Crain's Detroit Business, Feb. 6, 2017 issue by Crain's Detroit Business

FEBRUARY 6 - 12, 2017

Signs point to historic skyscraper dispute

A little less Gilbert in new push for tax incentives

Owners, buyers battle over Ford Building, Page 3

Spotlight elsewhere on brownfield bills, Page 3

RON FOURNIER Publisher/Editor

IMMIGRATION’S ECONOMIC IMPACT

TANYA MOUTZALIAS/THE ANN ARBOR NEWS VIA AP

Maria Martinez of Detroit holds onto an American flag during a Michigan United news conference last week following President Donald Trump’s executive order.

Local biz worries over order’s effect

By Dustin Walsh dwalsh@crain.com

Friday is the birthday of both of Omar Zadoyan’s two sons — 6 and 3 years old. It will be the second birthday for both boys in the U.S. after emigrating from Iraq as refugees in 2014. Zadoyan, who works as a health care advocate for the Arab Community Center for Economic & Social Services in Sterling Heights and is a student at Macomb Community College, will buy birthday cake and balloons. Educated as a civil engineer and employed as a banker in his native Baghdad, Zadoyan is now a proud green-card holder in the U.S. — a status he fears won’t be possible for his fellow countrymen trying to flee war-torn Iraq following President Donald Trump’s executive order that suspends refugee resettlement from seven Middle East countries. Zadoyan joins local business leaders and economists who fear that the order says the U.S., and Southeast Michigan, are not open for business to all immigrants. The order is creating tension between the economy, which needs to expand, and the need to ensure the security of U.S. citizens against SEE EFFECT, PAGE 19

Michigan refugees Most refugees now in Michigan came from the seven countries in President Trump’s executive order of Jan. 27. Origination

Iran

Iraq

1,119

Libya

NEWSPAPER

Somalia

255

Sudan Syria

55 1,374

Yemen Total from countries in exec. order Total of all refugees to Michigan

3 2,815

4,258

Source: U.S. Department of State

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Fiscal 2016

$2 a copy. $59 a year.

Resettlement agencies face uncertain future

By Sherri Welch swelch@crain.com

The region’s refugee resettlement infrastructure is at risk in the wake of President Trump’s executive order blocking and limiting refugee admission to the U.S. Layoffs are on the horizon for all four local nonprofit resettlement agencies, which added staff to handle the expected influx of refugees from war-torn Iraq and Syria after How a resettlement former President Obama raised the agency helped Odai Alaaneri and his number for fiscal 2017 to 110,000. Following the executive order, Sa- family, Page 18 maritas, Catholic Charities of Southeast Michigan, U.S. Committee for Refugees and Immigrants Detroit and Jewish Family Services of Washtenaw County could see an estimated loss of three-quarters or more of the roughly $4 million in total federal dollars they would have received before the new limits were put in place. SEE AGENCIES, PAGE 18

For angel fund, Traverse City means more than tourism See Crain’s Michigan Business, Page 8

Duggan’s future may lie beyond his city In January 2014, I wrote a column for The Atlantic titled, “President Trump? Stranger Things Might Happen.” While I didn’t exactly predict Donald Trump’s election, I did foresee the rise of the angry, anti-establishment populism he rode to the White House. So forgive this cheeky prediction: If Mayor Mike Dug- Duggan: Could gan wins re-election lead to re-election and higher office? continues his pattern of incremental but important progress in Detroit, he could be a contender for the presidency. Don’t laugh. The same factors that fed Trump’s ascent could aid a pudgy pragmatist from Detroit:  Voters don’t want to elevate anybody from Washington, a city gripped by two-party extremism and gridlock.  Voters favor change agents and outsiders over status quo candidates.  Voters are tired of politicians who over-promise and under-deliver. But I’m getting ahead of myself. Duggan has to win re-election and convert Detroit’s nascent recovery into something broader and bolder — and then develop national ambitions. He doesn’t seem to have them now. People like me obsess over his political future. Duggan is obsessed with Detroit. “The first term basically was to get the city working. The buses are now running on time and the police are showing up and the lights are on,” the mayor said in a telephone interview as he launched his campaign for re-election. “Those things were very important. Now we’re going to turn our attention to building a city that’s a great city for families. I think that is the number-one issue.” SEE DUGGAN, PAGE 22

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MICHIGAN BRIEFS End state income tax? Look to Kansas first As Republican lawmakers in Michigan consider abolishing the state’s income tax, they might want to heed the example of another Midwestern state, a Bridge Magazine report notes. In Kansas, GOP Gov. Sam Brownback in 2012 led an effort to put a substantial income tax cut into law, the ultimate goal being a gradual elimination of the tax. The state GDP responded by growing at less than half the national rate through early 2016, and Brownback siphoned millions of dollars from state highway funds to balance the budget, which last November was in a $345 million hole. In Michigan, the state income tax is a $9 billion source of revenue, but backers of tax-cut proposals have not said from where funds to compensate for that loss would come, Bridge reported. A bill sponsored by Rep. Lee Chatfield of Levering would cut the state’s 4.25 percent income tax to 3.9 percent in January 2018, then call for further rollbacks of 0.1 percent yearly until the tax is eliminated over 40 years. State Sen. Jack Brandenburg of Macomb County, meanwhile, said he intends to introduce a bill to scrap the income tax over just five years.

The proposals stir a familiar economic debate. Anna Heaton, press secretary for GOP Gov. Rick Snyder, told Bridge that Snyder wants proof there is “adequate” revenue from other sources to make up the difference. But Michael LaFaive of the Midland-based free-market think tank Mackinac Center for Public Policy called the House tax proposal “a good first step” and said Michigan “is still taxed too much. We should be a leader in efficient government.” According to the Tax Foundation, a Washington, D.C., tax research organization, Michigan ranked 25th among the 50 states in the share of income paid in fiscal 2012 paid toward all state and local taxes, with 9.4 percent of income paid in those taxes.

MICH-CELLANEOUS

J The number of unpaid bills in most Michigan hospitals plummeted since the state expanded Medicaid under the Affordable Care Act in 2014, according to a new study by the University of Michigan’s Institute for Healthcare Policy and Innovation. The report showed that of the 88 hospitals reporting 2015 data in full to the state, unpaid bills dropped by about half. The results showed that 90 percent of reporting hospitals have spent less of their total budget on covering the cost of unpaid care. In 2013, those hospi-

INSIDE

tals spent $627 million on uncompensated care; in 2015, it was down to $327.1 million. A separate study by the UM Institute for Social Research showed there was an across-theboard decline in uncompensated care in all 142 state hospitals. J Jarrod Agen, chief of staff to Gov. Rick Snyder, is joining President Trump’s administration as deputy assistant to the president and communications director for Vice President Mike Pence. Agen became Snyder’s Jarrod Agen chief of staff in January 2016 after serving two years as Snyder’s communications director. Agen’s experience includes serving as deputy press secretary and associate director of strategic communications for the U.S. Department of Homeland Security and at the federal Environmental Protection Agency and State Department. J Michigan House members last week introduced a public records proposal they say will increase transparency, AP reported. The package of bills, which would subject the governor and lawmakers to public re-

cords requests, is a new attempt to get legislation to the governor’s desk after similar bills won overwhelming approval in the Republican-led House last year but died in the GOP-controlled Senate. The bipartisan proposal’s lead sponsors are state Reps. Lee Chatfield, R-Levering, and Jeremy Moss, D-Southfield. The legislation gained momentum last year in the wake of Flint’s water crisis and a sex scandal that forced two legislators from office. J Michigan’s Unemployment Insurance Agency settled a lawsuit in which it was sued for using an automated computer system that falsely accused thousands of people of fraud, AP reported. The suit was dismissed by a U.S. district judge under an agreement between the state and the plaintiffs. The state said the deal codifies practices put in place after it ceased “auto-adjudications” in 2015. A lawsuit seeking financial damages is ongoing. J The Pioneer Group, a Big Rapids-based publisher of newspapers and operator of a digital marketing services business, was sold to Hearst, the New York City-based publishing giant, after four generations of family ownership, MiBiz and the Grand Rapids Business Journal reported. Terms were not disclosed. Pioneer publishes the daily The Pioneer in

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COMPANY INDEX: SEE PAGE 21 Big Rapids and the Manistee News Advocate; weeklies in Baldwin, Benzie County and Osceola County; and four shopper publications. In Michigan, Hearst owns the Huron Daily Tribune and Midland Daily News. J Union membership in Michigan declined in 2016 as part of a drop nationwide, according to the U.S. Department of Labor. The Bureau of Labor Statistics said the number of union members in Michigan dropped from 621,000 in 2015 to 606,000 last year, going from 15.2 percent to 14.4 percent, AP reported. The Michigan decrease was part of a 0.4 percent drop of labor-affiliated workers in the U.S. from more than 14.8 million in 2015 to 14.6 million in 2016.

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Real estate

Legislature

Signs point to dispute over Ford Building Taking the

‘Gilbert’ out of the ‘Gilbert bills’

Detroit developer’s projects may move into background in new push at incentives By Lindsay VanHulle

Crain’s Detroit Business/Bridge Magazine

Ford Building Inc. to complete the sale. A variety of postponements and cancellations have occurred in that time frame. And still, the 188,000-square-foot building at Griswold and Congress streets eludes Sterling Group, Gary Torgow's real estate company.

LANSING — Late last year, Dan Gilbert visited the Capitol to personally lobby lawmakers to pass new tax incentives that he promised could help unlock billions of dollars of development in Detroit. They didn’t pass. As supporters prepare to try again, Gilbert — and Detroit — will shade into the background in the push to pass what popularly became known as the “Gilbert bills.” This time, the rest of the state will get the spotlight from backers of a proposal Dan Gilbert: to create a tax in- Visited Capitol last centive for year to lobby “transformation- lawmakers. al” brownfield projects. They plan to focus less on Detroit projects, in part to sell outstate legislators and their constituents on the opportunity the incentive would create in their own backyards, and in part to insulate the campaign against critics who characterized the bills as a way to pad billionaires’ pockets with public money. Gilbert’s Rock Ventures LLC was one of the chief architects of the concept. But the campaign that backed it the first time around included other

SEE BUILDING, PAGE 17

SEE BILLS, PAGE 20

KURT NAGL/CRAIN’S DETROIT BUSINESS

Workers pulled down the letters spelling out “Ford Building” on both the awning and the second floor of the historic 18-story downtown Detroit skyscraper. At right, the building before the letters were removed.

Delays, removal of name part of fight over sale of one of Detroit’s first skyscrapers By Kirk Pinho kpinho@crain.com

For more than a year, there’s been a fight over the sale of one of Detroit’s first skyscrapers. Now, the two sides are fighting over the signs on the side of the building. Last week, a group of attorneys

COSTAR GROUP

and the owner of the Ford Building sat in a room to discuss a pending court-ordered sale Feb. 1 of the 18-story downtown high-rise. While they met, workers were pulling down the letters spelling out “Ford Building” on both the awning and second floor. The case of the missing signs is

just the latest off-key note in a 17-month Wayne County Circuit Court battle between Tom Paglia Jr., whose family has owned the building since 1991, and Detroit-based Sterling Group, which has a contract to buy it for $12 million. Twice — on June 23 and Dec. 16 — the court ordered Paglia and his

Sports

Olympia will consider minor league teams for Little Caesars Arena By Bill Shea

MUST READS OF THE WEEK

bshea@crain.com

The Detroit Red Wings and Detroit Pistons eventually could have company at Little Caesars Arena in the form of a minor league sports team. Adding a third team remains a few years away, but it represents an opportunity for smaller businesses to spend marketing dollars inside the new arena they otherwise couldn’t afford to pay with the major league teams. It’s a difference of thousands versus millions. The Wings and Pistons are to begin play at the $635 million arena in September, but it would be at least three or more years before the venue SEE TEAMS, PAGE 21

Next in line An important part of business planning is dealing with leadership succession that ensures a company’s future, Page 13

Ford Field’s $100M upgrades ARENA FOOTBALL LEAGUE

Dan Gilbert owns the Arena Football League’s Cleveland Gladiators franchise, and Olympia Entertainment has had feelers from that league and others about playing at Little Caesars Arena.

New video boards are expected to be among the additions at Ford Field for next season, Page 23

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Snyder seeks private donations to boost Detroit Promise funding By Chad Livengood clivengood@crain.com

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Gov. Rick Snyder wants businesses and philanthropic foundations to boost the Detroit Promise college scholarship program with up to $24 million to fill gaps in a tenuous tax-capturing mechanism that remains two years away from generating revenue. Detroit's citywide reassessment of all commercial, industrial and residential property value is expected to set 2017 as the baseline year for the Detroit Promise Zone Authority to begin collecting 50 percent of all revenue growth in the 6-mill State Education Tax in 2019. The Michigan Education Excellence Foundation has raised $6 million for the Detroit Promise scholarship program and has a goal of generating $30 million in donations, according to the foundationâ&#x20AC;&#x2122;s president, Peter Remington. The Detroit Promise college scholarship covers the difference between a studentâ&#x20AC;&#x2122;s federal financial aid Pell Grant and the cost of tuition. There are about 760 Detroit high school graduates attending community colleges in Wayne County this year and 290 enrolled in four-year universities under the program. Snyder prodded the business leaders and philanthropists in his Jan. 17 State of the State address to help sustain the program. â&#x20AC;&#x153;I am calling on our philanthropic and business communities to join in and help (Mayor Mike Duggan) and I support the Promise and continue the path to give awesome opportunities to these great, young people from Detroit,â&#x20AC;? Snyder said in the speech. The fundraising drive for the Detroit Promise is designed to ensure the scholarships are sustainable as Detroit's property values rebound, Remington said. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;ve got to be able to raise it because even when the tax recapture start thereâ&#x20AC;&#x2122;s still going to be philanthropy needed,â&#x20AC;? said Remington, CEO of The Remington Group. The Detroit-based Skillman Foundation has contributed $150,000 to the scholarship and college access program, but has held back contributing more because of uncertainty over long-term taxpayer support, foundation CEO Tonya Allen said. â&#x20AC;&#x153;It feels like itâ&#x20AC;&#x2122;s a really, really big burden on our community to raise those revenues and we donâ&#x20AC;&#x2122;t really know how long weâ&#x20AC;&#x2122;re doing it,â&#x20AC;? Allen said. â&#x20AC;&#x153;If weâ&#x20AC;&#x2122;re saying weâ&#x20AC;&#x2122;re going to be able to do this for young people in Detroit, I want us to be able to do a real promise â&#x20AC;&#x201D; not a cautionary promise.â&#x20AC;?

Projecting revenue

gvsu.edu

Duggan is convinced rising property values in Detroit will fuel the tax revenue needed to sustain the scholarship program in the future. Tax assessments on 112,482 residential

properties â&#x20AC;&#x201D; about 44 percent of the city's parcels â&#x20AC;&#x201D; rose this year, according to city assessment data. â&#x20AC;&#x153;If you look at the projections â&#x20AC;Ś every year, the revenues that are coming in on the tax side go up faster than we believe the demand will be,â&#x20AC;?Duggan said. â&#x20AC;&#x153;So we feel really good about those projections. So Detroit Promise is rock solid." A Crainâ&#x20AC;&#x2122;s analysis of state Treasury Department data shows the Detroit Promise could collect about $300,000 in 2018, $670,000 in 2019, $1.16 million in 2020 and rise to $4.9 million by 2026. Those revenues depend on property values and state education tax collections rising annually, according to one of the architects of Michiganâ&#x20AC;&#x2122;s promise zones, which were designed to create a taxpayer-subsidized version of the popular Kalamazoo Promise college tuition guarantee. â&#x20AC;&#x153;The earliest Detroit would qualify for tax capture ... would be the fall of 2018,â&#x20AC;? said Chuck Wilbur, senior policy consultant at Public Policy Associates in Lansing. â&#x20AC;&#x153;But then they have to actually have growth to capture (taxes), and we donâ&#x20AC;&#x2122;t know with certainty yet that thatâ&#x20AC;&#x2122;s going to happen." Wilbur helped craft the original Promise Zone legislation as former Gov. Jennifer Granholmâ&#x20AC;&#x2122;s senior adviser in 2006 and has continued to consult organizations in the implementation of the community-based college scholarship programs. The law spurred the creation of ten promise zones around the state in Baldwin, Battle Creek, Benton Harbor, Detroit, Hazel Park, Lansing, Muskegon County, Newaygo County, Pontiac and Saginaw. For Detroit, the annual cost of the program is hard to pinpoint. It depends on how many students enroll in the community college program â&#x20AC;&#x201D; which has no academic criteria â&#x20AC;&#x201D; and the university scholarship, which requires a minimum 3.0

grade point average and ACT score of 21, Remington said. If Detroit's high school graduation rate goes up, the annual cost will rise with demand, Remington said. â&#x20AC;&#x153;That to me is not an unpleasant thing,â&#x20AC;? Remington said. â&#x20AC;&#x153;It would be the best thing that can happen.â&#x20AC;?

â&#x20AC;&#x2DC;Success coachesâ&#x20AC;&#x2122; Remington raises money for the Detroit Promise through the Michigan Education Excellence Foundation, which was originally set up by Snyder's office to direct private donations to the Education Achievement Authority to run 15 chronically failing schools in Detroit. The Detroit Regional Chamber administers the Detroit Promise scholarships on behalf of the Michigan Education Excellence Foundation. In addition to awarding scholarships, the Detroit Promise program is paying for five full-time counselors at the five community colleges where Detroit students are attending: Wayne County Community College District, Oakland Community College, Macomb Community College, Henry Ford College and Schoolcraft College. The counselors, who are dubbed â&#x20AC;&#x153;success coaches,â&#x20AC;? meet with the Detroit Promise scholarship recipients twice monthly to keep an eye on their academic progress and offer career advice, said Greg Handel, vice president of education and talent programs at the Detroit Regional Chamber. Handel said the career coaches take a â&#x20AC;&#x153;proactive approachâ&#x20AC;? to helping the students stay focused on their associate degree or technical certificate. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;re trying to make sure students donâ&#x20AC;&#x2122;t just go into community college, but theyâ&#x20AC;&#x2122;re actually completing,â&#x20AC;? Handel said. Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

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Blue Care Network, HAP delay anesthesia preauthorization policies after objections By Jay Greene jgreene@crain.com

Blue Care Network and Health Alliance Plan of Michigan backed away last month from controversial proposals to require providers to receive preauthorization for full anesthesia services before patients receive colonoscopies and similar procedures after at least three Michigan physician organizations objected. The policies could have made it more difficult to get insurance payment for anesthesia for a common procedure many find unpleasant. The new preauthorization policy â&#x20AC;&#x201D; stated as necessary by Blue Care because of rising anesthesia costs, overuse of anesthesia and questions about its outcomes â&#x20AC;&#x201D; had been scheduled to go into effect Jan. 8, according to a Nov. 18 memo to anesthesia providers. HAP had planned to begin a similar prior authorization requirement on March 1, but has indefinitely delayed it after discussions with state specialty societies and the Centers for Medicare and Medicaid Services, HAP said. Naim Munir, M.D., HAPâ&#x20AC;&#x2122;s chief medical officer, said HAP reviewed the evidence for different types of sedation for routine endoscopies and colonoscopies and felt further study was required. â&#x20AC;&#x153;All patients who need a colonoscopy require some level of sedation, and the drug options used for sedation have different costs and risks,â&#x20AC;? Munir said in a statement. Sedation during these procedures typically is through the use of propofol, a strong drug that must be administered and monitored by an anesthesiologist or nurse anesthetist. Use of full anesthesia for endoscopies â&#x20AC;&#x201D; the target of the Blue Care and HAP policies â&#x20AC;&#x201D; varies widely among regions and by patient populations, a Journal of the American Medical Association study said. The study said full anesthesia use ranges from 59 percent in the Northeastern U.S. to 13 percent in the Western U.S., with the Midwest averaging in the middle. Moreover, full anesthesia for endoscopies has increased to an average of more than 30 percent of cases in 2009 from 14 percent in 2003. Two-thirds of the cases are delivered to low-risk patients and much more often when the patient is insured or on Medicare, the study said. Scott Plaehn, D.O., an East Lansing-based gastroenterologist with the Michigan Gastroenterology Institute, said he uses full anesthesia for nearly all his patients requiring endoscopies with little risk. â&#x20AC;&#x153;Our experience has been that patients experience a lot smoother procedure when we use the MAC anesthesia with propofol,â&#x20AC;? Plaehn said. Early in his career, Plaehn said, he used other anesthesia (Demerol, Fentanyl and Versed), but patients â&#x20AC;&#x153;tended to have slower recovery time and the overall procedure was less than ideal.â&#x20AC;?

Blue Care said in policy statements to gastroenterologists and anesthesiologists that internal financial and utilization audits showed rising costs and wide variations in the use of full, or general, anesthesia for routine colonoscopies and other endoscopic procedures. The proposed Blue Care policy would have discontinued payments for many routine endoscopic procedures for non-Medicare patients without prior authorization and submission of clinical information. Last fall at a meeting with Blue Care officials, representatives with the state anesthesiology society, the Michigan State Medical Society and the Coalition of Concerned Physicians & Patient Advocates objected to Blue Careâ&#x20AC;&#x2122;s proposed policy and charged that it is motivated by cost savings and not by patient quality or safety. The associations reacted to several policy statements by Blue Care, including the following: â&#x20AC;&#x153;Monitored anesthesia during GI endoscopy is clinically indicated far less often than it is employed. Its value in the majority of cases is difficult to establish. It may actually lead to a higher incidence of serious events,â&#x20AC;? according to a November Blue Care memo. Anesthesiologists Harry Parr, D.O., and Dave Krhovsky, M.D., president of the state medical society, strongly disagreed with Blue Careâ&#x20AC;&#x2122;s contention that anesthesia procedures for endoscopies could lead to higher numbers of adverse events. They also Harry Parr: charged that the Disagreed with sole reason Blue Blue Care. Care wanted to implement the policy was to reduce the use of full anesthesia. â&#x20AC;&#x153;The research doesn't support that statement, and it is a rationalization on their part for a decision based strictly on financial reasons,â&#x20AC;? said Parr, chairman of the ASAâ&#x20AC;&#x2122;s practice committee. Helen Stojic, director of corporate affairs for Detroit-based Blue Cross Blue Shield of Michigan, denied that Blue Careâ&#x20AC;&#x2122;s original policy decision was based solely on financial reasons. Stojic said Blue Care audits found some anesthesiology groups have much lower rates of using anesthesia than other groups. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s about reducing costs, but we want to balance it,â&#x20AC;? Stojic said. â&#x20AC;&#x153;If something can be done safely and effectively, that is where we want to be.â&#x20AC;? Stojic added: â&#x20AC;&#x153;BCN wants to provide the highest-value care to its members â&#x20AC;&#x201D; that entails balancing provider preference with keeping health care affordable for our customers.â&#x20AC;? On quality, Stojic also cited Blue

Careâ&#x20AC;&#x2122;s analysis of an April 2016 study in the journal Gastroenterology, â&#x20AC;&#x153;The risks associated with anesthesia during colonoscopy,â&#x20AC;? shows that there is a 13 percent increased risk of complications for patients when using anesthesia services. But Eric Perry, D.O., director of anesthesia services at Michigan Endoscopy Center in Farmington Hills, said the Gatroenterology article fails to apply to Michigan anesthesiologists in several ways. For example, more than half of the patients received procedures by non-gastroenterologists; the comparison was from no sedation to sedation; and the type of sedation is not identified (propofol, Fentanyl or Versed). Stojic said that Blue Care is open to reviewing other studies that doctors want to present to it. â&#x20AC;&#x153;BCN cited the study it saw,â&#x20AC;? she said. On the decision to postpone the policy, Stojic cited the physician opposition and that Blue Care wants to give doctors more time to get ready for it. She also said there is potential later this year that new professional quality guidelines will be released from the American Society for Gastrointestinal Endoscopy that will help Blue Care make a final decision. Later this year, Stojic said, Blue Care will re-evaluate its policy after new guidelines are released and claims data are reviewed.

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OPINION

Rise up, Detroit Why President Trump’s executive order on immigration is an assault on Michigan’s economy, and why you should fight back

ou’re a Crain’s reader, which means you’re a leader of Detroit’s civic life. You’re important. People care about your opinions. Politicians covet your money. And you spend healthy parts of every day deciding how to leverage your power. I have a thought. Rise up, metro Detroit. Lean in. Speak out. Whether or not you supported President Trump, his decision to “temporarily” ban people from seven predominantly Muslim nations from entering the United States is a mistake you can help fix. A Muslim ban in all but name, Trump’s executive order is hard to defend on moral grounds, and its implementation raises alarming questions about the competency of this new administration. But more to the point — and closer to your bottom lines — Trump’s refugee policy is an assault on Michigan’s economy. Signed by Trump on, of all days, Holocaust Remembrance Day, the order indefinitely suspends the resettlement of Syrian refugees and blocks entry into the U.S. for at least 90 days by citizens of Iran, Iraq, Libya, Somalia, Sudan, Syria and Yemen. While it invokes the attacks on Sept. 11, 2001, as justification, Trump’s order exempts the 9/11 hijackers’ own countries and also, conveniently, doesn’t include several countries where the Trump family does business. For months during his campaign, Trump promised a Muslim ban — “a complete shutdown of Muslims entering the United States” — before recasting his policy as “extreme vetting.” Still, one quote from 11 months ago stands as the dark core of his intent: “Islam hates us.” While it doesn’t explicitly ban Mus-

RON FOURNIER

Editor and Publisher Listen to Ron Fournier at 6:10 a.m. Monday on the Paul W. Smith show on WJR AM 760.

lims, Trump’s order commits the United States to “prioritize refugee claims made by individuals on the basis of religious-based persecution. ... ” Trump himself says this favoritism applies to Christians, not Muslims. If that is not a religious test, an anathema to America’s founding principles, it’s a freighted quiz. The wrong answer (“I’m Muslim”) shut this nation’s doors. What a horrible signal to send to Michigan’s immigrant community, many of whom call Iraq and Syria their native lands. People like Khaldoon Alaswad, a cardiologist at Henry Ford Hospital whose 77-year-old Syrian mother had her March 14 visa interview canceled in an email message last week. Alaswad, a fierce critic of the Syrian regime who likely would be arrested if he tried to visit his mother, wants her to come to the United States. She suffers from heart and kidney failure. “Now I cannot get my Mom,” he told my colleague Jay Greene. “But it is just not about me.” The order initially created confusion and chaos at airports around the world. Passengers with green cards and people with visas were barred from flights without warning. No wonder. At least three national security leaders — Defense Secretary Jim Mattis, Homeland Security Secretary John Kelly, and Secretary of State-designee Rex Tillerson — told associates they were kept in the dark.

Kelly was getting briefed on the order when he looked up at a television and saw Trump signing it. The White House employed legislative aides to write the order without the knowledge of the aides’ bosses, powerful lawmakers. Such affronts, such carelessness, were justified by a White House spokesman claiming that Trump needed to keep the order secret to prevent a flood of refugees. So Trump doesn’t trust his Cabinet to keep a secret? Did he forget that he announced to the world, months ago, that a ban was coming? OK, how does this affect your bottom line? As my colleague Dustin Walsh reported, immigrants add value to the economy and pad a declining workforce. In Cleveland and Minneapolis, for instance, the economic impact of refugees between 2000 and 2012 was 10 times greater than the cost of refugee services. In Michigan, more people are leaving the workforce than entering it, and most businesses — including your business, I bet — face a talent deficit. Along comes an order to ban refugees from certain countries, followed perhaps by restrictions on elite visas for people with advanced degrees and special skills. Yes, a draft order circulated by the White House would curb all visas except those going to diplomats. A nation hostile to immigrants also robs itself of future successes. Detroit is full of people who have built enormous businesses, employing thousands, who crossed borders and oceans to get here in the first place. Replacing a welcome mat with a “keep out” sign keeps out exactly the kinds of risk-takers who can dream big and make those dreams real. How can this be good for your business, your city, your country? You’re an important person with power to leverage. Call your congresspeople. Deploy your lobbyists. Write an op-ed. Unite with like-minded civic leaders, and force Trump to fix this.

Senate transportation package won’t get Michigan’s roads fixed

appreciate the optimism of Keith Crain about what he described as “a promising solution” to our state’s “ongoing nightmare” of crumbling roads and bridges (“I am waiting for the orange barrels,” Jan. 23). Unfortunately, what Mr. Crain described as “a promising solution,” a transportation package passed by the Legislature a little over a year ago, will not fix the roads. As a result of the legislation, Michigan residents started paying higher gas taxes and registration fees on Jan. 1. However, the legislation did not include needed reforms like lower and more uniform weight limits for heavy trucks, stricter enforcement of weight limits, improved design and construction specifications to ensure roads are more durable and last longer, and a more equitable, transparent and accountable distribution formula for transportation dollars collected by the state and transferred to counties and local communities. Without those reforms, the additional revenue generated by the higher taxes and fees on Michiganders will not be nearly enough to improve the condition of our roads and bridges. In fact, the Michigan Department of Transportation’s Roads Innovation Task Force Report of June 2016 (as revised in September 2016) indicated that, even with the additional revenue, state trunk lines (interstates and M-designated state highways) will be in much worse shape in 2025 than they are today. Specifically, it found that only 46 percent of state trunk lines will be in good or fair condition in 2025 compared with 84 percent in 2015. The report further indicates that less than 30 percent of state trunk lines will be in good or fair condition in 2040. Not surprisingly, MDOT Director Kirk Steudle was quoted by Gongwer News Service on Jan. 27 as stating that the 2015 package of bills “doesn’t by any means solve the problem.” Two months ago, Gov. Rick Snyder’s 21st Century Infrastructure Commission issued a report that provides an alarming assessment of

Nobody wants to volunteer, maybe?

I am always a bit disappointed that, unlike in the time of the Founding Fathers, there are not a lot of businesspeople interested in serving in government. Whether local, state or federal government, it seems like most business executives simply say no. That is why you have to be pleasantly surprised to look at President Donald Trump’s Cabinet and see some business folks who have stood up and are willing to work in government for a few years. I have had the pleasure of having Wilbur Ross, the incoming Secretary

KEITH CRAIN Editor-in-chief

of Commerce, speak at several seminars we have held, and he has always done a great job. Our new Secretary of State, Rex Tillerson, has a long history

in business, most recently as CEO of ExxonMobil. I have always thought government should be run like a business, and although I’ll get a lot of argument, I look forward to seeing a government with a board of directors and delegation of authority. It might make more executives interested in taking time out to serve in government. If I recall my history, that is how our Founding Fathers planned for our government to work. We have a couple of big positions that will be up for election next year, and it will be interesting to see wheth-

er any Michigan business executives will be interested in running. We will elect a new governor next year, and already we have quite a few candidates coming out of the woodwork. Following our present governor is going to be a tough job, in spite of what some folks might say. If my count is right, we’ve got somewhere around a dozen candidates from both parties who have thrown their hats into the ring or seem like sure bets to run. Virtually all are career politicians. Meanwhile, U.S. Sen. Debbie Stabenow will be running for a third

OTHER VOICES Tim Greimel

Greimel is a Democratic state representative from Auburn Hills.

Nobody likes paying higher taxes and fees, and the only thing worse is paying higher taxes and fees but still not fixing the problem. just how ineffective the 2015 transportation package is. The report confirmed that, even with the new taxes and fees, Michigan’s roads and bridges will “continue to deteriorate.” Moreover, the report estimated that a whopping $2.2 billion more per year will be needed to ensure that 95 percent of interstates and principal arteries, 85 percent of other state highways, and 85 percent of county primary roads and major city roads are in good or fair condition. Nobody likes paying higher taxes and fees, and the only thing worse is paying higher taxes and fees but still not fixing the problem. That’s why many of us in the Legislature voted against the “plan” that only pretends to fix our roads and bridges while hiking taxes on residents who will only become more cynical about government when those taxes do not fix the problem. Maybe the federal government will decide to spend enough additional money on roads to paper over the shortsighted approach that the legislature took in 2015. If not, Michigan residents are in for a truly rough road ahead.

six-year term. With all her objections to our Cabinet, my guess is that she will have a tough time at best winning re-election. I am sure there will be plenty of candidates from both sides crying for her seat. I always felt no one, particularly business executives, wanted to run for office. I think that is changing. I bet we will have some good choices for governor in addition to who's already announced. Democracy works best when we have lots of choices. Next year, we’ll have plenty. It will be an interesting election cycle. But then, they always are.

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Business must heed warnings of cybersecurity talk TEL AVIV — This week, I am changing all my passwords. That's what spending a few days immersed in cybersecurity talk and visits with cutting-edge technologies will do to you. The stories of malware, hacks, ransomware and other calamities of our digital world gave me new appreciation for the IT teams who focus on protecting key business systems. (Yes, Crain's IT team, I mean you!) Security was clearly top of mind for the CIOs who joined a Michigan cyber delegation to Israel organized by Mark Davidoff, Michigan managing partner for Deloitte; Dave Behen, CIO for the state of Michigan; and Brian Rich, CIO of Consumers Energy. (You can find my blogs about the trip at crainsdetroit.com.) Our group ran in tandem with Gov. Rick Snyder and his economic team and a group organized by the Michigan Israel Business Bridge. We all remember the big consumer-facing hacks — Target and Home Depot — as well as calculated political paybacks, like the Sony hack. (And of course, the controversial Russian engagement before our presidential election.) But I learned about new threats, too. Last month, a hacker demanded a ransom, paid in bitcoins, from an Austrian resort hotel where the electronic key system had been compromised. Hotel guests were locked out of their very expensive rooms. An email with payment instructions warned management that the ransom would double if unpaid by the end of the day. The hotel paid the equivalent of $1,800.

MARY KRAMER Group Publisher

Mary Kramer is group publisher of Crain’s Detroit Business. Read her blogs about her Israel trip at crainsdetroit.com/marykramer

Michigan should identify and invest in best-inclass academic programs in cybersecurity.

Now imagine if that mischief were focused on connected cars? Or the energy grids? And the intent was to take an economy down? At a major cyber tech conference in Tel Aviv we attended, Prime Minister Benjamin Netanyahu said it

best: Cyberattacks are the new form of warfare. Some takeaways from our trip: J Michigan should identify and invest in best-in-class academic programs in cybersecurity. The jobs WILL be there. J Jarrod Agen, who jumped ship last week from serving as chief of staff for Gov. Rick Snyder to a spot in the Trump White House, should tout Snyder for a key advisory role in shaping U.S. responses to cyberattacks. A couple of years ago, Snyder came up with an innovative idea: the Michigan Civilian Cyber Corps. Be-

hen has recruited 51 members — leaders in digital across the state. The goal is to have an on-call army of 200 who can help respond to cyberattacks. But the biggest takeaway of all? Israeli startup companies, led by military veterans of elite tech units, may give the edge to Detroit automakers when it comes to keeping connected vehicles safe from hacks. At least 400 startups are focused on auto technology. I guess there is a reason that General Motors, Ford and other American companies have opened R&D centers in Israel.

LETTER TO THE EDITOR Barbara McQuade respected by all Editor: Mr. Crain, you are so correct about Barb McQuade (“Keith Crain: A beginning and an end,” Page 6, Jan. 30). I have been a judge in the U.S. District Court for 29 years, and before that, a state district judge and an assistant prosecutor in Wayne County, and I have seen many U.S. attorneys, and Barbara is the best by far. She is totally dedicated to the job without regard to politics, but with a mission of improving life for the citizens. She is respected by both sides of the bar and our bench. Our community and the administration of justice will suffer if she were to leave. Judge Bernard A. Friedman U.S. District Court, Eastern District of Michigan

Send your letters: Crain’s Detroit Business will consider for publication all signed letters to the editor that do not defame individuals or organizations. Letters may be edited for length and clarity. Email: rfournier@crain.com

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SPECIAL REPORT: CRAIN’S MICHIGAN BUSINESS

Looking beyond tourism

Northern Michigan angel fund focuses on Traverse City’s economic base By Tom Henderson thenderson@crain.com

Inside:  NewTree Fruit,

this page

 Silikids, Page 9  Trade with China,

Deanna Cannon and Lee Gardner are two of the founders of Northern Michigan Angels.

Page 11

TOM HENDERSON/CRAIN’S DETROIT BUSINESS

The founders of the Northern Michigan Angels LLC hope to make a profit from their investments in early-stage companies, but they have another goal, too — to create high-paying jobs and diversify an economy that is reliant on seasonal tourists. “There is a true desire to see this area prosper. There’s a concern we’ve become too much of a T-shirt and tourist location,” said Deanna Cannon, one of four founders of the group in 2012 and its executive director, and the owner of Cannon & Co. CPAs PLC in downtown Traverse City. “At some point, every growing enterprise needs equity, not debt, and we’re here to help them,” said Lee Gardner, another co-founder. “We’re looking to build scalable enterprises that can provide year-round jobs. We have plenty of motels and restaurants, but we need to broaden the economic base here.” Cannon said she got the idea to form an angel investing group in northern Michigan in 2010. She had been running the Traverse City office of Los Angeles-based Corporate Finance Associates, an investment banking firm. “I kept running into companies that didn’t want to sell, they wanted to grow and they needed capital, but they were too small to get commercial funding,” she said. So she closed the local CFA office and began recruiting other local high-net-worth individuals to join her in providing early-stage funding to small businesses. SEE ANGEL, PAGE 10

Cherries, $250,000 grant, labor help juice startup plant roots By Tom Henderson thenderson@crain.com

Luc Hobson, one of the co-founders of the NewTree Fruit Co. LP and its chief scientist, lives in Montreal. The other founder, CEO Chad Anderson, lives in De Pere, Wis., a suburb of Green Bay. So why is their startup company located in Traverse City? One, there are tons of tart cherries practically just out the door. Two, a grant of $250,000 in 2014 from the Michigan Department of Agriculture and the Michigan Economic Development Corp. to help reimburse the costs of marketing and getting their production facility up and running. Three, “this is an area where it’s easy to attract labor,” said Anderson. As NewTree says in its website about its line of fruit juices, which are branded in retailers as Edit Fruit Juice: “To meet our high standards of

freshness and quality, Edit juice is harvested from the rolling orchards of Michigan, with its rich soil and diverse varieties. Michigan grows the most tart cherries and blueberries in the country, and is the third-largest grower of apples and grapes. Edit juice is made in beautiful Traverse City, Mich., recognized as the Cherry Capital of the World.” There will soon be a fourth reason NewTree is in Traverse City. Deanna Cannon, a founding member of the Northern Michigan Angels LLC, said her group is in the final stages of negotiating a term sheet for an equity investment in the company. Anderson said he has raised $500,000 from friends and family and that this angel investment will be part of a $500,000 first close of what he hopes will eventually be a funding round of $3 million. NewTree was one of 36 semifinal-

ists at last November’s Accelerate Michigan Innovation event in Detroit. The company didn’t win any of the $1 million at stake in the competition but got to showcase its technology and juices to would-be investors, and Anderson said he has had ongoing serious talks with one of the venture-capital firms there about joining the current funding round. NewTree uses a patented process to eliminate nearly all the fructose, sucrose and glucose from fruit juices, reducing, for example, the amount of sugar in a 10-ounce of grape juice from 48 grams to one. It replaces the sweetness lost in the process with stevia, a natural sweetener and sugar substitute extracted from the leaves of the plant species stevia rebaudiana. The active compounds of stevia are called steviol glycosides, which SEE JUICE, PAGE 9

NEWTREE FRUIT CO.

NewTree Fruit Co. co-founder and chief scientist Luc Hubson (left) and board member Greg Palalexis confer at the Traverse City factory.

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SPECIAL REPORT: CRAIN’S MICHIGAN BUSINESS

Silikids finds niche with silicone products for children By Tom Henderson thenderson@crain.com

Silikids Inc. is a Traverse City company that moved there from Los Angeles in 2012 because its co-founder and CEO, Stacey Feeley, wanted a better quality of life for her kids. Her husband’s parents had a place in Glen Arbor and she was smitten with the area’s lakes, beaches and forests. Now, she hopes to move its manufacturing here, too, from China. Silikids makes sippy cups, eating utensils, straws and other food-related items for kids out of silicone, a benign product believed to have none of the health worries related to various plastics. Feeley said the company is on a growth trajectory that she hopes over the next few years will eventually allow her to use U.S. manufacturers in northern Michigan. She said the company will double revenue this year to about $1 million and with an expanded product line being introduced in March should more than double revenue next year. The expanded line will include items for adults, such as coffee mugs, tableware and storage bowls. “If you’re not producing in the millions of units, manufacturers here say, ‘Go to China.’ They won’t even quote the product,” she said. “But that’s what we want to do, get big enough to bring manufacturing here. We don’t need a lot of complicated equipment, we just need a waffle press.” Feeley is a native of Texas. After graduating from the University of Colorado, she moved to Los Angeles to pursue an acting career and was there 15 years before moving to Michigan. She got parts in public service announcements and had roles in several movies that never landed distributors, but found out

JUICE FROM PAGE 8

are up to 150 times as sweet as sugar and heat stable. Anderson and Hobson founded NewTree in 2013. Anderson has a bachelor’s degree in food science from Iowa State University and has spent 30 years in the food industry. Hobson, who has a degree in biochemistry from the Université du Québec à Chad Anderson: Montréal and Co-founded has 25 years of NewTree in 2013. experience as a scientist in the food industry, is the inventor behind the Canadian patent for NewTree’s desugaring process. He said it took him six years of tinkering before he came up with what he thought was a commercially via-

TOM HENDERSON/CRAIN’S DETROIT BUSINESS

Silikids Inc. co-founder and CEO Stacey Feeley moved her company to Traverse City from Los Angeles in 2012. her true calling was as an entrepreneur. In 2007, she and a partner, Giuliana Schwab, founded Silikids. She’d recently given birth to the first of her three daughters and hated using the readily available plastic implements made for kids. “They were just horrible. Plastics leech into baby bottles and cups. There had to be something better.” That something was silicone, an inert polymer made up of repeating units of siloxane, which is a chain of alternating silicon and oxygen atoms. The timing of Silikids’ launch was fortuitous. The next year, Canada

banned bisphenol A, a polymer known as BPA and commonly used in cups, coffee mugs and water bottles. “That put us on the map,” said Feeley. Bans in other countries soon followed. In 2013, the U.S. banned BPA in infant formula packaging. The ban in Canada may have put Feeley on the map, but the Great Recession was hitting at the same time, which made it difficult to raise money and expand the company. In 2012, Feeley moved the company to northern Michigan. “We needed to get out of Los Angeles. I wanted a different life for my kids,” she said.

ble process, which precipitates the various sugars out of fruit juices in large, stainless steel holding tanks. There wasn’t a eureka moment, he said. “I read that Thomas Edison said not only did he invent the lightbulb, but 20,000 things that were not the lightbulb. That’s basically what happened.” In 2012, Hobson got a patent on the process. Since, then, patents have been applied for in the U.S., Europe, China, Japan and India. Years earlier, Hobson had been working in Montreal, and one of his suppliers was Anderson, who sold Hobson’s company liquid smoke that he made in Wisconsin from burning sawdust. Anderson is the CEO and owner of Momentum Three Inc. in De Pere, which makes a variety of flavorings, spices and food additives, including corn syrup, evaporated cane juice, crushed red pepper, phosphate, maple flavor and native tapioca. Hobson and Anderson had become friends. Hobson originally thought he would just license the de-

sugaring process to established juice companies, but Anderson convinced him that they should form their own juice company. Anderson dispatched a colleague, Greg Papalexis, to the Traverse City area to talk to local fruit growers and build possible relations for the would-be company. One of those he talked to was John King of King Orchards in Antrim County, who told him about a state of Michigan grant program to grow jobs in the agricultural sector. Eventually Papalexis wrote the grant proposal that won the grant of $250,000, the maximum allowed under Gov. Rick Snyder’s Strategic Growth Initiative. Eighty-seven applied for grants, with 14 being awarded. NewTree has two adjacent 7,000-square-foot production facilities just south of Airport Road, the major thoroughfare in Traverse City that routes south of the downtown area and surrounding neighborhoods. One sits idle; the other, which began operations in 2015, can pro-

Schwab remained in California, where she is Silikids’ chief creative officer. Soon after the move, Feeley met with the Northern Michigan Angels, which had just been formed. In 2013, Feeley raised a funding round of $400,000, led by Start Garden of Grand Rapids and joined by the Northern Michigan Angels and the Blue Water Angels of Midland. Lee Gardner, a board member with the Northern Michigan Angels, said the group was drawn to Silikids because it has a focus on northern Michigan companies, and was impressed by Feeley and “the creative design and affordable prices” of her

NEWTREE FRUIT CO.

NewTree fruit juices are now distributed to retailers throughout the region.

cess 40,000 gallons a month, though Anderson said once the idle facility is equipped with larger tanks, perhaps later this year, the capacity can go to 400,000 gallons a month. The company, which employs five, also rents a house in town for Anderson and Hobson to use on their frequent visits. Currently, the company’s three kinds of fruit juices — tart cherry, apple and grape — are sold in 10-ounce bottles that are filled by a contractor, Cherry Growers in near-

product line. “Stacey is determined, persistent, realistic and carries a very positive attitude regardless of startup challenges,” he said. With that funding, Feeley was able to ramp up production and marketing. She said she will begin raising a funding round of at least $1 million late this year to further boost production and marketing. Originally, Feeley sold its brightly colored items in small boutique stores. Today, Silikids products are sold at Meijer and Babies “R” Us locations throughout the U.S. and at retailers in the Netherlands, Malaysia, Australia, Sweden, Chile, Taiwan, Saudi Arabia and South Africa. Prices range from $8.95 for a sippy cup to $9.95 for a spoon that doubles as a pacifier to $6.95 for a set of six reusable straws to $11.95 for a bib. Products even include a capability that seems miraculous to anyone who has ever put something made of metal in a microwave. Silikids’ cups have stainless steel rings at the top to give them some rigidity. The rings are coated in silicone. Silikids has been awarded 10 patents; one is for the chemistry behind the silicone-coated ring that allows the metal to be microwaved without any ill effect. Silikids has four employees, but its benefit to the Traverse City area goes beyond those modest employment numbers. The company is headquartered in downtown Traverse City but does its warehousing, packaging and order fulfillment south of town at Grand Traverse Industries, using its employees. GTI is a nonprofit that provides jobs for the handicapped. Tom Henderson: (231) 499-2817 Twitter: @TomHenderson2

by Grawn. Currently, NewTree juices are distributed by Lipari Foods Inc. to Whole Foods stores in Grand Rapids, Chicago and Lansing; Festival grocery stores; Hollywood markets; and Busch’s grocery stores. Anderson said NewTree, which began selling juice last February, had revenue in 2016 of $76,000, which he said will be up substantially this year. He declined to give a revenue forecast, saying the increase hinges on negotiations with a company that distributes to health food stores in the U.S. and with a major European juice company that wants to market a healthier line of juices. Diabetics are a major target for NewTree, which is expanding production at a time when food companies are responding to health concerns about the levels of sugar in their products, both naturally occurring, as in fruit juices, and as additives in the form of fructose or corn syrup. Tom Henderson: (231) 499-2817 Twitter: @TomHenderson2

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SPECIAL REPORT: CRAIN’S MICHIGAN BUSINESS

ANGEL FROM PAGE 8

“I jumped into this with both feet,” she said. “It was abundantly clear we needed an angel group.” Gardner, who had recently retired to the Traverse City area, got an email from a friend telling him about the fledgling angel group. He had been CFO of Eco Oxygen Technologies LLC, an Indianapolis company that makes systems for treating waste water and which had been funded by angel investors when it was founded in 2003. “I knew how important angel investing could be,” he said. “I went to work at Eco Oxygen the day

the angel deal closed.” He met with Cannon and with the help of two other co-founders, former Dow Chemical executives Ron Hurd and J.T. Hoagland, who were familiar with the Blue Water Angels in Midland, the Northern Michigan Angels launched in 2012. Hurd is chairman of the group. Hoagland owns Cherry Capital Foods, which distributes food products made in the Traverse City area throughout Michigan. The group got advice and modest funding through a Michigan Economic Development Corp. program administered by the Ann Arbor-based Michigan Venture Capital Association.

The group added 10 members in 2016 and has a total of 31. Since its inception, members have raised more than $2.3 million for 22 companies, and it is in the process of either raising money or negotiating term sheets for four more would-be portfolio companies, Ann Arbor-based Court Innovations, which provides cloud-based online court negotiations and mediations to allow litigants to settle cases without going to court; and three Traverse City companies — NewTree Fruit Co., which has developed a patented process to take most of the fructose and sucrose out of fruit juice (see story, Page 8); Vector Center LLC, which offers business

management consulting services; and Promethient LLC, which makes thermal heat-pump systems. The angels target companies in manufacturing, consumer products and technology, typically investing between $80,000 and $100,000 in individual deals, with members free to choose which deal to back, with their investment as low as $5,000. In addition to funding companies, the Northern Michigan Angels has organized eight pitch events in Traverse City for companies seeking funding. While it has a northern Michigan focus, it has syndicated deals around the state with other angel groups, such as the Blue Water Angels and the

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Grand Angels in Grand Rapids. It is doing the Court Innovations deal in collaboration with the Grosse Pointebased Belle Angels, a group of women investors. Portfolio companies include HistoSonics Inc., a medical device company in Ann Arbor; Genomenon Inc., which makes software to analyze an individual’s genome to help fight disease; Advanced Battery Concepts of Clare; and Varsity News Network of Grand Rapids, which provides a cloud-based platform that high schools and universities use to provide news on events. Northern Michigan companies that have received funding include the Harrietta Hills Trout Farm in Cadillac and Traverse City-based Silikids Inc., which makes sippy cups and other household products for kids out of silicone (see story, Page 9), and Grawnbased Altus Brands, which makes outdoor sports gear. The Northern Michigan Angels have had three high-profile exits. Two companies went public — Livonia-based Gemphire Therapeutics Inc. last August and ProNAI Therapeutics Inc. in July 2015; and last September, Ann Arbor-based RetroSense Therapeutics LLC, a pharmaceutical company that hopes to use gene therapy to restore vision to the blind, was bought by Ireland-based Allergen plc. The RetroSense sale for $60 million brought a return of three times their original investment to participating Northern Michigan Angels, a return that could grow much larger if RetroSense hits development targets. Future payments built into the sale price could hit as much as $495 million over the next 15 years. “A lot of our group wishes they’d got in on that deal. We had seven members or so who were in on it,” said Cannon. The IPOs, on the other hand, represent the flip side of the coin. ProNAi’s IPO was eagerly received, with shares opening at $17 on July 16, 2015, and hitting $28.68 by the end of the day. The company raised $138 million, and the bump in share price was a big gain, on paper, for its angel and venture capital investors. But U.S. Securities and Exchange Commission rules have locked-in periods for investors following an IPO. After six months, they can sell their shares, but only to accredited highnet-worth individuals. They can’t sell shares on the open market for 12 months. Alas, on June 6, 2016, ProNAi reported disappointing results of Phase 2 human trials for its lead lymphoma drug, called PNT2258, and said it was suspending work on the drug and would focus on a newly licensed drug called PNT 141. Shares plummeted overnight, eventually hitting a low of $1.32. Late last week, its shares were trading at $1.56. Gardner was one of the angels who invested in ProNAi. In January, the company, which moved its headquarters to Vancouver after the IPO, changed its name to Sierra Oncology Inc. Gemphire opened at $10 a share and was at at $10.85 late last week.

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SPECIAL REPORT: CRAIN’S MICHIGAN BUSINESS

Trade mission helps state food biz target Chinese markets By Amy Lane

Special to Crain’s Detroit Business

When Nancy Niezgocki returned in November from her first-ever export mission, to China, she wasn’t even off the plane when she had emails about her cinnamon-sugar roasted almonds, pecans and cashews. “The minute I got home, I was receiving emails from Chinese companies, saying, ‘Very nice meeting you, loved your product, let’s talk,’” said Niezgocki, president of Beverly Hillsbased Old World Style Almonds Inc. Since then, she’s hired an administrative assistant to help her with exporting matters and to maintain prompt contact with interested retailers and distributors. Niezgocki is revising her product’s labeling to conform to Chinese requirements, researching needed health and sanitation procedures, and experimenting with different types of packaging to help her nuts stand out. And she’s looking at the possibility of adding more production equipment and employees to roast the 32-year-old company’s signature nuts, now sold at special events, sports and theater venues in Michigan and elsewhere. As for how exports could boost the company’s approximate $1.2 million in sales, Niezgocki said: “I have a feeling probably it’s going to be gradual. But if I were able the first year to add another $100,000 in sales, I would be very satisfied.” It’s the type of outcome that the Michigan Department of Agriculture and Rural Development hopes to foster in leading the November food and agriculture trade mission that for some companies built upon relationships already forged, and for others laid new ground. The department is looking to open opportunities in the Chinese market for small and medium-sized Michigan food producers and companies, focusing efforts on eastern China and a middle class there with rising incomes and expected to reach 220 million people by 2020. China is “an extremely important market that we cannot ignore,” said MDARD Director Jamie Clover Adams. And she said consumers are looking for Jamie Clover unique and difAdams: “Cannot ferent tastes, ignore” China. whether in craft beer, wine, dried fruits and snack foods and even tea. For Nirvana Tea Inc. co-founder and CEO Alecha Benson-Lockhart, who wants the loose teas produced by her 3-year-old business to become an internationally recognized brand, China seemed a natural place to start. “The genesis of tea drinking started in China,” she said. “So I knew that it wasn’t something I’d have to sell.”

Benson-Lockhart connected to MDARD through Eastern Market Corp., producing her teas at the Detroit Kitchen Connect shared commercial kitchen space for food entrepreneurs. MDARD provided her resources about exporting and additional assistance and exposure, including through international trade seminars and in-state gatherings that bring prospective international buyers to Michigan businesses. Traveling to China as part of the trade mission, Benson-Lockhart wasn’t disappointed. “It exceeded expectations,” she said. The mission included meetings set up in Shanghai and Shenzhen, where companies met potential buyers vetted by a contractor working with the Chicago-based Food Export Association of the Midwest USA and MDARD. Benson-Lockhart said there was “great interest” particularly in Nirvana’s herbal and fruit-flavored teas, including blueberry, an orange-berry blend of orange, cranberries and chamomile, and lemon-ginger. “With the fruit, it’s an introduction to something different” from the traditional teas known to the Chinese, she said. She’s following up on interest in anticipation of getting her teas on

store shelves. Nirvana teas are currently sold primarily in Southeast Michigan and on Amazon.com. Benson-Lockhart declined to disclose Nirvana Tea sales but said she hopes exports to China and eventually other markets will add at least 20 percent to revenue. And with that expanded business, she would like to add employees in Detroit to her full-time staff of four. “It’s a way of giving back to the community, and putting Detroit on the map … for tea,” Benson-Lockhart said. In addition to buyers’ meetings, the trade mission included tours of stores and briefings by U.S. Department of Agriculture officials who staff agriculture trade offices in China. Michigan food and agriculture exports to China have grown steadily in recent years, reaching $70.9 million in 2015 compared with about $23 million five years prior, according to MDARD. Top processed items exported to China include products used for livestock feed and in the brewing industry, and dairy items like fresh cheese and milk concentrate. Among Chinese consumer tastes, Clover Adams said, there’s opportunity for Michigan companies to make inroads.

That’s an aim of northern Michigan global exporters Graceland Fruit Inc., Cherry Central Cooperative Inc. and Shoreline Fruit LLC. In China, dried-fruit producer Graceland exports dried cranberries, blueberries and cherries to distributors who sell them to commercial food industry buyers and manufacturers for use in applicaBrent Bradley: tions like baked Growing interest goods and in dried fruit. breakfast bars. But the Frankfort-based company is seeing growing interest in snack-sized packages of trail mixes and dried fruit, said Brent Bradley, vice president of sales and marketing. Graceland began selling small packs of dried fruits in 2015 on the online Alibaba shopping platform Tmall Global, where foreign companies can sell retail packages directly to Chinese consumers. Bradley, who travels to China several times a year, said going on the November trade mission helped Graceland solidify relationships and

introduce customers and distributors to Michigan officials, which is important to underscore government support. He said Graceland export sales to China have doubled each of the last three years and China is now Graceland’s largest export market, representing between 15 percent and 20 percent of Graceland’s companywide U.S. and international sales, which he declined to specify. Also selling in China online, and in bulk to distributors, is Shoreline Fruit, a cooperative of two families of tart cherry growers in the Grand Traverse region. Shoreline grows, processes and markets cherries, processes blueberries and cranberries, and is looking to strengthen its China business, said Brian Gerberding, director of sales. The trade mission provided “some very strong new contacts” and “we are very hopeful some of the contacts we made will result in new sales,” he said. Brian Klumpp, director of business development at Traverse City-based Cherry Central, said the mission built on previous relationships Cherry Central had formed in China, including through another state-sponsored trade mission there in 2013. SEE TRADE, PAGE 12

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SPECIAL REPORT: CRAIN’S MICHIGAN BUSINESS

TRADE FROM PAGE 11

“There’s nothing like being face to face with people you work with,” he said. “We spent a great deal of time with existing companies we work with; it also gave us a chance to meet with new people.” With 10 member cooperatives representing more than 700 farms in five states and Canada, Cherry Central grows, processes and markets fruit including apples, blueberries, cranberries, strawberries and cherries and has annual sales of about $200 million. Cherry Central’s business in the China market started with bulk sales of dried fruits, Klumpp said, but there are now “some retail products that are catching a little fire,” like dried cherries, blueberries and cranberries. “If you’re selling a premium product, and our products aren’t cheap, you need to have a pretty good income to spend on something … (that) is more of a treat, more of a luxury,” Klumpp said. “It’s the rising middle class that’s going to sustain us and keep us in business there.” As part of the trade mission, the Cherry Marketing Institute in Dewitt, an organization funded by

LARRY PEPLIN

Detroit’s Atwater Brewery, which has Chinese representatives who participated in the trade mission, is pursuing the China market. North American tart cherry growers, did a promotion highlighting tart cherries and uses. The institute, which last year hired a marketing and consulting firm to represent it in China, is working “to increase our sales and demand in that market,” said Julie Gordon, CFO and export marketing director.

So, too, are blueberry growers. Southwest Michigan’s Grand Junction-based MBG Marketing, a producer-owned blueberry marketing cooperative, saw in the mission an opportunity “to get on the ground in China” and understand aspects like culture, business channels and consumer attitudes “and where we

might play in that economy,” said participant Melanie LaPerriere. She is vice president of sales and general manager for Naturipe Value Added Foods LLC, the MBG marketing arm for processed blueberry products. She showcased blueberry powders, concentrate and individual quick-frozen items to potential Chinese buyers and said food service and manufacturing avenues are a focus in building consumer demand for blueberries. Michigan craft beers are also looking to tap into Chinese tastes. Concurrent with the MDARD trade mission, Shannon Long, founder and CEO of a Michigan business that assists craft breweries with exporting, was staffing a booth at China’s largest trade show for imported food and beverage sectors and promoting brews including those from Dark Horse Brewing Co. in Marshall, Arcadia Ales in Kalamazoo and Greenbush Brewing Co. in Sawyer. Long’s Brew Export LLC utilizes a warehouse in Comstock Park as a base to receive breweries’ products and export them to foreign distributors. American craft beer holds significant appeal in China, for both high-quality ingredients and innovative flavors, Long said. Detroit’s Atwater Brewery, which

Mark Rieth: Sees opportunity for Atwater.

has Chinese representatives who participated in the trade mission, is pursuing. “We’re doing all of our due diligence right now to find out the best way to go about entering the China market,” said owner and CEO

Mark Rieth. He sees opportunity for products including Atwater’s Lager and Vanilla Java Porter and said that while Atwater would initially export beer produced in Detroit, it is also looking at the potential of producing beer in China with breweries there. “We have some potential opportunities with some large breweries over there to do some strategic partnerships down the road, if that makes sense,” Rieth said. Atwater, which had revenue of $11 million in 2016, exports to Peru, Germany and Canada for sales that make up about 2 percent of Atwater’s overall business. But Rieth anticipates exports could climb to about 20 percent of business in the next five years, with the majority of growth coming from China.

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SPECIAL REPORT: SECOND STAGE

in line

GETTY IMAGES/ISTOCKPHOTO

Succession planning means biz bosses must find, develop new leaders Topics: n Shri Thanedar of Avomeen LLC has been

training his employees to lead the company since he founded his business, Page 14. n George Johnson, founder of Detroit firm George Johnson & Co., hired a managing partner to ensure the business will carry on, Page 15. n Matthew Likins, owner of 1st Choice Physical Therapy LLC, approached his partners about forming a succession plan, Page 15.

By Rachelle Damico

Special to Crain’s Detroit Business

Have you identified the future leaders of your company? Succession planning ensures employees are recruited and developed to fit key roles within the company if a business owner dies, retires or must leave the company. Jane Owen, president of Vistage Michigan, a peer-to-peer business coaching organization in St. Clair Shores, said the number-one mistake businesses make when it comes to succession planning is waiting to the last minute. “I encourage CEOs to identify potential successors from the start, and to ask their senior leaders to do the same,” Owen said.

“I encourage CEOs to identify potential successors from the start, and to ask their senior leaders to do the same.” Jane Owen, Vistage Michigan

As a company evolves, business owners should take steps to ensure employees are ready to fill new roles. “Creating a culture that embraces development and incorporating development into performance reviews set the stage for employee growth, especially to the next level of leadership,” Owen said. Shri Thanedar, owner of Ann Ar-

bor-based Avomeen LLC, documents yearly performance reviews — or “performance appraisals” — as a way to measure an employee’s progress. “Our vision will be not be difficult because it’s something that we are aware of, thought about and planned for,” Thanedar said. “I took great pains to make sure that I hire people that are independent thinkers, are

leaders and have the ability to work independently.” Owen said if businesses are hiring from outside of the company, it’s imperative to recruit for specific talents and capabilities that fit the role and the company culture. A way that businesses can see if a candidate fits that mold is to see how they interact with other employees. “I think it’s very important to communicate to your entire organization about where things are going,” said George Johnson, founder of Detroit-based George Johnson & Co. In this month’s Second Stage, Crain’s talked to three different companies about finding and identifying their future leaders.

C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 6 , 2 0 1 7

SPECIAL REPORT: SECOND STAGE

Avomeen owner: ‘No one is irreplaceable’ By Rachelle Damico

Special to Crain’s Detroit Business

Shri Thanedar, owner of Ann Arbor-based Avomeen LLC, has been training his employees to lead the company since the moment he founded his business. “No one is irreplaceable. It is important that a business continues and does not overly depend on one person,” Thanedar said. “As a company grows, people need to take on and move into positions of higher responsibility.” Avomeen was founded in 2010 and has 50 employees. The analytical chemistry and drug testing company has grown rapidly — up to 40 to 50 percent every year. Thanedar sold the majority of the company to Chicago-based private equity firm High Street Capital in November of last year. However, he made legal agreements that employees would remain with the company and that he would remain as interim CEO until he finds a replacement. For the past two months, Avomeen has been vetting candidates, Thanedar said. To help with the process, the company hired an outside executive and C-level search firm. “We have chosen a search firm that specializes in that level of hiring — finding qualified candidates who

Shri Thanedar, owner of Ann Arbor-based Avomeen LLC, has been training his employees to lead. have run companies, grown companies and sold companies,” he said. “We are looking for someone that has not only grown revenue, but understands the challenges of revenue growth.” Thanedar said he will not rush through the hiring process and has been considering candidates both inside and outside of the company. “We won’t act until we find some-

one that’s a good fit,” Thanedar said. “It’s not so much timing as finding the right person.” Having developed employees, Thanedar said, allows for a smoother transition. Avomeen has yearly performance reviews — or “performance appraisals” — where each employee does a self-evaluation to set goals for himself or herself and see how they align

AVOMEEN LLC

with the company’s. A supervisor independently appraises the employee and sets up a formal meeting to discuss it. This allows employees to take the lead, be held accountable for their responsibilities, and feel valued, Thanedar said. “That communication process is so important because the employee’s perception of his or her performance

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is often different than the supervisor’s,” he said. “If it’s not communicated, it’s very difficult for an employee to improve and do better.” Thanedar said business owners should also pay attention to how a successor fits into the company’s culture. “It’s so important that the new leader understands the culture of the company and builds upon that culture,” Thanedar said. “If the culture of the company is contrary to the leadership style of the leader, then that could result into a mismatch.” Thanedar said the company will be introducing CEO candidates to Avomeen’s management team to see how they interact. “A lot of it is seeing how well those interactions happen, and getting feedback from the team about the leader,” he said. Thanedar will be remaining with the company as a board member and will help transition the CEO into their new role. “It’s very important to be available if needed, but it’s also very important to step away and not interfere with the process,” he said. “The leader should feel that he or she is now responsible for the future and the growth.”

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SPECIAL REPORT: SECOND STAGE

Adviser helps accounting firm handle transition By Rachelle Damico

Special to Crain’s Detroit Business

George Johnson, founder of Detroit accounting and advisory firm George Johnson & Co., hired a managing partner to be able to transfer the day-to-day responsibilities of the company, and to ensure the business will carry on. “It allows a business to continue to service without interruption, and transferring to a new company would require a period of additional time on the client’s part,” Johnson said. “It’s a matter of setting things up until I phase out.” Johnson in 1971 founded the company, which employs 20. The firm, George Johnson: which also has a Hired a managing Chicago office, partner. focuses on retirement and benefit plans, and does audit and tax work for health care and real estate businesses. The company started forming a practice continuation plan in 2008, which ensures the business is transferred to another CPA firm or individual in the event of disability or death. Johnson hired a consultant, August Aquila from Minneapolis-based Aquila Advisors LLC, to help form the plan and find a successor. This included interviewing candidates by phone, performing background checks and investigating financial records. “It’s good to hire a firm or person who specializes in your industry,” Johnson said. “They have a lot of experience as far as where things have gone wrong. Why reinvent the wheel?”

To help with vetting, Johnson asked friends for recommendations and reached out to trade groups to which he belongs, including the Troy-based Michigan Association of Certified Public Accountants. It was not an overnight process. Johnson said he vetted about 10 different financial institutions or individuals during an eight-year period. “You have to give yourself enough time,” Johnson said. “It may take six to eight months to find out something will not work.” For instance, in 2009, Johnson and his consultant flew out of state to meet a prospective candidate, but reconsidered after receiving the firm’s financial records. “The practice wasn’t a solid financial practice, and our philosophies were different as far as how to manage the practice,” Johnson said. “If you see something that’s not going to work, you really shouldn’t get into it.” Johnson found a fit when he approached Anthony McCree, a principal at UHY LLP who had 14 years of experience with the audit and assurance group, health care practice and U.S. Securities and Exchange Commission practice. They had met before about seven years ago, when George Johnson & Co. was working on a financial audit for two clients. McCree was leading the audit committee. “I was able to see how he worked and handled himself,” Johnson said. Last year, Johnson and McCree met and discussed responsibilities McCree would take on as the company’s managing partner. “We both had the same philosophies, so it was easy to agree upon different things,” Johnson said. During a four- to six-month period, they negotiated terms and presented them to an attorney, which included ownership stake, nondis-

closure and transfer of ownership. (McCree currently had a minority stake in the company.) An attorney finalized the agreement. “If things don’t go well, we’d go ahead and split off,” Johnson said. “It’s like a premarital agreement — you don’t get married unless you think it’s going to work out.” Johnson said he delegated responsibilities to McCree in steps — first meeting with clients and then handling more complex parts of the business, such as finance and marketing responsibilities. “It’s difficult — if not impossible — to give someone everything at once,” he said. “We assign responsibilities, and each person is accountable and has an open mind.” Johnson said he then steps out of the way to allow McCree to lead. “There comes a time when you have to walk away,” Johnson said. “If you have a competent person coming in, they’re not going to have someone dictating what to do. That’s a recipe for failure.” Johnson said he meets with McCree every Monday for about 1-2 hours to discuss issues that may come up and to set agendas. “One key factor in our success is communication,” Johnson said. “If concerns are coming up, we resolve them each week, or set up a plan to resolve the issue.” Johnson said he has no current plans to retire, and is focusing on client retention, development and overall vision for the firm. Last year, Johnson hired South Carolina-based consultant Bob Gibble to work with McCree and Johnson on a strategic plan, which includes plans to expand their Chicago office. “I look at the future as being very good,” Johnson said. “Even though things are going well, we want to look down the road.”

INAUGURAL 2017-18 SEASON

1st Choice goes to school on succession By Rachelle Damico

Special to Crain’s Detroit Business

After taking a class on business management and growth, Matthew Likins, owner of 1st Choice Physical Therapy LLC, approached his partners about forming a succession plan. “It hadn’t been something that I thought about previously because I’m quite a ways from retirement,” Likins said. “A good succession plan can take many years to properly implement, and if you wait until you think you’re ready to retire, it’s greatly limiting to your options.” Likins, a physical therapist, owns the Sterling Heights-based physical therapy company along with partners and physical therapists Peter Kovacek and Dave Walters. The company employs 15, has

“It hadn’t been something that I thought about previously because I’m quite a ways from retirement.” Matthew Likins, 1st Choice Physical Therapy LLC

three locations and celebrated its 14year anniversary this year. Likins approached his partners about forming a succession plan after taking a class last year at Goldman Sachs Group Inc.’s 10,000 Small Businesses program at Wayne State University.

“We are thinking about what we need to do so that when that happens, it’s a smooth and a beneficial transition for everyone, with the notion that you plan these things years in advance,” he said. Likins said the company is hiring and looking at identifying, recruiting and developing talent in hopes that future employees will move into an ownership position with the company. “Some therapists are perfectly intent coming in and providing great care to their patients, and that’s as far as they want to take it,” Likins said. “That’s a wonderful thing, but then there’s also folks that want to provide great care and see themselves growing into a greater role — running a clinic or eventual ownership of their own clinic.”

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Invest Detroit names McClelland first COO Sarah McClelland was named the first chief operating officer of Invest Detroit, the Detroit-based nonprofit community development financial institution announced. McClelland, 57, will continue on Sarah McClelland the board of directors, where she has served since 2013. McClelland previously served as chief control officer of J.P. Morgan Chase & Co.â&#x20AC;&#x2122;s global commercial banking business, president of the Michigan market for Chase, and managed the central middle market of commercial banking groups in Ohio, Kentucky, Tennessee and Michigan.

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BUILDING FROM PAGE 3

A suggestion, or a demand? The issue that sparked the case is what exactly Exclusive Realty LLC CEO Charles Mady, the broker on the deal, told Paglia shortly before the expected sale on Aug. 15, 2015. Paglia and his attorneys Dennis Dettmer and Michael Dezsi contend in court records that Sterling Group, through Mady, demanded a $500,000 price cut because of immediate capital improvement needs to the building. They say they declined to reduce the price, and therefore the purchase agreement was nullified, according to court documents. Sterling Group and its attorneys at Detroit-based Barris, Sott, Denn & Driker PLLC contend â&#x20AC;&#x201D; and Mady says in a sworn affidavit â&#x20AC;&#x201D; he merely suggested, not demanded, a price reduction and that the contract should have been honored. Itâ&#x20AC;&#x2122;s not known if the building has another buyer in the wings. Its state-equalized value has increased since 2015 from about $2.3 million to

$2.57 million, an 11.7 percent bump, since the lawsuit was filed in 2015, according to city records. Last weekâ&#x20AC;&#x2122;s sign removal prompted a same-day filing of a motion to hold Paglia in contempt of court. Sterling Group is asking the court to make Paglia put the signs back up. In a response to the contempt motion, Dezsi argues that the trade name â&#x20AC;&#x153;Ford Buildingâ&#x20AC;? was never included in the sale and that the signs are not â&#x20AC;&#x153;fixtures that become part of the propertyâ&#x20AC;? being sold, based on a 1999 Michigan Court of Appeals case. The response also says that the 1991 purchase also included a separate $100,000 purchase of the trade name, which would make it separate from the building. â&#x20AC;&#x153;Iâ&#x20AC;&#x2122;m not going to comment onâ&#x20AC;? the signs being removed, Paglia said last week, adding that he did not bring the matter before the Detroit Historic District Commission, which would typically have to be consulted on such a building modification because the building is in a local historic district. â&#x20AC;&#x153;It (the sign) could be getting cleaned. Thereâ&#x20AC;&#x2122;s a lot of different things that could be going on.â&#x20AC;?

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8-11 a.m. Feb. 13. Automation Alley. The 2017 Technology Industry Report will be unveiled from Automation Alleyâ&#x20AC;&#x2122;s survey of 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 the coming changes in the manufacturing industry. Detroit Institute of Arts, Detroit. $25 members; $45 nonmembers. Email: events@automationalley.com ; phone: (800) 427-5100. Giving Up the Wheel: The Future of Mobility and Its Impact on Michigan.

11:30 a.m.-1:30 p.m. Feb. 14. Detroit Economic Club. David Dauch, chairman and CEO, American Axle & Manufacturing Holdings; Matt Simoncini, president and CEO, Lear Corp.; and James Verrier, president and CEO, BorgWarner Inc., will dissect current mobility efforts and share insights on the rapidly evolving road ahead. Westin Book Cadillac, Detroit. $45 members; $55

guests of members; $75 nonmembers. Website: econclub.org. Digital Marketing Boot Camp. 8-11

a.m. Feb. 15. Detroit Regional Chamber. Learn the latest innovations in social media, how to digitally tell a brandâ&#x20AC;&#x2122;s story, and trends and tips to improve digital marketing strategy. College for Creative Studies, Detroit. $55 members; $95 nonmembers. Contact: Marianne Alabastro, phone: (313) 596-0479; email: malabast@detroitchamber.com; website: detroitchamber.com/digital-marketing-boot-camp. Prepare to Meet Your Funder! Truths on Small-business Financing. 2-4 p.m.

Feb. 15. The Entrepreneurship Center at Washtenaw Community College. Presentation gives current or prospective entrepreneurs insight into different types of funding and how to prepare to meet with loan officers. Speakers: Lou Morse, financial literacy program coordinator, Bank of Ann Arbor; Joe Koss, faculty member, Washtenaw Community College; Kory Scheiber, program specialist, Small Business Development Center. Entrepreneurship Center at Washtenaw Community College, Ann Arbor. Free. Phone: (734) 249-5880; email: entrepreneurship@ wccnet.edu. Calendar guidelines. Visit crainsdetroit.com and click â&#x20AC;&#x153;Eventsâ&#x20AC;? near the top of the home page. Then, click â&#x20AC;&#x153;Submit Your Eventsâ&#x20AC;? from the drop-down menu that will appear. Fill out the submission form, then click â&#x20AC;&#x153;Submit eventâ&#x20AC;? at the bottom of the page. More Calendar items can be found at crainsdetroit.com/events.

There are also no records of Paglia obtaining a city building permit for the work, which is also required, according to guidelines from the HDC. Messages left with Barris, Sott, Denn & Driker attorneys were not returned. On Friday morning, Dezsi filed a motion to declare Sterlingâ&#x20AC;&#x2122;s purchase agreement in default.

A rich history According to Historic Detroit, which tracks Detroit building architecture and history, the building was designed by Daniel Burnham, who also designed the Dime Building (now Chrysler House) across the street from the Ford Building, as well as the Flatiron Building in New York City. Named for the Edward Ford Plate Glass Co., which made its headquar-

Page 17

ters there, the building for a short time was the tallest in the city, according to Historic Detroit. According to CoStar Group Inc., a Washington, D.C.-based real estate information service, the building rents for an average of $14.95 per square foot per year and has 188,000 square feet that are 79.6 percent leased. The contempt of court motion also said that Paglia is refusing to transfer the building's website domain, www.fordbuilding.com, to Sterling Group. Dezsi said in his filing that the domain name was not part of the agreement, although the websiteâ&#x20AC;&#x2122;s contents were. As of last week, the building sale had not been finalized. And its website had been down for more than 48 hours. Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

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Beyond the financial strife, the agencies are concerned that if they lose employees possessing specialized language and cultural awareness skills, they may be tough to replace. There’s also uncertainty about the future of resettlement operations beyond the terms of the executive order, given that the bulk of refugee placements in Michigan going back five or more years has been people coming from the seven countries affected by the executive order: Iran, Iraq, Libya, Somalia, Sudan, Syria and Yemen. The Jan. 27 order signed by Trump suspended all refugee admissions into the U.S. for 120 days. It’s also preventing anyone from the seven Muslim-majority countries from entering the U.S. for 90 days and blocking Syrian refugees indefinitely. Additionally, the order will reduce the total permitted number of refugees for the 2017 fiscal year from 110,000 to 50,000, as part of moves the administration said are aimed at preventing foreign terrorists from gaining entry to the U.S. Detroit has been one of the top refugee resettlement destinations in the U.S., injecting tens of millions of dollars into the local economy, because it has a resettlement infrastructure that is “second to none,” said Steve Tobocman, executive director of Global Detroit, a proponent of immigration as an economic development strategy. Having a robust refugee resettlement infrastructure is important to ensuring that local refugee resettlement agencies can successfully compete for federal refugee resettlement contracts going forward, which in turn, is important to the region’s economic future, he said. “We know that immigrants and refugees have significant entrepreneurship rates, bring a diversity of skills needed for local business to compete and grow and add diversity to our local economy,” Tobocman said. The U.S. has taken in 32,954 refugees from all countries since Oct. 1, 2016, according to the U.S. Department of State. With the new ceiling, just over 17,000 additional refugees will be allowed into the U.S. between now and the end of September, even after the 120-day hiatus is lifted. Typically, Michigan resettles about 6 percent of the refugees coming to the U.S., and Southeast Michigan takes in about two–thirds of them, Tobocman said. He estimates the region could have expected to see about 4,300 of the 110,000 refugees originally expected in fiscal 2017. That would have added up to more than $4 million in estimated, total federal funding coming to the four local resettlement agencies with the $950 per person allocation to each agency to provide services for the first 90 days. But given the 55 percent reduction in the total number of refugees that will be allowed into the U.S. this year, and assuming the region saw a comparable cut, that would leave $1.8 million in total federal resettlement dollars for the four local agencies. The four-month hiatus in any refugee influx and the several

C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 6 , 2 0 1 7

Where Michigan refugees come from The bulk of refugees coming to Michigan between fiscal years 2012 and 2016 were from the seven countries in the executive order that President Trump signed on Jan. 27. COUNTRY OF REFUGEE’S ORIGIN

2012

2013

Iran

Iraq

FISCAL YEAR 2014

2015

2016

2,484

3,431

2,759

1,442

1,119

Somalia

196

275

287

255

Sudan

179

1,374

Total from seven countries in executive order

2,607

3,742

3,070

2,028

2,815

Total of all refugees to Michigan

3,594

4,651

4,006

3,012

4,258

Libya

Syria Yemen

Source: U.S. Department of State

months it would take to repopulate the pipeline of refugees coming to the U.S. would cut that figure by at least another third, leaving roughly $1.2 million to be split among the local agencies according to the number of refugees each has handled and would handle. None of that, however, takes into consideration concerns that resettlement activity may not fully pick back up after the terms of the executive order expire, given the region’s focus on resettling populations hailing from among the countries named in the order. Local resettlement agencies that had staffed up to handle a continued influx of Syrian refugees that began last year said they won’t be able to support current staffing levels with the new limitations. “This isn’t an enterprise you start up overnight. It requires years of work to get it right,” said William Blaul, director, institutional advancement for Clinton Town-

ship-based Catholic Charities of Southeast Michigan. “It’s very difficult to start up, shut down, start up, shut down — that’s one of our struggles with this (order).” Catholic Charities, one of the largest resettlement agencies in Southeast Michigan, laid four people off earlier this month following a decline in refugees late last year. It’s now redeploying its 10 remaining employees involved in that work to other parts of the nonprofit where possible as a way to delay layoffs. “We’re a pretty lean organization, so having a little extra help is good. But we can’t sustain that,” Blaul said. The agency placed 732 refugees in fiscal 2016. Like other resettlement agencies, it provides contracted services for the first 90 days including: providing an affordable, safe home with furnishings and cultural orientation, assistance in applying for safety-net

benefits and social security, enrolling children in school and adults in an English-as-a-second-language course, and transporting them to mandatory health screenings and the grocery store. Catholic Charities and other local resettlement agencies are ramping up fundraising in the hopes of weathering the refugee suspension financially. But the suspension and subsequent budget issues also bring with them the potential for losing top talent that could command higher pay elsewhere, Blaul said. “When we lay off people and they go into the job market, it’s very hard to get them back. ... With the language skills, cultural skills and awareness and the right temperament — lots of patience and understanding — that’s not something you just go onto a job site and advertise for and get all of these qualified candidates.” Catholic Charities hopes and trusts the federal government to re-

Family finds local help after fleeing Iraq Seeing his barber shop burned because he was the wrong religion was bad enough, but when his 5-year-old daughter was kidnapped, Odai Alaaneri knew it was time to leave his native Iraq. Thankfully, he and his wife were able to get their daughter back the same day in the summer of 2012, after the town’s faith leaders negotiated her release. They returned home only to grab their passports and clothing before fleeing to Turkey with their daughter and her 2-year-old sister the same night and staying there until they were allowed to come to the U.S. one year ago. At Detroit Metropolitan Airport, a representative from the U.S. Committee for Refugees and Immigrants Detroit met them and took them for a warm meal before taking them to their new home in Dearborn. USCRI passed through one-time federal funding to help the family ($925-$1,125 per person, depending on need) and helped them sign up for food assistance and Medicaid. It also pointed them to the nearest school for their children, connected them with resources to learn English, helped Alaaneri find a job at nearby Land Mark Industries Inc. within 40 days of arriving in the U.S. and lined him up with the training needed to acquire a

COURTESY OF ODAI ALAANERI

Odai Alaaneri and his wife, Nagham Alnuaimi, fled Iraq in 2012 with their two daughters and lived in Turkey, where this picture of the girls was taken. chauffeur’s license after three months so he could move into a better job, driving a school bus for Keys Grace Academy in Madison Heights. Alaaneri, 40, is very happy that he and his family are in the U.S. because they are safe and able to build a life once again, said Tawfik Alazem, di-

rector of the Detroit field office, translating for Alaaneri. The family six months ago welcomed a new daughter who plays with her sisters, now ages 6 and 9. And Alaaneri is making plans to open a barber shop in metro Detroit. Sherri Welch

view refugee vetting and security, “but we really hope they stick to these 120 days and it doesn’t become 240 or 360,” he said. “We have people assigned based on a substantial contract. … If we don’t have a contract to operate this program under, we can’t operate it. We’ve been talking to programs around the country and they are in the same place.” Southeast Michigan’s largest resettlement agency, Detroit-based Samaritas (formerly Lutheran Social Services of Michigan) is still gauging the impact the new federal policies will have on its 100 employees engaged in resettlement operations. But it’s clear it will be significant, Sean de Four, vice president of child and family services, told Crain’s last week. Last year, the agency assisted 1,950 refugees, an unprecedented number, de Four said. With the executive order, “we’re going to have significant layoffs, and the agency is going to have to absorb the expenses of rent and other overhead that won’t be covered by the arrivals we were anticipating,” de Four said. Samaritas is operating on a $107 million budget this year. Of that, about $10 million was budgeted for its resettlement activities, with $6 million expected to fund administrative costs. The remaining $4 million would have been pass-through funding for refugees. USCRI’s Detroit field office, which typically resettles 600-700 refugees per year, took in 80-90 refugee families from Iraq and Syria in January, meaning it will have federally backed services to provide into April. But no one knows what will happen after that, said Zeina Hamade, community outreach coordinator for the local office of the Arlington, Va.-based organization. Staffing changes are likely, she said, but the agency isn’t sure how many layoffs it will have to make and when they will come. “Right now, we’re taking it day by day and working on advocacy and continuing to build our relationships with members of Congress who’ve been very supportive,” she said. “We’re hoping things will change sooner rather than later, but we really don’t know what will happen in the next few months.” Like its peers, Jewish Family Services of Washtenaw County geared up to resettle more clients than ever before, and now “we are at the point where we might have to lose all of it,” said Executive Director Anya Abramzon. About half of the agency’s 60 employees provide resettlement and additional services for refugees such as English as a second language, health screenings and employment and training assistance. The nonprofit, which operates on a $2.8 million budget, expects the suspension to translate to a loss of $50,000-$60,000 per month, she said. It’s working hard to find additional resources to bridge the pause in refugee activity and sustain the programs. “The question is: Is this just 2017, or is this business as usual going forward?” she said. “I think it’s important for all of us to know that.” Sherri Welch: (313) 446-1694 Twitter: @SherriWelch

C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 6 , 2 0 1 7

EFFECT FROM PAGE 1

terrorism. On Jan. 27, Trump signed the executive order, which temporarily blocks travelers from seven Muslim-majority nations and suspends the resettlement of refugees in the U.S. The order drives a wedge between Southeast Michigan’s long-standing relationship with immigrants, and refugees, from those countries — Iraq, Syria, Iran, Libya, Somalia, Sudan and Yemen — and the local economy and workforce. However, many fear the ban won’t be temporary and that further executive orders, drafts of which were leaked from the White House last month, will target high-skilled immigrants who come to the U.S. on H1-B visas, which could further limit businesses’ access to talent. A Detroit CEO told Crain’s he knows of at least one Southeast Michigan company whose leadership has warned its H1-B visa employees — the stars of this company’s workforce — not to leave the country. “The fear is they won’t be able to come back to the United States,” said the executive, who spoke on condition of anonymity. “It’s a bad situation; I’m so sad for all the families stuck waiting in places like Turkey or Jordan or Lebanon,” said Zadoyan, 37, who immigrated to the U.S. after waiting nearly two years in Turkey for refugee status. “I’m worried about the future for them. They are waiting and suffering, which is bad, because we have jobs waiting for them, so they can start a new life away from the violence.” For executives, the order expands beyond a moral argument and sends a signal to foreign nationals that the U.S., including Southeast Michigan, is not interested in their talents. “We hire talent, not addresses. We look for skills, education and training; we have people of all different types from all over the world,” said Dan Coker, president and CEO of Gentherm Inc., a Northville-based manufacturer of thermal management systems. “We have to make sure we protect our people and conduct a global business. Things like this are not conducive to that goal.” Trump issued the order — which halts travel from nationals from the seven nations for at least 90 days, stops refugee resettlement for at least 120 days and bans the resettlement of Syrian refugees indefinitely — in the name of safety, aimed at keeping out potential terrorists. He plans to beef up the nation’s vetting process for U.S. visas issued to nationals of the affected countries. But the White House must strike a difficult balance between keeping the country safe without harming businesses’ ability to compete on a global scale. The immediate economic impact of this order in particular is likely to be minimal because of the limited number of immigrants and refugees the U.S. accepts from those countries, according to experts. But if bigger changes are in the offing for visa programs that businesses depend on, that could change. “In terms of the economic hit from this (executive order), it’s prob-

ably not that big,” said Hoyt Bleakley, a University of Michigan economist. “But it’s definitely disturbing as a precedent. We’ve operated with visas for a very long time, under an implied bargain that if you come here, work hard and play by the rules, there’s a path for you. But that message now is that bargain is only valid if we feel like upholding it.” Matt Simoncini, CEO of Southfield-based Lear Corp., said this particular order doesn’t have a nearterm impact, but the company, in general, “supports the free flow of documented, legal immigration.” Michigan has a long history of immigrants helping drive its economic engine. Syrians, for example, were among the first Middle Easterners to migrate to Michigan in the late 1880s. By the early 1900s, Middle Eastern people were flocking to Detroit seeking employment from Henry Ford and settling in Highland Park and later in Dearborn. Southeast Michigan is now home to more than 100,000 immigrants from the Middle East. However, their economic performance is a mixed bag. The median household income for those who identify as Arab in the U.S. was $56,433, according to the 2010 U.S. Census, compared with all households in the U.S. at $51,914. Iraqi and Yemeni households have the lowest median incomes at $32,075 and $34,677, respectively. Syrians, who saw the strongest restrictions under the executive order, have a U.S. median household income of more than $65,000, according to census data, compared with just over $48,000 for Michigan’s median household income and a nearly $59,000 median household income for Southeast Michigan families. Michigan admitted 1,374 refugees from Syria, 1,119 from Iraq, 255 from Somalia, 55 from Sudan, nine from Iran and three from Yemen in fiscal year 2016, according to the U.S. State Department. And the influx of immigrants, particularly refugees from Syria, to the other regions like the European Union has not come without cost. The International Monetary Fund estimated that refugee resettlement would boost public expenditures roughly 0.19 percent of gross domestic product, adding to the public debt and increasing unemployment in 2016. But the influx was also expected to boost output by 0.1 percent when the immigrants join the workforce. “It’s easy to see the possible shortterm effects,” said Charles Ballard, an economist at Michigan State University. “Dropping immigrants into a labor market can displace jobs or even depress wages, but the longrun effects are close to zero.”

Economic benefits Cities across the U.S., however, have found success in resettling immigrant and refugee populations — economically. Cleveland welcomed 4,518 refugees from Bhutan, Ukraine, Burma and Somalia between 2000 and 2012. Volunteer agencies (commonly referred to as “volags”) and cities spent $4.8 million on refugee services in 2012, according to an eco-

nomic impact study on the population by Chmura Economics & Analytics. The funds included $2.5 million on wages to staff members at the organizations and $1.1 million on food, clothing and transportation. However, the economic impact outpaced the support spending tenfold, the study reported. The economic impact of those refugees in 2012 is estimated at $48 million and the creation of 650 jobs. Between 2003 and 2012, the refugees in Cleveland started 38 businesses, hired 141 employees, and accounted for 248 home purchases in Cuyahoga County, according to the study. In 1980, thousands of Hmong, an ethnic group from rural regions of Laos and Thailand, were granted refugee status and immigrated to the U.S. following the Laotian Civil War, which was rife with ethnic cleansing and military attacks. St. Paul, Minn., is home to the largest Hmong population in the U.S. with more than 65,000 people of Hmong descent. As of 2013, Hmong businesses in greater Minneapolis-St. Paul had combined revenue of $100 million, according to Asian Americans, an encyclopedia published in 2013 on the economic history of the group.

the U.S. to start or scale businesses here. The White House confirmed it is also considering adding more nations to the list, including Pakistan. Rumors have flown that it may include Afghanistan, Colombia and Venezuela. Law firms are advising clients to not only ground visa workers from the initial seven countries, but any countries with similarities — e.g., predominantly Muslim countries with links to terrorism, such as Indonesia, said Mike Nowlan, partner and co-leader of the immigration practice at Clark Hill PLC in Detroit. The White House also, at least briefly, considered revoking all immigrant and nonimmigrant visas of nationals from the original seven nations covered in the executive order. “The executive branch has tremendous latitude over this matter,” Nolan told Crain’s. “There are countries with known issues that are not listed. How long before they get added?” The seven countries represent nearly 40 percent of all refugees accepted into the U.S. in the past 10 years, but represent a small slice of known terrorist plots. Seventeen of the 154 foreign-born terrorists convicted of carrying out or attempting to carry out a terrorist attack in the U.S. between 1975 to 2015

were from the seven nations, according to a September study by the libertarian think tank Cato Institute. None of those 17 were responsible for any deaths in the U.S. Ballard said the supporters of a ban like this are basing that support on fear, not data. “Trying to shape the debate, you can point out that on net, immigration raises GDP, probably increases the rate of innovation, but I don’t know whether people are listening,” Ballard said. “For the opponents of immigration, the economic arguments ... are in like (fourth) place, behind racism, xenophobia and religious intolerance.” Zadoyan, a devout Christian, said it’s not religion that binds his new community in the U.S., but the experience of abandoning the dangers of the Middle East for a new home in a new country. “Muslim or Christian ... we’re all human,” Zadoyan said. “I love this job. I’ll do anything I can to help people, whether they are a Christian from Iraq or a Muslim from Syria or something else. Life is challenging, and the best thing we can do is to help each other reach our goals of providing for our families.” Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh

Filling workforce gaps Locally, the resettlement of refugees and other immigrants is an important stopgap in our aging workforce — with as many as 10,000 baby boomers retiring each day. Michigan’s labor force hovered at about 5 million before the Great Recession and has since remained stagnant at just more than 4.9 million (roughly 3 million in Southeast Michigan). Unemployment remains at pre-recession lows at 5 percent. In Wayne, Macomb and Oakland counties alone, online job postings increased nearly 44 percent since between the end of 2014 to the end of 2016 to more than 112,300, according to data from the Workforce Intelligence Network for Southeast Michigan. More people are leaving the workforce than entering, and more jobs are opening as a result. Social Security is operating on a $32 trillion shortfall, and boosting the workforce is one way to ensure enough tax revenue enters the program to pay out the booming number of retirees, Bleakley said. “Our native population is not growing, yet our institutions operate on a pay-it-forward aspect, such as Social Security,” Bleakley said. “These institutions rely on having large working-age populations to support the elderly transfer payments. Migration to the U.S. has helped that become less burdensome.”

Fears of more to come Businesses and institutions are also bracing for the potential of three more executive orders focused on immigration, which were leaked to the media last week. Those orders, not yet verified, include a total review of the work visa program and the entrepreneur parole program, which temporarily allows foreign-funded entrepreneurs into

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Dan Gilbert’s involvement in a series of bills led to speculation that the incentive could help a number of his proposed projects, such as the redevelopment of the former J.L. Hudson’s department store site on Woodward Avenue.

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FROM PAGE 3

Michigan cities, but Gilbert’s star power in the state’s largest city made him the public face of the legislation. The Saginaw-area senator who likely again will be the lead sponsor of the bills said Gilbert and his team haven’t been asked to step aside. Rather, developers and business leaders in other communities will be asked to step up in an effort to battle misconceptions that the legislation would help Detroit at the expense of other cities. “We were so focused on crafting the right legislation that we took our eye off the messaging ball, which is vitally important,” said Sen. Ken Horn, R-Frankenmuth, who added that he bristled at hearing the “Gilbert bills” moniker. “It’s my responsibility as the (committee) chairman, I feel, to bust those myths,” said Horn, who leads the Senate’s economic development committee, where the bills likely will land. “We’re going to talk about the vision that we have for Michigan (and) the type of people that we’re attracting into Michigan. They’re investing their personal incomes into these projects as residents of these projects, as tenants to the office spaces and the retail spaces.”

A personal appearance Gilbert, founder and chairman of Quicken Loans Inc. and Detroit’s most well-known real estate developer, initially operated mostly behind the scenes on the legislation last year, which would have allowed developers to capture a portion of state income tax revenue generated by new developments at brownfield sites. But by December, time was running out on the two-year legislative session in Lansing, and the five-bill package was days away from failing to make it to the governor’s desk. To save it, Gilbert testified before a House committee that the proposal would close the financial gap between construction costs and market rents in cities like Detroit, and

About the bills The Michigan Senate plans to reintroduce a package of bills to create what is being called a “transformational” brownfield incentive. The bills failed to make it out of the last legislative session that ended in December. The final version of the bills last term would have captured a portion of state income taxes for developments on contaminated or blighted sites. A news conference is planned for Tuesday in Lansing to unveil the bills.

noted that projects in Kalamazoo, Jackson and Petoskey also might finally see life. “This is going to have an echo effect across the entire state,” he said then, “not just Detroit.” State senators, chamber leaders and economic development professionals from across Michigan are scheduled to unveil the new bills at an event Tuesday in Lansing. The bills, when reintroduced, will have to restart the approval process. Jared Fleisher, Quicken’s vice president of government affairs, said representatives from Gilbert’s team will attend the Tuesday event alongside possibly more than a dozen other members of a coalition supporting the incentive. No one on Gilbert’s team, however, is listed as a speaker. Contrast that with last fall, when Matt Cullen, Rock Ventures’ principal, led off the first round of committee hearings on the bills. The coalition, known as MI Thrive, has grown to nearly 40 members, Fleisher said. The coalition is expected to release the expanded list Tuesday. Fleisher said members live “from Monroe to Marquette.” “We don’t want to downplay or hide the fact that Detroit is going to benefit from this legislation. It will,” said Dan Austin, a senior account executive with Van Dyke Horn Public Relations in Detroit and a spokesman for the coalition. “At the

same time, we need to make it clear that Detroit is not the only city that is going to benefit from this legislation. And as part of that, we are attempting to prove to the people of Michigan that, yes, the cities in your community, in your region, are going to benefit as well.” In addition to Van Dyke Horn, MI Thrive plans to hire Lansing-based public affairs communications firm Marketing Resource Group to work on the incentive campaign. The incentive would require developers to meet minimum investment thresholds in order to qualify for the tax capture, which start at $500 million in Detroit and go down from there based on a city’s population. Tax captures would be capped at $40 million annually, and the state could approve no more than five per year. Horn said he removed a five-year sunset clause in the forthcoming version, which Gov. Rick Snyder previously supported, though Horn added that he would be open to negotiating the provision as the bills move through the Legislature. When the bills were introduced last September — they later died at the end of the legislative term — Gilbert’s involvement led to speculation that the incentive could help a number of his proposed projects, from the redevelopment of the former J.L. Hudson’s department store on Woodward Avenue and a $1 billion Major League Soccer stadium on the site of the stalled Wayne County Consolidated Jail project on Gratiot Avenue. Horn last week cited a number of projects throughout the state as possibilities if the incentive were approved and developers were found, including redevelopment of the Pontiac Silverdome and Northland Mall in Southfield. “These are pent-up potential projects that will not happen but for some little spark that causes them to take off,” he said. “This is indeed a statewide program, and it’s not centered around any one particular community.” Lindsay VanHulle: (517) 657-2204 Twitter: @LindsayVanHulle

C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 6 , 2 0 1 7

TEAMS FROM PAGE 3

and its management could realistically consider more teams in the building, said Tom Wilson, president of Olympia Entertainment. Olympia will handle scheduling at the new arena. For a couple of years, all attention will be on the complex task of moving two major league franchises into a brand-new 20,000-seat building, and scheduling concerts and other events jockeying to use the state-of-the-art facility, Wilson said. “Our focus has been so much on getting this thing built and making it magnificent” for the Red Wings and Pistons, Wilson said. But leasing the arena to minor league teams — or the owners of the Red Wings and Pistons launching additional teams themselves — could happen, he said. “It’s always possible. Some of those leagues have called; we’ve had feelers from the Arena Football League and lacrosse,” Wilson said. “So many of those leagues struggle for an identity; they’re looking for a big city or a new arena.” Any new team would use the arena when it’s least busy, which means after the hockey and basketball seasons end. The Pistons and Red Wings each play 41 regular-season home games from October to April. “It most likely would have to be a summer-based thing like the WNBA or arena football,” Wilson said. Another challenge is fitting alternative sports teams around major concerts, which are quite lucrative for arenas. “You can’t risk losing a major concert for a minor league sport,” Wilson said. It’s done elsewhere, however, such as the Staples Center in Los Angeles being home to four teams and a full concert schedule. Ultimately, what adding a minor league team would mean is that sports marketing opportunities would be available to businesses unable afford to link their brand to the major league teams. Sports insiders say Olympia is keenly aware that it can generate additional revenue from a third team. “As you see with tickets and sponsorships pricing, it won’t be available to everybody to start, so they’ll be looking for ways to put in other teams and events,” said Mike Dietz, president and director of sports marketing firm Dietz Sports & Entertainment in Farmington Hills. He’s had clients swing sponsorship deals with the new arena but declined to name them. “I think eventually they’ll have a third tenant in some sport,” Dietz said. Modern technology means that the days of companies paying to have their names affixed to a wall or scoreboard have evolved. “That arena’s been built so that most of the signage is digital, not static, so it can be changed easily,” he said. “They can make it look and feel so their sponsors feel they’re getting the attention that they need.” Olympia hasn’t disclosed its corporate sponsorship pricing other than suites, all of which sold out in 2015 at a cost of $300,000 a year under seven- to 10-year leases. Dietz estimated that basic minor league corporate sponsorship deals in

general range, such as in Single-A baseball, from $15,000 to $75,000 a season. “With the major league teams, it’s going to get close to six figures just to start out,” he said. Among the major corporate sponsorship buyers so far at the arena are Little Caesars Pizza, Meijer Inc., St. Joseph Mercy Health System, Michigan First Credit Union and Comerica Bank. Financial terms of their deals with Olympia have not been disclosed. The barrier to entry in corporate sports marketing has plunged because teams and venues are much more sophisticated with deals, Dietz said, and the advent of social media has meant companies can craft other ways to link themselves with teams beyond traditional signage. Promotions using social media expose a brand to more people than just fans at a game, he said. “You can get involved in social platforms but not arena signage,” Dietz said. “Each team has all their Twitter followers and Facebook folks.” Signage has evolved, too: Little Caesars Arena will be equipped with plenty of digital messaging boards that increases available inventory for sale. But that raises new questions for advertisers of all sizes: “Sponsors have to sort through that. Are 5 minutes of LED advertising enough to drive sales or build brand awareness?” Dietz said. Olympia said businesses of all sizes can afford deals now. “It’s true that there are different price points for different products — much like a ticket for one popular, established entertainer might cost more than a smaller, lesser known act,” Wilson said. “That said, we have entry points for all businesses.”

Rich minor league history After a couple of years getting Little Caesars Arena up and running, Olympia will begin to seriously weigh its options on another sports tenant. Adding a third team would represent a rebirth of arena-based minor league sports. Alternatives to the major league Detroit sports teams used to abound. The Detroit Drive arena football game averaged more than 14,000 fans per game at Joe Louis Arena during its 1988-92 run. The Detroit Vipers ice hockey team and Detroit Shock women’s basketball team were popular, if not profitable, at the Palace of Auburn Hills. The recession made such teams — often barely profitable, and usually in the red — economically unfeasible, Wilson said, even if they were drawing thousands of fans a game. Owners wanted to ensure their dollars were being spent on their major league teams, and marketers followed suit. Wilson ran Palace Sports and Entertainment during the heyday of local minor league sports. There are thriving minor league teams elsewhere in metro Detroit today, such as the developmental United Shore Professional Baseball League in Utica and the semi-pro Detroit City FC drawing more than 5,000 fans a game in Hamtramck. But those are outdoor sports, and the age of alternatives to the arena-based major league teams ended locally when the late William Davidson sold the Shock in 2009.

The post-recession recovery means a minor league team at Little Caesars Arena is much more likely than a few years ago. “It’s always possible,” Wilson said. A third team in the new arena will come down to economics, and the decisions will drive what advertising opportunities are available to businesses. For Olympia, it’s an opportunity cost, said Andrew Zimbalist, professor of economics at Smith College and author of several sports finance books. “What would you put there that night if there isn’t a game?” he said. “Can (Olympia) bring in a rock concert or Ice Capades or rodeo show?”

Ancient art of scheduling Filling the event calendar won’t be a challenge for Olympia as promoters jockey to get their shows in the new arena, but picking the best mix of events becomes more complex as you add sports teams, industry insiders say. “It is a battle for available dates,” said Haynes Hendrickson, president of Haddonfield, N.J.-based sports consultants Turnkey Sports & Entertainment Inc. “A non-major league team is going to want weekend dates to maximize their attendance. Those are valuable dates to commit to a non-major league team when you could bring in more lucrative events such as concerts and family shows.” It’s widely believed that the Palace of Auburn Hills will close, and possibly be demolished, after the Pistons leave, and Joe Louis Arena already is scheduled for the wrecking ball after the Red Wings exit. That squeezes the market for entertainment acts in the Detroit market, which means more competition among event promoters to get into Little Caesars Arena — and reduces in-venue marketing opportunities. “Demolishing both the Joe and the Palace will reduce the number of possible venue days in Detroit; one arena in place of two,” said Rodney Fort, a University of Michigan sports economics professor. “That pretty much puts (Olympia) in the driver’s seat.”

Making it work There are examples of major league teams sharing their arenas with minor league clubs. Detroit real estate investor Dan Gilbert has an entertainment empire in Cleveland that includes the NBA defending champion Cavaliers and two minor league clubs that share its are-

na. One of his top aides explained that minor league teams help brand build for all parts of Gilbert’s holdings, which also include casinos and a race track. “They really enable us to engage with a wide and diverse fan base, and helps us cross-promote,” said Len Komoroski, CEO of the Cavaliers and Quicken Loans Arena. The minor league teams — the Lake Erie Monsters of the American Hockey League and the Cleveland Gladiators of the Arena Football League — serve to allow families and sponsors to experience the building at a lower price point than Cavs games, Komoroski said. “Each event offers a touch point where we can engage with people,” he said. He declined to specifically say if the minor league teams are profitable. The Gladiators averaged 11,046 per game, and the Monsters drew 8,438 per contest. It’s done elsewhere, too: Eight of the 10 arenas currently shared by NBA and NHL teams have another pro or college team that uses the venue for its home game.

A different type of team An alternative option to a traditional sports team moving into the arena could be an e-sports team, said Victor Chiasson, assistant professor of sport management at Eastern Michigan University. “Based on where the new investments in non-major league teams are going, an e-sports franchise using Little Caesars Arena may have the best chance of succeeding and also gives the millennial audience another reason to visit the new facility,” he said. “The new Golden 1 Center in Sacramento and Madison Square Garden have hosted events.” E-sports tournaments at arenas have drawn thousands of fans who watch uniformed teams playing video games in competition for cash prizes, with the game action displayed on large video screens. The owners of the Sacramento Kings recently launched NRG eSports, which hosts competitive video game tournaments. E-sports are on Olympia’s radar. “We’ve looked at it a little, but not immersed ourselves in it yet,” Wilson said. “It’s happening all over the country.” Bill Shea: (313) 446-1626 Twitter: @Bill_Shea19

INDEX TO COMPANIES These companies have significant mention in this week’s Crain’s Detroit Business: 1st Choice Physical Therapy LLC Atwater Brewery Avomeen LLC

MBG Marketing

Michigan Department of Agriculture

13, 14

Michigan Education Excellence Foundation 4

Blue Care Network

NewTree Fruit

Catholic Charities of Southeast Michigan

Nirvana Tea

Cherry Central Cooperative

Northern Michigan Angels LLC

Cherry Marketing Institute

Old World Style Almonds

Olympia Entertainment

Shoreline Fruit LLC

Ford Building George Johnson & Co.

13, 15

Graceland Fruit

Silikids

Health Alliance Plan of Michigan

Sterling Group

Jewish Family Services of Washtenaw Co.

Samaritas

USCRI Detroit

M1 Thrive

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C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 6 , 2 0 1 7

Business-oriented style has marked Duggan’s tenure as mayor By Chad Livengood clivengood@crain.com

and Kirk Pinho kpinho@crain.com

Mayor Mike Duggan’s CEO-style approach to governing Detroit has been evident since he took the reins at City Hall following a long period of political and economic turmoil. The former CEO of the Detroit Medical Center, who was the business community’s favorite in the 2013 mayoral election, launched his re-election bid last week. Detroit emerged from bankruptcy in December 2014, and Duggan is credited with starting to change the culture of doing business in Detroit and setting a new tone for the city’s revitalization. “I think there’s a mindset now among city government of ‘How can I help?’ That’s not everywhere, but it’s getting to be everywhere. And that’s driven from the mayor’s office,” said Bill Nowling, who was former Detroit Emergency Manager Kevyn Orr's communications director and now runs the Detroit office of Finn Partners, a global public relations firm. Here’s a progress report on how Duggan’s agenda has impacted business in Detroit: J Attracting talent to City Hall: Duggan has filled some top city leadership roles with hires from outside of Detroit. Louisville, Ky., native Beth Niblock left her hometown to become Detroit’s chief information officer. City Planning Director Maurice Cox came to Detroit from New Orleans, where he was associate dean for community engagement at the Tulane University School of Architecture. Duggan recently hired veteran transportation and engineering executive Mark de la Vergne of Chicago to be the city's first mobility chief.

DUGGAN FROM PAGE 1

Duggan concedes this will be a hard promise to keep, requiring dramatic progress in areas of chronic failure: public education, public safety and joblessness. Duggan can point to small but positive progress in reducing crime, growing the police force and nurturing entrepreneurship, but Detroit’s network of public and private schools is a mess — and he seems to acknowledge the limitations of a mayor’s authority. “I’ve only started,” he told me. “I think we have a good school board. We have a superintendent running the school system who is an educator — for the first time in eight years. I think they need an opportunity to prove what they can do. When you start putting teaching first,” a school system attracts quality teachers and philanthropy support, he said. Duggan criticized Lansing’s role in stifling public-charter school reform last year, and he called threats to close 24 underperforming Detroit public schools “a manufactured crisis.”

issued by the PLA. Since Duggan took office, more than 10,700 blighted homes have been torn down in the city and about 2,500 more are in the pipeline. But Detroit’s blight removal program has been under scrutiny of city and state auditors as well as federal investigators over escalating costs. A state review found Detroit’s blight program was wrongly reimbursed for $7.3 million from federal blight-removal funds. The Detroit Land Bank agreed to pay back $1.3 million, but the rest remains in dispute.

The mayor also recruited three people with Detroit roots to come back to Michigan: Health Director Abdul El-Sayed, Housing and Revitalization Director James Arthur Jemison and Jed Howbert, executive director of the mayor's jobs and economy team. The mayor kept Orr’s chief financial officer, John Hill, who came to Detroit from Washington, D.C., where he ran a civic improvement organization and the capital city’s financial control board. Sonya Mays, CEO of Develop Detroit, a nonprofit housing developer, credits Duggan with putting in place a “high-capacity, very technically capable” team at City Hall that has made it easier for real estate developers to pursue projects in the city. “The mayor’s very talented,” Mays said. “But the mayor has to delegate a fair bit. And he’s got some really good people in place.”

owed $941,955 in corporate taxes and penalties based on profits the downtown firm made from work within the city limits. That ruling, which Honigman is appealing, prompted an unnamed company to come forward and voluntarily pay $1.2 million in back taxes, Duggan spokesman John Roach said.

J Tax collections: Since Detroit exited bankruptcy, Duggan has emphasized the need to go after tax revenue the city is legally owed from residents, nonresidents who work in the city, and businesses. During Detroit’s bankruptcy, just 68 percent of property owners were paying their tax bills. After a citywide reassessment that resulted in the taxable value of half of the residential properties being reduced, the tax-paying compliance has risen to 82 percent. “It turns out, when people feel they’re being assessed fairly, they pay their taxes,” Duggan said. The Duggan administration also has stepped up efforts to force businesses and nonresident workers to pay the city’s income tax. In December, a Michigan Tax Tribunal judge sided with Detroit in ruling that the Honigman Miller Schwartz and Cohn LLP law firm

Bill Nowling, former communications director

proved by the state Legislature in 2012 and the city council in 2013, before Duggan took office Jan. 1, 2014, the Public Lighting Authority in the last three years has installed 65,000 streetlights. Not only was a poorly functioning streetlight system a serious safety issue for residents, it also was detrimental to city businesses. The project was paid for with bonds

J Project Green Light: A public safety effort geared toward businesses like gas stations, liquor stores and others, Duggan and Police Chief James Craig announced last week that the 100th business started participating in the program. It involves business installing high-definition security cameras whose feeds are patched directly to the Detroit Police Department. Duggan and Craig said crime at the participating businesses has decreased, with a nearly 40 percent drop for the original eight participants and a nearly 20 percent drop at others. Sandy Baruah, president and CEO of the Detroit Regional Chamber, said Duggan’s focus on neighborhood crime, fixing bus routes and getting streets relit has been good for

I asked him what he hoped Detroiters would say about their city in four years if he wins a second term. “I want people in the neighborhoods to be saying this is a better place to raise a family,” he said. Duggan, 58, is a former prosecutor and businessman who became the first white mayor of majority-black Detroit since Roman Gribbs’ administration in the early 1970s, when Detroit was not yet a majority African-American city. He had moved from Livonia to the city to run for mayor, surviving a ballot challenge that forced him to win the Democratic primary as a write-in candidate. The victory made Duggan a national political figure, a star among Democrats who had watched their bench depleted under President Obama. He had defied the headwinds of American politics that stoke racial, demographic and ideological polarization. Duggan did it the old-fashioned way: showing up at people’s doorsteps and asking for their votes. By Election Day, he had attended 250 house parties across Detroit, with gatherings as small as three people

in the early days. He ran on a platform of fiscal sanity, safer streets and economic development. His slogan: “Every neighborhood has a future.” Four years later, the future for most Detroit neighborhoods remains uncertain. And yet Duggan is the clear front-runner, in part because he under-promised and over-delivered. He said his administration would be ethical and competent, and he produced modest, measurable results, including streetlight replacement; faster police, fire and ambulance response times; and the incremental expansion of bus services. Another advantage: Duggan is a formidable fund-raiser with deep ties to metro Detroit’s business community. He is likely to scare away most serious competition. Still, Duggan will run with a cloud over his head. The federal government is investigating how the Detroit Land Bank Authority spent (or misspent) $250 million from the Troubled Asset Relief Program to fight blight. When a recent audit found that

someone at the land bank authorized shifting money to camouflage the fact that the program had exceeded federal guidelines that capped demolition costs at $25,000 per home, the federal government suspended the program. Using text messages obtained through Freedom of Information Act requests, Crain’s reported last year that Duggan learned of the suspension in August. But City Council learned of the suspension only in October. Duggan should not have kept the federal hand-slapping a secret — not from the public or the City Council. Still, Duggan heads into re-election with the reputation he brought to Detroit. He is Mr. Fix It, an executive with a record of turning around large, ailing organizations as deputy Wayne County executive, head of the Detroit Medical Center, and now mayor of an iconic city on the move. His resume, if padded with four more years of progress, would put the governorship and even presidency within reach. Duggan laughed when I told him that. “I try to reside on planet Earth,” he

“I think there’s a mindset now among city government of ‘How can I help?’ That’s not everywhere, but it’s getting to be everywhere. And that’s driven from the mayor’s office.”

Motor City Match: A Detroit Economic Growth Corp. program that connects aspiring business owners with technical support, real estate locations and grant funding to leverage loans and private investments, it deploys $500,000 in funding each quarter to small businesses.

Economic development: Several major companies, ranging from Adient Ltd. to Sakthi Automotive Group USA to Flex-N-Gate to Linc, have invested hundreds of millions of dollars in the city in new manufacturing facilities or relocations of corporate headquarters. In 2014, Duggan helped bring the American Lightweight and Modern Metals Manufacturing Innovation Institute to Corktown, a $148 million investment. J

J New streetlights, fewer blighted buildings: In a $185 million effort ap-

businesses and residents. “I think the Green Light program is a great example of holistically addressing community needs,” Baruah said. Schools, regional transit, auto insurance: Duggan’s victories in Detroit’s

revitalization come as he has suffered some political losses outside the city limits. In 2015, Duggan became heavily involved in an effort to turn around Detroit’s long-failing public schools. He backed a plan crafted by business, philanthropic, civic and religious leaders to relieve Detroit Public Schools of $617 million in debt and create a citywide commission to decide where schools are located in the city and by whom. But the Republican-controlled Legislature rejected the proposed Detroit Education Commission, siding with charter school advocates that the panel would give the mayor too much power to favor DPS over charter schools. Duggan’s efforts to get the Legislature to allow insurers to sell a lower-cost auto insurance in Detroit without the unlimited lifetime medical benefits died in last year’s legislative session. Detroit’s highest-in-the-nation auto insurance rates are seen as a major deterrent to attracting new residents to the city, one of Duggan’s biggest goals to stem decades of population loss and neighborhood abandonment. Duggan and other regional leaders also were handed a defeat in the November election on a four-county millage to fund the Regional Transit Authority. Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

said. “I was born here. I left the best job I ever had at the DMC only because I felt like I could help this city go in the right direction. My motivation is to have an impact on the city.” I believe him. He’s focused on Detroit. But after watching Barack Obama and Donald Trump exploit voters’ desire for change, I won’t rule anything out. In 2008, Obama was a junior senator who had never been a chief executive. In 2016, Trump was a brand-building businessman with no government experience. They had not run a city. They had not reformed a city. President Duggan? Stranger things have happened.

BANKRUPTCIES The following businesses filed for bankruptcy protection in U.S. Bankruptcy Court in Detroit Jan 27-Feb 2. Chapter 7 involves total liquidation. J En’ Pointe Dancewear & Accessories LLC, 1139 W 14 Mile Road, Clawson, voluntary Chapter 7. Assets: $244,376.61; liabilities: $280,090.79. Tyler Clifford

C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 6 , 2 0 1 7

THE WEEK ON THE WEB JAN. 28-FEB. 3 Microsoft to move tech center, 165 jobs to downtown Detroit

icrosoft Corp. and Bedrock LLC announced Friday that the technology company will move its Michigan Technology Center from Southfield to downtown Detroit early next year. Microsoft will take more than 40,000 square feet in the Dan Gilbert-owned One Campus Martius building, a deal reported by Crain’s last month. At least 165 Microsoft employees will move to One Campus Martius.

COMPANY NEWS

J One month after Detroit Medical Center received a clean bill of health on violations in infection control of surgical instruments, the Centers for Medicare and Medicaid Services and the Michigan Department of Licensing and Regulatory Affairs launched a new investigation at DMC. J Beaumont Health kicked off an advertising campaign, developed by Detroit-based agency Doner, that represents the first major branding effort since the 2014 merger that created the Southfield-based eight-hospital system. A new 30-second TV spot was to air locally during halftime of Sunday’s Super Bowl telecast. J Eau Claire, Wis.-based home improvement retail chain Menard Inc. is expected to break ground on a new store in Taylor this spring, with construction expected to finish in 2018, Taylor Mayor Rick Sollars said. J Detroit-based Corporate Elevator Consultants Inc. was sold by owner Mike Rowley to a group including his brother, Rodger Rowley, and Georgia-based Thyssenkrupp Elevator America executive Trey Zackery that formed Corporate Elevator Asset Management LLC. J Kingfa Science and Technology (USA) Inc. plans to invest $60 million in expanding its Canton Township manufacturing operations, the Michigan Economic Development Corp. announced. In other MEDCbased news, Auburn Hills-based Automotive Lighting LLC plans to invest $35 million to convert its exhaust component facility into an exterior lighting production facility in Independence Township, Valeo North America Inc. seeks to invest about $5 million in a low-speed test track and supporting building in Auburn Hills, ABB Inc. plans to invest $9.1 million in new equipment and expand robotic production in Auburn Hills, and Macomb Smoked Meats seeks to acquire a building next to its Macomb Township production facility and spend $2.8 million on packaging lines, production and warehousing. J Yanfeng US Automotive Interiors plans to cut more than 300 jobs at facilities in Monroe beginning in April. The layoff notice comes less than

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

$44 million

The preliminary general fund operating budget surplus for Wayne County for fiscal 2015-16, according to the state Department of Management and Budget. The county said it expects a surplus for the second straight year after years of financial reverses.

$48 million

The investment by Canadian supplier Magna International Inc. in its new headquarters for its Magna Seating division in Novi. Magna’s U.S. operations are based in Troy.

$85 million The planned joint investment by General Motors Co. and Honda Motor Co. to build hydrogen fuel cell stacks for next-generation green vehicles at a factory in Brownstown Township, Automotive News reported.

two weeks after the company received a $600,000 grant from the state to develop a new headquarters in Novi. J Novi-based automotive electronics supplier Stoneridge Inc. acquired Orlaco Products BV, a Netherlands-based supplier of camera-based vision systems for vehicles, for 75 million euros, or more than $80 million. J City Connect Detroit and the Detroit Creative Corridor Center are finalists for The Atlantic’s national Renewal Awards, an online competition. The publication of Washington, D.C.-based Atlantic Media chose 25 community-minded U.S. nonprofits to compete for five $20,000 prizes from Allstate Insurance Co. Voting runs until Feb. 17 at theatlantic.com/ renewal-awards.

OTHER NEWS

J Billionaire businessmen and pro basketball owners Dan Gilbert and Tom Gores formally submitted their joint application to Major League Soccer for an expansion team in Detroit. A short description matches the $1 billion stadium and mixed-

use development plan Gilbert and Gores unveiled last April. J Work started in downtown Detroit on the Shinola Hotel, a joint venture of Shinola/Detroit LLC and Bedrock LLC that’s expected to open in 2018. J Dearborn nonprofit Leaders Advancing and Helping Communities said it would turn down $500,000 in federal funds for youth development and public health programs because of the “current political climate” regarding President Trump’s actions against the Muslim and Arab community, AP reported. J The Michigan Business and Professional Association inducted seven members into the Michigan Business Women Hall of Fame. Honored in a ceremony in Detroit were Lizabeth Ardisana, ASG Renaissance; Birgit Klohs, The Right Place Inc.; Mindi Fynke, Employee Health Insurance Management Inc.; Cynthia Pasky, Strategic Staffing Solutions; Glenda Price, Marygrove College; Andra Rush, Detroit Manufacturing Systems; and Nancy Schlichting, Henry Ford Health System. J The University of Detroit Mercy received $4.5 million in endowments from two alumni. Bernard Schlaff, an aeronautical engineer who graduated in 1944 from the former University of Detroit and died in 2015, left $3 million to establish a scholarship for engineering students. Jane Nugent, a 1948 graduate who became a Detroit Edison Co. administrator, donated $1.5 million to UDM to help women studying business. J The Oakland County Football Club announced it will move from Rochester to Royal Oak for its second season of semi-pro soccer. J Work began on the state’s $200 million, two-year closure of I-75 southbound from Detroit to Downriver. J Allen Park was released from receivership by the state of Michigan following improvements in its finances, AP reported. J Comerica Bank’s Michigan Economic Activity Index gained 1.3 percentage points in November to hit 129.7.

OBITUARIES

J Jack Demmer, a longtime metro Detroit auto dealer who founded Jack Demmer Ford and Jack Demmer Automotive Group, died Jan. 31. He was 93.

ANNALISE FRANK/CRAIN’S DETROIT BUSINESS

Structural steel placement at the site of the future Little Caesars world headquarters in The District Detroit started on Jan. 31. The building is slated for completion in 2018. As of last week, steel has been placed up to the fourth floor at the front of the structure.

RUMBLINGS

CRAIN’S DETROIT BUSINESS

In a letter sent to season ticket holders, Detroit Lions President Rod Wood wrote that about $100 million will be invested in “major renovations” to Ford Field.

Lions to spend $100M on Ford Field upgrades in 2017

In a letter sent to the season ticket holder base, and posted by a fan on Twitter, Detroit Lions President Rod Wood wrote that team owner Martha Firestone Ford and her family will invest approximately $100 million in “major renovations” to Ford Field. Few details were provided, but the letter did say the video boards, which are original to the 64,500seat, $500 million stadium’s 2002 opening, will be replaced. They’ve long been considered undersized by modern NFL standards. It’s expected the details of the new investments will be revealed Feb. 15 when the team hosts a private meeting for suite holders, some premium seat holders and corporate sponsors. Wood’s letter also promised a new sound system and other undisclosed improvements.

The $100 million in upgrades announced this week come just days after the team disclosed its latest rebranding effort, which includes a tweaked version of the team logo that removes the black outline, and new uniforms that will be unveiled April 13. The team has said the base colors of Honolulu blue and silver will remain. Recent projects by the Lions include $2 million for new lighting, $5 million on roof repairs, a $1.5 million retail shop renovation, quadrupled stadium-wide Wi-Fi service, metal detectors, cheerleaders, painted blue end zones, and new game-day fan activities. “We are committed to continuously enhancing your experience and always looking for ways to improve,” Wood wrote in the season ticket holder letter.

RenCen’s Coach Insignia restaurant to close Coach Insignia will close its doors 72 floors up in Detroit’s Renaissance Center on Feb. 18 after 13 years offering classic American cuisine and a wide-spanning view of the city and neighboring Windsor. The restaurant’s lease expires Feb. 28, ending a 10-year term. It isn’t yet certain what restaurant or business will replace the 23,000-square-foot eatery atop the city’s tallest building. “A lease has an end date, so we’ve internally been talking and preparing for a worst-case scenario” for the past two years, said Eric Djordjevic, president of Detroit-based Epicurean Group, which owns Coach Insignia. “At this point, there’s not an opportunity to negotiate a renewal.” General Motors Co., owner of the Renaissance Center, is looking for a restaurant to take Coach In-

signia’s place, it said in a statement. Epicurean will offer Insignia’s 60-some staff the option to stay with the company, including an offer to move to a new restaurant, Nomad Grill in Southfield, Djordjevic said. Nomad Grill’s soft opening will be in the third week of March at the new Best Western Premiere hotel at 26555 Telegraph Road. In 2004, restaurateur Matt Prentice opened Coach Insignia, which occupies the Ren Cen’s 71st and 72nd floors. The restaurant replaced The Summit, which closed in 2000. Epicurean CEO Stanley Dickson Jr., bought the Bingham Farmsbased Matt Prentice Restaurant Group in 2009. Also in 2009, Epicurean, then called Trowbridge Restaurant Group, bought GM’s two-thirds share of Coach Insignia.

Former Crain’s editor joins Core Partners as VP Former Crain’s Detroit Business Editor Jennette Smith Kotila has been hired as vice president of marketing and communications for Bingham Farms-based real estate company Core Partners LLC. Smith Kotila, 42, begins the newly created position Wednesday. She will focus on Core Partners' marketing, communications and client service, according to a news release. Smith Kotila spent 18 years at Crain's until leaving in December as part of a reorganization. She pre-

viously worked at The Times Herald in Port Huron and The Macomb Daily in Mount Clemens. Core Partners has about 130 employees Smith Kotila and manages about 10 million square feet of real estate. It also provides construction and brokerage services.

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