Crain's Detroit Business, July 25, 2016 issue by Crain's Detroit Business

Jennifer Lord and Rick Berg are two of 14 attorneys highlighted in The Litigators, a special report on recent major court action around Michigan, Page 9

JULY 25 - 31, 2016

Benefits ordinances disturb developers

Some fear proposals would take control of or delay projects By Kirk Pinho kpinho@crain.com

MICHIGAN ECONOMIC DEVELOPMENT CORP.; BLOOMBERG (RIGHT)

A conceptual rendering shows the planned American Center for Mobility at Willow Run, a former World War II bomber factory that sits mostly vacant today (inset), awaiting development.

Willow Run deal near

Sale could close by next summer; developers seek funding for mobility test hub By Lindsay VanHulle

Crain’s Detroit Business/Bridge Magazine

The sale of more than 300 acres at a former World War II bomber factory in Washtenaw County for use as a testing hub for connected and driverless cars could close by next summer, said those involved with the purchase. Yet even as developers of the planned American Center for Mobility at Willow Run in Ypsilanti Township move ahead with buying property, significant hurdles remain to clear — namely, funding — before the estimated $80 million facility can open. News last week that the center’s property acquisition entity, Willow Run Arsenal of Democracy Landholdings LLP, has agreed to pay

$1.2 million for the 311-acre Willow Run site is a milestone for supporters of the mobility project, which has an expected opening date of 2018. Beyond standard due diligence, including inspections and ap-

provals, the specific conditions required for closing are unknown: The Michigan Economic Development Corp., which has an ownership stake in the project and is helping to negotiate the transaction, would not release the purchase agreement publicly nor share the terms, citing John Maddox: confidentiality CEO says mobility agreements. center is targeting The Amerifederal funding. can Center for Mobility project is pegged to need about $60 million from the federal government. CEO John Maddox would not comment last week on the status of fundraising, saying: “A lot (is) up in the air.” He has said, however, that his team is targeting the U.S. trans-

NEWSPAPER

crainsdetroit.com Vol. 32 No 30

portation, energy and commerce departments for funding. That likely could include multiple requests in the form of grants or budget allocations, either from the executive branch or Congress, Maddox told Crain’s at the Detroit

Regional Chamber Mackinac Policy Conference in June.

The MEDC has committed $3 million to the Arsenal of Democracy landholding entity for the property purchase and startup costs. Maddox’s team is seeking an additional $17 million from the agency’s Michigan Strategic Fund, though a spokeswoman did not know when the project will come back before the board. An MEDC staff memo from March said developers planned to return with the remaining funding request should the property purchase happen “as anticipated.” That request also would require an operational budget and a site plan for development, the agency wrote, along with a recommended payback schedule for the state investment. The MEDC said then that state $2 a copy. $59 a year. funding would be used “as leverage to finalize federal investment.” The MEDC and Revitalizing Auto Communities Environmental Response Trust, or RACER Trust —

the trust handling cleanup and redevelopment of former General SEE MOBILITY, PAGE 15

Virtually all real estate projects of note in Detroit involving a public contribution of land or tax incentives would be affected by either of the proposed community benefits ordinances making waves in the development community in recent weeks that appear bound for the November ballot. The proposals would require developers to incorporate certain socalled community benefits, such as jobs, local hiring and environmental protections, in projects of a certain size if they receive public funding or city-owned land. Some of the proposed provisions are making the development community leery about things like too much control of real estate projects and delays in an already time-intensive business. While much of the discussion has centered on what are formally referred to as "tier-one" projects —

those with investments of at least $15 million or $75 million, depending on the proposal — language in both specifically addresses projects $3 million or more, which would greatly expand the number of projects affected. While there are significantly less stringent requirements attached to those so-called “tier-two” projects, defined as being between $3 million and $14,999,999 in one of the proposals and $3 million to $74,999,999 million in the other, real estate experts say the effect on efforts to develop and redevelop property in Detroit would be chilling. Mike Ferlito, project developer for Detroit-based Ferlito Group LLC, says his planned $4.5 million project, The Selden, at Selden Street just west of Cass Avenue in Midtown, could experience delays and unreasonable requirements under the proposed ordinances. SEE INCENTIVES, PAGE 16

Bill would dim electricity choice in state, some say By Jay Greene

Facts of energy choice

Only two of 10 active alternative-energy suppliers in Michigan could qualify to serve electricity customers in the state’s 10 percent choice program under legislation sponsored by Sen. Mike Nofs, R-Battle Creek, unless they make major investments that would likely make the business unprofitable. At issue are provisions in the bill that would require the suppliers to “own or have under contractual rights” at least 90 percent of the electric capacity within Michigan to meet peak demand in the competitive market by Oct. 1, 2018, and every year after. The two alternative-energy suppliers that do generate enough power in Michigan to meet the proposed requirement are Cadillac-based

 The current electric choice law allows customers to purchase competitively priced electricity from alternative energy suppliers. That market is capped at 10 percent of electric sales.

jgreene@crain.com

Wolverine Power Marketing Cooperative Inc. and Jackson-based CMS ERM MI, a CMS Energy Co. alternative-en-

ergy supplier affiliate. Spokespersons for several other alternative-energy suppliers say they may be forced to shut down operations by 2018 in Michigan if

 That choice market now has 6,140 customers using 1,964 megawatts of power, mostly large businesses such as Dow Corning and U.S. Steel, as well as about 200 school districts.  The 10 percent cap means more than 11,000 customers, mostly businesses, are on a waiting list to get into the choice program. If those customers were allowed to buy power in the choice program, they would account for about 25 percent of electric sales in the state.

Nofs’ Senate Bill 437 is approved this year and signed into law by Gov. Rick Snyder. If they do, thousands of energy choice customers, including 200 school districts, could see electricity costs rise as they lose access SEE ENERGY, PAGE 17

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MICHIGAN

BRIEFS Enbridge reaches $176M settlement over oil spill

Enbridge Energy Partners reached a $176 million settlement for the costliest inland oil spill in U.S. history — a pipeline rupture in Michigan that polluted a nearly 40-mile stretch of the Kalamazoo River, federal officials said. The agreement between U.S. government agencies and the Canadian company concluded years of negotiations following the release of an estimated 843,000 gallons of heavy crude in July 2010, AP reported. In addition to a $61 million penalty, the deal requires spending on measures to prevent future spills, detect leaks and prepare for emergencies across Enbridge’s Lakehead network, a web of 14 pipelines extending more than 2,000 miles across seven states. Particular scrutiny was required for twin underwater pipelines that cross the Straits of Mackinac, the waterway linking Lakes Huron and Michigan in northern Michigan. The penalty is the largest ever assessed for violations of the federal Clean Water Act except those stemming from the Deepwater Horizon spill in the Gulf of Mexico six years

ago, a U.S. Department of Justice official said. The settlement adds to the expense of $1.2 billion that Enbridge has incurred for the spill near Marshall, which oozed into Talmadge Creek and then the Kalamazoo River.

Dow, DuPont shareholders approve companies’ merger Shareholders of Midland-based

Dow Chemical Co. and Delaware-based DuPont Co. last week ap-

proved the companies’ historic merger, clearing a hurdle for the deal to close this year and for a later split into three entities, Bloomberg reported. Majorities of both sets of stockholders approved the 50-50 combination of the two largest U.S. chemical makers, the companies said in a joint statement. The $59 billion allstock transaction is a record for the industry. DuPont Chairman and CEO Ed Breen will become CEO of DowDuPont Inc., the name of the combined entity. His counterpart at Dow, Andrew Liveris, will be chairman. DowDuPont is supposed to split into three by the end of 2018, creating separate companies focused on

Erin Klug

agriculture, specialty products and materials science.

MICH-CELLANEOUS n Michigan’s jobless rate dipped to 4.6 percent in June, a slight drop from May but the lowest in 15 years, AP reported. The state said it was the second consecutive monthly decline and the fourth this year. Michigan’s labor force has grown by 101,000, or 2.1 percent, since June 2015. n New York City-based investment bank Oppenheimer & Co. Inc. will pay $900,000 in fines to the state for failing to register its investment advisers working in Michigan. The Michigan Department of Licensing and Regulatory Affairs said it reached a

consent agreement with Oppenheimer requiring the bank to register all of its Michigan investment advisers and notify in-state clients about the violations. n Switch, the Nevada-based company that is turning the former Steelcase Inc. pyramid in Gaines Township into a regional data center, will partner with the nearby ArtPrize arts competition in Grand Rapids, MLive.com reported. Switch will host an interactive STEAM (science, technology, engineering, arts and mathematics) learning lab at ArtPrize’s HUB headquarters during the 19-day event this fall. n Amway is offering its 5,000 U.S. employees the chance to learn if they are genetically prone to chronic inflammation that leads to gum disease and other health conditions, MLive.com reported. The testing

and follow-up education at the Adabased company will be done by Interleukin Genetics Inc., a Massachusetts life sciences company in which Amway’s parent, Alticor, has a stake. n A bidding war among six buyers drove up the price of a foreclosed Caledonia Township shopping center, and the bank collected more than the $2.3 million value assigned to the 11-year-old Glen Valley Center, according to Colliers West Michigan, which represented the property owner in the sale. Six offers on a property is unusual but reflects demand for flourishing retail developments, said a Colliers retail adviser, who declined to provide the owner’s name or the sale price, MLive.com reported. n Michael Price, founding president of Grand Rapids-based Mercantile Bank Corp. and its CEO since 2007, will retire next Jan. 1, the bank holding company said. Price, who founded the bank in 1997, will be succeeded by Robert Kaminski Jr., executive vice president and COO for Mercantile, MLive.com reported. n Even before its opening, the new Holland Energy Park is gaining recognition for its sustainable design. Representatives of the $240 million power plant project, which is nearing completion, announced it had earned the Envision Platinum award from the Washington, D.C.based Institute for Sustainable Infrastructure, MiBiz reported. n The Flint-based Charles Stewart Mott Foundation has given $15 million to the Flint Cultural Center Foundation, a supporting organiza-

INSIDE THIS ISSUE

CALENDAR .........................................14 CLASSIFIED ADS...............................15 DEALS & DETAILS.............................14 KEITH CRAIN....................................... 6 MARY KRAMER .................................. 7 OPINION .............................................. 6 PEOPLE ...............................................14 RUMBLINGS .......................................19 WEEK ON THE WEB ..........................19

COMPANY INDEX: SEE PAGE 17 tion of the Flint Cultural Center Corp., toward renovation and restoration of the city’s historic Capitol Theatre, AP reported. Organizers hope to have the theater, which opened in 1928, fully restored for a planned reopening in late 2017 or early 2018. n Christmas every day at Bronner’s and chicken dinners at Zehnder’s are among the Frankenmuth highlights in a new tourism video intended to attract Canadian visitors to Michigan’s “Little Bavaria,” MLive.com reported. A production team from Brand USA, a marketing organization established to promote the U.S. as a travel destination, visited Bronner's Christmas Wonderland, Zehnder’s of Frankenmuth and other attractions this month. The video is to debut later this year at visittheusa.com; Brand USA’s YouTube channel; and the marketing channels for Travel Michigan and the Frankenmuth Chamber of Commerce and Convention & Visitors Bureau.

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“Marilyn and I have a strong understanding of where we can achieve success for our company and for our clients. We don’t go chasing things that aren’t in our realm of success.” Peter Van Dyke

Bank of Ann Arbor buy may signal growth focus Bank to expand into Oakland County with Birmingham deal By Tom Henderson thenderson@crain.com

The Bank of Ann Arbor has been cautious about expansion, sticking mostly to its Washtenaw County roots and sticking a toe into Wayne County in the 20 years since its founding. Its move into Oakland County with the announcement last week that it had agreed to buy the Bank of Birmingham and its parent company, Birmingham Bloomfield Bancshares Inc., signals a change in philosophy.

JACOB LEWKOW

Peter Van Dyke and Marilyn Horn formally change the name of their firm to Van Dyke Horn Public Relations today. It will still operate out of its office in the Fisher Building.

NEW OWNERS, NEW NAME

The all-cash transaction — for $16.50 a share, or about $33.3 million — also represents a sizable return for the Bank of Birmingham's original investors, who launched the bank in 2006 with an initial public offering of $13 million only to see share prices plummet to $3 at the bottom of the recession. The deal is subject to regulatory approval and the approval of Birmingham Bloomfield shareholders, and is expected to close before the end of the year. Crain’s first reported the news Wednesday.

The Bank of Ann Arbor was founded in 1996 by prominent Ann Arbor real estate developer Bill Martin. (See related story, Page 18.) In 2010, the bank entered Wayne County when it bought the assets of Plymouth-based New Liberty Bank when the latter was shut down by federal regulators, as one of many local community banks that didn’t survive the recession. In 2013, the Bank of Ann Arbor expanded into Saline, rehabbing a branch it bought from Bank of America. The same year, it bought Ervin Leasing, a 35-year-old Ann Arbor company that provided equipment financing for businesses and was rechristened UniFi Equipment Finance. In 2014, the bank did a $4 million renovation and 10,000-square-foot expansion of its downtown Ann Arbor headquarters, adding a third floor. More expansion is likely but not imminent, Tim Marshall, the bank’s president and CEO, told Crain's Thursday. He said expansion could SEE BANK, PAGE 18

Detroit PR agency Berg Muirhead sold to longtime employees By Bill Shea bshea@crain.com

The owners of one of Detroit’s prominent boutique public relations firms have sold their agency to a pair of longtime employees who will rebrand the agency on Monday. Marilyn Horn and Peter Van Dyke in January bought Detroit-based Berg Muirhead and Associates from founders Bob Berg and Georgella Muirhead, who created the agency in 1998. The purchase price wasn’t disclosed. Horn, who is now president, has a 60 percent ownership stake and Van Dyke, as CEO, has 40 percent, the latter said. On Monday, the firm will formally rename itself as Van Dyke Horn Public Relations. It will continue to operate from its office in the Fisher Building, and Van Dyke said the space is undergoing renovation to update equipment and systems, and for the rebranding. Muirhead and Berg will remain with the agency.

“We love having them here and serving our clients for as long as they wish to,” Van Dyke said. Muirhead said it was a relief being able to plan for the agency’s future with two people she trusts, a process that Van Dyke said began with talks about five years ago. Until retirement, Muirhead plans to continue working with Berg on their client accounts. “For the next few years, we plan to be an important part of the agency. We both love what we do, and we think we bring great value to the organization,” said Muirhead, 66, who previously was a senior community relations administrator for the cities of Ann Arbor, East Lansing, Southfield and Detroit. Berg, 73, was a longtime journalist before moving into political media relations, most notably as Detroit Mayor Coleman Young’s press secretary from 1983-93. The agency is on pace to do more than $1 million in revenue this year (up from $680,000 in 2015) from

MUST READS OF THE WEEK

SEE AGENCY, PAGE 18

New baseball park a hit for economy, business growth By Adrienne Roberts aroberts@crain.com

Teresa and McKenzie Norman and their Twisted Roots salon were among the winners of the fourth round of Motor City Match grants given last week, Page 7

A business education minus the tuition bill — and put them in front of Michigan and Silicon Valley venture capitalists, Page 4

imminent, though long term “everything is on the table for evaluation.”

Grand slam for downtown Utica

Taking root in Eastern Market

UM Professor David Brophy looks to take businesses to school —

BANK OF ANN ARBOR

Bank of Ann Arbor President and CEO Tim Marshall said more expansion is not

ADRIENNE ROBERTS

A “cool downtown vibe” brought Jimmy John’s Field to Utica, owner Andy Appleby said.

The sign for Argentine tango classes and the Locker Room Saloon’s yellow awning are familiar sights for many metro Detroiters as they drive past downtown Utica on M-59. Some might even remember the hog slaughterhouse that once stood on the outskirts of the city. Now, another landmark signifies the city — the new Jimmy John’s Field. With games at the minor league baseball park drawing an average of about 3,200 people, more than half of the city’s population (in the 2010 census, Utica had 4,757 residents) is

coming to the city five days a week. Visitors are grabbing dinner before games at restaurants in Utica, drinking a beer at local bars afterward and parking on city streets — all of which have major effects on a city that didn’t previously draw large crowds for events. The ballpark, built by Andy Appleby, owner of Rochester-based General Sports & Entertainment, can seat 1,900 people, with a capacity for 4,000, and cost him $15 million to build. “We were looking for a great location (for a ballpark) in metro Detroit for quite some time,” Appleby said. SEE UTICA, PAGE 16

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

Schooling startups UM business class aims to help 15 tech companies take off By Tom Henderson thenderson@crain.com

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David Brophy, a finance professor at the University of Michigan, wants to take 15 early-stage tech companies to school in the prestigious Ross School of Business, and it won’t cost them a penny. Company founders will gather for three hours each Wednesday night during the fall term, which runs from Sept. 7 to Dec. 14. Each week they will meet with teams of business school students, local successful entrepreneurs and venture capital mentors to hone their business models, plan their marketing, improve their pitches, and, in some cases, end up with new investors. The course is titled Financing Technology Startups: A Venture Capital Practicum. The venture capitalists are split among 25 who are based in Ann Arbor, who attend classes in person, and 20 in Silicon Valley, who participate by Skype or GoToMeeting. Ann Arbor-based Neurable Inc. is an example of how the class can pay off, literally. The company, a spinoff from UM, has created a patent-pending, noninvasive brain/ computer interface that, thanks to artificial intelligence software developed by founder, President and CEO Ramses Alcaide, allows people to control objects with their brain activity. With a few minutes of coaching, they can operate computer games, wheelchairs and, for a demonstration on the Discovery TV network, even a full-sized car in real time. Alcaide took the class last fall. Among the class’ mentors was Robert Winter, a Silicon Valley-based venture capitalist who is also the managing member of Houston-based OWL Investment Group, which is made up of 40 angel investors nationwide. Winter is also a judge at the Rice University business plan competition in Houston. In April, Neurable finished second at the competition, winning a commitment at the time of at least $50,000, which soon grew

“I don’t want something that’s a gleam in the eye or a pointy-headed professor’s hot idea. I’ve had enough of those.” David Brophy, University of Michigan

to $285,000 as more members of the investment group wrote checks. Of the 150 startups that have participated in the course’s 11-year history, Brophy, the director of the Center for Venture Capital and Private Equity Finance at Ross, said 30 got funding as a direct result. Other companies that have gone on to be funded include Brighton-based FlexDex Inc., a maker of tools for minimally invasive surgery that announced last week that it had closed on a funding round of $5 million; Genomenon Inc., a UM spinoff focused on personalized medicine through genome interpretation software, which raised a seed round of almost $1 million last year and won $100,000 as runner-up at last November’s Accelerate Michigan Innovation competition; and ContentOro LLC, an Ann Arbor company that sells content from books to websites and which raised a seed round of $550,000 last August. “I want companies with proven technologies. They have to have stuff that works that is IP protected,” said Brophy, referring to protections for intellectual property such as patents granted or applied for. “And it’s technology that’s being utilized, whether it’s in pilots or early sales. “I don’t want something that’s a gleam in the eye or a pointy-headed professor’s hot idea. I’ve had enough of those,” he said. And he said he didn’t want those who think the class will be easy. “There will be a hell of a lot of brain and brawn to be done, a lot of hard work to do to get ready for serious investors.” Recently, the Michigan Economic Development Corp. released a 73page report on how the 21st Centu-

ry Jobs Trust Fund has done at diversifying the state’s economy. One result was an ongoing disconnect between research universities and the private sector, in a variety of metrics. For 36 years, Brophy has been trying to bridge that gap. In 1980, he hosted a seminar on the UM campus bringing emerging growth companies together with would be investors. “I thought we’d do it for two or three years, and that would be the end of it,” he said. Instead, what is now called the Michigan Growth Capital Symposium has grown into one of the largest and most emulated pitch events in the U.S., with investors flying in from around the country each May to hear Midwest companies make their case for investments. At the end of the fall class, companies will have their own pitch event. There is another point to the class, said Brophy. It introduces those with growing companies to eager, smart business students they might want to hire as they get funded and grow faster. “I want to help stop the brain drain, and you can’t do it by putting a ball and chain around an ankle,” said Brophy. “But you can do it by having a company fall in love with a student. I know it’s only ones and twos, but it’s what we need to do.” In fact, Michael Thompson, who is now the head of business development at Neurable, was one of the Ross students last year helping Alcaide hone his skills, and got hired as a result. Tom Henderson: (313) 446-0337 Twitter: @tomhenderson2

Crain’s event to focus on food economy Behind Michigan’s food story is a business story. The food economy is one of untapped growth potential. At Crain’s Food Summit, key players from local food companies will gather to focus on building Michigan’s supply chain and pairing ideas with the visions from major national food companies. The summit will connect entrepreneurs, farmers, manufacturers, distributors, retailers, growers and processors to potential customers

and those interested in learning more about our food ecosystem. Investors will be introduced to food entrepreneurs from around the state in an effort to showcase the investment-worthy companies. The program includes a keynote panel featuring Jeff Dunn, president of Campbell Fresh, along with breakout sessions on how the local food movement is impacting agriculture, processing, distribution, and retail and restaurants.

There will also be a local food truck rally. The event runs from 2-7 p.m. Aug. 22 at Eastern Market in Detroit. Individual tickets are $80, and groups of 10 or more are $75 each. A discount combo ticket with the Live Love Local event is available for $100. Registration closes Aug. 18. To register, go to CrainsDetroit. com/events. Questions can be directed to Kacey Anderson at cdbevents@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 // J U LY 2 5 , 2 0 1 6

OPINION

CBA law would stifle city investment

Detroit has been on a roll — 6,000 new housing units opening or under way and new companies forming, expanding or setting up satellite operations, mostly in downtown or Midtown. And more could be on the way. But a drive to mandate specific ways that politicians and community activists can micro-manage specific investments may bring the growth to a screeching halt. It appears that two competing proposals could be on Detroit’s ballot in November that would create what’s known as a community benefits agreement ordinance. The intent of putting formal CBA standards in place doesn’t sound bad on the surface: Putting down on paper the kinds of education and land use programs, local small business and other ways a developer must engage the local community. These are good things. The trouble is that by requiring developers to operate via CBAs through a new standardized city law, it opens the door to project management by people who may or may not have the subject matter expertise to give guidance and set the rules of play for developers. The city is better off negotiating through the Mayor’s office or the Detroit Economic Growth Corp. such benefits for each investment that seeks and obtains any tax advantages. Those negotiations could include hiring Detroiters, for example. Of the proposals on the table, the lesser evil may be Councilman Scott Benson’s plan, with a higher investment threshold. But the competing plans and proposals are described in Kirk Pinho’s Page 1 story. Now is not the time to put additional demands on potential investors; the development approval process is already time-intensive and cumbersome. Many Detroit residents are understandably suspicious of business because of the decades of disinvestment. We hope trusted leaders can help communicate that a mandate for community benefits may short-circuit the city’s progress.

Don’t forget to support the zoo Who doesn’t have a voice at the ballot box? Penguins and polar bears. The regional millage to support the Detroit Zoo is up for renewal this year. It has been easy to overlook this local political topic because of all the rancor in the run-up to the presidential election and other regional topics. But let’s not forget the zoo. In 2008, voters in Wayne, Oakland and Macomb approved a 10-year, one-tenth mill property tax to help the zoo with a sustainable funding model. While the zoo raises a lot of money in many ways, about a third of its $35 million budget comes from the millage. With the millage scheduled to expire in 2018, the zoo is seeking a 10-year extension on the August primary ballot. For a homeowner whose home is worth $200,000, the cost remains a minor $10 a year. The zoo is well run, is continually adding and improving offerings and is one of this region’s many cultural treasures. Voters should approve the millage.

Re: TC-area cottage owners say rental ban is unfair I live in Northport, 30 miles north of Traverse City, near the tip of a gorgeous peninsula, and more and more of our village homes are being turned into rentals which, of course, are empty nine months of the year. Our sense of community is hurting as more and more “strangers” flock in during the summer. Yes, I suppose my merchant friends benefit, but what happens to our community when young people who’d like to live here long term can’t afford to buy these homes, which are snapped up immediately?

TALK ON THE WEB Reader responses to stories and blogs that appeared on Crain’s website. Comments may be edited for length and clarity. creased property values in Southfield and adjoining areas. 269053

Re: Mexicantown to benefit from Main Street program Clearly marked public parking lots should exist. Neon signs on the businesses should be used to make the place look alive and exciting at night. Justin Thompson

Susan Ager

Re: Chase Bank to give raises to low-paid workers Have you gone into a Chase Bank recently? Replacing tellers with an enhanced indoor ATM machine. Plus, (CEO Jamie) Dimon had to do something to deflect the attention from his pay. My local credit union is looking better and better. NOLALiz

Re: Company loses appeal to store ‘met coke’ outside Let the company folks and attorney put it in their backyards.

DownriverDem

Re: Guest blog: Immigration Re: ‘Embracing Peace’ sculpture in Royal Oak Re: Judge sides with church, policies must change oil exploration company H1-Bs are used to displace AmeriUgly, cheap kitsch, Seward JohnThis is great news. Every barrel of oil we drill domestically means we don’t have to pay American dollars to Middle East countries. There’s also the added benefits of the money staying in-state, leading to in-

can workers with lower-paid foreign

son ... the man who makes giant sculptures for simpletons.

guest workers. The program should be ended. Why would someone looking for a career choose IT when greedy companies would rather hire guest workers?

Art is art, and not everyone appreciates some of it.

NoH1-Bvisas

Carl Fuglein

today. And no one is giving away services. Sure, it helps a lot that there are plenty of government-sponsored insurance systems out there, and I am sure that they are also doing quite well. Anything and anyone connected with health care should be doing very well with lots of profits. Everyone seems to be looking for employees, and mosts hospitals have a long list of job openings. If you take a look at our nation’s demographics, you quickly realize that our population is aging and they are getting older rather rapidly.

Obviously, as our population ages, they will need even more health care, and that certainly bodes well for the health care providers. The advancement in medicine is quite extraordinary. But as we see more and more revolutionary cures in health care, we are seeing costs skyrocket. And there is no reason to believe that these medical breakthroughs aren’t going to continue. There is no doubt that our nation’s economy is sluggish in terms of economic growth right now. But there are pockets of prosperity all around. All you have to do is look.

Nemesis

Some industries are thriving in SE Michigan There are plenty of businesses that are doing OK these days. And happily, a lot of them are based in Southeast Michigan. Everybody who lives around here knows darn well that the automobile business is doing really well. GM announced quarterly profits that were double the previous year’s. Suppliers are working lots of overtime to meet the demands of their customers. And, just about every car dealer in the Detroit community is enjoying record sales. If you are in the car business, things are good.

But that’s not the only industry that seems to be doing very well these days. All you have to do is drive by one of our hospitals and you quickly realize the health care industry is doing very well indeed. If ever Beaumont was going to merge with two other hospital systems in Detroit, they picked the perfect time. When your hospitals are booming, it sure is easier to gloss over some minor and major shortcomings. But, overall, it was perfect timing to create a new system from three existing ones. Health care is doing very well in

KEITH CRAIN Editor in chief

Southeastern Michigan at the physician and service provider level as well. Just try to get an appointment with a doctor or lab and you’ll discover how big a backlog they have

C R A I N â&#x20AC;&#x2122; S D E T R O I T B U S I N E S S // J U LY 2 5 , 2 0 1 6

Takeaway on health care issues: Many priorities, not enough cash Four Democrats, four Republicans and on most issues, perhaps 80 percent agreement. Sounds remarkable, but the lawmakers who joined the Michigan Association of Health Plans summer conference last week at the Grand Traverse Resort were mostly on the same page about major health care issues in the state. The Medicaid expansion that provided an additional 600,000 people with health care coverage? Check. But will legislators continue to pay out bigger chunks from the stateâ&#x20AC;&#x2122;s general fund, beyond the current $100 million? Republicans state Rep. Al Pscholka from Southwest Michigan and state Sen. Jim Marleau from Lake Orion remain stalwart in their support. â&#x20AC;&#x153;I wasnâ&#x20AC;&#x2122;t just â&#x20AC;&#x2DC;yes,â&#x20AC;&#x2122;â&#x20AC;? Marleau said. â&#x20AC;&#x153;I was â&#x20AC;&#x2DC;hell, yes.â&#x20AC;&#x2122; â&#x20AC;Ś Where else are you going to get a 9:1 match with the federal government?â&#x20AC;? Term-limited Pscholka, who chairs the House Appropriations Committee and sponsored the expansion legislation, exhorted the crowd composed of many health insurance executives to use the news media to tell stories of lives saved. â&#x20AC;&#x153;Donâ&#x20AC;&#x2122;t aggregate the num-

Nonprofits: Tell your story to the business community at a

discounted rate! IN

Giving Guide

MARY KRAMER Publisher

bers,â&#x20AC;? he said. â&#x20AC;&#x153;Tell the stories.â&#x20AC;? In recounting a Tea Party primary challenge mounted against him last election cycle because of the Medicaid expansion, he concluded: â&#x20AC;&#x153;I do not understand how you can be pro life and deny access to health care.â&#x20AC;? The invited lawmakers were chairs or vice chairs of legislative committees focused on insurance or health policy issues. I was invited to help moderate the discussion, from opioid abuse that Marleau said was killing 13 Michigan residents a day to specialty drug costs, now often topping $100,000 for a course of treatment. (On that issue, â&#x20AC;&#x153;weâ&#x20AC;&#x2122;re paying the worldâ&#x20AC;&#x2122;s bill,â&#x20AC;? noted Democratic Sen. Curtis Hertel, because unlike other countries, the U.S. doesnâ&#x20AC;&#x2122;t set drug prices, so our

drug prices are the highest in the world.) The backdrop for all discussion: the shadow of Flint and the need to continue to invest in early childhood and nutrition to remedy damage to Flintâ&#x20AC;&#x2122;s children. And beyond Flint: knowing that an overdue tab exists for poor infrastructure investment in communities all over the state. Which led to Marleauâ&#x20AC;&#x2122;s call that communities should file plans on money set aside for infrastructure with the state treasurerâ&#x20AC;&#x2122;s office as they do for pension plans under accounting rules. My takeaway from the discussion: too many priorities and not enough cash. The eight lawmakers understood issues and had compelling ideas to solve problems, bipartisan ideas. It was Democratic Sen. Rebekkah Warren of Ann Arbor who sounded the note of reality by noting: â&#x20AC;&#x153;It took us 10 years on road funding.â&#x20AC;? Mary Kramer is publisher of Crainâ&#x20AC;&#x2122;s Detroit Business. Catch her take on business news at 6:10 a.m. Mondays on the Paul W. Smith show on WJR AM 760 and in her blog at www.crainsdetroit.com.

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Beauty supply, property developer big winners in Motor City Match By Marti Benedetti mbenedetti@crain.com

A beauty supply shop in Detroitâ&#x20AC;&#x2122;s

Eastern Market and property developers in the cityâ&#x20AC;&#x2122;s Live6 Alliance

neighborhood got large pieces of the Motor City Match grant pie last week in the fourth round of the program. Twisted Roots LLC, which will sell products for hair care, nail maintenance, accessories and apparel basics, won a $75,000 grant, which owner Teresa Norman said will be used for interior and exterior renovations, masonry repair, equipment purchase and fixtures. Block Party LLC, co-owned by Tadd Heidgerken, Ryan Wrocklage and Amanda Conlen, received a $70,000 grant for space it is developing to house multiple tenants in an open-concept design. Planned for the property is sushi lounge Social Sushi, and Ima, a Japanese ramen and small-plates restaurant and bar. In addition to the restaurants will be a welcome center for Live6 Alliance, a community development corporation working on revitalization efforts in the neighborhood. Funds will be used for building renovation and kitchen equipment that will benefit the tenants, Heidgerken said. Norman said she had a good feel-

ing about winning. â&#x20AC;&#x153;I worked hard on the business plan and application for the grant,â&#x20AC;? she said. She bought the 1865 gray brick building in 2014 and has been renovating it since. Last year, it won Eastern Marketâ&#x20AC;&#x2122;s Murals in the Market, which means her building was a canvas for an artist. The building sports several large paintings, the most notable of which is of a young girl on the side of the building that faces Gratiot Avenue. She plans to open her shop in late fall or early spring. It will offer shoppers many items currently not available downtown. It also will host self-esteem workshops for the community, schools and young women. The historic Alger Theater hosted the award ceremony. Eleven companies were given parts of $500,000 to establish and expand their businesses. Other winners of the fourth round of the Motor City Match were: n Detroit Vegan Soul ($60,000). nâ&#x20AC;&#x2030; Norma Gâ&#x20AC;&#x2122;s ($60,000). n Live Cycle Delight ($50,000). n Amaze-Enjoyment LLC ($50,000). n Guadalajara #2 Inc. ($50,000). n Lil Brilliant Mindz LLC ($30,000). n Beau Bien Fine Foods ($20,000).

n Meta

($20,000).

Physica Wellness Center

n Third Wave Music ($15,000).

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

WRIF, WCSX to change hands Beaumont, Oakwood, United Physicians as part of $240 million radio deal to form clinically integrated network By Bill Shea bshea@crain.com

Three Detroit FM radio stations are part of a deal in which Naples, Fla.-based Beasley Broadcast Group Inc. will buy suburban Boston-based Greater Media Inc. in a transaction valued at $240 million. Beasley (NASDAQ: BBGI) gets 21 Greater Media stations including Detroit rock station WRIF 101.1 FM, classic rock channel WCSX 94.7 FM and WMGC 105.1 FM, which earlier this month flipped from sports talk to classic hip-hop and R&B. The deal was announced last week in a statement from Beasley. In the most recent Nielsen Audio rankings, WRIF had the second-largest listenership in metro Detroit, while WCSX was fourth. WMGC ranked 23rd. No changes to management, staffing or format are expected for the local stations, a Greater Media spokeswoman said via email. The deal is expected to close in the fourth quarter. The boards of both companies have approved the deal, which remains subject to federal regulatory scrutiny. Beasley does not have stations in the Detroit market, but it does have stations in other markets that are home to Greater Media channels. Greater Media has owned WCSX since 1973, and it acquired WRIF in 1994 and WMGC in 1996, according to michguide.com, a repository of statewide broadcast industry data

By Jay Greene

and information. Beasley, which was founded in 1961, comes to the deal with 51 stations in 12 markets. It intends to pay $100 million cash for Greater Media, and pay $25 million in stock to Greater Media shareholders. It also will refinance $80 million in Greater Media debt, and sell tower assets it estimates to be worth $20 million. Greater Media investors will receive the proceeds of the equipment sale. Beasley said it has planned to sell stations in Charlotte, N.C., where it competes with Greater Media, to meet federal regulatory scrutiny of the deal. It has seven stations in Charlotte; Greater Media has two. Beasley had net income of $6.3 million last year on $106 million in revenue, and it said it expects the Greater Media deal to add $141 million in revenue. It wasn’t immediately clear what would become of Greater Media’s 10 weekly newspapers it owns in New Jersey. Greater Media, founded in 1956, has stations in the Boston, Charlotte, Detroit, New Jersey and Philadelphia markets. Its Detroit market is run by Steve Chessare. Once the deal is finalized, Beasley said, its shareholders will own 81 percent of the company stock, and Greater Media shareholders the remainder. In addition, Greater Media shareholders will have the right to appoint one member to the Beasley board of directors, which will add a ninth seat, Beasley said.

jgreene@crain.com

Beaumont Health, Oakwood ACO and United Physicians have agreed to form a joint business venture to contract directly with health insurers, employers, small businesses and unions in an organization that would limit patients to Beaumont providers and hospitals, Crain’s has learned. Called Beaumont Care Partners, the clinically integrated network organization includes eight of Beaumont’s hospitals, outpatient centers and other post-acute care facilities and could include up to 5,000 physicians on Beaumont’s eight hospital medical staffs, although about 2,500 are expected to join, said Bill Isenstein, BCP’s executive director and executive director of Oakwood ACO. “This is getting us ready” to contract with customers in a narrow provider network that has the ability to control costs, utilization, quality and patient safety and outcomes, Isenstein said, adding: “It won’t happen overnight. The market is evolving. Everybody is talking about it.” Under a clinical integrated network approach, hospitals, physicians and other providers work closely together to lower costs and improve quality, usually through a single electronic medical record and ownership or contractual arrangements. The network then contracts with payers, employers or other groups to negotiate payment and bonus incentive arrangements.

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Michael Williams, M.D., BCP’s medical director and president of United Physicians, said the goal is to improve quality, reduce unnecessary use and improve patient outcomes and safety. United Physicians is Southeast Michigan’s second largest physician organization by 2,232 total physicians, just behind Wayne State University Physician Group with 2,255 physicians, according to Crain’s 2015 list of largest physician organizations. “We all have to work together to maximize efficiencies. A lot of that is driving incentives and rewarding performance,” Williams said. “The costs of health care are very excessive, and people are looking for cost-effective solutions.” Nationally, more than 500 clinically integrated networks exist, according to The Advisory Board Co. In 2014, Together Health Network was formed as a joint venture between Ascension Health Michigan and Trinity Health Michigan. Together Health includes more than 25 hospitals and 5,000 physicians across Michigan and has a contract with Blue Care Network. Beaumont Care Partners is a limited liability company owned equally by Beaumont Health, Oakwood ACO and United Physicians. The organizations will continue to operate other past independent and joint projects. “As the local health care market evolves, collaboration among physicians and hospital partners is more important than ever,” Theodore Tangalos, M.D., chairman of Beaumont Care Partners and family medicine physician, said in a statement. Under a management plan still under formulation, Isenstein said BCP will contract with insurers, employers and others in a variety of

reimbursement models. Bonus payments will be paid based on meeting quality, use, cost and outcome targets. Payments will be shared with participating physicians and hospitals based on hitting those metrics. “Physicians must have medical staff membership (at Beaumont hospitals), but they also must commit to meeting quality metrics,” he said. “You have to be accountable and (commit to) improve population health.” Williams said BCP’s predecessor organization is Beaumont United Care Partners, which was formed in 2012 by Beaumont Health System and United Physicians. “We have talked in the past about clinical integration networks,” he said. “It is coming up because of the transition to value-based health care” in which providers are paid based on quality and outcomes, not on volume of procedures. BCP is governed by a 12-member board of managers. Besides Tangalos, they are Belal Abdallah, M.D., vice chairman; Eric Silberg, M.D., treasurer; Simon Dixon, M.D.; Peter Tucker, M.D., secretary; Laura Glenn, SVP, Beaumont Medical Group; David Hug, M.D.; David Walters, D.O.; Michael Khoury, M.D.; Karen Weaver, M.D.; Sarju Shah, M.D.; and Deborah Withrow, J.D. Beaumont Health consists of eight hospitals with 3,337 beds, 168 outpatient sites, nearly 5,000 physicians and 35,000 employees. In 2015, Beaumont generated $4.1 billion in net revenue. Oakwood ACO is a physician-hospital organization founded in 2010 with more than 1,000 physicians and four hospitals to contract with Medicare under the shared savings program.

Mitchell Plastics to build $20.5M plant in Sterling Heights By Adrienne Roberts aroberts@crain.com

Tier-one automotive supplier

Mitchell Plastics said it will invest

$20.5 million to build a manufacturing plant in Sterling Heights, a move that will create 122 jobs, the Michigan Economic Development Corp. announced last week. The Ontario-based company plans to use the 200,000-squarefoot plant at the former Sunnybrook Golf & Bowling Inc. site at 17 Mile and Van Dyke roads to produce automotive interior parts. The 144-acre site can accommodate build-to-suit manufacturing buildings up to 1 million square feet on 2 or more acres. The development is expected to include two new hotels. Mitchell Plastics got its start in 1997 as Ultra Manufacturing Ltd. The company designs and develops auto-

motive interior mechanisms and decorative components. According to the MEDC, the company has grown by 75 percent in the past five years and has 2,200 employees throughout Ontario, Alabama, Indiana, Germany and Mexico, and at a sales and engineering office in Troy. Mitchell Plastics last week won a $427,000 performance-based grant from the Michigan Strategic Fund, a division of MEDC. Michigan was chosen over competing sites in Ontario, where it already has a significant production base, and Charlestown, Ind., where its current facility has room to support the increased production. The MEDC said the grant was needed to help offset the costs to build the new plant. The city of Sterling Heights has offered Mitchell Plastics a property tax abatement.

SPECIAL REPORT: THE LITIGATORS

CASE STUDIES This report showcases 14 of the lead attorneys behind recent major court action. Why these men and women? The attorneys profiled are the result of litigation reporter Chad Halcom’s efforts combing through court filings, sending queries to law firms in our database, and reaching out to a range of other personalities to identify attorneys. These are the litigators driving the big verdicts, major settlements and interesting litigation around the state. The cases in this report are the result of a subjective selection, but we believe they represent a cross-section of the cases that matter in the Michigan business community today. The profiles begin on this page and continue through Page 13. Jennette Smith, editor

Rick Berg

Jennifer Lord

Shareholder, Butzel Long PC, Detroit

Partner, Pitt McGehee Palmer & Rivers PC, Royal Oak

Rick Berg’s litigation team at Detroit-based Butzel Long PC has just won perhaps the toughest litigation assignment in town — defending Flint amid hundreds of lawsuits that have poured in since last October in the city’s massive water crisis. But it’s also a task the firm hopes the city won't need. “We are honored to represent the city of Flint at this crucial time but hope for a prompt and comprehensive legislative solution that will make the litigation, and the need for our services, unnecessary,” Berg said. “A litigation avalanche is not the most expeditious or effective solution to this problem.” Berg and fellow Butzel shareholders Sheldon Klein, Susan Johnson, James Wynne, David DuMouchel and George Donnini, after assembling a team and inter-

viewing for the job, are representing the city in all state and federal lawsuits in which it is a defendant. Battles are already taking shape for the firm to weigh in on whether the federal courts have jurisdiction — at least two have found they do not — and whether the 2012 state law that put Flint under a series of appointed emergency managers effectively made the city an “arm of the state.” That could affect governmental immunity, for pursuing cases in the Michigan Court of Claims for establishing liability under Public Act 436 of 2012, the state emergency manager law. "These issues are already raised and are being vigorously contested," Berg said. About 330 lawsuits related to the water crisis have been filed in state and federal courts since last October, though only about 15 so far

name the city as a defendant. The rest — mostly by individual families targeting either engineering firms hired by the city, various emergency managers appointed to oversee Flint, or the Michigan Department of Environmental Quality, will likely still be of concern to Butzel attorneys since they have witnesses and records that overlap with the Flint cases. The city may become an interested party in many and make requests for the judges in those cases. While a vast majority of the suits do not specify damages, some have sought refunds of water bills totaling more than $150 million. Total lead poisoning claims could exceed $200 million based on the number of individual and class plaintiffs thus far, but it’s not yet clear how much liability Flint would share in those cases.

It would seem MiDAS, the state software platform that checks unemployment claims against other records and flags possible fraud, didn’t start with such a golden touch. Jennifer Lord said the Pitt McGehee firm in Royal Oak has collected more than 1,000 callers so far who reported damages after their unemployment benefits were improperly flagged by the $47 million Michigan Integrated Data Automated System, which went online in 2012. Lord is handling a prospective class-action lawsuit at the state Court of Claims against the Michigan Unemployment Insurance Agency on behalf of thousands

who lost benefits or faced wage garnishment, lost tax refunds or other judgments based on a MiDAS determination.

Stories by Chad Halcom / chalcom@crain.com

A February audit found only 263 out of 3,460, or 8 percent, of appealed rulings from 2013 to 2015 were actually upheld. Judge Cynthia Stephens denied a state bid to scrap the suit based on governmental immunity in May, and the case is on hold while UIA contests that ruling at the Court of Appeals. “Because it’s a governmental immunity issue, they don’t have to ask permission to appeal, it’s automatic,” she said. “We’re optimistically confident that the appeals court will uphold Judge Stephens’ decision.” The state has said automated findings of fraud now get reviewed, and a bill that requires more human oversight of MiDAS and a certified mail notice to beneficiaries is in a House committee.

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

SPECIAL REPORT: THE LITIGATORS

Michael Bogren

Keefe Brooks

Board chairman, office managing attorney

Founder and managing partner

Plunkett Cooney PC, Kalamazoo

Brooks Wilkins Sharkey & Turco PLLC, Birmingham

More than a dozen municipalities statewide can keep their local rules on wages that companies pay on public projects, and more may follow after Michael Bogren helped the city of Lansing defeat a lawsuit at the Michigan Supreme Court. The managing attorney of Plunkett Cooney’s Kalamazoo office and formerly its governmental law practice leader argued Lansing’s case at the Michigan Court of Appeals and also submitted briefs to the state Supreme Court in a 2012 lawsuit by Associated Builders and Contractors of Michigan.

The high court found in May that municipalities can pass their own ordinances governing wage rates on public projects. Associated Builders had argued that this went against a 93-year-old legal precedent in the state courts, as well as another 2009 appellate ruling over a security services contract with Detroit for Cobo Center. “I thought we were correct on the law and that the changes in the 1963 constitution had made Lennane (the previous Supreme Court

wage ruling, from 1923) essentially an inoperable decision,” he said. “But it wouldn’t have surprised me if it had gone the other way. Getting a panel in the Court of Appeals to parse that out without stepping on the authority of another court can be difficult.” Prevailing-wage ordinances are local government rules modeled in part on a 1965 state law requiring the state, its school districts and public universities to pay the going rate of wages and benefits negotiated with contractors in the vicinity. The ruling preserves Lansing’s ordinance and others statewide, Bogren said. David Otis of Plunkett Cooney’s East Lansing office and the Lansing city attorney's office also handled the Associated Builders case.

“It wouldn’t have surprised me if it had gone the other way.”

An industry competitor settled quietly with a subsidiary of Detroit-based Walbridge Aldinger Co. last fall rather than appeal a $5.3 million Wayne County verdict won by Keefe Brooks. Walbridge Industrial Process LLC, a project pre-construction, engineering and equipment installation company serving the energy and heavy process industries, had alleged theft of trade secrets against rival Atlas Industrial Contractors Inc. of Columbus, Ohio, and former Walbridge employee James Seagram. Walbridge alleged Seagram, an estimator, used a Gmail account to email himself more than 300 company documents during his last week of employment at the company in 2012. Some of these he went on to email to his new company account after he started as an estimator for Atlas. An Atlas executive originally contended the company did not have any Walbridge trade secrets, and Seagram had denied wrongdoing in affidavits submitted in court. Jurors in early 2015 awarded

$5.3 million of the $5.6 million that Walbridge sought. After months of discussions and post-trial motions, Atlas declined to take its case to the Michigan Court of Appeals and settled. Brooks wouldn’t say for how much, but a judgment last June shows that the claim against Atlas totaled about $3.9 million, with interest, before settlement. The settlement has been paid. “To avoid the cost and time of going through an appeal, you do take a haircut (on the judgment), but not necessarily a giant one,” Brooks said. Seagram filed for personal bankruptcy late last year. Atlas indicated before trial that forensic experts already searched its systems and deleted the transferred Walbridge files. “In the old days, if someone tried this when they left they might have stuffed documents under their shirt or pants, but now it’s all electronic,” Brooks said. “It’s not the first time we’ve run into this, and we often know where to look.”

Changing the odds in your favor. z

Best Lawyers Lawyer of the Year

Over $2 billion recovered

Super Lawyers Michigan Top 10 lawyers for 7 consecutive years

Gary August Shareholder Zausmer, August & Caldwell PC, Farmington Hills

Gary August practices in construction law and insurance disputes from an Oakland County office, but it’s nearby Wayne County that’s kept him busy in municipal and real estate litigation lately. August represented Wayne County in a lawsuit that formally settled in January with AECOM Technical Services Inc. and Ghafari Associates LLC of Dearborn over the unfinished county jail. The deal in the 2013 lawsuit calls for both companies to proceed with concept plans, preliminary inspections and evaluations on a scaleddown version of the initial project. He also is defending the Wayne County Airport Authority in a lawsuit over new bus service pickups which began April 4. Advocates for the disabled claimed the new stops were either inaccessible or created segregated service in violation of the federal Americans with Disabilities Act, but U.S. District Judge Victoria Roberts declined to issue a restraining order against the airport in April. “Being able to handle the litigation over handicapped issues and make that service available at the airport was important work for us, since the judge denied the injunction that would have blocked it,” he said. August also represents Dearborn in a prospective class-action lawsuit before Wayne County Circuit Judge Brian Sullivan over its method of calculating water usage from meters, and represents the Plymouth Township clerk in a lawsuit where the Michigan Court of Appeals found in June that Aug. 2 primary ballots cannot include Rep. Kurt Heise or local resident Donald Schnettler, as challengers to township supervisor Shannon Price. August is serving as assistant attorney general to represent the Michigan Department of Transportation in any prospective litigation

PARTNER SPOTLIGHT

E. Powell Miller

over the planned Gordie Howe International Bridge development, while the firm’s managing shareholder Mark Zausmer handles land acquisition matters for MDOT in Detroit’s Delray neighborhood. August also represented a New York real estate investment group that acquired the Riverfront Towers high-rise apartment buildings on the Detroit River for $79.5 million, in a former dispute over a debt transfer leading up to the sale, according to Wayne County Circuit Court records. That lawsuit was settled in midJune, and New York-based Image Capital LLC now has a majority stake in the apartment towers.

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

SPECIAL REPORT: THE LITIGATORS How much do Michigan lawyers bill for their services? Here are median rates of billable hours for lawyers across the state. Blue bars represent the 25th percentile to 75th percentile range of billing rates from respondents statewide in 20 business law practices, with the median or 50th percentile number inset in white. Respondent sample sizes ranged from less than 10 to more than 360 by practice area.

Douglas Donnell

$50

$150

$200

$250

$300

$350

$400

$450

$500

$275

Appellate Bankruptcy/debtor

Partner, management committee chairman

Bankruptcy/creditor

Mika Meyers Beckett & Jones PLC, Grand Rapids

Business planning

An $80 million-plus judgment against Huntington National Bank last fall for its alleged role in a West Michigan company’s Ponzi scheme is under appeal, but still stands as one of the year’s largest awards in any Michigan courtroom. Attorney Douglas Donnell represented the trustee in the Chapter 7 bankruptcy of Teleservices Group Inc., a vendor company through which President Barton Watson of Grand Rapids-based Cyberco Holdings Inc. managed a multimillion-dollar Ponzi scheme targeting equipment finance lenders. Cyberco originally was a computer services company with legitimate customers, but by 2004 derived “virtually all” its revenue through a massive lending fraud scheme, according to court documents. Watson allegedly used Teleservices, another company he controlled, as the purported vendor for Cyberco to obtain financing for equipment purchases that never happened. “(Watson) was the mastermind. He’d call a finance company and ask, ‘Can I get financing to buy computers from Teleservices? It’s a company I’ve done business with before,’” Donnell said. “And Teleservices would acknowledge installing the computers, and Cyberco would acknowledge receiving them.” Teleservices would then forward lender funds to Cyberco, which had accounts at Huntington and would pay off earlier lenders or pay exorbitant salaries to Watson and others. Watson committed suicide shortly after federal agents raided Cyberco and seized his assets in late 2004. The trustee alleged that Huntington received tens of millions in deposits after its employees had suspicions about Watson and Cyberco, and the trustee was entitled to recover “avoidable” transfers in the scheme. Huntington has contended previously in court that it only kept about $16.9 million worth of loan repayments during the Cyberco scheme, and it would be an exorbitant punishment to pay the sum of all deposits to Cyberco’s account, “to pay that from which it never benefited, or had the legal right to benefit from.” U.S. District Judge Paul Maloney last fall ordered Huntington to pay $71.8 million plus interest on some transfers received from Teleservices.

$100

Partner

$223

Dykema Gossett PLLC, Bloomfield Hills $295

$260

Civil litigation

$275

Environmental law

$300

Foreclosure/borrower

$210

Foreclosure/lender

$215

Health care law

$298 $195

Insurance law Intellectual property

$333 $250

Landlord/tenant, commercial Medical malpractice, plaintiff Medical malpractice, defendant

$400 $175

Probate, trust administration

$250

Probate, trust litigation

$295

Product liability $250

Securities law

$400

Tax law

$300

Source: State Bar of Michigan 2014 Economics of Practice Law Report

Kathleen Lang Member Dickinson Wright PLLC, Detroit

building Enbridge leased to house cleanup and treatment of animals after the July 2010 oil spill. Last month, the Michigan Court of Appeals also sided with Enbridge in a lawsuit by a fired contractor employee that alleged interference with a business relationship and infliction of emotional distress; the Michigan Supreme Court also agreed in March to hear Enbridge's appeal in a third case in which a neighboring resident alleges that oil fume exposure caused excessive vomiting and later surgery.

Lawyers aren’t normally seen as builders or makers. But hundreds of millions of dollars of local commercial and residential development in metro Detroit is underway because of litigation Alan Greene handled in recent months. Pulte Group Inc. subisidiary Pulte Land Co. broke ground earlier this year on the 338-lot Bald Mountain neighborhood development in Orion Township after Greene represented the developer in a late 2014 lawsuit against the township for denying a rezoning request for the former Bald Mountain Golf Course. That case netted a consent judgment last year in Oakland County Circuit Court. Southfield-based Redico LLC is also planning a $180 million redevelopment of the Village at Bloomfield, on the site of the half-finished Bloomfield Park in Pontiac and Bloomfield Township. Greene represented Wells Fargo Bank NA as a lender in litigation surrounding the former development and handled a deal that transferred redemption rights to the site to Pacific Coast Capital Partners LLC

$300

Real estate

More than a year has passed since Enbridge Energy Partners LP and other affiliate companies entered a $75 million settlement deal with the state for cleanup and restoration costs stemming from a West Michigan oil spill, but Kathleen Lang has kept busy cleaning up other residual legal action for the company in Michigan. Lang is lead counsel in various lawsuits involving Enbridge, which convinced Calhoun County Circuit Judge Sarah Lincoln last November there was no cause for action in a lawsuit by the owner of a Marshall

Alan Greene

Lang was also lead counsel for Alberta-based Enbridge Inc. in a class-action lawsuit by owners and occupants of land along a river who settled for more than $6 million in late 2014. In other matters, Lang has represented Lorillard Tobacco Co. in various trademark infringement litigation actions against retailers found selling counterfeit Newport cigarettes in Michigan, New York state and elsewhere. Lorillard became a wholly owned subsidiary of North Carolina-based Reynolds American Inc. in June 2015.

and Redico. Wells Fargo also transferred ownership of two other former developments to PCCP and to Coventry, as well as a partnership interest in another development in a deal valued around $85 million total for the lender. Also, he prevailed in February 2015 in a lawsuit over a former Farmer Jack grocery distribution center, when the 6th U.S. Circuit Court of Appeals in February 2015 upheld the state Nonrecourse Mortgage Loan Act of 2012 as constitutional. The Legislature and Gov. Rick Snyder passed that act after Michigan courts sided against David Schostak of Livonia-based Schostak Bros. & Co. on a different nonrecourse loan. “That new ruling ended all the potential for litigation,” Greene said. “If they had ruled otherwise, there would have been tons of lawsuits worth hundreds of millions, just based on the size of the CMBS (commercial mortgage-backed securities) market in Michigan.”

“That new ruling ended all the potential for litigation.” Alan Greene

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

SPECIAL REPORT: THE LITIGATORS

Len Niehoff Of counsel, appellate advocacy practice leader Honigman Miller Schwartz and Cohn LLP, Ann Arbor

It’s not often that one attorney is able to argue for millions in additional property use tax exemptions for DTE Energy Co., and to keep firearms away from University of Michigan students, in the same year. Len Niehoff, appellate advocacy practice group leader at Honigman Miller Schwartz and Cohn LLP and professor from practice at the UM Law School, awaits an oral argument date before the Michigan Court of Appeals after convincing Court of Claims Judge Cynthia Stephens last November that UM was exempt from state laws that ban local governments from making weapon restrictions. Ann Arbor resident Joshua Wade filed a lawsuit last year against the university over a 2001 policy that generally bars anyone but law enforcement or military personnel from possessing a firearm on UM property. The Michigan Supreme Court also found last July that Detroit-based DTE could claim a property use tax exemption on various transformer and substation sites in its grid that

the state typically allowed only for energy plants. “It’s very clear how the process works for most normal manufacturing — you have a plant where materials go in and a finished good comes out the other end. There’s an exemption if the property manufactures a good. But electricity works differently,” Niehoff said. “Treasury’s position was once it leaves the plant it’s a finished good. But DTE’s position is that there’s much more to it.” The Supreme Court sided 4-3 with DTE in the $13 million dispute and found other parts of its grid are involved in the larger industrial process of making electricity suitable for consumer use. The case then returned to a lower court for clarification on how much use was exempt or non-exempt.

“DTE’s position is that there’s much more to it.”

E. Powell Miller President The Miller Law Firm PC, Rochester

E. Powell Miller makes a fairly perennial appearance in tallies of top verdicts and court settlements in the region, but recently his firm has gained visibility representing former Compuware Corp. Chairman and CEO Peter Karmanos Jr. in various matters. Miller represented Karmanos in arbitration with Compuware, in which arbitrator Gene Esshaki ruled in early 2015 that the Detroit company Karmanos co-founded in 1973 owed him $16.5 million for his claim the company terminated him without cause and canceled his stock options. Compuware has taken that case to the Michigan Court of Appeals. “While you take some pride in reaching a good settlement, it often takes something more to deliver the goods in a trial setting, and to convince the fact finder of your case,” Miller said. “Which was good to do, because I think the world of Pete Karmanos, and every penny that he got he deserved.” Karmanos alleged Compuware terminated his consultant contract without cause in 2013 and canceled

his stock options after Karmanos made public statements criticizing the management’s handling of a takeover bid at the time by Elliott Management Corp. of New York. Miller’s firm is also handling Karmanos’ separate 2015 lawsuit against Compuware and Thoma Bravo LLC, alleging fraud in the Chicago private equity firm’s $2.4 billion acquisition, as well as defending Karmanos in a May lawsuit by his three sons, alleging he’s in default and owes more than $105.6 million on a 2013 loan through a stock partnership. The defense is seeking to dismiss that case, which awaits an Aug. 24 conference before Oakland County Circuit Judge Wendy Potts. Miller was also co-counsel for a class of more than 20,000 registered nurses who provided direct patient care in acute-care hospitals from late 2002 to late 2006. The nurse class settled with Detroit Medical Center in September for $42 million, weeks before beginning a trial on allegations the hospitals had conspired to keep wages in the region artificially low.

Geoffrey Fieger and Ven Johnson

Fieger, Fieger, Kenney & Harrington PC, Southfield Johnson Law PLC, Detroit

High-profile plaintiff attorneys Geoffrey Fieger and Ven Johnson haven’t shared a law firm letterhead for five years. But together, they still led the field with two of Michigan’s largest jury verdicts of 2015, both in Wayne County. Johnson, of Johnson Law PLC, last June obtained the highest personal injury verdict in Wayne County for about $22.6 million, of which $15.6 million was entered as a judgment against Reliable Transportation Specialists Inc., one of Reliable's drivers and Container Port Group Inc. Driver Burt Holt was inspecting his trailer at Container Port in Detroit when another driver working for Reliable Transportation struck him in 2011, allegedly causing ankle and leg injuries that permanently disabled Holt and cost him his trucking business. Johnson also concluded a term as president of the Michigan Association for Justice last year and becomes chairman of the State Bar of Michigan negligence committee, which handles legislative and legal issues, starting Aug. 1. Fieger, of Southfield-based Fieger, Fieger, Kenney & Harrington PC, won an award last May for about $21 million against Oakwood Healthcare Inc. for performing the wrong surgery on a patient. Bimla Nayyar, 81, of Belleville died about two months after doctors at Oakwood (now Beaumont Hospital — Dearborn), performed a brain surgery in 2012 when she was seeking treatment for a joint dysfunction in her jaw. Hospital staff had placed Nayyar’s name on another patient’s medical scan records. The family won $300,000 in damages for expenses, $13 million for pain and suffering, $4.5 million for the family’s past loss, and $2.2 million for future losses, plus interest and legal fees. The hospital has appealed and obtained a judgment scrapping the verdict just last week, and Fieger could not be reached on whether he’ll challenge that decision in court.

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

SPECIAL REPORT: THE LITIGATORS

Perrin Rynders Partner Varnum LLP, Grand Rapids

Some of what Perrin Rynders has done lately might seem to fall near the margins of “litigation.” But it’s proven to be worth tens of millions in potential impact on health care providers and self-insured businesses in Michigan. For one thing, Rynders doesn’t technically represent any litigants in Shane Group Inc. et al v. Blue Cross Blue Shield of Michigan. But he and co-counsel Bryan Walters at Varnum helped convince the 6th U.S. Circuit Court of Appeals in June to scrap a $30 million class-action settlement deal Blue Cross reached in 2014 with various businesses over its charging agreements with hospitals. Some 26 self-insured businesses dubbed the “Varnum Group” in court documents joined a group of objectors who thought the class settlement too small, too secretive and too burdensome. “We were allowed to see hardly any records, or data, so we couldn’t really evaluate the settlement on whether it’s fair,” Rynders said. “But our analysis just from information that’s available to the public was the settlement is woefully inadequate.” Blue Cross is reviewing the decision and hopes to “bring this matter to resolution once again,” said corporate affairs director Helen Stojic. The company has said previously it used “most-favored-nation” clauses to negotiate the best prices and charge competitive premiums to customers. In another dispute, Rynders has settled about 120 out of 150-plus lawsuits against Blue Cross since 2011 without coming near a courtroom, from self-insured companies who allege various hidden fees in the Blues’ third-party administrative agreements with those companies. Only one company, Hi-Lex Controls Inc., ever went to trial with a $5 million-plus award against the insurer. Rynders said most other cases enter a pattern of early court motions followed by a settlement within months. A few involving Indian tribal nations might be “litigated more fully,” he said. Rynders wouldn’t say what the combined settlements are worth — but they may exceed $25 million, since only about 20 municipal governments were able to secure more than $13 million on similar cases a few years ago. The company has contended previously that the fees enabled clients to receive substantial hospital discounts, and that state appellate courts have sided with Blue Cross on the same issue.

David Shea Founding and managing partner Shea Aiello PC, Southfield

The eclectic law practice of David Shea and his Southfield firm drew the spotlight several times in recent months — from successful defense work for Hantz Financial Services Inc. to representing Flint residents in that city’s ongoing water crisis. Shea is founding partner of Shea Aiello PC and general counsel at

Hantz Group, Southfield-based where he has served on its board of directors since 2006. He is also lead counsel for some Flint residents and businesses suing the city’s engineering firms, several past emergency managers and the Michigan Department of Environmental Quality, among others at U.S. District Court.

The state is seeking a dismissal, but Shea is asking Judge John Corbett O’Meara to consolidate several pending suits into one proceeding. Like other local litigators, Shea said his practice has recovered significantly from the Great Recession. Shea prevailed in 2015 when the Michigan Supreme Court let a lower court ruling stand in favor of Hantz Financial Services, refusing a potential $20 million class-action claim on behalf of investors who purchased promissory notes through Hantz from Medical Capital Holdings Inc. He also represents more than 40 nurse anesthetists in an April lawsuit against St. John Providence Inc.

and owner Ascension Health before Oakland County Circuit Judge Wendy Potts, alleging loss of severance pay and other benefits in a move to outsource those specialists. About 66 employees lost their jobs Dec. 31 at St. John Providence Hospital and Medical Center in Southfield or St. John Providence Park Hospital in Novi, but a handful returned late in January and about two dozen returned on a contingent basis with an option to sign on full time later. But more than two dozen did not return, and most found jobs elsewhere. Shea declined to estimate damages in the lawsuit, but CRNAs average $170,000 per year in salaries.

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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 // J U LY 2 5 , 2 0 1 6

DEALS & DETAILS ACQUISITIONS & MERGERS

Evangelical Homes of Michigan, Saline, a nonprofit health and human service organization for seniors, has acquired the former St. Joseph Mercy Saline building. The 100,000 square-foot facility houses its Redies Center for Rehabilitation and Healthy Living for short-term

care and a state-of-the-art rehab and wellness center. Website: evangelicalhomes.org.

CONTRACTS

Farbman Group, a Southfieldbased real estate company, has retained Rightsize Facility, Chicago, a nationwide office interiors and facility services firm, to create

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ready-to-lease model office spaces at its New Center One building in Detroit. Websites: farbman.com, rightsizefacility.com. PARI Robotics, Rochester Hills,

an automation and robotics company, has retained Aqaba Technologies, Sterling Heights, internet consultants, to redesign its corporate website. Websites: parirobotics.com, aqabatech.com. Plastipak Packaging Inc., a subsidiary of Plastipak Holdings Inc., Plymouth, a manufacturer of rigid plastic containers for the consumer product industries, announced a partnership with Arizona Beverages, Woodbury, N.J.,

JULY 27

Minority Business Women’s Conference.

7 a.m.-7 p.m. Michigan Minority Supplier Development Council. An event designed to bring together minority women business owners and corporate executives to discuss industry trends, share practical advice and network. It features national headliners, keynote speakers, discussion forums, breakout sessions and a few surprises. The Henry Hotel, Dearborn. $200. Phone: (313) 873-3200; email: info@minoritysupplier.org; website: www.minoritysupplier.org.

THURSDAY JULY 28

Doing Business in Mexico. 11:30 a.m.-1:30

Melinda D. Zatkoff Associate Reising Ethington, P.C. Reising Ethington P.C. announced that Intellectual Property attorney Melinda D. Zatkoff has joined the firm as an Associate. Melinda’s practice primarily focuses on drafting and prosecuting patents worldwide in various arts including medical, chemical, automotive, materials, and fabrics. She comes to Reising Ethington from Brinks Gilson & Lione. Melinda’s experience includes foreign and domestic patent and trademark prosecution, infringement and clearance analysis, and agreement work.

AUTOMOTIVE Christopher E. Couch Vice president, iInnovation and Product Groups Cooper Standard Cooper Standard appointed Christopher E. Couch to the newly created position of vice president, innovation and product groups. With more than 20 years of global automotive manufacturing experience garnered through technical, strategic and senior executive roles at both automakers and tier one suppliers, Couch will lead Cooper Standard’s i3 Innovation Process from idea inception to commercialization.

Metcom Inc., St. Clair Shores, a

consumables management technology company, announced an agreement to provide printed products, branded apparel, online procurement and distribution services to Levy Group, Detroit, a company that provides construction materials, road building, steel mill, logistics and laboratory services. Websites: metcom-inc.com, edwclevy.com.

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to commercialize in the U.S. the ThermoShape system, which creates a smooth-wall, hot-fill, extended-shelf-life recyclable polyethylene terephthalate container. Websites: plastipak.com, drinkarizona.com.

p.m. Automation Alley. Seminar aims to help Michigan’s small and midsize companies identify market opportunities, devise entry strategies and learn more about technical requirements for selling products, services and technologies in Mexico. Automation Alley, Troy. $20 members; $40 nonmembers. Contact: Lisa Lasser, phone: (248) 457-3283; email: lasserl@automationalley.com. New Enterprise Forum Showcase and Pitch Pit. 5-7:30 p.m. Spark. Training entrepreneurs

on how to present to investors. Learn what is important to communicate and what isn’t. Three entrepreneurs each give a four-minute pitch of a business idea to a panel of investor judges. Spark, Ann Arbor. Free. Contact: NEF Public Relations, phone: (734) 214-0110; email: PR@NewEnterpriseForum.org.

UPCOMING EVENTS

Geo-Targeting Your Audience. 11:30 a.m.-1 p.m. Aug. 10. Troy Chamber of Commerce. Brian Blau, Quell Communications Group, will walk attendees through a digital marketing program to target specific audiences. Discussion includes messaging and positioning, content generation, digital production and media deployment across diverse online channels. Troy School District Services Center, Troy. $28; $18 Troy Chamber members. Add $5 for registering on day of event. Contact: Jaimi Brook, phone: (248) 641-8151; email: theteam@troychamber.com. ASE Talent Symposium. 7:15 a.m.-4:15 p.m. Aug. 11. American Society of Employers. Talent

acquisition, management and development practices will be topics. Aaron Olson, Northwestern University instructor, chief talent officer and author of Leading With Strategic Thinking, will be the morning keynote speaker on “Developing Strategic Leadership: The Key to Competing.” Starr Shafer, president of StarResults and senior consultant with Career

Systems International, will be the afternoon

keynote speaker on “Develop Your Employees or Someone Else Will.” Management Education Center, Troy. $219 ASE members; $259 nonmembers. Contact: Dan Van Slambrook, phone: (248) 223-8008, or Ed Holinski, phone: (248) 223-8017. Website: aseonline.org.

Navigating the U.S. Banking and Cybersecurity Landscape. 9-11:30 a.m. Aug. 12. Asian Pacific

American Chamber of Commerce. Symposium on banking solutions along with the surrounding cybersecurity landscape. Speakers: Lorraine Reategui, managing director and head of middle market international, J.P. Morgan Chase, on “Best Practices for Banking in the USA — Solutions You Should Know” and Raj Patel, cybersecurity consulting partner, Plante Moran, on “Managing Today’s Cybersecurity Risk for Global Business.” Chase Tower, Detroit. $10 APACC members and partners; $20 nonmembers. Contact: Leonie Teichman, phone: (248) 430-5855; email: leonie@apacc.net. Inside the CEO Mind. 4-6 p.m. Aug. 16. Detroit Regional Chamber. Mark Sellers, owner of HopCat, speaks on the business mind that has mastered the art of customer service. He will discuss bringing a vision to reality and how HopCat stands out. A question-and-answer session follows. HopCat, Detroit. $30 chamber members; $55 nonmembers. Contact: Marianne Alabastro: phone: (313) 596-0479; email: malabast@detroitchamber.com. 2016 Crain’s Food Summit. 2-7 p.m. Aug. 22. Crain’s Detroit Business. Key players from local food companies will focus on building Michigan’s supply chain and pairing ideas with the visions of major national food companies. The summit will connect entrepreneurs, farmers, manufacturers, distributors, retailers, growers and processors to potential customers. Eastern Market, Detroit. $80 individual; groups of 10 or more $75 each; discount combo ticket with Live Love Local is $100. Preregistration closes Aug. 18 at 5 p.m. Contact: Kacey Anderson, email: cdbevents@crain.com; phone (313) 446-0300; website: crainsdetroit.com.

Calendar guidelines. Visit crainsdetroit.com and click “Events” near the top of the home page. Then, click “Submit Your Events” from the drop-down menu that will appear. Fill out the submission form, then click “Submit event” at the bottom of the page. More Calendar items can be found at crainsdetroit.com/events.

PEOPLE: SPOTLIGHT Airport authority CEO to retire in September

The public authority that oversees Detroit Metropolitan Airport said it will begin a search for a new full-time CEO when Thomas Naughton retires at the end of September. The Wayne County Airport Authority said last week it has approved a consulting deal that begins Oct. 1 for Naughton to aid the transition to a new CEO, who also Naughton oversees Willow Run Airport in Van Buren Township. The authority appointed Joe Nardone, now its vice president of business development and real estate, as interim CEO beginning Oct. 1. The authority voted in 2012 to give the job to Naughton full time. He had been appointed interim CEO in October 2011 after the authority voted to fire then-CEO Turkia Mullin amid questions about the hiring process and a severance payment from her previous job with Wayne County. In 2009, when he was the authority’s senior vice president of finance and CFO, Naughton was honored as a Crain’s CFO of the Year in the nonprofit/ government agency category for his role in securing $1.2 billion to build the 122-gate McNamara Terminal and the $431 million North Terminal. He has worked for the authority since it was created in 2002.

Amador steps down as Mercy Education leader Amy Amador, who led Mercy Education Project in Detroit for

the past decade, has stepped down to pursue new opportunities, the nonprofit said. The organization, which offers free educational programs for lowincome women, named Kathryn Tanner, 55,

to succeed Amador, 41, as executive director. Tanner, a Detroit native, had spent the past 18 years at Montana State University, at the Office of Activities and Engagement, the Diversity Awareness Office and the Women’s Center. Under Amador’s direction, the organization was named one of Crain’s Best Managed Nonprofits in 2013. Tanner

C R A I N ’ S D E T R O I T B U S I N E S S // J U LY 2 5 , 2 0 1 6 CRAIN’S DETROIT BUSINESS

July 18, 2016

MOBILITY FROM PAGE 1

Motors Corp. plants in Michigan after the automaker’s 2009 bankruptcy — said the deal could close in the third quarter of 2017, though it could be sooner depending on how quickly developers can lock up necessary approvals and financing. RACER Trust has owned the Willow Run property since 2011. Assuming that happens as planned, developers could be ready to request construction bids as soon as the deed is in hand, Maddox said. “RACER is confident that the underlying use for the property has a very compelling business case, and we are confident that the buyer and developer team ... are absolutely the right team to get it done,” said Bruce Rasher, RACER’s redevelopment manager. Willow Run Arsenal of Democracy Landholdings is a limited partnership created in March to handle the property acquisition. Its owners include Willow Run Land Management Services, a nonprofit corporation registered with the state, and the Michigan Strategic Fund, which bought an equity stake as part of its $3 million funding award in the spring. Once it owns the property, the landholding entity will lease the site to the American Center for Mobility, which is a separate nonprofit corporation. “We are ecstatic about this development because the American Center for Mobility will give Michigan a

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A conceptual rendering of the planned American Center for Mobility at Willow Run. MICHIGAN ECONOMIC DEVELOPMENT CORP.

cutting edge in this new technology,” Rasher said. “It’s important not just for the township of Ypsilanti and Wayne and Washtenaw counties, but all of Southeastern Michigan, because the world’s largest concentration of automotive R&D and engineering resides here.” In the meantime, developers say they can move forward with designing the site now that they have a formal purchase agreement with the state and RACER Trust. They have hired a Detroit-based civil engineering consulting firm with mobility chops: The Mannik & Smith Group Inc. also helped design the 32-acre Mcity test bed at the University of Michigan. The American Center for Mobility as proposed will include a 2.5mile highway loop for developers of

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and daylight conditions. Mannik & Smith landed a contract worth up to $150,000 to work on the project, company executives said. Maddox said his team is in talks with two other firms that specialize in intelligent transportation system design and project management, though he declined to name them because they are not yet under contract. Mannik & Smith is working with the American Center for Mobility and the Michigan Department of Transportation on both site design and to address right-of-way issues near the intersection of U.S. 12 and Wiard Road in order to build the highway loop portion of the project, said Sean Kelley, a senior vice president and principal with the firm.

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connected and autonomous vehicles to test their cars at freeway speeds; a grid simulating urban streets, with intersections, buildings and pedestrian crossings; and buildings where the site’s operations will be based, Maddox said. Ideally, he added, the center also could provide a place for automotive experts to focus on drafting voluntary standards for the industry — separate from the rules expected to come from federal regulators — and test their ideas on-site. Maddox said the purchase agreement will allow his team more direct and frequent access to the site to speed up land surveys, which will be used for site design and to create 3-D computer models that will simulate the facility in different weather

Page 15 Kelley said he expects that work on a detailed design will begin soon with increased access to the property. The project likely will be built in phases, with the highway loop section coming first, he added. Project design is scheduled to last at least through the end of the year. “Certainly, we would want to break ground on our facility construction as soon as possible after the final sale date,” Maddox said. RACER Trust will continue ongoing environmental cleanup to prepare the site for development. RACER received close to $500 million when it was created in federal bankruptcy court for its work on old GM plants across the country; its budget for Willow Run is $35.8 million, of which $5 million has been spent, according to trust officials. The trust also worked to identify the location of utilities, some of which date back decades and had not been properly documented, Rasher said. Investment banking firm Stout Risius Ross Inc., which has a Southfield office, was hired to appraise the property and determined the $1.2 million figure that became the purchase price, Rasher said. The ultimate scale of the project is unclear. The American Center for Mobility has been described as a 335-acre site, yet the RACER Trust property to be sold is 311 acres. RACER administrators and Maddox couldn’t explain the discrepancy. Maddox said developers “fully intend” a 335-acre footprint.

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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 // J U LY 2 5 , 2 0 1 6

INCENTIVES FROM PAGE 1

“We develop the highest and best use for our specific projects,” said Ferlito, whose project would have a dozen condominiums and small office and restaurant space. “When you have a community involvement that can direct the size, the uses and the shape — one, you create even more red tape and delays. Timing is everything on these projects.” “Two, you always build for value. When you have people that don't really know what they are talking about or how real estate works, they can curtail the whole project. I think what will happen is you will start seeing developers not pulling out of the city, but slowing down.” Rashida Tlaib, a former state lawmaker who is advocating for a community benefits ordinance with tier-one projects starting at $15 million, says there needs to be rules ensuring that regular, everyday Detroiters see the benefits of what has been an increased level of economic investment in the city. The Detroit City Council has flexibility to exempt projects from community benefits agreement requirements, Tlaib said. Specific projects around the country — such as the Staples Center in Los Angeles, the Pittsburgh Penguins' Consol Energy Center and the Ballpark Village project in San Diego — have incorporated CBAs. But if one of the proposed ordinances is enacted, Detroit would be the first in the country to have one.

Two proposals There are two proposals at play. The first one, slated to be put on the Nov. 8 general election ballot by the Detroit Election Commission, was organized by Rise Together Detroit, a

UTICA FROM PAGE 3

“Four years ago (when we visited the site in Utica, we saw that it) was right on the river, right on M-59 and it had this cool downtown vibe to it as well.” Appleby spent two years building the stadium, and since it opened in May to house his new United Shore Professional Baseball League, downtown Utica now has a spotlight on it, with people driving from all over the region to spend an evening at the ballpark. But the question remains: How will Utica handle more traffic downtown? Utica is a mere 2-square-mile bedroom community between Sterling Heights and Shelby Township in Macomb County. “It’s a very small town tucked in among giant suburbs,” said Utica Mayor Jacqueline Noonan. The city will celebrate its 200th anniversary of white settlement next year. In 1904 and 1905, fires destroyed many of the buildings downtown, but the brick buildings survived and are still standing. Most of the buildings that comprise downtown were built after the fires, and the city maintains that historic, small-town feel.

coalition of community groups and others, such as the North End Woodward Community Coalition, the Maurice

City Council President Brenda Jones introduced a nearly identical ordinance earlier this month but on Friday morning withdrew it from consideration to be placed on the November ballot.

It would require that tier-one projects of $15 million or more that receive $300,000 or more in things like tax abatements or incentives enter into a legally binding community benefits agreement with a group of “representative residents, businesses and nonprofit organizations” within the “host community.” Those agreements would spell out what specifically the developer would provide to the community in which the development is located. Those could be things like education and land use programs, local small business Rashida Tlaib: and resident inWants rules to clusion and parlevel playing field ticipation in the for CBAs. project. Environmental protections and others are also considered community benefits. Tlaib, who is now community partnerships and development director for the Detroit-based Sugar Law Center, said Rise Together Detroit came to its $15 million figure by averaging costs of Detroit Economic Growth Corp. projects over the past two decades. “The $15 million didn't fall from the sky,” she said. “It came from an average ... they are not trying to force anybody to do something unreasonable.” Tlaib also said the City Council can waive CBA requirements.

A hybrid plan Councilmember Scott Benson, who introduced what he called a hybrid CBA ordinance, said he is concerned about the effect of a comparatively small threshhold for requiring CBAs. His proposal, which the council Friday morning voted to send to the election commission to place on the November ballot, would require community benefits agreements for developments $75 million or more and receiving $1 million or more in public incentives or on property with a cumulative market value of $1 million or more that was sold or transfered to a developer. “I'm an urban planner by trade,” he said. “I've done commercial and residential development for 16 years. I've got a great concern about the chilling effect that the Sugar Law version would have on future deals, and trying to attract businesses to Detroit. We need to come up with something that everyone can get around.” His proposal had exempted projects costing $75 million or more in downtown from a community benefits agreement requirement. That provision has been stripped from the proposed ordinance. Amin Irving, president and CEO of Ginosko Development Co., said he favors the Benson proposal because it “gives the local community residents a powerful voice in the development process of their community” and “ensures the overall strategic objectives of the city, owners, residents and capital investment.” Irving is one of four development

Marvin Beatty, who was one of the investors in the $72 million Gateway Marketplace project at Eight Mile Road and Woodward Avenue that brought Detroit its first Meijer Inc. store, said the Rise Detroit Together proposal took decision making and authority out of the hands of elected officials and placed it in those of residents who were unaccountable to the public. Tlaib said the City Council must approve a community benefits agreement before it goes into effect. “The city signs the CBA, too,” she said. “The accusations are misleading and intentionally paint the CBA process (as laid out in the Rise Together Detroit version) as circumventing the process, when it’s the opposite.” When 60 percent of Detroit's population lives in deep pov-

Downtown Utica, which runs about a quarter mile along Auburn Road, is comprised of six bars and restaurants, barbershops, a woman’s hair salon, resale shops, a tattoo parlor, an Argentine tango dance studio and various offices, among other businesses. The city’s downtown is flanked by USA Tire, which sells new and used tires but looks almost like an antique shop or museum, and Hogs Hollow Smokehouse, a barbecue restaurant named after the city (Utica was once called Hogs Hollow because of its slaughterhouse), with very few vacancies in between. Within the past six months, about five business have either opened or expanded in Utica, and the Clinton River Hike and Bike trail was completed in that time as well, Noonan said. She said businesses have come and gone in her time as mayor for nearly 30 years, but the occupancy rate has remained high. One of those longtime businesses is the Shamrock Irish Pub, which opened in 1935. Joe Mayernik, the owner of the restaurant for 35 years, said he’s seen “mammoth changes” in Utica since he came to the city in the early 1980s. He said the arrival of the ballpark has helped his restaurant, known for

its burgers, beer and outdoor patio. “Being a family-oriented restaurant and bar, the ballpark was perfect for us,” Mayernik said. “Many families go (to the baseball games), and our crowd is the same.” He said that since the stadium opened he’s hired three employees, doubled his business on Sundays and has seen a 10 percent increase in gross revenue. Mayernik, who’s also chairman of Utica’s downtown development authority, said he’s heard and experienced nothing but positive things with the new stadium. John Sattmann, owner of Hogs Hollow Smokehouse and vice chairman of the city’s DDA, agrees. Sattmann has been trying for the past six years he’s been on the DDA to organize large events, such as the Zombie Fest and Oktoberfest, to bring people to downtown Utica and get them walking through the city. So when Appleby and the city began talks on the stadium, Sattmann pushed for the ballpark, and the DDA leased the 15.7-acre project site to Appleby for $1 a year for 30 years with two 10-year options. He’s seen increased revenue at Hogs Hollow Smokehouse on the weekdays, although his Friday and Saturday nights have remained about the same.

“I think (on) Friday and Saturday nights, my regulars might be a little afraid to come down here because they heard of (the parking issues),” Sattmann said. “I still want my regulars too, because when the ballpark closes for the summer, I need my regulars to come back and join me on the weekends. But I think it’s growing pains like anything else.” The DDA and Appleby together built a 850-car parking lot adjacent to the stadium, but with games bringing in up to 4,000 people at times, there are not enough spots for everyone. Appleby is working to correct this problem by having his employees park outside the city and shuttling them in for games to free up parking spaces. Sattmann said that as the city and Appleby work to solve the parking issue, he hopes new visitors to the city and regulars will both come to town on weekend nights. Ultimately, though, he believes the stadium will attract businesses and people to the city. “With the new ballpark, hopefully new businesses are going to come and stay because the economy is flourishing,” Sattmann said. Joe Sowerby, a partner at the Mt. Clemens-based real estate firm Anton, Sowerby & Associates, said it’s hard to predict at this point what

& Jane Sugar Law Center for Economic and Social Justice and the Community Development Association of Detroit.

partners planning a sprawling $300 million mixed-income multifamily development with 1,037 units on the land that is best known as housing the former Brewster-Douglass housing projects along I-75 south of Mack Avenue. It would also include a pair of properties in Eastern Market. “The city, for a long time, but even more specifically recently, has been very effective in negotiating community benefits agreements on most, if not all, of the projects that involve city resources,” said Eric Larson, CEO of the Downtown Detroit Partnership and Bloomfield Hills-based Larson Realty Group, which is part of the planned redevelopment on the site of the former Tigers Stadium. “The idea that we need an ordinance to accomplish this objective is a bit misguided only because we really have been as a community very effective at getting these community benefits agreements negotiated.”

Most votes wins

erty ... a thriving Detroit won't be possible without including neighborhoods in the process." Beatty is also an investor in the planned redevelopment of the former Michigan State Fairgrounds site, adjacent to the Gateway Marketplace site, as well as a large-scale multifamily mixed-used development in Brush Park on 8.4 acres of land with more than 300 apartment units. “It does nothing for the future growth and development of the city, and it takes the responsibility of governance away from the elected officials and moves it to a group of community people who are more than likely well-intended but, in my estimation, unable to separate their personal feelings or their lack of knowledge about a particular development to make the right kinds of decisions,” he said. “Don’t tie a rope around the neck of developers and funders and banks so they are unable to make the kinds of improvements the city is so desperately in need of,” he said. Brad Williams, vice president of government relations for the Detroit Regional Chamber, wrote in a letter to Jones last week that the chamber favors Benson's proposal because it "creates greater certainty and accountability mechanisms, allows the participation of city government and protects small investors most sensitive to barriers." If both proposals end up on the November ballot, the one that gets the most votes wins, Benson said. If neither proposal gets at least 50 percent of the vote, both fail, said Mark Brewer, a former Michigan Democratic Party chairman who is an attorney with Southfield-based Goodman Acker PC advising Rise Together Detroit on the ballot proposal. Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

effect the stadium could have on drawing new businesses into the community. “The ripple from the stadium is not going to be an overnight sensation,” Sowerby said. “It’s developing as we speak.” He said Utica is a “tight, solid community” with a mix of older retail developments with a bump in newer retail developments. The stadium buzz is new, but he said Macomb County as a whole has “rounded the corner real estate-wise.” Despite some uncertainty surrounding parking, Appleby has plans to add teams to his threeteam developmental league at the stadium and complete a second phase to the project, a retail and condo development across the Clinton River on 1.4 acres. Appleby said that phase could begin within the next six months. Noonan also expects Utica’s momentum to continue, as the city’s bars and restaurants have always been popular, and the completed riverfront will now draw in more bikers and runners. “We want to continue to be a vibrant and exciting place to be,” she said. Adrienne Roberts: (313) 446-1612 Twitter: @AdrRoberts

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

ENERGY FROM PAGE 1

to lower-cost, competitively priced electricity. An earlier version of the bill was approved 6-1 by the Senate energy and technology committee, with Sen. Mike Shirkey, R-Jackson, being the lone vote against. Since that approval May 31, Nofs has altered the bill twice to gain support. Sources told Crain’s the latest version is undergoing another revision. The Legislature is on recess until September aside from one day scheduled for August. While Nofs declined an interview request, spokesman Greg Moore released the following statement: “We are in the process of re-working several items (including the electricity choice section) and therefore don’t want dated information being put out for discussion. It would also be premature to get into specifics before we’ve had a chance to fully brief members and stakeholders.” In previous interviews, Nofs has argued that SB 437 does not kill the customer choice program, which was approved as part of a comprehensive 2008 energy package. “Nofs is correct that his bill doesn’t kill choice. Wink wink. He is right. It doesn’t kill the 10 percent, it only kills the 10 percent for non-Michigan utility AES (alternative-energy suppliers),” said an energy expert with ties to alternative-energy suppliers who spoke to Crain's on condition of anonymity. “Wolverine and CMS do fine. They want to be able to grow the choice load. They don’t care if Constellation (or other alternative-energy companies) goes out of business” in Michigan. While Consumers’ AES serves only two companies with 35 megawatts of power, the energy expert told Crain’s that Consumers and Wolverine could add choice customers that would be left stranded if the other companies close in Michigan in 2018 because of the proposed rules. Several energy experts told Crain’s that Wolverine and CMS ERM MI already meet Nofs’ proposed 90 percent demand guideline because they or their parent companies produce electricity in Michigan and have sufficient capacity to meet daily peak demand for their customers. Wolverine Power marketing cooperative CEO Kim Molitor did not re-

turn email requests and phone calls the past three weeks seeking comment. The Wolverine AES, an affiliate of the parent Wolverine Power Cooperative, has 29 choice customers and generates more than 159 megawatts in Michigan. Wolverine is owned by five distribution cooperatives and two alternative-energy companies, including Spartan Renewable Energy. The other alternative-energy companies, including Constellation AES and First Energy Solutions, purchase most of their electricity for their choice through the regional wholesale energy market that includes Michigan — the Midcontinent Independent System Operator

— although their parent companies produce electricity in Michigan and other states for other customers. For example, Constellation has 2,900 choice customers in Michigan who receive 872 megawatts of electricity, the MPSC said in a 2015 report. Constellation is owned by Exelon Corp., one of the nation’s largest utilities with 23 nuclear plants and the 12th-largest wind producer. Exelon also produces 400 megawatts of wind power in Michigan and is adding another 150 MW in Sanilac County this year under power purchase agreements with businesses. Like several other power suppliers, Exelon also produces power for its AES affiliates. FirstEnergy Solutions has 310 customers and contracts for 248 megawatts of power. FirstEnergy is an affiliate of Akron, Ohio-based FirstEnergy Corp., an investor-owned utility. Dave Mengebier, Consumers’ senior vice president of governmental and public affairs, confirmed that CMS ERM MI is a subsidiary of CMS Energy and is a licensed alternative-energy company. However, he said CMS ERM does not have any current retail choice customers. “At one time CMS ERM had retail customers, but we got out of that business in the 1990s,” said Mengebier, adding that the lone customer, Double Eagle Steel Coating Co. in Dearborn, was on a long-term contract from the 1990s that ended last year when the plant closed. Mengebier confirmed that CMS ERM has two remaining customers, Dearborn Industrial Generation and AK Steel with 35 megawatts, but those customers do not participate in the choice market. DIG and AK Steel are wholesale customers serviced through CMS ERM through special

INDEX TO COMPANIES

These companies have significant mention in this week’s Crain’s Detroit Business: American Center for Mobility .............................. 1

The Miller Law Firm PC ....................................... 12

Bank of Ann Arbor ...........................................3, 18

Mitchell Plastics ................................................... 8

Bank of Birmingham .............................................3

Motor City Match ..................................................7

Beaumont Care Partners .................................... 8

Oakwood ACO ....................................................... 8

Beaumont Health ................................................. 8

Pitt McGehee Palmer & Rivers PC ..................... 9

Berg Muirhead and Associates ...........................3

Plunkett Cooney ..................................................10

Block Party LLC ......................................................7

RACER Trust ........................................................... 1

Brooks Wilkins Sharkey & Turco PLLC ..............10

Shea Aiello PC ...................................................... 13

Butzel Long PC ...................................................... 9

Twisted Roots LLC .................................................7

Dickinson Wright PLLC ........................................11

United Physicians ................................................. 8

Dykema Gossett PLLC .........................................11

University of Michigan ......................................... 4

Ferlito Group LLC ................................................... 1

Varnum LLP .......................................................... 13

Fieger, Fieger, Kenney & Harrington PC ........... 12

WCSX 94.7 FM ....................................................... 8

Honigman Miller Schwartz and Cohn LLP ....... 12

WMGC 105.1 FM ..................................................... 8

Johnson Law PLC ................................................. 12

WRIF 101.1 FM ........................................................ 8

Michigan Economic Development Corp. ........... 1

Wolverine Power Marketing Cooperative .......... 1

Mika Meyers Beckett & Jones PLC .....................11

Zausmer, August & Caldwell PC .......................10

approval by the MPSC. But Mengebier also denied Consumers has a “plan to open (CMS ERM MI) to retail customers” like the other alternative-energy companies. Bob Strong, general counsel with the Association of Businesses Advocating Tariff Equity, which represents major employers in Michigan, said Wolverine and CMS ERM could qualify under current business practices to be the only surviving AES companies in Michigan. Strong said Wolverine and CMS ERM would qualify because they are based in Michigan and produce electricity here. “The issue is that for the last 18 months there have been proposals floated in the House and Senate that would dramatically change the landscape for AES in Michigan,” Strong said. “At this point no one knows how those issues will be resolved.” Strong said SB 437’s new rules would “be so stringent that over the next couple years it will drive almost everybody out of business that wants to be an AES.” Several AES executives said that to continue serving customers in the choice market, Nofs’ bill would require alternative-energy companies or their parent companies to build more power plants in Michigan for their choice customers or contract with DTE Energy Co. or Consumers Energy, which have excess capacity. However, building new generation to comply with the proposed law for relatively small numbers of customers would increase capital costs and boost prices beyond what they are currently charging choice customers and most likely higher than what the DTE and Consumers currently charge retail customers, AES executives said. Said the energy expert: “If Constellation or AEP wants to compete in Michigan, they would have to contract with DTE or Consumers. Utilities could then increase rates to AES, and suddenly prices charged to choice customers are not competitive.” Mengebier disagreed. He said Nofs’ legislation simply would place more generation responsibility on alternative-energy companies doing business in Michigan to ensure sufficient electric capacity and reliability for everyone in the state. But the energy expert told Crain’s that Nofs’ bill is plainly designed to kill choice for the vast majority of alternative-energy companies and leave the 10 percent choice customers with only two currently licensed alternative-energy companies to choose from, one being a major utility. “Consumers Energy, which operates an AES, and Wolverine would continue to serve the 10 percent market and could grow even stronger because they already generate sufficient electricity in the state to survive the bill,” said the energy expert. Mengebier scoffed at the idea Consumers Energy would try to capitalize on alternative-energy companies leaving Michigan. “This whole theory about trying to corner the market is new to me. I never heard of it,” he said. But Mengebier acknowledged the alternative-energy companies would have to change their business models to comply with Nofs’ proposed rules. “It requires AES to demonstrate they have a firm physical capacity in

Michigan if MISO determines there is a shortfall in capacity,” he said. “Wolverine is different from the others because they are investing and building in the state. The other AES purchase excess capacity” through MISO. Mengebier acknowledged that some AES parent companies like Constellation and FirstEnergy produce electricity. “The difference is where they are located. Do these alternative suppliers have assets in Michigan just like many other energy providers?,” he said. Teresa Ringenbach, Direct Energy Business LLC’s senior manager of Midwest government and regulatory affairs based in Columbus, Ohio, said Nofs’ bill changes the level playing field alternative-energy companies have today with the utilities. “We buy reserve margin in the market,” Ringenbach said. “We buy what our customers need plus an extra amount for a 10-year peak as determined by (the MISO wholesale market). The utilities do it too.” Direct Energy, a Lansing-based AES, has 1,552 customers and provides 280 megawatts of power to choice customers in Michigan. Direct Energy is a subsidiary of Windsor, U.K.-based Centrica PLC, which produces power in the UK but only purchases wholesale electricity in the U.S. with 5 million customers. Ringenbach told Nofs in a recent hearing that one of the chief problems with the bill is that it would require alternative-energy companies to produce or purchase electricity only with Michigan-based power generators. “It doesn’t force DTE or Consumers to sell. If they don’t sell (to alternative-energy companies), they could collapse the market,” Ringenbach said. “The solution is to go to the MPSC and be forced to go through a long case. ... (Our) customers would lose their spot in line and be forced to the end of the line (11,000 customers waiting to enter the choice program).” Steven Transeth, president of Transeth & Associates PLLC, a Lansing-based energy consulting firm, said Nofs’ bill simply requires utilities, cooperatives and alternative-energy companies to demonstrate they have enough capacity to serve their customers. “The bill impacts (alternative-energy companies),” said Transeth, a former MPSC commissioner who testified recently on Nofs’ bill. “If you provide electricity in this state, you must demonstrate you have sufficient capacity to service your customers in Michigan. Many providers don’t want to demonstrate that.” The MISO wholesale market addressed the electric reliability and capacity issue in a June report where it said Michigan is unlikely to face electric capacity shortages until 2018, when peak demand could outweigh supply. Meanwhile, MISO said “action is required in the near term to ensure sufficient resources in future years.” What concerns Nofs and his supporters, including DTE and Consumers, is the market’s projection that Lower Michigan could have a 300-megawatt reserve capacity shortfall in 2017 and will have to rely on importing electricity. Jay Greene: (313) 446-0325 Twitter: @jaybgreene

www.crainsdetroit.com Editor-in-Chief Keith E. Crain Group Publisher Mary Kramer, (313) 446-0399 or mkramer@crain.com Editor Jennette Smith, (313) 446-1622 or jhsmith@crain.com Director, Digital Strategy, Audience Development Nancy Hanus, (313) 446-1621 or nhanus@crain.com Managing Editor Michael Lee, (313) 446-1630 or malee@crain.com Managing Editor/Custom and Special Projects Daniel Duggan, (313) 446-0414 or dduggan@crain.com Assistant Managing Editor Kristin Bull, (313) 446-1608 or kbull@crain.com News Editor Beth Reeber Valone, (313) 446-5875 or bvalone@crain.com Senior Editor Gary Piatek, (313) 446-0357 or gpiatek@crain.com Research and Data Editor Sonya Hill, (313) 446-0402 or shill@crain.com Newsroom (313) 446-0329, FAX (313) 446-1687, TIP LINE (313) 446-6766

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BANK FROM PAGE 3

take the form of adding bank branches or loan offices, or a combination, in northern or western Oakland County. He also said expansion into downtown Detroit might also make sense, given the fast-growing tech community there and the Bank of Ann Arbor’s technology industry group, which finances tech and venture capital companies. “Longer term, everything is on the table for evaluation;’ but for now, the focus will be on this transaction and minimizing the impact on any existing customers of the Bank of Birmingham,” Marshall said. Marshall said the impact on Bank of Birmingham customers and employees will be minimized to a great degree because both banks and their online and mobile platforms are powered by the same technology backbone, provided by Brookfield, Wis.based Fiserv Inc. “Downtown Detroit is certainly on the table and open for future discussions and evaluation,” he said. “We have clearly understood the dynamics of downtown Detroit, especially as it relates to technology, life sciences and startups. We see what’s going on, but at this point, we haven’t made any decisions for what makes sense for the technology industry group.” Rob Farr, president of the Bank of Birmingham, will remain president of Oakland County operations after the deal closes. He said the acquisition would provide his customers a wider range of lending and wealth-management services and the county’s growing tech community access to the Bank of Ann Arbor’s tech group. The Bank of Ann Arbor for 14 years has had a tech group, headed by Michael Cole, who had been head of the technology group in Los Angeles for the Royal Bank of Canada. Two of the bank’s 12 directors have a strong technology background — Jan Garfinkle, founder and managing director of Arboretum Ventures, which has had several successful exits from tech startups it helped launch, and Jeffrey Williams, the CEO of two of Garfinkle’s companies, HandyLab Inc. and Accuri Cytometers Inc., when they were sold. Cole’s group does debt financing for companies backed by venture capital, provides cash management

AGENCY FROM PAGE 3

a portfolio of about 30 clients, Van Dyke said. Among them are the Somerset Collection mall, Livonia-based Deshler Group, Detroit Future City, the New Detroit coalition, Detroit’s Public Lighting Authority, and the firm’s original first two clients, Detroit-based Strategic Staffing Solutions and the Grand Hotel on Mackinac Island. Van Dyke’s older brother James Van Dyke is a partner at another client, Detroit-based real estate development and consulting firm The Roxbury Group. “When we took over ownership, I wanted to be a million-dollar company and grow from there,” Peter Van Dyke said, noting that the goal was

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

‘Community bank’ began as Martin’s big idea By Tom Henderson

the Michigan Republican Party; Thomas Borders, co-founder of the Borders bookstores; and Cynthia It was the mid-1990s and Bill Martin, the promi- Wilbanks, now vice president for government relanent Ann Arbor real estate developer and founder of tions at the University of Michigan.The bank, which First Martin Corp., was fed up at seeing local commu- was capitalized with $6 million, opened its headnity banks getting bought by national and large re- quarters on Jan. 16, 1996, at 125 S. Fifth Ave. in a gional banks. former Comerica Bank branch. It had 15 employees. “I got so frustrated as they got gobbled up Today, it has about 185 employees, seven that I decided, ‘This community is big branches and about $1.2 billion in assets. enough and smart enough and wealthy “I had no idea how successful we’d be. A lot enough to start a community bank.’ So I of credit goes to Tim Marshall and the team started one,” Martin told Crain’s after it was he has put together,” said Martin, referring to announced last week that the bank he startthe bank’s president and CEO. ed, the Bank of Ann Arbor, had agreed to buy the Bank of Birmingham. Martin has been chairman of the bank’s “My wife (Sally) did the business plan, board since its founding. “The end game was and I got the forms we needed in Lansing. I Bill Martin: Bank never to grow the business and get acquired,” told her, every place you see a dollar sign, founder says he he said. “It was to have a bank that served the leave it blank. We’ll fill it in later. The people “had no idea how community.” in Lansing looked down their nose at me: successful we’d As for the Bank of Birmingham acquisi‘What does this guy know about banking?’ be.” tion, Martin said: “It’s a natural fit. We look at “I picked up the phone and called my Birmingham as the other end of the dumbbuddies and asked them to throw some money in the bell that will be our service area.” pot, and they did,” he said. Having grown, is the Bank of Ann Arbor considering Those friends who invested included Robert a possible IPO to cash out its investors? Teeter, for many years the leading pollster for the “I don’t think so. We’ve never talked about it,” said Republican Party and its national candidates Martin. “If we ever need to raise money for some reathrough his company, Market Opinion Research; Peter son, we wouldn’t need to do a public offering, we’d just Fletcher, an Ypsilanti businessman and activist in raise it from our current shareholders.” thenderson@crain.com

and 401(k) services, makes bridge loans to companies getting other financing and provides lines of credit to venture capital firms. From the start, the group looked beyond Ann Arbor, and Josh Linkner was one of its first customers when he was with ePrize. The group has also provided access to capital to several tech companies being incubated at Detroit's TechTown. The acquisition will give the Bank of Ann Arbor about $2.5 billion in assets and assets under management, about 225 employees and eight branches. The Bank of Birmingham, founded as part of a local boom in community banking just before the recession hit, has about 40 employees, a single branch on Woodward Avenue, about $274 million in assets and $250 million in deposits. Last year, the Bank of Ann Arbor had record net income of $14.2 million, up from $11.6 million. It hit such milestones as $1 billion in deposits, $600 million in commer-

cial loans and $800 million in total loans. Assets hit $1.2 billion and were up $452 million, or 58 percent, in four years. The Bank of Ann Arbor was advised on the Birmingham deal by New York investment banking firm Keefe, Bruyette & Woods Inc. and law firm Varnum LLP. Birmingham Bloomfield was advised by Grosse Pointe investment banking firm of Donnelly Penman & Partners and law firm Warner Norcross & Judd LLP. Andrew Christians, a managing director at Donnelly Penman, said the deal represented a substantial return for Birmingham Bloomfield investors. “Unfortunately for the bank, it was started in 2006, which means they got thrown into the depths of the recession pretty quickly. It took them a lot longer to get going than they’d planned. The stock price was at $3 at the bottom of the crisis and was at $9 in the last year,” he said. He said the bank either needed either to raise more equity capital to fund growth or look for a bigger

partner with more service offerings, while at the same time returning capital and profits to investors. “The Bank of Ann Arbor was the best choice,” said Christians. “It’s at the leading edge in technology, which makes sense given its base in Ann Arbor, with its venture capital and entrepreneurship. And that will filter down to Birmingham now.”

achieved within six months of taking over the company. The agency, which focuses on midsized clients, has added automotive, retail and real estate clients in recent years. “We’re really building up the strong foundation of the previous owners,” Van Dyke said. “There’s very little change for clients other than the name. Marilyn and I have a strong understanding of where we can achieve success for our company and for our clients. We don’t go chasing things that aren’t in our realm of success.” Van Dyke Horn Public Relations has nine employees. The new ownership structure reflects a change in the fact that Berg and Muirhead both handled clients, but now Van Dyke, 35, is the chief cli-

ent-handler with Horn, 59, in charge of the administrative and business aspects of the agency, such as budgeting and human resources. She was promoted in 2013 to vice president of finance and administration. Horn is an Oakland Community College and Wayne County Community College District graduate and had 30 years of finance experience working for Henderson Financial and National City Bank. She also had her own private financial practice for 18 years. Outside of the agency, which she joined in 2009, she’s involved with the Wayne State University Project One Module, Second Ebenezer Church and The Notary Society. Van Dyke joined Berg Muirhead in 2006, and became a vice presi-

dent in 2011 and partner in 2013. He was named a 2010 Crain’s 20 in their 20s honoree for his work in bringing new clients worth $100,000 in revenue, and for launching and managing the firm’s internship program. A Wayne State PR grad, he has been involved as an organizer with the Marche du Nain Rouge festival and Detroit Artists Market, Detroit Historical Museum, and worked in communications at the Detroit Institute of Arts prior to Berg Muirhead. Van Dyke said the Berg Muirhead commitment to the community and diversity will continue under the new agency name, and noted that Horn is involved with the Michi-

Praise from competitors Marshall’s newest competitors — Oakland County bankers — praised him and his bank after the news broke Wednesday. “It’s a great transaction, to be honest with you,” said Grant Smith, president and CEO of Clarkston State Bank. “Tim Marshall is a firstclass guy and a good friend. The Bank of Ann Arbor has been a great success, just a really well-run bank, and it makes sense for them to come into Oakland County.” Patrick Fehring, president and CEO of Farmington Hills-based Level One Bank, said the news came as a surprise because the Bank of Ann

gan Minority Supplier Development Council, and the agency sponsors a

minority scholarship for public rela-

Arbor has been so focused on Washtenaw County but that it makes sense. “The bank had done such a great job in Washtenaw County, but Oakland County is a great place to do business,” he said. “This signals their growth intentions.” Level One launched in October 2007. Fehring said Marshall was a mentor of his as he prepared to open his own community bank. “I wanted to network with him,” Fehring said. “The Bank of Ann Arbor had been very successful, and I wanted advice. He was very free with his time and sharing the secrets of his success.” Over the years, the two banks have shared participation in larger commercial loans. Level One is familiar with growth through acquiring community banks in Oakland County. During the recession, it bought the assets of Farmington Hills-based Paramount Bank and Farmington Hills-based Michigan Heritage Bank when they were shut by regulators, then later bought Novi-based Lotus Bank and Farmington Hills-based Bank of Michigan. Level One now has almost $1.1 billion in assets. More than a year ago, Level One became a competitor in Ann Arbor when it opened a loan office on State Street downtown. Will Level One be doing further expansion in Ann Arbor with fullscale branches? “We have no plans beyond what we already have,” Fehring said. Jack Shubitowski, president and CEO of Milford-based Huron Valley State Bank, which was launched in 2005, saw the deal as a good-news, bad-news situation. As a community banker in a state that has seen the loss of dozens of community banks in the last decade, he was saddened to hear that there will be one fewer community bank in Oakland County. But the good news, he said, was that it was bought by a community bank and not a national or large regional bank scooping up deposits. “The Bank of Ann Arbor has always been a strong performer and has a record of supporting its community, but we’ve still lost another community bank.” Tom Henderson: (313) 446-0337 Twitter: @tomhenderson2

tions students at Wayne State. “For a lot of the work that we do, it’s important to reflect the diversity of the community we serve,” Van Dyke said. Terrence Oprea, president and CEO of Detroit-based PR firm MCCI, is a longtime friend and competitor of Berg’s. He had praise for the firm and its original owners. “Especially when it comes to political and urban affairs, they’ve been one of the handful of go-to agencies,” Oprea said. “They’ve left quite a mark.” Oprea also said he’s impressed with Van Dyke as a PR leader. “I think he has a reputation as a very thoughtful, hard-work ethic, next-generation leader,” he said. Bill Shea: (313) 446-1626 Twitter: @Bill_Shea19

WEEK Report: Verizon near deal to buy Yahoo

erizon Communications Inc.

was nearing a deal to buy Yahoo Inc., beating rival bidders that included Detroit’s Dan Gilbert, according to people familiar with the matter, Bloomberg reported Friday. New York Citybased Verizon was discussing a price close to $5 billion for California-based Yahoo’s core internet business, a source said.

COMPANY NEWS n Philadelphia-based Axalta

Coating Systems acquired Southfield-based United Paint and Chemical Corp.’s automotive interior rigid thermoplastics coatings business, with production eventually to be phased over to Axalta’s facilities. n Dallas-based Comerica Inc. told analysts that it will cut 9 percent of its workforce as part of a $230 million cost-cutting effort. As of Dec. 31, more than 5,200 of the bank’s 9,000-plus employees and 213 of its 480 branches were in Michigan. n Shareholders of Midlandbased Chemical Financial Corp. overwhelmingly approved its proposed $1.4 billion acquisition of Troy-based Talmer Bancorp Inc. Talmer shareholders approved the deal last week. n Detroit-based Huron Capital Partners LLC said its portfolio company, Edison, N.J.-based Albireo Energy LLC, has bought two Delaware building automation systems companies, Advanced Power Control Inc. and Energy Systems Technologies Inc.

n Japanese automaker Toyota

has donated nearly $1.5 million to the Michigan Science Center in Detroit to help upgrade its theater and boost educational offerings. n The Container Store’s second Michigan store is set to open in Troy Sept. 17. The Texas-based retailer is

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

RUMBLINGS

ON THE WEB JULY 16-22

Detroit Digits

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

$6.6 million

The seed funding to be provided among five investors, among them Dearborn-based Ford Motor Co., for Civil Maps, a California startup that creates 3-D maps for autonomous cars, Bloomberg reported.

$8 million

The amount to be divided in a settlement from three hospitals and an oncology clinic for 43 patientsturned-victims suing former Oakland County oncologist Farid Fata, in prison for fraud and money laundering.

$255 million

The amount auto supplier Denso Corp., whose North American base is in Southfield, agreed to pay in settlements between two class actions over price-fixing allegations.

hiring for its new 23,000-squarefoot store at Troy Commons. The chain’s first Michigan location opened in Novi in June. n Florida-based discount clothing and housewares chain Stein Mart will expand its metro Detroit presence by opening a 29,000-square-foot store in the Gateway Shopping Center in West Bloomfield Township in October. Stein Mart opened a store in Rochester Hills last year and will open one in Ann Arbor in October. n Single-game preseason and regular-season Detroit Lions tickets will go on sale beginning at 10 a.m. July 27, the team announced. Tickets will be issued exclusively via Flash Seats, the team’s digital entry ticketing system. n Auburn Hills-based Henniges Automotive Holdings Inc. set plans to open its first manufacturing plant in Poland, Rubber & Plastics News reported. The company added it

plans to add more than 500 employees over the next five years. n Southfield-based powertrain components supplier Metaldyne Performance Group Inc. will consolidate its eight brands under the MPG moniker.

OTHER NEWS n Mark Bernstein, a University of

Michigan regent and president of The Sam Bernstein Law Firm PLLC in

Farmington Hills, and his wife said they are withdrawing a $3 million gift to relocate and rename the

William Monroe Trotter Multicultural Center on campus, citing feedback

from the campus community about preserving its current name. n Officials involved in the Automotive Hall of Fame said they would like the facility to move to Detroit from Dearborn to better reflect the city’s automotive history and participate in Detroit’s revival. n Amid ongoing controversy over an anti-Black Lives Matter campaign tweet sent from the Populux club Twitter account, the

Majestic Theatre Center and Complex

will close the club and reopen it as the Magic Stick in September in the Magic Stick’s former location on the second floor of the Majestic at 4140 Woodward Ave. n The state Local Emergency

Financial Assistance Loan Board

formally approved a $150 million emergency loan as part of Michigan’s bailout of the debtridden Detroit school district. n Although many tenants have moved out, original plans to demolish Northwood Shopping Center in Royal Oak were delayed by Beaumont Health because no clear plan has emerged for the use of the 14-acre property. n The Canadian official in charge of the $2.1 billion Gordie Howe International Bridge project strongly hinted that the span between Detroit and Windsor may fail to open by its original 2020 estimate because 30 properties in the U.S. haven’t yet been acquired. n The Detroit Pistons unveiled a new outdoor basketball court for Pontiac-based shelter Haven.

AARON ECKELS

The 2016 class of Crain’s 20 in Their 20s gathered Wednesday at the Detroit Yacht Club to celebrate the honor. Read about the winners at crainsdetroit.com/20s.

Squabble puts RTA in time crunch to get tax on Nov. ballot

n the face of significant objections from Oakland and Macomb counties, time is dwindling for the Regional Transit Authority of Southeast Michigan to get a transit tax on the Nov. 8 ballot. The RTA’s 10-member board must approve its regional master plan, ballot language of the plan’s tax, and the campaign for a “yes” vote — something that was delayed a week on Thursday when it became apparent Oakland and Macomb would cast “no” votes. For an issue to get RTA approval, its board’s rules require a super-majority and at least one “yes” vote from each county. Ballot language must be submitted to the state by Aug. 16. Oakland and Macomb have raised concerns about how the RTA will meet its legal requirement that 85 percent of the tax raised in each county is spent within that county. The proposed tax is a 1.2-mill issue that the RTA estimates would generate $2.1 billion over 20 years (and $4.6 billion in total once state and federal funding is added in). “Over the short time we have ahead, the RTA will work tirelessly to provide all reasonable additional details, processes or assurances that can be worked out,” RTA board Chairman Paul Hillegonds said in a statement Friday. Oakland County has said it first raised its concerns about the RTA plan in November, and little has been done to address them in subsequent meetings. The plan was rolled out to the public on May 31. “If there’s a time crunch on the plan, the people asking for $4.6 billion over 20 years created it,” Gerald Poisson, Oakland County’s chief deputy county executive, said on Friday.

R-Stevensville, received MAHP’s legislator of the year awards. Crain’s Detroit Business also received MAHP’s Rick Murdock: To President’s Recognition retire as MAHP Award for its director. coverage and for facilitating policy discussion in health care.

Rick Murdock to retire as chief of health plans group

UAW-GM Spirit of Detroit HydroFest,

Rick Murdock, longtime director of the Michigan Association of Health Plans, has announced his retirement. Last week at its annual meeting in Traverse City, the MAHP board approved Dominick Pallone, current deputy director, to succeed Murdock on Jan. 1. Murdock has been with MAHP since 2002, first as deputy director. In 2004 he was elevated to executive director. He served as director of the health plan division at the Michigan Department of Community Health from 1997 to 2002 and worked in state government for 25 years. Pallone has been with MAHP since 2014, after spending seven years with Midwest Strategy Group. He served four years as an aide in the state Legislature for Sen. Shirley Johnson and Rep. Marty Knollenberg. In other action, state Sen. Curtis Hertel Jr., D-Meridian Township, and state Rep. Al Pscholka,

Belle Michigan Fund reports ROI with company sale The Grosse Pointe-based Belle Michigan Fund LP, an early-stage

investment fund made up of women who invest in woman-led companies, has had its first successful exit since forming in 2012. According to general partner Carolyn Cassin, the fund made back almost twice the amount it invested 16 months ago in Magaw Medical LLC, a Fort Worth, Texas, company founded by two nurse anesthetists to develop a cost-effective laryngoscope system for examining the throat and vocal cords. The sale price was not disclosed. Cassin said the Farmington Hills acquirer asked not to be named. “This is a good news story for everyone involved,” she said. “Belle partners made a sizable return on their investment while retaining a finanical interest in any future sale of the company within six years.”

Preview party created for Detroit HydroFest A strolling dinner event has been created for this year’s

which is celebrating its 100th anniversary. The “Classic Shore Dinner” race preview party is scheduled for 5:30-9:30 p.m. Aug. 25 at The Roostertail restaurant. The 2016 APBA Gold Cup hydroplane boat race itself is scheduled for Aug. 26-28. Tickets for the preview party are $75. Included in the price are a strolling supper catered by the London Chop House, Huron Room, Andiamo, Fishbone’s, Bayview Yacht Club and Wolfgang Puck Pizzeria & Cucina; a free drink and a cash bar; greetings by Gold Cup race owners and drivers; two Roostertail pavilion Gold Cup tickets for Aug. 28; a raffle ticket, benefiting the March of Dimes, for a chance to win a 2016 General Motors Co. vehicle; a private tour of the Gold Cup boat pit area; and live entertainment. For tickets for the party or the races, or sponsorship information, call race organizer Detroit Riverfront Events Inc. at (313) 329-8047. Event and race details are at detroitboatraces.com.

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