Crain's Detroit Business, Sept. 5, 2016 issue by Crain's Detroit Business

SEPTEMBER 5 - 11, 2016

Small-biz leaders: Brain drain, state tax income are on the line Policy changes weighed as some biz owners cash out By Lindsay VanHulle

Crain’s Detroit Business/Bridge Magazine

LANSING — The scenario: A small-business owner in Michigan, close to but not necessarily at retirement age, meets with a financial adviser to consider selling the company. He decides to move to Florida — in part for the climate and in part because the Sunshine State has no income tax — and buy a condo with the tax savings. Rob Fowler calls them cashed-out entrepreneurs. And he says he has seen it happen three times in roughly eight years, by former members of the board of the Small Business Association of Michigan, of which he is president and

CEO. “They sold their business, which is always a happy thing,” Fowler said. “What’s unhappy about it is out of Michigan goes the combination of their money — born and raised here — (and) their experience. And, you know, lots and lots of cashed-out entrepreneurs invest in other businesses, but not if they’re not around to watch their investment.” The issue, he said, is the “low-hanging fruit” confronting his association’s board as it looks deeper at ways to increase entrepreneurship — and their success — in the state. The group is studying state policy areas to develop recommendations on ways Michigan leaders could remove barriers to starting a business: from access to capital, to access to markets, to recruiting talent. The problem is particularly acute in Michigan, a state that has lost a net 18,000 businesses since 2006. The starkest drops were in the rural northern Lower Peninsula, as Bridge Magazine reported last month based on data from the U.S. Bureau of Labor Statistics. Only three counties —

About the bill State Sen. Wayne Schmidt (pictured), R-Traverse City, in April introduced Senate Bill 893, which would deduct from the state’s income tax “income received from the sale of a business that is reinvested within that same tax year into another business that does business in this state.” The exemption would apply to tax years beginning after Dec. 31, 2015. The bill has been referred to the Senate’s banking and financial institutions committee. Schmidt said he hopes it gets a hearing this fall.

Livingston, Midland and Missaukee — had net business gains. Wayne County’s 29,982 businesses are 9.2 percent fewer than in 2006. Oakland and Macomb counties lost 4.2 percent and 4.8 percent of their businesses, respectively, over the same decade. To Fowler, the issue is of losing owners’ wealth and expertise in order to mentor and support startups. Sen. Wayne Schmidt, R-Traverse City, introduced the bill. He hopes it will get a hearing when the Legislature reconvenes this fall. “It is a long-term (effort) just trying to figure out how do you keep capital in here and how do you keep young entrepreneurs, that next generation?” Schmidt said. “One of my SEE TAX, PAGE 16

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RENDERINGS COURTESY THE KINGSLEY INN

An artist’s rendering of the Doubletree by Hilton Bloomfield-Detroit, currently the Kingsley Inn, shows the updated hotel.

A landmark monarch gets a new moniker Kingsley Inn owners plan renovation this fall

By Sherri Welch

year and a half after buying it, to explore the interest they were getting The owners of a local landmark hofrom buyers around the country. But tel, the Kingsley Inn in Bloomfield then they had a change of heart. Hills, have a new flag, look and restauElia and Shiffman are also partners rant in the works for the site long in 800 Parc LLC, the operator of the restaurants at Detroit’s Campus Martiknown as a meetup spot in the tony us. suburbs. “At the end of the day,” Elia said, “we The Kingsley name will come down decided a long-term investment in the when the hotel hoists the Doubletree by Hilton flag a year from this fall, fol(Kingsley) property made more sense lowing a more than $10 million reno- A two-story lobby is among the rather than a short-term gain from a vation to completely update the hotel’s major renovations planned at the potential sale because of the first-class Kingsley Inn. interior and exterior. location of the site,” which is within The hotel will also welcome a new the city center district of Bloomfield restaurant, Joe Muer Seafood, early next year. Hills, on Woodward Avenue near Long Lake Road. Zaid Elia, CEO of Birmingham-based real estate “We feel ... what the hotel has to offer cannot be repcompany The Elia Group, and Matthew Shiffman of the licated anywhere on Woodward,” he said. Birmingham-based Alden Development Group, the hoWhile the hotel’s name will shift to Doubletree by SEE KINGSLEY, PAGE 18 tel’s owners, had put it on the market last fall, roughly a swelch@crain.com

Bonds 101

As Michigan’s regional and private colleges dig deep during a building boom, they learn it’s hard to get good grades on their credit ratings. Special Report, Page 9

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MICHIGAN

BRIEFS Senate committee OKs autonomous vehicle bills

A four-bill package that would regulate the driverless car industry in Michigan cleared a state Senate committee last week, setting up a possible vote by the full Senate this week. The legislation, introduced in May, won unanimous support from the Senate’s economic development and international investment committee at a hearing at a facility of Auburn Hills-based Nexteer Automotive in Saginaw County, said Sen. Mike Kowall, R-White Lake Township, a co-sponsor of the bills. The bills would allow autonomous vehicles on state roads for any reason, not only for testing; create the Michigan Council on Future Mobility within the Michigan Department of Transportation to recommend policies to support the industry; set standards for connected vehicle networks, including data collection and sharing information gathered from crashes; authorize in statute the planned American Center for Mobility at the old General Motors Co. Willow Run facility; and extend liability protections to licensed mechanics who work on automated vehicles.

The package is co-sponsored by state Sens. Kowall; Ken Horn, R-Frankenmuth; and Rebekah Warren, D-Ann Arbor. Kowall said Senate Bills 995-998 could be taken up in the Senate as soon as Tuesday. Lindsay VanHulle

Level One to expand into Grand Rapids market Farmington Hills-based Level One Bancorp Inc. announced last week that it will enter the Grand Rapids market, its first expansion into West Michigan. On Thursday, the bank was to acquire the lease of a vacant bank branch property on Burton Street on Grand Rapids’ east side. Over the next several months, the 7,000-square-foot building will be remodeled, with the branch opening scheduled for early December. In the coming weeks, Level One plans to hire about 12 banking professionals from the Grand Rapids area. In the past year, Level One bought Farmington Hills-based Bank of Michigan and opened a branch in downtown Detroit. The bank has about $1 billion in assets. Tom Henderson

MICH-CELLANEOUS n A Chicago developer has withdrawn plans for a 12-story hotel and luxury apartments on a long-vacant downtown block in East Lansing, the Lansing State Journal reported. The project, which was to cost more than $50 million, will have to be revised — if the developer still thinks it’s worth building. The cause is a requirement, buried in an ordinance on building heights adopted in February, that for any multifamily rentals built in B-3 zones downtown, 50 percent of the development must be owner-occupied condos or apartments for senior citizens. It’s the latest snag in more than a decade of failed efforts to transform blighted properties between the Peoples Church and Abbot Road near Michigan State University. n Free People, a retailer known for its American “bohemian chic” apparel and accessories, will soon open its first West Michigan store, at Breton Village in Grand Rapids, MLive.com reported. Philadelphia-based Free People has one Michigan location, at the Somerset Collection in Troy. nGlobal pharmaceutical giant Pfizer Inc. has taken the next step in its proposed $146 million expansion to its manufacturing plant in Portage, Mi Biz reported. The City Council has granted the drugmaker a $14.5 million tax abatement that the company will use for a new work center and warehouse. n For the first time in nearly 70 years, Rockford-based Wolverine World Wide Inc. plans to expand the Big Rapids footwear factory that produces many of the boots and shoes issued to U.S. mil-

itary personnel, MLive.com reported. The estimated $2 million project will grow the factory by 16,000 square feet. n Seven Lansing-area residential complexes have agreed in a federal lawsuit settlement to no longer ban families with children from renting one-bedroom apartments, MLive. com reported. The federal lawsuit accused a rental manager and three corporate entities that own the complexes of discrimination against families with children. Evidence was gathered by the Fair Housing Center of Southeastern Michigan, which had agents pose as prospective renters asking for one-bedroom units, according to the U.S. Attorney’s office. Those who said they wanted to rent a unit with their child were turned away. Under the terms of the settlement, the defendants will pay $20,000 to victims and $5,000 in civil penalties to the U.S. government. n Michigan Attorney General Bill Schuette asked the U.S. Supreme Court to intervene so a new ban on straight-party voting can take effect for the November election, AP reported. The emergency request filed Friday says a federal district judge and the 6th U.S. Circuit Court of Appeals wrongly blocked the law when “all Michigan has done is adopt an approach that 40 other states already follow.” The ban

INSIDE THIS ISSUE

BANKRUPTCIES ................................15 CALENDAR .........................................15 CLASSIFIED ADS...............................15 KEITH CRAIN....................................... 6 OPINION .............................................. 6 OTHER VOICES ................................... 6 PEOPLE ...............................................14 RUMBLINGS .......................................19 WEEK ON THE WEB ..........................19

COMPANY INDEX: SEE PAGE 18 would prevent voters from supporting all candidates from one party with one mark. Schuette says a response is needed by Sept. 8 so officials can start printing ballots. The lower courts ruled that the GOP-sponsored law would disproportionately burden black voters. n Roger Curtis has left as president of Michigan International Speedway to pursue other opportunities, track owner International Speedway Corp. announced. Curtis, 49, had been president of the track near Brooklyn, Mich., for the past 10 years. ISC, based in Daytona Beach, Fla., said its COO, Joie Chitwood, will oversee MIS operations until a replacement is found.

Correction n A company profile in the Cool Places to Work feature in the Aug. 29 issue should have said that Goodman Acker PC, which ranked 34th on the list, has 32 employees. Also, its senior partners are Gerald Acker and Barry Goodman.

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Road games

Blue Cross offers new care plan, new fee By Jay Greene jgreene@crain.com

Blue Cross Blue Shield of Michigan

That stretch of highway sees about 120,000 total vehicles, north- and southbound, every day, MDOT said. The Palace sees about 890,000 people for events annually. The most obvious tactic is to encourage fans to leave earlier for games and events, said PS&E CEO Dennis Mannion. Once games begin next month, the Palace will use discounts on concessions to help encourage fans to arrive sooner, such as the “Power Hour” from 6 to 7 p.m. that includes reduced drink, food and merchandise prices and a chance to meet former players in the North Pavilion. More dining options have been added or upgraded in recent years, beyond the traditional hot dogs and nachos that are event staples, in a bid to make the

has joined forces with 35 other Blues plans to offer large self-funded companies with employees in other states a new way to reduce health insurance costs and improve quality for workers by coordinating care with a national network of the Blues’ best physicians. S elf-funded employers in Michigan with employees in other states will be charged a special assessment per employee to fund the program, called Blue Distinction Total Care (BDTC). The Alina Pabin: Fee fee will appear on goes back to their Blue Cross incentive payments. invoice in April. “This is a new fee they will pay — a provider-delivered care management charge,” said Alina Pabin, director of value partnerships at Detroit-based Blue Cross. “The fee is mostly a pass-through. The fee goes directly back to incentive payments” to physicians. Pabin said Michigan employers will only be charged based on the number of out-of-state employees who have

SEE PALACE, PAGE 16

SEE BLUE CROSS, PAGE 17

LARRY PEPLIN

With the Palace of Auburn Hills in the middle of the I-75 construction mess, Detroit Pistons management has been developing strategies to educate fans and offer real-time data on traffic and alternative routes during the upcoming basketball season.

Palace will rely on technology, enticements to help Pistons fans battle I-75 construction traffic snarls By Bill Shea bshea@crain.com

The Palace of Auburn Hills is deploying a mix of the latest technology and old-school common sense to soften the impact on fans who have to navigate the I-75 reconstruction traffic nightmare to Detroit Pistons games and concerts. A worry is that traffic snarls — vehicles are limited to a single lane at times — could result in fans arriving late to games, and instead of buying concessions and merchandise, rushing to their seats. Reduced fan spending is a concern for the Palace and Pistons as the improving young team

ow Brook Amphitheatre.

regains popularity and works toward again averaging $1 million a game in revenue, which is the National Basketball Association average. Palace Sports & Entertainment management began developing various strategies to educate fans, and to offer real-time data on traffic and alternative routes. Planning began three years ago, and has been refined this year as the Michigan Department of Transportation in August began its 20-year, $1 billion reconstruction of I-75 with two years of work between Coolidge Highway and South Boulevard just south of the Palace. The construction work also affects the PS&E-run DTE Energy Music Theatre and Mead-

Ex-BoM exec to help Vision Investment By Tom Henderson thenderson@crain.com

Mike Sarafa, until recently the president of the Bank of Michigan, has been recruited to help run a new family investment office in Bloomfield Hills. The office, Vision Investment Partners LLC, launched in August with a fund of more than $15 million. It is an outgrowth of a deal with a private equity firm in Southlake, Texas, a year ago. And it has its sights set on deals with retail, food and real estate ties, among other segments. Where did the seed money come from? Two pairs of Chaldean brothers,

Mark and Kevin Denha and Omar and Saber Ammori, sold to Gauge Capital a minority but substantial interest in Wireless Vision Holdings LLC, which owns and runs 270 T-Mobile retail stores across the country and is the wireless provider’s largest exclusive retailer. “That created a windfall, and they needed to create a way to deploy resources,” said Sarafa. That result is Vision Investment, which is based in Wireless Vision’s headquarters at the northeast corner of Big Beaver Road and Woodward Avenue. A 5,000-square-foot space is being built out on the ground floor.

“Saber and I began talking early this summer,” said Sarafa, who still has several months left on a consulting contract with Farmington Hillsbased Level One Bank, which closed in February on its acquisition of the Bank of Michigan. “We’ve known each other our whole lives. We got serious a month ago, and two weeks ago I moved in.” Prior to co-founding the Bank of Michigan in 2005, Sarafa was president of the Farmington Hills-based Associated Food Dealers of Michigan, an association made up largely of Chaldean and Arab-American retailers. SEE SARAFA, PAGE 18

TOM HENDERSON

Mike Sarafa, managing director of Vision Investment Partners LLC in Bloomfield Hills,

in his future office, which is under construction.

MUST READS OF THE WEEK First season for new Lions regime

Plan B’s

Front-office and roster changes mark runup to

WSU Physician Group, DMC devising backup

team’s 2016 debut, Page 7

plans during troubled contract talks, Page 17

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M-1 officials: QLine on track for early 2017 opening Fundraising for additional operational dollars in works By Bill Shea bshea@crain.com

Woodward Avenue in Detroit should be free of orange barrels and open to traffic in the days before Thanksgiving as construction of M-1 Rail’s QLine streetcar project enters its final months, project organizers said last week. Behind the scenes, the project is seeking to raise millions of dollars for a reserve fund intended to cover operations for the 6.6-mile loop’s first 10 years of passenger service, which is expected to begin in early 2017 — possibly as soon as April, if the system passes more than 1,000 state and federal tests. The project so far has raised $187.3 million in a mix of private, public and foundation money to cover capital, operational and other costs, M-1 Rail CEO Matt Cullen said during a briefing with reporters Thursday afternoon at the system’s Penske Technical Center headquarters in New Center. M-1 said it has $21.4 million stashed away for operations. Based on an estimate of $5.8 million to run the system annually, backers would need to raise as much as $37 million to cover operational costs through 2027. That’s the year M-1 has agreed to turn over the system to the public Regional Transit Authority of Southeast Michigan, which will ask voters in Wayne,

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Oakland, Macomb and Washtenaw counties in November to approve a property tax that would raise $3 billion over 20 years to pay for improved mass transit, including the QLine’s operations. M-1 not having the full 10 years worth of operational funds banked spooked those involved in the RTA, and that organization in recent weeks opted to push back by three years the date when it would assume control of the streetcar line. Cullen said M-1 has seven years’ worth of operational funding covered. He said M-1 expects fare box revenue and other forms of income, such as advertising sales, to cover about half of the annual operating costs. The remainder would come from the reserve fund. If passenger fare expectations hold up, M-1 would end up needing just $18.7 million to cover the remaining three years of operational costs. That money is expected to come from a forthcoming pitch to larger employers along the route, which runs from Grand Boulevard to Congress Street, who would buy bulk passes for employees, Cullen said. That could include Wayne State University and the College for Creative Studies, and the major employers such as hospitals and corporations. “There are a lot of people that have not contributed that we would like to ask (for donations),” Cullen said.

MICHAEL LEWIS II

A look at construction on Woodward Avenue in Detroit as the QLine rail system is being built. M-1 also could seek donations from the corporate world, more advertising commitments or use other funding mechanisms to bank the rest of the operations money. Detroit-based Quicken Loans Inc. spent $5 million on naming rights with M-1 Rail earlier this year to call the streetcar the QLine. Quicken Loans Chairman Dan Gilbert is M-1 Rail’s co-chairman and has invested $10 million into the project, which is being funded by a mixture of corporate, foundation and public money. Raised or committed so far is $187.3 million, including $142 million for construction and the cars. Ridership in the first calendar year is expected to reach 1.8 million, and 5 million within five years, M-1 Rail COO Paul Childs said. He noted that the numbers are rides, not unique numbers of passengers. Organizers predict 5,000-8,000 riders a day, with a basic one-way fare of $1.50. Yearly and other types of passes, including fare cards that link to other transit systems, still are being worked out, Childs said. Overall, M-1 Rail’s capital costs have inched up about 4 percent in the past couple of years because of a change in streetcar vendors, Cullen said. The project originally planned to order six streetcars from Czech rail car manufacturer Inekon Trams for approximately $30 million, but Cullen said Inekon wasn’t going to be able to deliver the vehicles on time, so the sides failed to reach a final deal. In June 2015, M-1 signed a $32 million contract with Brookville, Pa.based Brookville Equipment Corp. for six streetcars, along with spare parts and support services. The first is expected to be delivered within a month or so, and the rest could be here by the end of the year. Cullen said public outreach indicated that people wanted less overhead power wiring, so the Brookville

cars rely more on battery power — driving up the project cost. Changes to the aerial wiring related to the cars also contributed to the modest cost increase. M-1’s plan is a mostly curbside fixed-rail streetcar circulator system, co-mingled with traffic, with 20 stations at 12 stops between Grand Boulevard and Congress Street. It will run in the median at its north and south ends. The cars will move at the speed of traffic, and an end-to-end trip is predicted to take about 25 minutes, M-1 said. It will run every day of the year except during the Thanksgiving Day parade. Questions have arisen about the plan to run the system only until 11 p.m., meaning it would be unavailable for downtown nightlife patrons. Childs said M-1 will continually re-examine its operational hours and adjust them, and how many trains are running, so the system is most efficient. M-1 also said Thursday that track installation is 83 percent complete. Woodward, a slalom of construction barriers since work began July 2014, will be open except for occasional lane closures just before Thanksgiving, Childs said. Construction of passenger stations and the traction power substations is 40 percent finished, 60 percent of the aerial electrical wiring is done and 85 percent of the poles for the lines have been installed. The Michigan Department of Transportation is spending $59.2 million in state and federal funds to concurrently reconstruct some of Woodward and two overpasses as M-1 lays the tracks and builds the system’s infrastructure. In June, M-1 announced that Lombard, Ill.-based transportation management firm Transdev Services Inc. has signed a five-year, $15.5 million deal to run the system. Bill Shea: (313) 446-1626 Twitter: @Bill_Shea19

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OPINION J

Wealth drain bill needs review

effrey Miller, M.D., who owns Novi-based vein clinic Miller Vein, said at 53 he doesn’t intend to retire soon. But as he gets closer to retirement, if his financial adviser and attorney suggest financial benefits of moving out of state, he’d look at it. While it’s tough to quantify just how many business owners might be in Miller’s particular position, it is clear to industry groups like the Small Business Association of Michigan that there are enough of them for significant worry; the state has lost three former SBAM board members alone in recent years via the phenomenon of “cashed-out entrepreneurs.” A state bill was introduced earlier this year which would deduct from the state’s income tax rules income from a business sale that is then reinvested into another business in Michigan. The goal is to prevent small-business owners from moving their wealth and expertise out of Michigan. However, accountants interviewed in Lindsay VanHulle’s Page 1 story raise questions about the bill and nonspecific wording when it comes to defining reinvestment. Does investing in a fund that has a small percentage of portfolio investments in Michigan count? If so, what’s the point? This particular legislation will need a fly-specking, and some revisions, but more importantly, Michigan does need to remove barriers to starting a business, growing it with available capital, and building an equal playing field for doing business.

Test scores show deficiencies Nobody likes to fail. Especially if you fail publicly. But the release last week of M-STEP scores — representing testing of students in grades 3-6 and high school juniors — shows Michigan has a long way to go before it becomes a Top 10 state in student achievement. The tests were introduced in 2015, so this is only the second year. But in most areas, half of Michigan students scored below “proficient” in subject areas that included math, science, reading (English Language Arts) and social studies. That’s worth repeating: 50 percent statewide weren’t mastering the subjects, and for children of color, the numbers were higher. The temptation when scores are low is to change the test. That’s the last thing Michigan needs. Instead, we need the commitment of state elected leaders to keep pushing for excellence. And business leaders must keep the pressure on. This is the future workforce in an increasingly competitive world. We owe Michigan’s children the means to hit higher expectations.

How companies survive 100 years

ow many new companies will be here two decades from now? The answer, quite frankly, is not many. The average life cycle of new corporations is roughly 12 to 15 years, a significant decrease from the 1920s when the average age was 67 years. One reason may be the objectives with which entrepreneurs go into business: Some may build demand for a novel product that a larger company will buy for a large sum of money. But for those entrepreneurs who want to build a lasting organization, there is much to learn about managing for long-term success from members of the Century Club — companies that have been in continuous, independent operation for more than 100 years. Even in a country as young as ours, well over 700 companies have survived more than a century. Nearly 100 of these are here in Michigan, including Detroit’s SmithGroupJJR (1853), Chris Engel’s Greenhouse (1883), Dittrich Furs (1893), Detroit Store Fixture Co. (1898) and Hubbell, Roth and Clark (1915). After more than a decade studying these companies in the U.S. and Japan with my colleague Makoto Kanda of Meiji Gakuin University, we’ve found five key factors that contribute to companies’ long-term survival.

Strong corporate mission, culture Companies that have celebrated 100 years in business have very strong cultures and are deliberate about preserving them. Often the beliefs and values of the founder have been passed on through generations. How this transmission occurs differs from company to company — not all firms have written mission or value statements — but leaders consistently affirm the importance of their corporate credo as a primary factor of their success. Profit is, as Max De Pree of Herman Miller Inc. (1905) says, the result of doing well what they do as a company, not their goal.

Strengths, change management Picture old companies and you might think of stodgy, outdated practices, but nothing could be further from the truth. Companies must adapt and successfully implement change to survive the many challenges faced during a century of operating a busi-

OTHER VOICES Vicki TenHaken

TenHaken is a professor of management at Hope College and author of the book Lessons From Century Club Companies: Managing for Long-Term Success.

come dedicated, loyal members of the organization and often describe their relationship with the company as “being part of a family.” Whenever possible, Century Club companies grow leaders from within. Most have already identified their next leader and have a process in place for his or her development.

Active members of community

Century Club companies put time into building both social and commercial relationships with their local comness. Century Club companies have munity. “We do a lot of business with both unique strengths that have led to success, but their long-term survival the businesses nearby and the people comes from continuous efforts to who live in the surrounding neighborevolve while protecting and building hoods,” said Phil Ippel, co-owner of on those strengths. They have mas- Hoekstra’s Hardware (1867) in Katered the delicate balance between lamazoo. “We feel like this is where we’ve been, and this is the place to be. tradition and change. This is home.” A local reputation as beDeep relationships ing a great place to work helps attract talent and provides access to other rewith partners sources. In return, enduring enterprisCentury Club companies regard es invest resources into projects that the maintenance of relationships with will develop and sustain their commucustomers and other business part- nities. Century Club companies see ners — from generthemselves as ation to generation A local reputation part of the so— as crucial to cial structure of their success. Gor- as being a great their communidon Food Service, place to work helps ty, enjoying established in both its responGrand Rapids in attract talent. sibilities and 1897, says every Vicki TenHaken benefits. product, order or Leaders at decision is “inspired by the people on Century Club companies overwhelmthe other side of the plate.” It and other ingly believe in a balance of these five Century Club companies develop factors: Don’t focus too much on cusclose-knit, mutually supportive rela- tomers and ignore your employees; tionships that enable the type of trust don’t invest in developing your comand learning necessary to navigate the pany’s core competencies without changes and challenges faced by a helping your community; don’t company over the years. change so fast that you forget to honor the traditions that got you to this point Employees that feel or be stuck in tradition that you cannot change. They know they need to be like family profitable to survive — and as a rule, Century Club companies recognize they are very profitable — but they see employees as an important factor in profit as the power behind their comtheir success and do whatever they pany, not its purpose. can to develop and retain them. HavSurvival over the long term may be ing long-term employees allows for the ultimate performance measure: It long-term growth and innovation that tests the value, resiliency, relevance builds on corporate memory, and it and creativity of an organization in a instills a type of loyalty and dedication way short-term financial success does to the company that is difficult to rep- not. Implementing these factors won’t licate. Employees who have been with guarantee success, but they will cera company for a long time feel trusted tainly help make your business a betand supported. In return, they be- ter organization.

A great race and a great partnership A couple of weeks ago, I had the honor and pleasure of being asked to be the grand marshal of the Detroit hydrofest boat races that were celebrating their 100th year of racing on the river. Since our company is celebrating our own 100th anniversary, it seemed perfectly appropriate for Crain Communications to participate. It was a great weekend with some exciting racing and huge crowds to enjoy the weekend. What made it even more enjoyable was that General Motors and the United Auto Workers were the joint sponsors. Their spon-

KEITH CRAIN Editor-in-chief

sorship made a lot of sense since they also sponsor the Belle Isle Grand Prix. These are a couple of events that are absolute naturals for General Motors

and the UAW. Today’s Grand Prix boats, one of three classes that were racing, now use highly modified Chevy automobile engines that seem as loud as the aircraft engines of yesteryear. Both events have free admission on Friday, giving everyone in the city a chance to see these exciting boats in action. And the topper seems to be that the headquarters for General Motors and the UAW are both on the Detroit River just a stone’s throw from the action. I can’t think of more fitting spon-

sors for the boat races than GM and the UAW. Given the local nature of both events, it’s nice to see two big local enterprises getting involved with these two sporting events for all of Detroit to enjoy. I, along with thousands of racing fans, look forward to many years of racing and GM and the UAW being involved. Both sporting events are great for the city and certainly have some of the most exciting racing during the year in our own city. I may never be grand marshal of the Gold Cup again, but I look forward to watching both sporting events every

year along with lots of other racing fans. Not only is it lots of fun, but there is a great deal of economic activity that goes along with these weekend programs. I remember when Roger Penske took the lead of our Super Bowl in 2006, an event that brought in millions to our city and region. It is the same with both of these racing weekends. Perhaps not anywhere as much as a Super Bowl, but both racing weekends contribute mightily. It was a great partnership between General Motors and the UAW. A partnership that should last a long time.

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Co-directors tell why they made auto bailout documentary By Dustin Walsh dwalsh@crain.com

The 2008-09 collapse of the U.S. auto industry was a defining moment in the historical tapestry of Detroit. The collateral damage of the mortgage-backed securities crisis that plagued our economy and caused the largest recession since the Great Depression had General Motors, Chrysler and their suppliers facing certain doom. Until Uncle Sam, at the behest of a federal task force, stepped up using taxpayer dollars to bail them out. Dustin Walsh: It worked. Less Crain’s Detroit than a decade lat- Business er, the auto industry is buzzing and is on pace to celebrate another near record year of car sales and profits. But a pair of former movie and television executives believed the public didn’t get the full story and made the film “Live Another Day,” a documentary adapted from the Paul Ingrassia book Crash Course. Media previews of that film kick off this week. Bill Burke, co-director and former Turner Broadcasting and TimeWarner executive, and Didier Pietri, co-director and former president of ABC

Pictures,

spent three years interviewing the industry and union executives, orchestrators of the bailout, journalists and other experts about the industry collapse. Bill Burke: The documenta- Co-director of ry features inter- “Live Another Day” views with former Chrysler CEO Bob Nardelli; Bob Lutz, former GM vice chairman; Steve Rattner, head of the auto task force appointed by President Barack Obama; Jay Alix, founder of advisory firm AlixPartners LLP; Jimmy Lee, vice chairman of J.P. Morgan Chase; Bob King, president of the UAW; Steve Miller, former CEO of Delphi Automotive plc and current CEO of IAC; among others. I chatted with the producers about the film, its characters and the events surrounding the government bailout. The documentary, which won the best documentary prize in April at the Myrtle Beach International Film Festival, debuts in theaters on Sept. 16.

Q: Why would a couple of producers, removed from Detroit, make this documentary? Pietri: I picked up the book Crash

Course one day randomly at Barnes and Noble. It was just a fascinating sto-

ry. I have a longstanding passion and interest in the car industry in general. And the book had such incredible characters and incredible events. But I didn’t think it got Didier Pietri: the whole story Co-director of from these peo- “Live Another Day” ple. I felt with the right research and access, we could tell a fuller and more complete and more interesting story. Burke: We don’t see this as a Detroit story. We really see it as an American story about management and labor, government and business ... and Wall Street. This film really picks up where “The Big Short” left off. The U.S. is a uniquely auto driven country. It’s a huge part of our history. Everyone knows what their first car was. Pietri: There is a huge emotional attachment (to the car). There’s no emotional attachment to banks. Songs are written about cars. If we include the suppliers, the dealers, the workers, this is a gigantic universe that transcends just Detroit. Q: The trailer is clearly critical of the UAW and the federal task force. Was that intentional? Pietri: The trailer is a condensed

version of the movie. We tried to revisit

the top with a clear mind and no union or government bias. What we did is take a very honest viewpoint, a direct viewpoint. (What) most people don’t understand, and it was partly revealed during the (congressional) hearings, is that the UAW is a labor monopoly. Usually the only people that like monopolies are the monopolies. When we explained the jobs banks, people were shocked. With the task force, it’s more complicated. Running a car company is a big venture. It’s very complex. For a task force of people with no experience in the industry to come in, claim incompetence among the industry’s leaders, and then claim they rejuvenated the industry in just three months, that’s difficult for people that were there to understand. The executives at GM and Chrysler were not as incompetent as the task force made them seem. Burke: Anyone that’s worked in business for some time and has consultants drop in and say they don’t know what they are doing ... well, that builds a lot of resentment. We think it’s incredible how the industry has resurged, but let’s face it, a lot of these cars that are being sold today were designed and engineered well before the task force showed up. Q: What makes this story and the documentary so compelling? Pietri: We didn’t use a narrator.

We’re not Michael Moore, trying to tell

you what you’re supposed to think. The protagonists tell the story. And because we don’t have a narrator propelling the story forward, we had to weave the dialogue through the entire cast. Obviously, the members of the task force have a different point of view about what happened than Nardelli and Lutz. People are actually learning something at our movie. That’s why people are coming out to see it. Burke: Everyone in this film is really smart. This is not like campaign coverage. It’s people giving their opinion. No one is selling you. It’s bright people telling you what they experienced and what they believe. Q: What did you learn about the industry making this film? Pietri: I didn’t realize just how diffi-

cult the relationship was between labor and management. These contract negotiations are as a difficult as peace in the Middle East. They were so focused on fighting each other, they didn’t realize what was really happening. Everyone, including the president of the UAW (Bob King) admits mistakes were made. But what we don’t know is whether those mistakes are going to be repeated... Did we learn anything now that oil is cheap and we’re back to buying big SUVs? For more information on the film, or to watch the trailer, see liveanotherdaymovie.com.

New Detroit Lions regime braced for first full season By Bill Shea bshea@crain.com

A frenzy of front-office and roster changes, along with millions of dollars in fan-oriented capital improvements at Ford Field, have wrapped up for the 2016 Detroit Lions. Now, they have to play the games. The National Football League team opens the 2016 season with a 4:25 p.m. kickoff on Sept. 11 at the Indianapolis Colts, and it will be the first full campaign for Lions President Rod Wood and his hand-picked general manager, Bob Quinn. They took the reins after owner Martha Firestone Ford fired Tom Lewand, the team’s longtime top executive and now CEO of Detroit watch peddler Shinola, and General Manager Martin Mayhew last year. Wood subsequently purged and reorganized much of the team’s business administration in the latest bid to get the franchise on the right track for its first NFL championship since 1957. Quinn, hired away from the New England Patriots in January, faced his first major Lions crisis when wide receiver Calvin Johnson decided to retire after nine seasons. He holds nearly every team receiving record. To replace his production and dominance, if that’s even possible, Quinn signed 13-year veteran Anquan Boldin, 35, to a one-year, $2.75 million deal. Even better, he signed promising young receiver Marvin Jones, 26, formerly of the Cincinnati Bengals, to a five-year, $40 million deal.

Both played well in limited preseason action, but the first-team offense under quarterback Matthew Stafford failed to score a touchdown — sparking worry the Lions will struggle early this season. They also struggled with penalties and turnovers. In addition, Quinn took Taylor Decker at No. 16 in this year’s NFL draft. The Ohio State University product fills the critical left tackle position. Decker, 21, in May signed a fully guaranteed fouryear, $10.9 million contract. While Quinn and head coach Jim Caldwell have to handle the on-field decisions, Wood and the front office have crafted plans calculated to improve the fan game-day experience. For example, the Lions are going to promotional giveaways this season, such as Barry Sanders bobbleheads to the first 20,000 through the gates for the Oct. 16 game. They’re also adding games outside the stadium before kickoff, and tweaking the popular 5050 raffle. In a decision both hailed and reviled, Wood decided the Lions will have cheerleaders for the first time. Led by former Detroit Pistons dance team director Rebecca Girard-Smoker, approximately 25 women will entertain fans during games and at team events. The decision was fueled by surveys and meetings with fans, Wood said. And having cheerleaders is one of the strategies for entertaining fans, and brand building. “It’s a big challenge for sports right now to get people to come to the

games versus sitting at home and watching it on a great high-definition TV or going to a sports bar,” he said. “You’ve got to give them something that’s great in-game entertainment. One of the things that came out on a long list of ideas is the cheerleader idea. We evaluated it, and obviously there are going to be people upset and people enthused by it. But so far I think it’s been very, very well received.” On another teeth-gnashing topic for fans, Wood said he expects to have news about improved Ford Field Wi-Fi — a technology bane of many college and pro teams with signal-dampening large stadiums — in the near future. Here are the other improvements and changes for this season: n The team bought 89 walkthrough metal detectors from Twinsburg, Ohio-based CEIA USA Ltd., meaning there now will be 104 units at Ford Field’s gates, up from 15 last year. Those are now used in conjunction with amusement park-style corral lines to get fans into the stadium more quickly. Previously, the lines have been more of a free-for-all crowd of fans queued up at the doors. n Driving to Ford Field may get a little easier because the team is integrating the popular Waze navigation app with the team’s own app, with the intent of pushing traffic notifications to users. The Lions are also developing, with the city, a pick-up/drop-off area at the stadium for fans using Uber, Lyft or taxis. Details about the location are not yet available.

n The Lions and new retail concessionaire Levy (which has handled Ford Field’s concessions since the stadium opened) remodeled and modernized and rebranded the team’s flagship merchandise store near Gate A at a cost of $1.5 million. n The end zones were replaced with blue artificial turf in August. The team hasn’t had blue end zones since it played at the Pontiac Silverdome. “People love our Honolulu blue, and the more we use it the more people appreciate it,” Wood said. n The number of sales/account representatives that handle season ticket holder accounts was increased to 16 from six. n Wood said the Lions spent “several hundred thousand dollars” on 80 separate loudspeakers, deployed in four hanging clusters from the stadium roof, from Berkeley, Calif.-based Meyer Sound Laboratories Inc. to improve sound coverage, intelligibility and clarity during games and events. The speakers were added to the original sound system, which will be replaced entirely in 2017. n To reduce Ford Field’s massive utility bills, $2 million worth of new and more energy-efficient lighting was installed both inside and on the stadium exterior. There are 250 new LED lights, with color projection capability, on the stadium roof, and another 30 each on the east and west exterior stadium walls. Replaced inside were 660 1,500-watt metal-halide lamps, used to illuminate the field,

with 264 1,400-watt LED lights — and the new lighting is much friendlier for TV viewing. n The team spent $5 million to renovate the stadium’s roof. The work, done between April and July, included replacement of weather-damaged roof sections, insulation improvements, and an application of weather reinforcement and protection material. Additionally, the massive Ford Motor Co. logo on the roof was repainted. n Highlighting new concessions is a 4-pound, 9-inch doughnut cake covered in blue frosting and filled with a layer of apple filling. It sells for $15, and for a bit extra, fans can get a cup of apple cider — with or without a shot of rum. They’ve been so popular in the preseason that Ford Field executive chef Joe Nader said he expects to sell 300 for the home opener at 1 p.m. Sept. 18 against the Tennessee Titans. n In November, the Lions struck a deal for 50,000-watt news/talk station WJR-AM 760 to broadcast their games live, replacing CBS Radio Inc.-owned WXYT-FM 97.1 “The Ticket,” which had aired the games since 2004. Terms of the five-year deal between the Lions and Atlanta-based Cumulus Media Inc. were not disclosed. The switch came amid accusations that the team was trying to stifle on-air criticism at WXYT, a charge the Lions denied. The team said the switch was made because the contract was up and WJR offered better terms. Bill Shea: (313) 446-1626 Twitter: @Bill_Shea19

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Survey: Employers expect 3% avg. merit raise in ’17 By Lindsay VanHulle

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Employers in Michigan expect to offer an average merit raise of 3 percent in 2017, a figure the American Society of Employers said is “beginning to sound like a broken record.” The Livonia-based organization, in an annual survey for its members, said the average merit raise remained at 3 percent in 2016 — and in several prior years — despite ongoing economic recovery since the recession and falling unemployment rates. Yet the flat raise amount “is consistent with several national surveys, as well, so this is not a Michigan phenomenon,” Mary Corrado, the organization’s president and CEO, said in a statement. “It appears the shift toward modest raises and variable pay and reward options is no longer a trend, but a compensaMary Corrado: practice Not just a Michigan tion that’s here to stay issue. — at least until the next upheaval in the economy or labor markets.” Of the 231 firms surveyed, 83 percent award some kind of variable compensation, including annual bonuses, profit sharing and employee referral rewards, survey results show. The society’s 2016-17 survey includes 183 employers from Wayne, Oakland, Macomb, Livingston and St. Clair counties, or 79.2 percent of total respondents. Employers with 1 to 500 employees in the state represented 83 percent of respondents. Manufacturing was the leading industry, at 60 percent of respondents, with the remaining 40 percent made up of trades and services employers. Other survey results show: n Annual bonuses as a percentage of base salary next year are expected to be roughly 5 percent each for nonexempt hourly nonunion and salaried employees; 9 percent for exempt salaried employees; and 24 percent for officers and executives. n 61 percent of employers award merit pay to all employee groups, with top performers receiving the largest award. That is an increase from years past, the society said, when employers were more likely to award their best employees most of the merit awards and some merit pay to average-performing employees. n 4 percent of employers that responded to the survey expect to freeze wages or salaries in 2017. Lindsay VanHulle: (517) 657-2204 Twitter: @LindsayVanHulle

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SPECIAL REPORT: BUSINESS EDUCATION

Building and bonding By Chad Halcom chalcom@crain.com

A branding battle and an “arms race” for new and improved facilities in recent years has created a twotiered bond market for colleges and universities, where prestige means investor appeal and regional schools sometimes struggle, analysts and local officials said. Michigan public universities issued at least $300 million in new bonds and refinanced at least $300 million more since last summer, according to recent credit rating agency data. The markets for the most part received the new debt well, although ratings or outlooks have slipped since December for Wayne State University, Eastern Michigan University and Lake Superior State University. Eastern and Lake Superior have both seen some enrollment slippage lately, but many smaller universities feel a mix of “operations pressures” from a limited marketing radius and regional pull, reduced state funding and a losing brand battle, said education group sector lead Jessica Matsumori and Director Jessica Wood of U.S. Public Finance Higher Education at S&P Global Ratings Inc., which rates 11 of Michigan’s 15 public universities. Matsumori said top-tier schools or those that rate highly on various listing services have been strengthening their credit ratings lately, while other schools are losing ground. “It sort of comes down to brand. If you have a reputation that extends into national and international markets, then enrollment is easier to maintain, and if you don’t, then what you’re competing on with other insti-

Michigan’s regional and private college credit ratings struggle in investor markets

tutions is price,” she said. “That becomes more difficult in an environment where we see students applying to typically 10 to 12 schools each, versus just a handful years ago. So it’s more difficult for the less selective institutions to keep them.” Only the University of Michigan (AAA, stable) and Michigan State University (AA+, stable) have a better bond rating than the state as a whole (AA-, stable), and analysts say it’s probably not coincidental that the Big Ten schools get the least amount of operating revenue from the state higher education budget (4.8 percent and 14.2 percent, respectively, versus 22.4 percent at Lake Superior in fiscal 2015). In fact, based on the relative short shrift the state of Michigan gave to Detroit bondholders versus pensioners and employees in supporting a rescue plan for the city’s Chapter 9 bankruptcy almost two years ago, bondholders may feel slightly more skittish about institutions based here, said Matt Fabian, partner at Municipal Market Analytics Inc. in Massachusetts.

Work will continue throughout the school year on a $78 million student housing complex on the south campus of Oakland University. BRIAN BIERLEY/OAKLAND UNIVERSITY

“With public universities, there have been few if any defaults, and there is some assumption by (bondholders) the state will step in and backstop an obligation they can’t meet,” he said. “But that’s probably less the case in Michigan, because the state doesn’t seem to have as much of a temper to help out its facilities.” S&P maintained Eastern’s BBB+ rating but downgraded its outlook from stable to negative in April, citing falling enrollment (off more than 1,000 since 2013), low unrestricted net assets of about $15 million, and a burgeoning $254 million debt last year that shows “less flexibility for additional debt.” Moody’s Investors Service Inc. downgraded Eastern last month from an A1 to A2 credit rating, also citing enrollment challenges and a weak ratio between its operating cash flow and debt service. Up in Sault Ste. Marie, meanwhile, S&P also lowered the outlook for Lake Superior from stable to negative, on enrollment slippage (14 percent, or 340 students over the past five years). Crain’s reported last month that S&P moved Wayne State from an AA- to an A+ rating, while Moody’s maintained an Aa3 but lowered its outlook from stable to negative, on more than $400 million in debt WSU carries. Matsumori and Wood also pointed out that S&P’s rating criteria changed earlier this year, and that was also a partial factor in some university downgrades. Eastern’s flexibility for new debt could be tested when it expects to issue new bonds this fall to put toward a $19.6 million “co-generation” project and a $3.4 million energy SEE BONDS, PAGE 10

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efficiency technology upgrade to 33 EMU buildings. The co-generation project will build a new heat and power system that uses natural gas to produce both electricity and steam heat for the campus. Another project, upgrades to Wise Residence Hall, was financed through a term loan, and three phases totaling $8.4 million should wrap this fall. Not everyone is taking a credit hit for building and bonding, however. Moodyâ&#x20AC;&#x2122;s maintains an A1 rating on Oakland University, even though the school issued a record $113 million in new bonds toward $122 million of planned construction. A new $78 million student housing complex on the south campus, and a $44 million expansion to its Oakland Center student activities and meeting/ event building in the west campus, will increase OUâ&#x20AC;&#x2122;s total debt load from about $223 million to $336 million, said John Beaghan, OUâ&#x20AC;&#x2122;s vice president for finance and administration. â&#x20AC;&#x153;But we have such a strong housing demand to live on campus, and the new complex will generate such a specific new revenue source that Moodyâ&#x20AC;&#x2122;s was not concerned and the bond buyers werenâ&#x20AC;&#x2122;t either,â&#x20AC;? Beaghan said. â&#x20AC;&#x153;And the bond sale was oversubscribed (more interested buyers than bonds).â&#x20AC;? The new bonds are general revenue and do not specifically obligate the new housing fees for repayment, but Beaghan said the fact that the housing

This artistâ&#x20AC;&#x2122;s rendering shows the planned front entrance to Wise Residence Hall at Eastern Michigan University.

complex will increase the universityâ&#x20AC;&#x2122;s total revenue likely improved investor appeal. Also, maintaining an A credit rating and stable outlook from S&P is Saginaw Valley State University, after selling nearly $61 million in bonds this year. But only about $10 million goes to finance its Zahnow Library renovation, while more than $50 million refinances bonds from 2007 and 2008 at lower interest rates. Traditionally schools preferred to bond mostly projects tied to a revenue source, like new housing or a sports facility with a ticket gate, experts said. But Wood and Matsumori said that changed rapidly amid the financial market meltdown of 2008-09, as universities increasingly put academic buildings and even renovations and maintenance for bondholders. â&#x20AC;&#x153;Where you were used to getting support from the state to build those other kinds of facilities, the governments really pulled back and universi-

OAKLAND UNIVERSITY

Among the projects that Oakland University has financed is a new $78 million student housing complex on the south campus.

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ties have had to turn to these other resources,â&#x20AC;? Matsumori said. Smaller and more regional colleges also are more susceptible to the local economic cycles, and recently have been embroiled in a facilities competition to shore up enrollment by enticing students with on-campus living, dining and other amenities, newer classes and research space and other expensive investments, experts said. â&#x20AC;&#x153;Lots of schools sold bonds (the past few years) for a facilities arms race that they are losing,â&#x20AC;? Fabian told Crainâ&#x20AC;&#x2122;s. For Michigan in particular, enrollment is a hard-fought battle as K-12 enrollment has sagged for years, the state has about 100,000 fewer people than a decade ago, and a displaced-worker surge from the Great Recession has largely returned to work, reducing demand for retraining and education. In other university debt loads, MSU maintains its S&P rating and a Moodyâ&#x20AC;&#x2122;s rating of Aa1 after selling $208 million in bonds last summer, including about $157 million for capital projects, and increasing total debt to more than $1.1 billion. The university began construction on its $156 million â&#x20AC;&#x153;1855 Placeâ&#x20AC;? multifamily housing and mixed-use development last fall, and some family housing is set to be move-in ready this fall. Wayne State also expects to finance as much as $14 million of its $59 million Mike Ilitch School of Business in District Detroit via bonds. Groundbreaking was last fall on the new building, which is expected to open in 2018. In a public university credit rating analysis released by S&P in July, 83 percent of all institutions had stable outlooks, while only 63 percent of Michigan institutions did so. Three out of 11 rated Michigan institutions had a negative outlook (Eastern, Wayne and Northern Michigan University), even though only about 17 out of nearly 160 institutions did nationwide, and only one school â&#x20AC;&#x201D; Ferris State University â&#x20AC;&#x201D; had a positive outlook and an A rating. Ferris State carried about $94 million total debt last summer, down $5 million from the previous year, on an operating budget of more than $240 million. The agency generally doesnâ&#x20AC;&#x2122;t rate much private college debt in Michigan, although the College for Creative Studies and Hope College both had a BBB+ rating, with stable and positive outlooks respectively. The Thomas M. Cooley Law School maintains speculative or junk rating and negative outlook. Chad Halcom: (313) 446-6796 Twitter: @chadhalcom

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SPECIAL REPORT: BUSINESS EDUCATION

Appeal of entrepreneurship classes on rise for all majors By Bridget Vis

Special to Crain’s Detroit Business

Entrepreneurship has become a hot subject in recent years on the college and university campuses across Southeast Michigan. As interest grows, the schools are meeting the demand by launching, expanding and considering new programs that teach entrepreneurship to all students, not just business majors. “Student demand for entrepreneurship courses is continuing to increase,” said Stewart Thornhill, executive director of the Zell Lurie Institute for Entrepreneurial Studies within University Michigan’s

Stephen M. Ross School of BusiThornhill: Desire ness. up for entrepreUM is an exneurship courses. ample of the growth in interest. The university has had to add another section of its Entrepreneurial Business Basics course to its fall catalog based on student demand this year, and nearly 400 nonbusiness majors are expected to take the course, up from 228 last year, said the institute. Because of the interest in entrepreneurship, UM also launched an entrepreneurship minor specifically for nonbusiness students last year. “Students recognize that knowing how businesses operate and how to operate them is very beneficial,” said Thornhill. UM is not the only school to add to or expand its offerings. In the past year, Michigan State University and the University of Michigan-Dearborn introduced entrepreneurial programs open to all majors, and Wayne State University is in the process of approving an entrepreneurship and innovation certificate for nonbusiness undergraduate students and community members. Those are among the many area schools that are investing in entrepreneurship courses and programs. Here is a sample:

New offerings Since its 2015 launch, 75 nonbusiness students have completed UM’s new entrepreneurship minor, and 379 are currently enrolled in the program, according to the Zell Lurie Institute. The main driver of the growth is student enthusiasm, said Thornhill. For example, he said, many students are involved in entrepreneurial programs and organizations outside of their academic transcript, such as the student-run organization called OptiMize, which has hundreds of members from all areas of study. OptiMize’s website, optimizemi.org, says it is “a supportive community for student innovators working toward a just and sustainable world. ... With the

right mentorship and support, we believe anyone can learn to turn their ideas into impact.” Performing arts majors in UM’s School of Music, Theatre and Dance also have an exclusive program, called Excellence in Entrepreneurship, Career Empowerment and Leadership, which offers courses, mentoring and networking opportunities in entrepreneurship and career development. The program, which launched last fall, offers two practicums for the entrepreneurship minor, including a record industry workshop that resulted in a student-run record label, called Maize Collective, said Jonathan Kuuskoski, assistant director of entrepreneurship and career services in the SMTD. “I think the next new thing (for the entrepreneurship program) will come from students,” said Thornhill. “We will do what we can to make it successful.” Michigan State began in January a multidisciplinary entrepreneurship minor, open to both business and nonbusiness undergraduates. The program was designed to be inclusive of all majors to encourage nonbusiness students to participate, said Neil Kane, director of undergraduate entrepreneurship at MSU.

“The way I view it, entrepreneurship is cross-functional,” said Kane. “The concepts it teaches are applicable across all industries.” Kane said around 200 students committed to the minor in the first semester, with about two-thirds coming from majors other than business. The minor is expected to grow this semester — enrollment in the Intro to Startups course has increased from 90 its first year three years ago to 650 students this fall, he said. What makes MSU’s program unique is its collaboration between departments, Kane said, as the minor is not housed in any one college on campus, and students take classes related to their major to complete it. As the new program develops, Kane said, two priority areas to expand are international entrepreneurship and social entrepreneurship, which requires a slightly different skill set than for-profit entrepreneurship. This year, University of Michigan-Dearborn launched an entrepreneurship certificate through its College of Business that is open to all students regardless of major as well as people not formally enrolled. SEE CLASSES, PAGE 12

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Tim Davis, instructor of entrepreneurship at UM-Dearborn, said the certificate was started because the school recognized that having an entrepreneurial mindset benefits more than those students who plan to open their own businesses. “Thinking entrepreneurially can help people in many aspects of their life because it involves problem solving,” said Davis. The certificate is made up of three required entrepreneurship courses and one elective course from another discipline. Before adding the certificate, UM-Dearborn offered business and nonbusiness students a class titled Entrepreneurial Thinking and Behavior, now one of three required courses in the certificate. Davis, who teaches the course, said the class regularly hits its 40-student capacity and often has a

SPECIAL REPORT: BUSINESS EDUCATION waiting list. Judging by the demand, Davis said he expects the university to expand its entrepreneurial classes.

Existing programs Eastern Michigan University also

has an entrepreneurship minor open to all students. The introductory entrepreneurship courses have no prerequisites to encourage nonbusiness students to take them, said Fraya Wagner-Marsh, management department head in the College of Business, which houses the programs. About half of the 25 students enrolled in this fall’s introductory course are from nonbusiness majors, such as criminal justice, interior design and journalism, said Wagner-Marsh, who said she has seen an increased interest in entrepreneurship as more students see it as a viable career path. She said she believes this outlook has been spurred by more resources being available at universities and through the

state through grants and programming. EMU also is one of the many local schools that hold business plan and pitch competitions for students through its Center for Entrepreneurship.

Lawrence Technological University

offers students in the College of Engineering the option of taking a certificate specializing in entrepreneurial engineering skills. The college also has integrated entrepreneurial concepts into the undergraduate engineering curriculum, said Cristi Bell-Huff, director of LTU’s Studio for Entrepreneurial Engineering Design. Bell-Huff said the college has put a focus on teaching the entrepreneurial mindset because students, besides being able to build products, need the business know-how to decide if there is a market and then how to reach it. During engineering students’ sophomore year, they build a working product prototype in the studio class Bell-Huff oversees and then test that product out with actual customers.

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“Students are really uncomfortable doing that at first, but it’s a really important skill to develop,” she said. The engineering college also partners with a local nonprofit each year, giving students the experience developing products for specific customers, said Bell-Huff. Funding for the entrepreneurial programs came largely from a grant by the Kern Family Foundation, said BellHuff. A grant from the Chicago-based Coleman Foundation in 2009 created a fellows program to teach students across all disciplines how to start a business, said Karen Evans, who was co-director of the Coleman Fellows Program. As a result of the program, which ended in August, faculty members across the university began introducing more entrepreneurial concepts into their coursework, said Evans. That includes a chemical biology professor who added a unit on entrepreneurship to a science class, she said. Oakland University since 2007 has offered an entrepreneurship minor to nonbusiness students through its School of Business Administration. In 2011, the program was redesigned to reach both business and nonbusiness majors. The program begins with introductory business courses and the theories behind entrepreneurship, then builds Jae Hyeung Kang: into implementHas seen a growing ing those coninterest by non-biz cepts, said Jae Hyeung Kang, students. who teaches entrepreneurship at Oakland. Kang said students in his advanced entrepreneurship course, called New Venture Creation, work in teams to develop a business model and plan. About half the students enrolled are nonbusiness majors, he said. In the four years he has taught the course, Kang said, he has seen a growing interest by nonbusiness students. Around 25 students take the minor each year. Schoolcraft College has had since 2012 a small-business entrepreneur certificate program open to all its students as well as community members through its Small Business Development Center. The five-course certificate is meant to teach those looking to launch successful small businesses the basics of entrepreneurship, including writing a business plan, financial management, marketing and business legal issues, said Jodie Beckley, SBDC director. Beckley said more than 202 participants have completed the program. Schoolcraft also offers several classes through its Continuing Education and Professional Development department that complement the certificate, such as Cooking Up a Successful Food-Related Business and Social Media Strategy to Maximize Growth. The SBDC also puts on short seminars about the startup success and the center’s free business counseling resources to students in those programs by working collaboratively with the instructors, she said.

Walsh College teaches business courses to College for Creative Studies students to assist those who have businesses or plan to open them. The partnership began in 2013. Walsh also has LaunchPad, which assists aspiring entrepreneurs in developing and launching their businesses. The LaunchPad is available to current students, faculty and degreed alumni of Walsh. Washtenaw Community College

has an entrepreneurship certificate available to all students through its Business and Computer Technologies department. The certificate has three entrepreneurship courses, all of which can be completed in a short amount of time to cater to business owners and those wanting help launching their businesses, said Kristin Gapske, director of the community college’s Entrepreneurship Center. Gapske said the certificate teaches business skills, how to recognize market opportunities, and how to develop a business plan, among other topics. “It’s a great way for business owners to get practical experience and be done,” she said. The community college also has an Entrepreneurship Center, run by the business and computer technologies department, which has numerous free resources, such as personal business advice, a co-working space, workshops and all-day industry-focused boot camps. Gapske said she has seen a growing interest in the creative industry seeking the center’s services, including Mark Ducker, executive director of YPSI 24-Hour Film Shootout, who sought advice for how to promote his annual filmmaking event. Beyond the certificate and resources, many other noncredit programs exist at WCC to help students and outside entrepreneurs, including courses in digital marketing and how to make a YouTube video or Wordpress website, Gapske said.

Future plans Wayne State University could approve the entrepreneurship and innovation certificate this fall and then begin offering entrepreneurial courses as part of the certificate as soon as January, said Margaret Smoller, associate dean of WSU’s Ilitch School of Business. Smoller said students could participate in the certificate program after they complete prerequisite business courses, while nonstudents will need to have an undergraduate degree. The proposed program would begin with an introduction to entrepreneurship and build to a hands-on capstone such as pitching a business idea to potential funders, said Smoller. Smoller said many nonbusiness students have asked about entrepreneurial courses, including participants in the university’s Blackstone LaunchPad and its business accelerator TechTown Detroit. “So I know there’s a lot of interest in Detroit for this type of program,” she said. Wayne State’s School of Engineering got approval for a revamped entrepreneurship certificate this summer that is available to graduate and undergraduate students. The certificate SEE NEXT PAGE

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was revised to better match the engineering students’ curriculum needs, said Gary Witus, associate director of the Anderson Engineering Ventures Institute at WSU. Witus said students who take the certificate could have their tuition for the program subsidized through the institute. University of Detroit Mercy has had an interdisciplinary entrepreneurship minor available to all undergraduate students for many years. About half the students who take the minor are nonbusiness majors, said Joseph Eisenhauer, dean of UD Mercy’s College of Business Administration, which manages the minor. He said the college could soon expand its entrepreneurial offerings to students based on increased campuswide interest. “In the modern world, more students are thinking of starting their own business,” he said. Beyond expanding entrepreneurial course offerings, UD Mercy recently opened a Center for Social Entrepreneurship, housed in the School of Business Administration, to provide the skills local practitioners need to grow their businesses, said Eisenhauer. Henry Ford College does not currently offer specific entrepreneurship programs for nonbusiness students, said Paul Fisher, associate dean of business and computer technology, but he said it could offer such programs based on student interest. n

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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 // S E P T E M B E R 5 , 2 0 1 6

EMU sees early benefit from retention, completion plan By Chad Halcom chalcom@crain.com

Eastern Michigan University could already be saving more than $1 million per year in lost revenue from enrollment attrition, thanks to a mix of new programs launched about three years ago to shore up retention and degree completion. And that figure’s likely to grow. The university’s Degree Completion and Retention Plan enters its third year of implementation with the fall semester that begins this week. Formulated in large part to address a sixyear graduation rate for freshmen that was second to last in the state at the time, Eastern has been focusing on enrollment policies, academic preparedness, financial aid, curriculum and student advisory services. The EMU plan specifically targets men of color and single parents, two groups with historical six-year graduation rates under 20 percent, according to university and national data. The school has since broadened that focus to people of color and parents in general. And it may be yielding some early results. Interim Provost and Executive Vice President Rhonda Longworth said it will be another two years until an impact on graduation rates can be measured, but there is “nominal progress” and signs of suc-

cess in various pilot programs and new resources. Year-over-year freshmen “retention” rates — or the portion of a firsttime freshmen class in a given fall semester that returns as sophomores the following fall — have climbed from about 72.6 percent two years ago to 74.7 percent last fall. For a typical EMU freshman class size, that’s a difference of about 60 students — not visible, perhaps, and it’s not clear how much improvement was attributable to the plan. But at full-time tuition rates over $9,000 per semester, a 2 percentage point retention bump translates to about $1 million in annual tuition revenue saved. Eastern’s six-year graduation rate for students has hovered at or slightly under 40 percent in recent years — surpassing only Wayne State University among the state’s 15 public institutions. Longworth said graduation rates were up more than 2 percentage points last year, but fall 2016 data is not yet available. “By 10 years out, I’d like to see us hit 50 percent graduation rates,” Longworth said. “That may be a stretch goal, because if the first numbers come in around the fifth year, it involves averaging 2 percentage point growth every year,” she said. “(That) is ambitious, but if you don’t set ambi-

tious goals, you may not know what you can reach.” The plan involves the BrotherHOOD (Helping Others Obtain Degrees) Scholars Community, a pilot program Longworth: of a living-learnWants 50% grad ing community rate in 10 years. within EMU offering mentorship, study groups, social events and other opportunities for men of color. It began with 25 students in 2014 and is expected to surpass 60 students this fall, said Longworth and interim Undergraduate Studies Director Michael Tew. “Assigned mentors often don’t really work out,” Tew said. “So we created opportunities for graduate student ‘near-peers,’ and some junior faculty could attend events, interact with some students in the program, and find out if they were interested in taking a role.” Retention rates for BrotherHOOD freshmen have topped 80 percent, exceeding the university as a whole, and a companion SisterHOOD initiative for women of color makes its debut this fall. Other initiatives, started in spring

2015, under the degree completion and retention plan have included adding about 10 new student adviser positions and new “customer-focused” adviser centers that resemble retail shop space in areas of high student traffic, Longworth said. EMU now hosts one of these centers in each of its five colleges. The school also mandated one advisory appointment for all freshmen during fall semester, and others for students struggling to maintain a GPA or who haven’t hit certain progress checkpoints in their first 60 credit hours. The school also puts greater emphasis on underclass general education course tracks, Longworth said. “We did an update of our gen ed requirements and looked at the reluctance around some contents of it,” she said. “The data was stark. Students who followed the requirements in a recommended order were progressing further, and graduating more successfully. “It builds a lot of scaffolding that we can use later on in pursuing their majors, and everyone at the university can assume a common data set of competencies (in the student body) for planning their upper division coursework.” Chad Halcom: (313) 446-6796 Twitter: @chadhalcom

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Jim works with individuals and businesses to develop effective tax strategies and provide consulting and valuation services as well as assist clients with their more traditional public accounting attest needs. Jim has over 20 years experience in public accounting.

Timothy R. Mackay Executive Vice President, Consumer Banking Officer Level One Bank Level One Bank, one of Michigan’s leading community banks, promoted Timothy R. Mackay to Executive Vice President, Consumer Banking Officer. Mackay joined Level One Bank in 2013 as Sr. VP, Retail Banking and was soon promoted to Sr. VP, Retail and Mortgage Banking. With nearly 25 years of experience in bank leadership, Mackay is responsible for the strategic leadership of the Consumer Banking Division, including branch banking, small business banking, residential mortgage and marketing.

Bryon will be responsible for driving business development for MPS Group by analyzing potential markets into which the company may diversify, establishing business development plans and strategy that aligns with the company’s overall mission, and supporting the identification, negotiation and implementation of strategic partnerships. Bryon previously served as National Account Manager for U.S. Ecology, Inc./ EQ- The Environmental Quality Company in Boise, Idaho.

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Executive V. P., Risk Management Officer Level One Bank, one of Michigan’s leading community banks, promoted Eva D. Scurlock to Executive Vice President, Risk Management Officer. Scurlock, one of Level One Bank’s co-founders, joined the Bank in 2007 as Assistant Vice President, Credit Manager. In 2012, Scurlock was promoted to Sr. VP, Sr. Credit Officer. With over 15 years of experience in the banking industry, Scurlock is responsible for the strategic leadership of enterprise risk management, including credit and compliance risk.

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Candice Bowman has joined Lambert, Edwards & Associates as Director of Business Development. Based in Detroit, Bowman will oversee the firm’s new business efforts with a focus on the Southeast Michigan region, as well as LE&A’s national Consumer, Automotive, Education, Healthcare and Investor Relations practices. She joined LE&A from Detroit-based architecture and design firm, Hamilton Anderson Associates (HAA) where she managed business development, marketing and public relations activities.

September 5, 2016

CALENDAR THURSDAY SEPT. 8

Connecting Cultures to Business Luncheon. 11:30

a.m.-1:30 p.m. Livonia Chamber of Commerce. Representatives from metro Detroit businesses will provide information about Asian, German, Chaldean and Hispanic cultures and new ideas to better prepare for productive interactions with business people from different cultures. Moderator: Roop Raj, WJBK-TV2. VisTaTech Center, Schoolcraft College, Livonia. $30 members; $40 guests. Contact: Laura Tahmouch, phone: (734) 427-2122; email: tahmouch@livonia.org. Political strategist Greg Valliere. Noon-1:30 p.m.

CFA Society Detroit. Valliere, the chief political

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Page 15

BANKRUPTCIES

The following businesses filed for protection at U.S. Bankruptcy Court in Detroit Aug. 26-Sept. 2. Under Chapter 11, a company files for reoganization. A Chapter 7 bankruptcy is a liquidation. BRP Acquisition Group Inc., dba Black River Plastics, 15000 Hall Road., Sterling Heights (also of Port Huron), voluntary Chapter 7. Assets: $0; liabilities, $1.7 million. JA Family Enterprises Inc., dba Dooley's Tavern and Dooleyâ&#x20AC;&#x2122;s of Sterling Heights, 12414 Hall Road, Sterling Heights, voluntary Chapter 11. Assets and liabilities not available. Law-Den Nursing Home Inc., 1640 Webb St., Detroit, voluntary Chapter 11. Assets and liabilities not available. Chad Halcom

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TAX

FROM PAGE 1

goals was initially just to get it out there so that there is discussion.” The legislation, though, might not be the simple fix proponents hope, several accountants whose firms do business in Southeast Michigan told Crain’s. Aside from the difficulty of legally establishing residency in Florida — it’s more complicated than buying a house and changing an address, they said — the bill as drafted could have unintended consequences, not least that it might not serve as enough of an incentive to encourage business owners to stay in Michigan. At least one said younger entrepreneurs actually could benefit most from the deduction, particularly if they have a hot startup that takes off while they’re in their 30s and suddenly have cash to invest in another company. And, they noted, many business buyers purchase the company’s assets, rather than stock, because assets are depreciable; a provision in the federal Internal Revenue Code also allows buyers in some business transactions to purchase the stock in a company but treat it as an asset for tax purposes. In either case, the seller must pay state income tax on the portion of income from the deal that belongs to the state, regardless of whether the seller lives in a state without an income tax requirement. For instance, if a business did a quarter of its sales to Michigan customers, then 25 percent of the seller’s gains from the sale of the business would be owed to Michigan. “My personal feeling is that it probably isn’t going to change those individuals’ (minds) that are selling their businesses, from the simple standpoint that when they’re looking to sell their business they’re looking to cash in their chips and then diversify themselves,” said Dennis LaPorte, a partner in the tax group of UHY LLP in Sterling Heights. “I would think that the majority of it would be a moot point.”

Studying solutions Each year, the state’s small-business

PALACE FROM PAGE 3

arena a dining destination. “It’s inspired people to come eat dinner early,” Mannion said. He also said the 20,000-seat Palace is contemplating opening its doors earlier for Pistons games to encourage fans to arrive sooner. Fans with tickets for suites, courtside seats and other premium seating already can get into the Palace at 5:30 p.m., which is a halfhour earlier than those with regular tickets, but the Palace may push that even earlier to 5 p.m., Mannion said. “We’re making sure entertainment starts the minute the doors open — music, videos, live bands; there’s stuff to do,” he said. PS&E also is using technology to battle traffic jams: Even if fans still get bogged down by traffic, the Palace is hopeful it can ameliorate any revenue loss with the use of in-seat concessions and merchandise sales via a mobile

“They sold their business, which is always a happy thing. What’s unhappy about it is out of Michigan goes the combination of their money and experience. ”

association ranks Michigan nationally on a variety of metrics, from private sector research and development to commercialization of university technology. The declining rate of startup companies in Michigan got Fowler’s attention, too. He convened an internal task force to consider why Michigan might be losing entrepreneurs to other places, and how public policy could be improved to help them stay. That could mean addressing something as intangible as cultural norms that discourage people from starting businesses, to advocating for walkability or mass transit if that’s what could help Michigan attract new talent, to pursuing state programs or finding people with expertise to pull research out of universities and turn it into products. The organization could be ready to present its recommendations this fall, with plans to develop a policy platform that could be shared with all candidates for governor in 2018, Fowler said. The issue of cashed-out entrepreneurs is just one thread. Many small-business owners fund their retirement accounts with income from selling their business, he said. Could there be a way to incentivize them to stay in Michigan when they do retire? “That’s exactly the person you want to stay and actively re-engage with other companies, invest and mentor and maybe even start a new one,” Fowler said. “That wealth, if reinvested in some way, we could certainly think about treating that differently. I think we’d start again with the proposition that it’s bad policy to run wealth away by putting it at a disadvantage.” Several accountants, though, said many of their business clients aren’t necessarily interested in reinvesting in a business when they retire; rather, they’re interested in taking their retirement savings and looking for the highest return with the least amount of risk. “If they were changing their residency to Florida, I think they would do it potentially to save tax, but (mostly) because they were already planning to move,” said Michael Mayette, a principal with Rehmann in Troy. “The discussion about Florida residency comes up

a lot, and generally it comes up because somebody’s already bought a place or moved there or has thought about it for other non-tax reasons.” Becoming a Florida resident requires establishing a permanent home in the state, including filing a declaration of domicile, earning a homestead tax exemption, registering to vote in the state, registering children for school or providing “the date non-Florida residency was terminated,” according to the Florida Department of Revenue. The department’s guidelines say that simply obtaining a Florida driver’s license only proves intent to become a permanent resident. Jeffrey Miller, M.D., who owns Novibased vein clinic Miller Vein, said at 53, he doesn’t intend to retire soon. But he said as he gets closer to retirement, if his financial adviser and attorney handling his estate planning suggest he had a financial incentive to move out of the state, “I would definitely consider moving.” The concept of an income tax deduction for business sale income makes sense, said Miller, a Small Business Association of Michigan board member who owns the chain of five clinics across Southeast Michigan. He said he expects his roughly $5 million company to see growth between 12 percent and 15 percent this year. Yet Miller said he believes more business owners might contemplate staying in Michigan, especially younger ones, if they could exempt their sale proceeds without the requirement they be reinvested — though he understands why the language was included. Accountants say proving that a resident has left Michigan is one of the most important — and the most complicated — pieces of the process. “It’s not only about abandoning your current state of residency. It also

Residency, ultimately, might be irrelevant when it comes to cashing in on a business sale today, several financial advisers said. That’s because the owner of a small business incorporated in Michigan as an S-corporation, in particular, will have to pay income taxes on any business income that can be sourced to the state of Michigan based on how much work the company did in the state — even nonresidents, said Richard Spengler, Grand Rapids-based senior director of the multistate tax consulting group for BDO USA LLP, which has an office in Troy. Schmidt’s bill might be trying to fix a perceived problem, Spengler said, though he added that he isn’t sure the perceived problem actually exists because so many business transactions are done as asset sales. As drafted, Senate Bill 893 raises questions in its wording, including how to define a business owner reinvesting in another business or doing business in Michigan, Spengler said. “Irrespective of what they’re trying to accomplish, whether that’s right or wrong, there are flaws in the legislation itself” due to holes in the language, he said. “I would say it’s not clear what they’re even intending, because it’s so sparse that it could apply to lots of situations.” Sue Tellier, owner of Grand Rap-

app. There also are apps and digital signs that help fans find the shortest line for food, merchandise and restrooms. But the easier solution is to keep fans informed ahead of time. Over the summer, the Palace licensed Moveable Ink, a software program that sends real-time traffic condition reports in emails that geo-targets the vehicles of fans who buy tickets directly from PS&E or Ticketmaster, or are premium seat holders. The email provides a map of what the traffic patterns look like within a few miles of the venue, and also weather and parking information. Unlike traffic apps such as Waze, Moveable Ink allows PS&E to embed dynamic messaging into the emails, such as game previews, live statistics and ticket offers. “This is one we can actually put messaging in, and give more specific fan data,” Mannion said. “It’s a piece, a tool. As we use it, we’ll get better and better at the type of messaging we do.” Additionally, the Palace benefits from its digital traffic operations cen-

ter that opened in 2008. It uses a bank of high-definition monitors that display live camera feeds showing traffic at the Palace and along local roads, including I-75. The system is tied into the Michigan Department of Transportation’s network of traffic cameras, and there is a live MDOT chatroom that brings together Palace traffic staff with MDOT, Auburn Hills police, the Oakland County Road Commission, local broadcast media, meteorologists and others who can provide information and impact traffic. The center — which uses instant messages, social media, emails, and in-arena PA announcements to communicate with fans — can reroute traffic if weather, accidents or other road conditions dictate. A wrecker service is on site for instant dispatch to accidents. The system, plus road improvements over the years and specialized software that manages stoplights, has cut down exit time after Pistons games from 60 minutes in 1988 to 2530 minutes today.

“We’ve used that to monitor the traffic and reroute some of the entrance points to improve egress,” Mannion said. The Palace has 8,600 parking spots, and the venue’s operations team can redo parking patterns in real time based on traffic conditions, he said. “It’s very dynamic where they’re shifting these traffic patterns,” he said. One bottleneck the Palace faces is that it charges for parking. Palace Sports & Entertainment-owned DTE does not, meaning traffic enters that venue far more quickly. Road construction has been a constant for Palace Sports and its venues since they opened. “There’s always been some sort of ongoing construction pattern around one of our facilities,” Mannion said. But the I-75 project is the most comprehensive traffic issue yet. “We see the potential multiple scenarios night by night,” he said. “The worst is a fender-bender in middle of (a) single lane. We’re working on cre-

Rob Fowler, Small Business Association of Michigan

requires establishing yourself in another state,” said Curtis Ruppal, a Grand Rapids-based partner in the state and local tax group for Plante Moran, which has multiple offices in metro Detroit. If Michigan business owners still have personal and professional connections in Michigan, including maintaining a second home, “have you really abandoned Michigan as your primary residence?” Ruppal said.

Tax tangle

ids-based government sales firm JetCo Solutions, said that while she isn’t looking at selling today, she and her husband will want to know as they get close to retirement that they have financial incentives to stay in Michigan. Tellier said she does not envision herself retiring to anywhere but Michigan. “Anything we can do to keep entrepreneurial spirits in Michigan is a positive thing,” said Tellier, an SBAM board member whose firm helps clients obtain government contracts through such services as proposal management and writing responses to requests for proposals. “As those of us who are business owners right now look at retirement (and) look at selling our companies — look at the next phase of our professional lives — the more options we have, the better.” Ruppal, of Plante Moran, said he foresees the bill as written could have a broader impact than its authors hoped, in that there is nothing in the language that he believes could prevent a business owner from moving to another state and investing the proceeds of a sale into an equity fund that has just 5 percent of its portfolio activity in Michigan. More corporate income than intended could wind up tax-exempt, he added. “Let’s put it this way: I think the way the language is worded, there would be some creative tax positions,” he said. Schmidt said he intentionally left out definitions that clarify the size or value of companies allowed to benefit from the income tax deduction in order to start debate on the issue. The language ideally would be refined during committee hearings with input from interested groups, he said. He added that he intends the primary beneficiaries to be smaller businesses, perhaps up to $30 million in value. “That’s kind of my vision for it, but again, we didn’t put parameters (on it). It’s still a work in progress,” he said. “It might turn out that maybe, all things considered with other changes that we’ve made, this isn’t the best route. I’m willing to do (or) try anything, or look at it, to make sure that that kind of money stays in Michigan.” Lindsay VanHulle (517) 657-2204 Twitter: @LindsayVanHulle

ative ways, if those types of things happen, on quick response time to keep it moving.” Good communication from the state also is a critical factor. “We have a pretty good history of working with MDOT,” Mannion said, noting that PS&E has dealt with road construction around its various venues for decades. Palace management gets weekly updates from the state, he added. “Over this past winter, MDOT staff met with several stakeholders, including PS&E, to discuss project timelines and the impacts to traffic,” said Rob Morosi, MDOT’s spokesman for the I-75 project, via email. “MDOT and PS&E regularly share information so the venues can appropriately plan ahead, and we can work with our contractors to limit the inconvenience. All the stakeholders understood the necessity of the work and the tight deadlines we are dealing with this fall.” Bill Shea: (313) 446-1626 Twitter: @Bill_Shea19

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

BLUE CROSS FROM PAGE 3

seen designated Blue Distinction providers in other states. About 50 percent of employees in Michigan companies who contract with Blue Cross work out of state. On average, the additional fees the employers will pay for Blue Distinction generally amounts to less than 1 percent of a business’ annual medical spend, said Pabin. She could not estimate annual revenue from the program to Blue Cross, partially because it depends on how many outof-state employees use a Blue Distinction provider. However, Pabin said, Michigan physicians won’t be paid any more under the Blues’ value-based program. “They don’t receive any additional incentives beyond the work we are paying them for now” for participating in value-based programs in Michigan, she said. Over the past several years, other commercial carriers have also been rolling out national value-based programs, including United Healthcare, Aetna and Cigna. These programs provide financial incentives to physicians and hospitals if they reduce overall costs and improve quality. Pabin said Blue Cross’ national effort to weave together all Blues value-based programs, which number at more than 450, has been in development since 2013. The Michigan Blues began rolling out its value-based programs in 2005 with the physician-group incentive program, which pays some 40 physician organizations financial incentives to improve quality and lower costs.

Employers react to fees Joel Clark, president of Southfield-based J.S. Clark Agency Inc., said the added administrative fee self-funded employers will be asked to pay is a small price to pay now for expected savings down the road. “I have one self-insured large group with employees in 13 states,” Clark said. “My client will get invoiced about $14,000 for 2017 (for about 1,700 outof-state employees) as our portion of the funding for the providers who are doing a good job. The health of the population should be better, and there should be reduced claim costs.” Jerry Konal, principal and employee health and benefits office business leader for Mercer Health and Benefits LLC in Southfield, said some self-funded employers he has spoken with have a slightly more skeptical view of the new fees. “Frankly, they are a little frustrated,” Konal said. “The reaction from clients is, ‘Wait a minute. We are being charged more? ... They should be doing these Jerry Konal: things anyway. Employers have Now I am paying skeptical view of more for it and new fees. they can’t show the value for it?’ ” On the other hand, Konal said the Blue Cross value-based programs have nice components that have the potential to encourage physicians to improve quality and reduce costs. “They show savings overall from the program, but Blue Cross has not done a great job in showing clients their net

reduction (in costs) because of the program,” said Konal, who said the Michigan Blues’ physician group incentive program (PGIP) is one example. Millions of dollars in overall cost savings to the Blues from PGIP, but there’s scant data on how it has contained employers’ rising costs, he said. Konal said the information from Blue Cross shows annual cost ranges from $90 to $110 for each member “attributed” to a Blue Distinction provider. He said the fees will vary depending on which services and state members receive care. In addition, Blue Cross estimates net member savings of about $50 per member attributed to a Blue Distinction provider. Blue Cross is planning to hold meetings with its employer clients over the next several months to explain the program and its benefits, Pabin said. Some employers have already received written materials and one-on-one meetings, she said. Meanwhile, Mercer has been trying its best to explain to clients how the Blue Cross plan will work, Konal said. “We hope to meet with (Blue Cross executives) so they can explain it,” he said. Konal said he hopes Blue Cross can develop specialized reports to show each employer how much they have saved by having employees use Blue Distinction providers as compared with other providers. “I can see the differences might not be huge for an employer with a few thousand employees,” said Konal. “This is something that has to change” because employers want to see value from the fees.

How Blue Distinction works Employees at companies under

contract with Blues plans for health insurance services will receive a list of physicians and others who are designated as Blue Distinction Total Care providers. They are encouraged to see those providers, but will not be charged a lower or higher rate to do so, Pabin said. “We are trying to get patients to see BDTC providers, but patients can still go to whatever provider they want in the network,” Pabin said. “Doctors participating in quality measurements tend to be much better, the total cost of care is generally lower, the quality is higher and patients (are) getting recommended for screening tests much more often.” Last year, Pabin said, Blue Cross Michigan began selecting primary care physicians for the distinction designation in the Blues’ value-based programs that include PGIP, patient-centered medical homes and specialists involved in the Blues’ organized systems of care program. Nationally, providers in these networks total about 59,000 primary care professionals and nearly 59,000 specialty clinicians. About 13 million Blue Cross members already access distinction program providers, but right now only in local Blue Cross markets. For employers, the savings using BDTC providers can be significant over the costs of other providers. Blue Cross estimated savings range from $6 to $9 per employee per month, which translates to $840 million in savings each year for the self-funded companies, Pabin said. In Michigan, for example, Blue Distinction providers already have cut hospitalizations from conditions that could have been treated in a physician

office by 26 percent the past few years, Pabin said. In 2014, Blue Cross had a 16.3 percent decrease in pediatric ER visits and a 10.9 percent decrease in adult ER visits, she said. Currently, Blue Cross plans spend about $145 billion annually on value-based care that rewards providers for producing better patient outcomes. Those payments, which now represent about 33 percent of total medical claim dollars, have been increasing over the past several years and have doubled from 2014. Konal said Mercer has been evaluating value-based incentive programs in more than 400 metropolitan areas the past few years to judge the savings potential. “We have put quite a bit of investment in evaluating these programs across the country,” Konal said. “We can tell you where you are getting good value and who is not, right down to the provider level.” Under Blue Distinction, Blue Cross projects it will generate even more value-based care programs into the mix for self-funded employers. Clark said value-based programs are the future direction health insurers are headed to help employers save money and lower health care inflation. “For years, the industry paid fee for service and negotiated with networks on price in exchange for more patients,” Clark said. “You pay me for X-ray and $125 for a primary care visit,” but that only encourages higher use. “Value-based programs can save employers money by better managing utilization and getting care to employees at the right time.” Jay Greene: (313) 446-0325 Twitter: @jaybgreene

WSU Physician Group, DMC pursue backup plans in talks By Jay Greene jgreene@crain.com

Detroit Medical Center is working

on a “Plan B” in case it cannot get

Wayne State University Physician Group

back to the contract bargaining table. Trouble is, Wayne State officials also say they are working on a backup plan if its clinical services and medical director contracts can’t be resolved with DMC by Sept. 30, when the current contract expires. Last week, contract negotiations broke down between the two academic health partners over the issue of whether DMC can continue to recruit physicians employed by Wayne State University Physician Group. Wayne State wants a “nonsolicitation of physicians” clause in its contracts with DMC to protect its business interests. DMC officials have refused, saying they cannot agree to that for various business and regulatory reasons. There is a nonsolicitation clause in the current contract, but the proposed agreement for the new contract is more specific and DMC objects. The DMC-Wayne State teaching relationship is significant because the medical center is one of Detroit’s largest safety net hospitals with more than 3,000 physicians on its medical staff. DMC is owned by for-profit Tenet

Healthcare Corp., a Dallas-based, in-

vestor-owned chain of hospitals. “Our first concern is always we provide access and quality care for patients,” said Roger Wiseman, DMC’s senior vice president of population health and president of the Michigan Pioneer ACO. “We are preparing, like in any large contract if expiring, to have a Plan B in place.” Wiseman said DMC’s backup plan involves hiring other physicians and medical groups to replace UPG doctors. Wayne State’s Plan B is to explore talks with other hospitals in Southeast Michigan, said Jack Sobel, M.D., chairman of UPG and dean of the Wayne State University School of Medicine. One hospital system that has come up in the past as a potential expanded partner is Henry Ford Health System, which is also located nearby in Detroit. Wayne State already trains medical students at Henry Ford Hospital. Sobel said Wayne State was forced to go to Plan B because he maintains that DMC officials “terminated contract discussions” Tuesday during a two-hour session at the medical school. DMC CEO Joe Mullany told Crain’s he disagrees strongly with Wayne State’s description that DMC unilaterally terminated contract talks.

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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 // S E P T E M B E R 5 , 2 0 1 6

KINGSLEY 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 Digital Editor Carlos Portocarrero News Editor Beth Reeber Valone, (313) 446-5875 or bvalone@crain.com Senior Editor Gary Piatek, (313) 446-0357 or gpiatek@crain.com Research and Data Editor Sonya Hill, (313) 446-0402 or shill@crain.com Newsroom (313) 446-0329, FAX (313) 446-1687, TIP LINE (313) 446-6766

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FROM PAGE 1

Hilton Bloomfield-Detroit, the Kingsley name will live on inside the hotel, which was built in 1950s, attached to its banquet room space, Elia said.

Real estate roots A real estate lawyer by trade, Elia said his entry into the hotel and restaurant businesses came as a byproduct of real estate purchases. The Elia Group develops retail shopping centers, most recently a center at 13 Mile Road and Woodward that’s home to a Panda Express and Qdoba Mexican Eats restaurant. In addition to operating the Detroit restaurants, Elia is co-owner of Birmingham restaurant 220 Merrill with Denise Ilitch. He and Shiffman, who is currently building two mixed-use projects in downtown Birmingham, became connected through a mutual friend. The two bought the hotel through Kingsley Hospitality LLC for an undisclosed amount in May 2014 from Kingsley Ventures LLC, which was registered to John Frasco. The property ended its decade-long affiliation with Carlson Rezidor’s Radisson a few months later, returning to the independent Kingsley Inn banner. “We were, at that time, developing different development options for the property … looking at different retail

SARAFA FROM PAGE 3

“We were fortunate to get Mike to join us. We wanted a leader to come in and work with Omar and Kevin. Mike was a big free agent. It was Kevin Durant and Mike Sarafa,” said Saber Ammori, making a joking reference to the most prominent recent free agent player in the National Basketball Association. While all four brothers and Sarafa are managing directors of the family office, Saber Ammori and Mark Denha will concentrate on the T-Mobile business.

Food, real estate focus Sarafa said the new fund will target investments in food and retail companies and real estate developments, with a focus on companies with sales of between $3 million and $30 million a year and EBIDTA (earnings before interest, depreciation, taxes and amortization) of between $500,000 and $5 million a year. The brothers have been involved in real estate development and retail food businesses. Kevin Denha was a franchise developer for 7-Eleven, his brother has owned a variety of convenience stores, and Saber Ammori was the lead franchisee for Fuddruckers in the state of Michigan. “We want to stay in our wheelhouse,” said Safara. He said the fund will invest in healthy, small companies in need of capital to grow and in turnaround situations where it can provide operational assistance or bring in management help. “We really like deals where we can

uses and office uses,” Elia said. “But ultimately, we decided the highest (rate of return) and best use for the property was the hotel.” Troy-based management company Hotel Investment Services Inc., which runs the DoubleTree in Bay City and the Inn at St. John’s in Plymouth, will continue to manage the Kingsley after its Doubletree rebranding, and staff will be fully trained under the five-star Hilton program, Elia said. The owners invested several hundred thousand dollars to open the Nosh & Rye Deli and a fitness center and install new high-speed internet, lighting and carpeting after buying it. Now, a complete overhaul of the hotel’s exterior is planned, along with extensive interior renovations of its 151 guest rooms, 15,000 square feet of banquet space, swimming pool and lobby, which will be converted into a two-story lobby, Elia said. The renovations will bring modern variations of the Hilton standard to the hotel, he said, creating a new exterior and a contemporary interior. The Kingsley was built in 1958, and its west building was added in 1983, Elia said. The last renovation of the property was in 1997. “We expect it to (continue to) be not only a prime meeting space but ... to grow with the millennials,” Elia said. “We specifically designed our hotel to be modern and fresh and to have all the technology that group expects,” including high-speed Wi-Fi and the latadd operation expertise,” said Sarafa, who said the fund could grow as needed with additional family money, and that as the office builds a track record, it could raise a second fund that would also include outside limited partners. The office employs five and plans to be at 15 by year’s end. Sarafa said a human resource manager is joining the office this month and he is looking to hire a financial analyst. Vision Investment has several portfolio companies already. One is new. The others are companies the brothers owned that have been folded into the Vision umbrella. Prior to the formal launch of the family office, a deal was struck for it to open and operate 20 Jamba Juice stores in Michigan and 20 in southern Florida in July. Jamba Juice Co. (Nasdaq: JMBA) is based in Emeryville, Calif., and sells healthy food and juice products. Vision Investment will open its first three Jamba Juice outlets inside Meijer stores in November and two streetside locations, in Ann Arbor and Southfield, in the first quarter. Moved into the portfolio are about 40 Comcast Xfinity stores the brothers operated inside Wal-Mart and Best Buy stores in Pennsylvania and Indiana, and four new retail strip mall centers, including newly finished centers in Ferndale and Westland and centers being built in Clarkston and Clinton Township. Sarafa said he has several deals in due diligence, two of them growing out of companies he met in August at the Crain’s Food Summit, an event meant to help jump-start connections in the Michigan food industry. Another Vision Investment initiative is a deal to invest in a household furnishings company. Still another is a 30-store deal

Joseph Vicari: Plans a second Joe Muir Seafood.

est in audio/video technology for corporate presentations. Renovations are expected to begin in November and to wrap up a year from then. The hotel will remain open throughout the phased project.

Neumann/Smith Architecture is the architect on the

renovation. A general contractor has not been selected, Elia said. On the restaurant plans, Joe Vicari Restaurant Group has signed a 15-year lease for the Kingsley’s 250-seat space, said CEO Joseph Vicari, and plans to open a second Joe Muer Seafood there in early February. Northern Lakes Seafood Co. operated a restaurant there before relocating to Troy in 2013. The Kingsley location is far enough north not to compete with the original Joe Muer Seafood in downtown Detroit, Vicari said. “We feel ... a first-class fish house, seafood restaurant is something that’s missing in that area,” he said. The Bloomfield Hills location will be similar to the downtown location, with the same firm, Ron and Roman Inc. in Birmingham, doing the design, Vicari said. The restaurant group may also eventually operate the hotel’s banquet business, Elia said. with a national retailer.

Infusion of PE funds “Mike is picking up where Mike George left off, as the titular head of the Chaldean community,” said John Donnelly, managing director of the Grosse Pointe investment banking firm Donnelly Penman & Partners,

Michael George, a co-founder of

Melody Farms Dairy Co. and the Chaldean Iraqi American Association of Michigan,

died in 2014 at age 81. Donnelly praised Sarafa for skillfully navigating an exit from the Bank of Michigan’s partnership with Lansing-based Capitol Bancorp Ltd.

When the Bank of Michigan was founded, it was part of a national chain of community banks Capitol Bancorp was building. Its model was to own 51 percent of the banks, with local business leaders owning 49 percent. The Federal Deposit Insurance Corp. later ruled, as the recession hit, that each member bank shared fiscal responsibility for any financial failings of the others. Sarafa raised $3 million and bought out Capitol Bancorp’s share in July

The Birmingham and northern Oakland County area is a strong market, said Michael O’Callaghan, executive vice president and COO of the Detroit Metro Convention & Visitors Bureau. The market’s overall average daily rate for all hotels is about $95, up 3 percent from last year, he said, according to STR Inc. data. The Kingsley competes primarily with the Embassy Suites by Hilton Detroit Troy Auburn Hills, Holiday Inn Express–Detroit Birmingham, Courtyard Detroit Pontiac/Auburn Hills and Au-

burn Hills Marriott Pontiac at Centerpoint, said Hotel Investment Services

CEO Ron Wilson, whose team operates The Kingsley. Excluding the Townsend Hotel in Birmingham, occupancy for that Birmingham/northern Oakland County group of upscale competitors for the past 12 months has been 67.1 percent for that set of hotels, he said, and average daily rates have been $125.71, up 4.4 percent over the previous 12 months, based on STR data. “Everyone knows where the Kingsley is,” said Chuck Skelton, president of Ann Arbor-based Hospitality Advisors Consulting Group Inc. The renovation and affiliation with Hilton’s Doubletree brand and the Hilton reservation system cement the hotel in its current location, he said. “It’s been a go-to place for years. This puts a nice brand on top of it that people are loyal to and respect,” Skelton said. 2012. In August, Capitol Bancorp declared bankruptcy and eventually went out of business. Most of its partner banks were shut down by federal regulators. The eventual sale to Level One returned a healthy profit to Sarafa’s investors. “Mike did what many others couldn’t. He got out of the burning building and protected his people,” said Donnelly. “I’m thrilled to see additional private equity firms in Michigan,” said Michael Beauregard, a senior partner at Detroit-based Huron Capital Partners LLC, annually the state’s most active PE firm. “What they are doing is consistent with a trend in private equity today, which is to have more of an operational focus,” said Kevin Prokop, a managing partner at Detroit-based Rockbridge Growth Equity LLC. “People who have been operators are marrying their skills to capital. “And they are smart to focus on the lower middle market. It’s easier there to find companies that need your guidance, and those are small ships that are easier to turn around,” he said.

INDEX TO COMPANIES

These companies have significant mention in this week’s Crain’s Detroit Business: Alden Development Group ................................... 1

Oakland University ........................................ 10, 12

American Society of Employers ......................... 8

Palace Sports & Entertainment .........................3

Blue Cross Blue Shield of Michigan .....................3

Saginaw Valley State University .......................10

Detroit Lions ..........................................................7

Schoolcraft College ............................................. 12

Detroit Medical Center ....................................... 17

Small Business Association of Michigan ........... 1

Eastern Michigan University ....................9, 12, 13

University of Detroit Mercy ................................ 13

The Elia Group ........................................................ 1

University of Michigan .........................................11

Joe Vicari Restaurant Group ..............................18

University of Michigan-Dearborn ......................11

Kingsley Inn ............................................................ 1

Vision Entertainment Partners LLC ...................3

Lake Superior State University .......................... 9

Walsh College ....................................................... 12

M-1 Rail ................................................................... 4

Washtenaw Community College ...................... 12

Michigan Department of Transportation ..........3

Wayne State University ............................ 9, 12, 17

Michigan State University ...............................9, 11

Wireless Vision Holdings LLC ...............................3

WEEK State fairgrounds plans: Housing, retail, theater

pdated plans released last week for the former site of the Michigan State Fairgrounds in Detroit include a walkable development with housing, retail space, a multiplex theater and a large park. More community meetings are planned this fall before the City Council is presented with a site plan in early 2017, city officials said.

COMPANY NEWS  Metro Detroit residents can have groceries and other products delivered to their doorsteps anytime in a new arrangement between Walker-based retailer Meijer Inc. and Alabama app-based grocery delivery service company Shipt Inc. Meijer’s first foray into home delivery launches Sept. 15 in a membership-based service to residents of Detroit and other locales.

 Meta Physica Massage & Sauna

won $50,000 in the 2016 Hatch Detroit new-business contest among four finalists at the Hatch Off event. Comerica Bank sponsors the prize in the competition presented by Opportunity Detroit. The other finalists were clothing boutique Bird Bee, ceramic design and manufacturing studio Corbé, and urban farm and catering business Coriander Kitchen & Farm.

 Champps Kitchen and Bar

locations in Livonia and Troy and the Bailey’s Sports Grille in Canton Township closed along with 22 other restaurants across the U.S. as part of a cost-savings measure by Dallas-based parent company Last Call Guarantor LLC.  Restaurateur and chef Omar Mitchell, who has used his buildyour-own-burger concept to open Great Lakes Burger Bar locations in Detroit and Garden City, is using the same idea for pasta for I Luv Cheese, which opened a Clinton Township location last week and will debut in downtown Detroit this week.  Rock City Eatery will open the doors to its new, larger space in Detroit’s Midtown district Sept. 8 with an expanded, more experimental menu. Rock City will be in a 3,600-square-foot space at 4216 Woodward Ave.  Southfield-based Covisint Corp. will add three new independent members to its board of directors in an agreement with New York City-based Dialectic Capital Management LP and its affiliates, which own about 6.2 percent of the company’s outstanding shares.  Jeffrey Kutcher, M.D., a leading pioneer in total athlete brain health, has opened the Sports Neurology Clinic at The Core Institute in

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

ON THE WEB AUG. 27- SEPT. 2

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

The number of years in business for Mexicantown restaurant El Zocalo, which was expected to close Sunday.

$3.9 million

The amount of a research grant awarded to the University of Michigan by the National Institutes of Health to accelerate cross-disciplinary research through the new Michigan Integrative Musculoskeletal Health Core Center.

$2.8 billion

The sale price for New York City-based Rouse Properties Inc., owner of Southland Center in Taylor and four other malls in Michigan, paid by an affiliate of Brookfield Asset Management Inc.

Brighton. Kutcher advises professional, college and high school teams nationally and founded a clinic at the University of Michigan.  The owner of the Ferndale-based Detroit Metro Times, Cleveland-based Euclid Media Group, bought out John Badanjek, the former industry rival it hired as publisher last year, as one of the alt-weekly’s minority owners and publisher. Terms were not disclosed.  Detroit-based Peninsula Capital Partners LLC announced it has finished raising a sixth fund, with capital commitments of $402 million.

 Healthy Living Medical Supply

plans to move its corporate headquarters to Detroit from Troy in November as part of an effort to locate offices closer to its customers and health plan clients, officials said.  New York City-based Siebert Brandford Shank & Co. LLC, the nation’s No. 1 minority-owned municipal finance and underwriting firm, changed its name to Siebert Cisneros Shank & Co. LLC. The

change reflects

Henry Cisneros, the former U.S. Department of Housing and Urban Development secretary,

becoming an Henry Cisneros equity owner. Company chairwoman, CEO and majority owner Suzanne Shank is based in Detroit.  Three Detroit hospitals — Sinai-Grace Hospital, Harper University Hospital and Detroit Receiving Hospital, all part of the Detroit Medical Center — are among 20 Michigan facilities to lose some Medicare funding due to high infection rates this year, The Detroit News reported.

 Southfield-based Fox Sports Detroit launched a new city-focused branding campaign during Detroit Tigers game telecasts with five cinéma vérité-style commercials to be unveiled over the next five weeks.

 Laurent Bresson

resigned as president and COO of Auburn Hills-based Nexteer Automotive Corp. Bresson,

RUMBLINGS Half-day Fridays in summer a top cool work perk

W Michael Richardson

44, left on good terms to pursue an undisclosed opportunity, the company said. Michael Richardson, 60, senior vice president and chief strategy officer, is the interim replacement.  Cara Graninger, executive director of Living Arts in Southwest Detroit, said she plans to step down to return to a teaching artist role with the nonprofit arts organization.

OTHER NEWS  Half of the schools on Michigan’s new list of low-performing public schools are in Detroit but cannot be closed by the state until 2019 at the earliest, Gov. Rick Snyder’s office said, angering some Republican lawmakers and school-choice advocates, AP reported.  Michigan’s 12 accountable care organizations again fared better in 2015 than national averages in saving Medicare money, sharing savings and improving quality, said an analysis by Crain’s. Seven of the 12 ACOs saved enough money for Medicare to earn a total of $26.1 million for their owners.  Pittsburgh-based U.S. Steel sued Michigan over an effort to curb Detroit-area air pollution. U.S. Steel said the state Department of Environmental Quality illegally enacted a rule that calls for the company to submit a plan for meeting sulfur dioxide compliance standards, The Detroit News reported.  A dozen nonprofit veterans agencies in Michigan —including five affiliated with the Detroit VA — are sharing in nearly $8.1 million in fiscal 2017 grants newly awarded by the U.S. Department of Veterans Affairs to help prevent homelessness for low-income veterans and their families.  Detroit has followed through on its threat to sue hundreds of financial institutions and other companies in an attempt to recoup $12.2 million in unpaid property taxes, AP reported. The filings last week came at the deadline for the city to sue to get the money it said is owed from 2010-12 on more than 1,500 parcels of land.  Motor City Match began taking applications from entrepreneurs who want to bid for a portion of $500,000 in grant funding. Applications are available at MotorCityMatch.com and due Oct. 1.

hen it comes to workplace wish lists, a fully stocked snack room is no match for being able to leave the office early on a summer Friday. That’s according to an unofficial poll of Crain’s readers as part of our Cool Places to Work in Michigan report published earlier this week. As part of that report, we looked at the most popular perks at the 75 winning companies and asked readers which one they would most want at their offices.

Of the 230 votes, 101 — 44 percent — went to “half-day Fridays in summer.” A pet-friendly office came in second with 31 votes, followed by paid time off for volunteering (19 votes) and company-provided Fitbits and incentives for being active (18 votes). Not as popular: paternity leave, a meditation room or unlimited snacks. See the full results of the poll and our full report on creating magnificent workplaces at crainsdetroit. com/coolplaces.

What happens when Wall Street likes your bank deal So much for the argument made by

Deutsche Bank and other institutional investors that Troy-based Talmer Bancorp should have shopped for a

better deal when it was announced in January that it had agreed to be bought by Midland-based Chemical Financial Corp. for $1.1 billion. Talmer execs didn't seek other bidders at the time, calling the deal a merger of equals. Talmer shareholders would own 45 percent of Chemical stock, getting $1.61 in cash and 0.4725 shares of Chemical stock for each share of Talmer they owned. While some investors didn’t like the deal, the market did. Demand for both Talmer stock and Chemical stock drove both share prices sharply higher. When shareholders at both

banks approved the sale in July, Chemical stock was at $39.12 a share, up from $29.67 when the deal was announced, making the deal worth $1.4 billion. When the deal formally closed last week, Chemical’s stock was at $46.19 a share, which valued the deal at $1.7 billion. Among other things, there’s been a question about what the deal means for sponsorships, such as the name sponsorship of the Free Press marathon in October. (Talmer is at the beginning of a three-year sponsorship contract.) This fall’s race will still be under the Talmer brand, with the next two bearing the name of the Detroit Free Press/ Chemical Bank Marathon.

National group to assist Detroit businesswomen of color Women of color in Detroit will get more help in growing their businesses after a national advocacy organization and the Michigan Black

support structure that grows with them personally and professionally.” The two groups will launch a small-business funding event in October to Chamber of Commerce match entrepreneurs with signed a joint memorancapital, Cofield said. Date dum of understanding and location are not yet last week that will create Natalie Cofield determined. programming and This week, the group reduce funding challenges. plans to launch an online accelerator The MBCC’s Women of Color program called Prospectus. Program Entrepreneur Circle inked the deal partners include Google Inc. and Wells Fargo & Co. The online Aug. 30 with Washington, D.C.component is a nine-week training based Walker’s Legacy. “Women that have exceeded their program focused on legal, financing sales quota; that’s excellent. But a lot and resources, Cofield said. of what we offer is qualitative,” said Walker's Legacy is named after C. J. Walker, the first self-made female Natalie Cofield, Walker’s Legacy founder and CEO. “Women of color millionaire in U.S. history and a lack the social support system to help historical female entrepreneur. their business. That’s why our work is For more information, go to important; we bring that network walkerslegacy.com.

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