Crain's Detroit Business, May 8, 2017 issue by Crain's Detroit Business

MAY 8 - 14, 2017

Shinola Detroit dives into audio

Delphi spinoff: mobility bet in changing industry Supplier splits with Big Iron heritage. Page 3

Transportation

Champion, cash needed for growth

Page 8

Could QLine expand?

By Bill Shea

bshea@crain.com

t took a decade to get the QLine from an idea on paper to a streetcar on rails. The project survived amid the city’s political scandals and a historic municipal bankruptcy, and weathered an effort by the city, state, and federal government to kill it in favor of more buses. Expanding the QLine to run father north on Woodward Avenue, or on spur routes elsewhere in the city, may be a simpler and cheaper endeavor, the system’s CEO said, as the line prepares to start ferrying the public this Friday. “The next ones aren’t as expensive,” said Matt Cullen. “We had a lot more complexity.” What he means is that the nearly $200 million to get the $6.6-mile QLine loop designed, built, and running also provides much of the infrastructure needed for expansion. For example, already built is the 19,000-squarefoot Penske Technical Center in the New Center neighborhood. The $6.9 million facility serves as the maintenance, storage and operations nexus for QLine, and would for any expansion. SEE QLINE, PAGE 26

Inside

How safe will the QLine be for other drivers, pedestrians? Page 13 The new QLine streetcar takes a test run down Woodward Avenue. DANIEL MEARS/AP

Timeline of light rail in Detroit. Pages 13-16

Insurance

State targets L.A. Insurance for deceptive business practices

By Chad Livengood clivengood@crain.com

CRAIN’S DETROIT BUSINESS/CHAD LIVENGOOD

L.A. Insurance, under fire for its seven-day insurance policies, is also being pursued in court over claims it tricked customers into buying roadside assistance plans.

State insurance regulators have accused multiple L.A. Insurance agencies of deceptive business practices for allegedly tricking customers into unknowingly buying a roadside assistance plan to pad their profits — charges the company’s CEO claims have been invented by state investi-

gators “targeting us” for closure. Records obtained by Crain’s through a Freedom of Information Act request show the Michigan Department of Insurance and Financial Services has been investigating L.A. Insurance since at least 2011 in what appears to be a sweeping and ongoing probe of an insurance agency with a large presence in Detroit and other urban areas.

State investigators found L.A. Insurance’s roadside assistance plans could more than double the down payment through a sales tactic known as “sliding” in which an agent would not disclose the ancillary product or tell the customer the emergency towing service was a mandatory portion of the insurance premium when it was not. SEE INSURANCE, PAGE 24

NEWSPAPER

crainsdetroit.com Vol. 33 No 19

$2 a copy. $59 a year.

Short’s Brewing goes long << From humble dorm-room beginnings brewery becomes one of the state’s largest. Page 10

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 8 , 2 0 1 7

MICHIGAN BRIEFS

INSIDE BANKRUPTCIES

State confirms jobless fraud claims The state’s unemployment office has confirmed claims of benefits fraud in more than half of the cases it has re-examined after a computer wrongly accused thousands of Michigan residents of falsely receiving benefits. Fraud was found in about 52 percent of the 14,454 cases — a total of 7,582 cases — originally decided between 2013 and 2015 that have been reviewed to date, the Michigan Unemployment Insurance Agency said last week. A total of 6,872 cases, or 48 percent, were reversed for such reasons as the state obtaining additional information about a claimant or for its practice of averaging wages over a quarter. In all, the unemployment office plans to review approximately 28,000 cases that were flagged as fraudulent by a computer, a process that should be finished in July, the state said. Refunds were owed in 13 percent of fraud cases overturned to date, the unemployment agency said. The embattled unemployment agency is in the midst of a complete restructuring amid the fraud complaints, which have led to multiple lawsuits, and complaints about customer service.

JASON ROBINSON/GENERAL MOTORS CO.

Durant-Dort Factory One in Flint, where General Motors Co. founder William Crapo “Billy” Durant and partner Josiah Dallas Dort started the Flint Road Cart Co. in 1886.

GM opens restored Flint birthplace General Motors Co. opened the Durant-Dort Factory One in Flint on May 1 after four years of restorations, Automotive News reported. The factory is considered to be GM’s birthplace and the “epicenter” for the worldwide automotive industry, the automaker said in a statement. Factory One includes space to rent out for events, as well as a GM carriage-building and vehicle-manufacturing archive collection. In 1886, William Crapo Durant and Josiah Dallas Dort leased the factory to build carriages. Durant went on to buy Buick Motor Co. and then built GM in 1908. In 2012, Mark Reuss, GM’s executive vice president of global product development, purchasing and supply chain, and Kevin Kirbitz, the Factory

One operations manager, became interested in restoring the building. “Factory One sparked the global auto industry and was a catalyst in the formation of General Motors,” Reuss said in a statement. “It preserves the stories of the early visionaries who built a brand-new industry in this city, within the very walls of where it happened.”

House approves brownfield tax breaks The Michigan House approved legislation Thursday that would ease the cost of cleaning up and redeveloping brownfield sites across the state. The legislation, which the Senate approved in February and was backed by Detroit businessman Dan Gilbert, could soon be sent to Gov. Rick Snyder for his signature after reviewing House changes. The bills seek to help

developers clean up areas with environmental hazards. They allow developers to keep a portion of taxes generated from businesses and residents moving into the site. The main bill passed 85-22 with bipartisan support while others passed on 83-24 margins. Additionally, developers would be able to receive up to 50 percent of taxes generated from the sites for a maximum of up to 20 years. Developers could get no more than $40 million annually.

CALENDAR

CLASSIFIED ADS

DEALS & DETAILS

KEITH CRAIN

OPINION

OTHER VOICES

PEOPLE

RUMBLINGS

WEEK ON THE WEB

COMPANY INDEX: SEE PAGE 26

Corrections J On the list of largest law firms in Southeast Michigan and Greater Michigan in the April 24 issue, Honigman Miller Schwartz and Cohn LLP’s attorney counts were incorrect. Honigman has 211 attorneys in Southeast Michigan, 272 worldwide, and 37 in greater Michigan. The company is tied for ninth-largest in greater Michigan with Plunkett & Cooney PC. A corrected version of the list is at crainsdetroit.com/section/data_lists. J Ron Fournier's column on Page 8 of the May 1 issue referred to Gov. Rick Snyder by an incorrect title and incorrectly characterized $270 million in proposed budget cuts. The

$270 million is the total general fund reductions proposed by House and Senate Republican lawmakers. J In the May 8 Twenty in their 20s section, Amanda Lewan’s age was incorrectly listed as 29 on the photo inset. Lewan is 28. Also in Lewan’s profile, a quote was misattributed to Etrit Demaj. The quote was provided by Edi Demaj. J In David Alade’s profile on page 9, Alade was said to be a Brooklyn native. Alade is from Queens, N.Y. J In Stacey Matlen’s profile on page 11, Matlen’s LLC was incorrectly referred to as Fresh Share LLC. The company’s correct name is Fresh Fare LLC.

Grow your business at the West Michigan Procurement Summit. May 16, 2017 • DeVos Place Convention Center Join Pure Michigan Business Connect for a free, one-day matchmaking event in Grand Rapids, MI, as we connect suppliers and key purchasers from various industries under one roof.

150+

Sourcing Needs

Visit MichiganBusiness.org/PMBC for additional summit details or to register.

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 8 , 2 0 1 7

Auto suppliers

Delphi’s spinoff reflects changing auto industry By Dustin Walsh dwalsh@crain.com

Delphi Automotive plc’s paring of its powertrain business to focus on technology for autonomous and electric vehicles is the latest move by legacy auto companies to keep up with an industry expected to change rapidly as self-driving cars take to the roads. The Troy-based company announced last week that it would create two separate publicly traded

companies, one focused on powertrain components and the other on electrical architecture and electronics safety. The move is the culmination of years shedding old-line automotive parts businesses in favor of a technological focus, now highlighted by the push for autonomous vehicle technologies. The spinoff, which will be tax-free, is expected to be completed by March 2018, Delphi said. Current

Delphi Automotive plc split off its powertrain unit to focus on technology for autonomous and electric vehicles.

Delphi shareholders will hold stock in both companies. Since emerging from bankruptcy in 2009, the former General Motors Co. unit has divested its high-volume, low-margin automotive operations. In 2015, Delphi sold its thermal business to Germany’s Mahle GmbH for $727 million and sold its 50 percent stake in its Korea Delphi Automotive Systems Corp. Ltd. joint venture to its partner for $70 million. SEE DELPHI, PAGE 25

DELPHI

Health care

Services

Hospital finances improve, but changes loom

Trouble on tap

By Jay Greene jgreene@crain.com

Officials say recent improvements have cut notoriously long lines at Detroit Water and Sewerage Department payment centers.

PHOTOS BY JOEL KURTH/BRIDGE MAGAZINE

Detroit cites progress, but shutoffs actually rose last year By Joel Kurth Bridge Magazine

Camay Larry has a bucket under her gutter and tattoo over her heart. The bucket collects rainwater from the roof so she can flush her toilet. The tattoo reads “Cry Later” in cursive. It’s become a daily affirmation since the city of Detroit disconnected her water a few weeks ago. She says she needs to stay strong for her 1-year-old son, Juan. “What I’m going through right now, I have to laugh for my baby because he doesn’t know this isn’t normal,” said Larry, 24, whose house on the east side is filled with jugs she spends much of her days refilling. “I have to keep it together for him because, baby, we’re struggling. He doesn’t know he’s taking a bath in the sink, that I make his bottles from a (neighbor’s) garden hose or that I

break down every night and cry.” Larry bought the house for $3,500 in late 2015. Unbeknownst to her, she said, it came with a $3,400 water bill that is now her responsibility. This is life today in Detroit, a city that, since its historic bankruptcy, has abandoned its longtime practice of ignoring past-due bills in an effort to end what water officials called a culture of delinquency. When Detroit launched the aggressive shutoff campaign in 2014, drawing international attention, city officials pledged that shutoffs would decline after the initial blitz. But newly compiled city records obtained by Bridge Magazine through the Freedom of Information Act show that residential shutoffs last year jumped 18 percent over the previous year, to 27,552. SEE WATER, PAGE 23

Camay Larry has lived without running water for a few weeks because of a bill dispute.

MUST READS OF THE WEEK

More than One Campus Martius

Perks at work

Gilbert confirms a large addition to the former Compuware Building is being considered. Page 9

How second-stage companies recruit and retain talent. Page 17

Local hospitals continued to do well financially in 2016, despite shifting patient volumes to lower-paying outpatient and observation services, flat payer reimbursement, rising operating costs and regulatory burdens. Lower tax-exempt bond costs and a rising stock market boosted hospital system bottom lines, especially at Flint-based McLaren Healthcare, Detroit-based Henry Ford Health System and Southfield-based Beaumont Health. But uncertainty looms strong for hospitals as the Trump administration pushes to change regulations and payment formulas under the Affordable Care Act. Last week, U.S. House Republicans passed a bill that would rework many provisions of that 2009 law, commonly known as Obamacare. The Obamacare replacement still must pass the Senate, considered a high hurdle. Over the past several months, hospital and insurance company executives have strongly advised President Donald Trump and congressional Republicans against radically changing Obamacare provisions they have incorporated into their business models since 2010. “The biggest thing we are most concerned with is the (future of) Medicaid expansion, because we have 670,000 people in it and without it, they would not be insured,” said Pat McGuire, CFO of the seven-hospital St. John Providence Health System in Warren. SEE HOSPITAL, PAGE 26

SPI IN 4

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 8 , 2 0 1 7

INSPIRING DESIGN

COURTESY OF SOAVE ENTERPRISES LLC

An aerial rendering of the Corktown neighborhood.

Elton Park project construction to begin this week in Corktown By Kirk Pinho kpinho@crain.com

Fishbeck, Thompson, Carr & Huber, Inc.

IS EVERYTHING.

Take charge of your career with an MBA from Lawrence Technological University.

Anthony Soave’s sweeping mixed-use development in Corktown begins construction Monday. A ceremony will be held to break ground on the $150 million Elton Park project that’s planned to bring 420 apartments and 30,000 square feet of retail space to a 4.5-acre swath of the neighborhood west of downtown. The name comes from a park that was demolished in the late 1950s to make way for the John C. Lodge Freeway. The $45 million first phase of the project, announced last year, includes 151 apartments totaling 124,000 square feet, averaging 821 square feet, and just over 13,000 square feet of retail. That phase is expected to be complete by late summer 2018, according to the developer. The project has received $6.9 million from the Michigan Community Revitalization Program and construction financing from Comerica Bank and Huntington Bank. Contractors on the project are Eastpointe-based Monahan Construction, which is construction manager; the architecture firms of Detroit-based Hamilton Anderson Associates and Quinn Evans Architects, which has offices in Detroit and Ann Arbor; and Detroit-based The Roxbury Group, which is providing development services. Soave, president and CEO of Detroit-based Soave Enterprises LLC, purchased Checker Cab, which is

i Project-based instruction i Industry-savvy professors i On-campus or online Learn more at: ltu.edu/mba

admissions@ltu.edu

The first-phase buildings Checker Cab Building (redevelopment): Two floors of one- and two-bedroom lofts The Robertson (new construction): Four stories, 45 one- and two-bedroom apartments, retail. The Crawford (new construction): Five stories, 40 one- and twobedroom apartments, retail. 2100 Trumbull (new construction): Five live/work spaces, retail. 2120 Trumbull (new construction): Five live/work spaces, retail. 8th Street Row (new construction): 4 three-story attached rowhouses with 1,744 square feet each. Source: Soave Enterprises LLC.

expected to move to another Detroit location as part of the redevelopment efforts, in 2002. The next year, Soave started buying property surrounding the Checker Cab building, and has accumulated 18 parcels on Trumbull, Elizabeth, Brooklyn, Plum and Eighth streets, largely in 2003 and 2004, although a pair of additional properties in the development area were purchased in 2013 and 2014. Soave founded City Management Corp. in 1961 and built it into a multistate waste-management

The $150 million Elton Park project is planned to feature 420 apartments and 30,000 square feet of retail space. firm, selling it to Waste Management Inc. seven years later. His Soave Enterprises has varied business interests, ranging from metal recycling to industrial services and hydroponics. The Roxbury Group has been responsible for the redevelopment of the David Whitney Building and others in the last decade. Soave has developed large residential properties, including one under way in suburban Washington, D.C., where he is working on around 12,000 units in Louden County. He has also developed condominiums along the beaches of Naples, Fla. The company says it has a real estate development portfolio of approximately $2 billion in six states. Soave also has residential complexes in Michigan, including Huron Pointe in Huron Township, The Milltown in downtown Rochester, The Overlook in Rochester, The Moors of Oxford in Oxford Township and Tullamore in Oxford Township. Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

BANKRUPTCIES The following businesses filed for bankruptcy protection in U.S. Bankruptcy Court in Detroit April 28-May 4. Under Chapter 11, a company files for reorganization. Chapter 7 involves total liquidation.

J Harvest CCP LLC, 1315 Lone Pine Road, Bloomfield Hills, voluntary Chapter 11. Assets and liabilities are not available. J Joseph Berenholz, M.D., PLLC, 30445 Northwestern Highway, Suite 140, Farmington Hills, vol-

untary Chapter 11. Assets and liabilities are not available. J EPC Enterprises Inc., 4696 Dixie Highway, Waterford Township, voluntary Chapter 7. Assets and liabilities are not available.

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 8 , 2 0 1 7

OPINION

Safety push needed as QLine launches

etroit’s long-awaited streetcar line opens to the public on May 12. Consider it the driver’s permit phase; the QLine shares traffic lanes with motorists, pedestrians and bicyclists, and there are bound to be some bumps, if data from cities with similar systems are a guide. M-1rail.com, the line’s website, offers safety tips and diagrams, and downtown outreach has been largely through employers and the Downtown Detroit Partnership. But as Bill Shea reports on Page 13, some transit supporters fear outreach hasn’t been strong enough. We agree. A busy summer, with thousands of occasional downtown visitors, will be critical for the streetcar’s success. Employers, restaurants, the sports venues — all need to help educate visitors on safety and navigation tips. We suspect the push by M-1 Rail begins with the public opening. Meanwhile, expect to see some unhappy motorists who, accustomed to parking along Woodward Avenue for quick dashes into buildings along the route, find their vehicles towed. “Could be the most expensive latte you’ve ever had,” says Paul Childs, the laconic COO of M-1 Rail, who warns against parking over the streetcar track “just for a minute” to run into a coffee shop. Childs even had a FedEx truck towed last week after a fruitless 15-minute search for its driver. Parking in the right-of-way for the QLine earns tickets, fines, towing and storage fees that could approach $700, Childs told a group of government officials riding the cars in a test run last week. A lot is riding on the QLine’s success. Transit fans hope the QLine will whet the appetite among voters for expanded transit options in the region through the Regional Transit Authority, which narrowly lost a millage election last November. In retrospect, the RTA may have been smarter to schedule its millage for November 2018.

City Airport a worthwhile asset There is talk about closing City Airport and using the rather large piece of land for some other purpose. This is not the first time folks have talked about closing the airport, which has been serving the city of Detroit since the 1920s. What is now called Coleman A. Young International Airport has been a fixture in our city. It is a valuable asset that should be nourished, not abandoned. There are lots of cities that have an airport that primarily serves the business community such as Cleveland’s Burke Lakefront. One exception is Chicago’s Meigs Field, where Mayor Richard Daley bulldozed the runways in the dark of night. The airport has remained abandoned since then. The rumors of a casino on that site have seemed to be wrong, and the mayor’s dream, luckily, is dormant for now. City Airport has had a couple of feeble attempts to host a commercial carrier out of the airport, but it simply never caught on. The airport is a great magnet for corporations interested in locating in Detroit or doing business in our city. Whenever there is business activity in our city, like the North American International Auto Show or SAE, there seem to be quite a lot of visitors’ airplanes parked at City Airport. As our business community grows, the airport can become even more of an asset. Somehow I cannot imagine our mayor giving all the economic growth to Oakland County and its airport in

KEITH CRAIN Editor-in-chief

Waterford Township. I have no idea what the present and potential economic benefit is for the city, but it would seem reckless to abandon such an asset that could never be replaced. It seems hard to believe that this city is looking for large pieces of land. I always understood that there was plenty of land available; we were lacking the need on the part of someone who might like to build a huge manufacturing facility. We are still looking, and I am sure that we haven’t lost a factory because of a lack of land. I will be the first to admit that I am a pilot, although retired, and we’ve had an airplane at City Airport for at least a couple of decades. Having the airport close to downtown has given us a great reason to stay in Detroit. If there had been no City Airport, I wouldn’t have been surprised to see our company move out to Oakland County many years ago. City Airport is a unique and valuable asset for economic growth. To even consider closing it would be foolhardy. It deserves to be kept open, nurtured and promoted.

The business case against legislative term limits

ary Barra spent 34 years climbing the corporate ladder at General Motors before becoming the Detroit automaker’s first female CEO in 2014. She oversees a company of 225,000 employees across the globe that generated $166.4 billion in revenue last year. Jay Farner became CEO of Quicken Loans in February after 21 years with the mortgage giant, which saw its lending volume top a record $17 billion in 2016 under his leadership as president and commercial pitchman for a company with 16,000 employees. Gerry Anderson joined DTE Energy in 1993 as a vice president at the Detroit-based energy company and held several executive jobs before becoming president in 2004 and CEO the following year. DTE has a nationwide workforce of 10,000 and posted $10.3 billion in operating revenue in 2015. Tom Leonard spent four years representing a suburban Lansing state House district in Clinton County before being elevated to speaker of the House, a position that wields great power over a $55 billion annual state budget and 48,000 state employees. Leonard’s predecessor, Kevin Cotter, also spent four years as a state rep from Isabella County before being propelled into the speaker’s seat for a mere two years, before the state Constitution sent him home. With all the clamoring from businesspeople who want the government to be run like a business, why do we promote junior-level associates to be chief executive officers of the Legislature every two to four years? Because of term limits. In 1992, 59 percent of voters, fed up with career politicians in Lansing and Washington, took out their anger at the ballot box by imposing constitutional limits of three two-year terms for House members and two four-year terms for members of the Michigan Senate. The U.S. Supreme Court ruled the term limits on members of Congress were unconstitutional, and they got tossed out. The state term limits stuck. A generation later, the consequences of this ill-conceived experiment in government reform are showing up in nearly all facets of our state’s governance — or lack thereof. There’s little to no institutional memory among the elected members of the Legislature. Lobbyists, gubernatorial appointees and legislative aides — and former lawmakers working in those jobs — fill in the memory gaps for freshmen reps every two years. Not one member was around when Proposal A passed in 1994 — and few, if any, could explain how this constitutional amendment greatly changed the way property is taxed and public education is funded in this state. Term limits serve to insulate

CHAD LIVENGOOD clivengood@crain.com

House members from the consequences of their public policy decisions. One-third weren’t in office a year and half ago when the Legislature passed a $1.2 billion road funding bill that won’t be fully funded until 2021. In 2019, two-thirds of the House will have had no role in the Legislature’s decision to earmark $600 million of the $11 billion general fund for roads and bridges — a decision that will put a strain on the funding source for prisons, Medicaid, municipalities and public universities. By that time, thanks to term limits, just a dozen of the 38 current senators could still be office — if they get re-elected in 2018. The revolving door of term-limited legislators has certainly created new opportunities for more Michiganders to become involved in governing the state. For the most part, that’s a good thing for a representative democracy. But the Legislature hasn't exactly been attracting the highest quality of characters in recent years for a $71,685-a-year job that expires in six to eight years and no longer includes retirement benefits. In the past two years alone, one state senator went to jail for shooting up his ex-wife’s car (Virgil Smith of Detroit); two state representatives were caught in a bizarre sex scandal leading to the resignation of one and the expulsion of the other (Todd Courser of Lapeer and Cindy Gamrat of Plainwell, respectively) and another state rep (Brian Banks of Harper Woods) resigned as part of a plea deal with prosecutors over bank fraud charges. And Banks got elected to a district representing northeast Detroit and part of the Grosse Pointes with a rap sheet that includes eight felony convictions for writing bad checks and credit card fraud. His campaign slogan was literally “you can bank on Banks.” State Sen. Bert Johnson of Highland Park, was just indicted by a federal grand jury for allegedly putting a woman on his Senate payroll for a no-show $23,000 job to repay her for a $14,000 personal loan. While the sideshows of these mostly personal problems play out in the media, real and consequential issues facing this state go unnoticed. As the House was consumed in August 2015 with booting Courser and Gamrat from office, researchers were discovering lead in Flint’s water supply.

There are commission reports about the dire need to fix our broken infrastructure and poor-performing public education system piling up in Lansing. Another report from a gubernatorial commission on the future of Michigan’s economy is due out in May. But few elected members of the Legislature are paying attention with the term-limits clock ticking for them to find new jobs (many land gigs in local or state government or at lobbying firms after their time in office). Because they don’t have time. When the newly elected class of nearly 40 House members arrives in Lansing every other January, the ones who want to be committee chairmen or take leadership posts quickly start making their moves. Leonard went from being an assistant prosecutor in Genesee County in 2012 to running the state House this year. He succeeded Paul Opsommer, who went from being House Transportation Committee chairman in 2012 to a lobbyist for Ambassador Bridge owner Manuel “Matty” Moroun weeks after he was term-limited from office. Now Leonard is reportedly eyeing a run for attorney general in 2018 — because he can't run for re-election to the House again. In a matter of five years, Cotter went from private sector law practice to a rocky two-year term as speaker of the House that may be best remembered for pushing Courser and Gamrat out of the Capitol. Both Leonard and Cotter are both perfectly qualified public servants. But they simply have had no time to gain the kind of experience on the job that Barra, Farner and Anderson got before being elevated to the CEO’s seat. Senate Majority Leader Arlan Meekhof got a little more on-the-job training. The Ottawa County Republican is in the third year of a four-year term leading the Senate. In his first four-year Senate term, Meekhof was the majority party's floor leader — the business equivalent of chief operating officer — after serving two terms in the House. Meekhof used a business case for at least lengthening term limits during a recent fiscal policy summit in Lansing. “If you had a $55 billion company and told investors every six years you’re going to bring in new people that haven’t done this very much, how likely are people to invest in that business?” Meekhof said, according to The Detroit News. “It's very uncertain.” Meekhof’s point is something for the likes of Barra, Farner, Anderson and their respective boards to think about. If uncertainty is really the anathema of businesspeople, why stand by and let our state government be run with a constant churn of leadership uncertainty?

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 8 , 2 0 1 7

Investing in children now benefits all in the future At a corporate event this March, I discovered that former junk bond king Michael Milken has now fashioned himself into one of the country’s leading advocates for medical research. During his speech, Milken made it clear that the health and education of our children were the greatest threat facing the U.S. economy. I could not have agreed with him more. As the board chair for the Downtown Boxing Gym youth program, I have seen the benefits of investing in that health and education. The state of Michigan spends about $2 billion a year on our department of corrections, about $45,000 per inmate and about $200 per year for every man, woman and child in our state — spent on prisons. Most researchers estimate the direct costs of homelessness are about $20,000 per person per year (medical bills, police, emergency response, temporary aid, etc.). Only about 60 percent of Detroit’s children graduate high school. About one in four African-American male dropouts are incarcerated. Wouldn’t it be so much better for all involved if we invested in vulnerable children and help them realize their full potential — thereby helping them become taxpayers themselves? Meanwhile, our budget at the boxing gym is about $5,000 per student per year. The boxing gym, open since 2005, was founded by Coach Khali Sweeney — a man who saw a need in his community, and did what he could to address it. The gym provides Detroit’s kids with a safe alternative to the streets. It’s much more than a place to learn how to box. Here, kids can come to train, study and meet accomplished adults who expand their capacity to envision their future careers. Coach initially ran the gym with his personal savings. When those funds were exhausted, he sold anything and everything else he had to keep the doors open. For a long period, the gym was where he slept. Coach has never asked parents for money. In 2010, Jessica Hauser visited the gym. Jessica, a cellist and PhD student at Oakland University, thought she was going to learn how to box. Instead, the visit became a pivotal moment in her life. She saw how boxing spoke to the children. She saw how attentive and well-behaved they were, and how they responded to Coach Khali. Jessica dropped everything and became the executive director of the gym. And in doing so, sold many of her own possessions — including her cello — to keep the gym afloat. An article by Sharon Luckerman in the Detroit Jewish News in 2012 made its way to my employer, Rock Ventures. Coach and Jessica came looking for help finding a permanent location for the gym. An old car wash near Eastern Market had housed the gym. The building was condemnable, the program was outgrowing it, and the landlord was difficult. Someone asked me to look into helping; they wanted a budget guy to look into the financials. Then it was my turn to visit the gym and fall in love with the mis-

OTHER VOICES Matthew Roling

Business development director, Rock Ventures LLC; chairman of the board, Detroit Boxing Gym sion and the visionaries toiling away. In the fall of 2013, the gym was con-

sidering buying a new building at 6445 East Vernor Highway that would become a permanent home. The first time I walked in, there were tools and debris everywhere, chemical stains on the floor, possible asbestos. But the price was right. It was hard for me to visualize how we could turn that building into something special. Now, the building has found a second life as an after-school program. Since purchasing and rehabbing the building, our budget, staff and enrollment have grown several fold. We now serve almost 140 Detroit children, with a waiting list of over 600.

So many of the children the gym serves are trapped in the type of poverty that is cyclical, generational and deeply psychological. There are no silver bullets to remedy it. Youth development takes patience, good nutrition, healthy bodies, academic support, accountability, encouragement and love. Michael Milken was definitely onto something when he spoke about bodily health, but for the gym that’s a vitamin swallowed in support of academic health. Beyond moral calls to act, ending poverty is about the economic benefit we receive. When we invest in helping

ATTENTION

LOCAL TRAILBLAZERS:

LAST CHANCE TO

NOMINATE! Crain’s Detroit Business is now 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. Winners will be profiled in the Oct. 2 issue of Crain’s and honored at an awards event in November. If you consider yourself a trailblazer or have been inspired by one, we invite you submit a nomination to Crain’s 40 under 40.

SUBMIT A NOMINATION TODAY

at crainsdetroit.com/nominate Nomination Deadline: May 17

impoverished children we prevent them from growing into impoverished adults. Coach and Jessica have had over 300 children pass through their doors. 100 percent of them have graduated high school and over 95 percent of them have gone on to a college or trade school. None are in a penitentiary. None are homeless. Capitalism and investing should be about acting for more than profit. When we recognize that investing in our children is not only the right thing to do, but also economically the smart thing to do, all of us will be richer for it.

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 Y 8 , 2 0 1 7

Shinola Detroit dives into audio with turntables, and headphones on way

One Of The Worldâ&#x20AC;&#x2122;s Top Sandler Training Companies

Learn how to create an ELITE team to take your company to the next level! Murray Feldman

WWJ Business Editor

Featuring Gerry Weinberg

Alana Nicol

CEO of President of Gerry Weinberg & Associates, Inc.

If youâ&#x20AC;&#x2122;re a CEO, President or Business Owner, who is: â&#x20AC;˘ frustrated with unpaid consulting and how long it takes to close business? â&#x20AC;˘ unsure your existing salespeople have what it takes to grow your company? â&#x20AC;˘ disappointed that your vision isnâ&#x20AC;&#x2122;t met?

Wednesday, May 17th 11:30 AM â&#x20AC;&#x201C; 2:00 PM Andiamo Bloomfield Twp. Investment: Sponsored by Gerry Weinberg & Associates and WWJ Newsradio

To Register or For More Information, Visit: www.gerryweinberg.sandler.com or Call (248) 353-4030 | RSVP Required Registration must be confirmed by a team member from Gerry Weinberg & Associates, Inc.

Your trust. Your triumphs. We care about both. Weâ&#x20AC;&#x2122;re here to help. If you are in VHDUFK RI ĂąH[LEOH Ă°QDQFLQJ VROXWLRQV IRU \RXU EXVLQHVV WDON WR XV DERXW DVVHW EDVHG OHQGLQJ

&RQWDFW 0LNH 6HPDQFR WRGD\ (248) 658-1100 KLWDFKLEXVLQHVVĂ&#x20AC;QDQFH FRP

By Kurt Nagl knagl@crains.com

Shinola/Detroit LLC has a knack for things that spin. The hands of a watch, wheels of a bicycle and now vinyl on a turntable. The company is expanding its audio division, launched in 2015 inside 1,500 square feet of space at the Shinola Detroit store in Midtown. Neighboring the store is Jack Whiteâ&#x20AC;&#x2122;s Third Man Records, where the Detroit native and former White Stripes front man opened a 10,000-squarefoot vinyl pressing plant in February. â&#x20AC;&#x153;It makes sense to bring music back to Detroit,â&#x20AC;? said 38-year-old Alex Rosson, a self-described audiophile heading up Shinola's audio division since it started in 2015. â&#x20AC;&#x153;They had a vision and it aligned with what I was interested in. It was very grandiose and gave me free reign.â&#x20AC;? Shinola moved audio operations out of the store in February to the company's factory headquarters in the A. Alfred Taubman Center for Design Education building. Rosson said he regrets moving out just as Third Man opened its vinyl plant, but he still plans to partner with the company eventually. Thatâ&#x20AC;&#x2122;s only one line on a long list of objectives, though. Rosson is from Los Angeles. In 2008, he co-founded Audeze, where he worked for seven years crafting high-end headphones and building the brand. After the company underwent a round of investments, he said he was ready to move on. He now spends the majority of his time in Detroit, but travels back to the West Coast to keep tabs on the research and development arm of Shinolaâ&#x20AC;&#x2122;s audio division. The plan is to move the 12 employees in Los Angeles to Detroit, where all operations will be in one location. â&#x20AC;&#x153;A lot of people think weâ&#x20AC;&#x2122;re taking advantage of the name,â&#x20AC;? Rosson said, referring to Detroit. â&#x20AC;&#x153;But I think Detroit needs that. Itâ&#x20AC;&#x2122;s a message that we got to do this together if weâ&#x20AC;&#x2122;re going to do it.â&#x20AC;? Again, itâ&#x20AC;&#x2122;s about taking one thing at a time, Rosson said, gesturing at the factory floor, which seems tidy enough for everyone but him. He wears dark, thick-rimmed glasses and a long black ponytail. Heâ&#x20AC;&#x2122;s a perfectionist, a hi-fi fiend and obsessed with delivering studio-quality sound to listeners. â&#x20AC;&#x153;I like to run a tight ship,â&#x20AC;? he said. â&#x20AC;&#x153;My plan â&#x20AC;&#x201D; once I get a minute to breathe â&#x20AC;&#x201D; is to tap into Detroitâ&#x20AC;&#x2122;s music community.â&#x20AC;? The new audio division is 5,000 square feet on the fourth floor of the College of Creative Studies-owned building, which along with the fifth floor makes up Shinolaâ&#x20AC;&#x2122;s factory headquarters. There are 19 workers at the audio plant, some of whom Rosson recruited while others came from Shinolaâ&#x20AC;&#x2122;s leather and watch divisions.

KURT NAGL/CRAINâ&#x20AC;&#x2122;S DETROIT BUSINESS

Alex Rosson, 38, is a self-described audiophile heading up Shinola/Detroit LLCâ&#x20AC;&#x2122;s audio division since it started in 2015. As Rosson explained his plans to continue expansion of the division, a White Stripes record spun on a Shinola Runwell Turntable in the corner of the plant. The record player was a special edition for Black Friday, one of two turntables released in November and on sale at the companyâ&#x20AC;&#x2122;s store and website and some audio retailers. They took about a year to develop, Rosson said. The company doesnâ&#x20AC;&#x2122;t release revenue figures or client information, but Rosson said the factory produces 20-25 turntables per day and has so far produced 1,000. Rosson said 90 percent of the turntable assembly takes place in the Shinola factory in Detroit, with the rest assembled by American Board Assembly in California. All of the parts are top of the line, he said, and they try to source as much in the U.S. as possible, but â&#x20AC;&#x153;inevitably, we have to get parts overseas because itâ&#x20AC;&#x2122;s environmentally and financially responsible.â&#x20AC;? The leather and decorative components are produced in Shinolaâ&#x20AC;&#x2122;s leather factory. The Runwell Turntable costs $2,500 and unlike many other record players, it is â&#x20AC;&#x153;calibrated and optimized out of the box.â&#x20AC;? Rosson likens it to fine architecture. "Buildings and homes that are mass-manufactured and slapped together begin to decay before the paint is even done drying," he said. "But look around you, there are buildings in every direction in Detroit that have been here a hundred years because of the people behind them, how they were engineered, how they were thought out, how they were built. They have a soul and they were built to last." That's what separates Shinola audio from competitors, he said. For $1,500 the company also sells bookshelf speakers to pair with the turntable. All the electronics and assembly for the speakers is handled by American Board Assembly. It is all part of Rossonâ&#x20AC;&#x2122;s desire to control and perfect his audienceâ&#x20AC;&#x2122;s listening experience.

â&#x20AC;&#x153;I come from the crazy audiophile world where itâ&#x20AC;&#x2122;s about music as a ritual bringing people together,â&#x20AC;? he said. He knows the high price limits his audience, but he said heâ&#x20AC;&#x2122;s not too worried about getting them off the shelf. â&#x20AC;&#x153;People will buy into the beauty and ease of setup, and it should be the last turntable you ever buy,â&#x20AC;? he said. Rosson said his vision is far from complete and the new factory is simply a stepping stone. He has an ambitious goal of moving the division into an old 20,000-square-foot creamery at 634 Selden St. He said the company bought the space as soon as he gave it the OK. Terms of the purchase and plans for buildout were not available, though Rosson said he is looking to move there in the next year and a half. Also in the works are headphones, Rossonâ&#x20AC;&#x2122;s bread and butter. The Canfield line is expected to be available by the end of the year, Rosson said, and at $1,000 a pair he expects them to be the main revenue driver for the division. â&#x20AC;&#x153;Jewelry for the ear,â&#x20AC;? he called them. "We engineered it to last, hand selected every component with purpose, worked with the best, and built something very special," he said of the audio products. "And even when it was done, we werenâ&#x20AC;&#x2122;t. We spent months fine tuning the profile, revising it, perfecting it." For now, the focus is on the turntable and convincing consumers Shinola does audio, too, and does it well. Larry Sanders, 61, of Detroit, works in the audio divisionâ&#x20AC;&#x2122;s quality assurance. He came from the leather department, where he had been for three years. He grew up around turntables and wanted to see â&#x20AC;&#x153;what makes them tick,â&#x20AC;? he said. A while back he brought home a turntable he helped build at the factory, but refrained from setting it up right away. â&#x20AC;&#x153;Iâ&#x20AC;&#x2122;m saving it for the family to get together,â&#x20AC;? he said. â&#x20AC;&#x153;Then Iâ&#x20AC;&#x2122;ll put on some Stevie Wonder or Fleetwood Mac.â&#x20AC;?

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 8 , 2 0 1 7

One Campus Martius, constructed in 2003, is owned by a 50-50 joint-venture between Dan Gilbert’s Bedrock LLC and Detroit-based Meridian Health, which purchased it from Compuware Corp. at the end of 2014 for $142 million.

COSTAR GROUP INC.

This undated photo shows the northern portion of One Campus Martius where a large addition could be built.

Gilbert confirms plans for large addition to One Campus Martius By Kirk Pinho kpinho@crain.com

Dan Gilbert confirmed that he plans to build an addition to the One Campus Martius building downtown where his Quicken Loans Inc. makes its headquarters. In an interview last week with Crain’s, Gilbert did not elaborate on size or timeline for construction, but when asked about the potential for an addition to the 1 million-square-foot building he and Detroit-based Meridian Health purchased for $142 million in 2014, he said, “I’d say you’re on the right path on that.” Crain’s reported in March that recent behind-the-scenes discussions had taken place about adding around 250,000 square feet to the building on its north side, according to one source. Two other sources confirmed discussions but did not know the size of the planned addition. The building at 1050 Woodward Ave., formerly the Compuware Corp. headquarters, has 15 stories of office and retail space, but there is a northern section that is just three stories tall that could accommodate an addition. It would be one of several new building projects that Gilbert, who has emerged as the city’s most prominent landlord and developer in the last five years, has in the works. Included in his development pipeline is a $775 million project on the 2-acre site of the former J.L. Hudson’s department store immediately north of One Campus Martius and a twoblock development immediately east of the building with office and residential towers. In addition, he and Detroit Pistons owner Tom Gores plan a $1 billion Major League Soccer stadium and mixed-use development with three 18- to 28-story towers for office, residential and hotel space on the site of the half-built Wayne County Consolidated Jail site. A 400 unit-plus residential development is underway in Brush Park and his team has also been in talks with General Motors Co. about a 10acre development along the Detroit River.

BEDROCK LLC

Three generations and counting, on you. For a family’s wealth to sustain ensuing generations, its capital has to grow and its management must remain stable. The Family Office at Greenleaf Trust helps affluent families achieve those goals, and so many more. We capably serve at every level of the wealth continuum, harnessing the most robust technologies, sophisticated investment platforms, and comprehensive reporting tools. All the while providing remarkably personalized service. It’s no wonder Greenleaf Trust has grown to nearly $9B in assets under advisement in just 18 years. We know family matters—in every meaning of the phrase. Give us a call to learn how we can serve yours.

3 4 9 7 7 wo o dwa r d av e n u e b i r m i n g h a m , m i 4 8 0 0 9

g r e e n l e a f t ru st. c o m

248.530.6200

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 8 , 2 0 1 7

SPECIAL REPORT: CRAIN’S MICHIGAN BUSINESS

Short’s Brewing Co. is on track to brew 55,000 barrels of beer this year, up from 48,000 barrels last year and 39,000 in 2014.

COURTESY OF SHORT’S BREWING CO.

No stopping Short’s Craft beer powerhouse expects to brew 55,000 barrels this year By Tom Henderson thenderson@crain.com

From humble beginnings, Joe Short has created a craft beer powerhouse, with revenue expected to jump from about $17 million last year to $20 million this year. Short’s Brewing Co. is on track to brew 55,000 barrels of beer this year, up from 48,000 barrels last year and 39,000 in 2014 in its continually-expanding brewery in Elk Rapids, a tourist town on Lake Michigan north of Traverse City. In nearby Bellaire, Short’s has a big and bustling brew pub as well as a popular restaurant and a retail store called Short’s Mart, where fans can buy Short’s-branded beer steins and glasses, golf shirts, hats, hoodies, jackets and T-shirts. About 7,500 barrels of Short’s beer will be distributed this year in Illinois, Indiana, Ohio, Pennsylvania and Wisconsin. Short’s employs about 150 year-round and 200 in the summer. Depending on the definition of what makes a brewer a “craft” brewer, Short’s is either No. 2 or No. 3 in Michigan. Bell’s Brewery Inc. is the clear leader, with a capacity to brew one million barrels a year. Founder’s Beer in Grand Rapids has capacity of about 900,000 barrels. But Short and others in the beer industry, including the national Brewers Association, say Founder’s lost its craft brewery status when it sold a 30 percent stake of the company to Ma-

hou San Miguel, Spain’s largest brewery group, in 2012. The association limits ownership by larger brewers to a maximum of 25 percent for brewers to retain the craft designation. When Short began brewing beer, he wasn’t thinking craft beer mini-empire, farm-to-table dining or souvenir shops. He was under the legal drinking age, and he was just thinking about getting beer. As a sophomore at Western Michigan University, he made a practical decision: “It was easier to make beer myself than find someone to buy it for me,” said Short. “Then, I wanted to make it drinkable. And then I wanted to make it really drinkable,” said Short, his old-fashioned handlebar mustache seeming to extend his smile. Short liked brewing his own beer well enough to leave college his junior year, subsequently getting jobs at breweries in Traverse City, Jackson and Webberville. But he said it was at another job that he decided his love of beer, and brewing beer, might actually become a career. He was working as a bus boy at the Dockside, a popular bar and restaurant on the western shore of Torch Lake near the tourist town of Alden, washing glasses and listening to two customers arguing philosophy. One made a point that resonated with Short: If you’re going to do something for a living, do something you enjoy.

TOM HENDERSON/CRAIN’S DETROIT BUSINESS

Joe Short (left), Leah Short, and Scott Newman-Bale of Short’s Brewing Co. In 2002, Short, who was then 22, registered Short’s Brewing Co. as a business in Michigan. In 2003, he began renovating a 120-year-old hardware store in downtown Bellaire, where he opened his brew pub in April 2004 with a seven-barrel brewing system. (There are 31 gallons in a barrel.) Short is CEO. The other title, his favorite, is creative engineer, with an emphasis on “creative.” “We’ve got 400 beers in our portfolio,”

says Short. Only a small percentage are made at any one time. Short’s wife, Leah, has the title of visionary. She created the restaurant menu and oversees deli operations. Leah had been water-ski buddies with Joe and worked at a marina adjacent to the Dockside when he was washing dishes there. She worked at the brew pub on a volunteer basis. SEE SHORT’S, PAGE 11

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 8 , 2 0 1 7

SPECIAL REPORT: CRAIN’S MICHIGAN BUSINESS

Microbiological Testing Services FOOD | WATER | PHARMA | STERILITY | COSMETIC

Analytical & Chemical Testing

“Verifying Purity, With Value” FOOD TESTING

COURTESY OF SHORT’S BREWING CO.

Short’s makes beers in categories it labels as flagship beers, specialty beers, seasonal beers, pub beers, private stash beers and imperial-series beers.

SHORT’S FROM PAGE 10

“I did random things in exchange for food and beer,” she said. Leah thought the summer of 2005 would be her last in Michigan. The plan was to go to graduate school in Montana, but she and Joe started dating, she traded school for marriage and the beer business and began running the brew pub in 2006. In 2008, Short bought a former factory in an industrial park on the outskirts of Elk Rapids to expand operations and began shipping beer made there the following March. Every label was affixed by hand. Today, a $2 million bottling line automates the bottling and labeling process; the facility has undergone eight expansions and now occupies about 25,000 square feet. In 2004, Short’s brewed a total of 324 barrels. Today, it does that volume every two days. There are about 13.8 cases of beer in a barrel, 55 six packs and 331 bottles. Scott Newman-Bale, who moved to the U.S. from England in 1999, is a partner and head of business development. Short’s website says that while Joe’s focus is “on the next big thing to excite craft beer fans in Michigan,” Newman-Bale is “the guy who found a way to fund such projects and make them financially viable.” He is also treasurer of the Michigan Brewers Guild. Tony Hansen, who met Joe Short at a home-brew club meeting in 2006, is the head brewer. Short’s makes beers in categories it labels as flagship beers, specialty beers, seasonal beers, pub beers, private stash beers and imperial-series beers. Flagship beers include Bellaire Brown, an American brown ale; Huma-Lupa-Licious, an India pale ale; Soft Parade, a fruit rye ale; and Space Rock, a gluten-reduced American pale ale. Specialty beers include Alien Einstein, a pale lager; Beach Wheat; Aorta Ale, an amber ale; Bim Bam Boom,

a stout; Black Cherry Porter; Bludgeon Yer Eye, a black IPA; Celestial Critter, a Belgium blonde ale; Chocolate Covered Strawberry, a brown porter; Controversius Maximus, a double IPA; Empress Catherine, a Russian imperial stout; Key Lime Pie, a fruit beer; and Twisted Cain, an American black ale. As if making hundreds of beers wasn’t diversification enough, in 2014, Short’s began selling 10 different ciders under the Starcut Ciders brand. The brewery has also diversified into selling spent yeast to operators of wastewater treatment plants (the yeast eats microbes) and used grain to local vintners to use as mulch. Short’s only setback came in 2012 when Joe tried to buy a 100-year-old former Bech’s Mustard factory adjacent to the marina near downtown Elk Rapids. He wanted to renovate the building to create a second brew pub, put in some public boat slips and help incubate three food startups. The Elk Rapids planning commission held hearings but wasn’t swayed either by Short’s plans or the crowds of supporters who showed up to voice approval in 90 minutes of public comment. The commission turned down the proposal, and the morning after the vote, a contractor leveled the old factory. Today the site serves as a green space. “It’s not even nice grass,” said Leah. “They had their mind made up. They didn’t want us there,” said Joe, who said he had budgeted $1 million on the renovation. Elk Rapids’ loss was Bellaire’s gain. The Shorts decided to expand there, instead. In December, Short bought the former home of the Antrim Review newspaper next door to his brew pub and began an expansion that will add 150 seats to the previous capacity of 208. They will also convert their original Short’s Mart retail store into a business incubator after they move the store into a former pharmacy downtown they are renovating. Twitter: @TomHenderson2

Micro Bio offers a wide variety of food testing following FDA-BAM, USDA, AOAC/FSIS guidelines, assuring you are provided the results on time, and within compliance.

ENVIRONMENTAL MONITORING

PERSONAL CARE PRODUCT & PHARMACEUTICAL TESTING

Micro Bio provides services for monitoring your work process environment and assists with designing an Environmental Monitoring Program that can be adapted to your HAACP plan.

Micro Bio offers Rapid Testing Service through our validated BD FACS Microcount flow-cytometer equipment, as well as traditional testing through USP compendia. CFR, cGLP and ICH guidelines are followed.

ISO/IEC 17025:2005 FDA Registered / Audited FEI # 100011551 MDEQ Certified Laboratory # 9979 Accreditation #77268

Micro Bio 1925 W. Maple Road Troy, MI 48084 (248) 288-6098 www.microbiollc.com

Jessica Korda • Tickets • Corporate Hospitality • Pro-Am • Sponsorship Opportunities

Visit volviklpga.com or call 734.707.0789

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 8 , 2 0 1 7

CALENDAR WEDNESDAY, MAY 10

REinvest Michigan. 8-9:30 a.m. Troy Chamber of Commerce. Economic update: Paul Traub, senior business economist, Federal Reserve Bank of Chicago – Detroit Branch; Panel discussion to follow: Matthew Farrell, CEO, co-founder, Core Partners; Jennifer Nelson, chief business development officer, Michigan Economic Development Corp.; and Traub. Moderator: Daniel Duggan, vice president – origination, Bernard Financial Group. Altair Engineering, Troy. $25 members; $40.00 nonmembers. Website troychamber.com

UPCOMING EVENTS

Best Practices for Managing Competing Rights in the Workplace. 9 a.m-noon. May 16. Nemeth Law PC. Attorneys will discuss best practices for employers in today’s charged workplace climate. Topics include: Policing Politics: polarization in the workplace; Controlling the Conversation: protected speech or hostile work environment? Culture Clash: diversity decisions that divide;

Reasonably Unreasonable: when accommodating one employee disadvantages others; Religious Freedom Restoration Act: when do the employer’s religious beliefs become a defense to discrimination claims? Management Education Center, Troy. $75. Contact: Pamela Perkowski, phone: (313) 567-5921; email: pperkowski@nemethlawpc. com; website: www.nemethlawpc. com Automotive Roundtable: Staying Relevant in a Time of Revolutionary Industry Transformation. 5-8 p.m. May 17. Marketing and Sales Executives of Detroit. Panelists include: Julie Martin, vice president sales, Hella; Jim Seta, global vice president, automotive bearing sales, SKF USA - Automotive. Moderator: Glenn Stevens, vice president, MICHauto, Detroit Regional Chamber. Marriott, Southfield. $50 member; $65 nonmember. Website: www.msedetroit.org Tech Takeover: Ransonware Rescue Manual. 8:30-10:30 a.m. May 24. Automation Alley. A cybersecu-

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

Michigan’s #1 Financial Advisor* Charles C. Zhang CFP®, MBA, MSFS, ChFC, CLU Managing Partner

Charles has been ranked in the top 10 on Barron’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 Barron’s March 4, 2017. Rankings based on assets under management, revenue generated for the advisors’ firms, quality of practices and other factors. **As reported in Barron’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.

rity presentation will define the different ransomware that exists and address how to avoid an attack, what to do if hit and how to protect a business. Speaker: Godfrey Nolan, president, RIIS LLC, a mobile and web development firm based in Troy. Automation Alley, Troy. Free for members; $20 nonmembers. Phone: (800) 427-5100; website: automationalley.com Inforum 55th Annual Meeting Featuring Mae Jemison. 11:30 a.m.-1:30 p.m. May 25. Astronaut Mae Jemison, a scientist, doctor and crew member on Space Shuttle Endeavour, is the speaker. The Henry, Dearborn. $50 members; $75 guests. Website: inforummichigan.org. Tech Takeover: Collaborative and Autonomous Robots: How Do You Use These Things? 8:30-10:30 a.m. May 31. Automation Alley. Behco-MRM, a technology distributor and integrator, on how to successfully use new robotic tools in applications including machine tending, fabrication, quality inspection and assembly. Automation Alley, Troy. Free for members; $20 nonmembers. Phone: (800) 427-5100; website: automationalley.com Building a Consumer-Focused Health Care System. 11:30 a.m.1:30 p.m. June 5. Detroit Economic Club. Mark Bertolini, chairman and CEO, Aetna Inc., will discuss his thoughts on a 21st century health care sysMark Bertolini tem that is built around the consumer. Townsend Hotel. $45 members, $55 guests, $75 nonmembers. Website: econclub.org. Gender Equality in the U.S. and the Workplace. 11:30 a.m.-1:30 p.m. June 12. Detroit Economic Club. A discussion on the social barriers which hold women back from participating more fully in the workplace, and where progress has been made; what the talent pipeline looks like across Fortune 500 companies in the U.S., and how it differs by industry and how leaders’ talent decisions impact gender equality in the workplace. MotorCity Casino Hotel, Detroit. $45 members; $55 guests of members; $75 nonmembers. Website: econclub.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.

DEALS & DETAILS ACQUISITIONS & MERGERS

JJLiberty Center One, Royal Oak, a data center, acquired Zimcom Internet Solutions, Cincinnati, Ohio, a cloud solutions provider. Website: libertycenterone.com.

CONTRACTS

JJAmber

Engine LLC, Detroit, a Quicken Loans company, a home furnishings services provider, has integrated with Profitsystems, Colorado Springs, Colo., a retail management system provider. Websites: amberengine.com, profitsystems. com. JJPublicCity PR LLC, Southfield, a public relations agency, has been retained by the Ann Arbor Art Fair, Ann Arbor; Figure Skating in Detroit, Detroit, a youth development program for Detroit girls; EHM Senior Solutions, Ann Arbor, a health and human service organization; and Amaze Travel, Northville, a travel agency. Websites: publiccitypr.net, theannarborartfair.com, figureskatingindetroit.org, ehmchoices. org, amazetravel.com. JJQualitech, Bingham Farms, a technology integrator and software reseller, has installed its hosted phone system at TrillaMed, Bingham Farms, and Shamie Properties, Franklin. Website: qualitech.net JJBEET Analytics Technology, Plym-

outh, a manufacturing solution provider, and KUKA, Augsburg, Germany, an automation supplier, have signed a value added reseller agreement. Websites: beet.com, kuka. com.

EXPANSIONS

JJLakehouse

Studios, Brighton, a digital media and design agency, opened at 32751 Franklin Road, Franklin. Telephone: (248) 890-4848. Website: lhs-dmg.com.

JJLighthouse of Oakland County, Pontiac, a nonprofit organization for emergency services, workforce development programs and long-term case management, has opened a 2,100-square-foot service center at 5850 Dixie Highway, Clarkston. Telephone: (248) 620-6116. Website: lighthouseoakland.org.

NAME CHANGE

JJOh

So Radio, Southfield, is now operating as Oh So Media Group. The transition coincides with the launch of Oh So Magazine, Oh So Photo Studio and Oh So Radio. Website: ohsoradio.com.

NEW PRODUCTS

JJGravity

Software, Detroit, an accounting software company, has released its Revenue Recognition module. The module enables companies to recognize revenue and expenses in the period earned in accordance with IASB and FASB standards. Website: go-gravity.com.

NEW SERVICES

JJBNP

Media, Troy, a publishing company, has launched Autonomous Vehicle Technology, a brand dedicated to the business-to-business autonomous vehicle industry. The first stage of the launch is its new website: autonomousvehicletech. com. Website: bnpmedia.com. JJWalsh College, Troy, announced its new graduate degree program, Master of Arts in Business. Website: walshcollege.edu.

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.

Deadline extended for 40 under 40 nominations The deadline has been extended to nominate candidates for Crain’s 2017 class of 40 under 40, which recognizes young achievers based on factors such as financial impact and community leadership. Past winners have started companies, found success at a young age, established businesses and made nonprofits stronger. The program has run annually since 1991. Winners will be profiled in the Oct. 2 issue of Crain’s and will be honored at the awards event in November. With more than 640 alumni invited, the annual event brings together the current class with colleagues, clients, family and friends to celebrate this achievement. To be eligible, nominees must be 39 or younger as of Oct. 2, 2017. The deadline to nominate someone has been extended to May 17.

Winners will be profiled in the Oct. 2 issue of Crain’s and will be honored at the awards event in November. The deadline for nominees to fill out their forms is May 24. To make a nomination, go to www.crainsdetroit.com/nominate. Once nominated, nominees will receive an email with a link to the form. For questions regarding the awards or this nomination program, please contact Special Projects Coordinator Keenan Covington at kcovington@crain.com or (313) 446-0417.

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 8 , 2 0 1 7

SPECIAL REPORT: THE QLINE 1863 Aug. 4: Regular streetcar service begins in Detroit with eight horse-drawn cars operating on Jefferson Avenue between Third Street and Elmwood Avenue. Fares were 5 cents.

1956 April 8: Detroit streetcar service ends, in favor of buses, when the No. 233 car pulls

CRAIN’S DETROIT BUSINESS

Trolleys from the 1970s-era line.

into the Detroit Street Railway carhouse in Highland Park at 5:56 a.m.

2007

study for the streetcar project.

February: John Hertel, CEO of the Regional

July: The Kresge Foundation, the Hudson

1976

Transit Coordinating Council, develops the

Webber Foundation, Roger Penske and Dan

concept for a 3.4-mile privately-funded light rail

Gilbert agree to fund a study and preliminary

line on Woodward Avenue from downtown to

plan by UDM and Deloitte & Touche LLP.

New Center as the catalyst for a regional transit

October: UDM’s “Woodward Transit Catalyst

A mile-long trolley line called Detroit Citizen’s Railway (later called the Detroit Downtown Trolley) was built on Washington as tourist-shopping attraction that was part of a revitalization effort to turn are into a pedestrian mall. It ended in 2003.

system.

Project” study is presented to the effort’s

June: Hertel approaches University of

organizers. It estimates construction at $103

Detroit Mercy about creating a feasibility

million for a 3.4-mile line with 23 stations,

QLine safety plans: Are they enough? M-1 Line zones

The M-1 Line is a 6.6-mile Woodward loop with 20 stops and a dozen permanent stations between Grand Boulevard and Larned Street. Fifteen zones serve three parts of the city: New Center, Midtown and Downtown. Zone

CHANDLER ST.

M-1 RAIL TECH CENTER

NORTH END/NEW CENTER

Fisher building

Grand Station

W. GRAND BLVD.

Amtrak Station

Amsterdam Station

BURROUGHS

94 WOODWARD

Ferry Station

Detroit Institute of Arts

Warren Station

WARREN AVE.

JOHN R ST.

CASS AVE.

10 MIDTOWN

Canfield Station

CANFIELD

Max Fisher Music Center MLK JR./ MACK AVE.

Martin Luther King Jr. Station

WATSON

Little Caesars Arena

Sibley Station

SIBLEY ST.

Streetcar project in talks with city to hire transit officers to protect trains and stops, keep parked vehicles off tracks By Bill Shea bshea@crain.com

75 Foxtown Station Fox Theater

Comerica Park

ADAMS Grand Circus

Grand Circus Station

DOWNTOWN

Detroit Opera House

3 GR AN

IOT AT GR

IVE

RA VE

IGA

NA VE

KURT NAGL/CRAIN’S DETROIT BUSINESS

The view from a recent test run of the M-1 Rail QLine, which took funders and government officials around the 6.6-mile Woodward Avenue loop in Detroit.

W. FORT ST.

Campus Martius

Campus Martius Station

CONGRESS ST.

1 LARNED ST.

Congress Station Source:M-1 Rail

The safety plan for the QLine remains a work in progress as the streetcar system prepares to launch service on Friday. Until the system is running, it will remain unclear whether the plans are enough. A last-minute issue remains policing. The nonprofit’s top executives told Crain’s last week that the system is in talks with the city, which the mayor’s office confirmed, to contract the transit police who patrol the Detroit People Mover. They’d be used, at times, aboard the streetcars and would use a patrol car to police the streetcar’s 6.6-mile loop of track on Woodward Avenue between New Center and Larned/Congress streets. Matt Cullen, CEO of the M-1 Rail nonprofit that created the QLine, declined to say how much the transit police might cost the system because

KURT NAGL/CRAIN’S DETROIT BUSINESS

The QLine streetcars are 66 feet long and able to carry 125 passengers on average. They are air-conditioned, heated and come equipped with bike racks and Wi-Fi. talks still are underway, but did say it’s among the factors that have pushed the line’s annual estimated

operating cost to more than $6 million. The QLine officers would be

backed up by the city’s regular police and Wayne State University officers, said M-1 COO Paul Child. The line launches May 12 with free rides. Formal paid passenger service begins later in the month. The original plan was to use private security, but M-1 opted instead to use transit officers because they have police powers and connections to agencies such as Homeland Security. Part of the deal with the city is getting language drafted that would allow the transit police to ticket and tow vehicles parked on the streetcar tracks so that QLine trips aren’t delayed, M-1 said. The deal for transit police services has been in the works “for some time” and is not a recent change, said Dan Lijana, M-1’s top spokesman. Here’s what the officers will handle: Each streetcar is expected to carry about 125 passengers, and the sysSEE SAFETY, PAGE 14

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 8 , 2 0 1 7

SPECIAL REPORT: THE QLINE

with passengers carried in two streetcar-style trains powered by overhead electrical wires. November: “The Regional Area Initial Link” (TRAIL) is incorporated as a nonprofit organization to construct the Woodward Transit Catalyst Project.

2008 Early 2008: Roger Penske becomes chairman of the project’s board, and Dan Gilbert becomes vice chairman.

Gilbert

street rail companies to receive state funds and construct rail stops and other infrastructure on state-owned right-of-way. Matt Cullen becomes volunteer CEO of TRAIL.

Feb. 25: Crain’s breaks the news of the streetcar proposal.

2009 January: Gov. Jennifer Granholm signs legislation that authorizes private funding of a railway on Woodward Avenue. It permits

Granholm

KURT NAGL/CRAIN’S DETROIT BUSINESS

Roger Penske, chairman and CEO of Penske Automotive Group Inc., checks the view from the QLine. He put $7 million toward the project.

March: TRAIL changes its name and reincorporates as M-1 Rail. September: M-1’s board votes to cooperate

with the city of Detroit’s “Detroit Transit Options for Growth” light rail project to create a 9.3-mile, $528 million line that would run from Hart Plaza to the city limit at Eight Mile Road. The goal is to be fully running by 2013. M-1 and its private funding would construct 3.3 miles of the line, and the city would use bonds and other funding to pay for the service to the city limit. December: Federal legislation is enacted to allow M-1 Rail’s private funding to serve as the local match for extension of the line.

2010 February: The U.S. Department of Transportation awards a $25 million federal grant to the Michigan Department of Transportation for the combined rail project.

SAFETY FROM PAGE 13

10% SAVINGS When your business is more energy efficient, it’s also more profitable—and DTE Energy wants to help make that happen. Take John Logiudice, owner of Florentine Pizzeria, for example. DTE worked with him to make some small changes that led to big savings. Simply installing a programmable thermostat, sink aerators, LED lights and a prerinse spray valve in the kitchen saved John around 10% a month on his energy bill. If you’d like to manage energy use to save money at your business, visit dteenergy.com/savenow.

tem has been predicted by organizers to ferry about 5,000 to 8,000 passengers on average per day. Rides are predicted to take 22-25 minutes as the streetcars — powered by aerial electrical lines and by batteries — will move at the speed of vehicle traffic (35 mph). Officers also will be tasked with security at the line’s 20 stations and to ensure vehicles aren’t parked on the rails.

Safety planning M-1 also continues to promote its safety education plan for pedestrians, motorists, and cyclists who must learn to share Woodward with up to six of the 66-foot-long, 44-ton streetcars. While the cars can top out during service at 35 mph, they cannot stop on a dime. For months, the nonprofit has conducted safety education meetings and has pushed out videos to help people learn about navigating the roadway with the streetcars. The best education, however, will be actually seeing the vehicles in action, Lijana said. He said hundreds of people have attended QLine safety briefings. “There’s nothing that beats the experience of seeing the actual streetcar out on the street,” he said. One local transit advocate worries that the QLine safety outreach effort may not be enough. “I still think there’s a fair bit that needs to be done to ensure people that come into the corridor are familiar with the QLine enough for safety,” said Megan Owens, executive director of Detroit-based Transportation Riders United, which promoted transportation access and mobility in the metro area. It also remains to be seen if the QLine has done enough to tell the public, including delivery services, to not park on the tracks. Vehicles continue to be towed from the rails.

Accident data Every transit system eventually has accidents, including fatalities. M-1 said it has plans in place to deal with incidents, as required by law. That includes communicating with the public, businesses, and media to

June Woo

Aug tatio proc

201

Dec. Mayo Secre reach rail pl rapid to th point

201

Jan. and t

JJ T

JJ B

mi pre

JJ T

to Sa

JJ T

pri

JJ T

Wo in

JJ T

reg es ho

JJ T

pa for eit an the ca as

JJ T

air wi ca

quic of s upd O fata ing the and time ed t rail Th syst jurie fram nific ligh F per serv cars den low The ly be Th sion railm P tem

it at

ing d ding

ed to as

SPECIAL REPORT: THE QLINE June: M-1 Rail becomes part of the city’s Woodward Avenue Light Rail project. August: The U.S. Department of Transportation green-lights the rail project to proceed with an environmental study.

2011 Dec. 13: Crain’s breaks the news that Detroit Mayor Dave Bing, Gov. Rick Snyder and U.S. Secretary of Transportation Ray LaHood have reached an accord that would kill the city’s light rail plan in favor of a proposed regional system of rapid-transit buses — a decision linked directly to the city’s looming takeover by a Snyder-appointed emergency financial manager.

eral

2012

ject.

Jan. 6: A hasty gathering of M-1’s backers and top elected officials, including U.S. Sen.

Carl Levin, meets at Mayor Dave Bing’s office to discuss the proposal to kill the city’s light rail plan. LaHood gives M-1 90 days to convince Washington of the merits the streetcar plan. M-1 has to convince Washington, along with the city and state, that the system can be built and operated at its estimated costs. It spends the rest of the year doing so via a series of reports. November: The Legislature creates the Regional Transit Authority of Southeast Michigan, which eventually is intended to take public control of M-1 Rail. Jan. 18: LaHood announces a $25 million grant for M-1 Rail, the final piece of funding necessary for the project to move ahead.

JJ The line is a 6.6-mile Woodward loop with 20 stops between Grand Boulevard

with and d on

JJ The $142 million streetcar system is being paid for with a mix of public and

will acreds afe-

e exeet-

ries ffort

that ople fafor ecuansproand

the the ces, cles ils.

ually ties. deal law. with a to

Keynote Speaker CEO, RISE

THURSDAY, MAY 18 6:00 PM

Quick QLine: Need-to-know and Larned Street.

has eets to ting

Jocelyn Benson

2013

zers senare s as erial s — traf-

e its striwho with -ton out can-

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 8 , 2 0 1 7

JJ Base fares will be $1.50 and end-to-end rides are predicted to take 22-25

minutes as the streetcars will move at the speed of vehicle traffic (35 mph). M-1 predicts 5,000-8,000 riders per day. JJ The line’s hours, which could change as service demands fluctuate, will be 6 a.m.

to 11 p.m. Monday-Thursday; 6 a.m.-midnight on Fridays; 8 a.m.-midnight on Saturdays; and 8 a.m.-8 p.m. Sundays. private funding.

JJ The line, which operates mostly in a curbside layout using the second lane on

Woodward, is powered by a mix of overhead electrical power lines and batteries in the streetcars. It operates 60 percent of the route on battery power.

Join us to help celebrate women whose achievements in the field of communications we recognize and honor! Enjoy a silent raffle and dinner at the Plum Hollow Country Club while meeting and connecting with women from metro Detroit who are part of the communications community. Hope we see you there!

Carol Cain Emcee

Producer, Reporter

For more information about the event, visit us at womcomdetroit.org Tickets are available at eventbrite.com

JJ The six-car system is expected to operate as a pair of two-car trains during

regular operations, with the other two cars as backups or for use during especially busy times downtown. Fewer cars may operate during off-peak hours. JJ The three-piece articulated cars are 66 feet long and able to carry 125

passengers on average. There are 34 cloth seats along with a slew of loop handles for standing, mostly in the center portion of the streetcars, which are lower at either end. They’re air-conditioned, heated and come equipped with bike racks and Wi-Fi. Passengers enter from grade-level station platforms, and each side of the streetcars has two large sliding doors. For safety, there are six internal cameras whose footage is recorded, and four exterior cameras used by the driver as navigation aids. JJ The streetcars also are equipped with “black boxes” similar to what’s found on

airliners. There are enclosed driver modules on either end of the car. The operators will have a central digital screen that displays information about the status of the cars, a radio, horns and the usual controls equipped on transit vehicles.

quickly get messaging out, and use of social media for near real-time updates. Overall, streetcars have the fewest fatal incidents by rail mode, according to 2007-13 statistics compiled by the Federal Transit Administration and published in December. In that time, just nine deaths were attributed to streetcar incidents out of 968 rail fatalities, the data shows. The entire American streetcar system as a whole averaged 148 injuries per year in that same time frame, according to the report, significantly below heavy rail (203) and light rail (280). Federal data measures rail “events” per every 100 million miles of revenue service, and by that metric U.S. streetcars as a whole averaged just 166 incidents annually from 2007-13, far below light (498) and heavy rail (312). The streetcar event rate declined yearly beginning in 2008. The FTA defines “events” as collisions, injuries, deaths, accidents, derailments, and evacuations. Portland’s modern streetcar system, opened in 2001 and responsible

for what transit insiders say is the current streetcar boom, averaged nearly an accident a week in 201314, according to an analysis by OregonLive.com. None were fatal, and few were the fault of the streetcars. Portland was running 13 streetcars, more than double Detroit’s fleet. Cincinnati, which is the newest U.S. streetcar system and the one most similar to the QLine, saw 10 accidents during testing and first few months of service, Cincinnati.com reported. The system in September launched a 3.6-mile line with five vehicles at a cost of $148 million. In its first three months of testing beginning in October 2014, the Washington, D.C., streetcar line sustained nine accidents, NBCWashington.com reported. The only incidents during QLine testing were a few clipped mirrors on vehicles parked too close to the tracks, and one streetcar had a camera clipped, Childs said. A message was left with the Detroit Department of Transportation seeking the agency’s bus accident rate numbers for 2016. CONTINUES ON PAGE 16

I Want To Live In Michigan! I am the President of a $2B division of a $14B global corporation. I am interested in continuing to grow my career, but the next promotion requires a move out of state. But I WANT TO LIVE IN MICHIGAN! So I am launching a job search. My responsibilities include 10,500 employees and a sales force of 600 across North America. I personally manage our 12 largest and most strategic customers. A list that includes some of the largest and highly respected companies in the U.S. I am known as an outstanding leader and strong business strategist, with a unique ability to drive process and accountability that yield high customer loyalty and consistently strong financial results. If you think I may be able to help lead your organization to new heights, let’s talk. Please leave a message at (734) 892-5820. I will get right back to you.

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 8 , 2 0 1 7

SPECIAL REPORT: THE QLINE April: M-1 Rail gets its required federal environmental clearance to proceed. July 18: The City of Detroit files for Chapter

and general contractor. Detroit-based White Construction Co. is subcontracted by Stacy and Witbeck to work on the project.

9 bankruptcy protection.

Dec. 20: Initial prep work begins.

July 20: Alameda, Calif.-based civil

2015

construction firm Stacy and Witbeck Inc. wins

June 8: M-1 signs a $32 million deal with Brookville, Pa.-based Brookville Equipment Corp. for six streetcars, spare parts and support services.

the bid to become M-1’s construction manager

at a cost of $6.9 million. It’s used for the line’s maintenance, storage and operations. June 30: M-1 signs five-year, $15.5 million deal with Lombard, Ill.-based Transdev Services Inc. to operate the QLine. Sept. 12: The first streetcar arrives in Detroit. On-street testing begins not long after. Nov. 8: Voters narrowly reject a regional transit tax that would have funded QLine operations starting in 2024.

2016

Dec. 1: Track construction ends and Woodward formally reopens in its entirety.

March 24: QLine name is formally unveiled. Quicken Loans Inc. paid $5 million in 2014 for the naming rights. CRAIN’S DETROIT BUSINESS

The final piece of the QLine track is welded into place in November 2016.

Accident plans Additionally, to get a transit system operator license, M-1 has had to conduct emergency drills, and put in place reporting procedures for the state and federal government. While state and federal transit laws don’t require the QLine system to carry insurance, the city mandated that M-1 carry $50 million in accident insurance and to indemnify the city against any liability, Child said. That was accomplished via a $50 million commercial general liability insurance policy through the QLine’s third-party operator, Lombard, Ill.based transportation management

May 2: The 19,000-square-foot Penske Technical Center that will be the central nervous system of streetcar system opens

firm Transdev Services Inc., the system said. M-1 in January 2016 signed a five-year, $15.5 million contract with Transdev to run the QLine. As part of its bid to avoid mishaps, M-1 isn’t launching at a full-service capacity on Friday, Child said. Instead, the system will take six to nine months to ramp up operations so that it has time to work out any kinks, get a sense of passenger needs and allow the public to get used to sharing the road with the streetcars, he said. Initially, the line is expected to begin with three of its six cars in morning service, and use four during peak hours. That eventually will increase

2017 May 12: QLine service is scheduled to begin. KURT NAGL/CRAIN’S DETROIT BUSINESS

The Penske Technical Center serves as the nerve center of M-1 Rail QLine.

Sources: M-1 Rail, detroittransithistory.info, state of Michigan, Crain’s research

to four regular streetcars in use with a fifth when necessary, and the final car will be on the road during big events. “We’re new and we’re going to start off slow, and we’re going to do it right and pay attention to safety,” Child said. In addition to having its own security force, and being connected to the city’s police, fire, and EMS services, the QLine cars themselves are equipped with safety equipment, an on-board camera system and “black boxes” similar to the accident-recording devices used on aircraft. Bill Shea: 313 (446-1626) Twitter: @Bill_Shea19

KURT NAGL/CRAIN’S DETROIT BUSINESS

Exterior shot of the QLine, which opens to the public on May 12.

ENERGIZING MICHIGAN’S

Future

Energy is essential to the way we live, work and play. ITC operates, builds and maintains the region’s electric transmission infrastructure. We’re a Michigan-based company working hard to improve electric reliability, increase electric transmission capacity, and keep efficient, reliable energy flowing to homes and businesses across the state.

Building the electric transmission infrastructure that will power the future. www.itc-holdings.com

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 8 , 2 0 1 7

SPECIAL REPORT: SECOND STAGE

Perks at work Inside this section: In this month’s Second Stage, Crain’s talked to three different companies for advice, tips and tactics they’ve used to improve retention rates. n Looking toward tomorrow: Company gives employees a vision for the long-term, this page n Profit sharing: Giving back to employees when times are good, Page 18 n Feeling valued: A concierge service to improve employees’ work-life balance, Page 19 n Losing employees? You may be making these common mistakes, Page 19

Companies offer tips, advice for retaining talent By Rachelle Damico

Special to Crain’s Detroit Business

As the economy improves, many employers are finding employee retention to be an increasing challenge. “It’s an issue where the economy is especially hot,” said David Haviland, founder of Phimation Strategy Group, an Ann Arbor-based consultancy that focuses on second-stage businesses. “The marketplace is more competitive than it has ever been, and everybody has employees jumping ship at a rate higher than they were before.” Companies that have high turnover rates during or shortly after the hiring process should make sure prospective employees are a cultural fit. Haviland said that means making sure they are aligned with the company’s purpose and that the company can take the prospective employee where they want to go in the future. Rochester-based physicians network MedNetOne Health Solutions struggled to retain employees until they changed their hiring process.

PHOTO BY LARRY PEPLIN

Ewa Matuszewski (left), Mark Lazar, Andrew Kurezk, Erica Ross, Kathryn Correll and Samantha Michalak of MedNetOne Health Solutions in Rochester. “We would just get through training, and we began losing people to other companies locally who needed individuals with the skills that we prepared our employees with,” Ewa Matuszewski, CEO and co-founder said. Once employees are on board, make sure there is a development program in place. Employers may balk at spending money on development activities, or taking the time to create a career path for an employee, but the cost tends to be lower than the time and money spent on training and hiring a new employee. “Generally, the cost of finding a new employee is sustainably more than the cost of keeping an employee,” Haviland said. “There’s a great return on investment case to be made for retention programs, especially if they’re focused on key positions and key performers.” Employers should also consider becoming more aggressive with compensation, or consider other incentives, such as work flexibility or gym memberships. “Happy wife happy life, it’s the same thing for employees,” said Polly Swingle, co-founder and co-owner of The Recovery Project, a Livonia-based rehabilitation center. “They buy into the mission and what we want our company to be like because they’re happy.”

Firm gives its employees a vision for the long-term By Rachelle Damico

Special to Crain’s Detroit Business

To keep your employees today, you need to give them a vision for tomorrow. That’s what Ewa Matuszewski learned when she was trying to solve her company’s retention problem. Matuszewski is co-founder and CEO of MedNetOne Health Solutions. She said the organization made changes to its hiring process after struggling to keep employees. “We would hire, and within a period of 18-24 months we’d lose folks that we thought would stay with the company for many years, if not forever,” Matuszewski said. “They’d be out the door joining our competitors or moving on to other organizations.” The Rochester-based member service organization provides technical, infrastructure and clinical support to about 800 physician members. MedNetOne has 48 employees. The company began making changes to improve retention about 10 years ago. To adapt to the changing healthcare industry, MedNetOne began looking for candidates with knowledge in public and population health and quality improvement strategies. Previously, the organization hired individuals who had a clinical degree in nursing. And to recruit candidates, MedNetOne began a collaboration with Oakland

“We’re in a changing society, and we need to have individuals that are willing to innovate, transform and lead that change.” Ewa Matuszewski

University’s School of Health Sciences master of public health program and Madonna University’s undergraduate population health program. The organization also made changes to the interviewing process. Today, candidates are interviewed by a team of potential peers rather than with HR. “It’s the folks the prospective employees will be working with,” Matuszewski said. “You have to fit into the culture and the activities that are requiring your assistance.” Prospective employees are asked about their long-term goals, their ambitions within the company and where they see themselves in five years. “We’re in a changing society, and we need to have individuals that are willing to innovate, transform and lead that change,” Matuszewski said. “Every employee wants to know if there’s a tomorrow, and how they fit into that process.” SEE VISION, 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 Y 8 , 2 0 1 7

SPECIAL REPORT: SECOND STAGE

Giving back to employees when business is good By Rachelle Damico

Special to Crain’s Detroit Business

The Recovery Project, a physical and occupational therapy provider, rewards employees when the business is doing well, an effort owners and co-founders Polly Swingle and Charles Parkhill believe has had the biggest impact on retention. “Our promise since we started the company is that profits would be shared,” Parkhill said. “If we’re doing well we always try to give back to our employees.” The Livonia-based company employs 60 and has an additional location in Clinton Township. Parkhill said The Recovery Project has awarded employees bonuses or given gifts spontaneously such as Apple iPads, flat-screen TVs or Tigers tickets. The company has lost only about six employees since it was founded 14 years ago. “We’ve been very fortunate to not really have to worry about re-

“It is important for our employees to get together outside of the workplace to have opportunities to be social and enjoy each other’s company outside of the clinic.” Polly Swingle

tention,” Swingle said. Last year, Parkhill said he and Swingle discussed tactics to maintain favorable retention rates after noticing other firms were hiring. “The economy is getting better, and we have to think about these things,” Parkhill said. Since 2016 was a strong financial year for The Recovery Project,

TOP GRADUATE PROGRAMS Set yourself apart Separate yourself from the crowd by earning a graduate degree from Grand Valley. With 38 master’s and doctoral programs, we offer the degree you need to advance your career, increase earnings, and enhance your job satisfaction. Programs deliver a unique blend of theoretical knowledge, practical experience, and professional networking here in West Michigan that no other university can match. And, you’ll benefit from Grand Valley’s respected reputation among employers, convenient campuses, affordable tuition, and diverse educational opportunities. Set yourself apart. Contact The Graduate School at (616) 331-7105 or gradschool@gvsu.edu for more information or help getting started. Spring classes start May 2017.

gvsu.edu/gs

Parkhill said the company surprised employees with Apple watches and offered the team their own customized Nike tennis shoes. “If we hire right, take great care of our employees and keep them happy, they’re going to do a great job with our client group,” Parkhill said. “If we take care of them right, then they’ll take care of our clients right.” In addition to gifts, The Recovery Project started a dining program this year which allows employees to be reimbursed twice a year for a dinner up to $125 for themselves and a guest. To promote wellness, Swingle said employees are also reimbursed up to $25 a month to use on wellness activities, such as yoga, cycling or a massage. “We’re a rehab center, so we’re always talking about staying healthy,” Swingle said. Swingle said The Recovery Project is also in the process of planning group wellness activities for team members which will occur three to four times per year. For instance, Swingle and another instructor will teach a yoga class and provide pizza, beer and wine. “It is important for our employees to get together outside of the workplace to have opportunities to be social and enjoy each other’s company outside of the clinic,” Swingle said. “Sponsoring wellness activities outside of the clinic helps improve our staff’s overall quality of life.” Employees are also incentivized for continuing education, an aspect

VISION FROM PAGE 17

Matuszewski also recommends letting new employees know that they’re not just there for the shortterm, but to help the company grow — and that their engagement in that growth is key. Before the company revamped its approach to retention, employees left “because they really didn’t know what they’d be doing with us tomorrow,” she said. “Now, we’re very clear in our mission and our vision in how every employee fits into the tomorrow of our company.” MedNetOne also moved away from strict set working hours and gave employees more flexibility, focusing instead on making sure employees complete projects and achieve goals. For instance, Mark Lazar, MedNetOne’s director of corporate affairs, needed time off this year to coach the U.S. men’s curling junior national team. (The team won a silver medal at the 2017 World Junior Championships in South Korea.) While overseas, Lazar continued to oversee MedNetOne projects and coach the organization’s team by phone and e-mail.

Polly Swingle and Charles Parkhill , co-founders of The Recovery Project, a physical and occupational therapy provider, reward employees when the business is doing well as a way to improve employee retention. Swingle said is important to the company’s team that includes physical therapists, speech therapists and occupational therapists — all of which require continuing education to maintain their licensing. The company also pays for employee association dues to encourage employees to become members of their professional associations. “We feel as a company that this is critical because it makes their customer service so much better, and it

also makes the value of our company so much higher if we have these employees that are very knowledgeable with the newest techniques and the science behind what they do,” Swingle said. Swingle said these efforts keep employees happy, which she said is the key to retention. “If you have a happy employee, the work that they’re going to provide for you is going to be at a better quality,” Swingle said. “They’re going to provide and be more reliable, accountable employees.”

“He has the ability of designing coaching-like team-based approaches to our organization,” Matuszewski said. She realized that allowing people to pursue projects outside of work can benefit the company. It “has been really positive,” she said. The organization also adapted employee benefits and incentives. Employees are incentivized monetarily or with additional flex time for meeting certain types of projects or targets they have identified individually or as a team. “We’re not able to meet the salary targets that Beaumont or Detroit Medical Center can reach, but we can ensure them that if they take certain targets, we would be able to provide them with incentives that would allow them to have that job satisfaction and ... job security,” Matuszewski said. Encouraging employees to manage projects also allows employees the opportunity to take the lead and grow, Matuszewski said. That required a personal change, she said. “It was really difficult for me to let my guard down,” Matuszewski said. “I was indeed one of those very prescriptive people.” Since then, she has learned to take a step back, for

the good of the company. “I don’t have to be number one all the time,” Matuszewski said. “I will provide the environment and the opportunity for our newer staff to show that they have the ability of leading a team or designing a project.” Allowing employees to develop themselves professionally is another strategy Matuszewski said is crucial for retaining employees. MedNetOne employees are incentivized for developing themselves professionally outside of the office. For instance, MedNetOne has paid for employees’ online classes, or have reimbursed employees for obtaining a certification. The organization also has a budget for the staff to maintain their professional certification status. “One of my biggest investments has always been in education,” Matuszewski said. “Learning is key to the success for any organization.” Due to these efforts, Matuszewski said the organization’s retention rate has gone up by 60 percent. In addition, all employees hired in the past four years have stayed with the company, and in the past three years, 100 percent of the interns have stayed.

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 8 , 2 0 1 7

SPECIAL REPORT: SECOND STAGE

A concierge service to improve employees’ work-life balance By Rachelle Damico

Special to Crain’s Detroit Business

Would employees have an easier time focusing at work if they weren’t worried about everyday errands, like picking up dry cleaning? Michigan First Credit Union hired a third-party concierge service to help employees save time, stay focused and enjoy their time off more, said Patty Jones, chief human resource officer at Michigan First. “We really feel that our investment in our team members from an attraction and retention standpoint is so critical,” Jones said. “We want to make sure our team members feel that they’re always valued and appreciated for the service they provide.” Michigan First has 17 branches throughout the state and 300 employees. About two years ago, the Lathrup Village-based credit union received an e-mail from Cincinnati-based concierge service organization Best Upon Request. Michigan First hired the organization after meeting with one of their

“We work hard to set our culture so that people feel valued, appreciated and they know that we respect them for the work that they bring.” Patty Jones, Michigan First Credit Union

concierges and introducing them to employees. “We asked them to provide us with a concierge who would match our culture and be able to do great work for our team members,” Jones said. Employees sign up for the concierge free of charge to help with chores such as taking their cars in for regular maintenance or picking up prescriptions. Jones said it has saved employees about 200-250 hours per month for all the organization’s team members, and five or six hours a week of her own personal time. “Our team members will benefit from being able to focus at work and being able to provide a little more balance in their life so that

when they go home they can spend good quality time with their family,” Jones said. In addition to the concierge services, Jones said other initiatives have led to retention. The company implements team building exercises twice a year, has a leadership program for developing talent and offers other perks like Red Wings and Tigers tickets, gift cards to restaurants and a free on-site gym at their main branch location available for all employees to use. “We work hard to set our culture so that people feel valued, appreciated and they know that we respect them for the work that they bring,” Jones said. “We truly believe that the most critical component of our success is our people.”

EY names Michigan, northwest Ohio region Entrepreneur of the Year finalists By Tyler Clifford tclifford@crain.com

EY has chosen its Michigan and northwest Ohio region finalists for the Entrepreneur of the Year 2017 Award. Award winners will be announced at a gala at the Detroit Institute of Arts on June 21. Honorees are recognized for innovation, financial performance and personal commitment to their businesses and communities, chosen by a panel of independent judges. This is the program’s 31st year, which now recognizes leaders in more than 145 cities and more than 60 countries. J Jan Akervall and Sassa Akervall, president and CEO respectively, Akervall Technologies Inc., Saline J David Dauch, chairman and CEO, American Axle & Manufacturing Holdings Inc., Detroit J Adrienne Way, owner and CEO, Edcor Data Services LLC, Troy J Denise Crawford, president and CEO, Family Health Center, Kalamazoo J Jason Wenk, founder and CEO, FormulaFolio Investments LLC, Grand Rapids J Laura Varon Brown, executive director, Gilda's Club Metro Detroit, Royal Oak J Chris McCuiston and Jenny McCuiston, co-founders, Goldfish Swim School Franchising LLC, Troy

This is the program’s 31st year, which now recognizes leaders in more than 145 cities and more than 60 countries. J Damien Rocchi, CEO, Grand Circus Detroit, Detroit J Jeff Grasman, president, Grand Equipment Co., Hudsonville J Lon Offenbacher, president and CEO, Inteva Products LLC, Troy J Wade Wyant, president and CEO, ITS Partners, Grand Rapids J Matthew O'Bryan, president and CEO, KLA Laboratories Inc., Dearborn J Brad Oleshansky, founder and CEO, M1 Concourse, Pontiac J Brent Parent – Material Handling Services LLC, Perrysburg, Ohio J Doug Armstrong, CEO, North Star Reach, Ann Arbor J Alan Mack, president and CEO, NxGen MDx, Grand Rapids J Tom Shea and Bob Powers, co-founders, OneStream Software LLC, Rochester J Kirk Vercnocke, CEO, Phoenix Innovate Inc., Troy J Charles Stocking and Carol Stocking, co-CEOs, Principle Business Enterprises Inc., Bowling Green, Ohio

J Steve Peacock, owner, Pro-Vision Video Systems, Bryon Center J Chris Rizik, CEO, Renaissance Venture Capital Fund, Ann Arbor J Barry Spilman and Peter Osten, co-founders, RPM Freight Systems, Royal Oak J Mike Jennings, CEO, Secure-24 LLC, Southfield J Royce Neubauer, CEO, Service First Logistics Inc., Auburn Hills J Molly MacDonald, founder, The Pink Fund, Bloomfield Hills J Birgit Klohs, president and CEO, The Right Place Inc., Grand Rapids J Phil Brabbs, co-founder, Torrent Consulting LLC, Ann Arbor J Jason Vazzano and Kurt Steckling, co-founders, Vectorform LLC, Royal Oak J Carla Walker-Miller, president and CEO, Walker-Miller Energy Services LLC, Detroit Regional award winners can be considered for EY's Entrepreneur of the Year national awards, which will be announced at the national awards gala Nov. 18 in Palm Springs, Calif. The national awards are followed by the World Entrepreneur of the Year award, which will take place in June 2018 in Monaco. The Entrepreneur of the Year Awards is produced by EY, which is based in London. Crain’s Detroit Business is a sponsor of the regional award program.

Losing employees? You may be making these common mistakes By Rachelle Damico

pecially with key positions.

David Haviland, founder of Ann Arbor-based consultancy Phimation Strategy Group, said second-stage businesses that are losing employees are likely making these two common mistakes:

2. You are not challenging your employees.

Special to Crain’s Detroit Business

1. You haven’t looked at your compensation structure regularly. Companies that do not pay attention to what their competitors are offering risk losing employees to the competition. “They haven’t looked at their composition structure regularly, and they’ve gotten out of sync with what the market rates are,” David Haviland: Employees leaving Haviland said. “Then it’s a a wakeup call. wakeup call when people start noticing they’re leaving.” To retain employees in an increasingly competitive market, Haviland said employers should be aggressive with compensation, es-

“They’re just asking employees to do the job, and they’re not thinking about it from the employee perspective of where the employee wants to go in their career and where they’re looking for — not just today or next week — but in the future,” Haviland said. “One of the best retention tools is giving employees really fun, interesting, great work to do.” Haviland said this can be challenging for companies because they want to give employees the same type of work repeatedly to be more productive and efficient, but it can bore employees and they may grow unhappy with their work. “What employees, and especially millennials are often looking for, is that the work itself is new, changing and challenging for them,” Haviland said. Haviland suggests having the management team cross training employees and look for new people to do assignments, as opposed to the same people that have done the same type of work repeatedly.

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 Y 8 , 2 0 1 7

CRAIN'S LIST: LARGEST MICHIGAN ACCOUNTING FIRMS

Ranked by number of Michigan employees (Includes Southeast Michigan employees) Rank

Company Address Phone; Website

Managing partner(s)

Number of employees in Michigan Jan. 2017/ 2016

Number of employees Southeast Michigan Jan. 2017/ 2016

Number of Michigan Number of employees Michigan engaged in employees audit/ engaged in accounting taxes

Number of Michigan employees engaged in consulting

Number of Michigan employees engaged in other

Number of CPAs Michigan Jan. 2017/ 2016

Plante Moran PLLC 27400 Northwestern Highway, Southfield 48037 (248) 352-2500; www.plantemoran.com

Gordon Krater

1,599 1,503

1,142 1,062

514

321

402

362

630 617

Deloitte LLP and its subsidiaries 200 Renaissance Center, Suite 3900, Detroit 48243-1895 (313) 396-3000; www2.deloitte.com/us/en.html

Mark Davidoff

1,071 1,083

992 1,001

438

234

224

175

319 315

PricewaterhouseCoopers LLP 500 Woodward Ave., Detroit 48226 (313) 394-6000; www.pwc.com

Ramesh Telang

787 795

755 764

405

170

124

450 432

Ernst & Young LLP 777 Woodward Ave., Suite 1000, Detroit 48226 (313) 628-7100; www.ey.com

George Lenyo

673 674

586 589

206

191

168

108

258 253

Rehmann 1500 W. Big Beaver Road, 2nd Floor, Troy 48084 (248) 952-5000; rehmann.com

Randy Rupp CEO

627 605

296 288

192

125

154

158

266 257

BDO USA LLP 2600 W. Big Beaver Road, Suite 600, Troy 48084 (248) 362-2100; www.bdo.com

Fred Rozelle assurance regional John Marquardt tax office Thomas Callan CEO

518 562

135 135

128

163

222

158 147

380 351

125

127

164 169

6 7

UHY LLP Chrysler House, 719 Griswold St., Suite 630, Detroit 48226 (313) 964-1040; www.uhy-us.com

KPMG LLP 150 W. Jefferson Ave., Suite 1900, Detroit 48226 (313) 230-3000; www.kpmg.com

Heather Paquette

369 352

310 291

134

83 71

Doeren Mayhew & Co. PC 305 W. Big Beaver Road, Suite 200, Troy 48084 (248) 244-3000; www.doeren.com

Mark A. Crawford chairman and shareholder

241 226

239 225

111

108 97

Rhonda Huismann

207 196

13 11

Crowe Horwath LLP 55 Campau Ave. N.W., Suite 500, Grand Rapids 49503 (616) 774-0774 ; www.crowehorwath.com/offices/ grandrapids/

87 76

Yeo & Yeo PC 3023 Davenport, Saginaw 48602 (989) 793-9830; www.yeoandyeo.com

Thomas Hollerback president and CEO

200 215

23 37

85 86

Grant Thornton LLP 27777 Franklin Road, Suite 800, Southfield 48034 (248) 262-1950; www.grantthornton.com

Dan Zittnan

109 104

53 39

Baker Tilly Virchow Krause LLP 2000 Town Center, Suite 900, Southfield 48075 (248) 372-7300; www.bakertilly.com

Patrick Killeen

103 123

103 103

48 43

Beene Garter LLP 56 Grandville Ave. SW, Suite 100, Grand Rapids 49503 (616) 235-5200; beenegarter.com

Thomas Rosenbach

95 91

0 0

48 43

Clayton & McKervey PC 2000 Town Center, Suite 1800, Southfield 48075 (248) 208-8860; www.claytonmckervey.com

Robert J. Dutkiewicz president

78 71

36 31

Cohen & Co. B 21420 Greater Mack Ave., St. Clair Shores 48080 (586) 772-8100; www.cohencpa.com

Robert MacKinlay

66 77

30 26

Gordon Advisors PC 1301 W. Long Lake Road, Suite 200, Troy 48098-6319 (248) 952-0200; www.gordoncpa.com

Executive committee

62 62

32 62

MRPR Group PC C 28411 Northwestern Highway, Suite 800, Southfield 48034 (248) 357-9000; www.mrpr.com

Angela Mastroionni

51 27

26 19

Croskey Lanni PC 345 Diversion St., Suite 400, Rochester 48307 (248) 659-5300; www.croskeylanni.com

David Croskey, CPA

48 43

29 27

Cole, Newton & Duran CPAs 33762 Schoolcraft Road, Livonia 48150-1625 (734) 427-2030; cndcpa.com

Arthur Cole

45 D 29

45 D NA

14 12

Mattina Kent & Gibbons 1214 N. Main St., Rochester 48307 (248) 601-9500; www.mkgpc.com

Vincent J Mattina Jr.

43 41

29 27

20 21

Echelbarger, Himebaugh, Tamm and Co. 2301 East Paris Ave. SE, Grand Rapids 49546 (616) 575-3482; www.ehtc.com

David Echelbarger president

41 34

0 0

14 9

Polk and Associates PLC 30600 Telegraph Suite 2191, Bingham Farms 48025 (248) 645-5700; www.polkcpa.com

Richard Williams

41 32

13 8

Derderian, Kann, Seyferth & Salucci PC 3001 W. Big Beaver, Suite 700, Troy 48084 (248) 649-3400; www.DKSScpas.com

Ursula C. Scroggs managing director and president

37 37

23 20

Alan C. Young & Associates PC 7310 Woodward Ave., Suite 740, Detroit 48202 (313) 873-7500; www.alancyoung.com

Alan C. Young CEO

36 31

7 7

This list of accounting firms is an approximate compilation of the largest such companies in Michigan. It is not a complete listing but the most comprehensive available. Unless otherwise noted, information was provided by the companies. Companies with headquarters elsewhere are listed with the address and top executive of their main Michigan office. NA = not available.

B Formerly Godfrey Hammel, Danneels & Co. PC. Bought by Cohen & Co. Ltd. of Cleveland in January 2016. C Merged with Hantz Rhoades & Doehrer LLC , effective Jan. 1. The combined firms operate as MRPR CPAs & Advisors with offices in Southfield, Ann Arbor and Saline. D Acquired Bartos, Hoffer, Lustig, and Tomes PC and Michael G. Thomas CPA on Oct. 1, 2016. LIST RESEARCHED BY SONYA D. HILL

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 8 , 2 0 1 7

Deadline nears to nominate for Health Care Heroes award By Jay Greene jgreene@crain.com

The deadline is approaching to nominate innovators and leaders for Crain’s annual Health Care Heroes program, newly expanded in its 16th year. New categories are focused on medical research that is ground-breaking and life-changing for patients and their families. To make a nomination, go to www. crainsdetroit.com/nominate. A panel of six health care judges will choose the winners and runners-up. The deadline to nominate is May 22. Overall, the eight categories recognize medical innovators and patient advocates dedicated to saving lives or improving access to care.

The deadline to nominate is May 22. J Corporate Achievement in Health Care: Honors an individual at a company that has created an innovative health care program or benefits plan that has solved a problem in health care administration. J Innovation in Oncology Care or Research: Honors a company or individual responsible for a discovery or for developing a procedure, device, program or service that can save lives or improve quality of life in oncology care. J Innovation in Heart or Vascular Care or Research: Honors a company or individual responsible for a discovery or for developing a procedure, device, program or service that can save lives or improve quality of life in heart or vascular care. J Innovation in Other Health Care Services or Research: Honors a company or individual responsible for a discovery or for developing a procedure, device, program or service that can save lives or improve quality of life in any related health care field. J Administrator or Executive: Honors an administrator at a hospital, health insurance company, pharmaceutical company or any health care related support company who has made a significant contribution to their company and the health care industry. J Physician: Honors a physician whose clinical or administrative performance is considered exemplary, innovate and groundbreaking. J Allied Health: Honors an individual from nursing or allied health fields deemed exemplary, innovative or groundbreaking by patients and peers. J Board Member: Honors leadership and distinguished service on a health care board. Articles about the winners will be published in the Crain’s July 17 health care special section.

Commercial Finance Experience

In Your Corner.

Ŷ Domestic and international bi-lateral

and syndicated commercial, realestate and asset-based financing.

Ŷ Loan workouts, restructuring,

bankruptcy and collection.

First Tier Ranking in Corporate Law and Commercial and Construction Litigation

Contact David McLeod at dkmcleod@varnumlaw.com

Detroit

Novi

Grand Rapids

Kalamazoo Ŷ Grand Haven

Lansing

Ann Arbor

Hastings

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 8 , 2 0 1 7

SPOTLIGHT

Macomb nonprofit names new director

The Wagner Place redevelopment is expected to include a restoration of the Wagner Hotel’s facade and turet.

NEUMANN/SMITH ARCHITECTURE

Ford Land’s $60M Wagner Place breaks ground By Kirk Pinho kpinho@crain.com

A $60 million project to transform a historic hotel and other largely vacant buildings in west downtown Dearborn broke ground last week. The Wagner Place development, led by Ford Land Development Corp., the real estate arm for Ford Motor Co., is expected to result in

ADVERTISEMENT SECTION

about 600 of the automaker’s and its suppliers’ data insights and analytics employees moving there in the middle of next year through relocation and consolidation. In December, the city secured a $3 million performance-based grant from the Michigan Strategic Fund to construct a 373-space parking deck on what is a surface parking lot at West

FINANCIAL SERVICES Chris Hooper

Director of Seminar Services M&O Marketing

LAW Ryan Plecha

Senior Counsel Kostopoulos Rodriguez, PLLC Ryan C. Plecha has joined Kostopoulos Rodriguez, PLLC, as Senior Counsel in the firm’s litigation practice group. Ryan’s practice focuses on complex civil and commercial litigation. “KORO is excited that Ryan’s unique understanding of people, business and the law will be an asset to the firm and our clients,” said K. Dino Kostopoulos, founding and managing partner of KORO. I am confident that Ryan will help KORO fulfil its purpose of “taking care of businesses.”

For more information about advertising in this section, contact Lynn Calcaterra at (313) 446-6086, or email lcalcaterra@crain.com

Chris Hooper has been promoted to Director of Seminar Services at M&O Marketing in Southfield, MI. In this role, Hooper will oversee one of the most sought after financial services seminar programs in the country. In addition, he will also be responsible for expanding his team and developing the Seminar Services department at M&O Marketing. Hooper has been with M&O Marketing since 2015.

David M. Dickman President & Managing Partner of Wealth Management

Vivaldi Capital Management Vivaldi Capital Management, an independent financial firm serving high net worth families and institutions, welcomes David M. Dickman as President and Managing Partner of Wealth Management. David will be drawing on over 25 years of industry experience to advise clients, oversee Vivaldi’s wealth management team and develop numerous firm-wide strategy initiatives. He joins from J.P.Morgan’s Private Bank where he was a Managing Director and Midwest Regional Executive.

Village Drive and Monroe. The project is expected to bring a pair of three-story mixed-use buildings to downtown and restore the Wagner Hotel into retail and office space. One-third of the 150,000-square-foot development is expected to be retail space. “Developing an urban office environment positions Ford to offer a work setting that will appeal to a new generation of employees,” Dave Dubensky, chairman and CEO of Ford Land, said in a statement. “Wagner Place supports our goals to create a more collaborative and inviting campus atmosphere for all employees.” The project area is between Mason Street to the west, Oakwood Boulevard to the east and south of Michigan Avenue. Some of the structures in the area are slated for demolition as part of the project, according to a December MSF memo. “This is absolutely a transformational project that will change the future of downtown west Dearborn in the sense that we are bringing in over 600 employees who will be able to patronize our businesses, and activate the climate and environment there,” said Cristina Sheppard-Decius, executive director of the West Dearborn Downtown Development Authority. Detroit-based Neumann/Smith Architecture is the architecture firm on the project while Mid-America Real Estate Corp., which has an office in Bloomfield Hills, will be responsible for leasing the retail space to tenants. Dearborn Mayor John O'Reilly Jr. said in a statement that the project “represents the ongoing evolution of not only our west downtown, but the entire city.” The project is the latest large-scale real estate move for the automaker. It is spending about $1 billion in the next 10 years to overhaul its headquarters campus and research and engineering hub in Dearborn, and has leased about 240,000 square feet at Fairlane Town Center in the former Lord & Taylor space and an adjacent mall wing. Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

Laprisha Berry Vaughn has taken on the role of executive director of the Macomb Children’s Healthcare Access Program. Vaughn, 39, was director of programs and engagement for the nonprofit organization and has been there since March 2016. “This is what I have been preparing for,” Vaughn Vaughn said, explaining that her main goal in the new position will be to expand services in Oakland County and eventually Wayne County, which also have CHAP programs, filling in gaps as needed. The Warren-based MCHAP focuses on improving the health of children on Medicaid while decreasing costs and taking advantage of available resources, according to its website. Vaughn said the group is aiming to improve services of several pediatric practices identified as “high-volume and low-performing.” Vaughn replaces Monica Woodson, who came on as director in 2014 and is beginning a new role as CEO of the Albany Park Community Center in Chicago.

Gates to head new Bodman office Attorney Floyd Gates Jr. will lead Bodman PLC’s new Grand Rapids office. This will be Bodman’s fifth Michigan location, which includes its Detroit headquarters and full-service offices in Troy, Ann Arbor and Cheboygan. Gates, 49, will be the sole attorney in the Grand Rapids operaGates tion, which he plans to grow. He brings more than 18 years of legal experience in litigation and corporate law. He will be a member of Bodman’s Banking, Business and Litigation and Alternative Dispute Resolution Practice groups, according to a news release. Gates came from Detroit-based Miller Canfield PLC, where he served three years as a principal in the Grand Rapids office.

Snyder appoints 3rd Circuit Court judge Gov. Rick Snyder has appointed Mariam Bazzi to the 3rd Circuit Court in Wayne County. She replaces Judge Daphne Curtis, who retired from the bench. Bazzi, 38, became a Wayne County assistant prosecuting attorney in 2006 and is the lead attorney of the Deed and Mortgage Fraud Task Mariam Bazzi Force. She was assigned to multiple district courts in the county and led complex felony and misdemeanor cases. Bazzi got her start in law as a clerk for the Law Offices of Hamood, Runco & Fergestrom.

May 8, 2017

WATER FROM PAGE 3

It’s a staggering tally, even for a city where unflattering numbers are the norm. And the numbers contradict a narrative repeated by Detroit officials for years that the shutoffs were an attempt to quickly get residents into compliance and then would decline. Instead, they’re becoming a way of life. Last year alone, the number of shutoffs equated to almost 1-in-6 of the city’s 175,000 residential accounts. That’s more disconnections in one year than the total number of homes in the city of Saginaw (about 25,000). In the three years since the campaign began, the city has had 83,000 residential shutoffs, city records show. That’s more than all single-family houses in Southfield, Farmington Hills, West Bloomfield Township and Novi combined. Another 18,000 residential customers could be next, following the April announcement that shutoffs suspended during cold months are resuming.

A legacy of incompetence Other cities nationwide cut service on delinquent accounts, but what makes Detroit’s situation so challenging is that the city is trying to fix customers’ habits while also trying to fix itself. Even city officials acknowledge the Detroit Water and Sewerage Department has a legacy of ineptitude. “Honestly? Everything I hear about the water department is almost all negative,” said Detroit City Councilwoman Mary Sheffield, who has hosted community meetings about water issues. “The inefficiencies in the department needed to be addressed before they started shutting off water to thousands of people’s water and impacting their lives like that. Bills are still being sent to the wrong addresses. Water is still shut off at the wrong houses. Water is still running at abandoned houses. They should fix themselves before they start hurting residents.” She and others said, however, that the department has improved since the shutoff campaign began in 2014, when the city earned condemnation from the United Nations. But Sheffield contends rampant mistakes with bills and customer service have exacerbated the problem. Quantifying the mistakes is impossible, though, because of limitations to the city’s billing records. Detroit officials acknowledge they don’t know the identity of two-thirds of their customers because most bills are sent to “occupant,” and they don’t know if homes that are shut off are occupied. Water officials don’t hide from their reputation. Late last month, a spokeswoman for the department, Chandra Lewis, listened patiently as speaker after speaker at an east-side community forum recited horror stories about water bills. When it was her turn to speak, Lewis smiled, thanked them for bringing the problems to her attention and offered an acknowledg-

Page 2323

C R A I N ’ S D E T RCORAIN I T’S BDETROIT U S I NBUSINESS E S S // M A Y 8 , 2 0 1 7

ment rarely heard from public officials. “I’ll be the first to admit that we are having problems with customer service,” Lewis told the Eastside Community Network. She represents a leadership of the water department that took over less than two years ago. “We ask for your patience. We inherited a mess.”

‘Poverty is poverty’ Founded in 1836, the department began with a water system of wooden logs and a sewer made of brick and stone. It grew to serve 43 percent of the population of Michigan, selling water to 126 suburbs and 4 million residents. Detroit has the reputation for delivering some of the cleanest municipal water in the nation. But over the years, the water department’s failings became the stuff of legend. Its 3,438-mile network of pipes still contains some made of wood. Drawing water from Lake Huron, the system carries 400 million gallons of water per day — though as much as 80 million gallons of that leaks before reaching customers, according to the department’s 2015 master plan. Years of suburban frustration over high bills, and Detroit’s bankruptcy, led the city to agree in 2015 to agree to lease the system to a new regional agency, the Great Lakes Water Authority. The deal gives the city $50 million per year over 40 years to pay for repairs. The suburbs get a stronger voice in setting water rates. And Detroit has to pay its own way, no longer able to pass along the cost of unpaid bills to suburban customers. But Detroit must do so in a city where 40 percent of residents live in poverty, more than 100,000 homes have been foreclosed in the past 10 years, and water sales are declining every year as conservation efforts increase and the population remains flat. Perhaps that’s why water department director Gary Brown looks tired. Meeting with Bridge in late April in his downtown office, Brown recounted a recent meeting with a mother of eight whose water was turned off for nonpayment. Six of her children tested positive for lead paint poisoning, Brown said. Her water was restored, but her problems will persist, he predicted. Brown wondered aloud if the most humanitarian thing would have been to leave her without water, plunging her into such a crisis that social services agencies would have to intervene so the woman could get “more holistic” help. “I’ve disconnected a lot of people. But poverty is poverty. These things happen every day,” said Brown, a former deputy police chief and City Council member who became department director in late 2015.

get on payment plans and numerous other assistance and repair programs, some of which offer dramatic debt relief if residents keep current on payments. “I’ve lived in the city all my life. All my family is here,” Brown said. “I’m concerned about water quality like anyone with any humanity.” In the past year, the department has tripled the size of its customer help staff (bringing it to 30), simplified its bills and added 28 payment kiosks throughout the city to ease what had been long lines at three customer service centers. A payment app is in the works.

REAL ESTATE WATERFRONT PROPERTY

SUMMER WEEKLY RENTALS HARBOR SPRINGS

• In Town, walk to beach • 4 bedrooms 3 baths • NEW Furnishings • Hot tub • A few weeks still available

Joe Blachy (231) 409-9119

Call anytime between 7am & 10pm www.jobstcottage.com

Since the shutoffs began, 91 percent of residential customers are current on bills, up from 77 percent in 2014 and inching closer to the national average of 95 percent, the city said. (Unpaid bills from residents and businesses still total $122 million, though, about a third of the department’s $364 million budget.) Another sign of optimism: The 18,000 now eligible for shutoff is down from 24,000 at this time last year. Those numbers fluctuate as the year progresses and some residents fall further behind in bills. The city disconnects accounts that are more than 60 days and $150 delinquent.

JOB FRONT POSITIONS AVAILABLE

Senior Account Manager for Maxion Wheels, in Novi, MI. Duties: Manage & direct the org & execution of sales strategies, incl’g initiating & maintaining cust contact, for passenger car & large commercial truck wheel programs. Coordinate communication w/ customers’ eng’g, financial, materials planning & qual control departments of assigned accounts. Negotiate prices, retain current bus, ensure all products fully satisfy customer eng’g req’ts & devel detailed quotations & follow-up responses. Facilitate the eng’g & devel of new products in accordance w/ evolving customer needs & requirements & locate & devel potential new customers. Participate in program launches & on APQP (Advanced Product Quality Planning) teams, ensure all eng’g & commercial issues are addressed in a timely fashion & manage & oversee prog team members in addressing customer tech eng’g req’ts. Contribute to the devel of bus unit sales & marketing strategies. 40% travel, both domestic and international. Req’s: Bach Degree in Mech, Manuf’g, Ind, Electrical/Electronics, or Automation & Control Engineering, or Bus. 2 years exp in an account management or prod or application eng’g pos in the auto and commercial wheel manufacturing ind. Exp must include: providing eng’g & prod devel support for passenger car & large commercial truck wheel programs; devel’g integrated wheel designs & technologies, incl’g welding solutions for assemblies between wheel discs & rims; stamp-based manufacturing, spinning, roll-forming & welding processes for wheels; coordinating eng’g prog activities w/ external wheel component suppliers & customers; prog management for new wheel prod introd, from concept through prod’n, in accordance w/ APQP processes; leading internal wheel prod design & eng’g devel activities, incl’g design reviews of new programs & plant launch operations. Exp can be acq’d concurrently. Mail resumes: Kelsey Stalk, HR, Maxion Wheels, 39500 Orchard Hill Place, Ste 500, Novi, MI 48375. Ref Senior Account Manager pos. EOE

420 Howard St., Petoskey, MI 49770

COMMERCIAL PROPERTIES Hall Rd. & 44935 Hayes - Bar & Rest. $2.8M Invstd, Asking $575K 52 Ac./Chesterfield Twp - Underground & Engineering done, 25 Mi. Rd. just E/Gratiot $700K-112 Units - Land cleared ready to dev. Collision Shop - Warren ~ $900K O.B.O.

BILL McMACHEN - 586-915-4441

INDUSTRIAL PROPERTY

ST. CLAIR COUNTY, MI 430,000 Sq. Ft., 20 Acre Portfolio For Sale by Owner. $760,000 Gross Rent, 26 Year History. Industrial, Warehouse, Offices. Much Potential. Email Contact:

srsco3500@gmail.com

OFFICE SPACE

PHOTO STUDIO

POSITIONS AVAILABLE

Communications Manager JGA, a global leader in creating branded environments, is seeking a Communications Manager to manage all internal and external communications, including social media, website, print and public relations. If you are a team player with 3+ years in B2B marketing and PR, have an awareness and curiosity of retail and design, interpersonal skills, positive attitude, high energy, flexible and adaptive to various opportunities; Submit Resumes to: info@JGA.com

FRANCHISE OPPORTUNITIES

9/WOODWARD

STERLING HEIGHTS, MI

City taking steps Brown said he takes a “compassionate” approach. He said the intent of shutoffs is to spur residents to

cdbclassified@crain.com 313.446.6068

ANALYZE MATCH

CrainsDetroit.com/JobConnect |

REQUEST FOR PROPOSALS

The General Retirement System City of Detroit has issued a Request for Proposal for Investment Consulting Services.

VACANT LAND

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

SURVEY

INVESTMENT CONSULTANT RFP

Call 248-398-7000

Call Tom @ 586-759-7220 tpawelkowski@cityofwarren.org

MISCELLANEOUS

MARKET PLACE

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

3.4 Ac. Vacant Land 33353 & 33431 Mound Rd. Zoning Comm’L/Resid’l 178 Rd. Frontage less 50 Foss Rd. Easement

Brown said most disconnected customers have water restored within 48 hours. It’s an assertion that’s challenged by water activists and may be impossible to verify. Bridge has attempted to obtain that data, but city officials said the department’s billing system doesn’t track that information. If Detroit’s new policy is compassion, water activists said they have yet to see it. “It’s getting worse, not better,” said Cecily McClellan, a volunteer with the group We the People of Detroit, which distributes bottled water to disconnected residents.

FRANCHISES AVAILABLE

The deadline for submitting a proposal is June 2, 2017.

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

For further information please visit our website: www.rscd.org

BUSINESSES FOR SALE

INDUSTRIAL SERVICES

WHITTEMORE, MI WOODSHOP

C.W. JENNINGS INDUSTRIAL EXCHANGE

Fully Equipped Millwork/Cabinet Shop 6888 Whittemore Rd, Whittemore, Mi 20,000 sq ft - $225,000

Call Pete @ 989 239-3666 Sahasa Realty Corp

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

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 8 , 2 0 1 7

INSURANCE FROM PAGE 1

Unlike other states, sliding is not explicitly outlawed in Michigan law. But state Insurance Director Patrick McPharlin issued an administrative order in September 2015 barring the practice under a law that allows him to take action against insurance agencies that engage in fraudulent and dishonest sales tactics. L.A. Insurance is challenging whether McPharlin's bulletin is legally binding. As state regulators scrutinize L.A. Insurance’s sale of roadside assistance plans, the department also has threatened to ban the seven-day auto insurance policies that L.A. Insurance markets to Detroiters who can’t afford big down payments for traditional six-month plans. L.A. Insurance sells seven-day insurance plans to Detroit motorists for as little as $199 in what’s emerged as a legal workaround for Detroiters to get their vehicles registered and then drive without insurance for the rest of the year. The seven-day plans are a symptom of Detroit having some of the highest auto insurance rates in the country. Beginning last July, the state insurance department began taking action against L.A. Insurance in a series of six complaints seeking to revoke the licenses of a dozen agents and shut down 10 agencies from Detroit to Lansing. In regulatory filings, DIFS accuses L.A. Insurance employees of selling auto insurance without a license, misrepresenting themselves as a licensed superior, disguising the cost of a roadside assistance plan as part of auto insurance premiums, falsifying documents and deceiving recipients of a welfare-to-work program. The investigations center on L.A. Insurance agents adding six-month or one-year roadside assistance and emergency towing plans from Nation Safe Drivers Auto Club without customer consent. Anthony Yousif, CEO of L.A. Insurance, said his company’s franchise agencies have been unfairly targeted by state insurance investigators who use their broad powers to pull transaction records and then contact customers and tell them they were “illegally charged.” “The customers are not filing the complaints,” Yousif told Crain’s. “They’re creating their own complaints. The investigator creates the problem.” Andrea Miller, spokewoman for the Department of Insurance and Financial Services, said she cannot comment on “any ongoing enforcement cases.” The regulatory complaints were filed in July and August 2016 and March 3 of this year and most rely on interviews with L.A. Insurance customers and undercover stings dating back to 2013. Hearings before administrative law judges are set for later this summer. “In general, investigations can take months or years to complete, depending on the nature of the conduct involved and number of consumers affected,” Miller said in a statement to Crain’s. “DIFS’ prosecution of enforcement cases can be affected by many factors, including, but not limited to, available department resources, cooperation of witnesses, and coordination of investigation activities with other state departments and government agencies.” The Department of Insurance and Financial Services has previously denied it is targeting L.A. Insurance in its ongoing review of the legality of seven-day auto insurance plans. But Yousif said insurance regulators won’t give guidance on how to sell the roadside insurance coverage since a judge blocked the department from shutting down three stores in 2013 over previous allegations of misleading and dishonest business practices. “At that time, we asked the department of insurance, ‘Tell us how you want us to oper-

ate?’” Yousif said. “They don’t want us to be in compliance. They want to shut us down.” Those three stores — two in Ypsilanti and one in Owosso — are among the 10 facing closure in the latest regulatory action for allegedly having unlicensed agents selling insurance and misleading customers that the roadside assistance plan was included in their no-fault coverage.

Added charges In several cases, records show, L.A. Insurance's roadside assistance charge added about $100 to a roughly $250 seven-day insurance plan. But the prices for a week of insurance coverage and at least six months of roadside assistance protection varied wildly from store to store, according to investigation records. “The amount that will be charged is often determined by the agent during the insurance sale and depends on how much money the customer has available for the insurance purchase. A portion of that money is then diverted to purchase the NSD membership,” state insurance regulators wrote in one complaint against L.A. Insurance operators Sonny Kassab and Sandy Kassab, who run two agencies in Detroit. A customer identified only by the initials “DW” told investigators he “wanted to spend up to $500 to start a six-month policy” when he went to the Kassabs’ store at 17516 Livernois in Detroit’s University District on July 29, 2013. After the customer was told the down payment for a six-month plan would exceed $500, Sonny Kassab quoted him $370 for a seven-day policy. “DW” was charged at least $200 more — over 54 percent — for a roadside service plan that was “disguised as part of the premium for the insurance policy” that cost him $370, according to the complaint filed against Sonny Kassab and Sandy Kassab. Just $104 — or 28 percent of the total bill — went to covering the premium of the customer’s July 29, 2013, bill for seven-day insurance. The remaining $66 “was converted to personal or business use” by the L.A. Insurance agent, according to the Aug. 1, 2016, complaint. In that complaint, the state alleges the Kassabs repeatedly engaged in a “prohibited practice of sliding by using the cover of the insurance transaction to trick customers by including (Nation Safe Drivers) membership in the insurance transaction without their permission or knowledge.” Attorneys for L.A. Insurance argued in a May 1 court filing that “sliding” roadside assistance plans into insurance policies is not expressly banned in state insurance law or regulations and is “merely referenced in a 1981 non-binding administrative bulletin, which itself states that it does not have the force and effect of law.” “These claims fail as a matter of law because the conduct complained of is not actually prohibited by statute or properly promulgated administrative rules — or even by non-binding bulletins,” the company’s attorneys wrote. Royal Oak-based L.A. Insurance has hired Lansing attorney John Pirich of the Honigman Miller Schwartz and Cohn LLP law firm to defend its agents and agencies in the administrative law proceedings, Yousif said. Pirich is regarded in Lansing as one of the top attorneys for navigating the halls of power in state government. He most recently represented President Donald Trump in stopping a December recount of Michigan’s presidential election results.

Illegal in most states A representative for Boca Raton, Fla.-based Nation Safe Drivers said the automobile club

was was for sista cies wee “ kind claim ers. awa Th mos “ the give eye, wou Th from to th of M mot in o insu wom Y are seve com to N they claim ing al,” Y B form side it. D L.A. Lah Cra sell Det road cha Th

FRO

Th quis base Hel Alle prov soft outh upd an burg tom sum on-g ya T lion con wire “ will of elec tain tial and CEO “As and men part gree atre are grow

e in

and cloedly nce side ault

surbout nce

verssise to

ften nce the purrted inaint asses in

tials end n he is in 3. pay500, day

e— plan m for acnny

ll — omnce. onal ent,

assracsurby ship per-

n a ssisexegu1981 h itand

ause proadding

ired man detra-

the wer preng a ntial

ased club

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 8 , 2 0 1 7

was unaware that L.A. Insurance was under investigation in Michigan for allegedly sliding its roadside assistance plans into insurance policies until contacted by Crain’s last week. “We would never condone that kind of activity,” said Eric Sharfstein, claims director at Nation Safe Drivers. “Our customers should be made aware and offered the product.” The practice of sliding is illegal in most states, Sharfstein said. “It is something that does go on in the industry, unfortunately, and it gives insurance agencies a black eye,” he said. “It’s something we would not approve of at all.” The roadside assistance plans from Nation Safe Drivers are similar to the kind of vehicle assistance AAA of Michigan offers its members. But motorists have to be AAA members in order to purchase a separate auto insurance policy from AAA, spokeswoman Susan Hiltz said. Yousif said L.A. Insurance’s agents are trained to inform customers that seven-day and six-month plans come with an optional membership to Nation Safe Drivers. “Not only are they telling them, we’ve got disclaimers that shows that they’re buying it and also shows that it’s optional,” Yousif told Crain’s. But customers are not always informed they’re purchasing the roadside assistance plan before they buy it. During an April 4 interview of an L.A. Insurance agent at an store at Lahser and Eight Mile in Detroit, a Crain’s reporter observed the agent sell a seven-day insurance policy to a Detroit man without disclosing the roadside assistance plan until after charging his credit card. The agent, Takara Thompkins, of-

DELPHI FROM PAGE 3

The same year, it went on an acquisition binge, acquiring U.K.based cable equipment supplier HellermannTyton for $1.7 billion; Allen Park-based Control-Tec LLC, a provider of telematics and analytics software, for $100 million; Plymouth-based over-the-air software update provider Movimento Inc. for an undisclosed sum; Pittsburgh-based software developer Ottomatika Inc. for an undisclosed sum; Warwick, Rhode Island-based on-glass connectors supplier Antaya Technologies Corp. for $151 million; and New York-based media connectivity module supplier Unwired Holdings Inc. for $191 million. “Looking ahead, new mobility will be defined by the convergence of automated driving, increased electrification, and connected infotainment, all enabled by exponential increases in computing power and smart vehicle architectures,” CEO Kevin Clark said in a statement. “As a result of our strategy to grow and expand through organic investments, acquisitions, and strategic partnerships aligned to the safe, green and connected industry megatrends, our (electronic) businesses are well positioned for significant growth as the only global provider of

roadside assistance on a seven-day plan that cost $121. “I thought the amount I had paid was for the seven-day policy,” said Coburn, who signed a document acknowledging she had purchased “roadside service and towing.” “Shame on me for not catching it.” Coburn said she returned to the L.A. Insurance agency the day Blood called her and demanded a refund, which the agent issued. “They’re charging for something that’s not being explained unless somebody calls them out on it,” Coburn said. “And they’re making all of this money.”

Public assistance recipients

fered to refund $100 on a $271 charge to the man’s credit card when he questioned the charge. After being told the roadside assistance plan would last well beyond the life of his actual insurance coverage, the man decided to keep the membership. Catherine Coburn, a waitress and single mother of two from Clinton Township, said she received a call

last month from state insurance investigator Justin Blood about the $271 seven-day plan she bought in January at an L.A. Insurance in Roseville. Blood’s call and a subsequent questionnaire he sent Coburn suggests the insurance department continues to investigate L.A. Insurance. Coburn said Blood asked whether she knew she paid an extra $150 for

State insurance regulators also say their investigation of L.A. Insurance agencies in Ypsilanti and Owosso owned by Jennifer and Laurence Essak “uncovered unfair and dishonest treatment of public assistance recipients.” A former L.A. Insurance employee told investigators he was trained to “manipulate the numbers to inflate” insurance quotes for individuals in a welfare-to-work program called PATH (Partnership, Accountability, Training, Hope) that helps subsidize auto insurance premiums so people can get to work. To get taxpayer assistance, the PATH recipient must present two insurance quotes for a six-month policy to a service provider, which then cuts a check to the insurance agency. The state insurance department’s complaints against L.A. Insurance accused agents of falsifying receipts to “conceal” charges for roadside assistance plans that weren’t an approved use of the taxpayer funds.

an integrated ‘brain and nervous system’ of the vehicle.” Analysts believe the electronics business will be able to generate higher returns once separated from the capital-intense powertrain unit. “We believe higher growth potential exists as the industry adopts electrified powertrains, which require more robust electrical architectures,” Richard Hilgert, senior equity analyst of the auto sector for Chicago-based equity research firm Morningstar Inc., said in an analyst note. “Greater numbers of circuits per vehicle will also be required to meet higher demand for electronic devices. Advanced driver-assist systems and autonomous driving systems are included in Delphi’s electronics product portfolio.” Hilgert estimates those electronics components will grow 20 percent year-over-year for the next decade. “Because less capital-intense algorithm development is a large part of the value add for the company’s electronic control devices, in conjunction with higher margins, we believe Delphi’s remaining businesses will have higher returns on invested capital,” he said in the note. Steven Wybo, senior managing director of Birmingham-based advisory and turnaround firm Conway MacKenzie Inc., said the move is designed to boost Delphi’s ability to

draw investment and please Wall Street. “I think this is a good move, as Wall Street likes to punish auto stocks and reward tech stocks; Tesla is a prime example,” Wybo said. Johnson Controls Inc. performed a similar spinoff last year, separating its building efficiency and battery business apart from its automotive seating business, now called Adient. Adient plans to open a $75 million headquarters in the city of Detroit later this year. Delphi joins a growing list of auto companies heavily investing in autonomous vehicle technology. Last year, GM acquired California startup Cruise Automation for $1 billion, invested $500 million in Lyft and launched its own car-sharing service called Maven. Ford Motor Co. created a subsidiary based on mobility and partnered with Uber. Fiat Chrysler Automobiles NV formed a relationship with Google for automated minivans. The city of Detroit hired a new mobility chief in December. Fellow supplier, Southfield-based Lear Corp., bought the intellectual property and technology of Santa Rosa, Calif.-based Autonet Mobile Inc., an Internet-based telematics and app service provider for the automotive market in 2015 and acquired Troy-based automotive con-

nectivity supplier Arada Systems Inc. — which supplies vehicle-to-infrastructure technology on roadways, including in the city of Detroit. Liam Butterworth, currently senior vice president and president, Powertrain Systems, will become president and CEO of the new entity. Timothy Manganello, currently an independent director on the Delphi board, will become nonexecutive chairman of the new Powertrain company’s board of directors. Manganello was most recently chairman of the board and CEO of BorgWarner Inc. The public powertrain business, which will have about $4.5 billion in annual revenue, will likely become an attractive M&A target in the near future, Wybo said. It’s thought that Delphi already tried to sell its powertrain unit before settling on spinning it off. Hilgert, in the analyst note, said Delphi was likely unable to secure its target price from potential buyers that could have included BorgWarner, Continental Automotive Systems or Magna International. “In our opinion, there was no shortage of prospective buyers leading us to the conclusion that management was disappointed by buyers that might have wanted to cherry-pick individual product lines and/or the valuation that buyers

PHOTOS BY CHAD LIVENGOOD/CRAIN’S DETROIT BUSINESS

An L.A. Insurance office on Van Dyke.

Catherine Coburn, a waitress and single mother of two from Clinton Township, said she received a call last month from a state insurance investigator . Insurance regulators accuse Laurence Essak of engaging in an “egregious” scheme of “bait and switch sales” where the PATH recipient would get a $300 check for the down payment on a six-month policy but be given a seven-day policy that cost $83. The remaining $217 would be applied to a Nation Safe Drivers roadside membership fee without the customer’s knowledge, according to the complaint. The Essaks, who also are being represented by Pirich, did not return messages left at their Ypsilanti stores. The CEO of L.A. Insurance said the sale of seven-day plans to public assistance recipients was an error. “If somebody sold them anything under a six-month policy, they’re not doing their job or they weren’t trained properly,” Yousif said. Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

were willing to pay,” Hilgert said in the note. Delphi may be positioning itself as a tech company, but it has deeply automotive roots. It was formed in 1994 as a unit of GM, then called the Automotive Components Group. In 1999, it was spun out to become an independent public company. Things went south from there, with the U.S. Securities and Exchange Commission investigating the supplier for irregular accounting practices. It filed Chapter 11 bankruptcy protection in 2005, resulting in the closing of more than two dozen plants and elimination of tens of thousands of jobs, before emerging from bankruptcy in the midst of the automotive industry collapse in 2009. Delphi controversially incorporated in the U.K., but maintained its operational headquarters in Troy. In 2016, it won an appeal to the Internal Revenue Service on its U.S. tax liability. The IRS wanted to tax Delphi as a U.S. entity, which would have cost the supplier hundreds of millions in back taxes. As a U.K. tax resident, Delphi isn’t required to pay U.S. taxes on its sales tied to overseas operations and is only taxed in the U.S. on income related to sales in the U.S. Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 8 , 2 0 1 7

QLINE 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 and Events Kim Winkler, (313) 446-6764 or kwinkler@crain.com Digital Product Manager Carlos Portocarrero, (313) 446-6056 or cportocarrero@crain.com Membership Director Nancy Hanus, (313) 446-1621 or nhanus@crain.com Creative Director David Kordalski, (216) 771-5169 or dkordalski@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 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 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.

FROM PAGE 1

Also already paid for are the designs for any additional streetcars, although the fleet of six likely could support a modest extension of the line. “Within 10 years, I would not be surprised if there are a couple of connector spokes,” said Cullen, who added that the QLine was intended to be a demonstration project and to be part of a wider public commuter transit system that includes city and suburban bus systems and Amtrak. Aside from more tracks north on Woodward, possible candidates for streetcar service include Monroe Street in Greektown, and Jefferson Avenue, which has population density and economic development potential. But any expansion faces major hurdles: “Who’s the champion of that? Where’s the money come from?” Cullen said. The QLine’s champion was Roger Penske, the M-1 Rail chairman who has served as Detroit’s mastermind for major projects such as Super Bowl XL in 2006. Penske, the auto racing and truck rental industrialist, personally convinced many of the QLine’s financiers to commit to the project. Penske has intimated that he’ll be stepping back from his civic efforts, so someone else would have to quarterback a major expansion of the streetcar system. That person also would have to navigate the political and economic hurdles that any transit project must overcome. Even without some of the startup costs, any streetcar expansion still will cost tens of millions of dollars. The

HOSPITAL FROM PAGE 3

“Those people will not be in position to buy insurance, so for us, the paramount is protecting the Medicaid expansion. We worry about that being phased out or eliminated,” he said. McGuire said of secondary concern is losing federal subsidies that help pay for private insurance of more than 85 percent of the 350,000 people on Michigan’s health insurance exchange. “Some portion of those will become uninsured if the exchange piece goes away,” he said. Though McGuire said most health systems in Michigan won’t face immediate budget decisions this year if Obamacare is phased out or radically altered, repeal would have a devastating effect on many in 2019. “There are a lot of dollars getting paid through the Healthy Michigan plan,” he said. “People don’t realize how much (Obamacare) has helped keep a lot of health systems afloat the past three or four years.” Moody’s Investor Services predicts that Trump’s effort to eliminate parts of Obamacare that expands Medicaid and private insurance coverage “would be negative for the nonprofit health care sector.” Among metro Detroit’s major hospital systems: J Beaumont Health: Eight-hospital Beaumont enjoyed an operating income increase of 43 percent to $200.6 million in fiscal 2016 ended Dec. 31. Over the last three years, Beaumont’s operating margins have steadi-

QLine benefited from having major deep-pocket private donors along the tracks, such as Quicken Loans, Compuware and Ilitch Holdings, along with Wayne State University, Detroit Medical Center and Henry Ford Health. The single biggest QLine donor was the Troy-based Kresge Foundation, and its CEO, Rip Rapson, said he worked hard to convince the nonprofit’s board to provide what eventually totaled $50 million for the project. Now, the foundation is eager to aid the high-speed bus regional transit effort, but Rapson wouldn’t rule out financing help for streetcar expansion. “It’s very attractive,” he said. Having the Regional Transit Authority of Southeast Michigan in place also will make any effort to get federal transit dollars for expansion easier, Cullen said. Basically, a city or region must have an RTA established to act as the pass-through for federal funding, and the lack of one locally hampered M-1’s early efforts. Cullen said the demand and economic case are there for adding service, but there’s nothing formally in the works from M-1 beyond getting the QLine running. “We as a board have not signed on for any additional tasks,” Cullen said. One transit insider said that demand will fuel the political will for expansion, especially beyond the city. “I hope once people have a chance to ride on it, to experience what convenience modern transit can really mean, more will say, ‘Why don’t we have this in Royal Oak and Troy and Grosse Pointe,’ and we’ll have demand,” said Megan Owens, executive director of Detroit-based Transporta-

tion Riders United. That echoes what the QLine’s founders have said all along. “People get a chance to ride a modern transit system and see the convenience and service it provides, and they’ll say ‘What about us, let’s do more of this sort of thing’ whether it be light rail or bus-rapid transit or streetcar,” said Leo Hanifin, dean emeritus at the University of Detroit Mercy’s College of Engineering and Science, and an M-1 Rail board member who led the original streetcar study that became the QLine.

ly risen to 4.6 percent in 2016, 3.4 percent in 2015 and 3.1 percent in 2014. “We had very strong volume growth of the organization, year over year across the spectrum” said John Kerndl, CFO of Beaumont Health. Net revenue grew 6.7 percent to $4.4 billion. J Henry Ford: Despite a 13 percent increase in total revenue to $5.7 billion, six-hospital Henry Ford recorded a 15 percent decrease in operating income to $95.1 million in fiscal 2016 ending Dec. 31. “It was a good year for us by historical perspective. By adding Allegiance and HealthPlus, we had significant growth in revenue, $5 billion to $5.7 billion (in 2016),” said Edward Chadwick, Henry Ford’s CFO. But Henry Ford’s operating margin dropped to 1.7 percent last year from 2.2 percent in 2015. The decline in income primarily was due to the loss of a major Medicaid contract for HAP Midwest Health Plan and PPO business on the Obamacare exchange for 2016. Henry Ford’s net income increased to $275.6 million from $72.1 million, a 282 percent increase, primarily because of $240 million of equity added from the Allegiance and Health Plus acquisitions. J McLaren Healthcare: During its first six months of fiscal 2017 ending March 31, McLaren Healthcare Corp., an 11-hospital system based in Flint, recorded a 3.8 percent increase in operating income to $67.8 million from $65.3 million in 2016. McLaren’s operating margin rose to 3.6 percent from

1.8 percent. “We are having another good year. We are continuing to grow as a company and managed our costs well,” said David Mazurkiewicz, McLaren’s CFO. After investment income gains and other nonoperating income, McLaren’s net income increased 66 percent to $142.9 million in the first half. J St. John Providence: For the first six months of fiscal 2017 ending Dec. 31, St. John Providence Health System, a five-hospital system based in Warren, had a slightly misleading 38 percent decline in operating income to $29.9 million from $48.3 million for the same period in 2016. But McGuire said 2016 revenue and income numbers were slightly inflated because the state of Michigan finally paid its overdue bill from Healthy Michigan Medicaid. St. John’s revenue increased 1.8 percent to $1.09 billion, while expenses grew 3.6 percent to $1.06 billion. J Trinity Health: The Livonia-based national Catholic system with 90 hospitals, including eight in Michi-

Funding The streetcar, which was the brainchild of longtime local transit official John Hertel, was originally envisioned as a privately funded $100 million project. That has grown to at least $187.3 million to cover construction, administrative and early operating costs. The money comes from corporate, foundation and public sources. M-1 will have a final QLine capital cost by the end of June, Cullen said. The system also will have recast its operating budget by then, which Cullen said will be more than $6 million annually because, in part, of a late decision to contract the city’s transit police for streetcar safety rather than use private security. Previously, the yearly operating budget had been forecast at $5.8 million. A long-term question that remains unanswered is how the system will be funded in the future. M-1 operating funding is available for several years of service, but the original intention was for the system to be ab-

sorbed and funded by the publicly funded regional transit authority. However, the RTA failed to win voter support for a transit tax in November. Cullen said other options included seeking corporate donations, selling more advertising, and reselling the naming rights. Quicken Loans Inc. in March 2016 announced that it had bought the naming rights for $10 million over five years. Quicken Chairman Dan Gilbert is M-1 Rail’s co-chairman, and Cullen is one of his top lieutenants. The ideal operational funding solution, Cullen said, is the RTA getting a regional tax approved. “We think there’s a path to sustainability and it depends on what happens to the RTA,” Cullen said.

Organizational changes Over the next 12 months, M-1 Rail will scale back because an operating streetcar system no longer requires the same size organizational infrastructure, Cullen said. What that means remains to be seen. “We’re going to revamp the organization to become smaller and leaner because we won’t be building it anymore,” he said. One thing it does mean is that Cullen expects to step away from the CEO role. His future role will be more appropriate as an M-1 Rail board member, he said. While nothing is official, it’s likely that current COO Paul Child could assume the CEO role. “Paul has effectively carried a lot of that role already,” Cullen said. Bill Shea: (313) 446-1626 Twitter: @Bill_Shea19

gan, the first six months of fiscal 2017 ended Dec. 31 saw operating income jump to $109.9 million, up from a loss of $27.2 million, which includes a premium adjustment loss of $65 million. Operating revenue improved 9.9 percent to $8.7 billion for the same six month period in 2016. Trinity’s Southeast Michigan affiliate is Ann Arbor-based St. Joseph Mercy Health System, which did not report individual financial data

J University of Michigan Health System: UMHS operating income in-

creased 80 percent to $121.1 million for a 6.5 percent margin during the first six months of fiscal 2017 ended Dec. 31 from $67.3 million. Revenue also grew 8.1 percent to $1.85 billion. Last year, UMHS completed the acquisition of Wyoming-based Metro Health Corp., adding net patient revenue of about $280 million. Detroit Medical Center, which is owned by Dallas-based Tenet Healthcare Corp., did not report financial data to Crain’s, per its usual practice, and would not comment further.

INDEX TO COMPANIES These companies have significant mention in this week’s Crain’s Detroit Business: Beaumont Health Delphi Automotive plc Ford Land Development Corp.

Michigan First Credit Union

Phimation Strategy Group

QLine

Henry Ford Health System

Quicken Loans

L.A. Insurance

Shinola Detroit

McLaren Healthcare

Short’s Brewing Co.

MedNetOne Health Solutions

The Recovery Project

C R A I N ’ S D E T R O I T B U S I N E S S // M A Y 8 , 2 0 1 7

THE WEEK ON THE WEB

April 29 - May 5 | For more, visit crainsdetroit.com

Oakland University names new president

akland University has named Ora Hirsch Pescovitz, M.D., its seventh president. The board of trustees announced its decision Thursday after the university reviewed more than 60 candidates and hosted several on-campus visits and forums. It came down to two finalists: Pescovitz and Carl Camden, CEO of Troy-based Kelly Services Inc. Camden is stepping down from that position effective Wednesday. Pescovitz will take up her post at Oakland on Aug. 13 under a five-year contract. A faculty survey conducted in the leadup to the vote indicated that the faculty preferred Pescovitz over Camden and trusted more in her abilities to lead the university and implement her vision. Pescovitz is senior vice president for Eli Lilly and Co.’s pharmaceutical company and U.S. medical leader for Lilly Bio-Medicines and former CEO of the University of Michigan Health System. A renowned pediatric endocrinologist and researcher, she has published more than 190 papers and books, according to a news release. She also serves as an adjunct professor of pediatrics at the Indiana University School of Medicine and was previously executive associate dean for research affairs there. Among her awards and honors, she was elected to the National Academy of Medicine. Pescovitz was the University of Michigan’s first female executive vice president for medical affairs and health system CEO. She stepped down from UM in June 2014 and accepted the Eli Lilly position the same month. Oakland University announced in September it would not renew the contract of George Hynd, who served as president for three years, earning $400,000 annually.

BUSINESS NEWS The hosts of Detroit’s top-rated morning radio show, “Dave and Chuck the Freak” on 101.1 FM WRIF, got four-year contract extensions. J Hockeytown Cafe in downtown Detroit is getting a new broadcast and recording studio plus performance space on its second floor for CBS Radio Detroit stations. J Clarkston native Luke Jaden is filming an adaptation of horror author Stephen King’s “My Pretty Pony” at Blake’s Orchard in Macomb County and areas throughout Romeo, with costumes and accessories provided by Dearborn-based Carhartt Inc. J Jonathan Holtzman’s new Farmington Hills-based multifamily real estate company City Club Apartments has taken over management of some of its apartment assets. The apartments were previously manJ

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

15 percent

The growth metro Detroit saw in construction jobs over the past year, according to a study by the Associated General Contractors of America.

93,000

The number of tickets the University of Michigan will sell for 2017 Wolverine home football games in response to increased demand.

$60 million

Total cost of the Wagner Place development, a Ford Land Development Corp.-led project that broke ground last week in west downtown Dearborn and is expected to house 600 Ford Motor Co. workers.

aged by Village Green Cos., of which Holtzman was formerly CEO. J A.G. Simpson (USA) Inc. is planning an expansion of facilities in Sterling Heights, which is expected to generate capital investment of $9 million and create 50 jobs. The Michigan Economic Development Corp. awarded the company a $400,000 performance-based grant for the project. J Comerica Park will host an International Champions Cup match on July 19 between A.S. Roma and Paris Saint-Germain. It will be the first soccer event played at the home of the Tigers. J Livonia-based supplier Tower International Inc. said its first quarter net income more than doubled as sales rose slightly and the company avoided major costs it faced during the same quarter last year, Automotive News reported. J Bingham Farms-based Floyd Street LLC started construction Monday on The Park, an eight-unit luxury apartment complex in Birmingham at 1193 Floyd St. The Park will offer four

811-square-foot one-bedroom units and four 1,140-square-foot two-bedroom units costing $2,000-$3,000 a month. J Cohen & Co. Ltd. has opened an office in the Chrysler House in downtown Detroit. The 5,500-square-foot space at 719 Griswold St., leased from Bedrock LLC, is the Cleveland-based accounting firm’s eighth location. J Banyan Investments LLC and Detroit Mayor Mike Duggan broke ground on a $10 million renovation of the historic St. Charles School building in Detroit’s Islandview neighborhood.

OTHER NEWS The World Heritage Foundation-Prechter Family Fund has made a new commitment to match up to $5 million in gifts made to support bipolar disease research at the University of Michigan. J Wayne State University’s Center for Urban Responses to Environmental Stressors received a $7.5 million fiveyear renewal from the National Institute of Environmental Health Sciences of the National Institutes of Health. J The Battle Creek-based W.K. Kellogg Foundation has made a $3.5 million grant to support the Detroit Promise scholarship program for high school graduates in the city. J Henry Saad, a Michigan Court of Appeals judge since 1994, will retire from the bench effective Nov. 30. J The city of Detroit opened applications last week for its TechHire Bootcamp training program aimed at Detroit residents interested in becoming entry-level developers. J The city of Detroit has issued requests for proposals as it seeks out assistance on planning and design strategies for Russell Woods, Jefferson Chalmers and Banglatown under its continuing neighborhood redevelopment initiative. J The city of Detroit has begun demolition of the former Animal Control building at Riverside Park as part of a multimillion dollar plan to expand and improve the park on the city’s southwest side. J Two Michigan high school teams earned top honors at the FIRST Robotics World Championship in St. Louis, a competition that Detroit will host for the next three years. J

KIRK PINHO/CRAIN’S DETROIT BUSINESS

The Country Club of Detroit in Grosse Pointe Farms is set to host a U.S. Amateur championship Aug. 29-Sept. 3, 2020, the United States Golf Association announced.

RUMBLINGS

Event to reveal results of Kresge Foundation study

ational business leaders and local entrepreneurs remain bullish on Detroit, according to a new study due out from the Kresge Foundation. The Troy-based foundation is set to share specifics on the latest findings from the Detroit Reinvestment Index, a report launched in 2016 to that measure Detroit’s comeback from bankruptcy in 2014 through the perceptions of business leaders and entrepreneurs, in Washington, D.C. on May 17 at an event hosted by The Brookings Institute. Kresge Foundation President and CEO Rip Rapson; Pamela Lewis, head of the New Economy Initiative and Anthony Hatinger, co-Founder and CEO of Detroit Ento — an Eastern Market-based startup that’s turning locally sourced insects into food products like tortilla chips — will join other corporate, philanthropic and nonprofit

Rip Rapson: Kresge president and CEO.

Pamela Lewis: Leads the New Economy Initiative.

leaders on a panel discussing Detroit’s strategy to bet big on small businesses, whether it can serve as a model for other Rustbelt cities and what small business owners and entrepreneurs still require in order to continue to power Detroit’s comeback. Want to listen in? The event will be webcast live and is open to the public.

Nearing run for governor, Calley touts repeal of MBT L t. Gov. Brian Calley inched closer to a campaign for governor with a new online video advertisement last week that makes a direct appeal to business owners. “I got rid of the Michigan Business Tax — it just didn’t work,” Calley says in the new ad paid for by his political action committee. “We replaced it with it with one that was fair for all businesses — Brian Calley: Has large and small. history with Your govern- business taxes. ment got that right.” As president of the Senate, Calley cast a tie-breaking vote in 2011 on the main package of legislation that replaced the MBT with the 6 percent Corporate Income Tax. It was part of a $1.8 billion tax cut for businesses that was paid for, in part, by the elimination of multiple tax credits, deductions and exemptions for individuals. But Calley’s web ad only tells part of the story about the demise of the Michigan Business Tax. As a Republican state representative from Ionia County, Calley was involved in the crafting of the compromise MBT legislation in 2007 and joined then-Democratic Gov. Jennifer Granholm at the bill signing. The MBT, a levy that taxed a combination of corporate income and gross receipts, was replaced in 2011 with the flat 6 percent Corporate Income Tax. Some large businesses remain in the MBT system to cash-in job retention and creation tax credits through 2031.

Calley co-sponsored three of the bills that were part of MBT legislation in 2007 that replaced the Single Business Tax, which the Legislature repealed at the behest of a voter-initiated campaign to overhaul the tax code for business profits. Calley’s work with Democrats on the MBT could be an issue used against him in a Republican primary next year. In an interview with Crain’s, Calley defended his work on the much-hated MBT with Democrats, who controlled the state House and governor’s office at the time. “There are times you have to approach things with incremental progress,” he said. “... If I had walked away from the process, I’m afraid we wouldn’t have been able to make even incremental progress in protecting as many small businesses as possible.” Calley said he worked to ensure small businesses could pay a 1.8 percent income tax rate as an alternative to MBT’s complicated mixture of a 4.95 income tax and 0.8 percent gross receipts tax. The MBT legislation Calley was involved in crafting lowered the alternative rate from 2 percent and increased the limits on owner income, gross receipts and business income for filing under the alternative tax, according to the nonpartisan House Fiscal Agency. “I was able to expand the number of businesses that qualified for (the alternative tax),” Calley said. Calley is planning an event on May 30 that’s expected to be his launching pad for the 2018 governor’s race. “It’s going to be a great day,” Calley said.

DETROIT is a RISING LEADER in INNOVATION and CREATIVITY – and so are YOU.

You need a university that can say the same.

June 30 » » global.cmich.edu/MET Apply by

Learn more at

With a Master of Entrepreneurial Transactions degree from Central Michigan University, you’ll gain the additional skills to turn your ideas into reality. Finish your online degree in as little as one year and receive personalized support and education from industry leaders.

CMU is an AA/EO institution, providing equal opportunity to all persons, including minorities, females, veterans and individuals with disabilities (see cmich.edu/ocrie). 46744 4/17