Crain's Detroit Business, March 20, 2017 issue by Crain's Detroit Business

MARCH 20 - 26, 2017

Aiming for integration

Selling Motown ‘experience’ Boxing, music among Airbnb’s Detroit sales pitches, Page 4

HMOs make their case for how they would combine mental, physical care, Page 8

Despite population and size advantage, Detroit falls behind

Real estate

Ann Arbor outpaces Detroit with highest real estate values By Kirk Pinho kpinho@crain.com

Even after Detroit’s decades of decline, the state’s largest city both by size and population still had bragging rights in 2014 as the one with the highest total real estate value: $12.3 billion. No more. In the last two years, Ann Arbor, a fraction of Detroit’s size and population (see chart) but mighty in academic and tech culture, has overtaken the Motor City as the Michigan community with the highest total assessed value. It’s a head-turning revelation. It shows, at least on paper, just how far post-bankruptcy Detroit — which has received consider-

Ann Arbor has passed Detroit, the state’s largest city, in the total value of real estate within its borders, and Troy is closing in.

Troy Population: 83,280 Size: 34 square miles

By Mike Wilkinson

Households: 30,812

able positive press locally, nationally and internationally for its buoyed business district, though that represents just a few of its 143 square miles — still has to go in its recovery. While Ann Arbor is just 0.7 percent lower in total assessed real value than it was in 2008, Detroit remains fathoms deeper, 60.5 percent lower than it was when stock and home prices collapsed. “We just did not see the market decline like other cities and municipalities saw,” said Dave Petrak, Ann Arbor’s city assessor. “Ours went down, but we saw single-digit decreases while others were going down double digits.”

Bridge Magazine

Median household income: $85,027 Assessed value: $5.24 billion

696

SEE VALUES, PAGE 16

23 275

Ann Arbor

Detroit

Population: 117,070

Population: 677,116

Size: 29 square miles

Size: 143 square miles

Households: 47,179 Median household income: $55,990 23

Assessed value: $6.39 billion

Broken cities, elusive recoveries

Households: 255,740 Median household income: $25,764

The numbers are staggering: Between 2008 and 2016, Flint lost more than three-quarters of its taxable value. Detroit, now the state’s second-largest city in terms of property value, saw its value plummet by $7 billion, losing nearly 60 percent of its 2008 value. It’s not just those two cities that remain dramatically below 2008 values. It’s also Muskegon Heights and Saginaw. Pontiac and Albion. Taylor and Southfield. And more than two dozen other communities. While property values have yet to recover across most of Michigan, more than 1.4 million people — one in seven residents — live in communities where property values are less than half of where they were at the beginning of the recession. Those declines have gutted property tax collections and affected what cities can offer citizens in security and amenities, limiting the qualities that make these communities attractive to newcomers. SEE BROKEN, PAGE 16

Assessed value: $5.43 billion

Sources: U.S. Census and Bridge Magazine

Energy

Massive power outage renews calls to ‘harden’ the grid By Jay Greene jgreene@crain.com

More than a million people who lost electricity for up to a week because of the March 8 wind storm have a big question: Should DTE Energy Co. and Consumers Energy Co. invest more to keep the lights on?

More: Michigan leads the nation with most outages per capita, Page 17 The daylong storm, with gusts up to 65 mph, blew down more than 3,000 DTE power lines. Consumers Energy lost 7,900 wires and 1,000 poles. Since a December 2013 ice storm

NEWSPAPER

crainsdetroit.com Vol. 33 No 12

$2 a copy. $59 a year.

plunged 600,000 electric customers into the dark and cold, the state has ordered utilities to spend more to reduce power outages. During the next five years, Consumers plans to spend $150 million annually, up more than 11 percent from last year and 81 percent from 2015 on tree-trimming, burying power lines, installing more durable poles and other fixes. DTE is in the middle of a five-year, $412 million plan to do similar. It might not be enough, when Michigan has the most outages in the nation per capita because of a windy climate, aging equipment and lots of trees that knock lines down. SEE STORM, PAGE 17

Outages more common in Michigan

Of the states with the most power outages, Michigan has had the highest per capita rates of power outages in the country since 2011. Rank

State

Outages

Per 100,000 residents

Michigan

929

9.38

Ohio

830

7.16

California

2,769

7.05

Pennsylvania

820

6.41

New York

935

4.75

North Carolina

373

3.69

Texas

1,019

3.65

Source: Eaton Corp. reports on power outages

C R A I N ’ S D E T R O I T B U S I N E S S // M A R C H 2 0 , 2 0 1 7

MICHIGAN BRIEFS

INSIDE

State expected to drop A-F grades for schools The state superintendent is dropping a plan to give a letter grade to every public school and, barring legislative action, instead will issue a report card showing indicators such as each school’s proficiency on the state exam, The Associated Press reported. Superintendent Brian Whiston had intended to develop the A-F grading system as part of an effort to make Michigan, which has lost ground nationally, a top-10 state for education. But the concept, while supported by some Republicans in the GOP-led Legislature, is controversial and has been questioned by many in the education community. Two officials who were briefed by Whiston — State Board of Education member Tom McMillin and Michigan Association of School Administrators Executive Director Chris Wigent — told the AP that the state Department of Education’s default accountability plan will be a “dashboard” format with no grades. Michigan’s draft plan to comply with the new federal Every Student Succeeds Act, which was released for public comment on Feb. 14, had proposed A-F grades. Michigan currently publishes a top-to-bottom percentile

CALENDAR

CLASSIFIED ADS

DEALS & DETAILS

KEITH CRAIN

OPINION

OTHER VOICES

PEOPLE RON FOURNIER

14 6

RUMBLINGS

WEEK ON THE WEB

COMPANY INDEX: SEE PAGE 18

CATHY BRAGIEL/MICHIGAN.ORG

Operators of twin oil pipelines beneath the swirling waterway where Lakes Huron and Michigan converge insisted last week they remain structurally sound even though an outer layer of protective covering has worn away in some places. ranking for each school and issues a color-coded scorecard that shows how its students fared on the state assessment, the graduation rate and other factors.

Enbridge insists pipelines safe Operators of twin oil pipelines beneath the swirling waterway where Lakes Huron and Michigan converge insisted last week they remain structurally sound even though an outer

layer of protective covering has worn away in some places, while skeptics said the deterioration is further evidence the lines should be shut down, The Associated Press reported. Officials with Enbridge Inc. said the exterior material is not essential to the pipes’ integrity and there is no reason for concern about its absence in spots along the lines extending nearly 5 miles along the bottomlands of the Straits of Mackinac. “If there was ever a time when we weren’t 100 percent confident in its

fitness, we wouldn’t be operating the pipeline,” Brad Shamla, the Canadian company’s vice president of U.S. operations for liquid pipelines, told reporters before a meeting of the Michigan Pipeline Safety Advisory Board.

Auto insurance fee for severe injuries rising The annual auto insurance fee Michigan drivers pay toward caring for people catastrophically injured

in crashes is rising to $170, a $10 increase, The Associated Press reported. The Michigan Catastrophic Claims Association announced the new per-car assessment for the 12 months starting July 1. It increased by the same amount last year. The Livonia-based group collects funds to reimburse insurers for personal injury protection claims exceeding $555,000 per claim. The association paid $1.1 billion in 2016, mostly for brain and spinal cord injuries, multiple fractures, and back and neck injuries. It said about $140 of the total will cover anticipated new claims and $26 will address a $1.9 billion estimated deficit for existing claims. Another 40 cents goes toward administrative expenses.

Are Your Favorite Days of the Week Monday Through Friday? Then it must be because you love your job! Cool Places to Work in Michigan returns for another year. This prestigious program recognizes employers that go the extra mile to make their employees feel appreciated – as judged, in part, by the employees themselves.

NOMINATION DEADLINE: APRIL 7, 2017 » Nominate your Cool Place to Work today at crainsdetroit.com/nominate

C R A I N ’ S D E T R O I T B U S I N E S S // M A R C H 2 0 , 2 0 1 7

Q&A

McQuade talks Kilpatrick case, her legacy and teaching at UM

Environment

By Dustin Walsh dwalsh@crain.com

Barbara McQuade is a crusader against public corruption and has brought charges against officials in Macomb County and Detroit Public Schools and famously secured a conviction of former Detroit Mayor Kwame Kilpatrick on public corruption charges. Barbara McQuade: Now she’s Starts at teaching headed to a new at UM on May 1. job after seven years as U.S. attorney for the Eastern District of Michigan. A Sterling Heights native, McQuade is a graduate of the University of Michigan and UM Law School, where she’ll now teach classes on national security, criminal law and criminal procedure as a professor from practice starting May 1. She resigned earlier this month following U.S. Attorney General Jeff Sessions’ call for resignation of 46 U.S. attorneys. McQuade spoke with Crain’s reporter Dustin Walsh about her time as the U.S. attorney in Detroit and plans for the future. Did the call for your resignation come as a surprise?

Not really. We were asked to stay on past the election (of President Donald SEE MCQUADE, PAGE 18

Elimination of Great Lakes cleanup funding threatens ecology, economy CRAIN’S DETROIT BUSINESS

Rouge River restoration work has been part of the Great Lakes Restoration Initiative.

Southeast Michigan also benefits from federal dollars By Dustin Walsh dwalsh@crain.com

In 1965, unlined wastewater lagoons holding chemical sludge spilled contaminants into a nearby tributary stream of Muskegon Lake, separated only by dunes from Lake Michigan. In the years that followed, Kathy Evans would eat the fish her father caught out of the lake. But not all of them. While cleaning his catch, Evans’ father would toss a few fish in the trash — the smell of chemicals and petroleum was too strong to stomach. Today, Muskegon Lakes’ fish are designated as safe to eat as are those of

MUST READS OF THE WEEK Join Crain’s Inner Circle Ron Fournier: We’re looking for your help in learning how Crain’s can help you, Page 6

Bigger One Campus Martius? Talks renewed on adding on to the former Compuware building, Page 14

other lakes in the region thanks partly to millions of dollars in federal funding. But the funding that saved Muskegon Lake and dozens of other Michigan waterways is in jeopardy under the President Donald Trump administration’s 2018 budget — which proposes cutting the $300 million Great Lakes Restoration Initiative to zero. In a move that threatens Michigan’s ecology and economy, the White House on Thursday proposed to slash Environmental Protection Agency funding by 31 percent and go further to eliminate the GLRI, which was reported earlier this month to see a cut of 97 percent in

early budget speculation. From the polluted Rouge and Clinton Rivers to Harsens Island to the banks of the Detroit River, the proposed elimination of the GLRI would deliver a blow to environmental rehabilitation projects in Michigan. The end of the program also would handicap the economic development efforts of counties that put Trump in the White House — like Macomb and St. Clair. “I am grateful that we have the Great Lakes Restoration Initiative,” said Evans, now environmental program manager for Muskegon-based West Michigan Shoreline Regional

Development Commission. “We are finally able to remove the toxic mud from our lakes and streams and make the needed improvements to the quality of our water, fish and wildlife, communities and economy.” The issue isn’t just about the environmental benefits, it’s economic,” said Cameron Davis, vice president of environmental engineering firm GEI Consultants Inc. “(GLRI) is significant for coastal communities that endured a long legacy of pollution; making sure those areas are restored ecologically, but also to make them prime destination spots, increased tourism and a lot of other economic benefits.” SEE LAKES, PAGE 15

Economic development

Do business lures really work? By Lindsay VanHulle

By the numbers

LANSING — Economic development leaders rolled out a new push for business-attraction incentives last week with the familiar refrain that Michigan needs them to keep up with other states for larger projects. But little hard data exists, at least publicly, to support that contention. A lack of transparency about incentives, tax credits and other economic development tools has dogged efforts in Michigan to create or expand programs years after Gov. Rick Snyder eliminated many of them. Roughly two-thirds of all economic development incentive packages offered each year by the state’s economic development agency from 2014 to 2016 were accepted, according to data released by the Michigan Economic Development Corp. at Crain’s request. It sounds like a good showing. But

Companies accepted about two-thirds of the incentives packages offered to locate or expand in Michigan over the last three years, data show. The Michigan Economic Development Corp. said it tracks all offers made and their outcome. The numbers reflect incentives offers made and accepted in the specified year, though deals accepted could be related to offers made in the prior year.

Crain’s Detroit Business/Bridge Magazine

Year

Offered

Accepted

% Accepted

2014

113

65.5%

2015

102

65.7%

2016

146

101

69.2%

Source: Michigan Economic Development Corp.

there is precious little available data to compare it against, so it’s hard to tell if Michigan is doing well, poorly, or somewhere in between. Incentives are not easily benchmarked across states and the state doesn’t always learn why it failed to close a particular deal. The MEDC will

not release a list of projects it pitched, citing confidentiality agreements. State officials almost never say when companies choose to locate elsewhere. Senior administrators at the MEDC say it’s rare to find out why another state was more SEE INCENTIVES, PAGE 18

C R A I N ’ S D E T R O I T B U S I N E S S // M A R C H 2 0 , 2 0 1 7

INAUGURAL 2017-18 SEASON

KATIE ALEXIS PHOTOGRAPHY

Lessons from Downtown Boxing Gym’s Khali Sweeney are among the Detroit experiences that Airbnb is marketing.

Airbnb hopes to double Detroit presence through ‘experiences’ By Sherri Welch swelch@crain.com

DON’T MISS YOUR OPPORTUNITY

BECOME A MEMBER TODAY For more information, call 248-377-0100 or visit www.pistons.com

San Francisco-based Airbnb projects it will double its economic impact in Detroit this year to $20 million following the launch of a program called “Trips,” which is marketing 23 experiences like sparring at the Downtown Boxing Gym or touring the city’s recording studios. The program targets millennials looking for authentic experiences who would rather stay in a cool neighborhood than a hotel and have been the early adopters of Airbnb. Airbnb, the web-based platform that helps travelers rent private homes or rooms in cities across the globe, said it doubled its 2015 economic impact in Detroit to $10.5 million last year. Of that total, $3.1 million went directly to Detroiters hosting guests in their homes, and the remaining $7.4 million came through indirect spending with local restaurants, shops, taxi cabs and other local businesses, the company says. Airbnb launched its Trips platform as a part of its app in mid-November, enabling travelers to book experiences in 12 markets initially. Detroit was one of the first. The full charge for the experiences hosted by nonprofits goes to them, but Airbnb is taking a 20 percent cut of the fee visitors pay for all other experiences when they’re booked through its platform, similar to the model for its home-booking service. Airbnb included Detroit in the Trips platform along with heavy tourist destinations, given rising interest in Detroit, much of it from New York, said Chris Lehane, head of global policy and communications.

The program targets millennials looking for authentic experiences. The other initial markets were: Miami, Los Angeles, San Francisco, Havana, London, Paris, Florence, Nairobi, Cape Town, Tokyo and Seoul. Airbnb is now adding other markets like Barcelona. Many of the Detroit experiences offered reflect their interest in the city’s music and fashion scenes and social causes. Users can sign up for a limo tour of Detroit recording studios and vinyl shops with Kid Rock’s former lead guitarist, go “techno clubbing,” tour the city’s famous high-rise buildings, get a lesson in night photography or get tips on “Detroit style” from the owner of clothier 1701 Bespoke. Or, they can opt to learn about the Pretty Brown Girl movement with the director of the Charles H. Wright Museum of African American History or take part in a boxing training session with the founder of Downtown Boxing Gym, a nonprofit that provides an after-school tutoring and boxing program for Detroit youth age 7-18. About a dozen visitors have done the $59, two-hour training with Detroit Boxing Gym Founder Khali Sweeney so far, Executive Director Jessica Hauser said. The experience and partnership with Airbnb “helps out-of-town guests learn more about our program and see first-hand the important work we’re doing with Detroit students,” she said.

The experiences could also spur more people to visit Detroit. Currently, 300 Detroit homes host Airbnb travelers, with half renting out an extra, unused room in their home and an equal number renting out their full residence when they aren’t there. Hosts set their own rental rates, with help from a price-setter on the Airbnb platform. They keep 97 percent of the price they charge, and 3 percent goes to Airbnb, which also charges travelers a 9 percent fee. By Airbnb’s count, just under 27,000 people came to Detroit through bookings on its platform last year. Detroit, the top destination for visitors booking a Michigan trip through Airbnb, has had 100 percent increases in the number of people coming here each of the past two years, said Ben Breit, press secretary for the Midwest for Airbnb. Following Detroit, Ann Arbor drew 18,528 visitors last year through the Airbnb platform, Traverse City had 14,822 and Grand Rapids 9,445. On average, each Detroit host, most of whom are middle-class, rented their home or a room an average of 50 times last year through the platform, earning about $5,000. “Our goal is for these Detroit Experiences to really catalyze that economic impact, particularly in neighborhoods that aren’t traditionally known as places for tourists to go,” Breit said. The growing tourism via Airbnb could also provide the state with a new revenue stream, Lehane said. Airbnb, which is collecting and paying lodging taxes in 220 markets currently, is in conversations with the Michigan Department of Treasury about collecting the state’s 6-percent use tax on the rentals here in Michigan and forwarding those to the state, he said.

C R A I N ’ S D E T R O I T B U S I N E S S // M A R C H 2 0 , 2 0 1 7

RTA may not seek transit tax until 2020 By Bill Shea bshea@crain.com

The Regional Transit Authority of Southeast Michigan may wait until 2020 to ask taxpayers to fund a mass transit plan in metro Detroit, the chairman of the RTA’s board said. Voters in November narrowly rejected a 10-year, 1.2-mill transit tax that would have raised $3 billion for a system of rapid-transit buses, commuter rail, and improved traditional bus service in Wayne, Oakland, Macomb, and Washtenaw counties. It also would fund Detroit’s QLine streetcar. Under the state law that established the RTA in 2012, the organization can ask voters for funding every two years, meaning the next opportunity to put a tax on the ballot is 2018. That may not be enough time, RTA board Chairman Paul Hillegonds said. The RTA still is analyzing its ballot defeat — the issue lost by fewer than 20,000 votes out of 1.7 million cast across the four counties — and reeling from RTA CEO Michael Ford being ousted by the board on Thursday after questions about his expense reimbursements arose. Hillegonds said renewals for the suburban bus tax and Ann Arbor’s transit tax could crowd the 2018 ballot. The RTA board has a retreat scheduled in April at which it will discuss its master plan, budgetary needs, and a new CEO, he said. Ford was fired without cause on Thursday, which means he’ll be paid the remaining $161,000 on his threeyear contract that began in 2014. The Detroit News, using public records, published a story outlining what some critics said were excessive bills for hotels, meals, and other expenses. Tiffany Gunter, the RTA’s COO and deputy CEO, was appointed interim CEO. She said Tiffany Gunter: Appointed interim she intends to seek the job full CEO of RTA. time. Hillegonds defended the RTA’s money handing: “We have been totally transparent with the mistakes we find. There wasn’t intentional wrongdoing.” The RTA may seek additional money to operate through at least 2020. It has been spending about $1.7 million annually on administrative operations, mostly salaries and studies, and Hillegonds said that probably needs to increase to about $2 million annually.

Employment Litigation Experience

In Your Corner.

Ŷ Represents employers in litigation involving all types of employment and labor claims. Ŷ Advises healthcare organizations in matters involving peer review activities, professional credentialing and discipline. Ŷ Counsels employers regarding employment policies, reductions in force and employment agreements.

First Tier Ranking in Labor Law – Management Health Care Law

Detroit

Novi

Grand Rapids

Kalamazoo Ŷ Grand Haven

Lansing

Ann Arbor

Hastings

Contact Terry Miglio at tjmiglio@varnumlaw.com

C R A I N ’ S D E T R O I T B U S I N E S S // M A R C H 2 0 , 2 0 1 7

OPINION

Never forget Michigan

t was one of those quiet moments that spoke volumes. Standing in front of photographers during a visit to Michigan last week, President Donald Trump invited fellow Republican Rick Snyder into the frame. “Come on, governor,” he joked. “Even though you didn’t endorse me.” Reflecting on the presidential campaign, a woman could be heard saying that Trump hasn’t forgotten Snyder’s snub. The president replied with a forced smile, “I never forget.” And so we’re left wondering: Will Trump better remember Snyder’s slight or the promises he made to Michigan? The question comes to mind upon review of the budget Trump sent to Congress, which would eliminate: J The Great Lakes Restoration Initiative, which improves wetlands, reduces pollution, and increases waWill Trump better ter quality throughout the Upper Midwest (See story on Page 3). remember J The Community Development Snyder’s slight or Block grant, including $31 million that goes to Detroit for homeless the promises he shelters, transportation for seniors, made to housing rehabilitation and demolition costs. Michigan? J The Low-Income Home Energy Assistance Program, which helps the disabled, elderly people and families with preschool-age children pay for heating. The Trump administration wants to shift the money to the Pentagon and the Homeland Security Department, which would receive a combined boost of $55 billion. Budget Director Mick Mulvaney called the budget a promise kept. “If he said it in the campaign,” Mulvaney said of Trump, “it’s in the budget.” That’s not true. The budget includes no investment in urban areas, which Trump promised to voters in Detroit and elsewhere. It makes no mention of Trump’s promise to invest $1 trillion in new infrastructure; instead, Trump proposed eliminating a $500 million roads program. The Trump budget does nothing to tame the deficit, because he would increase national security spending while preserving the runaway costs of entitlements like Social Security. His knife pierces only “discretionary spending,” just 15 percent of the federal budget, which is why the cuts are so deep. A fiscally responsible budget would cut entitlements and raise taxes. The Republican-led Congress will reject Trump’s budget, and the president knows it. His strategy is to propose cuts so outrageous that GOP lawmakers can negotiate his blueprint down from draconian to merely extreme. Candice Miller, Macomb County Public Works commissioner and former Republican U.S. representative, said Trump’s budget hurts voters in Michigan who put him in the White House. She’s a fierce advocate for the Great Lakes initiative that Trump wants to eradicate. “This is a really small amount of money, really, and it’s of great significance to the states that voted for him,” she said. “These states can’t absorb (this cut). This is a time where I hope the president will reconsider.” Trump and his party should reconsider. Because Michigan won’t forget.

Join our Inner Circle

e’re looking at Crain’s Detroit Business with fresh eyes: Your eyes. We are collecting advice, opinions, and even constructive criticism from a self-selected group of advisers. I’d like you to be one of them. Please join our Inner Circle — an in-person and online community dedicated to making Crain’s the best, most engaging media company in Michigan. We’re not changing what makes Crain’s distinctive and important, but with your help, we will make Crain’s essential. Why are we doing this? First, I just took over as publisher from legendary leader Mary Kramer and I need to know more about the loyal Crain’s audience. Second, the entire Crain’s team wants to serve you better. What do you like about our coverage? What don’t you like about it? What would make Crain’s an utterly indispensable news source? Our reporting must be so compelling that Crain’s is your first read in the morning and your last read at night. All day, I want you wondering, “What’s Crain’s up to?” Help us decide what beats to cover, what stories to write, and what ways we can deliver news and information that helps your business succeed. Would you like more access to our reporters and editors? Do you need more data about your competitors and the Michigan business ecosystem?

RON FOURNIER Editor/Publisher

While our journalists will always be independent and objective, the newsroom will benefit from your advice.

More than the news Separate from the newsroom, we have another large team of experts who can help solve your business problems, working directly for you. Not satisfied with the way your company is marketed? Need to build your personal brand? Looking for a bigger pipeline of talent? Want help researching complicated issues and presenting them to your clients, customers and board members? Start thinking of Crain’s as more than a trusted weekly newspaper. We’re a full-service communications company on Gratiot Avenue — a building full of storytellers you can hire to find and fix your compa-

Help us decide what beats to cover, what stories to write, and what ways we can deliver news and information that helps your business succeed.

ny’s pain points. On my first day at this job, I told the Crain’s staff that the heart of our operation is not the newsroom, though it’s stocked with top-shelf journalists. It’s not even the sales team, the hard-working folks who bring in the money that pays for great journalism. The heart of our operation is our audience. The heart and soul of Crain’s is you. Please join our Inner Circle at crainsdetroit.com/innercircle or by emailing me at rfournier@crain. com. Tell us what you want. Tell us what you need. Dare us to deliver. Ron Fournier is editor and publisher of Crain’s Detroit Business and Mary Kramer is group publisher. Catch them at 6:10 a.m. Mondays on the Paul W. Smith show on WJR AM 760.

LETTERS ‘Old school’ industries also matter to Detroit To the editor: Finally! Ron Fournier tells (part of ) the untold story of Detroit business owners who never left the city. May I also add a comment about long-standing Detroit businesses that are thriving in traditional, “old school” industries? Our own Detroit-based business was started by my father in 1978 as a simple print and mail shop, with the old weekly TV Guide as one of our first customers. Today we are a leader in direct mail and Web-based business-critical communications, touching more than a million

end-users daily across a range of industries. We made a $3 million capital investment (with our own money) last year to expand our production capabilities and our team. We have 200 employees and are looking for more, but it’s still hard to fill entry-level jobs in the city. We are not downtown, nor are we in a walkable area. As a matter of fact, our location is decidedly unhip, but for the most part it works for us, with outstanding access to expressways and some of our largest customers. Detroit is a tapestry of businesses that employ from five to 10 people to thousands. In between, there are foundational companies

like ours that employ hundreds and are vital to the ongoing success and revitalization of the D. We’re not retail or a restaurant, we’re not startups and we’re not tech companies, per se, but we are here, and we matter to Detroit. We’re not looking for kudos for being city supporters, but if our story resonates with other prospective Detroit business owners in the more traditional business space who question whether they should jump on the Detroit bandwagon, I would encourage them to do so. There’s room for all of us. Robert Tokar CEO Wolverine Solutions Group Detroit

It is time for DTE to do more digging This is becoming almost an annual column. It certainly is more than an annual DTE event. Several times a year, thousands of homes and businesses lose their power for several days, causing great inconvenience and greater financial losses. Meanwhile, you can still use your home phone, and if you had power, your gas lines continue to feed your furnace and your cable TV still works. They all have their lines buried to avoid costly disruption of service to customers.

KEITH CRAIN Editor-in-chief

We have been hearing for years that it’s all the fault of the trees. If they didn’t grow, we wouldn’t have this problem. Yet, I am told in some new

sites with no trees, the power company continues to install power lines overhead rather than bury them to protect them from the ravages of weather. It is time for DTE and other power companies to start burying their lines. Since DTE claims buried lines are too expensive, I would suggest the company give its customers a choice. Tell your customers what it would cost to put lines below ground and let the neighborhoods decide if they would be willing to invest the money for the knowledge that their power supply

will be far more reliable. I have no idea how much it costs to bring in linemen from other states to repair power lines after a ugly storm like we had March 8, but it has to be substantial. Let customers decide whether they are willing to invest in buried lines that give reliable power during Michigan’s often severe wind storms. We might put the auxiliary-power companies out of business but it would be a fair tradeoff. We have been suffering loss of power for decades. It is time for DTE to fix the problem or be willing to compen-

sate businesses for their losses during these power outages. When other utility companies have buried their lines for years, it is time for DTE to start slowly but surely eliminating exposed power lines above ground. Businesses and customers deserve better service. If the utilities become responsible for business losses during these interruptions, then they might speed up the conversion. Correcting the problem is long overdue. It is time to speed up the conversion to underground power lines.

C R A I N ’ S D E T R O I T B U S I N E S S // M A R C H 2 0 , 2 0 1 7

We need to shift ‘conventional wisdom’ on education in Michigan It’s really simple when you look at it. About one-third of future jobs will require a bachelor’s degree or more. About two-thirds of future jobs will require an associate’s degree or other training — mostly in a skilled or technical trade. Yet, all our young people will have many school days this spring filled with the anxiety of standardized testing. Policy mandates that teachers focus their classrooms on these tests, as they play a role in their performance evaluations. The focus on these tests leaves students feeling their life’s prospects hang on the results of these series of questions. University-bound students generally do well with testing, but what about the other students? For them, this process can be demoralizing. This is one of the major disconnects here in Michigan between education and career preparedness. The focus on standardized testing centers on college preparedness, yet only a minority of high school graduates will need a four-year degree in the workforce. Michigan Gov. Rick Snyder is looking at new ideas to boost student interest in skilled and technical trades. As part of his 2018 budget, he proposed $20 million for school districts to apply for funding for capital improvements to career-technical centers. With this focus, he recently visited the William Ford Career-Technical Center in the Wayne-Westland School District. This facility provides training for high school students aspiring to be welders, auto mechanics, heating and cooling technicians, computer technicians, firefighters and other skilled fields. Many of these students are ready for the workforce upon high school graduation. “These are great career opportunities,” Snyder said. “It is not just that they are learning skills, they are also learning to work together as a team, and that is valuable as well.” The center is a source of pride for Superintendent Michele Harmala, but despite the necessity of this center, its future is never certain because of the flux in student enrollment which funds such programs. With so many core classes required for graduation — and such an emphasis on college preparedness — many students and their families may not recognize the opportunities in the skilled trades. Thus, enrollment and the finances to run the program can vary from year to year. There are similar funding challenges with the Livonia Career Center, where students get training in programs such as auto repair, medical services and construction. We need a shift in education policy: Less focus on testing and more on employable skills. Let’s introduce more applied learning techniques to the classroom. Let’s use computer-aided drafting as a geometry class. Let’s introduce techniques in welding to algebra classes. Speaking of welding, Matthew Gibb, a deputy executive for Oakland County, recently made a pow-

OTHER VOICES Dan West

West is president and CEO of the Livonia Chamber of Commerce. erful statement: “Aside from advanced law, advanced business, and advanced medicine, a welder will

out-earn everybody.” Let’s stop comparing “two-year kids” with “four-year kids,” as income levels in the skilled trades continue to surpass most jobs held by those with bachelor’s degrees in liberal arts. With overtime, a good welder can easily earn a six-figure salary. But “conventional wisdom” may discourage an interested student from exploring such skilled trades. Many parents remain convinced their kid child has to get a four-degree to get a good job. Yet, 16 percent of bartenders held a bachelor’s degree or more in 2012. Remember: Only 33 percent of future jobs require a bachelor’s degree or

more, according to a Harvard University study. The business community can also be helpful in changing “conventional wisdom.” Business leaders need to do a better job of explaining what they need, and sharing the skills they seek from schools and policy makers. The leading complaint we hear from local employers is they cannot find the experience and talent to fill job openings. We need these employers to lead the conversation and advance the cause. Locally, we took a big step in boosting education-business relationships across Western Wayne County with

the February gathering of the I-275 Industrial Council. Some 90 people gathered to learn about the skilled trades and STEM programs at Livonia, Wayne-Westland, and Plymouth-Canton schools. This led to productive dialogue with dozens of human resource managers from local companies. It was an energizing gathering, but more of this needs to happen. More business-education chats and less “conventional wisdom” will encourage more young people to explore their passions for careers, and provide a better foundation for our region’s economic development.

EVERY COMPANY HAS ONE:

a messenger; a collaborator; a comedian; a trailblazer. A company is only as successful as the personalities who make up its workforce, and we want to tell their stories in a creative, engaging way.

Whatever your colleague’s superpower may be, Crain Custom Content will tell the story, complete with a custom illustration by a Detroit-based comic artist.

Your custom Superhero will be featured in the Superpower section of the Monday, June 5 issue of

Highlight A Superhero In 3 Easy Steps

You identify someone in your organization who has a unique super power

A writer from Crain Content Studio will interview you to develop the story

For details and rates contact Lisa Rudy at lrudy@crain.com or (313)446-6032 RESERVE YOUR AD BY MAY 5

A Detroit-based comic artist will design a custom-illustration of the nominee

C R A I N ’ S D E T R O I T B U S I N E S S // M A R C H 2 0 , 2 0 1 7

SPECIAL REPORT: HEALTH CARE

Coordinating care

M in By

jgree

Jon Cotton , president of Meridian Health Plan in Michigan, and Danielle Devine, Meridian Michigan’s director of operations. Managed care companies are making their pitches for how they would combine physical and mental health services.

PHOTO BY LARRY PEPLIN

The rocky road to Medicaid health services integration By Jay Greene jgreene@crain.com

Michigan legislators are preparing to debate one of the most controversial health care policy issues of the year. It could impact more than 300,000 patients and thousands of workers in the state’s public mental health industry. It isn’t the Affordable Care Act, or its offspring, the state’s successful Healthy Michigan Medicaid expansion that now covers nearly 650,000 of the state’s low-income citizens. It’s whether to integrate financing of the $8.9 billion Medicaid physical health managed care system with the $2.6 billion Medicaid mental health system. On one side, the Michigan Association of Health Plans, which represents Medicaid health plans, is advocating to make real a budget boilerplate proposal championed last year by Gov. Rick Snyder that would have led to an HMO takeover of the Medicaid behavioral health budget. That original Section 298 boilerplate has since been revised to “make recommendations regarding the most effective financing model and policies for behavioral health services to improve the coordination of behavioral and physical health services for individuals with mental illnesses, intellectual and developmental disabilities and substance use disorders.”

In this section: Managed care companies are making their pitches for how they would combine physical and mental health services under a reworked system of funding Medicaid mental health, Page 9

n One of the major challenges in delivering coor-

dinated care to Medicaid patients is connecting mental health providers with primary care doctors and nurses. The effort has never been consistent, leaving many consumers without integrated care, Page 9

MDHHS officials say they won’t be the ones to make recommendations to the Legislature. Instead, much to the chagrin of HMO executives and some legislators, they interpret the Section 298 instructions to “work with a workgroup” to recommend next steps to the Legislature. However, the Section 298 Facilitation Workgroup, which is overwhelmingly controlled by public mental health advocates, has only recommended care coordination improvements in the current public mental health system — tweaking, but not essentially changing, the sta-

tus quo. It does not recommend integrating financing of behavioral and physician health. But the general concept of better coordinating care through integration of physical and behavioral health services remains a strong future policy consideration. At least eight health plans have submitted 14 pilot proposals to integrate behavioral health and physical health in future managed care contracts. MAHP and HMO executives tell Crain’s they can more effectively manage both behavioral health and physical health in a coordinated and integrated delivery system. They point to more than a dozen other states that have seen improved quality, health outcomes and reduced clinical costs from their efforts to combine funding streams. But the Michigan Association of Mental Health Boards and its nearly 100 community mental health program agencies and regional prepaid inpatient health plans say that mental health consumers and their families can best be served by improving the current system. They say experiments in other states to integrate financing have created more problems than they’ve solved, especially when intellectually challenged and developmentally disabled populations are included in managed care contracts. Currently, 13 Medicaid health plans manage physical health through state-awarded re-

gional contracts. The Medicaid HMOs, in turn, contract with hospitals, medical groups, pharmacies, and other providers to deliver medical services. On the behavioral health side, 10 regional prepaid inpatient health plans manage services through state funding streams. The PIHPs then contract with mental health, substance abuse and other agencies to deliver behavioral health services. Last year, Crain’s reviewed integration efforts in Arizona, Florida and Iowa. Officials there were optimistic that integration of behavioral health and physical health were working out for providers and patients. Over the past decade, more than 30 states have moved to integrate physical health and behavioral health services under health plan or behavioral plan oversight. States are looking to lower costs, reduce service duplication and improve care coordination and quality for their citizens. Fourteen states (28 percent) contract with HMOs for a fully integrated complement of behavioral and physical health benefits, excluding pharmacy benefits, but most HMOs subcontract out for behavioral health, according to a report by Open Minds Institute, a consulting firm in Gettysburg, Pa. Eleven states (22 percent) contract with HMOs but exclude at least one behavioral health category such as substance abuse or developmental disability. Another 16 states (32 percent), including Michigan, carve out most behavioral health benefits from HMO contracts, the report said.

M mak wou hea syst hea M gan care four tion 14 Mic and In hea care vice tion hav lion cal Med hea diso Th the larg igan man 120thor latu imp hea U aid hea

C is By

jgree

O deli icai hea doc som case coo nev con A troi aim doc hea mor In mitt said men com coll hea gan pati and In

LIN

urn, hardical 0 renage The subbe-

efcials beork-

ates and plan king and for

with beludsubding sult-

with oral de(32 most con-

C R A I N ’ S D E T R O I T B U S I N E S S // M A R C H 2 0 , 2 0 1 7

By Jay Greene jgreene@crain.com

Managed care companies are making their pitches for how they would combine physical and mental health services under a reworked system of funding Medicaid mental health. Meridian Health Plan of Michigan, Priority Health, UnitedHealthcare and Blue Cross Complete are four of eight managed care organizations that have submitted a total of 14 pilot proposals to the state of Michigan to manage both physical and behavioral health care services. In their proposals, Michigan’s health plans argue they can assume care for most behavioral health services with the same quality, care options and safeguards as patients have now under the state’s $8.9 billion Medicaid managed care medical program. Nearly 25 percent of Medicaid enrollees have behavioral health diagnoses and substance use disorders. The Medicaid HMOs submitted the pilot study proposals as part of a larger report conducted by the Michigan Department of Health and Human Services in conjunction with a 120-member private workgroup authorized last year by the state Legislature. The goal was to study ways to improve the behavioral and physical health Medicaid systems. Under the state’s current Medicaid contracting model, 11 Medicaid health plans manage physical health

“We could contract with every community mental health agency, contract with social workers, home helpers and providers. We would build our contracts around that.” Jon Cotton, Meridian Health Plan of Michigan

through state-awarded regional contracts. On the behavioral health side, 10 public mental health authorities, called prepaid inpatient health plans, manage services through state funding streams. The PIHPs then contract with mental health, substance abuse and other agencies to deliver behavioral health services. The Medicaid HMOs contract with hospitals, medical groups, pharmacies, and other providers to deliver medical services. But HMO executives like Jon Cotton, president of Meridian in Michigan, say they can deliver comprehensive and coordinated behavioral and physical health services to the Medicaid population. They believe

they can deliver as much or more than the current system offers. “We can show how much better the health is with our system. We just want a chance to prove ourselves,” Cotton said.

Pilot models proposed Meridian already provides integrated physical and behavioral health services in a Medicaid managed care system in Illinois. The plan’s experience managing contracts for integrated behavioral and physical health services bodes well for the pilot in Michigan, Cotton said. “With the pilot here, we don’t need to staff up,” he said. “We could contract with every community mental health agency, contract with social workers, home helpers and providers. We would build our contracts around that.” One of the four pilot proposals Meridian submitted last month to MDHHS calls for Meridian to manage behavioral health services for its Medicaid managed care patients in any region where it currently has a state contract. The Detroit-based HMO’s pilot proposal did not identify a county or region. Meridian is the state’s largest Medicaid health plan, with more than 504,000 members. Priority Health proposes to conduct a pilot in Kalamazoo County in partnership with the Kalamazoo Community Mental Health and Substance Abuse SEE HMOS, PAGE 10

Communication, not financial integration, is key, mental health programs argue By Jay Greene jgreene@crain.com

One of the major challenges in delivering coordinated care to Medicaid patients is connecting mental health providers with primary care doctors and nurses. Providers and some mental health agencies use case managers to locate doctors and coordinate care, but the effort has never been consistent, leaving many consumers without integrated care. A pilot plan proposed by the Detroit Wayne Mental Health Authority aims to address the lack of medical doctors willing to treat behavioral health patients and coordinate care more effectively with health plans. In a Section 298 pilot project submitted to the state, Detroit Wayne said it would partner with fellow mental health authorities in Macomb and Oakland counties and collaborate with two unspecified health systems in Southeast Michigan to help Medicaid mental health patients find primary care doctors and coordinate care. In Detroit Wayne’s Metro Region

298 Proposal, the partners would coordinate care for individuals who aren’t already enrolled in Medicaid managed care. The three prepaid inpatient health plans in Wayne, Oakland and Macomb would work closely with the health systems to link patients with primary care providers with the goal of reducing visits to emergency departments and admissions to hospitals, said Ron Hocking, Detroit Wayne’s COO. If successful, the regional pilot could be expanded statewide. “We wanted to demonstrate coordinated care at the provider level,” Hocking said. “We can make huge improvements in emergency and crisis care by going after the high utilizers. Those not in Medicaid HMOs. The top 500 people with the highest total costs.” Hocking estimated there could be as many as 1,500 consumers in the three counties who could use the pilot system. Based on existing models, he estimated that if even 500 consumers were managed effectively using the program, the state could

save 10 percent of costs, or about $8 million during an 18-month period. Bob Sheehan, CEO of the Michigan Association of Mental Health Boards, said Detroit Wayne’s approach and a dozen other mental health organization pilot proposals would negate the need for Medicaid HMOs to manage the public health systems $2.4 billion Medicaid behavioral health budget. “None of the (mental health proposals) calls for physical health” financing integration, Sheehan said. “Integration would be conducted clinically by cooperation, working with the health plans” to coordinate physical health. Other non-HMO pilot studies include Medical Network One, which proposes to work with the Judson Center, Oakland Health Integrated Network, Oakland Family Services and Common Ground to coordinate care. Another multi-mental health advocacy pilot model includes ArcMichigan, Association for Children’s SEE PROGRAMS, PAGE 11

St. John Providence health system, offers a Bachelor of Science in Nursing (BSN) for qualified applicants.

With nursing classes integrated across the curriculum, you can start your nursing studies on day one! To learn more about this four-year, direct-admit program, visit: www.ltu.edu/nursing

NURSES.

Medicaid HMOs make case for integrated financing approach

Lawrence Technological University, in partnership with

WANTED:

SPECIAL REPORT: HEALTH CARE

Architecture and Design Arts and Sciences Engineering Management

Southfield, Michigan 800.225.5588 admissions@ltu.edu

Possible is everything.

SICK OF DEALING WITH PRINTERS? Luckily for you, we love it.

We’ll keep your printers and copiers running, manage your supplies, ramp up your security, and save you up to 30%.

“We recently switched to imageOne. Not only was it a substantial cost savings, but the overall experience has been extraordinary.” -Michael P. Kolb Chief Information & Security Officer Dickinson Wright

C R A I N â&#x20AC;&#x2122; S D E T R O I T B U S I N E S S // M A R C H 2 0 , 2 0 1 7

SPECIAL REPORT: HEALTH CARE

HMOS FROM PAGE 9

Rebuilding Detroitâ&#x20AC;&#x2122;s Neighborhoods

LMF= AF LG L@= DAN= GFDAF= =N=FL GF

?kb]Zr% FZk\a +-% +)*0Zm /3,) i'f' from the campus of the University of Detroit Mercy to celebrate the work and impact This Old House had on Detroit

?^Zmnkbg` ma^ ahf^hpg^kl Zg] mZe^gm _khf

Mabl He] Ahnl^3 D^obg H <hgghk Mhf LbeoZ Kb\aZk] Mk^ma^p^r Fh]^kZm^] [r3

<akblmr F\=hgZe] Zg] FZkehp^ Lmhn]Zfbk^ Li^\bZe `n^lml bg\en]^3

University of Detroit Mercy President :gmahgr @Zkb[Ze]b Director of Public Affairs for the Land Bank

Zg] hma^kl.

WATCH

<kZb` ?Zae^

THURSDAY, March 30 9PM ET

MaZgd rhn mh hnk lihglhkl3

Services through its Priority Health Choice Inc. Guy Gauthier, vice president of Medicaid with Priority Health, said the Grand Rapids-based HMOâ&#x20AC;&#x2122;s Kalamazoo County pilot proposal is only a framework for a larger plan that could be replicated in other counties. It already has a similar integrated system in Kent County. â&#x20AC;&#x153;Typically, the most complex folks with behavioral health (also) have complex medical problems,â&#x20AC;? Gauthier said. â&#x20AC;&#x153;You need to work with them at the patient level.â&#x20AC;? Care managers, for example, can help patients navigate complex health issue and make sure there are no gaps in care or communication between the physical and the behavioral side. Under the current system, care coordination is unclear, Gauthier said. â&#x20AC;&#x153;You donâ&#x20AC;&#x2122;t know what you donâ&#x20AC;&#x2122;t know. Some could (have a) very good caregiver and could be OK,â&#x20AC;? he said. â&#x20AC;&#x153;On the other side, if they donâ&#x20AC;&#x2122;t have (a) good caregiver and there is lack of coordination on the provider part,â&#x20AC;? there could be problems â&#x20AC;&#x201D; for instance, when a primary care provider doesnâ&#x20AC;&#x2122;t know if someone recently went to the ER. Priorityâ&#x20AC;&#x2122;s goals are to increase access to behavioral health services and physical health services, cut health care costs, provide the right care at the right time, increase care coordination, and educate members in self-management skills. Blue Cross Complete, the Medicaid HMO subsidiary of Blue Cross Blue Shield of Michigan, also said its experience with integration in Iowa and several other states gives it an advantage. â&#x20AC;&#x153;Collaborative efforts between Medicaid health plans and (mental health organizations) to coordinate member care are currently in place, but do not fully accomplish the goal of integrated health care management,â&#x20AC;? said Blue Cross in its pilot proposal. â&#x20AC;&#x153;With claims data and care plans split across multiple payers, neither entity has a complete picture of the member, which inhibits the ability of both entities to effectively coordinate services in a holistic manner to meet all of the memberâ&#x20AC;&#x2122;s needs and maximize cost efficiency.â&#x20AC;? Blue Cross said it could improve care coordination by speeding up the process for identifying patients who require behavioral health or physical health services, as well as using a single information technology system, simplifying prescribing for doctors, removing access barriers to patients, assigning care coordinators to each patient and conducting regular provider team meetings. â&#x20AC;&#x153;We believe that a comprehensive care delivery model will promote positive health outcomes for enrollees in Michiganâ&#x20AC;&#x2122;s Medicaid program,â&#x20AC;? said Heidi Chan, market president with Blue Cross Complete, in an email statement to Crainâ&#x20AC;&#x2122;s. â&#x20AC;&#x153;A model that would more closely integrate medical and behavioral health is the wave of the future for the program,â&#x20AC;? she said. â&#x20AC;&#x153;Aligning incen-

tives and enhancing coordination across medical and behavioral health care providers who participate in Michiganâ&#x20AC;&#x2122;s Medicaid program will reduce fragmentation in the delivery of care, improve communication, and promote a more comprehensive approach to an individualâ&#x20AC;&#x2122;s care.â&#x20AC;? UnitedHealthcare, the nationâ&#x20AC;&#x2122;s largest health insurer with 39 million total members, proposes to use its experience with integration in 22 other states covering 5 million membersâ&#x20AC;&#x2122; physical and behavioral health services, initially excluding developmentally disabled populations, in one or all of its managed care regions in Michigan. â&#x20AC;&#x153;Within our integrated model, members would receive a single, comprehensive assessment that includes all physical and behavioral health needs as well as identifies needs for social supports,â&#x20AC;? said UnitedHealthcare Community Plan of Michigan in its proposal. UnitedHealthcare already contracts with several community mental health agencies in the Lower Peninsula to manage the behavioral health visits covered by Medicaid now, said Dennis Mouras, CEO of the UnitedHealth Michigan operation. Mouras said UnitedHealthcare also has met regularly with several PIHPs to coordinate care of specific members who have behavioral health issues. But he said the best way to coordinate care is through an integrated financing approach. â&#x20AC;&#x153;We have a whole person care model that provides a single point of contactâ&#x20AC;? to members, Mouras said. â&#x20AC;&#x153;The team includes a registered nurse, a masterâ&#x20AC;&#x2122;s degree social worker and a community health worker.â&#x20AC;? Mouras said UnitedHealthcareâ&#x20AC;&#x2122;s â&#x20AC;&#x153;person-centered approachâ&#x20AC;? results in reduced administrative and clinical costs by reducing unnecessary utilization and improveing the patient experience.

Snyder budget Early last year, Gov. Rick Snyderâ&#x20AC;&#x2122;s proposed fiscal 2017 budget called for the state to consider combining the state Medicaid programâ&#x20AC;&#x2122;s physical and behavioral health budgets. Immediate backlash came from the public mental health community, which collectively called Snyderâ&#x20AC;&#x2122;s budget proposal a takeover of the public mental health system and a recipe for disaster. Brian Calley: But Lt. Gov. Pushed back on Calley proposal last year. Brian pushed back, explaining that the public mental health provider system would remain intact. Calley suggested the governorâ&#x20AC;&#x2122;s intention was only to replace the 10 regional prepaid inpatient health plans with the Medicaid HMOs for greater integration of services. The PIHPs currently receive state funding and contract with about 46 community mental health agencies and another 83

service providers, most of which are nonprofit. After legislative hearings, Snyderâ&#x20AC;&#x2122;s boilerplate budget proposal was revised in April to allow a 120-member workgroup to recommend best ways to improve the stateâ&#x20AC;&#x2122;s Medicaid behavioral health system. But like the previous two draft reports, the final report recommends that the state maintain the current bifurcated funding streams to health plans and mental health organizations. Thus, the $2.6 billion Medicaid mental health system in fiscal 2018 would operate much the same for the next year, unless the state Legislature authorizes regional pilot studies and diverts some funding to health plans. In late January, Medicaid HMOs, PIHPs and mental health organizations began submitting pilot proposals to MDHHS. Fourteen pilot projects were submitted by the eight HMOs. The Michigan Association of Health Plans submitted its own plan for state Legislature to consider. The proposals are all carve-ins of behavioral health to physical health, said Dominick Pallone, MAHPâ&#x20AC;&#x2122;s executive director. Pallone said most of the proposals would exDominick clude some bePallone: Move forward with pilots. havioral health populations, such as the developmentally disabled population. Patients with mental illness and traumatic brain injury would be served by the health plans. Each health plan would contract separately with the state, as they do now under medical services contracts, he said. â&#x20AC;&#x153;We would move forward with (regional) pilotsâ&#x20AC;? to test various approaches, Pallone said, rather than implementing a fully integrated care model all at once across the state. But Pallone said all pilots would have complete financing of behavioral and physical health care services. â&#x20AC;&#x153;Financing would come to the health plans and then payments would go to (community health programs) and providers,â&#x20AC;? Pallone said. â&#x20AC;&#x153;We would contract with private and public providers.â&#x20AC;?

â&#x20AC;&#x2DC;Patient-centeredâ&#x20AC;&#x2122; In MAHPâ&#x20AC;&#x2122;s pilot proposal, Pallone said Medicaid HMOs agree to take care of patients the same way the prepaid inpatient health plans administer their contracts with the state. â&#x20AC;&#x153;We are advocating, on the contractual side, that what is in the 10 PIHPs, we pull out all relevant requirements and put those into our contracts,â&#x20AC;? Pallone said. â&#x20AC;&#x153;We are fullrisk entities and are paid on a capitated (per member per month) basis using the stateâ&#x20AC;&#x2122;s rate-setting methods.â&#x20AC;? Under Blue Crossâ&#x20AC;&#x2122; proposal, MDHHS would award contracts to Medicaid health plans and pay the plans based on monthly capitation

rate leve hea cent form pred I es to al h stan pha C tal h to h pita cian â&#x20AC;&#x153; out Cott PIH syst over nev The som bulk cal a P hea cent â&#x20AC;&#x153;Co ter S ty m â&#x20AC;&#x153;The (com gram agre

FRO

Men Men ty R tion Nati L HM sum iora She ing with and mod ue-b prov â&#x20AC;&#x153; inte said

Ho pil

B and agen hea ing to co al he â&#x20AC;&#x153; ship thos tion pati B ry ca peo sues â&#x20AC;&#x153; doc Med thos

C R A I N ’ S D E T R O I T B U S I N E S S // M A R C H 2 0 , 2 0 1 7

SPECIAL REPORT: HEALTH CARE are

der’s rember ways be-

t rends t bialth iza-

caid 2018 the ture and ans. MOs, izaposects MOs. alth tate

sals -ins oral sical said Palexor. said proexbealth ns, bled l illould Each ately nder d. (reaphan care

ould viores. the ents proaid. and

one take the adthe

cone 10 reour fullitatasis eth-

osal, s to the tion

rates based on complexity and acuity levels of patients. In addition, the health plans would receive quality incentive bonuses under a pay-for-performance program based on meeting predetermined health outcomes. In its contract, Blue Cross proposes to cover physical health, behavioral health, intellectual disability, substance use disorder treatment and pharmacy services. Cotton said contracting with mental health providers would be similar to how Meridian contracts with hospital systems, medical groups, physicians and other providers. “What we would do is simply take out a surplus layer of money,” said Cotton, referring to the 10 regional PIHPs. “The more I look at it, if (the system is) not carved in, I see a ton of overhead and wasted money. I’ve never seen so many middlemen. They would be gone. There would be some administrative savings. But the bulk of savings would be in the clinical areas.” Pallone said community mental health programs already have 99 percent of the contracts with the PIHPs. “Contracts would go to the AAA, Easter Seals, Hope and all the community mental health programs,” he said. “The state would mandate that the (community mental health programs) be part of the contracts. We agree with that.”

PROGRAMS FROM PAGE 9

Mental Health, Epilepsy Foundation, Mental Health Association, Disability Rights Coalition, Michigan Protection and Advocacy Service and the National Alliance of Mental Illness. Like Detroit Wayne’s, the nonHMO pilots do not propose to assume combined financing for behavioral and physician health services, Sheehan said. They focus on improving care coordination for consumers with mental health, substance abuse and developmental disorders. Some models also include innovative value-based payment models to improve efficiencies. “We want to integrate the care, not integrate the payment,” Sheehan said.

How Detroit Wayne's pilot would work Because Detroit Wayne, Oakland and Macomb and its contracted agencies see patients with mental health issues on a daily basis, Hocking said they are in the best position to coordinate physical and behavioral health services. “We have a much closer relationship with them and can reach out to those consumers, not by coordination at the financial level, but at the patient level,” Hocking said. But Hocking said finding a primary care physician is a huge hurdle for people who have mental health issues and are not in a Medicaid HMO. “There are a lot of primary care doctors who don't want to accept the Medicaid rate. Part of our proposal is those who participate with us, con-

Integration’s advantages The health plans argue that their proposals would find cost savings that could be reinvested into mental health care. Cotton said many providers don't know if patients are compliant with their medications or whether they went to the ER too many times. “Savings can be found on the clinical side,” Cotton said. “I want to take those savings and spend it on the clinical side in expanded services.” The appeals and complaints process would also improve if Medicaid HMOs managed the system, said Danielle Devine, Meridian Michigan’s director of operations. “What we hear is that when a member complains to the community health agency who administers the services, they are (also) responsible for investigating the complaint,” Devine said. Cotton likened the behavioral health complaint system to “the fox guarding the henhouse.” Devine said Medicaid HMOs have a state-mandated system for investigating and resolving complaints. “We have different levels of grievances,” she said. “If they don’t like the resolution, they can take it to level two and state entities get involved.” Pallone said Medicaid health plans must conform to the state’s Patient

Right of Individual Review Act, or PRIRA, on decisions disputed by members. “If a decision is made by a carrier or provider, there could be an appeal through the PRIRA system,” Pallone said. “The appeals procedure involves the state and an administrative law judge. If you don’t like the final or internal decision, you can go to (the Department of Insurance and Financial Services) or the director.” Under state-awarded contracts, Cotton said quality would be monitored and rewarded by the state as it does now under the Medicaid physical health contracts. “We would have well-defined quality measures and (the) complaint system would be very well defined in the contract and clear,” Cotton said. “It would focus on person-centered planning and choice.” Health plan executives say the biggest misconception about integrating care is that they will try to avoid financial risk at all costs. “(Mental health officials) say managed care organizations run away from risk. We think it is the opposite,” Cotton said. “It is our best interests to focus on the high utilizers of care and prevention. That reduces (wasteful) clinical costs that can be invested back into the system. We are saying combine the funding and you push the $11.5 billion where services are needed the most.”

“Everstream’s robust fiber network provides customers with the high-speed network connectivity, tools and scalability they need to be successful today and as their needs change tomorrow.” Brett Lindsey, President and CEO, Everstream

“Reaching out to consumers to ensure they have what they need is old time social work. Communication is the key to integration, not financial control.” Bob Sheehan, Michigan Association of Community Mental Health Boards

tract with us, will accept (our patients) who carry our (identification) cards,” Hocking said. Under Detroit Wayne’s proposal, the MDHHS would pay an enhanced Medicaid rate to providers who treat the pilot proposal’s patients. “We will hire (more) care coordinators (with additional state funding), or master social workers for those cases, to deal with the more severe cases, people who might have physical complications,” said Hocking. “They would make the phone calls. Make sure they get meds, make appointments and ensure preventive care.” Sheehan said many mental health organization pilot proposals call reducing clinical care costs by identifying patients who use unnecessary health care services, such as ER visits. “Because care isn’t coordinated, ER use is expensive,” he said. “We have more than 700 projects (in Michigan) aimed at efficiency and savings in those areas.” Jennifer Peltzer-Jones, R.N., a senior staff psychologist in the emergency department at Henry Ford Hospital in Detroit, told Crain's in a previous interview that hospitals routinely see patients with mental health issues.

“Community health agencies only pay for hospitalizations if a patient needs psychiatric care,” Peltzer-Jones said. “The HMOs pay for all ER visits. Quite frankly, that is one reason that is driving the HMOs” to more closely coordinate physical and behavioral health dollars. If more mental health organizations focus on unnecessary ER care, Peltzer-Jones said that would be a big help not only to the HMOs, but also to the hospitals. “For ER care, it doesn’t matter who pays, we provide the care,” she said. “At our ER, we have been able to partner in devising coordinated care for some patients, and we have been seeing increased interest to do this.” Over time as mental health organizations reduce such unnecessary clinical costs as inappropriate ER use, savings can be used to hire more case managers and community health workers, Sheehan said. Consumers could receive more help with housing and transportation, he said. “Reaching out to consumers to ensure they have what they need is old time social work,” he said. “Communication is the key to integration, not financial control.” Jay Greene: (313) 446-0325 Twitter: @jaybgreene

Faster Fiber. Better Business. &OUFSQSJTF UP 8IPMFTBMF. Networking to high-speed internet. Everstream is your Business Fiber Network.

everstream.net

C R A I N â&#x20AC;&#x2122; S D E T R O I T B U S I N E S S // M A R C H 2 0 , 2 0 1 7

CRAIN'S LIST: LARGEST PHYSICIAN ORGANIZATIONS

Ranked by number of physicians Company Address Rank Phone; website

Top executive(s)

4,040 B NA

0 0

CIN

Beaumont Dearborn, Beaumont Farmington Hills, Beaumont Grosse Pointe, Beaumont Royal Oak, Beaumont Taylor, Beaumont Trenton, Beaumont Troy, Beaumont Wayne

Michael Williams, president and CEO; Diane Slon, executive VP, COO

2,400 2,386

0 0

IPA

The Physician Alliance LLC 20952 12 Mile Road, Suite 130, St. Clair Shores 48081 (586) 498-3555; www.thephysicianalliance.org

Michael Madden president and CEO

2,241 2,246

489 480

IPA

McLaren Physician Partners 2701 Cambridge Court, Suite 200, Auburn Hills 48326 (248) 484-4928; www.McLarenpp.org

Gary Wentzloff president and CEO

2,191 2,041

696 607

PHO

Beaumont Health, Beaumont Health Farmington Hills, Children's Hospital of Michigan, Crittenton Hospital and affiliates, Detroit Medical Center hospitals, Pontiac General Hospital, Garden City Hospital, Henry Ford Health System, Karmanos Cancer Center, McLaren Health Care Corp., Oakland Regional Hospitals, Select Specialty Hospitals, St. John Providence Health System, St. Joseph Mercy Health System, St. Mary Mercy Hospital of Livonia, Triumph Hospital of Detroit, UM Hospital, others St. John Hospital and Medical Center, Providence Hospital, Providence Park Hospital, St. John Macomb-Oakland Hospital, St. John River District Hospital, Children's Hospital of Michigan, Detroit Receiving Hospital, Beaumont Health, Henry Ford Health System, McLaren-Macomb, Harper Hospital, Karmanos Cancer Institute McLaren Health Care Corp., Karmanos Cancer Center

David Spahlinger University of Michigan Faculty Group Practice 4101 Medical Science Building I, Ann Arbor 48109-0624 executive vice dean for clinical affairs (800) 211-8181; medicine.umich.edu/medschool/ patient-care/u-m-medical-group Bruce Muma C Henry Ford Physician Network CMO and interim 1 Ford Place, Detroit 48202 president and CEO (313) 874-1466; henryfordphysiciannetwork.com

2,048 2,014

2,048 1,827

Group practice

1,906 1,910

1,269 1,320

IPA

Henry Ford Health System, others. Includes 1,168 employed physicians in the Henry Ford Medical Group.

Beaumont Care Partners LLC 15500 Lundy Parkway, Dearborn 48126 (313) 586-5872; www.beaumontcarepartners.org

William Isenstein executive director

United Physicians Inc. 30600 Telegraph Road, Suite 4000, Bingham Farms 48025 (248) 593-0100; www.updoctors.com

4 5 6

Physicians Jan. 2017/2016

Full-time employed physicians Jan. 2017/ Type of 2016 organization Physician hospital affiliations

Michigan Medicine (formerly University of Michigan Health System)

MedNetOne Health Solutions 4986 N. Adams Road, Suite D, Rochester 48306-1416 (248) 475-4701; www.mednetone.com

Ewa Matuszewski CEO

1,100 1,200

1,100 0

IPA

Crittenton Hospital and Medical Center, Henry Ford Health System, Beaumont Health, Mercy Memorial Monroe, McLaren Health System, St. John Providence Health System, Detroit Medical Center

Consortium of Independent Physician Associations 101 N. Main St., Suite 430, Ann Arbor 48104 (734) 302-2128; www.medicaladvantagegroup.com

Paul MacLellan CEO

1,100 1,100

1,100 NA

IPA

ProMedica Bixby Hospital, ProMedica Herrick Hospital, ProMedica Toledo Hospital, Hillsdale Community Health Center, Port Huron Hospital, St. Joseph Mercy Hospital, Henry Ford Health System, St. Mary Mercy Livonia

Oakwood ACO LLC 15500 Lundy Parkway, Dearborn 48126 (313) 586-5872; oakwoodaco.org

Belal Abdallah, chairperson; William Isenstein, executive director and COO Yasser Hammoud, medical director, CEO

977 1,045

0 0

PHO

Beaumont Dearborn, Beaumont Taylor, Beaumont Trenton, Beaumont Wayne, Beaumont Royal Oak, Beaumont Troy, Beaumont Grosse Pointe, Beaumont Farmington Hills

915 930

0 0

IPA

St. Mary, Henry Ford Main, Henry Ford Wyandotte, St. Joseph Mercy, Detroit Medical Center, Garden City, Beaumont Health and hospitals designated by health plans with which UOP physicians are contracted

United Outstanding Physicians LLC

Hubbard Drive, Suite 200, Dearborn 48126 10 18800 (313) 240-9867; www.uopdocs.com DMC PHO LLC 28411 Northwestern Highway, Suite 750, Southfield 48034 (248) 262-7369; www.dmcpho.com

Nazmul Haque chairman

739 650

209 207

PHO

Detroit Medical Center

Olympia Medical LLC

Randall Bickle president and CEO

500 500

75 80

IPA

Beaumont Farmington Hills, Garden City, St. Mary Mercy Livonia, Providence Park, St. Joseph-Ann Arbor

IHA Health Services Corp. 24 Frank Lloyd Wright Drive, Lobby J2000, Ann Arbor 48105 (734) 747-6766; www.ihacares.com

William Fileti CEO

491 448

415 376

Group practice

Professional Medical Corp. 2425 S. Linden Road, Suite D, Flint 48532 (517) 336-1400; www.pmcpo.com

Asif Ishaque president

473 489

63 97

IPA

Hurley Medical Center, McLaren, Genesys

Huron Valley Physicians Association PC

Jeffrey Sanfield president

450 463

75 440

IPA

St. Joseph Mercy Health System, Chelsea Community Hospital and Livingston

Oakland Physicians Network Services 2360 Orchard Lake Road, Sylvan Lake 48320 (248) 682-0088; www.opns.org

Rodger Prong, executive director; Marco Gudziak, president Jerome Frankel medical director

450 450

0 0

IPA

St. Joseph Mercy Hospital Oakland, Huron Valley-Sinai DMC, Beaumont Royal Oak, Crittenton, McLaren, Henry Ford, Providence

445 430

IPA

Beaumont Dearborn, Beaumont Farmington Hills, Beaumont Trenton, Children's Hospital of Michigan, Crittenton Hospital and Medical Center, Henry Ford Health System, Huron ValleySinai Hospital, McLaren Oakland, Sinai-Grace Hospital, St. John Providence Health System, St. Joseph Mercy Health System, St. Mary Mercy Hospital Livonia

Wayne State University Physician Group 1560 E. Maple Road, Troy 48083 (877) 978-3627; www.wsupgdocs.org

Lisa Keane president and COO

400 400

Group practice

Michigan Healthcare Professionals PC 30000 Northwestern Highway, Farmington Hills 48334-3292 (248) 851-3300; www.mhpdoctor.com

Jeffrey Margolis president

398 364

Group practice

Accountable Healthcare Alliance

Robert Jackson, president and medical director

207 264

3 6

IPA

Beaumont Health, Children's Hospital of Michigan, Crittenton Hospital Medical Center, Detroit Receiving Hospital, DMC Surgery Hospital, Pontiac General Hospital, Garden City Hospital, Harper University Hospital, Henry Ford Health System, Huron Valley-Sinai Hospital, Hutzel Women's Hospital, Karmanos Cancer Center, McLaren-Macomb, McLaren-Oakland, Rehabilitation Institute of Michigan, Select Specialty Hospital, Sinai-Grace Hospital, St. Joseph Mercy Health System, St. Mary Mercy-Livonia, St. John Providence Health System, Triumph Hospital Detroit, UM Health System, Vibra Hospital of SE Detroit, others Beaumont Health, Beaumont Hospital Farmington Hills, Crittenton Hospital, Detroit Medical Center hospitals, Garden City Hospital, Henry Ford Hospital West Bloomfield, Huron ValleySinai Hospital, McLaren Macomb, McLaren Oakland, McLaren Lapeer, Pontiac General Hospital, Port Huron Hospital, St. John Providence Health System, St. Joseph Mercy Oakland, St. Mary Mercy Hospital Henry Ford Wyandotte Hospital, St. Mary Mercy-Livonia, Beaumont Health, St. Joseph Health System, Michigan Medicine, Mercy Hospital Port Huron

DMC Primary Care Physicians PC 21531 Harper Ave., Suite 101, St. Clair Shores 48080 (586) 498-8922; www.dmcpcp.com

Kenneth Dziuba, president and medical director

166 96

0 0

IPA

Five Mile Road, Suite 210, Livonia 48154 12 33300 (313) 357-1215; www.olympiadocs.com

Hogback Road, Suite 3, Ann Arbor 48105 15 2002 (734) 973-0137; www.hvpa.com

15 17 18

Oakland Southfield Physicians PC 29200 Northwestern Highway, Suite 325, Southfield 48034 (248) 357-4048; www.ospdocs.com

Allen Road, Suite 104, Allen Park 48101 20 8338 (517) 336-1400

St. Joseph Mercy Health System, Michigan Medicine

Detroit Receiving Hospital, Children's Hospital of Michigan, Harper-Hutzel, DMC Sinai-Grace Hospital, St. John Providence, Beaumont Health, Garden City Hospital, Henry Ford Health System, Crittenton Hospital, Huron Valley Hospital, Karmanos Cancer Center, Rehabilitation Institute of Michigan

This list of physician organizations encompasses physician hospital organizations and independent practice associations and is an approximate compilation of the largest such groups in Wayne, Oakland, Macomb, Washtenaw and Livingston counties. IPA = Independent practice association. PHO = Physician hospital organization. ACO = Accountable care organization. CIN = Clinically integrated network. It is not a complete listing but the most comprehensive available. Unless otherwise noted, information was provided by the organizations. NA = not available. An expanded list is available with a Crainâ&#x20AC;&#x2122;s data membership at crainsdetroit.com/lists.

B Includes some physicians listed by United Physicians and Oakwood ACO. C Charles Kelly retired as president and CEO in December. LIST RESEARCHED BY SONYA D. HILL

Excel

C R A I N ’ S D E T R O I T B U S I N E S S // M A R C H 2 0 , 2 0 1 7

CALENDAR TUESDAY MARCH 21

J The State of Relations Between Cuba and the U.S. and Future Opportunities.

11:30 a.m.-1:30 p.m. Detroit Economic Club. Find out what’s next and learn about future opportunities in Cuba. Westin Book Cadillac. $45 members; $55 guests of members; $75 nonmembers. Website: econclub.org. J CFA Detroit Speaker Series Lunch Featuring Adrian Cronje. Noon-1:30

p.m. Certified Financial Analyst Society Detroit. Speaker: Adrian Cronje, CFA chief investment officer and founding partner of Balentine, on “An Industry Wake Up Call: What is the Adrian Cronje Real Threat to Our Industry and How to Turn it into Opportunity?” $45. The Community House, Birmingham. Contact: Michelle Doran, phone: (734) 546-2390; email: info@cfadetroit.org.

WEDNESDAY MARCH 22

J Tech Takeover: Safe Human-Robot Collaboration. 8:30-10:30 a.m. Auto-

mation Alley. Technology distributor and integrator Behco-MRM leads a discussion on the safety aspects of using collaborative robotics. Topics will include systems level issues, safety audits, smart considerations and risk assessment. A panel discussion and Q-and-A period will follow. Speakers will include: Brent Bartson, technical manager for Universal Robots; Elena Dominguez, safety consultant, Pilz Automation Safety; Ryan Groat, senior engineer, Panther Global Technologies; Adam Boike, application engineer, Behco-MRM. Automation Alley. $20. Email: events@automationalley.com; phone: (800) 427-5100.

THURSDAY MARCH 23

Real Estate Forecast Breakfast.

8-9:30 a.m. Birmingham Chamber of

Commerce. New housing trends in southeast Michigan and the developments in Detroit. Speakers: Dan Elsea, president, brokerage services, Real Estate One; Mike McNally, vice president, operations, Olympia Development; Michael Stoskopf, Home Builders Association of Southeastern Michigan. The Reserve, Birmingham. $40 members; $50 nonmembers. Website: bbcc.com. Talent Outlook: Detroit Drives Degrees. 8-10:30 a.m. Detroit Regional J

Chamber. Leaders from the higher education, business, government and nonprofit and philanthropic sectors meet to offer perspectives from the private and public sector, and highlight work the Detroit Drives Degrees (D3) initiative is doing to strengthen the talent pipeline and meet the growing demands of employers. Detroit Athletic Club. $35 members; $70 nonmembers. Contact: Maggie Greaney, (313) 596-0482; website: detroitchamber. com.

FRIDAY MARCH 24

J Big Data and Business Analytics Symposium. 8 a.m.-6 p.m. Wayne

State University. This symposium focuses on managing and analyzing the data captured through marketing, product development, manufacturing, distribution, sales, and service in a global setting. Gain insights on identifying big data opportunities, developing business cases, and using analytics to drive business success. Wayne State Student Center Building. $40. Contact: Mark Garrison, phone: (313) 577-5683; email: mgarrison@wayne.edu. Expanding Education and Access Through Public Media. 11:30 a.m.-1:30 J

p.m. Detroit Economic Club. Paula Kerger, president and CEO, PBS. will share insights into PBS’ efforts to remain relevant amid a changing media environment. Townsend Hotel, Birmingham. $45 members; $55 guests of members; $75 nonmembers. Website: econclub.org.

DEALS & DETAILS ACQUISITIONS & MERGERS

J Clio Holdings LLC, Birmingham, an investment firm for countertop suppliers and fabricators, has acquired US Marble, Remus. Website: clioholdings.com.

CONTRACTS

zipLogix LLC, Fraser, a real estate technology company, teamed with ShortTrack, Chicago, Ill., a secure transactions technology company, to allow zipForm Plus users to securely place title orders. Websites: ziplogix.com, shorttrack.io/. J

EXPANSIONS

Jagannathan Neurosurgical Institute PLLC, Troy, a neurosurgical J

clinical office, has opened at 3290 W. Big Beaver Road, Suite 150, Troy. Telephone: (248) 792-6527. Website: mi-neurosurgery.com.

MOVES

G2 Consulting Group, Troy, a geo-technical, environmental and construction engineering services firm, has moved from 1595 Eisenhower Place, Ann Arbor to 1350 Eisenhower Place, Ann Arbor. Telephone: (734) 390-9330. Website: g2consultinggroup.com. J

NEW PRODUCTS

Meritor Inc., Troy, launched its P600 series Tridem Heavy-Haul planetary axle for heavy duty, longhaul, oil field, mining and logging J

UPCOMING EVENTS

Putting Social Media to Work for Your Business. 6-9 p.m. March 28. J

Schoolcraft College. Discover how to select and manage the right social media platform(s) for products or services. Jeffress Center, Schoolcraft College, Livonia. $45. Contact: Sara Gumina, phone: (734) 462-4438; email: sgumina@ schoolcraft.edu; website: sbdcmichigan.org.

WITH

9th Annual Trade Secrets with Connie Holzer. 6-9:30 p.m. March 29. JVS.

Keynote speaker Connie Holzer, owner of Tom Holzer Ford, who has built it into one of the top Ford dealerships in the country. Holzer took over the dealership when Connie Holzer her husband died in 2006, at the same time the country was going into an economic tailspin. Troy Marriott. $150. Contact: Judy Strongman, phone: (248) 233-4213; email: jstrongman@jvsdet.org; website: jvsdet.org/tradesecrets. The Culture of Accountability. 7-9 a.m. March. 31. The Business Roundtable. Stanley Targosz III, CEO of Education Planning Resources, will speak on how stronger cultures of accountability lead to higher performance and commitment within companies. Birmingham Country Club. $35 person, $350 table of eight and branding opportunities. Contact: Christa Moxon, phone: (269) 685-7829; email: christa.moxon@thebusinessrt.org; website: thebusinessrt.org.

Calendar guidelines. Visit crainsdetroit.com and click “Events” near the top of the home page. Then, click “Submit Your Events” from the drop-down menu that will appear. Fill out the submission form, then click “Submit event” at the bottom of the page. More Calendar items can be found at crainsdetroit.com/events.

Access and download ALL Crain’s data, including: • • • •

1,500+ companies 4,000+ people 60+ industry lists (Downloads valued at $3,000+) Excel® downloads of ALL Book of Lists data

Membership also includes: • Full digital access to crainsdetroit.com • 52 print weekly issues of Crain’s Detroit Business • The 2017 Book of Lists • Weekly newsletters outlining updated lists, with links to the data and downloads

Exclusive to Data Members: Access the complete digital Excel® download of Book of Lists

applications. Website: meritor.com.

NEW SERVICES

ProQuest LLC, Ann Arbor, a content curator, has partnered with Gridlogics, Pune, India, provider of custom software for patent research, management, data analysis and project management, to provide intellectual property searches with search, workflow, analytics and visualization tools. Websites: proquest. com, gridlogics.com. J

*EXAMPLES OF INFORMATION THAT CAN BE ACQUIRED

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

BY BECOMING A DATA MEMBER

BECOME A DATA MEMBER at crainsdetroit.com/DataMembership

C R A I N ’ S D E T R O I T B U S I N E S S // M A R C H 2 0 , 2 0 1 7

Sources: Talks of office addition to One Campus Martius renewed Dan Gilbert’s team has recently discussed whether to build an addition to the One Campus Martius building downtown.

By Kirk Pinho kpinho@crain.com

BEDROCK LLC

ADVERTISEMENT SECTION

AUTOMOTIVE

CONSULTING

Samuel Spencer Chief Financial Officer & Head of Mergers and Acquisitions The Chemico Group

Robert E. Vogelei Partner & Shareholder Cambridge Consulting Group Account Director Rob Vogelei has been appointed to the firm’s leadership team as a Partner and Shareholder. In addition to his role as Account Director within the Benefits Consulting Practice Group, Vogelei will help lead the firm in the development and implementation of core growth initiatives, business development and overall vision, direction and strategy.

NONPROFITS Richard D. DiBartolomeo

Chairman, Board of Trustees Judson Center Judson Center, a nonprofit helping Michigan’s children and families succeed since 1924, welcomed Rick DiBartolomeo, B2B CFO, as Chairman of the Board of Trustees. DiBartolomeo has over 35 years of experience as a financial leader with Deloitte, the State of Michigan and Rehmann Group, and is currently Partner at B2B CFO, where he provides financial and operational leadership expertise. He has been a passionate, engaged member of Judson Center’s Board since 2005.

At Chemico, Spencer oversees the company’s finance and accounting departments, Information Technology and all corporate mergers and acquisitions. Prior to joining Chemico, Mr. Spencer most recently served as Vice President of Finance, Operations and Process at the Michigan Minority Supplier Development Council. He also held leadership roles at Morgan Stanley’s Investment Banking Division, USB Investment Bank, Dana Holding Corporation and A.T. Kearney.

Know someone who is making the move to a new job, just received a promotion or was recently appointed as a board member?

SHARE THE NEWS IN CRAIN’S

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

Dan Gilbert’s team has had serious conversations within the last two months about building a large addition behind its One Campus Martius headquarters building downtown, Crain's has learned. One source said the addition, if built, would be about 250,000 square feet behind the 1 million-square-foot building originally built for Peter Karmanos’ Compuware Corp. Discussions about adding to the building have taken place in the past, including under Compuware ownership, but this appears to be a fresh round of talks. Two other sources with knowledge of the talks confirmed they have taken place recently. A spokeswoman for Gilbert’s Bedrock LLC declined comment last week. “We cannot comment on rumors and speculation,” said Whitney Eichinger, director of communications for Gilbert’s Detroit-based real estate company. One Campus Martius, located at 1050 Woodward Ave., has an almost “W”-shaped design, spread across 15 stories of office and retail space, although there is a northern section that is just three stories tall that could potentially accommodate more space. For months Gilbert, the founder and chairman of Quicken Loans Inc. and Rock Ventures LLC, has talked about the need for new office space downtown, where he is arguably the central business district’s most powerful and influential landlord. While there are vacant buildings, there are few large blocks of contiguous space available. It’s not known what would happen to the two massive murals that Bedrock curated over the last two years on the northern sides of One Campus Martius. The Shepard Fairey mural was completed in May 2015; the artists How and Nosm (brothers Raoul and Davide Perre) completed the other mural in April. Gilbert, also the owner of the Cleveland Cavaliers, has been the most active real estate developer in downtown Detroit the past several years. Most recently last month, Bedrock unveiled its long-anticipated plans for a new high-rise on the site of the former J.L. Hudson’s department store site at Woodward and East Grand River avenues. As currently conceived, that building would be 1.2 million square feet with a 734-foot residential tower, which would be the tallest building in the city, besting the Detroit Marriott at the Renaissance Center by 7 feet. The redevelopment would include 279,000 square feet of office space spread out over four floors of a nine-story podium. Among the other projects Gilbert, who Forbes values at $5.8 billion, is pushing:  A two-block development east of One Campus Martius consisting of an office tower with at least 20 stories and a residential building with at least 16 stories. The area is bounded by Randolph Street, Bates Street, Cadillac Square and Monroe Avenue.  A 10-acre mixed-use development with General Motors directly east of the Renaissance Center.  A $1 billion development with a Major League Soccer stadium and three 18- to 28-story towers for office, residential and hotel uses on the site of the half-built Wayne County Consolidated Jail on Gratiot Avenue with Detroit Pistons owner Tom Gores. One Campus Martius, constructed in 2003, is owned by a 50-50 joint-venture between Bedrock and Detroit-based Meridian Health, which purchased it from Compuware at the end of 2014 for $142 million. Kirk Pinho: 313-446-0412 Twitter: @kirkpinhoCDB

PEOPLE: SPOTLIGHT

Stefanini North America names CEO Stefanini North America Inc. has named a new CEO, Spencer Gracias, as the S o u t h field-based information technology provider looks to expand 25 percent in North America and the Asia Spencer Gracias Pacific region. Gracias, 43, is tasked with pushing forward Stefanini’s goal of acting as a “digital transformation agent for clients” to facilitate growth, according to a news release. He began his new role in February, following the departure of the previous CEO, Antonio Moreira, in December.

Detroit Manufacturing appoints COO, CFO Detroit Manufacturing Systems named two new top officers after the Detroit-based c o m p a n y ’s COO and CFO recently retired. Joseph Lupinski, who is new to the interior compoJoseph Lupinski nent manufact u r i n g company, will replace Eddie Martin as COO. David Crispino, the company’s finance director, will step into former CFO David Crispino Charles Pear’s role. Lupinski, 51, comes to Detroit Manufacturing Systems from a 27year career in operations. Crispino, 58, has 25 years of experience in financial leadership, including with Ford Motor Co.

Rochester chamber names president The Rochester Regional Chamber of Commerce named Alaina Campbell its new president, the chamber announced this week. She replaces Sheri Heiney, who stepped down in December to become president and CEO of the Prescott Chamber of Commerce in Arizona. Campbell brings six years of experience as the executive director of the Orion Area Chamber of Commerce, where she led efforts to double membership and launch initiatives including the Healthy Body, Healthy Mind Expo.

March 20, 2017

Page 15 15

RAIN C R A I N ’ S D E T R O ICT B’SUDSETROIT I N EBSUSINESS S // M A R C H 2 0 , 2 0 1 7

CALLING LOCAL TRAILBLAZERS! Crain’s Detroit Business is seeking nominations for its 2017 class of 40 under 40. We’re looking for today’s brightest under 40 who continue to make their mark within their company, their industry and their community.

CRAINS DETROIT BUSINESS

Debris blocks a branch of the Rouge River, which has received Great Lakes Restoration Initiative dollars for cleanup.

LAKES FROM PAGE 3

GEI served as a consultant on the Muskegon Lake cleanup, among others in Michigan, and has offices in Grand Rapids, Iron Mountain, Iron River, Lansing, Marquette and Traverse City. Davis, appointed by the Obama administration in July 2009, served as the chief liaison to Congress for Environmental Protection Agency Great Lakes matters, until January. “The upper Midwest is so critical in so many ways, having these areas cleaned up is good policy,” Davis said. “In this case, what’s good for the environment is good for the tax base. I’ve always told our legislators that (GLRI) is small-case environment and upper-case economy.” At Muskegon Lake, small portions of the overall cleanup predating GLRI, started in 2010, had large economic impacts. The work tied to a $10 million grant under the Troubled Asset Relief Program during the Great Recession in 2009 led to 6.6 times that amount of return on investment, according to a 2012 study by Grand Valley State University. The single project, removing toxic sediment from the shoreline, boosted property values by $12 million, creating $600,000 in new annual tax revenue and led to 65,000 more visitors to the lake, Evans said. Municipalities in Southeast Michigan are also benefiting from the federal program. Some of the completed GLRI-funded projects in Southeast Michigan include: J $2.8 million for a plan to clean up the lower Rouge River channel JJ$4.3 million to restore habitat near Harsens Island near the St. Clair River. JJ$1.4 million to reconnect the discharge of Belle Isle’s Blue Heron Lagoon to the Detroit River, restoring fish access to over 95 acres of existing habitat. JJ$670,000 to restore shoreline and wetlands on the Detroit River. JJ$500,000 to remove a dam near the Rouge River, improving the ability to dissipate flood waters. JJ$1.5 million to restore coastal marsh on Lake St. Clair. More than 200 projects have been funded through the GLRI since 2010. A project in Wayne County to restore habitat at the Henry Ford Estate Dam, Rouge River Oxbow and Nankin Lake near River Rouge may be in jeopardy if the Trump administration slashes GLRI funding. The project is expected to reconnect 50 miles of the Rouge River and 108 miles of tributaries to the Great Lakes system,

remove over 40,000 cubic yards of sediment as well as restore habitat. The project, which began in October 2016 and is slated for completion in October 2019, is earmarked for $6.5 million in funding from the GLRI. Kaye Byrd, director of communications for Wayne County Public Works, said the EPA has not contacted the county about any potential cuts for funding, but the county would not immediately scrap the project if funding was cut. “If the EPA were to cut funds to the program, the county would likely place the project on hold and pursue other sources of funding to complete the work,” Byrd said in an email to Crain’s. However, most municipalities and states don’t have the “political will” to finish the projects without the federal funding, said Candice Miller, Macomb County Public Works commissioner and former Republican U.S. representative. “I am very cognizant of the deficit and understand we have to have budget cuts, but this isn’t the way,” Miller said. Miller is currently overseeing a project in Macomb County funded by GLRI that will rehabilitate the Clinton River spillway — most recently funded by a $5.7 million GLRI grant. That project will be completed this year, narrowly avoiding the cuts. Miller said the project is critical to the vitality of local communities, but also the Trump administration’s threats to cut GLRI ring hollow. “I am in support of many of the things Trump is trying to do, but this is a principal advocacy of mine,” Miller said. “This is a really small amount of money, really, and it’s of great significance to the states that voted for him. These states can’t absorb (this cut). This is a time where I hope the president will reconsider.” Trump won five out of the eights Great Lakes states — Michigan, Indiana, Ohio, Pennsylvania and Wisconsin. New York, Illinois and Minnesota went to Hillary Clinton. Miller believes the eight Great Lakes states will join up to oppose the cuts in a bipartisan show of force. Trump’s plan is a traditional scorched earth approach to negotiation — threatening a massive cut with the goal of meeting in the middle so the opposing party is happy with a smaller than proposed cut. “(The cut) won’t happen to that level, but I do believe everyone is going to take a haircut,” Miller said. “But it’s going to be difficult to get those cuts through this block of states.” Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh

SUBMIT A NOMINATION TODAY

at crainsdetroit.com/nominate

JOB FRONT

POSITIONS AVAILABLE

RETIREMENT SYSTEMS OF THE CITY OF DETROIT Joint Personnel Committee 500 Woodward Ave, Suite 3000 Detroit, Michigan 48226

ENGINEERING POSITION DETROIT, MI. Amazon Corporate LLC seeks candidates for the following (multiple Operations positions available): Engineer III (Job Code: OEIII-MI-2017) to plan, organize, implement, and manage projects to ensure economical, safe, and effective use of materials, energy, and people. Manage and lead operations and area managers to correct quality defects and effect process efficiencies to improve customer experience. Up to 50% domestic travel required to various fulfillment centers. Candidates must respond by mail Referencing the job code:

OEIII-MI-2017 to: AMAZON PO Box 81226 Seattle, Washington 98108.

JOB TITLE: Executive Director - Retirement Systems SALARY: $150,000 - $200,000 (Starting salary is dependent upon qualifications and experience) The City of Detroit has two distinct and separate retirement systems: the General Retirement System; and the Police and Fire Retirement System. The legal and fiduciary responsibility for the general administration, management, and proper operation of the Retirement Systems, and for making effective their provisions, is vested in each Retirement System’s Board of Trustees. The Retirement Systems provide services and benefits to approximately 9000 active members and 12,000 retirees and beneficiaries. Currently, combined Retirement System assets are in excess of $4 billion. Each Retirement System is comprised of two distinct plans: a legacy traditional defined benefit plan and a new hybrid defined benefit plan. Information about each Retirement System is available on the RSCD website at www.RSCD.org. Please refer to the website for the full job description and benefits. Submit information for this job posting to: jobs@rscd.org

CRAIN’S CLASSIFIEDS WORK! To Place Your Ad Call (313) 446-6068 or Fax (313) 446-0347

MISCELLANEOUS

SURVEY

MARKET PLACE

ANALYZE MATCH

ANNOUCEMENTS

RELIABLE REALTY GROUP, LLC CrainsDetroit.com/JobConnect |

is pleased and proud to announce that the City of Melvindale’s City Council has appointed Reliable Realty Group as their Exclusive Representative for the sole purpose of Marketing and Disposition of City-owned Commercial and Industrial Real Properties.

Please direct any inquiries to: Larry Quick (248) 200-6181 ldquickrrg@gmail.com COMMERCIAL | INDUSTRIAL MULTI-FAMILY | INVESTMENT BROKERAGE | MANAGEMENT Accountability / Responsibility / Reliability / From Start To Finish / Every Transaction / Every Time

FRANCHISE OPPORTUNITIES

CHECK US OUT AT WWW.PASSPORTPIZZA.COM CALL (586) 992-8800 OR EMAIL MIKE@PASSPORTPIZZA.COM

INDUSTRIAL PROPERTY

ROMEO, MI 75 Ac. Vacant Ind’l zoning, poss. multiresid’l or comm’l. opp. All Util’s. 1,334 Rd. Frontage, 1/2 Mi. from X-way exit. Call George @ 586-531-2436 georgevh@hughes.net

OFFICE SPACE

INDUSTRIAL SERVICES

STUDIO SPACE IN FERNDALE (9/WOODWARD)

C.W. JENNINGS INDUSTRIAL EXCHANGE

2,500 Sq. Ft. ~ $1,200 Per Month Also 1,000 Sq. Ft. ~ $500 Per Month.

Global Industrial Consulting Construction • Acquisitions Exporting • Financing (855) 707-1944

FRANCHISES AVAILABLE

REAL ESTATE

Call or email today for information on a custom advertising plan!

cdbclassified@crain.com 313.446.6068

Call 248-398-7000 WATERFRONT PROPERTY

St. Clair River, Algonac MI Residential Point Lot 130’ X 210’ Steel Seawall All Underground utilities on site "Private" Island & Street $750,000 - Terms available Email Robert ~ robert48001@yahoo.com

C R A I N ’ S D E T R O I T B U S I N E S S // M A R C H 2 0 , 2 0 1 7

VALUES

typically considered half of the market value, which puts Ann Arbor at $12.76 billion and Detroit at $10.86 billion for 2016. The figures include residential, commercial, industrial and development properties. Ann Arbor, in Washtenaw County, is home to the University of Michigan, the state’s most prestigious university. That naturally increases the value of the city’s property.

FROM PAGE 1

Indeed, just for residential property, the assessed values in Ann Arbor are 4.5 percent higher than in 2008, compared to 73.9 percent lower in Detroit. Ann Arbor’s residential base makes up 66.7 percent of its value, compared to 63.3 percent in 2008. Detroit’s, on the other hand, now makes up 47.2 percent, compared to 71.5 percent almost a decade ago.

Other rebounds

Climbing sale prices The city, using data from the Detroit Land Bank Authority and Multiple Listing Service, says average sale prices have climbed in most neighborhoods between 2014 and 2016. In 21 neighborhoods, average sale prices rose up to 25 percent; in 25, they rose 25.1-50 percent; and in 70 neighborhoods, they rose 50.1 to 329.6 percent, according to the city. Six neighborhoods declined up to 76 percent. John Naglick, Detroit’s deputy CFO, said in a statement that the decline in total value over the years is not unexpected, but the hit to property tax revenues hasn’t been as bad as it could have been because of improved property tax collection. “We fully expect that the final 2016 collection report will show that we continue to increase the percentage and amount of the roll that is paid while current,” Naglick said. And that’s important.

Ann Arbor’s housing market tends to be stronger than Detroit’s. Detroit, a city of 677,000 people, has gone through monumental change over the last several decades. Though the city has made strides to improve

BROKEN

Municipal meat and potatoes

It’s also prompted some communities to raise property taxes even higher — further diminishing desirability. And because Michigan restricts how quickly increases in property values can trigger increases in taxable value, a Michigan law that irritates municipal leaders and their advocates, the financial effects could linger for decades. Can these cities suffering the steepest declines ever recover? “Under the current structure, no,” said Tony Minghine, associate executive director and chief operating officer of the Michigan Municipal League, an association for townships, villages and cities. The municipal league has long advocated for changes in how the state funds municipalities. For this report, Bridge Magazine and Crain’s Detroit Business analyzed the annual property value assessments, compiled by the state treasury, for all municipalities in the state from 2008 to 2016. It adjusted the past values for inflation and focused on real property, comprised mainly of residential, commercial, industrial and agricultural property. The data show that industrial property fell the furthest overall, losing 40 percent of its 2008 value. Meanwhile, residential property, by far the largest class of property comprising 75 percent of all value, fell 21 percent. Only agricultural land was worth more in 2016 than it was, adjusted for inflation, in 2008. Commercial property is still 24 percent below 2008.

Many communities across Michigan faced the same daunting problem: As property values plummeted after the housing bubble popped and the recession deepened, property revenues that fund city services likewise fell. Municipal employees took pay cuts and furloughs, and paid more for their health benefits. Certainly, not every city or township is suffering; some have seen home prices rebound and overall property values begin to climb. And yet, only 183 municipalities in the state have seen overall property values exceed 2008 levels, when adjusted for inflation. Most are small towns with fewer than 2,000 residents. All told, just under 400,000 people live in these 183 communities. For the remaining 9.5 million people living in Michigan, the value of all property — residential, commercial, industrial and agricultural — has fallen from 2008, in many cases markedly. And for leaders in those communities, the fall in property and taxes has meant tough choices. “The quality-of-life programs (were) unfortunately one of the first things that got cut,” said Tracey Schultz Kobylarz, supervisor of Redford Township, a community of 47,000 residents in western Wayne County. It lost more than 62 percent of its 2008 tax base, or more than $1.1 billion. At one point the township had a deficit of $10.2 million. Those things that can create community and a sense of place were the

CRAIN’S DETROIT BUSINESS

Detroit’s turnaround has made headlines, but the data shows that the city still faces an uphill road toward real prosperity. For a city that just a few years ago emerged from the largest Chapter 9 municipal bankruptcy in history, revenue collection is a must.

Trading places

FROM PAGE 1

services, attract businesses, and invest in its neighborhoods, the city’s image is still plagued by stories of population loss, crime, and blight. And though Detroit’s alleged turnaround has also made headlines, the data shows that the city still faces an uphill road toward real prosperity. Last year, Ann Arbor’s total assessed property value, which is half of market value, was $6.38 billion, according to data compiled by Bridge Magazine, while Detroit’s was

$5.43 billion; the year before, Ann Arbor was $5.95 billion, just ahead of Detroit’s $5.91 billion. Perhaps even more telling is the pendulum swing in residential values. In 2008, Detroit’s assessed value was $9.83 billion, more than double Ann Arbor’s $4.07 billion. Fast-forward eight years to 2016, and the tides have shifted: Ann Arbor’s residential assessed value was $4.26 billion compared to Detroit’s $2.57 billion. The state-equalized values are

first to go, or get changed: the holiday parade, the art in the park. Maybe a city mowed the parks or swept the streets less frequently; perhaps flowers didn’t get planted in the boulevard. What remained: the basics of police and fire protection. In Redford Township, the town’s parks department once had 15 employees; now it has three. Its ice rink is leased to a private company and public events in town — like holiday celebrations — require the generosity of local businesses that underwrite them. Township employees pay more for less health coverage and haven’t seen much in the way of raises in eight years. “We immediately readjusted what we do here,” Schultz Kobylarz said. “We knew that if we didn’t change the way we were doing things, we wouldn’t be able to turn the lights on in three years.” At the same time property values were falling, the state had been cutting back on municipalities’ share of state sales taxes — known as revenue sharing. The Michigan Municipal League estimates that Redford Township received $15.5 million less in state revenue sharing between 2008 and 2015 than what was anticipated, cuts that occurred under both Democratic and Republican governors. While making its own cuts, Redford officials also asked voters for more money to help with public safety. They approved a special assessment property tax — but that raised the township’s overall millage

rate, including Wayne County’s 9.1 mills, to nearly 35 mills (that’s $35 for every $1,000 in assessed valuation). That’s one of the highest rates in the state; for a home with a market value of $100,000, property taxes would amount to $1,750. For comparison, in Brownstown Township southeast of Redford, it’s 22.3 mills; in Livonia it’s 23 mills; Canton Township 20 mills. Schultz Kobylarz, who said the township needed the additional money, said she also knows those higher taxes come with a cost: “You can’t tax your way out of a broken system.” And broken, she said, it is. “It’s 100 percent broken.” Many agree, and point to a much larger and infamous example of government failure as Exhibit A. Financial woes in Flint, which lost 76 percent of property values between 2008 and 2016, led a succession of state-appointed emergency managers to make the fateful decision to switch water systems without properly treating the new water to prevent lead poisoning.

Haves and have-nots Robert Kleine is a former state treasurer who worked for former Democratic Gov. Jennifer Granholm. He’s now the interim director of the MSU Extension Center for Local Government and Finance, which helps municipalities with financial planning. “There are winners,” Kleine said, referring to standout communities like Ann Arbor and Grand Rapids

Ann Arbor is not the only midsized city creeping up on Detroit. Troy, with about 82,000 residents in 34 square miles, is also closing in on Detroit’s total assessed value, with $5.24 billion last year ($10.48 billion market value). Troy is the home of banks, other financial institutions, law firms, swank shopping malls and prime housing. Its residential value has almost rebounded to where it was in 2008, with values just 4.1 percent lower ($4 billion in 2008, $3.84 billion last year). Its total property value is 18.5 percent lower than it was in 2008. Detroit officials still say better times are ahead. “It’s still too early, by far, to make up for losses that have taken decades to accumulate, but we are showing real gains and have a plan to continue them,” said Jed Howbert, executive director of Mayor Mike Duggan’s Jobs & Economy Team. Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

that have seen values substantially recover and which are attracting new residents. “But there are too many losers.” Michigan’s municipal finance structure is so wobbly that those cities that have seen the steepest decline in property taxes, absent a substantial recovery in revenue sharing, are in serious trouble. “The only way the system we know can work is robust revenue sharing,” Kleine said. “The system is completely broken without (an increase in) revenue sharing.” But that would mean finding more money read: taxes — in Lansing with a legislature that just came close to cutting income taxes. New taxes are often a hard sell. Fewer than two dozen cities have income taxes, and only Detroit has a utility tax (and casino revenues). Voters across the state have approved property tax increases for police, fire and other services, but there are limits as to how much communities can ask for — and in how much voters are willing to approve. “You have a system where a community has zero ability to recover,” Minghine said. Without reform, MSU’s Kleine wonders what will happen the next time Americans stop buying cars and homes and TVs, when they again tighten their belts and Michigan is facing rising unemployment and sliding property values. “Right now we’re in an economic recovery,” Kleine said. “What’s going to happen in the next recession? And it’s going to happen.”

C R A I N â&#x20AC;&#x2122; S D E T R O I T B U S I N E S S // M A R C H 2 0 , 2 0 1 7

Michigan ranks tops in nation for power outages per capita By Ron French Bridge Magazine

Michigan ranks fourth nationally in the total number of power outages over the past six years. And state residents put up with more outages per capita than any other state. There were 192 reported power outages in Michigan in 2016, according to the Eaton Blackout Tracker Annual Report, putting Michigan â&#x20AC;&#x201D; which is 10th nationally in population â&#x20AC;&#x201D; behind only California, Texas and New York in the total reported number of outages. That ranking wasnâ&#x20AC;&#x2122;t an anomaly. Michigan also had the fourth-most power outages cumulatively from 2011 through 2016. Most outages are short (the average is 35 minutes, according to Eaton, a power management company), and affect relatively small areas (3,244 residents on average). Thatâ&#x20AC;&#x2122;s probably little comfort to the more than 1.1 million homes and businesses that lost power as a result of a massive wind storm March 8. Why does Michigan have more power outages than other states? Itâ&#x20AC;&#x2122;s a simple question with a surprisingly unclear answer, said Julie Bennett, who heads up energy and

STORM FROM PAGE 1

MPSC Chairman Sally Talberg said the commission may call for an investigation into the response by DTE and Consumers like it did after the 2013 ice storm. In May 2014, the MPSC ordered utilities to increase the pace of funding to improve reliability, increase distribution automation and tree trimming to reduce outage frequency and duration. For now, Talberg said the commissionâ&#x20AC;&#x2122;s main concern is making sure people have recovered from the outages and that the power system is safe. â&#x20AC;&#x153;The storm of this magnitude, with one million customers without power, could go down as the largest electric restoration in (state) history,â&#x20AC;? she said. Actions the MPSC could take include ordering utilities to spend more on maintenance, tree trimming and such improved automation and reporting technology as smart meters. Already, Consumers and DTE spend more than $45 million annually each on tree trimming. Downed trees account for more than 50 percent of outages. â&#x20AC;&#x153;It may be hard to improve (reliability in extreme storms) given that so many poles and wires came down, far surpassing the ice storm in 2013,â&#x20AC;? Talberg said. Officials for DTE and Consumers said it would take them several months to get a firm understanding on the costs to repair the system from the storm damage. Utilities have insurance to cover such losses, minus deductibles, and usually get some money back in higher rates, negotiated with the state, tied to

environmental practice for Public Sector Consultants, a nonpartisan public policy research firm in Lansing. (Disclosure: The Center for Michigan, which includes Bridge Magazine, is a PSC client.) â&#x20AC;&#x153;Nobody really knows,â&#x20AC;? Bennett said. â&#x20AC;&#x153;It kind of surprises me we donâ&#x20AC;&#x2122;t know.â&#x20AC;? Michigan ranks among the worst states for number of outages caused by weather and downed trees, according to the Eaton report, but also for outages caused by power equipment failure and utility company human error. (More positively, Michigan ranked 12th in the nation last year in another study for its progress in modernizing its grid.) But a state utility official told Bridge that wind may not have been the only contributing factor to the widespread power outages that started March 8. Sally Talberg, chairperson of the Michigan Public Service Commission, said Michigan utilities have a lot of aging equipment. â&#x20AC;&#x153;Some is 80 years old,â&#x20AC;? Talberg said. Surrounded by water, Michigan is buffeted by high winds and thunderstorms that knock trees and limbs across power lines.

Talberg said the Public Service Commission, which regulates utilities in the state, has urged utility companies to be more aggressive in tree trimming in areas close to power lines, an often contentious process pitting trimming crews against homeowners trying to protect their trees. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;ve really emphasized making sure theyâ&#x20AC;&#x2122;re following through on trimming problem trees,â&#x20AC;? Talberg said. â&#x20AC;&#x153;(But) Michigan has a lot of trees outside the (utility company) right of ways,â&#x20AC;? limiting the trimming that can be done to protect power lines. Officials from DTE declined to comment for this story, citing continued focus on restoring power to those who lost electricity during the recent storm. Consumers Energy released a statement that said in part, â&#x20AC;&#x153;We have an active forestry program that has spent $88 million in the last two years to clear trees away from power lines. We also have spent $520 million over the last five years to strengthen our electric system and plan to spend $750 million over the next five years.â&#x20AC;? According to Public Service Commission data, Michigan homes suffer an average of one outage per year, with a total time without power under three hours.

such catastrophes, Talberg said. Consumersâ&#x20AC;&#x2122; Mary Palkovich, vice president of energy delivery, told Crainâ&#x20AC;&#x2122;s that without additional investments over the past several years in distribution system improvements, the number of customers losing power would have exceeded 364,000 of its 1.8 million electric customers. Palkovich said utilities usually make quick repairs to get lights working and later go back and make temporary fixes more permanent. DTE said it will â&#x20AC;&#x153;assess its infrastructure investment strategy once all customers are restored from the wind storm,â&#x20AC;? Randi Berris, DTEâ&#x20AC;&#x2122;s communications manager, said last week in a statement. More than 800,000 of DTEâ&#x20AC;&#x2122;s 2.1 million electric customers lost power for one to seven days.

MPSC asked DTE and Consumers to develop a five-year distribution improvement plan for maintenance and capital improvements. â&#x20AC;&#x153;We know we have an old system that needs upgrading,â&#x20AC;? Talberg said.

Power reliability projects Like Consumers, DTE has been on a multi-year program to modernize and improve its distribution system. In 2016, DTE spent more than $110 million on reliability projects on top of annual investments of $750 million for capital improvements and routine maintenance, DTE said. This amount is up more than $100 million from 2012, officials said. Reliability projects include replacing wood cross-arms with fiberglass designs, stronger wires, additional fuses on circuits to minimize numbers of outages, creating microgrids, expanding tree trimming, adding more switching devices that allow the company to close power lines and circuits for maintenance or when power needs to be redirected another direction to maintain electric supply. Earlier this year, Talberg said the

EXPERIENCE THE BENEFITS OF PRIVATE AVIATION. Whet Whether W Wh hethe h r you yo ar aaree tr trav traveling a el av e in ing fo ffor or bu bbusiness ussiinneess oorr le leis leisure, isur uree, pprivate rivate i i tit ll i ddetails t ill tto bbe customized t i d tto your aviation allows your ttrip unique requirementsâ&#x20AC;Śand itâ&#x20AC;&#x2122;s more affordable than you think. SECURITY FLEXIBILITY

COMFORT

EFFICIENCY

CONVENIENCE

SERVICE

PentastarAviation.com 888-426-8999 888 6 8999

ÂŠ2017 Pentastar AviationÂŽ. Air charter transportation services are provided by Pentastar Aviation Charter, Inc., D 8 6 )$5 3DUW RQ GHPDQG DLU FDUULHU RU E\ RWKHU 8 6 )$5 3DUW FHUWLĂ&#x20AC;FDWHG RQ GHPDQG DLU FDUULHUV arranged by Pentastar Aviation, LLC.

MAKE THE MOST OF YOUR EDITORIAL COVERAGE IN CRAINâ&#x20AC;&#x2122;S kbora@crain.com â&#x20AC;˘ (212) 210- 0750

with custom

Reprints, nts E-pmrior e! and

A F e e - O n l y We a l t h M a n a g e m e n t G r o u p

Michiganâ&#x20AC;&#x2122;s #1 Financial Advisor*

The â&#x20AC;&#x2DC;new normâ&#x20AC;&#x2122;? Ken Sikkema, senior policy fellow with Lansing-based Public Sector Consultants, told Crainâ&#x20AC;&#x2122;s the utilities have increased investments to improve their distribution systems over the past decade to replace aging infrastructure. But they have to be careful to balance the amount they spend on reliability improvements with the need to keep rates affordable. Sikkema, a former Republican state Senate majority leader, believes there should be a discussion in the Legislature and MPSC about whether more investment needs to be made to prepare for more storms. â&#x20AC;&#x153;We ought to look at the frequency of storms as the new norm,â&#x20AC;? he said. Dan Scripps, president of Institute for Energy Innovation, said Michigan utilities should spend more to upgrade aging equipment, create a more resilient grid and prepare for stronger storms. Over the past four years in rate cases, DTE and Consumers have moved from spending about 37 percent on generation and 21 percent on distribution to 32 percent on generation and 25 percent on distribution, Scripps said. â&#x20AC;&#x153;They are responding to the number and duration of outages,â&#x20AC;? Scripps said. â&#x20AC;&#x153;The question is are they responding fast enough to the criticism?â&#x20AC;? Jay Greene: (313) 446-0325 Twitter: @jaybgreene

Charles C. Zhang CFPÂŽ, MBA, MSFS, ChFC, CLU Managing Partner

Charles has been ranked in the top 10 on Barronâ&#x20AC;&#x2122;s list of Top 100 Independent Financial Advisors for 2015 and 2016, and is currently the highest ranking fee-only NAPFA-Registered Financial Advisor on the list.**

We Uphold a Fiduciary Standard 101 West Big Beaver Road 14th Floor Troy, MI 48084 (248) 687-1258 or (888) 777-0126

www.zhangfinancial.com Assets under custody of LPL Financial and TD Ameritrade. *As reported in Barronâ&#x20AC;&#x2122;s March 5, 2016. Rankings based on assets under management, revenue generated for the advisorsâ&#x20AC;&#x2122; firms, quality of practices and other factors. **As reported in Barronâ&#x20AC;&#x2122;s August 22, 2015 and August 27, 2016. Based on assets under management, quality of practices, revenue that advisors generate for their firms, and other factors. For fee-only status see NAPFA.org. Minimum Investment Requirement: $500,000 in Michigan/$1,000,000 outside of Michigan.

C R A I N ’ S D E T R O I T B U S I N E S S // M A R C H 2 0 , 2 0 1 7

MCQUADE FROM PAGE 3 www.crainsdetroit.com Editor-in-Chief Keith E. Crain Executive Vice President KC Crain Publisher/Editor Ron Fournier, (313) 446-1674 or rfournier@crain.com Group Publisher Mary Kramer, (313) 446-0399 or mkramer@crain.com Managing Editor Michael Lee, (313) 446-1630 or malee@crain.com Director, Crain Custom Content Kristin Bull, (313) 446-1608 or kbull@crain.com Product Manager/Marketing Kim Winkler, (313) 446-6764 or kwinkler@crain.com Deputy Product Manager/Digital Carlos Portocarrero (313) 446-6056 or cportocarrero@crain.com Membership Director Nancy Hanus, (313) 446-1621 or nhanus@crain.com News Editor Beth Reeber Valone, (313) 446-5875 or bvalone@crain.com Special Projects Editor Amy Elliott Bragg, (313) 446-1646 or abragg@crain.com Design and Copy Editor Beth Jachman, (313) 446-0356 or bjachman@crain.com Research and Data Editor Sonya Hill, (313) 446-0402 or shill@crain.com Newsroom (313) 446-0329, FAX (313) 446-1687, TIP LINE (313) 446-6766

REPORTERS Tyler Clifford, breaking news. (313) 446-1612 or tclifford@crain.com Annalise Frank, breaking news. (313) 446-0416 or afrank@crain.com Jay Greene, senior reporter Covers health care. (313) 446-0325 or jgreene@crain.com Chad Livengood Covers Detroit rising. (313) 446-1654 or clivengood@crain.com Kurt Nagl Breaking news. (313) 446-0337 or knagl@ crain.com Kirk Pinho Covers real estate. (313) 446-0412 or kpinho@crain.com Bill Shea, enterprise editor Covers the business of sports. (313) 446-1626 or bshea@crain.com Lindsay VanHulle, Lansing reporter. (517) 657-2204 or lvanhulle@crain.com Dustin Walsh, senior reporter Covers economic issues. (313) 446-6042 or dwalsh@crain.com Sherri Welch, senior reporter Covers nonprofits and philanthropy. (313) 446-1694 or swelch@crain.com ADVERTISING Sales Inquiries (313) 446-6032; FAX (313) 393-0997 Director of Sales Lisa Rudy Senior Account Manager Katie Sullivan Advertising Sales Christine Galasso, Gerry Golinske, Sharon Mulroy, Diane Owen Classified Sales Manager Angela Schutte, (313) 446-6051 Classified Sales Lynn Calcaterra, (313) 446-6086 Events Manager Kacey Anderson Marketing and Sales Promotions Manager Christina Fabugais-Dimovska Senior Art Director Sylvia Kolaski Special Projects Coordinator Keenan Covington Sales Support Suzanne Janik Media Services Director Geof Innis Media Services Manager Hussein Abdallah CUSTOMER SERVICE Main Number: Call (877) 824-9374 or customerservice@crainsdetroit.com Subscriptions $59 one year, $98 two years. Out of state, $79 one year, $138 for two years. Outside U.S.A., add $48 per year to out-of-state rate for surface mail. Call (313) 446-0450 or (877) 824-9374. Single Copies (877) 824-9374 Reprints (212) 210-0750; or Krista Bora at kbora@crain.com To find a date a story was published (313) 446-0406 or e-mail infocenter@crain.com Crain’s Detroit Business is published by Crain Communications Inc. Chairman Keith E. Crain President Rance Crain Treasurer Mary Kay Crain Senior Executive Vice President William A. Morrow Executive Vice President/Director of Strategic Operations Chris Crain Executive Vice President/Director of Corporate Operations KC Crain Vice President/Production & Manufacturing Dave Kamis Chief Financial Officer Bob Recchia Chief Information Officer Anthony DiPonio G.D. Crain Jr. Founder (1885-1973) Mrs. G.D. Crain Jr. Chairman (1911-1996) Editorial & Business Offices 1155 Gratiot Ave., Detroit MI 48207-2732; (313) 446-6000 Cable address: TWX 248-221-5122 AUTNEW DET CRAIN’S DETROIT BUSINESS ISSN # 0882-1992 is published weekly by Crain Communications Inc. at 1155 Gratiot Ave., Detroit MI 48207-2732. Periodicals postage paid at Detroit, MI and additional mailing offices. POSTMASTER: Send address changes to CRAIN’S DETROIT BUSINESS, Circulation Department, P.O. Box 07925, Detroit, MI 48207-9732. GST # 136760444. Printed in U.S.A. Contents copyright 2017 by Crain Communications Inc. All rights reserved. Reproduction or use of editorial content in any manner without permission is prohibited.

Trump), but we thought we’d have a few more months on the job. Most of us thought that meant until a nominee was selected. It was a little disruptive (to the office), but not unexpected. Was teaching at UM always in your plan?

I had been in talks for a long time and was planning to go there to teach in the fall. I went to law school there, and when I thought about what I wanted to do next, I knew I wanted to stay in public service. I have to feel like I’m making a difference and that’s what motivates me most. I have accumulated a wealth of knowledge over the past 25 years, so it seemed only natural.

INCENTIVES FROM PAGE 3

attractive and that companies don’t generally volunteer that information. Michigan isn’t unique when it comes to a lack of sunshine on economic development incentives. Timothy Bartik, a senior economist at the W.E. Upjohn Institute for Employment Research in Kalamazoo, this month published a report using data from 33 states that suggests incentives frequently are adopted for political reasons and the policymakers make decisions without solid information about whether they’re effective. “Any money you devote to an incentive is money you could have devoted to something else,” said Bartik, who found that incentives are expensive in many states, including Michigan, and don’t effectively target industries that pay the highest wages or invest in research. “My view is that states should be talking about more rigorously evaluating these programs.” Backers of increased incentives say Michigan needs them to compete. That competition is real, but there is strong disagreement on how to win, and whether taxpayer-funded incentives really matter much. Two bills that have cleared the Senate would capture some state income and sales taxes to help large real estate developments on contaminated, or “brownfield,” sites, and loosen the rules to allow companies in border counties — including Wayne County — to count workers who don’t live in Michigan as new hires to win state incentives for relocation or expansion projects. Sen. Jim Stamas, R-Midland, last week introduced legislation that would allow some companies to be refunded a portion of state income taxes paid for new hires if they create hundreds of jobs and meet certain wage requirements. Approval will be a battle. All three proposals died in the Legislature at the end of the last term in December. And after the Republican-led House in February voted down a plan to roll back the state’s income tax, perceptions could be a problem if lawmakers vote to give businesses a tax break instead. Opponents of the pending legislation believe Michigan should be

What do you remember as your most challenging cases?

Many of our cases were challenging, particularly in combating violent crime. But we developed a strategy that was effective. So while we’ve seen violent crime rise in other cities, it’s remained stable here. I’m proud of that. Clearly the Kilpatrick case was challenging — it was enormous and had to be pulled together in a way that was easy to understand and digestible for a jury. But we cleared the plates of our lawyers and helped those good lawyers do the case right. I’m very proud of that case. What made you confident in the Kilpatrick case?

As the investigation developed, there were surprises. Discovering able to compete on its business climate without having to subsidize select industries with taxpayer dollars. Snyder in 2011 replaced the unpopular Michigan Business Tax with a flat 6 percent corporate income tax rate, ending most of the state’s tax credit programs in the process. Critics of incentives often point to the defunct Michigan Economic Growth Authority program, which they contend was allowed to grow far beyond its original intent, saddled the state with $9 billion in future tax-credit obligations and caught budget administrators by surprise. Supporters of the bills, many of whom work in economic development, don’t disagree that MEGA became unsustainable. They believe low corporate taxes and fewer regulations are a fundamental economic base that Michigan needs, and by and large has achieved. But, they counter, Michigan will continue to lose projects if it doesn’t have an equal shot at the table. “Site selectors tell us they will weed out Michigan often times” if it appears Michigan does not have the same incentives as other states, said Doug Rothwell, president and CEO of Business Leaders for Michigan, the state’s business roundtable, who helped develop Stamas’ bills. “How many times has that happened? I don’t know, but if it happens even once, that’s too many.”

Separated by incentives A one-page document created as part of lobbying efforts for Stamas’ legislation, dubbed “Good Jobs for Michigan,” shows a map of the U.S. with a number of states highlighted next to news headlines about company decisions that would bring hundreds or thousands of jobs. For instance, in Tennessee: “VW SUPPLIER GESTAMP INVESTING $180 MILLION, ADDING 510 JOBS IN CHATTANOOGA,” reads a June 24, 2015, headline from the Chattanooga Times Free Press. Local leaders approved a property tax incentive for Gestamp. Neither document, however, says whether Michigan was in contention for the project. Michigan has a $100 million cash pool to support all projects in the state in a single year. That works well for small to midsized projects, but a

there were text messages was a major development. It came out of the separate case, when Gary Brown sued Kilpatrick and Christine Beatty for his dismissal. That was a good development and a total surprise. But really, the biggest surprise was the egregious nature of his offenses. Do you have any regrets?

Well, there’s plenty of cases left in process. When you’re invested in those cases that haven’t been finalized, you’re anxious about that. When you’re an attorney, there’s always another case you wish you could complete. But they’ll be done when they are ready to be done. The career prosecutors (at this office) will see them through to fruition. large attraction or expansion project would drain most, if not all, of the available resources, said Birgit Klohs, president and CEO of Grand Rapids-based economic development firm The Right Place Inc. Over the past 10 years, the state of Tennessee and city and county economic development teams offered hundreds of millions of dollars in incentives to German carmaker Volkswagen AG to build and expand a plant in Chattanooga. “We never stood a chance of getting VW, ever,” Klohs said.

‘Give away the store’ It’s possible that companies may already have a location in mind regardless of whether incentives are offered, but use incentives to try to get a better deal out of states, said Michael LaFaive, a fiscal policy director at the Midland-based Mackinac Center for Public Policy who opposes incentive programs. LaFaive doesn’t think incentives are effective or fair, because they redistribute money to businesses that first is collected from taxpayers. He said states like Ohio do more financial harm than good to their residents if they “give away the store.” “The incentives are going to run out someday, so the companies need to decide where they want to be when the incentives do end,” said LaFaive, who believes states should compete solely on their business climates. Many companies, he said, “pick the location first and then go shopping for some economic icing for their location cake.” Incentives aren’t the top reason any company chooses a site. Talent, land and facilities, infrastructure and utilities are more likely to be priorities of site selectors. But incentives can seal the deal, especially when it would be more expensive to operate in Michigan than another state.

Do you think you have a legacy?

People often have a bad opinion of government; that it can’t be effective or improve the quality of life. I hope we’ve demonstrated that government can be part of the solution. I hired great people that are dedicated to justice, so I think my greatest legacy will be the people I’ve hired. Do you see a future in politics or a possible judgeship?

Probably not politics, but I never say never. As a U.S. attorney, you do what’s right, not what’s popular. We’ll see what may come (as far as a judgeship), but this was never a stepping stone for me. This was always the destination and I am really proud that I have had the chance to serve. “To be competitive, you have to have incentives,” said Jennifer Nelson, MEDC’s executive vice president and chief business development officer. States like Ohio, Indiana, Wisconsin and Texas that are among Michigan’s main competitors for jobs offer tax exemptions that Michigan does not. The Texas Enterprise Fund is Texas’ main tool for business attraction. The cash program had an initial round of funding worth $295 million when it launched in 2003 and received another $90 million in 2015 to replenish it, according to a spokeswoman for the Texas Economic Development Corp. Gov. Greg Abbott, a Republican, asked for another $108 million for 2018-19. The Texas Enterprise Fund has given out more than $600 million in incentives since it was founded. In Wisconsin, the state’s economic development corporation said it awarded $197.3 million, mostly in grants and tax credits, in the 2016 fiscal year. Ohio offers a number of grants and loans, as well as a tax credit for job creation and a sales tax exemption for buying data center equipment. Job creation tax credits in Ohio apply to businesses that create at least 10 jobs within three years, with minimum annual payroll of $660,000, according to Ohio economic development data. Michigan tracks the outcome of every deal it offers, the MEDC said. The state offered 146 deals in 2016 and 101 were accepted, a rate of 69.2 percent, according to MEDC data. Agency spokesman Otie McKinley said the accepted deals listed in a given year could be the result of offers made a year earlier. Efforts to gather similar tracking data from Ohio, Indiana, Wisconsin and Texas were unsuccessful. Lindsay VanHulle: (517) 657-2204 Twitter: @LindsayVanHulle

INDEX TO COMPANIES These companies have significant mention in this week’s Crain’s Detroit Business: Airbnb Bedrock LLC

GEI Consultants Inc.

Meridian Health Plan

Blue Cross Complete

Priority Health

Consumers Energy

Regional Transit Authority

DTE Energy

UnitedHealthCare

Downtown Boxing Gym

C R A I N ’ S D E T R O I T B U S I N E S S // M A R C H 2 0 , 2 0 1 7

THE WEEK ON THE WEB MARCH 11-17

St. Joseph Mercy, UM explore Chelsea venture

he two biggest health systems in Ann Arbor, St. Joseph Mercy Health System and the University of Michigan’s Michigan Medicine, are exploring a joint venture that is expected to lead UM to a 49 percent investment in St. Joseph Mercy Chelsea Hospital. Rob Casalou, regional president and CEO of St. Joseph Mercy, said UM and St. Joe’s are expected to invest about $20 million in improvements in Chelsea. The community hospital would increase operating rooms to eight from six, boost operating beds from about 100 now to the licensed capacity of 133 beds and add minimally invasive robotic surgery. “The university is having access issues. Patients are not able to access UM because of capacity issues. We have excess capacity at Chelsea. We are doing well, but” have unused beds, said Casalou, noting that UM approached St. Joe’s about a year ago with an initial proposal. UM could invest in new towers, beds or partner with regional hospitals to increase capacity, Casalou said.

COMPANY NEWS J Work on the first of 18,600 seats inside Little Caesars Arena has started, in a $3.5 million installation project contracted with Grand Rapids-based Irwin Seating Co. The seats are reportedly all red, include cup holders, and are larger and more comfortable than the modest Joe Louis Arena seats. J Platinum Equity, the private equity fund founded by Detroit Pistons owner Tom Gores, has closed its fourth private equity fund, Platinum Equity Capital Partners IV, at its $6.5 billion hard cap, Pensions & Investments reported. The fund’s target was $4.5 billion. J The Stars & Stripes Festival is moving to Novi this year after 10 years in Macomb County. Funfest Events, which puts on the event, and Palace Sports and Entertainment could not reach an agreement to continue the festival at Freedom Hill Amphitheatre, where it had been held since 2013. J Metro Detroit Chevy Dealers will return as title sponsor of Detroit City FC for its third straight season, with the soccer team’s players donning home and away jerseys featuring the auto dealer group's logo. J Developers expect to break ground in early May on the $100 million City Modern Project in Detroit’s Brush Park. The Dan Gilbert-led project includes 107 for-sale units being developed by Farmington Hills-based Hunter Pasteur Homes and 303 rental units being developed by Detroit-based Bedrock LLC

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

63 percent

The percentage of Business Leaders for Michigan members who believe the state economy will improve over the next six months.

The number of events The Palace of Auburn Hills will need to host to stay open after the Detroit Pistons leave the facility for downtown, according to an executive with Palace Sports & Entertainment.

$50 million

The amount Southfield-based automotive supplier Chassix Inc. plans to invest to expand its operations to Eastern Europe. It plans to build a 140,000-squarefoot plant in Ostrava, Czech Republic.

and partners. J Google Demo Day March 30 in Detroit will give one business with a big idea the chance to pitch to Silicon Valley investors later this year. First, selected applicants must pitch their projects to a panel of judges, investors and peers at the event, which will take place at Grand Circus’ headquarters at 1570 Woodward Ave. J Elite Mr. Alan’s pivot to premium goods seems to have treated the sneaker and sports apparel retail chain well, as the company looks to open a West Bloomfield Township store on March 23, its first Detroit outlet store in May, and two other locations in Clinton Township and Grand Rapids. J Electro-Matic Ventures Inc., which is based in Farmington Hills and supplies high-tech automation components and services to U.S. manufacturers, has bought RAF Fluid Power, marking the company’s first acquisition. J Troy-based education technology company Alchemie, which develops

RUMBLINGS

mobile games, received a $700,000 Small Business Innovation Research grant from the National Science Foundation.

OTHER NEWS J Existing home and condominium sales last month fell sharply and median sale prices continued their upward trajectory. Year-over-year sales in metro Detroit dropped 8.4 percent from 3,685 in February 2016 to 3,375 last month, while prices rose 5 percent from $138,000 to $144,900. J The Michigan Strategic Fund approved a $42,000 grant to support Washtenaw Community College’s Advanced Transportation Center, which aims to train candidates entering the transportation industry workforce. J Michigan Attorney General Bill Schuette is taking action against VietNow National Headquarters Inc., an Illinois-based organization fundraising here and across the U.S., for what the office calls deceptive donation solicitations and spending donations improperly. J Businesses, nonprofits and others with innovative conservation ideas for farm or forest land can submit proposals for U.S. Department of Agriculture Conservation Innovation Grants of up to $75,000 until May 9. J Even though the home teams were knocked out early, year two of the Horizon League’s “Motor City Madness” tournament at Joe Louis Arena saw a jump in attendance from 20,908 last year to 29,240 this year, thanks to the addition of the women’s tournament to the venue. J Applications for the eighth round of Motor City Match are due April 1. The program awards $500,000 in matching grants to businesses each quarter using federal Community Development Block Grant funding.

OBITUARIES J John Graham, founder of Troybased prototype sheet metal supplier Al-Craft Industries Inc., died Feb. 12. He was 91.

CRAIN’S DETROIT BUSINESS

The Michigan Department of Natural Resources and Belle Isle Conservancy are seeking public input on a new management strategy for Belle Isle Park. The park’s caretakers will hold two public meetings from 2 to 4 p.m. or 6 to 8 p.m. on March 29 at the park’s Flynn Pavilion. Interested parties unable to attend the meetings can fill out an online questionnaire until April 7 at https://www.surveymonkey.com/r/belleisle2017

Next fall, The Palace of Auburn Hills will be without its main tenant, the Detroit Pistons, and its future hasn’t yet been decided.

Palace needs 4 events per month to stay open We now know the magic number for The Palace to remain open. An executive with Palace Sports & Entertainment spoke briefly at a Rochester Regional Chamber of Commerce luncheon last week about how the company will determine the Auburn Hills arena’s future. Palace Sports executives have said repeatedly that no determination has yet been made on whether the venue, which opened in 1988, will be demolished or continue to operate when its main tenant, the Detroit Pistons, move downtown. Senior vice president of consumer and premium sales Brad Lott said that the building needs to be used four times a month or that its infrastructure would deteriorate. The Palace is forecasting what viable opportunities, such as concerts, will be possible, he said. Lott said the kind of shows that will play at the DTE Energy Music Theatre in Independence Town-

ship, also owned by Tom Gores’ Palace Sports, won’t play at the much larger Palace. DTE has a capacity of more than 15,000, while the Palace has a capacity of up to 23,000, according to Palace Sports & Entertainment’s website. The 570,000-square-foot center averages about 200 events per year, about 20 percent of those being home games for the Pistons. However, many events now held at the Palace will want to book the new downtown Little Caesars Arena, which will give them the aura of novelty and the excitement that go along with something new. Lott said without a considerable amount of monthly events, it would not make sense to keep the Palace open. He pledged that the Palace will not become another Pontiac Silverdome. “If there aren’t enough concerts to fill, we are committed to redeveloping the land,” he said.

Poll shows Duggan with lead over Young An early poll for Detroit’s 2017 mayoral election next fall shows Mayor Mike Duggan with a wide early lead over challenger Coleman Young II. The poll, which offered respondents a choice between those two candidates, found Duggan with support of 46 percent of likely voters and Young with 21 percent; 29 percent said they were “unsure” and 4 percent said they supported another candidate, according to a news release from MIRS Newsletter, which commissioned the poll. The poll of 310 likely voters, conducted by Denno Research, had a margin of error of 6 percent. Some have speculated that Young, a Democratic state representive, could pose a serious challenge to Duggan, partly because of his name. His father, Coleman A. Young, was Detroit’s mayor from 1974 to 1994.

Coleman Young II: Running for mayor of Detroit.

Mike Duggan: Has lead in early polling.

Race has also been considered a factor in re-election for Duggan, Detroit’s first white mayor since that 1974 election. The poll found that 24 percent said having an African-American mayor in the majority African-American city was important or very important. Seventy-six percent said it was not very important or completely unimportant.

WE’RE LOOKING AT CRAIN’S DETROIT BUSINESS

WITH FRESH EYES…

YOUR EYES.

See how: crainsdetroit.com/innercircle