Crain's Detroit Business, April 4, 2016 issue by Crain's Detroit Business

Somerset grabs 3 stores making Michigan debuts, Page 4

APRIL 4-10, 2016

Tax decisions may pinch Medicaid

Fed rulings could force state to dip into general fund By Jay Greene jgreene@crain.com

AARON ECKELS

Redefining rehabs

Real estate renovations are going far beyond standard-issue apartment conversions. In Rochester, a century-old home is transforming into a French restaurant. In Dearborn, the former city hall is now artists’ space. And in Royal Oak, a pair of architects redeveloped a downtown building into their office and home. These are what we call “cool rehabs,” and we show them off on Pages 8-10.

Michigan could lose two tax sources this year that contribute up to $700 million in state general fund revenue used to help support the state's fast-growing $13.6 billion Medicaid program. Over the past 20 years, Michigan has increasingly relied on a hybrid mix of taxes on mostly health care companies to help fund Medicaid, which now covers about 2.3 million people, or about 20 percent of the state's population. But this gravy-train arrangement — providing taxes of up to 5.5 percent of premiums or medical claims that the federal government has allowed states to charge health care companies, self-insured employers and individuals

to boost Medicaid budgets — may be coming to an end. There are two primary reasons for this. First, the U.S. Court of Appeals for the 6th Circuit in Cincinnati this summer could reverse a 2014 lower court ruling that upheld the state’s 0.75 percent Health Insurance Claims Assessment tax on medical claims. This HICA tax, if upheld, would raise $300 million next year, which translates through 2-1 federal matching formula into $900 million in state Medicaid funding. The second reason is that the Centers for Medicare and Medicaid Services has told Michigan it will

not be able to use funds generated by a 6 percent tax on HMO premiums for federal matching funds

SEE MEDICAID, PAGE 19

Brat Pops, tickets and trinkets: Sales influence whether Tigers revenue thrives By Bill Shea bshea@crain.com

The Detroit Tigers last week trotted out the exotic and oddball concession items that fans can eat during ballgames this season — including a battered bratwurst patty that’s deep-fried and sold on a wooden stick for $8. They call it a Brat Pop, and depending on whom you ask, the meat popsicle is either peak Midwestern ballpark gastronomy or the lunch special of the apocalypse.

Opening Day Here’s a rundown of Detroit’s home opener Opponent: N.Y. Yankees Where: Comerica Park When: April 8; 1:08 p.m.

Either way, it’s revenue. The team’s executive chef, Mark Szubeczak of Buffalo, N.Y.-based concessionaire Delaware North Sportservice, said a few hundred such novelty items are sold each

game, adding up to several thousand dollars. While that’s not much money for a team whose record payroll expense this season teeters on the edge of $200 million, the Tigers may sell enough artery-clogging novelty foods to cover, say, catcher James McCann’s $519,500 salary. It’s the sale of oddball foods along with tickets, trinkets, premium seating, suites, apparel, parking, programs, corporate sponsorships, booze and other in-game ballpark sales that creates millions of dollars of what’s termed local revenue. And local revenue can be a factor in whether Major League Baseball teams thrive or wither compared to their peers. “Sports teams locally — particularly in the order of the National Hockey League, National Basketball Association and, finally, MLB — rely heavily on their home gameday revenue such as concessions, tickets, premium suites and park-

ASSOCIATED PRESS

The Tigers added a starter and an $18 million salary in Jordan Zimmermann, helping push the team’s payroll near $200 million. ing because their national television revenues are far less than the National Football League,” said Rochester sports entrepreneur Andy Appleby, who has owned pro baseball and soccer clubs.

MLB’s 30 clubs equally share 27 percent of the league’s estimated $9.5 billion in overall revenue, while the NFL splits 65 percent of SEE TIGERS, PAGE 21

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MICHIGAN

BRIEFS Flint official: State overruled city decision to treat water

An official with Flint’s water plant said last week that he had planned to treat the drinking water with anti-corrosive chemicals after the city began drawing from the Flint River but was overruled by a state environmental regulator. Mike Glasgow, then a supervisor at the plant and now municipal utilities administrator, said he received the instruction from district engineer Mike Prysby of the Michigan Department of Environmental Quality at a meeting to discuss the final steps before Flint switched from the Detroit water system as a cost-saving measure in April 2014, The Associated Press reported. Glasgow said Prysby told him a year of water testing was required before a decision could be made on whether corrosion controls were needed, which the DEQ has since acknowledged was a misreading of federal regulations on preventing the lead and copper pollution that reached some homes, businesses and schools. Meanwhile, the ongoing Flint water crisis has helped move Michigan Gov. Rick Snyder, who once consid-

ered a run for the White House, to the top of Fortune’s list of the world’s most disappointing leaders. As Fortune says: “Good fortune can quickly turn sour after one bad decision, and repeatedly making poor decisions can only make matters worse.” Fortune assembled the list of business and government leaders worldwide, then asked readers who is the most disappointing. Snyder led late last week, trailed by Martin Shkreli, founder and former CEO of Turing Pharmaceuticals; New Jersey Gov. Chris Christie; and Chicago Mayor Rahm Emanuel. Others on the list: Sepp Blatter and Michel Platini, former FIFA chiefs; Martin Winterkorn, ex-chairman of Volkswagen; and Marissa Mayer, CEO of Yahoo.

Froot Loops an all-day treat? Kellogg hopes so Millennials aren’t supposed to like breakfast cereal all that much, dismissing it as too sugary, too processed and inconvenient. But they also are embracing the likes of Froot Loops and Smorz as indulgent snacks, which is giving Battle Creekbased Kellogg Co. an opportunity to

reposition some of its brands for the nation’s largest demographic. As fewer people eat cereal for breakfast, Kellogg is trying to boost sales of its cereals with campaigns that encourage consumption of cereal throughout the day, including as snacks and for dinner, Bloomberg reports. “It’s an alternative to a salty or savory snack in the evening when you’re looking for a little TV time,” said Craig Bahner, president of Kellogg’s U.S. Morning Foods division. The shift to 24/7 breakfast foods has helped other companies, including Illinois-based McDonald’s Corp. Its U.S. revenue and profits have surged since last fall, when it began offering some popular morning items all day.

improvement plan. NMU wants to spend about $100 million to build modernized housing and dining facilities, The Mining Journal of Marquette reported. Bell’s Brewery is making changes to its packaging and logo. Officials of the Kalamazoo area-based company said the plans will roll out later this year, MLive.com reported. The new packaging will display more prominently fan favorites like the Two Hearted Brook Trout and the Oberon Sun. A new currency parity policy is taking effect for the Blue Water Bridge, which spans the St. Clair River between Port Huron and Sarnia, Ontario, AP reported. The Mich-

MICH-CELLANEOUS A $380 million development

said the change is starting for motorists traveling from the U.S. into

in Lansing is expected to include two boutique hotels, a medical office building, restaurants and housing. Construction on the Red Cedar Renaissance project is scheduled to begin June 1, Joel Ferguson, president of Lansing-based Ferguson Development, told the Lansing State Journal that the project will be “a game changer” for Lansing and nearby East Lansing and “a catalyst for other activities.” Plans include 129 townhomes and student housing that can accommodate 1,200 people.

Northern Michigan University

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INSIDE THIS ISSUE

CALENDAR .........................................14 CLASSIFIED ADS............................... 17 DEALS & DETAILS.............................15 OPINION .............................................. 6 OTHER VOICES ................................... 7 PEOPLE ...............................................16 RUMBLINGS ...................................... 22 WEEK ON THE WEB ......................... 22

COMPANY INDEX: SEE PAGE 21 Canada paying with Canadian currency. The Canadian currency rate for eastbound traffic will be reviewed and adjusted either up or down on April 1 and Oct. 1 of each year. Details of tolls for crossing the bridge are posted online.

Corrections A story on the “Pure Michigan” marketing campaign in the March 28 issue misattributed the following quote: “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. 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.” It should have been attributed to Identity President and founding partner Mark Winter. The year-created date for University of Michigan spinoff Praktio LLC in the list of university spinoffs in the March 28 edition should have said 2014. The headline on a March 28 story about Lycera Corp. should have said upcoming trials will be on patients with ulcerative colitis.

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Detroit schools panel rekindles charter debate State bill package would let commission decide where schools locate, which should close By Chad Halcom chalcom@crain.com

A recent addition to the pending legislation overhauling Detroit Public Schools is rekindling a long controversy on whether the charter school model of education itself has succeeded in Detroit. The proposed Detroit Education Commission, as written into the Return to Excellence bill package that cleared the Senate last month, could decide where and whether schools can locate or expand in Detroit and set the criteria for closing any schools that underperform. The House expects to take up the reform legislation after it returns

from recess next week. But groups like the Michigan Association of Public School Academies and the Great Lakes Education Project that advocate for charters and school choice have already gone on an offensive against the commission in talks with legislators and the media, calling it a threat to choice and a panel beholden to Detroit’s mayor and the traditional school district for its own future. Advocates like the Coalition for the Future of Detroit Schoolchildren, which proposed a version of the commission last year, say it would focus not on finances, but outcomes, and bring accountability. The 22-year-old

legislation that created today’s nearly 350 charters statewide spawned an ad hoc system where schools often proliferate where they aren’t needed, they say, and authorizers can lack incentive to hold them to higher standards. The commission was not originally a part of the six-bill restructuring package that would split DPS into two districts and retire about $500 million in structural deficits. It was added shortly before the Senate voted 21-16 to pass it in March, and the House appropriations committee will consider it this

Enrollment trends Public and charter enrollment in Detroit K-12 children living in Detroit:

Fall 2004: 186,482 Fall 2014(est): 134,689 K-12 enrollment in Detroit Public Schools:

Fall 2004: 141,406 Fall 2014: 47,238 Charter enrollment in Detroit:

Fall 2004: 35,919 Fall 2014: 52,420

SEE SCHOOLS, PAGE 17

Sources: DPS, U.S. Census Bureau, National Alliance for Public Charter Schools

“When I started in the late 1960s, 13,000 people with developmental disabilities

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Listen while you commute Crain’s reporters go “Behind the Story” in our new podcast. soundcloud.com/crainsdetroit

were living in institutions in Michigan. Today, there are zero.” Gerald Provencal

Provencal leaves mark at MORC

CEO known for push to close institutions, move residents into the community By Sherri Welch swelch@crain.com

Gerald Provencal, longtime president and CEO of Macomb-Oakland Regional Center, one of the region’s largest human services agencies, retired last week after 44 years with the agency, the past 38 at its helm. During his tenure, Provencal, 74, and MORC became known internationally as advocates for people with developmental disabilities, pushing for the closure of institutions and reintegrating residents into the community. He guided MORC through deinstitutionalization and conversion from a state mental health agency to a private nonprofit in 1996 during Gov. John Engler’s term.

The United Nations and more than 55 countries have sent delegations to see the Clinton Township-based agency’s work. Among them was Iraq, which sent a group of six in mid-March. Provencal himself has visited two dozen countries at their expense to aid in putting similar programs in place, from South America, Europe and Eastern Europe to Australia and South Korea. During his tenure, MORC was recognized as one of the top U.S. agencies in its field by the President’s Committee on Mental Retardation both under President Jimmy Carter in the 1970s and President Ronald Reagan in 1986. And in 2000, President Bill Clinton

Gerald Provencal retired last week after 44 years with the Macomb-Oakland Regional Center.

bestowed the Presidential Service Award on MORC volunteer Ruth Taylor for her work with the agency. MORC, which provides services SEE PROVENCAL, PAGE 20

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3 retailers to open their first Michigan stores at Somerset By Sherri Welch swelch@crain.com

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Three national retailers are opening their first Michigan locations at Somerset Collection this spring, beginning with Danish footwear and leather goods store Ecco last Friday. Clothing and accessories brands Vince and Vineyard Vines are set to open in the Troy mall in May. Ecco opened on the third level of Somerset North in the location previously occupied by Journeys, which has moved across the hall to the former Foot Locker location, said Peter Van Dyke, partner at Berg Muirhead, speaking on Somerset's behalf. Foot Locker moved to a larger location adjacent to its luxury sister brand House of Hoops on the third level of Somerset North. Vince will bring its line of â&#x20AC;&#x153;everyday luxury essentialsâ&#x20AC;? clothing, footwear and accessories for men and women to the first floor of Somerset South this May. The store will be its first in Michigan and second in the Midwest. Vince is moving into a 2,700-square-foot location formerly occupied by Ralph Lauren Home. Ralph Lauren closed the home goods section of its two-level store and re-established its brand at Somerset as Polo by Ralph Lauren, selling clothing, footwear and accessories at its existing store on the first floor of Somerset South. Another new clothing and accessories retailer, Vineyard Vines, will open in May in the former A/X Armani Exchange location on the second level of Somerset South. Armani continues to operate Emporio Armani and Giorgio Armani at Somerset Collection.

203 dispensaries submit bid to city A total of 203 medical marijuana dispensaries in Detroit met the March 31 deadline to submit bids to operate in the city required by a zoning ordinance, said Dave Bell, interim director of the cityâ&#x20AC;&#x2122;s Building Safety Engineering and Environmental Department.

The zoning ordinance, approved by Detroit City Council last December, called for dispensaries to submit bids between March 1 and 31 to operate in the city. The ordinance requires that dispensaries operate in designated zones such as 1,000 feet from drugfree zones, including arcades, child care centers, educational institutions, libraries, outdoor recreation facilities, schools and youth activity centers, among other institutions. Marti Benedetti

COURTESY OF SOMERSET COLLECTION

Ecco opened on the third level of Somerset North in the location previously occupied by Journeys, which has moved across the hall to the former Foot Locker location, at the Somerset Collection in Troy.

Vineyard Vines will offer its hallmark high-end ties, hats, belts, shirts, shorts and bags for men, women and children at the 4,338-square-foot store. Changes are afoot with several existing retailers at the Troy mall, as well, said the mall's owner, The Forbes Co., in a news release. Lululemon, located in Somerset Collection South, is nearly doubling its size as it moves into the 4,867-square-foot store that formerly housed MAC Cosmetics. MAC Cosmetics is moving to Somerset Collection North where jeweler Rogers & Hollands operated before closing. Set to open in April, the new MAC store will be the first in the

country to launch the brand's new design, VanDyke said. The Talbots women's clothing store in Somerset South will also be the first in the country to debut the retailer's new design in July. Also on tap this year is a redesign of the Somerset South Godiva location. Somerset Collection's ability to attract luxury brands and its existing retailers' willingness to reinvest in their locations at the mall is a testament to the strength of the local market, said Nate Forbes, managing partner of The Forbes Co., in a written statement. Sherri Welch: (313) 446-1694 Twitter: @SherriWelch

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OPINION Medicaid funding method on the line

ichigan spends $13.6 billion on Medicaid — health care coverage for qualified low-income or disabled people. A huge chunk of that sum comes from the federal government and is passed through Michigan’s budget, but it’s a huge general fund budget item, too. For years, Michigan has used a mix of taxes to fund Medicaid — mostly taxing health plans and self-insured employers and individuals. But as Jay Greene reports on Page 1, there are two challenges to that funding. First, an appeals court this summer could disallow the state’s tax on medical claims, the so-called HICA tax. Second, the federal government has told the state it can’t use taxes assessed against HMO premiums as matching funds for federal dollars after Dec. 31. Combined, the budget hole could be about $700 million. So the options could include covering fewer people, cutting back on benefits or paying providers — doctors and hospitals — less. The Small Business Association of Michigan is part of a broad business coalition that would like to eliminate the HICA tax, which one business group says has generated $1 billion for the state. But the tax on HMOs might be preserved, says Tony Stamas, SBAM’s vice president of government relations, if the state understood exactly why the feds are disallowing it as a match. Perhaps there are ways to tweak the tax in ways palatable to federal regulators. “We may not have to throw everything out,” he told Crain’s. One option under consideration is continuing the HMO use tax but have it channeled into the state’s general fund, rather than Medicaid specifically, to fit federal regulators’ concerns. There’s yet another issue: whether the expansion of Medicaid has slowed or reduced increases in health insurance premiums because hospitals cut their uncompensated care case loads. SBAM supported Medicaid expansion in Michigan for that very reason. “(Expansion) has helped with uncompensated care,” Stamas said. But it’s unclear if it has led to reduced costs for business. And it may not be clear for a couple of years because most hospitals have multiyear contracts with insurers. It's in the next generation of contracts that any savings would be realized. Meanwhile, the Flint water crisis has turned a spotlight to aging infrastructure in water delivery across the state. Something will have to give in a state budget buffeted by competing priorities.

Senate bills battle for education The charter school lobby is fighting fiercely against legislation that would create a Detroit Education Commission to open and close publicly financed schools — traditional public or charter — based on performance. The state Senate has approved the so-called Return to Excellence bill package in March, but charter lobbyists frame this as a battle to preserve school choice. It is actually a battle to improve education outcomes for children and to wisely use the millions of dollars funneled through both traditional public and charter schools in Detroit, where the citywide “occupancy” of the public and charter schools is a little over 60 percent. The commission is intended to rationalize state-supported facilities. The commission has the support of the broad-based Coalition for the Future of Detroit Schoolchildren, whose members included Mark Reuss from General Motors Co. and John Rakolta Jr. of the Detroit-based construction firm Walbridge. There is a fear that a commission could be politicized, but that would be tough to do if standards for schools were clearly set at the outset. What’s clear is that school choice alone is not the panacea; if it were, Detroit wouldn’t be at the very bottom in most national rankings, failing its children at nearly every turn.

Pure Michigan campaign extends to biz

any people know Pure Michigan only as the state’s successful tourism and travel campaign, which has attracted hundreds of thousands of visitors to Michigan since its inception in 2006. But not many are aware that the Pure Michigan campaign extends into business and talent marketing initiatives for the state, as well — helping drive further economic development here. Michigan has a great story to tell, and we’re excited to tell it. Our tourism ads run nationally on television, but our business marketing efforts are more targeted and run primarily outside of Michigan to attract business investment. Crain’s Detroit Business Publisher Mary Kramer shared this in her March 13 blog, “Michigan needs a Flint water counter-messaging campaign,” where she implored state officials to create a business-attraction campaign, utilizing recognizable, heavy-hitters in business. We have this in motion already, and to great effect.

OTHER VOICES Steve Arwood

Arwood is the CEO of the Michigan Economic Development Corp. and director of the talent and economic development department.

We have learned that business leaders want to hear from their peers about why they should consider Michigan, and our Pure Michigan “What Happens When” business marketing campaign works to do just that. For the past five years, we’ve been working with Michigan companies to tell their success stories worldwide. We feature prominent business leaders from across the state, like Quicken Loans Chairman Dan Gilbert and Domino’s

Pizza CEO Patrick Doyle, and share how Michigan provides a competitive advantage. This campaign targets C-suite executives and site consultants. We’ve also invested significantly in other campaigns such as “We Run On Brainpower,” aimed at attracting talent to the automotive industry, and Pure Michigan Business Connect, helping small and medium businesses within the state to grow. So far, the results are telling. Site Selectors have ranked Michigan among the top seven states for major new and expanded facilities and first among Great Lakes states for three consecutive years. Indeed, the Flint crisis and recent MEDC budget cuts are significant challenges, but we are proactively addressing them. This week, we introduced a program through Business Connect to help businesses in Flint find procurement opportunities. The program, will provide an opportunity for sustainable revenue — something they need more than ever.

LETTERS

Ex-Port Authority director weighs in on goals

Editor: As the former executive director of the Detroit/Wayne County Port Authority, I found your March 28 article “Port Authority goals: Change law, boost traffic” quite interesting. It seems as though not much has occurred at the new terminal since my departure. During the three years of my leadership, we had cruise ships, Navy ships, tall ships and many other vessels using the new port terminal. It was a beehive of activity. It is a sad day when I hear that the current leadership thinks about selling the federally funded

terminal because they have no cruise ship activity or initiatives of their own. I question the passenger traffic that has been stated is going through that terminal. Furthermore, I take issue with the statement about my administration trying to bond projects off the waterfront. Any financing project I was involved with was tied to waterfront activity that was pitched to us. It is laughable to read that the Detroit Economic Growth Corp. called our work unnecessary competition. I might add that they were the only economic development organization

opposing us. Yet, when we look at other port authorities around our country, they work hand in hand with their cities and counties to provide economic development. In fact, the port authority in Cleveland has helped finance many projects in its region. Finally, it is my hope that Director John Loftis does not try to promote the sale of that beautiful building and can deliver the cruise ship business as I did. John Jamian Former executive director, Detroit/Wayne County Port Authority

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As with sports, a game plan can be key to business success S

ports contests are often won before the games even start. The bright lights of a big game at any level attract all the eyeballs, of course, but the hard work that’s done behind the scenes to prepare mentally can sway momentum and give your team the tactical advantage it needs to win. When you get to the most competitive level of sports, you realize that success often boils down to the preparation (scouting reports, film sessions, game plans) done by coaches and players before the game more than what actually happens during the competition. These small pieces of the puzzle play their part in collectively developing a strategy that allows your team to pin its strengths against the opposition’s weaknesses. It’s amazing how much of sports — which so often come down to people being bigger, faster and stronger than the opposition — is really dictated by strategy, effort and mental preparation. The same principles apply to the business world. Regardless of the profession you’re in, much of your success is driven more by your preparation and game plan than your actual ability level. The world I know firsthand is mortgages, specifically the wholesale side. We partner with mortgage brokers throughout the country and aim to provide them the best client service experience— with the goal of producing more volume than our competition. There are four of the country’s top mortgage lenders within 60 miles of one another in metro Detroit — so we’re not only competing for loans, we’re all try-

OTHER VOICES Mat Ishbia

ing to recruit the brightest minds and talented people onto our teams. The game plan starts up front with the most basic of resources —

your people. The first step to sustaining a successful sports program, or company, is regularly self-evaluating your team and recognizing what holes need to be filled from a recruiting perspective. In-house training has to be a major corporate priority, but team growth and the constant infusion of new, talented individuals is essential. Just as college coaches are in a constant battle to sign the most talented athletes in the country, professional recruiters are doing the same thing. But once you have your new re-

cruiting class, it’s up to the signees and coaches to maximize the talent and develop a strategy to accomplish its ultimate team goals. Before one game is played — or one sale is made — everyone needs to be on the same page internally, and a game plan is absolutely critical if you’re going to finish the year in the No. 1 spot. Team members and company leaders have to work together to strategically put themselves in the best possible position to win. Just like in sports, you’ve got to study your competition — know how

their strengths and weaknesses stack up against yours. Be aware of the strategies or “pitches” they use to win over clients, and be prepared to discuss how your business can top that. Success doesn’t happen by accident. It happens when you have the right game plan and put in the necessary training before the big game starts. Mat Ishbia is president and CEO of United Shore Financial Services in Troy and was a member of the 2000 Michigan State University national championship basketball team.

TALK ON THE WEB

DPS principals, officials face bribery charges There was corruption before the emergency managers got there and

corruption since.

Educator 57

The bottom line is morality. These people did wrong and we should all be outraged by their selfish actions, and they should be prosecuted to the fullest extent of the law.

Alex Agbay

Murray Feldman to leave Fox 2 after 40 years We could always count on Murray to give us accurate and helpful tips on his Feldman Report. Another good one is leaving, it's a shame. Steve

Laura Trudeau to retire Sounds like a worthy cause to move on to. Best wishes. Dave Gifford

Huntington is proud to have recently been recognized as a Regional and National 2014 Greenwich Excellence Award in Middle Market Banking for Cash Management Overall Satisfaction. We’re even more proud of our treasury management team, who earned this award through their hard work and dedication to our customers. Member FDIC. ¥® and Huntington® are federally registered service marks of Huntington Bancshares Incorporated. Huntington® Welcome.TM is a service mark of Huntington Bancshares Incorporated. © 2016 Huntington Bancshares Incorporated.

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SPECIAL REPORT: REAL ESTATE

t t c e p

KIRK PINHO writer@email.com Reporter Twitter: @twitteracct

kpinho@crain.com / Twitter: @kirkpinhoCDB

Lender dedicated to underserved communities

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Melinda Clemons is on the front lines of commercial real estate financing in Detroit as a senior loan officer for the local office of Washington, D.C.-based Capital Impact Partners, a community development financial institution founded as NCB Capital Impact in 1981 as part of the National Consumer Cooperative Bank Act. It Clemons has organized more than $1.9 billion in loans since its inception. A Detroit native, she previously worked for Urban Partnership Bank, J.P. Morgan Chase and Raymond James Financial Inc. She is a University of Michigan and Cass Technical High School graduate. I talked to Clemons about her job and the market. Talk about the commercial real estate financing market in Detroit, as you see it.

What’s exciting about Detroit is that there are a lot of institutions in banking that want to come into the market. But half of those are still restricted and the transactions still need subsidies to make them work. You see LevelOne and Fifth Third and Flagstar doing some projects here. A large portion of lending is done by CDFIs (community development financial institutions). Tell us about CIP and what it does.

We are a CDFI, basically meaning we have a mission from the government to lend to underserved communities. We focus on community facilities — lending to co-ops, charter schools, federally qualified health care centers, and have a place-based strategy in Detroit only in which we have lending products to increase density in neighborhoods. We don’t do housing loans anywhere else in the country. We did Banner Foods on Schaefer Highway. We also apply every year for a New Market Tax Credit allocation. Last year, very few companies in the city got them, but we put ours toward Banner Foods. We also financed Detroit Edison Public School Academy on Wilkins (in Eastern Market), Presbyterian Villages, the Argonaut Building, the Woodward Garden Theater and Willys Overland project. At what point will we see new development not having to use subsidies?

That’s the ultimate goal, but it’s when we get rental rates to a higher level. Everyone a few years ago thought $2 per square foot was a magic number — but subsidies are still needed. I would say it’s closer to $3 per square foot where we won’t need them anymore.

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PHOTOS BY AARON ECKELS

Tamás and Gail von Staden redeveloped the former Dobie Jewelers building in downtown Royal Oak into workspace (for their Von Staden Architects LLC) and their home (for their family of four). Here’s their living

space, before and after. Retail space is on the ground floor of the Washington Avenue building.

A fine state of repairs From a restaurant to living space to education center, redevelopments move outside the box By Kirk Pinho kpinho@crain.com

It seems that every week, plans for a mixed-use development emerge in Detroit or the suburbs, with developers mostly scrambling to build rental housing stock. Yet there are a handful who have thought outside the box in recent years, opting for unique conversions of old space into something fresh — something wildly different than its previous use. Over the past two months, Crain’s surveyed real estate brokers, developers, architects and other experts for their favorite outside-the-box redevelopment projects in and around Detroit that have been completed since 2014 (or will be completed soon).

Taking these recommendations, we’ve identified four redevelopments that have substantially — and successfully — reimagined space into such unique uses as a single-family home, a French-inspired restaurant, loft apartments with space for artists, and a new education center downtown. These projects stood out from the dozens suggested for consideration based on a variety of factors, especially how substantially a building’s use was flipped on its head. Architecturally, that in and of itself is a challenge, experts said. Geoffrey Dancik, who is putting the finishing touches on the redevelopment of the Chapman House in downtown Rochester into a French cuisine-inspired restaurant expected to open next month, said

maintaining the architectural integrity of the 8,200-square-foot house at 311 Walnut Blvd. was one of the biggest hurdles. “The repurposed building had to meet the modern demands of a restaurant and special events venue, including accessibility and safety compliance,” he said of the 1917 house. But even more challenging can be finding the financing to pay for such projects. “You don’t see the ends of the spectrum — for example, churches and strip clubs — getting traditionally financed often,” said Kevin Kovachevich, partner at Southfield-based Bernard Financial Group Inc., which originates debt for real estate projects and acquisitions. “There is a reason SEE NEXT PAGE

t c m e e r o

w t w w a

o a t m l s e (

h m

t f i o W i

1 f p f t f o

500 S. Washington Ave., Royal Oak

Chapman House, Rochester

City Hall Artspace Lofts, Dearborn

DNR’s Outdoor Adventure Center, Detroit

Architects turn a downtown building into office space — and their home.

A 1917 house has been restored and will open as a French restaurant.

It used to be the Dearborn mayor’s office. Now, it’s loft and artist space.

A 150-year-old downtown landmark was saved from demolition.

PHOTO STORIES OF ALL 4 PROJECTS: crainsdetroit.com/coolrehabs

a t $ p

KELS

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SPECIAL REPORT: REAL ESTATE FROM PREVIOUS PAGE

those are the edge of the spectrum. They are atypical commercial real estate use. You can’t get easy debt for specific, special-use projects.” David Di Rita, principal of Detroit-based Roxbury Group, the developer behind the transformation of the former Globe Trading Co. building on the Detroit River into the Outdoor Adventure Center for the Michigan Department of Natural Resources, called it “a mark of progress” for Detroit that multifamily and more traditional mixed-use developments are becoming more “bankable.” “We have proven out the market,” he said. “There aren’t a whole lot of end users out there for unique projects like the Globe that are bankable.” What follows are snapshots of the four “cool rehabs” that caught our attention, along with their developers’ lessons for navigating the financing and historic preservation laws.

French cuisine in a historic home With the culinary leadership team in place, the long-planned conversion of the historic Chapman House in downtown Rochester is expected to be completed in May, when the new restaurant with seating capacity of around 260 opens. Finishes and décor, all of which seemingly gave a nod to the property’s original condition, were imported from around the world to give the restoration its authenticity. During a tour in March, developer Dancik rattled off details of a painstaking (and expensive, though he wouldn’t disclose how much) restoration process fluidly, as if he had memorized every square foot of the space and each step to the smallest detail. (See details, this page.)

Work-life balance in Royal Oak Tamás and Gail von Staden have one of the shortest commutes to work in town. The husband-and-wife architecture team has to walk only a few feet every morning to get to its Von Staden Architects LLC office on the second floor of the 500 S. Washington Ave. redevelopment in downtown Royal Oak. They and their two children, 11 and 16, live in the 4,000-squarefoot single-family residential portion of the building, which features an architecture office on the second floor and retail space for Citizen Yoga and Rail & Anchor on the first floor. The garage is accessible from an alley, and there are also a patio and green roof as part of the $2 million development, completed in 2014. The building's windows are from the failed Bloomfield Park

development and were received from one of the subcontractors on the project, said Gail von Staden, principal of Von Staden Architects. She said she and her husband’s relationship with contractors through their careers allowed them to keep project costs down, as did Tamás’ “elbow grease” on the project. The biggest challenge wasn’t financing or architecture-related, she said. “That we could remain married during it and run a business at the same time,” she said with a laugh. (See details, Page 10.)

Bringing the outdoors indoors in Detroit According to the DNR, the boiler of the SS Columbia — which for decades brought kids and adults to and from the Boblo Island amusement park on the Detroit River — was built in the former Globe Trading Co. building, now the DNR’s Outdoor Adventure Center. After opening last year, the 43,000-square-foot building constructed more than 150 years ago now serves the public in another way: Educating people about Michigan’s natural resources with activities, events and simulators built into the formerly blighted building. “It really was one of the most photographed poster children of our ruins of Detroit landmarks,” said Rebecca Binno Savage, a historic preservation expert who worked on getting the building added to the National Register of Historic Places and the historic preservation lead for Detroit-based architecture firm Kraemer Design Group PLC. “I’m so happy to see it in use again. It could have gone the way of so many and just been demolished. Thank God.” (See details, Page 10.)

City Hall Artspace Lofts Conversion of the former Dearborn City Hall into 53 lofts with space for artists Building address: 13615 Michigan

Ave.

Building city: Dearborn Building size: 100,000 square feet Year originally built: 1920s;

concourse in 1981

Contractors: Artspace Projects, Minneapolis, developer; The Monahan Co., Eastpointe, general contractor; Neumann/Smith Architecture, Southfield, project architect; JDC Construction, Washington, D.C., project manager Building owner: City Hall Artspace LDHA LP

Building purchase cost: $1.65

Did you know? A gun range was housed on the fourth floor of an annex building. Bullet-riddled walls have been repaired in the redevelopment.

Total project cost: $16.5 million

Sources: Artspace Projects, Crain’s archives

Project completed: December Renovation cost: $14.85 million

million

A furnished studio on the main floor of City Hall Artspace Lofts (above) was once the mayor’s office. A spiral staircase was restored.

From city HQ to artists’ canvas What to do when you want to move your city government operations to a more central location? Ask the city of Dearborn, which sold its old City Hall on Michigan Avenue in the east downtown area to a Minneapolis-based developer that converted the three-building campus into 53 lofts. Sure, lofts aren’t atypical conversions in the development community. But here’s what is: the original space itself, and ancillary space in the new development for entrepreneurs and artists; office space for creative businesses and nonprofits; and space for an artist-in-residency program and art galleries. The ensuing development, the City Hall Artspace Lofts, welcomed its first residents to the $16.5 million redevelopment of the 1920s buildings Jan. 1. (See details, this page.)

Chapman House

Conversion of a nearly century-old house into a French restaurant. Building address: 311 Walnut Blvd. Building city: Rochester

A privacy/acoustic fence behind the Chapman House separates a courtyard, intended for events, from nearby homes and businesses. Coconut husk, imported from the Netherlands, covers the wall and is designed to encourage growth by climbing plants.

Building size: 8,233 square feet Year originally built: 1917 Project completed: To be completed

next month

Renovation cost: Undisclosed Building purchase cost: $759,000 Total project cost: Undisclosed Contractors: Bentley Property

Holdings, Birmingham, developer and general contractor; Quinn Evans Architects, Ann Arbor Building owner: Bentley Property

Holdings

Did you know? Workers removed more than 2,600 five-gallon buckets of concrete, coal, brick, sand and other debris from the basement to make the needed headroom for a private tasting room, wine lockers, a walk-in cooler and freezer and prep kitchen.

Sources: Geoffrey Dancik, co-owner; city of Rochester.

C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 4 , 2 0 1 6

SPECIAL REPORT: REAL ESTATE 500 S. Washington Ave. Mixed-use redevelopment of the former Dobie Jewelers building with retail and office space and a single-family residence Building address: 500-504 S. Washington Ave., Royal Oak Building size: 13,000 square feet Year originally built: 1920s-1930s Project completed: 2014 Renovation cost: $1.35 million Building purchase cost: $650,000 Total project cost: $2 million Contractors: Tamás von Staden, Royal Oak, general contractor/ project manager; Von Staden Architects LLC, Royal Oak, project architect; MA Engineering Inc., Birmingham, project engineer Building owners: Tamás and Gail von Staden Did you know? The building once housed printing presses for the Royal Oak Tribune.

Sources: Tamás and Gail von Staden

A stairway built from reclaimed wood from Reclaim Detroit leads to the third-floor conservatory on the roof of the building, at left. The conservatory overlooks downtown Royal Oak. PHOTOS BY AARON ECKELS

A three-story tree and wooden bridge is a focal point inside the former Globe Trading Co. building, which has been transformed into an outdoor adventure center on the Detroit riverfront.

Michigan Department of Natural Resources Outdoor Adventure Center

Litigation Experience

In Your Corner.

Redevelopment of the former Globe Trading Co. building on the Detroit

River into the new building for the DNR

Building address: 1801 Atwater St.

Ŷ Business litigation, contracts and commercial matters.

Building city: Detroit Building size: 43,000 square feet

Ŷ Construction law and litigation.

Year originally built: 1860 Project completed: 2015 Renovation cost: $12.8 million Building purchase cost: $1* Total project cost: $12.8 million Contractors: Roxbury Group, Detroit, developer; Walbridge Aldinger Co., Detroit, general contractor; Hobbs & Black Architects, Ann Arbor, project architect Building owner: DNR Did you know? Henry Ford was once an apprentice machinist in the building.

* The Roxbury Group purchased the building from the city of Detroit for $1, redeveloped it and sold it to the DNR

First Tier Ranking in Corporate Law and Commercial Litigation Ŷ

Detroit

Novi

Grand Rapids

Kalamazoo Ŷ Grand Haven

Lansing

Ann Arbor

Hastings

Contact Rich Hewlett at rthewlett@varnumlaw.com

Sources: Michigan Department of Natural Resources; David Di Rita, Roxbury Group; Crain’s archives.

C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 4 , 2 0 1 6

2015 property sales value down; 60% of deals from outside state By Kirk Pinho kpinho@crain.com

Last year was active for large buyers of commercial real estate in metro Detroit, with everything from downtown skyscrapers to sprawling suburban apartment complexes to massive Ann Arbor office building portfolios dominating the investment sales market in 2015. But there was about $106 million less spent in the top 10 real estate purchases compared to 2014. Over the past several months, Crain’s has been culling information from brokerage houses, databases and other sources to get a snapshot of the year that was for property sales in the five-county region that includes Wayne, Oakland, Macomb, Livingston and Washtenaw. The total dollar value of the top deals that closed between Jan. 1, 2015, and Dec. 31, 2015, was $664 million, down 13.8 percent from the $770.2 million that was spent in the top 10 deals that closed in 2014. Yet still, investors from outside of Michigan continue to see strong investment return opportunities in the local market, as six of the top 10 deals were to out-of-state buyers, just one fewer than in 2014. That's because they see their dollars stretching more in the Detroit market, said Steve Morris, principal of Farmington Hillsbased Axis Advisors LLC. “Detroit appears to be a market where they can come in and get a better value than they could in other major markets,” he said. “Their perspective of a better value is still at a higher number than the educated local investors.” Gabe Schuchman, managing director of Bloomfield Hills-based real estate firm Alrig USA LLC, said there is high investor demand for properties that are in good condi-

“Detroit appears to be a market where they can come in and get a better value than they could in other major markets.” Steve Morris, principal, Axis Advisors

tion or can be renovated or built upon cost-effectively. “Product that falls in between high quality or value-add is very tough to move right now as both investors and financing markets are not stretching for mediocre transactions as they did before the Great Recession,” he said. In 2014, there were 28 deals for $10 million or more, with 17 of the buyers being from outside Michigan. Those deals totaled $903.5 million. In 2015, the 33 property sales for $10 million or more totaled $1 billion, with 15 going to out-of-state investors. One of the local buyers, Jeff Hauptman, CEO of Oxford Cos., said the market for office sales is strong in his company's home base of Ann Arbor, where it has about 2 million square feet under ownership and management. Oxford Cos. in June closed on the $102 million purchase of the McMullen Realty Co. Inc. office building portfolio consisting of 22 Ann Arbor buildings with 704,000 square feet of space. “Real estate is cyclical, and the market is peaking for apartments and retail, but we believe the timing is right to buy good, well-located office buildings,” he said. Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

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C R A I N â&#x20AC;&#x2122; S D E T R O I T B U S I N E S S // A P R I L 4 , 2 0 1 6

CRAIN'S LIST: OFFICE LEASES Rank Building

1 Ally Detroit Center, Detroit 2 615 W. Lafayette, Detroit 3 Dominos Farms, Ann Arbor 4 The First National Building, Detroit 5 2020 Taylor Road, Auburn Hills 6 100 Phoenix Drive, Ann Arbor 7 28405 Van Dyke Ave., Warren 8 26200 Town Center, Novi 9 0 Masco Drive, Livonia 10 3310 W. Big Beaver Road, Troy 11 Ally Detroit Center, Detroit 12 5800 Mercury Drive, Dearborn 13 5900 Mercury Drive, Dearborn Lake Corporate Center, Van 14 Grace Buren Twp. Executive Drive, Farmington 15 27555 Hills 16 700 Tower Drive, Troy 17 4 Parklane Blvd., Dearborn 18 2875 W. Grand Blvd., Detroit 19 Northfield Plaza, Troy 20 26555 Evergreen Road, Southfield 21 150 W. Jefferson, Detroit 22 2701 Troy Center Drive, Troy

Ranked by square feet

Owner, owner city

Square feet

Tenant

Broker

Bedrock Real Estate Services LLC, Detroit

Ally Financial Inc.

Bedrock Management Services LLC; Jones Lang LaSalle

321,000

Bedrock Real Estate Services LLC, Detroit

Quicken Loans Inc.

Bedrock Management Services LLC

183,000

Dominos, Ann Arbor

University of Michigan

Domino's Farms; Jones Lang LaSalle

167,016

Bedrock Real Estate Services LLC, Detroit

Bedrock Management Services LLC

151,000

Kojaian Management Co., Bloomfield Hills

Honigman Miller Schwartz and Cohn LLP TI Group Automotive Systems LLC

Newmark Grubb Knight Frank

143,908

Wickfield Phoenix, LLC, Ann Arbor

Truven Health Analytics

Signature Associates; Colliers International

140,549

Red River Asset Management LLC, New York City

General Motors Co.

Signature Associates; CBRE Inc.

111,221

JFK Investment Co, Detroit

Phoenix Integration Inc.

Colliers International

93,961

Schostak Brothers and Co. Inc., Livonia

Masco Corp.

Colliers International

91,220

Farbman Group , Southfield

Publicis Groupe

Farbman Group; Jones Lang LaSalle

78,061

Bedrock Real Estate Services LLC, Detroit

Quicken Loans Inc.

Bedrock Management Services LLC

76,000

Ford Motor Land Development, Dearborn

Carhartt Inc.

Plante Moran CRESA

70,773

Ford Motor Land Development, Dearborn

Carhartt Inc.

Plante Moran CRESA

70,707

Sovereign Partners LLC, New York City

Citimortgage

Jones Lang LaSalle; Signature Associates

68,000

Kojaian Management Corp., Bloomfield Hills

Allstate Insurance Co.

Colliers International; Allstate

61,142

Friedman Integrated Real Estate Solutions LLC, Farmington Hills Ford Motor Land Development, Dearborn

Benesys

53,770

DealerDirect LLC

Friedman Integrated Real Estate Solutions LLC; Jones Lang LaSalle N/A

Brian Najor, Birmingham

Detroit Police Department

Signature Associates; CBRE Inc.

50,000

Hayman Cos., Southfield

Fiserv

Hayman Co.; Jones Lang LaSalle

49,375

Time Equities Inc., New York City

Towers Watson Delaware Inc.

Newmark Grubb Knight Frank

49,267

52,393

Piedmont Office Realty Trust, Johns Creek, Ga.

CW Professional Services

Transwestern

48,915

Osprey Management, Brighton

Gestamp North America Inc.

Friedman Integrated Real Estate Solutions LLC

47,447

List is based on information from CoStar Group Inc., CPIX, Crain's research, from published information or as submitted by brokers, advisers or property owners. Crain's has tried to list all brokers involved in a transaction, but in some cases brokers may have been omitted. Some leases were omitted because of a lack of complete information.

B Lease renewal. C New lease. D New lease. Building on Schoolcraft College campus to be built for Masco slated for completion in the spring of 2017. E Extension. LIST RESEARCHED BY KIRK PINHO

CRAIN'S LIST: LOCAL SALES Rank Building

Buyer

Ranked by price Seller

Broker/advisers

The Solomon Organization, Nykel Management, Troy None 1 Somerset Park Apartments, Troy Summit, N.J. Oxford Cos., Ann Arbor McMullen Realty Co. Inc., Ann Arbor CBRE Inc. Realty Co. Inc. portfolio, Ann 2 McMullen Arbor Bedrock Real Estate Services LLC, iStar Financial, Detroit Police and Fire Bedrock Management Services LLC; 3 Ally Detroit Center, Detroit Detroit Retirement System Eastdil Secured Hokanson Capital Inc.; Westcorp Buzz Silverman Berkadia Cedarbrooke Apartments, Auburn Hills 4 Inc., Edmonton, Canada ElmTree Funds, St. Louis, Mo. Northern Equities Group, Farmington Marcus and Millichap Real Estate 5 30001 Cabot Drive, Novi Hills Investment Services Inc. Lexington Realty Trust, New York Spirit Realty Capital, Scottsdale, Ariz. NA Faurecia building, Auburn Hills 6 City Sovereign Partners LLC, New York Bank of America, Charlotte, N.C. CBRE Inc. 7 Bank of America building, Troy City Continental Management, Slatkin Co., Bloomfield Hills Signature Associates; Bloomfield Financial 8 Trilogy Residences, Belleville Southfield Bedrock Real Estate Services LLC, AKNO Enterprises, Milan, Italy Bedrock Management Services LLC Tower, Book Building portfolio, 9 Book Detroit Detroit Pacific Coast Plaza Investments Starwood Capital, Miami Beach, Fla. Friedman Integrated Real Estate Solutions Mound Road, Sterling 10 44757-44833 LP, El Cajon, Calif. LLC Heights GFI Capital Resources Group Inc., Marcus and Millichap Real Estate Beachwood Apartments and Townhomes, Jacobson Bros. LLC, Birmingham 11 Harrison Township New York City Investment Services Inc. DDI, China Bedrock Management Services LLC; Jones David Stott, Clark Lofts buildings, Detroit Bedrock Real Estate Services LLC, 12 Detroit Lang LaSalle Farbman Group, Southfield TD Auto Finance LLC, Farmington Farbman Group, CBRE Inc. The Standard at Farmington Hills, 13 Farmington Hills Hills Time Equities Inc., New York City First Industrial Realty Trust, Chicago CBRE Inc. Airport Park, Romulus 13 Griffin Capital Essential Asset General Development Co., Southfield Trident Ventures LLC Atlas Copco U.S. headquarters, Auburn 13 Hills REIT II Inc., Los Angeles, Calif. Healthcare Trust Inc., New York Villa Healthcare, Skokie, Ill. NA Addington Place, Northville 16 City Friedman Integrated Real Estate The Hayman Co., Southfield Jones Lang LaSalle; Friedman Integrated 17 Troy Tech Park, Troy Solutions LLC, Farmington HIlls Real Estate Solutions LLC The Hayman Cos., Southfield Associated Estates Realty Corp., Hancock Real Estate Strategies Clinton Place Apartments, Clinton 17 Township Richmond Heights, Ohio Universal Properties Three LLC, CW Capital , Bethesda, Md. Friedman Integrated Real Estate Solutions Seven Mile Crossing, Livonia 19 Southfield LLC

Square feet

Acres

Units

Price Rooms ($000,000)

2,226

$216.0

704,000

$102.0

1,000,000

$100.0

584

$49.0

188,000

$42.8

278,000

$40.0

450,000

$35.0

850,000

$30.5

246,000

$30.0

258,000

$18.7

376

$18.5

210,000

$18.0

274,000

$17.8

665,000

$17.8

119,659

$17.8

65,000

$17.3

425,000

$16.5

202

$16.5

347,000

$16.0

List is based on information from CoStar Group Inc., Crain's research, from published information or submitted by brokers, advisers or property owners. Crain's has tried to list all brokers involved in a transaction, but in some cases brokers may have been omitted. LIST RESEARCHED BY KIRK PINHO

An expanded version of these lists may be purchased at crainsdetroit.com/section/data_lists

C R A I N â&#x20AC;&#x2122; S D E T R O I T B U S I N E S S // A P R I L 4 , 2 0 1 6

CRAIN'S LIST: INDUSTRIAL LEASES Rank

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

Building

Ranked by square feet

Owner, owner city

Tenant

Broker

Square feet

Brownstown Business Center, Brownstown Twp. B

Ashley Capital, Canton Twp.

Dakkota Integrated Systems LLC

Newmark Grubb Knight Frank

637,609

Brownstown Business Center, Brownstown Twp. C

Ashley Capital, Canton Twp.

Hollingsworth Logistics Group

Newmark Grubb Knight Frank; Colliers International Colliers International; Shannon Shaya

548,874 451,000

Oakland Park, Highland Park D

Stuart Frankel Development Co., Troy Modular Automotive Systems LLC

Romulus Business Center, Romulus C

Ashley Capital, Canton Twp.

Hollingsworth Logistics Group

Signature Associates; Colliers International

386,026

Brownstown Business Center, Brownstown Twp. D

Ashley Capital, Canton Twp.

Thyssen Krupp Industrial Services

Colliers International

366,124

Brownstown Business Center, Brownstown Twp. C

Ashley Capital, Canton Twp.

Keystone Automotive Warehouse

Newmark Grubb Knight Frank; Binswanger

360,749

Pontiac Central LLC, Industrial Realty Group, Los Angeles, Calif. Ashley Capital, Canton Twp.

Fanuc America Corp.

Signature Associates

322,000

Plastipak Packaging Inc.

Signature Associates

225,765

19991 Brownstown Center Drive, Brownstown Twp.

Ashley Capital, Canton Twp.

Amazon.com

210,124

Romulus Business Center, Romulus D

Ashley Capital, Canton Twp.

Owens & Minor Distribution Inc.

Romulus Business Center, Romulus D

Ashley Capital, Canton Twp.

Hollingworth Logistics Group

Signature Associates; Newmark Grubb Knight Frank Jackson Cooksey; Newmark Grubb Knight Frank Colliers International; Cedarwood Realty LLC

Crossroads Distribution Center, Belleville D

Ashley Capital, Canton Twp.

AEL Span LLC

Ashley Capital

183,396

Northern Equity Group, Farmington Hills Ashley Capital, Canton Twp.

Magna Seating of America Inc.

Signature Associates

180,000

Norplas Industries, Inc.

Signature Associates

173,859

Crossroads Distribution Center, Belleville D

Ashley Capital, Canton Twp.

Exel Inc.

159,504

Brownstown Business Center, Brownstown Twp. D

Ashley Capital, Canton Twp.

Cabot Street Real Estate, LLC

Pontiac Centerpoint Campus Central, Pontiac 36445 Van Born Road, Unit 200, Romulus D

Cabot Drive, Novi Brownstown Business Center, Brownstown Twp. D

54725 Grand River Ave., New Hudson Oakland Park, Highland Park Mound Business Center, Warren D

2020 Taylor Road, Auburn Hills Warren Business Center, Warren B

195,886

Walbridge Aldinger Co., Detroit

Marada Industries Inc.

Signature Associates; Newmark Grubb Knight Frank Newmark Grubb Knight Frank; Signature Associates Signature Associates

Stuart Frankel Development Co., Troy

Android

Signature Associates

150,000

Ashley Capital, Canton Twp.

KUKA Systems Corp. North America

Signature Associates

147,389

Signature Associates; Newmark Grubb Knight Frank Newmark Grubb Knight Frank

146,068 143,908

CBRE Inc.

140,972

Hove Street Properties, Toronto, Export Corp. Canada Kojaian Management Co., Bloomfield TI Group Automotive Systems LLC Hills Ashley Capital, Canton Twp. IAC Warren

Allied Commerce Center, Livonia

209,450

158,736 151,686

B Lease renewal plus expansion. C New lease. D Lease renewal. LIST RESEARCHED BY KIRK PINHO

CRAIN'S LIST: LARGEST GENERAL CONTRACTORS

Ranked by 2015 revenue Rank

1 2 3

Revenue ($000,000) 2015/2014

Value of new contracts ($000,000) 2015/2014

Barton Malow Co. 26500 American Drive, Southfield 48034 (248) 436-5512; www.bartonmalow.com

Ryan Maibach president and CEO

$1,780.3 $1,498.0

Walbridge Aldinger Co.

John Rakolta Jr. chairman and CEO

Company Address Phone; website

Local employees Jan. 2016

Total new projects 2015/2014

Southeast Michigan projects started 2015

$1,882.2 $1,803.3

900

236 255

177

1,432.0 1,550.0

1,366.0 1,436.5

310

185 185

Sheldon Yellen CEO

1,400.2 B 1,453.9 B

1,424.6 1,480.3

1,790

NA 94,865

4,034

Top local executive(s)

777 Woodward Ave., Suite 300, Detroit 48226 (313) 963-8000; www.walbridge.com

Belfor Holdings Inc. 185 Oakland Ave., Suite 150, Birmingham 48009 (248) 594-1144; www.belfor.com

Aristeo Construction Co. 12811 Farmington Road, Livonia 48150 (734) 427-9111; www.aristeo.com

Joseph Aristeo president

410.0 315.6

367.9 353.6

310

456 320

Commercial Contracting Group Inc. 4260 N. Atlantic Blvd., Auburn Hills 48326 (248) 209-0500; www.cccnetwork.com

William Pettibone chairman

291.0 321.0

195.0 225.0

185

143 111

Walsh Construction Co. 3011 W. Grand Blvd., Suite 2300, Detroit 48202 (313) 873-6600; www.walshgroup.com

Sam Bahou business group leader

251.3 350.1

NA 172.0

115 110

Roncelli Inc. 6471 Metropolitan Parkway, Sterling Heights 48312 (586) 264-2060; www.roncelli-inc.com

Gary Roncelli chairman and CEO and Thomas Wickersham president and COO

242.0 247.0

224.0 145.0

220

90 88

Ideal Contracting 2525 Clark St., Detroit 48209 (313) 843-8000; www.idealcontracting.com

Frank Venegas Jr. chairman and CEO

239.0 192.0

274.0 168.0

365

879 828

859

Dearborn Mid-West Co. 20334 Superior Road, Taylor 48180 (734) 288-4400; www.dmwcc.com

Jeff Homenik president

183.0 128.0

NA NA

251

NA NA

Sachse Construction and Development Co. LLC 1528 Woodward Ave., Suite 600, Detroit 48226 (313) 481-8200; www.sachseconstruction.com

Todd Sachse CEO and founder and Steve Berlage president and COO

172.2 135.2

227.2 207.5

120

186 197

This list of general contractors is a compilation of the largest such companies in Wayne, Oakland, Macomb, Washtenaw and Livingston counties. It is not a complete listing but the most comprehensive available. Crain's estimates are based on industry analyses and benchmarks, news reports and a wide range of other sources. Unless otherwise noted, information was provided by the companies. Companies with headquarters elsewhere are listed with the address and top executive of their main Southeast Michigan office. Actual revenue figures may vary. NA = not available. If you believe your company should be on this list, contact Sonya Hill at shill@crain.com.

B In 2015, 88.05 percent of revenue for Belfor, a disaster recovery firm, was from construction management. The figure was 92 percent in 2014. LIST RESEARCHED BY SONYA D. HILL

An expanded version of these lists may be purchased at crainsdetroit.com/section/data_lists

C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 4 , 2 0 1 6

CALENDAR WEDNESDAY APRIL 6

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MichBusiness. Speaker: 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 the chairman and cofounder 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 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. Women’s Power Breakfast. 7-9 a.m. April 21. Gleaners Community Food

Bank. Brings together more than 600 of the area’s most powerful women. Co-chairwomen are Faye Nelson, vice president public affairs, president, DTE Energy Foundation; Andra Rush, chairman and CEO, Rush Trucking Corp.; Nancy Schlichting, CEO, Henry Ford Health Systems. Eastern Market Shed 3, Detroit. $120 individual; $1,000 table. Contact: Suzette Hohendorf, phone: (313) 923-3535; email: wpb@gcfb.org.

DEC Presents John Noseworthy. 11:30 a.m.-1:30 p.m. April 21. Detroit Economic Club. Noseworthy is president and CEO of the Mayo Clinic. Cobo Center, Detroit. $45 DEC members; $55 guests of DEC members; $75 nonmembers. Phone: (313) 963-8547; email: info@econclub.org. Fuel: Detroit. 9 a.m.-5 p.m. April 21. Fuel Leadership. Speakers include Mark Kelly, commander of Space Shuttle Endeavour’s final mission; authors Marcus Buckingham and Mitch Albom; Jacques Panis, president, Shinola; lifestyle guru Martha Stewart; Sarah Kay, founder, co-director, Project Voice; Michael Strahan, co-host, “Live With Kelly and Michael.” Sound Board, Detroit. $495 general; $895 VIP. Contact: Jordan Broad, phone: (248) 206-7065; email: Jordan@FuelLeadership.com. Next Steps to Improve Michigan’s Economy. 10-11 a.m. April 22. Automation Alley. Steve Arwood, CEO of the Michigan Economic Development Corp., discusses

MEDC’s plans to help grow Michigan’s economy and what it takes to continue the state’s reinvention. Automation Alley, Troy. Free with advance registration; $10 walk-in members; $15 walk-in nonmembers. Contact: events@automationalley.com; phone: (800) 427-5100.

Breakfast of Champions. 7:30-9 a.m. April 27. Leadership Oakland. Barbara McQuade, U.S. attorney,

Eastern District of Michigan, speaks on “Public Leadership — Fighting for Justice.” MSU Management Education Center, Troy. $32 Leadership Oakland Alumni Association members; $36 nonmembers. Website: leadershipoakland.com/events. DEC Presents Denise Morrison. 11:30 a.m.-1:30 p.m. April 27. Detroit Economic Club. Morrison, president and CEO, Campbell Soup Co., is the speaker. Westin Hotel, Southfield. $45 DEC members, $55 guests of DEC members, $75 nonmembers. Contact: (313) 963-8547; email: info@econclub.org. DEC Presents Dinesh Paliwal. 11:30 a.m.-1:30 p.m. May 9. Detroit Economic Club. Paliwal, chairman, president and CEO of Harman International, is the speaker. Cobo Center, Detroit. $45 DEC members; $55 guests of DEC members; $75 nonmembers. Contact: (313) 963-8547; email: info@econclub.org.

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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.

C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 4 , 2 0 1 6

DEALS & DETAILS

CONTRACTS

Qualitech, Bingham Farms, a

technology integrator and software reseller, was selected by Adkison, Need & Allen PLLC, Bloomfield Hills, a law firm, to provide an Intel terminal server for remote access as well as installation services. Website: qualitech.net. Gale Group Inc., Farmington Hills, part of Cengage Learning Inc. and a publisher of research and reference resources, announced an agreement with the Egyptian

Specialized Presidential Council for Education and Scientific Research to

deliver Gale resources to academic institutions; schools; and public, special and corporate libraries in Egypt. Resources that can be accessed locally through the Egyptian Knowledge Bank include the first module of Gale’s Early Arabic printed books from the British Library, National Geographic virtual library and Middle East collections from “Archives Unbound.” Website: gale.cengage.com.

EXPANSIONS

The Barre Code, Chicago, a fitness franchise, has opened a new studio at 831 S. Main St., Royal Oak. Telephone: (248) 565-8372. Website: thebarrecode.com. AirTime Trampoline & Game Park, Troy, has opened a location at

Twelve Mile Crossing at Fountain Walk, 44255 12 Mile Road, Novi.

Telephone: (248) 918-0909. Website: airtimetrampoline.com. Legoland Discovery Center Michigan, operated by Merlin Entertainment plc, London, England, has opened a location at Great Lakes Crossing Outlets, 4240 Baldwin Road, Auburn Hills. Website: legolanddiscoverycenter.com/ michigan.

MOVES

Unique Systems Design Inc., a technical

fast-to-market solution provider, has moved its headquarters and engineering center from 2242 S. Telegraph Road, Bloomfield Hills, to 43940 Woodward Ave., Suite 200, Bloomfield Hills. Website: usdi.com. Comprehensive Payroll Co., a provider of services to small and midsize businesses, has moved from 23650 Woodward Ave., Suite 100, Pleasant Ridge, to 26075 Woodward Ave., Suite 150, Huntington Woods. Website: cpayrollco.com.

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

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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 // A P R I L 4 , 2 0 1 6

Crain’s seeks Health Care Heroes Do you know a Health Care Hero? Crain’s Detroit Business is seeking nominations for Health Care Heroes, a special report on health care professionals that will run in the July 18 issue. The program will honor medical innovators and patient advocates dedicated to saving lives or improving access to care. Winners will be chosen in five categories:

Corporate achievement in health care: Honors a company that has

created an innovative health benefits plan or solved a problem in health care administration.

Advancements in health care:

Honors a company or individual responsible for a discovery or for developing a procedure, device or service that can save lives or improve quality of life. Physician: Honors a physician whose performance is considered exemplary. Allied health: Honors an individual from nursing or allied health fields who is deemed exemplary by patients and peers. Trustee: Honors leadership and distinguished service on a health care board. A panel of health care judges will choose the winners. The deadline for nominations is May 16. They can be made at CrainsDetroit.com/nominate. Questions? Contact Michael Lee at (313) 446-1630 or malee@ crain.com.

“Marilyn was a pioneer, a visionary and a leader.” The Mars Agency

Mars Agency founder Barnett dies at age 83 By Bill Shea bshea@crain.com

Marilyn Barnett, an advertising industry pioneer for women who founded The Mars Agency 43 years ago in Southfield, died of cancer March 28. She was 83. “Marilyn was a pioneer, a visionary and a leader. She saw opportunity where others didn’t," Mars posted on Facebook. "And because she had the courage to follow her dreams and ignore those who said it couldn't be done, this great company stands stronger than ever today." “All of us at The Mars Agency will continue to be inspired by her unwavering commitment to excellence, innovation and creativity." The agency, which has been noted for its work in shopper marketing, marked its inaugural Founder’s Day to honor Barnett in each of its 10 North American offices on Oct. 30. She was Mars’ chairman of the board and company president, but had stepped away from dayto-day operations. Her son, Ken Barnett, is the company’s global CEO and has been with the firm since 1976. Her awards and honors over the years have included membership in the Adcraft Hall of Fame, Oakland County Executive of the Year, Michigan’s Top 25 Women Business Owners and many others. Barnett was a model, doing on-camera work for the Farmer Jack grocery store chain and Oldsmobile and American Motors Corp.

before quitting to start her own agency. “I did all of the Farmer Jack commercials," she told Crain’s for a 1996 profile. “I used to sit on a bale of hay, talking to the farmer.” Mars would pick up Farmer Jack, which closed as a chain in 2007, as a client in 1995. She launched the company, then known as Mars Advertising Inc., in 1973 with

$22,000, two telephones and three employees. “At the time, Marilyn Barnett: super markets Launched the were not in the company in 1973. electronic media,” Barnett said in the 1996 interview. “They weren’t on television at all. They were print-oriented. At the outset in the pioneering stage, it was Farmer Jack’s. We had wonderful success and started talking to other supermarket chains around the country.” She was a Wayne State University graduate with Bachelor of Arts degrees in psychology and communications. Mars Agency rebranded two years ago in an effort to better convey the marketing products delivered to clients, Crain’s reported at the time. When the company launched, Mars stood for “marketing, advertising, research and service.”

The company had $59 million in global revenue last year, of which $55 million was domestic, according to data from Advertising Age. Mars ranked as the 176th largest U.S. ad agency in 2014 by revenue at $58 million. The 2015 rankings are not yet available. In recent years, new client wins have included New Berlin, N.Y.based Greek yogurt giant Chobani Inc.; wireless services provider Cricket Wireless; Waterbury, Vt.-based single-serve coffee machine maker Keurig Green Mountain Inc.; and Kansas City, Mo.-based greeting card company Hallmark Cards Inc. Detroit’s ad community praised Barnett's legacy. Marcie Brogan, founder and chairman of ad agency Brogan & Partners in Birmingham, said: “When I started Brogan & Partners, Marilyn ran the only female-owned ad agency listed by Crain’s. Many years later, she and I were still the only ones … a reflection of our industry’s continuous — and continuing — lack of gender and racial diversity.” Others had similar sentiments. “As a woman who started an agency in the early 1970s, she broke down barriers and innovated in ways that set your shop up for longterm success," said Tim Smith, president and CEO of Detroit-based ad firm Skidmore Studios. “She was someone who was able to lift up and shake up the ad business when it needed it most.” Bill Shea: (313) 446-1626 Twitter: @Bill_Shea19

ADVERTISING SECTION

CONSTRUCTION

ADVERTISING & MARKETING Marcy McCausland Chief Accounting Officer and Controller JR Thompson and Competition Graphics Marcy McCausland has been appointed Chief Accounting Officer and Controller of J.R. Thompson and Competition Graphics. A 30-year veteran of financial management, McCausland will be responsible for financial statements, cost accounting, payroll, accounts payable and receivable, budgeting, tax compliance and special analyses. JRT is a creative marketing services firm specializing in communications, digital and technology services. CG is a leading supplier of automotive and motorsports graphics.

Trudeau to retire from Kresge Foundation at year's end Laura Trudeau, managing director of the Kresge Foundation's Detroit program and a grant-maker instrumental in many of the city's significant revitalization projects over the past 15 years, plans to retire at year's end. For the remainder of the year, Trudeau, 62, Laura Trudeau will be a senior adviser to Kresge President and CEO Rip Rapson, and as an executive-onloan, working with the coalition supporting Regional Transit Authority of Southeast Michigan

and M-1 Rail(to be renamed QLine). Wendy Lewis Jackson and Benjamin Kennedy, deputy directors of Kresge's Detroit grant focus area, will serve as its interim co-managing directors, taking on oversight of the program and its $31 million annual grant budget. Trudeau joined Troy-based Kresge in 2001 after a 28-year career at National Bank of Detroit — now J.P. Morgan Chase. As leader of Kresge's community development program and, later, its Detroit program grant area, she has overseen the investment of more than $425 million in grants and loans.

Maggie DeSantis to head LTU center in Midtown Longtime community activist

Maggie DeSantis will head a new

REAL ESTATE

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Chris Greene

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Continuum Services

The LaSalle Group, Inc. is excited to announce Randy Palermo as its new President. Randy has been with LaSalle since 1993 and has been integral in the company’s growth for the past 25 years. As LaSalle begins a new chapter at its new headquarters in Farmington Hills, its growth has been rapidly expanding. With an increased workload and more clients than ever, Randy’s promotion from Executive Vice President to President comes at a critical time in the company’s success.

PEOPLE: SPOTLIGHT

Continuum Services, a Michigan-based, singlesource commercial facilities services and maintenance organization, is pleased to announce the promotion of Chris Greene to chief financial officer. In this new role, Greene will be responsible for all accounting and finance functions, including planning and implementation of growth, acquisition and profitability strategies; financial analysis; risk management; forecasting and the development of financial plans and performance measures.

For more information or questions regarding advertising in this section, please call Lynn Calcaterra at (313) 446-6086 or email: lcalcaterra@crain.com

economic development program at the Lawrence Technological

University Detroit Center for Design + Technology in Midtown.

DeSantis, 65, founder-CEO of the Eastside Community Network and

who stepped down recently, will launch

Building the Engine of Community Development in Maggie DeSantis Detroit, a

program to pair neighborhood redevelopment programs with philanthropic and educational resources, and help provide training for their leaders. Donna Givens succeeded DeSantis as Eastside CEO.

Visteon names interim CFO Visteon Corp. named William Robertson, vice president and

corporate controller, as interim CFO. Robertson, 54, replaces Jeffrey Stafeil. Stafeil announced in January his plans to leave the Van Buren Township supplier.

C R A I N â&#x20AC;&#x2122; S D E T R O I T B U S I N E S S // A P R I L 4 , 2 0 1 6 CRAINâ&#x20AC;&#x2122;S DETROIT BUSINESS

April 4, 2016

SCHOOLS

â&#x20AC;&#x153;If a school doesnâ&#x20AC;&#x2122;t meet standards for a certain period of years, the authorizers can close them. And the solution should be holding authorizers accountable, rather than creating more regulation.â&#x20AC;? Mark Ornstein, Detroit 90/90

FROM PAGE 3

month. Steven Rhodes, the transition manager who began overseeing Detroit Public Schools this month, supports establishing a commission led by a â&#x20AC;&#x153;cross section of Detroiters who have a vested interestâ&#x20AC;? in its education system. â&#x20AC;&#x153;The advantage of a (commission) is its ability to rationally organize and allocate the public and charter educational assets in the city so that education in Detroit can compete with education elsewhere,â&#x20AC;? he said in a statement to Crainâ&#x20AC;&#x2122;s last week. â&#x20AC;&#x153;Once that is done, I believe Detroit will be in a better position to attract families.â&#x20AC;? But CEO Mark Ornstein of Detroit 90/90, the nonprofit charter management organization that oversees the University Preparatory Academy and University Preparatory Science & Math charter school districts in the city, said the current commission proposal is far-reaching and may have other priorities besides academics when it reviews

charter schools. â&#x20AC;&#x153;If the commission starts working with a focus on helping the DPS survive and turn itself around financially â&#x20AC;&#x201D; well, the reason that it struggles financially is a loss of market share. People have voted with their feet (by leaving DPS). Potentially, you could hurt charters as a whole industry if you step in with that priority,â&#x20AC;? he said. â&#x20AC;&#x153;I support helping the DPS survive, but the charter authorizers are charged with getting the school to perform. If a school doesnâ&#x20AC;&#x2122;t meet standards for a certain period of years, the authorizers can close them. And the solution should be holding authorizers accountable, rather than creating more regulation.â&#x20AC;? At issue is an accumulation of charter schools across the city â&#x20AC;&#x201D;

VACANT LAND

some academically exceptional, and others that have struggled to meet state standards â&#x20AC;&#x201D; ever since the legislation in 1994 that created the current framework for them. Total K-12 enrollment at DPS was about 45,786 students this winter, compa.red with about 160,000 in 2002, according to recent school district data. Thatâ&#x20AC;&#x2122;s about a 72 percent decline, even though the total school-age population within Detroit has fallen about 45 percent over that same period. At the same time, about 50 charter holders operating 100 schools within Detroit schoolsâ&#x20AC;&#x2122; boundaries enroll more than 40,000 students of their own, according to data from the Education Trust-Midwest. Gary Naeyaert, executive director of the Great Lakes Education Project, which advocates for charter

schools, said the latest total Detroit student headcount is actually closer to 50,000, outpacing DPS. And where students go, money follows. Ornstein estimates the Detroit 90/90 schools enrolled about 3,500 students combined for the 2015-16 academic year â&#x20AC;&#x201D; which at $7,391 per-pupil school aid this year translates to about $25 million in state funding alone. Grand Rapids-based National Heritage Academies, the stateâ&#x20AC;&#x2122;s largest charter management organization with more than 45 for-profit schools statewide, previously has reported enrolling more than 30,000 students statewide and operating about 20 schools across Southeast Michigan. The loss of market share is one of many financial stresses that has left the traditional public school

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Page 17 district scrambling. Rhodes had previously said Detroit schools would run out of funds to pay teachers by April 8, before the Legislature in March passed a $48.7 million rescue bill that will keep the district operating through the end of the current school year. The reform bills in the House propose a seven-member commission, filled with appointees by Detroit Mayor Mike Duggan, that would monitor both charters and traditional public schools. Two members would be teachers or administrators from traditional public schools and two from charter schools, one each would be a parent of a charter or traditional school student, and one would be a person experienced in managing school accountability systems and performance improvement metrics. Among other things, the commission must review the siting of proposed new charter or traditional public schools and make a set of siting recommendations based on demographics, existing school seating capacity, â&#x20AC;&#x153;academic

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opportunities (already) available” in the immediate area, and other factors. The commission also creates an “A” to “F” grading system that the state School Reform/Redesign Office must review and adopt or change, to monitor school performance. If a school rates an F for three consecutive years or any three of the past five years, the reform officer has the power to close it. If a school consistently rates an A or B grade it can expand without much oversight, but everyone else would be subject to close scrutiny under the siting guidelines. Charter school advocates say market forces and regular reviews by the public colleges and school districts that authorize charters already shutter the underperforming schools. At least 80 schools have gone out of business statewide since the current charter law took effect, including 17 since June 2014, according to an August 2015 report from the Michigan Department of Education. Of the most recent closures, 15 were due to lack of financial viability, academic viability, or both; one never managed to open and one merged with another school. But Education Trust, which publishes an annual report evaluating the 40 universities, community colleges and school districts that authorize charters statewide, notes that 67 percent of charters statewide did worse than DPS itself in the portion of African-American eighth-grade students meeting state standards on the former Michigan Education Assessment

C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 4 , 2 0 1 6

“We will continue to articulate the truth, which is we need a rationalized school district community with efficiencies and resources in it to focus on academic improvement. We do not come from an ideological intention or focus, and this is not a choice issue.” Tonya Allen, co-chairman, Coalition for the Future of Detroit Schoolchildren Program, or MEAP, test in 2013. And DPS itself ranked last among 20 major urban areas for African-American eighth-grade scores on national tests that year. “What’s clear is this: No one, including the governor and state superintendent, has the authority to revoke a chronically low-performing authorizer’s ability to open and expand public schools in Michigan, despite the fact that such authorizers receive millions of taxpayers’ dollars annually,” the report says. “Michigan lacks a clear regulatory framework or law that outlines performance standards for authorizers and the consequences for not meeting them.” About 20 charter districts outperformed DPS in that report, with schools like University Preparatory Science & Math and National Heritage’s Detroit Enterprise Academy and Detroit Premier Academy scoring more than one-third of students proficient in 8th grade math. About 40 trailed DPS, with Detroit Leadership Academy, Allen Academy and Detroit Academy of Arts and Sciences

scoring less than 10 percent proficient in 8th grade math that year, according to Education Trust. The report gives four out of 16 charter authorizers of a combined 80 schools a D or F grade, based on performance standards set for

schools, improvement to chronically failing schools and their decisions on charter school openings and quality of operators. The A and B grade authorizers, meanwhile, are responsible for about 217 schools statewide in that report — but the data isn’t broken out by school location, and the Detroit commission wouldn’t necessarily use the same criteria. Partly at issue, some critics say, is that authorizers themselves receive a small percentage of state per-pupil school aid funding for the students that each charter enrolls, possibly making some institutions reluctant to close them. But charter advocates say the proposed DEC is designed to put self-interest ahead of charters. The bills authorize a commission to exist up to 10 years, but its renewal after the first five years is contingent on whether it is “effective in achieving a turnaround in the (traditional) district,” including its finances, and whether it improves all public school enrollment and academics. Ralph Bland, CEO of Detroit-based nonprofit charter management organization New Paradigm for Learning, authorized by DPS and two universities to operate five schools in the city, said he supports the concept of a commission to di-

rect new schools to communities where they are needed, rather than where any corporation can find viable real estate to place them. “We definitely need some cohesiveness and alignment with closing and opening schools, and there needs to be a source of direction so we are all on one page, as far as where schools go and where the need for schools will be,” he said. “I think the reality is more DPS schools should close, and that some charter schools should close.” Tonya Allen, a co-chairman of the coalition that originally proposed a commission last year, said charter schools within Detroit can be authorized by any of 14 different entities statewide, and their current business model can cause them to overpopulate in areas with high population and high parent dissatisfaction.

The city already has the second-most charters per pupil of any community in the country, she said, and she’s heard the charter advocate arguments, but that all schools need accountability. “We will continue to articulate the truth, which is we need a rationalized school district community with efficiencies and resources in it to focus on academic improvement. We do not come from an ideological intention or focus, and this is not a choice issue,” she said. “We already have more choice than anybody. It’s about increasing outcomes.” Naeyaert said the legislation creates too many layers of bureaucracy, both for DPS and the charter community. He also expects the new panel will have its priorities largely dictated by the mayor and subordinate the charters to the traditional district’s bottom line. “That’s too many bodies. It’s going to lead to a lot of finger-pointing and slightly differing agendas, and it isn’t going to improve academic performance,” he said. “It isn’t necessary, and just creates a lot of cooks in the kitchen.” Chad Halcom: (313) 446-6796 Twitter: @ChadHalcom

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MEDICAID FROM PAGE 1

after Dec. 31. This HMO use tax raises $600 million annually, which provides $400 million for Medicaid and $200 million for school funding. With federal matching, the $400 million earmarked for Medicaid magically multiplies into $1.2 billion in total state Medicaid funding. The third tax Michigan imposes on health care companies is on hospitals, nursing homes and ambulance companies. The socalled Quality Assurance Assessment Program, or QAAP tax, which is not in jeopardy, generates an additional $1.1 billion. Matching funds raises this amount to $3.3 billion. In all, Michigan total taxes on health care organizations and medical claims amount to $1.8 billion. When federally matched, this totals $5.4 billion, or 40 percent of the Medicaid program’s $13.6 billion budget. “There is a perfect storm brewing about how you finance Medicaid. We have relied on provider and use taxes” for the past several years, said Rick Murdock, executive director with the Michigan Association of Health Plans. “The use tax is a huge part of financing, but it will no longer be available as a matchable expense” after Dec. 31. As a solution, several key state legislators in the House and Senate are working on a plan that ultimately may require Michigan to come up with additional general funds to continue serving about 2.3 million Medicaid beneficiaries at the same benefit level. Sen. Ken Horn, R-Saginaw, has been appointed by Majority Leader Arlan Meekhof to lead a subcommittee to develop a solution to the Medicaid financing problem. While Horn declined to comment, sources told Crain’s that one working plan calls for the HMO use tax to continue but not be

used directly for Medicaid. Instead, the HMO tax could be repurposed and used as general fund revenue, which could then free up other general funds to be used for federal Medicaid matching dollars. “Horn is looking at a solution for both doomsday scenarios,” said Murdock, referring to the possibility that the state could lose both the HICA and the HMO use tax. “We need a financing option for Medicaid.” California recently faced a similar situation and came up with an interesting solution that taxes health plans, but gives the insurers tax credits to hold them harmless for the $1 billion in taxes. It is waiting to hear from the federal government whether it will be allowed to use the alternative health plan tax plan to fund its $85 billion Medicaid program that covers 13.5 million people, or more than one-third of the state’s population. Laura Appel, vice president of federal policy and advocacy with the Michigan Health and Hospital Association, said the Medicaid funding problem in Michigan is very serious. “We have actively been a part of the case since the beginning,” she said. “We rely heavily on the taxes to fund the Medicaid program.” But Appel said “there is a strong feeling we are living on borrowed time. If we were to lose millions of dollars in tax revenue to fund Medicaid, it is not real tricky what will happen next.” Appel said the state would be faced with either covering fewer people, offering fewer benefits or paying providers less. “The state will probably have to take a tough look at all three of those things,” she said, noting that paying providers less will make worse the shortage of doctors and dentists.” But not all are bemoaning the potential end of the HICA tax. Bret Jackson, executive director of the Economic Alliance for Michigan, said the alliance has fought against the HICA tax since it began

in 2011 because it increases employers’ health care costs. “Employers have paid $1 billion since Michigan began the tax,” said Jackson, noting it increases costs for businesses, including fully insured companies and small groups. He said the companies accrue no benefits by paying the tax. The largest payer, he said, is the UAW Retiree Medical Benefits Trust, which provides care for 288,000 retired autoworkers in Michigan. However, Jackson said he has no solution to replace the HICA and HMO use tax. “The HICA tax needs to go away, and we want to make sure Medicaid is fully funded,” he said. But if the 6th Circuit Court overturns Michigan’s HICA tax, which some say is possible yet unlikely, the state Legislature will have to come up with $300 million in replacement general funds to garner the federal matching dollars — on top of the $600 million for the HMO tax, Murdock said. “We have to find a solution. There is a ticking time bomb, and we need a long-term solution to Medicaid,” Jackson said. Because of a U.S. Supreme Court ruling in March — Vermont’s Alfred Gobeille v. Liberty Mutual Insurance Co. — Michigan’s HICA case, Self-Insurance Institute of America v. Rick Snyder, was sent back to the 6th Circuit Court for reconsideration. Mike Ferguson, president of the Self-Insurance Institute of America, which filed the lawsuit in 2012 against Michigan, said the institute is concerned that other states could follow Michigan’s lead in assessing taxes on self-insured companies. The Illinois Legislature is considering a bill similar to Michigan’s to institute a 1 percent HICA-type tax on medical claims of self-funded employers. “We are fighting to beat that back,” he said. Ferguson said the institute argued in the Michigan HICA case that a provision in the federal Employee Retirement Income Security Act disallows the tax because it places undue administrative burdens on self-insured plans. “We lost at trial court, lost the appellate level and filed an appeal with the U.S. Supreme Court,” Ferguson said. “At the same time, the Vermont-Liberty Mutual case was going through the 2nd Circuit. The Supreme Court took the Liberty Mutual case and put our case aside.” What happened next was the Supreme Court ruled in favor of Liberty Mutual and ordered the 6th Circuit to reconsider the Michigan HICA case. Does Ferguson have a suggestion on how Michigan can replace the HICA tax if overturned? “That is up for them to figure out,” he said. “If the state believes there is a positive effect to the revenue stream, they can pass a broad-based tax across the population.” Jay Greene: (313) 446-0325 Twitter: @jaybgreene

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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 // A P R I L 4 , 2 0 1 6

PROVENCAL FROM PAGE 3

105

ENGINEE

DES

145

INSPIRING RESULTS

for those with developmental disabilities in Macomb, Oakland, Wayne and nine other counties almost entirely with federal Medicaid dollars passed through the state and county mental health authorities, has topped Crain’s list of the largest nonprofits in the region for well over a decade. It operates on an annual budget of about $200 million and employs 320 people. As he prepared to pass oversight of the agency to its next executive director last week, Provencal spoke with Crain's about his career and the changes he’s seen in services for the developmentally disabled during his career. What first attracted you to advocacy for the developmentally disabled?

My mother used to say you have to look out for the little guy. When in college at Western Michigan University, majoring in sociology, I went to work at the state hospital in Kalamazoo as an attendant in 1966. I learned almost the moment I was there that it was no place for people to live. Once you walked through that door, you were locked in. Your life was the bedroom and the day room, maybe pacing or sleeping off the medication. You didn’t have to be divinely inspired by your parents to know there had to be something better for these people. (Then), during the last semester of my senior year, I had this instructor in social work who was a macho guy, and he spoke to me. He had a big heart and started talking about community activism and how we could all make a difference. It just spoke to me. You’ve made a career of moving the developmentally disabled out of institutions and back into the community. Why were you opposed to institutions?

Agencies in this state and other states by 1972 were still relying on institutions as the major home for people with disabilities. We said no; they should live among us. Institutions were not just passé, they were damaging to people because they stunted their intellectual and emotional growth by limiting their exposure to the average people in a community and kept them from developing like the rest of us develop. We all learn from copying our neighbors, others who have succeeded in business. During your tenure at MORC, has there been an increase or decrease in developmentally disabled people needing services?

There’s increase in the number receiving services and whose families want and need those services. The only services the state offered during the ’50s and ’60s were institutional services, state group homes and training schools. They were not programs that would provide services in your home. Families in the past would have

“The irony is that it was common for people to pay more to have their dog boarded than the state was paying for people with disabilities to live in the community at large. It was a sickening disparity between people and possessions.” Gerald Provencal

kept their son or daughter at home and just lived with the burden of that. Today, they know regardless of the disability, he is entitled to services paid through the state. More people today are asking because they realize there’s something out there — education for people who are school age, inhome services and group and foster homes. As an example of how far things have come: In the ’70s while I was running (an early) group home program in Plymouth, I had $4.28 per day per developmentally disabled person to cover everything: room, board, supervision, transportation to vocational workshops and leisure activities, spending money, clothing. At the same time, my wife and I got interested in dogs and began boarding dogs. We were charging $4.50 per day for a standard-size dog. The irony is that it was common for people to pay more to have their dog boarded than the state was paying for people with disabilities to live in the community at large. It was a sickening disparity between people and possessions. Have we moved away from institutionalization for the developmentally disabled today?

When I started in the late 1960s, 13,000 people with developmental disabilities were living in institutions in Michigan. Today, there are zero. We were obsessed with getting people out of the institutions and moving them into the community. But there are still states that use institutions, including New York, New Jersey, California and Illinois. When I started, the estimate was there were 250,000 people across the country living in institutions. And a similar number lived in private institutions like nursing homes. Today there are something like 35,000 people nationally living in institutions. There are still things to be done for them. Aside from being an advocate, are there any other ways you’ve helped spur deinstitutionalization for the developmentally disabled?

We’re activists here; that in-

cludes lawsuits. I’ve been an expert witness in 20 lawsuits filed in federal court by groups like the American Civil Liberties Union and parent associations. The 14th Amendment assures each citizen of equal protection under the law. And our people have been denied equal protection under the law. They weren’t allowed to attend school and housed in institutions they didn’t choose. In every single case, the state lost in court or agreed, signed a consent agreement and moved people out of institutions. And your work gained international attention?

People started to see around the country and the world that we weren’t just talking about community placements. We were doing it, and doing it quickly. We became obsessed with closing institutions and opening communities: group homes, foster homes, any kind of residential option that would meet the needs of a person and that they would prefer. Fifty-five countries have sent delegations here to see how we have built this program up or we have gone there at no taxpayer expense, with the overseas groups paying. It really starts with the compulsion to change an old system that had been unintentionally hurting them. What’s your most memorable experience during your tenure?

I worked in Paraguay with a friend of mine for one day about eight years ago. We were told about two fellows who had autism and lived in an institution. Their level of disability was such that they were being taken advantage of sexually by other men in their unit. We met with the people and worked with some Catholic nuns who formerly had run a leper colony and still had the house. We worked with the nuns to open a group home for those two men with autism in that house, within 48 hours. They had clothes, were fed properly and didn’t have to look over their shoulder fearing someone was going to assault them. Nobody paid us; we paid our own way down there. I’ve had hundreds of experiences, but that one really stuck out. What are your plans after retirement?

I will remain on the board at MORC. And I’m looking at three other boards. I’m still going to do international travel on a volunteer basis. There are people I’ve worked with before in other countries where we’ll be implored to come and show them how to do something. I’m dreading walking out of here. Any of the things I come up with to occupy my time will pale to what I’ve been able to do here. But one has to have the grace to leave and help someone else to take over. I believe it was my greatest gift to be in a position to do something about this. Sherri Welch: (313) 446-1694 Twitter: @sherriwelch

C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 4 , 2 0 1 6

Chief: DPD oversight cost city more than $50M By Robert Snell rsnell@crain.com

Detroit spent more than $50 million reforming the police department and jail operations during 13 years of federal court oversight, Detroit Police Chief James Craig said Friday. That figure, including $15 million paid to a federal watchdog, emerged one day after U.S. District Judge Avern Cohn issued an order saying the Detroit Police Department “has met its obligations” for improvements under an agreement with the U.S. Justice Department. The figure puts a price tag on a long, controversial and briefly scandalous court oversight of the police department following complaints about excessive force, illegal arrests and improper detention in holding cells. The amount included almost $7 million for a computerized offi-

cer-tracking system and an $87,825 monthly fee paid to court monitor Robert Warshaw of New Hampshire-based Police Performance Solutions LLC. He was appointed to monitor the Detroit Police Department’s progress in 2009 and replaced Sheryl Robinson Wood, who quit after text messages showed a personal relationship between her and then-Mayor Kwame Kilpatrick. “Looking back, we can honestly say becoming a constitutional police department is important to the community that we serve, but it was a costly undertaking,” said Craig, who was hired in 2013. Early on, Craig focused on implementing reforms in hopes of ending the prolonged court oversight. He blamed delays prior to his arrival on the Kilpatrick-Robinson Wood relationship, a “revolving door” of police chiefs and the fi-

nancial incentive for Warshaw. “There were a lot of contributing factors outside the control of the department,” Craig said. In 2014, Cohn terminated the sweeping 2003 decree that included oversight by Warshaw after the federal government found substantial compliance by the city. For the past 18 months, the government still was able to keep an eye on police by reviewing internal audits and other steps. Craig is focused on sustaining the reforms, he said. “We have seen other departments, and some have relaxed and not sustained this culture of accountability,” Craig said. “We’re not going to do that.” Despite spending millions fixing the department, the city has still not equipped all uniformed officers with body cameras. Craig said the department was discouraged from buying cameras for all

TIGERS FROM PAGE 1

its $12 billion in revenue, according to Forbes. What that means is local revenue kept by baseball teams is vitally important for the club’s bottom line, especially since, unlike the NFL, baseball doesn’t cap its player salaries. Detroit upped its payroll this season so far to $192 million, up from $172 million a year ago. “For clubs that are willing to expand player payroll to their most competitive levels, being able to tap revenue streams that are directly beneficial to the club become all the more important,” said Maury Brown, a sports business financial analyst who writes for Forbes.com. By generating more local revenue, teams can opt to spend it on players, farm systems, managers, equipment, ballpark improvements, or whatever they want, ideally to improve team performance or the game-day experience for fans. Atop whatever they can peddle to fans at the stadium, teams also increasingly seek lucrative local cable TV deals. Southfield-based Fox Sports Detroit currently pays the Tigers $50 million a year for local broadcast rights, and Detroit gets among the best local TV ratings in baseball. The money the Tigers get from MLB is the shared revenue from

MICHAEL LEWIS II

The Smokehouse Burger, made of cheddar cheese, house-smoked pulled pork, crispy onion straws, jalapenos and barbecue sauce is one of 18 new menu items available at Comerica Park for the 2016 baseball season. the enormous national network television broadcast deals, merchandise licensing from items such as jerseys and caps, and from the digital operations at Major League Baseball Advanced Media. The Tigers, who open their home schedule Friday against the New York Yankees, had an estimated $268 million in total revenue last season, which ranked 14th among MLB’s 30 clubs, according to Forbes.com. Ten years ago, Detroit’s revenue was $170 million. At the top of the 2015 revenue list were the Yankees, naturally, with $516 million; and trailing everyone were the attendance-challenged Tampa Bay Rays, at $193 million. The Tigers had an estimated $11

INDEX TO COMPANIES

These companies have significant mention in this week’s Crain’s Detroit Business: Alrig USA LLC .........................................................11

Economic Alliance for Michigan ........................19

Axis Advisors LLC ..................................................11

The Forbes Co. ...................................................... 4

Capital Impact Partners ......................................3

Macomb-Oakland Regional Center ....................3

Chapman House ................................................... 8

The Mars Agency .................................................16

City Hall Artspace Lofts ....................................... 8

Michigan Association of Health Plans .............19

Detroit 90/90 ...................................................... 17

Michigan Health and Hospital Association .....19

Detroit Public Schools ..........................................3

Oxford Cos. ............................................................11

Detroit Tigers ......................................................... 1

Somerset Collection ............................................ 4

DNR Outdoor Adventure Center ........................ 9

Von Staden Architects LLC ................................. 9

million in operating income last season. Two seasons ago, Forbes estimated that the Tigers lost $20.7 million, so $11 million in income would represent a $31.7 million year-over-year swing in profitability — an improvement unexplained by Forbes or the team. The Tigers have a standing policy of not discussing their finances, so it’s unknown if the team operates entirely on its own financially, or if it requires subsidies from owner Mike Ilitch’s $3.3 billion business holdings. It is known that the team’s business department is charged with finding new revenue streams, something every professional sports team seeks. Ilitch hasn’t shied from large-market spending on players for his midmarket team, making the need for cash all the more acute. Since buying the club for $85 million in August 1992, he’s laid out more than $1.8 billion on player salaries. Of that, $1.4 billion has come since 2006 — but still has yet to translate into a World Series title. The team was marred by injuries in a disappointing 2015 season in which it finished 74–87, last in the American League Central Division. Despite the Tigers’ subpar re-

officers while under court oversight. Warshaw said implementing the technology would have prolonged the court’s oversight, Craig said. Warshaw could not be reached for comment Friday. Craig hopes to implement body cameras for all uniformed officers this year. Last week, Detroit police officials traveled to a small town near Dallas, Texas, to see how one municipal department utilized a brand of body cameras. Craig ultimately wants an integrated system that would include in-car and body cameras to provide a full view of an officer’s contact during traffic stops and interactions with the public. “We have not found a perfect solution,” Craig said, “but we are going to move forward even if we don't have a fully integrated program.” cord, after four consecutive playoff seasons, Detroit still finished ninth in all of baseball with 2.7 million in attendance, despite 17 teams playing in 12 larger markets. Last season, the Tigers averaged 33,654 for their 81 games at 41,574seat Comerica Park. Seating was adjusted this offseason to 41,297. Ilitch, 86, green-lighted several offseason player acquisitions by new General Manager Al Avila, including a six-year, $132.75 million deal in January for free-agent outfielder Justin Upton, and a five-year, $110 million contract for pitcher Jordan Zimmermann. The wobbly bullpen, long a target of fan and media ire, was bolstered with closer Francisco Rodriguez and his twoyear, $13 million contract. Avila was promoted to GM in July after Ilitch fired Dave Dombrowski, who had been in the role for 13 years. Avila, who joined the Tigers with Dombrowski in 2002, also has put new emphasis on advanced performance metrics and hired several stat wonks to crunch the numbers. Will the spending and statistical analysis get the Tigers over the hump for their first World Series victory since 1984? It’s obviously too early to say (although boo-birds will be calling for manager Brad Ausmus to be fired before the first pitch). ESPN’s power rankings on the eve of the season — Detroit opens on the road against the Miami Marlins on Tuesday — put the Tigers at No. 15 and predict an 83-79 record with a second-place finish in the division. Sports Illustrated, meanwhile, predicts an 80-82 season with a third-place divisional finish. The Tigers will rely on the pricey newcomers and high-paid proven veterans such as Miguel Cabrera and Justin Verlander (both earning $28 million this season) to prove they’re better than mediocre. And they will rely on fans’ pocketbooks to ensure the bills are paid. Bill Shea: (313) 446-1626 Twitter: @Bill_Shea19

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 or shill@crain.com 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) 657-2204 or lvanhulle@crain.com Dustin Walsh, senior reporter Covers the business of law, auto suppliers, manufacturing and steel. (313) 446-6042 or dwalsh@crain.com Sherri Welch, senior reporter Covers nonprofits, services, retail and hospitality. (313) 446-1694 or swelch@crain.com ADVERTISING Sales Inquiries (313) 446-6032; FAX (313) 393-0997 Advertising Director Matthew Langan Senior Account Manager Katie Sullivan Advertising Sales Gerry Golinske, Catherine Grace, Joe Miller, Diane Owen, Sarah Stachowicz, Classified Sales Manager Angela Schutte, (313) 446-6051 Classified Sales Lynn Calcaterra, (313) 446-6086 Events Manager Kacey Anderson Creative Services Director Pierrette Templeton Senior Art Director Sylvia Kolaski Marketing Coordinator Ariel Black Special Projects Coordinator Keenan Covington Sales Support Suzanne Janik, YahNica Crawford Editorial Assistant Nancy Powers Production Manager Wendy Kobylarz Production Supervisor Andrew Spanos CUSTOMER SERVICE Main Number: Call (877) 824-9374 or customerservice@crainsdetroit.com Subscriptions $59 one year, $98 two years. Out of state, $79 one year, $138 for two years. Outside U.S.A., add $48 per year to out-of-state rate for surface mail. Call (313) 446-0450 or (877) 824-9374. Single Copies (877) 824-9374 Reprints (212) 210-0750; or Krista Bora at kbora@crain.com To find a date a story was published (313) 446-0406 or e-mail infocenter@crain.com Crain’s Detroit Business is published by Crain Communications Inc. Chairman Keith E. Crain President Rance Crain Treasurer Mary Kay Crain Executive Vice President/Operations William A. Morrow Executive Vice President/Director of Strategic Operations Chris Crain Executive Vice President/Director of Corporate Operations KC Crain Vice President/Production & Manufacturing Dave Kamis Chief Financial Officer Thomas Stevens Chief Information Officer Anthony DiPonio G.D. Crain Jr. Founder (1885-1973) Mrs. G.D. Crain Jr. Chairman (1911-1996) Editorial & Business Offices 1155 Gratiot Ave., Detroit MI 48207-2732; (313) 446-6000 Cable address: TWX 248-221-5122 AUTNEW DET CRAIN’S DETROIT BUSINESS ISSN # 0882-1992 is published weekly, except for a special issue the third week of November, and no issue the third week of December by Crain Communications Inc. at 1155 Gratiot Ave., Detroit MI 48207-2732. Periodicals postage paid at Detroit, MI and additional mailing offices. POSTMASTER: Send address changes to CRAIN’S DETROIT BUSINESS, Circulation Department, P.O. Box 07925, Detroit, MI 48207-9732. GST # 136760444. Printed in U.S.A. Entire contents copyright 2015 by Crain Communications Inc. All rights reserved. Reproduction or use of editorial content in any manner without permission is strictly prohibited.

WEEK Gentherm acquires Ohio company

entherm Inc., the Northville-

based supplier of heating and cooling technology for automotive seating, acquired health care and industrial warming and cooling product maker

Cincinnati Sub-Zero Products Inc.

Terms were not disclosed. Cincinnati Sub-Zero will operate as a subsidiary of Gentherm, maintaining its Sharonville, Ohio, headquarters plant as well as its testing laboratory in Sterling Heights.

COMPANY NEWS

Detroit-based ride-sharing

company SPLT, Ann Arbor-based life sciences company Genomenon Inc. and Detroit-based software maker EntroCIM were the winners at the annual Google Demo Day in downtown Detroit. Google officials in Mountain View, Calif., will choose one of those three to fly to Silicon Valley to make pitches for capital to would-be investors on May 4. Livonia-based lithium-ion battery maker A123 Systems LLC signed on as a corporate sponsor of the inaugural LPGA Volvik Championship, scheduled for May 23-29 at Travis Pointe Country Club in Ann Arbor. Financial terms of the deal were not disclosed. California-based grocer Trader Joe’s said it plans to move its Northville store less than a mile south on Haggerty Road to the newly developed Northville Park Place shopping center. The new store is set to open early in 2017. Ann Arbor-based Hygieia, a medical device company, has teamed with Detroit-based Blue Cross Blue Shield of Michigan to launch a demonstration project to help about 1,000 diabetic patients more effectively manage their disease. The study will test Hygieia’s patented “d-Nav service” for patients with Type 2 diabetes. The city of Detroit’s administration said Findlay, Ohio-based Marathon Petroleum Corp. is reworking an emissions request for its Detroit refinery, promising a lower level of pollutants and spending $10 million to get there, AP reported. Detroit-based Fontinalis Partners and Durham, N.C.-based SJF Ventures led $8 million in funding to TransLoc, a Durhambased provider of cloud- and app-based transit technology to municipal transit agencies and universities across the U.S.

OTHER NEWS More than a dozen current

and former Detroit Public Schools officials were charged with crimes — including bribery — stemming from a federal corruption investigation, AP reported. The U.S. attorney’s office in Detroit

C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 4 , 2 0 1 6

ON THE WEB MARCH 26-APRIL 1

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

$30 million

The amount of redevelopment costs targeted for the site of Peabody’s Restaurant in Birmingham. Alden Development Group wants to build a five-story mixed-use structure on the site on Woodward Avenue near Maple Road.

3,100

The number of Dan Gilbert’s employees that he said live in Detroit. His Quicken Loans Inc. moved from Livonia to downtown Detroit in 2010, when just 77 of his employees lived in the city, he said.

The number of new menu items to be offered at Comerica Park concession stands for the Detroit Tigers’ 2016 season. Among the new items are a “brat pop” and a mac-and-cheese hot dog.

said the leaders facing charges include 12 current and former principals, an administrator and vendor. Earlier, Gov. Rick Snyder signed into law $48.7 million in emergency funding to keep the financially troubled DPS open through the end of the school year. Murray Feldman, Detroit’s longest on-air TV personality, is exiting WJBK Channel 2/Fox 2 in May after 40 years, sources told Crain’s. According to media reports, morning anchor and entertainment reporter Lee Thomas and Murray Feldman: feature reporter To leave Fox 2 this Jason Carr also are out at the spring. station. The Michigan Economic Development Corp., the Michigan State Housing Development Authority

and the Grandmont Rosedale Development Corp. announced a $15,000 crowdfunding campaign for a pathway through the Grandmont Rosedale community. The state restored most of Pontiac’s control over city finances, citing progress made following seven years of oversight. The change means stateappointed City Administrator Joe Sobota will soon resign. Detroit could set aside $30 million this year — three times as much as initially planned — to cover an estimated $500 million pension shortfall, city CFO John Hill said.

Detroit Pistons owner Tom

Gores and Columbus, Ohio-based Huntington Bank unveiled a plan to

make $25 million available in the form of loans and grants for businesses, entrepreneurs and residents of Flint and Genesee County affected by the ongoing drinking water crisis. The Detroit Sports Commission, in partnership with Olympia Entertainment and the Detroit Skating Club, submitted a bid to host the 2018 U.S. Figure Skating Championships. The competition will take place Jan. 3-7 and serve as the final qualifying event before selection of the U.S. Olympic figure skating team. A historic Farmington Hills orphanage site vacant for more than 10 years is on its way to a new life as a senior housing community. Farmington Hills officials approved a Planned Unit Development for the 31.5-acre former St. Vincent and Sarah Fisher site at 12 Mile and Inkster roads. A restitution fund will cover funeral expenses for victims of Farid Fata, the former Oakland County oncologist who misled people into believing they had cancer, The Detroit News reported. Fata was sentenced in July, months after pleading guilty in Detroit federal court. Robert Dye, chief economist for Comerica Bank, warned that the Michigan economy is losing momentum and faces manufacturing headwinds, based on the release of the bank’s latest Michigan Economic Activity Index. It fell by 1.2 percentage points to a level of 126.5, the first decline since February 2015. However, he said he expects the index to rise by year’s end. The Southeast Michigan Purchasing Managers Index was up sharply in March, rising 7.1 points to 59.1, recovering from a 5.1-point drop in February to hit the highest mark in six months. A Southfield arts commission has started a fundraising campaign to recoup money spent on a sculpture displayed at the former Northland Center, AP reported. The city acquired artist Marshall Fredericks’ “The Boy and Bear” and other public art last year from the mall's courtappointed receiver for $500,000.

OBITUARIES Gordon Guyer, former

president of Michigan State University (1992-93), died March 30. He was 89.

Jim Harrison, the Michiganbred novelist, poet and outdoors enthusiast who was best known for the historical saga Legends of the Fall, died March 26. He was 78. Curtis Hertel Sr., a former Michigan Speaker of the House and former executive director of the Detroit-Wayne County Port Authority, died March 27. He was 63.

RUMBLINGS UM law school has most influential grads, study says

he University of Michigan Law School produces the most influential bench of federal judges across the nation, according to a new study from a legal research and analytics firm — an impressive feat, since none of the current U.S. Supreme Court justices earned law degrees there. “Surprised? So were we,” states a website post from San Franciscobased Ravel Law last week about its new Ravel Influence Score, which tracks all federal judges by rulings they wrote and the number of times those decisions were cited in other opinions. On this index, the UM school led with a 41.43 score, with University of Chicago Law School

following at 35.47. Harvard Law School and Yale Law School, alma maters of nearly the entire Supreme Court bench, were third and fourth at 29.89 and 27.87. “With Michigan law, we found that several graduates with very high scores were powering the school’s ranking,” the website says, citing such UM alumni as Chief Judge John Walker, 75, and Judge Amalya Kearse, 78, both of the 2nd U.S. Circuit Court of Appeals in New York. Also mentioned were David Ebel on the 10th Circuit Court and Anthony Scirica at the 3rd Circuit. The study counted only law schools that have produced 10 more judges and assigned a score to each based on how frequently their opinions were cited elsewhere, meaning more prolific and longer-serving judges were likely to raise a school’s average. Kearse, incidentally, ranks as the second-most influential federal judge who has never served on the high court, in a separate report from Ravel.

Bigger guns could mean big pact for General Dynamics Sterling Heights-based General Dynamics Land Systems and Kongsberg Protech Systems USA of

Virginia might both be in the pipeline for a new multibilliondollar U.S. Army production contract, if a plan to upgrade the weapon turrets on Stryker vehicles gains traction. Friday was the deadline for defense contractors and suppliers to submit information to the U.S.

Army Tacom Life Cycle Management Command in Warren, in response

to a March industry request for information on products and systems for an “upgrade to the entire Stryker family of vehicles” that will be “focused mainly on lethality improvements.” Specifically, the Army wants to see what technology is now or will soon be available both for upgrading .50-caliber machine guns on Strykers to something

heavier, as well as converting flat-bottom Stryker hulls to a double V-hull configuration. Previous double V-hull upgrades have been awarded to GDLS, and the Army last July approved a request for 81 Strykers in the 2nd Cavalry Regiment in Europe to go from .50-caliber to the much larger 30 mm weapon. Kongsberg Protech said in December that GDLS selected its Protector Medium Caliber Remote Weapon Station as a 30 mm turret for the Europe upgrade. “The next round of upgrades is intended to improve the lethality of the Stryker formation, so it’s important to find solutions that work well in concert, and go beyond just making an individual vehicle more lethal,” Army Col. Glenn Dean, project manager for the Stryker Brigade Combat Team, said in a March statement. GDLS began producing Strykers for the Army in 2000, typically with a 12.7 mm, .50-caliber machine gun, and the Army has more than 4,000 of them worldwide. Analysts have said a broader upgrade could easily surpass $3 billion in cost.

Plus Capital founder to keynote MGC symposium Adam Lilling, a 1992 business school graduate at the University of Michigan and the founder and managing partner of Plus Capital, a venture capital firm in Santa Monica, Calif., that focuses on early-stage companies, will be the keynote speaker to kick off the 35th Michigan Growth Capital Symposium May 17-18 at the Marriott Eagle Crest in Ypsilanti. Lilling has founded several tech companies and served as a board member for several others. In 2010, he co-founded Launchpad LA, a mentorship organization for young entrepreneurs. In 2013, he founded Plus Capital, which has 11 portfolio companies. The symposium attracts hundreds of investors and service providers from around the country to hear pitches for capital from Midwest entrepreneurs. The event also includes a variety of panel discussions on topics ranging from health care reform to challenges facing medical software startups to keys to licensing technology. Local speakers will include Julia Owens, president and CEO of Ann Arbor-based Millendo Therapeutics Inc., which in January announced it raised a VC round of $62 million, largest for a drug development company in state history; and Tom Shehab, a principal in Ann Arborbased Arboretum Ventures LLC, which last September raised $220 million, the state’s largest VC fund. For information or to register, go to MichiganGCS.com.

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GC SUMMIT KEYNOTE SPEAKERS | MAY 17

THE TALE OF TWO TIPSTERS Cynthia Coo p e r an d Sh e rron Wat k in s s h are t h e ir sto r i es o n how t hey uncove re d two of t h e worst accoun t in g s c and a l s i n hi sto r y.

Cynthia Cooper Cynthia and her team unraveled the fraud at WorldCom, to date one of the largest corporate frauds in history.

Sherron Watkins Known worldwide as the Enron whistleblower, Sherron Watkins sounded the alarm that marked the beginning of the end for the corporate giant.

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