, and transportation. (313) 446-1626 or bshea@crain.com Robert Snell, reporter Covers city of Detroit and regional politics. (313) 446-1654 or rsnell@crain.com Lindsay VanHulle, Lansing reporter. (517) 6572204 or lvanhulle@crain.com Dustin Walsh, senior reporter Covers the business of law, auto suppliers, manufacturing and steel. (313) 446-6042 or dwalsh@crain.com Sherri Welch, senior reporter Covers nonprofits, services, retail and hospitality. (313) 446-1694 or swelch@crain.com

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WEEK Quicken Loans scraps plan for McIlroy-Fowler golf exhibition

uicken Loans Inc.’s plan to

have champion pro golfers

Rory McIlroy and Rickie

Fowler square off in an exhibition match under the lights at Detroit Golf Club has been abandoned. A spokesman for the Detroit-based company said talks never progressed beyond a preliminary stage. The proposed match, first reported by The Associated Press, was tentatively scheduled to be played June 7, the Tuesday before U.S. Open week begins at Oakmont Country Club in suburban Pittsburgh. The exhibition match in Detroit would have aired live on the Golf Channel and CBS.

COMPANY NEWS n The name of the new M-1 Rail streetcar line in Detroit will be

QLine, Detroit-based Quicken Loans Inc. announced. Quicken is paying

$5 million over 10 years for the naming rights to the $137 million streetcar project, set for completion early in 2017. n Warren-based Paslin Co., an assembly line robotics manufacturer, has been acquired by China robotics manufacturer

Zhejiang Wanfeng Technology Development Co. Terms of the deal

were not disclosed. n Southfield-based real estate investment trust Sun Communities Inc. expects to close on a $1.68 billion purchase of about 27,500 manufactured housing and RV sites from Scottsdale, Ariz.-based Carefree Communities Inc. by July. n Warren, Ohio, auto supplier Stoneridge Inc. will move its headquarters and at least 70 employees to Novi with the help of a Michigan Strategic Fund incentive. Stoneridge received a $1.4 million performance grant to support a $5.2 million relocation of the electrical and electronic vehicle component maker’s corporate office to Novi, where it has a sales operation. n Flint-based Halo Burger opened a stand at the Palace of Auburn Hills’ North Pavilion in the hamburger chain’s first pro sports partnership. Terms of the deal were not disclosed. n Dan Gilbert’s Bedrock Real Estate Services LLC made a big buy in Cleveland, a centerpiece of Tower City, the Avenue, from Forest City Realty Trust Inc. for $56.5 million, Crain’s Cleveland Business reported. The shops are strategically connected to the company’s other Cleveland assets: the Ritz-Carlton Hotel, Jack Cleveland Casino and Quicken Loans Arena.

C R A I N ’ S D E T R O I T B U S I N E S S // M a r c h 2 8 , 2 0 1 6

ON THE WEB MARCH 19-25

Detroit Digits

Verlander has relocated his

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

Wins for Warriors Foundation, from

$442,000

The amount owed in delinquent water bills by Oakland Township-based Vargo Golf Co. to the city of Detroit. Vargo is the management company running the city’s four golf courses. On Tuesday, City Council narrowly gave Vargo a one-year extension on a contract to manage the courses.

294

The percent increase in the Detroit Tigers’ value since 2006. The Tigers

were worth $292 million in 2006 and now are at $5 billion, according to Forbes.com, No. 14 of Major League Baseball’s 30 teams.

1 million+

The number of Lego bricks present in Legoland Discovery Center Michigan at Great Lakes Crossing Outlets in Auburn Hills, which opened to the public Friday. The attraction includes interactive rides, a 4-D cinema and a Lego Miniland display with replicas of Detroit’s most notable buildings and landmarks.

n Sergio Marchionne, chairman and CEO of FCA US LLC, will be volunteer chairman of United Way for Southeastern Michigan’s annual campaign through 2018. Marchionne, who held the same role four years ago for the Detroitbased nonprofit, succeeds General Motors Co. President Dan Ammann, who chaired the campaign the past two years. n Republic restaurant and bar in downtown Detroit is one of the country's 100 hottest restaurants for 2016, according to OpenTable, a San Francisco-based provider of online restaurant reservations. Republic opened in February 2015. n The Michigan Strategic Fund board approved the following: $3 million in state funds to become a limited partner in the American Center for Mobility project at Willow Run. The MSF is acquiring an equity stake as a partner in the controlling venture, the Willow Run Arsenal of Democracy Landholdings LLP; also a grant of up to $400,000

to Detroit-based jobs nonprofit RecoveryPark and RecoveryPark Farms Inc. to serve as bridge financing for operations and hiring while the organization and social enterprise secure firstphase financing.

n Wheelhouse Detroit Bike Shop

plans to open a location in Hamtramck in May in a 2,600-square-foot space at 9401 Joseph Campau St. n Detroit Tigers pitcher Justin

nonprofit veterans charity, the

temporary space in Birmingham to the Chrysler House in downtown Detroit.

OTHER NEWS n Michigan lawmakers voted to extend $48.7 million in emergency aid to keep the ailing Detroit Public Schools district open for the rest of the academic year and avoid the prospect of payless paydays for staff. n The $65 million Scott at Brush Park project, a new apartment development with 199 units for rent and approximately 15,000 square feet of retail space at Woodward Avenue and Erskine Street in Detroit, is expected to be complete by December, officials said. n The 93-unit Milner Arms apartment building in Detroit has a new owner. An entity affiliated with Birmingham-based Broder & Sachse Real Estate Services closed on the purchase of the 103-year-old building at 40 Davenport St. Price was not disclosed. n Mayor Mike Duggan announced Detroit will tap a tax zone that will capture money to send more students to college for free and create a sustainable, long-term college program for students in the city. Detroit high school graduates can attend one of five community colleges to earn a two-year degree. n The U.S. Department of Education said it has cut off grants to the Michigan Jewish Institute in West Bloomfield Township after finding that thousands of students lived in Israel and weren’t taking classes through the school, the Detroit Free Press reported. n Soccer power Real Madrid will return to Ann Arbor July 30 to play Premier League champion Chelsea at Michigan Stadium as part of the International Champions Cup preseason exhibition tournament, officials announced. Real Madrid lost to Manchester United 3-1 at the Big House last August in a contest that set a record for U.S. soccer attendance. n The Detroit Workforce Development Board, established last year to create jobs to revive the city, faces many obstacles, according to a new report by J.P. Morgan Chase & Co. The report, the second part of a series looking at Detroit’s labor gaps as part of Chase’s $100 million investment in the city announced in 2014, says the city lacks employer engagement, has few organizations offering basic job skills training and lacks information sharing. n Candice Miller, who had already said she wouldn’t seek another term in Congress after 14 years, said she will run for Macomb County public works commissioner, AP reported. n

RUMBLINGS

Ex-Hollywood actor pleads guilty in housing telemarketing scam

former Hollywood actor faces more than 10 years in federal prison after pleading guilty last week for his role in one of the most significant telemarketing scams in metro Detroit history involving thousands of distressed homes. Joseph “Joey Ace” Arsenault, 57, pleaded guilty to conspiracy to commit mail and wire fraud and is scheduled to be sentenced July 22 by U.S. District Judge Stephen Murphy. Arsenault, being held without bond, also must pay an undetermined amount of restitution. Arsenault, who was profiled by Crain's last month, was accused of helping persuade investors to buy homes involved in the alleged scam, which left scores of abandoned homes across the region, devastated struggling neighborhoods and compounded blight problems, federal prosecutors said. The alleged conspiracy involved homes purchased for as little as $500, in many cases through Wayne County tax auctions. The properties then were flipped, in one case for as much as $15,000, to investors duped into buying what they believed were bank-foreclosed homes for more than fair market value, court records allege. In all, about 300 victims lost more than $20 million after investing in more than 2,000 homes, according to prosecutors. Arsenault participated by posing as a foreigner named Kenneth Frue, who was interested in buying the investors' homes, prosecutors said. Arsenault is a former Hollywood bit player who appeared in the 1997 comedy "Orgazmo" and a handful of other films. Fifteen people have reached plea deals with prosecutors. One man is awaiting trial.

Freep Film Festival to kick off Thursday with Smith The third Freep Film Festival kicks off this week with a live discussion of movies, comics and pop culture with filmmaker Kevin Smith at the Fillmore Detroit on Thursday. This year’s festival runs Thursday Kevin Smith: through April 3. Offering “Fatman Joining Smith on Batman.” for his stand-up performance “Fatman on Batman” at 8 p.m. Thursday will be comic-book writer Marc Bernadrin, who hosts a prodcast with Smith. Also showing Thursday as part of the festival’s kickoff is “T-Rex,” a documentary about Olympic gold

medal-winning Flint boxer Claressa “T-Rex” Shields, at 7 p.m. at the Detroit Institute of Arts’ Detroit Film Theatre. Other venues include the Cinema Detroit, the Museum of Contemporary Art Detroit, Elizabeth Theater at the Park Bar, Emagine Theatres in Royal Oak, Third Man Records and Detroit Historical Museum. Most screenings and associated events are $10, and tickets are sold through the venues unless otherwise noted. Last year’s festival drew about 6,000 for all of its shows. The event is presented by the Detroit Free Press and Michigan.com, which oversees the newspaper’s shared business functions with the rival Detroit News. The festival’s executive director is Steve Byrne, the Free Press’ arts and entertainment editor. Details about the films and events, including ticket information, are at freepfilmfestival.com.

First students complete Ross’ anti-racism program More than 100 students — the boys and girls basketball teams at Detroit’s Jalen Rose Leadership Academy, Saline High School and West Bloomfield High School, and with the ice hockey team at Saline — last week graduated from Stephen Ross’ new anti-racism pilot programs. The eight-week Ross Initiative in Sports for Equality programming was launched locally after months of studying and planning in 2015. The anti-discrimination curriculum will be intended to promote understanding, respect and equality among studentathletes and coaches. The students were treated to a morning of celebration and interactive activities on March 23 at the University of Michigan, Ross’ alma mater and recipient of more than $300 million from him. Next up is a second round of RISE programming at the three schools, adding the program to more local high schools, and launching curriculum at Michigan and Michigan State University. RISE has a youth pilot program under way with the nonprofit Think Detroit PAL, which gets city kids ages 7-14 involved in various sports. It launched messaging at UM and MSU football games last year. Ross has said he doesn’t expect RISE to end racism, but believes it will start a national conversation using athletics. Ross, a Detroit native and real estate billionaire with degrees from UM and Wayne State University and who owns the NFL’s Miami Dolphins, formed RISE earlier last year as a response to his 2013 situation in which one of his players quit the team over racially tinged harassment. n

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