Gilbert, others push in Lansing to broaden tax-capture funding for big projects, Page 3 SEPTEMBER 19 - 25, 2016
An impromptu dance-off includes “Hamilton” producer Jeffrey Seller (fourth from left) on stage at an Orchestra Hall Detroit Homecoming event last Thursday as Mike Ellison (center with microphone) performs.
‘A place of interest’ Ballmer talks Detroit pride, poverty, philanthropy
PHOTOS BY AARON ECKELS
Retired Microsoft CEO Steve Ballmer spoke at the third Detroit Homecoming last week.
Steve Ballmer balled his fists and pounded the table, rattling silverware and water glasses in a private room of a downtown restaurant. “It’s attackable,” he bellowed, “and it should be attacked!” The Detroit-born retired Microsoft CEO made famous for his vocal exuberance for “developers, developers, developers” had another passion in mind while eating lunch last week with his wife, Connie, and Crain’s Detroit Business Associate Publisher Ron Fournier: Attacking intergenerational poverty through philanthropy. This is a heavily edited transcript of their discussion. The full tran-
script is at crainsdetroit.com.
I want to talk about generational poverty and government reform, but I think I would like to start in Detroit. … I have heard you have been very involved in Detroit Country Day, but just very quietly.
Steve: Yes, I have been very involved in Country Day.
Will you tell me what you have been doing with them? Because it has not been written up at all.
Steve: And it won’t be written because I asked them to make sure it didn’t get written up. (Laughs) Lawrence Tech, as well?
about that, too. Lawrence Tech was pretty big.
Those are two institutions that helped shape the man you became. Are there other institutions that you look back on and say … ? Steve: Franklin Hills Country Club,
where I was a caddie.
Tell me about caddying for (mall developer Al) Taubman.
Steve: I won’t say anything about that, you won’t hear a word about that from me today. (Laughs) What was it like caddying in general there?
Steve: To me, that was actually
Steve: And Lawrence Tech. I forgot
More inside n Detroit Homecoming, in words and images, Page 20
n Room at the inn? Shinola hotel brings more rooms downtown, Page 21 n Coming Sept. 26: Detroit 2.0 tallies the outcomes and outlooks from three years of Detroit Homecoming. nMore news: Will Leather expansion, “Hamilton” to come to Detroit and more, Page 22
SEE BALLMER, PAGE 21
Douglass-Market plan builds on lessons learned from history By Kirk Pinho kpinho@crain.com
Richard Baron was fresh out of law school at the University of Michigan when he moved to St. Louis for a Legal Aid Society fellowship in the fall of 1968. Baron, then a blond-haired young man from the east side of Detroit, had
been there only a month when he started representing tenants in what would become the St. Louis public housing rent strike of 1968-69. His career, first as an attorney and then as one of the nation's leading affordable housing developers, follows an almost parallel track with the country’s as it shifted away from large-scale
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high-rise developments warehousing low-income people to a more mixed-income approach that groups residents from a variety of economic backgrounds. Richard Baron Which helps get us to today, as city officials and developers work on a $416.6 million plan for more than 1,000 units of mixed-income housing across 25 acres of greater downtown Detroit land, primarily on the former Brewster-Douglass housing projects site, but also a trio of others in Eastern Market and Brush Park. Mixed-income developments like
The Douglass-Market plan renderings show diverse architecture.
the one proposed for the Brewster-Douglass site “changed the whole economic base of these communities by giving them more buying power, allowing retail services to come in,” said Baron, now in his 70s and chairman and CEO of St. Louis-based McCormack Baron Salazar Inc., one of the
country’s largest affordable housing developers. Of course, that’s not the only improvement. “It drastically reduced policing issues for local departments and was a much more stable situation.” SEE DOUGLASS, PAGE 18
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MICHIGAN
BRIEFS U.S. Senate OKs water bill with millions for Flint
The U.S. Senate approved a $10 billion water projects bill last week that includes emergency funding for Flint — nearly a year after officials declared a public health emergency because of lead-contaminated water. The measure goes to the House, where approval of a similar bill — minus the Flint provision — is expected as soon as this week, AP reported. The Senate measure would authorize 29 projects in 18 states for dredging, flood control and other projects overseen by the U.S. Army Corps of Engineers. The bipartisan bill includes $100 million in grants and loans to replace lead-contaminated pipes in Flint and other cities with lead emergencies, as well as $50 million to test water for lead in schools and $70 million for water infrastructure loans. Meanwhile, Michigan’s former state epidemiologist acknowledged in a plea deal that she was aware of dozens of cases of Legionnaires’ disease in the Flint area around the same time the city changed its water source to the Flint River in 2014, but that she didn’t report it to the general public.
ss e U in po t i s x is Bu n E V he tio t a at Avi
s
Corrine Miller, the former director of disease control and prevention at the Michigan Department of Health and Human Services, pleaded no contest to a misdemeanor of willful neglect of duty in exchange for prosecutors dropping felony misconduct and conspiracy charges. A definitive connection between the river water and Legionnaires’ has not been made, but many experts believe it was the cause.
Lawsuit: Ferguson, Bernero ‘stole’ Lansing project Joel Ferguson, developer and chairman of the Michigan State University board of trustees, is accused of conspiring with Lansing Mayor Virg Bernero to use their political influence to “steal� an important development project from two former partners. Developers Christopher and Leo Jerome filed a federal lawsuit alleging that Ferguson, Bernero and others have long engaged in racketeering — rigging bids, bribery and extortion — culminating in Ferguson taking the $380 million Red Cedar Renaissance project from the Jeromes, the Lansing State Journal reported. The lawsuit was filed by Livo-
nia-based attorney and former Michigan Attorney General Mike Cox in the
U.S. District Court for the Western District of Michigan in Kalamazoo. Be-
sides Ferguson and Bernero, also named were the Lansing Economic Area Partnership, LEAP President and CEO Bob Trezise, Ferguson’s partner Frank Kass and their joint development company on the project, Ferguson-Continental LLC. In 2012, the Jeromes proposed the mixed-use Capital Gateway project, which included two former car dealerships and the former Red Cedar Golf Course, the lawsuit says. The Jeromes say they were forced to consider Ferguson and Charles Clark, of Lansing-based Clark Construction Co., as development partners who demanded Bernero give Ferguson’s team control of the project and cut the Jeromes out. Ferguson and Bernero denied wrongdoing.
MICH-CELLANEOUS n Michigan would tax and regulate medical marijuana in a tiered licensing system under legislation that won final legislative approval and that is expected to be signed by Gov. Rick Snyder, AP reported. The Republican-controlled House last week voted for a main bill to require a state operating license to grow, process, sell, transport or test marijuana used for medical purposes. Another bill clarifies that allowable marijuana includes non-smokable forms such as oils, food items and pills. “Provisioning centers� that sell marijuana to patients or their
caregivers would pay a 3 percent tax on their gross retail income. n Michigan’s estimated median household income was $51,084 in 2015, up 2.4 percent from 2014 and, factoring inflation, the state’s biggest increase since 1999, according to U.S. Census data released last week, MLive. com reported. Adjusted for inflation, Michigan’s median household income had been trending down since 2000 and hit bottom in 2012 but since has increased by 5.6 percent beyond inflation. n Johnson Technology will add 100 jobs and invest $14.5 million in a third Muskegon-area aviation engine manufacturing facility, MLive.com reported. The Muskegon-based military and aviation engine component manufacturer plans to convert a warehouse into a manufacturing plant in Norton Shores to be ready by Jan. 1. Johnson employs nearly 700 people in Michigan. n Meijer Inc. is chronicling its 82year history with the recent unveiling of a “Heritage Center� at the retailer’s
INSIDE THIS ISSUE
CALENDAR .........................................15 CLASSIFIED ADS............................... 17 DEALS & DETAILS.............................15 KEITH CRAIN....................................... 6 MARY KRAMER .................................. 6 OPINION .............................................. 6 PEOPLE ...............................................16 RUMBLINGS ...................................... 22 WEEK ON THE WEB ......................... 22
COMPANY INDEX: SEE PAGE 21 Michigan corporate headquarters in Walker, MLive.com reported. The 5,000-square-foot museum includes memorabilia and artifacts collected by the corporation, the Meijer family and former employees. n Michigan’s jobless rate was unchanged at 4.5 percent in August from July, remaining at its lowest level in 15 years, AP reported. The U.S. jobless rate was unchanged at 4.9 percent.
Corrections n In the Sept. 12 article “How to sell tickets to millennials,� the last names for Lindsey Pollak and Larisa Zade were misspelled, and it should have made clear that participants in the Museum of Contemporary Art Detroit’s Monster Drawing Rally are artists of any age and not necessarily New Wave members. n A Sept. 12 story titled “How to boost Detroit’s creative economy? First, take inventory� should have said the state’s arts and cultural funding through the Michigan Council for the Arts and Culture is expected to stay about the same next year. n A caption in the Sept. 12 issue should have said the musical “Carmen� is taking place at Detroit Opera House. The show runs Oct. 15-23.
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CSP sale: Lighter is better for suppliers $825M deal reflects value of lightweight auto parts By Dustin Walsh dwalsh@crain.com
age introduced this month in the Senate. Called “transformational brownfield projects,” the legislation would let developers use sales and income tax revenue generated by visitors and residents of the new mixed-use properties to offset the costs that go into preparing a dirty site for construction — provided they invest a minimum level of private capital into the project. In Detroit, that would require a developer to put up at least $500 million in private funding; smaller communities would require minimum thresholds of $25 million to $100 million,
The $825 million purchase of Auburn Hills-based Continental Structural Plastics Holdings Corp. by Japan’s Teijin Ltd. is a strong indicator that environmental regulations are driving up value for makers of lightweight automotive parts. Announced last week, the deal for the composite materials supplier is one of the largest deals for a local company this year and is expected to close in December. The price is eye-popping for an automotive supplier — 10.25 times CSP’s earnings before interest, taxes, depreciation and amortization, a common way of valuing a deal. The multiple represents one of the highest in the automotive industry in recent years. The price tag also represents a boon for majority owner Scott Capital Group and Florida Gov. Rick Scott, who purchased CSP in 2005 under his investment firm Richard L. Scott Investments LLC. The investment is being held in a blind trust while Scott holds political office. CSP is “a company on the forefront of the lightweight parts market,” said Fred Hubacker, executive director of Birmingham-based advisory firm Conway MacKenzie Inc. “It’s hard to imagine any supplier commanding that (price) multiple, but it’s a significant sign of the confidence in the (lightweight plastics) market.” The deal gives Teijin new North
SEE BROWNFIELD, PAGE 18
SEE CSP, PAGE 17
Clockwise from top left: Mega-projects that could fill large brownfield sites such as the stalled Wayne County Jail site; the Pontiac Silverdome site; the now-closed Summit Place mall; and the old Uniroyal site along the Detroit River.
FILE PHOTOS
Brownfield bonus
By Lindsay VanHulle
Crain's Detroit Business/Bridge Magazine
and Kirk Pinho kpinho@crain.com
LANSING — Dan Gilbert's top lieutenant and economic development organizations around the state are pushing a plan in Lansing to allow the capture of state sales and income taxes to help pay for major redevelopment projects. Such a plan could ease the path for massive projects Gilbert is planning in Detroit, including the redevelopment of the 2-acre site that used to house the J.L. Hudson's department store on
Senate floats Gilbert-backed plan to let developers capture sales, income taxes for such projects
Woodward Avenue and a new $1 billion Major League Soccer stadium and other development proposed for the site of the stalled Wayne County Consolidated Jail project on Gratiot Avenue. A statewide coalition is building behind the proposal, which supporters say is necessary to line up more financing options for projects that developers traditionally have a hard time selling — those that involve cleaning
MUST READS OF THE WEEK
Where the railroad tracks end Current QLine terminus signals that there won’t be an extension anytime soon, Page 8
up lead, asbestos or other contaminants, known as brownfields. Yet it’s difficult to say with certainty what a plan like this might cost the state in revenue it otherwise would collect. And it first would have to get past Gov. Rick Snyder, who does not believe in letting government pick private-sector winners and losers. Gilbert’s umbrella company, Rock Ventures LLC, is lobbying for the effort, which has resulted in a five-bill pack-
Pellerito Foods seeks to cook up space with city land deal, but process is slow By Sherri Welch swelch@crain.com
A four-year process to acquire land from the city of Detroit and a subsequent loss of $10 million in annual hash brown business shredded the expansion plans Pellerito Foods was cooking up at the time. Now, with bite-size contracts slowly helping to recoup that lost revenue, Pellerito is looking at beginning construction next year on a $14 million expansion that will quadruple its processing space. The expansion will position the 73-year-old Eastern Market company — already among the largest suppliers of fresh-cut potatoes in the country— for even more growth.
A rendering of the planned Pellerito Foods expansion in Eastern Market. Preliminary plans drawn up by Royal Oak-based Stucky Vitale Architects call for a two-phase construction project that will take Pellerito from 25,000 to 100,000 square feet of space for process-
ing potatoes and other fresh-cut vegetables and from 60 employees to 180 over five years. To make the project viable, Pellerito SEE PELLERITO, PAGE 19
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Q&A: GERRY ANDERSON
DTE CEO’s concern: Energy reserve margin Gerry Anderson believes Michigan’s electric industry is at the start of a fundamental shift in the way power is produced and delivered. Anderson, chairman and CEO of Detroit-based DTE Energy Co., and other Michigan utility executives are warning policymakers of an approaching problem: That the number of aging coal-fired power plants going offline within the next decade could leave the state short of the necessary electricity re- Gerry Anderson: serves to power all Push on power of their customers’ capacity. needs. Anderson last week met with Crain’s editors and reporters to discuss pending energy legislation and one of the key policy issues still outstanding — what’s often referred to as reliability, or ensuring that Michigan will have enough electricity to meet demand in a few years. He referred to a recent projection by the Midwest’s grid operator, called the Midcontinent Independent System Operator, or MISO, that predicts the re-
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gion’s electricity reserve margin could fall short of a recommended 15 percent by 2018 and continue sliding through 2026. Yet MISO’s projection does not include plans for any new power plants. A future without new plants isn’t likely. Anderson’s point, though, is that it takes utilities at least four years — if not longer — to plan for a new power plant. Anderson said DTE could be ready to pursue a new natural gas plant by 2020 or 2021. His concerns, which are shared by leaders of Jackson-based Consumers Energy, get at the heart of one of the most hotly contested pieces of the bills pending in the state Legislature: electric choice. Specifically, Anderson said he is concerned that the 10 percent of Michigan electricity customers who are allowed to buy power on the open market are being served by some suppliers that don’t generate their own power, and thus could create grid instability if they’re not required to have enough electricity beyond a one-year supply. Advocates for choice have said many alternative suppliers might be forced out of business if they’re required to have multiple years’ worth of electricity reserves owned or under contract because they don’t generate their own power. Sen. Mike Nofs, R-Battle Creek, and one of the lawmakers taking the lead on the energy bills, recently told Crain’s he is considering language that might allow alternative providers to count toward the bill requirement electricity purchased on a three-year auction MISO is considering offering in Michigan. Below is a condensed and edited version of Anderson’s remarks.
What is the main problem facing the industry?
We’re trying to warn people that we have something very fundamental underway right now that will take time to address, and if we don’t get after it, we’re going to run into a problem. We need policy in Michigan to address, most fundamentally, reliability. There are other aspects of this legislation that are important, but ... I’ll be honest with you, we’re going to keep building renewables and we’re going to retire our coal fleet and build a lot of new resources either way. But the one thing that needs to be handled is the reliability. What are reserve margins and why are they an issue in the policy debate?
Reserve margins are critical to reliability because electricity is not stored in any meaningful amount today. So that real-time supply and demand always have to match, and if they don’t, you’re either shedding load or your grid is going down — one of the two. So you keep a reserve margin, and the number across the country is 15 percent. People vary a little bit from that, but you keep 15 percent
excess supply, essentially, to deal with unpredictables. And the unpredictables are the economy spikes, or the weather spikes, or you lose a bunch of power plants in a region or all three of those happen simultaneously. We’re going to build (capacity) for our customers. Consumers is going to build for their customers. But the critical issue in Michigan is: What happens for the 10 percent of the market that doesn’t have a company like us behind them? That 10 percent is served by marketers. Those marketers do not own power plants of any significant dimension here in Michigan. What I keep telling legislators and thought leaders is, you’ve got to realize a couple things. First of all, it takes us a long time to respond to this. We can’t turn on a new plant next year. It takes four years to permit and site and construct and start one of these up, so if we’re going to offset this, we’ve got to be moving now. Aren’t there already customers who have chosen to receive discounts SEE NEXT PAGE
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on their electricity bills in exchange for having service interrupted when demand runs high?
Interruptables are part of our reserve margin, so that’s one way to create a reserve — if you’ve got people who say, “Well, I can go off.” We also take homeowners and cycle their electricity. We actually have the ability to punch off homes’ air conditioners. ... We’ll cycle it, 15 minutes off, 15 minutes on. And then there are (industrial users) who will also agree to be punched off. So the first step, and what would have happened here, our first step would have been to punch those people off. But here’s the issue, is when industrials sign up for that service, they don’t sign up to be interrupted because 10 percent of the market is not being covered. They sign up thinking we’re going to establish a viable 15 percent reserve margin and my odds of being interrupted are low. When people sign up for a discount, they should expect to be interrupted. But they shouldn’t expect to be interrupted a whole lot more than they signed up for because somebody else is failing to cover their part of the load requirement. What year is the point of no return when it comes to a shortfall in reserves?
The region begins to go short in (20)18. And it’s shorter in Michigan, so if you’re looking for people to contract ahead if the region’s short, don’t look to (importing power). Is there enough political will to pass Michigan energy legislation this term?
People ask me that, like our investors, and I say, “I don’t know. It’s an uphill climb, but we’re still climbing.” It’s really hard to predict. The Senate’s closer than the House because Mike Nofs has been working it really hard.
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We’re up against term limits (in 2018), and I don’t know who the (energy) committee lead will be, but you really could have a restart. And in the House, there were an awful lot of voices. So one of the reasons we’re going around seeing people is we’ve got a window here, and at the end of the window, I think we’re probably done at the end of this winter. I am not sanguine that next year we just pick it up and finish it off.
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Is your goal ultimately for Michigan to return to a fully regulated market?
I don’t want to say this the wrong way — I care about it for reliability, but for our profits, I don’t care about it. We’ve got plenty to do. We’re very busy with our 90 percent and things we’re doing outside of our utilities. I tell my investors ... our infrastructure is old enough, like a lot of infrastructure, that we’ve got more investment than we can really handle. A real throttle for things is customer affordability and trying to make sure that we pace investment with customers’ ability to absorb it, industries’ ability to stay competitive. Do I think the state would be better off without the 10 percent and either/or? I’ve always said the state should have made a choice, one or the other. Compiled by Jay Greene and Lindsay VanHulle
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OPINION Brownfield bill could be catalyst
L
arge-scale projects, especially in urban areas, often become a financing morass with developers angling for tax breaks, low property acquisition costs, grants and any other funds they can find. Some people wonder: Don’t they make enough money? Oftentimes, for the really big, complex projects, they actually don't. As Matt Cullen, principal of Rock Ventures, recently testified to a state Senate committee, there is an expensive gap between the cost of development in older cities compared with what developers can earn back in rent. These sites are often ridden with lead, asbestos or other contaminants. That means the cleanup, before construction or redevelopment even begins, is pricey. Many in the real estate and construction industries believe Gov. Rick Snyder’s tax overhaul in 2011 went too far in eliminating brownfield incentives. New legislation would fix the funding gap — at least for the biggest, most transformative projects. The Legislature should pass the package, which would capture a portion of state sales and income taxes, and in turn, reimburse developers for a portion of their costs. As Lindsay VanHulle and Kirk Pinho report on Page 3, a city would be limited to one so-called “transformational brownfield project” annually. The Michigan Strategic Fund could not sign off on more than five in the entire state in a single year. (Think the Pontiac Silverdome site or the redevelopment of the former Hudson’s store property in Detroit.) Few Detroit projects would reach the minimum $500 million threshold in private funding needed to qualify; smaller communities don’t often see projects with a price tag of $25 million or more. If this legislation is approved, and the proper checks and balances are baked in, the legislation could be a significant catalyst to more “big idea” projects. The effects on the state's budget cannot be ignored — that’s how the state got in trouble a few years ago — but there should be a way to provide an important financial incentive for a few truly transformative projects.
Transparency needed in no-fault fund Step one is transparency. It doesn’t appear likely that legislation on reforming Michigan’s auto nofault law will pass in the final weeks of the lame-duck legislative session. But the barrier continues to be an old issue: Disclosure of the claims data and future liability estimates of the Michigan Catastrophic Claims Association. Two bills that cleared the Senate last year would have set up a new fund to pay claims above a $545,000 benefits cap for auto insurers. We’ve editorialized in the past that no-fault reform could be sensible, but before that issue can be addressed, the financials of the catastrophic fund — created by fees paid by insured motorists — should be released. The Court of Appeals in August upheld the catastrophic fund’s exemption from the state’s Freedom of Information Act laws. The public release of the fund's claims data has been entangled in legal disputes for years. Bottom line: The fund is a public body funded by residents and businesses as part of their insurance bill. People and businesses on all sides of the issue deserve a look behind the curtain.
M
New, old Detroit must combine to become ‘now’ Detroit
ike Ellison is a remarkable performer — an actor, a singer and a poet. And last week, when he performed at Detroit Homecoming’s “creativity showcase” at Orchestra Hall (See photo on Page 1), he did what artists often do: He restated one of Detroit’s nagging issues in a powerful way: We talk about “old” Detroit and “new” Detroit, he rapped, but how about “NOW” Detroit? That’s it, isn’t it? There isn’t one Detroit. There are many Detroits that make up what’s happening now: new investment and new residents in a city with a 139-square-mile footprint that has lost well over half the population it had in 1950. And people who have been through the city’s decline fear they are being left behind. There must be room for everybody in “now” Detroit. Ford Foundation CEO Darren Walker put it another way when he decried our “binary” way of framing beliefs in this country. You have to embrace Black Lives Matter or the police, you can’t possibly be in favor of both, he said. We have lost the power of “and.” This is the third year that Crain’s Detroit Business has produced Detroit Homecoming: booking speakers, planning programming, inviting successful expats from literally all over the world (one came from Singapore) and working with talented partners like Colleen Robar, Display Group and Ja-
MARY KRAMER Publisher
mie Rae Turnbull to pull off an experience our guests tell us is like no other. And it’s all possible with the support of the Downtown Detroit Partnership, a handful of foundations and key corporate sponsors like Quicken Loans and Lear Corp. We plan everything down to the minute. But we can’t plan insights and takeaways. Attendees share memorable moments and insights, like listening to billionaire expat Steve Ballmer describe how he and his wife, Connie, will contribute to projects they think move the needle to interrupt cycles of poverty from one generation to the next. Or Walker speculating that the Ford Foundation’s founders probably never envisioned a day when a gay black man would lead the foundation. We have learned much through this Homecoming experience. One important lesson: There is something about this city that people carry with them long after they move away. A sense of pride, maybe, or a badge of
honor to say they’re from “the D.” But it’s real and it’s powerful and it can produce the foundation for a catalytic reaction to reinvest. That’s the magic of Homecoming. These former Detroiters we invite to this special experience — whether they were raised in the city or Southfield or Warren — think of themselves as “from Detroit.” Another lesson: You don’t have to live in Detroit to make a difference. We ask them to re-engage in some way: to write a check to a Detroit charity, to be a mentor to an entrepreneur, to bring a meeting or convention to the city. And they do. An expat who recently sold his company gave $2 million to Wayne State last year. Another expat who had a successful exit in selling his company this past year told me he has Detroit plans, too. Expat Tony Fadell wants to assemble high-tech go-carts in the city, the president of his new company said Friday. Now if we could get a couple of big corporate expats to think about moving a call center here or another way to create more jobs, it would be icing on that Homecoming cake. Mary Kramer is publisher of Crain’s Detroit Business. Catch her take on business news at 6:10 a.m. Mondays on the Paul W. Smith show on WJR AM 760 and in her blog at www.crainsdetroit.com.
TALK ON THE WEB Re: Shinola, Gilbert to open Shinola Hotel downtown If people keep opening hotels, maybe in the not-too-distant future, Detroit will be able to attract some major conventions or other events. The lack of rooms has kept us from being a major host for way too long. Choirmistress
The city is three to five years away yet from getting the entertainment district completed. It’s a bit premature for giant hotels. 264909
The problem is that it’s still a bou-
tique hotel here and there. Convention planners want large blocks of hotels near convention centers and similar venues. Marco Ramirez
‘Talks to begin talks’ underway on idea of Pistons downtown The keys here are concessions, parking and other streams of cash flows concerning PS&E. I cannot see how a Pistons move to the Illitch-operated arena will make economic sense for PS&E. This new arena only makes economic sense for the Illitch family. Carolyn Mazurkiewicz
The revenue dynamics are against any full-season move by the Pistons to an arena owned and operated by someone else. I will also add that fan experience extends much farther than what happens on the court. Without control of the in-venue experience (including guest services, suite/concession services, etc.), the most we might see is a couple of games. However, Tom has built a great org team in Detroit, and anything is possible. Michael Garrett
Reader responses to stories and blogs that appeared on Crain’s website. Comments may be edited for length and clarity.
Let there be light Last week, during the third annual Detroit Homecoming, we asked the mayor of Detroit to give an update to all the expats in our audience. Many of them had been away from Detroit for a decade or more. Although the mayor had a long list of worthwhile accomplishments, two stood out. What had to be a tremendous task was relighting the entire city of Detroit. With lots of new technology available and far too many streetlights that simply didn't work, the mayor took on the daunting task of replacing tens of thou-
sands of streetlights all over the city. Now it seems like daylight on most streets. It took a while, but Duggan didn't get discouraged. He just kept his head down and got the job done for the entire city. Lighting helps reduce crime as well as simply enhancing the environment. Duggan and his team then took on the blight, tens of thousands of houses that needed to be dealt with. His goal was to demolish something like 50,000 houses. A job that would take a normal man 25 years or more.
KEITH CRAIN Editor-in-chief
It’s making a difference in many parts of our city. But the surprise is that there are thousands more houses that don't
deserve to be demolished. Many of these can be and are being saved for new owners who have bought houses at bargain prices and are spending some money to fix them up. Neighborhoods are being reborn. Some folks who couldn't afford houses are now in their own homes in a new neighborhood. The revitalization of our city under Mayor Duggan is simply remarkable. And he's working hand in hand with our governor, who may be of a different party, but they get along and get things done for our city and
our state. It is something that their peers across the country should take note of. It is very pleasant to watch a Republican and a Democrat working together for the common good. Not only can it happen, but it is happening, and Detroit is proof positive. Mike Duggan has done great things for the city, and Gov. Snyder is also doing great things for the state. There is still plenty to do, but they both have an agenda and are working away at their own lists. It's nice to see government work correctly.
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Detroit Central City changes name, announces plan for affordable housing By Jay Greene jgreene@crain.com
Detroit Central City Mental Health
has been reborn with a new name — Central City Integrated Health Inc. — and a new growth plan centered on creation of new health centers surrounded by affordable housing projects under new CEO Ryan Lepper. Lepper, a metro Detroit native who came from the institutional investment community, took over Jan. 1 as CEO after longtime CEO Irva Faber-Bermudez retired. Lepper had been CFO of Detroit’s sixth federally qualified health center. Central City’s innovative growth plan calls for it to build more than a dozen new health clinics — providing medical, dental and mental health care — to be surrounded by affordable housing for its clients in Detroit, the rest of Southeast Michigan and eventually greater Michigan and other states. “Our name change reflects our plans to take this model, expand in Detroit and other cities Ryan Lepper: like Warren, “Name change Southfield and reflects our plans.” Grand Rapids, and eventually take it into other states,” Lepper said. “No other organization in Detroit is doing what we are doing. We have literally everything — housing, medical, dental and behavioral health.” Central City takes care of about 4,500 people per year. Over the next five years, Lepper said, he hopes to double clients served and expand the organization to a more than $20 million annual revenue business from $13 million this year. Lepper said the affordable housing model generates developer fees for Central City at about $500,000 per project. “We would like to do two properties each year and generate $1 million in development fees,” he said. As a federally qualified health center, Central City has integrated primary medical, dental and mental health services along with housing and support services to clients. “We want to first acquire the affordable housing, populate it with clients, then build health centers and create villages,” Lepper said. One project he expects to announce this year in Detroit will fea-
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ture up to 277 “tiny houses” of 400 to 500 square feet for clients. “The affordable housing would be anchored by a health center,” he said. “We want to get it right here first in Detroit. We have the health care; we just need to get the development down. I expect two projects this year and next year to do three more large projects, then go from there.” Lepper cited the model Central City has already established with developer Joseph Early in downtown Detroit at the historic Charlotte Apartments, west of Second
Avenue off Charlotte Street, blocks away from a wave of redevelopment in Midtown. It is also just south of Central City’s Midtown health center at 10 Peterboro St. to afford easy access for residents. Central City also offers an array of social services to the homeless by offering temporary housing for veterans and disabled people, literacy training, employment support and transportation services. The $6.1-million Charlotte project created 27 750-square-foot, one-bedroom units for homeless veterans,
people with disabilities, and others. Charlotte offers low-income rent for tenants and support services from Central City. The project was funded by City of Detroit Home Investment Partnership Program funds, Michigan
State Housing Development Authority low-income housing tax credits,
brownfield tax credits and $300,000 from the Home Depot Foundation. Kiel Opperman, co-chairman of Central City’s development committee, said Lepper’s vision of growth was met with intense excitement by board members.
“When we take a look at the environment we were able to create with the Charlotte Apartments and all the fantastic amenities that are part of that, we feel we can push that clinic model and affordable housing to other properties down the road,” Opperman said. Opperman said all of Charlotte’s apartments are occupied, and about 400 people are on the waiting list. “These are previously homeless people,” he said. “There is great demand in the Midtown area.” Jay Greene: (313) 446-0325 Twitter: @jaybgreene
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M-1 Rail track construction signals expansion on Woodward unlikely By Bill Shea bshea@crain.com
The notion of the M-1 Rail streetcar chugging north to the suburbs on Woodward Avenue has come to a literal dead end, at least for the near term. Track construction in Detroit is scheduled to end before Thanksgiving, and one of the final portions of work reveals that long-term transit thinking no longer includes more rail service on Woodward Avenue. The northern terminus of the line just north of East Grand Boulevard in Detroit’s New Center Area is among the last construction zones, and the track hasn’t been laid to allow for an immediate northern extension of the line. It ends at M-1’s maintenance garage and doesn’t have a spur line in the street to allow easy future track extension northward without rail realignment and Woodward reconstruction in front of M-1’s Penske Technical Center. Instead, project organizers say the 3.3-mile streetcar system, which will run between E. Grand and Larned Street when passenger service begins next spring, will feed into a train-like bus rapid transit (BRT) commuter system that has been proposed for the entire length of Woodward (and for Detroit’s other major arteries, Gratiot and Michigan avenues). Passengers would transfer from the QLine, as M-1’s Woodward streetcar line is called, to the BRT service, or to the traditional city and suburban bus sys-
BILL SHEA/CRAIN’S DETROIT BUSINESS
The end of the M-1 Rail on the north end of Woodward, looking south, shows no spur for further construction north. tems that traverse the route. M-1 issued a statement on Thursday that downplays the difficulty of any future rail expansion on Woodward: “From the inception of the project, M-1 Rail made sure that the design did not prohibit future extension of the route. Our infrastructure, track and stations can support additional streetcar or light rail connectivity, whether connected from the north, south, east or west. The (Regional Transit Authority of Southeast Michigan) plan connects the QLine to the north specifically by bus rapid transit, and that is a plan we support.” Since the idea was hatched in 2007 to create a privately funded rail line on Woodward — there also was a city-led public rail project for Woodward that
died in 2011 amid Detroit’s financial collapse — M-1 organizers have said the streetcar line is a “circulator” system that would plug into other forms of commuter mass transit, such as the legacy bus services, Amtrak, and the Detroit People Mover. Connecting to the proposed BRT line, and traveling alongside it on Woodward, also is part of M-1’s plan. “The RTA plan is to have bus rapid transit on Woodward to provide for the long distance travel from Oakland County into Detroit and vice versa,” said Carmine Palombo, deputy executive director of the Southeast Michigan Council of Governments regional planning agency that is the clearinghouse for transit efforts locally. “The QLine was never envisioned by the developers as the long-distance solution in the corridor. It
was designed to provide access. It can be extended in the future if funding can be found.” Higher-speed light rail, in theory, could be built north of M-1’s tracks as commuter rail, and passengers could switch lines at the New Center station. Any effort to extend rail, either higher-speed or similar to M-1’s speed-oftraffic service, north along Woodward would have to be led by government, M-1 organizers have said for years. Any expansion of the streetcar to the obvious routes of Michigan and Gratiot avenues also would happen under public control of the system. Detroit streetcar service began under a city charter in 1863 with privately owned horse-drawn cars on tracks. Streetcar operations, long-since turned into a city department, ended in favor of buses in 1956. M-1 is a nonprofit whose $187.3 million budget is funded by corporations, foundations, hospitals, but also federal, state and local tax dollars, making it a hybrid private-public effort. Its original intent was to avoid government red tape to quickly build a streetcar that would boost economic development by moving residents, workers and visitors along the city’s chief business and entertainment district. Eventually, it fell under government regulation. The city’s since-scrapped plan to construct a more traditional commuter light rail line on Woodward, from downtown
to the city limit at Eight Mile, had been estimated in 2011 to cost $528 million. Some transit insiders have estimated it would cost even more than that to reach Eight Mile, and to link the entire 27 miles of Woodward from downtown to Pontiac would reach into the billions of dollars — money that largely would have to come from the federal government and could take decades to secure. No one currently is advocating more rail service on Woodward beyond the QLine, Palombo said. “Many people have asked me about the situation. They have asked if (the QLine on Woodward) is just phase one. The answer is ‘no,’ this is all that has been discussed. There is no phase two, at least not yet and not by the private sector,” he said. “Could it go further north in the future, or south and east down Jefferson for that matter? The answer is ‘yes.’ I have never seen a cost estimate to do either, but it is possible. To go to Eight Mile or beyond will be expensive.” The bus rapid transit service has been pushed since 2011 by the city, regional and state leaders, and now is the focus of a $3 billion, 20-year property tax issue put on the Nov. 8 ballot by the Regional Transit Authority of Southeast Michigan in Wayne, Oakland, Macomb, and Washtenaw counties. That same tax also is intended to fuel M-1 Rail operations beginning in 2027.
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SPECIAL REPORT: HEALTH CARE EXTRA
A BLUEPRINT FOR
BETTER HEALTH CARE Michigan project to map out plan for linking physicians, hospitals, social service organizations By Jay Greene jgreene@crain.com
Michigan health officials next year will embark on an ambitious pilot project that they hope will help mend ills the health care system isn’t equipped to fix alone. The goal is to remake the state’s health care system by linking it to social service organizations to more comprehensively coordinate care for patients. Funded by the Affordable Care Act and a $70 million state innovation model grant to Michigan’s Department of Health and Human Services, the three-year experiment will start this January in five Michigan “community innovation” regions: Washtenaw and Livingston counties, Genesee County, Jackson County, Muskegon County and 20 counties in northern lower Michigan. While providers will eventually use the program to help coordinate care for all patients with acute care needs and chronic diseases, the program next year will start by targeting high and un-
necessary use of emergency department services. In 2018, the five participating regions will choose additional goals that could include reducing obesity, depression, infant mortality, highcost health care users and individuals with multiple chronic diseases. Paul Valenstein, M.D., co-chairman of the State Innovation Model working group for Washtenaw and Livingston counties, said frequent ER users often have untreated conditions, don’t have a regular primary care provider and generate high costs to the health care system. “This is a test to evaluate what we do and, if successful, will be replicated across Michigan,” said Valenstein, director of clinical microbiology at St. Joseph Mercy Health System and head of pathology with IHA Inc., an Ann Arbor-based multispecialty medical group. Under what is being called Michigan’s Blueprint for Health Innovation, each region will have a coordinating agency that will be responsible for managing the project that will link medical prac-
tices certified as patient-centered medical homes, participating hospitals in accountable systems of care, payers and social service organizations that range from mental health providers to housing agencies. HHS is in the final stages of signing contracts with regional managing organizations and selecting an information services company to be the central repository of clinical and patient use data that will be used to manage costs and monitor quality, said Elizabeth Hertel, HHS director of policy and legislative. “We are hoping to achieve improved quality and measures that cause negative health outcomes in the ER as well as behavioral health, housing services and medical services,” Hertel said. Besides ensuring that medical and social service providers communicate, Hertel said, the key will be developing payment incentives and collecting and sharing data. SEE BLUEPRINT, PAGE 10
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“All have to be involved,” she said. “The devil is in the details. We are working with them to make sure we are addressing their concerns and needs.” Managing the regions will be the Ann Arbor-based Center for Healthcare Research and Transformation in Washtenaw and Livingston counties, Jackson Health Network in Jackson County, Muskegon Health System in Muskegon County, the Flint Health Coalition in Genesee County and a coalition of health departments in the northern region. Each region is furiously creating the infrastructure and necessary community connections to prepare for the rollout early next year. “We need to identify who is a frequent user of ERs, using existing data networks like (the Michigan Health Information Exchange) but also a central data aggregator” to collect and share clinical and utilization information among participants, Valenstein said. “We also need humans (at medical practices and ERs) to exercise judgment and refer patients to appropriate agencies to address particular problems they have,” he said. Valenstein said connections with social service agencies are important because frequent ER users and other high-cost patients have problems that could range from mental health, substance abuse, poor housing, lack of nutrition and inability to pay for medications. “We need to know why they are using the ER. Do they have an end-of-life issue? They may need palliative care. Do they have an opioid issue? They may need substance abuse counseling. The ER is not the best setting. We want to flag people and get them referred,” Valenstein said. Marianne Udow-Phillips, director of the Center for Healthcare Research and Transformation, said lessons learned from the blueprint are expected to lead to quality improvements and cost reductions in the larger health care delivery system. “If we can reduce ER use, we can lower costs for Healthy Michigan (Medicaid) and for the traditional Medicaid program,” Udow-Phillips said.
Keys to success Among the important keys to the blueprint program are the state’s 400 certified patient-centered medical homes, said Jean Malouin, M.D., medical director of the Michigan Primary Care Transformation Project, which is overseeing the program. A medical home is a physician practice that has agreed to follow guidelines that include expanded office hours for patients, a registry for tracking chronic diseases and ongoing care coordination with laboratories, pharmacies, imaging centers and specialty physicians. Practices receive bonus payments for hitting various targets. As Michigan’s federal MiPCT grant expires in December, state officials decided to continue the program through at least 2019 by folding it into
S
Paul Valenstein: Connections are important.
Marti Walsh: Working closely with patients,
the $70 million SIM grant. Over the past five years, MiPCT’s 1,953 providers, including nurse practitioners and physician assistants, have cared for 1.2 million patients, Malouin said. At least 15 other payers such as Blue Cross Blue Shield of Michigan, Blue Care Network, Priority Health, and the Medicare and Medicaid programs have their own incentive programs to reward practices. For example, Medicare pays practices an additional $9.50 per member per month, which includes $4.50 for care management staffing. “Net savings for the first two years of the program was $336 million with a return on investment of $8.56 (for every $1 spent). We are really thrilled about that,” said Malouin, adding: “Preliminary reports show sustained savings over the next three years.” “My personal obsession is to sustain the (600) care managers and turn this into an ongoing program,” said Malouin. Care managers are hired by the medical practices to help coordinate care for the patients seen in the medical homes. State officials will also rely on another new federal Obamacare grant to continue the medical home program under the five-year Comprehensive Primary Care Plus project. Participating in the program, besides Medicare and Medicaid payers, are such commercial payers as Blue Cross and Priority Health. Medicare will offer $2.50 to $4 per member per month bonus payments for hitting quality and usage targets. One of the goals of the blueprint is to more than double the number of medical homes in Michigan to 1,000 by 2020 and patients served to more than 2.5 million. Along the way, HHS wants to cut from 16 percent to zero the number of patients with no primary care provider, said an HHS state report. By increasing access to primary care and other health system improvements, HHS also hopes to reduce unnecessary hospital admissions, readmissions that occur within 30 days, ER visits and admissions to neonatal intensive care units and those inpatient admissions that could be prevented by having access to a provider, the HHS report said. Malouin said the most effective way to reduce overall health care costs is to avoid unnecessary hospital admissions and readmissions. “We decrease admissions and hospital days by doing interventions,” she said. “The best way to do this is with transition calls.” A transition call works like this: Care managers call patients within 48 hours after discharge to make sure they are doing well and understand SEE NEXT PAGE
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what’s next. The key is making sure they get enough rest, take their medications and make their follow-up appointments, Malouin said. “I am a practicing physician myself, and these transitions-of-care calls really help quite a bit,” she said.
Coordinating care At CHRT, Udow-Phillips said the SIM workgroup’s 30 members are developing a single plan for Washtenaw and Livingston counties to coordinate care among the free clinics, homeless shelters, health departments, medical care and mental health providers. “We will hire a data aggregator to show the impact,” she said. “We have reasonably good data in the medical care system, but we have very poor and not coordinated data on what happens in human services. ... We want to add information about who gets referred to mental health and homeless shelters and do those interventions.” Marti Walsh, M.D., IHA’s chief quality and population health officer, said IHA, St. Joseph Mercy and the University of Michigan Health System
will be working closely to ensure that patients are medically stabilized in the ERs and given alternatives for follow-up care. “One thing will be getting them hooked up with a primary care provider and coordinate that for the patient,” said Walsh, who is co-chairman of the accountable systems of care and medical home subcommittee for IHA, St. Joe and UMHS. “We already do a lot of that,” coordinating with social services, Walsh said. “(The blueprint) is proposing greater capabilities for the patient (and) more care transformation” to reduce inappropriate ER use and connect patients to social services. Amy Schultz, M.D., executive director for population health with the Jackson Health Network, said coordinating medical care with social services has been a goal the network has been working toward the past several years. The network is a partnership between physicians, community leaders and Henry Ford Allegiance Health.
“We have been working for the past five years to align providers around cost and quality,” said Schultz, who is a preventive medicine specialist. “Now we have an opportunity to create a network with social services. The state will help accelerate that and get everybody to work together on the same page.” Schultz has seen the benefits of hospitals working closely with social services. For example, Henry Ford Allegiance staff noticed a pregnant woman with diabetes kept showing up at the emergency department. The hospital treated her each visit, but she kept on returning. “It wasn’t until a community health worker visited her and found she was living in a tent that it became clear the real issue was lack of stable housing (and access to refrigeration for food and medication),” said Schultz, who also is the medical director of the Jackson County Health Department. “The medical system alone couldn’t address the problem. This model focuses
on how integrating with community services can have a much greater impact on health.”
Incentive plans While funding for administration of the blueprint and to pay the data aggregator will come from the $70 million federal grant, reimbursement to the physician practices, and, in turn, the social service and community innovation system, will come through Medicare, Medicaid health plans and other insurance companies, Hertel said. “We are relying on payer partners to come up with alternate payment models,” she said. Total payments to providers for the program is unknown at this time. “It depends on volume. There is a budget for the provider reimbursement, but there isn’t a cap,” Udow-Phillips said. Mike Koziara, Priority Health’s COO, said the Grand Rapids-based health plan will continue to fund the medical homes in its network, as will the other payers. Priority also will pay any Medicaid provider in the Muskegon region for like services where it is participating in the blueprint, he said. “We will repackage the payment methodologies, and it will flow through the providers” to the social service agencies, Koziara said. “This is something we have been advancing for years and hopefully can expand the medical home program through the blueprint.” Koziara said medical homes will be paid for reduced ER use in two ways. First, Priority will measure ER use for all patients involved in the program statewide, then compare performance of its own medical homes. “We will measure and reward at the macro level and practice level and create incentives to reward primary care physician-treatable ER visits,” he said. “If we reduce costs in total, we will share those cost savings.” Besides the medical home providers in Muskegon, Priority will expand the program by adding other physicians who participate in the Medicaid program, Koziara said. “We haven’t had any huge success in reducing ER use. You need to have a multifaceted strategy to have a sustainable impact,” he said. In northern Michigan, however, Priority quickly identified why patients were using hospital ERs more than other regions, Koziara said. “We had high ER use rates in Northern Michigan and looked closely at it,” he said. “We found there are no urgent care centers and no after-hour care (at physician offices). They would go to the ER and do what you expect.” Koziara said the good thing about the blueprint is that it embraces the entire community. “This is more than just the payer and provider,” he said. “As hard as Priority works to change care with incentives and programs, you have fee for service that dominates providers and hospitals, and you don’t get the progress you need. You get a few more people to the party, and you can bend the cost curve.” Jay Greene: (313) 446-0325 Twitter: @jaybgreene
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SPECIAL REPORT: HEALTH CARE
Michigan received $709 million from Obamacare to improve health system By Jay Greene jgreene@crain.com
Michigan has been one of the nation’s more aggressive states in seeking funds from the Affordable Care Act in the six years since the controversial bill was narrowly approved by Congress in 2010 and signed into law by President Barack Obama. Some $709 million, or 2.5 percent, of $28.5 billion allocated to states in 94 grant programs through 2015 under Obamacare, as it is often called, has reached Michigan, which ranks 11th overall in funding. That’s $72 per person. The bulk of those funds have gone to state government ($240 million), community health centers ($329 million) and prevention efforts ($81 million), according to a report by the Center for Healthcare Research and Transformation in Ann Arbor.
In 2015 alone, Michigan received $219.6 million, including $118 million to health centers, $61 million to state agencies and $22 million to support the health workforce. Michigan’s latest ACA grant is for a $70 million state innovation model (SIM) program that is designed to allow the state to improve its health care delivery system. The grant, which is part of
MICHIGAN GRANT FUNDING FROM THE ACA 56.1% Health and community-based organizations
By recipient for fiscal year 2015
28.8% State agencies 8.0% Local agencies 3.9% State colleges and universities
0.4% Private colleges and universities 1.1% Other 1.7% Tribal organizations
Source: Center for Healthcare Research and Transformation
Obamacare’s $100 billion in mandatory spending on programs through 2019, will help administer the Blueprint for Health Innovation under the state Department of Health and Human Services. It is designed to help reduce wasteful spending, experiment with innovative payment models and integrate care coordination of physicians, hospitals, behavioral health, social service agencies, payers and
health information aggregators. While providers will use the program to help coordinate care for all acute and chronic diseases, the SIM grant will target high and unnecessary use of emergency department services next year. In 2018, the five participating regions will choose among goals to reduce obesity, depression, infant mortality or high cost patients. Gov. Rick Snyder and the HHS have “been pretty aggressive in applying for grants and drawing down dollars that are available,” said Marianne Udow-Phillips, CHRT director. “Community organizations like ours are all for it. The ACA is a lot more than policy issues and insurance coverage. I’d like people to understand there are a lot of financial benefits that go beyond insurance.” While Obamacare’s 2,000-plus pages primarily expanded private insurance access and offered states the ability to expand Medicaid coverage, the legislation also contained many pilot projects intended to address the cost and quality conundrum. “This is one of the more innovative things in the ACA,” said Udow-Phillips. “People often talk about ACA as not having a focus on the cost of health care, just insurance. There are great innovative projects addressing costs beyond the medical care walls.” In early 2013, Snyder, who was one of a handful of Republicans in Michigan to support Medicaid expansion, ordered HHS to apply for the SIM grant through Obamacare. Michigan then became one of 11 states to receive approval from the Centers for Medicare and Medicaid Services Innovation Center. Jay Greene: (313) 446-0325 Twitter: @jaybgreene
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NEI funders commit to $28.5 million goal Wilson Foundation joins groups in third round of initiative’s funding By Sherri Welch swelch@crain.com
A quarter of the New Economy Initiative’s funders have committed to a third round of funding for the 9-yearold economic development effort, including a newcomer, the Ralph C. Wilson Jr. Foundation. The latter is led by David Egner, former executive director of NEI and former president of the Hudson-Webber Foundation, one of the original funders of the initiative. Egner took the helm of the Grosse Pointe Farmsbased Wilson Jr. Foundation last November. Three of the original funders of NEI have joined Wilson in making commitments totaling $13.5 million toward a goal of $28.5 million to continue the foundation-led economic development efforts through 2020. They are the New York City-based Ford Foundation, Miami-based John S. and James L. Knight Foundation
and Detroit-based McGregor Fund. Announcement of a third round of funding comes in tandem with the New Economy Initiative’s release of
data pointing to the $2.9 billion impact the initiative has had in Southeast Michigan. The latest round of funding follows collective commitments of $100 million to launch the effort in 2007 and a second $35 million round in 2014. Twelve national and local foundations have provided funding for NEI. Aside from the three that have recommitted to the initiative, the others are C.S. Mott Foundation, Community Foundation for Southeast Michigan, Hudson-Webber Foundation, Kresge Foundation, Max M. and Marjorie S. Fisher Foundation, Skillman Foundation, W.K. Kellogg Foundation, William Davidson Foundation and the New York-based Surdna Foundation. “We’re in discussion with all of our (funders) ... about continuing our work,” said Matthew Lewis, communications officer for the NEI. To date, NEI said, it has granted $96.2 million to organizations and programs supporting entrepreneurs. According to an analysis conducted by PricewaterhouseCoopers LLP and the W.E. Upjohn Institute for Employment Research, NEI’s support has helped entrepreneurs and small businesses generate $2.9 billion in real economic output and create 17,490
jobs in Southeast Michigan. The analysis of the New Economy Initiative's impact also showed: 4,400 companies were provided with Pamela Lewis: service by NEI “Now is time to grantees through maximize impact.” 2015. 179,571 people attended events in metro Detroit’s entrepreneurial network. More than 1 million square feet of entrepreneurial space has been activated. NEI’s grants leveraged $232 million in additional program dollars through matches from NEI grantees. Companies supported by NEI generated $1.9 billion in real gross domestic product. Nearly 40 percent of the companies supported by the New Economy Initiative since 2009 are minority-owned, double the national average, NEI said in a news release. As a result of its grants, NEI said, it has helped to increase the number of business support organizations and programs in the region from
fewer than 10 to more than 50 since 2007. And almost two-thirds of local entrepreneurs surveyed for the analysis said the level of support for starting and growing a business has increased in the past five years, NEI said. “NEI has become ‘a critical catalyst’ in Detroit’s revival and a model for other U.S. cities,” Bruce Katz, centennial scholar at the Brookings Institution and founding director of the Metropolitan Policy Program, said in the news release. “The creation of a consortium of foundations has not only helped pool large amounts of philanthropic capital, but has also provided a vehicle for collective impact. NEI is a case of the whole being greater than the sum of its parts.” But there’s still work to be done, NEI Director Pamela Lewis said in the news release. “Now is the time to maximize the impact of this initiative and ensure that the foundation of support for entrepreneurs that has been built is sustained and strengthened,” she said. Just as Detroit helped to create America’s middle class, it’s “showing once again that it can be a model for the nation and for philanthropy.” Sherri Welch: (313) 446-1694 Twitter: @sherriwelch
Crain’s summit to focus on ‘consumerism’ of health care The Nov. 17 Crain’s Health Care Summit will focus on how the sector is changing as the industry focuses more on consumers. The “consumerism” of health care will be discussed in three parts: for employers, doctors and health systems. Keynote speaker Ben Umansky, a managing director with the Washington, D.C.-based Health Care Advisory Board, will discuss the industry’s big-picture changes. New to the summit will be the Healthy@Work innovation challenge. Entrepreneurs will pitch ideas on how employers can engage millennials in the health care discussion. The audience will vote on a winner. Companies interested in taking part can apply at www.crainsdetroit.com/healthy. With a new president chosen by the time of the event, a panel will talk about the changes in store for Detroit-area health care companies. Among the speakers will be Jared Bernstein, a national health care economist who has been an economic adviser to President Barack Obama. The event runs from 7:30 a.m. to 1 p.m. at the Troy Marriott. To register, go to www.crainsdetroit.com/events.
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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 1 9 , 2 0 1 6
COSTAR GROUP INC.
The 53-unit Marwood Apartments building is the first acquisition of the new nonprofit Develop Detroit LLC.
Develop Detroit buys apartment building near QLine’s north terminus By Kirk Pinho kpinho@crain.com
REGISTER TODAY
THURSDAY
NOV. 17
TROY MARRIOTT 7:30 A.M.- 1 P.M. TITLE TITL E SPONSO SP SPONSOR ONSOR R
The Consumerism of Health Care The annual Crain’s Health Care Leadership Summit provides opportunities to learn about the everchanging landscape of the health care industry as well as fortify professional connections to help navigate these changes. Join local business leaders and health care providers to discuss the latest in innovative health care strategies and best practices for 2016 and beyond.
Register at crainsdetroit.com/events, or call (313) 446-0300
Sonya Mays has closed on the first deal for her Develop Detroit LLC with the $2.05 million purchase of the Marwood Apartments four blocks north of the under-construction QLine streetcar line’s northern terminus. Mays, a senior adviser to former Detroit Emergency Manager Kevyn Orr from 2013-15, announced the nonprofit Develop Detroit’s formation this summer with the goal of working on multifamily development and acquisition in the city’s neighborhoods. The 53-unit Marwood Apartments had been owned by Joshua Weinberg. The $2.05 million sale price for the 1924 building amounts to $38,679 per unit. According to CoStar Group Inc., a Washington, D.C.-based real estate information service, the building at 53 Marston St., just east of Woodward Avenue, has 20 one-bedroom units with an average asking rent of $442 per unit; 30 two-bedroom units asking $590 per unit; and three
three-bedroom units renting for $649 per unit. The average asking rent amounts to 59 cents per square foot, according to CoStar. The deal is just one brokered recently by Bloomfield Hills-based Income Property Organization, which represented Weinberg and Develop Detroit. Two months ago, a $17 million deal for the 259-unit Bloomfield Square Apartments at South Boulevard and Squirrel Road in Auburn Hills closed between seller Robert Levin and purchaser Loop Investments, described as an Israeli investor. The ownership entity, Bloomfield Loops Square LLC, is registered to Elliot Indig, an attorney with West Bloomfield Township-based law firm Aidenbaum Schloff and Bloom PLLC. CoStar lists the owner of Bloomfield Square as Yechiel Lopiansky. The sale price amounts to $65,637 per unit. Kirk Pinho: (313) 446-0412 Twitter: @kpinhoCDB
Michigan banks show improved health Michigan banks continued to reflect their return to health following the Great Recession, according to the quarterly report issued by Fort Lauderdale, Fla.-based BauerFinancial Inc., a ratings agency that evaluates the health of banks and credit unions. At the bottom of the recession, in March 2010, BauerFinancial gave 15 banks in Michigan, including eight in Southeast Michigan, its lowest rating of zero stars. But in its newest ratings of the 131 banks with operations in Michigan, only two got zero stars. Of the 38 in Southeast Michigan, just one, Urban Partnership Bank of Chicago, got zero stars. Twenty got the top rating of five stars; 15 got four stars. BauerFinancial evaluates capital-to-debt ratios, profit and loss trends, delinquent loans and write-offs, historical data, liquidity, reserves, repossessed
assets, community reinvestment ratings and market versus book value. These are the five-star banks with a presence in Southeast Michigan: Ann Arbor State Bank; Chelsea State Bank; Comerica Bank, Dallas; Crescent Bank & Trust, New Orleans; Crestmark Bank, Troy; Dearborn Federal Savings Bank; Fifth Third Bank, Cincinnati; First Independence Bank, Detroit; First State Bank, St. Clair Shores; Hantz Bank, Southfield; Huron Valley State Bank, Milford; Independent Bank, Grand Rapids; KeyBank, Cleveland; Level One Bank, Farmington Hills; Monroe Bank and Trust; PrivateBank and Trust, Chicago; Sterling Bank and Trust, Southfield; Talmer Bank and Trust, Troy; TCF National Bank, Wayzata, Minn.; and University Bank, Ann Arbor. Tom Henderson
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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 1 9 , 2 0 1 6
DEALS & DETAILS CONTRACTS
Your People LLC, Huntington
Woods, was named the agency of record for the Coalition on Temporary Shelter, Detroit, a nonprofit that provides emergency shelter, transitional and permanent housing and support services for homeless families. Website: yourppl.com. Yottabyte LLC, Bloomfield Township, a provider of softwaredefined data storage and data centers, has contracted with the University of Michigan, Ann Arbor, for Yottabyte’s research cloud to help scientists in the analysis of sensitive data sets restricted by federal privacy laws, proprietary access agreements or confidentiality requirements. Website: yottabyte.com. Birchtree Dental Center, Westland, has announced an affiliation with Great Expressions Dental Centers, Southfield, that will allow Birchtree to offer extended hours and services. Websites: birchtreedental.com, greatexpressions.com.
MOVES
Foster Swift Collins & Smith PC,
Southfield, has moved its law office from 32300 Northwestern Highway, Farmington Hills, to 28411 Northwestern Highway, Suite 500, Southfield. Telephone: (248) 539-9900. Website: fosterswift.com.
NEW PRODUCTS
Endra Life Sciences, Ann Arbor,
launched the Nexus 128+, adding up to twice the photoacoustic sensitivity to its previous computed tomography imaging system. Website: endrainc.com.
NEW SERVICES
ZipLogix LLC, Fraser, announced
new features to its zipTMS, a real estate transaction management system. It adds collaborative functionality for brokerage accounts, increases transaction organization and enhances transaction document retention. Website: ziplogix.com. SRG Global Inc., Troy, a subsidiary of Guardian Industries Corp., a manufacturer of coatings on plastic for the automotive, commercial truck and consumer goods industry, announced its G-Coat tint-overchrome process that improves paint adhesion to chrome-plated plastic parts. Website: srgglobal.com. The Shirt Box, Farmington Hills, a men’s clothing retailer, launched The Sock HookUp, a service that selects and delivers a pair of fashion-forward socks to a subscriber’s door every month. Website: sockhookup.com. Drew Technologies Inc., Ann Arbor, a subsidiary of Opus Inspection, East Granby, Conn., a manufacturer of vehicle communication and equipment for the vehicle inspection and automotive service industry, has
released its remote assisted programming service, which allows any repair shop to update software in a vehicle’s computer system during service or reprogram when replacing parts. Website: drewtech.com.
Altair Engineering Inc., Troy, released new features to its HyperWorks software suite. HyperMesh 14.0 improves workflows and provides a complete framework of model building and stress analysis features for aerospace. Website: altair.com.
Deals & Details guidelines. Email cdbdepartments@crain.com. Use any Deals & Details item as a model for your release, and look for the appropriate category. Without complete information, your item will not run. Photos are welcome, but we cannot guarantee they will be used.
WEDNESDAY SEPT. 21
New Roles for Philanthropy in Metro Detroit: A Perspective From the Kresge Foundation. 8-9:30 a.m. Troy
Chamber of Commerce. Speaker: George Jacobsen, program officer, Kresge Foundation. Rehmann, Troy. Free for Troy Chamber members; $10 for nonmembers. An additional $5 will be charged to those registering the day of the event. Contact: Jaimi Brook, phone: (248) 641-8151; email: theteam@troychamber.com. Lawrence Technological University President’s Symposium. 7-9 p.m.
Lawrence Technological University. “NAFTA Revisited: The Way Forward in the 21st Century Global Economy” will review dramatic changes in the global economy since NAFTA took effect in 1994. The moderator is Thomas Marx, professor and director of the Senior Service College Fellowship program and Center for Leadership at LTU. Panelists will be Douglas George, consul general of Canada in Detroit; Juan Manuel Solana Morales, consul general of Mexico in Detroit; and Paul Traub, senior business economist, Federal Reserve Bank of Chicago. LTU, Southfield. Free. Contact: Donna
CALENDAR
Kress, phone: (240) 204-3054; email: dkress@ltu.edu.
THURSDAY SEPT. 22
Detroit Riverside Chat. 5-8 p.m.
Marketing and Sales Executives of Detroit. Jay Farner, president and chief marketing officer, and John Fikany, vice president of strategy, both of Quicken Loans, talk about their company’s innovation and technology-driven culture. The moderator will be Dave Zilko, CEO of Fuel Leadership. International Institute of Metropolitan Detroit, Detroit. $45 members; $60 nonmembers. Website: www. msedetroit.org/events. Inside the CEO Mind. 8-10 a.m. Detroit Regional Chamber. Patti Poppe, president and CEO of CMS Energy Corp. and Consumers Energy, will talk about her ideas on leadership success, strategic planning and commitment to customer-first management. Emagine Theatre, Royal Oak.
$30 members; $55 nonmembers. Contact: Marianne Alabastro, phone: (313) 596-0479; email: malabast@detroitchamber.com.
FRIDAY SEPT. 23
Building a Winning Culture Leadership Breakfast. 7:30-9 a.m. The
Business Round Table. The speaker is Tom Burt, executive vice president and COO of Duncan Aviation. Birmingham Country Club, Birmingham. $35. Contact: Christa Moxon, phone: (269) 685-7829; email: christa.moxon@ thebusinessrt.org. Calendar guidelines. Visit crainsdetroit.com and click “Events” near the top of the home page. Then, click “Submit Your Events” from the drop-down menu that will appear. Fill out the submission form, then click “Submit event” at the bottom of the page. More Calendar items can be found at crainsdetroit.com/events.
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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 1 9 , 2 0 1 6
ADVERTISEMENT SECTION
PROFESSIONAL SERVICES
PEOPLE: SPOTLIGHT
PulteGroup names CEO, adds young Pulte to board
MANUFACTURING Harve C. Light & Alexander A. Calderone Partner / Partner Calderone & Light, LLC Harve Light, former Senior Vice President and leader of Comerica Bank’s middle market workout group, has joined the firm of Calderone Advisory Group in the role of Partner. In connection with this move, the firm will be renamed to Calderone & Light, effective immediately. Light will assume the role of overseeing the firm’s turnaround and crisis management practice, which provides advisory services to middle market businesses and their creditor constituencies during distressed situations.
Carleen Gray Vice President of Commercial Sales STAHLS’ STAHLS’, a global leader in the garment decoration industry, has appointed Carleen Gray to vice president of commercial sales. Gray will retain her current role as vice president of marketing and chief marketing officer. Under Gray’s leadership, STAHLS’ will continue to expand its partnerships with licensed brands, major sports leagues and colleges, as well as further develop its apparel manufacturing division. Gray will also oversee growth of STAHLS’ E-Sports and E-Commerce retail sectors.
Greg Peirce Vice President and Chief Technology Officer STAHLS’ STAHLS’, a global leader in the garment decoration industry, has promoted Greg Peirce to vice president and chief technology officer. With more than 20 years of IT experience, Peirce will be responsible for consolidating STAHLS’ North American IT operations, including implementing solutions that streamline all business operations and improve customer experience. Peirce leads a global team focused on creating technologies in a culture that values innovation and speed to market.
Katrina Agustin
Vice President of Enterprise Architecture and Solutions Delivery Carhartt, Inc. Carhartt has promoted Katrina Agusti to vice president of enterprise architecture and solutions delivery. Agusti will develop an IT application roadmap to enable Carhartt’s corporate strategies, as well as define and deliver strategic IT initiatives.
Alex Calderone of Calderone Advisory Group has taken on a new partner, Harve Light, and renamed the firm to Calderone & Light. He will co-lead the firm’s turnaround and crisis management group, while also assuming responsibility for its expanding litigation support practice. Calderone recently received the Turnaround Management Association’s 2016 “Top of the Class” award. This award celebrates emerging leaders who have reached significant success in the turnaround industry before age 40.
ACCOUNTING
AUTOMOTIVE
Mike Dingwall
Andrew J. Hanna
Assurance Partner
Director of Research & Development
RSM US LLP
Mectron Engineering
Mike joins RSM, the 5th largest accounting firm in the U.S., which recently opened its first office in Michigan. He will lead this office utilizing his 25 years’ experience as an auditor and advisor to domestic and international clients. Previously, he was an audit partner at KPMG leading their Detroit middle market practice and led Moore Stephens Doeren Mayhew’s International Service Group assurance practice. Mike focuses on the automotive, manufacturing, real estate and technology industries.
Mectron Engineering, a leader in inspection systems technology, has promoted third generation Andrew Hanna to Director of Research and Development. The Hanna family founded Mectron in 1968. Andrew started working as an engineer in 2013. He graduated with an undergraduate from the University of Michigan and his Masters in business from University of Notre Dame. Hanna’s new roles include overseeing product development, researching new inspection techniques and leading Mectron’s development team.
HEALTH CARE Terrisca Des Jardins
Administrative Director Physician Organization of Michigan ACO Physician Organization of Michigan Accountable Care Organization, LLC (POM ACO) is pleased to announce the appointment of Terrisca Des Jardins, MHSA, as Administrative Director. With nine physician organizations and approximately 5,200 provider participants across the State of Michigan, POM ACO serves more than 100,000 Michigan Medicare beneficiaries and is the second largest ACO in the United States in the Centers for Medicare and Medicaid Services Medicare Shared Savings Program.
PEOPLE ON THE MOVE provides an opportunity to announce the selection, promotion, appointment, leadership or role responsibility expansion of an employee, colleague or team member across industries and sectors. For more information or questions regarding advertising in this section, please call Lynn Calcaterra at (313) 446-6086 or email: lcalcaterra@crain.com
PulteGroup Inc. said its president, Ryan Marshall, is taking over immediately as CEO, ending a months-long campaign by the homebuilder’s founder for a change in leadership, and Bill Pulte, managing partner of Bloomfield Hills-based Pulte Capital Partners LLC,
was named to the PulteGroup board. Marshall will replace Richard Dugas, who will remain as executive chairman of the board until the Atlanta-based company’s 2017 shareholder meeting. Dugas in April announced plans to retire next year, after Bill Pulte, the company’s founder and largest shareholder, began pressing for a change in direction. Dugas had been CEO since 2003. The founder and new board member are grandfather and grandson and share the same name. The younger Bill Pulte’s company is an investment firm unrelated to PulteGroup Inc. PulteGroup in 2014 moved its headquarters from Bloomfield Hills to Atlanta, citing the growing share of its customer base outside the Midwest. Bill Pulte: Elected to board.
New communications, media directors named Detroit Mayor Mike Duggan has tapped two former journalists to serve in communications positions in his administration. Peter Kadushin, 32, a former New York Post and New York Daily News reporter, is the new director of communications, and Joseph Harris, 38, is the new director of media services. Kadushin was deputy communications director of New York City and a deputy communications director for the United Federation of Teachers. He replaces John Roach, who was communications director since Duggan took office in 2014 and now is director of media relations. In his new role, Harris, a former WJBK-TV2 videographer and editor, will oversee the city’s two cable television channels and video production for Duggan’s administration and the Detroit City Council. The city’s former media services director, Aaron Alfaro, left the position recently.
Visteon adds Bergman Van Buren Township-based
Visteon Corp. elected former Bright House Networks LLC President Nomi Bergman to its
board of directors, effective Oct. 1.
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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 1 9 , 2 0 1 6 CRAIN’S DETROIT BUSINESS
September 19, 2016
CSP
FROM PAGE 3
American sales channels for automotive composite products. CSP has 14 locations globally, 11 of them in the U.S., and has more than 3,000 employees. The company molds structural and exterior auto parts, including body panels on the 2016 Chevrolet Corvette and hard tops for the Jeep Wrangler. Teijin is betting that more stringent pollution regulations will accelerate the move toward lighter materials in cars and build a $2 billion business for automotive composites by 2030. The maker of chemicals and materials has stepped up acquisitions under CEO Jun Suzuki, who took the helm in January 2014. Teijin Advanced Composites America Inc., a research and development subsidiary,
already operates in Auburn Hills. CSP supplies lightweight composite materials and molded parts for automotive and other industries. As a major producer of carbon and heat-resistant fibers as well as thermoplastics, Teijin offers complementary expertise to CSP’s operations in glass fiber- and carbon fiber-reinforced composites and thermosets, CSP CEO Frank Macher said in a telephone interview with Plastics News. Teijin has plans to build a carbon fiber factory in the United States, giving CSP a North American source for that material. Casey Selecman, advisory services director for Southfield-based IHS Markit Inc., said the use of composite plastics is trending through the auto parts industry. Carbon-fiber and other composite materials are valued for their strength, durability and light weight. “Fuel-efficiency requirements aren’t
getting more lenient, so weight is a big deal,” Selecman said. “It has a much more robust opportunity than it’s been given credit. Even parts you wouldn’t associate with these materials are being investigated for the weight savings.” Composite cylinder casings and other engine parts are being explored for production, he said. The transaction also ends a cycle of private equity ownership for CSP since 1998 when it was acquired Westport, Conn.-based Max Capital LLC for an undisclosed price. In 2005, CSP management, with $14 million from investor American Capital Strategies Ltd., and the investment firm controlled by Rick Scott performed a leveraged buyout of CSP for an undisclosed price. In 2006, CSP acquired the plastics materials manufacturing and molding
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2985 Wylie Rd, Dexter, MI
tall (Tangshan) Structural Compos-
Petoskey
Sunday, September 25th at Noon 8102W US HWY 2 | Manistique, MI
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• 4 bedrooms 3 ½ Baths • 2-Car attached Garage • Model Furniture Package included • On Golf Course • Lake Views $319,000
Joe Blachy
(231) 409-9119 Call anytime between 7am & 10pm
Email: joe@joeblachy.com Website: joeblachy.com 420 Howard St., Petoskey, MI 49770
COMMERCIAL PROPERTIES
COMMERCIAL PROPERTIES
Commercial Real Estate
FIXTURED RESTAURANT
AUCTION Fully Equipped Restaurant and Storage Buildings on 8 Acres Turn Key Operation Monday, Oct. 10th. At 4:00 p.m. 540 S. Orr Rd. Hemlock, MI 1/4 mile South of M-46 For complete listing go to: www.furloauction.com 989-835-1581
FOR LEASE 3,200 Sq. Ft. Orchard Lake Road Jonathan Brateman Properties, Inc. (248) 477-5000 jbrateman@aol.com
www.bratemanproperties.com
Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh Plastics News contributed to this report.
POSITIONS AVAILABLE
ARCHITECT
2 POSITIONS AVAILABLE For CAE Moldflow Analyst for Magna Exteriors America Holdings, Inc., in Troy, MI. Duties: Develop & complete process simulation from initiation to completion for injection molded thermoplastic auto components, incl’g improving dimensional stability & cosmetic appearance of injection molded parts. Support current & future mfg programs w/ filling, packing, cooling, & warpage analysis utilizing Autodesk Moldflow software. Collaborate w/ eng’g, tooling & mfg personnel to optimize tooling & parts design & processing windows of injection molded parts. Assist program teams in devel’g CAE quotes, & prepare tech’l presentations as req’d. Analyze fiber-reinforced thermoplastics in order to optimize tooling & processes for fiber orientation, knit line & dimensional stability, incl’g gating feasibility, cavitation & dimensional/cosmetic parts reqs. Utilize CAE Moldflow analysis to test effects of fiber orientation, residual stresses, & weld lines on structural integrity of plastic parts. 5% travel both dom & intern’l to support mfg divisions. Req’s: Master Deg in Mech’l, Plastics or Chem Eng’g. 2 yrs exp in an Autodesk Moldflow eng’g pos. (will alternatively accept Bach Deg in same & 5 yrs exp in an Autodesk Moldflow eng’g pos). Exp must inc’l: using AutoDesk Moldflow for structural analysis of fiber-reinforced plastic auto components, incl’g associated warp & shrink factors; designing cooling systems for injection molding tools utilizing complex actions, incl’g modeling cooling circuits, cooling inserts, & thermal pins; devel’g process simulation techniques for modeling controlled actuations used to balance family molds; using Autodesk Moldflow for analysis of large auto structural parts developed from fiber-reinforced plastics, nylon, & propylene. Exp can be acq’d concurrently. Apply: ext.recruitment@magna.com Identify CAE Moldflow Analyst position. EOE.
A national real estate development company seeks a highly motivated and organized individual to join their team as their architect in Bloomfield Hills, Michigan. Responsibilities include: • • • • • •
Prepare schematic design and design development documents Prepare construction documents for interior build outs Prepare illustrations for use in presentations Work with clients to select finishes Maintain up to date plans for all properties Prepare preliminary conceptual site and building plans
Qualifications: • • • • •
Must be a registered Architect licensed in Michigan Minimum of 5 years experience in architecture Experience in space planning and interior design Proficiency with AutoCAD 17, Microsoft Word, Excel and PowerPoint Experience with Revit or other imaging programs is desirable.
TO APPLY: Please send resumé to: job.opportunity.re@gmail.com POSITIONS AVAILABLE
BEST CONDO VALUE!
On the heels of its announcement earlier this year that CSP would invest $33.5 million to expand its operations in Huntington, Ind., media reports indicated Scott wanted to cash out. Foley & Lardner LLP in Detroit represented Teijin on the deal. Mark Aiello, partner at Foley, said CSP’s strong intellectual property catalog drew several interested parties. The deal with Teijin is a clear boon for Scott Capital and its investors, indirectly including Florida’s governor. Scott’s net worth is estimated at nearly $147 million, according to an annual financial disclosure with the Florida Commission on Ethics in 2015.
POSITIONS AVAILABLE
WATERFRONT PROPERTY
STONY POINT GOLF COURSE
ites Co. Ltd.
JOB FRONT
MARKET PLACE INDUSTRIAL SERVICES
operations of ThyssenKrupp Budd Co. and increased revenue to $300 million that year, from roughly $90 million in 1998. Scott announced he would run for governor of Florida in 2010, transferring his investments to a blind trust under management by Scott Capital, run by Greg Scott, who is no relation to the governor. Meanwhile, CSP had survived the Great Recession and began growth on the rebound. In 2013, it generated $600 million in revenue. In 2014, CSP acquired five North American plants from customer Magna International Inc., adding 1,000 employees and 600,000 square feet of manufacturing space. It also created a joint venture with China’s Qingdao Victall Railway Co. Ltd. called CSP Vic-
Page 17
PRODUCT DEVELOPMENT ENGINEER for Maxion Wheels, in Novi, MI. Duties: Analyze customer req’s & devel engin’g specs for new automotive wheel products. Prepare engin’g designs & cost analyses for price quotations, & coord product design & devel operations, incl specification change requests. Serve as engin’g liaison between company operations & customers in N & S America, incl transferring, receiving, & updating CAD info & drawings. Check engin’g drawings, interpret & elaborate technical engin’g standards. Identify cost reduction opportunities & develop related plans. Initiate & update customer APQP systems & conduct FMEA processes w/ customer & company plant-level reps. Identify new market opportunities & trends. Support quality engineers w/field issue investigations, & sales, warranty, & purchasing teams w/engin’g analyses. 25% travel, both domestic & international. Req’s: Bach Deg in Ind, Mech, or Mfg Engin’g, or foreign equiv. & 2 yrs exp in an automotive wheel product development or quality assurance engin’g pos. Exp must include: engin’g & manuf’g processes for steel & aluminum wheels for passenger cars & commercial trucks, incl stamping, laminating, welding, painting, aluminum casting, & machining processes; calculating costs & economics of quality assurance systems for automotive wheel mfg programs using cost modeling processes; performing packaging evals for new automotive wheel products, incl analyzing packaging & transportation-related defects; automotive wheel gauges & measuring devices, incl interpreting measurement results according to individual wheel critical characteristics; utilizing PLM software to complete RFQs & to coord product devel & engin’g change processes. Exp can be acq’d concurrently.
Mail resumes: Kelsey Stalk, HR - Maxion Wheels 39500 Orchard Hill Place, Ste 500 Novi, MI 48375. Ref Product Development Engineer Pos. EOE
Call Us For Personalized Service: (313) 446-6068 FAX: (313) 446-0347 E-MAIL: cdbclassified@crain.com INTERNET: www.crainsdetroit.com/section/classifieds
See Crainsdetroit.com/Section/Classifieds for more classified advertisements
POSITIONS AVAILABLE
û ACCOUNTING û Manager, Core Assurance (Mult. Pos.), PricewaterhouseCoopers LLP, Detroit, MI. Examine financial & accounting records, docs., & tangible equip. of clients. Req. Bach’s deg. or foreign equiv. in Acc., Bus. Admin., or rel. + 5 yrs post-bach, prog. rel. work exp.; OR a Master’s deg. or foreign equiv. in Acc., Bus. Admin., or rel. + 3 yrs rel. work exp. Travel up to 20% req. Apply by mail, referencing Job Code: MANDET Attn: HR SSC/Talent Management 4040 W. Boy Scout Blvd. Tampa, FL 33607
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grant funding. The plan, called the Douglass-Market project, one of the most expansive in recent Detroit history, would be constructed over five years mostly on the site of what was perhaps the city’s most notorious public housing project and attempt to integrate economically diverse residents in a new community west of I-75 and south of Mack Avenue.
Problem upon problem In Detroit, in St. Louis, in Chicago, Brewster-Douglass and other similar properties nationwide had fallen victim to crime, drugs and decay. One problem begat another. Then another. All compounding until the system began to pancake under the weight. “The way they are treating the residents; there are drugs; the maintenance is awful,” Baron recalled St. Louis public housing residents saying in the late
GI
VE
BROWNFIELD FROM PAGE 3
depending on population. A variety of projects throughout the five-county region, including the redevelopment of the Pontiac Silverdome in Pontiac and the Uniroyal site along the Detroit River, for example, likely would meet the requirements of the legislation. State law currently allows developers to capture the new property taxes generated by the completed development. Proponents say a sweetened incentive could mean the difference between a project happening or not, since brownfield projects inherently are expensive and complicated. And Gilbert, who has amassed more than 13 million square feet of real estate holdings in and around downtown Detroit since 2011, certainly has some projects in the works: Matt Cullen, Rock Ventures’ principal, said in a Thursday interview with Crain’s that this incentive could unlock at least $2 billion in projects by his company alone. “This is critically important for us,” Cullen said. “But we all need it, from Ann Arbor to Grand Rapids to Flint to Detroit.”
YO U
RE
ple could get themselves together.” By the time the commission Baron served on released its 200-pluspage report, the damage had long been done. The panel estimated that the capital improvements for the country’s 86,000 “severely distressed” public housing units would cost $5.6 billion, plus another $1.9 billion for related costs for a total of $7.5 billion over 10 years, or $87,209 per unit. Adjusted for inflation, that is $12.86 billion, or $9.6 billion for capital improvements and $3.26 billion for related costs, for a rate of $149,580 per unit today. Today, operating public housing costs between $350 and $650 per month per unit for things like maintenance, taxes and insurance, said Amin Irving, founder of Novi-based Ginosko Development Co. and one of the developers behind the planned Douglass-Market project.
St. Aubin St.
Dequindre Cut Greenway
ment of Housing and Urban Development Choice Neighborhoods Program
Russell St.
Last week, more details of the ambitious plan were made public as the city seeks up to $30 million in U.S. Depart-
Brush St.
FROM PAGE 1
Woodward Ave.
DOUGLASS
1960s. DOUGLASS-MARKET PLAN Local public housing authorities Mack Ave. like the Detroit Housing Commis4. sion — created in the 1930s as part 75 of the New Deal to manage and opWilkins St. erate federally funded public housing projects like the Brewster-Doug2. 3. lass — generally received enough 1. revenue from rents to support those operations. e. 75 Av iot There was no federal subsidy for at Gr the agencies. 1. Frederick Douglass housing site But in the 1950s and 1960s, rental 2. Proposed pedestrian bridge 3. Shed 4 revenue began to decrease as resi4. 3480 Russell St. dents who could afford homes bought them; and as racial turmoil reached boiling points, some fled the Commission on Severely Distressed Brewster-Douglass and others, where Public Housing at the tail end of the large numbers of black residents from George H.W. Bush administration in the the South came during the Great Migra- early 1990s. That unexpected situation flew in the tion, Baron said. With fewer units rented, fewer dollars face of the federal government’s working came in to pay for maintenance, and lo- theory in the Great Depression that pubcal public housing authorities’ ability to lic housing would just be a short-term perform even that most basic of tasks safeguard for struggling families. “Public housing when it originally bewas almost permanently crippled. And fewer people could stomach gan was not intended to be a permanent home,” said Harold Ince, deputy execumoving in, no matter how desperate. “You started to see this enormous tive director of the Detroit Housing concentration of low- and fixed-income, Commission, which owns the Brewnon-working families in these sites,” said ster-Douglass site. “It was a temporary help so that peoBaron, who served on the National
The plan The Brewster-Douglass trajectory was akin to that of the infamous Cabrini-Green housing projects in Chicago and the Pruitt-Igoe projects in St. Louis — the one whose 1972-76 demolition was made possible by the work of Bar-
O MPL S A OYEES A RE
Target projects The Hudson’s site is one of the most prime pieces of downtown real estate, with 2 acres of vacant land along Woodward. Gilbert has said the mixed-use project is expected to be transformational to downtown, but precious few details of the planning have been publicly disclosed. In addition, Gilbert and Detroit Pistons owner Tom Gores in April proposed a 20,000- to 25,000-seat stadium on the 15-acre site of the half-built Wayne County jail, construction on which was halted three years ago and which Wayne County still owns. County Executive Warren Evans has said he plans on moving forward with completion of the jail project. The Gilbert-Gores proposal includes a 500,000-square-foot soccer stadium flanked by three 18- to 28-story glass towers — one a hotel, one offices and one residential. Less-discussed publicly, Gilbert’s team and General Motors Co. have been discussing what to do with approximately 20 to 25 acres of largely vacant land immediately east of the Renaissance Center. “We have historic, beautiful cities that we can turn into engines of the state’s
growth and prosperity — if we have the tools to do it,” Cullen testified this month before a Senate committee. “As a state, we don’t have the economic development tools we need to unlock the large-scale, transformational projects that are going to truly move the needle in revitalizing our cities,” Cullen testified. “The fact is that in many cases there continues to be a gap between the cost of development in our older cities and what you can get back in rent.” Cullen’s statement underscores a point shared by others in the industry — that Snyder’s 2011 tax overhaul went too far in eliminating incentives for business attraction and economic development. Some worry that Michigan is not as competitive as other states, such as Texas, when it comes to landing major corporate spending or large-scale real estate projects. “These projects and others are ready to go,” Cullen said. “We are motivated to get this thing done and get going. You hate to miss a window.” Snyder in the past has resisted efforts to add or restore tax credits. His administration renegotiated credits with the Detroit 3 automakers under the defunct
Michigan Economic Growth Authority
program after discovering the state was
O T N
on the hook for $9 billion in obligations. A spokeswoman for Snyder said the governor will review the bills if they land on his desk, but his office did not say how the concept fits with his philosophy on tax incentives. “He hasn’t said ‘no,’ ” said Sen. Ken Horn, R-Frankenmuth, who introduced the main bill in the package Sept. 7 and held a hearing on them the next day in the committee he leads. He hopes to vote them out of committee this week. “I think I’ve got a fighting chance.”
How it would work If adopted, the bills would require both the municipality in which the brownfield is located and the Michigan Strategic Fund, a division of the Michigan Economic Development Corp., to sign off on a developer’s brownfield plan. Proposed projects would require a financial analysis before the incentive could be approved. Captured revenue could be used to reimburse developers for any brownfield-eligible costs, including demolition, construction or restoration of buildings and other site improvements. All projects would have to contain mixed uses, including residential and commercial. The enhanced incentive
on and others beginning 48 years ago. “I think the real catalyst behind” more mixed-income developers, said Irving, “was saying, ‘Hey, we don’t want the Cabrini-Greens of the world.” The Pruitt-Igoe project — designed by Minoru Yamasaki, the Detroit-based architect behind Ally Detroit Center (formerly One Detroit Center) and New York’s World Trade Center — was one of the first federally funded housing projects to be demolished. Choice Detroit LLC, the chosen development entity for the planned Douglass-Market sites, however, does in some ways want what has come in the aftermath of Cabrini-Green’s demolition. With 65 acres, the site is planned for more than 2,300 housing units, and the property has become a favorite of Windy City developers since the last towers came down five years ago, Crain’s Chicago Business, a sister publication of Crain’s Detroit Business, reported earlier this year. To be sure, Choice Detroit — the development entity consisting of Ginosko, Dan Gilbert’s Bedrock Real Estate Services LLC; Columbia, Md.based Enterprise Community Partners; and KBK Enterprises, which has offices in Columbus, Ohio, and Pittsburgh — is envisioning a project far smaller in scale.
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could apply to a single project, or a series of related developments. Cities would be limited to one transformational brownfield project annually; the Michigan Strategic Fund could not sign off on more than five statewide in a single year. “We kind of grew allergic to the tax credits. We have nothing to offer the really big investments,” Horn said. “There’s still room for more tools. We just have to make sure they all work and they don’t over-promise.” Horn, Cullen and others say developers would carry all of the financial risk, since the incremental tax revenue would not have existed without the development. Horn said that is in part because developers will have an interest in ensuring the developments are occupied and gaining value. Property tax revenue also should rise with the new developments, he said. Today, many of the sites have little to no value. “You’ve got nothing today. If we do nothing, you’ve got nothing tomorrow,” Horn said. “If you have no occupancy, no renters, no condo owners, no retail shops that come in, no office space that’s leased out, then the state still loses nothing.”
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But still significant. In addition to the housing, the city also plans things like enhanced health, education, workforce development and youth services; a new 1-acre public park called Douglass Park at the Brewster-Douglass site; and improvements to and restoration of the street grid and pedestrian access from Brewster-Douglass/Brush Park into Eastern Market over I-75. About 22,000 square feet of retail space is also planned. The retail is something that, with the Brewster-Douglass projects, couldn't be sustained before the last of the towers came down in 2014. “These neighborhoods were where retail and businesses did not settle because the incomes weren’t there,” Ince said. There was a generational cycle of poverty that couldn't be broken, said Kathy Makino-Leipsitz, who owns about 1,600 units across more than 20 affordable-housing developments, primarily in Detroit. “I saw the families, the grandmother, daughter and granddaughter all move into that same type of situation,” said Makino-Leipsitz, who bought her first low-income building in 1983. "They got caught in this kind of trap."
PELLERITO FROM PAGE 3
is seeking to recoup the existing and new business with Sysco Corp. (NYSE: SYY) that it lost a year and a half ago when it couldn’t ramp up capacity quickly enough due to delays in acquiring land from the city, in part because of Detroit’s bankruptcy. The company is also talking with potato farmers and other investors about helping finance the expansion, in exchange for things like space sharing and agreements to buy part of their crops. “We’re looking at early 2017 to consummate a deal for additional business and/or strategic investors,” said owner and CEO Jim Pellerito. Launched in 1943, Pellerito Foods claims it was the first company in the country to sell peeled potatoes. Today, it’s one of the largest processors of fresh, peeled, sliced and diced potatoes in the country, as well as cooked, refrigerated hash browns. And it supplies fresh-cut vegetables from asparagus to zucchini, purchased from local farmers. Its customers include Sysco, Panera Bread, The Kroger Co. of Michigan and
Kowalski Sausage Co. Inc. The compa-
didn’t have the capacity,” Pellerito said. “We could have gotten the business; it was just a matter of how we were going to produce it.” In the year and a half since, Pellerito has secured about $2 million in new business. Word-of-mouth is yielding new, small accounts which have helped increase Pellerito’s revenue 8 percent so far this year, following 5 percent growth each of the past two years, he said. The company is looking to grow its $10 million in annual revenue. Still, “we’re not comfortable expanding yet,” Pellerito said. “We want to make sure the business is there before we build something.” The city did not comment on the amount of time Pellerito said it took to close on the purchase of the land. But Felecia Studstill, a contracted account executive for the Detroit Building Authority, said in an email statement that the city averaged 218 days from application to close for the 58 commercial properties it sold this year, down from 270 days. “The processing and vetting time is generally fast on our end,” she said. “The total application through purchase agreement time, though, is largely a function of the amount of time spent in
ny has operated from the same site since 1987. Seeing opportunity for growth, Pellerito approached the city about buying the property next to his production site five years ago. It took two years to secure an deal with the city and get City Council approval and another two were spent in a holding pattern while the city went through bankruptcy, Pellerito said. The company paid $68,000 for the property, which is south of its Mack Avenue site, between Hale and Scott streets, bounded by St. Aubin Street. The deal closed in April 2015 and included pricing credit for job creation and other factors, the city said. The delays in obtaining the land and expanding its production footprint and capacity, however, cost Pellerito $2 million in existing hash brown business with Sysco and $8 million in new, annual business it would have gained if it had won the contract to become the food service company’s sole supplier of hash browns east of the Mississippi. Instead, the new business and its existing hash browns business moved to Minnesota-based Michael Foods Inc.’s Northern Star brand. “We were disqualified because ... we
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The actual financial impact to the state is difficult to determine, but would reduce general fund revenue by a “likely significant amount,” according to an analysis by the Senate Fiscal Agency. The actual revenue loss would depend on how many such transformational projects are approved in a given year, how large they are and how loosely the state defines sales tax revenue as having come from a particular development. “Unlike tax credits distributed to a taxpayer to subsidize an activity, which are not subject to appropriation, the bills would apparently authorize direct expenditure payments to an owner or developer of an eligible property without an appropriation,” the agency wrote. “Furthermore, the captured revenue and distributed payments would not be subject to any legislated maximum level other than equaling the sum of all costs permitted to be funded under the bills. Because those costs would not be limited, and could include costs incurred before the approval of a transformational brownfield plan, the bills would effectively impose no limit on the amount of revenue captured. In the case of a transformational brownfield plan located in a non-county municipality with a population of 600,000 or more, over time the
captures could exceed $500 million.” A portion of the income tax revenue generated from new residents at a development could be captured, according to the analysis and committee testimony. The Senate Fiscal Agency estimated the state’s income tax revenue losses could total between $15 million to $45 million, using an average individual income tax liability of $1,500 in 2013 after credits were applied and an estimated 10,000 to 30,000 tax returns from residents of transformational brownfield projects. Additionally, Senate fiscal analysts said the bills would create “extensive” administrative costs for the Michigan Department of Treasury, which today does not identify where sales tax revenue originates. The department likely would have to hire more employees and add informational technology systems to track the source of sales tax revenue across multiple sites, they wrote. Local income taxes would not be captured under the bills. Horn said he has had discussions with the Michigan Municipal League, which supports the legislation “in concept,” and other local government associations to address concerns about possible lost revenue. He said the legislation sets up a tiered approval structure, with multiple sets of
eyes in local and state government watching the projects. “We are trying to be very careful and thoughtful,” he said. “The underlying goal in all of this is to make sure there is a net gain for the state.”
Proposed impact The real impact, Horn said, is at the local level. Individual communities will be the ones to decide what “transformational” means for their residents. A $25 million project in Saginaw, part of Horn’s Senate district, could “fundamentally transform” its downtown. Brownfield conditions in the city “have frightened developers away through the years,” JoAnn Crary, president of Saginaw Future Inc., the economic development agency serving Saginaw County, testified before the Senate panel. One downtown project under consideration will require significant investment and undertaking, she said, but it also could be a catalyst that leads to more development. “It creates a nucleus so that we can develop and build around it,” she said. Saginaw Future and regional economic development agencies The Right Place Inc. in Grand Rapids and South-
negotiation with the purchaser on the sales price.” The team is working diligently to be more efficient and to make the process of acquiring city-owned commercial properties more timely, she said. About a half mile away, Pellerito’s neighbor Wigley’s Meats & Produce is also looking to expand by acquiring both privately owned and city-owned land near its Detroit production site. It’s had an application to purchase land filed with the city since late March or early April, said co-owner Tom Wigley. “It takes quite a bit of time. Even if you know the people to contact, it still takes time.” The plan for that area has always been wholesale distribution, he said. “I don’t know if the city is still looking at it that way. I think they’re thinking more of retail and residential in that particular area” near the northern boundary of Eastern Market along Mack Avenue. As reported by Crain’s last month, Eastern Market Corp. is negotiating a land acquisition plan with the city that would help it to expand its footprint to more than five times its current size. Sherri Welch: (313) 446-1694 Twitter: @sherriwelch
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have signed on to a coalition of developers, development agencies and chambers of commerce called MI Thrive. The group consists of more than a dozen members, though an official list wasn’t made available. The group’s members “share a common goal: Helping move Michigan and its cities forward,” said Dan Austin, a senior account executive with Detroit-based Van Dyke Horn Public Relations, which is handling public relations for the coalition. In southwest Michigan, there is pentup demand for urban housing, while in Grand Rapids, the brownfield incentive could make it feasible for developers to pursue projects adjacent to downtown, according to committee testimony. “The transformation of downtown, its neighborhoods and especially along the Grand River is not complete — but the easier projects are over,” Rick Chapla, The Right Place’s strategic initiatives vice president, told the Senate committee. The legislation includes a provision that would waive the minimum private investment requirement in communities eligible for federal blight elimination funding or in a municipality under a state of emergency for drinking water
contamination. That could create opportunities for smaller projects in Flint, which otherwise would require at least $50 million in private investment under the bill. Flint has been struggling to recover from lead-contaminated drinking water caused by a state-appointed emergency manager’s decision to draw tap water from the Flint River. “That excites us, obviously,” said Bryce Moe, managing director of Flintbased Skypoint Ventures, which does real estate development in the city and Genesee County. Skypoint Ventures is considering two projects that could benefit from the incentive, though Moe did not disclose details. “These are projects inherently by nature in our urban areas that have a financial gap, because the current business case is not there,” Moe said. “There’s a whole list of reasons why, and this really, really goes after that and attacks that gap, that space, in the project that a traditional investor or traditional lender does not have the appetite for.” Lindsay VanHulle: (517) 657-2204 Twitter: @LindsayVanHulle Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB
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Some highlights of what Homecoming speakers and expats said “I’m a believer. I’m charged up. I think the things that people are talking about can happen. It will take tremendous energy and intelligence to make it happen, but I’m excited.” Former Microsoft Corp. CEO Steve Ballmer “I’m a big believer that Midtown is going to be the Brooklyn, the SoHo of Detroit, the place where creative and innovative stores and restaurants are going to occur.”
The faces of Homecoming
Will Adler, owner, Will Leather Goods “Our business model used to be around building the car. … Everything we’re doing now — car-sharing, autonomous, electrification — is where customers are going and will begin to go over time.”
From smiles to laughter, to seriously furrowed brows, the faces of event attendees tell the story
Dan Ammann, president, General Motors Corp. “We don’t know shit from Shinola about running a hotel.”
SCOTT SPELLMAN
The opening-night scene: Candlelight and graffiti in the long-closed Brewster Wheeler Rec Center, destined to be a new restaurant.
AARON ECKELS
Shinola founder Tom Kartsotis (right) speaks about developing a new Shinola hotel with Dan Gilbert (center) and KC Crain (left).
Tom Kartsotis, founder, Shinola/Detroit LLC “I have no shame for Detroit. I had tremendous opportunities here. I was doing every job of a producer when I was young before I went to the University of Michigan.” Jeffrey Seller, producer, “Hamilton” “Most of the engineers there (Silicon Valley) have grown up in the software world. To be able to build these kinds of vehicles, it’s a lot harder than it looks. This is something on a whole different scale than an iPhone.”
CHRIS EHRMANN
Detroit booster Emily Gail offers ways expats can support the city. NUCLASSICA performs on amplified violins at Homecoming dinner. AARON ECKELS
Tony Fadell, founder, Nest and a father of the iPod “It’s incredible how it’s come back. It’s just so exciting.” Emily Gail, longtime Detroit booster, current Hawaii resident and creator of the “Say Nice Things About Detroit” campaign
AARON ECKELS
CHRIS EHRMANN
Left: Gov. Rick Snyder presents the “Guvvy” to “Hamilton” producer and Oak Park native Jeffrey Seller. Center: Ford Foundation CEO Darren Walker talks candidly about race with Crain’s Mary Kramer. Right: Inventor Tony Fadell (left) tells Autoweek’s Dutch Mandel that consumers will soon choose cars that “fit their need” like they buy shoes for
AARON ECKELS
different occasions.
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Projects to boost Detroit’s hotel rooms, but how many is too many? By Sherri Welch swelch@crain.com
The Shinola Hotel project, announced last week, is the latest in a string of hotel projects planned or underway in downtown Detroit. While increasing investment in the city is good news, it raises the question: Can Detroit support the number of hotel projects planned and under consideration for the central business district? Experts say yes. There’s demand for 800 to 1,000 more rooms downtown in the next two to three years. Six projects in development could bring roughly 970 more rooms to the downtown market over the next few years, well within that range. But if the Crowne Plaza Downtown Detroit Riverfront moves forward with construction of a second tower, as it’s considering, that could mean another 400 or more rooms. And that would exceed the tipping
BALLMER FROM PAGE 1
very informative because it was my first job, and in a way you learn a lot as a caddie, you meet a bunch of different kinds of people.
How about relationships, being around people who are older than, more experienced probably, even wealthier than you … ?
Steve: You learn some stuff. It’s interesting … whether it’s Taubman. He paid well. He paid really well. What kind of guy was he?
Steve: All I remember is, if you were a young caddie — he always took a cart, if you were a young caddie who didn’t know how to drive a cart, it wasn’t the easiest world. (Laughs)
You were a caddie that didn’t know how to drive a cart?
Steve: Exactly. Connie: He does now.
Intergenerational poverty is an epidemic in the country right now.
Steve: We are looking for good opportunities to support community organizations, government projects, as well as traditional not-for-profit innovations amongst those communities. Private money is never going to fill in all the gaps, it’s mostly got to be used as venture capital if you’re willing to try new things, spark new things, and get things off the ground.
(Crain’s tells the Ballmers about a small literacy program in Detroit.) They’re solving a problem for a handful of kids. Is this the kind of program that might get your money?
Connie: Let me give you just a brutal-
point of demand experts say Detroit can absorb in the next few years. Many of the announced hotels projects are just plans at this point, said hospitality expert Ron Wilson, CEO of Troybased Hotel Investment Services Inc. “But if all of these projects were to happen, I would be cautious about adding any more until that supply is absorbed.” With the increasing population, activity and corporate presence downtown, there is undoubtedly support for additional rooms, said Mike O’Callaghan, COO and executive vice president of the Detroit Metro Convention & Visitors Bureau. Detroit’s downtown hotel occupancy and average daily rates are up this year, bucking the declines cities including Chicago, Pittsburgh and Cleveland have seen this year, O’Callaghan said. Year to date through July, average daily occupancy for the 5,000 hotel rooms in
Detroit’s central business district was 67.6 percent, up from 66.3 percent for the same period of 2015, he said, referencing data from STR. The average daily rate for the same period increased to $154, up from $148 for the first seven months last year and $141 for the period in 2014. The occupancy number so far this year is about 1.5 percentage points better than the counties of Wayne, Oakland and Macomb, O’Callaghan said. In the years before Detroit’s comeback, suburban hotels would fill up first. But now, the Detroit hotels are, and the overflow is going to the suburbs. Ideally, the downtown market could use more rooms, including a large block of about 400 from a full-service convention hotel, he said. “The additional second tower at the Crowne Plaza would suit us nicely.” Right now, during high-demand periods, the people in town for a conference
or other event who can’t get a downtown room must be bused to the suburbs, O’Callaghan said. But many planners won’t go for that., he said “They don’t want their attendees on buses.” Besides the increased demand from conventions, more people are living downtown. And their relatives need someplace to stay when they come to visit, O’Callaghan said. The companies that have moved into the city’s core are also increasing demand for hotel rooms as their out-oftown employees come in for meetings. But is the demand sustainable? “I think so,” O’Callaghan said. “We know leisure visits are up and corporate visitors feel more comfortable about coming here,” he said. “And we’re getting more interest from groups and conventions than we have in decades.”
ly boring, pragmatic view on this that just came to me today (during their visit to the mayor’s office) … When there is a lack of leadership or a lull in leadership what often happens in a city or an area is you have all these nonprofits arise because they’ve all got to try to — you know, the system is broken so we’re all going to get around the system. So that’s lovely and that’s innovation, and there’s so many great ideas, but there’s also a point at which a community can just have either too many nonprofits to support or they’re duplicating each other and ... Steve: Or they’re all sub-scale or none of them can ever fund-raise. Connie: And they’ll never get very far. … And even if they do good for 50 people, that’s awesome, but as a funder you don’t want to sort of enable bad behavior by supporting a little bit of everything. At this point, and I guess this is where I’ve gotten very pragmatic, we’re really interested in scale and we’re interested in what can reach the most people. Steve: Scale and replicability. … Philanthropy has got to pick and choose its role.
in on housing, retail, buildings, infrastructure. You say, ‘OK, that’s fantastic, it really is, but what are the other supports that they’re going to wind up wanting to put into that neighborhood or how do the social services come together around that neighborhood?’ … And you can’t just start from scratch: You’ve got to have a not-for-profit that wants to focus in on that kind of an area. Connie: I felt the morning was really hopeful in that we were in the mayor’s office and met a lot of his team and they were … Steve: … and the mayor. Connie: And they were incredibly energized. These are people who have been in really stellar professions elsewhere, and they chose to come back here under this mayor because they knew that work was being done. Steve: Normally when I come back to Detroit I see no hope, and I think Connie just framed it perfectly. Connie: A great team of people. Good goals and … Steve: A real plan. Connie: And it takes so long, right? Everybody has got to be in it for the long haul, and you’ve got to be patient. They seem to have a great start. They would be, for example, we haven’t made any commitments or decisions and we don’t know what we’re doing ever here yet because we’re learning, but that is a group that would be fun for somebody like us to partner with.
said, “We can do better than just doing that.” And so I said, “I’m really going to prove to you what happens to government money.” I said there should be something like a corporate 10K for government, and there really isn’t. And when I said “government,” I don’t mean federal, state, local. Put them together, because who knows who pays for what?
Let’s talk about what you learned about Detroit and how Detroit could be a good place to experiment with your philanthropy.
Steve: The thing we did today was cool. We went and visited this redevelopment project at Livernois and McNichols, what they call Live/Six. And they’re pushing to have parts of the neighborhoods really invest in some areas so they can become what I call little towns, real community neighborhoods with retail, walking and all this stuff. Sounds like a great idea and the guys are very focused
INDEX TO COMPANIES
These companies have significant mention in this week’s Crain’s Detroit Business: Center Healthcare Research/Transformation ....10
New Economy Initiative ...................................... 13
Central City Integrated Health ............................7
Pellerito Foods .......................................................3
Continental Structured Plastics Holdings ........3
Priority Health ......................................................10
Detroit Central City Mental Health ....................7
The Right Place ....................................................19
Detroit Housing Commission ............................18
Rock Ventures LLC .................................................3
Develop Detroit LLC ............................................14
Saginaw Future.....................................................19
DTE Energy ............................................................. 4
St. Joseph Mercy Health System ....................... 9
Jackson Health Network ....................................10
Skypoint Ventures ...............................................19
M-1 Rail ................................................................... 8
Teijin Advanced Components America ............ 17
Mich. Dept. of Health and Human Services ..... 9
University of Michigan Health System ..............11
Mich. Primary Care Transformation Project ...10
Wigley’s .................................................................19
Being a native, how much are you going to want to put a thumb on the scale and help Detroit? Steve: (Laughs) We’re here for Detroit Homecoming, but it is not acci-
dental (that they toured the city and talked to the mayor’s staff).
So when I get to writing my lead, how far over my skis do I get?
Steve: (Laughs) I’m from Detroit! I’m from Detroit! I think there’s important work going on here, and we are really, really, really glad to be learning about it. Tell me about your interest in government reform.
Steve: This came out of a discussion Connie and I had about supporting people. I said, “The money we don’t give away is going to go to the government, and they’re going to give it to sick people, poor people and old people.” And she
Sherri Welch: (313) 446-1694 Twitter: @sherriwelch
I hate to ask people to write my lead, but it’s a good way to help me see if I’m going too far. Obviously, the wealthiest living Detroiter and his very well-informed and compassionate wife have decided to put money in places that can help bring to scale solutions that are working in a big way now. And you’ve gone to a few cities and one of them is your hometown and you’re very impressed by the political team in place. How likely is it that that will equal some Ballmer money in Detroit?
Connie: Someday? Yes.
Connie: I’d say very likely. Steve: Very likely. I don’t know if it’s tomorrow. I’m not asking about tomorrow.
Steve: We’re trying to set expectations because we’re not erratic. We build steadily. Connie: This is the deal, Ron. It’s really hard for outsiders to come to a city, a region, and make smart decisions, and so we don’t want to come and say, “We know what’s best for you people.”
And people hate that, especially here.
Steve: And we don’t know what’s best for people, Ron. Connie: And so to come into an area, we want to do it really thoughtfully, and we would want to have somebody on the ground. We would have to … really learn about these people in the mayor’s office, what’s going on with your county, and we’d have to really learn before we come in and make those (donations). And we’re just not there yet. But you’ve already committed to learning more about Detroit? Take that next step.
Steve: This is a place of interest. Yes! Absolutely a place of interest. Rachel Fritz contributed to this story.
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WEEK State cites DMC for health code violations L ack of employee training and management oversight were two of eight health code violations found in a state inspection report issued about the sterile processing department at four hospitals that are part of Detroit Medical Center. DMC has 60 days to submit a corrective action plan or face possible sanctions, a spokesman for the Michigan Depart-
ment of Licensing and Regulatory Affairs said. The LARA report pertained to Detroit Receiving, Harper University, Children’s and Hutzel Women’s hospitals.
COMPANY NEWS n Chick-fil-A, the Atlanta-based fast-food chain, is set to open Oct. 13 in the Somerset Collection in Troy. A stand-alone restaurant in Lansing is scheduled to open the same day. n The Detroit Lions are worth $1.65 billion, which represents a $210 million year-over-year increase in value but still ranks the team as the second-to-last in worth in the 32-team National Football League, according to annual estimates released by Forbes.com. n The DoubleTree by Hilton Detroit hotel in Novi has completed a $3.5 million renovation of its rooms and suites, meeting spaces and an outdoor courtyard. n Dearborn-based auto supplier The Oakwood Group plans to spend $5.2 million to expand its operations in Taylor and hire 50 employees, the Michigan Economic Development Corp. said. n Alrig USA LLC, a Bingham
Farms-based real estate investment and development firm, acquired the 21,000-square-foot The Crossings strip shopping center in southern Kent County’s Gaines Township from Grand Rapids-based V&V Crossings LLC. Terms were not disclosed. n A First Choice Urgent Care Center location is to open in Garden City, adding to one in Dearborn. n The Container Store, a Texasbased retailer that specializes in organizational and storage products, opened its second location in Michigan in the former Loehmann’s woman’s clothing store in Troy. Its first Michigan store opened in June in Novi. n The 2-year-old Detroit City Distillery in Eastern Market is planning to expand its production into the former Stroh’s Ice Cream Factory and Goebel Brewing Co. plant across Gratiot Avenue, where it will begin distilling whiskey this fall. n A fire suspended operations at the Kar’s Nuts plant in Madison Heights, AP reported. n Revenue for the three Detroit casinos dropped 2.2 percent in August compared with July, according to the Michigan Gaming Control Board.
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 1 9 , 2 0 1 6
ON THE WEB SEPT. 10-16
RUMBLINGS
Homecoming news A summary of some of the news that came out of the Detroit
Homecoming:
Producer’s promise: ‘Hamilton’ is coming to Detroit Oak Park native Jeffrey Seller, producer of Broadway’s blockbuster show “Hamilton,” told Crain’s Associate Publisher Ron Fournier that the hit hip-hop musical will come to the city in the next 2½ years. Seller wouldn’t specify a date, but he said unquestionably the show would appear at his favorite venue, the Fisher Theatre.
Will Leather to move some operations to Detroit Will Leather Goods will relocate its hat manufacturing and e-commerce operations from Oregon to Detroit and hire 50 more staffers over the next 18 months, its owner told Crain’s. “We’re in the process of beginning to do some manufacturing in Detroit. We’re going to bring our hat shop to Detroit,” said Will Adler, who founded the Eugene, Ore.-based luxury leather products maker that has a retail outlet in Detroit’s Midtown area. He opened his 9,000-square-foot retail space at 4120 Second Ave. (the old Tom Boy Super Market) in November 2015. A Detroit native, he attended the Will Adler: Plans inaugural Homecoming in 2014. local moves.
Early talk on Pistons playing in Detroit Talks to bring the Detroit Pistons to downtown Detroit to play the occasional game — or perhaps even all their games — at the new Little Caesars Arena are in the earliest of stages, one of the key figures said. Tom Wilson, the former longtime president of Palace Sports & Entertainment and the Pistons who now works for Detroit Red Wings and Tigers owner Mike Ilitch as head of Olympia Entertainment, described the discussions as talks to begin talks, or pre-negotiations. There’s no deal in place now, Wilson said. His remarks came during a breakfast session at Cass Technical High School’s media center, overlooking the Tom Wilson: Talks arena now under construction. before talks?
Opel to be built in Orion? ‘Perhaps’ General Motors Co. may build the 2017 Opel Ampera-E electric car in Southeast Michigan. GM President Dan Ammann hinted the European market car could share the same production line with its North American version, the Chevrolet Bolt, at Orion Assembly in Orion Township. When asked if the Ampera-E would be built in the U.S. next to the Bolt, Ammann responded, “perhaps.” Ammann, a native of New Zealand, also revealed he Dan Ammann: Drops a hint? now is a Detroiter. Last year, Ammann bought the Fisher Mansion in Detroit’s historic Palmer Woods neighborhood. The 15,000-square-foot home, built in 1926, has 15 bedrooms, 15 bathrooms and an eight-car garage.
IPod creator Fadell in the car biz Founder and former CEO of Nest Labs and iPod creator Tony Fadell is now in the car business. A Grosse Pointe native, Fadell, along with CEO Dave Bell, created California-based Actev Motors, a builder of connected go-carts. The $999 go-carts are connected to the internet and cater to children 5-9 years old. The carts go into production in China next week, but Bell said the plan is to bring final assembly to the U.S., hopefully in Detroit.
OTHER NEWS
n Dan Gilbert and Stephen Ross,
two of Wayne State University School of Law’s most successful alumni, each donated $5 million to the school, making the largest donations in the law school’s history. Their $10 million gift creates the Benson Legacy Fund for Wayne Law and Benson Endowed Enhancement Fund for Wayne Law. The gifts are named after Jocelyn
Benson, who is leaving her post as law school dean to become CEO of the Ross Initiative in Sports for Equality, founded by Ross, the chairman of real estate development company The Related Cos. and owner of the NFL’s Miami Dolphins n The Detroit Federation of Teachers said its members ratified a
new deal with the city’s new school district, AP reported.
D
DTE seeks operator for new HQ restaurant
TE Energy Co. is looking for an operator to helm the 4,000-square-foot restaurant it will open next summer in the 1.5-acre triangular park it’s developing just outside its headquarters at 1 Energy Plaza in Detroit. According to the specs, the venue will be a “two-story contemporary building with a cantilever roof” with 110 seats, 85 inside, and a 750-square-foot roof deck and outdoor patio bar. It will have daily lunch, dinner and cocktail service, weekend brunch and a “moderate price point.” “Surrounding the dining space is
a 270-degree NanaWall that can fully open during warmer seasons to showcase panoramic views of the new park and downtown Detroit skyline,” the company said in a notice. DTE has hired real estate broker Kees Janeway, founder and CEO of Birmingham-based Kees Corp. LLC, to handle the search. The 56,000-square-foot park is bounded by Grand River Avenue, Plaza Drive and First Street in the heart of the central business district. DTE bought the land around 2012, but it hasn’t disclosed the acquisition and development costs.
Health care leaders back RTA millage rate A group of health care leaders is speaking out in favor of a proposal on the ballot Nov. 8 that would increase taxes by $2.9 billion over 20 years to support the Regional Transit Authority bus system in Southeast Michigan and a commuter rail line to Ann Arbor. On Monday at 10:30 a.m., the health care leaders will hold a news conference at Eastern Market’s Shed 5 to explain why they are supporting a “yes” vote for the expanded regional transit system. The ballot question asks taxpayers in Oakland, Wayne, Macomb and Washtenaw counties to approve a 1.2-mill tax. Four hospital executives and a pediatrician will present internal studies that show how missed medical appointments are sometimes caused by lack of transportation. Over the next several months, health care leaders will try various methods to spread the word on the importance of approving the taxes for a better bus system. Elliott Attisha, a pediatrician employed by Henry Ford Health
System, will describe patients whose
conditions were made worse because they lacked reliable transportation. One young girl was unable to get a ride to the pharmacy to fill her asthma prescription and ended up back at the doctor’s office with an exacerbated breathing problem. Attisha is the husband of Mona Hanna-Attisha, M.D., who gained fame last year by blowing the whistle on problems with excessive lead in water supplies in Flint. The health system executives include: n Jean Meyer, president and CEO, St. John Providence Health System. n Conrad Mallett, chief administrative officer, Detroit Medical Center. n Bob Riney, Henry Ford’s executive vice president and COO. Riney also is chairman of the Michigan Health & Hospital Association board. n Paul Conway, chief human resources officer of Beaumont Health.
Detroit trademarks Project Green Light The city of Detroit has trademarked “Project Green Light Detroit.” The trademark filing appears to hint at protecting “signage, lighting or green light logo signifying participation” in Project Green Light, a public safety program that began in January and uses a central camera system, high-resolution cameras and bright lighting to capture clear images of license plates and criminals. But little official reason was given why the city wanted the trademark. “This particular application was filed in the normal order of protecting the city and its interests,” Melvin “Butch” Hollowell, Detroit’s corporation counsel, said in an emailed statement. A likely reason: The city is looking
to protect the name to keep merchants who aren’t in the program from claiming or advertising that they are. Earlier this month, Mayor Mike Duggan and Comcast announced an expansion of the program designed to allow more business participation by decreasing the upfront cost to businesses. The city said upfront costs could be upwards of $6,000, while under the partnership with Comcast, they could be as little as $1,000 for camera installation and $140 per month for cloud storage and camera lease. Project Green Light started as a pilot program in January with eight gas stations and has since expanded to include other types of businesses, including liquor stores and McDonald’s restaurants.
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