Crain's Detroit Business, Feb. 5, 2018 issue by Crain's Detroit Business

Detroit Pistons now sporting the Blake effect Page 3

What keeps OU’s president up at night?

Blake Griffin

Page 4

FEBRUARY 5 - 11, 2018 | crainsdetroit.com HEALTH CARE

DEVELOPMENT

Map reveals new District Detroit details DMC cost

cuts extend to the menu

Kirk Pinho

kpinho@crain.com

Two high-rise buildings are planned to flank Comerica Park. The towers, overlooking the home of the Detroit Tigers, are just a few of the developments in the Ilitch family’s District Detroit project revealed in an aerial map that shows the latest vision for what surrounds the 41,299-seat baseball stadium. In addition, a new hotel where Hockeytown Cafe now stands and retail flanking both Need sides of Woodto know ward Avenue’s  Aerial map passage over I-75 obtained by Crain’s are planned, acshows 200,000 cording to the square feet of new map, which retail space Crain’s obtained last week.  Two new All told, it inhigh-rise towers cludes nearly planned near 200,000 square Comerica park feet of new retail space, plus the previously undisclosed hotel, a “tech store” and a market, in addition to the two high-rise buildings referred to as Montcalm Tower and Adams Tower. The Ilitch family’s Detroit-based Olympia Development of Michigan real estate company declined to make one of its executives — or an executive from development partner Baltimore-based Cordish Cos. or planning consultant White Plains, N.Y.-based Street-Works — available for an interview. Instead, it provided a statement that shed no greater light on what the aerial revealed: “Our team is evaluating many great ideas for bringing additional tenants

By Jay Greene jgreene@crain.com

THE DISTRICT DETROIT

An aerial view of downtown Detroit from above Little Caesars Arena.

SEE MAP, PAGE 18

LISA SAWYER/CRAIN’S DETROIT BUSINESS

INFRASTRUCTURE

Utilities, automakers team up on plug-in vehicles By Jay Greene jgreene@crain.com

Michigan’s two biggest utilities are investing time and money on the future of plug-in electric vehicles as a way to boost revenue, improve electricity reliability and future capacity — and potentially lower prices for residential, business and industrial customers. Consumers Energy Co. is working with General Motors to educate the crainsdetroit.com

public, encourage electric vehicle sales, expand PEV charging stations and work on a “customer journey map.” DTE Energy Co. is working with Ford Motor Co. and GM on similar projects. While executives tell Crain’s that the pilot projects are in the early stages, they will become part of a larger effort this year by the Michigan Public Service Commission to set guiding principles and a special electric rate structure to Vol. 34 No. 5

$5 a copy. $169 a year.

create a charging network for plug-in electric vehicles, or PEVs, to thrive. Today, there are approximately 14,000 electric vehicles motoring around Michigan with only about 1,000 charging stations, the MPSC said. Projections call for those numbers to increase dramatically, surpassing the 45 percent annual growth in the US in 2017, experts said. SEE ELECTRIC, PAGE 21

Need to know Michigan’s two biggest utilities are investing in the future of plug-in electric vehicles 

 Pilot projects are in the early stages, but will become part of a larger effort this year  Michigan Public Service Commission to set guiding principles and a special electric rate structure

FOCUS

‘Future of surgery’

NEWSPAPER

HEALTH CARE

Medical 3-D printing is 'future of surgery'

<< Medical 3-D printing creates customized prosthetics designed to fit a patient’s body. Page 10

By Jay Greene jgreene@crain.com

nt fuOne day in the not-too-dista be able to ture, your surgeon might joints, even give you new bones, “printed” soft-tissue organs that were in-house. out of It sounds like something series sci-fi “Westworld,” the HBO are robots humanoid where Michigan 3-D-printed. But Southeast cutting on the hospitals are working to make edge of medical innovation it a reality. docMichigan, of University the At by otolaryntors and researchers led M.D., are Green, Glenn gologist medical 3-D working on nearly 30 to help projects that are customized individual patients. UM’s most successful implantable 3-D-cre3-D procedure is a medical device to ated biodegradable splint ng airway treat a rare life-threateni in babies occurs mostly that disorder The called tracheobronchomalacia. to peridisorder causes the windpipe prevents norodically collapse and mal breathing. device The manufactured splint printers is using one of UM’s 30 3-D airway area in sewn around a floppy proand support provide the neck to growth. Over tection during airway absorbed by three years, the splint is a total of 15 the body. UM has treated of three patients from the ages Green, who months up to 70, said ChilMott C.S. UM’s practices at dren’s Hospital. printing) “We think (medical 3-D in suris the next great revolution the earstill in gery,” said Green. “It is trying to work ly stage where we are reimisn’t There everything out. it. It is a key bursement for most of on.” problem we are working in the UM is not the only hospital 3-D medical region working to bring room. printing into the operating and Detroit in Henry Ford Hospital Royal Oak are Beaumont Hospital in own applicaalso working on their nal techtions for this transformatio nology.

SEE DMC, PAGE 18

INSIDE

, 2018 // F E B R U A R Y 5 OIT BUSINESS CRAIN’S DETR

Patients at the Detroit Medical Center’s four downtown hospitals, including Children’s Hospital of Michigan, no longer get a choice of entrees for their meals as the hospital chain aims to cut costs. The move comes amid a broader cost-cutting push at DMC, including up to 300 job cuts expected in the coming weeks, and runs counter to years of expanding menus at hospitals that have come to resemble hotel room service. The shift is drawing Need some complaints to know from patients and  DMC downsizes concerns from patient menu at doctors who wor- four downtown ry that patients hospitals, including won’t eat food Children’s Hospital they don’t like.  Critics say to “You get meat- cut costs; DMC loaf on Monday says to improve and that’s it,” efficiency Donna Stern, a longtime DMC  Decision runs employee and counter to national chair of Local 140 trend by hospitals Unit of the Amer- to expand patient ican Federation choices of State, County and Municipal Employees, said. “There is a lot of food waste because people are not eating what they don’t want.” John Truscott, a DMC spokesman with Truscott Rossman in Lansing, confirmed that DMC now only offers a single menu entree per meal. He said DMC decided to make the change recently as a move to increase efficiency and timeliness of food delivery. Despite the menu choice reduction, Truscott said patients still have other food options if they request it. He said patients with such dietary restrictions to limit sodium or gluten continue to receive special meals. “They have a few choices of other items that are available daily,” said Truscott, adding that the menu is “more limited than room service style of menu, but there are still options.”

Company makes software for 3-D printing. Page 11

What is medical 3-D

printing?

device manufacturing in which an advanced type of medical technology to design a specific prosthetics using imaging polymers and powders for machines create customized Materials include biocompatible shape of a patient's body. for jaws and hips. tracheal splints and titanium that from a computer program printer receives instructions J It works like this: A 3-D data from a patient’s CT scan. has been fed medical imaging or FDA-approved, filaments of plastics, ceramics to eject thin J Using materials of specialized by a laser, the printer begins melted is that powder biocompatible medical say a jaw — is completed. Medical 3-D future final shape of the object — layers of material until the Technology complete. to medihours 24 using and can take between six Hospitals are already Most of- J Printed objects currently cal 3-D printing technology. cutting those times in half. d machine is improvements are J Medical 3-D printing is

tissue The ability to print human such on could have a huge impact cal research, things as pharmaceuti operaorgan transplants, surgical e surgery. tions and reconstructiv hospitals Bioprinting could allow ing centers” to become “manufactur Eric Myers, a said tissues, living of Henry Ford product designer at the “They will be Innovation Institute. skin for a burn able to make a sheet of out of cartipatient or full ears made lage.” is new “Another future application of taking drugs,” Myers said. "Instead makes neric pill, a pharmacist

3-D implant Plymouth, a medical r, said the and model manufacture advancing as technology is rapidly for difficult researchers seek answers patient care problems. sophisticatPrinting speeds for the and tridoubling are ed machines doctors to pling each year, enabling ahead. And schedules move surgery and biocomthe types of polymers be used as can than patible powders models are raw material to create the multiplying. than a Materialise operates more rang— dozen medical 3-D printers to $800,000 ing in cost from $100,000 rthopedic models for

C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 5 , 2 0 1 8

MICHIGAN BRIEFS

INSIDE

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

Speedway slashes seating for campground

The Michigan International Speedway is eliminating more seating to make way for new high-end campgrounds and other fan amenities at the Irish Hills racetrack. The campground will be joined by a new hospitality area and countertop seating to be complete by the first NASCAR Cup Series race June 8-10, spokesman Brad Kuhbander said. Renovations are part of the speedway’s vision to enhance fan experience by diversifying venue layout and offerings. Daytona-based International Speedway Corp., which owns the venue, has steadily cut seating at the venue from its peak of 137,000 a decade ago to 72,000 last year. After renovations, the speedway will have “in excess of 50,000 seats,” Kuhbander said. Each of the additions will be located behind Turn 1 of the speedway. Countertop seating will be added to the Turn 1 grandstands and the hospitality section area will move there from Turn 4. The campground will overlook the track and put spectators “closer to the track than ever before,” according to a news release. Amenities are to include paved sites, electric and wa-

MICHIGAN INTERNATIONAL SPEEDWAY

A rendering of the Michigan International Speedway shows where grandstands have been eliminated to make room for a new high-end campground as part of the speedway’s efforts to enhance fan experience.

ter, fire pits, game area, patio, private game room, private viewing area, RVs and fifth-wheels. Access for the new campground costs $2,440 for two adults for the five days and includes all the amenities in addition to general admission seating for Friday and Saturday.

Michigan joins battle to protect Great Lakes from Asian carp

An interstate partnership has been established to help cover costs of operating a system proposed for a Chicago-area waterway that would help keep invasive Asian carp out of the Great Lakes, Michigan Gov. Rick Snyder said last Wednesday, according

to the Associated Press. The initiative would support upgrades to the Brandon Road Lock and Dam near Joliet, Ill., a key choke point between the carp-infested Mississippi River watershed and Lake Michigan. A $275 million draft plan released last year by the U.S. Army Corps of Engineers would attempt to block the carps’ path toward the lake with a gauntlet of devices, including an electric barrier, noisemakers and water jets. Officials in some Great Lakes states, including Michigan, are pushing for faster action. But Illinois is resisting, fearing the project would disrupt freight shipping on the busy waterway.

STRENGTH IN NUMBERS. Tiny zebrafish could make a huge impact on curing diseases. Dr. Tracie Baker, assistant professor in Wayne State University’s School of Medicine and Institute of Environmental Health Sciences, conducts research with zebrafish to uncover environmental influences that lead to disease in humans. Why zebrafish? Because more than 80 percent of genes associated with disease in humans are found in these fish. Plus, research costs are dramatically less and experimental results sometimes happen within hours instead of years. Turning thousands of unassuming fish into an improved quality of life for millions — that’s Warrior Strong.

WARRIOR STRONG

Snyder said the multi-state coalition could remove one obstacle by providing funds required to supplement federal outlays. In particular, the Corps wants partners outside the federal government to pay about $8 million a year for operation and maintenance once the system is up and running. Coalition members would share those costs for five years while seeking other long-term sources. Michigan, Ohio, Wisconsin and the Canadian province of Ontario have joined the partnership, he said. States in the region that have yet to sign on include Illinois, Indiana, Minnesota, New York and Pennsylvania, plus the province of Quebec. But those on board represent more than 90 percent of the lakes’ surface area.

Snyder wants higher landfill fee

Gov. Rick Snyder proposed a steep rise in Michigan’s fee for taking waste to landfills, saying it would generate $79 million annually for cleanup of contaminated sites and other environmental programs, the Associated Press reported. The plan would raise the landfill dumping fee from 36 cents per ton to $4.75 per ton, although Snyder noted that other Midwestern states charge as much as $13 per ton. It would replace the Clean Michigan Initiative, a bond issue approved by voters in

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1998 that generated $675 million but is expected to dry up this year. “Michiganders deserve a smart and safe plan to ensure the protection of our environment and public health — today, tomorrow and for generations to come,” Snyder said. Despite progress under the existing program, Snyder’s administration and lawmakers have struggled to find a new revenue source to deal with some 7,000 abandoned paper mills, foundries and other hazardous industrial sites awaiting cleanup.

CORRECTION In our Jan. 29 story about the impact of tax reform on small and midsized businesses, we misstated the membership numbers of the Small Businesses Association of Michigan. SBAM has 26,000 members statewide.

C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 5 , 2 0 1 8

DEVELOPMENT

Eastern Market plan seeks to balance food, other uses By Sherri Welch swelch@crain.com

A master planning process for balancing out food businesses with a coming avalanche of residential and retail development in Detroit’s historic Eastern Market got underway last week, but not soon enough for some food companies. The plan is set to be completed sometime in the fourth quarter, but three growing food companies operating in the market and one from elsewhere in metro Detroit need property before then to get much-needed expansion projects underway. Eastern Market Development Corp., the development arm of the

Need to know

Planning process for mixed- use development of Eastern Market underway 

 But some food companies need land to expand now  Eastern Market Development Corp. assembling properties now to keep, bring them to the market district

market’s nonprofit operator Eastern Market Corp., is working with the city to assemble the properties needed to keep the companies in the market there and to attract the fourth company. “These are urgent projects that need to be under construction sometime in 2018,” said Eastern Market

President Dan Carmody. “To keep food businesses in or around the center of Detroit, additional land needs to be developed for food use.” Led by the Detroit Economic Growth Corp., the planning project launched last week with the goal of marrying the historic market’s food market heritage with the mixed-used development such as restaurants, retail and housing that’s increasingly moving into the neighborhood. Boston-based Utile Architecture & Planning was chosen to do the larger plan for the district, following a request for proposals last summer, Carmody said. SEE MARKET, PAGE 20

A master planning process for balancing out food businesses with a coming avalanche of residential and retail development in Detroit’s historic Eastern Market got underway last week.

TAX CHANGES

SPORTS BUSINESS

Will loss of season ticket write-off mean budget cuts?

Griffin gives Pistons new marketing sizzle

By Bill Shea bshea@crain.com

Thanks to a deeply loyal and deep-pocketed fanbase, the University of Michigan is taking a wait-and-see approach to a change in the tax code that could jeopardize millions of dollars of athletic department funding. For years, a charitable donation of $150 or more to UM’s Preferred Seat Donation program was required in return for the right to buy football season tickets, and until this year the Internal Revenue Service Need allowed donors to to know write off 80 per GOP tax bill cut cent of the dona80 percent write tion. Charitable off linked to season donations to athticket donation letic departments in return for foot UM budgeted ball season tickets $30.1 million this purchase privilegyear for donation es has been a revenue common practice  Fan loyalty may at many universistave off any ties. serious drop That changed despite loss of tax with the Republibreak can-led tax bill that became law on Jan. 1. The 80 percent charitable donation write-off was eliminated. It’s too soon to know if that will mean a decline in season ticket sales across college football, but Michigan appears to be relying on the loyalty of its fans to keep buying season tickets despite the tax break going away. Donations in return for tickets account for $30.1 million of the UM athletic department’s $182.4 million budget, which has only a $2 million margin built in for the current year. SEE TICKETS, PAGE 19

By Bill Shea bshea@crain.com

The Pistons acquired Blake Griffin last week in a blockbuster trade with the L.A. Clippers.

DETROIT PISTONS

Expect to see a lot more of Blake Griffin’s face around Detroit. The Pistons acquired the veteran all-star power forward last week in a blockbuster trade with the L.A. Clippers. They plan to use him alongside Andre Drummond as the foundation of both their team on the court and in their sales and marketing efforts to fill seats and increase corporate Need sponsorship dol- to know  Griffin becomes lars. Adding Griffin Detroit’s best set off a complex scorer business chore-  The deal should ography de- fuel retail and signed to ticket sales smoothly maximize his pres-  The risk is ence by goosing Griffin’s injury ticket, merchan- history and dise and other gargantuan revenue streams contract — and generating some excitement about a team that has seen half-empty stands in its first season in the new Little Caesars Arena. Less than 48 hours after he arrived in Detroit, Griffin’s face already appeared on the portion of the team’s website soliciting 2018-19 season ticket renewals. The trade that brought Griffin and two role players from the Clippers in return for Tobias Harris, Avery Bradley and Boban Marjanovic (and two draft picks) caught NBA fans and insiders by surprise, and it marks the SEE GRIFFIN, PAGE 17

MUST READS OF THE WEEK Expansion plans

Engler at MSU

Staying semi-pro

Cold-pressed raw juice maker Drought is growing in more ways than one. Page 14

Despite controversy, what the former governor brings to the table. Page 8

Detroit City FC to stick with NPSL this season. Page 6

C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 5 , 2 0 1 8

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WHAT KEEPS YOU UP AT NIGHT?

Your money is her spicy sauce “Spicy sauce.” That’s what Ora H. Pescovitz calls herself. Yes, the president of the Oakland University considers herself to be the zippy dash of something extra that completes the school’s recipe for success. And her secret ingredient is your money. Pescovitz, 61, has been on the job less than a year, coming to the school on the border of Rochester and Auburn Hills from Eli Lilly and Co., where she was senior vice president and U.S. medical leader for Lilly BioMedicines. RON Before that, the pediatric endocrinologist and researcher FOURNIER served as head of the University of Michigan Health System. “It started with a headhunter,” she said when I asked how she landed at Oakland University. “But for me it came about because I was at a stage in my life and I think about it this way: We’re all about the three Ts — time, talent and treasure. We have the opportunity to use those three Ts any way we can. I feel personally obligated to use my time and talent and whatever treasure I might have to the best of my abilities to make a difference.” I had come to Pescovitz’s office to ask what kept her awake at night, but was instead learning what filled her days — passion and vision and a four-point agenda. Plus, the insatiable need to raise enough money to fulfill her school’s potential. “I was anxious to commit my energy to an institution where I thought the foundation was strong and the resources were good, but where I like to think of myself as the spicy sauce, where my impact might just be that little bit of difference that would make a difference,” she told me. Has she made a difference yet? “I’m starting to,” Pescovitz laughed. “I am starting to see the simmering.” Pescovitz’s priorities are student success and academic excellence; academic research; community engagement; and diversity. She wants the Crain’s community of business leaders to see the connection between her success and theirs. If Oakland University grows its pipeline of talent, Pescovitz argued, local employers will benefit. And if Oakland University becomes a research powerhouse, the region will have another academic magnet for economic development. “We have not contributed nearly what we are capable of contributing to the economic ecosystem,” she said. Speaking of contributions. She wants you and other Crain’s readers to consider donating to Oakland University. Here’s that part of our conversation, lightly edited for length and context.

The Pescovitz File Age: 61 Education: 1973-1974, Hebrew University, Jerusalem, Israel; 1974-1978, honors program in medical education Northwestern University, B.M.Sc., Evanston, Ill.; 1976-1979, Northwestern University Medical School, M.D., Chicago Mentor: My parents Biggest achievement: My three kids First job: Selling encyclopedia yearbooks Life goal: To use what I learned to prepare the next generation

Oakland University President Ora Pescovitz was senior vice president and U.S. medical leader for Lilly BioMedicines.

Where do you think the university will be five years from now?

Let me mention a challenge first because that will tell you one of the things that stands in the way of us achieving some of the things, then maybe I will get to that, too. OK. That’s a better question. What are the obstacles standing in the way of Oakland University being all it can be?

The single biggest obstacle that I have, and that we have collectively, is funding. We don’t have resources. When I compare (Oakland University) to what I saw at the other institutions I have been at, we simply just do not have enough resources. I imagine your state funding has been dramatically decreased over the last 10 to 20 years?

Yes. When you look at the trajectory of state funding, it certainly does not come close to covering our needs and we cannot put our needs on the backs of students and tuition, so our biggest potential for increasing resources is grants and philanthropy and the potential to be more successful in the entrepreneurial space. Those are really the three potential sources that we have to increase resources. Funding itself is the single largest obstacle. Is that something you plan to put more focus on than maybe past presidencies did?

Yes, I do. I would say it’s a big part of my job.

Have you launched a campaign with a specific goal?

We haven’t yet launched a campaign. We are in the recruitment phases for a vice president for advancement. I would say that’s a really key goal for us. I would love to say that in five to 10 years we have named every one of our schools. And raised the money that comes along with naming schools?

Yes.

Do you have any goals yet regarding how much you want increase your endowment?

I would like to see it quintupled. What is your endowment now?

We have about $100 million.

And you would like to get that up over $300 million?

Yes.

How do you plan about going and doing that? You are reorganizing the development office. You are going to try and raise more money and …

… and put on running shoes.

What do you do to get the word out? How do you make Oakland University one of the top places where wealthy people donate their money?

We inspire them with our vision and have them see how their gift makes a difference here. That’s a big sell.

Yes. So your job is to write your column and help me.

C R A I N â&#x20AC;&#x2122; S D E T R O I T B U S I N E S S // F E B R U A R Y 5 , 2 0 1 8

Program sets standard field trips for Detroit schools students By Sherri Welch

Need to know

New efforts by some of Detroitâ&#x20AC;&#x2122;s largest cultural nonprofits will mean all K-5 students in Detroit Public Schools Community District will take three standard field trips to a local cultural or technology-related destination each year, beginning next fall. The programs are a reversal from sporadic, inconsistent field trips in recent years as the district dealt with massive financial shortfalls that resulted in a $617 million state bailout last year. Third-grade students in Detroit Public Schools Community District will visit the Detroit Institute of Arts this week , kicking off the return to standardized field trips by grade level. The field trip program dubbed â&#x20AC;&#x153;Cultural Passportâ&#x20AC;? comes as part of discussions launched last summer between the DIA, Detroit Symphony Orchestra, Michigan Opera Theatre and the district, looking for ways the institutions can help strengthen arts access and education for students in the district. The three institutions will provide educational materials to support the field trips and free or reduced admission, while the district picks up transportation costs for third-graders to visit the DIA, fourth-graders the DSO and fifth-graders MOT this year. MOT said it can accommodate only half or about 2,500 DPSCD fifth-graders this year, but expects to host all students in that grade for dress re-

District reinstituting standardized arts, technology field trips

swelch@crain.com

JJDetroit Public Schools Community

JJMove comes as part of discussions with top arts organizations in city on strenghtening access to arts, arts education JJMore in-school programs supported by the groups also in discussion

hearsals for spring performances every year beginning in 2018-19. Next year, the Cultural Passport program will expand to provide three field trips during the year for all K-5 students, Superintendent Nikolai Vitti said. The district will pay for or raise money to cover the full cost of the trips as a hallmark program of its new strategic plan and â&#x20AC;&#x153;whole childâ&#x20AC;? approach, beginning next year, Vitti said. This spring, it plans to issue a request for proposals from all local arts and cultural groups and technology-based attractions in the region such as The Henry Ford to inform the field trip plan for the 2018-19 school year. â&#x20AC;&#x153;A lot of what weâ&#x20AC;&#x2122;re doing is rebuilding systems that existed previously with Detroit Public Schools,â&#x20AC;? Vitti said. Turmoil in the district in recent years has prevented a consistent, standardized approach by grade level. Some schools had access to Title I or other school-based funds that en-

DETROIT INSTITUTE OF ARTS

Third-grade students in Detroit Public Schools Community District will visit the Detroit Institute of Arts as part of a program of standard field trips.

abled them to take their first-grade students to see a movie and maybe third-graders to the DIA. But itâ&#x20AC;&#x2122;s been a random, sporadic, inconsistent process, Vitti said. â&#x20AC;&#x153;What we want to do is create a strategy and comprehensive approach,â&#x20AC;? Vitti said. Offering more comprehensive school arts programs is an important move toward closing achievement and equity gaps for students in the district, he said, noting that itâ&#x20AC;&#x2122;s been proven that exposing children to the arts leads to improvements in areas including critical thinking, creativity, self-esteem and self awareness, which usually leads to students being more civically involved.

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He also believes the Cultural Passport program can help improve arts education in the schools, which could help increase the districtâ&#x20AC;&#x2122;s enrollment. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s a consistent, comprehensive way to ensure studentsâ&#x20AC;&#x2122; education goes beyond reading, math and science,â&#x20AC;? Vitti said. â&#x20AC;&#x153;I think most parents agree that just focusing on the core is not always speaking to the interests and talents of the children.â&#x20AC;? Local arts and cultural organizations have tried to help fill arts education gaps in the past, but itâ&#x20AC;&#x2122;s been difficult given the need to coordinate with individual schools and principals, Vitti said. â&#x20AC;&#x153;A lot of the logistics, frankly, frus-

trated partners in this realm.â&#x20AC;? By taking a standardized approach, the district is able to reduce a lot of the logistical issues, he said. The field trips were an obvious place to start, but the conversations between the three cultural institutions and district go beyond them, said Caen Thomason-Redus, senior director of community and learning for the DSO. The DSO and MOT and others like Music Hall Center for Performing Arts already provide programs in select schools in the district. And the DIA is in its 77th year of hosting a Detroit public school student exhibition. Through ongoing conversations, the three cultural institutions are looking at the breadth of what each is doing, how those things might align and possibly adapting them in some way to allow for a layering of programs, Thomason-Redus said. Where the Cultural Passport program is about increasing the exposure students have to the arts, the DSO programs being looked at for the future are more focused on the handson creation of music, he said. â&#x20AC;&#x153;Those two sides are critical elements in ... youth development.â&#x20AC;? The hope, DIA Public Relations Director Pamela Marcil said, is that by working together, â&#x20AC;&#x153;we can have a stronger impact than if one of us worked with DPSCD alone.â&#x20AC;? Sherri Welch: (313) 446-1694 Twitter: @SherriWelch

C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 5 , 2 0 1 8

Detroit City FC to stick with semi-pro NPSL this season By Bill Shea bshea@crain.com

Detroit City FC will play at least one more season in the semi-pro National Premier Soccer League while the club’s bid to turn professional remains on hold pending uncertainty over the fate of upper-tier leagues. The team’s 2018 NPSL schedule was released Thursday, with league play beginning at 3 p.m. May 13 at AFC Ann Arbor. DCFC, which plays to an average of 5,000-plus at Keyworth Stadium in Hamtramck, has played in the NPSL since the team was founded in 2012. Club ownership has been preparing to turn pro for some time, but the bid remains on hold while the U.S. soccer system slogs through a court battle over the status of the leagues below top-tier Major League Soccer. “We’re certainly playing in the NPSL season from April to August. Nothing beyond that I can speak to with any certainty at this point,” DCFC CEO and co-owner Sean Mann said via email Thursday morning. The team’s ownership said last summer that it was possible the move to a higher league could happen in the fall of 2017, but that timetable was disrupted by the status of those leagues being thrown into confusion. Mann and his four co-owners don’t want to make a move to a pro league until the resolution of an ongoing federal antitrust lawsuit by DCFC’s possible landing spot, the New York City-based North American Soccer League, against the Chicago-based U.S. Soccer Federation, which sanctions American soccer leagues. USSF provisionally approved NASL and the Tampa-based rival United Soccer League a year ago as Division II leagues, a step below Major League Soccer atop the American soccer organizational pyramid. Then last fall, USSF rejected NASL’s application to remain a Division II league, meaning it could drop to the less attractive Division III, the lowest level of U.S. pro soccer above amateur status. The next level below that, the fourth tier of the soccer pyramid, is where Detroit City FC plays now, with unpaid players. Division II leagues have to meet criteria such as having 12 teams. NASL doesn’t have enough teams, but has said it’s in talks with teams that may join it, including DCFC. The 30-team USL, which is closely tied to Major League Soccer and is considered the more financially stable league, is expected to retain its Division II status and has plans for its own Division II league. DCFC has said it’s not in talks to move to the USL.

PHOTOS BY DETROIT CITY FC

Detroit City FC will play at least one more season in the semi-pro National Premier Soccer League while the club’s bid to turn professional remains on hold.

Need to know

JJPopular semi-pro team puts bid to turn pro on hold for now JJUpward move hinges on uncertain status of upper tier leagues JJDCFC 2018 schedule released

The semi-pro Detroit City Football Club plays at the 80-year-old Keyworth Stadium in Hamtramck.

The NASL on Sept. 19 filed a federal antitrust lawsuit in U.S. District Court for the Eastern District of New York against the soccer federation that alleges it conspired with MLS and its marketing arm, Soccer United Marketing, along with the USL, to

limit competition and drive the NASL out of business. A federal judge in November denied the NASL’s injunction request to preserve its Division II status, and the league subsequently filed an appeal that’s ongoing.

Amid the court fight, NASL said last month it was moving to an August-June schedule that would potentially mean matches in winter weather. The other option for Detroit City FC is the new National Independent Soccer Association, a Division III league that’s being formed by investors Peter Wilt, a longtime soccer executive, and attorney and consultant Jack Cummins. It said in December it has three confirmed markets (Chattanooga, Tenn., Connecticut and Miami) and is in talks with others, including DCFC. When DCFC turns pro hinges on what happens in the courtroom. NPSL plays a spring-summer schedule, and NASL is moving to an August-June format, similar to what many international leagues do.

Wherever DCFC eventually ends up, it will need a deep-pocket principal owner as part of any move to turn pro. USSF requires a Division II team to have a controlling interest owner with a $20 million minimum net worth and Division III teams to have a controlling owner with a $10 million net worth. None of Detroit City’s owners meet that requirement, and Mann has previously told Crain’s they have had talks with undisclosed potential investors to satisfy ownership requirements to turn pro. DCFC already has an annual operating budget of $1 million and will add more spending when it turns pro because it will add additional staff and take on the expense of player salaries. Current DCFC players, a mix of professionals and students, are not paid. The team has spent its offseason launching a project to renovate a defunct indoor ice arena into a soccer fieldhouse on Detroit’s east side not far from Belle Isle. This week it won a $40,000 Motor City Match matching grant for the fieldhouse project.

Detroit City FC co-founder leaves ownership group, new partner added By Kurt Nagl knagl@crain.com

Detroit City FC has added a new partner to its ownership group as co-founder Ben Steffans leaves the semi-professional soccer team. Mike Lasinski has joined the group as one of five equal partners alongside David Dwaihy, Todd Kropp, Sean Mann and Alex Wright, according to an announcement on the team’s website. In 2017, Mann took on the role of CEO, becoming the first owner to work for the club on a full-time basis.

Need to know

JJBen Steffans leaves soccer organization JJOwnership group composed of five equal partners JJTeam looks to build its brand

“Detroit City FC thanks Ben Steffans for his contribution to building Le Rouge, and wishes him well in his future endeavors,” DCFC said in the announcement. Messages left with the team were not immediately returned.

Lasinski is CEO and managing director for 284 Partners, an Ann Arbor-based intellectual property consulting firm. His wife is state Rep. Donna Lasinski, D-Scio Mike Lasinski: Township. Their Joins ownership son, Alec, played group for DCFC. with Le Rouge during the 2016 season.

“As a leader in his profession, Mike has earned the freedom to invest in organizations he believes in, and it speaks to his values and love for the sport of soccer that he is joining DCFC,” Wright said in the announcement. “I wanted to be a part of an organization that is focused on bringing the best product it can to a sport and city that I think is the future,” Lasinski said in the announcement. New ownership dynamics come as the team looks to bolster its brand and

build a pipeline for local talent in hopes of eventually turning professional. The team is planning to open in September a 75,000-square-foot fieldhouse to be supported with a $40,000 grant from Motor City Match, which announced its 10th round grants Tuesday. The team is holding open tryouts March 30 at Total Sports Oakland University. Registration is $50 and includes a shirt, a 2018 season ticket and two hours of competitive soccer.

C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 5 , 2 0 1 8

How consultant, cell phone repairman share office space Chanel Hampton operates a small consulting service for nonprofit organizations, higher education institutions and other mission-driven clients. Dwain Watkins rushes to downtown offices to repair broken cell phones. And they work under the same roof. Hampton and Watkins are two CHAD entrepreneurs LIVENGOOD operating their small businesses out of the shared office space of Bamboo Detroit, a co-working space in the Julian C. Madison Building at 1420 Washington Blvd. Hampton, owner of Strategic Community Partners, and Watkins, co-founder and CEO of CellularEMT, discussed how they run completely different businesses at Bamboo during an interview for the Crain’s “Detroit Rising” podcast. In last week’s segment of the “Detroit Rising” podcast, Bamboo Detroit co-founder Mike Ferlito discussed how he sees the tightening downtown office space market shifting toward more shared spaces among different kinds of businesses.

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Dwain Watkins is co-founder and CEO of CellularEMT, an on-demand cell-phone repair business.

‘Detroit Rising’ “Detroit Rising” is a weekly Crain’s podcast on businesses, entrepreneurship and economic and workforce development in Detroit that is broadcast each Monday at about 12:42 p.m. on “Business Rap” on WQTX 92.1 FM in Lansing and is published on crainsdetroit.com/DetroitRising on Tuesdays. You can also listen to all our podcasts by subscribing on iTunes, Apple Podcasts or anywhere else you get your podcasts.

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C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 5 , 2 0 1 8

OPINION COMMENTARY

Engler thrust into action at crisis-struck MSU E

AST LANSING — Two weeks ago, former Michigan Gov. John Engler was settling into a semi-retirement — serving on some corporate and foundation boards, working on a national talent-development project and building a retirement home in Texas. And then Michigan State University President Lou Anna Simon resigned amid the public upheaval over what officials at Engler’s alma mater knew and when about campus sports medicine doctor Larry Nassar’s years-long sexual abuse of female patients. Engler’s name immediately surfaced in political circles as someone who could be interim president as the 50,000-student university fields inquiries from Congress, the NCAA, the attorney general, state legislators, a leading credit-rating agency, donors, alumni, faculty, students and parents. At age 69, taking on the unforeseen management challenge of turning around a university in a freefall crisis of public confidence “wasn’t something I was seeking,” Engler said Wednesday after MSU’s board of four Republican and four Democrats unanimously made him the interim president. “They called. I answered. We have to act,” said Engler, the three-term governor who is often defined by both Republicans and Democrats as being a decisive, if not demanding, leader. A polarizing figure to some, Engler’s arrival to the president’s office just five days after the board accepted Simon’s resignation was met by backlash from faculty, students and one of Nassar’s victims credited with triggering the avalanche of sexual abuse victims whose courtroom testimony came crashing down on MSU leaders in recent weeks. Ashley Fuente, president of MSU’s Council of Graduate Students, called the Engler appointment “hasty” after the elected trustees made public apologies at a Friday board meeting. “Even on a temporary basis, the damage that could be caused by appointing a politician as an interim president on an already polarized campus could be catastrophic,” Fuente said. “... John Engler is the wrong direction. This is already spurring protests.” In a bid to tame the criticism of a stalwart of Republican politics governing a liberal university campus in a period of national political turbulence, Engler

CHAD LIVENGOOD clivengood@crain.com

will get assistance from the man he unseated in the governor’s office in 1990, Democrat Jim Blanchard. Blanchard, 75, will serve as a senior adviser in a still-undetermined-role, Engler said. Adding Blanchard was designed to get a unanimous vote for Engler, empowering him to make house-cleaning moves to change what Democratic Trustee Brian Mosallam called “a culture that enables sexual misconduct” on the East Lansing campus. “It doesn’t get any stronger than this — Blanchard and Engler together. That’s quite a team,” said MSU Trustee George Perles, a former Spartan football coach and Democratic member of the board. But like the 83-year-old Perles, neither Engler nor Blanchard have been in the thick of managing a public crisis for a large institution in the era of social media and the viral dissemination of news and information. Engler retired in July after six years as president of The Business Roundtable, the national sounding board for corporate CEOs. Before that, Engler spent six years running the National Association

of Manufacturers and has mostly lived in Virginia since leaving the governor’s mansion at the end of 2002. Blanchard has been a partner at the Washington, D.C., law firm DLA Piper for the past 14 years. But despite making their livings outside of Michigan, both men are seen as elder statesmen in their respective state political parties. And that may help university leaders get a handle on external communications. Last week, Grand Rapids businessman Peter Secchia, a prominent MSU alum, Republican donor and Engler friend, drew criticism for comments he made to WZZM-TV that complaints about Nassar were overlooked “because he was a rock star” on campus. Secchia also suggested that parents uncomfortable sending their children to MSU should look elsewhere. MSU Trustee Joel Ferguson also drew fire for comments he made in an interview that downplayed the significance of Nassar’s sexual abuse, which prosecutors say totals 256 victims. “By naming Engler interim president and Blanchard a senior adviser, what they seem to be signaling is that they have two people who can corral some of these external voices in the donor community who have not helped MSU in this process,” said Bill Nowling, veteran Republican communications adviser and managing director of Lambert Edwards & Associates’ Detroit office. Engler said there are aspects of his post-politics career that have prepared him for leading MSU through this crisis. At Business Roundtable, Engler was

CHAD LIVENGOOD/CRAIN’S DETROIT BUSINESS

“This institution has much to be proud of. But we have to change the culture,” said newly minted interim MSU president John Engler, who was joined Wednesday by members of the board of trustees.

a top lobbyist for corporate CEOs — many with differing agendas. “I come from a world where nothing’s ever really unanimous,” Engler said. “And often things are political.” The man who spent the first 32 years of his working life in the capital just five miles from his new office in MSU’s Hannah Administration Building hopes his critics can put politics aside. “I don’t see a political advantage for anyone to gain here,” Engler said. “This is not an election. I’m not a candidate. I’m out of here as soon as we can get a permanent president here.” The split MSU board, a group of influential donors, athletics boosters and individuals with the political connections to win a party nominating convention to be on the ballot, portrayed Engler as the best available option to lead the university in a time of crisis. Engler, known for being blunt, questioned who else would take the job. “I don’t know what you all think at the moment, but I’m guessing our pool of candidates would be somewhat limited this morning because they would be concerned listening to the questions, reading the press and thinking about where we are today,” Engler said. Engler vowed to “change the culture” to restore the university’s reputation and make the president’s job more desired than its current status in the higher education business. “This is a really attractive presidency for strong candidates from across the country,” Engler said. “And I think it will be much more attractive in a little while than it might be this morning, so that would be my goal.” Ferguson, a wealthy real estate developer, used a construction analogy to describe Engler and Blanchard’s role in laying the groundwork for the school’s next leader. “I can’t build a building without a strong foundation,” he said. Ferguson, a Democrat, has resisted calls to resign. On Wednesday, Ferguson acknowledged the inferno of scorn engulfing the board by using another analogy to justify the swift move to hire Engler. “As far as us moving quickly, you know, when something’s on fire, you really don’t call the fire department three days later,” he said. “You move right away.”

Please don’t dig any more trolley lines

had a quick trip to Washington, D.C., last week and was quite literally stunned to see the progress on a fixed subway line out to Dulles Airport and beyond. Of course, this is costing billions. It could only happen now in Washington, which appears to have unlimited money for such costly projects. We need a much better, much bigger public transportation system in metropolitan Detroit. But I sure hope that we learned our lesson from the very short, very expensive rail line we built on Woodward Avenue.

KEITH CRAIN Editor-in-chief

I have no idea how it is doing now that everyone is aware of it, but I am sure it will always cost more to run than

it takes in fares. It is near impossible for public transportation to break even. Detroit cannot afford to build a fixed-rail system. Even the friendliest Congress is not going to give Detroit anywhere near the billions of dollars required to build fixed rail touching all three counties of metro Detroit. Not only is it not financially possible, but it would simply not make good sense to build something that would be unmovable. Detroit needs the flexibility to be able to change transit as conditions change, and that would appear to be some sort of bus system.

Nowadays, those buses might be powered by fuel cells or electricity, but however they are powered, they would be able to shift routes as required. We all seem to agree that we need a mass-transit upgrade. But I do hope cooler minds prevail in how we go about it. Although I can think of nothing cooler than a multibillion-dollar fixed-rail system, there are plenty of other places to spend our money first. Buses would be a great addition to our community, and we would see the improvement immediately. That is not a bad thing.

LETTERS

End costly abuses of no-fault insurance State Rep. Lana Theis states in her article in the Jan. 29 edition of Crain’s Detroit Business that her No. 1 priority is to reform Michigan’s auto no-fault system. Nowhere in her article does she indicate that protecting the consumer benefits of no-fault insurance is a priority. Shouldn’t that be her No. 1 priority as an elected representative? As a rehabilitation nurse, I have recognized for decades the crucial difference no-fault auto insurance has for those who have sustained catastrophic injuries in an auto accident. Those who have been catastrophically injured in non-vehicular accidents, and who only have standard health insurance, only have coverage for time-limited rehabilitation treatment that is often inadequate. Worse yet, non-vehicular accident victims may have no insurance coverage at all. As a result, the rehabilitation potential for these accident victims is short-changed, and severe disability and chronic dependency is the outcome. In contrast, access to a comprehensive rehabilitation program because of no-fault insurance allows victims the opportunity to achieve their optimum rehabilitation potential. There is no doubt that there have been significant abuses of no-fault insurance. The overcharging practices of no-fault insurance by way too many medical providers and suppliers absolutely should be exposed and prohibited. Predatory attorney practices that result in unnecessary lawsuits should also be legally curtailed. Those reforms are absolutely needed. But in terms of the Personal Injury Protection benefits unique to Michigan’s no-fault legislation, why throw the baby out with the bathwater? The auto insurance companies in Michigan are already making high profits. It isn’t possible to determine exactly how profitable auto insurance is in Michigan, but why would so many auto insurance companies be clamoring to do business in Michigan if it wasn’t highly profitable? Why dismantle the Personal Protection Insurance that covers medical costs, wage loss, and replacement services for victims injured in auto accidents to increase profit margins? Nor is there is any guarantee that doing so will result in significant rate reduction for consumers. In fact there is much evidence that premiums charged for no-fault insurance are already unnecessarily high. Michigan has the best auto insurance benefits in the nation, but auto insurance does need to be more affordable. We need to make ending the costly abuses of no-fault and regulating premium rates relative to profit margins our reform priorities. The people of Michigan deserve no less. Brenda Reeber, RN, CRRN Ludington

C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 5 , 2 0 1 8

LETTERS

Board diversity is good for business To the Editor: For the first time, the Private Directors Association, a national organization, brought a conversation about corporate board diversity to Detroit. It is now time for that discussion to move past the hotel conference room and into offices across our region. Boards of directors make important decisions that impact the companies they serve as well as our community and our nation. Boards make decisions that affect the way we live and work. Good corporate decision-making comes from people who have a wide variety of backgrounds, experiences and perspectives. From our experience, we know that diverse boards make wiser decisions, which benefits shareholders, workforces and customers. All in-depth studies support the concept that board diversity is good for business. McKinsey found that companies in the top quartile for gender diversity are 15 percent more likely to have financial returns above their respective national industry medians. Companies in the bottom quartile for gender, ethnicity and race are less likely to achieve above-average financial returns. A study by EY and the Peterson Institute for International Economics shows companies with 30 percent female leaders can add up to six percentage points in gross margin. Research from institutes in China and Hong Kong show over 10 years of data and more than 1,000 case studies found “strong evidence” that companies with male-dominated boards had a higher likelihood of fraud. Unfortunately, many public company boards still do not have enough diversity to ensure widespread success. With private companies, there is even less. That includes age, gender and racial diversity, cultural diversity and diversity of experience. Too many companies exclusively want “C-Suite” executives on their boards. As a business community, we must broaden these searches so they focus on talent, not title. Division leaders, financial decision-makers, HR leaders and supply chain experts are all examples of the types of skill sets that companies should be attracting to boards, regardless of corporate rank. Board members should search outside of their typical circles for qualified professionals to join them in service. We recommend that companies consider taking a cue from the world of sports and consider a version of “The Rooney Rule.” In 2003, the National Football League adopted a policy created by the late Pittsburgh Steelers Owner Dan Rooney requiring every team to interview at least one diverse candidate for head coaching and top front office vacancies. That rule has led to a more diverse talent pool and workforce. Some law firms around the country have adopted a similar “Mansfield Rule,” named after the first woman admitted to practice law in the United States, considering women and attorneys of color for 30 percent of leadership and governance roles. Perhaps the most remarkable example of diversity in action is Detroit’s own General Motors, a com-

pany with a female CEO and a board that is 50 percent female, along with executives who break the stereotype of older, white men in senior auto positions. There is no coincidence that the turnaround of GM, along with many other companies post-recession, occurred while this leadership and governance profile has been in place. It can happen more widely and broadly with more corporate commitment. Terry Barclay, President and CEO, Inforum Leslie Murphy, CPA and board director Reginald M. Turner, Member, Clark Hill PLC and board director Roy Verstraete, board director, adviser and senior executive

Balanced budget helps state’s future To the editor: With the Michigan Legislature, Gov. Rick Snyder has worked tirelessly over the last seven years to right the state’s budget and finances. This discipline has allowed us to reduce taxes for Michigan families and job providers, invest in important areas such as education and roads, and pay down long-term debt, all while putting money aside for the next economic downturn. This disciplined approach to our state’s finances is part of the reason Michigan has seen a tremendous rebound — creating more than

540,000 private-sector jobs and increasing family incomes at a faster pace than almost any other state. As a growing state, we can do anything, but we cannot do everything if we are not responsible. If we work together, we can continue to reduce taxes and invest in priorities to improve the lives of all Michiganders. Nearly $3 billion in new tax cuts have already been made since Snyder took office while still increasing investments in services for residents and paying down long-term debt. As we begin the debate about additional tax reductions, we need to keep at the forefront our commitment to pass sustainable balanced budgets that do not leave our chil-

DISCOVER THE BLUE WATER BRAND Feb. 15, 2018 9:30 A.M. – 12 P.M.

Blue Water Convention Center, 800 Harker Street, Port Huron Tickets: $40

PANEL: THE SKILLED TRADES GAP A focus by the state of Michigan on four-year degrees has left an enormous shortage in the skilled trades. What’s the right mix and how do we get there? PANELISTS:

Julie Armstrong, Chief Academic Officer, St. Clair County Community College Jennifer Montgomery, President, McLaren Port Huron Hospital Donna Russell-Kuhr, President/CEO/Co-Owner, PTM Corp.; President, Economic Development Alliance

dren, and their children, paying for the debts we incur today. A balanced budget is required by the constitution. But more than that, a smart, balanced budget that puts dollars in the pockets of Michigan families while investing in critical areas is an important part of securing Michigan’s future. Nick Khouri State Treasurer 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

PANEL: THE BLUE WATER BRAND Branding is important, and the Blue Water region of St. Clair County has a strong one. But what’s the best way to leverage strengths when cities, regions and the state as a whole each have their own branding strategies? How can we all work together? PANELISTS:

Jeff Bohm, Commissioner and Board Chairman, St. Clair County Kathy Vertin, Co-owner, Riverbank and Snug Theatres and Inn on Water Street Mark Walker, Organizer, House Committee for the National Antique and Classic Boat Show; Chairman, Michigan Mutual, Inc. Kelly Wolgamott, Director of Travel Marketing, Pure Michigan

C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 5 , 2 0 1 8

FOCUS Medical 3-D printing is 'future of surgery'

HEALTH CARE

By Jay Greene jgreene@crain.com

One day in the not-too-distant future, your surgeon might be able to give you new bones, joints, even soft-tissue organs that were “printed” in-house. It sounds like something out of “Westworld,” the HBO sci-fi series where humanoid robots are 3-D-printed. But Southeast Michigan hospitals are working on the cutting edge of medical innovation to make it a reality. At the University of Michigan, doctors and researchers led by otolaryngologist Glenn Green, M.D., are working on nearly 30 medical 3-D projects that are customized to help individual patients. UM’s most successful implantable 3-D procedure is a medical 3-D-created biodegradable splint device to treat a rare life-threatening airway disorder that mostly occurs in babies called tracheobronchomalacia. The disorder causes the windpipe to periodically collapse and prevents normal breathing. The manufactured splint device using one of UM’s 30 3-D printers is sewn around a floppy airway area in the neck to provide support and protection during airway growth. Over three years, the splint is absorbed by the body. UM has treated a total of 15 patients from the ages of three months up to 70, said Green, who practices at UM’s C.S. Mott Children’s Hospital. “We think (medical 3-D printing) is the next great revolution in surgery,” said Green. “It is still in the early stage where we are trying to work everything out. There isn’t reimbursement for most of it. It is a key problem we are working on.” UM is not the only hospital in the region working to bring 3-D medical printing into the operating room. Henry Ford Hospital in Detroit and Beaumont Hospital in Royal Oak are also working on their own applications for this transformational technology.

Medical 3-D future Hospitals are already using medical 3-D printing technology. Most often, an FDA-approved machine is used to create precise replicas of skulls, jaws, hearts and valves, knee and hip implants, fibulas and even sports shoe inserts and hearing aids. The 3-D printed models help doctors plan and practice complex heart, orthopedic, facial and pulmonary procedures. The models are also used for patient and family education. Prices vary, but most models cost between $300 and $10,000 and

What is medical 3-D printing? JJMedical 3-D printing is an advanced type of medical device manufacturing in which machines create customized prosthetics using imaging technology to design a specific shape of a patient's body. Materials include biocompatible polymers and powders for tracheal splints and titanium for jaws and hips. JJIt works like this: A 3-D printer receives instructions from a computer program that has been fed medical imaging data from a patient’s CT scan. JJUsing materials of specialized filaments of plastics, ceramics or FDA-approved, biocompatible medical powder that is melted by a laser, the printer begins to eject thin layers of material until the final shape of the object — say a jaw — is completed. JJPrinted objects currently can take between six and 24 hours to complete. Technology

improvements are cutting those times in half.

are made out of plastic, ceramic, titanium or compressible metal mesh, in the case of aortic or mitral valve replacement parts. But medical 3-D printing technologies may one day be used to manufacture artificial veins, muscles, limbs, cells, tissues, skin and other organs. Researchers are experiment-

ing with printing human tissue and organs by layering living cells instead of plastic or titanium, a process called bioprinting. Regenerative medicine researchers at Wake Forest University are already using human cells instead of polymers to print organs using an advanced Integrated Tissue and Organ Printing System.

The ability to print human tissue could have a huge impact on such things as pharmaceutical research, organ transplants, surgical operations and reconstructive surgery. Bioprinting could allow hospitals to become “manufacturing centers” of living tissues, said Eric Myers, a product designer at the Henry Ford Innovation Institute. “They will be able to make a sheet of skin for a burn patient or full ears made out of cartilage.” “Another future application is new drugs,” Myers said. "Instead of taking a generic pill, a pharmacist makes one using a 3-D print to match a patient’s specific needs that has a time release function,” he said. Researchers believe practical use of these advances could be 10 to 20 years away. But the future might get here quickly. Bryan Crutchfield, general manager of Materialise North America in

Plymouth, a medical 3-D implant and model manufacturer, said the technology is rapidly advancing as researchers seek answers for difficult patient care problems. Printing speeds for the sophisticated machines are doubling and tripling each year, enabling doctors to move surgery schedules ahead. And the types of polymers and biocompatible powders than can be used as raw material to create the models are multiplying. Materialise operates more than a dozen medical 3-D printers — ranging in cost from $100,000 to $800,000 — and creates orthopedic models for more than 500 hospital and medical customers in the U.S., including more than a dozen in Michigan (See story, Page 11). “We take CT and MRI images, which are slices of the body, (and) we can recreate 3-D models of a patient’s anatomy and then allow clinicians to

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C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 5 , 2 0 1 8

Materialise makes software that powers 3-D printing By Jay Greene jgreene@crain.com

In her office at Henry Ford Hospital, cardiologist Dee Dee Wang has more than 100 3-D models of hearts. HENRY FORD HEALTH SYSTEM

take those models and use in approaches to treatment,” Crutchfield said. “Doctors can pre-plan those surgeries using software. It helps improve patient education (and) patient outcomes because it takes less time in surgery and you can plan ahead to execute it.”

Hospital uses Researchers at UM, Beaumont Hospital in Royal Oak and Henry Ford Hospital in Detroit, as well as many other hospitals nationally, are developing a variety of heart, orthopedic and pulmonary 3-D clinical projects in collaboration with Materialise and seeking FDA review to use them in medical settings. Henry Ford owns three 3-D printers, costing from $5,000 to $50,000, that produce about 70 percent of the hundreds of models they have created for patients and doctors.

The Henry Ford Innovation Institute houses the 3-D printers from Stratasys, Formlabs and MakerBot. So far, more than 700 patients in eight different departments have been treated using the 3-D models the team has made in the past three years. “Doctors have given us hundreds of ideas, from surgical instruments to devices” for tracheas, hearts and catheters, Myers said. About 95 percent of the 3-D models are of the heart, but they also are made for doctors in orthopedics, oncology and otolaryngology. The printing process works like this: After Myers receives the CT scan on the body part, he carefully separates everything out of the image except the heart or body part he will print. Depending on the size of the print and complexity, the printer will take six to 24 hours to create the thin layers that make up the object. “We use (the model) for patient

Materialise, a Belgian company with a regional office in Plymouth, is at the leading edge of medical 3-D printing — a revolutionary technique in medicine that has the potential to cut surgery time by one-third, reduce health care costs, improve outcomes and enable patients to receive customized treatments personally designed for them, say experts interviewed by Crain’s. One day, says Bryan Crutchfield, general manager of Materialise, medical 3-D printing will be able to create replacement functioning organs like skin or heart Bryan valves for transCrutchfield: At plantation. leading edge of But right now medical 3-D Materialise contracts with more than 500 hospitals and health care companies that includes the University of Michigan, Beaumont Hospital, Henry Ford Hospital, Detroit Medical Center and Spectrum Health to develop 3-D patient anatomy models and to help plan out medical procedures with doctors. Materialise also works with another 700 corporate entities, including General Motors Corp., Ford Motor Co. and Microsoft, on a variety of industrial 3-D manufacturing projects. Each year, Materialise produces 150,000 medical parts for 50,000 patients in cardiovascular, craniomaxillofacial, orthopedics and pulmonology, Crutchfield said. “We have six laser machines and seven (stereolithography) machines here. They run all night and education. That is huge. It is much easier to explain to patient and family how (the surgery) would affect them, as opposed to pointing at 2-D drawings. They see a 3-D image they can hold and patient comprehension goes through the roof.” Myers will usually have the model ready for the physician by the next day. “At first, we didn’t know how to use it,” he said. “It took us the first six months to boil it down to the process to use on patient care.” A growing number of Beaumont surgeons also are using the Royal Oak’s 3-D medical printing laboratory to educate patients and their families about their procedures, said Ken Richey, Beaumont’s 3-D medical lab manager. Beaumont contracts with Materialise and two other companies to print out the structural materials used for the demonstrations. Besides patient education, doctors at Beaumont and Henry Ford use

Need to know

Materialise has 80 employees in Plymouth that work with hospitals and corporations on medical 3-D printing projects 

 Medical 3-D printing could revolutionize surgical procedures by using biocompatible materials for replacement body parts and organs  Most current uses allow doctors to use 3-D models to pre-plan surgeries or for patient education

“We have six laser machines and seven (stereolithography) machines here. They run all night and in the morning we do cleaning and maintenance on them.” Bryan Crutchfield

in the morning we do cleaning and maintenance on them,” he said “The latest generation is three times faster than the previous one. The next will be five times faster. We (the industry) are constantly improving.” Mayo Clinic is the largest owner of 3-D health care printer systems, Crutchfield said. In Southeast Michigan, UM, Henry Ford, Beaumont, DMC and other hospitals also conduct medical 3-D printing projects. “Hospitals are using it for patient visualization and planning,” he said. “Hospitals lease a software program to use at their hospital, or ask us to do it for them. Some hospitals buy machines to do on their own. We have a suite of products for all the bony structures in the body.”

Materialise also has worked out licensing deals with Henry Ford and UM to commercialize their 3-D research. Deals to collaborate on projects also have been cut with other Michigan hospitals. “We are collaborating with Henry Ford’s structural heart group, using software to better plan their cardiovascular surgeries,” Crutchfield said. “They have developed a proprietary algorithym for mitrovalve (surgery) and we have licensed that from them.”

Insurance hurdles Using specialized software developed by Materialise and inputting medical imaging from computed tomography or magnetic resonance imaging of the patients’ body parts, a medical 3-D printer uses a variety of polymers and powder to slowly build a model to be used in a surgery procedure. Cost of printers range from $100,000 to $800,000; printed models can range in cost from $300 to $10,000. Materialise’s software is called the Mimics Innovation Suite. It incorporates 3-D medical images from CT, MRI, 3-D ultrasound and other imaging platforms. The software segments the target organ or bone and processes it for clinical uses. On the second floor of Materialise’s Plymouth offices, more than a dozen clinical engineers sit behind large-screen computers with headphones on and talk with physicians at hospitals and other medical facilities across the country. “Our clinical engineers discuss the case with the surgery team to get the best possible results,” Crutchfield said. Wilfried Vancraen founded Materialise in Belgium in 1990 as a SEE PRINTING, PAGE 13

tient to the part,” Myers said. “You fit the part to the patient.” For example, Myers said most hip and knee implants are generic devices. “Using 3-D printing you can custom fit each one,” he said.

University of Michigan Glenn Green: Working on nearly 30 projects.

Kongkrit Chaiyasate: Champion of 3-D.

medical 3-D printing technology to help doctors plan out medical procedures and surgeries. Using 3-D models reduces OR time and “saves $180 a minute in OR costs,” Myers said. “You are choosing the correct device more often, the correct catheter and it helps reduce length of stay.” And 3-D printing makes it easier to customize parts for patients. “You no longer have to fit the pa-

UM has been researching medical 3D printing since 1996 under biomedical engineer Scott Hollister, but it wasn’t until 2012 that Green and Hollister joined forces to develop the implantable airway splint. “I had been looking for a solution for some time. There is a severe problem with a lot of kids dying around the country of tracheobronchomalacia,” Green said. “We have done 15 procedures so far ... 13 have done very well. One died of cardiac disease; another child passed away because of lung problems.” SEE FUTURE, PAGE 12

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SPECIAL REPORT: HEALTH CARE FUTURE FROM PAGE 11

UM has more than 30 printers in operation, with half in the otolaryngology department, and has printed out hundreds of models and implants, Green said. The most expensive is a $100,000 EOS 3-D printer, which is used to make the implantable airway splints. “We are working on more than a dozen devices in my area, ranging from surgical models for students and residents to practice on to implantable devices,” said Green, noting that the medical education value of 3-D will show dividends in the future. Implanting the splints requires a special FDA emergency exemption, but Green said UM is working with the FDA to get approval for a clinical trial that would prove the airway splint’s effectiveness. Success in clinical trials is a proven method to convince private and government payers to reimburse treatments, he said. “If we were supported through reimbursement, it would make a gigantic difference,” said Green, adding that many more patients could be helped using 3-D. “All our initial work was supported by federal grants. A lot was self-supported through donors. We are starting to see some corporate involvement, device manufacturers putting money into it.” Green at UM said inserting the 3D airway splint in a child can save $1 million in future medical costs. But each time UM wants to operate on a patient it must get insurance approval that Green says takes up to 10 hours of staff time.

Beaumont Hospital Beaumont pediatric plastic surgeon Kongkrit Chaiyasate, M.D, conducts about 50 craniofacial, or skull reshaping, surgeries each year on babies and young children under age one. Known as the “champion” of 3-D printing at Beaumont, the Thailand-born Chaiyasate said in his six years at Beaumont he has worked on cases ranging from faces mangled by a raccoon to gunshot wounds to children with deformed cleft palates. “We see babies (a day or two old and up to a year) who have craniums that are not growing. In the old days, surgeons would eyeball it and then do cuts. Now we do a CT scan for diagnosis and then plan it out and use the plating guide” created using the 3-D printer, Chaiyasate said. “It is a two-hour surgery with about four to six weeks for recovery.” Chaiyasate said surgeries are performed on babies who are born with joints between the parts of the skull that have fused prematurely, which can put pressure on the brain. The CT imaging gives Chaiyasate information on where to expand the skull. It usually takes two weeks to get back the plating guides from Materialise or two other 3D printing companies that Beaumont uses. While the costs are about $5,000 more for the 3D procedure, Chaiyasate said families are not billed extra. “The procedure saves money because of less time in the OR. Insurance gives you one payment for the hospital, and we fold the costs into the bill,” he said. “There is no net financial (charge) for the procedure. We have higher quality and better outcomes for patients.” Chaiyasate’s first case was Ramon Aguilar Jr. in 2012. Ramon was born with a craniofacial condition known as

HENRY FORD HEALTH SYSTEM

Cardiologist William W. O’Neill, M.D., Medical Director of the Henry Ford Center for Structural Heart Disease, shows patient Dennis Stora of Allegan a 3-D model made of his heart before his procedure.

Goldenhar syndrome. “Ramon had a congenital defect. One side of his face was not the same as the other,” he said. The goal of the surgery was to reconstruct the right side of Ramon’s face and his jaw to allow him to eat solid food. Ramon completed the surgery and at age 21 graduated from high school. Chaiyasate also does about three surgeries per month — aided by medical 3-D printing — to rebuild faces for patients who have cancers of the jaw. The four-hour surgery starts by cutting into the calf bone to get a replacement bone for the jaw. “We use 3-D (printing) to create a guide, a piece of plastic to snap the segment on, for the fibula and the jaw,” Chaiyasate said. “It was an 18-hour surgery, but we do it now in four hours because of the planning.” Looking to the future, Chaiyasate said Beaumont doesn’t yet place materials like 3-D printed bones or joints in the body. “Skin grafts are the future. We have a long way to go to get there, but it’s going to happen,” he said. “The difficulty now is controlling the cells. They cannot be replicated in mass volumes.” Richey, who has been with Beaumont since 1998, said he recognizes the value of using specialized software and digital images to illustrate in color and in three dimensions patients’ medical

problems for surgeons. “The surgeons love it. When you think about how much it costs in the OR — $250 per minute — the surgeons can sit at my desk in the lab and plan (their) surgeries,” said Richey, adding that surgery time can be cut nearly in half. A growing number of Beaumont doctors, including neurologists, pediatric surgeons, orthopedic surgeons, cancer surgeons and interventional radiologists, are using the 3-D medical printing software that was developed by Materialise to plan out their procedures.

Henry Ford Hospital In her office at Henry Ford Hospital, cardiologist Dee Dee Wang has more than 100 3-D models of hearts on a bookshelf. Each heart is custom-made for patients based on CT scans of their hearts. She calls them her clinical heart library. “Our patients are too frail and not candidates for open heart surgery, and their remaining option is getting readmitted to the hospital, or hospice. They have less 6 months to live, so they are very sick and have run out of options,” said Wang, who is head of structural imaging and medical director of 3-D

printing at Henry Ford Innovation Institute. Nearly five years ago, cardiologist William O’Neill, M.D., Henry Ford’s medical director of the Center for Structural Heart Disease, began doing transcatheter mitral valve replacement procedures using medical 3-D procedures under an FDA humanitarian exemption. The mitral valve connects the left upper (atrium) and lower (ventricle) chambers of the heart. However, this heart procedure is one of the most technically challenging because the mitral valve is one of the most complex structures in the heart. Incorrect valve sizing can cause the valve to embolize, creating blockages. An embolism could block blood flow to the rest of the body and cause harm. Using 3-D imaging, planning and printing, O’Neill and fellow cardiologist Adam Greenbaum, M.D., created new techniques using a wire guided up through the femoral vein in the leg to the heart to open more blood flow to the rest of the body. This allows safe implantation of these valves into patients and could potentially help thousands of patients, Wang said. More than 13 percent of patients over age 75, or approximately 5 million people, have some degree of aortic or mitral valve disease. So far, Henry Ford

has successfully performed more than 200 of the procedures, including placing a valve in the mitral position more than 50 times, the hospital said. The FDA gave approval for the mitral valve in valve implantation last fall. “Dr. O’Neill is working on a problem where the patient has no or low blood flow. We can’t do surgery in those instances,” Wang said. “For many patients, we think we have fixed the problem and now these patients are candidates for mitral valve replacement.” 3-D printing is also helping cardiologists improve a more common procedure called the “left atrial appendage closure,” Wang said. This procedure is for patients with irregular heartbeat conditions, called atrial fibrillation, who are not able to take blood thinners. The danger of a clogged atrial appendage pouch is that a blood clot could form, break away and cause a fatal stroke. Henry Ford has conducted more than 1,000 of the atrial procedures. Two years ago, the FDA approved a device called the Watchman for use in this type of procedure. But imaging planning for the procedure was lacking. By printing out the exact replica of the heart, Wang said, cardiologists could get a better view of the blockage and devise a better surgery plan. “Before, there was a 16 percent complication rate,” said Wang. “By innovating 3-D imaging and 3-D printing customized case plans for our patients, we demonstrated that in our first 100 patients we had zero complications.” Wang said the use of the 3-D model for atrial appendage procedures “helps us to choose the right size of the catheter” inserted into the patient’s body to place mesh devices. She added that the 3-D model also gives doctors a better idea of how large the Watchman self-expanding device needs to be to open the atrial appendage. Wang said manufacturers make five sizes, but many more are needed because each patient’s heart, valves and appendages are different sizes. “Before, you had to guess the right sizes,” Wang said. “Now we have a better idea what ones to use.” Data shows before 3-D was used, doctors used an average of 1.8 devices per patient; that number has dropped to 1.2, she said. For the left atrial appendage Watchman procedure, Wang said the use of 3-D printing also cut surgery time to about 45 minutes from 80 minutes, reducing costs and improving outcomes. Medical 3-D printing was the subject of jokes five or six years ago in some circles of medicine. Now, Wang said, 3-D has proven itself, because lives have been saved. “People can’t blow it off now. In the next 10 years, all hospitals will have inhouse printers and all patients will have access to them,” said Wang, adding that the future is limitless for 3-D applications in health care. “Bench research 10 to 15 years down the road will enable transplants and see early stem cells for organs.” Like many hospitals, payment for 3-D printing is a challenge. Henry Ford funds its 3-D program through Ford Motor Foundation grants. “We are early adopters. We get phone calls from physicians in other hospitals in the U.S. and in other countries, France and Germany,” Wang said. “We get questions how we do it and get lots of referrals — they fly in — if they can’t do it locally.” Jay Greene: (313) 446-0325 Twitter: @jaybgreene

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DMC settles dispute by boosting spending on 2 safety-net hospitals By Jay Greene jgreene@crain.com

Detroit Medical Center has agreed to settle a financial dispute with Legacy DMC, the nonprofit board overseeing the sale agreement of DMC, by spending $2.3 million on improvements at DMC SiNeed nai-Grace Hospito know tal and DMC J Dispute was Detroit Receiving over interest on Hospital, the orescrow payments ganizations anto Legacy DMC nounced last week. J DMC has met its Last summer, commitments on Legacy DMC sent capital projects the owner of J Interest adds to DMC, for-profit $850 million in Tenet Healthcare spending since Corp. of Dallas, a sale of formerly bill for $2.3 milnonprofit hospital lion in interest on chain a $80.5 million escrow payment it owed as part of a 2010 sale agreement. The $2.3 million is in addition to $850 million promised in 2010 when Vanguard Health Systems acquired DMC. Tenet acquired Vanguard in 2012. DMC Legacy board members, several of whom are physicians, identified nearly 60 needed pieces of emergency, surgical and neurological equipment for the two DMC hospitals. “Our commitment to Detroit’s resi-

“Our commitment to Detroit’s residents has never wavered and has never been stronger.” Anthony Tedeschi

dents has never wavered and has never been stronger. These latest expenditures are directly focused on front-line patient care, benefiting the patients who entrust their care to us and the dedicated surgeons and health teams who care for them as well as the communities we serve,” Anthony Tedeschi, M.D., DMC CEO, said last week in a statement. “Our board is pleased with the results of the capital projects completed at the various DMC facilities,” Joe Walsh, Legacy DMC president, said in a statement. “The goal from the beginning was to ensure quality, accessible health care for all of Detroit’s residents, including indigent and at-risk populations. That’s a fundamental part of DMC’s mission. The system has upheld and met that goal and their financial commitments under the Legacy covenants in regards to the five-year capital expenditure.” Before the settlement, DMC had argued that it did not have to pay interest on the escrow based on changes in Medicare and Medicaid disproportionate-share reimbursement policy.

In its sixth annual report last year, Legacy DMC said DMC was almost in compliance on the required $850 million in total capital spending. But Legacy DMC in 2016 said DMC came up $80 million short by the end of 2015 in its obligation to spend $500 million on specified capital projects over five years. DMC spent about $75 million in 2016 on the patient tower for Children’s Hospital, leaving it $5.4 million short of the $500 million by end of 2016. DMC expected to exceed in 2017 by about $25 million the $500 million in spending for 15 specified capital projects. An updated Legacy DMC report on compliance with the sale agreement is expected in the next couple of months. Despite the millions of dollars spent by Tenet on capital and regular maintenance projects, Legacy DMC board members have continued to express concern that regular maintenance and upkeep of DMC’s six hospitals have lagged. Legacy DMC has estimated $50 million to $70 million should be spent annually in routine updates to “preserve the facility and capital improvements” over the last six years. DMC has declined to share with Legacy DMC how much it spends annually in routine maintenance on the hospitals. JACOB LEWKOW FOR CRAIN’S

Jay Greene: (313) 446-0325 Twitter: @jaybgreene

DMC spent about $75 million in 2016 on the patient tower for Children’s Hospital, as part of its obligation to spend $500 million on specified capital projects.

PRINTING FROM PAGE 11

company devoted to transferring data to 3-D printers. The next year it developed a special software program for the medical and dental industries. Materialise now has 165 patents for its software, manufacturing and medical device products. In 1996, Materialise opened an office in Ann Arbor and in 2010 opened its Michigan headquarters in Plymouth, where it has medical and engineering divisions with 80 employees. The company has 160 offices in 16 countries with 1,400 employees. Crutchfield said Materialise was just approved by the FDA for its titanium cranial plate implant. Its cranial implants are used to repair faces of conjoined twins or patients deformed by accident or cancer. He said a titanium hip implant is next. “We sell 3-D printed custom made titanium implants in Europe and we are continuing to clear those through the FDA process here,” Crutchfield said. “There are new breakthroughs in 3-D printed metal and plastic products every year.” But Crutchfield said one of the limitations in medical 3-D printing is health insurance coverage. Most procedures are not directly covered by insurance. “The usual route for coverage first is Medicare and Medicaid,” he said. “The Radiological Association of America is working on it. We need to get the standard of care approved.” Jay Greene: (313) 446-0325 Twitter: @jaybgreene

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Drought presses forward with services arm By Annalise Frank afrank@crain.com

Cold-pressed raw juice maker Drought is expanding in more ways than one. The Royal Oak-based company announced last week that it has launched a new arm called Drought Solutions to provide burgeoning companies and entrepreneurs project-based and consulting services. It’s also opening its new expansive production space in Berkley in the next 30-60 days and has national expansion on the horizon. Drought gets inquiries on everything from its overall strategy to suppliers, freight and storage, said Julie James, co-founder and chief marketing officer. The team wants to pay it forward, after mentors helped James and her three sisters grow the company from a Kickstarter campaign in 2011 to a juice manufacturer with six Southeast Michigan locations and sales across the Midwest. The juice is also now available wholesale across the U.S., according to Drought’s website. “I think we have found that through actually navigating, growing our own business and really teaching ourselves … we have amassed quite a substantial knowledge in food manufacturing and small business growth,” James said. “We realized this is a valuable asset we have ...” Depending on the request, the team can assist with food preparation, storage, business planning, USDA organic certification, licensing and more, James said. Introduction consultation sessions and initial project outlines are offered for free. Services after that are $150 per hour and other fees are project-based. The company began offering solutions services in the last 90 days, James said. It hasn’t hired new staff specifically for Drought Solutions, instead extending responsibilities of existing staff. However, as Drought develops its strategy and grows the services arm, James expects to hire about three more senior staff members this year. Drought employs 52 currently. “Part of our success has always relied on being scrappy and lean,” James said.

PHOTOS BY DROUGHT

Drought announced last week that it has launched a new arm called Drought Solutions to provide burgeoning companies and entrepreneurs consulting services.

Need to know

JJDrought launches new services arm called Drought Solutions JJCompany offers consulting, expansion strategies and more JJFree consultations, $150-per-hour services and project-based fees

James declined to specify revenue figures. Crain’s reported in April on the move to approximately 15,000 square feet in Berkley at 2070 Eleven Mile Road. Part of the Berkley space will act as a retail storefront. As for more Drought storefronts cropping up? James said the company doesn’t plan to open more locations this year, outside of the Berkley site. An Ann Arbor location opened in July.

Drought is opening its new production space in Berkley in the next 30-60 days.

Detroit auto show wraps Julia Reyes Taubman, MOCAD co-founder, up with 756,397 attendees documentary photographer, dies at 50 during public days The 2018 North American International Auto Show wrapped up Sunday with a total of 756,397 attendees over its nine public days, show officials reported. That’s up slightly over last year’s 755,229. The highest attended day of the public show, which kicked off Jan. 20 at Cobo Center in Detroit, was Saturday at 124,205. Total ticketed attendance for this year’s show was 809,161 — including The Gallery, industry preview days, the Charity Preview and public show — topping last year’s 806,554. This year’s show at Cobo Center in Detroit had an estimated regional economic impact of $480 million, David Sowerby, managing director, portfolio manager at Ancora in Bloomfield Hills, said in a news release. That’s the equivalent to holding nearly two NFL Super Bowls a year in Detroit, he said.

The Charity Preview on Jan. 19 raised nearly $5.1 million for children’s charities in Detroit. In all, nearly 13,000 people attended the black-tie gala, recognized as the largest annual single-night fundraiser in the world. The Charity Preview has raised nearly $118 million since the Detroit Auto Dealers Association established the gala 42 years ago. More than 700 vehicles were on display — 52 made their world debut, seven made their North American debut and 10 one-of-a-kind vehicles made their first appearance at an auto show. More than 5,000 members of the media from 60 countries attended the show. Nearly 40,000 automotive and mobility experts and innovators from 2,002 companies engaged in emerging mobility technologies and trends at Industry Preview, show officials said.

Author and MOCAD co-founder Julia “Julie” Reyes Taubman died Jan. 28 at home in Bloomfield Hills after a battle with cancer. She was 50. Taubman was active in the national arts community. In addition to her work at the Museum of Contemporary Art Detroit, she was a member of the board of governors of the Cranbrook Academy of Art in Bloomfield Hills and a former board member of Julia Reyes the Rock and Roll Taubman: Died Hall of Fame in Jan. 28. Cleveland. The accomplished documentary photographer published a book, Detroit: 138 Square Miles, in 2011 with a forward by best-selling author Elmore Leonard, with whom she developed a great friendship.

In his foreword, Leonard, who passed away in 2013, wrote: “In Julia’s composition there is beauty in despair, and sometimes a glimmer of hope. We see life and death in Detroit, nothing Chamber of Commerce inspired, but more real than any other reality show.” The long-term leader of MOCAD and the arts will be greatly missed by the institution she spent years crafting and supporting, Elysia Borowy-Reeder, the contemporary art museum’s executive director, said in an emailed statement. “Her gifts to our community and to MOCAD in the form of her astute guidance, generous philanthropy and her exceptional art collection will live on forever,” Borowy-Reeder said. “Her generosity and energy founded MOCAD (in 2006) and has forever transformed this museum and our community. Our most heartfelt condolences go out to her family and loved ones.”

Taubman was born and raised in the Washington, D.C., area. She was a member of the Reyes family, owners of Chicago-based food and beverage distributors Reyes Holdings LLC, one of the nation’s largest privately held companies. She is survived by her husband Robert Taubman, chairman, president and CEO of Bloomfield Hills-based Taubman Centers Inc.; children Ghislaine, Sebastian and Theodore; stepson Alexander; father Joseph; and brothers M. Jude, J. Christopher, David, James, Thomas and William Reyes. “I and our children were blessed to have her in our lives,” Robert Taubman said in a statement. “Julie’s extraordinary strength, free spirit, deep love for her family and her memory will forever be a comfort and inspiration for us all.” Memorial donations can be made to the University of Michigan’s A. Alfred Taubman Medical Research Institute.

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CALENDAR MONDAY, FEB. 5 Michigan Should Lead the Next Frontier of Innovation. 11:30 a.m.1:30 p.m. Detroit Economic Club. U.S. Senator Gary Peters will discuss Michigan’s opportunity to become a hub for transformative technologies, including self-driving vehicles, artificial intelligence, and robotics, and the implications Gary Peters these technologies will have on Michigan’s economic future. The Masonic. $45 members, $55 guest of members, $75 nonmembers. Website: econclub.org

UPCOMING EVENTS Market Research: Identifying and Leveraging Contract and Competitive Intelligence. 9 a.m.-noon. Feb. 13. Schoolcraft College. By building useful competitive intelligence, firms can formulate a winning proposal strategy with their client and competition in mind. Course will provide an overview of key data sources, methods for data analysis, and next steps for applying market research for business development and growth. Schoolcraft College. $45. Contact: Kara or Shan-

DEALS & DETAILS non, phone: (734) 462-4438; email: ptac@schoolcraft.edu; website: schoolcraft.edu/bdc/about/ptac The Economy & Workforce: The Reentry Opportunity. 11:30 a.m.1:30 p.m. Feb. 13. Detroit Economic Club. Jeff Korzenik, chief investment strategist/senior vice president, Fifth Third Investment Management Group, on the opioid epidemic as a workforce challenge. Townsend Hotel. $45 members, $55 guest of members, $75 nonmembers. Website: econclub.org Tech Takeover: Executive’s Guide to Protecting Client Data and Your Business. 8:30-10:30 a.m. Feb. 14. Automation Alley. What happens if a company loses a client’s data? What if the company was the entry point for such a breach? Learn how to protect data and a client’s identity by leveraging data security as a business advantage. Automation Alley. $10 members; $20 nonmembers. Phone: (800) 427-5100; email: info@automationalley.com Don’t Call Me a Millennial: Busting the Myths of the Next Generation of Leadership. 7:30-9 a.m. Feb. 27. Young Professionals Panel includes: Sommer Brock, director of development, Cranbrook Educational Community; Clarence Dass, founder, The Dass Law Firm and Jennifer Korman, communications

project manager, Mercedes-Benz Financial Services. MSU Management Education Center. $32 member, $36 nonmember. Website: leadershipoakland.com/breakfast-of-champions/ 2018 Detroit Policy Conference. 7:30 a.m.-4 p.m. March 1. Detroit Regional Chamber. The Detroit Policy Conference will focus on creating a culture of civility in Detroit, exploring what it means to be “civil” and the role that communities play in influencing individual behavior. MotorCity Casino Hotel. $159 members; $235 nonmembers. Website: detroitchamber.com/dpc Birmingham Bloomfield Chamber’s Government Forecast Breakfast. 8-9:30 a.m. March 2. Speaker is U.S. Congressman Dave Trott. Townsend Hotel. $40 members; $50 nonmembers. Contact: Andrea Foglietta, phone: (248) 4307688; email: andreaf@bbcc.com; website: www.bbcc.com Embracing Emerging Technologies to Diversify Business. 9:30 a.m.-3:30 p.m. March 8. Asian Pacific American Chamber of Commerce. APACC 15TH Annual East-West Business Connection. Edward Village, Dearborn. $75 member; $100 nonmember. Contact: Leonie Teichman, email: leonie@apacc.net Website: apacc.net

A Conversation with Tim Sloan: Leadership, Culture and Innovation. 11:30 a.m.-1:30 p.m. March 15. Detroit Economic Club. Wells Fargo CEO and President Tim Sloan will discuss leadership, innovation, and the financial services industry. MotorCity Casino Hotel. $45 members, $55 guest of members, $75 nonmembers. Website: econclub. org Positive Links Speaker Series: Clash! Bridging Cultural Divides in the Workplace. 4-5 p.m. March 19. Ross School of Business. Hazel Rose Markus, Davis-Brack Professor in the Behavioral Sciences Department of Psychology at Stanford University, shows how recognizing and including interdependence within workplace culture cycles can bridge divides and enhance individual motivation, creativity, and performance. Michigan Ross Campus. Free. Contact: Jacob Feinberg, phone: (734) 764-0544; email: cpoevents@umich.edu; website: positiveorgs.bus.umich.edu 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.

EXPANSIONS JJUnion Partners I LLC, Oak Brook, Ill., a metals and logistics investment holding company, has purchased an Automotive Steel Technical Center in Gibraltar, from Heidtman Steel Products Inc., Toledo, Ohio. Union Partners will use the 9,500-square-foot facility as a focal point of its testing and research. Websites: unionpartnersllc.com, heidtman.com. JJThe United States Postal Service, Detroit District, has leased 235,137 square feet of industrial space located at 2500 Enterprise Drive, Allen Park. Friedman Integrated Real Estate Solutions LLC, Farmington Hills, subleased the property to USPS, with tenant Technicolor Video Cassette of Michigan Inc., Eaton Rapids, as the sublandlord. Websites: usps.com, friedmanrealestate.com.

STARTUPS JJUrgent Care of Milford is now open in Prospect Hill Shopping Plaza, 600 Highland Ave., Milford. The new clinic will focus on providing quality health care that is affordable. Phone: (248) 714-9925. Website: urgentcareofmilford.com.

Submit Deals & Details items to cdbdepartments@crain.com.

Cool Places to Work in Michigan returns in 2018.

This prestigious program recognizes employers that go the extra mile to make their employees feel appreciated – as judged, in part, by the employees themselves.

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MARCH 2, 2018

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Michigan individual health insurance enrollment down, but small group up By Jay Greene jgreene@crain.com

Enrollments in Michigan’s individual health insurance market fell 9 percent in 2018, but insurers are also reporting significant increases in small-group policies marketed to employers. “We had a very good year, a banner year” in the small group market, said Rick Notter, director of individual business marketing and distribution with Blue Cross Blue Shield of Michigan. Notter said he believes small group enrollment is growing because small employers are hiring more as the economy grows stronger. Blue Cross did not have available data for its small group. Health Alliance Plan also saw a 3 percent increase in its small group market business, while its off-exchange individual sales declined by 7 percent, an official said. Statewide, 9 percent fewer people signed up for individual insurance on the online exchange in Michigan for 2018, commonly referred to as the Obamacare exchange, compared with a 5 percent drop in enrollment nationally. Overall, nearly 500,000 people in Michigan purchased individual policies, including 293,940 on the healthcare.gov health insurance exchange and about 200,000 off the exchange. The individual market represents less than 6 percent of people with health insurance. Despite the individual-market decline, most experts had predicted Michigan to take a much larger hit of 15 percent to 20 percent because of rising premiums, a lack of federal support for premiums and general uncertainty over the Affordable Care Act. “We actually were projecting a 7 to 10 percent drop statewide, and thought we would lose 5 percent (individual) membership,” Notter said.

“Even though we took a significant rate increase, we still were the second- or third-lowest plan, and we are the only carrier in many counties.” Premiums on the Michigan exchange rose an average 27 percent for individual health insurance, while the small-group market only averaged a 4 percent increase, a little more than the 2.5 percent hike in 2017, according to the state Department of Insurance and Financial Services. Blue Cross increased rates 23 percent for its individual HMO product through Blue Care Network, which experienced the largest enrollment gains, and 32 percent average for its individual PPO product lines, Notter said. HAP dropped out of the individual health insurance exchange for 2018. However, its off-exchange individual sales dropped by 7 percent, said Lee Ann Welsh, a HAP spokesperson. The individual market represents only 2 percent of HAP’s business, she said. But HAP’s small-group member-

“People want to keep their coverage and because of the advanced premium tax credit (federal subsidy) their premium did not go up by much, if at all.” Rick Notter, director of individual business marketing and distribution with Blue Cross Blue Shield of Michigan

ship increased by 3 percent over 2017, Welsh said, adding that many new small employer groups with fewer than 10 employees moved from individual to small group coverage.

Need to know

JJMichigan individual health insurance enrollments fall 9 percent in 2018 as premiums rise and people move to small group market JJHealth insurers report strong growth in small group market as employers hire people and seek lower premiums JJUninsured rate cut in half in Michigan to 5 percent in 2016, but data for 2017 unavailable

“We believe this is due to affordable rates and value-added services offered to small group employers,” Welsh said. “We anticipate that HAP’s small group membership will continue to grow as our rates in that sector become even more competitive throughout 2018 and into 2019.” But unique problems faced the individual market this year. First, the enrollment period was cut in half to 45 days; and second, average premiums increased about 27 percent in Michigan, based on a variety of factors, including the Trump administration’s decision not to provide $10 billion in cost-reduction subsidies for low-income people. Notter said Blue Cross increased individual market sales by 12,000 to 244,000 statewide and increased its market share to 58 percent from 49 percent. Some 171,000 people purchased individual policies on the Obamacare exchange and 74,000 purchased policies on the open market, he said. “People want to keep their coverage and because of the advanced premium tax credit (federal subsidy) their premium did not go up by much, if at all,” Notter said. Notter said additional support to independent agents with improved information technology also boosted sales. Priority Health also experienced

ADVERTISING SECTION

a decline in the individual market, although data won’t be completely tabulated until February, said Amy Miller, a Priority spokesperson. She said enrollment declines of slightly more than 9 percent were projected. Miller said small-group enrollment has been steady with no changes in the overall numbers. However, the small-group enrollment period is more flexible than the individual market and offers more signup periods for employers and their workforces. Next year, the individual market could decline again, but this time for yet another reason. In 2019, individuals will not face a tax penalty under the Affordable Care Act if they don’t purchase a health insurance policy. The individual mandate was one provision in Obamacare that encouraged younger, healthier people to purchase insurance, which worked to lower premiums for older people by spreading risk. But Notter said he doesn’t believe there will be a big drop in individual enrollment or a big increase in premiums for 2019, even with the mandate penalties disappearing. “We have already priced people in taking the penalty and not taking coverage,” he said. “Those people probably have already opted out” of the individual market and those who are in want to be covered. The share of Michigan residents who are uninsured dropped to about 5 percent in 2016 from 11 percent in 2013, the year before Obamacare took effect. More recent state data is unavailable, but nationally the uninsured rate ticked up to 11.7 percent of U.S. adults last summer, up from 10.9 percent. Jay Greene: (313) 446-0325 Twitter: @jaybgreene

PEOPLE

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

PROFESSIONAL SERVICES

FINANCIAL SERVICES

Curtis B. Kaye

Beth Oates

Appraiser, ASA candidate

Regional Communications Manager

Miedema Appraisals Curtis Kaye joined the Miedema Asset Management Group team in October 2017 as a machinery and equipment appraiser. He is a candidate for ASA designation. He brings 25 years of auction experience and a wide range of appraisal experience with him. As a part of the Miedema team, he will focus on machinery, equipment, and other personal prop appraisals. Miedema welcomes Curtis, and looks forward to helping our clients meet their needs with dependable valuations. Located in Clinton Twp, MI.

Fifth Third Bank Fifth Third Bank is pleased to welcome Beth Oates as vice president and regional communications manager. In this role, Oates will lead the reputation management, internal communications, and public relations efforts for Fifth Third’s Michigan regions with an emphasis on Detroit, Grand Rapids, Lansing, Kalamazoo, and Traverse City. Prior to joining Fifth Third, Oates was the senior director of communications for the Society of Manufacturing Engineers.

KNOW SOMEONE ON THE MOVE?

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

FINANCE J Carlos Calderon to manager of Mexico consulting practice, Small to Mid-sized Entities department, Clayton & McKervey PC, Southfield, from senior, Financial Accounting Advisory Services, EY (Ernst & Young LLP), Detroit.

LAW J Elizabeth Luckenbach to member, Dickinson Wright PLLC, Troy, from partner, Jaffe Raitt Heuer & Weiss PC, Southfield; Sara Rubino to member from partner, Jaffe Raitt Heuer & Weiss PC; and Juliet Boyd to associate from associate, Jaffe Raitt Heuer & Weiss PC. J Kaitlin Brown to shareholder, Maddin, Hauser, Roth & Heller PC, Southfield, from associate.

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

SPOTLIGHT Focus: Hope CEO moving to youth jobs program

Focus: Hope CEO Jason Lee is leaving the Detroit nonprofit to serve as executive director of the Detroit Employment Solutions Corp.’s Grow Detroit’s Young Talent program, effective Feb. 12. His departure comes on the heels of the resignation of CFO Ollette Boyd, effective Jan. 26. Jason Lee Longtime Focus: Hope board member Vernice Davis Anthony, former president and CEO of the Greater Detroit Area Health Council, will act as interim CEO while the nonprofit conducts a search for a permanent CEO and retools operationally. In his new role at the DESC, a newly created position, Lee, 44, will lead efforts to raise $10 million to support the Grow Detroit’s Young Talent program.

Gibb leaves Oakland County post

Matthew Gibb has left his post as Oakland County Executive L. Brooks Patterson’s top economic development official. Gibb, whose official title was deputy county executive, started working for the county in May 2011 after serving as Orion Township supervisor, elected in 2008. He said his last day with the county was last Monday. He was previously a real estate attorney. Gibb, 49, said he is in discussions with unidentified companies for both contract or “potentially in-house” work, ranging from startups to larger firms. He said his work will focus “bringing companies up and into the future.”

Craig Fahle to exit Detroit Land Bank

Craig Fahle plans to resign from his post as spokesman for the Detroit Land Bank Authority to get back to his roots in media. Fahle, 50, is set to exit the city agency March 2 but will stay on longer as needed for the transition. He said he made the decision after mulling his future and realizing how much he missed media. Craig Fahle He left WDET 101.9 FM, where he hosted a weekday talk show for seven years, to join the land bank in August 2014. Fahle said his resignation is unrelated to any investigations at the land bank and that it was motivated only by a desire to “get back to what my true passion is.” He declined to specify exactly what his media future holds.

C R A I N ’ S D E T R O I TCRAIN B U’SSDIETROIT N E SBSUSINESS // F E B R U A R Y 5 , 2 0 1 8

Page 2

GRIFFIN FROM PAGE 3

first in-season trade by the Pistons for an established elite player since Rasheed Wallace in 2004 — who proved to be the piece needed to win the championship that season. Detroit isn’t poised to make a serious run at the Larry O’Brien Trophy in 2018, but landing Griffin is a windfall for the Pistons’ sales and marketing staff that’s been starved of established, marketable talent for years. “We definitely want to create excitement around Blake Griffin joining our team, given his profile and the success he’s had in his career,” said Kevin Grigg, the Pistons’ vice president of public relations. “His presence will be weaved into our marketing materials and marketing plans. We’re going to take advantage of the excitement of the trade and the excitement that Blake brings to the floor.” But that won’t be at the expense of the team’s other star, 24-year-old Andre Drummond, who has been Detroit’s best player but doesn’t have the resume or profile that five-time all-star Griffin, 28, has compiled during his eight seasons. “At the same time, we will still continue to market all of our players. We have a young star in Andre Drummond who was just named to his second all-star team. Injuries have sidelined Reggie Jackson this year and last year, but everybody saw what he brings to our team two years ago,” Grigg said. At some point later this spring or summer, the Pistons’ business staff will begin plans for the 2018-19 marketing and sales effort, but Grigg said it’s too early to talk about how Griffin will be part of those plans other than he will be a major element.

Behind the scenes The Blake-ization of the Pistons began when coach and team President Stan Van Gundy’s front office informed Grigg that a deal was pending. That set Grigg’s department in motion. They drafted a press release, assembled biographical and statistical information, alerted the media and set up Wednesday’s introductory press conference and interviews. “When you’re bringing a player in the caliber of Blake Griffin, there’s going to be additional requests and attention, which is great,” he said. The Pistons flew the new players from L.A. to Detroit on Tuesday, and they have a concierge function that helps all new players with housing and other aspects of integrating into a new city. While the Pistons don’t disclose what they do to help players, across sports it’s common that teams have immediate housing available along with information about schools, dining, shopping, etc. The team’s multimedia unit sent a video team to see the new players arrive via private jet at Oakland County International Airport on Tuesday evening and created a short news media-style interview that was published across the Pistons’ online and digital platforms.

BANKRUPTCIES The following business filed for bankruptcy protection in U.S. Bankruptcy Court in Detroit Jan. 26-Feb. 1. Under Chapter 11, a company files for reorganization. J Captain Nemos Subs and Salads LLC, 28801 Telegraph Road, Flat Rock, voluntary Chapter 11. Assets: $21,825; Liabilities: $411,007.22.

The multimedia team also created video that will be used to integrate the new players into the game-day production, such as player introductions. On Wednesday, the players had physical exams and a photo shoot for their official team headshots and posed action shots. The Pistons’ social media team also was part of the trade mechanics, creating “welcome” graphics for use across platforms and posting videos, photos and news about the process. There also are physical changes stemming from the trade: 50 signs inside the arena, locker room, and at the practice facility — the team’s former home, The Palace of Auburn Hills — have to be replaced because of the trade, and another 300 to 400 digital images will be changed, Grigg said.

Sales boost Merchandise is a critical piece of the trade process involving a star player. Fans want Griffin’s No. 23 jersey, especially, so those are among the first retail items made available, both in the arena and online. Other items follow in coming days and weeks. “At the Cleveland game (Jan. 30), we had nearly a hundred jerseys in the store at Little Caesars and those sold out that night,” Grigg said. “We have a process in place where we’ll have jerseys at each game, and within the next two weeks we expect to have 1,500 jerseys completed. We prioritize everything to make sure we’re doing everything in the right sequence.” Merchandise sold inside Little Caesars Arena is handled by Buffalo-based retail concessionaire Delaware North Sportservice. Teams and concessionaires split sales revenue, but the ratio isn’t disclosed. Blake was acquired not just to make the team better — they’re 23-26 and on the edge of playoff eligibility — but to boost ticket and merchandise sales. While the team, in its first season at downtown’s Little Caesars Arena after 29 years at the Palace of Auburn Hills, doesn’t discuss its financials, Forbes. com has estimated that the Pistons ranked 17th in the 30-team NBA with $172 million in revenue for the 2016-17 season. In addition to using Griffin to push season tickets, he was immediately part of an in-game auction for “The Blake Show” that provided four center floor seats to see him play his old team when the Clippers visit Little Caesars Arena on Feb 9. He’ll be featured in more programming as the season wears on. Grigg said it’s too soon to say if the Pistons will get a bump in season ticket renewals and deeper interest from corporate sponsors because of the trade. Merchandise and ticket sales are expected to be the initial impact.

Risks While the trade gives the Pistons an established star to help win games and sell tickets, the deal isn’t without risks: Griffin is injury-prone and hasn’t played a full season since his rookie year, and he comes with a five-year, $173 million contract that he signed in June (but didn’t include a no-trade clause). It’s one of the largest contracts in NBA history, and Griffin’s injury history and performance level — advanced analytics assign him a 20.69 Player Efficiency Rating that ranks 34th in the NBA — have fueled criticism that the contract is a millstone. Griffin’s $29.7 million salary this season, for accounting purposes, is 21.8 percent of Detroit’s salary cap. Next is Andre Drummond’s $23.7 million, which is 17.5 percent of

the cap. If Griffin misses significant time with more injuries, or his performance declines, the Pistons could see their rebuilding process that’s already going on Tom Gores: Pistons move has nine years take even longer. risk. Pistons owner Tom Gores, who authorized the trade and the team taking on Griffin’s enormous contract, acknowledged the potential for the trade to backfire. “The move is not without risk. We gave up a lot to get him, including Tobias Harris — one of the hardest-working, highest-character players I know — and two high-quality young men in Avery Bradley and Boban Marjanovic,” Gores said in a statement. “But we are very excited to bring Blake Griffin to Detroit. He is a great fit for our team and will bring a combination of toughness and athleticism that will elevate our team and excite our fans.” He made an impressive Detroit debut on Thursday against the Memphis

MARKET PLACE

February 5, 2018 17

Grizzlies in front of an announced crowd of 17,481 fans at Little Caesars Arena, leading all scores with 24 points and grabbed 10 rebounds in the 104102 win.

Butts in seats Detroit at the time of the trade was officially averaging 17,419 fans per game at 20,491-seat Little Caesars Arena. That ranks 19th-best in the NBA. (The Clippers rank 20th.) Fans have posted images on social media of a half-filled Little Caesars Arena during Pistons games, fueling a narrative of a team unable to fill the $863 million arena it shares with the Detroit Red Wings. However, the Pistons appear to have little trouble selling premium seats. The courtside seats range in price from $13,464 to $71,808 for next season, and there are waiting lists for six of the eight of the courtside price categories. Two of the four clubs, which range in price from $9,020 to $13,640, are also sold out for next season. Having Griffin on the roster certainly won’t hurt efforts to peddle the best seats, and he may fill the cheap seats, too.

JOB FRONT

Bill Shea: 313 (446-1626) Twitter: @Bill_Shea19

REAL ESTATE AUCTIONS

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Griffin also makes sense for the game. The Clippers have been a postseason fixture since Griffin’s arrival in 2009, and the team opted only recently to trade him as part of a rebuilding effort. In 34 games with the Clippers this season, he averaged a career-low .441 field goal shooting percentage but a career-best .785 free-throw percentage. In his 34.5 minutes per game in L.A., he averaged 7.9 rebounds per game, 5.4 assists, and 22.6 points — the second-best scoring of his career since averaging 24.1 per game in 2013-14. He immediately becomes Detroit’s best scorer: No Piston has averaged 20 or more points a game since Rip Hamilton in 2005-06. Griffin started all 82 games his rookie year, and played in 80 games in both 2012-13 and 2013-14, but he missed significant time — 103 games — with injuries the rest of his career. This season, he’s missed games with a concussion and sprained knee ligaments. Detroit also got forward Brice Johnson, 23, and center Willie Reed, 27, in the Griffin deal.

NOTICE OF PUBLIC SALE Under §§440.9610-13 of the Michigan Commercial Code and other Michigan law as applicable, §§ 104.9610-13 of the Nevada Commercial Code and other Nevada law as applicable, §§ 9610-13 of the California Commercial Code and other California law as applicable, and pursuant to a Security Agreement dated November 9, 2010, executed by General Payment Systems, Inc., f/k/a Continental Prison Systems, Inc. d/b/a EZ Card and Kiosk ("Debtor" or "Pledgor"), which maintains an address of 15375 Barranca Parkway, Suite C-201, Irvine, California 92618, as pledgor, and Hugh Pobur, as agent for the secured party, whose address under this notice is 38505 Woodward Ave., Suite 100, Bloomfield Hills, Michigan 48304, Attn: Patrick Lannen, as may have been amended or modified, the property of the Pledgor described in below (the "Collateral") will be sold by public sale to the highest bidder, on Friday, February 16, 2018 at 10:00 a.m., at the offices of Plunkett Cooney, 38505 Woodward Ave., Suite 100, Bloomfield Hills, Michigan 48304, Attn: Patrick Lannen.

POSITIONS AVAILABLE

All bidders, other than Hugh Pobur as agent for secured party, as the first priority secured party, shall be required to remit immediately available funds in satisfaction of their bid; Hugh Pobur, as secured party, shall be permitted to credit bid, and reserves the right available under §§9620 and 9621 of the above referenced statutes.

ACQUISITIONS MANAGER

The Collateral may be sold in one unit or in parcels. Contact Mr. Lannen for additional information.

Grand/Sakwa Properties is seeking an Acquisitions Manager - Responsibilities will include sourcing and analyzing acquisition opportunities that meet the Company’s criteria and assisting in due diligence efforts to complete deals.

All of the Pledgor’s right, title and interest in and to any and all, now owned or hereafter acquired, account receivables, accounts, licenses, contract rights, revenues, deposit accounts, license receivables, patents, intellectual property, property, inventory, proceeds, and equipment, including but not limited to, kiosks, software and parts.

The candidate should have 2-5 years experience in acquisitions and/or brokerage of retail, office, multifamily or industrial properties as well as the ability to source and analyze acquisition opportunities and willingness to participate in all facets of the deal process. Please email Jill @ jdemetriou@grandsakwa.com

Collateral Description

COMMERCIAL PROPERTIES

VACANT LAND

û Ass’t Living Site Plan Apv’d, Hartland on M-59, 9-Acres, Have Mkt. Study, 120 bed, $1.3M û 38 Condo’s Macomb County, 10 Yrs. old, All Leased, $4.2M

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Call Us For Personalized Service: (313) 446-6086 FAX: (313) 446-0347 E-MAIL: cdbclassified@crain.com INTERNET: www.crainsdetroit.com/section/classifieds

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MAP

FROM PAGE 1

and development to The District Detroit, as reflected in this conceptual planning map from early 2017,” the company said. “We look forward to making announcements when development plans and tenants move beyond the conceptual phase. Our planning work continues, as does dialogue with potential tenants, developers and others about exciting potential opportunities in The District Detroit.”

Skyline changers Although the map is from mid-January 2017, it was circulated in real estate circles at least into the summer last year, suggesting that the plans are still relatively fresh. Crain’s first reported on one of the towers last week. Four sources, speaking under the condition of anonymity, said a high-rise residential building with more than 20 stories was planned to overlook Comerica Park east of Woodward. A specific location was not identified at that time. According to the map, the Adams Tower would be on an Ilitch-owned surface parking lot and effectively envelope the Grand Valley State University building — blocking its Comerica Park view — next to the Detroit Athletic Club. A source briefed on the plans said the new tower would have baseball stadium-style seating for residents on its rooftop. The Montcalm Tower would be at Woodward and Montcalm Street, next to St. John’s Church. The towers’ planned

DMC

FROM PAGE 1

Ronald Rovinsky, a former Chrysler Corp. network administrator who is disabled, said he was given four meals at DMC Harper University Hospital in a recent stay this month. He said all the meals were surprises except for the one dinner he received of beef and broccoli. He was told the dinner entree by dietary staff when he was served lunch. “No one offered me a menu. I saw one on my table when I was checking out. My dinner choice was printed in the menu. … There were no other options,” he said. “I was asked if I wanted coffee or a beverage, but nobody asked me anything about other choices.” Crain’s obtained a DMC patient menu and Rovinsky confirmed it did not present any other food options than the daily meal selections. For example, Monday breakfast is scrambled eggs and hash browns, oatmeal, an apple cinnamon muffin, orange juice and 2 percent milk. Lunch Monday is turkey pot pie, baby carrots, a wheat roll, apple cobbler and tea. Dinner Monday is southern meatloaf with brown gravy, mashed potatoes, Capri mixed veggies, wheat roll, fruit cup and 2 percent milk. Rovinsky, who said it appeared medical and support staff were stretched thin during his two-day stay, told Crain’s he wasn’t upset his meals were preselected. He said he has a big appetite and was especially hungry after his back surgery. But he said he did think it was odd he wasn’t given choices for his two breakfasts, one lunch and one dinner. He recalls more variety in choices during his two previous inpatient stays at other hospitals: Beaumont Hospital Royal Oak and the old Sinai Hospital in Detroit. “Breakfast was everything: pancakes,

C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 5 , 2 0 1 8 heights are not revealed. The map does not identify specific residential locations, although at least one of the two towers would be residential; the other could likely be residential or office, based on recent downtown development trends. Robert Gibbs, principal of Birmingham-based Gibbs Planning Group, said the towers shouldn’t be office space “because office goes dark and weakens at 5 p.m.” “It’s a good idea to propose more high-density residential, more towers; the skyline can handle it,” Gibbs said. Two key hurdles for the towers and other developments to clear would be securing financing, which is tricky in a greater downtown market often reliant on gap financing to make up the difference between construction loans and developer equity, and demand for space, whether it’s residential or office. Can the market support the influx of the thousands of new residential units planned downtown and in its surrounding neighborhoods over the next several years? Although large blocks of Class A office space are currently at a premium, are there enough new local and/or national tenants to support it? But if built, they would be part of a series of new buildings in the works that would dramatically redefine Detroit’s skyline. Among them: Dan Gilbert’s 800foot residential tower, the tallest building in the city and state, under construction on the site of the former J.L. Hudson’s department store on Woodward to the south of the Ilitch sausage links, a banana, and I don’t like bananas, oatmeal, hash browns. You eat what you want,” said Rovinsky. “Seems like they were trying to give you everything to cover their bases.” Stern and two physicians at the hospitals who requested anonymity said families and patients objected to fewer menu choices at DMC hospitals, especially Children’s. They believe it will lead to a noticeable decline in satisfaction as patients are discharged and fill out satisfaction surveys. “There is a big fuss at Children’s about the single menu. They say they are reversing it, but it hasn’t happened yet,” Stern said. “This is counter to good patient care. You have sick kids and it sometimes is hard to get them to eat to begin with. Parents have to go out to get food.” Stern said dietary workers, who are in the services union, have been blamed for the menu change by parents. Despite lack of choices, Rovinsky said dietary staff were friendly when they delivered his meals. Truscott said he is unaware if any parents or patients have complained about the change in menu. He said it was a DMC decision to improve efficiency of food service delivery. Another patient at DMC Harper, Donita Redmond, said she isn’t happy with the limited menu but later found out from dietary staff that she could make some substitutions to the daily preselected meals. “I wish there were more variety because I've been here for six days and I found myself eating some of the same things over and over for breakfast, lunch and dinner,” she said. “It would be nice if they switched up the choices every day or had more choices.” However, Truscott said Children’s Hospital will be changing back its menu in several weeks. He said he didn’t know what prompted the change, but that managers are talking

family’s development zone, and his Monroe Blocks development, which is expected to include a 35-story office tower and a 26-story residential tower, among other buildings up to 15 stories. And if Gilbert gets development rights to the half-built Wayne County Consolidated Jail site, high-rises are widely expected to come out of the ground at Gratiot Avenue and I-375 at the foot of downtown. Philadelphia developer David Grasso has been considering a tower of up to 35 stories at the southwest corner of Woodward and West Grand Boulevard, and the owners of the Crowne Plaza Downtown Detroit Riverfront hotel are planning a 28-story second tower that would rise about 338 feet, taller than the existing 25-story building.

Entertainment neighborhood On the map, what was earlier referred to as the “Super Block” of 300 or so apartments between Comerica and Woodward is referred to as the “Live! Block,” which includes the tech store, market and nearly a dozen other retail and commercial tenants. It does not specify whether the apartments are still part of Olympia’s vision for the area immediately west of Comerica. “The Live! Block is an excellent idea; it’s always been a missing tooth in this arena district,” Gibbs said. “It makes sense to put residential there on top of it.” Cordish, which is working with Olympia on the District Detroit project, creates entertainment neighbor-

“The Live! Block is an excellent idea; it’s always been a missing tooth in this arena district. It makes sense to put residential there on top of it.” Robert Gibbs, principal of Birminghambased Gibbs Planning Group

hoods at the core of its developments which are often branded as “Live!” districts with restaurants and sports-viewing options. It has worked in Kansas City, Mo.; Louisville; St. Louis; Charleston; Cleveland; and other cities. A pair of retail stores are planned to flank the eastern and western sides of Woodward Avenue as it passes over I-75, a costly move that would require widening the bridge overpass. The vision provides few specifics for what’s expected for the so-called Columbia Park area, which is the area behind the Fox Theatre running south to Bagley Street, west to Grand River Avenue and north to I-75. The map shows mostly surface parking lots between the I-75 service drive to the north, Clifford Street to the west, Park Avenue to the east and Adams Street to the south, except for a handful of existing buildings. None of the six planned historic rehabs and new multifamily construction projects costing at least $160 million with 686 units unveiled

A sample menu from DMC.

with parents about changing the single-entree menu to get the best menu options for children. “Children have different palates,” he said.

Competing hospitals expand choices Other local hospital chains have spent years expanding their menus. Beaumont Health and St. Joseph Mercy Health System offer patients a variety of choices in their menu and expanded choices in recent years, which is considered better for patient health, hospital officials said. Colette Stimmell, vice president of communications with Beaumont Health, said Beaumont has expanded its menu in recent years. “We offer a variety of menu options for patients at all of our hospitals and also provide room service at all our hospitals,” she said. St. Joseph Mercy Hospital in Ann Arbor also has expanded its menu, especially for patients with heart or kidney problems. Lisa McDowell, a registered dieti-

tian who is St. Joe’s director of prevention, nutrition and wellness, said St. Joe’s has moved to a “room service” concept that offers more choices and is seasonal. Children and pregnant women are especially sensitive to food choices, she said. “Patient menus are designed around concept of food as medicine and are focused on fresh and colorful ingredients,” McDowell said. “Patients can pick from the menu. If they don’t choose, they default to the healthier options.” McDowell said patient satisfaction has increased over the past decade as St. Joe’s has offered more food options. Moreover, giving patients menu choices gives them some sense of control and helps their recovery, she said. If DMC is limiting menu choices, McDowell said she would anticipate the hospital could face a “satisfaction issue, if choice is not there.”

Dietary workers protest DMC’s dietary and food service

last year are in Columbia Park. However, two years ago, Crain’s obtained a request for proposals that said the Blenheim Building at 2218 Park Ave. was to be turned into 15 apartments; the Detroit Life Building at Detroit Life Building at 2210 Park Ave. was to be turned into 25 apartments; and the Fine Arts Building facade at 44-48 W. Adams St. was to be redeveloped. An RFP for the facade project went out last year; responses were due Dec. 31. Some of the plans laid out in the map have previously been disclosed including the office, retail and hotel developments immediately surrounding Little Caesars Arena, which opened last year and cost $863.5 million to build. The District Detroit project was first unveiled in the summer 2014 and included a vision for 45-50 blocks of land of downtown, much of which is owned by the Ilitches, who made their fortune through the Little Caesars pizza chain. When it was announced nearly four years ago, the investment estimate was $650 million, including $450 million in public-private spending on the arena, which opened last year for the Ilitch-owned Detroit Red Wings and Detroit Pistons, owned by billionaire Tom Gores. Eighteen months later, the investment estimate was revised upward to $1.2 billion, of which 75 percent was said to be private spending, Olympia executives said at the time. The current total investment estimate is not known. Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB workers have objected to management’s decision to downsize the menu. Dietary employees also have protested layoffs and management changes in their department, which is believed to be part of a systemwide downsizing of up to 300 employees over the next several weeks. On Jan. 17, a large number of dietary workers called in sick for work to protest layoffs and patient menu changes. Some also participated in a small union rally the next day near Orchestra Place off Woodward Avenue near DMC. Stern was suspended from her job by the DMC on Jan. 18 and fired Jan. 29. She is appealing the firing through a union grievance process. Truscott confirmed to Crain’s on Thursday that Stern was fired. “We can’t get into details about HR matters such as this, but as a rule, the Detroit Medical Center does not tolerate behavior from any employee that jeopardizes patient care and activity that is not protected under the law,” he said. DMC CEO Anthony Tedeschi on Jan. 22 announced a management reorganization and employee downsizing of an unspecified number of workers. He said the reorganization is designed to improve patient care. In a memo to employees, Tedeschi said a hospital reorganization is underway that has already cut 14 management positions and will reduce further the number of DMC managers and employees. But Crain’s has learned from several sources who requested anonymity that some of the 300 layoffs will include dietary and food service workers, clerks in nursing units, support staff and a number of middle managers in various clinical departments. Jay Greene: (313) 446-0325 Twitter: @jaybgreene

C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 5 , 2 0 1 8

TICKETS FROM PAGE 3

“We are moving forward with our ticket renewals for football in the coming weeks,” said Kurt Svoboda, UM’s associate athletic director, via email. “It is simply too early to know what the impacts will be. I think we’d be in a better position to comment as we approach the fiscal year-end and the budget meeting with our regents in the spring.” The university knows it has fans such as 1981 Michigan grad Sheldon Rich, who has had a pair of season tickets in the end zone since 1982. Rich has an independent health care consulting practice in south Florida and flies in for UM football games every fall. He’s used the Preferred Seat Donation write-off for years, but losing the tax break won’t stop him from renewing. “It’s not going to impact my desire to renew my tickets,” said Rich, who’s also a clinical faculty member at Michigan.

The loyalty factor Rich’s devotion to Michigan is a common one and reflected in Wolverine football’s average attendance: It was 111,589 last season at Michigan Stadium, which was best in the nation. The football program hasn’t seen a crowd under 100,000 since 1975. The athletic department said there were 72,000 non-student season tickets sold last season, and all such tickets fell under the Preferred Seat Donation program. Student tickets, single-game tickets and mini-plans of less than a full season’s worth of tickets are not part of

Wolverine football’s average attendance was 111,589 last season at Michigan Stadium.

the donation program. Michigan football seats range in price from $78 for end zone seats to $90,000 for suites. Most seats cost between a few hundred dollars to $4,000. Access to seating is based on UM’s cumulative “Priority Point Program.” Donors earn one point for every $100 in giving to the athletic department or marching band, and another point for every $1,000 donated. Points also are accumulated for every year a season ticket is bought, for alumni status and for being a UM letterwinner. In 2017, there were 1,024 new donors seeking football season tickets, and it required 22 points to get them, UM data shows. Of those 1,024 donations, 39 percent were awarded tickets. For 2015 and 2016, donors needed only 1.5 points to get tickets and every donor got season tickets. The number of points needed to secure season tickets varies based on demand.

Michigan also uses the seating donation program for men’s basketball and ice hockey, but football accounts for the majority of the system’s revenue. UM’s athletic department budget, approved by the board of regents in June, estimated $30.1 million in preferred seating donation revenue for the 2017 and 2018 budget years. That was before the GOP-led tax bill was created in Congress. The $30.1 million in estimated seat donation revenue accounts for 16.5 percent of the athletic department’s $182.4 million in predicted revenue for fiscal 2018. The current athletics budget was a school record for both revenue and expenses, estimated at $180.4 million to run the department in 2017-18. That left a $2 million surplus, so any sizable decline in season ticket donations from the tax law change means UM’s

margin shrinks. The department hasn’t run a deficit since 2001. Michigan and other universities urged their season ticket base to make their charitable donation in return for tickets before Jan. 1, when the change in the tax rules went into effect. “I can’t say that there was a rush prior to Dec. 31. It’s also an imperfect measure since they are just deposits,” Svoboda said. “We can’t provide ongoing figures until much later in the process and will be happy to do so when we are able.” Florida State and Oklahoma are among the schools that asked fans to buy three years’ worth of season tickets in return for donations made before the end of 2017, ESPN reported. Michigan didn’t appear to make such a request in the information it put online for 2018 football ticket donations. A note on UM’s athletic department website from Athletic Director Warde Manuel explained the change in the tax code. While the tax write-off is gone, UM’s donation program continues for the 2018-19 season, the school said. “Preferred Seat Donations provide the necessary resources to address academic, career development, and athletic needs of more than 900 student-athletes across all 29 varsity teams,” Manuel wrote on the athletic department website. “This program is pivotal in allowing Michigan athletics to remain one of the few self-sustaining athletic departments in the country.” Michigan created its Preferred Seat Donation program beginning with the 2005 season, and phased it in over two years under then-Athletic Director Bill Martin.

Impact on Spartans Michigan State University has its Spartan Fund program with a donation range of $50 to $50,000-plus. The 201718 Spartans athletics budget showed $14.2 million in Spartan Fund seating donation revenue in an overall budget of $127.6 million. Paul Schager, Michigan State’s executive associate athletic director for external operations, said MSU’s strong fan and alumni base should mean a minimal impact from the tax change. The school sent a letter in mid-December to donors warning of the tax changes and got about $1 million in renewals via the Spartan Fund before Jan. 1. “We don’t anticipate significant attrition. After getting reaction and conversations, it’s logical to assume there could be a decline, but the tax break is only one factor in why people support MSU athletics,” he said. “We don’t anticipate it’s going to be overly significant.” Aside from the loss of the write-off, MSU also faces the possibility of donors withholding support because of the ongoing crisis over the university’s handling of the Larry Nassar sexual molestation case that’s made global headlines in recent months, and subsequent reporting by ESPN that suggests the university mishandled abuse allegations in the football and basketball programs. “You really don’t know if there will be any impact,” Schager said. “We don’t see a lot of people abandoning their support. We’re fortunate to have a loyal following.” Bill Shea: 313 (446-1626) Twitter: @Bill_Shea19

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C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 5 , 2 0 1 8

Study: Detroiters spend $2.6 billion annually in suburbs By Chad Livengood clivengood@crain.com

A new study seeking to assess the viability of revitalizing Detroit’s long-deserted commercial corridors found Detroiters spend $2.6 billion in retail stores in the suburbs each year. It’s a data point the Detroit Economic Growth Corp. is now using to develop targeted strategies to convince property owners, developers and retailers to invest in a dozen clustered corridors where the study found demand is most pent-up for grocers, restaurants, service business and merchandise. “Detroiters, by and large, are going out of the city to buy goods and services because those goods and services aren’t here,” said Mike Rafferty, vice president of small business services for DEGC. “It’s a lot of money.”

MARKET FROM PAGE 3

The focus of the planning is a 1.1-square mile area bounded by Gratiot on the southeast, Joseph Campau on the northeast, Warren Avenue on the northwest, and I-75 Chrysler Freeway on the southwest, according to the RFP. The Greater Eastern Market Framework will seek to leverage the unique assets that have made the market a regional hub for food production and distribution while also increasing neighborhood amenities and expanding their opportunities for nearby employment. It will encompass land use, urban design, movement of goods and people, transporDan Carmody: tation and parking Non-food retail for the working has grown. food district which has also become a magnet for foot traffic with the retail market, restaurants and residential, Carmody said. Development of a centralized stormwater management plan for the district which could serve as a model for other parts of the city is also part of the $800,000 planning process, supported by a $200,000 grant from the Ralph C. Wilson Jr. Foundation to the Nature Conservancy. The plan will include a large community engagement process, building on the 2015 community engagement Eastern Market did, Carmody said. By safeguarding the market’s core food production and distribution role as new retail and residential development comes in, the city is trying “not to make mistakes other cities have made,” Moddie Turay, executive vice president of real estate and finance for the DEGC, told Crain’s last year. With a list of 30 companies that have expressed the need for more space, Eastern Market Corp. has developed a plan of its own to expand its footprint to five times its size or about 250 acres by 2025 to give food distributors and processors space for more modern facilities as new federal food handling requirements are phased in. But its plan must mesh with the larger plan that’s in development for the district, given that the city owns a significant amount of the property in the area through the Detroit Land Bank. The four food companies can’t wait

Need to know

New study found Detroiters spend $2.6 billion annually in the suburbs on goods and services. J

J Most demand is for neighborhood grocery stores, restaurants, service industry storefronts. J Detroit Economic Growth Corp. to use the data to pitch commercial corridors to developers, retailers.

A similar study was conducted in 2010 that later was part of the sales pitch to get Whole Foods to build a store in Midtown and Meijer Inc. to build two stores in the city — one on the Detroit side of the Eight Mile Road border with Macomb County and a second store on Grand River in the far northwest corner of the city. until the master planning process is completed later this year, Carmody said. So Eastern Market Development Corp. is working with the city, Detroit Land Bank, DEGC and to piece together properties to create the larger plots the four food companies need to expand their operations this year. It’s already closed on one deal and has a sale agreement on a second, Carmody said, declining to identify the properties or the companies in urgent need of more space. Donald Lindown, senior managing director at Azimuth Capital Management LLC in Bloomfield Hills and a former chair of Eastern Market Corp., is chairing EMDC. A $750,000 program-related investment from the Kresge Foundation — a loan EMDC will pay back as it sells properties for projects — is providing initial operating capital for the development corporation, and EMDC is seeking additional funding from other Eastern Market supporters, as well, Carmody said. The city is keen to keep the 1,500 food processing and distribution jobs currently in Eastern Market, he said, and add to that number, if possible. Wolverine Packing Co. closed recently on the purchase of another 8 acres of city-owned land just north of the PepsiCo bottling plant. It plans to launch a $30 million expansion in the spring, its fifth plant in Eastern Market, once it’s secured approval for a 12-year tax abatement and brownfield incentives from the state. It’s unique to have a single owner for a property large enough for a development in the area, Carmody said, which is where EMDC comes in. Carmody expects it to be a long-term process to assemble the land needed for the food companies looking to expand because of how many properties with different public and private owners in the area. Eastern Market is also trying to find a larger site within the greater market area to serve as a new wholesale distribution center, Carmody said. Currently, the wholesale business operate out of same sheds retail does without dedicated cooling areas. There’s not a site large enough for the 400,000-600,000 square-foot wholesale distribution facility the market’s operator plans to construct within Eastern Market’s current footprint, Carmody said. “We hope it comes out of the planning process, but it’s on our radar, and we’re always looking for opportunities,” he said. There’s no shortage of competition

The new study, conducted by the placemaking consulting firm Streetsense, offers evidence that there’s business opportunities for retailers big and small in Detroit’s underserved commercial corridors, Rafferty said. “You assume that if the average median household income is $24,000, no one’s going to want to buy groceries here, no one’s going to buy toilet paper or toothpaste,” Rafferty said. “(But) those who don't have high incomes, they still buy stuff. The assumption is absolutely wrong.” Streetsense, based in Bethesda, Md., partnered with the Detroit-based construction design firm Virtuoso Design + Build on the retail study, which was commissioned by the DEGC. DEGC intends to use the data from the study to judge the need for Motor for property in the market district. A strong non-food retail base has grown in Eastern Market over the last 10-12 years, Carmody said, and there are over 1,000 housing units now being proposed. “One of our concerns with development pressure is … it will displace food uses. “There’s probably six non-food commercial projects that are looking at a mix of commercial uses and residential. Many of these projects have been talked about, some haven’t,” Carmody said. Among them: J At Gratiot Avenue and Russell Street, Sonya Mays’ Develop Detroit plans a $106 million, two-phase project called the Eastern Market Gateway that would add 440 apartments to the market, plus 25,000 square feet of retail space. J To the north at 2801 Russell St., Joey Jonna’s Birmingham-based Jonna Luxury Homes is planning the Russell Flats project, which would bring 82 condominiums plus first floor retail space to the area. J Detroit-based Ventra Group LLC, run by the former head of the DEGC, George Jackson, is working on a $19 million plan to convert a former Detroit Water and Sewerage Department building at 3500 Riopelle St. into a brewery, food processing and production facility, retail space, as well as a food storage and preservation facility and restaurants J And Detroit-based The Platform LLC, headed up by Peter Cummings and Dietrich Knoer, have plans to redevelop the 4.3-acre former Joe Muer’s Seafood site just outside of Eastern Market into multifamily and retail/ commercial uses. The Platform would co-own the site along with current owner DVP LLC. The project is bounded by Gratiot, St. Aubin, East Vernor Highway and the Dequindre Cut. “That development pressure is a natural extension of what’s happening in Midtown and downtown. That’s what makes additional sites for food companies so important,” Carmody said. The economic development corporation will also encourage affordable housing and a wide mix of commercial tenants so the market continues to serve a wide variety of people, he said. “We’re ... concerned if we don’t help with the tenant mix of the district, we’ll just have tenants who serve affluent populations and not people living around the district.” Sherri Welch: 313 (446-1694) Twitter: @SherriWelch —Kirk Pinho contributed to this report.

City Match grant applications for small business development and steer entrepreneurs and retailers to neighborhoods where the nearby availability of certain services and stores are lacking. Based on consumer spending data, the study details the amount of square footage of retail shopping that could be supported in the 12 neighborhoods. The largest corridor, for example, is in northwest Detroit along 21 double-sided blocks of Grand River Avenue. The study says the spending power of nearby middle-class residents could support 1.3 million square feet in retail and service-industry storefronts. Researchers found about 81 percent of the consumer demand in that section of Grand River is for neighborhood goods and services or “convenience-based retail” — bakeries, deli-

catessens, grocery stores, drugstores, dry cleaners, hair and nail salons. “The consultants actually walked every corridor and took note of which buildings were vacant, which buildings were occupied, what type of retail were they occupied (with) and the approximate square footage of that,” said Lily Hamburger, senior small business strategy manager for the DEGC. DEGC will fashion the data in pitches to developers, chain retailers and entrepreneurs that have been skittish of investing in Detroit, Rafferty said. “We know what the demand is,” Hamburger said. “We have the tools to be able to go out and say to property owners, ‘There’s an opportunity here.” Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

TIPPMAN INNOVATION

Wolverine Packing Co. is planning a $30 million plant to expand its Eastern Market operations.

Wolverine Packing seeks tax incentives to build plant By Sherri Welch

swelch@crain.com

Wolverine Packing Co. is seeking tax incentives to build a $30 million meat processing and cold storage plant in Detroit’s Eastern Market. The 178,000-square-foot plant is planned for roughly 8 acres just north of the Pepsi Bottling Plant, east of I-75, at 4225 Dequindre St. Wolverine closed on the purchase of the property, previously a part of greenfield land known as Forest Park, from the city a few weeks ago for $1.15 million, said Wolverine Vice President Jay Bonahoom, whose family owns the business. As part of the deal, Wolverine donated $300,000 to the city to fix up the remaining four to five acres of the park, he said. The new plant is expected to create 50-100 jobs. A request to designate the property as an Industrial Development District is set to go before the Detroit City Council this month, the DEGC said. The designation would give Wolverine a 12-year tax abatement. The Michigan Strategic Fund is also expected to consider brownfield incentives for the project this month or next, Bonahoom said. Fort Wayne, Ind.-based Tippman Innovation is serving as project architect. “We have four processing plants in Eastern Market, and they’re all operating pretty close to capacity,” filling contracts for domestic, Middle Eastern and other international customers, Bonahoom said. “In order to keep up with that, we

Need to know

J After closing on Eastern Market property, Wolverine Packing making plans for $30 million plant J City, state set to consider incentives for project which is expected to create 50-100 jobs J New plant, Wolverine’s fifth in the market, needed to meet business demand

need more capacity as well as (freezer) storage space.” Wolverine plans to break ground as soon as it has the incentive approvals and the ground thaws, he said. Launched in Detroit in 1930 as a small lamb and veal packer, Wolverine today produces a range of portioned and processed meats including ground beef and steaks, pork, poultry and seafood. “When we initially approached the city, we also were looking at the suburbs as well as out-of-state (locations),” Bonahoom said. “But we wanted to stay in the city because all of our people are here, and we just like Detroit.” A core group of its 500 employees have expertise in food safety, mechanical repairs and equipment maintenance. By staying in Detroit, the company, which has annual revenue of about $1.3 billion, can tap their expertise as it brings the new plant online, he said. Sherri Welch: 313 (446-1694) Twitter: @SherriWelch

C R A I N ’ S D E T R O I T B U S I N E S S // F E B R U A R Y 5 , 2 0 1 8

ELECTRIC FROM PAGE 1

For example, GM plans to sell 1 million PEVs globally on an annual basis by 2026, up from 43,000 in 2017, driven by ongoing cost reductions and the debut of at least 20 new all-electric vehicles starting in 2021. Britta Gross, director of GM’s advanced vehicle commercialization policy, said for more than 20 years GM has understood the critical value of working with utilities to increase public understanding of PEVs and to expand investment in charging stations. GM has discussed PEV policy with more than 50 utilities over the years, including DTE and Consumers. “When we were designing the Volt in the 1990s we learned utility involvement is important,” Gross said. “We have not always had the same vision and goals. We had to align our policy priorities .... and our communication talking points.” Gross said GM, DTE and Consumers have reached an understanding and are working together closely to help the public understand the value of PEVs. “We need more investment in the EV infrastructure and would love to see more involvement (by utilities) in home charging,” she said. GM has more than 700 workplace chargers, mostly in Michigan, and has received grant funds from the U.S. Department of Energy to research fastcharging systems. Last fall, the MPSC opened a case and is hearing testimony from PEV stakeholders on how best to prepare the state for the electric car revolution that some hope will ease reliance on fossil fuels and reduce pollution. On Feb. 20, the MPSC plans to hold its second technical conference on PEVs among utilities, automakers and suppliers, environmental groups, renewable energy producers and other business interests. Sometime this year the MPSC plans to develop a regulatory policy for PEV development and prepare for the future of electric vehicles.

Utility interest As a former GM executive, CEO Patti Poppe of Consumers has a special interest in seeing PEVs and autonomous vehicles expand in Michigan and nationwide. Poppe recently sat down with Crain’s to discuss her vision. “We are excited for electrification and automation of vehicles and the role it plays in mobility,” Poppe said. “Customer research shows people would rather have screen time than windshield time, and the consumer behavior coupled with technology advancement will create the adoption of autonomous vehicles at an extremely fast pace.” Poppe said electric vehicles will transform the utility industry and Michigan should be a national leader. “Many studies have shown that customers will charge their electric vehicles at night when they have a lower price to incentivize them,” she said. “The existing infrastructure can be utilized to serve this new electric demand.” Besides lower rates, customers can choose to be interrupted during charging and receive bill credits when energy use is expected to be extremely high. Many homes and businesses already participate in utility “demand response” type programs that limit their electric use on high-demand days. Last summer, Poppe, who also is cochair of the Edison Electric Institute Electric Vehicle Working Group that is

RON FOURNIER/CRAIN’S DETROIT BUSINESS

CEO Patti Poppe of Consumers Energy talks about how charging electric vehicles at night can ease peak capacity challenges and lower rates for all customers.

developing an electric utility strategy for enabling electric vehicles, began talking with GM executives at a very high level. “GM believes in plug-in vehicles and we are working with them” to increase sales of PEV and the number of charging stations in Michigan, said Poppe, adding that Consumers will benefit from additional sales of electricity at non-peak hours. “There are only five days of the year that require us to be at peak capacity,” she said. “Our base is way lower. (An increase in) electric vehicles will push up the use closer to the peak.” Poppe said all of Consumers electric customers will benefit by greater sales at night. “It will lower kilowatt-hour” prices during the day “and electric vehicles will push up the base. That is good for lower rates,” she said. Expanding PEVs in Michigan will help Consumers sell more electricity at non-peak hours, primarily at night when rates are lower, ease the need to build power plants to ensure sufficient electricity capacity and work to lower peak hour rates during the day for all customers, Poppe said. For the automakers, they can benefit because the utilities have customer addresses for practically every person and business in the U.S. “They sell electricity to everybody and are able to talk with every single consumer. We don’t have that access,” GM’s Gross said. Gross said the utilities understand how important it is for them to become involved in the development of PEVs. “What they do well is install electric equipment, maintain it and they understand what it means to the economy and the environment,” she said. “It is not just about selling more electricity. It is also efficiencies.

Working with automakers At Consumers, Mike Delany is managing the PEV project and working directly with GM executives. He said the primary problem the utility and GM are trying to solve is how to accelerate adoption of electric vehicles and the charging infrastructure in Michigan.

“If we do it in a way that is smart, there will be benefits to the system as a whole,” Delany said. “We are spending a lot of time with them, thinking things through. What can we do as a utility to provide a better customer experience” for those people who purchase PEVs. Poppe said GM and Consumers are developing a “customer journey map” that will clearly lay out both the thought processes someone goes through when deciding to purchase a PEV, but also want that customer needs to do at home to prepare to bring home an electric car. “Buying an electric car is much more complex than buying a gas model where you just drive it home and have gas stations along the way” to fill up, Delany said. Consumers and GM are working on a plan to make it easier for people to purchase and install home charging units, Delany said. Consumers hopes to finish its plan with GM and submit it to the MPSC this spring, he said. “Eighty to 90 percent of charging is done at home. We haven’t nailed down what the solution is,” Delany said. “We are identifying issues customers want when they buy a car and want to plug in at home. We want to make the process easier for customers.” Currently, Consumers has an atnight charge rate for home charging users, said Delany, but the PSC will be considering special rates at night and for charging stations during non-peak hours. One of the main collaborations Consumers and GM are engaged in has to do with the utilities helping automakers sell their electric cars by coordinating educational efforts on the value of PEVs to the public. “We found through working with GM that our customers want to hear from us when it comes to electric vehicles, so they get some comfort around buying one and knowing they can drive to work and have places to charge,” Delany said. Consumers also is working with GM to solve what is called electric auto buyers’ “range anxiety,” which is worry about running out of electricity in get-

ting from point A to point B, Delany said. "We want to make sure we have the foundational infrastructure in the state to physically get electric vehicle owners where they want to go," Delany said. "If you go from Jackson to Traverse City, there is enough charging infrastructure on the way and back." The MPSC will be considering this year how to pay to expand the number of PEV charging stations, said Norm Saari, one of the three PSC commissioners and a former Consumers executive. Saari said PEVs became an issue in Michigan eight years ago. But it wasn’t until 2016 when Consumers requested approval to spend $10 million to fund charging stations and a rebate to customers who purchased charging units at their home or business. PSC requested Consumers withdraw the request to give it time to study the issue. Saari said private companies have installed charging stations, including ChargePoint, which charges 15 cents per kWh to use. He said rates could be lower, under 10 cents, as charging stations expand along Interstates 94, 75, 96 and in towns and cities. “We expect the number of electric vehicles to grow considerably over the next decade. How will utilities accommodate that grow? We need to know,” Saari said. “There will be impact on rates across the board. We are concerned about increased demand for electricity during the day and the impact on the grid.” Consumers also is working on a 2018 action plan that will outline what the utility can do on its own and what requires MPSC approval, Delany said. “There are things we can do today without approval from commission,” he said. “New initiatives we can do on a small scale ... small investments as a company, develop charging station distribution system, making improvements to the PEV website.”

DTE ramps up Camilo Serna, DTE’s vice president of corporate strategy, said DTE understands that PEVs can provide many benefits to electric customers. He said DTE is working with Ford and GM, but also with municipalities, environmental groups and battery makers to promote PEVs. “Ford is developing technology to use electric vehicle load to meet demand response” that can create more electric capacity at peak times, Serna said. “They are putting in a significant number of chargers in Dearborn and other areas.” A Ford spokesman declined an interview request for the story. “We don’t disclose details of discussions with partners,” said Alan Hall, Ford’s communication manager of autonomous and electric vehicles, in an email to Crain’s. But from a utility perspective, Serna said the benefits to DTE from PEVs are multiple. “(Car) owners can save on fuel and maintenance. Utilities want to charge owners when they are parked at home and night time, when rates are lower after 11 p.m.,” he said. Rates are lowered during the day because additional electricity purchases help to spread fixed costs across many more units, Serna said. “Utilities have capacity to take on that load and it benefits those customers with lower rates,” he said. “People react to that rate and charge at that time. The effect is lower rates for all.” Jay Greene: (313) 446-0325 Twitter: @jaybgreene

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THE WEEK ON THE WEB

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Greektown signs on for Project Green Light

Rescue Mission revives Super Bowl party

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group of businesses in downtown Detroit’s Greektown is the first to join Project Green Light as a collective, the city of Detroit announced last week. Eleven businesses in the entertainment district signed a three-year deal for the public safety program. They agreed to each pay about $250 per month for up to three cameras, internet service from Detroit-based Cronus Communications LLC and cloud storage of up to 30 days as part of the initiative, the city said in a news release. Almost 250 businesses are participating in Project Green Light. Mayor Mike Duggan said the corridor program grew out of increased interest from businesses. “Today, you can drive along Grand River or Livernois and other major roads and see rows of flashing green lights on individual businesses,” Duggan said in a statement. “So, we decided to see if there was enough interest for entire business corridors to join all at once, and the response has been great.” As part of the agreement, the businesses will be required to install cameras only on the outside of the building. Additionally, 15 cameras will keep tabs on the corridor, and seven illuminated signs will hang on light poles. Camera placement was determined by the Detroit Police Department. The monthly payments will cover installation and maintenance costs of the cameras and signs for the businesses and corridor, the news release said. The Green Light Corridor program requires at least five businesses near each other to sign up as partners. Installation costs are covered by the monthly payments, as opposed to paying up front for individual businesses. Video will be fed to the Detroit Police Department Real Time Crime Center and officers will visit the area routinely, the release said. “Project Green Light gives our business owners in the city of Detroit a platform to be involved in creating a safer environment for not only their patrons, but for all who live, work and play in this city,” Police Chief James Craig said in the release. “The Green Light Corridor partnership is another great example of how we can work together to help create a safe community for everyone.” Earlier this month, Duggan said he would like to eventually mandate every retailer in Detroit with latenight hours to join Project Green Light. Such a mandate could affect as many as 4,000 businesses but would require City Council action.

BUSINESS NEWS J Southfield-based Bernard Financial Group, which originates and services debt for commercial real estate, opened a small office in downtown Detroit. J TechTown is growing its eightweek Retail Boot Camp from once to twice yearly due to popular demand. J AT&T subsidiary Michigan Bell

etroit Rescue Mission Ministries was set to revive its Super Bowl party for the homeless last weekend to give those on the streets a warm place to watch the game, something to eat, coats and hygiene kits and a helping hand. The event presents an opportunity to engage the homeless to get them connected with the assistance they need to get off the streets for good.

After its maiden party for the big game in 2006, DRMM hosted it for a couple more years but discontinued it when the winters were milder and corporate support thin. The colder weather this winter and support from organizations including the city of Detroit, Quicken Loans, Comcast and White Castle spurred the Super Bowl party’s return.

GRANDMONT ROSEDALE DEVELOPMENT CORP.

A new food, art, music and retail hub is set to open Feb. 10 in northwest Detroit. The nonprofit Grandmont Rosedale Development Corp. is heading the Grand River Annex in a 1,400-square-foot building it owns at 19556 Grand River Ave. The Annex is funded for a year through a Kresge Foundation community revitalization grant of a little more than $100,000.

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

100,000

The number of people who attended Meridian Winter Blast in downtown Detroit — up from 90,000 last year.

$1,000

The amount in ride credits Lyft Inc. plans to give to one nonprofit each month in both metro Detroit and Ann Arbor

$25 million

The cost of the health and wellness center Wayne County Community College District is building at its downtown Detroit campus.

Telephone Co. is planning to lay off 114 employees at its Detroit Credit & Collections Call Center at 105 E. Bethune St. in the New Center area effective March 28. J Detroit City FC has added a new partner, Mike Lasinski, to its ownership group as co-founder Ben Steffans leaves the semi-professional soccer team. J Virginia, Ill.-based Michigan Cable Partners Inc. sold its MIcom cable system in Highland Park to Philadelphia-based Comcast Corp. Comcast will begin carrying its cable television service, along with its internet and phone services that make up Xfinity, on the network to residents and businesses starting March 1. J The Motor City Match program approved $600,000 in cash grants in its 10th round for Detroit businesses including Detroit city Fieldhouse, Ferne Boutique, Drizzle Dreams, Alma Kitchen, Shears and Shaving LLC, Banner Sign Co. and Pembury Holdings. Detroit River Sports won the biggest grant, $65,000, to help

the kayak tour company establish a permanent location in Jefferson Chalmers. J Cream Blends, headed up by Yolanda and Rick Williams, will open its flagship store in downtown Royal Oak on Feb. 10 to sell its body butters, oils and soaps, and host workshops. J Cleary University President and CEO Jayson Boyers’ contract has been extended for five years and now expires in 2022. J Olivet College expects to host hundreds of women for its second annual Cultivating Women Leaders: Pioneering the Future seminar on March 2. J A dozen women social entrepreneurs will compete for cash prizes and support services worth up to $50,000 in the inaugural Ford EmpowerHER pitch competition on Feb. 7. J Detroit City Distillery plans to start marketing for distribution in Chicago this year and has opened an event venue at its production facility in the former Stroh’s Ice Cream factory building on Gratiot Avenue.

OTHER NEWS J Parimal Mehta, the founder and owner of Detroit-based FutureNet Group Inc., is facing an 11-count indictment connected to a multiyear scheme to bribe a former Detroit city official. J The nonprofit Detroit Metro Convention & Visitors Bureau revealed its new advertising campaign, “Detroit: It’s Go Time,” a transition from the previous moniker of “America's Great Comeback City.” The Michigan Department of Transportation is scheduled to start phase two of a $60 million reconstruction project on Hall Road (M-59) early this week with underground utility and electrical work for temporary traffic lights. J Detroit’s summer jobs program, Grow Detroit’s Young Talent, is trying out a year-round, career-focused educational program in schools to supplement its current initiative.

Gov. Rick Snyder is launching a public campaign designed to burnish his legacy of turning around Michigan’s broken budget and making the state more business-friendly in a new television ad.

Snyder’s bowl ad pushes business-friendly Michigan G

ov. Rick Snyder is launching a public campaign designed to burnish his legacy of turning around Michigan’s broken budget and making the state more business-friendly in a new television ad that was set to air Sunday before the Super Bowl. Snyder’s nonprofit advocacy group, Making Government Accountable, was to air a 60-second ad before kickoff Sunday that touts 500,000 new jobs created in Michigan since Snyder took office in 2011 and a “remarkable” turnaround in post-bankruptcy Detroit. “Now it’s time to accelerate and protect Michigan’s comeback, keep a great thing going and never be 50th out of 50 again,” a male narrator says in the ad. The ad is Snyder’s third Super Bowl ad since 2010, when the little-known millionaire businessman from Ann Arbor bought expensive air time during the most-watched televised event to declare “it’s time for a nerd” to run the state after years of governance by career politicians. “Michigan’s comeback has been remarkable,” Snyder said in a statement. “We now kick off the final year of my administration the same way we began this journey to reinvent Michigan, with Super Bowl Sunday, and highlighting Michigan’s talent and grit to succeed.” Snyder is preparing to present his final budget plan to lawmakers next week and in the midst of a struggle

Gov. Rick Snyder is preparing to present his final budget plan to lawmakers next week. with fellow Republicans over their desire to cut taxes and his desire to invest increased tax revenues in roads, schools and talent development. The Super Bowl ad makes no mention of those political dynamics playing out at the Capitol. Making Government Accountable’s uses the same male narrator as the 2010 ad and similar ads Snyder’s re-election campaign produced in 2013 and for the 2014 Super Bowl. The new Super Bowl ad also contains some of the same images of closed manufacturing plants and empty office buildings as the previous ads. A spokeswoman for Making Government Accountable said the group would not divulge how much it spent on the ad. As of Friday, just one ad buy had been disclosed with the Federal Communications Commission by NBC affiliates in Michigan. Snyder’s group bought time before kickoff on WDIV in Detroit for an undisclosed amount. It also booked a single spot before kickoff on WOODTV in Grand Rapids for $12,000, according to an FCC filing.

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MOCAD mourns the loss of our Co-founder and Visionary Julie Reyes Taubman. We are forever grateful for her leadership, kindness, passion and friendship.

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