His vision for Detroit’s skyline
DMC, St. Joseph weigh worth of bundled care
Dan Gilbert talks about new projects, legislation and office space, Page 3
Is Medicare pilot program working for hospitals? It’s too early to tell, Page 3
NOVEMBER 28 - DECEMBER 4, 2016
Gores’ entry makes it three’s company Gores on both the Ilitch, Gilbert teams could portend more investments By Kirk Pinho and Tom Henderson kpinho@crain.com thenderson@crain.com
And suddenly there were three. After more than five years of one billionaire, Dan Gilbert, and a billionaire family, the Ilitches, being the dominant business and real estate forces in downtown Detroit, Detroit Pistons owner Tom Gores has officially entered the picture with last week’s announcement he will move his team back to the city after a 28-year run in The Palace of Auburn Hills. The move creates an interlocking network of business interests, with Gores, a private equity billionaire, squarely in the middle of two camps that have been viewed as rivals. He sealed a deal with the Ilitches to play the 2017-18 season in the new Little Caesars Arena while deeply entwined with Gilbert's own seismic sports splash: a bet on a proposed new Major League Soccer stadium on the site of the half-built Wayne County Consolidated Jail at Gratiot Avenue and I-375. Gores is bound to change the city’s leadership dynamic. The swiftly developing relationships hold the promise of more
PHOTOS BY LARRY PEPLIN
Tom Gores adds another pro sport to the downtown Detroit landscape; he’ll move his Detroit Pistons there from Auburn Hills next season.
Gores investment in Detroit. And his background as a private equity pioneer means he’s always on the lookout for a new deal. The relationships also may give Gores, who lives primarily in Los Angeles, local partners with real estate expertise. And he comes armed with money to invest. In August, the com-
© Entire contents copyright 2016 by Crain Communications Inc. All rights reserved
NEWSPAPER
crainsdetroit.com Vol. 32 No 49
$2 a copy. $59 a year.
pany said it was targeting a cap of $5.5 billion for its new fund. In fact, it likely provides the impetus for even more investments in downtown, such as in real estate with Gilbert, said Arn Tellem, Gores’ vice president of Palace Sports & Entertainment. Tellem said that more investment from Gores is possible after the MLS stadium bid for the jail site is resolved. He declined to specify what other real estate investments Gores and Gilbert might work on together. And there has been talk about more unspecified Gores projects in The District Detroit, the 50-block swath of downtown anchored by the new arena and spearheaded by the Ilitches. Michael Beauregard, senior partner at Detroit-based Huron Capital Partners LLC, annually Detroit's most active private equity firm, also said Gores’ move to downtown has triggered speculation that Platinum Equity LLC, Gores’ private equity company, makes its presence felt in Detroit. “Obviously, there’s going to be a lot of talk now of Platinum doing business here,” he said. The potential is high, said former Detroit Mayor Dave Bing. “He brings tremendous assets. He is being very careful on what his approach is going to be. I do believe he’d like to get on the entertainment, retail and development side. A guy with deep pockets like that can do a lot of good,” Bing said. And a lot of that stems from relationships he has built on both sides. SEE GORES, PAGE 18
A history of moves Detroit’s four major sports teams don’t move often. Here’s a look back at the times they did and the spaces they played in:
Detroit Lions 1934: The Lions move to Michigan from Portsmouth, Ohio, and play at University of Detroit Stadium (seating capacity 25,000) until 1937, with a one-season return in 1940.
1938: Tiger Stadium (52,416), then
called Briggs Stadium, becomes the team’s new home, initially through 1939 and then continuously from 1941 through 1974.
1975: The Lions relocate to the
cavernous Pontiac Silverdome, right (80,311).
2002: Ford Field (65,000) opens downtown. Detroit Pistons 1957: After moving to Detroit from Fort Wayne, Ind., the Pistons play mainly in
Olympia Stadium (15,000), with occasional games at the University of Detroit.
1961: The team begins a 17-year run at Cobo Arena (12,000).
1978: The Pontiac Silverdome, which
could seat more than 60,000 for basketball, becomes the team’s home for 10 years.
1988: After building it with $90 million of his own money, Pistons owner Bill Davidson unveils the Palace of Auburn Hills (20,000).
Detroit Red Wings 1926: The team makes its debut at the Border Cities Arena in Windsor because no Detroit facilities are available.
1927: The Wings move into the
newly built Olympia Stadium (15,000).
1979: The new Joe Louis Arena
(current hockey capacity: 20,027) hosts its first Red Wings game on Dec. 27.
Detroit Tigers 1901: The team debuts in the American League before 10,000 fans in Bennett
Park at Michigan and Trumbull avenues. The Tigers would play at that site for nearly a century.
1912: Navin Field, named for Tigers owner
Frank Navin, is constructed at Michigan and Trumbull, left.
1938: Briggs Stadium becomes the
expanded facility’s new name, for then-owner Walter Briggs.
1961: Tiger Stadium becomes the final name of the site (capacity: 52,416). 2000: Comerica Park (current capacity: 41,297) opens at 2100 Woodward Ave. SOURCE: CRAIN’S RESEARCH; TIGER STADIUM PHOTO CREDIT WIKIMEDIA COMMONS; OTHER PHOTOS FROM CRAIN’S ARCHIVE
2
C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 8 , 2 0 1 6
MICHIGAN BRIEFS State appeals injunction over Flint water delivery
Jackson toy store to close next month after 67 years
The state filed a notice of its intent to appeal a federal judge’s injunction that water must be delivered to the homes of Flint residents — a requirement it claims would cost taxpayers $10.5 million monthly, MLive.com reported. Attorneys for the Michigan Department of Treasury and Flint Re-
A beloved toy shop is closing next month after 67 years in Jackson, but its owner is thankful for the “smile stories” told by his employees about kids and parents who have left happy after visiting what became one of the nation’s largest independent toy stores. After the closing of the Toy House & Baby Too store was announced last week, Phil Wrzesinski, its president and owner, told MLive.com the fond memories of providing playthings to city residents won’t fade. “The products have changed ... but the core mission has always been the same,” Wrzesinski said. “Our job was to help people out. That’s what my grandfather set out to do when he started the store.” Business has declined in recent years, Wrzesinski said, with chains and online companies pushing independent toy stores out of favor with consumers.
ceivership Transition Advisory Board
last week filed the notice of appeal in U.S. District Court. U.S. District Judge David M. Lawson had ordered door-to-door water deliveries for Flint families unless the state can prove residents have functioning faucet filters, in a case brought against the Treasury Department and the RTAB appointed by Gov. Rick Snyder by the American Civil Liberties Union, Concerned Pastors for Social Action and others. Water is currently available to city residents at no cost, but they must pick up bottles at distribution sites around the city. The appeal came after attorneys for the state argued that the judge’s directive on water deliveries should be delayed until they could appeal. The state has claimed the ruling “far exceeds what is necessary to ensure Flint residents have access to safe drinking water.”
MICH-CELLANEOUS
J Riverside, Mo.-based NorthPoint Development sees opportunity in for-
mer automotive manufacturing sites around the state’s capitol. NorthPoint and RACER Trust announced an agreement that would have the
Missouri-based industrial development firm acquire about 260 acres of former General Motors property in Lansing, Lansing Township and Delta Township, MiBiz reported. RACER Trust is a Livonia-based group that remediates former GM sites in multiple states. J A judge dismissed a misconduct-in-office charge against ex-state lawmaker Todd Courser, who quit office in a sex scandal last year, AP reportTodd Courser: ed. Courser still Misconduct charge faces a perjury dismissed. charge in the case in Ingham County Circuit Court. He is accused of soliciting an aide to send a phony email to cover up an affair with fellow Republican Rep. Cindy Gamrat. J The Michigan Department of Environmental Quality is extending public review into next year on a proposal by Nestlé Waters North America to significantly increase its Osceola County groundwater extraction. The DEQ said last week it was extending public comment until March 3, 2017, on Nestlé’s plans to increase pumping to 400 gallons per minute
INSIDE at a White Pine Springs production well near Evart, MLive.com reported. Connecticut-based Nestlé, which is spending $36 million to expand its Ice Mountain bottling plant in Stanwood, wants to pump up to 576,000 gallons per day from a well located between two coldwater trout stream tributaries of the Muskegon River. Michigan Citizens for Water Conservation sued Nestlé in 2001 over poten-
tial damage to lakes, rivers and streams that groundwater withdrawals would cause. The two sides reached a settlement agreement in 2009, reducing Nestlé’s siphoning to 218 gallons per minute from 400. J Grand Valley State University broke ground on its newest construction project, an expansion of the university’s health campus in downtown Grand Rapids, MLive.com reported. GVSU named the new building Raleigh J. Finklestein Hall, after the Grand Rapids entrepreneur who was lead donor for the project. The project carries a $37.5 million price tag, with an additional $9 million for its two-story parking deck. J East West Brewing Co. said it will open soon, perhaps by year’s end, in a 2,000-square-foot space in the Eastown neighborhood of Grand Rapids, the Grand Rapids Business Journal reported. The new brewery is owned by Balwinder Bal, whose
BANKRUPTCIES
18
CALENDAR
14
CLASSIFIED ADS
15
DEALS & DETAILS
14
KEITH CRAIN
6
MARY KRAMER
6
OPINION
6
RUMBLINGS
19
WEEK ON THE WEB
19
COMPANY INDEX: SEE PAGE 18 family owns the adjacent Bombay Cuisine. J
Grand Rapids Community College
named Bill Pink, its vice president and dean for workforce development, as its next president, MiBiz reported. J A wind energy project in Shiawassee County is hitting some blowback as county commissioners talk about a moratorium on the huge turbines until they can fully understand what’s being proposed. Virginia-based Apex Clean Energy wants to develop a wind turbine project in four Shiawassee townships, the Argus-Press in Owosso reported. County commissioners recently told their lawyer to draft an opinion on a wind energy moratorium. An Apex official said more than 140 property owners have signed up. A public meeting is slated for Dec. 7.
3
C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 8 , 2 0 1 6
Downtown
Vision for city’s skyline
Dan Gilbert talks about projects, legislation and why Detroit needs new office space
N
ame an area in greater downtown Detroit, and Dan Gilbert thinks it makes sense to build there. “The river, anything along Woodward, starting to go west into Corktown, Capitol Park,” says the billionaire founder and chairman of Quicken Loans Inc. and Rock Ventures LLC, the most active developer in the city of Detroit with his Detroit-based Bedrock LLC. The company, which is run by CEO and co-founder Jim Ketai, has five or six large-scale developments and redevelopments in the works downtown: ground-up new construction and redevelopments of historic buildings like the David Stott Building and the Book Tower. All told, Gilbert and his team say they have about $3 billion in projects ready to go, but they are pushing for some help from the Legislature in the form of a proposed law that would grant tax breaks for certain so-called “transformational” projects around the state. Following a discussion at the University of Michigan/Urban Land Insti-
tute Michigan Real Estate Forum earli-
er this month, Gilbert spoke with Crain's Detroit Business reporter Kirk Pinho about those projects, the legislation and, among other things, why he believes 10 million square feet of new office space is needed in Detroit. The interview was conducted the day before Gilbert announced along with Under Armour CEO Kevin Plank that the Baltimore-based retailer would open a 17,000-square-foot store in one of Gilbert’s buildings. A year ago, you were talking about the need for 10 million square feet of office space. I’m trying to get to the bottom of the math on that.
I can’t give you the numbers, but I can give you the formula. Basically what I did at the time, if you take the occupied square footage in downtown and Midtown, how ever you measure it, 7.2 square miles, right? And say, if all the companies that are currently there just grew at the rate of GDP and they needed corresponding growth of their office space. The economy grows 3 percent, they grow
3 percent and their office space grows 3 percent. I can make a case that that’s very conservative because that accounts for not a single new tenant moving downtown. I’m just saying if they just grew at the rate of GDP and their space grew at the rate of GDP, and I can also say some of the companies like us, and maybe even General Motors, for that matter, can probably make a case that we grow faster than the rate of GDP. Based on what space was available and what that number turned out to be. … Make sense?
No, it makes sense, but if we are only getting $23, $25 a square foot for Class A office space ...
We are quoting $27.
... At that rate, how do you make the case for new building financially? I’m not aware of any huge office tenants looking to come down or looking to build new.
You don’t need any of those based on what I just said. We don’t need anybody coming down, but they will and they are. There is one (tenant) you haven’t gotten ahold of. SEE GILBERT, PAGE 15
PHOTO BY AARON ECKELS FOR CRAIN’S DETROIT BUSINESS
Strategies
New Rizzo owner looks beyond controversy, aims for growth By Chad Halcom chalcom@crain.com
Former pro hockey goalie Patrick Dovigi says the puck got past him when his company bought the former Rizzo Environmental Services and found out after the deal closed that it was at the center of a corruption investigation. But he says the strengths of the company that drew in his company, GFL Environmental, to buy Rizzo to expand into Michigan still remain. The Sterling Heights-based waste hauler, now GFL’s U.S. subsidiary, is still a well-run business, he said, and so far customers are standing by it despite an ongoing corruption probe
that already has roped in the former company’s CEO, landed three local elected officials in court and promises several more indictments. “Many of the victims here are our employees; there are 750 of them working Patrick Dovigi: hard here, and Focused on all this public at“righting the ship.” tention now is on the actions of what’s likely to be an individual or two, and that’s what hurts those
(other) people here,” he said. “Everyone’s proud of where they work, and it would have been easy for people to jump ship and say they didn’t want to be around for this. “But they are still with us.” Business continues to grow, Dovigi said. He is working in Michigan three to four days a week to help “right the ship” amid a well-publicized FBI corruption probe. Job one, though, is retaining confidence with municipal clients; already one local community, Huron Township, has tabled a new contract award. But the city of Southgate recently agreed to an eight-year extension on SEE RIZZO, PAGE 17
Health care
Hospitals weigh worth of bundled care By Jay Greene jgreene@crain.com
Detroit Medical Center and St. Joseph Mercy Health System in Ann Ar-
bor are at ground zero when it comes to answering the question: If you pay hospitals and physicians a flat rate for a health care procedure, will that lower costs and improve quality because care is coordinated more effectively? Medicare’s bundled payments for care improvement initiative (BPCI) — one of a dozen cost-containment
programs mandated by the Affordable Care Act — seeks to answer that question. So far, the results at DMC and St. Joseph Mercy appear to be mixed to positive, although the program is still in its early stages, executives say. Managing care requires hard work and close coordination between doctors, hospitals and such postacute care providers as home health agencies, rehabilitation centers and nursing homes, they say. An August report by The Lewin
Group, a Falls Church, Va.-based consulting firm, conducted for Medicare on results for the first 15 months of the program showed a small amount of cost savings but no change in monitored quality measurements. The most common bundled payment at the 110 hospitals surveyed was for orthopedic surgery (75 percent of hospitals), followed by cardiovascular surgery (27 percent) and spinal surgery (18 percent). Though the jury is still out on SEE MEDICARE, PAGE 16
MUST READS OF THE WEEK
Crittenton foundation board changes When Ascension Health bought Crittenton Hospital, it downgraded Crittenton’s community foundation board, which has one former board member concerned about the future of its $35 million in funding, Page 4
Vacant despite the trend The Old Wayne County Building in Detroit is one of the five biggest empty office properties in a region that’s seen an upward swing in occupancy rates, Page 8
Aaro
4
C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 8 , 2 0 1 6
Ascension restructures Crittenton foundation board into advisory panel By Jay Greene
consolidate the hospital and founda- that we were no longer board memtion boards. This was done based on bers,� said Seifert, who recently was One of the lesser known changes the size of the Crittenton organization honored as philanthropist of the year at Crittenton Hospital Medical Center and was effective in September.� by Oakland University. “We were verin Rochester Hills following its acquiTaylor confirmed Crittenton creat- bally informed of the new governance sition last fall by Ascension Health ed a foundation advisory committee structure and received a vague letter Michigan was the downgrading of its under the hospital board. The com- from Russ Shelton, the current chair 50-year-old community foundation mittee includes some, but not all, of of Ascension-Crittenton hospital board into an hospital advisory com- the former foundation board. Respon- board, thanking us for our service.� mittee. Taylor told Crain’s that the donated sibilities are limited to promoting Over the past two defundraising and serving as li- assets remain with the foundation cades as independent hosand have not been transferred or aisons to the community. pitals have banded together “The Crittenton Founda- mixed with other Ascension funds. into larger multi-hospital Rob Collier, president of the Countion will continue to honor systems for financial and the intention of the past and cil of Michigan Foundations, told strategic support, local hosfuture generous donors by Crain’s he looked into the changes at pital and foundation boards ensuring that the funds do- Crittenton at Seifer’s request. He have undergone changes nated continue to support spoke with lawyers in the AG’s charithat have included ceding the work� of Crittenton Hos- table trust division. “My understanding is that Ascensome authority to regional pital, Taylor said. or corporate offices. That George Seifert: He added that Ascension sion can do this,� Collier said. “The hasn’t always come without Former foundation Michigan has no plans to way the hospital board is structured, conflict. make similar changes at any they can terminate the foundation board member Under the restructuring, asked AG for of the other 14 hospitals it board if they want.� Hospitals must play a delicate balCrittenton’s hospital board opinion on change. owns in Michigan. of trustees now has fiduciaDespite Ascension’s reas- ancing act when they join larger ry responsibility for both surances that Crittenton’s $35 health care organizations, he said. On one hand, hospitals want to be the hospital and the $35 million foun- million in community donations redation, with some power residing mains intact and available for local use, as efficient as possible, Collier said. with Ascension Health Michigan, its Seifert said legal documents he need- But hospitals also must be transparparent company. ed to see as foundation trustee were ent with the community, especially Some of the former hospital foun- kept from him. He said he remains when they are seeking and managing dation members are now part of the concerned that community donations charitable donations, he said. advisory committee, but not long- have no independent oversight. “There is a balancing act� when it time board member George Seifert, a “The board of the Crittenton Foun- comes to consolidating donor assets CONTINUED NEXT PAGE retired top executive with AT&T. dation was never officially notified For months, Seifert had asked questions about the future of the $35 million in donated community assets and other pending changes affecting the hospital foundation. But he told Crain’s he didn't get complete answers and felt he was being “stonewalled� by Ascension officials. He even complained to Attorney General Bill Schuette’s office about the changes in responsibilities of the foundation board. Megan Hawthorne, the AG’s deputy press secretary, did not respond to interview requests. ,163,5,1* '(6,*1 At issue is whether hospital foundations are truly independent when articles of incorporation give decision-making power to the hospital board or new corporate owner. “I raised the issue of the foundation being an independent 501(c)3,� said Seifert, who is chairman of the Rochester College Foundation and president of the George and Elizabeth Seifert Foundation. “I was told that Crittenton was the member and they could in essence do what they wanted. That is when we engaged independent counsel. Even though the lawyers came highly recommended and charged our (family) foundation over $10,000, they were of little help in providing information on the rights of the member to a 501(c)3.� Ascension officials declined requests for interviews, but Brian Taylor, Ascension’s chief marketing officer, released a statement to Crain's. “Consistent with many changes in our health care environment, Ascension Michigan is looking for ways to )LVKEHFN 7KRPSVRQ &DUU +XEHU ,QF HQJLQHHUV _ VFLHQWLVWV _ DUFKLWHFWV _ FRQVWUXFWRUV streamline governance when appro1RYL _ 0DFRPE _ _ IWFK FRP priate,� the statement said. “While two separate legal entities will continue to exist, the decision was made to jgreene@crain.com
Business Growth Solutions CUSTOMIZED FOR YOUR BUSINESS
GENERATE MORE LEADS INCREASE CONVERSION RATES Ĺš COMPEL MORE FREQUENT TRANSACTIONS Ĺš COMMAND HIGHER PRICES Ĺš GENERATE GREATER PROFITS Ĺš BUILD A MILLION DOLLAR BUSINESS Ĺš
ZS,
Ĺš
E-Learning Marketing System & Coaching & Consulting Services To learn more contact
Keys2Business, LLC 248-231-5205 • chuck@Keys2Business.com www.Keys2BusinessMarketing.com
“We Guarantee Results!� – CHUCK KEYS Author & Public Speaker
5
C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 8 , 2 0 1 6 FROM PREVIOUS PAGE
or eliminating local foundation boards, Collier said. “How do we do this and let donors know we are still helping the local community?”
Undergoing changes In Southeast Michigan, Ascension operates the five-hospital St. John Providence Health System. Other regional Ascension hospitals include Borgess Health in Kalamazoo, Genesys Health in Grand Blanc Township, St. Joseph Health System in Tawas City and St. Mary’s of Michigan in Saginaw. Last year, Ascension reorganized the governance at its other Michigan hospitals, essentially phasing out its independent hospital boards and creating a regional board structure. For example, the five local hospital boards of St. John Providence have been eliminated in favor of a single Southeast Michigan Hospital Board. Jamie Orlikoff, president of Chicago-based Orlikoff and Associates, said the trend of centralizing hospital boards into regional boards has been going on the past decade. Fewer boards reduces costs, enhances integration, helps coordinate strategic planning and avoids infighting between member hospitals, he said. In many cases, health care systems have retooled hospital boards into essentially advisory boards to carry out local functions. “They don’t have the authority to hire or fire the CEO, they don’t have audit authority, or planning,” he said. “They have the ultimate responsibility for quality, safety, medical staff credentialing, accreditation and community relations.” Similar to how Ascension reorganized Crittenton’s board structure, Orlikoff said, many local hospital boards that are part of systems also carry out foundation responsibilities. “When you remove the traditional fiduciary responsibilities from hospital boards and move it up to regional boards, the local hospital board now has the ability to assume oversight of the foundation board,” he said. “It fits very nicely.” But Orlikoff said there is a danger when the hospital board and the foundation board are the same and also have fiduciary responsibilities to manage charitable assets and the operations of the hospital. “When hospital boards have both powers, you (as manager or trustee) tend to defer (preferences) to the money-members on the board,” he said. “This creates conflicts. You don’t want to co-mingle responsibilities.” Collier said there is a national trend in which smaller foundations have been merged into larger foundations to produce higher returns and reduce administrative costs. For example, MidMichigan Health in Midland this year consolidated the donor assets of its four hospitals into a newly created corporate foundation, officials said. However, MidMichigan makes sure donated funds are earmarked into individual hospital accounts per donor preferences. “The key issue donors want is if their funds are protected,” Collier said. Jay Greene: (313) 446-0325 Twitter: @jaybgreene
Electronic Payments, Data Privacy and Security Law Experience
In Your Corner.
®
Ŷ Data Security and information law, privacy policies, breach notification requirements. Ŷ Electronic payments, mobile payments, electronic fund transfers, stored value cards. Ŷ Aviation law, aircraft acquisitions, disposition, operation, leasing and financing, FAA filings, International Registry requirements.
Contact Jill Miller at jmmiller@varnumlaw.com
Ŷ
Detroit
Ŷ
Novi
Ŷ
Grand Rapids
Ŷ
Kalamazoo Ŷ Grand Haven
Ŷ
Lansing
Ŷ
Ann Arbor
Ŷ
Hastings
6
C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 8 , 2 0 1 6
OPINION
The news has been good for Detroit
O
Epstein’s Trump alliance could bridge political divides
L
ena Epstein was married in early August, but she postponed her honeymoon in Hawaii till December. Why the delay? She grabbed the chance to co-chair Donald Trump’s Michigan presidential campaign after a three-minute interview with the candidate in a campaign stop in Dimondale in mid-August. “He asked me: ‘Lena, how are we doing in the polls?’ And I said, “Mr. Trump, it’s too early to be worried about polls. You’ve got to go out and wow this crowd like you've done in every other state.’” A few days later, she began her career as a co-chair and “Trump surrogate” on TV and radio. “I never apologized for misstatements he made,” Epstein said last week as she reviewed her work on the campaign. “I would just pivot to why I supported him: to grow the economy, protect our borders and have increased opportunities for families and children.” Her straightforward responses — not excusing the bombast of the candidate or the missteps like the infamous 2005 audiotape of Trump’s lewd comments about grabbing women, but focusing on issues many silent voters found important —
MARY KRAMER Publisher
in 2010, Epstein says she started questioning her political roots while an undergrad economics major at Harvard University. She went on to earn an MBA at the University of Michigan. “I literally had to Google ‘Republican Party’ because I didn't know any Republicans,” she said last week. She knows plenty now. Earlier this month, she spoke at Temple Beth El about the future of the Republican Party and how Americans — Republican and Democrat — could come together. Epstein herself bridges many political divides; she is active in Detroit, including serving on the board of the Detroit Historical Society. Her family is part of the city’s history; she’s the granddaughter of the late Stanley Winkelman, whose eponymous stores were a retail staple in Detroit for decades. At a donor party for the Detroit Historical Society two days after the presidential election, Detroit Mayor Mike Duggan teased Epstein, who has been a Duggan supporter and contributor: “I thought for months, poor Lena, she has the worst job in Michigan. Then on Wednesday morning, I thought: She’s the smartest person in Michigan.”
ver breakfast the other day, Daniel Loepp recalled the skepticism that greeted his 2010 decision to move Blue Cross Blue Shield of Michigan from suburban Detroit to the Renaissance Center downtown. “Nobody could predict what would come next,” the CEO said. “There’s so much good news in Detroit now.” Oh so much good news. In the last week alone, there’s been a cornucopia of blessings for Detroit, including: n The Detroit Pistons announced Tuesday that the team will move from the Palace of Auburn Hills to the under-construction Little Caesars Arena. Originally conceived for the Ilitch-owned Detroit Red Wings, the arena is scheduled to be completed in time for the 2017-18 hockey and basketball seasons. n Construction began on the American Center for Mobility testing site for driverless cars at Willow Run. Housed at the site of a World War II bomber factory, just outside the city that democratized transportation in the early 1900s, the $80 million project is an important part of the campaign to make Michigan the home of 21st century mobility. n Kevin Plank kept his promise to Dan Gilbert, announcing that his Under Armour Inc. will open a store in downtown Detroit in the spring. Plank made the announcement at a Children’s Tumor Foundation fundraising gala hosted by Gilbert, which raised nearly $5 million. At the 2015 Detroit COSTAR GROUP INC. Homecoming, Plank spoke Sources told Crain’s that Adient will move of investing in Detroit into the Marquette Building at 243 W. during an interview with Congress St. in downtown Detroit. Gilbert. n The world’s largest steelmaker, ArcelorMittal, is opening a plant in Detroit for the first time. The plant, which won approval of a $2 million grant from the Michigan Strategic Fund last week, will add at least 120 jobs over five years. n Auto seat maker Adient Ltd. announced Tuesday that its corporate headquarters are moving to downtown Detroit (Crain’s first reported the plan last month). With the state’s backing and a $97.9 million investment, Adient follows the path carved years ago by foresighted leaders like Gilbert of Quicken Loans and Loepp of Blue Cross Blue Shield.
There is no human being immune to sickness or injury. Millennials are walking away from severe auto accidents without injury? Millennials are exempt from cancer? Really? Hospitals have patients of all ages. I have heard millennials characterize an expensive sickness or injury as an oopsey. In many cases of not carrying insurance, their expensive treatment is paid for by taxpayers. This is
Yes, let’s give Trump a chance just like the Republicans did with Obama when they stated emphatically at the beginning of his presidency they would oppose everything he supported. Thankfully, Obama was able to jam through the bailout of the auto industry that went on to record sales and helped to turn around Detroit. Detroit’s and Michigan’s way of thank-
First-term lawmaker becomes chairman of the most powerful legislative committee. What a telling comment on term limits. Jungoni
All too often we hear about folks who say it can’t be done. Most of the time they are wrong. Certainly one of the great success stories took place last week. The Detroit Thanksgiving Day Parade — now dubbed America’s Thanksgiving Parade — has been one of the great private/public partnerships. With furniture retailer Art Van anchoring the parade as well as other sponsors, the entire community can
It took hundreds of volunteers and sponsors to make it a success. And now it is quickly gaining nationwide fame as well. Just one more indication of the continued recovery of Detroit. It has not happened in a day, but it continues every day getting better and better. It has been a slow and sometimes difficult journey. But the progress is undeniable.
Who would have imagined that the Pistons would join the other three pro sports teams downtown? Just another indication of our recovery. Detroit is on a roll, and nothing demonstrates it more than the dedicated team that puts on our parade. We have the right leadership in both the public and private sectors. But we can't take it for granted.
Over a quarter of a century ago, Detroit introduced the North American International Auto Show to the world, taking what was a smaller dealer-focused show into a major platform for new vehicle introductions by global auto players. It has been a great success that continues to need the support of all of us. Detroit is the comeback kid. Let us keep helping it grow.
TALK ON THE WEB Re: Millennials signing up for Obamacare Even with insurance, a procedure of $500 or less (which, honestly, is quite reasonable for an ER procedure) would likely fall under the deductible of whatever least-expensive plan millennials are paying for. I’m not saying anyone shouldn’t carry insurance, but if this is the primary argument for it, the more contentious millennial buyers will balk. Paul Lacey
A great combination
KEITH CRAIN Editor-in-chief enjoy this annual rite.
made her a popular fixture on talk shows, including some segments that were picked up by cable networks in Europe. But there were critics, too. “I grew a thick skin pretty quickly,” she said. If there is hope for creating a middle ground or at least a hint of civility between Trump haters and Trump supporters, Epstein’s saga may be helpful. She breaks the mold of what the left envisions Trump voters to be. Born to a Jewish family of staunch Democrats, Epstein and her sister Lily are the third generation to run the family's Southfield-based Vesco Oil, a distributor of lubricant products to customers ranging from car dealers and oil-change outlets to manufacturers. The company has 200 employees and operates in five states. A Crain’s 20 in their 20s honoree
Reader responses to stories and blogs that appeared on Crain’s website. Comments may be edited for length and clarity. an illustration of ignorance. Are the millennials that are now signing up for insurance figuring Trump will not pick up the bills for their oopseys? Carolyn Mazurkiewicz
Re: Keith Crain: Good, bad election effects likely
ing him was to stab him in the back. John md I support the protesters, not because I don’t want to give Donald Trump a chance, but because he needs to address them himself and assure them that he will not discriminate against them. E M Parmelee
Re: Rizzo CEO resigns as feds charge 2nd official Look for the investigation to ex-
pand.
BenAround
Re: Cox will be 1st woman to lead budget panel
7
C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 8 , 2 0 1 6
Private equity firm buys controlling interest in Avomeen By Tom Henderson thenderson@crain.com
High Street Capital, a Chicago-based private equity firm, planned to announce Monday that it has bought a controlling interest in Ann Arbor-based Avomeen Analytical Services LLC, a fast-growing chemical testing and analytics company. In June, Shri Thanedar, who founded Avomeen in 2010 and is its CEO, was named an Entrepreneur of the Year by Ernst & Young for the Michigan and northwest Ohio region, and the company has been on the Inc. 5000 list of fastest-growing private companies in the U.S. two years in a row. In 2015, Avomeen was ranked 673rd for its 670 percent growth rate over three years, and in 2016, the company was ranked No. 1,365 for a three-year growth rate of 281 percent. Thanedar said the company has grown revenue by 400 percent in the last four years to more than $10 million. In 2014, Thanedar was a finalist at a Crain’s Salute to Entrepreneurs event. Thanedar said that with High Street’s support, the plan is to grow Avomeen through acquisition and to expand its brick-andmortar presence to California. He said he will remain as CEO for now, but the company will start looking for a replacement. “I’ve kept a large stake in the company and will continue running it for the short term, but we’ll hire a CEO in the next three to six months, and I’ll move on to a board position,” said Thanedar, who is 61. “I’ll take on other projects and things of interest. “I want to take the company to the next level in the next four to five years, so it’s better to share the risks and rewards with High Street, which has an expertise in growing companies,” said Thanedar. “They will be more than just financial parters. They bring a lot of operational expertise to the table.” He said he hopes to double current employment of 50 and double current revenue in that time. Twenty-two of its employees have Ph.Ds. Thanedar said he wants to hire 10 to 15 scientists in the next four months. “California is an area we want to expand to. Many of our clients are in California, and they’d like us to have a local presence,” he said. “Dr. Thanedar was looking for a partner to continue Avomeen’s rapid growth through opening new labs near key customers, completing acquisitions and rounding out the company’s infrastructure,” Rob France, a High Street Capital principal, said in a statement. “High Street Capital brings relationships, capital and expertise to help Dr. Thanedar and his team execute upon this growth plan.” Thanedar founded Avomeen in December 2010 after briefly trying retirement and finding it boring.
He wanted to get back into analytical chemistry and drug development, having owned companies that did those things from 1990 to 2009. Avomeen has provided chemical testing and analysis for the pharmaceutical, cosmetic, consumer product, health and beauty and manufacturing industries. A focus is on deformulation, a type of reverse engineering that identifies ingredients in complex formulations. His first client was a company that was purchasing another company and wanted to know if the formulation of one of its products was
as claimed. It was. Other early customers were a law firm that needed to know if a liquid that caused a slip and fall was the same liquid an employee at a gas station used for cleaning, and a pet-supply company that wanted Thanedar to develop a nonpetroleum-based coating to protect dog paws while out walking or running on snow in the winter. Capstone Partners LLC provided investment banking services for the deal, the terms of which were not disclosed. Tom Henderson: (313) 446-0337 Twitter: @tomhenderson2
TOM HENDERSON/CRAIN’S DETROIT BUSINESS
Shri Thanedar founded Avomeen Analytical Services in 2010.
Huntington is proud to have recently been recognized as a Regional and National 2014 Greenwich Excellence Award in Middle Market Banking for Cash Management Overall Satisfaction. We’re even more proud of our treasury management team, who earned this award through their hard work and dedication to our customers. Member FDIC. ¥® and Huntington® are federally registered service marks of Huntington Bancshares Incorporated. Huntington® Welcome.TM is a service mark of Huntington Bancshares Incorporated. © 2016 Huntington Bancshares Incorporated.
8
C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 8 , 2 0 1 6
Five empty office buildings, clockwise from top: Old Wayne County Building, Detroit; Centerpointe Business Campus building, Pontiac; former Federal-Mogul Headquarters building, Southfield; Ottawa Tower II, Pontiac; former Kmart headquarters, Troy.
SPECIAL REPORT: REAL ESTATE
Wide-open spaces
A look into 5 large metro Detroit office buildings that have missed the declining vacancy rates trend By Kirk Pinho kpinho@crain.com
Sitting at the southern end of what is known as the Woodward loop in Pontiac is the Ottawa Towers II building: Vacant, unused for years as its owners fought in court with the city over the demolition of the Phoenix Center parking deck. With 200,000 square feet, it is the fifth-largest office building in the region sitting empty, according to data compiled by Newmark Grubb Knight Frank. Those five buildings outside the downtown Detroit market have sat that way for years, bucking the regional trend of declining vacancy rates as the economy continues its upward swing (See related story, Page 11). All were mothballed when large corporations or governments fled elsewhere, either amid downsizing, a large corporate bankruptcy or after a rent-rate fight. With 2.27 million square feet, they
represent 3 percent of the 74.64 million-square-foot regional office market. A tiny blip overall, but still enormous in their own right. And each has its story.
Former Kmart headquarters, Troy At West Big Beaver Road and Coolidge Highway sits the largest vacant office building in the region, the former Kmart Corp. headquarters that has been empty since the retailer fled for Illinois more than 10 years ago. Its challenges, not the least of which is its sheer size, are seen as immense but not insurmountable. In fact, renewed interest in redeveloping the 1.1 million-square-foot behemoth has regenerated recently as owner Nate Forbes said this summer that his Forbes Co. is again “reviewing development plans for the site ... that will complement the vibrancy and
growth on the Big Beaver corridor.” During a conference last week, Forbes said his company is in the middle of developing a master plan for the property. “We feel the need in Troy for a real communal place, a central gathering spot, surrounded by some potential lifestyle and other-type uses complementary to Somerset,” said Forbes, who owns the nearby Somerset Collection shopping mall. He said there should be “something to show the marketplace” in the next six to nine months. That’s a change that real estate experts see as being the result of increased development activity in the area, such as a Florida developer’s plans for a $130 million apartment project next to the City Center Building at 888 W. Big Beaver. Plans are to renovate that building as well. And there have been ongoing discussions in recent months about how best to use the city’s 127 acres of municipal
property. After Kmart vacated the office complex in the mid-2000s and moved to Illinois as a subsidiary of Sears Holdings Corp., the plan was for a $320 million redevelopment called the Pavilions of Troy. Reston, Va.based developer Richardson Development Group Inc. was to be the developer; New York City-based equity fund BlackRock Inc. owned the property at the time. BlackRock paid $40 million for the Kmart property in December 2005, according to CoStar Group Inc., a Washington, D.C.-based real estate information service. That project would have had 440,000 square feet of commercial and retail space, 132 residential units, a public ice rink, a 3,000-seat theater, restaurants and a grocery store. But under the weight of the economic recession, those plans collapsed. Both the Kmart property and the Somerset Collection are owned by
Forbes Frankel Troy Ventures LLC.
The Detroit Free Press reported the December 2009 sale price as $17.5 million. Sidney Forbes, founder of Forbes Co., told Crain’s in 2012 that the purchase of the Kmart property “was a defensive move” after Farmington Hills-based Grand/Sakwa Development began courting Somerset Collection tenants for a retail development. “So when we had the opportunity to buy that land, we took it,” Sidney Forbes said four years ago. Grand/Sakwa’s plans stalled at the Troy City Council, and there has been little action on it since. At its peak, the Kmart property accommodated 5,000 employees. When it was sold in 2005, it had fewer than 1,900, many of whom were transferred to Illinois. While the Kmart building may technically be office space now, no one expects it to remain that way. SEE VACANCIES, PAGE 9
C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 8 , 2 0 1 6
9
SPECIAL REPORT: REAL ESTATE
VACANCIES FROM PAGE 8
Centerpointe Business Campus building, Pontiac While not vacant in the truest sense — it does have semi-regular use as a movie studio in nearby space — the 384,000-square-foot Centerpointe Business Campus building is the second-largest empty office building in the region. The building is owned by Michigan Motion Picture Studios LLC and operates as Raleigh Michigan Studios at the site of a former General Motors truck plant and office complex. “It’s been in steady use for the last four or five years, but the building is for lease,” said John Boyd, agent/ broker at Southfield-based Signature Associates Inc., which is marketing it with an asking rent of $9.50 per square foot plus utilities. “But the ‘Transformers’ (filming) just ended ... anything is possible.” The studio’s financial backers include entrepreneur Linden Nelson; John Rakolta Jr., CEO of Detroit-based Walbridge Aldinger; the Taubman family; and Ari Emanuel, brother of Chicago Mayor and former White House Chief of Staff Rahm Emanuel. The project was also heavily fi-
nanced with public funds through a range of programs. The building has three floors and sits on 24 acres.
Former Federal-Mogul headquarters, Southfield This 360,000-square-foot property is a bit of an outlier among the bunch because at least one big user, Beaumont Health, recently had been in serious negotiations to buy it and then occupy it, according to sources. However, that deal collapsed earlier this year. Located at 26555 Northwestern Highway, the property that consists of four interconnected buildings had been the home to automotive supplier Federal-Mogul Holdings Corp. until two years ago, when the company moved about 750 employees into the former Blue Cross Blue Shield of Michigan office complex in Southfield. The Southfield office of Colliers International Inc. has the listing to sell the building or lease it to tenants. “It’s incredibly well located, and it’s an incredible campus,” said Paul Choukourian, managing director of the local Colliers office. “It’s in the center of everything — for really any industry, but especially for automotive. The campus is remarkable, with extra land for expansion and incredible amenities inside the facility. It’s
Online: Step inside the 5 buildings. See the photos at crainsdetroit.com/ realestate
got incredible potential.” The property, built in the early 1970s, is owned by New York Citybased Lexington Realty Trust, which paid $12.7 million for it in July 2004, according to CoStar Group Inc.
Old Wayne County Building, Detroit With 225,000 square feet, the Old Wayne County Building at 600 Randolph St. downtown is the most opulent of the group, but because of its unique layout, it presents challenges for potential tenants. Real estate experts have said in the past that the building, which is more than a century old, is best suited for a single tenant. It has been vacant since Wayne County moved its executive branch employees into the Guardian Building in 2008. Former County Executive Robert Ficano and the former ownership group Old Wayne County Building LP had a dispute about rent, and the county purchased the Guardian Building that year. Ficano claimed at the time that it was being overcharged for its 200,000 square feet in
AGENCY LEASING | TENANT REPRESENTATION | ASSET SERVICES VALUATION & ADVISORY | CAPITAL MARKETS Brian Piergentili Garrett Keais Managing Principal Senior Managing Director brian.piergentili@cushwake.com garrett.keais@cushwake.com
Tony Avendt Senior Vice President tony.avendt@cushwake.com
28411 Northwestern Hwy, Suite 900 Detroit, MI 48034
the building. The county contended it was paying $45 per square foot, while a representative of the ownership group said the county was actually paying $16 per square foot. Ficano then filed a $40 million lawsuit against the owners, accusing them of billing for unnecessary expenses, not returning a security deposit and not paying a debt of $35 million. The building is currently owned by a New York-based investment group that has remained largely quiet since purchasing it more than two years ago for $13.4 million. However, sources have said that construction and renovation work is expected to begin this month. The Guardian Building purchase was part of a larger deal that included the 35,000-square-foot building at 511 Woodward Ave. (which also sits empty) and the 1,450-space First Street Parking Deck.
Ottawa Tower II, Pontiac This 200,000-square-foot building, part of a two-building complex that housed General Motors employees, became vacant about six years ago when GM’s trucking division employees left, said Michael Stephens, who is part of the building’s ownership group, Ottawa Tower II LLC. The other Ottawa Tower building
is about 47 percent occupied, largely by State of Michigan employees, Stephens said. The problem with leasing the vacant building has been uncertainty surrounding Pontiac’s proposed demolition of the Phoenix Center, which attaches the two buildings and provides parking for their tenants. A four-year legal battle is ongoing, but the Michigan Supreme Court recently declined to take up a condemnation case filed by the city, which owns the parking deck. That, in turn, makes active again an injunction the building owners filed in 2012 after the then-emergency manager, Louis Schimmel, announced plans to demolish the city-owned deck. “We had nearly completed renovations and upgrades and started marketing the building,” Stephens said. “We were starting to get a lot of interest, a national call center specifically, because OnStar already had the fiberoptic infrastructure (in thebuilding) for a call center. “We are not soliciting tenants for a couple hundred square feet; primarily the type of tenants who want a minimum of 20,000 to 25,000 square feet, or the whole building. But nobody is going to move 1,000 people into a building if you can’t guarantee the parking.” Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB
10
C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 8 , 2 0 1 6
SPECIAL REPORT: REAL ESTATE
Auto recovery drops office vacancy rates, but will turnaround last? By Kirk Pinho kpinho@crain.com
Business Insurance
Tailored For Your Company
(Because the right fit is important) We provide small business protection for:
Clothing & Apparel Stores Funeral Homes Offices & Office Condos Florists Card & Gift Shops
Barber & Beauty
Shops Appliance Stores Pharmacies Optical Goods Hearing Aid Stores & many more!
”In Omnia Paratus” Business • Personal
888.513.8784
www.insureFIDA.com
One of the key effects of the economy’s improvement since the 2008 recession has been a decline in vacancy in the region’s biggest suburban office markets. We can thank the automotive industry for fewer empty office floors in Wayne, Oakland, Macomb, Livingston and Washtenaw counties, as a record-breaking 17.5 million cars were sold in the U.S. last year, outpacing the previous high of 17.4 million in 2005. In short, more car production and sales mean more auto suppliers and other companies need to hire workers and take more office space. “We are still automotive oriented,” said Steve Morris, managing principal of Farmington Hills-based real estate firm Axis Advisors LLC and an adjunct professor at the University of Michigan’s Stephen M. Ross School of Business. According to data from Newmark Grubb Knight Frank, which has offices in Southfield and Farmington Hills, the region’s office market was 20.9 percent empty at the end of 2006. Yet five years later in 2011, it hit 27.3 percent, leaving 19.47 million square feet of the 71.33 million square feet without a tenant. Fast forward another five years, and the office market, which now stands at 74.64 million square feet, is 17.8 percent vacant. Companies beyond automotive, such as tech firms,
Metro Detroit office market trends Vacancy 2011: 27.3 percent 2016*: 17.8 percent Total inventory 2011: 71.3 million square feet 2016: 74.6 million square feet Average rental rate 2011: $18.82 per square foot 2016: $19.31 per square foot * Through third quarter. Source: Newmark Grubb Knight Frank
are making an entry into the local office market as well, said Paul Choukourian, managing director of the Southfield office of Colliers International Inc. “All the industries are doing better. The economy is up, mainly driven by automotive in this market,” Choukourian said. The region’s largest submarkets (markets outside downtown Detroit) have all trended positive the past five years: Southfield is at 17.22 million square feet, greater downtown Detroit is at 15.56 million, Troy is at 13.26 million and Farmington Hills is at 6.25 million. Southfield’s office space has gone from a 31.5 percent vacancy rate at the end of 2011 to 21.9 percent this year, and Troy has similarly become
more occupied. That city had a vacancy rate of 31.7 percent in 2011 and today is a healthier 21.3 percent. Greater downtown Detroit has gone from 31.2 percent vacant to just 15.5 percent, and Farmington Hills has fallen to 12.7 percent from 19.8 percent in 2011. Declining vacancy rates are having an impact on tenants, said Mark Krysinski, partner of the Real Estate Practice Group for Southfield-based Jaffe Raitt Heuer & Weiss PC. “I think office is performing better, significantly, and as a result, tenants have less power today than they had shortly after 2006,” he said. “That’s for sure. It’s a tighter market. There is still space out there, but it’s getting harder and harder to find.” Mark Collins, senior vice president in the Southfield office of CBRE Inc., said that each year for the past four or five years, there has been about 1.5 million to 1.6 million square feet of previously vacant space that has been leased. “Things have been steady like this,” he said. But how the auto industry and others fare the next several years will impact how much longer the positive leasing trends continue. This year’s total car sales and next year’s are projected to be flat, but still close to meeting 2015’s record-high 17.5 million. “We are going into our seventh or eighth year of a recovery, so we are due for a downturn,” Morris said.
FIRST YEAR FREE The time to upgrade your business communications is NOW. Switch to any of Clear Rate Communications’ reliable business solutions by December 31 and not only will you get a superior product with unmatched customer service, you’ll also get the FIRST YEAR FREE*. Call 877.822.4922 or visit clearrate.com to learn more.
•BroadBeam™ Fiber •Cloud Phone System •High Speed Internet •Hosted Microsoft Email •VoIP or Traditional Phone Lines And So Much More!
Contact Us Today! *New customers only. Conditions and restrictions apply. Subject to availability. Offer subject to change.
877.822.4922
C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 8 , 2 0 1 6
CRAIN'S LIST: LARGEST NONRESIDENTIAL PROPERTY MANAGERS By square feet under management in metro Detroit Company Address Rank Phone; website
1 2
Jones Lang LaSalle Americas Inc. 226 E. Hudson, Suite 200, Royal Oak 48067 (248) 581-3300; www.jll.com
CBRE Inc. 2000 Town Center, Suite 500, Southfield 48075 (248) 353-5400; www.cbre.com
Top local executive(s)
Total square Total square feet feet nonresidential nonresidential Total square property under property under foot management management nonresidential INSIDE metro OUTSIDE property under Detroit metro Detroit management Oct. 2016 Oct. 2016 Oct. 2016 Major properties under management
Ken Koupal, Larry Emmons, Tim Kay, managing directors; John Cullen, SVP of property management and John M. Krieger, EVP John Latessa, executive managing director; Todd Pardon, asset services director Andrew Farbman, CEO; Andrew Gutman, president; Michael Kalil, COO
35,200,000
41,900,000
77,100,000
GM properties, American Axle HQ, BOA properties
32,983,839
8,024,106
41,007,945
The Renaissance Center, 777 E Eisenhower Pkwy, Ann Arbor, and 888 W Big Beaver, Troy
18,000,000
9,000,000
27,000,000
Chase Tower, Sheffield Office Centre, Bingham Office Center, Southfield Centre, Riverside Center, 1007 Church St., Oakland Commons, New Center One, 205 W. Randolph, 209 W. Jackson, Parklane Tower, Midland Mall, 27777 Inkster
3
Farbman Group/NAI Farbman 28400 Northwestern Highway, Fourth Floor, Southfield 48034 (248) 353-0500; www.farbman.com
4
Ford Motor Land Development Corp. 330 Town Center Drive, Suite 1100, Dearborn 48126 (313) 323-3100; www.fordland.com
Donna Inch chairman and CEO
15,608,322
0
15,608,322
Regent Court; iTek Center; Fairlane Office Centre; Corporate Crossings; Fairlane Business Park: Product Development Center; Fairlane Plaza
Bedrock Real Estate Services LLC 1092 Woodward Ave., Detroit 48226 (888) 300-9833; bedrockmgt.com
Jim Ketai, CEO, managing partner; Dan Gilbert, partner
14,400,000
7,750,000
22,150,000
One Campus Martius, One Detroit Center, First National Building, The Z, Chase Tower, 615 West Lafayette, One Woodward, Chrysler House, 1001 Woodward, Book Building, Book Tower, David Stott Building, Federal Reserve Building and others
14,000,000
10,000,000
24,000,000
Brownstown Business Center; Romulus Business Center; Livonia Corporate Center
13,940,000
3,000,000
16,940,000
PNC Center, Travelers Towers, Jewish Community Center, Farmington Hills Officenter I & II
5 5 7
Susan Harvey Ashley Capital LLC 2575 S. Haggerty Road, Suite 500, Canton Township 48188 senior vice president (734) 394-1900; www.ashleycapital.com Frederick Liesveld, Newmark Grubb Knight Frank 27725 Stansbury Blvd., Suite 300, Farmington Hills 48334 executive vice president and Jerry Burgess, director of (248) 350-9500; www.ngkf.com management services
A property manager oversees all financial, administrative, contractual, maintenance and daily operations for the interior and exterior of properties. This list is an approximate compilation of the largest such companies in Wayne, Oakland, Macomb, Washtenaw and Livingston counties. Companies with headquarters in the Detroit area are listed with their total property under management. Companies outside the area are ranked by property managed by their Detroit offices only. This is not a complete list but the most comprehensive available. Unless otherwise noted, information was provided by the companies. NA = not available. LIST RESEARCHED BY SONYA D. HILL
11
12
C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 8 , 2 0 1 6
Brownfield legislation would cap annual tax captures at $50M Michigan Senate could vote on bills as soon as Tuesday, coalition says By Lindsay VanHulle
Crain’s Detroit Business/Bridge Magazine
LANSING — Legislation pending in the Michigan Senate to allow developers to capture a share of state sales and income taxes to defray costs of large projects on contaminated property would limit the amount of captured annual tax revenue to $50 million, Crain’s has learned. The change is one of several being offered by proponents of the socalled transformational brownfield incentive as the Senate considers voting on a five-bill package when the lame-duck session resumes next week, possibly as soon as Tuesday. The tax revenue cap did not exist under a version of the bill that cleared a Senate committee in September, raising early concerns that developers would benefit from limitless tax captures at the expense of governments and schools. It was added later in an effort to shore up the legislation as fiscally responsible, said Dan Austin, a senior account executive with Detroit-based VanDyke-Horn Public Relations, who represents a coalition of developers and economic development agencies across the state backing the proposal.
“We think the $50 million is a responsible, doable number that should satisfy people who are a little bit worried,” Austin said. “We’re not funding projects through this program. We’re just helping bridge any kind of gap (developers) might have.” The proposal would capture new sales and income tax revenue generated at completed real estate developments from new residents and retail customers. Developers would be able to use the capture to help finance what are being called transformational brownfield projects, or those on property with environmental contaminants or are considered blighted or obsolete. Another change to the bills would include historic buildings if the strategic fund “determines the redevelopment is not economically feasible absent the transformational brownfield plan,” according to information from the coalition. Developers would have to meet minimum private investment thresholds; in Detroit, that would require at least $500 million in private funding, and $15 million to $100 million in smaller communities, depending on the population. The Michigan Strategic Fund, a division of the Michigan Economic Development Corp., could approve only five projects per year. Austin said the number of approved projects in a
About the coalition A 26-member coalition called MI Thrive has formed in support of Senate Bills 1061-65, known as a “transformational brownfield plan,” that would allow the capture of state sales and income taxes to help finance large development projects on contaminated sites. The bills cleared the Senate’s economic development and international investment committee in September; the full Senate could take them up in lame-duck session, possibly as soon as Tuesday. Members include: n Rock Ventures LLC, the holding company for Detroit businessman Dan Gilbert’s family of companies n HRS Communities LLC, a
Farmington Hills-based real estate development company n Detroit Regional Chamber n Invest Detroit n Downtown Detroit Partnership
given year could be fewer than five depending on how much captured revenue they would require. The revised legislation also would require the strategic fund board to select a third-party firm to conduct an independent fiscal analysis of proposed projects that would capture more than $1.5 million in annu-
n The Right Place Inc., a Grand Rapids-based economic development agency n Grand Rapids Area Chamber of Commerce n Sam Cummings, managing partner of Grand Rapids-based CWD Real Estate Investment n Building Owners and Managers Association of Metro Detroit n Saginaw Future n Saginaw County Chamber of Commerce n Shaheen Development, a Saginaw-based real estate development firm n Southwest Michigan First n Lansing Economic Area Partnership Inc., a Lansing-based economic development agency n• TraverseConnect, a Traverse City-based umbrella organization housing the Traverse City Area Chamber of Commerce and
al tax revenue, Austin said, as well as consult with the state treasurer before approving an incentive. Supporters have said developments chosen for the incentive would need to have a net financial gain for the state. A brownfield TIF could last for up to 30 years, though the intent is for the capture to end once the proj-
The Leader in Shareholder Rights
Venture North n Petoskey Regional Chamber of Commerce n Central Upper Peninsula Planning and Development Regional Commission n Lake Superior Community Partnership n Michigan Realtors n Michigan Economic Developers Association n Skypoint Ventures, a Flint-based real estate development firm n Macomb County Chamber of Commerce n Jackson County Chamber of Commerce n City of Jackson n City of Sterling Heights, including its economic development adviser n City of Southfield
Sources: MI Thrive, Van Dyke Horn Public Relations
ect’s costs are recovered. Other amendments would add incentive clawbacks in the event total private investment differs from what was proposed or does not meet minimum requirements. Under the incentive, a maximum of 25 percent of residential income taxes paid by residents of the new developments generally would be captured. Detroit businessman Dan Gilbert floated the concept for the legislation in conjunction with economic development agencies across the state. In the city, Gilbert is planning to redevelop the J.L. Hudson’s department store site on Woodward Avenue and is working on a plan for a $1 billion Major League Soccer stadium and mixed-use project on the site of the Wayne County Consolidated Jail building on Gratiot Avenue, despite Wayne County’s recent decision to move forward with the jail project. Both could be potential candidates for such an incentive. “It is well established that smart forms of assistance are needed to make challenging redevelopment projects possible in Michigan’s cities. Given the gap between construction and rehabilitation costs and market rents, particularly in our urban cores, many projects are simply not viable without assistance to close this gap,” the coalition, known as MI Thrive, wrote in a letter to Gov. Rick Snyder and legislative leaders. “While current programs are helpful for small and mid-sized projects, they do not solve for the large-scale projects that will have the greatest impact in accelerating the growth and revitalization of Michigan’s cities,” the letter stated. Snyder spokeswoman Anna Heaton said the governor has noted concerns about the bills as they were introduced, but will wait to decide whether he would sign them until after the bills finish moving through the legislative process. Lindsay VanHulle: 517-657-2204 Twitter: @LindsayVanHulle
13
C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 8 , 2 0 1 6
KeyBank names Willett president of Michigan, northwest Ohio markets By Tom Henderson thenderson@crain.com
Cleveland-based KeyCorp (PNYSE: KEY) has named Ted Willett as Michigan market president for KeyBank. He has also been named commercial banking sales leader for the Michigan and northwest Ohio markets. Willett will also be responsible for broadening KeyBank’s community involvement. “Ted’s proven leadership and collaboration Ted Willett: skills, market Excited to lead this knowledge, commarket. munity involvement, and strong business acumen make him the ideal leader for these markets,” said Jim Hoffman, president of the northwest Ohio market, in a press release. “We are excited to welcome him to this new position.” Willett replaces Hoffman as Michi-
gan market president. He had held the title on an interim basis since March, when Kirk Albert left KeyBank to join the Ann Arbor-based Michigan Business Alliance, a lending organization serving area credit unions. Willett has nearly 30 years’ experience in the financial services industry, mostly in commercial and corporate banking. Before starting his banking career, he was in public accounting in the Detroit office of KPMG. He began his banking career as a commercial banker for NBD Bank and then worked for Wells Fargo in a variety of commercial and corporate banking roles before joining Key in 2015 as a commercial banking sales leader for the northwest Ohio and Michigan markets. “I’m thrilled and excited to be named to this position and to lead this market during the growth we are seeing,” Willett told Crain’s. “I’ve been in commercial banking here for 28 years, and I’ve never been so excited about this market.” Willett got his bachelor’s degree in
accounting from Michigan State University and his MBA in finance from the University of Michigan. Willett lives in Bloomfield Hills and belongs to the Detroit Athletic Club, Oakland Hills Country Club, and Detroit chapter of the Association for Corporate Growth. KeyCorp had assets of about $136 billion in 15 states as of Sept. 30. According to the Federal Deposit Insurance Corp., as of June 30, KeyBank was 17th in deposit share among Michigan banks, with 23 branches, deposits of more than $1.3 billion and a market share of 0.67 percent. Chase Bank was No. 1, with 246 branches, deposits of $42 billion and market share of 20.96 percent. Tom Henderson: (313) 446-0337 Twitter: @TomHenderson2
HELPING COMPANIES NAVIGATE THROUGH
DIFFICULT BUSINESS SITUATIONS • • • • •
Turnaround, Workouts & Restructuring Performance Improvement Litigation Support Fraud Investigations & Forensic Accounting Executive Coaching
calderonelight.com
After making key hire, Honigman to open 7th office in Grand Rapids By Chad Halcom chalcom@crain.com
Detroit-based Honigman Miller Schwartz and Cohn LLP is opening a seventh law office, in Grand Rapids, after hiring away the managing partner of another top national law firm’s office in that city last week. Tracy Larsen, founder and former partner of the Michigan office of Barnes & Thornburg LLP in Grand Rapids' PNC Bank Building, joined Honigman as co-chair of the firm’s mergers and acquisitions practice group and as managing partner of the new Honigman office. He has been working from the firm’s current Kalamazoo office while locating a permanent office space, likely to open in Grand Rapids’ downtown business district by early 2017. “The overall strategy of growth for Honigman has always been one of talent acquisition, more than a focus on the acquisition of geographic space,” he said. “There is no doubt that our new local office will have a focus on mergers and acquisitions, but any other skills we may attempt to build out are yet to be seen or decided. We haven’t sat down yet for a specific discussion on a Grand Rapids strategy.” Still, Larsen has experience growing local offices. He was the first Michigan attorney in 2003 for Indianapolis-based Barnes & Thornburg, which now houses about 25 of its more than 550 attorneys in Grand Rapids. During his tenure at the office, he has handled hundreds of transactions, including as an adviser for Rockford-based Wolverine Worldwide (NYSE: WWW) on a $1.2 billion
acquisition of the performance and lifestyle group from Kansas-based Collective Brands Inc. in 2012, and an adviser to Canadian auto supplier ABC Group Inc., acquired by Cerberus Capital Management LP earlier this year for undisclosed terms. A 1984 graduate of the Indiana University School of Law, Larsen was previously an attorney at Warner Norcross & Judd LLP, Grand Rapids’ largest law firm, before joining Barnes, and he enjoyed a good business relationship with Honigman long before joining the Detroit firm. “I am delighted to be associated with the Honigman team,” he said. “It has been considered the dominant Michigan law firm for about all of my time in practice since 1984. We’ve known about each other a long time, and I used the firm as a referral source, and we’ve always had a good relationship when this (move) just happened to develop.” Honigman Chairman and CEO David Foltyn also hailed the addition of Larsen to the firm and his experience in complex business transactions. “His arrival is the latest step in our talent acquisition strategy as we both expand our footprint in Michigan and welcome one of the most respected and active M&A lawyers in the Midwest,” Foltyn said in a statement. Robert Sikkel, administrator of the Grand Rapids labor and employment law department, is now managing partner of Barnes’ Michigan office. Chad Halcom: (313) 446-6796 Twitter: @chadhalcom
WHO WILL MAKE BUSINESS HAPPEN? SPARTANS WILL.
JON CURTIS, MBA ‘16 SENIOR FINANCIAL ANALYST GENERAL MOTORS
Michi higa hig an Sta an State University’s Br Broad Co oll lle le leg ege ge off Bu Bus sine ess hel he elps wor work o king prrofessionals re each th heir go oals a . Whe ethe t r you u want to analyze bi b g data to o dr drive drive ve de d cisi cisions, s le ead glo obal teams, or sh ob hape the e futu future re of you ourr business, our Executive MBA BA A prepa prrepa pa ares s you to take on to tomor morrow row’s s challenge ge es. s Wit i h classes held every other weekend for o 20 months s, an MBA from the top-rank ked business college at Michigan Statte University is clos ser than you think.
Learn more at: BROAD.MSU.EDU/EMBA A
14
C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 8 , 2 0 1 6
DEALS & DETAILS
NEW PRODUCTS
Leon Speakers, Ann Arbor, manufacturer of custom audio and video designs, announced Tonecase, customizable solutions to enhance Sonos speakers. Website: leonspeakers.com.
STARTUPS
ACQUISITIONS & MERGERS
Habitat for Humanity of Oakland County, Pontiac, a home improvement nonprofit, has acquired two ReStore locations in Farmington Hills and Pontiac. Website: habitatoakland.org.
EXPANSIONS
Art Van Furniture, Warren, has opened PureSleep mattress showrooms at 41512 Ann Arbor Road, Plymouth, and 1664 E. Sternberg Road, Muskegon. Website: artvan.com.
One Earth Writing, Huntington Woods, a nonprofit
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.
HEALTH CARE
ADVERTISING & MARKETING Jeffrey H. DeClaire, MD Medical Director, Department of Surgery, director of the Orthopedic Adult Reconstruction and Joint Replacement Program at Crittenton Hospital Medical Center DeClaire LaMacchia
Senior VP, CustomerCentric Strategies Phoenix Innovate Phoenix Innovate, Troy, MI has added Moira DiJulio, Senior VP, Customer-Centric Strategies to its Marketing Services team. DiJulio joins Phoenix Innovate from agencies in Baltimore, MD with a successful track record launching new brands and leading the strategic planning, research and data-driven marketing efforts for national brands. She has solved complex marketing problems for clients such as: Blue Cross/ Blue Shield, Career Education Corporation, Harrah’s Casinos, and Spirit Airlines.
ENGINEERING & CONSULTING
Orthopaedic Institute. Jeffrey H. DeClaire, M.D., has been appointed to the position of medical director, Department of Surgery, and director of the Orthopedic Adult Reconstruction and Joint Replacement Program at Crittenton Hospital Medical Center. This new role will be key in the strategic development and operational improvement of the service line. Dr. DeClaire’s responsibilities will include onboarding of new surgeons, increasing efficiencies, process improvement, ensuring high-reliability outcomes for patients.
NON-PROFIT Mark Roberts
Jennifer L. Chehab
Senior Director of Resource Development
Fleis & VandenBrink
Detroit Regional Chamber
Senior Project Manager Jennifer Chehab, PE has joined our Farmington Hills office. She is a strong client advocate having led municipal infrastructure projects for over 20 years throughout metro Detroit and surrounding areas [including the cities of Warren, Clawson, Troy, Utica, Royal Oak, Sterling Heights, the Village of Bingham Farms]. Her primary focus will be in design and management of municipal utilities, infrastructures, road projects and site designs.
TUESDAY NOV. 29
Sheriff Michael Bouchard — Leading in Times of Chaos.
public charity focusing on writing workshops, has opened at 25121 Scotia Road. Telephone: (248) 3760406. Website: oneearthwriting.org.
ADVERTISEMENT SECTION
Moira DiJulio
CALENDAR
As senior director of resource development, Roberts will advise leadership on all matters related to philanthropy and membership growth. Roberts is a fundraising professional with 20 years of experience at hospitals and universities. Most recently, he served as the senior director of development at Wayne State University’s College of Engineering where he was responsible for the strategic planning and execution of a $40 million campaign.
Mike Bouchard: Oakland County sheriff.
7:30-9 a.m. Leadership Oakland. The Oakland County sheriff shares what it’s like to lead in turbulent times in law enforcement. Troy Community Center, Troy. $32 members; $36 nonmembers. Website: leadershipoakland. com.
WEDNESDAY NOV. 30
Michigan’s Private Higher Ed: A Powerful Workforce Generator. 11:30 a.m.-1:30
p.m. Detroit Economic Club. A lack of public funding and the resulting economic reality are forcing private higher education institutions to be responsive to student demands and employer needs. Speakers include Stephanie Bergeron, president and CEO, Walsh College; Virinder Moudgil, president and CEO, Lawrence Technological University; and Keith Pretty, president and CEO, Northwood University. MotorCity Casino Hotel, Detroit. $45 members; $55 guests; $75 nonmembers. Website: econclub.org.
UPCOMING EVENTS
MichAuto’s Annual Meeting: The Convergence of Auto and Tech in Michigan. 4 p.m. Dec. 8. Detroit Regional Chamber.
Discussion on how culture is a critical success factor for Michigan and its automotive industry to evolve, grow and compete. Automotive Hall of Fame, Dearborn. Free for members; $50 nonmembers. Contact: Sarah Nagel, phone: (313) 596-0384; e-mail: snagel@ detroitchamber.com. inGAGE Role Model and Investor Series With Gwen Jimmere. 7:30-9 a.m. Dec. 8.
Inforum. Jimmere, founder and CEO of Naturalicious and co-founder of Pitch Proof, shares her entrepreneurial journey as the first African-American woman to hold a U.S. patent for a natural hair care product. Comerica Bank, Livonia. Free. Website: inforummichigan. org. Hyper-Partisanship and the Changing Nature of News. 11:30 a.m.-1:30 p.m. Dec. 12. Detroit Economic Club. Mark Thompson, president and CEO of The
New York Times, will discuss the corrosion of language and debate, which he identifies as a particular challenge for news publishers. MotorCity Casino Hotel, Detroit. $45 members; $55 guests; $75 nonmembers. Website: econclub. org. Earning It: A Conversation With Pulitzer Prize Winner Joann Lublin. 7:30-9:30 a.m. Dec. 13. Inforum. Lublin, author of
Earning It: Hard-Won Lessons From Trailblazing Women at the Top of the Business World, will share insights from trailblazing executive women who broke the corporate glass ceiling and reached the highest rungs of the corporate ladder — most of whom became
chief executives — in retailing, manufacturing, finance, high technology, publishing, advertising, automobiles and pharmaceuticals. Great Lakes Culinary Center, Southfield. $35 members; $50 nonmembers. Website: inforummichigan.org.
The Big Four. 11:30 a.m.-1:30 p.m. Jan. 17. Detroit Economic Club. Detroit Mayor Mike Duggan, Wayne County Executive Warren Evans, Oakland County Executive L. Brooks Patterson and Macomb County Executive Mark Hackel
will discuss regional successes, issues and their plans to drive the Southeast Michigan region forward. The meeting will take place during the 2017 North American International Auto Show and will also include the unveiling of the 2017 Detroit News Readers Choice Award winners. Cobo Center. $45 members; $55 guests; $75 nonmembers. Website: econclub.org. 60 Minutes to Success: Connecting Business to the Education Pipeline. 3:304:30 p.m. Jan. 17. Automation Alley. Learn about the business benefits of MI Bright Future, a program created by the Workforce Intelligence Network that con-
nects regional employers with local students. Speakers include Sarah Sebaly, senior program manager, and Lisa Gordon, program coordinator, MI Bright Future. Automation Alley, Troy. Free. Contact: rivarde@automationalley. com. Ten Key Questions for Leaders: Moving From the Urgent to the Important. 8-10:30 a.m. Jan. 20. Marketing and Sales Executives of Detroit. Priscilla Archangel, president of Archangel & Associates LLC, talks about the key im-
portant questions that, if properly addressed at individual, team and organizational levels, will strengthen your company’s effectiveness. Management Education Center, Troy. $45 members; $60 nonmembers. Website: www.msedetroit.org. 2017 Technology Industry Outlook. 8-11 a.m. Feb. 13. Automation Alley. The 2017 Technology Industry Report will be unveiled as Automation Alley surveyed technology and manufacturing executives from Southeast Michigan and across the country to determine their knowledge of Industry 4.0, or the fourth industrial revolution, and whether they are ready for coming changes in the manufacturing industry. Detroit Institute of Arts, Detroit. $25 members; $45 nonmembers. Email: events@automationalley.com; phone: (800) 427-5100.
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.
November 28, 2016
GILBERT FROM PAGE 3
GM tech people from Austin?
No.
Microsoft?
I don’t know. Could be. There could be another one, too. Has that been reported? (Aside, to public relations staff) Have you guys seen that in the clips anywhere? It might not be them.
The Microsoft thing? It’s kind of been rumored for several years. They are in Southfield now, in the Town Center.
So your question is, why is the marketplace ‌ Yeah.
Because there was such a glut of office space, plus the price of the buildings and the price per square foot went to such a low ‌ and the construction costs kept going like this (up), I would argue the same thing if I didn’t know all the stuff and experience. Because how does that make sense? Because less supply, rates go higher, but there is a gap because it’s not that easy to take people who are used to paying $19 ‌ especially when there is space in the suburbs, too. We wouldn’t go there for competitive reasons; we would go there because we just don’t have (available space) and we want to put everything in Detroit. The average person could still take empty space there. ‌ In other words, they could say, “I could pay $25 or $27 (per square foot) in Detroit, but I’m not going to pay $40, even though it’s new.â€? There is a period of time I think, to move the market, when you need some incentive thing that only helps the state on a net basis. If I’m the state, I’m not approving it either, by the way; you have to have a tangible net gain. Have you seen it?
Yeah, I’ve seen it. (The legislation allows the capture of state sales and income taxes to help pay for major redevelopment projects.) It starts at $500 million in the city proper, if I remember right, but in other areas it’s a lower threshold.
Based on population. It’s called “transformational,� (projects) and there is a formula they use. And then there is a limit on a statewide basis how many projects a year, and there’s a limit on each city, I think, too.
There are some that are $25 million, which would be transformational for them, versus $500 million for Detroit, say.
We need to have stakeholders. There is no way we are going to get this through the Legislature without really having a statewide coalition based on the state Legislature. We were sort of surprised to talk to Saginaw and Flint and even Marquette. There are people that are sort of in the same situation on a smaller scale who really think this is really going to kickstart their cities.
What’s your read on the appetite or the ability of the Legislature to really approve that this year?
It’s a long, complicated process right now — a lot of moving parts to it. We had it come out of the Senate committee, so the next step is to get to the Senate floor, then the House committee and then the House floor. Then the governor, too. The governor
15
C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 8 , 2 0 1 6 CRAIN’S DETROIT BUSINESS
“We think the river, anything along Woodward, starting to go west into Corktown, Capitol Park. I’m not sure office stuff would be over there, but more residential or smallertype uses, more boutique offices, stuff like that.� Dan Gilbert has to — they (lawmakers) have to know that he’s going to be there and not veto something. There are really only a handful, maybe two or three, really prime pieces to build downtown anymore, two of which you control. What about the riverfront? As far as new building, is that something you’re interested in?
We are, and others are as well, as you know. ... We think the river, anything along Woodward, starting to go west into Corktown, Capitol Park. I’m not sure office stuff would be over there, but more residential or smaller-type uses, more boutique offices, stuff like that. But we flat-out need. ‌ Let me give you an example. We have net — not just Quicken, but the family of companies — we have net gain, year-to-date in 2016 of 2,000 new people; 250 square feet, on average (per employee). We use less than the average. We put more people in. Jimmy (Ketai) tries to squeeze as many people. It’s probably between 200 and 220 (square feet per person) when you take into account corridors, lobby, conference rooms. That’s 400,000 to 500,000 (square feet). We, ourselves, just one business, not even in one year, we occupy 400,000 to 500,000 more feet of space in Detroit. That’s what I am talking about. We would like to do that next year. Rock Connections (a Gilbert-owned strategic marketing company specializing in call center services). You know Rock Connections? They are going in the old PwC building.
They are absolutely booming, getting business from everywhere. And this is the greatest job ever for Detroiters who don’t have college degrees or maybe don’t have high school degrees. I’ve been saying this about call centers for years now. Hire somebody, if they can talk, show up on time, wear a tie, come in to work, get $12 an hour plus full, great benefits, the good ones move up and can do Quicken Loans-type banking jobs, and even if they don’t, it’s not a bad start, compared to ‌ I always look at like two, three industries. What’s going to help the Detroiters where it’s not happening, they are not going to college, or they dropped out of high school and they do want to work. A call center is a great place. They got like 700 people. They just moved in there, and they are out of space like six months ago, and they are out of space. Why not make Hudson’s all office and move all your employees in there?
I think what you’re saying is right, but there is Hudson’s, and then there’s the other ones. We have about five or six of them ready to go here. We have plans for residential, office, some stuff that’s very, very needed —
community ‌ you’ll see. By the end of the year?
On Hudson’s or the whole thing? Hudson’s. What we’d like to do is be sure we have this gap filled. We are not going to make a killing — at least not the near, short-term, the first five or 10 years, on any of these buildings. And you don’t have to be, and I think people know that. We don’t sit there with spreadsheets saying we need X return. What we just don’t want to have is a bleed with negative cash flow and have that depress the whole market. So we look to just get a few percent above par, at least at the beginning. You can run numbers all day. First of all, we only occupy 37 percent of our buildings. Thirty-seven percent. That’s it. Even with our growth and everything, we have to have others, and they are not going to pay above what they will pay. So is it going to be 60 stories? Hudson’s?
I don’t know the exact number. I really don’t. Close to that?
I don’t know. I’m trying to think. Look, if you’re going to build there ‌ what do you call that in business school? I don’t know — I didn’t go there.
Economies of scale.
My degrees are in poetry, I don’t know these things.
You’d be a great businessperson then. What’s your sense on the report (on the jail site) that just came out?
Everything is happening the way it was supposed to happen. When we went in originally, we proposed that the consultant that they end up using, that we would both use it together, that that would be the best, unbiased way of doing it so we wouldn’t sit there and have to have ours say this, and theirs say this, and then everybody would argue who’s right and who’s wrong on a line-item basis. So we said, how about this? We’ll pay half and you pay half and get one unbiased, third-party consultant and let them go in and analyze the cost; not only the cost on what it would take to complete the jail, but also the cost to move onto the alternative sites and then what the deficit is and all that stuff. They (commissioners) said you’ve got to have your own consultant. So after they had already ordered ‌ we were like three weeks behind them, and we did hire one, an outside third party that’s going through, and we’ll be there in a few weeks. Now we are going to compare theirs to ours. Ours is determining exactly how much it would cost to build what they want to build somewhere else, as well as the other buildings they would move, and then see if there is a deficit, which there will be, and how much of that can be eaten up by the cost of buying the land and any other creative ways to make this happen. Before January, is that going to happen?
I do believe, in this case. Look, you never know in politics and with holidays, but my gut is that one way or the other, this thing will probably come to a head by New Year’s Day. Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB
Page 15
JOB FRONT
MARKET PLACE
POSITIONS AVAILABLE
INDUSTRIAL SERVICES
C.W. JENNINGS INDUSTRIAL EXCHANGE Senior Associate Director/ Business Development University Communications. The Associate Director position leads the business development team within University Communications, spearheading the growth of and maximizing outcomes from CMU’s partnerships with business, industry, and non-profit and governmental organizations and agencies. The Associate Director is responsible for developing, planning and implementing a comprehensive outreach plan to leverage the university’s assets and offerings, strengthening existing business relationships and forging new ones in order to generate enrollments. Leadership skills, a collaborative, goal-oriented mindset and an entrepreneurial spirit are a must. Required: Bachelor’s Degree and three years of relevant work experience related to the duties and responsibilities of this position, preferably in business outreach and development, sales, marketing or communications. Prior budgeting and supervisory experience, with proven experience in leading a team to quantifiable outcomes. Excellent communication, relationship management and customer service skills, including the ability to rally others around opportunities to build new partnerships required. For a complete list of requirements and to apply online please visit www.jobs.cmich.edu CMU is an AA/EO institution, providing equal opportunity to all persons, including minorities, females, veterans, and individuals with disabilities (see www.cmich.edu/ocrie)
MISCELLANEOUS
Global Industrial Consulting Construction • Acquisitions Exporting • Financing (855) 707-1944
REAL ESTATE AUCTIONS
GOVERNMENT AUCTION
36.35 - ACRE FORMER MILITARY SITE NEWPORT & TELEGRAPH RD. NEWPORT, MICHIGAN U.S. GENERAL SERVICES ADMINISTRATION € € € RICH BALSANO 312-353-0302 realestatesales.gov
COMMERCIAL
LAND AUCTION
SURVEY ANALYZE
Thurs., Dec. 8th at 4pm 0 Grand River Ave - Brighton, MI
MATCH
Prime land for development in Brighton! 2.3¹ acres zoned Commercial/Local Business! With 350+/- feet of frontage, LW¡V WKH SHUIHFW ORFDWLRQ IRU DQ\ PHGLFDO professional or business. Located across the street from Encore Village, a planned 150 Acre/555 unit residential FRPPXQLW\ RIIHULQJ DVVLVWHG OLYLQJ DSDUWPHQWV DQG VLQJOH IDPLO\ GZHOOLQJV Available curb cuts on Grand River and 5LFKDUGV IRU HDV\ DFFHVV $ SKDVH DQG VXUYH\ DUH DYDLODEOH XSRQ UHTXHVW Located just off I-96 and East of US-23 on Grand River.
CrainsDetroit.com/JobConnect |
Call Us For Personalized Service: (313) 446-6068 FAX: (313) 446-0347 E-MAIL: cdbclassified@crain.com INTERNET: www.crainsdetroit.com/section/classifieds
Auction Held Off-Site at Alexanders Land & Sea Grill: 10180 Grand River Ave, Brighton, MI
See Crainsdetroit.com/Section/Classifieds for more classified advertisements
SOLDBYBETHROSE.COM 419.469.1819
Can’t Attend Our Auction? | Bid On Our App!
The Crain’s reader: 29.2% are with companies contemplating moving/ expanding. Help them find you by advertising in Crain’s Real Estate section. 313.446.6086 • FAX: 313.446. 034 7 E-Mail: cdbclassif ied@crain.com
16
C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 8 , 2 0 1 6
MEDICARE FROM PAGE 3
whether St. Joe’s and DMC will actually profit — through shared saving arrangements — and improve quality for patients in the program, it is clear that patients will be better served as the hospitals now have financial incentives to lower costs and monitor patient care outcomes and events for 30- to 90-day episodes, depending on the procedure. As of July 1, the U.S. Centers for Medicare and Medicaid Services announced that more than 560 hospitals and physician group practices, along with 650 skilled nursing homes, 97 home health agencies and nine rehab facilities were participating in the second phase of the BPCI program. Starting with an acute-care hospital stay, the “model two” bundled payment program now covers 48 different clinical episodes of care. They include heart failure, joint replacement, stroke, cardiac bypass surgery and pacemaker replacements that all essentially will be paid in a single, or bundled, payment. They account for about 70 percent of Medicare spending. The “model three” program also starts with a hospital stay, but begins at a nursing home, rehabilitation facility, long-term care hospital or home health agency. There is a “model four” for select episodes that covers care 30 days after discharge, but only 10 hospitals remain in that model. By 2017, Medicare estimates, about
30 percent of Medicare fee-for-service payments to providers will have some risk attached, and by 2018, more than half. The program would put about $1.2 billion in Medicare spending in the new bundles in 2016, and that figure would grow to $2.9 billion in episode spending in 2020. CMS projects to save the Medicare program $343 million over five years. For example, a 90-day episode of care for total joint replacement — hip or knee — could include the hospital stay, physician services, outpatient care, home health, post-acute facility services and readmissions. The goal is to create financial incentives that encourage providers to coordinate care, reduce unnecessary services and expand initiatives that help patients recover quickly. “We have seen substantial cost savings, far below the cost threshold,” said Bill Restum, CEO of DMC Rehabilitation Institute of Michigan
and system executive for post-acute care. Restum said DMC has been able to coordinate care and lower costs by 20 percent for the hip and knee replacement cost per bundle based on Medicare’s target price. The average Medicare payment for surgery, hospitalization and recovery ranges from $16,500 to $33,000 for hip or knee joint replacement, CMS said. Detroit’s average cost for a total knee was $36,000, while Grand Rapids was $30,000 in 2015; a total hip averaged $28,000 in Grand Rapids and $35,000 in De-
troit. At DMC, surgeons in 2015 performed 342 total hip and knee replacements. So far this year, DMC has been able to reduce hospital readmission rates for those procedures to 8.8 percent from 10.6 percent in 2015. By coordinating care more effectively, recovery at skilled nursing home average days dropped to 14 from 21 days; and home health visits also dropped to seven per episode from 14. “We are on a hot streak,” said Restum, using a baseball metaphor.
Mixed results At St. Joseph Mercy, Paul Harkaway, M.D., chief accountable care organization development officer, said each of the five hospitals in the system has rolled out different bundles and uses different approaches. Overall, the results are mixed, he said. Some bundles have too few patients enrolled, and other bundles are affected by difficulties in post-acute care coordination, Harkaway said. “It is too early to make any conclusions,” he said, noting that some bundled payment episodes are going well and others might be scaled back due to lack of patient volume. “Financial performance has been mixed at best, probably not as been hoped,” Harkaway said. “We hoped for quicker results.” One of the problems with the program is the lack of timely data. While
in the second year of the program in terms of provided services, Harkaway said, St. Joseph’s has only received data up to the fourth quarter of 2015. “We might be doing very well now. We just don’t know because we don’t have current data,” Harkaway said. Since early 2015, St. Joseph’s five hospitals have completed 2,981 episodes of care. St. Joseph Livonia has been the busiest, with 1,023 procedures completed, including 270 heart failure and 210 major lower joint replacement. St. Joseph Livonia’s 12 bundled care projects underway include heart attack, cellulitis, heart failure, diabetes, joint replacement, other respiratory, other vascular surgery, red blood cell disorders and transient ischemia, also known as a mini-stroke. Harkaway said the focus is to make sure post-acute care services are used on time and with an effort to reduce hospital readmissions and ER visits. “In cases where you own the nursing home and the hospital, you see savings at the hospital but lose revenue at the nursing home,” he said. “We have decided if it means losing volumes in nursing homes, bring it on. We want to provide better care.”
Outside care Ali Ucar, CFO of Care Solutions Group LLC in Royal Oak, said there are many challenges with Medicare’s bundled payment program, but the key for hospitals is to work closely with post-acute care providers, including
nursing homes or rehabilitation centers, and home health services. “My belief is that this model is the right way to proceed because it forces all pieces of the health care to coordinate care, but there are many challenges,” Ucar said. For example, of the 90 days that hospitals are responsible for care for a hip replacement, 70 to 80 days could be care in the home, rehabilitation center or nursing home. “Managing and stabilizing that patient in their home with a patient’s primary care physician or home health nurse will avoid a very costly rehospitalization or emergency visit,” Ucar said. But Ucar said the critical period starts with the hospital discharge plan and the first five days either in rehab, nursing home or home care. “We are the group that works with them at home to stabilize that patient,” Ucar said. “We work closely with the primary care physician to schedule to appointment as quickly as possible.” Other critical providers to work with include the home health agency, for nursing, therapy and personal care needs; pharmacy, to make sure medications are being properly administered; and durable medical equipment, including walkers or oxygen. “All of that is overseen by a nurse care manager who is in touch with the patient at all times,” Ucar said. “What happens in the home is where all the action is.” Jay Greene: (313) 446-0325 Twitter: @jaybgreene
Reach up to 674,615* local and international business leaders and industry insiders with your ad in the
2017 NORTH AMERICAN INTERNATIONAL AUTO SHOW GUIDE! PRODUCED BY
IN CONJUNCTION WITH
ADVERTISING INFORMATION: Contact Matt Langan at advertisingcdb@crainsdetroit.com or (313) 446-6032 CLOSE DATE: Dec. 1, 2016 | MATERIALS DUE DATE: Dec. 8, 2016 | PUBLISH DATE: JAN. 16, 2017 *Based on distribution and potential readership
17
C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 8 , 2 0 1 6
RIZZO FROM PAGE 3
a previous award to the trash hauler, which Toronto-based GFL (which stands for Green for Life) acquired Sept. 30 in a deal valued around $300 million. Dearborn Heights and Richmond Township also penned new deals with GFL in recent weeks, as did the Southeastern Oakland County Resource Recovery Authority on behalf
of Hazel Park, a SOCRRA member. Dearborn has an upcoming study committee hearing and will consider a possible GFL contract as well. Still, a house-cleaning is underway — even though Dovigi is doubtful it will uncover a systemic or companywide problem. GFL has retained an out-of-town law firm and initiated a forensic audit of the new U.S. subsidiary, and a comprehensive targeted screening of all company employee emails, to reassure investors and customers it’s addressing the scandal. Departing Chesterfield Township Supervisor Michael Lovelock was arrested this month and taken to federal court, becoming the third public official to face criminal charges for taking alleged bribes from a Rizzo employee. Lovelock, 57, is accused of accepting more than $30,000 between 2010 and earlier this year. While the audit is still underway, Dovigi said he is confident in the former Rizzo workforce — including former COO Jeff Rizzo, who remains as regional vice president of GFL’s U.S. subsidiary, and in father Chuck Rizzo Sr., who continues to consult and oversee some training at the company.
New in town But Dovigi, 37, who grew up in Sault Ste. Marie, Ontario, and stepped in to manage the U.S. subsidiary after former Rizzo CEO Chuck Rizzo Jr. resigned in late October, said there is still much to do. The company said its doors are open to cooperate further with law enforcement, and Dovigi has been furnishing references from the parent company’s government customers across Canada to reassure Michigan officials about how it does business. He also expects to continue in Michigan well into next year, and there are no immediate plans to search for Rizzo Jr.’s successor. All this problem-solving and crisis management is a far cry from Dovigi’s days in minor league hockey, and as an NHL draft pick in 1997 by the Edmonton Oilers — or even his stint in corporate finance, through which he came to acquire a small transfer station and four waste trucks in Vaughan, Ontario, in 2004. He founded GFL Environmental Inc. in early 2007 and remains its president and CEO. The company has grown in large part through 57 acquisitions, boosted in part by an infusion of private equity capital in 2010.
The long haul The most recent of the acquisitions is Rizzo, in which Dovigi thought he saw a kind of kindred
spirit in business practices. “We already have service in Windsor, Ontario and Sault Ste. Marie, Ontario, right across from Sault Ste. Marie, Michigan — so it was a logical place to start in the U.S. market and an opportunity presented itself when Kinderhook (Industries, a New York private equity firm) decided they wanted to sell,” he said. “It just made sense for us, and culturally we saw a lot of similarity between the business we bought and the business we own.” Kinderhook, managed by metro Detroit expatriates Robert and Christian Michalik along with others, manages more than $2 billion of committed capital and more than 140 investments. The private equity firm had acquired a stake in Rizzo in 2012. Dovigi said he was actually Kinderhook’s first call, to shop the Michigan business in which it was the largest shareholder. A review of Rizzo’s books suggested then, and still does, that it lands contracts largely by being reliable and competitive on price. Then came the news, two weeks after the deal closed, that Rizzo was “Company A” in an ongoing investigation of what the FBI calls public corruption in “multiple municipalities in Southeast Michigan, primarily Macomb County.” Dovigi said the management has had multiple conversations with Kinderhook since then, but he was “not sure they shed any new light” about when the corruption investigation began. He says his company still enjoys a good relationship with Kinderhook. He also said he is still not certain Rizzo Jr. is “Cooperating Human Source 1,” the contractor employee who helped gather evidence for the FBI against Lovelock and two other public officials in Clinton and Macomb townships. But there are no plans to ask other Rizzo employees to leave, unless the audit or employee email screens reveal something new. “With Chuck (Jr.), there was just too much noise around it. ... And that’s why the decision was made” for him to resign in late October, Dovigi said.
New beginnings? But GFL isn’t done expanding into the U.S. market, and it has its eye on new acquisitions and new municipal and commercial contracts. The U.S. subsidiary could enter four states of the Upper Midwest within five years, Dovigi said, adding new services as it goes. The company also expects to bid on a new contract with Huron Township, which had voted Oct. 12 to switch haulers from Waste Management to Rizzo but rescinded that decision after the FBI case became public. And the email sweep continues, Dovigi said, to see if any employees might have been aware of bribes, kickbacks or other illicit deals with local officials. “We won’t be satisfied until we’ve done an exhaustive search,” he said. “But if you talk to the workforce here and the communities we serve, it doesn’t sound to me like it’s going to be a widespread thing.” Chad Halcom: (313) 446-6796 Twitter: @chadhalcom
FREE Webinar
Presented by:
Getting Your Foot in the Door: Practical Advice from Two Purchasing Executives Speakers:
Jason Hardy - EVP, Supply Chain Management, Paslin Scott Mors - Head of Procurement and Supply Management, ThyssenKrupp System Engineering
Wednesday, Dec. 7 12-1 p.m.
Register at crainsdetroit.com/webinars Powered by:
18
C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 8 , 2 0 1 6
GORES FROM PAGE 1
“I think the relationship that he has established with the Ilitch family, with (Ilitch Holdings Inc. President and CEO Christopher Ilitch) in particular, and also with Dan, I don’t know there is going to be a lot of competing with him in the middle,” Bing continued. “I think Tom is looking to make sure that he is on the good side of both those guys, and they’ll be looking at doing things together. In some cases, he may be with the Ilitch family on certain projects; on other projects, he may well be on the other side. But I don’t think he wants to get in the middle and create any friction at all.” That thought was shared by Robert Forsythe, dean of the Wayne State University Mike Ilitch School of Business that is getting a new building across from the arena. “I think they are all looking after, from talking to both (the Ilitch and Gilbert) organizations, they really have a lot of respect for one another, and I don’t see there is going to be a lot of conflict there” for Gores, a Michigan State University graduate. Tellem said there is a “common spirit” among the billionaires: “It’s not about egos; it’s about what makes business sense and what is right for the city.”
It’s about the bonds On Tuesday, Gores, Ilitch, Detroit Mayor Mike Duggan and NBA Commissioner Adam Silver sat on a stage in Cass Tech, the under-construction arena in view from the sixth floor as the men praised each others’ work to broker the deal to bring back to Detroit the franchise, which Forbes most recently valued earlier this year at $850 million. They also lauded the economic impact they expect the move will bring to Detroit, saying it will be hundreds of millions of dollars and bring jobs (based on a PS&E-commissioned study by the University of Michigan) to a city that desperately needs and wants them. The agreement, which was tentatively approved by the Downtown Development Authority board and still requires financing and other approvals from the Michigan Strategic Fund, DDA and Detroit City Council, is made possible in part by $34.5 million in public financing from refinancing DDA bonds and up to $55 million more in DDA-backed bonds to be repaid by Palace Sports & Entertainment.
LARRY PEPLIN
From left: Detroit Mayor Mike Duggan, Ilitch Holdings Inc. President and CEO Chris Ilitch and Pistons owner Tom Gores at last week’s announcement at Cass Technical High School. The bond refinancing takes bonds issued in 2014 in support of the arena construction and issues new bonds at a higher amount, with a lower interest rate and longer term. A DDA spokesman said neither the city nor the state would be responsible for repaying the bonds, even if Olympia or Palace Sports failed to pay their obligations. The DDA has touted that the move will bring hundreds of millions of dollars in economic benefits, making the costs of the public bonds, which are paid out of taxes captured in the DDA district, a cheap price to pay. But the deal has already drawn fire for why any public financing is needed with so many billionaires involved. And public financing for pro sports teams has long been criticized by many economists and others who question its actual economic payoff. “Governments often do more harm than good by providing subsidies of any sort to private enterprises. Nothing about the Pistons’ move to Detroit should be subsidized by taxpayers,” said Michael LaFaive, director of the Morey Fiscal Policy Initiative at the Mackinac Center for Public Policy, a conservative think tank.
Being impactful The turning point in negotiations to bring the Pistons to Little Caesars Arena came this spring, when Gores met with Ilitch and his parents, Mike and Marian, in the District Detroit Preview Center in Comerica Park. “They all came away feeling positive, and it really gave the negotiations a lot of momentum going forward. Tom and Chris, this deal doesn’t get done without them forging a strong personal relationship,” Tellem said. Gores made his billions fixing
INDEX TO COMPANIES These companies have significant mention in this week’s Crain’s Detroit Business: Ascension Health Michigan
4
GFL Environmental USA
Avomeen Analytical Services LLC
7
Honigman Miller Schwartz and Cohn LLP
13
KeyBank
13
Care Solutions Group LLC Colliers International
16 9, 10
3
Olympia Development of Michigan
1
Crittenton Hospital Medical Center
4
Ottawa Tower II LLC
9
Detroit Medical Center
3
Palace Sports & Entertainment
1
Detroit Pistons
1
Rizzo Environmental Services
3
Forbes Frankel Troy Ventures LLC
8
St. Joseph Mercy Health System
3
companies he bought on the cheap and then sold for a healthy profit, and you’ll get a picture of a civic-minded businessman who is receptive to feedback and shies away from micromanaging. He also hires strong, capable deputies, such as Tellem, who are “some of the most intelligent and sophisticated” minds in their fields, said Eric Larson, CEO of the Downtown Detroit Partnership. Gores, who was not available for an interview, has described himself as well-grounded. “I understand if I’m the CEO I’ll do my job, but I’ll never confuse that with humanity,” he told C-Suite Quarterly in 2011. “If I’m in a conference room and I need to lead a meeting, I’ll do it. In the meantime, if I’m in the regular world, I’m a regular guy.” Cliff Roesler, a partner in the Birmingham-based investment banking firm Angle Advisors-Investment Banking LLC, praised Gores for his skill at doing corporate carve-outs, which are deals that can be difficult to bring to fruition because they frequently involve underperforming business units that buyers may be reluctant to invest in. “His real start was in corporate carve-out transactions. He was a pioneer and was among the first in that segment of the PE market,” Roesler said. “Through Platinum he has demonstrated time and again that orphaned assets can be turned around. The result of this specialty is often jobs being saved and value being created from a deep hole. It's not easy and takes confidence, stick-with-itness and a terrific amount of energy. “Gores also knows that change can be a motivating event. If you look at his playbook, he uses change to stimulate new thinking and effectively change the storyline. It doesn’t work for everyone, but it seems to work repeatedly for him.” In addition, his charitable giving isn't for show, Larson said. “When Gores arrived back in Michigan, it was clear he was investing in the community without any arm-twisting or pleading,” Larson said. His FlintNOW initiative, created earlier this year in the wake of the water crisis in his hometown, pledged to raise at least $10 million for short-term and long-term recovery efforts. He also collaborated with Huntington Bank to make $25 million
available for business, residents and entrepreneurs in Flint affected by the crisis. As part of the Pistons deal, the team will build and rehabilitate 60 basketball courts throughout the city at a cost of $2.5 million over six years, plus donate $100,000 to the Detroit Workforce Solutions Corp., a city workforce development initiative. It will also host free youth basketball camps and give away 20,000 free Pistons tickets each year to Detroit residents. Bing, an NBA legend who played for the Pistons in the 1960s and 1970s, said Gores “seems to be genuinely concerned about what’s happening in Detroit and ... I think it goes way beyond just owning the Pistons, which is a good thing.” “I promised you I would try to be impactful, and I’m doing the best I can to be impactful,” Gores said at the Tuesday press event. He paid $325 million for the Pistons and PS&E in 2011, adding to his business interests that, according to Forbes, today include more than 25 companies with about $6 billion in assets through his Los Angeles-based private equity firm Platinum Equity, which he started in 1995. Current portfolio companies include Southfield-based Chassix Holdings Inc., a maker of a wide range of auto parts; Chicago-based Ryerson, which makes and distributes metal sheet, coil and plate products through service centers in North America and China; Litchfield, Ill.based Schutt Sports, which makes football, baseball and softball equipment; and Jefferson, Ind.-based American Commercial Lines, which transports dry and liquid cargo by barge on the U.S. inland waterways and provides shipbuilding and repair services. Beauregard, of Huron Capital Partners, said Gores’ move reflects a shifting tide in the city. “Having the Pistons downtown is another link in what has become a fantastic chain,” said Beauregard. “I was speaking at a panel in Houston two months ago, and after the panel people asked me where Huron was based. I’d say Detroit and they’d say, ‘That's the cool city now.’ ” Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB Tom Henderson: (313) 446-0337 Twitter: @tomhenderson2
BANKRUPTCIES The following businesses filed for protection in U.S. Bankruptcy Court in Detroit Nov. 18-22. Under Chapter 11, a company files for reorganization. Chapter 7 involves total liquidation.
Dynamic Control International Inc.,
50490 Kayla Drive, New Baltimore, voluntary Chapter 7. Assets and liabilities not available. Applied
Computer
Engineering,
50490 Kayla Drive, New Baltimore, voluntary Chapter 7. Assets and liabilities not available.
OM Shanti Med Spa, PLC by Ageless LLC, 29175 Ryan Road, Warren, vol-
untary Chapter 11. Assets and liabilities not available.
www.crainsdetroit.com Editor-in-Chief Keith E. Crain Group Publisher Mary Kramer, (313) 446-0399 or mkramer@crain.com Associate Publisher Ron Fournier, (313) 446-1674 or rfournier@crain.com Editor Jennette Smith, (313) 446-1622 or jhsmith@crain.com Director, Digital Strategy, Audience Development Nancy Hanus, (313) 446-1621 or nhanus@crain.com Managing Editor Michael Lee, (313) 446-1630 or malee@crain.com Managing Editor/Custom and Special Projects Daniel Duggan, (313) 446-0414 or dduggan@crain.com Assistant Managing Editor Kristin Bull, (313) 446-1608 or kbull@crain.com Digital Editor Carlos Portocarrero (313) 446-6056 or cportocarrero@crain.com News Editor Beth Reeber Valone, (313) 446-5875 or bvalone@crain.com Senior Editor Gary Piatek, (313) 446-0357 or gpiatek@crain.com Research and Data Editor Sonya Hill, (313) 446-0402 or shill@crain.com Newsroom (313) 446-0329, FAX (313) 446-1687, TIP LINE (313) 446-6766
REPORTERS Marti Benedetti General assignment (313) 446-0416 or mbenedetti@crain.com Jay Greene, senior reporter Covers health care, insurance, energy, utilities and the environment. (313) 446-0325 or jgreene@crain.com Chad Halcom Covers litigation, the defense industry, education, Macomb and Oakland counties. (313) 446-6796 or chalcom@crain.com Tom Henderson Covers banking, finance, technology and biotechnology. (313) 446-0337 or thenderson@crain.com Kirk Pinho Covers real estate, city of Detroit. (313) 446-0412 or kpinho@crain.com Bill Shea, enterprise editor Covers media, advertising and marketing, the business of sports, and transportation. (313) 446-1626 or bshea@crain.com Lindsay VanHulle, Lansing reporter. (517) 657-2204 or lvanhulle@crain.com Dustin Walsh, senior reporter Covers the business of law, auto suppliers, manufacturing and economics. (313) 446-6042 or dwalsh@crain.com Sherri Welch, senior reporter Covers nonprofits, services, food and hospitality. (313) 446-1694 or swelch@crain.com ADVERTISING Sales Inquiries (313) 446-6032; FAX (313) 393-0997 Advertising Director Matthew Langan Senior Account Manager Katie Sullivan Advertising Sales Christine Galasso, Gerry Golinske, Diane Owen, Sarah Stachowicz Classified Sales Manager Angela Schutte, (313) 446-6051 Classified Sales Lynn Calcaterra, (313) 446-6086 Marketing/Events Director Kim Winkler Events Manager Kacey Anderson Senior Art Director Sylvia Kolaski Marketing Manager Marilyn Banes Special Projects Coordinator Keenan Covington Sales Support Suzanne Janik Production Manager Wendy Kobylarz Production Supervisor Andrew Spanos CUSTOMER SERVICE Main Number: Call (877) 824-9374 or customerservice@crainsdetroit.com Subscriptions $59 one year, $98 two years. Out of state, $79 one year, $138 for two years. Outside U.S.A., add $48 per year to out-of-state rate for surface mail. Call (313) 446-0450 or (877) 824-9374. Single Copies (877) 824-9374 Reprints (212) 210-0750; or Krista Bora at kbora@crain.com To find a date a story was published (313) 446-0406 or e-mail infocenter@crain.com Crain’s Detroit Business is published by Crain Communications Inc. Chairman Keith E. Crain President Rance Crain Treasurer Mary Kay Crain Senior Executive Vice President William A. Morrow Executive Vice President/Director of Strategic Operations Chris Crain Executive Vice President/Director of Corporate Operations KC Crain Vice President/Production & Manufacturing Dave Kamis Chief Financial Officer Bob Recchia Chief Information Officer Anthony DiPonio G.D. Crain Jr. Founder (1885-1973) Mrs. G.D. Crain Jr. Chairman (1911-1996) Editorial & Business Offices 1155 Gratiot Ave., Detroit MI 48207-2732; (313) 446-6000 Cable address: TWX 248-221-5122 AUTNEW DET CRAIN’S DETROIT BUSINESS ISSN # 0882-1992 is published weekly by Crain Communications Inc. at 1155 Gratiot Ave., Detroit MI 48207-2732. Periodicals postage paid at Detroit, MI and additional mailing offices. POSTMASTER: Send address changes to CRAIN’S DETROIT BUSINESS, Circulation Department, P.O. Box 07925, Detroit, MI 48207-9732. GST # 136760444. Printed in U.S.A. Contents copyright 2016 by Crain Communications Inc. All rights reserved. Reproduction or use of editorial content in any manner without permission is prohibited.
19
C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 2 8 , 2 0 1 6
THE WEEK ON THE WEB NOVEMBER 19-23
Trump picks Betsy DeVos as education chief
P
resident-elect Donald Trump announced the selection of Betsy DeVos, a prominent charter school advocate from Michigan, as his secretary of education. DeVos leads the advocacy group American Federation for Children; her husband, Dick DeVos, is an heir to the Amway fortune and a former president of the Grand Rapids-area company.
COMPANY NEWS
Auburn Hills-based glass manufacturer Guardian Industries Corp. said its shareholders approved the sale of the company to KGIC Merger Corp., a subsidiary of Wichita, Kan.based Koch Industries Inc. Terms were not disclosed. Guardian, which employs about 17,000, was headed by Detroit Pistons owner Bill Davidson until his death in 2009. J Athletic apparel retailer Under Armour Inc. announced it will open a downtown Detroit store next spring. The new 17,000-square-foot Under Armour Brand House will be at 1201 Woodward Ave. Baltimore-based UA’s largest competitor, Oregon-based Nike Inc., opened a Community Store on Woodward in May. J Sterling Heights-based Key Safety Systems Inc. and Auburn Hills-based automotive safety supplier rival Autoliv Inc. are the final two bidders for troubled Japanese airbag maker Takata Corp., a source familiar with the deal told Crain’s. Takata and its customers chose the two suitors over competing bids from Flex-N-Gate Corp. and Daicel Corp., which were bidding with Bain Capital LP. J The Michigan Economic Development Corp. is backing auto seat maker Adient Ltd. in its bid to move its corporate headquarters to Detroit, awarding the company a $2 million grant in exchange for 115 new jobs. Adient plans to spend $97.9 million to move its headquarters into the city after being spun off from Milwaukee-based Johnson Controls Inc. J Auto aftermarket accessories firm Drake Automotive Group, a platform company of Detroit-based Huron Capital Partners LLC, acquired Tyler, Texas-based Fender Gripper Inc., a maker of protective auto fender covers. Terms were not disclosed. J New York-based Figure Skating in Harlem, a nonprofit that combines a focus on education with the discipline of figure skating, announced a teaming with the Michigan Women’s Foundation to bring its program for underserved girls to Detroit. J UAW-Ford donated $250,000 to help a Detroit nonprofit, the Pope Francis Center, launch a food program for the homeless, AP reported. The center is expected to serve up to 20,000 meals yearly. UAW-Ford also is sponsoring a newly renovated J
Detroit Digits A numbers-focused look at last week’s headlines:
$100,000
The amount of the top awards won by two Detroit-based businesses, Detroit Training Center and Louisiana Creole Gumbo, in the New Economy Initative’s NEIdeas: Rewarding Ideas for Business Growth challenge. Thirty other small businesses each won $10,000.
$40.8 million
The estimated cost of a redevelopment project at Joker Marchant Stadium, the spring training home of the Detroit Tigers in Lakeland, Fla. The playing field will be named Publix Field, and a $20 million building will house a new clubhouse, administrative offices and more.
$52 million
The agreed-upon payment by Detroit-based Ally Financial Inc. to resolve all investigations and claims by the U.S. Department of Justice related to residential mortgage-backed securities issued by Ally’s former mortgage subsidiary, Residential Capital LLC, and its subsidiaries.
warming center.
J St. Joseph Mercy Ann Arbor became the ninth level-one trauma center in Michigan as it received verification from the American College of Surgeons to treat the most severely injured patients through multidisciplinary trauma care. J General Motors Co. said thousands of pieces of office equipment and furniture being discarded because of renovations by the Detroit automaker will be donated to institutions and organizations across Michigan, among them Detroit’s Cody High School, AP reported. GM is working
with Zeeland-based furniture maker Herman Miller and environmental firm Green Standards on a two-year effort to divert materials from landfills. J Detroit-based DTE Energy Co. completed installation of the largest solar array in Ypsilanti. DTE said the 2,520-panel array at Clark Road and River Street will provide enough clean energy to power about 150 homes.
OTHER NEWS J
Developers broke ground for the
American Center for Mobility testing
facility for driverless vehicles at the site of the former General Motors Willow Run plant in Ypsilanti Township, AP reported. The $80 million center is to open next year. The Michigan Economic Development Corp. approved a 15-year Renaissance Zone designation for the site. J A plan for a $32 million extended-stay hotel in downtown Detroit, the 110-room The Element Detroit, gained approval of a $6.5 million performance-based loan from the Michigan Economic Development Corp.’s Michigan Strategic Fund. Metropolitan Hotel Partners LLC, a joint venture of Detroit-based The Means Group Inc. and Roxbury Group LLC,
plans to redevelop the 91-year-old, long-vacant Metropolitan Building near Grand Circus Park. J Meadowbrook Country Club in Northville has completed an extensive $5.3 million renovation of its golf course and plans to reopen it next May, club officials said. The project has kept the 100-year-old course closed since October 2015. J The Michigan Department of Transportation said it will close southbound I-75 between Detroit and the Downriver area early next year for two years ofreconstruction. The $165 million project includes repairs to the Rouge River Bridge. J The Beach Boys are set to be in Detroit Jan. 13 to headline the charity preview of the 2017 North American International Auto Show. Tickets to the Detroit Auto Dealers Association-organized event are $400 and are available at charitypreview.com.
ARCELORMITTAL TAILORED BLANKS
ArcelorMittal Tailored Blanks, a subsidiary of Luxembourg steel producer ArcelorMittal, intends to spend $83 million to set up a manufacturing plant in Detroit and create at least 120 jobs, the Michigan Economic Development Corp. said in approving a $2 million Michigan Strategic Fund grant. The company makes customized steel blanks, such as the pictured auto parts blank to be used as a door ring in an automobile.
RUMBLINGS
C-suite clowns: Parade pranksters hold lofty day jobs
A
postscript to America’s Thanksgiving Day Parade: Who was clowning around might surprise you. A who’s-who of local CEOs, nonprofit executives and philanthropists annually gather in downtown Detroit at the Boll Family YMCA at 5:30 a.m. on Thanksgiving morning to don costumes and makeup as part of the Distinguished Clown Corps. The tradition began 33 years ago when then-CEO of Campbell Ewald Tom Adams, and Walter McCarthy Jr., then chairman and CEO of Detroit Edison Co., spurred the launch of the Distinguished Clown Corps as a way to personally involve the region’s leadership in the parade. Since then, more than 2,000 distinguished clowns have marched in the parade. For the opportunity, the clowns make an annual donation, currently $1,000 for each person walking. That’s added up to $5 million over the years. Some of the group’s longest-serving corps members include: J Austin Kanter, owner, Kanter Associates, and this year’s grand jester of the Distinguished Clown Corps, by virtue of being the longest standing clown at 30 years. J Maggie Allesee, philanthropist, 28 years. J Larry Alexander, president and CEO, Detroit Metro Convention &
Visitors Bureau,
16 years.
Matt Cullen, principal of Detroit-based
J
Matt Cullen: 19 years on the march in holiday parade.
Rock Ventures LLC, CEO of Jack Entertainment LLC and a director of The Parade Co., 19
years.
Eric Larson, CEO of Bloom-
J
field Hills-based Larson Realty Group LLC, CEO of the Downtown Detroit Partnership and immediate past chairman of The Parade Co. board, 16 years. It’s a little-known fact that parade watchers can figure out how long a clown has been marching by the costume he or she wears, Cullen said. The one-piece, stereotypical clown outfit is sort of like the beginner garb, and after five years, clowns get a two-piece suit “which has obvious logistical advantages,” Cullen said. It’s half silver. Members with 10 years in the Distinguished Clown Corps have a costume that is half gold, Cullen said, and after 15 years, “you get a cape that’s great in cold weather.” At 20 years, a milestone Cullen will hit next year, clowns get a blue cape — and perhaps some other secret advantages yet to be discovered, he said.
Lear CEO to win Above & Beyond Award from public safety group Lear Corp. President and CEO Matthew Simoncini is to be among those honored by the De-
restructure the city’s financial positions. It also supported renovation of several city parks, recretroit Public Safety Founation programs, a Detroit dation during the Fourth Public Schools program Annual Above & Beyond that has brought paid tuAwards Wednesday night tors from East English Village High School to Clark Elat Cobo Center. ementary, and more than a The main aim of the Matthew dozen local nonprofits Above & Beyond Awards Simoncini: and their work, including is to honor police, Among honorees fire and EMS officers this week. the Detroit Public Safety Foundation, and it recently who have demonstrated opened a new innovation bravery, put their lives in danger, or those who are wounded center in Detroit. The Detroit Police Department or killed in the line of duty. More will also be honored for Project than 50 officers will be honored. Simoncini will receive the City Green Light, a public safety proChange Maker Award for leading gram that began in January and the company in making a signifi- uses a central camera system, cant, positive difference in De- high-resolution cameras and troit. bright lighting to capture clear imLear has made investments in ages of license plates and crimithe “grand bargain” that helped to nals.
ANNOUNCING A PREMIER
LEASIN G OPPORTUNITY WITH AN
UNLIMITED FUTURE
CONSIDER THE GMRENCEN. IT’S WHERE DETROIT MEETS THE WORLD. A GLOBAL BUSINESS DESTINATION, AN AMERICAN ICON AND A VIBRANT REFLECTION OF THE NEW DETROIT.
1RZ IRU WKH Æ“UVW WLPH LQ \HDUV WKH *0REN&(1 KDV SUHPLXP UHDO HVWDWH DYDLODEOH LQ WKH KHDUW RI WKH QHZ GRZQWRZQ 6HH ZKDW D QHZ ZRUOGYLHZ FDQ GR IRU \RXU EXVLQHVV 6KDUH WKH H[FLWHPHQW $QG HQHUJL]H \RXU WHDP Visit gmrencen.com/leasing.