Crain's Detroit Business, Aug. 1, 2016 issue by Crain's Detroit Business

Atwater brews a $15 million expansion plan that hops Michigan’s borders, Page 3

AUGUST 1 - 7, 2016

Presidential tumult likely to impact state races Uncertain candidate support expected to affect turnout By Lindsay VanHulle

Crain’s Detroit Business/Bridge Magazine

LANSING — State and regional business leaders say an unpredictable presidential election could have implications on down-ballot races, including the state House, where voters will elect representatives in all 110 seats in November. Those effects, though, most likely will sharpen after Tuesday’s primary and into September, as the race for the White House comes into focus. Business leaders and chambers of commerce are backing state House candidates — incumbents and challengers for open seats — whom they believe share their pro-business agendas. Their political action committees have given hundreds of thousands of dollars to candidates based in part on incumbents’ voting records and challengers’ positions on economic development programs, infrastruc-

ture challenges, education reform and tax incentives. But which party controls the House in January will depend in some measure on whether Hillary Clinton or Donald Trump becomes president. Republicans currently have an 18-seat majority in the state House. Yet some in the GOP have resisted supporting Trump, and there’s speculation that some voters might sit out the election altogether. Democrats tend to benefit from higher turnout in presidential election years, but how well Clinton performs in the state could determine how well her party does in state races. Several people told Crain’s they believe Democrats can pick up seats, but not a majority. “They’ll at least gain seats, I don’t think there’s any question about that,” said Mark Brewer, who served as Michigan Democratic Party SEE ELECTION, PAGE 15

Hamtramck feeling a retail revival

JENNIE WARREN

Joan and Raymond Bittner, longtime owners of the Polish Art Center, and others

say a comeback of sorts is underway with an array of shops and bars opening this year. See story, Page 9

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Funding, regional issues put RTA plan

OUT OF FOCUS By Bill Shea bshea@crain.com

A week of political theatrics that has left a proposed $4.74 billion regional transit plan on the verge of defeat has raised a simple, frustrating and all-too-common question: How did we get to this point again? The easy answer is that it’s the old Detroit-vs.-suburbs animosity rearing its head, led by a man who, depending on your perspective, is acting as either a wise and tough financial steward, or a relic of ancient bigotries and parochialism. Oakland County Executive L. Brooks Patterson, the 77-year-old skeptic of anything linked to Detroit and Wayne County and fiercely protective of the wealthy municipality he’s run as a fiscal conservative since 1992, has received criticism and praise for his objections to the plan. He’s demanding more benefits for his county under the Regional Transit Authority of Southeast Michigan’s plan, and he wants his two appointees to the RTA’s board to have the ability to veto funding decisions — especially any move to reduce money for the suburban bus system in favor of Detroit’s bus lines. He’s not alone in his objections. Tagging along with him this time

How likely is such a turnaround? Publicly, everyone is maintaining a sense of grim optimism. “Realistically, I think it’s a tough road, but it’s not impossible,” said Gerald Poisson, Oakland County’s chief deputy county executive and vice chairman of the suburban bus system’s board. Among the issues L. Brooks Patterson Behind the scenes, it’s much (left) and Mark Hackel have with the RTA plan is both want their board appointees harder to tell. The RTA has been on the books to have veto power. since the Legislature created it in is Macomb County Executive 2012, so Oakland and Macomb Mark Hackel, who favors the tran- have been well aware of the sit plan but balks at the RTA board’s voting structure. board’s voting structure. He, too, According to some transit inwants his two appointees on the siders, what spooked the counties authority to have veto power, akin is an alleged threat or suggestion to how the regional board that by Detroit that it would have oversees Detroit’s Cobo Center enough RTA board votes to tilt operates. federal funding allocation in favor Their opposition is enough to of the Detroit Department of Transgrind to a halt the regional transit portation at the expense of the plan, which must have its ballot Suburban Mobility Authority for Relanguage for its 1.2 mill property gional Transportation system. Was such a threat leveled? It tax submitted to the state by Aug. 16 to get on the Nov. 8 ballot. Oak- may be a matter of perspective. Dan Dirks, Detroit’s transportaland and Macomb voted against the ballot language approval mo- tion director, and the general mantion during a dramatic RTA board ager of SMART from 1998 to 2007, meeting Thursday, and the au- said DDOT’s position is that there thority’s chairman, Paul Hille- has to be flexibility in the RTA gonds, vowed to hold an emer- funding split as the bus systems gency vote this week if new talks expand or contract services. He could pry a “yes” vote out of Oak- said DDOT is expanding routes. SEE RTA, PAGE 16 land and Macomb.

Inside: Answers to key questions about the RTA plan and dispute, Page 16

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MICHIGAN

BRIEFS 6 state workers charged in Flint water crisis

Grand Rapids near top of hipster havens list

The Michigan attorney general’s office on Friday charged six current or former state employees with misconduct and other crimes stemming from the lead-contaminated water crisis in Flint, AP reported. A judge authorized the charges filed by the office of Attorney General Bill Schuette against three employees from the Department of Environmental Quality — Liane Shekter Smith, Adam Rosenthal and Patrick Cook — and three from the Depart-

Is Grand Rapids the Midwest’s hottest spot for hipsters? It is according to Infogroup, a Nebraska-based analytic and marketing service provider, which lately ranked the top 10 “most hipster” U.S. metro areas. Grand Rapids ranked No. 5 as the only Midwestern entry on the list from Infogroup, which compiled its list from metro areas with more than 1 million people and their frequency of young people-identified businesses such as breweries, bicycle shops, coffee shops, record stores, thrift shops, tattoo parlors and live entertainment venues. “There’s more to hipsters than just the look. They are a group that frequents certain types of businesses, and whose communities share particular characteristics,” the provider said at its website, Infogroup.com. Seattle topped the national list, followed by Portland, Ore.; Denver; and Sacramento, Calif. Rating sixth through 10th were, in order, San Diego; Providence, R.I.; Pittsburgh; San Francisco; and Rochester, N.Y.

ment of Health and Human Services

— Nancy Peeler, Corinne Miller and Robert Scott. Other charges against them include willful neglect of duty and various conspiracy counts. It’s the second round of charges stemming from the crisis. In January, Schuette announced the appointment of a special counsel to help his office investigate whether laws were broken. In April, two state regulators and a city employee were charged with official misconduct, evidence-tampering and other offenses. At the time, Schuette guaranteed others would be charged.

Tribe, state reach partial casino revenue settlement Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians, known as the Gun Lake Tribe, reached a set-

The

tlement with the state about how to distribute more than $21 million in casino revenue it has withheld for a year in a dispute over online lottery games. The tribe said last week it has reached a partial agreement with the state and Michigan Economic Development Corp. that shares the proceeds from electronic gaming at the tribe’s namesake Gun Lake Casino in Allegan County. The tribe said half of the escrowed $21.7 million will go to the MEDC in the form of revenue sharing, 35 percent will stay with the tribe and 15 percent will be diverted to a new business entity called GLIMI — a subsidiary of Gun Lake Investments, the tribe’s investment division, that will focus on non-casino economic development. GLIMI will have state oversight as well, the tribe said.

MICH-CELLANEOUS n Pfizer Inc. plans a $145 million

expansion of its Portage manufacturing plant within two years, part of what could be more than an $800 million investment over the next 10 to 12 years, MLive.com reported. The New York-based drug company is requesting a tax break from the city for the initial two projects: a $40.8 million warehouse addition and a $105.5 million work center.

n The city of Kalamazoo is getting $70 million from philanthropists and others to be used to create the Foundation for Excellence to help solve the city’s budget problems, cut property taxes and tackle other projects, AP reported. City leaders secured donations from Kalamazoo philanthropists William Johnston and William Parfet, among others, over a three-year period. Officials expect the foundation would be fully funded by 2020, so revenue from investments would be available long term. It would allow Kalamazoo to cut property taxes starting in January and spend $10 million a year on “aspirational” projects. n C3 Venture LLC, an injection molding company, is slated to bring 380 jobs to Flint under a deal approved by the state last week, MLive. com reported. C3 Venture will be moving facilities from China and Turkey with the help of a $5.7 million state loan. n Switch Ltd.’s site in southern Kent County has been designated a Renaissance Zone after receiving approval last week from directors of the Michigan Strategic Fund, MLive.com reported. The Las Vegas-based firm will be exempt from paying most state and local taxes for its proposed cloud-based data center at the former Steelcase Inc. pyramid facility in Gaines Township for the next 15 years. n Stikwood, a Sacramento, Calif.-based wood products manufacturer, plans to invest $4.2 million to

INSIDE THIS ISSUE

BANKRUPTCIES ................................. 5 CALENDAR .........................................14 CLASSIFIED ADS...............................15 DEALS & DETAILS.............................14 KEITH CRAIN....................................... 6 OPINION .............................................. 6 PEOPLE ...............................................14 RUMBLINGS .......................................19 WEEK ON THE WEB ..........................19

COMPANY INDEX: SEE PAGE 18 open a production facility in Kentwood, MiBiz reported. To support the project, the Michigan Strategic Fund approved a $400,000 performance-based grant. Stikwood makes “Peel & Stik” wood planking from reclaimed and sustainable sources. n Michigan State University raised $272 million during the 2015-16 fiscal year, the most successful fundraising year in the university's history, school officials said. The donations are part of MSU’s Empower Extraordinary campaign to conclude in 2018, AP reported. n Executives at small businesses in Michigan have a positive outlook on the state’s economy and expect their profits to hold steady, according to the June 2016 Michigan Future Business Index. Only 19 percent of the business executives had a pessimistic outlook on their profits, while more than one third said they expect profits to increase.

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Cornerstone eyes growth — but not at DPS expense

Atwater aims for UNTAPPED MARKETS

By Chad Halcom

$15 million expansion plan: Open brewery in GR, then take hops into other states

chalcom@crain.com

Reid Gough feels fairly certain that nearly doubling his organization's charter school student headcount in a few years doesn’t have to mean raiding $15 million from the new Detroit Public Schools Community District — or even other city charters. “If you have 27,000 students leaving Detroit every day to attend school, that’s an opportunity for everyone. They’re leaving the city’s schools because it’s an education-quality choice they make,” said Gough, who became CEO of the new Cornerstone Education Group in June. “We don’t need to cannibalize each other, if we keep more kids in the city,” he said. “And as younger people are here and are starting to have families, there’s going to be potential for population growth and a need for more schools. What we’re trying to do is build a foundation so that families feel like they want to send kids to the city to learn.” And that may take a while for Cornerstone, at least as a whole. Three K-8 charter schools that the education group maintains in the city earned an overall “C” rating for performance in the 2014-15 academic year, according to a report card from Excellent Schools Detroit, with “very weak” student proficiency and weak to average student growth. Its three private schools, however, are “recommended” by the organization even if they don't get an overall grade. But Gough says the schools have made progress since then. Indeed, he thinks a mix of anticipated city population stability, shuttering of underperforming charters and improvements in quality can help draw

By Dustin Walsh dwalsh@crain.com

Atwater Brewery is expanding in Detroit and beyond. The Detroit-based craft brewer has spent $2.5 million in the past 18 months to upgrade its brewing equipment at its Atwater Street location, doubling its capacity. Atwater will open its Grand Rapids taproom and small brewing facility later this year, with plans to open more taprooms and brewing operations outside of Michigan in a quest to become a national player in the fast-growing craft beer market. The installation of a new brewhouse system manufactured by Germany-based BrauKon GmbH, steam generators, grain silos, malt handling systems and a flash pasteurizer occurred last week. The brewer ramped up production ahead of the installation to avoid any supply disruption, CEO Mark Rieth said. Atwater’s old equipment was sold to a former brewer for California’s Firestone Walker Brewing Co., who plans to open a new brewery. The investment is part of a $15 million expansion over the next three years to increase capacity to 200,000 barrels of craft beer by 2020 from 40,000 barrels in 2014. By comparison, Grand Rapids-based Founders Brewing Co. is also expanding and is expected to have an annual capacity of roughly 1.2 million barrels in 2017. The craft beer industry in Michigan produced just under 770,000 barrels total in 2014, making Michigan the 10th-largest craft brewing state by volume, according to the latest available data from the Boulder, Colo.-based Brewers Association. Atwater’s new brewing operations are expected to begin later this week, Rieth said. “We’re expanding for two reasons — to continue to fulfill the growth in our markets, particularly Michigan, and to bring Detroit (beer) everywhere,” Rieth said. “We changed our motto to ‘Born in Detroit. Raised Everywhere,’ and we mean it. No matter where we go, it’ll always be centered around Detroit.” Atwater plans on going far. Rieth is looking for locations in Chicago and Boston to open taprooms and small brewing SEE ATWATER, PAGE 17

SEE CORNERSTONE, PAGE 18

CORNERSTONE SCHOOLS

LARRY PEPLIN

Workers install a new tank for brewing at Atwater Brewery in Detroit as part of the effort to make enough beer to help fuel a $15 million expansion with national ambitions.

Reid Gough, CEO of Cornerstone Education Group, said the number of children leaving

Detroit for school creates “an opportunity for everyone.”

MUST READS OF THE WEEK Insurer bucks

Science and shopping

Rolling Rock

HMOs post record

Brick-and-mortar stores get inside

Matt Cullen’s role shifts as

profits, Page 8

shoppers’ heads to make it in a digital

Gilbert’s business interests

world, Page 11

grow, Page 4

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Cullen’s role changes as Rock Ventures broadens executive team By Adrienne Roberts aroberts@crain.com

Matt Cullen, who wears many hats in Dan Gilbert’s sprawling web of businesses, is adjusting them. Cullen, the former president and CEO of the Detroit company that connects them all, Rock Ventures LLC, now has the role of principal at that company to make time for his other projects across the portfolio. Since February, Rock Ventures has made a number of executive changes and hires that include naming a new COO and chief administrative officer — and hiring a general counsel. Last week, Crain’s first reported that Josh McManus, 38, who for a year and a half has been at the company that links Gilbert’s diverse businesses, was named COO, a new position. In addition, Deb Dansby, 44, has transitioned from vice president of Rock Ventures to another newly created role, chief administrative officer.

And Howard Luckoff, 54, a partner at Detroit-based Honigman Miller Schwartz and Cohn LLP, will join Rock Ventures as general counsel on Aug. 1. Meanwhile, Lisa Dancsok, vice president of Rock Ventures, has resigned to take a job at another organization. Rock Ventures would not specify where Dancsok is going, and Dancsok declined to say what her new position will be. One of the drivers of the changes is to spread the work of the many projects in which the Gilbert entities have a hand. Initiatives Cullen is involved with personally include everything from being CEO of M-1 Rail, the organization building downtown Detroit's Woodward Avenue streetcar line, to spearheading a proposal to build a soccer stadium and bring a Major League Soccer team to Detroit, along with initiatives to bolster downtown Detroit. He continues to be the CEO of Gilbert’s casino company, Jack Enter-

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Matt Cullen hopes to make more time

for his projects across the Rock Ventures portfolio in the wake of executive changes and hirings.

tainment LLC, formerly Rock Gaming LLC.

“The way you do it is to prioritize the right things at the right time,” Cullen said. “(It helps to) work with really good people; there’s no way to do it yourself. Rock Ventures has excellent teams in place.” With a revamped organizational structure Cullen describes with the terms “fluid,” “flexible” and “flat,” he now has time to focus primarily on Jack Entertainment, which he calls a “$2 billion startup.” He said the casino company, which owns Jack Cincinnati, Jack Cleveland, Jack Thistledown, Greektown Casino-Hotel, Horseshoe Baltimore and Turfway Park, has grown from 10 employees three years ago to 7,000 employees. “We’re in the gaming business, but we’re approaching it differently,” Cullen said. “We got into it as urbanists.” With the goal of creating value for the downtown areas surrounding the gaming properties, Cullen is spearheading events such as Greektown at Sundown, in which Monroe Street near Greektown Casino-Hotel shuts down to vehicles on weekend nights and includes live music and street performers. The casino operations also are investing in the surrounding area, as with the purchase by Bedrock Detroit (a Gilbert-owned company) of Cleveland’s The Avenue Shops at Tower City Center, a retail center connected to Jack Cleveland Casino. Cullen, meanwhile, is the voluntary CEO of M-1 Rail. The 3.3-mile, $140 million project is on-budget, Cullen said, with deliveries of the streetcars to begin after Labor Day and construction scheduled to be completed in October. The streetcars could be running on the QLine by April, Cullen said. Another item on Cullen’s to-do list is a negotiation project that includes persuading Wayne County to sell the stalled county jail site on Gratiot Avenue. Cullen said he believes the site should be home to a soccer stadium because “the gateway to the city is not for a jail.”

The proposal is being worked on in partnership with Detroit Pistons owner Tom Gores. To accomplish its goal, Cullen said, the Gilbert-Gores group is doing concurrent studies with Wayne County to determine how much it will cost to finish the jail at the downtown site, how much it would cost to build a new jail elsewhere in the city and determining the economic impact for the city if a stadium is built downtown. With Cullen’s projects comprising only a portion of Rock Ventures’ initiatives, the company created new positions for current employees and brought in new executives to handle legal issues, communications and operations across the group of companies. McManus said that in his new role, he’s responsible for coordinating and connecting Rock Ventures’ companies on specific projects as well as safety, accounting and taxes and community events. Dansby and McManus are responsible for “operations and administration, and creating an environment that allows our companies to focus on growth and innovation,” Dansby said. McManus founded D:Hive in 2012 as a way to offer resources to people who wanted to live in, work in or start a business in the city of Detroit.

McManus later had a stint as the program officer for the John S. and James L. Knight Foundation in Akron, Ohio, before returning to work for Rock Ventures. Dansby joined Rock Ventures as vice president in 2012. Before that, Dansby was a managing partner of the consulting firm D&D Advisors LLC. Three new executives have been brought in to aid in these efforts, starting with Madeline Chadwick, a Michigan native who in February joined the company as vice president of communications. Previously, she was a senior director of global communications at eBay Marketplaces. Rock Ventures then created the position of vice president of community investments, naming former Skillman Foundation Vice President Chris Uhl to the post in April. Luckoff, who at Honigman has represented Rock Ventures’ companies for more than 20 years, will join the organization as general counsel. Until this point, the company has not had counsel “totally dedicated to the work of Rock Ventures,” McManus said. The new hires and changes all have one thing in common: They are required to work on “assorted and diverse things,” McManus said.

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Bills would restore tax credit for angel investors LANSING — Michigan’s venture capital industry says a proposal from a Macomb County lawmaker to restore a tax credit for angel investors is “a great first step” toward expanding funding for entrepreneurs in the state. Yet the bills, introduced during the Legislature’s summer recess, could be tough to sell: A short-lived angel tax credit ended when Gov. Rick Snyder overhauled the state’s tax system during his first term, and the Republican governor isn’t keen on bringing it back. Rep. Jeff Farrington, R-Utica, said the legislation has been on his to-do list since he was first elected to the House in 2010. His bills would allow investors who contribute at least $20,000 to an early-stage company through a recognized seed venture capital or angel investor group to claim a 20 percent income tax credit. Early-stage companies are defined as those in business fewer than five years — less than 10 if spun off from a university — with fewer than 100 employees and valued at less than $10 million. They also have to be headquartered in Michigan, with most of their employees working here. Retail startups are excluded. “There’s no doubt in my mind that we have an untapped market,” said Farrington, who is term-limited. “The money will follow the opportunities, but we have to plant the seeds.” Venture capitalists point to the credit as a way to make Michigan competitive with other states for startup funding, which they say in turn sends the message that Michigan welcomes entrepreneurs — particularly in high-tech, high-risk fields such as information technology, health care and pharmaceuticals, alternative energy and advanced manufacturing. A 25 percent income tax credit on an investment in early-stage companies was signed into law in December 2010, but it ended shortly afterward under Snyder’s tax reform. That initial credit “is really when we began to see the increase in angel activity,” said Maureen Miller Brosnan, executive director of the Michigan Venture Capital Association. There is some evidence to suggest the forerunner to Farrington’s proposal helped as intended. The venture capital association’s data show 294 people invested in nine angel groups across the state in 2015, which is a 59 percent spike in five years. In all, 128 startups received funding from an angel group

BANKRUPTCIES The following business filed for bankruptcy protection in U.S. Bankruptcy Court in Detroit July 22-28. Chapter 7 involves total liquidation. Aegis Bleu LLC, 231 Airport Drive, Holly, voluntary Chapter 7. Assets and liabilities not available.

in Michigan, 42 percent more than five years ago. The state’s nine angel groups — a 10th recently formed in the Upper Peninsula — invested more than $16 million in early-stage companies last year, Brosnan said, adding that the data is only a fraction of the total angel investment in Michigan and doesn’t account for individual contributions made by people not affiliated with angel groups. “We have seen a growth trajectory here, but one that clearly won’t be sustained unless we continue to feed it,” she said. “This is a way for the state of Michigan to once again embrace entrepreneurism and make this a priority for the state at a relatively low cost. “We really have all the right pieces in place. It is that funding component that is giving us the greatest pause.” She’s not alone in that view. A recent report from Columbus, Ohiobased consultant TEConomy Partners LLC for the Michigan Economic Development Corp. said states that lead in the

LINDSAY VANHULLE

CAPITOL BRIEFINGS lvanhulle@crain.com Twitter: @LindsayVanHulle so-called innovation economy have a strong network of angel investors, themselves entrepreneurs who have accumulated wealth and can provide not only funding but mentorship and guidance. Offering a tax credit helps build that network, the firm said. More than 20 states have some kind of tax credit program available to angel investors, according to estimates from the Overland Park, Kan.-based Angel Capital Association. “There are ongoing efforts in Michigan to encourage angel in-

vestments,” the TEConomy authors wrote. “However, this activity could be spurred with financial incentives provided by the state. In discussions with some of the individual private equity investors in Michigan, many mentioned that it is difficult to organize angel investors and to catalyze investment in what are perceived to be riskier ventures due to the lack of a state angel investment tax credit.” Support for tax credits in Michigan has waned under Snyder’s tenure. A tax credit offered to manufacturers under the now-defunct Michigan Economic Growth Authority

program left the state liable for more than $9 billion in obligated credits. Lawmakers last year killed a film production tax incentive, arguing that it was a subsidy to the movie business. Snyder has said he doesn’t think state government should pick winners and losers through tax credits. “Gov. Snyder appreciates the mentorship and generosity of angel investors who help startups get off the ground,” spokeswoman Anna

Heaton said via email. “Legislative measures, such as the crowdfunding bills he signed in 2014, have helped to increase support for startups, and Michigan has really led the nation on that front. However, we eliminated this tax credit as part of a restructuring of taxes on employers when we also eliminated the Michigan Business Tax. So the governor is not inclined to support bringing it back.” Farrington said he didn’t introduce the legislation earlier because the tax code had just changed. Since then, though, he said he sees a need for more economic diversity and ways to create more jobs. He said he crafted his bills based on practices in other states, and capped the angel credit at $6 million to allow Michigan to get its feet wet. Farrington said he is hopeful he can get Snyder’s administration on board, citing the governor’s background as a venture capitalist: “He knows that market better than probably anybody in the administration.”

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TALK ON THE WEB

OPINION

RTA: Let voters decide

What took them so long? That’s a fair question for the county executives in Oakland and Macomb counties — who may have derailed the opportunity for voters to weigh in on an up-down vote on a regional transit plan. Where were they when the legislation was drafted and voted on to set up the RTA’s governance structure in 2012? By most accounts, they signed on to the transit governance structure then. Regional transit has been a holy grail for decades in Southeast Michigan. But the region’s power brokers just haven’t been able to get it done. Oakland’s L. Brooks Patterson and Macomb’s Mark Hackel are now quibbling over governance, and over how many dollars reach some specific hinterlands of their counties. Bottom line: The legislation requires that 85 percent of millage dollars be spent in the originating county, so there is already a good system of checks and balances built in. The idea of regional transit is to be regional, to more effectively move people from their homes to their jobs or other destinations. We all remember James Robertson, the man who walked 21 miles a day from his home in Detroit to a manufacturing job in Rochester Hills. We know that employers – from retailers in shopping malls to manufacturers in Macomb County – are hurting for workers for entry-level jobs. Many candidates for those jobs don’t have transportation. That’s why 40 business leaders urged Patterson and Hackel to resolve the issue. There’s still an outside chance that an RTA plan can pass and be put on the ballot if revised language can be approved by Aug. 16. Maybe more employers who know first-hand how tardiness and absenteeism often have roots in the lack of affordable public transportation can weigh in. Voters should be able to make up their minds on this critical public issue and not have their county executives make this decision for them.

Land bank case demands answers It didn’t take long for an Oakland County jury last week to exonerate Barry Ellentuck of attempted fraud charges. A consultant to both the state and city of Detroit land banks, Ellentuck had been accused of overbilling the Detroit Land Bank Authority by $6,300. According to news reports, the case rested primarily on the word of a disgruntled ex-employee of Ellentuck’s company, ADR Consulting LLC. It is a curious case, and questions linger. Ellentuck maintains the charge was retaliation for talking to federal investigators about his concerns that the city had used a questionable bidding process to award contracts for blighted housing demolitions. A federal investigation of that program is underway. The case against Ellentuck fell apart when the chief prosecution witness was discredited at trial by Ellentuck’s own tape-recorded conversations that showed it was Ellentuck who discovered over-billing by the employee — not the other way around. When charges were filed in December, Attorney General Bill Schuette said in a statement: “We cannot allow criminal behavior in the new Detroit.” We agree. Nor can public institutions afford to damage their own reputations by recklessly using prosecutorial power. This case raises questions that need answers.

Re: RTA millage fails OK for November ballot Without transit and a good core, metro Detroit and Michigan are just a rust belt backwater joke, flyover country, not even a Chicago. We could be great if we came together instead of squabbling over racial and economic divisions.

getting poorer while it dithers. Perhaps we should just admit this is more about race than money. If every other major metro in the nation can do this, and we can’t, shame on us.

BrewPubNate

Michigan man

The DIA fiasco should be a lesson in creating unaccountable taxing “authorities” and “boards.” We have the M-1 light rail boondoogle imploding and behind schedule. Every major area that has tried to implement these monster plans has been plagued with delays and cost overruns. It’s a waste of taxpayer dollars.

A thought to those who live north of civilization on former farmland: You chose an energy-inefficient lifestyle where you spend a majority of your money on your house, vehicles and utilities. You chose to live where you need a car to get anywhere. There are people who cannot choose where they live based on age, disability or socioeconomic reasons. I know those people aren’t your problem, but if you can afford new cars and granite countertops,

Ron04

This region has been “thinking” about transit for generations, and

both sides. So far, we haven’t seen many, if any, “vote for me and here is why” messages. They will probably be replaced with a lot of “don’t vote for them, they are terrible” messages. Whoever can make that negative argument the more convincingly will win the election. About the only good thing that is going to happen is the advertising bonanza for broadcast property owners. If you are a broadcast outlet owner, then you are going to be sold out in the coming months. You will charge high rates and, remember,

I’m sure you can afford to help a disabled person get to work, a student get to school or an elderly person get to a doctor and for what, $8-10 a month? Dave Gifford

This would be a large property tax increase from which my family and I will get no benefit. We reside in Macomb County. In our socialist country, it appears that I keep using my hard-earned dollars for other people who I do not even know, and these people would never vote “yes” if the beneficiaries of such a tax were reversed. Carolyn Mazurkiewicz

Detroit has never paid its way for decades. Until Detroiters start paying instead of complaining, they can ride bikes, walk, use Uber, etc. Betz

LETTER TO THE EDITOR

Investing in workforce readiness benefits everyone Editor: Dustin Walsh’s July 18 article (“Firms struggle to fill jobs at entry level”) accurately describes challenges employers face trying to fill entry-level positions. With unemployment at a 10-year low, the labor shortage is real and could threaten economic growth. While companies deal with hiring challenges — with varying results — what seems to be the underlying theme is work readiness. Employers are not short on applicants, but rather they lack applicants who are prepared for entry-level jobs. When people are unprepared for job opportunities, they risk being left behind economically. What’s more, this cohort of unprepared workers contributes to even more labor shortages and creates a drag on potential economic growth. Here in Michigan, we have about a 5 percent unemployment rate. That means investing in employees to retain them can be the difference between battling constant turnover and giving managers time to do their core jobs. At Bank of America, we invest in

It will be a mud-slinging election Somehow, we have gotten through our two national conventions, nominated two folks for president from their respective parties and even thrown in a couple more candidates for vice president. We have endured the speeches and heard enough name-calling to get us in the mood for what will become probably the biggest mud-slinging presidential campaign that any of us can remember. We have a couple of candidates from both parties who have rather large unfavorable ratings. We will become inundated with attack ads for

Reader responses to stories and blogs that appeared on Crain’s website. Comments may be edited for length and clarity.

KEITH CRAIN Editor in chief

these orders are all cash with order, no credit allowed. The ads will all be terrible. From both sides. They will undoubtedly be ugly, mean and perhaps even vicious.

Send your letters: Crain’s Detroit Business will consider for publication all signed letters to the editor that do not defame individuals or organizations. Letters may be edited for length and clarity. Email: jhsmith@crain.com programming that gets at the heart of workforce readiness by providing job training opportunities. These opportunities create pathways to employment for metro Detroit’s youth as well as training for those displaced from the workforce. And that ultimately helps our entire region. We believe investing in workforce readiness is an economic imperative, and is something all area companies must do if our businesses and communities are to grow and thrive. There are many diverse and innovative workforce development programs such as Grow Detroit’s Young Talent, the Greening of Detroit, Recovery Park, our Student Leaders paid internship program at Focus: Hope, and vehicles to fund proBoth sides will be spending close to a billion dollars to win this election. Ironically, everyone will be shouting for a civil campaign with no name-calling and no mud-slinging. Both sides will be deploring the way the campaign is being waged. Everyone will deny that they condone this campaign that shortly will have sunken to the lowest possible level. (If it’s not already there.) But no one has any plans to stop, and the politicians will all blame the PACs — which are armed to the teeth. There will be scandals on both sides, although it would appear that Hillary Clinton has come into the campaign with a higher scandal count compared with Donald Trump.

grams such as workforce development grants. These are all things that Bank of America or the Bank of America Charitable Foundation support. We further support nonprofits with services that focus on connecting the unemployed and underserved with workforce opportunities, skill building and career coaching needed to participate in the 21st century workforce. We all benefit from a skilled, engaged workforce, and as corporate citizens, we must accept the responsibility to help remove barriers to those who have been disproportionately impacted by unemployment and other obstacles to workforce participation. More employers should take a stand with inclusive workforce development programs and by supporting nonprofit and civic efforts focused on this important topic. When we replace barriers with opportunities, we all win. Matt Elliott

Michigan market president, Bank of America; Business Banking Midwest region executive

Out of all of this mud-slinging, we are going to elect a president and a vice president for the next four years. And, as many pundits have said, we will get what we deserve, regardless of the winner. In spite of all the threats, no one is going to move to Canada or New Zealand. It is going to be a long, hot campaign season with a lot of sane people acting insane. Somehow, we will all survive; and aside from a few heart attacks, we will be no worse for wear. Our nation will be a bit tarnished, but it too will survive. And maybe with a little soap and water, we’ll be able to wash off the mud.

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Hospice of Michigan building sells for $6.1 million A 100-bed rehab care center employing 150 is to take its place By Kirk Pinho kpinho@crain.com

The Hospice of Michigan Inc. headquarters building at Mack Avenue and Brush Street in Detroit has sold for $6.1 million to a Chicago-based rehabilitative and nursing care services provider that plans a 100-bed facility expected to employ about 150 people. Hospice of Michigan, which at the beginning of the year merged with Ann Arbor-based Arbor Hospice & Palliative Care, is expected to move about 50 employees next year into Arbor Hospice’s building on Oak Valley Drive south of Scio Church Road in Ann Arbor, according to Robert Cahill, president and CEO of Hospice of Michigan. Jonah Bruck, president and CEO of Olympia Group LLC, which is not affiliated with the Ilitch family’s Olympia Development of Michigan, said he expects to spend about six months getting the appropriate city approvals before beginning construction on a $24 million to $25 million skilled nursing and rehabilitative center at the Hospice of Michigan building. He also plans to put up a 12,000-square-foot addition on the eastern side of the property. Bruck said he expects the center to open in the first quarter of 2018. The building purchase price is included in the overall project price tag. “It will be more like a hotel than a rehabilitation center,” said Bruck, who added that Olympia Group has six facilities with 1,349 beds in the Detroit region. He said the project will be privately financed by a bank from Chicago. Olympia Group’s June 30 purchase of the 48,000-square-foot Hospice of Michigan building gives the nonprofit $6.1 million that it will reinvest into patient care, said Matt Farrell, principal, board member and partner of Bingham Farms-based Core Partners LLC, which represented both the buyer and seller in the deal. “It was a great time to do it because of all the growth in Detroit and in Brush Park,” Farrell said. The sale price amounts to $127.08 per square foot. Between Hospice of Michigan and Arbor Hospice, the group cares for more than 2,200 patients in 58 states. When the Jan. 1 merger was official, the Hospice of Michigan board began discussing the sale of the headquarters building, according to Cahill. The building sits on about 3.75 acres south of Mack

Avenue across from the Detroit

Medical Center.

There were other potential buyers, including Birmingham-based

Broder & Sachse Real Estate Services LLC and Detroit-based The Sterling Group, Farrell said.

The two-story building was constructed about 15 years ago. Olympia Group operates six care centers in Southeast Michigan: the Ambassador Nursing & Rehabilitation Centre at 8045 E. Jefferson Ave. in Detroit; the Imperial Nursing & Rehabilitation Centre at 26505 Powers Ave. in Dearborn

Heights; the Father Murray Nursing & Rehabilitation Centre at 8444 Engleman St. in Center Line; the Regency Nursing & Rehabilitation Centre at 12575 S. Telegraph Road in Taylor; the St. Joseph's Nursing & Rehabilitation Centre at 9400 Conant St. in Hamtramck; and the Westland Nursing & Rehabilitation Centre at 36137 W. Warren Ave. in Westland. Ferndale-based Fusco, Shaffer & Pappas Inc. is the architecture firm on the Olympia Group project, Bruck said. Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

COSTAR GROUP INC.

The Hospice of Michigan building at 400 Mack Ave. is expected to be converted into a $24 million to $25 million new rehabilitative and skilled nursing facility with 100 beds following a $6.1 million sale to Olympia Group LLC.

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HMO health plans post net income high, record Medicaid profits State’s 18 plans posted a 2% margin in 2015; HMO enrollment grew by 5.7%

By Jay Greene jgreene@crain.com

Driven by record Medicaid profits, Michigan’s 18 HMO health plans in 2015 posted the highest cumulative total net income in at least 15 years, according to the 2016 Michigan Health Market Review. The 18 health plans — led by Grand Rapids-based Priority Health,

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Troy-based Molina Healthcare and Southfield-based UnitedHealthcare Community Plan — earned net income of $330.7 million for a 2 percent margin on revenue of $16.4 billion, said Allan Baumgarten, the Minneapolis-based consultant

who publishes the annual report. However, Michigan’s six nonHMO health insurers lost a cumulative $358.7 million for a negative 4.4 percent margin on $8.2 billion revenue. Other insurers offer indemnity coverage to employers or individuals through preferred provider organizations, point-of-service and exclusive provider organizations. Blue Cross Blue Shield of Michigan, the state’s largest health insurance company, lost $344.3 million in 2015 on revenue of $7.5 billion. Underwriting losses of $572.9 million were offset by investment income gains of $206.7 million. From 2011 to 2015, Detroit-based Blue Cross earned net income of $244.4 million. In a statement, Blue Cross said Baumgarten’s report did not include in $51 million in investment income and “is not a comprehensive view of our company. “We work diligently as a nonprofit mutual to manage our performance to small margins. Because external factors are volatile, it is not uncommon for a small positive margin to swing negative in some years,” Blue Cross said. On the other hand, Blue Care Network, one of the 18 HMOs, earned net income of $16.9 million last year

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for a 0.5 percent margin on $3.7 billion in revenue. From 2011 to 2015, Blue Care has earned $461.2 million. The health plans “largely broke even on their commercial business and Medicare Advantage plans, but had very strong profits on their Medicaid plans,” Baumgarten said. In April 2014, Michigan began enrolling people for its Medicaid expansion program authorized by the Affordable Care Act of 2010. More than 600,000 low-income people enrolled, including nearly 200,000 in 2015 and 2016, the report said. After increasing by 21 percent in 2014, enrollment in Medicaid HMOs grew by 8.5 percent in 2015 and an additional 3.4 percent in the first quarter of 2016. The most profitable Medicaid HMOs in 2015 were Molina with $53.8 million, UnitedHealthcare with $44.2 million and Flint-based McLaren Health Plan with $23.4 million, up from $12.2 million in 2014. Meridian Health, which posted net income of $23.4 million last year, is the largest Medicaid HMO, with 468,000 enrollees. Molina Healthcare had 299,000 Medicaid members in 2015. While Flint-based HealthPlus of Michigan recorded net income in 2015 of $62.4 million and a margin

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of 8.6 percent, HealthPlus’ Medicaid plan last year was sold to Molina and its commercial and Medicare business was sold to Health Alliance Plan. However, most of HealthPlus’ earnings resulted from the sale of its Medicaid HMO, HealthPlus Partners, to Molina for $47.4 million, Baumgarten said. For the second consecutive year, Priority Health was the state’s most profitable HMO. It had net income of $106.3 million for a 4 percent margin last year compared with 2014, when it had net income of $91.6 million and a margin of 3.9 percent. In a statement to Crain’s, Priority Health said the following: “Priority Health’s financial performance is a reflection of the company’s commitment to enhance its innova-tive product portfolio, manage rising health care costs and keep administrative costs low. Marquette-based Upper Peninsula Health Plan, with net income of $13.1 million, had the best margins at 5.3 percent for 2015. HAP, which is owned by Detroit-based Henry Ford Health System, posted a loss of $33.1 million, although that was partly offset by net income of $27.5 million at its HAP Midwest Health Plan Medicaid subsidiary. In 2014, HAP lost $5 million despite HAP Midwest posting net income of $19.5 million. Blue Cross, which is going through a three-year cost reduction and management improvement plan, also reported losses in its large-employer group plan segment and lower profits in its small-employer group. In 2015, after earning $78 million in 2014, Blue Cross lost $81.5 million in the large-group segment. Its medical loss ratio, which measures how much of premium is spent on medical costs, increased to 89.9 percent in 2015 from 86.7 percent. However, an increase in medical loss ratio either means patients were sicker than expected, service use was higher or prices paid to doctors or hospitals were higher. In the small-group business market of 50 or fewer employees, Blue Cross netted $27.7 million in 2015, nearly two-thirds lower than the $110 million in 2014. But Blue Cross’ 2015 financial statement revealed that administrative expenses rose by 24 percent in 2015 to $1.74 billion from $1.4 billion in 2014. This is most likely due to a $312 million settlement with Aetna over improper pricing strategies and $50 million in contributions to the Michigan Health Endowment Fund as other “social mission” expenses. HMO enrollment grew in 2015 by 5.7 percent, to 3.24 million from 3.1 million, the report said. Enrollment in commercial, individual and group plans increased by 2 percent to 1.29 million from 1.26 million. The HMO data were provided by the Michigan Department of Insurance and Financial Services through June 2015. Jay Greene: (313) 446-0325 Twitter: @jaybgreene

SPECIAL REPORT: RETAIL

HOTin

Hamtramck Lower rents, opportunity, diversity draw businesses to ‘funky,’ walkable city By Vickie Elmer

Special to Crain’s Detroit Business

Joan and Raymond Bittner knew they wanted to expand their Polish Art Center in Hamtramck, not move out to the suburbs like some other businesses. So they waited for an opportunity. Many years later, that opportunity came when the pants store next to them on Jos. Campau Street closed, giving them room for more cards, stoneware imported from Poland and folk art classes and demonstrations. Other merchants and residents have waited a long time for a revival of forIn-store tunes for Hamtramck’s main retail and retailers restaurant thoroughfares — and finally, deliver experience, they say, a comeback is underway with an array of shops and bars opening this Page 11 year. On the list are Wheelhouse Detroit, a bicycle shop that is scheduled to open in August, plus a pet supply shop, a photo gallery, a coffee shop and a garment maker that also will provide consulting to young designers. “There’s a sense of opportunity here,” said Mayor Karen Majewski, who has lived in Hamtramck since the late 1980s. Three years ago, she bought a storefront on Jos. Campau and, after renovating it, opened Tekla Vintage two years ago. Near her shop is a new quilt maker called Edwin Moran and the Mom and Pop Toy Shop, which sells vintage toys. Further down is a new co-working space called COCAD, the Community of Creatives and Doers. And Bank Suey, a former bank, and Golden Hill Chop Suey eatery, was established

JENNIE WARREN

Joan and Raymond Bittner, longtime owners of the Polish Art Center, say they are seeing a revival of

business development in Hamtramck.

SEE HAMTRAMCK, PAGE 10

PayAnywhere shakes up team, eyes future The voice on the phone was angry. And, of course, anonymous. To paraphrase, the message was: You were dumb enough to fall for it the last time you wrote about PayAnywhere. Maybe now you can tell the real story. PayAnywhere is dying. Everyone has been laid off. Marc Gardner is desperately trying to find a buyer before the plug is pulled. Check it out. Click. I checked it out. First, the backstory. In May 2014, I did a story for Crain’s on the David-vs.-Goliath nature of what PayAnywhere LLC was trying to do. PayAnywhere is part of Troy-based North American Bancard Holdings LLC, a processor of credit

card payments founded by Gardner in 1992. Then, the parent company had revenue of about $500 million and employed about 600. Today, those numbers are more than $800 million and about 1,100, respectively. Square Inc. was Goliath, founded in 2009 by Jack Dorsey, the co-founder of Twitter, who raised $440 million in venture capital to capture the mobile-payment market before an initial public offering in November 2013. Everyone knew mobile payment would be huge. In this case, David — PayAnywhere — didn’t have to slay Goliath, it just had to carve out decent market share. In April 2014, after spending

TOM HENDERSON Senior reporter thenderson@crain.com Twitter: @TomHenderson2 more than $30 million on development costs, Gardner launched PayAnywhere Storefront, a combination of tablet computer and stand that allowed for vendors at craft shows, farmers markets and antique shows, for example, to ac-

cept credit cards. It was a direct competitor to Square’s system, called Register. Reports of PayAnywhere’s death are dead wrong, Gardner said. He declined to disclose any metrics, such as the number of merchants using it, number of transactions, company revenue or number of employees, but he said: “We are profitable, unlike the company that occupies the No. 1 position." He said PayAnywhere is growing its revenue base. In June, Best Buy started carrying PayAnywhere’s newest card reader in its stores. “Using a sports analogy, we brought in a new head coach who wanted to change his starting lineup and bring in all all-stars,” said Gardner. He declined to say how

many lost jobs but said it was less than 1 percent of his employees, which would mean fewer than 11. The new coach is Jim Parkinson, a 24-year IT veteran of Santa Clara, Calif.-based Sun Microsystems Inc. In June, he was named CIO of PayAnywhere and North American Bancard. He said he wanted a smaller, more nimble team, that he wanted to bring in four longtime Sun engineers, and he wanted to have a team where everyone knew how to code. “The big reason I came here was to build PayAnywhere and to compete against Square,” said Parkinson. “PayAnwhere has an incredibly bright future. I go to bed thinking about it.” David is still, apparently, clutching his slingshot.

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

SPECIAL REPORT: RETAIL

HAMTRAMCK FROM PAGE 9

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in 2014 on Jos. Campau as an event and community space. On the other side of town along Conant Street, an array of Bangladeshi businesses and restaurants have opened in recent years, selling saris, spices, groceries, sweets and more. “It’s doing now what I thought it would do 40 years ago,” said Joan Bittner.

‘Cool and diverse’ She and others describe HamJENNIE WARREN tramck as a place where immigrants Owner Linda Wolyniec works in her new quilt making shop, called Edwin Moran, on and artists are coming to live, and Jos. Campau in Hamtramck. start businesses. Twentyand properties marketed at City Eatery, which started as a pop-up 30-somethings are “There’s a $17 or higher a square in Ferndale’s Rust Belt Market, is leavmoving to Hamtramck lot of young foot are “a tough sell in ing Hamtramck for a larger location because it’s “funky and Hamtramck,” he said, in Midtown. Staff at Rock City say cool and diverse” as well energy and his commercial Hamtramck often has slow nights as affordable and walk- coming in space is priced around with few diners and scant tips. And one of the biggest businessable, said Majewski. A $10 to $12 a square foot. few of them have taken with By comparison, retail es, the Polish Market, closed in June over “old guy” bars and businesses, leases in Midtown range after many years in Hamtramck. Empty storefronts have been a reinvented them with from $16 to $30 a square a lot of new names and specialfoot, according to Mid- longtime issue in Hamtramck, one that grew worse in the 2007-08 recesty drinks or pop-up food people with town Detroit Inc. Wheelhouse Detroit sion. Majewski said some of that offerings. One of them ideas.” owner Kelli Kavanaugh comes from landlords who want only was renamed Trixie’s after the mother of the John Grossi, discovered this differen- national chain tenants or others who two brothers who property, biz owner tial in rental rates. She hold properties but don’t want to renbought and rehabbed it. looked for a second lo- ovate them. Hamtramck has a hand“There’s a lot of young energy cation for her bicycle shop in nu- ful of “slumlords,” she said. Others say coming in with businesses, a lot of merous neighborhoods for two that with the momentum in Hampeople with ideas. Lots of overflow years and saw five other bike shops tramck, it could be time for them to from Corktown and Midtown” De- open in or near downtown Detroit. sell or spruce up their properties. troit, said John Grossi, who owns That made her look to Hamtramck Shoppers from near, far commercial and residential proper- for “its liveliness and diversity” and Businesses in Hamtramck tradities in Hamtramck as well as Amic- affordable real estate. ci’s Pizza, which he opened in 1985. She said it would have cost her tionally have thrived if they served Hamtramck’s traditional down- one and a half times as much in rent the the local population, or a partictown along Jos. Campau has new- to open a bike shop in downtown ular immigrant or ethnic group. Yet comers as well as old-time pawn Detroit or Midtown or Eastern Mar- increasingly, businesses rely as shops, dollar stores and a couple of ket, and yet Hamtramck still has much on the out-of-area visitors as bakeries. It’s a mix of old-time shops walkability and a strong food and the locals. selling discounted clothing or insur- entertainment scene. To help lure out-of-towners, the ance and a handful of Polish grocerHer 2,500-square-foot store is Bittners hand out maps of Polish ies, bakeries and shops, and new scheduled to open in August with and other restaurants and other trendy places. custom-made destination shops and places. They And the residents themselves neon signs and a also market through the Michigan mirror that melting pot-newcomer mural planned Welcome Centers, which brings in mixture. Nearly 44 percent of Hamfor its back wall. guests heading up and down I-75 tramck’s residents were born in a She will feature from throughout the Midwest and country other than the United apparel, which beyond. States, eight times as many as in De“Hamtramck has these new retail is not offered at troit. The city was 21.5 percent Asian her Detroit spaces that are pulling in people background, with many Banglastore, and more from the surrounding cities,” said deshi and Yemeni residents, and bikes. Kavana- Rebecca Smith, founder and CEO of 19.3 percent African-American. Kelli Kavanaugh: ugh is half Polish Better Life Bags. “They introduce Some 54 percent of its population Drawn by real and lived in these people who would never come was white as of the 2010 census. Hamtramck in to Hamtramck otherwise.” She cited estate costs, the 1990s, so as examples the chocolatier Bon diversity. Real estate advantages she’s happy to Bon Bon and her own company. That diversity is an attraction for be part of its revival. Smith has a workshop plus a some prospective business owners, The rising interest in Hamtramck small retail space under construcbut so is the fact that Hamtramck also has increased property values. tion in Hamtramck. benefits from Detroit’s revival and Her business is based on the idea When Majewski bought her subsequent rising rents, which have building at 9600 Jos. Campau three of helping women, often immigrant caused some to give up on a Mid- years ago, she paid $55,000 for it. women, back into the workforce. town Detroit business address and Now she estimates it could sell for She currently employs 16 women, move to the city surrounded by De- close to $100,000. The building re- 10 full time and six part time. They troit. Hamtramck rents on retail and quired considerable renovation and sew handbags, diaper bags, school restaurant spaces range from ap- repairs. bags and others. Her shop will be Bon Bon Bon owner Alexandra about 600 square feet and will allow proximately $9 to $18 a square foot a year, according to LoopNet, a com- Clark paid $110,000 for the customers to choose their own fab3,000-square-foot building at 11360 ric, finish and bag design. mercial listings site. Grossi estimates a wider range — Jos. Campau and will renovate it as a “A lot of people have never been from $3 to $20 a square foot a year, home for her artisanal chocolate to Hamtramck,” she said. “We love depending on location, parking and shop and production facility. the city. It helps that the rent is Yet not everyone is buying in. Rock cheaper, too.” amenities in the building. Some

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

SPECIAL REPORT: RETAIL

Retail realities

Stores must ‘master the experience’ of shopping to ultimately succeed, experts say

By Adrienne Roberts aroberts@crain.com

The phrase “retail is dead” may ring true for some metro Detroiters after witnessing the closing of malls such as Northland Center in Southfield and the Summit Place Mall in Waterford Township — now vacant symbols of times when more families would spend a day at the mall. Yet experts would argue that retail store shopping is not dying but changing quickly and dramatically. For instance, many consumers — and 72 percent of millennials, according to the ongoing Cassandra Report of generational insights — now begin the shopping process before they even step foot inside a store, using the internet to become more price savvy and more willing to shop for a better deal. They also know more about the retailer — from where they source their ingredients in products to the history of the brand. All this gives the consumer more power. “Shopping has changed as (society has) moved to being more inquisitive and less acquisitive (a term defined as an interest in acquiring material things),” said Ken Nisch: Ken Nisch, Shopping has chairman of changed with society. JGA, a brand strategy and retail design firm in Southfield. And it’s clear, at least anecdotally, that brick-and-mortar stores are relevant today. Witness the weekend crowds at the upscale Somerset Collection in Troy and the Great Lakes Crossing Outlets in Auburn Hills, plus there’s a palpable buzz surrounding new retail coming to Woodward Avenue in downtown Detroit. And research backs up the observations. A 2014 study by the global management consulting firm A.T. Kearney Inc., which has an office in Southfield, said that 95 percent of all retail sales are captured by retailers within a brick-and-mortar presence. The study also found that stores play a crucial presence in online sales, as two-thirds of customers purchasing online use a store before or after the transaction, and 55 percent of consumers prefer to use both stores and online throughout the shopping experience.

‘Master the experience’ But for brick-and-mortar retailers to ultimately succeed, Nisch argues, they must “truly master the experience,” which is both a science and an art. The experience must appeal to the brand’s customers — whether it’s men or women, millennials or baby boomers, and whether the store sells apparel, groceries or electronics. And retailers now must

CHRIS EHRMANN

Felix McCarthy works at the coffee bar in the Will Leather Goods store in Midtown.

Coffee bars are among the amenities retailers are offering to give customers another reason to linger in their stores. create a frictionless journey between the website and the store, said Greg Iszler, executive vice president of strategy and insights at The Mars Agency, a Southfield-based shopper marketing agency. Essentials to the experience are having in stock the products customers viewed online, making sure prices are consistent between online and the store and ordering out-of-stock products for shoppers and shipping them to their doorsteps for free. Who demands a seamless experience? Mostly millennials, said Ken Dalto, founder and owner of Farmington Hills-based business consulting firm Kenneth J. Dalto & Associates. “Baby boomers buy less, although have more purchasing power,” Dalto said. “The key to all selling right now is millennials.” He said the key to capturing millennial dollars is to combine online retail and brickand-mortar stores. A brand that’s melding the two spaces is Dearborn-based workwear brand Carhartt. Carhartt, established in 1889, is known for a loyal customer base that often works in the construction and manufacturing sectors and has been purchasing a specific product for years. Yet, at the brand’s Midtown flagship store — an industrial space with cement floors, wood accents and photos of people working outdoors in Carhartt gear — there’s hardly a printed sign in sight. Instead, the store is dotted with interactive kiosks and touch screens, offering customers the opportunity to view product details and other styles and colors that may not be available in stores. Mark Kastner, director of retail store operations at Carhartt, said the goal of the brand’s stores is to create a welcoming environment for all customers. The core consumer, who’s been shopping at Carhartt consistently over the years, may not need to view new products with the touch screen, but as the brand has directed some of its marketing campaigns toward the younger generations, the stores need to also cater to

CHRIS EHRMANN

Carhartt’s Midtown store has

interactive kiosks and touch screens, offering customers the opportunity to view product details like other styles and colors. them. With an engaged customer base walking into their stores, the touch screens are one way to appeal to that audience.

Tell, don’t sell Retailers also strive to appeal to shoppers’ emotions — those who are looking for inspiration and stimulation from the shopping process, something that can’t happen as easily online. They do that through storytelling, said Nisch. Take, for example, the Whole Foods Market in Midtown. The organic and natural food store, a project of Nisch’s, uses recycled materials from scrap yards in Detroit for store signs, and a collage made by a local artist designates the deli. Painted on the wall above the dairy section are the words “Detroit Proud to be Here,” while another wall features a painted grid of the city of Detroit. Nisch said the goal was to create a city grocery store that emphasizes local signature icons in both the offerings and space. Whole Food Market’s efforts to connect with the Detroit community is a theme common with such national retail stores attempting to emulate the “support local retail movement,” said Jeff Stoltman, an associate professor of marketing at Wayne State University. He said local grocery stores sometimes can’t afford signage, so they use chalkboards instead to list

products and specials. National retailers emulate local grocers with chalkboard signs, as well as featuring more natural materials like wood in their stores and using more earth tones in the design. Carhartt, in an effort to make its metro Detroit connection known to shoppers at its Midtown storefront, has decorated the store’s exterior with photos of Michigan residents (not models) wearing its apparel. While retailers strive to tell the story of their brand to connect with shoppers, consumers expect the story to be genuine. “Consumers expect a seed of authenticity and reality,” Nisch said. “They are savvy and don’t want to be lied to.” That’s why Alexandra Clark, founder of the chocolate shop Bon Bon Bon, with locations in downtown Detroit and Hamtramck, has customers taste a new ingredient she’s working with in the chocolates, even if she’s not sure she likes it herself. “It says ‘Hey, we make this and we’re not always right,’” said Clark. “You don’t have to always be right. And you don’t have to like everything that we make. We don’t like everything that we make. So then it leads to this more honest conversation, which only helps us.”

Battle of the sexes While it seems men and women (especially millennials) universally expect an authentic, experience-driven shopping trip, men and women differ greatly in the way they shop, said Nisch, basing the statement on research by Paco Underhill, author of Why We Buy: The Science of Shopping. For example, at Destination XL (DXL) in Troy (one of Nisch’s clients), the store is designed with the knowledge that big and tall men of any age and income level could walk in. The store is grouped by clothing type such as athletic wear, casual brands popular with teenagers and suits, among others. Many of the items are available in several colors and are grouped so that customers can easily pick up several colors of the same shirt or pant. The dressing rooms are intentionally located in the center of the store, because men are likely to bring a significant other to shop with them, and centrally located dressing rooms make it easier for that person to hand them clothes to try on. Contrast this with the Anthropologie store at the Somerset Collection, a Philadelphia-based retailer offering women’s clothing, accessories and home décor, which is designed to replicate a flea market, with candles placed next to doorknobs, which are next to dresses. The store is colorful with a large amount of merchandise on display. “Anthropologie is designed like more of a discovery trail,” Nisch said. “The store is driven by color, and (takes the shopper on) a geographic

excursion around the world.” Women like to pick up products more than once and don’t move in a straight path around stores, which is why Anthopologie is designed to look like organized chaos, he said. Both DXL and Anthropologie are designed for their core customer, but both try to create an experience that makes their average customer feel comfortable and engaged.

Beyond a transaction Just as how malls once offered a day’s worth of entertainment for a family, retailers are now offering instore entertainment and asides like coffee to keep people in the stores longer and make the experience more vibrant. “Increasingly important are retailer atmospherics such as ambiance, music, pace and tonality,” Stoltman said. “Very little is left to gut intuition.” Bon Bon Bon’s Clark unintentionally realized how important the Jeff Stoltman: music was to the Atmospherics e x p e r i e n c e increasingly when she was important in retail. using Spotify to play music at the storefront in Hamtramck, and a Califone record player at the Detroit shop. “People (in Detroit) would complain about the music, but people here (in Hamtramck) never would,” Clark said. “I think that’s the expectation of the customer. If they can’t tell where (the music is) coming from, then (they think), ‘They’re doing this for me.’” The record player also creates a point of conversation for customers, she added. Experiences can also come in the form of a restaurant, hair salon or coffee shop, which retailers are increasingly adding to their stores while simultaneously carrying less inventory, Dalto said. Locally, leather accessories stores Shinola and Will Leather Goods, both with storefronts in Midtown, have coffee shops in their stores, which is a way to enhance the experience and get customers to stay in their stores longer, Dalto suggested. Rob Rivenburgh, CEO of The Mars Agency, North America, said the overall positive experience retailers create through loyalty programs, a painless checkout and sales associates who can provide guidance will ultimately be the reason why consumers want to step into a brick-and-mortar store. For many, there’s a certain excitement that comes with holding and examining a product, as well as sharing the shopping experience with friends and family. Online retail and social media have yet to find a way to mimic that experience.

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

CRAIN'S LIST: LARGEST LOCAL AUTO DEALERS Company Address Rank Phone; website

Top executive(s)

Ranked by 2015 revenue

Revenue ($000,000) 2015

Revenue ($000,000) 2014

Percent change

Number of dealerships

Number of new vehicles sold, leased 2015/2014

Number of used vehicles sold 2015/2014

The Suburban Collection 1795 Maplelawn Drive, Troy 48084 (877) 471-7100; www.suburbancollection.com

David Fischer chairman and CEO

$2,001.5

$1,914.5

4.5%

33,818 34,621

20,202 18,425

Victory Automotive Group Inc. 46352 Michigan Ave., Canton Twp. 48188 (734) 495-3500; www.victoryautomotivegroup.com

Jeffrey Cappo president

1,223.7 B

1,033.5 B

18.4

35 B

24,718 B 21,321 B

15,202 B 14,532 B

663.3

15.9

12,853 12,508

8,170 6,615

Southfield Dodge Chrysler Jeep Ram 28100 Telegraph Road, Southfield 48034 (248) 354-2950; southfieldchrysler.com

Michael LaFontaine owner and chairman Maureen LaFontaine owner and president Kenneth Thomas owner and general manager

768.4

LaFontaine Automotive Group 4000 W. Highland Road, Highland Township 48357 (248) 887-4747; www.thefamilydeal.com

484.5 C

477.4

1.5

NA NA

Prestige Automotive 20200 E. Nine Mile Road, St. Clair Shores 48080 (586) 773-2369; www.prestigeautomotive.com

Gregory Jackson chairman and CEO

379.4 B

400.1

-5.2

6,905 B 15,071

2,081 B 2,168

Stewart Management Group Inc. 20844 Harper Ave., Suite 100, Harper Woods 48225 (313) 432-6200; www.gordonchevrolet.com

Gordon Stewart president

329.7

342.2

-3.7

6,534 6,668

3,726 4,170

303.3

-5.3

3,966 4,284

2,163 3,067

Snethkamp Automotive Family 16400 Woodward Ave., Highland Park 48203 (313) 868-3300; www.snethkampauto.com

Tony Elder president Robert Elder vice president Mark Snethkamp president

287.1

Elder Automotive Group 777 John R Road, Troy 48083 (248) 585-4000; www.elderautogroup.com

260.0

235.0

10.6

NA 5,500

NA 2,200

Jim Riehl's Friendly Automotive Group Inc. 32899 Van Dyke Ave., Warren 48093 (586) 979-8700; www.jimriehl.com

James Riehl Jr. president and CEO

235.9

231.7

1.8

NA NA

Buff Whelan Chevrolet

Kerry Whelan president

208.0

183.9

13.1

5,084 4,705

1,268 1,341

Royal Oak Ford/Briarwood Ford

Eddie Hall Jr. president

197.1

157.7

25.0

4,510 4,062

2,000 1,324

Pat Milliken Ford Inc.

Bruce Godfrey chairman

173.0

165.0

4.8

4,567 4,488

635 678

Bill Perkins Automotive Group

Bill Perkins president

157.8

146.9

7.5

3,282 3,009

3,202 3,226

Jeffrey Tamaroff Automotive Family 28585 Telegraph Road, Southfield 48034-1928 (248) 353-1300; www.tamaroff.com

Marvin Tamaroff chairman emeritus Jeffrey Tamaroff chairman and CEO Jeff Laethem president

148.1

146.1

1.4

3,639 3,742

2,486 2,450

148.0

134.0

10.4

3,432 2,998

609 1,172

George Matick Chevrolet

Karl Zimmermann owner and operator

147.5

115.4

27.8

NA 2,476

NA 1,127

Milosch's Palace Chrysler-Jeep-Dodge Inc. 3800 S. Lapeer Road, Lake Orion 48359 (248) 393-2222; www.palacecjd.com

Donald Milosch president

144.4 C

142.3

1.5

NA 2,655

NA 1,496

125.7

-1.5

NA NA

Village Ford Inc. 23535 Michigan Ave., Dearborn 48124 (313) 565-3900; www.villageford.com

Walter Douglas Sr. chairman Mark Douglas president James Seavitt president and CEO

123.8

Avis Ford Inc. 29200 Telegraph Road, Southfield 48034 (248) 355-7500; www.avisford.com

122.2 C

120.4

1.5

NA 2,787

NA 634

Van Dyke Ave., Sterling Heights 48313 10 40445 (586) 939-7300; www.buffwhelan.com Woodward Ave., Royal Oak 48067 11 27550 (248) 548-4100; www.royaloakford.com Telegraph Road, Redford Township 48239-1492 12 9600 (313) 255-3100; www.patmillikenford.com Gratiot Ave., Eastpointe 48021 13 21800 (586) 775-8300; www.merollischevy.com

Ray Laethem Inc.

Mack Ave., Grosse Pointe 48224 15 1677 (313) 886-1700; www.raylaethem.com Telegraph Road, Redford 48239 16 14001 (313) 531-7100; www.matickchevy.com

Gorno Automotive Group

Ed Jolliffe president

117.6

118.5

-0.8

NA 3,161

NA 1,276

Roseville Chrysler Jeep Inc.

Michael Riehl president

99.6

96.3

3.4

2,263 2,232

814 813

Rodgers Chevrolet Inc.

Pamela Rodgers president

77.6

74.1

4.7

NA NA

Bob Jeannotte Buick GMC Inc.

Robert Jeannotte CEO

53.0

0.0

1,100 1,097

316 282

Glassman Automotive Group Inc.

George Glassman president

52.7

51.6

2.1

1,542 1,257

857 935

Allen Road, Woodhaven 48183 20 22025 (734) 676-2200; www.gornoford.com Gratiot Ave., Roseville 48066 21 25800 (586) 859-2500; www.mikeriehls.com Allen Road, Woodhaven 48183 22 23755 (734) 676-9600; www.rodgerschevrolet.com Sheldon Road, Plymouth 48170 23 14949 (734) 453-2500; www.jeannotte.com Telegraph Road, Southfield 48034 24 28000 (248) 354-3300; www.glassmanautogroup.com

This list of local auto dealers is an approximate compilation of the largest such businesses in Wayne, Oakland, Macomb, Washtenaw and Livingston counties. Dealership companies must have local stores to be included on this list. Penske Automotive Group is not on this list because, while it is locally headquartered, it doesnâ&#x20AC;&#x2122;t have local car dealerships. It is not a complete listing but the most comprehensive available. Unless otherwise noted, information was provided by the companies. Actual revenue figures may vary. NA = not available.

B Automotive News. C Crain's estimate. LIST RESEARCHED BY SONYA D. HILL

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

CALENDAR 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 the topic “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. 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.

DEALS &

Website: karmanos.org.

DETAILS

Froude Inc., Novi, has announced that Froude Engineering Ltd.,

Worcester, England, is now a manufacturing and support center and that the Novi manufacturing and support center is the new world headquarters for the brand. Telephone: (248) 579-4295. Website: gopowersystems.com.

ACQUISITIONS & MERGERS

Vesta Modular, Birmingham, a modular unit and housing company, has acquired 76 classroom units in Florida, which will be leased to school districts in the state. Website: vestamodular.com.

MOVES

Dick’s Sporting Goods, Coraopolis,

Pa., has moved from the North Pointe Center, 45230 Northpointe Blvd., Utica, to 13000 Hall Road, Sterling Heights. Telephone: (586) 884-0200. Website: dickssportinggoods.com.

CONTRACTS

Identity, Bingham Farms, a public

relations firm, announced it has added as clients Broder and Sachse Real Estate Services Inc., Brooklyn Outdoor, Kansas City Marriott Country Club Plaza and Sachse Construction. Website: identitypr.com.

NEW PRODUCTS

National Association of Business Resources, Warren, through the Best

EXPANSIONS

Howard & Howard Attorneys PLLC,

Royal Oak, has opened an office in Los Angeles. Website: howardandhoward.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.

The Boldt Co., Appleton, Wis., a construction firm, opened an office at 51056 Century Court, Wixom. Telephone: (313) 329-2700. Website: boldt.com. Barbara Ann Karmanos Cancer Institute, Detroit, a subsidiary of McLaren Health Care, has opened a

15,000-square-foot patient care center at McLaren Port Huron.

and Brightest Companies to Work For program, has introduced the 2016 Resource Guide, which contains an in-depth look into best practices of the nation’s top employers. Website: 101bestandbrightest.com.

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

ADVERTISEMENT SECTION

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Brad Baker VP of Construction Operations C.E. Gleeson Constructors, Inc. C.E. Gleeson Constructors, Inc. has promoted Brad Baker to Vice President of Construction Operations. Baker, previously a Project Manager, will now oversee the company’s Project Management Operations. Gleeson Constructors is Headquartered in Troy, MI, with a Southeast Division in Charlotte, NC and a Southwest Division in Austin, TX. Baker is a Michigan State University graduate, with a Bachelor Degree in Construction Management.

NON-PROFITS

Berry Moorman P.C. welcomes Sandro D. DiMercurio as an associate to the Firm. Mr. DiMercurio passed the February 2016 Michigan Bar Examination and is concentrating his practice on real estate law, business law, civil litigation, and labor & employment law. His credentials include a J.D. / M.B.A. degree from the University of Detroit Mercy School of Law, and B.A. from Michigan State University. Berry Moorman P.C. is a full service law firm with offices in Detroit, Birmingham and Ann Arbor.

MANUFACTURING Anna Inch

Senior Director of Legal and Compliance Carhartt, Inc. Carhartt has promoted Anna Inch to senior director of legal and compliance. Inch will continue to provide comprehensive global legal support, and she will now lead Carhartt’s corporate compliance initiatives as well as its social compliance team.

PEOPLE: SPOTLIGHT HAP Midwest names Genord as CEO

Michael Genord, M.D., has been named CEO of Detroitbased HAP

Midwest Health Plan.

Genord, formerly CEO of HealthPlus of Michigan, helped transition HealthPlus Genord after Health Alliance Plan this year acquired its commercial and Medicare business lines. HAP Midwest, which in 2011 was acquired by Henry Ford Health System, in 2015 lost a lucrative Medicaid contract with about 90,000 enrollees in Southeast Michigan. A state contract rebidding process resulted in the provider being assigned to the Michigan Thumb, a region with about 10,000 Medicaid members. Genord joined HealthPlus in 2013 as chief medical officer.

Amato replaces Wathen as TriMas president-CEO After reporting that midyear revenue was off about $43 million from early 2015, Bloomfield Hills diversified manufacturing company TriMas Corp. said it had replaced David Wathen as president and CEO with

Thomas Amato, former

president and CEO at Plymouthbased

Chief of Staff

Girl Scouts of Southeastern Michigan (GSSEM) announced Carla Hogan as Chief of Staff. In her role, Hogan will support GSSEM’s Board of Directors and its committees, act as Council liaison for Council and National Delegates, assume oversight of the business office functions, and provide leadership and effective management in all areas of administration and project completion. Hogan comes to GSSEM from Hospice of Michigan (HOM) where she managed day-to-day governance and administrative operations.

Amato

Metaldyne LLC.

At Metaldyne, Amato, 52, oversaw a $1.1 billion engineered products maker. He was also president and chief integration officer at Metaldyne Performance Group. Wathen, 63, had been TriMas CEO since 2009.

Crain names former Valassis executive as CFO Detroit-based media company

Crain Communications Inc. named

former

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

Valassis Inc. executive Bob Recchia as

CFO. Recchia, 59, joined Livonia marketing firm Valassis in 1982 as Recchia treasurer and was CFO from 1990 until shortly after its sale to Harland Clarke Holdings Corp. in 2014. Crain Communications publishes Crain’s Detroit Business among 22 print publications and 34 digital-only news sites.

August 1, 2016

ELECTION FROM PAGE 1

chairman from 1995 to 2013 and who is an attorney with Goodman Acker PC in Southfield. He added that some seats become easier to win when the incumbent is term-limited. In all, 42 seats are up for grabs due to term limits or other factors. Democrats have two vacant seats due to the resignation of former state Rep. Derek Miller, D-Warren, to become Macomb County Derek Miller: Left treasurer, and to become the death of for- Macomb County mer state Rep. treasurer Julie Plawecki, D-Dearborn Heights. “What’s disconcerting around this election is it’s very volatile. It’s very hard to know where this election is going,” said Doug Rothwell, president and CEO of Business Leaders for Michigan, the state’s business roundtable. “For a business, the worst thing in the world is uncertainty. They’re making huge investment decisions, they’re making decisions that will be multiple years in the making, and it’s hard to do that when you don’t know what the policy environment is going to be.” Business Leaders for Michigan’s political action committee gave more than $185,500, mostly to legislative candidate committees, from April 21 through July 20, according to Michigan campaign finance records. Its super PAC, Business Leaders for Michigan PAC II, took in $36,000 during that same period. It received $10,000 contributions each from

“What’s disconcerting around this election is it’s very volatile. It’s very hard to know where this election is going. For a business, the worst thing in the world is uncertainty.” Doug Rothwell, Business Leaders for Michigan

Jackson-based Consumers Energy Co., Ann Arbor-based real estate firm McKinley Inc. and Benton Harbor-based Whirlpool Corp. Business Leaders for Michigan has scored House candidates’ responses to a questionnaire and posted the results on its website. The group is focused on policy areas that could move Michigan into the top 10 states for jobs and income, such as educational attainment, creating a competitive business climate and economic development programs. Its PAC has contributed to a slate of Republican challengers in open seats, including Jeffrey Neilson, an attorney from Northville Township, in the 20th District; Macomb County Commissioner Steve Marino, of Harrison Township, in the 24th District; and Pamela Hornberger, an educator from Chesterfield Township, in the 32nd District. “We want people elected to office (who) have that same sense of urgency and drive that we do,” Rothwell said. “We want people (who) are very much aligned with a progrowth agenda.” The Detroit Regional Chamber’s political action committee in June endorsed 28 Republicans and 24 Democrats running in Tuesday’s primary. Support was given to candidates based on their responses to a questionnaire, feedback from PAC board members and individual interviews, the chamber said. The chamber often doesn’t endorse candidates in races with mul-

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tiple strong candidates, choosing instead to let the primary election results narrow the field, said Brad Williams, its government relations vice president. For Tuesday’s primary, the chamber’s PAC considered incumbent votes on tax credit legislation for data centers that helped Nevada-based Switch move near Grand Rapids and on Detroit Public Schools reform, among other issues. Regarding Switch, “you might wonder why did it matter so much to us, but it’s one of those situations where it’s pretty indicative of someone who is going to support economic development initiatives in the future, regardless of geography,” Williams said. The Detroit chamber’s PAC gave more than $50,000 in the most recent quarterly filing period, with its largest award — $15,000 — going to a committee for Detroit Mayor Mike Duggan, records show. Its Powering the Economy super PAC received $4,300 in the period, a single contribution from the chamber. Other business groups weighed in on the primary, including the Michigan Restaurant Association, which said it is supporting candidates who have shown a “demonstrated commitment to the restaurant industry.” The association added that it typically weighs in during primary elections only in cases in which an incumbent with a strong voting record is facing a challenger or if a single candidate stands out in a race without an incumbent.

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At a glance To find out who business groups are supporting in Tuesday’s primary, visit: n Business Leaders for Michigan: businessleadersformichigan.com/ our-work/advocacy/ n Detroit Regional Chamber: www.detroitchamber.com/detroit-regionalchambers-political-action-committee-releases-endorsements-for-house-ofrepresentatives-detroit-city-council/ n Michigan Chamber of Commerce: www.michamber.com/chamberendorses-21-pro-jobs-lawmakers-re-election-state-house

The Michigan Chamber of Commerce has endorsed 21 incumbent

state representatives — all Republicans — and 23 challengers; of them, one, Ann Arbor school board member Donna Lasinski, is a Democrat, in the 52nd District. The state chamber’s PAC gave more than $146,000 in the most recent quarter, according to campaign finance records. It gave $10,000 apiece to House and Senate Republican campaign committees and to a committee for Attorney General Bill Schuette. The chamber’s super PAC, Michigan Chamber PAC III, received $2,500 from the Michigan Infrastructure and Transportation Association during the same period, records show. This fall, the chamber is placing much of its energy on open seats — especially since in many House districts, redistricting has led to competitive races in the primaries, said Rich Studley, its president and CEO. “Our core purpose is to help chamber members solve their business problems,” Studley said. “Sometimes, those problems are that a company needs a business solution, they need labor law posters or a workshop or a seminar, or help in finding the right insurance for their employees. But often, that business problem is legislative or regulatory — there’s a need to pass legislation that would be helpful to

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job providers, or there is a need to block legislation. “We think it’s especially helpful and important if we have members of the state House ... who have worked in the private sector and know what it’s like to pay taxes and be on the receiving end of regulations,” Studley added. “Often in government, we know the most important decision is who decides.” Come November, though, primary winners will have to contend with the impact from the presidential race. If the GOP’s base doesn’t turn out to vote, it could cause problems for Republicans in close House races, said John Truscott, president of Lansing-based public relations firm Truscott Rossman and a former spokesman for Gov. John Engler. Likewise, he said, seats currently held by Democrats could swing to the right in communities where Trump polls higher. And with falling unemployment, typical economic issues might not play as important a role in deciding who wins, Truscott said. “We’re dealing with two of the most unpopular candidates in our lifetime, so that has an impact of not motivating people to turn out,” he said. “Republicans have a strongenough majority; I do think they hold on to (the House).” Lindsay VanHulle: (517) 657-2204 Twitter: @LindsayVanHulle

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

“We’ve gone as far as we can go as a board. Clearly, negotiation now has to occur at the elected official level.”

RTA

FROM PAGE 1

“Do we really need to remain at 50-50? There needs to be discussions about the whole thing. We can’t lock ourselves in,” he said, acknowledging that future funding splits could theoretically favor DDOT if it greatly expanded and SMART made deep cuts, or vice versa. But he stressed that the city wants to cooperate, not compete, with the suburbs. “This is a long-term partnership, something we can all work together on,” he said. Dirks pointed to the creation in January of refleX, a DDOT-SMART joint venture of additional bus service on Woodward and Gratiot avenues, as an example of cooperation. “We’ve worked really well with SMART since that happened,” Dirks said. “It’s been the city’s impression that we’ve worked very well with SMART and the counties on this process.” For years, DDOT got 65 percent of the millions in federal transit funding for the region, and SMART got 35 percent. That ratio under the RTA was closer to a 50-50 split, but sources familiar with the internal workings of the RTA said telephone conversations in the past year among the different political entities — no names were offered — suggested that the voting governance structure of the RTA would be used to tilt the funding ratio sharply in DDOT’s favor again. Hackel said he will endorse the plan if he gets the veto that would prevent any radical funding switch. “It’s going to force everybody to play fair,” he said. “I couldn’t in all good conscience send it to (voters without it).”

List of objections The RTA voting structure is just one of several objections from Oakland County, which codified its RTA issues in a 19-page letter on July 5

What does the plan encompass?

Paul Hillegonds, RTA chairman

that was sent to RTA CEO Michael Ford. It outlines what the county said were concerns dating to November 2015, including what Patterson says is 40 Oakland County communities getting no benefit under the master plan despite paying into it. “Everything in our letter was being discussed for months,” Patterson said. “We’re not kidding. These are issues that have to be addressed.” Ford said the RTA was blindsided by the scope of the Oakland objections. “When we got this stuff at the last minute, it was a big surprise,” he said. “We had some discussions but nothing that was articulated in a focused area. Until we got that (memo), we didn’t have anything. Just general comments. Nothing you could take actions on.” Ford said he wouldn’t do anything differently, in retrospect. “If there was a political movement of some sort, it wasn’t conveyed to us,” he said. “We have board members who are the representatives of those areas. We have good relationships.” The RTA’s management sprang into action when it got the July 5 memo, Hillegonds said. “There were efforts immediately to begin conversations about what was really important in that memo. We’ve worked diligently to define that. Some of it really hasn’t been defined as recently until the day before (the canceled July 21 vote),” he said. In polite terms, Hillegonds expressed his irritation over Oakland and Macomb’s timing. “I can’t answer why these objec-

The proposal that the board voted against sending to the ballot is a 1.2-mill, 20-year property tax across Wayne, Oakland, Macomb and Washtenaw counties. It would raise $3 billion that would pay for a regional system of bus rapid transit lines on the Woodward, Michigan and Gratiot avenue corridors and on Washtenaw Avenue between Ann Arbor and Ypsilanti, create the long-discussed commuter rail service between Detroit and Ann Arbor, and cover their annual operating costs. The RTA millage also is expected to fund new traditional Detroit Department of Transportation and SMART bus service, a universal fare card for the region and an express service across the region from the airport. But the backbone of the plan are the bus rapid transit lines. Under a BRT system, buses operate much like a rail line, with train-like wheeled vehicles, dedicated lanes, priority traffic signaling and higher speeds. The tax also could pay for other transit infrastructure capital costs, and by 2024 assume the operating costs for M-1 Rail’s QLine streetcar line on Woodward Avenue in Detroit that’s

tions were raised at the 11th hour. The timing is very frustrating. The governance issue simply was a last-minute objection,” he said. “The issue of how much service can you provide in the out-county areas has been talked about in general terms, and there’s been ongoing discussion, and honestly we felt we were meeting those objections.” Patterson said his objections are rooted in being a good financial steward for Oakland County, and he expressed resentment over the backlash. “We raise concerns and everybody accuses us of being obstructionist,” he said. “We’re not going to be stampeded. We had to go public with something.” Hillegonds said it’s now up to the political leaders of the four counties and city of Detroit to find a solution, and that the public needs to understand what’s at stake. That’s why he opted to have a vote last week rather than delaying it a second time. “We felt we could advance the master plan, and we thought we should define for the public exactly where we are, and to indicate why we need now to defer to the elected officials. We’ve gone as far as we can go as a board. Clearly, negotiation now has to occur at the elected official level,” he said. Is Hillegonds optimistic? Somewhat. “I believe we can address some of the concerns; I hope all of the concerns. It will take some compromise,” he said. “We still have to work very carefully with the attorneys on the legal issues related to any compromise.” Not getting buy-in from Patterson and Hackel makes a ballot issue

a non-starter. New taxes are typically a tough sell, and the RTA case will be even harder to make if influential leaders in Oakland and Macomb counties oppose it, said Dave Dulio, a professor and chairman of Oakland University’s political science department. “Without the support of Brooks Patterson and Mark Hackel, it probably doesn’t have a chance of passing,” said Dulio, who added that he takes Patterson and Hackel at their word when they say they remain supportive of regional transit in concept. “It’s a question of the RTA folks, but I imagine that they don’t want to move forward without shoring up the support of those folks.” The RTA itself fell victim to forces beyond its control, at least one transit insider said. “The RTA is a very small organization. They were charged with making a good plan, coordinating the system, which is no easy task, and navigating the politics of the region. It seems like a lot,” said Marie Donigan, a former state representative from Royal Oak who is transit projects coordinator for the Detroit-based, pro-RTA nonprofit Harriet Tubman Center. Could the RTA have done a better job of political coalition building? That’s hard to say, but the business and civic community certainly was supportive: Patterson and Hackel were the targets of backlash last week from transit supporters that included a letter to them from nearly 40 prominent business and academic leaders; Dan Gilbert and Roger Penske were among the signatories demanding they reach an accord. There also were protests by transit advocacy groups, and the Detroit Free Press published a harsh editorial criticizing the issues raised by Patterson and Hackel as selfish parochial concerns at the expense of regionalism. And if the RTA fails to get on the November ballot? The RTA law allows it to seek a tax only every two years, and 2018 is when SMART’s

Transit questions and answers scheduled to begin passenger service in 2017. What would the tax cost and who would pay?

The RTA has said an average homeowner would pay $95 a year. At 1.2 mills, the owner of a $400,000 house would pay about $240. All property owners in the four counties would pay it. The tax would raise $2.9 billion and would be used to leverage state and federal money that would bring the total to $4.74 billion through 2036. What are the key points of the plan in dispute?

Oakland County sent a 19-page list of objections to the plan. Oakland County has objected that the plan provides little or no service to 40 of its communities, which would still pay the tax. Much of the northern parts of both counties and western Oakland are left out of the plan’s main improvements. A key concern from Oakland and Macomb

is how the RTA intends to spend the tax revenue to comply with the law that requires 85 percent of any RTA millage to be spent within the county from which it was collected, a concern they say is fueled by fluctuating property tax values. RTA Chairman Paul Hillegonds and RTA CEO Michael Ford have said the master plan will have safeguards in place to ensure that the threshold is met annually, and that new federal and state funds leveraged by the RTA tax would mean each county would likely receive more than the 85 percent return on investment. Additionally, the RTA administrators have said Oakland County’s demand for service in outlying communities in the north and western portions of the county will be addressed. Macomb County Executive Mark Hackel says his primary concern holding up his support for a ballot initiative is the RTA’s future voting structure. He said the authority’s board can’t place the proposed millage on the No-

millage is also up for renewal, creating a ballot with two transit taxes for many voters. “We’re really looking at being two to four years away, and a terrible loss of momentum of getting regional transit done in the near future,” Hillegonds said. In theory, the RTA could seek legislative approval for a special election, but Hillegonds is skeptical Lansing would be much help. “I believe it would be very difficult to get amendments to the legislation,” he said. The RTA drama has raised worries that a series of successful regional initiatives — governance of Cobo Center, the water authority, and taxes for the Detroit Zoo and Detroit Institute of Arts — could be the exception rather than the rule in a metro area long defined by stark parochial divisiveness fueled by generations of racial animosity and economic disparity. The question now is whether the RTA’s executives can produce a compromise among elected leaders who have publicly staked themselves to entrenched positions that would appear to doom the master plan of bus rapid transit, commuter rail between Detroit and Ann Arbor, and other transit improvements for a region that’s lacked them. One political insider familiar with the RTA situation said all of the political entities and the RTA itself are to blame for failing to see the potential structural problems with the legislation that created the authority in 2012. Once the problems became acute, the RTA fell victim to the squabbling that wrecked nearly two dozen transit efforts over the past 40-plus years, and so many other regional initiatives. “Everybody gets their ass kicked on regionalism at some point,” said the source, who agreed to speak only on the condition of anonymity. Crain’s reporter Lindsay VanHulle contributed to this story. Bill Shea: (313) 446-1626 Twitter: @Bill_Shea19

vember ballot without at least one vote from every county, but all future funding and operational decisions would require a simple majority. He wants each municipality to have a veto. Finally, there is fear that the suburban bus system, SMART, could lose funding under the master plan. Hillegonds has said the system in fact would receive millions of additional dollars under the proposal. What is the board’s composition and how does voting work?

The board is made up of two appointees from each county, and one each by the mayor of Detroit and the governor. The board chairman, Gov. Rick Snyder appointee Hillegonds, doesn’t vote. Board bylaws required a supermajority of at least seven votes, including one from each county and the city of Detroit, to put the plan on the ballot. The vote against sending the proposal to the ballot failed, with all four representatives from Oakland and Macomb counties voting against it.

LARRY PEPLIN

Atwater Brewery is installing a new brewing system made by BrauKon GmbH, based

in Germany.

ATWATER FROM PAGE 3

distribution, but taprooms feed the brewery,” Infante said. “Atwater is potentially creating more fans by getting them on a bar stool in their own towns.” Bell said the debate of having satellite brewing operations versus centralized brewing is long-standing among craft brewers. “Each brewer makes their own assessment,” Bell said. “We’re pretty happy to have a large, efficient brewery here where we can focus on quality control. That’s the trick: Can they pull off the quality in a number

operations, similar to its Grosse Pointe Park location and soon-to-be opened Grand Rapids location. Larry Bell, founder of Galesburg-based Bell’s Brewing Inc., said the Chicago and Boston markets will be tough to crack for any new brewers. “Both of those markets are incredibly competitive,” Bell said. “There are about 50 brewers operating in the Chicago city limits right now. I think they “We’re expanding for are going to have their two reasons – to work cut out for continue to them.” But Atwater isn’t fulfill the stopping at taprooms. growth in our The brewer plans to open a large brewery markets, in Austin, Texas in particularly 2017 and plans to open another in Michigan, and North Carolina in late to bring Detroit 2018 or 2019. Rieth expects Atwater (beer) everywhere.” to generate $10 million in revenue this year, but is Mark Rieth, Atwater Brewery aiming to double revenue to between $18 million to $20 of different locations? If they can, million in the next three years, more power to them.” due to expansion. Paul Gatza, director of the BrewAtwater’s peers in Michigan are ers Association, a nonprofit trade also expanding — Founders Brew- organization, told Crain’s previously ing acquired a building in January that one of the biggest challenges of to be able to produce an additional expanding is coming up with 250,000 barrels of craft beer annu- enough capital to make an impact. ally — but with a different ap“Oftentimes when companies go proach, said Joseph Infante, part- national, they try to get to as many ner at Miller, Canfield, Paddock and states as quickly as they can, but Stone PLC in Grand Rapids and they don’t go very deep in markets,” leader of the firm’s alcoholic bever- he said. “To do that, you need infraage regulation team. structure that can support it. And it “No one is expanding quite like helps to have representatives in the Atwater,” Infante said. “Most have new market to spread the word.” their main location and build it up Rieth said Atwater has a strong until they can’t anymore. You have relationship with its bank and that it to go to Grand Rapids to experi- plans to be a national player in the ence Founders. Atwater is showing craft beer market, expanding from a that the Michigan market isn’t regional brewer as it is now, and its tapped out, but is expanding to new expansion will likely support a Austin and North Carolina anyway. merger-and-acquisition strategy. They are creating more taprooms “That could mean we do some and getting their brands out there, rollups with other regional brewinstead of just chasing distribution ers,” Rieth said. “I don’t have anyto different regions.” thing in the works right now, but if Infante said Atwater’s plan is cer- I’m looking at trends, I’d be remiss to tainly more expensive, and there- not look at the opportunities out fore more dangerous, but its efforts there for us.” Dustin Walsh: (313) 446-6042 could be rewarded. Twitter: @dustinpwalsh “Most of your money is (made) in

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150 West Jefferson purchase a win for Redico By Kirk Pinho kpinho@crain.com

Southfield-based Redico LLC closed on the purchase of the 150 West Jefferson skyscraper downtown late Friday, according to real estate sources. For a decade, the Southfield-based development company has been chasing another real estate win in downtown Detroit after completing construction in 2006 of the last major office tower to populate the downtown skyline, One Kennedy Square. On Friday, it got that latest notch in its belt in a deal that real estate observers view as enormously positive. With the deal, Redico adds a half-million square feet of 89-percent-occupied office space near Cobo Center and the Coleman A. Young Municipal Center to its portfolio. The building, developed by Greenwood Village, Colo.-based John Madden Co. (it was formerly known as the Madden Building), also comes with a six-level underground parking garage with more

CORNERSTONE FROM PAGE 3

city residents back to Detroit for their education options. Founded in 1991, Cornerstone formed the new Education Group in June to oversee its more than 450 students between the private Cor-

nerstone Leadership & Business High School and its feeder K-5 and middle

school on Nevada Street in the city, plus more than 2,300 among the four Grand Valley State University-authorized charter public schools it has opened since 2009. They are

Cornerstone Health & Technology High School on Southfield Freeway and three K-8 feeders: Madison-Carver Academy, Lincoln-King Academy and Washington-Parks Academy.

The private schools cost about $11,000 per year in tuition, but a typical family pays less than half that due to private donor financial assistance. The private schools generated about $9 million in revenue per year in fiscal 2014 and fiscal 2015, according to financial statements, although data on the latest fiscal year

than 500 spaces. With its 25 stories, it's considered one of the landmark office towers downtown. Redico and Dale Watchowski, its president, COO and CEO, declined to comment for this story. Most recently in the city, Redico was one of four investors in the $12.2 million purchase of a pair of historic office towers, the Fisher Building and Albert Kahn Building in the New Center area. It has since backed out of the planned redevelopment project but will continue to manage the two buildings, which total more than 900,000 square feet. But since it built the midrise office tower on Campus Martius for $54 million in 2006, Redico has been quietly on the sidelines downtown. One Kennedy comprises about 250,000 square feet. Having someone other than Dan Gilbert make such a large deal downtown shows investors that he isn't the only power player in town. Said Paul Choukourian, managing director of the local office of Col-

that ended Sunday was not yet available. But Cornerstone has ambitions. Gough expects total enrollment for the coming school year will exceed 3,000, even though the private school headcount is not expected to exceed 500, and the Education Group is about two weeks from completing a capacity study on its ability to grow. While Gough expects to find the Education Group building footprint could hold 3,800 to 4,000 students, he hopes to begin expanding by next school year. That would likely mean constructing or adding at least one new school building, and some possible construction to expand at existing schools, to reach a total enrollment of 5,000. With that in mind, Cornerstone has raised about $20 million toward its $50 million Campaign of Excellence fundraising campaign goal announced in June, and hopes to raise $3 million more in its 13th annual Turning Point Invitational at the Country Club of Detroit in Grosse Pointe Farms on Aug. 14-15. The tournament typically has raised about $1 million each summer in

INDEX TO COMPANIES

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

JGA ..........................................................................11

Arbor Hospice & Palliative Care ..........................7

The Mars Agency ..................................................11

Atwater Block Brewing .........................................3

Michigan Chamber of Commerce ..................... 15

Better Life Bags ...................................................10

Molina Healthcare ................................................ 8

Blue Cross Blue Shield of Michigan .................... 8

North American Bancard Holdings LLC ............ 9

Bon Bon Bon ..........................................................11

PayAnywhere LLC ................................................. 9

Business Leaders for Michigan .......................... 15

Polish Art Center .................................................. 9

Carhartt .................................................................11

Priority Health ....................................................... 8

Cornerstone Education Group.............................3

Redico LLC ............................................................18

Destination XL ......................................................11

Regional Transit Authority of SE Michigan ........ 1

Detroit Department of Transportation ............. 1

Rock Ventures LLC ................................................ 4

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

SMART ..................................................................... 1

Detroit Regional Chamber ................................. 15

UnitedHealthcare Community Plan .................. 8

Hospice of Michigan ..............................................7

Wheelhouse Detroit ............................................. 9

Jack Entertainment ............................................. 4

Whole Foods Market ............................................11

150 West Jefferson Height: 25 stories (456 feet) Size: 500,000 square feet Major tenants: Miller Canfield Paddock and Stone PLC; Lochbridge; Starcom Mediavest Group; Amazon.com Built: 1989 Construction cost: $86 million Developer: John Madden Co., Greenwood Village, Colo. Previous owner: Piedmont Office Realty Trust, Johns Creek, Ga. Previous sale price: $93.75 million in March 2003 ($190.11 per square foot) Last week sale price: Undisclosed Occupancy: 89 percent Average rent: $22.20 per square foot per year Building features: Restaurants, putting green, bocce ball court, six floors of secure underground parking Did you know? The building was constructed on the site of the former Detroit Stock Exchange Building, which was demolished in 1983. liers International Inc., Southfield: “It’ll infuse a little competition downtown.” The deal is “proof that other par-

ties are willing to step up, compete and take on that risk to do so,” said Matt Farrell, principal at Bingham Farms-based Core Partners.

recent years, but Gough is hoping the participation of golf great Jack Nicklaus and an increased push for visibility will help. Since Cornerstone has historically maintained about a 28:1 student-teacher ratio, the growth will mean new hires over time. It would also mean nearly $15 million more state revenue if Cornerstone hits its growth targets, almost entirely on charter headcount — Gough said he hopes to do that in about three more years. Detroit Public Schools reported a total of 46,912 K-12 students last school year, while the Education Trust-Midwest and the Great Lakes Education Project have both estimated that more than 40,000 city students attend charters. Those numbers will likely change, however. Three charters in Detroit will be closed due to academic or financial viability concerns, while a fourth, the DPS-authorized New Paradigm Glazer Academy, is merging with another New Paradigm school, according to a recent Michigan Department of Education report. Mayor Mike Duggan has estimated that nearly 27,000 students commute outside of Detroit to attend public and charter schools elsewhere, and Gough thinks that creates a growth market Cornerstone can tap without raiding the traditional city schools or other city charters as heavily. Chrystal Wilson, interim communications director for the DPS Community District, said in a statement late last week that it too is looking to recruit from the commuter students. “We’re listening to parents and we are offering a new slate of innovative educational options this fall, including Montessori and dual language immersion, art and music and many other programs focused

on STEAM (science, technology, engineering, arts and mathematics). We want to see all 27,000 students come home to Detroit, and we are working hard to win them back," she said. Education Trust-Midwest has previously identified Cornerstone’s own Lincoln-King as a charter that trails DPS in standardized test performance, but Gough said the organization recently completed a twoyear self-study of its strengths and weaknesses, and has addressed that issue. Cornerstone’s Lincoln-King went from showing positive growth in four out of 18 areas during a Grand Valley review of the 2014-15 school year, to growth in 16 of 18 areas last school year. To put some of its performance in context, some schools in the University Preparatory Academy and University Preparatory Science & Math districts that traditionally outperform DPS on standardized testing also ranked “B” or a strong “C” on the Excellent Schools report. About 65 percent of all charter districts underperformed DPS on MEAP testing for eighth-grade math scores in 2013. Gough also said that some of Cornerstone’s leaders have supported the former Detroit Education Commission proposal in the DPS restructuring measures this summer, even though that provision never reached the governor’s desk. Even without it, however, he expects city charters will have more accountability and improve. “If some schools are not performing consistently, it provides opportunities for all of us,” he said. “And I think the authorizers are all taking a harder look at all the schools that are performing. And the ones that aren’t.” Chad Halcom: (313) 446-6796 Twitter: @chadhalcom

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

REPORTERS Marti Benedetti General assignment. (313) 446-0416 or mbenedetti@crain.com Jay Greene, senior reporter Covers health care, insurance, energy, utilities and the environment. (313) 446-0325 or jgreene@crain.com Chad Halcom Covers litigation, the defense industry, education, Macomb and Oakland counties. (313) 446-6796 or chalcom@crain.com Tom Henderson Covers banking, finance, technology and biotechnology. (313) 446-0337 or thenderson@crain.com Kirk Pinho Covers real estate, city of Detroit. (313) 446-0412 or kpinho@crain.com Adrienne Roberts General assignment. (313) 446-1612 Bill Shea, enterprise editor Covers media, advertising and marketing, the business of sports, and transportation. (313) 446-1626 or bshea@crain.com Lindsay VanHulle, Lansing reporter. (517) 657-2204 or lvanhulle@crain.com Dustin Walsh, senior reporter Covers the business of law, auto suppliers, manufacturing and steel. (313) 446-6042 or dwalsh@crain.com Sherri Welch, senior reporter Covers nonprofits, services, food, retail and hospitality. (313) 446-1694 or swelch@ crain.com ADVERTISING Sales Inquiries (313) 446-6032; FAX (313) 393-0997 Advertising Director Matthew Langan Senior Account Manager Katie Sullivan Advertising Sales Christine Galasso, Gerry Golinske, Diane Owen, Sarah Stachowicz Classified Sales Manager Angela Schutte, (313) 446-6051 Classified Sales Lynn Calcaterra, (313) 446-6086 Marketing and Event Director Kim Winkler Events Manager Kacey Anderson Senior Art Director Sylvia Kolaski Marketing Manager Marilyn Banes Special Projects Coordinator Keenan Covington Sales Support Suzanne Janik Production Manager Wendy Kobylarz Production Supervisor Andrew Spanos CUSTOMER SERVICE Main Number: Call (877) 824-9374 or customerservice@crainsdetroit.com Subscriptions $59 one year, $98 two years. Out of state, $79 one year, $138 for two years. Outside U.S.A., add $48 per year to out-of-state rate for surface mail. Call (313) 446-0450 or (877) 824-9374. Single Copies (877) 824-9374 Reprints (212) 210-0750; or Krista Bora at kbora@crain.com To find a date a story was published (313) 446-0406 or e-mail infocenter@crain.com Crain’s Detroit Business is published by Crain Communications Inc. Chairman Keith E. Crain President Rance Crain Treasurer Mary Kay Crain Executive Vice President/Operations William A. Morrow Executive Vice President/Director of Strategic Operations Chris Crain Executive Vice President/Director of Corporate Operations KC Crain Vice President/Production & Manufacturing Dave Kamis Chief Financial Officer Bob Recchia Chief Information Officer Anthony DiPonio G.D. Crain Jr. Founder (1885-1973) Mrs. G.D. Crain Jr. Chairman (1911-1996) Editorial & Business Offices 1155 Gratiot Ave., Detroit MI 48207-2732; (313) 446-6000 Cable address: TWX 248-221-5122 AUTNEW DET CRAIN’S DETROIT BUSINESS ISSN # 0882-1992 is published weekly, except for a special issue the third week of November, and no issue the third week of December by Crain Communications Inc. at 1155 Gratiot Ave., Detroit MI 48207-2732. Periodicals postage paid at Detroit, MI and additional mailing offices. POSTMASTER: Send address changes to CRAIN’S DETROIT BUSINESS, Circulation Department, P.O. Box 07925, Detroit, MI 48207-9732. GST # 136760444. Printed in U.S.A. Contents copyright 2016 by Crain Communications Inc. All rights reserved. Reproduction or use of editorial content in any manner without permission is strictly prohibited.

WEEK Pittsburgh chain’s big sandwiches due in Taylor, Novi

rimanti Brothers Restaurant and Bar, a Pittsburgh-based

chain known for its “two-handed” sandwiches with coleslaw and french fries on them, will open two restaurants in metro Detroit (and first in Michigan), one in Taylor on Wednesday and one in Novi by early September.

COMPANY NEWS n Allen Park-based Belle Tire

Distributors Inc. said it has hired a

new advertising agency, Pittsburgh-based Marc USA, replacing longtime relationships with Novi-based Atomic Ideas and Troy-based Hocking Media. Financial terms were not disclosed. n Auburn Hills-based automaker FCA US LLC intends to spend $1.5 billion to renovate and retool its Sterling Heights Assembly plant to build the next generation of the Ram 1500 pickup. n Grosse Pointe Park-based Wolverine Human Services launched a crowdfunding campaign that aims to raise $50,000 to build a community garden and farmers market on Detroit’s east side. n Stroh Brewing Co. is returning to Detroit on Aug. 22 with the release of its Bohemian-Style Pilsner. As Crain’s reported in June, Detroit-based Brew Detroit LLC will make the pilsner for Stroh, which is owned by Milwaukee-based Pabst Brewing Co. nFlexDex Inc., a Brighton maker

of surgical tools, said it has closed on a funding round of $5 million as it prepares for the commercial launch of its first product. n LawnGuru, an Ann Arborbased on-demand provider for landscaping and snow removal services, announced it closed a $1 million seed funding round to help accommodate rapid growth plans. n Bloomfield Hills-based O2 Investment Partners LLC

announced it has made a significant investment in CCSI Networks of Broadview, Ill., which provides wireless network deployment services to the telecommunications industry. Terms were not disclosed. A new Patronicity crowdfunding project aims to raise $50,000 to build a community garden and farmers market that will be cultivated by the residents of the streets surrounding the Wolverine Center and the

John S. Vitale Community Center on Detroit’s east

side.

WOLVERINE CENTER

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ON THE WEB JULY 23-29

Detroit Digits A numbers-driven look at last week's headlines:

5.1 percent

The increase in the number of passengers at Detroit Metropolitan Airport in the first half of 2016 compared to the same time last year, airport officials said. The increase added up to 16,885,617 passengers this year.

$50,000

The amount of a grant won by nonprofit S.A.Y. Detroit Play for its robotics program from New Hampshire-based FIRST (For Inspiration and Recognition of Science and Technology).

$4.83 billion

The reported price for which New York City-based Verizon Communications Inc. agreed to buy the web assets of Californiabased Yahoo Inc., ending the latter company’s two-decade run as an independent business and beating out Detroit’s Dan Gilbert and other bidders.

n Birmingham-based flower

shop Blossoms will expand with the opening Thursday of a storefront in Detroit’s Midtown district. The storefront will also feature an art space with works from students and young artists.

OTHER NEWS n Developers of a planned test bed for driverless cars at Willow Run in Ypsilanti Township won up to $17 million in state funding to build and operate the project. Willow Run Arsenal of Democracy Landholdings LLP is handling the

purchase of 311 acres for the $80 million American Center for Mobility.

n Windsor-Detroit Bridge Authority Chairman Dwight Duncan,

whose job is to get the multibilliondollar Gordie Howe International Bridge built, is recommending the federal government investigate buying the competing Ambassador Bridge, owned by Grosse Pointe billionaire Manuel “Matty” Moroun. Duncan and bridge authority

President and CEO Michael Cautillo have met informally with Moroun and his son Matthew, the Windsor Star reported. n A planned $17.9 million redevelopment of the former Save-A-Lot grocery store in downtown Ferndale has received state approval of a $2.24 million brownfield tax incentive. The Ferndalehaus development is expected to bring a new four-story, 105,000-square-foot building with apartments, retail and office space. n Wayne State University’s Mike Ilitch School of Business will house several ongoing market research and leadership studies related to workplace diversity and inclusion under a new Institute for Leadership and Diversity in the next school year.

n Volunteers of America Michigan

is using a five-year, $10.3 million federal grant to help metro Detroiters coming off the Family Independence Program with training, education and job placement in health care fields. n Backers of a new low-power FM radio station in Ferndale launched a crowdfunding campaign to finance equipment and other startup costs. The Indiegogo campaign at FerndaleRadio.com seeks $15,000 and has two months to go, said the station’s owner, Royal Oak-based Underwood V Radio. The 100-watt station’s call letters are WFCB 100.7 FM, and it plans to begin broadcasting in summer 2017. n With the dollar strong against foreign currencies, Comerica Bank’s Michigan Economic Activity Index fell 0.6 percentage points in May to 128.3 and continued a seesaw year. n The Michigan Strategic Fund approved the Michigan Translational Research and Commercialization Life Science Innovation Hub, to be managed by the University of Michigan Medical School’s Fast

Forward Medical Innovation program and the school’s Tech Transfer program.

OBITUARIES n James M. Nederlander, who

took over from his father a business that originated in Detroit and built the New York City-based Nederlander Organization into one of the largest producers of live entertainment and a dominant national theater chain, died July 25. He was 94.

RUMBLINGS

The Navy is launching a warship, and you, too, can get a ball cap W ith the commissioning of the USS Detroit approaching, the ship’s commissioning committee has created a line of USS Detroit-branded merchandise that includes shirts, jackets and accessories. The items were created in partnership with Ferndale-based Unique Expressions LLC, a provider of marketing products, and include sweatshirts, T-shirts, caps and accessories such as bags and water bottles. Shirts cost about $21, while hooded sweatshirts cost up to $43. “We searched for a Detroit-area supplier of quality, U.S.-made items that would commemorate the historic ship’s commissioning, as well as be desirable items people would wear or display,” John Peracchio, chairman of the local Navy League of the United States' USS Detroit Commissioning Committee, said in a news release. Products are available at USSDetroitwebstore.com. The commissioning ceremony for the USS Detroit

is scheduled for Oct. 22 on the Detroit RiverWalk at the GM Renaissance Center. The 378-foot, 3,500-ton Freedom-class vessel was built by the Marinette Marine Corp. shipyard on the Menominee River in Marinette, Wis. The new ship is the sixth U.S. Navy warship to bear the city’s name. Up to 4,000 people are expected for the commissioning ceremony, which will formally mark the Navy’s acceptance of the USS Detroit, estimated to cost $360 million, into the fleet and the point at which the vessel's captain takes official command.

Beaumont wins arbitration award against ... itself?

New WDET show touted as a ‘culture magazine’

William Beaumont Hospital in Royal Oak won a $1.8 million arbitration award from West Bloomfield MOB LLC and Winfire Co. LLC in Lake Orion, according to a July 26 ruling by the Michigan Court of Appeals. But the history of the case is somewhat unusual. In 2006, Beaumont became a tenant and minority owner of the building on Orchard Lake Road in which Winfire Co. was the majority owner and manager. By 2012, however, WBMOB had lost the building due to foreclosure. The next year, Kirko Management acquired the building and invested $500,000 to upgrade it. Beaumont remains a minority owner and tenant in the building, a Beaumont official said. Because Beaumont was building a large outpatient center, the nonprofit hospital demanded arbitration before the American Arbitration Association. Winfire Co. appealed in 2014 to the Oakland Circuit Court and lost. Winfire Co.'s appeal was based on its representation that the arbitrator’s award to Beaumont would leave WBMOB insolvent and unable to pay creditors. The appellate court said it appeared that the only creditor was Winfire Co. Beaumont also argued that it was a creditor because of its minority interest in the building and deserved compensation. So, the moral of the story is that you can sue yourself and win.

A new music and culture show debuted last week on WDET 101.9 FM, heralding the Detroit public radio station's attempt to build a vibrant listenership — and grow new revenue — from what has been a moribund part of the day. “CultureShift,” which airs live noon-3 p.m. weekdays, is hosted by Travis Wright and Amanda LeClaire. The show will be built around discussion of local music, arts, food and events along with prerecorded “sound-rich stories.” The show will also tap into WDET's music archive and other shows such as the station’s popular weekend program “Ann Delisi’s Essential Music.” The station is billing the new show as a culture magazine for radio, somewhat akin to the syndicated national programs “Morning Edition” and “All Things Considered.” It also describes the program as a “soundtrack to discovering Detroit,” according to a statement last week announcing “CultureShift.” The show re-airs midnight to 3 a.m. WDET will also make it available as a podcast, and use social media as a listenerinteraction tool to foster discussion. The show will be live-streamed on Facebook Live. Wright, 34, has been with WDET since 2011. LeClaire, 32, rejoined the station last week after working for WDET from 2006 to 2011. Alex Trajano is the show’s executive producer.

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