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

NOVEMBER 6 - 12, 2017 Patti Poppe: Powering change within, without

The world of self-storage, not so sleepy anymore Industry holds promise for SE Michigan. Page 3

Page 4

Transportation

Amazon isn’t lighting fires on transit push

A year later, getting suburbs on board

The C-suite

Michigan’s 100 largest public corporations have made only slight progress in the past decade on adding women to their boardrooms and executive suites, which remain overwhelmingly male. 15% of corporate board members are women.

13% of executive officers are women.

9% of the highest-paid officers are women.

Need to know

By Bill Shea bshea@crain.com

The two chief opponents of last year’s failed regional transit tax, now helping steer the next proposal, say Detroit’s pitch for Amazon isn’t pressuring them to rush. And if that means nothing is on the ballot in 2018, so be it. A year after voters rejected a four-county tax to fund buses and trains, transit leaders are getting Oakland County Executive L. Brooks Patterson and Macomb County Executive Mark Hackel to help design a system they’re willing to campaign for. Rushing, they say, will just risk another failure, Amazon or not. “What we’re doing is allowing the regional leaders, their staffs, to work toward consensus. They have been good about meeting regularly,” said Regional Transit Authority of Southeast Michigan Board Chairman Paul

JJPatterson, Hackel won’t be rushed but are open to a new RTA plan JJTalks remain ongoing among deputies JJRTA may soon get permanent leader

Hillegonds. “The last model was to work independently and present the plan to leaders. They objected to and didn’t get on board with that plan.” To make the new strategy work, RTA staff has been meeting regularly with the elected leaders’ deputies to discuss a new master plan, how it should be funded, and when it could go on the ballot. Hillegonds, who is senior vice president of corporate affair at DTE Energy and a former longtime state lawmaker wants a plan everyone actively supports before going to the public. Patterson and Hackel’s opposition last year, rooted in concerns over SEE RTA, PAGE 20

Entrepreneurship

Warmilu braves startup growing pains By Kurt Nagl knagl@crain.com

When Grace Hsia founded Warmilu in 2011 as part of a class at the University of Michigan, her performance as CEO made a difference in her grades. Now, with seven full-time employees relying on a paycheck and, as she sees it, thousands of babies depending on her company’s product, the stakes are higher. “The responsibilities on my shoulders as CEO have changed tremendously,” Hsia, 27, said. “People have chosen to put their livelihood and trust in me.” Warmilu (Warm + “I love you”) is headquartered in a 2,000-square-foot production facility in Scio Township, near Ann Arbor, where Hsia’s team makes non-electric warming blankets called IncuBlankets for infants. The main element of the fivecrainsdetroit.com

pound blanket is a plastic pack called the InstaWarmer, which generates heat through a chemical reaction. The pack stays warm for three to six hours after clickGrace Hsia: Not ing a disc in the planning to bootstrap anymore corner to activate. The company’s staff consists of two medical doctors, a chief operating officer, a vice president of business development and two seamstresses. They produce anywhere from 40 to 80 blankets per week, a substantial increase from the five to seven per week made by only two employees when the company started. SEE WARMILU, PAGE 21

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NEWSPAPER

Women make few inroads in top ranks Little progress in boardrooms, executive suites By Dustin Walsh dwalsh@crain.com

Women’s representation in the boardrooms of Michigan’s public companies has barely budged in the past decade. In the executive suite, the lack of progress is even more stark. Women today occupy only 15 percent of board seats at Michigan’s top 100 companies by market

capitalization, according to a biennial study conducted by Wayne State University for the Detroit-based Inforum Center for Leadership. Of the 102 new directors added since 2007 to these companies, 37 were women — roughly 36 percent of new director appointments were women. The new picture demonstrates that a decade’s worth of attention

to the importance of diversifying leadership has moved the needle, but only slightly. For women CEOs like Consumers Energy Co.’s Patti Poppe and prominent board members like Viston Corp.’s Nomi Bergman, the message is clear: It takes a culture change and appetite for risk to change the status quo. SEE WOMEN, PAGE 18

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

MICHIGAN BRIEFS

INSIDE

From staff and wire reports. Find the full stories at crainsdetroit.com

State aims to help those with disabilities find employment

CALENDAR

CLASSIFIEDS

DEALS & DETAILS

KEITH CRAIN

OPINION

PEOPLE

RON FOURNIER

Michigan will receive federal help to put into practice a statewide strategy helping people with disabilities find jobs. Lt. Gov. Brian Calley’s office said that Michigan will receive 300 hours of training, both in person and online, from the U.S. Department of Labor’s Office of Disability Employment Policy as part of a national effort called Employment First targeted at helping people with disabilities find employment. Michigan signed on to the effort in 2015 via an executive order that Calley signed. The program is intended to help create competitive and integrated job opportunities for disabled residents by encouraging employers to create such opportunities, as well as help state agencies that serve people with disabilities and workforce development purposes to coordinate policy goals. The federal assistance is in the form of training and technical help, not funding, Calley spokeswoman Laura Biehl said. A news release from the Office of Disability Employment Policy indicates Michi-

CHASTITY PRATT DAWSEY/BRIDGE MAGAZINE

Michigan regulators said last Wednesday that medical marijuana businesses can stay open while seeking a state license as long as they have been operating with the approval of their local community.

gan will receive training in capacity building and transitioning from school to work. “Advancing our efforts to implement Employment First in Michigan will help connect Michiganders with disabilities with more employment opportunities so they can live more self-determined in-

dependent lives,” Calley said in a statement.

stay open while seeking a state license as long as they have been operating with the approval of their local community. The announcement came after the state previously gave dispensary shops until Dec. 15 to close or potentially risk not obtaining a required license, which sparked a

State to let pot shops stay open In an about-face, Michigan regulators said last Wednesday that medical marijuana businesses can

RUMBLINGS

WEEK ON THE WEB

backlash from patients, shop owners and others. “Patient input played a big factor” in the reversal, said Andrew Brisbo, director of the Bureau of Medical Marihuana Regulation. The “most vulnerable” patients have the hardest time obtaining marijuana, he said. Dispensary shops are not explicitly addressed under a 2008 voter-approved medical marijuana law that currently lets 272,000 registered patients grow their own pot or buy it from 43,000 registered caregivers. A five-tiered licensing system is being developed under a 2016 law that further regulated medical marijuana and aimed to address confusion. The law will impose a new 3 percent tax on provisioning centers and establish licenses to grow, process, sell, transport or test marijuana. The state intends to issue emergency rules later this month letting certain dispensaries remain open.

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Election 2017

How Duggan, Young stand on 5 business issues By Chad Livengood

clivengood@crain.com

etroit Mayor Mike Duggan is heavily favored in Tuesday’s election and has wide support in the business community. He and his opponent, State Sen. Coleman Young II, have vastly different plans and approaches on most issues affecting business and commerce in Detroit:

Mike Duggan

Coleman Young II

Tax incentives: JJDuggan has pushed for enforcement of Detroit’s ordinance requiring real estate development projects receiving tax breaks and subsidies to employ Detroiters for 51 percent of the hours. For the $863 million Little Caesars Arena project, the city fined contractors $2.9 million through April for employing Detroiters for just 27 percent of the hours.

JJYoung wants legally binding community benefits agreements that would let the city take real estate developers and contractors to court for not hiring a majority of Detroiters. In a city that’s 80 percent African American, Young has said it’s akin to “apartheid” that less than a third of the hockey and basketball arena jobs went to Detroiters.

MUST READS OF THE WEEK Soccer stadium plan’s end opens up possibilities at jail site The plan unlocks a potentially enormous site for mixed-use redevelopment for Dan Gilbert. Page 6

Neighborhood Redevelopment:

Transportation:

Auto insurance:

Minimum wage:

JJDuggan has partnered with private developers and business interests on a neighborhood redevelopment strategy that has first focused on three areas of the city where the blight and foreclosure crisis was not as rampant during the Great Recession. Those areas are southwest Detroit, West Village and the Livernois and McNichols corridors. Duggan recently got City Council to approve $124.5 million in bonding for street improvements, $80 million of which will be directed to improving the streetscapes of 23 neighborhood shopping districts over the next three years. Since taking office, the Duggan administration has torn down nearly 12,900 blighted structures.

JJDuggan says the Detroit Department of Transportation has added 100 buses and 1,500 trips per week since he took office. He favors continuing to increase the number of buses transporting Detroiters along the city’s main corridors. Duggan also has supported extending the QLine along Woodward Avenue through a light rail route to Royal Oak and building a light rail system along Jefferson Avenue. He has not said how he would pay for that.

JJDuggan failed on his push with Republican House Speaker Tom Leonard that would have ended Michigan’s mandatory unlimited medical benefits and created a three-tier system for personal injury protection. Strong opposition from Duggan’s fellow Democrats contributed to the defeat. Duggan’s plan would have allowed drivers to buy $250,000, $500,000 or unlimited coverage. It also would have imposed strict cost controls on payments to medical providers.

JJDuggan has voiced support for a $15-per-hour minimum wage.

JJYoung has criticized the mayor’s approach, arguing that Duggan has effectively abandoned whole sections of the city that suffer from abandonment and decades of disinvestment. During the Oct. 25 mayoral debate, Young called for the city to return to a policy of selling Detroiters vacant residential lots for $1 and said he wants to see the city’s land bank sell side lots. More than 8,400 side lots have been sold to neighbors since Duggan took office, according to the Detroit Land Bank Authority.

JJYoung, who has been riding buses on the campaign trail, has criticized the QLine for not connecting Detroiters living in the city’s neighborhoods to jobs in downtown and Midtown. He has proposed construction of SkyTran, an elevated track of personal rapid transit pods powered by magnetic levitation. Young has not said how he would pay for a SkyTran track, which is under development in Tel Aviv, Israel.

JJYoung says he'll sue auto insurance companies in Michigan to challenge what he calls “racist redlining” in the territorial pricing of insurance. He has called Duggan’s auto insurance reform plan “useless” because it lacks reforms ending insurance pricing by ZIP code, credit score, gender, education level and occupation. Young also has said he’ll order Detroit police officers to stop asking motorists for proof of auto insurance during traffic stops. An estimated half of all Detroit motorists drive around the city each day without insurance.

JJIn February, Young introduced legislation to increase Michigan’s $8.90 hourly minimum wage to $15 per hour on Jan. 1, 2018, instead of the scheduled increase to $9.25 next year under a 2014 law. Young’s Senate Bill 185 calls for annual increases in the minimum wage that would be tied to the consumer price index and could not exceed 3.5 percent. The legislation has languished in committee without any action for eight months.

Commerce

Self-storage market has healthy space By Kirk Pinho kpinho@crain.com

Once a sleepy corner of the real estate business, self-storage centers have become a $38 billion industry nationwide. And for owners and operators, the Detroit area marNeed ket has proven to to know be lucrative as JJSelf-storage vacancy rates market predicted tend to be below to grow the Midwest and national averages JJCenters have and rents for become a $38 some units outbillion industry perform other nationwide Midwest cities. JJTends to And self-storage perform well for may offer a proinvestors ductive — and, incidentally, recession-proof — solution for vexing real estate problems, such as empty big-box stores. New York City-based research firm IBISWorld describes self-storage as “one of the fastest-growing sectors of

LARRY PEPLIN FOR CRAIN’S

Maurice Pogoda, president of Farmington Hills-based Pogoda Cos., one of the nation’s largest owners and operators of self-storage facilities with 35 properties totaling about 22,000 units, mostly in Michigan, at National Storage Centers in Southfield.

commercial real estate” and says the industry has seen 7.7 percent annual growth since 2012 and employs 144,000 nationwide. There are 50,000-plus facilities nationwide and about 1,100 in Michigan. “It has changed from being out-ofthe-way, under-the-radar, to being very, very prominent and seemingly almost the go-to (solution) to solve many problems, whether’s empty big-box or empty industrial,” said Maurice Pogoda, president of Farmington Hills-based Pogoda Cos., one of the nation’s largest owners and operators of self-storage facilities with 35 properties totaling about 22,000 units, mostly in Michigan. In the last two decades, several large real estate investment trusts have muscled into self-storage, making moves to consolidate ownership in the market that is dominated by small mom-and-pop owners and midsized companies, which control more than 80 percent of the storage facilities nationwide. SEE STORAGE, PAGE 19

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

WHAT KEEPS YOU UP AT NIGHT?

Patti Poppe: Powering change from inside and out

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Patti Poppe’s father taught her to be an engineer. Her mother taught Poppe to be a leader. The president and CEO of Consumers Energy Co. is a charismatic and change-making product of Jackson, Michigan, driving internal and external transformation at a company she took over just 15 months ago. Poppe, 48, came to the energy industry from General Motors, where she specialized in industrial engineering — the art and science of transforming legacy businesses RON into leaner operations. In a wide-ranging interview, FOURNIER Poppe said she’s bringing that ethic to Consumers to keep rates low and customer satisfaction high. “I’m training my entire team to see and eliminate waste.” Poppe, who started at Consumers Energy in 2011 as vice president of customer experience, leads Consumers during a period of disruption that rivals the tumult of the early 1900s. Fluctuating oil prices, clean energy technology and uncertainty in U.S. politics complicate leadership. What’s good for Michigan is good for her company, she told me. And whatever success she experiences at Consumers started in her hometown of Jackson and in the goodness of her parents. Her father, Bill Kessler, worked for Consumers Energy. Her mother, Mary Ann Kessler, was a school teacher and principal. “She took a stand for public education and for her students, and she led her teachers,” Poppe told me over lunch in suburban Detroit. “Every night at dinner, she would tell us about what happened today at school. She didn’t spare us the details so we really got to hear firsthand what it meant to lead people — sometimes the students, sometimes the teachers, sometimes the school board.” Our conversation was edited for length and context. What keeps you awake at night?

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Consumers Energy is an infrastructure company and, as I think about our role in Michigan, the infrastructure we provide can be a critical catalyst to the state’s growth and health. So what keeps me up at night is: What are the things that are keeping Michigan from growing? We have impact across the entire Lower Peninsula. We’re the largest energy company in Michigan. We can have a fundamental impact on the rate of growth in Michigan, and so the challenge for us is (making sure) that the critical infrastructure of natural gas and electricity across the state is reaching (the right places at competitive prices). [T]he decisions that we make at our company have 40- and 70- and 100-year impacts, so having an eye on what’s the potential for Michigan …. and being a part of driving that growth, is the opportunity that keeps me up at night. That’s pretty daunting. Most business people worry about the next quarter. You’re worried about the next several decades.

The decisions that we make are longterm, and our infrastructure is at a stage that it’s time to replace it. What’s different about running an energy company today than, say, 30 years ago?

What’s different is the type of transformation. So, for example, last year Consumers Energy closed seven of our 12 coal plants, (and) we reduced our carbon intensity by 30 percent ahead of any mandates. Why did you do that?

They were at the natural end of life. Coal is not the most economic energy source anymore, and it has a negative impact environmentally. Why does the environment matter to you? You’re running a business.

Because first of all, we live here, too. We breathe the air and drink the water, so we care about that. But it also has economic risk in the event of some environmental disaster that

“We want to be part of the reason why companies can say yes. The last thing we want is somebody to say, ‘Oh, I’d come to Michigan but your electric prices are too high.’ ”

could have been prevented and, frankly, carbon mitigation is our job. We need to recognize that the risks of being wrong about global warming are so much greater than the risks of being right. Why do you see yourself as a steward of Michigan’s success?

What people don’t understand about a utility is we can win when Michigan wins. When Michigan’s prices are competitive, that’s how we grow. ... What’s most important is that we get a cost structure in Michigan that is sustainable — that attracts businesses to come do work in Michigan again. That’s your bottom-line goal?

It is …. I think a lot of people think of the utility is sort of a sleepy old monopoly that really doesn’t care about prices because they’re guaranteed the customer base. We’re not guaranteed that people will move to Michigan. We have to be part of the attraction to Michigan, and that’s why we’re so committed to economic development for Michigan. We want to be part of the reason why companies can say yes. The last thing we want is somebody to say, ‘Oh, I’d come to Michigan but your electric prices are too high.’” Let’s talk about you. You grew up in Jackson.

I did.

What did your parents do?

My dad worked for Consumers. He was a nuclear engineer. What did your mother do?

It’s an amazing story, actually. She had seven kids and then went back to school got her bachelor’s and master’s degree after … I was in preschool. She went back to school and she was a teacher for a few years and then became elementary school principal and a middle school principal and went on to have an extraordinary career in public service. She knew kids, that was for sure. She had seven herself.

CONSUMERS ENERGY

The Poppe File Age: 48.

Education: Bachelor’s and master’s in industrial engineering, Purdue University; master’s in management, Stanford University. Mentor: Former Consumers Energy President and CEO John Russell. Biggest achievement: Living a full and abundant life. First job: Waitress at the Beach Bar in Clarklake. Life goal: At the end of my days, to hear: “Well done, good and faithful servant. Well done.” What did you learn from your parents?

My dad taught me how to be an engineer, and my mom taught me how to be a leader. She had a guidance counselor who was terrible with kids — and he was in the union and protected. She just took a stand for those kids and for years fought to have him removed and finally he did (leave). But, boy, it was a real toll. It was years of her just insisting that those kids deserve the best. Now, I’m not anti-union by a mile. Our union at our company is extraordinary. Anything else you want to say?

This is a really exhilarating … time to be leading. Why is that?

It’s not status quo. Change is actually required. I find that a real thrill. If I just had to give up and maintain (status quo), every day that would be a death march.

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CRAIN’S DETROIT BUSINESS

The Gratiot jail project was halted on Gratiot Avenue and I-375 because of cost overruns.

Soccer stadium reversal opens up ‘blank slate’ By Kirk Pinho kpinho@crain.com

The 15-acre Wayne County Consolidated Jail site offers a rare combination of location and scale, a prized one-two punch in downtown Detroit development. And now it’s effectively a blank slate following the Dan Gilbert and Tom Gores bombshell that they plan to have their hoped-for Major League Soccer team play in Ford Field instead of building a new stadium on roughly two-thirds, or 10 acres, of the county-owned jail site at Gratiot Avenue and I-375 at the foot of the central business district. What exactly would go there if Gilbert, the founder and chairman of Quicken Loans Inc. and Rock Ventures LLC, and his lieutenants can hammer out an agreement with Wayne County to build a new criminal justice complex elsewhere is a mystery. When the MLS plan was unveiled in April 2016, the project was said to include the stadium plus three highrise towers 18 to 28 stories tall with office, residential and hotel uses flanking it. But Matt Cullen, principal of Rock Ventures, said Thursday that those plans were preliminary and that no formal determination had been made about the mix of uses or the density of the project. “We gave a rendering (of what it could look like), but we haven’t gotten to a programming conclusion, let alone a massing study,” Cullen said. But whatever goes there if Gilbert develops it will tie in with his planned projects sprinkled around the downtown core. And the development team has an additional 10 acres to play around with in its vision for the site. “If you think about Campus Martius, moving now into the new Monroe (Block) development (to the east), which moves right into Greektown, then this project with MLS and football next door, and the Red Wings and Pistons (on Woodward), this will be a key gateway,” he said. “It’ll be mixed-use. It clearly will have a lot of entertainment aspects to it. It won't be sort of just a generic office block. We’ll be looking at bringing a lot of vitality to the site.” It’s not just the jail site itself that’s in the works. Gilbert’s team has been in discussions with Syncora Guarantee Inc., the Bermuda-based bond insurer that was a holdout creditor in Detroit’s bankruptcy, on the former Detroit Police Department headquarters building at 1300 Beaubien

Need to know

JJWithout a soccer stadium, potential uses for jail site multiply JJWould be one of the largest parcels of potentially developable land downtown JJStill hinges on sealing a deal for an alternative jail site

St. for a possible redevelopment as part of the broader jail site plan, according to two sources familiar with the matter. It’s also considerably larger than virtually all other known Gilbert project sites, some that have been discussed and revealed publicly, and others that have been kept behind closed doors. For starters, the site of the former J.L. Hudson’s department store at Woodward and Grand River is 2 acres; it’s slotted to have an 800-foot residential skyscraper and hundreds of thousands of square feet for other uses such as office and retail with a price tag of $900 million. The Monroe Block project spans about 3.5 acres of largely vacant property immediately east of Gilbert’s Quicken Loans headquarters in the One Campus Martius building. Current plans for the $800 million project include a 35-story office tower plus 480 multifamily units in a series of mid- and high-rise buildings, 170,000 square feet of retail space and 48,000 square feet of public space. Yet there are other large sites on the Detroit riverfront Gilbert has his eyes on, including a General Motors-owned property at least 10 acres in size immediately east of the Renaissance Center and the Uniroyal Tire Co. site by Belle Isle, which is 45 acres and has long been the subject of discussions with Gilbert’s team for a mixed-use development. “This is great news,” said Richard Karp, a Lansing-based developer who has Detroit projects in Capitol Park and along Washington Boulevard, said of Ford Field being the chosen MLS team location rather than the jail property, which has sat languishing since 2013, when construction was halted amid cost overruns. “This opens up the potential uses to the site to a much greater field of flexibility. That size will accommodate basically whatever anybody wants.” Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

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OPINION

COMMENTARY

Auto insurance’s brick wall of politics L ANSING — At about 9 p.m. Thursday night, Detroit Mayor Mike Duggan was sitting at a conference table in the Capitol office of a House Republican leader eating a slice of Cottage Inn pizza. It looked like dinner as the mayor, after hours of closed-door lobbying, was awaiting a vote that would prove to be his second failed attempt in four years to get the Michigan Legislature to take action to lower Detroit’s crushing auto insurance rates. Duggan had just spent much of the past week trying to win over support from about 15 fellow Democrats — taking away time from his own re-election effort ahead of Tuesday’s mayoral election. It was Duggan’s end of a bargain with Republican House Speaker Tom Leonard to pass sweeping changes to the state’s 46-year-old auto insurance law. The mayor came up with just four votes from the 45-member Democratic caucus as the bill went down in a 45-63 defeat. Leonard pulled together 41 of his 63 Republican members to vote in favor of House Bill 5013. “Outside the 36 square miles of Lansing, everybody in Michigan knows car insurance is too high,” Duggan said after brushing pizza crumbs off House Speaker Pro Tem Lee Chatfield’s conference table. “But the interests making tens of millions of dollars from these exorbitant charges have still proven too entrenched for us to overcome.” As Duggan has learned, the politics of auto insurance in Michigan are as complicated as it gets inside the Capitol dome. There’s no easily discernible partisan or ideological divide. Some see the issue strictly through Duggan’s dollars-andcents lens that an uncapped, unchecked medical benefit is ripe for abuse and overuse by drivers, medical providers and trial attorneys alike. Democratic legislators, particularly Detroiters, see the glaring differences in the prices auto insurers charge drivers based on their ZIP

CHAD LIVENGOOD clivengood@crain.com

The Legislature has been tied in knots on no-fault auto insurance for years as voter-imposed term limits disposes of state representatives every six years at just about the moment they start to fully grasp this immensely complicated issue. code, education level, credit score and occupation as a discriminatory form of racial and socio-economic redlining. “They don’t want to address the root cause of the problem, and I’m not into putting a Band-Aid on a gunshot wound,” said state Rep. Fred Durhal III, a Detroit Democrat who voted no. Duggan disagrees that redlining is actually the root cause of high rates in Detroit. “The territorial rating is being driven by the medical claims,” Duggan said. “We’ve got to get the medical claims down.” Leonard knows the political reality of removing the territorial pricing and shifting the cost of personal injury protection elsewhere in the state. “I’m willing to do everything I can to reduce rates for drivers in the city of Detroit. But I’m not willing to do so at the expense of citizens in my district and citizens throughout

the rest of the state,” said Leonard, who resides in a Lansing suburb where the auto insurance rates are cheap compared with Detroit’s suburbs. Other defenders of the auto insurance system who know someone who was critically injured in a car accident view reform as a code word for gutting medical care that can sometimes be the difference between an injured motorist ever walking or talking again. As Thursday night’s vote showed, protecting Michigan’s unique and yet costly unlimited lifetime medical benefits for injured drivers creates a bipartisan alliance between unlikely allies from Detroit, Bloomfield Hills, Lapeer and Traverse City. And reaching a breakthrough on this issue is going to take a lot longer than the 37 days that were spent trying to pass House Bill 5013 after a big, splashy press conference at the Capitol. The Legislature has been tied in knots on no-fault auto insurance for years as voter-imposed term limits disposes of state representatives every six years at just about the moment they start to fully grasp this immensely complicated issue. On one side, there’s the auto insurance companies that have been lobbying for years for cost controls in the medical costs that eat into their profit margins. On the other side, the hospitals, brain injury clinics, personal injury lawyers and catastrophically injured are fighting to preserve a lucrative business model and what’s arguably the best medical care that money can buy in America. And then there’s a new class of greenhorn legislators arriving at the Capitol every two years who are immediately inundated with lobbying from both sides of this issue — and left with little time to study the intricacies of tinkering with the status quo. “We’ve allowed lobbyists to have all the institutional knowledge — be it right, wrong or indifferent,” said state Rep. Sherry Gay-Dagnogo, a Detroit Democrat who voted

no on Duggan’s auto insurance legislation. “They’re the super Legislature. They will be there when we come. They will be there when we leave. And they set the stage for what’s going to fly and what’s not.” And even when the lobbyists set the stage, there are political calculations running deep in the House, where members are constantly watching their term-limits clock as they jockey for leadership positions or the next open seat in the Senate (26 of the Senate’s 38 seats are up for grabs next year). Two days before the vote, Durhal acknowledged in an interview that his pursuit of a top leadership post in the next term “plays a big role” in his decision to oppose the bill. The House Democratic caucus has had a long-standing policy stance against eliminating unlimited medical coverage in auto insurance. Duggan’s bill would have given drivers a choice to voluntarily opt out of unlimited medical benefits for a lower-cost plan. The mayor’s plan was in direct conflict with the orthodoxy of the Democratic caucus, which has punished some members internally for voting against the group’s positions in recent years. “It’s no secret that I do want to be the Democratic leader next (term),” Durhal told Crain's. “To me, that’s kind of the irony that exists. If I were to vote on this package, there’d probably be no way that I’d be the Democratic leader (in 2019).” Whether or not Durhal becomes the next Democratic leader after the 2018 election, this issue won’t go away. If Detroiters give Duggan another four-year term in Tuesday's election against state Sen. Coleman Young II, he plans to keep grinding away for votes. “I’ll come back again next year and the year after and the year after until we pass something to get these car insurance rates down,” Duggan said.

for everyone in the city to take an ownership stake in that renaissance. We all had front-row seats over the past 50 years to the slow deterioration of our economy and our cities in Southeast Michigan. Now, with a new mayor and some dedicated citizens, we have seen a rebirth. It certainly has only just begun, and if it took 50 years to tear the city down, it is going to take quite a while to rebuild it. As in other communities, the rebirth is starting at the city’s core and working out from the center. It

will take time, but it is happening. Given enough time, it will encompass the entire community. That’s why it’s important for everyone to vote. This is a chance for everyone to get involved in the business of politics, the biggest business in the land. Unfortunately, we have one of the lowest voter-participation rates in the world. As Detroit recovers, we should try to be a model for our state and our country. We can start at the ballot box. After all, we are all shareholders in the business of politics.

Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

Wherever you live, vote

lot of potential voters who support Mike Duggan for re-election will probably skip voting because they are sure he will win by a landslide. Many who support Coleman Young also will skip the polls, because they are convinced he will lose. Both sides may be right about the outcome, but they should all vote regardless. Voting is not only a privilege; it is a responsibility. Folks who skip voting are throwing away a right that has been fought for over cen-

KEITH CRAIN Editor-in-chief

turies. For Detroit, it’s even more important. The city is undergoing a renaissance, and voting is one way

LETTERS

Castaneda-Lopez warrior for district As a businessman, political endorsements are not something I generally do. But sometimes you are compelled to let the world know about someone special. Our Councilmember Raquel Castaneda-Lopez — Rocky, as she is called — is an amazing warrior for our district. She champions issues for all walks of life. Business is interesting. To get what we need to succeed in a city like Detroit is not easy. We have unique needs and circumstances. Rocky understands that and makes the hard choices, by initiating and backing those issues that help us and our customers. She builds coalitions to achieve common goals — even among competitors. Rocky champions causes pertinent to the entire city. She speaks and understands the languages of her district. She can and does address concerns of everyone, while celebrating the differences within the district. I have seen her in action, and worked alongside her. This councilmember embraces that 24-hour day and seems to work every minute of it. Her work ethic is unbeatable. She is frank, honest and so much fun. And admits when she doesn’t know something. That’s a leader I want on my team. Larry Mongo Owner D’Mongos Speakeasy Detroit

‘Been-ups’ vital to neighborhoods Ron Fournier’s Oct. 30 column about Detroit “Been-ups” brought a smile to my face. These businesses are the unsung heroes of our community. They struggle and are rarely in the limelight. They are important to the future of our neighborhood communities and the viability of our city. I find these stories to have more human interest than those highlighting larger organizations. Our chapter of SCORE is deeply involved in mentoring small businesses in Southeast Michigan. We meet these folks daily and nurturing them and their efforts is our chapter’s goal. I encourage Crain’s to continue to bring these community businesses in view of your readers. David Broner Certified SCORE mentor Send your letters: Crain’s Detroit Business will consider for publication all signed letters to the editor that do not defame individuals or organizations. Letters may be edited for length and clarity. Email: rfournier@ crain.com

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

McLaren Healthcare buys health plan in Indiana By Jay Greene jgreene@crain.com

Grand Blanc-based McLaren Healthcare Corp., a 12-hospital nonprofit integrated health system, has acquired MDwise Inc., a 360,000-member Medicaid health plan in Indianapolis, for an unspecified amount. The deal is expected to close by the end of 2017. MDwise, which has annual revenue of $1.5 billion, is a nonprofit HMO jointly owned by Indiana University Health System and Health and Hospital Corp. of Marion County, a public health organization. The MDwise acquisition is the first of several health care Phil Incarnati: deals McLaren is MDWise acquisito tion first of several. expected complete outside of Michigan in the coming years. It is looking at potential purchases of hospitals, health plans and physician groups in Ohio, Indiana and Michigan, McLaren CEO Phil Incarnati said. “This expansion allows us to leverage the success and strength of our health plan expertise, and brings significant benefits to the individuals and families served by MDwise,” Incarnati said in a statement. “In addition to providing a platform for future growth in Indiana, expanding our health plan operations allows us to create greater economies of scale and new opportunities to share data and best practices, all of which will improve the experience of both members and network providers.” Incarnati told Crain’s that talks have been going on with MDwise for about four months. He said one reason McLaren was selected out of three finalists was because it has experience operating a health plan, physician group and hospital operation. One of several integrated delivery systems in Michigan, McLaren also owns a 450-physician medical group and a 260,000-member McLaren Health Plan, a Medicaid and commercial HMO. “After a lengthy selection process, we are confident McLaren Health Care will be an ideal choice to acquire MDwise,” MDwise CEO Jim Parker said in a statement. “With their strong track record operating a successful health plan in Michigan, they have the expertise needed to assist MDwise to succeed in a rapidly changing managed care market while maintaining a high level of service to our members and provider partners.” Incarnati said he has asked Parker to stay on as CEO along with most of MDwise’s management staff. “Jim was brought in recently by the two current owners, and we like him,” Incarnati said. MDwise will be managed as a separate subsidiary organization, but overseen by Kathy Kendall, CEO of McLaren Health Plan. McLaren will maintain MDwise’s Indiana operations, and MDwise members will not experience any changes to their benefits or provider network, the two organizations said in a statement.

Need to know

JJMcLaren to acquire MDwise, an

Indianapolis Medicaid and individual market HMO JJMDwise has annual revenue of $1.5 billion and competes with three other Medicaid health plans JJMcLaren has been eyeing health plans, physician groups and hospitals in Ohio and Indiana

MDwise will continue to offer the same services currently available under its Hoosier Healthwise and Healthy Indiana Plans. MDwise also sells individual health insurance on

the state’s health insurance exchange under MDwise Marketplace, according to MDwise’s website. Once the transaction is complete, MDwise and McLaren Health Plan will collectively serve more than 620,000 individuals, making it one of the region’s largest provider-sponsored health plans. Incarnati said adding MDwise will create a $6 billion health care system with 40 percent of revenue coming from insurance operations and 60 percent from hospital and physician business. He said MDwise will most likely expand into commercial and Medicare products in the future.

On how he views the Indiana health insurance market, Incarnati said that in many ways it is more favorable than Michigan’s. He said provider rates are higher — and are built into Medicaid payment rates to health plans — and there are only four Medicaid plans competing for business compared with 11 in Michigan. Incarnati declined to give the purchase price because he said it could change by the time of closing later this year. He said McLaren plans some changes with MDwise to improve its operations. “The plan, depends on how you account for it, makes money, but the network activities lose money,”

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he said. “We don’t plan to operate it to lose money.” Savings at MDwise will come from creating scale, with back-office functions shared with McLaren corporate, and by fine-tuning patient utilization of health care services. “The provider community is fairly positive” about the change, he said. But managing a new health care organization out of state presents its challenges for McLaren. “We have been looking at Indiana and Ohio for some time,” Incarnati said. “Being in Indiana creates integration and infrastructure that will help us grow our out of state business.”

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

FOCUS SPECIAL REPORT: FINANCE

Detroit closes gap in debt delinquency rates

Need to know JJDetroit region has had a higher CMBS debt delinquency rate than the national average JJIn September, the Detroit metropolitan statistical area was less than one-tenth of a percent higher than the national delinquency average JJThat’s the closest it’s been in the last 10 years

CHAICHAN INGKAWARANON VIA ISTOCK

How the Detroit-Warren MSA delinquent loan rate compares to the nation

By Kirk Pinho kpinho@crain.com

For the last decade, the Detroit region has had a higher delinquency rate on commercial mortgage-backed securities debt than the national average. And for a string of several months during the Great Recession, about onesixth of the area’s outstanding debtors were more than 90 days late on their payments. But in September, the last month for which data from New York City-based Trepp LLC was available, the Detroit metropolitan statistical area was less than one-tenth of a percent higher than the national delinquency average. That’s the closest it’s been in the last 10 years, showing how much the Detroit area’s CMBS market has improved. That’s starting to trigger fresh interest from large institutional investors who had blacked out the region and state as a whole for years. Paired with recent demand for new office and other construction, improving vacancy rates and other factors, industry experts are optimistic. “It’s reflective of the general health of our economy and our lending environment and the condition of our SEE DEBT, PAGE 11

For the last decade, the Detroit region has had a higher commercial mortgage-backed securities debt delinquency rate than the national average. But in September, the gap narrowed to less than one-tenth of a percent — a dramatic improvement that could spur new interest from investors. Sept. 2010 17.96%

20%

Detroit-Warren MSA deliquent loan rate

15%

10% Sept. 2017 5.49%

July 2012 10.3%

5% National delinquent loan rate

2007 2008

Sept.

SOURCE: Trepp LLC

2009

2010

2011

2012

2013

2014

2015

Sept. 2017 5.40%

2016

2017

DAVID KORDALSKI/CRAIN’S DETROIT BUSINESS

C R A I N â&#x20AC;&#x2122; S D E T R O I T B U S I N E S S // N O V E M B E R 6 , 2 0 1 7

Move to cut corporate tax rate doesnâ&#x20AC;&#x2122;t come without some wrinkles Southeast Michigan businesses could be a major beneficiary of the Republicansâ&#x20AC;&#x2122; move to slash the corporate tax rate, but there are devils in the details. The proposed Tax Cuts and Jobs Act, released Thursday by the U.S. House of Representatives Committee on Ways and Means, would follow through on the longstanding White House plan to cut the corporate tax rate from 35 percent to 20 percent. But corporations wouldnâ&#x20AC;&#x2122;t escape without a few impacts. (And to be Need sure, the tax plan to know has a long way to JJTax reform bill go to make it eliminates through both perforchambers of mance-based pay Congress and deductions for could change sigexecutives nificantly or fail altogether.) JJReduces Sp e c i f i c a l l y , corporate tax rate the legislation to 20 percent calls to end an exJJCorporations ecutive compenstill benefit despite sation loophole litany of deduction created in a 1993 repeals tax bill that amended Section 162 of the code that limited pay. It consequently pushed companies to use performance-based pay to work around the tax code. Businesses now write off this performance-based compensation as a business expense; the tax overhaul framework would end that. The Joint Committee on Taxation estimates eliminating this so-called loophole will generate $9.3 billion in new tax revenue over 10 years. While public companies would face a higher tax burden from executive pay, they would still face a smaller overall burden thanks to the corporate tax cuts, said Anthony Licavoli,

DUSTIN WALSH dwalsh@crain.com

tax manager at accounting firm Rehmann Robson in Troy. â&#x20AC;&#x153;For C-corps itâ&#x20AC;&#x2122;s obviously going to have a significant impact,â&#x20AC;? Licavoli said. â&#x20AC;&#x153;I imagine, however, most companies will just take the hit because they will not be in a position to limit CEO pay because of the competitive nature of the market.â&#x20AC;? Slashing the corporate tax rate is expected to cost the government $2 trillion in lost revenue, according to the nonprofit think tank Tax Policy Center. The overall tax savings would be significant, even with the closing of the executive compensation loophole, for Southfield-based supplier Lear Corp., for example. It paid roughly $370 million in U.S. taxes in 2016 at an effective tax rate of 27.7 percent. Under the Tax Cuts and Jobs Act, Learâ&#x20AC;&#x2122;s 2016 tax income tax bill would have been reduced to $267.6 million on pre-tax income of approximately $1.39 billion with the 20 percent tax rate. Lear, though, was able to write off a significant portion of CEO Matt Simonciniâ&#x20AC;&#x2122;s $14.4 million compensation package and those of other members of its C-suite as a business expense. These writeoffs saved Lear in the neighborhood of $5 million in taxes in 2016. Under the new tax plan, these writeoffs would go away, but Lear would still come out way ahead â&#x20AC;&#x201D; by

more than $100 million. Whatâ&#x20AC;&#x2122;s unclear is whether accountants, like Licavoli, would be able to find loopholes and ways to move compensation around the table to avoid the new taxes like in the past. â&#x20AC;&#x153;Almost all compensation is performance-based now, and thatâ&#x20AC;&#x2122;s to get around the rules,â&#x20AC;? he said. â&#x20AC;&#x153;Most companies are smart enough to structure their compensation systems to avoid more taxes, and itâ&#x20AC;&#x2122;ll all depend on well the new language is written.â&#x20AC;? Other benefits for businesses built into the tax bill include moving to a territorial corporate taxation system, where U.S. companies are taxed only on income generated in the U.S. instead of globally like it is now. Though most companies avoid this by sheltering their foreign income in overseas subsidiaries. The bill, however, does call for repatriation of those offshore funds, specifically taxing them at only 12.5 percent over a period of up to eight years. This means companies can bring income generated overseas, projected at $2.5 trillion, back into the U.S. at a lower tax rate than currently. Ford Motor Co., which according to corporate filings has the most offshore cash of any local company, had $5.7 billion held overseas at the close of 2016. General Motors Co. had $2.4 billion, Lear Corp. $767 million, BorgWarner Inc. $437.1 million, and so on. The Joint Committee on Taxation estimates repatriation to increase federal tax revenue by $223.1 billion through 2027, but previous repatriation attempts didnâ&#x20AC;&#x2122;t have the material impact government had hoped. Other changes include limiting the ability to deduct net operating losses, repeal of corporate entertainment deductions and repeal of the qualified production activities income, among others.

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commercial real estate markets, and it also reflects that we are not an outlier anymore,â&#x20AC;? said Dennis Bernard, president of Southfield-based Bernard Financial Group. â&#x20AC;&#x153;Detroit for so long was an outlier.â&#x20AC;? CMBS are fixed-income or floating rate securities which use commercial real estate loans as collateral. The regionâ&#x20AC;&#x2122;s rebound is the result of riskier loans â&#x20AC;&#x201D; those issued during the debt boom of the early 2000s â&#x20AC;&#x201D; being shed from the balance sheets through either foreclosures or workout agreements, and because stricter lending standards today preventing riskier CMBS debt from being issued, Bernard said. He added that of the 540 outstanding CMBS loans on commercial real estate in the Detroit area, his company services 280 of them. Just one of them is delinquent. There will be a slight upward tick in delinquency rates soon, but only because of some of the 2007-08 loans issued just before the economic recession are still on the books, Bernard said. â&#x20AC;&#x153;Those are legacy loans which will have loan-to-value issues,â&#x20AC;? he said, adding that as the market has improved, he has toured downtown Detroit with four of the large life insur-

â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;ve had both good lender interest and probably some lender interest from lenders who have not historically been active in Southeast Michigan and Michigan as a whole.â&#x20AC;? Mike Schick

ance lenders who havenâ&#x20AC;&#x2122;t issued debt in the city in three or four decades. Mike Schick, director of Birmingham-based Q10 | Lutz Financial Services LLC, is similarly optimistic. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;ve had both good lender interest and probably some lender interest from lenders who have not historically been active in Southeast Michigan and Michigan as a whole,â&#x20AC;? he said. â&#x20AC;&#x153;In the mid-2000s the lending market was lending as aggressively as we have ever seen,â&#x20AC;? Schick said. Trepp data backs that up. In 2005, $1.65 billion in commercial mortgage-backed securities debt was issued in metro Detroit, according to Trepp. That tapered off over the next two years, as $1.44 billion was issued

in 2006 and $1.22 billion in 2007. Generally improving occupancy rates in the industrial and office sectors have also helped draw lender interest, Schick said. The Detroit area has $5.91 billion in CMBS debt spread across 541 loans, with $324.2 million delinquent across just 21 loans as of September, according to Trepp. Ten years ago, there were 997 loans with a total balance of $8.64 million, with $149.1 million delinquent across 21 loans for a delinquency rate of 1.72 percent. The 10-year high delinquency rate of 18 percent came in September 2010, which was almost double the national average of 9.05 percent. At that time, the market had $7.33 billion in outstanding CMBS debt across 794 loans; 136 of those were delinquent with a balance of $1.32 billion. A report last month by Commercial Property Executive says that retail and office properties, by far, have the most amount of delinquent CMBS debt nationwide, with both asset classes at or above the $5 billion mark in the last year. Hospitality, multifamily and industrial properties each have less than $2 billion in delinquent CMBS debt nationwide.

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

Michigan accountable care organizations score well for 2016 By Jay Greene

Top ACOs

Most of Michigan’s 19 accountable care organizations fared better in 2016 than national averages in both earning shared savings for their hospital and physician partners and in improving quality scores on their Medicare patients, according to an analysis by Crain’s. Under incentives provided by the Affordable Care Act, hospitals and doctors have been working together in various ways Need the past five to know years to reduce  Michigan’s 19 costs and imaccountable care prove quality for organizations 9 million tradiearned back $49.2 tional Medicare million patients. An ACO is a  56 percent of group of hospiMichigan ACOs earned money, but tals, physicians three lost a total of or other health care providers $2.5 million that agree to co Quality of care ordinate and to patients manage care, reimproved by duce duplicadoctors and tion, share savhospitals working ings and improve together quality for a minimum of 5,000 Medicare patients in a contract with the U.S. Centers for Medicare and Medicaid Services. Nationally, 31 percent of the 432 ACOs earned shared savings back for their organizations and 25 percent more saved Medicare money but did not qualify for earned savings back to their organizations. Some 44 percent lost money. But in Michigan, nine of 16 total shared savings ACOs earned money,

TOP SHARED SAVING MODEL ACOS IN MICHIGAN RANKED BY EARNED MEDICARE SAVINGS  The Accountable Care Organization Ltd., Farmington Hills, 10.5 million.

jgreene@crain.com

Reliance ACO LLC, Farmington Hills, $7.3 million 

 Oakwood Accountable Care Organization, LLC, Dearborn, $6.6 million  Trinity Health Michigan (St. Mary Mercy Hospital), Livonia, $5.4 million  Genesys PHO, L.L.C., Grand Blanc, $4.5 million

Other types of ACOs

PIONEER ACO MODEL  DMC Michigan Pioneer ACO, Detroit, $7.4 million

NEXT GENERATION ACO MODEL  Trinity Health ACO, Livonia, $6.5 million.  Henry Ford Physician ACO, Detroit, $3.9 million

for a 56 percent rate, higher than national average of 31 percent. Those nine ACOs earned back $49.2 million. But the other seven ACOs in Michigan didn’t save Medicare money, and three of those ACOs lost a total of $2.5 million, CMS said. Besides the 16 shared saving ACOs in Michigan, three other ACOs operate in the state under the Medicare Pioneer and Next Generation ACO programs. Those other three ACOs earned back $18.9 million. Medicare pays ACOs based on level of care they provide to patients, and ACOs with high quality scores that also save Medicare money share in the savings. ACOs that produce

poorer outcomes and higher costs may lose money.

How Michigan ACOs fared in 2016 Reliance ACO in Farmington Hills received the second-highest earned saving check in Michigan from Medicare at $7.3 million for 2016 and one of the top quality scores at 96.87 percent, according to CMS. Total Medicare savings was $15.4 million. Gene Farber, COO of Reliance ACO, said Reliance has saved Medicare more than $30 million in the three years the ACO has been in the program. “The doctors are happy when we get money back. They have done a really good job in improving the quality metrics,” Farber said. Reliance works closely with doctors to set up procedures to ensure patients receive timely care and are not placed in situations where they must be quickly admitted to a hospital or ER, he said. “The doctors don’t just treat Medicare patients that way. You set a standard for care for everybody,” he said. Farber said information technology helps physicians and their office staffs track patients. “We worked with hospitals to be notified when one of our patients is admitted,” he said. Reliance has 350 primary care doctors and admits patients to most hospitals in Southeast Michigan in Wayne, Oakland, Macomb, St. Clair and Monroe counties. The largest earned savings check went to The Accountable Care Organization Ltd. in Farmington Hills, which saved Medicare $21.8 million and got $10.5 million back. It had a quality score of 98.59 percent.

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ACO experts say the keys to savings and quality improvement are straightforward. Increase access to physicians, coordinate care with hospitals and specialty doctors, and reduce unnecessary services outside of physician offices. Care at the right time and at the right place can lead to fewer visits to urgent care, emergency rooms and hospitalizations, they say. In 2016, Physician Direct ACO of Sylvan Lake saved Medicare a total of $6.2 million and generated earned payment of $2.7 million, Medicare data shows. Its quality score was 90.26 percent. “The physicians we work with are very engaged, and committed to providing the best care for their patients,” Rodger Prong, its executive director, said in a statement. “Our leadership is outstanding in helping to determine the direction of the ACO and how to better serve our community of beneficiaries.” Physician Direct ACO is part of Oakland Physician Network Services, a 425-member physician organization. Another long-running ACO, Oakwood ACO, generated total Medicare savings of $14 million last year and earned savings of $6.6 million based on a quality score of 95.89 percent on 13,603 Medicare beneficiaries, said CMS. Working closely with its physicians and hospitals, Ryan Catignani, vice president of managed care with Beaumont Health, said Oakwood ACO was able to generate savings by reducing inpatient admissions by 3 percent and by cutting nursing home spending by 30 percent over its benchmark numbers. In addition, hospital readmissions were down 10 percent, emergency visits down 7 percent and emergency visits leading to hospitalizations were down 9 percent, he said. Now that Oakwood ACO is in the fourth year of the Medicare shared savings program, Walter Lorang, interim executive director for the Oakwood ACO, said it is more difficult to achieve savings targets. “The way the program is set up, it makes it more difficult because you are comparing you to yourself,” Lorang said. “We started a new benchmark last year, but it is more difficult” to hit the savings numbers. Moreover, Catignani said new patients are being assigned to ACOs each year. “Growth is a good thing, but there are strings because you have new people and don’t know where they have been managed before,” he said.

One of the criticisms of ACOs is each organization has a limited ability to control a single patient’s costs because patients are free to go outside an ACO network for care. Outof-network costs are not as tightly managed because communication between providers isn’t the same. Over the next year, Beaumont Health is working on a plan to expand Oakwood ACO to other Beaumont legacy hospitals and the former Botsford Hospital, Catignani said. In 2014, Beaumont Health was formed in a merger with four-hospital Oakwood Healthcare, three-hospital Beaumont Health system and Botsford Hospital. “We would be remiss not to recognize the merger and expected eventually the other pieces (of the system would be added),” Catignani said. “The rebranding of the ACO is in the works.” Catignani said he expected Oakwood ACO would expand with the other four Beaumont hospitals sometime next year. For 2016, the Physician Organization of Michigan ACO LLC saved the Medicare system $8 million in predicted costs and achieved 94.1 percent in quality for about 95,000 people in traditional Medicare. POM ACO, which did not earn savings back, includes the University of Michigan Health System and IHA medical group. “POM ACO is one of very few ACOs to achieve both savings and high quality for four years running,” Timothy Peterson, M.D., POM ACO executive director, said in a statement. “Given that we are also one of the largest and most established ACOs, we are especially proud of all that our member providers and their colleagues have achieved on behalf of Michiganders who rely on Medicare.” While the savings achieved by POM ACO in 2016 were just shy of the amount needed to share part of the savings with member physician groups, Peterson notes that members have already invested in improvements in 2017 that will continue to move the needle on care quality and cost. POM also reduced unnecessary emergency department visits and preventable hospitalizations. “Our involvement in the ACO program has led us to develop a care team approach in many of our clinics,” POM ACO executive medical director Martha Walsh, M.D., IHA’s chief quality and population health officer, said in a statement. Jay Greene: (313) 446-0325 Twitter: @jaybgreene

C R A I N â&#x20AC;&#x2122; S D E T R O I T B U S I N E S S // N O V E M B E R 6 , 2 0 1 7

Motor City Match awards 100th grant to Detroit small businesses By Tyler Clifford tclifford@crain.com

Thirteen Detroit businesses won a share of $500,000 in cash grants in the ninth round of Motor City Match. Mayor Mike Duggan and Michael S.R. Rafferty, vice president of Detroit Economic Growth Corp., on Monday announced the winners, which received grants between $10,000 and $75,000, at PizzaPlex in southwest Detroit. PizzaPlex won a $25,000 grant in the programâ&#x20AC;&#x2122;s most recent round, which helped the restaurant open last month. â&#x20AC;&#x153;These busiNeed nesses might not to know be able to get traJ Motor City ditional bank Match reaches a loans,â&#x20AC;? Duggan milestone of said at the event. supporting 100 â&#x20AC;&#x153;Out of the 100 businesses cash awards, 29 businesses have J 13 Detroit companies receive opened and 36 businesses are grants of under construc$10,000-$75,000 tion.â&#x20AC;? J Cash awards Among the have helped 29 ninth round winbusinesses open ners are an early and 36 are under childhood care construction center, a video production company, a wedding studio and restaurants. â&#x20AC;&#x153;The Motor City Match program works on two levels to accelerate the growth of local businesses,â&#x20AC;? Rafferty said in a news release. â&#x20AC;&#x153;First, it provides opportunity for equitable business development and job creation for entrepreneurs within our city. Second, it helps create retail clusters in neighborhoods with demand for goods and services, but lacking in supply.â&#x20AC;? One Stop Property Maintenance received the top $75,000 grant, which is logged as the 100th business to receive a Motor City Match award since its inception in 2015. Kenji Lemon has run the facilities maintenance business from his home for 11 years. During that time, the entrepreneur has picked up clients including Techtown, Detroit Public Schools and CVS. Lemon plans to use his award toward a total investment of $375,000 to build out a new headquarters, hire administrative staff and add equipment to expand the business. Loraine Smith-Hines received a $20,000 grant to help expand her growing child-care center in the Grandmont-Rosedale neighborhood in northwest Detroit. The Detroit native is investing a total of $55,000 in Primary Colors Early Childhood Center to open a resource center where computers, printers and event space will be available for parents and to host events for children. â&#x20AC;&#x153;We can now open more needed space. I quit my job as a teacher in February, and we need more space,â&#x20AC;? she said after accepting the award. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s a husband-and-wife team, which makes it a unique program.â&#x20AC;? The other Motor City Match awards for the ninth round: J Detroit Lash & Brow, an eyelash and eyebrow extensions and tinting service owned by Tamika Newsome â&#x20AC;&#x201D; $10,000. J The Social Club Grooming Co., a barbershop that fosters community engagement and discussion owned by Sebastian Jackson â&#x20AC;&#x201D; $20,000. J Detroit Wedding Studio, a wedding planning and coordinator service

owned by Carrie Gentry â&#x20AC;&#x201D; $20,000. J New Center Eatery, a casual dining and carry-out restaurant owned by Johnny Cannon â&#x20AC;&#x201D; $25,000. J D&D Cuisine LLC, an American cuisine gourmet restaurant owned by Damon Lockett â&#x20AC;&#x201D; $35,000. J Urban Flavors, a startup restaurant that offers local and urban organic dishes owned by Cleveland Crumsey â&#x20AC;&#x201D; $45,000. J The Detroit Pepper Co., a startup healthy alternative fast casual restaurant serving smoothies and raw juices owned by Marlin Hughes â&#x20AC;&#x201D; $45,000. J LPS-2 Inc., a green remanufacturing company of compatible toner cartridges for laser printers owned by

veteran Michael Dorsey â&#x20AC;&#x201D; $45,000. The Work Inc., a content and video production company owned by Edward Knight, Jesse and Shane Ford, Christopher Gruse and Jerome Walker III â&#x20AC;&#x201D; $50,000. J The Platinum Chef, a vegan, Caribbean baked-goods businesses owned by Rhoda St. Luce â&#x20AC;&#x201D; $50,000. J Olive Seed, a natural health and wellness provider offering various workshops and owned by Latricia Wright â&#x20AC;&#x201D; $60,000. Motor City Match also gave out 50 business plan awards, 26 space awards and seven design awards in this round. Those awards provide assistance to entrepreneurs paid for by the program. J

MOTOR CITY MATCH

One Stop Property Maintenance received the top $75,000 grant. Kenji Lemon has run the facilities maintenance business from his home for 11 years.

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

DEALS & DETAILS ACQUISITIONS & MERGERS

ing of advanced electronic controls and control systems. Websites: gentherm.com, etratech.com.

Gentherm Inc., Northville, a developer of thermal management technologies, has acquired Etratech Enterprises Inc., Burlington, Ontario, Canada, which specializes in the design, development and manufacturJ

CONTRACTS J Aqaba Technologies Inc., Sterling Heights, an internet marketing agency, has been retained by Jordan Clark-

son of the L.A. Lakers for the business analysis and development of a fan club app and a website refresh. Websites: aqabatech.com, jordanclarksonfanclub.com.

Brook, Ill., a physical therapy franchise, has opened a new location at 50912 Gratiot Ave., Chesterfield. Phone: (586) 200-6603. Website: athletico.com. Dickey’s Barbecue Restaurants Inc., Dallas, Texas, has opened a Dickey’s Barbecue Pit franchise at 3500 Washtenaw Ave., Ann Arbor. Phone: (734) J

EXPANSIONS J

Athletico Physical Therapy, Oak

263-0436. Website: dickeys.com.

MOVES J Cummings, McClorey, Davis & Acho PLC, a law firm, has moved its Livonia office from 33900 Schoolcraft Road to 17436 College Parkway. Website: cmda-law.com.

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Strengthening Urban Communities by Creating Opportunities for Minorities in Business. 11:30 a.m.-1:30 p.m. Detroit Economic Club. John W. Rogers Jr., chairman, CEO and chief investment officer, Ariel Investments, will discuss how to create economic opportunity for people of color in businesses despite the barriers those communities face. Westin Book Cadillac. $45 members, $55 guest of members, $75 nonmembers. Website: econclub.org

TUESDAY, NOV. 7 Emerging Intellectual Property Legal Trends for 2017 and Beyond. 7:30-11 a.m. Original Equipment Suppliers Association. Warner Norcross & Judd attorneys Janet Ramsey, Gregory DeGrazia, Michael Azzi, Vito Ciarvino, and Deloitte consultant Christopher Ongena will discuss IP legal and strategic decisions as well as challenges that may impact business. Detroit Marriott, Troy. $125 members before Oct. 24; $175 nonmembers before Oct. 24; $175 members after Oct. 24; $225 nonmembers after Oct. 24. Contact: phone: (248) 952-6401; email: info@ oesa.org.

Jim Hackett

Florine Mark

ett, president and CEO, Ford Motor Company; Mike Miller, director, Google Technical Services; Phil Hagerman, chairman and CEO, Diplomat Pharmacy. Panel includes: Linda Blair Apsey, president and CEO, ITC Holdings Corp.; Florine Mark, president and CEO, The Weight Watchers Group Inc.; Sandy Pierce, chairman, Huntington Bank; Lou Anna Simon, president, Michigan State University. Westin Book Cadillac. $150. Contact: Jennifer Hayes, phone: (313) 259-5400; email: jenniferh@businessleadersformichigan. com; website: businessleadersformichigan.com.

Crain’s Health Care Heroes. 8-10:30 a.m. Crain’s Detroit Business. Crain’s Health Care Heroes represent consummate professionals working within the health field. These heroes are innovators who are dedicated to helping save lives and improving access to care. Gem Theatre, Detroit. $85. $60 young professional ages 21-35. Contact: Kacey Anderson, phone: (313) 446-0300; email: cdbevents@crain.com, website: crainsdetroit.com

Integr8 Industry 4.0. 7:30 a.m.4:30 p.m. Automation Alley. Manufacturing and technology professionals will discuss cybersecurity, big data and artificial intelligence, additive manufacturing, advanced materials, robotics, the Industrial Internet of Things, cloud computing and modeling, simulation and visualization. Speakers include Howard Heppelmann, divisional vice president and general manager of Connected Operations Solutions at PTC, and Ian Steff, deputy assistant secretary for manufacturing at the U.S. Department of Commerce. Detroit Marriott, Renaissance Center. $449 member; $599 nonmember. Email: integr8@automationalley.com ; website: automationalley.com/integr8

WEDNESDAY, NOV. 8

UPCOMING EVENTS

November Economic Development Forum. 8-9:30 a.m. Troy Chamber of Commerce. A year in review and outlook for 2018 by local industry experts. Rehmann, Troy. Free members; $10 nonmembers. Contact: Jessica Hruska, phone: (248) 641-1606; email: jessica@troychamber.com; website: troychamber.com

A Deep Dive with Ed Bastian. 11:30 a.m.-1:30 p.m. Nov. 15. Detroit Economic Club. Delta Air Lines CEO Bastian talks about how he keeps a global airline on course. MotorCity Casino Hotel. $45 members, $55 guest of members, $75 nonmembers. Website: econclub.org

THURSDAY, NOV. 9 2017 Michigan CEO Summit. 8 a.m.-2 p.m. Business Leaders for Michigan. Keynote speaker is Andrew Liveris, executive chairman, DowDuPont. Other speakers include: Brian Walker, president and CEO, Herman Miller Inc.; Jim Hack-

Positive Links Speaker Series: Evelina Fredricksson. 4-5 p.m. Nov. 15. Center for Positive Organizations Ross School of Business. Fredricksson will share her experience of creating a positive setting for learning and growth in Cambodia. Robertson Auditorium, Ann Arbor. Free. Contact: Angie Ceely, phone: (734) 6478154; email: cpo-events@umich. edu

CEO Luncheon: Rod Alberts. 11:30 a.m.-1:00 p.m. Nov. 16. Troy Chamber of Commerce. Rod Alberts, executive director of the Detroit Auto Dealers AssociaRod Alberts tion and the North American International Auto Show, gives a preview of the 2018 NAIAS. Embassy Suites, Troy. $28 members; $38 nonmembers. Contact: Jessica Hruska, phone: (248) 641-1606; email: jessica@troychamber.com; website: troychamber.com A Celebration of Crain’s Forty under 40 and Twenty in their 20s. 5:30-9 p.m. Nov. 16. A celebration of Crain’s Forty under 40 and Twenty in their 20s is one the largest gatherings of Michigan’s rising leaders. Roostertail. $150; $140, 20s and 40s alumni; $105, young professional ages 21-35. Contact: Kacey Anderson, phone: (313) 446-0300; email: cdbevents@crain.com, website: crainsdetroit.com 2017 Women Entrepreneurs Conference. 8:30 a.m.-3 p.m. Nov. 18. Michigan Association for Female Entrepreneurs. Conference brings together female entrepreneurs, business experts, media, investors, and community and government leaders. Features speakers on how to grow a business, panel discussions, and the “Female Entrepreneur of the Year” award. University of Michigan Detroit Center. $55 member; $75 nonmember. Contact: Tonya McNeal-Weary, phone: (844) 490-6233; email: info@mafedetroit. org; website: mafedetroit.org The Role of Innovation in Meeting 21st Century Housing Challenges. 11:30 a.m.-1:30 p.m. Nov. 20. Timothy Mayopoulos, Fannie Mae president and CEO, will talk Timothy about the role of Mayopoulos innovation in meeting 21st century housing challenges. Westin Book Cadillac. $45 members, $55 guest of members, $75 nonmembers. Website: econclub.org To submit calendar items 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.

C R A I N â&#x20AC;&#x2122; S D E T R O I T B U S I N E S S // N O V E M B E R 6 , 2 0 1 7

Youâ&#x20AC;&#x2122;ve never fit in a box,

SPOTLIGHT Michigan Womenâ&#x20AC;&#x2122;s Foundation names COO

why should your investments?

The Michigan Womenâ&#x20AC;&#x2122;s Foundation promoted Margaret â&#x20AC;&#x153;Pegâ&#x20AC;? Tallet, who joined the foundation as chief community engagement officer four years ago, to the newly created position of COO. In the new Margaret Tallet role, Tallet will be responsible for overseeing the foundationâ&#x20AC;&#x2122;s external activities statewide, including development, communications, government affairs and special events. She will also lead the â&#x20AC;&#x153;Enough Saidâ&#x20AC;? campaign to eliminate the backlog of untested rape test kits in Detroit. Tallet has been active in fundraising, marketing communications and collaborations in metro Detroitâ&#x20AC;&#x2122;s arts and cultural, social service and education communities for 30 years.

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DPTV fills new COO position

Come learn why so many smart investors are choosing Schechter.

Detroit Public Television has named Tom Szczepanski its new chief operating officer. Szczepanskiâ&#x20AC;&#x2122;s appointment to the new position is effective immediately, said Marty Fischhoff, director of Tom Szczepanski c o m m u n i c a tions for DPTV. He will oversee all aspects of the stationâ&#x20AC;&#x2122;s operations, including developing growth strategies. Duties of the COO role had been handled by the executive vice president of productions and operations Jeff Forster, who left the role last year but continued on as an adviser. The role has since expanded to include more responsibilities. Szczepanski, 58, has been assistant vice president of development at the University of Michigan since 2010.

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Amway names new CFO

Amway Corp. has appointed Nick Thole its new chief financial officer. Thole, 43, takes on the new position immediately, c o m p a n y spokesman Nick Wasmiller said via email. Thole had been in the role on an Nick Thole interim basis since August, when the previous CFO, Mark Stevens, left the company. Thole will oversee the companyâ&#x20AC;&#x2122;s balance sheet, capital structure and overall financial reporting and control process. He joined the Ada-based multilevel direct sales company in 2008 and had served as CFO of the companyâ&#x20AC;&#x2122;s Europe, India and Africa region, vice president of internal audit, and vice president of financial planning and analysis.

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16 Page 16 2

PEOPLE

City Club Apartments sells properties in Ann Arbor, Illinois

CATEGORY BANKING/FINANCE

By Kurt Nagl

 Bullet. J Kristy Fercho

City Club Apartments has sold the 520-unit Village Green Apartments of Ann Arbor Township, as well as two properties in Illinois, for a total of $125 million, the company announced Thursday. The sale comes as the Farmington Hills-based real estate company seeks to expand its portfolio while narrowing its scope in the market. “Our focus has shifted to developing and managing urban and suburban-urban mid-rise, high-rise and historic mixed-use apartment and penthouse communities,” City Club Apartments CEO Jonathan Holtzman said in a news release. “These three apartment communities do not fit that vision.” The Village Green Apartments, at 459 Village Green Blvd., has been renamed The Haven of Ann Arbor. City records list the property as being owned by G & I IX VG Apartments LLC. In 2016, Holtzman sold his 50 percent stake in Village Green Holdings, a $4.5 billion apartment company that managed the Ann Arbor Township complex, to Dallas-based Compatriot Capital, while retaining ownership of 10,000 apartments in 30 communities valued at more than $2 billion, Crain’s reported. He split from real estate giant Village Green

to president of mortgage, Flagstar Bank, Troy, from senior CATEGORY vice president, customer delivery, Fannie Mae, Chicago, Ill. JBullet.

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To submit news of your new hires or promotions to People, goattorney, to  Liam Healy to senior Foscrainsdetroit.com/peoplesubmit and ter Swift Collins & Smith PC, Southfill outfrom the online form.Ferguson Please limit field, attorney, Widsubmissions to managementor mayer PC, Ann Arbor. Also, Matthew partner-level positions. Fedor to senior attorney from attorney, Fedor, Camargo & Weston PLC, Birmingham; Nicolas Camargo to senior attorney from attorney, Fedor, Camargo & Weston PLC; Trevor Weston to senior attorney from attorney, Fedor, Camargo & Weston PLC; Robert Hamor to associate from associate, Fedor, Camargo & Weston PLC.

REAL ESTATE  Thomas W. Litzler to executive vice president and chief operating officer, Schostak Brothers & Company Inc., Livonia, from president of the midwest, Brixmor Property Group Inc., Northbrook, Ill.

To submit news of your new hires or promotions to People, go to crainsdetroit.com/peoplesubmit and fill out the online form.

knagl@crain.com

www.crainsdetroit.com/onthemove To place your listing or for more information, please call Lynn Calcaterra at (313) 446-6086 or email lcalcaterra@crain.com

ACCOUNTING

FINANCIAL SERVICES Robert Willig

City Club Apartments has sold the Village Green Apartments of Ann Arbor Township.

Need to know

 City Club sells properties not fitting its high-end, urban vision

 He retained $2 billion worth of properties

Attention Developers!

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READERS REFER TO THE BOOK OF LISTS ONCE A MONTH Ranked by 2015 revenue

E 200 TE ATE A PRIVAT PRIV CRAIN'S LIST: PRIVA executive T executive Top

48334 Inc.,, Farmington Hills Orleans International (248) 855-5556; www.orleansintl.com B , Auburn Hills 48326 Henniges Automotive otive.com (248) 340-4100; www.hennigesautom Heights Electric Co.,, Madison McNaughton-McKay

Co.,, Farmington Hills Amerisure Mutual Insurance 48331 (248) 615-9000; www.amerisure.com Hills 48326 U.S. Farathane, Auburn (248) 754-7000; www.usfarathane.com 48126 Carhartt Inc., Dearborn (313) 271-8460; www.carhartt.com Warren 48092 Art Van Furniture Inc., (586) 939-0800; www.artvan.com

35 35 37 38 39

40 41 42

824.8

-0.2

219

7,435

800.0

689.0

16.1

550

15.9

1,092

Automobile dealerships

768.4

663.3

701.4

8.3

718

Property and casualty

759.7

355

Gregory Crabb president and CEO

500.0

40.0

3,000

Plastic injection molder,

700.0

2,416

Andrew Greenlee president and CEO Mark Valade chairman and CEO

664.0

4.1

505

5,033

Apparel manufacturer

691.0

620.0

4.8

1,798

3,622

Retail home furnishings

650.0

510.0

27.5

165

3,300

647.0

604.0

7.1

505

646.0

555.0

16.4

525

627.0

590.0

6.3

525

559.0

5.9

568

2,457

Information databases

591.9

453.0

28.5

597

1,090

Recreational vehicle and

582.0

-29.3

Petroleum retailer and

551.1

779.7

528.0

497.0

6.2

1,150

6,000

510.1

355.6

43.5

1,405

-5.7

396

1,639

-4.1

Michael LaFontaine, owner and chairman; Maureen LaFontaine, owner and president

Archie Van Elslander chairman and Kim Yost CEO C 48326 Frank Macher Plastics , Auburn Hills chairman and CEO Continental Structural (248) 237-7800; www.cspplastics.com Kenneth Hopkins Belleville 48111 president and CEO Neapco Holdings LLC, (734) 447-1372; www.neapco.com Thom Lipari 48089 president and CEO Lipari Foods LLC, Warren (586) 447-3500; www.liparifoods.com Bill Hodges executive vice Michigan CAT, Novi 48375 president (248) 349-4800; www.michigancat.com Kurt Sanford 48106 CEO ProQuest LLC, Ann Arbor n-US (734) 761-4700; www.proquest.com/e Robert Baidas, CEO; Wixom 48393 Loren Baidas, General RV Center Inc., president and (248) 349-0900; www.generalrv.com chairman Robert Barrick Royal Oak 48073 president Barrick Enterprises Inc., (248) 549-3737; www.barrickent.com Frederick Minturn Detroit 48226 president and CEO MSX International Inc., (248) 829-6300; www.msxi.com

DEADLINE EXTENDED 43

, Troy 48083 Financial Services LLC,

44 45 46 47

Mat Ishbia president and CEO D Mark Anderson president and COO

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traded on a that do not have stock and Washtenaw counties range of other Oakland, Macomb, Livingston news reports and a wide companies in Wayne, analysis and benchmarks, of their main Detroit-area compilation of the largest are based on industry the address and top executive companies is an approximate available. Crain's estimates elsewhere are listed with This list of privately held but the most comprehensive Companies with headquarters not a complete listing public exchange. It is provided by the companies. noted, information was sources. Unless otherwise not available. figures may vary. NA = office. Actual revenue SEE PAGE 19 Co. Ltd. in Sept. 2015. Automotive Systems Holding Structural Plastics. B Acquired by China’s AVIC agreed to acquire Continental 12 that Teijin Ltd. of Japan C It was announced Sept. Succeeds Kathleen McCann. D Named as president in August. E Plastics News estimate.

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

“Resolving Your Money Matters”

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Mahindra signals plans for auto plant near Detroit By Automotive News India’s Mahindra & Mahindra Ltd. on Thursday said it plans to build a 400,000-square-foot auto assembly plant on Rex Road in Auburn Hills, which would be the first new auto plant in the region in more than 25 years. The global manufacturer has scheduled a news conference for Nov. 20 in Auburn Hills with local political leaders, according to an advisory sent by Mahindra North America. U.S. Secretary of State Rex Tillerson hinted at Mahindra’s plans on Oct. 25 in New Delhi, Bloomberg reported. Mahindra plans to build offroad utility vehicles in the plant, The Times of India reported at the time. Mahindra’s advisory didn’t indicate when production would begin. Mahindra has been attempting to

WOMEN FROM PAGE 1

517.544.9100 www.ljross.com

Most of the net gains for women have been at the 15 Fortune 500 companies in Michigan. At those companies, women hold 25 percent of board seats, up from 14 percent in 2007 and higher than the 22.2 percent national average, according to the study. (An important caveat: Michigan has dropped from 20 Fortune 500 companies in 2007 to 15 this year, which means there are 26 fewer directors regardless of gender.) The study is scheduled to be released to the public Tuesday at an event at the Detroit Marriott at the Renaissance Center. A third of the 42 women directors serve at just three Michigan companies, General Motors Co., Kellogg Co. and CMS Energy Co. with five women directors each at GM and Kellogg and four at CMS. Terry Barclay, Inforum’s CEO, suspects companies like GM and Kellogg are leading the way in creating more board positions for women because they deal more directly with consumers. Terry Barclay “I do think we’re beginning to see a tipping point,” Barclay said. “It’s the big companies that lead in best practices, then the news spreads. These companies receive more public scrutiny, so a positive influence being greater transparency and action.” At 44 of Michigan’s smaller companies, those with a market capitalization of less than $100 million, women made no progress in being seated as board directors in the past decade. At these companies, women account for only 8 percent of board seats. According to the study, 31 of Michigan’s top 100 companies have no women on their boards at all. Susan Stautberg, chairman and CEO of West Palm Beach, Fla.based Women Corporate Directors

Need to know

JJIndian automakers plans to build auto

plant in metro Detroit

JJMahindra facility would be the first new auto plant in the region in more than 25 years JJManufacturer scheduled a news conference for Nov. 20 in Auburn Hills

enter the U.S. automotive market for more than 10 years, which included plans for a pickup and a possible retail network of more than 300 dealers. But those plans derailed in 2010 and ended up in litigation. Dealers sued Mahindra in 2012, claiming the automaker “pocketed more than $9.5 million, more than a $100 million worth of dealer trade secrets to utilize for their future entrance into the U.S. market, and a

strong market foundation gained at the expense of the dealers’ ‘free’ promotion of Mahindra’s brand name around the U.S.” Mahindra denied the dealers’ claims, placing blame for the failure of plans to sell its pickups in the United States on its former U.S. distributor, Global Vehicles U.S.A. Inc. of Atlanta. The current status of that litigation was not immediately clear. An amended complaint was filed by six dealerships in 2016. In 2013, Mahindra established its North American automotive headquarters in Troy, which includes design, engineering and vehicle development. In 2014, it announced plans to expand its technical center, adding about 110 engineering jobs. — Crain’s Detroit Business reporter Dustin Walsh contributed to this report.

“Companies want to get people with experience in new technologies who are younger, more tech-savvy. The problem is there are lot more men in Silicon Valley.” Susan Stautberg, Women Corporate Directors Foundation

Foundation, said companies are looking to the West Coast for board members from Silicon Valley’s tech sector, and that is stifling women’s ability to win seats. “Companies want to get people with experience in new technologies who are younger, more tech-savvy,” Stautberg said. “The problem is there are lot more men in Silicon Valley. “ The percentage of women directors of the top 150 Silicon Valley companies was 14.1 percent in 2016, according to a March study by California law firm Fenwick & West LLP. Southfield-based Lear Corp. was successful at achieving both by appointing Facebook Inc. executive Mary Lou Jepsen to its board of directors in 2016. Visteon Corp. appointed Nomi Bergman, former president of Bright House Networks until its merger with Charter Communications and Time Warner Cable, in 2016 to benefit from her telecommunications experience. “I give Visteon credit for being creative here, for seeking a board member with tech experience,” Bergman said. “But this isn’t just a board member problem, this is a leadership problem as well. It’s so much about heritage and how (male) executives generally hire others that are just like them, so change for women is just happening so slowly. We have to have more leaders willing to take a risk and pick someone that is different with different thoughts.” To Bergman’s point, there are fewer women executives in Michigan now than in 2007 and men outnumber women 7-to-1 in executive roles. Of the top 100 Michigan companies by market cap, 47 have no women executive officers, according to the study. There are outliers,

with more than one female officer, such as Kelly Services Inc. and Ford Motor Co. with four and SpartanNash Co. with three. Only nine of the 100 companies have a woman as their highest-paid executive, up from seven in 2007. Patti Poppe, president, CEO and board director of CMS Energy Co., said most companies pay only lip service to gender diversity. “A company needs to want to fill the gap,” Poppe said. “The problem will not fix itself; people who make hiring decisions and promotional decisions need to be deliberate about finding the best people and ensuring a diverse mix from beginning to end, top to bottom. There needs to be enough diversity in the selection pool for the best talent to Patti Poppe rise to the top. There are plenty of talented women out there and when a company works systematically to fill their pipeline from the front line to the boardroom, the problem goes away.” Barclay said the major barrier for women is complacency — 63 percent of men and 49 percent of women believe their company is improving gender diversity, according to the 2017 Women in the Workplace survey by McKinsey & Co. “We have to keep talking about this openly, to consistently look at the data,” Barclay said. “We have room to move, so we have to not allow complacency to get the better of us.” 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 // N O V E M B E R 6 , 2 0 1 7

STORAGE FROM PAGE 3

Among them: CubeSmart, based in Pennsylvania; Life Storage Inc., based in Buffalo, N.Y.; Extra Space Storage Inc. in Salt Lake City; National Storage Affiliates of Greenwood Village, Colo.; and Global Self Storage Inc., based in New York City. “Look at how entrepreneurial and mom-and-pop this industry still is,” said Pogoda, who founded his company 30 years ago. “It’s akin to motels in the 1950s before Holiday Inn and others came in and really started consolidating. It’s not really a sleepy industry anymore.” Part of that is because it has tended to perform well for investors regardless of economic conditions in the country. During periods of economic growth, people generally have more spending power and are able to accumulate more goods, so they need more space to stash them. During downturns, particularly during the foreclosure crisis, people are forced into apartments or smaller living spaces and need space to store what couldn’t fit in their new dwellings. “Lenders love this,” said Dennis Bernard, president of Southfield-based Bernard Financial Group. “They are very much in love with

Morrison Industries to hire for new Novi factory

self-storage. In many ways, it has similarities to senior housing. They may lease up slowly, but once they lease up, they stay well leased.” Bill Sheffer, president of the Lansing-based Self-Storage Association of Michigan, which is having its annual conference in downtown Detroit this week, said he doesn’t believe REITs will dominate the sector any time soon. “With the stock market and investment market so strong, these people have money and they are looking for places to put it,” he said. “Some of these facilities, especially in the outstate area, are relatively small, relatively antique in some respect. Let’s face it: We are talking about a number of 10-by-10 garages hooked together with locks on them.” According to Reis Inc., a New York

City-based commercial real estate data company, the region’s second-quarter self-storage vacancy rate was 8.5 percent, better than the Midwest’s 10.7 percent and the nationwide vacancy rate of 9.7 percent. Reis also projects that in a year, the vacancy rate will be 10.4 percent, lower than the Midwest (12 percent) and nationwide (11.1 percent) rates. By the end of 2021, Detroit’s 11.5 percent projected vacancy rate is expected to be better than the Midwest average (12.1 percent) and U.S. rates (11.8 percent). Part of that is because there are fewer self-storage units being built in the region than other parts of the country, said Michael Berger, president of Southfield-based U-Store Management Co., which has a portfolio of 16 storage properties with

about 7,000 units, mostly in Michigan. The company expects to add another eight facilities with about 3,200 units in Ohio later this month. “You have construction in more urban centers like Chicago and New York and California, but this market hasn’t seen that,” Berger said. “That’s what’s keeping occupancy rates quite high.” According to a recent report from Los Angeles-based international real estate brokerage CBRE Inc., the Detroit area has just three self-storage facilities in planning stages, with five more under construction. Several other metro areas have dozens planned or under construction, led by Dallas, with 49 planned and 82 under construction, the most in the country. Pogoda said significant capital has

started chasing self-storage deals lately. “Private equity has just come out of the woodwork,” he said. “In the U.S., there is about 7 to 7.5 square feet of storage per person. We have an enormous amount. Twenty years ago, if I saw an area with 3.5 to 4 feet per person, I would say if that area is not overbuilt, it’s right on the cusp.” Depending on unit sizes and whether they are or are not climate-controlled, some Detroit area asking rates outpace Midwest and national averages, although rentgrowth projects by Reis for the next five years show that the Midwest and nationwide average increases are expected to be higher. Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

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Morrison Industries said it will create up to 100 new jobs when it moves into a factory in Novi early next year. The custom shipping racks manufacturer plans to start production in a 50,000-square-foot facility at 46480 Magellan Drive in Beck West Corporate Park in January. The Morrison, Tenn.-based company, registered to its president and CEO Jacob Wilson as Morrison Tool & Fab Inc., is Need opening the to know plant to be closer J Custom to new and curshipping racks rent customers in manufacturer to metro Detroit’s hire up to 100 in and the northern Novi automotive manufacturing indusJ 50,000-squaretry, a news refoot factory to lease said. open in January Jacqueline Bell J Morris will join the comIndustries hires pany as general Jacqueline Bell manager. She from FCA as comes from Augeneral manager burn Hills-based FCA US LLC, where she was senior buyer of material handling since 2015, according to her LinkedIn account. “Morrison is positioned to make a splash in the northern market,” Bell said in a news release. “I’m excited to be a part of a company I’ve admired from afar for years.” Morrison did not retain a designer or contractor for the new facility. Spokeswoman Brittany Youngblood said the building is ready to go and will not go through much remodeling.

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

RTA

FROM PAGE 1

funding fairness and worries that taxpayers in outlying areas wouldn’t get services, evolved into an agreement to not campaign against the ballot issue, which eventually was defeated at the polls — winning in Wayne and Washtenaw county, while failing narrowly in Oakland County and by a wide enough margin in Macomb County to scuttle the issue entirely. Patterson said he’s scheduled to meet with Wayne County Executive Warren Evans this week to discuss the RTA, and he credits Evans with being realistic about the need for political consensus across the region. “He’s emerging as one of the prime movers for the RTA. He understands the risks,” Patterson said. The longtime Oakland County leader said he’s open to reaching an accord on a new regional plan as long as he believes it’s fair in terms of taxes and service. “We’ll examine it fairly,” he said. Patterson didn’t think the 2016 RTA master plan was fair because it taxed residents in areas that didn’t receive transit services. Some of the master plan was scaled back, which Patterson considered enough to not actively campaign against the tax. He also didn’t campaign for it, and the measure failed in Oakland County 50.09-49.91 percent. The 2016 transit tax, which would have raised $2.9 billion over 20 years across the four counties, and been used to leverage additional state and federal dollars to reach $4.6 billion, was intended to pay for a regional system of bus rapid transit lines, create the long-discussed commuter rail service between Detroit and Ann Arbor, and among other things fund the QLine streetcar’s operations in downtown Detroit. The issue lost by fewer than 20,000 votes out of 1.7 million cast across the four counties. Hillegonds has a basic message for those regional leaders: “You need to own this, help us create a revised plan, and own it to the extent you’re willing to campaign for it.” There must be consensus among the elected leadership of the five constituent RTA entities about the next plan and tax for it to become a reality. That’s the only way Hillegonds sees a path forward with voters because Patterson and Hackel are critical to convincing elected leaders down the chain to campaign for it. “They can be helpful with us going to city and local leaders to convey our message to voters,” Hillegonds said. “Regional consensus is absolutely critical. It can’t happen any other way. Frankly, we can’t go forward without their support. They have veto power over everything we do.” Andy LaBarre, chairman of the Washtenaw County Board of Commissioners, said the RTA’s new strategy is wise “given the political reality in Southeast Michigan.” Because Washtenaw doesn’t have an elected county executive, LaBarre has been participating in the ongoing talks with deputies from the other municipalities, colloquially known as the Big 4. “For this to be viable politically, it’s got to be a plan where the Big 4 have enough agreement that they can go to voters with something that’s compromise and consensus driven,” he said. “We want to see what Oakland and Macomb agree to that will work for Wayne and Washt-

GETTY IMAGES/VETTA

A property tax was sought last year to fund a new system of bus rapid transit, new traditional bus routes, and commuter rail between Detroit and Ann Arbor. The proposal won in Wayne and Washtenaw county, while failing narrowly in Oakland County and by a wide enough margin in Macomb County to scuttle the issue entirely.

L. Brooks Patterson: Examine it fairly.

Mark Hackel: Doesn’t want to rush plan.

enaw and the city of Detroit.” In 2016, the master plan was actively supported by elected leaders in Wayne and Washtenaw counties, and Detroit Mayor Mike Duggan backed it. The measure passed in those places. Now, with Detroit leading an effort to entice Amazon to build its second headquarters here, and bring 50,000 jobs, talks are underway on how the region can meet the online retailer’s desire for an effective mass transit system to move its workers. But Patterson and Hackel don’t want to be rushed into a plan just for the sake of Amazon. “That would be the wrong tactic for them to suggest,” Patterson said. “That’s the last thing I’ll let happen, to be pressured into a plan.” He and Hackel both told Crain’s last week they nor their deputies meeting with the RTA have any sense that the Amazon bid is fueling any need to hurry the process along. Hackel said he doesn’t believe a lack of an RTA system akin to what was pitched last year is a deal-breaker for Amazon, which is expected to narrow the list of 200-plus cities that submitted bids to a cadre of finalists before the end of the year and announce the winning city in 2018. “I seriously doubt if they don’t have the regional transit system others wanted, (Amazon) won’t come here,” he said. “I am one who refuses to be pushed into something because of other interest about it.” Hackel points to his county’s support of Suburban Mobility Authority for Regional Transportation, the primary bus system for the suburbs, as evidence Macomb County favors mass transit. SMART has its own dedicated tax. As an interim step until an RTA

master plan is created, SMART has proposed to increase the frequency of the limited-stop RefleX that it has operated in conjunction with the Detroit DepartPaul Hillegonds: ment of TransRegional leaders portation since need to help. September 2016 along the high-density Gratiot, Michigan and Woodward corridors. The proposal, which could be launched in January if it’s sorted out and funded, was included in Detroit’s pitch for Amazon.com’s second headquarters. Evans is optimistic about the RTA effort. “Our teams are working together regularly. There have been productive discussions and meetings. Perhaps the sting of last year’s millage defeat and collaboration around the Amazon effort will bring us to a plan we can all support,” he said via an emailed statement.

Concerns remain There still remains varying levels of support for the RTA itself among the leaders, and different philosophies about why it should exist. Hence, consensus could remain a difficult goal. Hackel, who balked at original RTA master plan over its board voting structure and how tax dollars would be apportioned for transit across the four counties, said last week that his chief use for the RTA isn’t buses and trains. “The RTA is helpful in that in can bring back more dollars for roads and bridges,” he said, adding that Macomb County residents are primarily interested in getting streets fixed. “We want more regional transit, but that’s not the No. 1 priority.” Hackel said the 2016 RTA plan and ballot initiative was rushed and didn’t reflect what residents in the region really wanted. His concerns last year were mollified, but he didn’t campaign for the ballot issue. This time, he said he feels “more confident” about the talks that have been

underway among the RTA members over the past 12 months. The RTA itself spent those 12 months licking its wounds over the failed tax, analyzing the elections results data, and cobbling together a new strategy to get a regional transit plan and tax proposal amenable to regional leaders who often are at odds with each other. Consulting firm HNTB Corp., which was used to craft the 2016 RTA master plan, was hired to provide new transit plan options for the leadership to consider. One option being studied now is to reduce the RTA’s master plan footprint to eliminate rural areas in the four counties. They wouldn’t get a vote on the RTA tax proposal because they wouldn’t receive it services or be taxed for them. Theoretically, limiting the plan’s tax district sheds a lot of the ‘no’ votes. Reducing the RTA footprint would require legislative approval, and to make that happen in time to get a transit tax on the 2018 ballot something would have to be sent to Lansing early next year, Hillegonds said. That means the regional leaders would need to agree on at least the basic framework of a plan in coming months. Evans prefers to use the existing RTA footprint, which is the boundaries of the four counties, but it open to alternatives. “The more comprehensive the regional transit system, the greater the benefits, and I think there’s a path forward to achieve that. I’d greatly prefer to get this done in the existing RTA footprint, but we don’t support taking the same flawed plan back to the public while expecting the same result,” he said. Oakland County’s northern reaches voted against the 2016 RTA tax because it didn’t offer them much in the way of services, Patterson said, so he’s open to reducing the RTA footprint to exclude those areas. He also said opt-outs, which would allow communities to not be part of the RTA, are an idea to consider. The RTA leadership opposes opt-outs because they create funding gaps. Funding always looms over transit issues. SMART and DDOT have

been fiercely projective of federal bus funding splits for the region, with RTA now acting as the coordinating agency for such dollars across the region. SMART and the Ann Arbor Area Transportation Authority bus system both have operating tax renewals on the ballot in 2018, meaning voters in some places will be faced with two transit tax questions if there’s also an RTA levy. Part of the RTA’s role is to ensure voters are educated about any tax question. By law, it cannot advocate for a ‘yes’ vote, but private campaigns typically are organized to get out the vote. Last year, a $6 million multimedia yes-vote campaign was funded by private backers. Many of the region’s business groups, hospitals, philanthropic groups and foundations, universities, financial institutions and companies, including DTE Energy Co., Quicken Loans Inc. and Rock Ventures LLC, Detroit Athletic Club, Penske Corp., Rush Group and Ford Motor Co., signaled support of the RTA plan last year. A new plan will require going back to those backers for more support.

RTA internal leadership Amid the quest for a new plan, tax, and regional consensus for them, the RTA remains without a full-time leader. Tiffany Gunter has been interim CEO since Michael Ford resigned in March over questions about his expenses. Hillegonds praised her work and said the delay in giving her the job full-time was because the RTA had to determine if it would continue in its current setup or be altered some way. “We’ve wanted to understand where RTA would be going in the future. In the past year, the transition to Tiffany’s leadership has been tremendous. She’s been an outstanding leader for the RTA. There’s high confidence in her by the board and the regional leadership,” Hillegonds said. “I believe the board in the near future will consider making her permanent.” Bill Shea: (313) 446-1626 Twitter: @Bill_Shea19

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

WARMILU FROM PAGE 1

Pricing depends on distribution costs and product model, ranging from $75 for the base, up to $300 for blankets with reusable packs.

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Business heats up While the number of employees and production have risen, the hours and worries also have multiplied. “I find my body will sometimes crash,” Hsia said, explaining how 90hour work weeks have occasionally led to bouts of pneumonia and bronchitis. “I’ve been trying to get more sleep, which is tough.” Even so, Hsia said the startup life is worth it. She graduated from UM in 2012 with a bachelor’s degree in materials science and engineering and has not stopped to consider the “what ifs.” What started as a school project turned into a full-time venture, and is now a calling. “I know we’re saving infant lives,” she said. “I wouldn’t have been able to experience that had I chosen a more traditional career path.” Around 2.6 million children in the world died during the first month after their birth in 2016, according to the World Health Organization. More than half of the deaths were due to conditions that could have been prevented, including lack of proper warmth and incubation. Hsia sees it as her responsibility to help those children, much like doctors helped keep her warm and incubated during her first fragile days of life. She was born premature, a month before her due date, at St. John’s Hospital in Detroit. “If not for the incubator, I probably would have passed away,” she said. “So every time we’re able to help a baby it feels like the universe has come full circle.” The fight never left Hsia, it seems, as her perpetual optimism keeps her business inching forward. Her worries at the helm of the startup have evolved from, “Will this idea even work?” to “How do I make this sustainable?” With that new outlook came a reality check.

A Preterm Warmilu nonelectric infant warming is sized to fit an infant.

“I thought it was a great opportunity to participate in a company that can make a resounding difference. There’s nothing wrong with making a profit while doing good.” — Dhani Jones, a former UM football player and co-founder of Hillman Accelerator, an investor in Warmilu

Lorenda Dowling, Warmilu seamstress, measures and cuts pieces in preparation for sewing production.

An end to bootstrapping Warmilu had been funded mainly through grants from the university, AnnArbor Spark, Michigan Economic Development Corp. and other business accelerator programs. It has received about $62,000 in grants since 2012. With less than $5,000 in yearly revenue, the business is still in search of a sustainable model. The grants won’t go on forever. But Warmilu has started generating more attention from investors. Over the summer, Hsia scored a $100,000 investment from the Pennsylvania-based Hillman Accelerator, which was cofounded by Dhani Jones, a former UM football player who played 11 seasons in the NFL. “I thought it was a great opportunity to participate in a company that can make a resounding difference,” Jones said. “There’s nothing wrong with making a profit while doing good.” The tipping point was Hsia’s tenacity and the expectation is that the company will continue to grow and take on more capital, which is a likely possibility if Hsia “continues to break down walls,” Jones said. The past couple of years have been

PHOTOS BY WARMILU

The Warmilu cut and pattern layering station is set up for sewing production.

a whirlwind of wall-breaking for the young CEO. Last year, she made Forbes’ 30 under 30 list, but no achievement brought more relief than striking the first big deal. Last year, officials from the nonprofit humanitarian aid organization Relief for Africa stumbled upon Warmilu’s website, and a few months later Hsia was on her way to Kenya to demonstrate her warming blanket in

front of 50-plus health officers. It was a success. “Some of the doctors called our packs magic,” she said. Shortly after the trip, she signed a three-year deal with the group to distribute blankets to 12 countries across the continent. The organization agreed to buy a minimum of 500 per year for three years at $75 a blanket. That equals a total of $112,500,

with the likelihood of selling more than the minimum. Next month, she is heading back to Africa on a business mission trip that includes a meeting with the first lady of Burundi. She also sent blankets to Doctors Without Borders in Spain and said the nongovernmental organization is eager to make a deal. Things are beginning to take shake up at home as well. In March, Warmilu was approved for a patent on its nonelectric warming pack. The company has been studying the domestic market and found they could potentially sell individual packs from $100$300 for a range of purposes. Hsia said she has had talks with North Carolina-based IMG College Seating about implementing her technology in college stadiums as seat warmers. She’s also been working to tap into the market for heating pads for pain relief. With the potential to break into the domestic market and plans to expand distribution abroad, Hsia is aiming to hit $500,000 in revenue next year, with a reach goal of $750,000. She said the company has decided to stop bootstrapping this year. In the meantime, Warmilu continues to grind through the startup life, working to perfect its product and its pitch. In January, it will compete for up to $500,000 at the WeWork Creator Awards in New York City. “When you start a company, I feel like there are so many highs and lows,” Hsia said. “That’s the rewarding part, is that my product is actually being used in the marketplace.” Kurt Nagl: 313-446-0337 Twitter: @kurt_nagl

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

THE WEEK ON THE WEB

RUMBLINGS

Beaumont buys First Center in Southfield

Sweeney named as one of the 2017 Top CNN Heroes

OCTOBER 27-NOVEMBER2 | For more, visit crainsdetroit.com

Beaumont Health is moving up to 3,000 employees into the First Center Office Plaza in Southfield by the end of 2018 following a purchase of the 31-acre property. The health system, which had been considering a move to the 686,000-square-foot First Center, said last week that employees currently occupy 16 leased or owned buildings in three metro Detroit counties. It has 38,000 employees plus 5,000 physicians, CEO John Fox said in a press release. By early next year, Beaumont's financial services team will become the first to move into the property, which consists of four interconnected buildings on Northwestern Highway near Lahser Road. Other departments moving could include compliance, legal affairs, IT, human resources and others, Beaumont said in a release. The health system will first occupy 360,000 of unused space, and existing tenant leases will remain; they will be evaluated going forward, the release says. Renovations, being designed by Neumann/Smith Architecture, and a renaming of the property are anticipated. “The consolidation of our business services that support patient care is a major step forward in advancing our commitment to being the employer of choice,” Carolyn Wilson, COO of Beaumont, said in the release. “It will allow teams in separate locations to work together in an updated, collaborative space with amenities our employees want, promoting teamwork, while enhancing efficiency and reducing cost. It will also help free up much-needed space on our hospital campuses for patient care by pulling business and administrative professionals out of our in-patient settings.” Wilson said in an interview with Crain’s that the property has good freeway access and parking options, both of which were selling points, along with atria and sunlight. The health system also plans a 1,000-space parking deck, Wilson said.

BUSINESS NEWS Ann Arbor-based Aquaro Histology Inc. completed a Series A funding round of $9.8 million from Telegraph Hill Partners, a venture capital firm based in San Francisco. J Tickets for the 2018 North American International Auto Show are now on sale. J Detroit Employment Solutions Corp. executive Jose Reyes announced that he is leaving the city workforce agency. J The Downtown Detroit Partnership installed a 60-foot Christmas tree in Campus Martius; the lighting ceremony is Nov. 17. J Art Van Furniture Inc. signed a franchise agreement for seven stores in Missouri and Illinois in its biggest such deal to date. J Bill Ford Jr., executive chairman of Ford Motor Co., said at a Detroit Economic Club meeting that he recognizes the automotive industry is on the verge of mutation and wants his J

CRAIN’S DETROIT BUSINESS

Citing a rosier Wall Street perception of Detroit, the Ilitch family said Wednesday it will pay off early nearly $200 million in bonds used to finance construction of the $863 million Little Caesars Arena. The Ilitches are pledging to use the savings from refinancing the Little Caesars Arena debt to accelerate downtown investment in their $1.2 billion, 50-block District Detroit mixed use development anchored by the arena.

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

$200 million The amount in bonds used to finance construction of the $863 million Little Caesars Arena that the Ilitch family has said it will pay off.

The number of local vendors set to participate in this year's wintertime Downtown Detroit Markets at 1001 Woodward Ave., Capitol Park and Cadillac Square.

$15 million The grant the William Davidson Foundation gave to the Detroit Symphony Orchestra, helping bring the DSO's total raised for its $125 million endowment campaign to $56 million.

company to remain a top performer. J A PlanetM report unveiled by Gov. Rick Snyder found that Michigan is an automotive hub, but infrastructure and policy changes are needed to propel it forward in the mobility tech race. J Women entrepreneurs in Jackson, Detroit and Grand Rapids were scheduled to pitch their business concepts last week and this week at Dolphin Tank competitions hosted by the Michigan Women's Foundation. J UBS plans to open an office in downtown Detroit in mid-2018 with event space that nonprofit organizations can rent out for free. J A three-story building at Jefferson Avenue and I-375 that is home to Data Consulting Group has been put up for sale for an unspecified price. J Thirteen Detroit businesses won a share of $500,000 in cash grants in the ninth round of Motor City Match. J Fewer Michigan hospitals — 19 —

NN has named Khali Sweeney, founder and CEO of Downtown Boxing Gym Youth Program, as one of its 2017 Top CNN Heroes: everyday people who are changing the world and making extraordinary contributions to help improve the lives of others. Sweeney and the nonprofit mentor about 100 high-risk youths each week. The program, which teaches “books before boxing,” has a 100 percent high school graduation rate, and 98 percent of the young people in it go on to college. In addition to the basics — reading, writing, math, science and social studies — students are exposed to computer coding, fiber optics, robotics/engineering, cooking, music, community service and other programs. About 850 students are on a waiting list to get into the program. Sweeney’s designation as one of the

Top CNN Heroes comes with $10,000, free leadership development from the Annenberg Foundation and the opportunity to secure national recognition and donations through Khali Sweeney CNNHeroes.com Additionally, he is in the running to be named the “CNN Hero of the year,” which comes with a $100,000 award. Between now and Dec. 12, people can vote up to 10 times per day on Facebook by messaging “VOTE” to the CNN Heroes page and/or by visiting the CNN Heroes website. CNN will honor all 10 heroes at the American Museum of Natural History in New York City on Dec. 17 during a live broadcast starting at 8 p.m.

received top grades this year in The Leapfrog Group's Hospital Safety Grades report than the 29 hospitals in 2016. J Consumers Energy Co. and the U.S. Chamber of Commerce Foundation are training go-betweens to give companies and job providers information needed to narrow the state's talent gap.

OTHER NEWS J Economic gains in gross domestic product and private sector job growth were overshadowed by “two red flashing lights” in education attainment and the financial and physical health of area residents in the Detroit Regional Chamber's 2017 State of the Region report. J Metro Detroit’s SMART bus service is planning to run a limited-stop service along Gratiot, Michigan and Woodward avenues to create a faster connection from downtown Detroit to the airport. J The Detroit-Windsor Tunnel reopened last week after being shut down for renovations; more nightly closures are expected through June. J Cases of hepatitis A are under investigation in restaurant workers at Firewater Bar and Grill and a Little Caesars Pizza location in Detroit. J Wayne State University plans to expand TechTown Detroit and boost the school’s business partnerships under its new Wayne Innovation Hub initiative. J The Michigan Economic Development Corp. released a web series that boasts about the state’s entrepreneurs and business landscape, under its Entrepreneurship & Innovation initiative. J A $150,000 Japanese garden is being constructed in Oakland County with donations from 13 businesses, the Michigan Economic Development Corp. and County Executive L. Brooks Patterson. J The Detroit City Council passed a tougher rental property ordinance requiring landlords to get the city's tens of thousands of rental properties up to code within two years.

ROSSETTI ASSOCIATES INC.

A rendering of a crowd outside Ford Field for a Detroit Major League Soccer game shows several flags that were originally conceived by supporters of the semi-professional Detroit City Football Club, which plays in Hamtramck.

Detroit MLS renderings include DCFC flags, swag

Detroit-based architecture firm took some heat for renderings released Thursday that show fans and merchandise booths at Ford Field, where Detroit’s Major League Soccer team would play, with Detroit City Football Club flags and swag. The misstep, which Rossetti Associates has apologized for and says it is rectifying, is the latest in a string of grievances die-hard DCFC fans, known as Northern Guard Supporters, have expressed with Dan Gilbert and Tom Gores, the two billionaires pushing to get an MLS expansion team to the Motor City. The NGS views MLS with disdain and Gilbert in particular as antithetical to the grassroots support the semi-professional DCFC has grown since its inception in 2012. Almost immediately upon their unveiling Thursday afternoon, DCFC fans took to Twitter and other social media outlets to vent outrage over the renderings by Rossetti, an internationally renowned company known for its work in North America on stadium and arena projects.

“THEY ARE USING OUR CLUB IN THE RENDERINGS! HELL NO,” tweeted graphic designer Drew Gentry, a co-founder of the Northern Guard. Other expletives were used in subsequent tweets. Gentry was calm during a Thursday night chat. But he sounded less than convinced by Rossetti’s apology. “Many times in our lives when we get caught, we say that we are sorry; it’s kind of a Band-Aid on a wound kind of thing,” Gentry said. “The group is pretty riled up.” He declined to say whether legal options are being pursued, but said that “we can’t rule out anything at the moment.” Denise Drach, director of marketing and business development for Rossetti, in an interview called the errors “an accident and a mistake.” “Some of our most talented renderers are our younger staff,” she said. “They wanted to create some excitement around the stadium and didn’t realize” the ramifications and “the politics” of including the DCFC flags and merchandise in the renderings.

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