APRIL 18-24, 2016
Michigan rises in the ranks of VC investment By Tom Henderson thenderson@crain.com
Venture capital investment in Michigan is thriving, based on data from the Michigan Venture Capital Association and the National Venture Capital Association. According to the quarterly MoneyTree report issued Friday by the NVCA and PricewaterhouseCoopers LLP, based on data compiled by Thomson Reuters, 13 Michigan companies got a total of $78.5 million from venture capitalists in the first quarter of this year. That was good for a state ranking of 14th nationally, up from the ranking of 19th when 10 state companies raised $48.3 million in the fourth quarter last year. It was the Angels fifth-best quarrising ter for state companies in Fund ready to the last 45 quarstart third ters, though off recruitment of from the $144.2 investors, million raised Page 5. in the third quarter last year. Michigan ranked second among Midwest states in the first quarter. Illinois was well out in front with $217.2 million in 24 deals, ranking eighth nationally. Minnesota ranked 15th with $67.3 million in 11 deals, with Ohio 21st at $40.7 million in seven deals, Indiana 25th at $24.4 million in three deals and Wisconsin 38th at $1.5 million in one deal. “It looks as if the progression from last year continues,” said
Ford’s futureforward office, design space, Page 3
QLine cues investors
LISA SAWYER
Real estate deals show economic clout of mass transit project By Robert Snell rsnell@crain.com
Real estate investors have spent more than $1 billion acquiring properties near the QLine rail route, gobbling up buildings near future rail stations and in Highland Park in hopes the project will be extended northward. The activity — including more than $350 million worth of property acquisitions by QLine backer and Quicken Loans Inc. and Rock Ventures LLC founder and Chairman Dan Gilbert — illustrates the economic impact of several developments along the Woodward Avenue corridor. Those include the rail line, a possible bus
More than $1 billion has been spent in real estate deals in the corridor that flanks the QLine and beyond. rapid transit system, a new Amtrak center and the Detroit Red Wings arena. All told, the economic impact of transit-oriented development
SEE QLINE, PAGE 19
Costs of proposed pipelines burn benefits By Gary Anglebrandt ganglebrandt@crain.com
MARK HOUSTON
© Entire contents copyright 2016 by Crain Communications Inc. All rights reserved
NEWSPAPER
clustered near Woodward. The investment also shows the symbiotic relationship behind Gilbert’s backing of the
Will more natural gas flow naturally lower cost? No
SEE VC, PAGE 21
crainsdetroit.com Vol. 32 No 16
is expected to top $3.5 billion within a decade, M-1 Rail officials say, and include a mix of 10,000 new residential units, offices and commercial projects
MICHAEL LEWIS II
$2 a copy. $59 a year.
Backers are eager to build pipelines to get Appalachian natural gas to the Midwest.
Who pays, and how? Getting a new pipeline paid for isn’t easy, or simple, but here’s how it happens, Page 20
In the first half of 2017, two big natural gas pipelines are scheduled to go into service, increasing the volume of natural gas entering Michigan by up to 35 percent. That’s the scenario developing out of separate proposals, one by the developers of Nexus, a $2 billion pipeline backed by Detroit-based DTE Energy Co., and the other by developers of Rover, a $4.2 billion pipeline backed by Dallas-based Energy Transfer Partners LP. Both plans are under review by the Federal Energy Regulatory Commission, which approves interstate pipelines. Developers on both
sides expect approval this year, with construction following soon after. How these spigots will impact customer power costs is an open question, though industry officials envision a general downward trend in customer bills as natural gas takes on a greater role in power generation over the next 15 years. The idea is to connect Appalachia, home to some of the most productive natural gas fracking operations in the country, to Ohio, Michigan and beyond. The gas is cheap and abundant, so much so that producers — some of them with bankruptcy rumors swirling about them — are desperate to get SEE PIPELINES, PAGE 20
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MICHIGAN
BRIEFS Chick-fil-A could open 20 locations in state by 2021
Coast Guard work turns Michigan Wheel faster
With only two locations within the state’s borders — in food courts at Detroit Metropolitan Airport and Oakland University — Chick-fil-A has only a bite-sized presence in Michigan. Now, MLive.com reports, the Georgia-based fast-food chain will soon reveal plans for as many as 20 locations in the state by 2021. The company plans to announce a full “Michigan expansion” at the April 19 groundbreaking of its first free-standing restaurant in the state, in Lansing, where crews will begin working soon. The chain plans to open 15 to 20 locations in Michigan over the next five years. A site plan for a Chickfil-A location in Gaines Township near Grand Rapids was approved last month, and a proposal for a second Grand Rapids-area location goes before the Wyoming Planning Commission this week. Chick-fil-A also said it plans to open a location inside the Somerset Collection in Troy by the end of 2016.
At its height in the 1960s and 1970s — as one of the biggest names in the marine world, especially in propeller manufacturing — Grand Rapids-based Michigan Wheel Corp. saw annual sales of more than $100 million. The economic downturn in 2009 reduced that figure to $15 million. Now the bad days are in the past for Michigan Wheel, which has had three straight years of rising sales and expects sales between $25 million and $27 million in 2016. “We’re like a Twinkie or a cockroach — we don’t go away,” Bruce Dieterle, the company’s president and CEO, told the Grand Rapids Business Journal. “There’s very few people in North America who can do what we do.” The company’s resurgence has been led by orders from the U.S. Coast Guard for its new Sentinel Class Cutters, an extremely fast 154-foot vessel. Michigan Wheel now has more than 110 employees, up from its low of 50.
MICH-CELLANEOUS
With locations mainly in midsize Midwestern college towns, HopCat has had success as a big fish in a small pond, but the beerbar chain now is entering big-city territory, the Grand Rapids Business Journal reported. Last month, HopCat’s Grand Rapids-based parent company, BarFly Ventures, announced the chain’s expansion into Chicago, roughly a week after the announcement of a HopCat coming to Kalamazoo. Following an investment of $30 million from a Texas-based private equity firm, BarFly owner and HopCat founder Mark Sellers said the company would open five HopCats a year for the next six years, with Louisville, Ky., and Lincoln, Neb., among others, joining existing locations in Ann Arbor, Detroit, East Lansing, Indianapolis and Madison, Wis. Sellers cited the “underserved” Lincoln Park neighborhood of Chicago as a potentially strong location: “Within 10 blocks in any direction, there’s nothing.” g Grand Rapids-based 616 Development LLC and Loeks Theaters Inc. detailed plans for a multi-phase, $140 million mixed-use development in the Arena South District of downtown Grand Rapids, MiBiz reported. The initial $100 million phase will include a nine-screen movie theater concept dubbed Studio C. The proposed development also includes 38,000 square feet of retail, 187 residential units, an outg
door public plaza and a 900-space parking deck, or about 300 more spots than now exist at the site. The developer hopes to break ground on the first phase in early 2017. g Big-box grocery stores such as Meijer can now sell beer and wine at their gas station convenience stores under legislation signed last week by Gov. Rick Snyder, AP reported. Snyder’s action lets grocery store gas stations count grocery supplies in other buildings toward meeting a booze-selling requirement. Some lawmakers from rural districts and gas station convenience store owners say it gives big businesses a leg up on the competition, letting them meet startup capital requirements automatically. Republican Rep. Ray Franz, of Onekama, who opposed the bill, said it’s a “carve out” for the big retailers. g Michigan would have the toughest lead-testing rules in the nation and require the replacement of all underground lead service pipes under a sweeping plan Gov. Rick Snyder and a team of water experts were to unveil Friday in the wake of Flint’s water crisis, The Associated Press reported. Other proposals include requiring utilities to test all schools, day care centers, nursing homes and similar facilities — not just some people’s houses — and the mandatory disclosure of lead plumbing in home sales and rental contracts, according to a document provided
INSIDE THIS ISSUE
CALENDAR .........................................16 CLASSIFIED ADS............................... 17 DEALS & DETAILS.............................15 MARY KRAMER .................................. 6 OPINION .............................................. 6 OTHER VOICES ................................... 9 PEOPLE ...............................................16 RUMBLINGS ...................................... 22 WEEK ON THE WEB ......................... 22
COMPANY INDEX: SEE PAGE 21 to AP by the governor’s office before the announcement. g Despite increased educational attainment and workforce participation, Michigan’s working women continue to be out-earned by their male counterparts. Median annual pay for Michigan women working full time is $37,419, compared to $50,157 for men, according to a new study from the National Partnership for Women & Families. Women in the state earn
75 cents for every dollar paid to men. Due to the pay gap, women in Michigan earn nearly $16 billion less than men — which could provide an additional 10 months of mortgage payments, on average, the study said. Minority women carry an even larger disparity: Black women are paid 66 cents and Latinas 57 cents for every dollar paid to white men in Michigan.
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Big plan on campus
FORD MOTOR CO.
Ford Motor Co. says its new net zero-waste, net zero-energy, net zero-water Sustainability Showcase facility will include
geothermal heating and cooling and generate renewable energy from the sun.
More than a year’s work, employee feedback went into Ford project By Kirk Pinho kpinho@crain.com
When you’re overhauling 7.5 million square feet of space, not everyone can be 100 percent satisfied. But Carl Roehling and SmithGroupJJR sure tried when they put forward an expansive plan to modernize and reconfigure Ford Motor Co.’s research and engineering campus and world headquarters space in Dearborn. After face-to-face interviews with more than 200 employees of the Dearborn-based automaker, the Detroit-based architecture and planning firm incorporated feedback from more than a year’s
worth of work into what ended up being the plan to transform how — and in what space — Ford does business. “It’s been a mile a minute,” Roehling said of the process since April 2015, when SmithGroup first began work “in earnest.” It was hired the previous month to do the master planning work. Ford announced the 10-year plan last week. Crain’s reported some details of the plan in June. All told, the plan includes moving 30,000 employees from just over 70 buildings in Dearborn and Allen Park into two campus-like locations: its Re-
search and Engineering Center Campus and a new location around the Ford World Headquarters build-
ing, both of which are more than six decades old. The Research and Engineering Center Campus is across the street from Edsel Ford High School in the triangular area bounded by Rotunda Drive, Village Road and Oakwood Boulevard; the headquarters is north of the site at Michigan Avenue and Southfield Road. The sheer size of the plan required interviews with everyone from young tech and development whizzes perhaps most comfortable working from a Starbucks or their kitchen tables to 60-something HR or finance executives who cut their teeth in Ford’s so-called “cubicle farms” decades ago. “I think it was a much more inclusive process than we anticipated. They rippled this through a lot more people to get these perspectives than we thought. It turned out it was a good thing,” said Roehling, now SEE FORD, PAGE 21
MUST READS OF THE WEEK
David Hall’s new pitch: His own mortgage biz Ex-Rock spokesman enjoys return to retail By Tom Henderson thenderson@crain.com
Starting Monday, David Hall will once again be a TV and radio pitchman for the mortgage business. But this time, it will be his mortgage business, Hall Financial LLC, not Dan Gilbert's. Hall has received a license from the state for the new company, which began operating out of a temporary office in Bloomfield Hills and is seeking a permanent headquarters in Royal Oak. He has hired 10 veterans of the mortgage industry, some from his days at Rock Financial, the brand Detroit-based Quicken Loans once used in Michigan, and some from his most recent stint at United Shore Financial Services LLC in Troy. TV spots will start running on WXYZ-Channel 7 and WMYD-Channel 20. And Hall says he is in the final stages of negotiations for a onehour radio show each Saturday morning on a local station that could start as soon as this weekend. For seven years, in addition to SEE HALL, PAGE 17
LARRY PEPLIN
David Hall’s face was once familiar as the pitchman for Rock Financial.
Auto Club’s new CEO ready to drive growth By Jay Greene jgreene@crain.com
“We want to bring value to millennials. We are closely watching and analyzing these trends.” Joe Richardson Jr. Auto Club CEO
YouTube splash
Medicaid boom
Yummy takeover
Tourism conference gears up after
ACA growth means big
Restaurants go off the
Pure Michigan online takeover,
business for HMOs,
menu to keep diners
Page 4
Page 9
hungry for more, Page 14
The Auto Club Group’s new CEO, Joe Richardson Jr., says he plans to push the member service, banking and insurance growth that his predecessor, Chuck Podowski, laid the foundation for the past 17 years. But the 30-year insurance veteran, who took over the Auto Club’s top executive position this month after serving as CEO designate with Podowski since August, has challenges before him as well. He plans to develop new capabilities for Dearborn-based AAA of Michigan in mobile technology and develop new products for millennials, many of whom do not own cars and instead use carpools, RideShare, Uber or taxis to get around. “My priorities are to service existing members, improve upon our services, develop more mobile applications and grow membership,” Richardson said in an interview with Crain’s. SEE AAA, PAGE 18
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State tourism agency’s new destination: YouTube Digital media push starts with 30-second spot promoting Detroit By Lindsay VanHulle
Crain's Detroit Business/Bridge Magazine
“As part of the Cohen & Company team, we’re immersed in a culture of continuous learning that helps us identify game-changing opportunities for clients.â€? – Cathy Lorenz, Partner RQH Ă€UP EHWWHU WRJHWKHU _ FRKHQFSD FRP JKG to this report
LANSING — When the state’s tourism agency introduced its new Detroit-centric Pure Michigan commercial last week, it also bought time on social media channel YouTube. For 24 hours last Monday, the 30-second clip played on the popular website, and users didn’t have an option to skip past it. That helped the ad reach more than 7.9 million impressions, or eyeballs, in a single day, according to its creators at Travel Michigan — better than they had hoped. That YouTube takeover, as Travel Michigan Vice President Dave Lorenz calls it, led to more than 30,000 views of a new landing page created as part of the campaign that promotes Detroit’s recovery from municipal bankruptcy. It was part of an $800,000 paid media campaign for the Detroit ad. This year, as the Pure Michigan branding campaign turns 10, tourism promoters are turning more often to digital media to tell Michigan’s travel stories. The web and social media are occupying a bigger share of a marketing arsenal that still largely encompasses print ads, radio and television. The evolution of digital media — and how to use it effectively — will be among the trends highlighted at the annual Pure Michigan Governor’s Conference on Tourism, which continues today in Lansing. “We still feel that TV video is critically important to get out that message, but you can do that in other ways,� Lorenz told Crain’s last week to preview the conference. “This whole concept about new media consumption is something that we’ll be exploring more over the next year.� This year’s conference, hosted by the Michigan Lodging and Tourism Association, is titled “Think, Act, Thrive� and is expected to draw upward of 800 tourism industry professionals through Tuesday. That day, Lorenz will speak on behalf of Travel Michigan, the state’s tourism division housed within the Michigan Economic Development Corp.
He is expected to touch on industry best practices during his address. That will include such things as digital marketing — Travel Michigan this year also paid to have Pure Michigan ads show up on the streaming video service Hulu for the first time — and how local convention and visitors bureaus could do similar things with their own marketing. Lorenz said he will encourage local visitors bureaus to do more “passion-oriented marketing,� a term he uses to describe promo-
TRAVEL MICHIGAN
The Belt, an art alley between the two wings of The Z parking garage in downtown Detroit, is featured in a new Pure Michigan ad about Detroit. tion of activities or themes. The Pure Michigan campaign has done this recently with ads touting Michigan’s craft beer industry and farm-to-table food culture. And he said he’ll call on them to undertake an idea “that is actually really unusual� for a business whose job it is to attract people to their own communities: a travel exchange of sorts, in which tourism industry promoters from across the state encourage people to visit other destinations. “It’s very conceptual,� Lorenz said, “but we’re going to ask them to help build it.� The idea sprang out of the Detroit promotional campaign. Lorenz said that just as the city has changed over the years, so have other cities around the state. That creates opportunities to visit new places. That exchange-city concept also could be used to support Flint, which is dealing with a public health crisis caused by lead-contaminated drinking water. As Crain’s previously reported, the crisis threatens to tarnish the Pure Michigan brand — especially on social media — and some fear long-term damage also could hurt business attraction efforts to the city. Lorenz said he will ask the tourism industry to support Flint. “My wife and I personally are going to be going there for leisure and maybe to do some work to help the community, and I’m going to encourage the industry to support one of our towns that needs support right now,� he said. “We in our industry need to stand up and encourage (visitors) to do it.�
$85.4 million in taxes The big highlight, though, will be the numbers. Lorenz plans to present the newest report from Toronto-based Longwoods International, which contracts with Travel Michigan to study the effectiveness of the Pure Michigan campaign. And researchers from Michigan
State University who conduct the
state’s annual tourism forecast will present highlights from last year and look ahead to this year. Neither released data before the conference, yet said the industry had a good year. Longwoods’ most recent study suggested Pure Michigan ads prompted 4.1 million out-of-state trips to Michigan in 2014, generating an estimated $85.4 million in state tax revenue. The state earned $6.87 for every dollar spent on Pure Michigan in 2014, the data show. Yet Longwoods’ figures are estimates. There is no way to determine whether a Pure Michigan ad inspired a traveler to visit the state. Travel Michigan spent roughly $12 million this year on a national TV ad buy for the Pure Michigan spots. The campaign’s total budget is $33 million. “In general, I can say that 2015 was a fantastic year for the state’s travel industry,� Sarah Nicholls, an associate professor in MSU’s community sustainability and geography departments, wrote Crain’s via email. She and her colleagues will present the full state tourism outlook Monday afternoon. One trend that’s having a noticeable impact, she said: A stronger U.S. dollar, which is reducing travel from Canada. With that exception, “every indicator that we track trended positively (not necessarily up, in the case of prices, for example) in 2015,� Nicholls said. “Gas prices were down considerably, and consumer confidence was up. Travel volume and spending increased. “Many properties and cities/regions reported their best year ever. This in spite of weather that was average at best (in the summer) and quite poor in the two most recent winters.� Lindsay VanHulle: (517) 657-2204 Twitter: @LindsayVanHulle Michael Lewis II contributing
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Calling all angels By Tom Henderson thenderson@crain.com
It’s time to recruit more angel investors to help launch startups in Michigan, and it’s almost time to raise the Michigan Angel Fund III, said Skip Simms, a senior vice president and director of entrepreneurial services at Ann Arbor Spark and the managing member of the MAF, an Ann Arbor-based angel organization that has raised two previous funds. The Michigan Angel Fund was launched in 2011, and its first fund raised $2.1 million from 72 accredited investors. The second fund of $2.05 million was raised in 2014 from 62 investors. Simms said he would like to raise more than $2 million for the third fund but declined to specify a target. According to Simms, the two funds invested $2.91 million last year in 14 deals, including $1.6 million in six deals in the fourth quarter alone. He said investments in companies range from $250,000 to $600,000, which include investments from the funds themselves, as well as additional personal money partners in which the funds might want to invest. He said he is in due diligence on one current deal that might close soon, with most of the unspent balance from the second fund to be used for follow-on investments in current portfolio companies. “We’ve reviewed a handful of companies since the end of the year, but are only close on one,” he said. “We've got enough money to invest in two more companies, so we’re getting close to the end of the second fund,” he said. “It's important for the economy for us to have a third fund. If we’re serious about diversifying the economy, we need to focus on early-stage companies that can scale and serve a global marketplace. And if we fund those companies, we also keep our students in the state because of job opportunities that excite them.” The Michigan Economic Development Corp. invested $600,000 in the first MAF fund and $500,000 in the second fund. It has come under attack by politicians in Lansing for some of its efforts at boosting entrepreneurship. Simms said he is still hopeful the MEDC will invest in the third fund. “We know there is an interest in Lansing to encourage people to include angel investing as an asset class in their portfolio,” he said. “I'm not clear what incentive there will be from Lansing. I hope there will be some money. It won't be a lot, but that’s fine.” The U.S. Securities and Exchange Commission limits participation in Simms’ funds to accredited investors. To be accredited, generally an investor must earn an individual income of more than $200,000 per year or have a joint income of $300,000 in each of the last two years and expect to maintain that
level in the future; or have a net worth of more than $1 million, individually or jointly with a spouse. According to the Kansas City, Mo.-based Angel Capital Association, there are more than 200,000 angel investors in the U.S., and in 2014, they invested about $24 billion in more than 73,000 startups. Simms said those interested in getting their accreditation, investing in the third fund or learning more about why angel investing is an important asset class can send him an email at
Fund that helps launch startups ready to start third recruitment of investors “If we’re serious about diversifying the economy, we need to focus on early-stage companies that can scale and serve a global marketplace.” Skip Simms, Michigan Angel Fund III
skip@miangelfund.com. “I’m always interested in talking to qualified investors who haven’t invested yet but who are interested. I’m always happy to talk to them
about this asset class,” he said. MAF has 16 companies in its portfolio, including Ann Arbor-based SkySpecs Inc., which makes software to operate drones
that inspect buildings and infrastructure; Grand Rapids-based Varsity News Network Inc., which provides online news and marketing platforms for high schools; Ann Arbor-based ContentOro LLC, which provides content licensed from publishers for websites; and Genomenon Inc., an Ann Arbor-based spinoff from the University of Michigan that provides software to simplify genome interpretation for personalized medicine. Tom Henderson: (313) 446-0337 Twitter: @TomHenderson2
“HOW CAN BEING MORE ENERGY EFFICIENT HELP MY BUSINESS?” Warmer weather may make it hard for businesses to save money on their gas and electric bills while still keeping employees and customers cool. That’s why DTE Energy wants you to know what you can do to accomplish both goals. Programming thermostats to automatically adjust the temperature during unoccupied periods and installing motion sensor lights in less used areas are easy ways to save without sacrificing comfort. Replacing incandescent lights with compact fluorescent or LEDs will result in even more energy savings. Together, we can reduce energy waste and help your business thrive. For more tips and ways to save, visit dteenergy.com/savenow.
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The upside of an uprooting — OPINION and one Detroit expat’s journey More time needed on mental health issues
P
oliticians are pretty predictable. But sometimes, such as the ongoing debate about how to improve the state’s administration of mental health services, the need for more time to understand the issues makes a lot of sense. Last week in Lansing we heard more about the long-running battle between Medicaid HMOs and mental health organizations over Michigan’s $2.4 billion Medicaid behavioral health budget. It’s going to be until late in the year before much more is known about how the state will proceed. And that is OK. On Tuesday, House and Senate leaders stepped into the fray and inserted their suggestions for how to proceed into the state’s proposed fiscal 2017 budget. That means the legislators essentially halted, at least for this year, Gov. Rick Snyder’s effort to hand over Medicaid behavioral health funding to the health plans. They also rendered moot Lt. Gov. Brian Calley’s self-imposed deadline of mid-May to have a workgroup create replacement language for mental health services for the proposed budget, which begins Oct. 1. Everyone involved wants to find a way to improve coordination of care between behavioral and physical health for patients with mental illnesses and developmental disabilities. How best to improve the system and cut costs will be left to a large group of stakeholders to sort through. And the workgroup has until December to make recommendations. This is the kind of policy topic where a better understanding of the complexities of patient conditions, care, and billing models is essential before blowing up the system.
Snyder team revamp sensible Speaking of the governor, the Flint water crisis has rattled his administration to its core. Among the issues: Intense communications breakdowns between Snyder and state department heads. The poor communication exacerbated the poor decision-making at the DEQ level — and beyond — that led to contaminated water. Last week, we learned that the governor has made additional staff changes in his executive ranks, largely involving moving people around to other administration roles. There’s a new chief legal counsel who had worked as deputy chief of staff (Elizabeth Clement). There’s a new press secretary (Anna Heaton), and the director of the Department of Licensing and Regulatory Affairs (Mike Zimmer) is moving over to a new post as Cabinet director. Moving the chess pieces around in any organization can make sense. Sometimes a new or reinvented role matches best to a manager’s strengths or experience. But we can’t help but wonder why, in the midst of a round of state government musical chairs, we’re not hearing about a few more exits. If you don’t have trust between employees and department heads, you don’t have the foundation for a strong administration. Lateral communication systems are key as well. Only those in the inner circle know the full sequence of communication breakdowns, but the Flint debacle does show that Snyder’s team has a lot of rebuilding to do to survive.
T
ony Bennett left his heart in San Francisco. I once left a piano in Buffalo, a casualty of yet another move during the early stages of my career. So when consumer electronics innovator, iPod godfather and Grosse Pointe South High alum Tony Fadell told me he had attended 12 schools in 15 years growing up, I winced, thinking Tony Fadell about how much energy uprooting takes. “We moved around a lot,” he said with a laugh. “It was exhausting.” He apparently recovered. Today, Fadell lives in the Silicon Valley area and runs the company he founded, Nest, which Google acquired in 2014 for $3.2 billion. A leader in developing the first generation of the iPod, he has been described by Fortune magazine as “the only disciple of Steve Jobs to achieve outside post-Apple success.” Detroit can claim him honestly as an “expat,” exactly the type we’ve been inviting to the annual Detroit Homecoming event in September since 2014. Crain’s Detroit Business produces the invitation-only event, which is supported by private foundations and local companies who believe in the concept of re-engaging successful “expats” in Detroit’s revitalization. (See related box.) Fadell hasn’t made it to Homecoming — yet. But we’re starting to tell the story of other Homecoming expat/alums and how they’re re-engaging with their hometown. (See the ad on Page 18.) Maybe Fadell will be part of the alumni group. The Lebanese-American community can claim Fadell, too, especially since he was honored last week by the American Task Force for Lebanon in a Washington, D.C., gala dinner. (The task force also has strong Michigan ties: Leslie Touma, a veteran in automotive communications, is the group’s executive director. Spencer Abraham, a one-term U.S. senator from Michigan, chairs the board.) In a telephone interview before the awards, Fadell said that the dizzying series of moves — including stops in Detroit, Toledo, Long Island, Dallas and Grosse Pointe — were tied to his father’s sales executive jobs with Campbell Soup Co. and, later, Levi Strauss. But throughout it all, family ties mattered. Both his parents were born in the U.S. His father’s large Lebanese-American family was
MARY KRAMER Publisher
About Detroit Homecoming What: An invitation-only experience
for successful metro Detroit “expats” to inspire them to re-engage with the city as “brand ambassadors,” investors or philanthropic donors
When: Sept. 14-16, 2016 Past attendees (2014 or 2015):
More than 300 “expats” have attended the two Homecomings combined. They include former New York Deputy Mayor Dan Doctoroff, actor Tom Skerritt, Method cofounder Eric Ryan, CNN and ESPN commentator LZ Granderson, Groupon co-founders Brad Keywell and Eric Lefkofsky, author David Maraniss, Motown founder Berry Gordy Jr., ABC correspondent Bob Woodruff, music industry executive Mike Jbara, Digg founder Jay Adelson, former NBA star Shane Battier and Basketball Hall of Famer George Gervin.
Outcomes to date include: Will Adler, CEO of Spirit Leatherworks, opened a retail store in Midtown; Terry Axelrod, founder and CEO of Benevon, moved training sessions for her consulting firm to Detroit; Sara Jane Boyers’ photographic work will be displayed in the U.S. Pavilion at the 2016 Venice Architecture Biennale in May-November; USA Gymnastics Hall of Fame member Wendy Hilliard is exploring opening a gym for children in Detroit; Teresa Sebastian’s Dominion Asset Group has made investments in Detroit development projects; San Diegobased entrepreneur Tom Tierney contributed $2 million to his alma mater, Wayne State University.
More information: www.detroithomecoming.com
based in Toledo, where, Fadell says, the Lebanese surname Fadell was as common as “Smith in the Detroit phone book.” His mother, a hospital administrator, hailed from a Polish-Russian family centered in Detroit; her father served as superintendent of Hamtramck schools in the 1960s and her mother once worked as Lee Iacocca’s executive chef. “Holidays were Christmas Eve in Toledo eating all this Lebanese food,” Fadell said, “and the next day in Detroit, eating Polish-Russian.”
Today, ethnicity — and immigration — hold a more compelling urgency and meaning. Fadell thinks immigration has been politicized. “This country was built on immigrants, and if I look at my team now, it’s multicultural, it’s diverse,” he said. “Of course we can’t have open borders, but we need H-1B visas (for skilled workers). Caucasians aren’t the only smart brains out there. We have some of the best talent in the world attending the University of Michigan and Stanford, and then we send them home because they can’t get visas. We need strong brains; we can’t let those brains go away.” He credits his maternal grandfather for teaching him how to take things apart — and put them back together — while living with the Fadell family after his wife died. “He was an educator, and at night a truant officer in the 1950s. And he also ran the metal shop, the auto shop, the wood shop at the high school. He’d take kids off the streets in the 1950s and give them training and careers — before jail. He did all kinds of things. So he took my brother and me into the garage; we fixed lawn mowers and built birdhouses. I knew how things worked.” After graduating from the University of Michigan with a degree in computer engineering, Fadell moved west. And the rest, as they say, is history. Last week’s awards event also honored Jackson native Paula Faris, co-host of ABC’s “The View,” and Veronica Reggie Kennedy, an attorney and widow of U.S. Sen. Ted Kennedy. Other well-known Lebanese-Americans honored in the past include singer-songwriter Paul Anka, actor Tony Shalhoub, opera singer Rosalind Elias and Westland native and actor Greg Jbara. Jbara and Faris could be great Homecoming prospects, too. The key to Homecoming — or awards events like last week’s gala — is to engage successful, high-profile people in a cause or initiative. Touma was already thinking of that the day after the gala. So Fadell just might have some ideas for creating e-learning opportunities for those thousands of Syrian refugees in Lebanon. “Tony is one of the biggest thinkers of his generation,” Touma said. “And he’s proud to be Lebanese.” Mary Kramer is publisher of Crain’s Detroit Business. Catch her take on business news at 6:10 a.m. Mondays on the Paul W. Smith show on WJR AM 760 and in her blog at www.crainsdetroit.com.
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 1 8 , 2 0 1 6
Alleged robocalls, text messages add to ViSalus dispute By Chad Halcom chalcom@crain.com
Court disputes between Troybased ViSalus Inc. and many of the direct sales company’s former distributors have added a new dimension lately in federal court — allegations of robocalls and unwelcome mass text-messages. The company, which markets weight-loss shakes, protein bars and energy drinks largely through a network of independent salespeople and canceled an IPO in 2014 amid falling revenue, calls “without merit” a proposed class action lawsuit alleging ViSalus made telemarketer calls and automated robocalls to former promoters and others, without their consent. The lawsuit at U.S. District Court in Portland, Ore., alleges violations of the federal Telephone Consumer Protection Act, both for calls to numbers on the National Do Not Call Registry and for robocalls made without consent. An Oregon woman, who briefly became a company affiliate in 2013, alleges ViSalus began calling repeatedly in early 2015, despite no recent contact and several requests that the company stop calling, in the case before District Judge Anna Brown. “Unfortunately ... ViSalus, on its own and/or through its representatives, has turned to a tried and true, albeit unlawful, method of reaching new customers: unsolicited telemarketing,” the lawsuit states. “(ViSalus) ... or its representatives place thousands of outbound telemarketing calls each day to consumers nationwide.” Also in early 2015, a similar Georgia lawsuit alleges, ViSalus began sending automated text messages to a former sales promoter in that state. She contends she got at least 63 such texts in just over four months and made several requests for ViSalus to stop, although the company contends in court it only received such a request in September. ViSalus in a statement Friday said it would defend itself against those lawsuits, and that both its independent promoters and its customers state their preferences in writing to the company about being contacted for future promotions. “ViSalus respects the National Do Not Call Registry and designs its telemarketing programs to be compliant with the (Telephone Consumer Protection Act) and other applicable laws and regulations. …,” the company said. “These lawsuits are part of the rapid rise in TCPA litigation over the past few years against companies in many industries.” John Craiger, partner at the law firm Quarles & Brady LLP, which is defending ViSalus in both the telephone consumer lawsuits, declined to comment on that litigation. Attorneys for the company at Seyburn Kahn PC in Southfield and Honigman Miller Schwartz and Cohn LLP in Detroit also did not return
calls. The new suits came shortly be-
fore a Detroit federal judge last month allowed portions of a 2014 lawsuit on behalf of three other former ViSalus promoters in Livonia, Northville and Canton Township to go forward. That suit is also a proposed class action, on behalf of an estimated 100,000 or more sales ViSalus distributors who lost money in what plaintiffs allege was a pyramid scheme selling starter kits and making monthly charges for auto-shipments of ViSalus products. The promoters allege civil violations of the federal Racketeer Influenced and Corrupt Organizations Act, unjust enrichment, conversion
and violations of the state Consumer Protection Act. Andrew Kochanowski, attorney for the promoters and shareholder at Southfield-based Sommers Schwartz PC, said he will try to get class certification this summer before U.S. District Judge Matthew Leitman in Detroit. ViSalus noted that Judge Leitman’s decision to let portions of the promoter lawsuit go forward “does not reflect the merits of the claims,” and the company is preparing its response to the latest version of it. The court has requested that response by next week. “ViSalus believes all of these law-
suits are without merit and will continue utilizing all available legal remedies to vigorously defend itself in these matters,” the company statement says Hints of trouble between ViSalus and its independent promoter network surfaced in early 2013, when ViSalus brought a series of lawsuits in Michigan, Florida and Georgia against Utah-based Ocean Avenue LLC and several ViSalus distributors it alleged were leaving to work for Ocean Avenue as a competitor. Most of those cases were later dismissed, however, and last November former ViSalus director of
7
security Carlo Pacileo received three years of federal probation plus a fine and community service in a related criminal case. The U.S. Department of Justice alleged last year that Pacileo hired owner Nathan Moser of owner Menlo Park, Calif.-based Moser and Associates, who in turn hired another company and collaborated with it to hire hackers to illegally obtain information from emails and computers of Ocean View’s co-founders and a former ViSalus employee for its litigation. Chad Halcom: (313) 446-6796 Twitter: @ChadHalcom
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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 1 8 , 2 0 1 6
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Investors drop plan for Achatz franchise By Sherri Welch swelch@crain.com
A group of local investors that includes Keith Sirois, CEO of Big Boy Restaurants International, is pulling back on plans to franchise Achatz Handmade
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Sirois; his son Kevin Sirois, former manager of marketing analysis for Checkers; and David Crawford, Big Boy senior vice president for marketing, paid a nominal fee to purchase the rights to franchise the pie company from owners Wendy and David Achatz in the fall of 2014. They had operated an Ann Arbor store then and opened kiosks in area malls during the holidays, looking for a viable franchise model, Keith Sirois said. “The product is just outstanding; it’s clearly the best pie product I’ve ever had,” he said. “We just couldn’t figure out the seasonality.” While there’s strong retail demand for pies between Thanksgiving and Christmas and, to some degree, around Easter and Mother’s Day, “we just couldn’t sustain business in other parts of the year,” he said. It’s not as difficult for Achatz itself to sustain its company-owned stores because it has a wholesale business that’s also producing revenue, Sirois said. “At some point, you’ve got to say either I can’t figure it out or it’s not viable,” he said. “And it’s probably more that I can’t figure it out than anything else, because the product is very good. Plus, I have a day job.” For its part, Achatz Homemade Pie Co. plans to eventually franchise the concept with someone else, Wendy Achatz said. The company is negotiating with Sirois and his group to repurchase the equipment from the Ann Arbor store they also purchased with the rights and operated before closing it permanently on Easter, she said. Achatz isn’t pursuing franchises for the moment, she said, as it focuses on opening another company-owned store in Northville by fall. Achatz projects the company will hit $10 million in revenue this year, up from about $9 million last year. Sherri Welch: (313) 446-1694 Twitter: @sherriwelch
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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 1 8 , 2 0 1 6
SPECIAL REPORT: HEALTH CARE OTHER VOICES
Marjorie Mitchell
Mitchell is executive director of MichiganUCan, a nonprofit health care advocacy group.
It’s time to build on success of the ACA
I
t has been six years since the passage of the Affordable Care Act. There is good news and bad news. The good news is that 20 million more people across America now have health insurance. Pre-existing conditions no longer are a barrier to access, children can stay on their parents’ insurance until age 26, lifetime caps on insurance are a thing of the past and thousands of jobs have been created to handle the newly insured. The bad news is that the costs of health care and insurance have continued to rise and are often pushed directly to the consumer in the form of higher copays and deductibles. It is time we, the people, build on the successes of Obamacare and engage in respectful, transparent conversations that will investigate the continuing barriers to affordable health care and develop the will to fix them. Discussion must consider a single-payer system, such as Medicare. The fact that health care costs have not been drastically reduced should not be a surprise. The ACA was developed by congressional committees heavily influenced by powerful, well-funded lobbyists for those interests who did not want their large profit margins jeopardized. It was impossible to address such issues as hospitals built to rival five-star hotels, the still-toolarge administrative fees, lack of cost transparency, and overpriced prescription drugs and medical equipment. Costs have fallen or leveled off in some areas, but we, as consumers, have seen little relief on health care bills. Copays and deductibles are rising. The threat of bankruptcy continues to loom over families who have a catastrophic illness, accident or who require expensive prescription drugs to sustain life. A recent Kaiser Family Foundation poll found that 24 percent of the public favors a single-payer system, and an additional 36 percent wants to build on the ACA. Change is wanted and needed. Let’s get the conversation rolling, leaving our ideologies at the door and with the health of our people as our beacon.
Medicaid HMOs grow bottom lines after expansion in Michigan
A healthy PROFIT
What is Healthy Michigan? Under the Patient Protection and Affordable Care Act of 2010, states were allowed to expand their Medicaid programs in 2014 to people ages 18-64 under 133 percent of the federal poverty level (about $16,000 per year for a single adult). ILLUSTRATION BY LISA SAWYER
By Jay Greene jgreene@crain.com
Medicaid HMOs in Michigan increased profitability significantly the past two years under the Affordable Care Act, primarily because the state expanded Medicaid by more than 619,000 and gave additional funding to support the newly insured population, according to an exclusive analysis conducted for Crain’s. Profits rose for the HMOs by 627 percent on their Medicaid business lines to $298 million, or a 3.9 percent margin, for 14 plans in 2015 from $41 million, or 0.9 percent margin, in 2013 — the year before Michigan expanded Medicaid under Obamacare, according to Allan Baumgarten, a Minneapolis-based health care consultant. Baumgarten in June will publish a full report on all HMO business lines, including commercial and Medicare, in the 2016
Michigan Health Market Review. The Medicaid data presented here is based on annual financial reports the HMOs submitted to the
Michigan Department of Insurance and Financial Services.
“Medicaid expansion and the rates the state is paying under expansion has been a very profitable business for the health plans of the state,” Baumgarten said. “Overall profitability is way up. The underwriting margins are very strong” as average premium per member per month revenue increased by 15 percent in 2015, the first full year under the Healthy Michigan Medicaid expansion, Baumgarten said. Underwriting margin excludes investment income gains and reflects premium revenue, medical and administrative expenses. It specifically assesses how well the SEE HMO, PAGE 10
Medicaid HMOs score big under Healthy Michigan, Page 12
Michigan was one of 31 states that agreed to expand Medicaid, with the federal government agreeing to pay 100 percent of the costs for three years, or through 2016. Then, starting in January 2017, Michigan and other states are required to fund about 5 percent of costs, which for Michigan amounts to about $150 million per year, rising to 10 percent by 2021. So far, 619,000 Michiganians have signed up for Healthy Michigan, with about 520,000 enrolled in a health plan, far exceeding the 450,000 state projections for the first two years. Despite Gov. Rick Snyder’s original proposal to place 50 percent of state savings — which amounted to more than $220 million in 2014 and 2015 — into a health savings sub-account of the governor’s budget stabilization fund, the state Legislature declined to do so. From 2014 to 2023, Healthy Michigan is projected to save the state $983 million, according to a report by Ann Arbor-based Center for Healthcare Research & Transformation. The savings come from
mental health and prison expenses for people who had received services previously paid for by the state general fund now covered by Healthy Michigan.
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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 1 8 , 2 0 1 6
SPECIAL REPORT: HEALTH CARE
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tion of medical services from the new Medicaid population. “We knew a little of the outpaFROM PAGE 9 tient utilization because some of health plans managed medical the (Healthy Michigan enrollees) care. were from the county health plans, Rick Murdock, executive direc- but nothing on inpatient or phartor of the Michigan Association of macy,” Murdock said. Health Plans, said the association While HMO and state Medicaid advocates for the state to set pre- officials expected newly enrolled mium rates that would generate at Medicaid patients would require least 2 percent annual profit mar- more medical services during the gins for the Medicaid HMO plans. first year than the traditional Med“Looking at our records the past icaid population, the massive en10 years in terms of marrollment gains and engins for Medicaid plans as hanced revenue made up an industry, they have for slightly sicker enrollbeen around 1 percent,” ees, Baumgarten said. Murdock said. “The highFrom 2013 to 2015, est was in 2008, at 3.7 perMedicaid premium revecent, and the lowest was in nue in Michigan in2013 at 0.7 percent. Last creased by 32 percent to year was about 2.8 peraverage $393 per member cent, which is where we per month. But medical advocate. We believe this expenses, which were provides a good, viable Allan projected to rise for that means for health plans” to Baumgarten: population, grew only by offer value to members State anticipated 20 percent to $321 per higher utilization. and the state. member per month, a Murdock’s profit mar$72 spread during that gins for 2015 are based on net in- three-year period that accounted come of $239 million, which takes for the profitability gains, the into account investment income, study for Crain’s found. taxes and required contributions “The state anticipated higher to reserves. Crain’s analysis level of utilization, built it into the showed underwriting income in rates, and it didn’t happen,” said 2015 of $298 million, which ac- Baumgarten. counts only for underwriting inBecause of that, Michigan Medcome and medical expenses. icaid officials expect to collect Regardless of the difference in about $26 million back from at accounting, Murdock said neither least five Medicaid HMOs for overthe state nor the HMOs really payments. knew what to expect with utilizaCrain’s has learned that Troy-
Michigan Medicaid profitability Most Michigan Medicaid health plans increased underwriting income and margins in 2015 (figures in millions):
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Underwriting Income 2015
Underwriting Income 2014
Underwriting Margin % 2015
Underwriting Margin % 2014
Aetna Better Health
$9.8
$8.0
4.2%
4.3%
Blue Cross Complete
-$1.6
-$13.9
-0.4%
-5.4%
Fidelis Secure Care
-$1.1
NA
-21.4%
NA
HAP/Midwest Health Plan
$43.5
$30.0
9.8%
8.2%
Harbor Health Plan
$8.5
$0.7
23.9%
3.0%
HealthPlus Partners
-$11.4
-$11.7
-4.4%
-4.0%
McLaren Health Plan
$29.4
$25.1
3.7%
4.2%
Meridian Health Plan of Michigan
$27.0
$14.3
1.3%
1.0%
Molina Healthcare
$81.9
$54.0
6.7%
6.0%
Priority Health Choice
$13.0
-$1.3
2.9%
-0.4%
Sparrow PHP (FamilyCare)
-$2.0
-$0.4
-2.3%
-0.6%
Total Health Care
$6.7
$5.6
2.1%
2.1%
UnitedHealthcare Community Plan
$79.1
$47.9
6.5%
4.8%
Upper Peninsula Health Plan
$15.2
$4.8
7.1%
3.4%
$298.0
$163.1
3.9%
2.8%
HMO TOTAL NA: Not applicable
Comerica Bank. Member FDIC.
Source: Michigan Health Market Review by Allan Baumgarten; state HMO filings
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11
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 1 8 , 2 0 1 6
SPECIAL REPORT: HEALTH CARE
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based Molina Healthcare of Michigan and Detroit-based Meridian Health Plan of Michigan have been informed they must pay back several million tied to “risk corridor” contract provisions. Molina must pay back $8.5 million and Meridian $3.6 million.
Healthy Michigan part of safety net In April 2014, Michigan became one of 31 states that began to enroll thousands of people with incomes at 133 percent or below the federal poverty level (about $15,000 for an individual) into Medicaid under provisions of the Affordable Care Act. The state had estimated 450,000 new Medicaid enrollees would join Healthy Michigan the first year. But 619,000 have signed up, swelling the Medicaid rolls by 30 percent to 2.3 million. Total HMO enrollment is 3.3 million. Medicaid expansion and nearly 350,000 additional people purchasing private insurance on the federal health insurance exchange in Michigan have cut the state’s uninsured rate from 11.5 percent in 2010 to about 8 percent this year. While population health improvements haven’t yet been calculated from ACA Medicaid expansion, Michigan’s hospitals, physicians, medical and health care companies also have benefited by receiving hundreds of millions in dollars in payments, boosting their revenue and strengthening their bottom lines, said Paul Hughes-Cromwick, co-director of Altarum Institute’s Center for Sustainable Health Spending in Ann Arbor.
“Medicaid expansion is a big boon to the state’s economy. You have 600,000-plus people covered, and the plans are doing extremely well,” he said. “You get all this new money into the state, and (expanding Medicaid) has a multiplier effect that is a win for the overall state economy.” For example, the 90 cents Michigan will receive from the federal government after 2020 for each dollar in Healthy Michigan Medicaid spending will translate into $1.35 to $1.80 or more in state economic activity, he said. Another positive ripple effect to Michigan’s Medicaid expansion has been the double-digit decline
“We knew a little of the outpatient utilization because some of the (Healthy Michigan enrollees) were from the county health plans, but nothing on inpatient or pharmacy.” Rick Murdock, Michigan Association of Health Plans
in costs to hospitals for uncompensated care, Hughes-Cromwick said. In 2014, for example, hospitals in the 31 Medicaid expansion states reduced uncompensated care costs by $7.4 billion, according to the U.S. Department of Health and Human Services. Like HMOs, hospital profit margins are increasing under Obamacare, Baumgarten said. Michigan’s 83 hospitals averaged 8.2 percent total profit margin in 2014, up from about 3 percent in 2013, he said. Unless hospital mergers pick up to blunt managed-care contract negotiating clout, health insurers will continue to force down prices that eventually will help to moderate private health premiums, Hughes-Cromwick said. Declining uncompensated care costs “will take pressure off the rates private payers will pay,” he said, adding that also eventually is expected to slow business health care costs. Nationally, Hughes-Cromwick said, Medicaid HMOs in many states also are recording some of the highest profit margins that they have enjoyed in years because of Medicaid expansion. Baumgarten, who surveys Medicaid plans in nearly a dozen states, said Michigan is the first state to report full 2015 numbers. He said several states, including Minnesota, are showing similar trends as Michigan. Looking forward this year, Baumgarten said he believes Medicaid HMOs will continue to post strong profits even as Medicaid enrollment and rates flatten. Hughes-Cromwick said he, for several reasons, expects Michigan to lower HMO Medicaid rates for 2017. He said the state will moderate rates as they take into consideration the relatively high profit margins HMOs have enjoyed the past two years and how utilization
rates for some plans have flattened. Hughes-Cromwick said Medicaid utilization in Michigan and other states started to decline during 2015. “We started to see acceleration with Medicaid and on the exchanges in 2014, and last year we started to see a de-acceleration,” said Hughes-Cromwick, who is conducting his own study on Medicaid expansion. “Utilization is stabilizing already. The plans with good care management are doing very well.” Gov. Rick Snyder’s fiscal 2017 budget, which he presented in February, calls for a 1.5 percent increase for traditional Medicaid and 2 percent for Healthy Michigan. However, the state’s rate-setting process — that is based on actuarially sound payments to HMOs — could lead to lower or higher rate increases than previous years, depending on projected utilization and health care inflation trends. Baumgarten said many HMO executives he has spoken with believe Michigan will lower rates for 2017. “The 3.9 percent profitability is maybe more than states want to pay,” he said. Murdock acknowledged that part of the good fortune for Medicaid HMOs in 2015 was “we got a good appropriation” because the state knows the plans provide good value to members. But he also said 2017 margins depend on rate levels, managing utilization of services and the big unknown — rising pharmaceutical costs. “We are concerned about pharmaceuticals,” he said. “I would be surprised if we hit those margins next year.” Jay Greene: (313) 446-0325 Twitter: @jaybgreene
Crain’s seeks 2016 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 can 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 Health Care Heroes 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.
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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 1 8 , 2 0 1 6
SPECIAL REPORT: HEALTH CARE
Medicaid HMOs score big under Healthy Michigan By Jay Greene jgreene@crain.com
Medicaid expansion in Michigan has paid off handsomely for most of the state’s 14 Medicaid HMOs. The three biggest Medicaid HMOs in Michigan — for-profits Meridian Health Plan of Michigan, Molina Healthcare of Michigan and UnitedHealthcare Community Plan — increased underwriting income to record levels, despite experiencing double-digit average increases in medical expense costs and a bump in administrative expenses, according to an analysis of Michigan financial data by Minneapolis-based consultant Allan Baumgarten. Molina Healthcare recorded $82 million in underwriting income last year for a 6.7 percent margin, and Meridian notched $27 million in underwriting income for a 1.3 percent margin, according to financial data filed to the Michigan Department of Insurance and Financial Services.
Molina of Michigan is owned by
Molina Healthcare of Long Beach, Ca-
lif., which operates Medicaid plans in 11 states, including Illinois and Ohio. Meridian is a family-owned plan based in Detroit that runs Medicaid and Medicare plans in six states. UnitedHealthcare Community recorded $79.1 million in underwriting income, a 65 percent increase from $47.9 million in 2014. The Southfield-based plan, which is owned by the nation’s largest HMO, Minnetonka, Minn.-based UnitedHealthcare Group Inc., lost $8.7 million in 2013, the year before Healthy Michigan Medicaid expansion began in April 2014. Priority Health Choice, a nonprofit plan owned by Grand Rapids-based Spectrum Health System, also found positive income during the Healthy Michigan expansion. Medicaid underwriting income jumped to $13 million, a 2.9 percent margin, bouncing back from losses of $1.2 million in 2013 and
BEFORE YOU DO SOMETHING YOU MIGHT REGRET, RETHINK.
Jon Cotton: “Better than we expected.”
Christine Surdock: “There was pent-up demand.”
$1.3 million in 2014. Even Harbor Health Plan Inc., the smallest Medicaid plan with 6,600 members, turned around its operation, recording $8.5 million in underwriting income on Medicaid in 2015 for a 24 percent profit margin. The for-profit plan, which is owned by Dallas-based Tenet Healthcare Corp., lost $41,000 in 2013 when Tenet acquired the former ProCare Health Plan. Tenet also owns Detroit Medical Center. Harbor Health CEO Mehrdad Shafa, M.D., said in a statement that the HMO financially improved for several reasons, including early medical intervention, outreach efforts to promote healthy lifestyles and the expansion of the Medicaid program.
Meridian boosts margins Meridian, the state’s largest Medicaid HMO with 455,000 members in 2015, has enjoyed a good two-year growth run, moving into new headquarters in downtown Detroit and adding more than 1,000 new employees. The HMO also increased its underwriting income 315 percent to $27 million last year from $6.5 million in 2013. Underwriting margins rose to 1.3 percent last year from 1 percent in 2014 and 0.6 percent in 2013. But in 2015, underwriting income rose more slowly to
70th
$14.3 million because medical expenses started to rise more quickly than the previous year, Meridian COO Jon Cotton said. “It is definitely better (income) than we expected,” said Cotton, noting that the premium rates have been fair the past two years. Like all HMOs, Meridian’s medical expenses increased the past two years — 13 percent to $321 per member per month last year from $283 in 2014. “(Healthy Michigan) population never had insurance ...,” Cotton said. “We had no idea what their medical costs and needs would be.” Cotton said the increase in medical expenses not only reflected costs associated from a somewhat sicker Healthy Michigan population, but also from other populations many of the plans absorbed during the past several years. Aside from the 142,000 Healthy Michigan members, Meridian added nearly 50,000 members that included TANF, or temporary assistance for needy families, which are mostly single moms with babies; aged, blind and patients with disabilities, known as ABD; and children with essential health needs, Cotton said. But Cotton said once Meridian started adding thousands of Healthy Michigan members and the health risk assessment tests started coming back, “we saw much more prevalence of chronic conditions — diabetes, heart disease, asthma and behavioral health issues — than we expected.” However, “once the costs came in it was much lower than we thought … , Cotton said. “It makes a big difference if someone has diabetes and you get them under control, on insulin, they never had before.” One reason costs may have risen more quickly at Meridian, said Cotton, is that it uses a variety of software programs that measure future medical needs of its population. The Key to your your next successful
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“We use predictive modeling on each patient and try to get them services to prevent them from developing into a more severe case,” Cotton said. “It probably costs more up front, but we avoid costs using these predictive tools,” he said. Meridian is one of at least five HMOs — including Molina — that will be required to repay the state for overpayments it received based on “risk-corridor” provisions in the Medicaid contract. Cotton said the plan will write a check to the state for $3.6 million because its patients were less sick and less expensive than predicted from April 2014 to April 2015. Molina, which is the second-largest Medicaid HMO with 327,000 members, also is on the hook to repay the state about $8.5 million under the risk corridor contracts. Despite Molina’s medical expenses increasing 23 percent to $312 per member per month in 2015 from $254 per member per month in 2013, Molina was able to increase its Medicaid underwriting income 222 percent to $81.9 million in 2015 from $25.4 million in 2013. “Molina has a very strong clinical program, and we certainly are dedicated toward taking care of this population,” said Christine Surdock, Molina Michigan’s CEO. She said profit margins have fluctuated over the years. “Any success we might have right now is (targeted toward) improving quality and cost effectiveness,” Surdock said. While the Healthy Michigan population required more medical services than traditional Medicaid, Surdock said use was lower than projected, especially in 2015. “There was pent-up demand. We tried to get those members to see their physician as opposed to the ER,” she said. At Priority Health, medical expenses for the Medicaid population rose 15 percent, lower than the industry trend of 20 percent, to $295 per member per month in 2015 from $257 in 2013. “We did anticipate that the Healthy Michigan population would be higher cost and higher utilization” because they are adults and not mothers and children, said Guy Gauthier, Priority’s senior director of government programs. “We were pretty conservative in how we recorded operations during first year, even into 2015.” Harbor Health’s Shafa said Healthy Michigan patients sometimes require complex treatment because their previous lack of access to affordable care created bigger problems. “As we are able to address the underlying problem, ongoing care and health often becomes less expensive to maintain,” Shafa said. “As more people have access to health care, we also expect to see an improvement in general health, and a move toward enhanced population health.”
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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 1 8 , 2 0 1 6
New local Spanish-language station will seek Tigers, Lions By Bill Shea bshea@crain.com
A new Spanish-language radio station is on the air in metro Detroit, and its operator is interested in becoming the flagship Spanish-language broadcaster for Detroit Tigers and Lions games. WDTW 1310 AM, under the branding name La Mega (“The Mega” in Spanish), is now airing Mexican popular music and Spanish-language news, weather and traffic information for metro Detroit. It began broadcasting last week. The 5,000-watt station is operated by suburban Cincinnati-based Spanish-language media publisher and broadcaster TSJ Media, a division of Gate West Coast Ventures LLC. Local Spanish-language entertainment promoter Pedro Zamora owns the station through his Taylor-based Zamora Entertainment Inc. He and TSJ Media have a deal for the current operating arrangement, which shares expenses and revenue. They also have prior deals in place in Ohio. TSJ Media is owned by Josh Guttman, a longtime Cincinnati radio industry figure. He said Zamora’s company spent about $1 million to reconstruct the radio station’s four broadcast towers, which were dismantled a few years ago in Taylor. “We literally started with a skel-
Pedro Zamora: Spanish-language entertainment promoter
Josh Guttman: TSJ Media owner plans to hire new staff
eton of a station and built it back from the ground up,” said WDTW General Manager Jaime Javier Jaime, who confirmed the $1 million estimate (adding that final costs are not yet in). Guttman said the plan now is to hire 10 to 15 full- and part-time staff members to operate the station out of Zamora’s Taylor office over the next six weeks. WDTW for now is being handled from TSJ Media’s station in Columbus, Ohio. “Piece by piece, we will hire local DJs, more local salespeople, a local production person and assistant program director,” Guttman said. “All of our stations work independent of each other, as far as sound. It’s all locally based.” TSJ has the Spanish-language broadcast rights for Cleveland Cavaliers and Cincinnati Reds games, and
Guttman said his plan is to approach the Detroit teams about striking a similar deal. “Our goal is to have conversations with the Tigers and Lions,” he said. The Tigers contract their radio broadcasts through a network of stations handled by CBS Radio Inc. and the Lions have a similar arrangement with Cumulus Media Inc. The Tigers confirmed they don’t have a Spanish-language station in their broadcast network, but had no other comment on the matter. Debbie Kenyon, the senior vice president and market manager for CBS Radio locally, said she’s interested in talking with the new station about possibly airing Tigers games. “We would love to have a conversation,” she said. Older radio listeners will remember 1310 AM as “Keener 13” when it used the WKNR call letters. It was a Top 40 powerhouse during the 1960s and ’70s. The station, which has had 11 different sets of call letters since going on the air in 1946, had previously been owned by radio giant Clear Channel (now iHeartMedia Inc.), which donated the station and license in 2012 to the Minority Media and Telecommunications Council as part of a diversity effort. It had been off the air since then, and its radio towers were taken down.
Zamora, who owns two other stations out of state along with several nightclubs, bought the station license from the Minority Media and Telecommunications Council in 2014 for $100,000, broadcast industry records show. His Zamora Entertainment, where a permanent studio is being built, does Spanish-language musician and entertainment bookings. The market’s other Spanish-language station is WSDS 1480 AM in Washtenaw County’s Superior Township, a 24-hour music station known as “La Explosiva.” It’s owned by Vazquez Broadcasting Corp., but its signal has more static in Detroit than WDTW’s cleaner broadcast. “You can hear (WDTW) clear as day in Pontiac, and Detroit is totally clear,” Guttman said. He estimated there are at least 200,000 potential listeners from Toledo to Detroit to Pontiac who can be tapped for Spanish-language radio content and advertising. Guttman also noted his company offers clients print advertising via several Spanish-language newspapers, and digital and mobile options. His company previously had a Spanish-language newspaper in Detroit, but eventually mothballed it and gave its advertising accounts to Latino Press, Guttman said. WDTW will be commercial-free
its first few weeks, Guttman said, and the market plan to introduce the station includes contests with business, billboards and an emphasis on word-of-mouth. Guttman said he has nine local advertisers inked to contracts for when the station begins airing commercials, and he expects to have an additional dozen or more by then. Camilo Suero, executive director of the 200-member Michigan Hispanic Chamber of Commerce, said he’s excited about the new station because its signal will reach the Spanish-speaking population pockets in Detroit, Pontiac and Macomb County. “This is going to be a positive. This will be a conduit for our corporate members to reach the growing Spanish-speaking market,” he said. Industry observers say a Spanish-language station could make money filling a locally neglected broadcast demographic. “Certainly there is room for 1310 as a Spanish station as Detroit has historically been among the most underserved in this area of the country’s major cities,” said Don Tanner, a partner in Farmington Hills-based Tanner Friedman Strategic Communications and a radio-industry insider. Bill Shea: (313) 446-1626 Twitter: @bill_shea19
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TREND DU JOUR: Takeover m Foodies
respond tastefully as area restaurants experiment with offbeat fare
GI
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By Audrey LaForest
Special to Crain's Detroit Business
In metro Detroit’s culinary landscape, restaurateurs must navigate their businesses through a sea of dining trends that can either boost or bust their restaurant brands. One such trend that appears to have some staying power is the “takeover menu,” where for a short time — varying from a day to a few months — a restaurant puts its regular menu to the side in favor of something new and special. It's sort of a modern take on a weekly special. Ferndale’s Imperial and Public House offer a takeover menu once a month that alternates between the two restaurants, but they’re not the only ones to dabble in the concept. Other takeover menus have appeared around town at places like St. Cece’s in Corktown, where every Tuesday the pub brings in a celebrated guest chef to put out a new
YO U
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Sunseed farm radish and anchovy butter at Mabel Gray in Hazel Park.
menu for one night only. Lizzy Freier, managing editor at Chicago-based research and consulting firm Technomic, said she’s been seeing more and more takeover menus crop up onto the restaurant scene in all major U.S. cities and even some smaller cities. “This is definitely a trend and one that’s probably here to stay,” said Freier, who analyzes restaurant menus for the firm. The trend can also help boost visits from tourists or as part of a “foodie” excursion. “More and more diners are really just considering themselves and calling themselves ‘foodies,’” she said. “They’re also more and more considering the experience of dining out to be just as important as the food itself.” There are plenty of reasons for a restaurant to consider doing takeover menus, Freier said. For owners and chefs, it’s a way to learn
new preparation techniques, new flavors or ingredients, and a testing ground to learn what consumers really like. But even more important, limited-run menus create instant buzz on social media and through word of mouth.
Break from routine Sandy Levine, owner of Ferndale’s Oakland Art Novelty Co. and Midtown’s Chartreuse Kitchen and Cocktails, said he’s held takeover-menu events ranging from sit-down multi-course meals with cocktail pairings to more casual a la carte menus. “It kind of breaks up the monotony... it’s fun to do something different,” Levine said. At the Oakland, which can seat 30 guests for a coursed sit-down dinner, Levine said it’s common to allow the guest chef to dictate the price of the menu, while he and his bartenders set the cost of the cocktails.
O MPL S A OYEES A RE
JOE VAUGHN
O T N
“If an entrée costs $20, an appetizer costs $10 and a dessert costs $10, (the chef) would charge $40 (per person) for the food,” Levine said, adding that the cost of the cocktails varies alongside the cost of the food. If the chef wanted to set a coursed meal at $100 per person, for example, Levine said he would try to lower the cost of the cocktails or adjust portion size. Staffing adjustments must also be considered, but depend on the scale of the takeover menu. Levine said he tends to “staff a little bit heavy” since the setup is more intensive, and preshift meetings require waitstaff to learn every new item in the takeover menu. “From a business standpoint, at least in my experience when we do it at the Oakland, the house makes significantly less money both in terms of gross sales and profits because we have to give more of the profits to the staff, so that it’s worth their while to come in,” he said. But in terms of improving profitability, Levine said an owner can make the takeover menu as profitable as he or she wants by adjusting ingredients and prices, in-
creasing the quantity of guests, and choosing the right day for the restaurant. “At the Oakland, we don’t do takeovers on days that we’re open, or — if we do them on days that we’re open — we do it on a day that’s typically a really slow day,” Levine said.
Takeovers with a twist While the Oakland focuses on takeover menus that typically occur one day only, Dave Kwiatkowski’s The Sugar House and James Rigato’s Mabel Gray are two examples of restaurants with takeover menus that are stretching the meaning of “for a limited time only.” Last October, for The Sugar House’s four-year anniversary, Kwiatkowski created a Bill Murray-inspired cocktail menu and took things a step further by changing the name of the bar — and replacing the hanging sign out
SM
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front — to “Bill Murray” through the end of 2015. The sudden name change, which lasted roughly three months, left some customers scratching their heads, but Kwiatkowski said he considers takeover menus, or similar pop-up events, the perfect testing ground for concepts. “It gives me a little bit of insight on how the concept will be received,” said Kwiatkowski, who is debuting a Tiki-themed menu that again will be accompanied by a new outdoor sign reading “Sugar House Tiki Bar.” When Kwiatkowski puts together a special menu, he said, it’s the job of the bartender who submitted the drink to also price it out. “They hand it to me and say, ‘This drink costs us $2.50,’ and I say, ‘OK, well, we’re going to charge $9,’” Kwiatkowski said, noting that his takeover-menu events like the Postcards from Polynesia Tiki party usually bring a 200 to 250 percent sales increase. Depending on the ingredients used, cocktail prices could go up. As an example, Kwiatkowski said, the bar always offers an $8 Old
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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 1 8 , 2 0 1 6
Oakland Art Novelty Co. in
Ferndale.
DAVID LEWINSKI
Blue Water Equity Partners LLC, Birmingham, a private equity fund, purchased controlling interest in Diversified Metal Products Inc., Gaylord, an aluminum and magnesium die-casting company servicing the agriculture, archery and automotive industries. Website: bluewaterep.com.
CONTRACTS
Duo Security Inc., Ann Arbor, a
cloud-based access security provider, announced that King.com Ltd., Dublin, an interactive entertainment company, and an independent unit of Activision Blizzard Inc., is rolling out to its 2,000 employees globally Duo Security’s
two-factor authentication system, which allows employees to verify their identity using a single click on a mobile phone app as a level of security beyond passwords alone. Websites: duo.com, king.com. Southfield-based Signature Associates has been appointed as the new leasing firm for Columbia Center Towers I and II, 101 and 201 W. Big Beaver Road, Troy. The two towers total more than 500,000 square feet of office space. Website: signatureassociates.com.
Franklin Construction Co. LLC, an affiliate of Franklin Property Corp.,
Birmingham, was awarded the entitlement contract for Dunhill Park, a 31-unit high-end Hunter Pasteur Homes development in
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besides profit,” he said. “Camaraderie, staff appreciation … collaborative efforts, learning from each other.” Rigato held a takeover-menu event at the end of February with fellow chefs Doug Hewitt from Chartreuse and Andy Hollyday from Selden Standard. The trio each served up one dish and paired it with a beer for $33 a person — a price that’s on the low side compared to a previous sixcourse Italian dinner and wine pairing he held with chef Luciano Del Signore for $115 a person. Takeover menus, Rigato said, “are not typically more or less profitable. They should be almost like isolated incidences. You either chase volume or you chase prestige.” Rigato does leave fellow restaurateurs who are considering takeover menus with a warning: Consumers will not be fooled if a concept seems gimmicky or too pricey for the value. Don’t do it, he said, “if you’re doing it to try to turn a dollar or if you’re flipping your concept in order to seem like you know what you’re doing.”
EXPANSIONS
Key Plastics LLC, Livonia, a
manufacturer of automotive interior, exterior and under-thehood plastic components, is opening a state-of-the-art flatbed paint system, including a 30,000-square-foot expansion, at its plant in Chihuahua, Mexico. The advanced system paints plastic parts for automotive interiors and features in-housedesigned software that can process over 100 different colors, including high gloss and piano black. Website: keyplastics.com.
Dogtopia of Birmingham, a franchise of Dogtopia Enterprises LLC, Tysons Corner, Va., has opened at 2300 Cole St., Birmingham. The dog daycare, boarding and spa facility is owned by Scott Paul. Telephone: (248) 540-3344. Website: michigan.dogdaycare.com/ dogtopia-of-birmingham.html. UHY LLP, Sterling Heights, a certified public accounting firm, has added Guinazu & Asociandos SpA, Chile, to the UHY global accountancy network. Website: uhy-us.com.
Altair Engineering Inc., Troy, announced that AVL List GmbH, Graz, Austria, has joined the Altair Partner Alliance Online Software Portal adding AVL Excite Acoustics and AVL Fire M software to the portfolio of third-party technology, in the domains of sound radiation calculation, computational fluid dynamics and multiphysics. Websites: altair.com, avl.com. Meritor Inc., Troy, announced a
new five-year agreement with
Navistar Inc., Lisle, Ill. Under the
agreement, Meritor retains standard position for brakes and rear axles, as well as standard positions for front axles in severe service, medium-duty and bus applications. Websites: meritor.com. navistar.com.
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Fashioned made with bourbon, sugar and bitters. But as a special addition to the seasonal, longterm takeover menu, it has previously offered an $18 version made with a Japanese whiskey, syrup made from a Pedro Ximénez sherry and housemade seaweed bitters. As for Rigato at Mabel Gray, every day presents the task of coming up with a new menu. He plans the 43-seat restaurant’s menu anywhere from 24 to 72 hours in advance and replaces anywhere from 10 to 100 percent of the menu on a daily basis. “I wouldn’t say that it’s necessarily more profitable, because I still run it like a normal restaurant with traditional food costs. … If we run out of something, we’ll move on,” Rigato said. “Ultimately, I’d say it’s less wasteful more than it is more profitable.” But in terms of the one-dayonly takeover menu, Rigato said you can make it “as profitable as you want to structure it,” but that he isn’t too concerned about making more money from just one event. “It’s motivated by other things
Novi. Dunhill Park has received rezoning approval and is going through the site plan approval stages. Franklin Construction was awarded the construction contract. The development is expected to be completed in 2016. Website: franklinpropertycorp.com.
www.deltadentalmi.com
MOVES
Jaffe Raitt Heuer & Weiss PC has
moved its law office from the Guardian Building, 500 Griswold St., Suite 2400, Detroit, to Grand Park Centre Building, 28 W. Adams Ave., Suite 1500, Detroit. Telephone: (313) 800-6500. Website: jaffelaw.com.
NEW PRODUCTS
Altair Engineering Inc., Troy,
announced that its subsidiary Altair ProductDesign, with ThyssenKrupp Elevator AG, Alpharetta, Ga., are developing a rope-less elevator system. The new elevator system, named “Multi,” does not require any roofmounted cables, which enables it to travel with no limits in height as with conventional elevators. Passengers therefore have no need to swap elevators mid journey. In addition, this weightoptimized new design, which uses electromagnetic drives to move the elevator between floors, is capable of transporting the elevator horizontally as well as vertically. Websites: altairproductdesign.com, thyssenkruppelevator.com.
NEW SERVICES
SME, Dearborn, formerly the
Society of Manufacturing Engineers, has rolled out a corporate membership program, which connects companies to professionals within the SME network. Employees will have access to SME membership benefits, including training, events, research and publications. Website: sme.org. Acromag Inc., Wixom, a designer and manufacturer of industrial electronics and measurement and control products, announced a new electronic contract manufacturing division at its facility in Wixom for the commercial, industrial, aerospace, defense, telematics and automotive industries. Website: acromag.com.
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Gilbert, Ross investors in sports analysis firm Bloomberg News
Billionaires Dan Gilbert and Stephen Ross are among the investors in a sports statistics company that analyzes game videos for teams, coaches and recruiters in multiple sports at all levels. Gilbert is founder of Detroit-based Quicken Loans Inc. and owner of the Cleveland Cavaliers. Ross, a University of Michigan alumnus and philanthropist, is owner of RSE Ventures and the Miami Dolphins. They are among the investors in New York City-based Krossover, which closed a $20 million Series B round led by Ross’ RSE Ventures. Basketball Hall of Famer David Robinson’s Admiral Capital Group private equity fund and Lyrical Partners’ Jeff Keswin, who founded Greenlight Capital, also are backers. The 5-year-old company’s basketball clients include newly minted NCAA men’s champion Villanova University as well as the University of Kentucky men’s team, a first-time customer in its 2012 title season. The new capital will be used to enhance Krossover’s video technology, founder Vasu Kulkarni said. Among the company’s products is a basketball video clip service in which the company tags players to specific plays in which they were involved. It also has tools for parents of players and for recruiters, who can receive video and statistics of players.
CALENDAR THURSDAY APRIL 21
Women’s Power Breakfast. 7-9
a.m. Gleaners Community Food Bank. Brings together more than 600 of the area’s most powerful women. Cochairwomen are Faye Nelson, vice president public affairs, DTE Energy, and president, DTE Energy Foundation; Andra Rush, chairman and CEO, Rush Trucking Corp.; and 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. 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. 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; and 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.
FRIDAY APRIL 22
Next Steps to Improve Michigan’s Economy. 10-11 a.m. 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.
UPCOMING EVENTS 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 LOAA 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. French-American Chamber meeting. 4-6:30 p.m. April 28. FrenchAmerican Chamber of Commerce, Michigan chapter. Gérard Araud, ambassador of France to the United States, is to attend a networking reception while visiting France-based automotive suppliers Faurecia and Valeo. Open to members and nonmembers. Noah’s, Auburn Hills. $40. Contact: Stephanie Salvadero, phone: (313) 701-
8294; email: salvaderos.faccmi@ gmail.com. Today. Tomorrow. Together. 11 a.m.-2 p.m. April 29. Eight Mile
Boulevard Association. 17th Annual 8MBA Leadership Luncheon features networking and a panel discussion with the “Big 4” (Detroit Mayor Mike Duggan, Wayne County Executive Warren Evans, Macomb County Executive Mark Hackel and Oakland County Executive L. Brooks Patterson) on current public policy issues facing Eight Mile and the region. Christy McDonald, host of DPTV’s “MiWeek,” will moderate. Curt Catallo, owner of Vinsetta Garage, Union Joints and other restaurants, will talk about his purchase of the Albert Kahndesigned WWJ building on Eight Mile and his plans to transform it into a restaurant. Cobo Center., Detroit $60; tables of 10 are $500. Registration closes April 25. Website: eightmile.org/ Leadership_Luncheon. 2016 Fight For Freedom Fund Dinner. 5-11 p.m. May 1. Detroit branch NAACP. Democratic presidential candidate and former Secretary of State Hillary Clinton will be the keynote speaker at the 61st annual event, which has the theme “Let America Be America Again.” Cobo Center, Detroit. $150. Phone: (313) 871-2087.
PEOPLE: SPOTLIGHT
Hitachi promotes Carroll to president-CEO Farmington Hills-based
Hitachi Automotive Systems America Inc. announced the promotion of Paul Carroll to
president and CEO. Carroll, 59, replaced Toru
“Richard” Kamioke, who
became vice president, executive officer and sales management division director and general Paul Carroll manager of the technical sales division of parent Hitachi Automotive Systems Ltd. in Japan. Carroll is the first nonJapanese native to serve in the role for the company, which manufacturers electrical systems for the auto industry at plants in Kentucky and Georgia. Before joining Hitachi, Carroll held various sales positions at Tokico America, a Hitachi subsidiary, and General Motors Co.
Uhlenbecker named Akebono president-CEO Farmington Hills-based
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.
Akebono Brake Corp. hired Wilm Uhlenbecker as president and
CEO, replacing interim CEO
Kanji Miyajima, now an
executive adviser to Uhlenbecker. Before joining Akebono Brake Industry Co. Ltd.’s North
More Calendar items can be found at crainsdetroit.com/events.
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Wilm Uhlenbecker
American subsidiary, Uhlenbecker, 51, was
president of Mahle Behr USA Inc. He joined Behr America in 2007 as COO before Mahle acquired a majority share of the supplier in 2013, later integrating Delphi Automotive plc’s thermal management business.
LAW Haran Rashes
General Counsel Clear Rate Communications Haran Rashes joins Clear Rate as their General Counsel. Filling this critical role, he executes all contract negotiations, regulatory and legal compliance, and litigation to support the company’s growth objectives. Haran has over eighteen years of specialized telecommunications regulatory and legal compliance experience. He was previously at Clark Hill PLC where he also served as the editor of the Michigan Telecommunications Report. He holds his Juris Doctor degree from the University of Toledo.
Caitlin Malloy-Marcon and Brad Strader, AICP, PTP Associate & Senior Associate, MKSK Caitlin is a transportation planner with over 10 years of experience in land use and development connectivity, transit oriented development and multi-modal transit station plans. She specializes in community engagement and transportation planning with experience in commuter and downtown parking management, heavy and light rail, bus rapid transit, accessible transportation and comprehensive transportation plans, as well as public and private sector experience. Brad brings to MKSK more than 30 years of experience in land use planning, code writing, downtown revitalization, transportation and transit planning. He has been involved in over 100 projects throughout Michigan, Ohio and elsewhere. Brad is a frequent instructor on a variety of topics for organizations like the MEDC, Michigan Association of Planning, the Michigan State Bar, the Michigan DOT and many transportation agencies in the Great Lakes Region.
Durance tabbed as Mi-Light exec director Diane Durance, a veteran of local entrepreneurship, was named executive director of Mi-Light, a 3-year-old nonprofit trade organization for the state’s photonics industry. She will remain president of Lansingbased MiQuest and on the board of directors of the Ann Arborbased New Enterprise Forum. Durance was executive director of the Great Lakes Entrepreneur’s Quest, an Ann Arbor nonprofit that supported would-be entrepreneurs. In 2014, it merged with the Small Business Foundation of Michigan to form MiQuest.
April 18, 2016
HALL FROM PAGE 3
his Rock Financial commercials, Hall hosted a three-hour show on Sundays on WJR AM 760 called “Real Estate Insiders.” Hall, 45, said he returned last week from a trip to West Palm Beach, Fla., where he was scouting out possible locations for an office he hopes to open there this year or next. He has applied for a Florida license. Hall said that in the next year or two he wants to open offices in Ann Arbor, Grand Rapids and Traverse City, and by the end of 2018 have a team of 100. For the past five years, Hall was at United Shore, much of that time running the retail mortgage operation for a company that specialized in wholesale lending, funding loans that brokers and institutions across the U.S. originated. Late in 2014, United Shore ended its retail business to focus exclusively on the wholesale business, where it ranked No. 1 nationally last year with $13 billion in volume. Quicken Loans was the No. 2 retail lender in the U.S., with mortgage volume of $78.5 billion. Wells Fargo & Co. Inc. was No. 1, with volume of $123.1 billion. After United Shore’s retail business was shut down, Hall was named that company’s vice president of innovation. He left United Shore in January to start his own company. “I really enjoy building a team. At the age I am now, I feel I have a lot to offer. I want to create a company where my main guys run it, and I’m here for guidance,” he said. “I'm grateful for my time at United Shore. I learned a lot about the mortgage side of the business, but I really wanted to get back into retail.” Though he was a senior vice president at Rock and a mortgage banker himself, most knew Hall as the ubiquitous spokesman of a fast-growing company whose huge advertising budget allowed for buys across the radio dial and on every TV channel. It was a marketing presence that began almost by accident. In the late 1990s, Hall said, he and a few brokers would work Sundays. He asked Gilbert, Rock’s founder, if they could run a spot letting folks
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 1 8 , 2 0 1 6 17 CRAIN’S DETROIT BUSINESS Page 17 annually being named a top “Dave and I have a Shore place to work. great relationship, “Dave helped us create a culture here. He’s going to knock it out of and he was an the park in retail. He’ll be a rock important part of star, but it will take him time to LEGAL SERVICES POSITIONS AVAILABLE build a business,” Ishbia said. “But growing this you'll really see him take off over Washtenaw Community College MEDICAL COLLECTIONS business.” the next 12-24 months.” 38 YEARS EXPERIENCE Associate Vice President for After his departure from Rock/ WORKERS COMPENSATION & AUTO College Advancement Reasonable fees contingent upon recovery Mat Ishbia, President and CEO, Quicken, Hall formed Hall Financial The Associate Vice President (AVP) for College Highest Peer Rating Advancement will be the lead administrator to United Shore Corp., which operated as an affilisupport fund development. The AVP will provide Former Adjunct member of Workers Comp direction for the Washtenaw Community College ate of the Ross Mortgage Group in Appeal Board (WCC) Foundation and its Board of Directors. WILLIAM S. STERN - 248-353-9400 driving to open houses know that Royal Oak until he joined United The successful candidate must possess a www.sternlawfirm.com they were open. Hall taped an ad Shore. Bachelor’s degree and five years of progressive executive leadership experience, with a “Dave is a smart guy. He’s got on Friday, it ran on Sunday, and successful record of significant fund MISCELLANEOUS development. Initial annual salary range is the background to be successful,” the phones started ringing. $110,000 - $120,000. His presence will be much more said Tim Ross, president and CEO To see the complete posting and NEED WAREHOUSING? muted now. “I’ve got a small bud- at Ross Mortgage, who said Hall’s complete an online application go to: https://jobs.wccnet.edu get,” he said. “I’m not competing departure from Ross was amicaPlymouth & Livonia Area • Cross-Dock Services • Trucking Services with Quicken. We want to be doing ble. MISCELLANEOUS • Diverse Supplier • Reasonable Rates “The question is whether he’ll 100 loans a month. They do 100 Call 810-701-0833 get the necessary exposure on TV loans an hour.” SURVEY Hall was named, at age 35, to and radio to get viewers and listhe 2005 class of Crain’s 40 under teners to pick up the phone and ANALYZE call him. Quicken is ubiquitous 40. Hall and Gilbert made head- and Dave was, too, at one time. lines in December 2007 when Hall But Quicken has a huge budget. MATCH was suddenly terminated without How much capital will he have to public explanation. The action set drive his message? Does he have off a whirlwind of speculation and the budget he needs in this envirumors in the blogosphere, in- ronment to attract a suitable numcluding allegations he was trying ber of customers?” Hall said he can’t be considered to form a rival mortgage company. CrainsDetroit.com/JobConnect | Quicken denied that the termi- a real competitor for Quicken simnation had anything to do with ply because of scale. He said one area where he definitely won’t those allegations. Though his departure from compete with Quicken is the latRock/Quicken was anything but ter’s highly publicized Rocket OFFICE SPACE amicable — there even were re- Mortgage smartphone app. He ports Gilbert allegedly struck Hall said the loan process is too comFurnished Class A Office Space at a bar mitzvah in 2009 — Hall’s plicated to manage with your departure from United Shore was thumbs. 27777 Inkster Rd, Farmington Hills “Quicken has a great organizaon good terms. In fact, United Shore has agreed to be one of tion, they really do. What they’ve those who funds Hall Financial’s built is remarkable. The mortgage Up to market is moving toward automamortgages. 100,000 SF Hall said that despite having no tion and do-it-yourself. There’s a publicity beyond word-of-mouth market for people who want that,” Available that he had started a business, his said Hall. For more information, contact: “We’re going to be marketing to company has closed two loans Sheila Fogarty Lesley Gutman people who are the opposite of and has about 30 in the pipeline. 248 686 5982 248 351 4383 fogarty@farbman.com lgutman@farbman.com “Dave and I have a great rela- that, who think doing a mortgage tionship, and he was an important is something they can’t fathom OFFICE SPACE OFFICE SPACE part of growing this business,” said themselves and need to talk to Mat Ishbia, United Shore president someone. Our slice of the pie is Grosse Pointe Farms Office Space Available OFFICE SPACE FOR LEASE "The Hill" on Kercheval. 1,100 sq. ft. of and CEO. When Hall was hired in people who know banks move too Luxury 2nd Floor Space Available. • Detroit’s best value Contact: Dane Fossee (313) 343-0700 May 2011, Shore was doing about slow and want good service and • East Jefferson facing Detroit River $1.8 billion a year in volume. consultation. Our philosophy is: • 5,000 to 60,000 square feet WATERFRONT PROPERTY “Hopefully, we’ll be a partner for ‘Let’s meet at Starbucks, sit down • $12.00 per square foot gross plus electric him, one of his wholesale lenders.” and talk.’” • Turn-key • Free parking • Free rent Aaron Emerson, the vice presi“We’ll be sending a lot of busident of communications at Quickness to them,” countered Hall. Ishbia credited Hall with help- en, declined to comment. Tom Henderson: (313) 446-0337 ing create a workplace environTwitter: @TomHenderson2 ment that has resulted in United
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REAL ESTATE
WALLOON LAKE
3 top execs leaving Detroit Medical Center By Jay Greene jgreene@crain.com
Three top executives are leaving
Detroit Medical Center to pursue
other jobs and opportunities, CEO Joe Mullany confirmed last week to Crain’s. COO Andrei Soran is leaving to be the CEO of an undisclosed health system in California; Larry Gold, CEO of Children’s Hospital of Michigan, has left to pursue other opportunities; and Michael Lacusta, an executive vice president, is leaving to become Ernst & Young’s coordinating services director for
JOB FRONT
the health advisory group, Mullany said. “As we continue on our ‘Path to the Top,’ one of the positives along with the negatives is that the great work being done at the DMC gets noticed nationally,” Mullany said in a statement to Crain’s. “And with that so do members of our team. When other organizations read about everything happening here at the DMC they want to incorporate those opportunities into their organization. The easiest way is to recruit DMC talent.” Mullany said Luanne Ewald has
been appointed interim CEO of Children’s Hospital. “Luanne has held a variety of positions within the Detroit Medical Center, most recently serving as corporate vice president for business development and marketing,” Mullany said. “In her most recent position she was instrumental in the vision, development and successful launch of the new Children’s Hospital” outpatient center in Troy. Ewald will work closely with physicians Stephen Lipshultz and Joseph Lelli, Mullany said.
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Delphi wins appeal of tax inversion decision By Dustin Walsh dwalsh@crain.com
Delphi Automotive plc will not pay U.S. taxes on its overseas sales, the supplier announced last week after winning an appeal with the Internal Revenue Service this month. The IRS notified the supplier in June 2014 that it would be taxed as a domestic corporation, despite its previously established tax domicile in the United Kingdom, which would have cost the supplier hundreds of millions in back taxes. The IRS planned to tax Delphi, whose CEO and operational headquarters are in Troy, retroactively from Oct. 6, 2009, when it emerged from Chapter 11 bankruptcy protection. It incorporated in Gillingham, 37 miles east of London. The IRS said that Delphi’s acquisition of old assets following bankruptcy triggered the decision to tax the supplier as a U.S. entity. Under U.S. tax code, U.S.-based companies are taxed on sales made globally, not just on U.S. sales. Delphi, however, appealed the IRS decision and won the ap-
peal from the IRS Office of Appeals on April 8, it said in a Securities and Exchange Commission filing Wednesday. As a U.K. tax resident, Delphi isn’t required to pay U.S. taxes on its sales tied to overseas operations and is only taxed in the U.S. on income related to sales in the U.S. In 2013, Delphi paid $256 million in taxes at a 17 percent effective rate, according to SEC filings. That figure could have risen to as much as 22 percent under the U.S. tax code, it said in a 2014 SEC filing. Under the tax code, Delphi’s tax spending could have increased more than $75 million, to roughly $331.3 million, in 2013. The appeal win may be a blow to the White House, which has sought to curb tax inversion and other methods for corporations to protect profits offshore in recent years. Apple Inc., Google Inc. and many other Fortune 100 companies have been targets of the IRS by incorporating portions of their businesses offshore that allow them to avoid U.S. taxes.
AAA
FROM PAGE 3
Founded 100 years ago, The Auto Club Group has 10.5 million members in 11 states, Puerto Rico, the U.S. Virgin Islands and Canada. It is the second-largest of the 53 AAA plans in the country behind Southern California’s Auto Club Enterprises, with 12.5 million members. Richardson said he plans to build on AAA’s 3.5 percent annual membership growth and its 5 percent annual insurance growth. Annual revenue was $3 billion in 2014 and 2015. But there are several emerging service lines — besides AAA’s traditional road, travel and insurance specialties — that Richardson said he wants to further expand. Two are mobile technology and banking. In 2011, the Auto Club entered the banking industry with its acquisition of a federally chartered bank in Nebraska. In what is renamed Auto Club Trust FSB, AAA is now marketing its own branded credit cards, auto and home loans in all 11 states, said Tom Ferries, CEO of the bank and AAA’s senior vice president of financial services. It also offers a wide range of banking products, including checking, savings, CDs/IRAs,
debit cards, and online and mobile banking. Last year, Auto Club Trust FSB also signed a marketing arrangement with U.S. Bank to co-brand two new MasterCard credit cards. The AAA cards feature a reward system to earn AAA dollars to purchase travel and other services or for cash back. “Since we own a bank, we are looking at it as a way to become an issuer over time,” Ferries said. “The agreement runs through 2012, and we have a right to buy the balance sheet” in pieces over that time. AAA has about 300,000 active credit cards, increasing at a 15 percent annual clip, with $600 million in balances, Ferries said. “We hope every one of our members will get a AAA credit card,” Richardson said. During the first three years, the AAA bank was managed in a community bank structure and grew to about $78 million in assets. But when Ferries arrived at AAA in 2014, he saw that the local branch structure was not scalable to all 11 states. “We changed our strategy from a branch to digital strategy, and from 2014 until last year we grew in assets to $300 million from $78 million and from $40 million in deposits to more than $240 million,” Ferries said.
$QRWKHU 'HWURLW +RPHFRPLQJ VXFFHVV VWRU\
IN
2014, Detroit was emerging from bankruptcy and Detroit Homecoming was created to bring expats back to their hometown to reconnect and reinvest
Teresa Mosley Sebastian President and CEO The Dominion Asset Group
in their hometown. Two years and two classes later, 300 people have returned. Teresa Mosley Sebastian, a graduate of Detroit Immaculata High School, University of Michigan, Wayne State University and MSU’s School of Law, came to the 2015 Detroit Homecoming and made connections that resulted in two major investments in projects led by local developers: DuCharme Place in Lafayette Park and another pivotal development in the downtown area. This may be just the beginning of Teresa’s affection for her hometown and the impact she will have on its future. Detroit Homecoming has delivered more than $240 million in pending investments in the city of Detroit. Visit detroithomecoming.com to see the many activities of the past two years. Look for even greater results as Detroit Homecoming 2016 kicks off Sept. 14-16.
For sponsorship information, contact Matt Langan at 313-446-6032 or mlangan@crain.com
DuCharme Place
In January, AAA rolled out its digital auto loan product, which is designed to allow members to complete an electronic application in 3 to 5 minutes. “It works just as advertised,” Ferries said. “We did a small amount of loans the first three months, about 60 to 70 (per month), but now we are done with our testing and expect to grow substantially this spring.” A third area Richardson said Auto Club is just beginning to develop is specialized member services for millennial AAA members — many of whom do not own cars. “We want to bring value to millennials,” Richardson said. “We are closely watching and analyzing these trends where there will be fewer cars in the marketplace. More (millennials) are living in metro areas where it is costly to own a car. They commute” (in different ways) but still could use the AAA card for services. AAA’s discounts and awards program also is poised to make a big splash with a digital alert system for retail and other service partners, Richardson said. “We are working with retailers to launch in the first few states in the third or fourth quarter,” said Richardson, adding that Michigan will be one of the first states. The technology will be available to all members by the end of the year. The AAA Mobile app digital discount alert system will work like this for its members: If you have downloaded an AAA Mobile app to your smartphone and go into a business such as Dunham’s Sports, Hard Rock Café or Papa Johns, an alert will pop up on your phone based on GPS to show you get an AAA discount by using your card. The app can be customized. Like investing in mobile technology, Richardson said, AAA’s future has always been finding new ways to serve its members. He said Podowski set the tone over the years that he wants to continue. “He was extremely focused on AAA’s financial welfare and brand and commitment to employees. My style is open communication, and I have been out in the community and in Lansing meeting legislators,” said Richardson, who still commutes each weekend from Chicago and plans to buy a house in Michigan this summer with his wife and four children. As he has gotten to know some of AAA’s 8,200 employees in 11 states, Richardson said he has learned of the multiple generations of employees who have worked at AAA. “We have dedicated employees, many long-tenured with three generations of family members,” he said. Richardson is becoming involved in the community by serving on the boards of directors of Business Leaders for Michigan, the Michigan Department of Insurance and Financial Services’ president’s council and Henry Ford Health System.
“There are many issues that I am just learning,” he said. “Our job is to work with regulators to develop a marketplace that is fully competitive.” Jay Greene: (313) 446-0325 Twitter: @jaybgreene
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QLINE
“We hope the QLine is an economic development driver, but that it also will be the catalyst for regional transit.”
FROM PAGE 1
QLine, which is expected to send property values soaring, including pieces of the billionaire’s downtown real estate portfolio. Quicken is paying $5 million over 10 years for the naming rights to the $140 million rail project and is the largest single corporate contributor at $10 million. “It’s brilliant for him to help fund the line. It shores up his real estate investments. He’s not doing it for charity,” said Robert Gibbs, managing principal of Birmingham-based Gibbs Planning Group Inc. “A lot of developers in cities nationwide built these transportation lines really as a real estate development tool.” Gilbert always viewed the rail project as the first step toward establishing a regional transit system while generating economic development, said Matt Cullen, president and CEO of Rock Ventures. Gilbert never would have started investing nearly $2.2 billion in acquiring, renovating and developing more than 85 properties in downtown without transit, Cullen said. “Dan always said, ‘I’m only coming (downtown) if there’s transit,’” Cullen said. “We hope the QLine is an economic development driver, but that it also will be the catalyst for regional transit.” Rail projects nationwide have sent real estate values soaring. A recent study in Denver showed office rents and property values near light-rail stations were 300 to 400 percent higher. Land near QLine stations is drawing investors in Detroit. Real estate transaction data from Southfield-based CoStar Group Inc. shows several properties along Woodward changing hands in recent months, particularly near three corners of the Woodward and Grand Boulevard intersection, the northernmost stop along the QLine. Since 2011, approximately $1.3 billion in new real estate developments have broken ground, debuted or been announced, Cullen said. About half of that figure, $627 million, is due to the new Red Wings arena. The $1.3 billion figure is in line with studies by the American Public Transportation Association, which shows that every $1 invested in public transportation generates about up to $8 in economic returns. The QLine has inspired economic activity along the Woodward corridor since the rail project was unveiled in 2011, Cullen said. “I know it did. No doubt,” Cullen said. “Suddenly, people are buying and fixing up buildings.” The CoStar data does not include sales prices for every property, so the total amount of sales is likely much higher than $1 billion. One development directly tied to the QLine will debut next month. On May 3, the Penske Tech Cen-
Matt Cullen, President and CEO, Rock Ventures
ter will open at the north end of the Detroit streetcar route. The facility will store QLine vehicles and streetcar technology systems, as well as house the rail operations team. Rail officials invested $10.6 million in the facility, including land acquisition and construction, which was headed by Detroit-based Turner Construction Co. That $1.3 billion figure cited by Cullen includes $275 million worth of residential construction in or near Midtown — projects like The Scott at Brush Park. The QLine was a “huge factor” behind the $65 million development, two blocks south of the future Martin Luther King Jr. rail stations, said developer Clifford A. Brown, managing partner of Southfield-based Woodborn Partners LLC. The project, slated for completion in December, will include 199 apartments and 15,000 square feet of retail at Woodward Avenue and Erskine Street. “We envision people shopping and you can jump on the rail and head north into Midtown or head
south and really take advantage of a lot of the entertainment that is headed toward downtown,” Brown said. “For our residents, the rail is a really cool opportunity.” The rail is scheduled to be complete in the first quarter of 2017. The 3.3-mile fixed-rail streetcar line will run along Woodward in the median at its north and south ends and have 20 stations at 12 stops between Grand Boulevard and Congress Street. Land near the Grand Boulevard rail stations has lured developers in recent months. “Our site is the best (transit-oriented development) site in Detroit where you have the Amtrak crossing, (QLine) and also the bus rapid transit proposal in the next five years,” said real estate developer Dang Duong. He is managing partner of 6402 Woodward LLC and is planning a $14 million project involving several properties near the southeast corner of the intersection that would add new apartments, retail and office space along Woodward in the New Center area. “Our vision is somebody from
Ann Arbor commutes to Detroit, or vice versa, gets a quick bite to eat or coffee before they hop on the (QLine) to get downtown,” Duong said. “For Detroit, that’s pie in the sky, but that’s what’s happened in Chicago, New York, San Francisco, you name it.” Gibbs expects the rail will be extended north, perhaps as far as Royal Oak, in about 25 years. “Skeptics still think this will be just like the People Mover, but once this is operating and you can’t get a seat and property values become hyper-inflated, there will be pressure to extend it,” Gibbs said. The economic impact is stretching beyond the QLine’s current boundaries as real estate investors and developers seek to capitalize on transit and other development in Detroit. Developer Dennis Kefallinos bought a 39,000-square-foot shuttered religious bookstore and thrift shop in February. The property is on the west side of Woodward, north of the Davison Freeway in Highland Park. Last year, the developer bought another property a few blocks east, south of the freeway. Kefallinos bought the properties because they were on the fringes of development, said Eric Novack, senior project manager for Kefallinos’ Detroit-based Boydell Development Co. and owner of Blackbird Asset Management LLC. “Detroit as a whole is opening up for more development as we
see Midtown, downtown and their outlying areas run thin of real estate opportunities,” Novack said. The QLine is one transit project slated for Woodward and sparking interest among developers. The Regional Transit Authority for Southeast Michigan is poised to ask voters across Southeast Michigan to approve a mass transit tax in November. The expected 1-mill property tax increase reportedly would fund a bus rapid transit system, which is similar to a rail line. The system features specialized train-like vehicles that travel at higher speeds along dedicated lanes. The wheeled vehicles likely would run along Woodward, Gratiot and Michigan avenues. The development spurred, at least in part, by mass transit possibilities does not surprise transit advocates like Marie Donigan, a former state representative from Royal Oak who is transit projects coordinator for the Detroit-based nonprofit Harriet Tubman Center. She cited American Public Transportation Association figures that home values are 42 percent higher if located near public transportation that feature high-frequency service. “Evidence is clear that property adjacent to transit is valuable,” she said. “It’s like gold.” Robert Snell: (313) 446-1654 Twitter: @robertsnellnews Kirk Pinho also contributed to this story.
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PIPELINES FROM PAGE 1
their gas out of Appalachia and off to new markets. This coincides with a shift, driven by the need for cleaner energy, in power generation that hasn’t happened in decades — and arguably since the utility industry formed in Thomas Edison’s time. Coal has been the dominant fuel nationally since then. Now utilities favor natural gas as a cleaner “bridge fuel” between coal and renewable energy. Natural gas plants burn fuel more efficiently and cleanly than those fired by coal. DTE’s Nexus pipeline, the biggest project of its most profitable business segment, Gas Storage & Pipelines, is on track to open in early 2017. It is splitting the cost and ownership 50-50 with Houston-based Spectra Energy Corp. Nexus will have a carrying capacity of 1.5 billion cubic feet of natural gas per day. This is a fair amount: DTE’s gas utility sends out about half that, 0.8 billion cubic feet, every day to customers. Rover’s planned opening date is in mid-2017. The pipeline will have a capacity of 3.25 billion cubic feet per day, more than twice that of Nexus. Analysts say Rover is the biggest proposed pipeline to emerge from the Appalachian gas boom. Nexus will be a main supply line for DTE’s future natural gas plants. DTE would like to have Consumers Energy Co. as a Nexus customer, too, though Jackson-based Consumers will not say whether it plans to become a customer of Nexus or Rover.
Infrastructure costs One might think such a flood of cheap natural gas, timed with the rise of gas-fired plants, would automatically translate to dramatic savings for Michigan utility customers. Gas utility costs already are coming down, thanks to cheap prices. Consumers Energy last month announced its lowest fees for gas customers in 18 years. Low natural gas prices will influence electricity bills as energy increasingly is sourced from this fuel. So should Michigan utility customers expect to be basking in cheap energy sometime in the next 15 years? Probably not. Industry insiders are loath to predict the long-term direction of utility bill costs, given the complex web of economic pressures, regulations and parties involved. But they say a sharp drop is unlikely.
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“The cost and expense of the pipelines themselves might negate the effect abundant supply has,” said Eric Brooks, a gas industry analyst for market researcher Platts. Besides the cost of building pipelines and shipping gas on them, there is the cost of building or buying new plants to burn the gas. There will be large-scale invest-
hasn’t analyzed the potential impact of low natural gas prices or new pipelines. But the mood in the industry is that they will translate into some savings for customers, albeit not as much as they might think. “We don’t get into the prediction business, but it is widely believed that gas will be abundant for the foreseeable future and that customers will benefit from that,” said Judy Palnau, spokesperson for the commission.
‘Clean and green’
ments in converting coal plants to gas, building new plants or buying existing ones. DTE expects to spend $8 billion on this by 2030, for example, most of it beginning after 2020. (Few specifics on plant retirements or replacements have been announced so far.) These costs arrive in customer bills in two places. One is the basic electricity rate utilities use to recoup the costs of building plants and related infrastructure. This is where new investments in plants appear. The other is a fee that pays for the buying and shipping of fuel to power plants. Through a convoluted process involving a mechanism known as the FERC tariff, the pipeline construction costs eventually make their way into these fuel fees. So while there won’t be a “rate hike” as defined in the regulations, there nevertheless will be a cost in customers’ total bills reflecting the pipeline costs. Whether that cost will be higher or lower than it would be otherwise is anyone’s guess. DTE predicts $100 million in electricity fuel costs will be shaved off customers’ bills from 2017 through 2032. It further estimates general natural gas price savings of $2 billion in that period statewide (taking into account other uses such as regular gas utility service), thanks to Nexus. “It’s the cheapest route to the cheapest gas,” said Don Stanczak, DTE vice president of regulatory affairs. The Michigan Public Service Commission, which regulates utility rates,
Along with cheapness, natural gas comes with other features that should help push down utility bills as the big switch to natural gas gathers steam. The dirtiness of burning coal comes from burning off rock filled with pollutants, which not only is less efficient than burning straight gas but also necessitates expensive cleaning equipment to scrub the air emitted from smokestacks. Gas plants require less labor. A gas plant needs about 25 people, where a coal plant needs hundreds, said Samuel Andrus, a natural gas industry analyst at IHS Inc., a market research company. The distance between Appalachia and Michigan is shorter than from where Michigan currently gets most of its piped gas: western Canada, Texas, Oklahoma, the Gulf of Mexico and Louisiana. That lowers shipping costs. Once the gas arrives in Michigan, the state’s abundant natural gas storage capacity helps to keep price spikes in check. All this should result in lower bills for customers. But in addition to the investments in plants and pipelines, upgrades to an aging grid are bringing up costs, and utilities are increasing investments in renewable energy. DTE plans to drop its reliance on coal from 55 percent of its energy-source mix to 25 percent by 2030. Consumers in the past 10 years has dropped its coal use from 41 percent to 24 percent. Both companies will rely on renewables to buttress their natural gas baseload fuel. These investments, too, will end up in customer bills. But these bills would be much higher if it weren’t for a lucky turn of history that has led to cheap gas arriving at a time of investment in cleaner energy, Andrus said. “We’re basically financing going clean and green with the cheap gas,” he said. Gary Anglebrandt: (313) 446-1612 Twitter: @Anglebrandt
Where will all this gas go? According to data provided to Crain’s from IHS Inc. and Platts, there are five major interstate natural gas pipelines that come into Michigan, with a combined capacity of about 8 billion cubic feet per day. The proposed Rover and Nexus pipelines would increase that capacity by 35 percent. How will Michigan absorb all this? Some, of course, will go to utilities. DTE Energy Co.’s electric and gas utilities already are signed up as Nexus customers. Consumers Energy is staying mum on whether it plans to sign up for either pipeline. If it does not, it still could end up buying gas from one of the other pipes’ “shippers,” or customers, many of which are natural gas producers. Beyond that, it’s too early to tell just how much natural gas will be used in Michigan, but not all of it will end up here. DTE expects Nexus to pick up utility customers in Ohio along the way to Michigan. For Rover’s part, the pipeline will hook up with existing infrastructure in Defiance County, Ohio, that will allow gas to be delivered to the Gulf Coast, dropping its capacity from 3.25 billion cubic feet per day to 1.3 billion cubic feet per day by the time it hits Michigan. Once in Michigan, each pipe would connect with an existing interstate pipeline called Vector (of which DTE owns 40 percent). Vector allows for transport to distribution hubs near Chicago and in Ontario that connect to other long-range pipelines. Because of these connections, it’s likely that most of the natural gas shipped on these pipelines will end up outside Michigan.
The nuts and bolts of pipeline funding The pipeline business is a good one to be in if a company can swing it. Plans for new interstate pipelines must be approved by the Federal Energy Regulatory Commission, which then regulates the pipeline’s ensuing activity. The trade-off is that pipeline owners get a guaranteed rate of return. FERC — not the pipeline owner — sets the fee, known as a tariff, that pipeline companies charge customers, called shippers. In doing so, FERC takes into account the “cost of service” that it took to get the pipeline built and sets a tariff that allows the company to recoup those costs, plus some extra as a return on investment. A typical return is in the range of 10 percent. Developers of the Rover pipeline are seeking a 9.75 percent rate of return, while Nexus developers are asking for 10.7 percent, according to a review of FERC applications performed by Eric Brooks, analyst at industry research outfit Platts. FERC will take action later if it thinks rates have gotten out of whack, but these rates might get pretty high before it gets nosy. A current FERC investigation was triggered when it suspected a pipeline company, Tuscarora Gas Transmission Co. of Houston, was getting rates of 23.6 percent and 24.9 percent. “Some say the pipeline business is the least risky,” said Samuel Andrus, industry analyst at IHS Inc., another research organization. These costs make their way into utility customers’ bills, by way of the cost to buy and ship fuel for power plants. In Michigan, this is known as the Power Supply Cost Recovery fee. If that fuel happens to be natural gas that came into the state by way of pipeline, then this cost includes the rate the utility paid for shipping — the FERC tariff. As a Nexus customer, DTE Electric will pay this rate, and ultimately so will its customers. DTE Electric will pay $7.6 million a year
under its current deal with Nexus, according to the Michigan Public Service Commission. DTE expects this will be cheaper than paying other pipe operators for shipping. It should be noted that utilities are not allowed, under state regulation, to profit from these fuel fees. The fees must cover the cost to get fuel and nothing more. The Power Supply Cost Recovery fee differs from the basic electricity rate set by the commission. This is the one the public hears about when utilities go before the commission to make their formal “rate case,” seeking permission to charge rates that allow them to recoup the costs of building and maintaining power plants. This cost materializes on customer bills under language such as “delivery charges” or “service charge.” The funding for Nexus, and any other pipeline, comes from customers that sign up for shipping capacity before it’s built, on contracts of 15 to 20 years. In the case of Nexus, those customers are natural gas producers plus DTE’s own utilities, DTE Gas Co. and DTE Electric Co. DTE Electric and DTE Gas together have signed up for 10 percent of the pipe’s capacity, the company said. Union Gas Ltd., a Chatham, Ontario-based utility, is another signed customer, and DTE hopes to sign up a string of utilities in northern Ohio whose terrain Nexus passes through. The outcome of all this is that while DTE Electric customers won’t be asked to directly fund the pipeline through the basic rates in their bills, they will be paying for some portion of it through power supply fees. Fortunately for them, these costs will be diluted by Nexus’ other customers, who also will be paying that FERC tariff with its baked-in construction costs. Effectively, the building of Nexus will be funded by companies outside Michigan. Gary Anglebrandt
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FORD FROM PAGE 3
principal of SmithGroup who previously was president and CEO of the company. That helped the overall plan because it provided more diversity of opinion and allowed SmithGroup to factor those viewpoints into the final plan. But boiling down all that feedback into something useful also posed one of the biggest challenges, said Roehling, who led the core team of about a dozen SmithGroup employees on the project. At times, as many as 30 or 35 were working on it, he said. “To try and get a sense of, and capture, and get an alignment of and understand so many diverse points of view, you have to synthesize many different perspectives before you give an answer,” he said. “We wanted to be sure that we included everybody. You have to synthesize that into something
VC
FROM PAGE 1
Chris Rizik, CEO and fund manager for the Ann Arbor-based Renaissance Venture Capital Fund, an affiliate of Business Leaders for Michigan that invests in local and national venture capital firms willing to look at deals in Michigan. Last year, a total of $328.2 million was invested in state companies, up from $223.9 million the year before and the second-best year since the Washington, D.C.-based NVCA started keeping records in 1995. Only the dot-com boom year of 2000 was better, with a total investment of $356.4 million. “The work that has been done over the last decade is bearing fruit,” Rizik said. “What has been encouraging in the last year has been the number of really sizable deals. We used to have maybe one big deal a year. In the last year, we’ve had four or five. And we’ve had investors coming into the state who never invested here.” The largest investments in state companies in the first quarter were the $27 million invested in Ann Arbor-based Millendo Therapeutics Inc., a drug development company; $10.7 million in Ann Ar-
very special, very powerful.” And with $1 billion or more behind the plan, that’s what Ford wants for the final product: special and powerful. Mark Fields, president and CEO of Ford, said last week that the plan would “make our employees’ lives better, speed decision-making and deliver results for both our core and emerging businesses.” That will be done through things like energy efficiency, collaborative workspaces, upgraded technology and other improvements. In part, all of that is in service to the greater goal: bringing the brightest minds in research, engineering and development to Dearborn — and keeping them there. Rather than having them in Silicon Valley developing the newest way to react to a Facebook post, Ford wants and needs that talent here, making cutting-edge advances in autonomous vehicle and onboard systems technology. “This is a war,” said Michael
Cooper, managing principal of Southfield-based architecture and planning firm Harley Ellis Devereaux Corp., which is not involved in the project. “The demand for these individuals is off the charts, globally.” He believes the plan is successful in a number of areas, including flexibility to changes in industry and customers; environmental sustainability; the ability to attract and retain talent; allowing for collaborative and consolidated workspaces; image projection and others. “I like the vision,” he said. “Ford is a forward-thinking organization. They understand a couple things that are important. They understand that facilities can drive business practices, culture and behavior. And that these facilities are not just there for facilities’ sake. They support business objectives. They understand the importance of knowing what you have and having the right things, taking inventory.”
As such, demolition of some existing buildings on the R&E campus is part of the plan, as is the construction of new buildings and parking decks where surface parking lots now exist. The Research and Engineering Center is expected to become the home of 24,000 employees with its renovation of 4.5 million square feet of space. There are now about 12,000 at the site, which was developed as a five-building campus in the early 1950s. More buildings were added over the years to meet increasing demand. About 1.3 million square feet of the Ford World Headquarters building, which President Dwight D. Eisenhower dedicated in 1953, will be “reworked” beginning in 2021, the news release said. Work at the Research and Engineering Center is expected to be completed by 2023; major work around the headquarters is expected to begin in 2021 and be complete in 2026.
bor-based Delphinus Medical Technologies Inc., whose devices use ul-
lion’s share of first-quarter investment, with $5.1 billion going into 376 deals. A total of $2.3 billion went into 177 biotechnology and medical device deals.
that venture capital is now a large part of Michigan’s economic rebound and a major part of the state’s economic fabric,” said Maureen Miller Brosnan, the MVCA’s executive director. Other highlights of the report: • Every dollar invested in a Michigan startup by a state VC firm attracts $4.31 in investments from out-of-state firms. “We’re beginning to be recognized as an established force,” Brosnan said. • There are 128 startups in the state that have received funding from one of the nine angel investor groups in the state, a 42 percent increase in five years. • Those nine angel groups have a total of 294 investors, a 59 percent increase in five years. They invested $16 million in state companies last year. “Angel investing is nothing but a good news story,” said Brosnan. • Last year, 42 percent of state VC investment was in health care and life sciences, with 38 percent in information technology, 8 percent in advanced materials, 4 percent in business services, 3 percent in consumer products, 1 percent in media and 4 percent in other fields. Not all was rosy, however. State VC firms estimate their portfolio companies will need a total of $661 million in follow-on investments over the next two years, but have only $387 million available for such investments. State VC firms have deployed 71 percent of their capital under management, with only 20 percent available for new investments. And diversity, or the lack thereof, continues to be an issue, as it does nationally. Of the $282 million invested in 74 state companies last year, just $6.8 million was invested in 13 companies run by women, people of color or the LGBT community. Only 12 of the 141 venture-backed companies, 9 percent, had a minority CEO. Fourteen of the companies, 10 percent, had a woman CEO.
trasound to detect breast cancer; $10.5 million in an undisclosed company in Houghton; and $9.1 million in Kalamazoo-based Armune BioScience Inc., which makes protein-based nonsurgical tests to detect disease. In January, Millendo, formerly known as Atterocor Inc., announced it had closed on a VC round of $62 million, the largest single round ever raised by a state company. Venture capital rounds are invested in chunks over time as companies hit development milestones. The $27 million recognized by the NVCA was the first of those payments. At it does every quarter, California ranked No. 1 among the states by a wide margin, with $5.74 billion invested in 364 deals. Rounding out the top five were Massachusetts, $1.51 billion in 109 deals; New York, $1.39 billion in 129 deals; Florida, $855 million in 16 deals; and Texas, $592 million in 48 deals. Nationally, $12.1 billion was invested in 969 deals, compared to $12 billion invested in 1,021 deals in the fourth quarter. It was the ninth straight quarter with at least $10 billion in investments. The software industry got the
INDEX TO COMPANIES
These companies have significant mention in this week’s Crain’s Detroit Business: 6402 Woodward LLC ..........................................19
Michigan Association of Health Plans .............10
AAA of Michigan ....................................................3
Michigan Public Service Commission .............20
Achatz Handmade Pie.......................................... 8
Michigan Venture Capital Association .............. 1
Auto Club Group ....................................................3
Molina Healthcare of Michigan ......................... 12
Boydell Development ..........................................19
Oakland Art Novelty ............................................14
Consumers Energy..............................................20
Priority Health Choice ........................................ 12
Delphi Automotive plc ........................................18
QLine ....................................................................... 1
Denso Manufacturing Michigan ........................ 12
Quicken Loans ........................................................3
Detroit Medical Center ....................................... 17
SmithGroupJJR ......................................................3
DTE Energy ........................................................1, 20
Sugar House .........................................................14
Ford Motor ..............................................................3
Travel Michigan ..................................................... 4
Hall Financial LLC ..................................................3
United Shore Financial Services ........................ 3
Harbor Health Plan ............................................. 12
UnitedHealthcare of Michigan .......................... 12
Mabel Gray ............................................................14
ViSalus ....................................................................7
Meridian Health Plan of Michigan ..................... 12
WDTW 1310 AM .................................................... 13
Michigan Angel Fund .............................................5
Woodborn Partners ............................................19
A deep dive into Michigan VC The Ann Arbor-based Michigan Venture Capital Association will formally unveil its annual report Tuesday at an event at the Madison Building in downtown Detroit. The report will show that while the number of VC firms nationally and their money under management has continued to shrink in recent years, metrics in Michigan for the number of firms headquartered here, their total capital under management and their total investments in Michigan all increased last year. While the number of national VC firms fell from 1,022 in 2006 to 798 last year, and their money under management fell from $288.9 billion to $165.3 billion, the number of state firms rose from 15 to 25, and their money under management grew from $860 million to $2.2 billion. State firms said they are planning to raise $599 million for new funds, compared with the $389 million they raised last year. There are now 128 venture professionals living and investing in Michigan, an increase of 94 percent in five years. And 141 companies in Michigan have received venture capital funding, an all-time high and a 48 percent increase in five years. Thirty-two startups got their first VC funding last year. A total of 74 companies got more than $282 million from state VC firms last year, also an increase of 48 percent. Over the past 10 years, the amount of venture capital invested in the state's startup firms increased by 150 percent, compared with growth of 144 percent in the Great Lakes region and 112 percent nationally. “All the key indicators continue to increase here. The report shows
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WEEK
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 1 8 , 2 0 1 6
ON THE WEB APRIL 9-15
Detroit Digits Ex-Tigers manager Leyland to head $20 million U.S. team TasteoftheLions.
A numbers-focused look at last week’s headlines:
J
im Leyland will manage the U.S. team at the 2017 World Baseball Classic, USA Baseball announced Friday. The former Detroit Tigers manager, 71, will be making his international coaching debut in the fourth edition of the tournament. Leyland, who managed for 22 seasons in the major leagues, stepped down as Tigers manager after the 2013 season and now works as special assistant to the team.
COMPANY NEWS Detroit-based SPLT, which
runs app-based ride-sharing programs for companies, won the $100,000 Pritzker Foundation Award at the sixth annual Clean Energy Trust Challenge in Chicago. It was previously announced that SPLT was chosen to make a pitch to venture capitalists at the annual Google Demo Day on May 4 in Mountain Valley, Calif. Mediation between Van Conway and Conway MacKenzie Inc. broke down as the parties prepared to battle in court. Conway, former chairman and CEO of the Birmingham turnaround and advisory firm, filed a lawsuit against the firm in Oakland County Circuit Court in February, alleging the board of directors violated contractual agreements by removing Conway as chairman and CEO while he was on medical leave.
Advance Plumbing & Heating Supply Co. and collaborative music studio Assemble Sound got the
lion’s share of the third round of grant funding — $100,000 each — from Detroit’s Motor City Match program. Funding for nine small businesses ranged from $18,000 to $100,000 and included restaurants, retail and professional service companies. Financial services company Ally Financial is opening 13 floors of new offices in downtown Detroit’s Ally Detroit Center that will be occupied by more than 1,500 employees and contractors, AP reported. About 350 Ally employees are moving into the building this month; most of the rest will be there by November. The Detroit Lions will again showcase area cuisine May 18 during their annual “Taste of the Lions” event, which benefits Eastern Market and its community outreach programming. General admission tickets for the strolling food and wine event at Ford Field went on sale last week at DetroitLions.com.
The redevelopment cost of the Strand Theatre project in Pontiac. The project will include a Slows Bar BQ and the renovation of the old theater, which will host films, comedy shows, concerts and other events upon completion.
$22 million
The cost to redevelop the 12-story “Hammer and Nail” building. Detroit-based The Roxbury Group will turn Midtown’s tallest building into 72 apartments and 2,000 square feet of retail space.
120
The number of jobs DTE Energy Co. has created for Detroiters at its downtown call center. DTE will rely on Strategic Staffing Solutions to recruit, hire and manage the employees.
The New York City-based Ford Foundation, the Miami-based John S. and James L. Knight Foundation and the Detroit-based Community Foundation for Southeast Michigan
are committing a combined $350,000 to a Wayne State University scholarship for students with a community service focus, in honor of Chief U.S. District Judge Gerald Rosen. Rosen, who also teaches at the WSU Law School, was chief mediator during the Detroit Chapter 9 federal bankruptcy. Oakland University will move forward on $122 million of new construction to wrap on its Rochester Hills campus by fall 2018, including a new residence hall to house 750 students, as newly approved by its trustees. Federal-Mogul Holdings Corp., the Southfield-based auto parts supplier controlled by billionaire Carl Icahn, is looking to expand its manufacturing facilities in eastern Europe and China to tap growth opportunities, co-CEO Daniel Ninivaggi said in a Bloomberg interview. More than 400 employees of Rock Connections LLC, a Dan Gilbert-owned, Detroit-based strategic marketing company specializing in contact center services, will occupy the majority of the largely vacant, 108,000-square-foot 1900 Saint Antoine building across the street from the unfinished Wayne County Consolidated Jail site by late spring or early summer, the company said. Three months after purchasing the Edward Village
Michigan hotel, formerly known as the Hyatt Regency Dearborn, the
new ownership has laid off top managers and much of the hotel’s sales team, sources told Crain’s. Southfield-based Beaumont Health is making final plans to demolish the Northwood Shopping Center in Royal Oak by year’s end, system officials said. March revenue for the three Detroit casinos rose 7 percent from February and 0.8 percent compared to the same month last year, but aggregate revenue from the Greektown Casino-Hotel, MGM Grand Detroit and MotorCity Casino Hotel was up just 0.3 percent, according to the Michigan Gaming Control Board.
OTHER NEWS A 114-year-old apartment building in the East Riverfront district has hit the market for $11.9 million. The Pasadena Apartments, at 2170 E. Jefferson Ave., stands 11 stories with 170 units and is being listed for sale by Jim Tumey, senior commercial agent for Detroit-based The Loft Warehouse. Virgil Smith’s former state Senate seat will be filled during the November election. Smith, a Detroit Democrat, last month agreed to resign after beginning a 10-month jail sentence stemming from a 2015 shooting incident involving his ex-wife. Gov. Rick Snyder said that a primary election for Smith’s former 4th District seat will be held Aug. 2; a Nov. 8 general election will determine who will finish the remaining two years of Smith’s term. The Royal Oak-based Detroit Zoo will open its 33,000-squarefoot, $30 million Polk Penguin Conservation Center to the public on April 18. The zoo previewed the facility to the media last week. The former site of Tiger Stadium in Detroit is being dedicated in the name of former Tiger and hometown sports hero Willie Horton, AP reported. The site is to be redeveloped into a youth sports facility and new Detroit Police Athletic League
headquarters.
Detroit Public Schools officials said elevated lead or copper levels have been found in 19 schools amid ongoing testing, AP reported. Researchers at Wayne State University have received a $2.5 million grant from the National Institute of Allergy and Infectious
Diseases of the National Institutes of Health to help study antibiotics for
the treatment of multidrugresistant diseases, AP reported.
OBITUARIES Paul Carey, the Detroit Tigers’
play-by-play broadcaster on WJR 760 AM for 19 seasons, died April
12. He was 88.
RUMBLINGS
Slow Roll will bring bike ride to Mackinac conference
I
t was bound to happen sooner or later: Slow Roll Detroit is going up north this summer. The Mackinac Slow Roll will take attendees at the 36th Mackinac Policy Conference on a bike ride through scenic Mackinac Island June 1. This is a new offering for those at the conference May 31-June 3. Jason Hall, who founded Slow Roll Detroit with Mike MacKool in 2010, will lead the ride. Slow Roll Detroit, described as the state’s, if not the world’s, largest, weekly bike ride, drew up to 4,500 riders each week in its 2014 and 2015 seasons. The Monday evening event has been replicated by several other U.S. cities. Rides start in different Detroit neighborhoods and routes vary each time. The rides range from nine to 14 miles and take about two hours. “The Grand Hotel has been working with Jason to pick the Mackinac route,” said Jim Martinez, spokesperson for the Detroit Regional Chamber, which hosts the annual conference. “The chamber approached Jason about Slow Roll. It fits so well with the event’s entrepreneurial theme. “We thought it was a great opportunity to shine the light on something that resonates here (in Detroit) and around the country,” he said regarding Slow Roll. The conference focus this year is on entrepreneurship, urban education and investing in the future to further grow high-profile business sectors. Martinez said, so far, the hotel has offered 80 bikes for the ride. The conference draws roughly 1,500 attendees, and he has already heard from several people who want to participate. The Mackinac Slow Roll will be sponsored by St. Joseph Mercy Health System.
Station plans stagecoach as radio broadcast site One Detroit-area radio station plans to broadcast from a unique spot during the Detroit Regional Chamber’s upcoming Mackinac Policy Conference — inside a stagecoach. WFDF AM 910, a talk radio station owned by local broadcasting entrepreneur Kevin Adell, will broadcast in and around the Grand Hotel on Mackinac Island during the annual policy conference in early June — including in an antique Wells Fargo & Co. mail stagecoach that Adell owns, a spokesman said. This is the first year the station will broadcast from the Mackinac conference, said Mort Meisner, owner of TV and radio talent placement service Mort Meisner
DEREK WEAVER
The increasingly popular weekly Slow Roll Detroit will be replicated on Mackinac Island this spring.
Associates in Huntington Woods and a spokesman for the station. Adell will have the stagecoach shipped to the island and also has purchased a portable uplink dish to enable the broadcast signal, Meisner said. Adell bought WFDF for $3 million in 2014 from The Walt Disney Co.’s Burbank, Calif.-based Disney Radio Group LLC. Station hosts expected to broadcast from the island include political consultant Steve Hood; former Detroit Police Chief Ralph Godbee Jr.; Karen Dumas, communications and external affairs chief for former Detroit Mayor Dave Bing; Cliff Russell, a broadcast reporter and press secretary to former Detroit Mayor Dennis Archer; and Bankole Thompson, former Michigan Chronicle editor.
4 Dykema partners leave to start own firm Four partners at Dykema Gossett PLLC have left to start their own business and employment firm.
Hickey Hauck Bishoff & Jeffers PLLC will formally open on
Monday in Detroit. The firm’s offices occupy 5,000-square feet in at One Woodward Avenue. Patrick Hickey, former head of Dykema’s labor and employment practice, is joind by Mark Hauck, Thomas Bishoff and Benjamin Jeffers. “We saw an opportunity to work together in a different environment,” Hickey said. “After 32 years at Dykema, I’m entering the second half of my career and together we have a like motivation and like energy to pursue something exciting.” The firm plans to hire an additional associate this week with potential to expand to nine attorneys, Hickey said. The firm will focus on employment counsel and litigation, such as contract disputes, employment discrimination, non-compete clauses, recall and litigation, Hickey said.
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IT’S NOT A SUMMER JOB.
Grow Detroit’s Young Talent is a 6-week summer youth employment program that has been re-tooled to ensure pre-screening and on-thejob support for teens and employers.
Mayor Mike Duggan invites you to help Detroiters, ages 14-24, get ready for the workforce through a summer immersion. He has committed to offering
8,000 summer jobs for Detroit youth.
IT’S A FIRST JOB.
0DNH DQ LPSDFW YLVLW *'<7 RUJ WRGD\ Grow Detroit’s Young Talent is a City of Detroit-endorsed program operated by the nonprofit organization Detroit Employment Solutions Corporation. For questions, contact gdytempl@detempsol.org
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