Crain's Detroit Business, March 5, 2018 issue by Crain's Detroit Business

City socks away cash against ‘pension cliff’ Page 3

Commentary: Selling suburbs on mass transit is tough Page 8

Detroit welcome center at risk of closing Page 6

MARCH 5 - 11, 2018 | crainsdetroit.com TRANSPORTATION

ALL ABOARD THE FUTURE. MAYBE. High-speed rail system Hyperloop studies Detroit-Toledo route

By Kirk Pinho kpinho@crain.com

The Michigan Department of Transportation has been asked to fund a feasibility study for a new highspeed train system that would link Detroit to Toledo and then the western border of Indiana near Chicago. The request is revealed in emails

obtained through a Freedom of Information Act request by Crain’s that show MDOT officials corresponding with Hyperloop Transportation Technologies, a California-based organization looking to create an interconnected transit system across the country that would travel at speeds up to 760 mph.

At least one call between MDOT and Hyperloop has taken place in just the last couple weeks. But how realistic is such a Jetsonian concept? At least in the nearterm, not very, in spite of some baby steps forward in recent months. HTT estimates that one mile of the supersonic system would cost

$20 million to $45 million, putting it in the $6 billion to $13.5 billion price range for just a direct route from downtown Detroit to downtown Chicago. Calculating a Detroit-Toledo-western Indiana-Chicago route is more complex, depending on precise locations and routing. SEE HYPERLOOP, PAGE 18

SEE NONPROFITS, PAGE 20

United Shore’s Mat Ishbia wants some of the attention showered on Gilbert, too By Bill Shea bshea@crain.com

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SEE ISHBIA, PAGE 21

PROFILE

crainsdetroit.com

By Sherri Welch

holesale mortgage mogul Mat Ishbia wants some of the local public attention monopolized by Dan Gilbert and his Detroit business empire anchored by Quicken Loans Inc. Ishbia in recent years has grown the wholesale business at Troy-based United Shore Financial Services LLC into a behemoth, the biggest in that industry. But siphoning attention from Quicken and Gilbert may be a tougher job. Quicken is the No. 2 U.S. retail mortgage lender — and led the nation in last year’s fourth quarter — and the company’s success has allowed Gilbert to create an enormous downtown real estate profile that makes him one of the nation’s most powerful civic leaders. He’s also LeBron James’ boss.

HYPERLOOP TRANSPORTATION TECHNOLOGIES RENDERING

Mat Ishbia

Congress slaps new taxes on nonprofits For charitable nonprofits, tax reform has done the unthinkable: find new ways to tax them. And that could be a harbinger of things to come, industry experts warn. Among other things, new taxes in the Tax Cuts and Jobs Act will decrease endowment interest income for some private colleges and tax unrelated business income for even the smallest nonprofits. The tax changes Need compound pro- to know jected declines in  Tax reform has charitable dona- brought new taxes tions resulting to the “tax-exfrom fewer people empt” sector itemizing tax de-  They add to ductions because fears charitable the standard degiving will drop duction has grown. with higher The increased standard financial presdeductions sures tax reform will bring for  Industry experts charitable non- say nonprofits of profits are an is- all sizes need to sue not just for step up in them but society advocacy efforts as a whole, given that the sector has taken on many services government doesn’t provide. Nonprofits need to develop a new muscle for pushing back, industry leaders said, communicating the value of the work they are doing, weighing in on how the U.S. Treasury Department and Internal Revenue Service enact the new regulations to ensure they are not onerous and even advocating to have the new taxes rolled back. That will be a challenge for a sector seen as meek by the Internal Revenue Service, said Washington, D.C., attorney M. Ruth Madrigal, who served as an attorney and policy adviser in the Office of Tax Policy at the US Treasury Department for six years before becoming a partner at Washington, D.C. law firm Steptoe & Johnson LLP.

Hyperloop trains would travel through underground and above-ground tunnels at speeds up to 760 miles per hour, developers claim.

Building a behemoth: Detroit’s other mortgage mogul

FINANCE

INSIDE FOCUS

Women in Leadership: Ronia Kruse, OpTech LLC << The Troy-based firm she founded in 1999 offers recruiting and staffing services and technology solutions for Fortune 1000 firms and the federal government. Page 10

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

MICHIGAN BRIEFS

INSIDE

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

$23 million ‘eco industrial park’ among Buick City site plans The Charles Stewart Mott Foundation is leading planning for a $23 million project to redevelop part of the former Buick City vehicle manufacturing site in Flint into an “eco industrial park” that could bring 300 jobs back to Flint in its initial phase. As envisioned, the Buick City Industrial Park would create new, environmentally friendly warehousing, packaging and light industrial space, along with green space that includes biking and walking trails to connect the property to the Flint River and surrounding neighborhoods. According to state documents, Mott would contribute $16.5 million to the proposed project, which garnered an additional $6.5 million commitment from the Michigan Strategic Fund last Tuesday. The Michigan Strategic Fund last Tuesday approved $1 million to fund due diligence activities to assess the financial feasibility of acquiring and developing the site and establish reserves and to make a $100 limited liability equity investment in a new entity created to acquire the property from the Racer Trust, which took ownership of the site as part of the

General Motors bankruptcy. The remaining $5.5 million in state funding would support an equity investment from the MSF Investment Fund in BC Leasing LLC to develop and operate the site. Upon successful completion of the due diligence and acquisition of the property, the MSF said its initial $1 million investment would be converted into equity in the project. The state funding is contingent upon Mott’s investment. Racer Trust said there’s other interest in the property beyond the proposed “eco industrial park,” which is one possible outcome. “... It is important to note that RACER Trust’s Buick City property is available for purchase and redevelopment and that there is other market interest in this property,” the trust said in an emailed statement.

7 MI hospitals high in Healthgrades ranking

Seven Michigan hospitals were judged among the country’s best for clinical outcomes across the common inpatient conditions and procedures in Healthgrades Operating Co. Inc.’s annual analysis. Michigan is one of 28 states to see at least one hospital on the Denver-based hospital research organization’s list of America’s Best Hospitals, which rates the top 1 percent and 2 percent of more than 4,500

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OPINION

PEOPLE

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WEEK ON THE WEB

House moves mental health bills

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Seven Michigan hospitals were judged among the country’s best for clinical outcomes

hospitals assessed nationwide in its lists of 50 and 100 best medical centers respectively. To be considered top 1 percent, hospitals must meet superior service standards across a variety of inpatient procedures for at least six consecutive years. The top 2 percent must meet similar standards for at least three consecutive years, according to a news release. Patients treated in hospitals achieving the top 100 award have, on average, a 22.3 percent lower risk of dying than if they were treated in hospitals that were not included in the ranking, Healthgrades said. “These hospitals exhibit exceptional, comprehensive, and consistent quality year over year,” the orga-

nization said in an announcement. “Simply put, patients are more likely to have a successful treatment without major complications — and have a lower chance of dying — at America’s Best Hospitals.” The following Michigan hospitals made the rankings, with all but Beaumont Hospital, Royal Oak making the top 50 list (the Royal Oak hospital was in the top 100 hospitals ranked): Beaumont Hospital, Troy; Providence-Providence Park Hospital, Southfield; Providence-Providence Park Hospital, Novi; Spectrum Health Butterworth Hospital, Grand Rapids; Spectrum Health Blodgett Hospital, Grand Rapids; Holland Community Hospital, Holland; Beaumont Hospital, Royal Oak.

Michigan lawmakers approved legislation that would upgrade mental health resources in hospitals and schools as part of a slew of reform bills shuffling through the state House, the Associated Press reported. One bill passed in Lansing would create an electronic database for the state’s inpatient psychiatric bed registry. Representatives voted 106-3 for the measure which aims to streamline hospital placement and emergency room wait times for psychiatric patients. Another bill requiring all public schools in Michigan to adopt a mental health first-aid course for teachers also cleared the House by a 107-2 vote. The legislation creates an optional course on recognizing and responding to mental illness symptoms as part of training for teachers. Three bills that enact time limits on psychological evaluations for court defendants and potential prison parolees also passed.

Sign up for the Agriculture Summit March 14, 2018 • Suburban Collection Showplace Join Pure Michigan Business Connect and the Michigan Department of Agriculture and Rural Development for a free, one-day matchmaking event as we connect key industry players. Don’t miss your opportunity to network and partner with buyers, producers, chefs and restauranteurs at the 2018 Pure Michigan Agriculture Summit.

Visit puremiag.com to register or for additional summit details.

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

AUTO SHOW

FINANCE

City socks away cash against ‘pension cliff’ By Chad Livengood clivengood@crain.com

ANNALISE FRANK/CRAIN’S DETROIT BUSINESS

The North American International Auto Show at Cobo Center in Detroit in January this year drew more than 5,000 media from 60 countries.

NAIAS organizers look at move to October By Dustin Walsh dwalsh@crain.com

The Detroit Auto Dealers Association is gaining support for its potential move of the North American International Auto Show from January to October. The potential move is propelled by a need for automakers and suppliers to showcase new technologies, such as autonomous cars, crash-avoidance systems and ride-sharing applications, that are better experienced outside Cobo’s walls, a source familiar with the proposed move told Crain’s last week.

Need to know

JJWheels are in motion to move NAIAS

from January to October

JJLargely supported by corporate sponsors JJChallenges remain for contracts, etc.

If the show moves, it wouldn’t happen until 2020, the source said. Southfield-based Denso International America Inc., which has been on the show floor for 14 years, said it favors moving the Cobo Center show to October because it would “provide a

lot of new and exciting opportunities.” But while the move is largely supported by stakeholders, it will be a complicated process. Most notably, NAIAS and Cobo Center signed an $11.8 million contract in July to keep the auto show at the Detroit riverfront event space through 2025, and in January. Moving the show to October would likely require contract renegotiation. There are currently no scheduled events that would conflict with a potential October date for NAIAS, Cobo Center confirmed to Crain’s. The show’s 12-week setup schedule

would also likely have to be shortened. The show laborers begin setting up the January show in October of every year but moving the show would cause that timeline to be constrained as other shows typically occur in September. The move has come under question privately, the source confirmed, due to large labor bills for automakers who must pay overtime and holiday pay to union laborers working through the many holidays ahead of the show, including Thanksgiving, Christmas and New Year’s. SEE AUTO SHOW, PAGE 18

HEALTH CARE

DMC faces anti-kickback violations investigation By Jay Greene jgreene@crain.com

The U.S. attorney's office in Detroit is investigating possible federal civil violations of anti-kickback, false claims and self-referral laws at Detroit Medical Center, according to a federal securities filing Monday by Tenet Healthcare Corp., DMC’s Dallas-based parent company. Last August, Crain’s reported that 14 layoffs of advanced practice providers could be tied to concerns that DMC and Tenet had that services the nurse practitioners and physician assistants were delivering to private doctors might run afoul of federal laws designed to prevent improper patient referrals to the hospital. The status of that investigation isn’t known. A spokesperson for the U.S. attorney’s office didn’t respond to re-

Need to know

JJDMC laid off 14 nurse practitioners and physician assistants JJCrain's reported that one concern DMC had was the providers might be violating federal anti-kickback laws in services performed for private doctors JJThe U.S. attorney's office in Detroit has launched an investigation into the practice

quests for comment. Tenet also reported to the U.S. Securities and Exchange Commission that the U.S. attorney’s office made a request for documents to Tenet DMC in the fourth quarter of 2017 related to issues raised in the Crain’s article, published Aug. 16. It is not known the date of the request from the U.S. attorney’s office or when the investigation began. SEE DMC, PAGE 19

The parent company of the Detroit Medical Center disclosed the investigation in a federal securities filing Monday.

In March of 2013, Detroit was hurtling toward a historic trip through bankruptcy court with over $100 million in unpaid pension bills and a negative fund balance of $72 million. Five years and $7 billion in debt reduction later, Detroit is poised to regain full control of its finances by next month after six years of state oversight following three consecutive years of balanced budgets and a fund balance exceeding $500 million at the end of the 2017 fiscal year. As Mayor Mike Duggan prepares to deliver his annual State of the City speech Tuesday that will likely touch on the impending end of state financial control, an Need old liability that to know contributed to JJDetroit poised Detroit’s municito shed state pal government financial oversight insolvency still by April looms over the city’s future. JJLooming Starting in pension payments 2024, Detroit offiof $143 million cials project they annually resume in will face annual 2024 payments of at JJCity has created least $143 million savings fund to after the city’s cushion blow to bankruptcy general fund budget debt-cutting plan required just nominal payments of $20 million from 2016 to 2019 and no payments from 2020 through the 2023 fiscal year. “It’s not a problem today or tomorrow. But it’s a huge problem in 2024,” State Treasurer Nick Khouri told Crain’s. Detroit’s 2014 bankruptcy court-approved reorganization gave the Duggan administration what amounted to a nine-year reprieve from paying full pension payments as the state and philanthropic foundations stepped in to fill the void in a “grand bargain” deal that preserved a city-owned art collection from being auctioned off to satisfy creditors. “We didn’t resolve all of the legacy obligations in the bankruptcy. We made them more affordable,” said Bill Nowling, who was former Emergency Manager Kevyn Orr’s spokesman during the bankruptcy. “Somehow, that’s gotten lost in all of the discussion on this.” To prepare for the sudden spike in payments, the Duggan administration and City Council have created a savings fund with the goal of socking away $335 million in surpluses over eight years that will be used to gradually ease the city into making full pension payments again by 2033. SEE PENSION, PAGE 19

MUST READS OF THE WEEK Investing in a favored sector

Health care industry cuts

Seeking more time to submit proposal

Redico jumps into apartment developments. Page 4

Wave of layoffs continues at Ascension St. John. Page 12

FGIC sues city to extend Joe Louis Arena redevelopment timeline. Page 11

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

MYEFSKI ARCHITECTS

Redico LLC is branching out into apartment development, with a $26 million project at Hoover and Greene, north of Michigan Stadium in Ann Arbor.

Developer Redico jumps into apartment sector in Ann Arbor By Kirk Pinho kpinho@crain.com

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Redico LLC is branching out into apartment development, first with a $26 million project north of Michigan Stadium in Ann Arbor. The Southfield-based developer has been best known in recent years for large mixed-use developments like the Gateway Marketplace project in Detroit, which brought the city its first Meijer Inc. store, and the Village at Bloomfield, the former Bloomfield Park site in Bloomfield Township and Pontiac. Now the company is scaling back its pursuit of new, sweeping developments like those with multiple components and instead turning its eye to a bread-and-butter real estate asset class: Apartments. That’s for two related reasons: The time it takes to pull off projects like Gateway Marketplace and Village at Bloomfield, as well as a cautious business approach, said Dale Watchowski, president, CEO and COO of the company started by Robert Sosnick. “I don’t think there are any indicators that the real estate industry is going into a decline. But at the same time with mixed-use developments, it’s 2-3 years until you’re out

BANKRUPTCIES The following businesses filed for bankruptcy protection in U.S. Bankruptcy Court in Detroit Feb. 23-March 1. Under Chapter 11, a company files for reorganization. Chapter 7 involves total liquidation.  R & P Holdings Inc., 24832 Romano, Warren, voluntary Chapter 7. Assets and liabilities are not available.  XG Security Services LLC, 25185 Goddard Road, Taylor, voluntary Chapter 11. Assets and liabilities are not available.

Need to know

Redico LLC is branching out with a $26 million project in Ann Arbor 

 Developer has been best known for large mixed-use developments  Company scaling back pursuit of sweeping developments for apartments

“Multifamily apartments have been a favored sector of the investment community for the past several years.” Larry Goss, Core Partners LLC

of the ground. ... My thought is, why would someone embark on a large mixed-use development that might be $200 million or $250 million when you don’t know what the market is going to be?” First for Redico in its multifamily play is the Ann Arbor project, in which the company plans 163 apartments and six townhouses on a 1.6-acre bounded by Hoover and East Davis avenues to the south and north, and Brown and Greene streets to the west and east. Construction is expected to be complete by August 2020, according to a site plan submitted to the city. There is another site outside of Michigan the company is exploring as a multifamily opportunity, as well. Watchowski said he expects Redico to do two or three apartment projects per year under the multifamily strategy. According to CoStar Group Inc., a Washington, D.C.-based real estate information service, the Ann Arbor multifamily market has nearly 29,000 units with an average ask-

ing rent of $1,120. Just 3 percent of the units are vacant, and 352 are under construction currently, according to CoStar. The Detroit metropolitan market has about 208,400 units with an average rent of $924 and a vacancy rate of 5.4 percent. About 4,800 are under construction. “Multifamily is here to stay in perpetuity,” Watchowski said. “We find it to be an asset class that is acceptable in good times and bad.” An affiliate of Redico, Southfield-based American House Senior Living LLC, develops assisted living, independent senior living and memory care facilities already, so Redico already has experience in residential facilities, Watchowski said. Larry Goss, executive vice president of Bingham Farms-based Core Partners LLC, said Redico is a well-respected developer likely to see success with multifamily projects. “Multifamily apartments have been a favored sector of the investment community for the past several years,” he said, since vacancy rates are low, demand is high and new construction in most markets has been low. “The challenge for developers in our market is the sluggish wage growth which limit rent increases bumping up against increasing construction costs, land prices, and zoning regulations — making it more costly and time-consuming to build. That combination has constrained new development in most localities. There are a few hot local markets that justify new construction of multifamily rentals, and I expect that’s where Redico will look to create new projects.” Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

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Detroit welcome center at risk of closing soon By Annalise Frank afrank@crain.com

Downtown Detroit has a welcome center, but it may soon be gone. No, not the Mexicantown International Welcome Center near the Ambassador Bridge — that’s state-focused and run by the Michigan Department of Transportation. The nonprofit Detroit Experience Factory, also known as DXF, needs $200,000 to continue running the city’s only welcome center, which sits just outside CamNeed pus Martius to know downtown. JJDetroit The office at Experience Factory 123 Monroe St. operates city’s only doesn’t have a welcome center traditional marJJNonprofit will keting budget, close the founder Jeanette downtown center Pierce said. It if it doesn’t get spreads word $200,000 by through social around end of media and its March tours. “One of the JJTo replace things we realHudson-Webber ized is that we’re Foundation grant really good at tellthat has ended ing other people’s stories, but we haven’t done the best job apparently of telling our story,” said Pierce, 37. Detroit’s welcome center needs 2018 funding by the end of March to stay afloat or DXF plans to close it, she said. It needs to replace an ended Hudson-Webber Foundation grant. The center now assists around 21,000 locals and travelers per year. It

ANNALISE FRANK/CRAIN’S DETROIT BUSINESS

Detroit Experience Factory’s downtown Detroit welcome center is at 123 Monroe St., just northeast of Campus Martius Park. It assisted 21,000 visitors and locals in 2017.

originally opened in 2008 in the downtown Woodward Avenue space that now belongs to Nike, but now it’s on Monroe Street across from Dan Gilbert’s Monroe Block development. It offers maps, links to resources and literature; operates pop-up welcome centers; and holds free and lowcost tours. Pierce, a Detroit native, is looking now for input on whether Detroit needs a physical welcome center. Such centers and engagement launch pads exist in many U.S. cities — Milwaukee, Cleveland and Chicago, for example — but their funding streams vary, she said. Detroit Experience Factory has a

yearly operating budget of $767,000. Outside its welcome center operations, it offers paid tours through downtown Detroit and the city’s neighborhoods; longer, more high-level tours; and custom programs. Fifty-six percent of its funding is earned revenue. The nonprofit would continue on without the welcome center, which doesn’t bring in much money, she said. Most of the welcome center’s funding came from Detroit-based Hudson-Webber — it gave the nonprofit $175,000 in 2016 and $150,000 in 2017. The foundation officially let DXF

know this fall that its support wouldn’t continue into 2018, she said. Its funding priorities are changing under President and CEO Melanca Clark. Jeanette Pierce: “For DXF, Haven’t done best what’s happenjob “telling our ing, and I think story.” you’re seeing it with a lot of things ... Funders will come in and they’ll support an initiative with the hope and intent it gets it stabilized, but not with the intent, necessarily, to be their permanent funding strategy,” said Downtown Detroit Partnership CEO Eric Larson. DXF is an affiliate of Downtown Detroit Partnership — as with entrepreneur educator Build Institute in the past. The DDP acts as fiduciary and provides support and back-end services. DXF has also received past funding from Bank of America, the Knight Foundation, Comcast Corp. and Huntington Bank. For around six months the team has been talking with possible public and private funders, but has only gotten “nos” and “maybes” so far, Pierce said. A fundraiser is planned for April 18 on Belle Isle. DXF has a $2,500-per-month, three-year lease with Dan Gilbert’s Bedrock LLC for its 1,400-square-foot space. It would need to sign a new lease by April to stay — $2,800 per

The year in numbers Detroit Experience Factory says in 2017: JJIt had 15,600 people on tours

JJIt gave out 10,000 Detroit Bar & Restaurant checklists to businesses JJ193 of 625 tours were free JJ95 percent of tours range outside downtown Detroit into the neighborhoods JJ71 percent of tour-takers were metro Detroit residents

month, Pierce said. She added that the landlord is not among reasons the group may leave.

Beginnings Pierce, a Detroit native and 2007 Crain’s 20 in their Twenties honoree, started DXF in 2006 as Inside Detroit. She quit her day job in 2008 to run the group full-time and open the welcome center on Woodward. In 2012, Pierce joined with D:hive, a three-year job- and residential-support project also funded by the Hudson-Webber Foundation. When D:hive ended, Inside Detroit started marketing itself as Detroit Experience Factory and opened at 123 Monroe St. Pierce plans 2018 as a strategizing year. If the $200,000 comes through, DXF could expand programming to include more arts, small-business pop-ups and community conversations. If funding fails, DXF would close its welcome center and cut its 40 parttime contractor staff down to 20. It would keep on its seven full-time employees — though that number was eight before the end of last year. “But we have to be here in order to implement those new and exciting things,” Pierce said. “The welcome center doesn’t even have to necessarily stay with us. It would basically give us the time to plan for the future of the welcome center ... and really just give that runway to what it could be next.”

Tell us about your business’ reinvention

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It’s been a decade since the Great Recession. And Crain’s Detroit Business is looking for stories not just of survival, but of reinvention. We want to hear about companies or nonprofits that — whether out of necessity, opportunity, ingenuity or all of the above — fundamentally transformed themselves during the Great Recession and now, 10 years later, are thriving because of it. Maybe you changed products. Or found a wildly different group of customers. Or did a refinancing job that felt like a high-wire act. Or — maybe — the recession shattered your company, but you’ve built a whole new one out of the ashes. We'll consider your submissions for a special section to be published in our April 16 issue. This isn’t a contest. We’re looking for stories with drama and lessons that can be learned by all leaders. Submit your story ideas at crainsdetroit.com/ideas by March 15. Contact abragg@crain.com or (313) 446-1646 with questions.

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Alexander Zonjic & Friends and a couple of other guests. Tell us about that. Zonjic: When we were putting this together it was very calculated—who do I bring in that reaches a jazz audience and might cross over and reach a different audience? Alex Bugnon, a brilliant jazz musician, has huge crowds from Detroit and is from Switzerland. And Javier Colon was the first-year winner of The Voice; the kid is incredible. His coach was Adam Levine and Adam loves him. He’s opened for Adam. Colon plays with an acoustic guitar; he kills it. Burns: How many people will be in this theater? Zonjic:We’ll have 400 people and there isn’t a bad seat. It’s very intimate; I think it is going to be a magical evening. Musictown Live with Alexander Zonjic & Friends is a fundraiser for Children’s Hospital of Michigan Foundation, planned for 7:30 p.m. April 28 at City Theatre inside Hockeytown Café. General admission is $40; VIP tickets are $150 and include an afterglow and a meet-the-performers aspect. Visit ChmFoundation.org for more information.

year in Detroit. In driver’s education you learn the rules of the road, but they don’t teach you skills behind the wheel. So we are actually getting kids behind the wheel in a skid car and giving them that feeling and the simulation of what you do in a skid. It’s giving them confidence and skills so that if they have one of these moments on the road, they can do something. Everything we do with that form of curriculum, it all ties back to your eyes, where you are going and where you are looking. And that then triggers the next big thing, which is an epidemic right now: the biggest killer of teens today is distracted driving. Everything with our curriculum talks about your eyes, and a lot can happen in three to five seconds. We have to empower kids so they can make the decisions. We have to change their behavior of how they are thinking because we are not going to be with them when they are behind the wheel of the car. The videos they show of the crashed cars in driver’s education are not working. So we have to do something to change that.

and we will donate those to hospitals. With super visits, we identify what a hospital needs and donate that or bring a Radio Flyer wagon to help kids move around the hospital. Burns: It’s very exciting that you are partnering with Children’s Hospital of Michigan Foundation. We’re looking to be more of a community foundation for children regionally and nationally. We want to let people know around the country that we support children’s initiatives. What do you think that could mean to our readers collectively? Wright: You can use Racing for Kids as your vehicle to get the word out. We race all around the U.S. and in other countries. Starting our 29th year, we’ve seen over 30,000 children. We’ve made over 600 hospital visits. This year we will pass the $6.5 million mark for what we’ve raised. Our mission is both preventive as well as remedial medicine.

3/1/18 12:11 PM

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

OPINION No. 1 Detroit-suburb reversal complicates transit talk economic M challenge: Fix roads COMMENTARY

ike Duggan made a declaration at a Feb. 15 groundbreaking for the redevelopment of a long-abandoned B. Siegel women’s clothing department store that once anchored the Livernois Avenue of Fashion — one that no Detroit mayor has been able to say confidently in the past half-century. “We’re competing with the suburbs every day for people and business,” Duggan said in a parking lot at Seven Mile and Livernois, a commercial shopping district just a short mile from the Oakland County border. Duggan has never so bluntly assessed how the nascent revitalization of Detroit is starting to change a half-century-old dynamic of the suburbs dwarfing the city with seemingly endless land for subdivisions, shopping malls and manufacturing plants. But as a new generation of young adults spurns the suburbs many of them grew up in, the Detroit mayor is starting to contrast what he has to offer — dense, walkable living and work environments — with the culde-sacs well beyond the city’s 140 square miles. “We’re not going to compete with them by being like them,” the former Livonia resident said of the suburbs. “We’re not going to do it by building a (commercial) building with a whole sea of asphalt around it.” Duggan made these remarks against the backdrop of the stalemate that’s formed with his suburban counterparts to north of Eight Mile Road over building a seamless regional mass transit system. Oakland County Executive L. Brooks Patterson and Macomb County Executive Mark Hackel have mounted a resistance to the plans Duggan and Wayne County Executive Warren Evans have pursued for regional transit that rely heavily on suburban cooperation — and wealth. Suburban leaders are well aware that a resurgent Detroit is back on the map in terms of competing for jobs and people. Southfield office towers have lost several tenants to Detroit in recent years, including Microsoft abandoning its suburban office for a space in Dan Gilbert’s One Campus Martius. Ford Motor Co. is moving 200 employees from Dearborn to a building on Michigan Avenue in Corktown that the automaker purchased in a

GETTY IMAGES

Suburban leaders are wrestling with the real prospect of stagnation, while Detroit leaders are continuing to harp on the need for mass transportation options to link together a region built for car-driven sprawl.

bid to create an urban workplace to attract the world’s top talent to develop a business strategy for selling electric and autonomous vehicles of the future. Google is preparing to leave its decade-old office in downtown Birmingham for some new digs next to Little Caesars Arena. And the advertising agency Doner is actively considering a move of its 450 employees downtown from Southfield. Many suburban communities are rapidly aging, as evidenced by budget cuts in recent years in school districts such as Utica, Grosse Pointe and Rochester that are facing declining enrollment. All the while, suburban roadways built in the boom years of 1970s, 80s and 90s are starting to crumble — a political problem not lost on leaders like Hackel, who wants more money for fixing roads before considering a

vast expansion of bus service in the region. Suburban leaders are wrestling with the real prospect of stagnation, while Detroit leaders are continuing to harp on the need for mass transportation options to link together a region built for car-driven sprawl. At the Detroit Regional Chamber’s annual Detroit Policy Conference last Thursday, the hand-wringing over the region’s woeful mass transit spilled out in a session focused on the Motor City’s failed bid for Amazon.com’s second North American headquarters. The conference centered on creating a culture of civility in Detroit and beyond. The elephant in the room was simmering tensions between Detroit and suburban leaders over making transit a priority in the face of Amazon’s rejection. An Amazon economic development official made it clear to local leaders that the Detroit region’s lack of an efficient and comprehensive mass transit system cost it in the race for HQ2. Indianapolis, Columbus and Nashville made the cut. All three of those cities have better mass transportation than the Detroit region, said Khalil Rahal, assistant county executive for Wayne County. “We need to take that lesson and

carry it forward,” said Jared Fleisher, vice president of government relations for Quicken Loans, who was one of Dan Gilbert’s top lieutenants on the Amazon bid. Metro Detroit’s disjointed transit system is the “significant thing that has held us back,” despite the glossy sales book the regional bid committee sent Amazon, Rahal said. “What we have to do is fix ourselves,” he said. “The book can get prettier, the book can change, but that’s not what’s going to attract people.” What Detroit and Wayne County officials have yet to do is make a compelling case for why the region as whole needs to change. They haven't even made public the revised regional transit plan Patterson publicly rejected. It’s hard to get complete regional buy-in when it looks like a one-way investment for suburban residents and leaders bracing for an uncertain future. And that’s the challenge ahead, especially as Duggan fashions a competition for investment, residents and employers between the suburbs and the city that suffered for so long while they flourished.

battery-only sales to reach that level. Perhaps the majority of plug-in buyers also have an available gas-powered vehicle for car trips of more than 100 miles. I’ll be amazed if plug-in sales represent 3 percent of the U.S. new car market by 2023. Mr. Crain and gas station owners have nothing to fear. I bought Prius cars in 2001 and

2005, and a Prius Plug-In in 2012. I buy about 15 gallons of gas once a month during the winter season, and once every other month from May through October. While Toyota greatly overstated the electric range for the 2012, I expect to purchase a no-gasoline engine electric car this year or next. I bought my first new gas guzzler in 1958 and have been waiting 60 years for a “real” plug-in vehicle

that has a respectable range. Now they’re here! Richard Rosenbaum Bloomfield Hills

CHAD LIVENGOOD clivengood@crain.com

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

LETTERS

Don’t worry about electric vehicles

To the editor: Regarding Keith Crain's Feb. 12 column on electric cars and their range: Mr. Crain has little to worry about. Less than 1 percent of new vehicles sold in the U.S. during 2017 were powered by large battery packs. It has taken 100 years for

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

magine a wellheeled corporate executive flies into town on his corporate plane to look at a potential site for a future factory. On his way to KEITH tour the site and CRAIN get a feel for DeEditor-in-chief troit, his car hits a pothole, which blows two tires and bends both rims. A substitute car takes him back to his plane, he leaves, and he never sees the site or Detroit. As the plane flies away, he swears never to set foot in Detroit or Michigan again. Sounds far-fetched? I hope so, but it’s still probably truer than fiction. We will never know just how much economic development we have lost or are going to lose before we fix our roads. Tire shops, wheel companies and automobile dealerships are more than happy to fix the problems for motorists created by our dangerous roads. Just like our medical systems taking care of people with the flu this winter, there are always some businesses that benefit from misfortune. We all know Michigan needs a thorough rebuilding of our road system. It seems we haven’t rebuilt our roads since we invented the horseless carriage, but it is time to stop slapping Band-Aids on the scars in our roads. That kind of reconstruction will be a painful process that won’t make motorists happy, either, but pulling a Band-Aid always hurts. This is imperative from an economic development standpoint. There can be no better attraction for potential companies to expand in or move to Michigan than a superior road system for employees and shareholders and management to drive. To have any hope of attracting new companies, we have to make this not just important but the No. 1 job of our government, local and state. It will probably take additional taxes, whether they are gasoline taxes or some other tax. We will have to raise billions in additional funds, and we will have put up with years of inconvenience to get the job done. But we have inconvenience now. Ask all the people sitting and waiting at your local tire shop, or sitting in traffic watching road crews patching holes. A world-class highway system is essential to attract businesses and build our economy. It will be painful to get there but a vital step to keeping Michigan on the positive move. I wonder if autonomous vehicles can spot potholes?

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

Pinnacle Homes sells to Ohio homebuilder By Tyler Clifford tclifford@crain.com

and Kirk Pinho

kpinho @crain.com

Bloomfield Hills-based Pinnacle Homes of Michigan LLC has agreed to be acquired by M/I Homes Inc., a homebuilder based in Columbus, Ohio. The deal is expected to close next month, a news release said. A request for comment was not immediately returned. The release did not specify financial terms of the deal. The deal is a strong sign of interest from a national home-builder in a Michigan housing-development industry that was left for dead in the depths of the Great Recession. Howard Fingeroot will join M/I Homes as president of the Detroit market. He founded Pinnacle Homes with Steve Friedman in 2005. Fingeroot, managing principal of Pinnacle Homes, said the compa-

Robert Schottenstein said in a statement. M/I Homes trades as MHO on the New York Stock Exchange and has a market capitalization of more than $900 million as of Monday morning, according to MarketWatch. The company has operations in Cincinnati, Indianapolis, Chicago, Minneapolis, Florida, Texas, North Carolina, Maryland and Virginia. New York City-based Zelman Partners LLC advised Pinnacle Homes in the negotiations.

A rendering of a 2,000-square-foot ranch offered by Pinnacle Homes in its Northridge development in Clarkston.

PINNACLE HOMES

“The housing market and newhome construction business has really been taking off.” Howard Fingeroot

ny’s projects currently in the works will not be affected. That includes the $150 million Village at Northville development at Five Mile and Beck roads in Northville Township, where more than 350 residences are in the works. Single-family residential, townhomes, loft-style apartments and retail are planned. “The housing market and newhome construction business has really been taking off,” Fingeroot said in a Monday afternoon interview. “It’s been a really rock-solid business. I think the larger builders see that. Builders like M/I Homes want to grow and see the opportunity in Southeast Michigan, and for us, it’s fabulous.” Fingeroot said Pinnacle had been approached by six homebuilders about a potential sale since the second quarter last year, when it hired Zellman for a recapitalization effort. “In 2017, we closed (sales on) over 200 homes. We’ve grown (sales) every year since 2009, when after the financial meltdown, ever since then, every year we have grown larger and built out a larger and larger portfolio,” Fingeroot said. “The Pinnacle team loves to come to work and I saw that same culture when talking to the M/I guys. It was a perfect fit in terms of the employees and for them to help them grow and develop in their careers. It was a really, really great fit.” Pinnacle Homes last year detailed to Crain’s a strategy to target the growing “active adult” demographic with subdivisions targeting empty-nesters age 50 and over who are looking to downsize. The company built more than 210 homes in 2017, the release said, and controls more than 1,000 home sites. “We believe this acquisition represents an excellent strategic fit for M/I Homes and further enhances our market position with a well-established operation and land position in a dynamic and growing housing market,” M/I Homes CEO

16 Hours. $1.26M. 365 Days of Hope. The Salvation Army is grateful and humbled by the outcome of our 31st Annual Bed & Bread Club® Radiothon presented by Ford Motor Company Fund. It takes an Army to fight poverty, hunger and homelessness. We thank you for joining forces with us to tackle these issues head-on. A special thank you to Dick Purtan whose vision and encouragement has enabled us to meet metro Detroiters’ needs for three decades. Thanks to our host News/Talk 760 WJR, and to Jim Vella and Ford Motor Company Fund who helped to drive home our mission. Just like our neighbors in need who count on our trucks to be there 365 days a year, we are so thankful to be able to count on partners like you in Doing the Most Good.

Thank You!

Artichoke Garlic Foundation

Ford Motor Company Fund

Foundation

The Experience You Deserve!

Dick & Gail Purtan, Jim Vella Family, Joe Vicari, Edsel & Cynthia Ford, John and Shelly Latella, Sandra Pierce, The Salvation Army Eastern Michigan Advisory Board, Blue Cross Blue Shield of Michigan, Strategic Staffing Solutions, Mark Ridley’s Comedy Castle, Lockhart’s BBQ, Franzese Products, Techmode, Big Boy, Tim Allen Foundation, Detroit Zoological Society, Anonymous Bread Donor.

Disaster

Relief

Emergency

Response

Housing

Counseling

Rehabilitation

salmich.org

Youth

Services

Social

Work

Evangelism

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

FOCUS

WOMEN IN LEADERSHIP

ALI LAPETINA FOR CRAIN’S

Ronia Kruse, president, CEO and founder of OpTech LLC, at the company’s offices in Troy.

A few questions for: Ronia Kruse By Rachelle Damico

Special to Crain’s Detroit Business

Ronia Kruse is the president, CEO and founder of OpTech LLC. The Troy-based company provides recruiting and staffing services and technology solutions for Fortune 1000 firms and the federal government. The company also provides consulting services in data analytics, connected vehicles, cyber security, embedded systems and information technology. Kruse graduated with a bachelor’s degree in accounting from Wayne State University in 1992 and received her master’s degree in taxation from Wayne State in 1994. Her career began in 1995 as a senior tax consultant for Deloitte & Touche LLP. She left the company in 1999 to start OpTech that year. You started your career in accounting. What led you to start an IT-based consulting company?

I was working as an international tax consultant for one of the large firms, and we had to leverage information technology to support a lot of the work we were doing in tax. At the

Need to know JJFounded OpTech LLC in 1999 JJProvides consulting services in data

analytics, connected vehicles, cyber security, embedded systems and information technology JJGeneral Motors was first client

time, I felt there was an opportunity to deliver greater value that was more customized to clients’ needs rather than delivering high-cost cookie cutter services that some of the big firms were offering. I was working with a client (General Motors), and one of the executives suggested I leave and start my own firm, and they said they’d be my first client. It took me about two years to develop the courage to do that. I left to start my own firm and General Motors was my first client. What were your early years like?

I sold my own personal consulting services, and I had to learn the IT. I was developing some applications, but it became more complicated and beyond my capabilities, since I

don’t have a computer science background. I began hiring individuals to develop some of the more complicated applications we needed for our clients. I started networking and selling my services to companies, including utilities, health care insurance providers and other large organizations. One of the big challenges I had was that it was much more difficult when you don’t have a big name behind you. I had to sell people on my capabilities and develop a brand. I didn’t grow up with a huge network, so I had to go outside my comfort zone to network and ask for the business. I worked an ungodly amount of hours to really develop the company. What were some early leadership lessons for you?

Having a vision, trying to sell people on your vision and getting people to buy into your vision. Later, it turns into being more of a servant leader and making sure you’re surrounding (employees) with good people, and making their interests in the company come before your own interests. Leadership for me has always been

to enhance other people’s skills and their abilities beyond what they thought they were capable of.

that are more computer driven.

What are some tactics for dealing with the IT talent gap we’re facing?

Technology is the thread that goes into every single occupation, and I think a lot of women are threatened (by getting into) STEM because it’s male-dominated, and males tend to gravitate more to STEM than women do. There’s a lot of amazing careers in STEM. I think a lot of women tend to put barriers in their minds in terms of their abilities to go after leadership positions and go into STEM fields. They should totally just plunge in, because that’s where the future is, that’s where all the opportunities are and that’s where we need a lot of women in leadership positions.

In our mind, there’s a short-term, mid-term and long-term approach to addressing the huge talent gap we’re facing. The short-term solution is trying to get people re-tooled in technology. There’s different training programs available that teach Java or .Net to individuals that want to learn how to program. For example, Grand Circus (a Detroit-based computer training school) does that. The midterm solution is, we need to change the mindset of corporations that put so many restrictions on individuals they need to hire, and realize you don’t necessarily need to have a 4-year degree in computer science in order to do certain jobs. The longterm solution is working with colleges to have more agile programs to allow people to obtain technical certificates or technical training without a 4-year degree. Also, working with high schools’ curriculum to perhaps provide college credits, or AP classes

What advice can you offer women interested in STEM careers?

This interview has been edited for clarity and brevity. It's part of a series of insightful conversations with women leaders about their triumphs and trials in business and what they've learned along the way. Know a dynamic woman leader we should profile? Drop us a note: abragg@ crain.com.

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

FGIC sues to extend Joe Louis redevelopment timeline

By Kirk Pinho kpinho@crain.com

One of the major creditors in Detroit’s bankruptcy is suing the city to get two more years to submit a redevelopment proposal for the Joe Louis Arena site downtown. New York City-based Financial Guaranty Insurance Corp. filed the federal suit in Detroit on Monday. The company received development rights to the site Need as part of its to know bankruptcy setJJCreditor in tlement with the Detroit’s city in 2014 over bankruptcy is suing a $1 billion claim. the city In the lawsuit in U.S. District JJSeeks two more Court, FGIC says years to submit a it requested from redevelopment the city a proposal for the 24-month extenJoe Louis Arena sion from the site Nov. 21, 2017, JJComplex nature deadline on July of the site and the 20 but the city city’s changing real agreed to only a estate market 180-day extenhave made it sion, even difficult to submit though the seta proposal tlement approved in bankruptcy court allows for a two-year extension. The complex nature of the 9-acre site, the former home of the Detroit Red Wings, and the city’s changing real estate market have made it difficult to submit such a redevelopment

JOE LOUIS ARENA

The complex nature of the Joe Louis Arena site, the former home of the Detroit Red Wings, and the city’s changing real estate market have made it difficult to submit a redevelopment proposal.

proposal. One city official last year called what surrounds the JLA “an absolutely wicked entanglement of infrastructure” that makes redevelopment difficult. Under the bankruptcy agreement, FGIC was to hire a developer to build

a hotel with at least 300 rooms; plus office, retail, and residential uses. The agreement gave the city 90 days to review a development agreement once submitted. The suit says the city’s planning department has “consistent with

(FGIC’s) view, questioned whether the Development Proposal should still include the contractually specified hotel or whether the Property would be better utilized in another form.” Detroit Corporation Counsel Law-

rence Garcia said in an emailed statement to Crain’s on Monday afternoon: “The City believes this suit has no merit and will respond appropriately to the complaint in court." Last year, Maurice Cox, the city’s planning director, called the web of infrastructure — freeways, skywalks and access ramps — surrounding the Joe Louis Arena a daunting facet to navigate. An affiliate of FGIC, Gotham Motown Recovery LLC, is responsible for forging the development agreement. “Gotham is committed to developing and revitalizing the Riverfront area where the Joe Louis Arena has stood for many years. We have dedicated tremendous resources to the project and had been working closely with the City to ensure a successful development. We are surprised and disappointed that the City has now chosen not to cooperate with us, requiring Gotham to file this lawsuit,” FGIC’s CEO Tim Travers said in a news release on behalf of Gotham. “We are concerned that the City’s actions may hinder and delay a successful development on the Joe Louis Arena site, which is our objective. We believe that a prompt resolution of this dispute will be in the best interests of those who live in and visit Detroit for years to come and look forward to resuming what had been an excellent partnership with the City to complete this important development with a shared vision.”

STATE DIRECTOR

Helen Taylor

We congratulate our fellow trustee, Gerry Anderson, on receiving the Climate Leadership Award from the Center for Climate and Energy Solutions. This national award recognizes exemplary leadership in response to climate change. Michigan Board of Trustees, The Nature Conservancy

nature.org/michigan

BOARD OF TRUSTEES

Peter S. Walters, Chair Stephen R. Polk, Vice-Chair Robert L. Anthony, Treasurer Gerard M. Anderson Essel W. Bailey Jr. Terry A. Barclay David W. Barfield Thomas B. Cook Stephen B. Dobson Mary F. Draves Kent B. Herrick Paul C. Hillegonds James D. Lammers James M. Nicholson Philip H. Power Milton W. Rohwer Joan B. Rose Kelly Rossman-McKinney Lloyd A. Semple Vivian Day Stroh Robert R. Tisch Barbara Van Dusen CORPORATE ADVISORS

Michael J. Jandernoa Fred P. Keller Richard A. Manoogian James B. Nicholson

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

TAKE YOUR COMMUNICATIONS FURTHER

Communicate with any team member, across any network, on any device.

ComSource is Michigan’s Leading Two-Way Radio Provider Since 1995

ST. JOHN PROVIDENCE HOSPITAL

Providence-Providence Park Hospital in Novi is one of the Ascension hospitals seeing layoffs this week.

Wave of layoffs continues at Ascension St. John

By Jay Greene jgreene@crain.com

Locations in Plymouth and Troy

LUNCHEON WITH

ANDREW FASTOW RULES vs. PRINCIPLES

www.cfasociety.org/detroit

Layoffs at Ascension Health hospitals in Michigan have intensified this week and spread to more of the company’s 14 hospitals in Michigan, according to employees, nurses and doctors. Ascension officials have not commented on the layoffs or how many jobs it plans to cut. St. John Hospital and Medical Center in Detroit, Ascension’s flagship hospital in Southeast Michigan, is planning a layoff of more than 250 employees as early as Friday, according to six people briefed on the plans who requested anonymity. Ascension Health owns five hospitals in Southeast Michigan under the St. John Providence banner. It is the nation’s largest nonprofit health system, with 140 hospitals. The St. Louis-based system has reported a 78 percent decline in operating income so far this year and is said to be taking steps to shore up its profit margins. Since late January, there have been layoffs of dozens of nurses, medical therapists and technicians, unit clerks and other support service employees. More are expected in the coming days or weeks, according to six sources familiar with aspects of the plans who requested anonymity. In Michigan, Crain’s has confirmed there have been layoffs at Providence-Providence Park hospitals in Southfield and Novi, St. John Macomb-Oakland Hospital in Plymouth and Warren, Borgess Medical Center in Kalamazoo and the St. John Detroit hospital. A physician leader who requested anonymity was told by a manager at Providence Park Hospital that at least 1,000 employees at Ascension Michigan hospitals will be laid off or outsourced to contract management companies, one being Touchpoint Support Services. Ascension Michigan spokesman Brian Taylor has told Crain’s several times that the Catholic system would

Need to know

JJAscension Health continues layoffs

that could amount to more than 1,000 across its 14 Michigan hospitals JJLayoffs include nurses, therapists, nurses aides, patient care technicians and patient transporters JJLocal Ascension Health hospitals include St. John Providence and Providence Park.

“We continually review staffing models to ensure efficiency of our resources, while providing the highest quality and most compassionate care as is consistent with our mission.” Brian Taylor, Ascension Michigan spokesman

not be making any public announcements of personnel changes at its hospitals. “We continually review staffing models to ensure efficiency of our resources, while providing the highest quality and most compassionate care as is consistent with our mission,” Taylor said last week and repeated in a statement Thursday. “At this time, we have no information to share regarding personnel matters.” Two laid-off employees have told Crain’s that they had been warned against speaking publicly about the layoffs and that their severance pay was contingent on not speaking with the media. One laid-off employee said he feared losing that pay, but he said he felt strongly that the public should know that the layoffs have hurt employee morale and will affect patient care. The St. John physician leader said

the manager told him the layoffs would be rolled out in stages to limit the public perception that they would affect quality and safety. At Borgess, two nurses who are union leaders talked to Crain’s Wednesday about the bulk of the layoffs they say management told them will occur March 4. Emily Fredericksen and Jamie Brown, two longtime employed nurses at Borgess, said they were told the nursing and other support staff cuts were necessary to increase productivity of workers. They estimated 60 to 70 nurses would be laid off based on their calculations of staffing ratio goals they were given by managers. Many hospitals nationwide are experiencing declining profit margins because of lower reimbursements from government and commercial payers, rising uncompensated care and fewer people covered by health insurance based on federal decisions to limit financial support for the Affordable Care Act, or Obamacare. At Ascension Health, which also is Borgess’ parent, employees believe the drop in profit margins to about 0.7 percent during the first six months of 2018 from 3.3 percent the same period in 2017 has led to the expense reduction and downsizing plan. Fredericksen said she was told by a nursing executive at Borgess that what is happening at Borgess and other Michigan and Indiana Ascension hospitals is a companywide plan to reduce costs and increase productivity. “This was explained to us that the decisions came from the top in St. Louis. This is an Ascension idea,” said Fredericksen, a pre-operative nurse at Borgess and vice chair of the hospital’s nurses union. The Borgess Staff Nurse Council is part of the Michigan Nurses Association. The St. John physician leader said doctors were told that there would also be “significant” layoffs in the administrative ranks, but that the number would be decided by Ascension’s corporate office in St. Louis.

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

RESTAURANT ROUNDUP

LE PETIT ZINC VIA FACEBOOK

Le Petit Zinc has moved from Corktown to 70 W. Alexandrine in the Strathmore Apartments building.

Peruvian restaurant moves into Atomic Chicken site By Laura Cassar and Annalise Frank afrank@crain.com

Buffy’s Mexi-Casian Grill is ending its run sharing space at Atomic Chicken in New Center and will be replaced with a Peruvian concept from restaurateur Greg Reyner. Buffy’s, a food truck run by Atomic Chicken co-owner Buffy Campeau, started serving tacos Jan. 24 at the chicken restaurant at 6500 Woodward Ave. Atomic Chicken has been trying to mix up things to boost sales after “disappointing” showings 10 months into its run, Scott Moloney, another Atomic co-owner, told Crain’s in January. Atomic plans to rotate different concepts through the space on a test basis and has lowered prices. Moloney confirmed to Crain’s in a message that Buffy’s will leave and the Peruvian concept called Inti will share space with Atomic starting Wednesday. Reyner is co-founder of Café Muse in Royal Oak. He is also working toward opening Marrow, a combination restaurant and butcher shop, in May or June in Detroit’s West Village — and he’s an owner in Atomic Chicken.

Le Petit Zinc reopens in new space

Le Petit Zinc is open in Midtown after moving from its Corktown home late last summer. After closing in September following a decade in the Detroit neighborhood, the French dining restaurant migrated to 70 W. Alexandrine St., connected to the Strathmore Apartments. Co-owners Karima Sorel and Scott Rutterbush first opened the cafe in 2009, bringing authentic Parisian flair to the area.

Winter Beer Carnival set

The inaugural Winter Beer Carnival is set for Chevrolet Plaza adjacent to Little Caesars Arena on March 10. The event will feature a lineup of flagship and specialty beers from top breweries, with numerous interactive, oversize games and classic carnival games. Participating brewers include Atwater Brewery, Batch Brewing Co., Brew Detroit, Dark House Brewing Co., Founders Brewing Co., Old Nation Brewery, Short’s Brewing Company, Starcut Ciders and more. “We are focused on creating extraordinary experiences,” Scott Sadoff, director of operations of Detroit Arena Ventures, said in a news release. “When programming events at Chevrolet Plaza, and at our restaurants, Mike’s Pizza Bar and Sports & Social Detroit, we al-

ways consider the ‘wow factor,’ and what will be unique and fun for our guests.” Tickets are $40 and include five 8 oz. craft beers and free play on all games. Food from Mike’s Pizza Bar, Sports & Social Detroit, Delectabowl, Detroit BBQ, El Guapo and Mac Shack will be available for purchase. The event will take place 1-5 p.m. and attendees must be 21 years of age or older. For more information, visit detroitbeercarnival.com.

Castalia Cocktails is the sister company to Sfumato Fragrances.

Sfumato mixes up fragrant cocktails

Sfumato Fragrances is opening a scent-inspired craft cocktail bar in Midtown. Castailia Cocktails explore “the ties between fragrance and flavor,” according to a news release. Sfumato was founded in 2013 by Jane Larson and her husband, Kevin Peterson. Its physical location at 3880 Second Ave. opened in November. A soft opening cocktail tasting takes place this week, with public tastings by reservation only the following two weeks. Reservations can be made at CastaliaCocktails.com. Regular hours for Castalia Cocktails starting March 21 will be 6 p.m.-midnight Wednesday-Saturday.

AMERICAN DREAMS Every few years, Crain’s Detroit Business celebrates the contributions of immigrant entrepreneurs, executives and community leaders to Metro Detroit — people who have improved our communities, powered our economy and paved a brighter future for the next generation in pursuit of the American dream.

HELP US TELL THEIR STORIES We invite you to nominate yourself or someone you know to be featured in this special section that will run in our 2018 Mackinac Policy Conference issue. Visit crainsdetroit.com/nominate. NOMINATIONS CLOSE: March 5 || PUBLISH DATE: May 28

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.

NOMINATIONS

EXTENDED TO

MARCH 9, 2018

A pothole to make you smile

Farmhouse Coffee and Ice Cream in Franklin is offering a pothole special to make a Michigan driver smile. Any customers who incurred a pothole-induced car repair expense in the month of February can bring their receipt to Farmhouse Coffee for a free single scoop of Michigan Pot Hole ice cream. The special runs until March 25 The Ashby’s Sterling flavor is described as a “thick black-tar fudge in rich chocolate ice cream with cookie asphalt pieces.” Farmhouse Coffee, which also offers breakfast, lunch and a variety of dessert items, is at 32644 Franklin Road.

NOMINATE your Cool Place to Work today at crainsdetroit.com/nominate

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

CRAIN'S LIST: LARGEST MICHIGAN WOMAN-OWNED BUSINESSES Ranked by 2017 revenue Rank

Company Address Phone; website

Majority owner(s)

Michigan employees Jan. 2018/ 2017

Revenue Revenue ($000,000) ($000,000) 2017 2016

Percent change

Percent womanowned

$3,325.0 C $3,132.0 C

6.2%

NA NA

Type of business

Ilitch companies B 2211 Woodward Ave., Detroit 48201 (313) 471-6600; www.ilitchcompanies.com

Marian Ilitch chairman

Andra Rush chairman and CEO

981.8

1,039.7

-5.6

872 845

Detroit Manufacturing Systems LLC 12701 Southfield Road, Building A, Detroit 48223 (313) 243-0700; dmsna.com

Dakkota Integrated Systems LLC 1875 Holloway Drive, Holt 48842 (517) 694-6500; www.dakkotasystems.com

Andra Rush chairman and CEO

600.0

737.0

-18.6

807 796

Complete assemblies for original-equipment manufacturers

RKA Petroleum Cos. Inc. 28340 Wick Road, Romulus 48174 (734) 946-2199; www.rkapetroleum.com

Kay Albertie owner

490.0 C

457.5 C

7.1

NA NA

100

Petroleum wholesaler, biodiesel, ethanol, E-85, jet A and jet A1 products, compressed natural gas and liquefied natural gas as well as a hauler of crude oil

Detroit Lions Inc. 222 Republic Drive, Allen Park 48101 (313) 216-4000; www.detroitlions.com

Martha Ford owner, chairwoman

341.0 D

321.0 D

6.2

NA NA

National Football League franchise

Strategic Staffing Solutions Inc. 645 Griswold St., Suite 2900, Detroit 48226 (313) 596-6900; www.strategicstaff.com

Cynthia Pasky president and CEO

340.0

330.0

3.0

1,340 1,225

Buff Whelan Chevrolet 40445 Van Dyke Ave., Sterling Heights 48313 (586) 939-7300; www.buffwhelan.com

Kerry Whelan president

261.6

224.8

16.4

166 163

100

Consulting and staff augmentation services, managed service provider and vendor management programs, outsourced solutions, executive search services, call center technology and a domestic IT development center Automobile dealership

Brazeway Inc. 2711 E. Maumee St., Adrian 49221-0749 (517) 265-2121; www.brazeway.com

Stephanie Hickman Boyse, president, CEO

215.8

191.7

12.6

61 58

Aluminum extrusion and heat transfer components for HVAC, appliance, automotive and energy applications

Vesco Oil Corp. 16055 W. 12 Mile Road, Southfield 48076 (248) 557-1600; www.vescooil.com

Marjory Epstein, chairman; Lillian Epstein Stotland, president; Lena Epstein, general manager Mindi Fynke president and CEO

184.0

173.0

6.4

184 178

Distributor of automotive and industrial lubricants, petroleum and aftermarket products and chemicals

145.8

134.7

8.2

142 113

100

Pharmacy benefits management services, third-party administration and consulting services

Food, sports and entertainment industries. Companies include Little Caesars Pizza, Olympia Entertainment, Detroit Red Wings, Blue Line Foodservice Distribution, MotorCity Casino Hotel, Ilitch Holdings Inc., Champion Foods, Olympia Development and Little Caesars Pizza Kit Fundraising Program. Automotive component manufacturing, module assembly and sequencing services

EHIM Inc. 26711 Northwestern Highway, Suite 400, Southfield 48033-2154 (248) 948-9900; www.ehimrx.com

Mahar Tool Supply Co. 112 Williams St., Saginaw 48602 (989) 799-5530; gomahar.com

Barb Mahar Lincoln CEO

110.0

119.0

-7.6

88 86

100

Tool management partner and industrial distribution, commodity management, gauging, staffing

Rush Trucking Corp. 35160 E. Michigan Ave., Wayne 48184 (800) 526-7874; www.rushtrucking.com

Andra Rush founder and chairman

103.0

121.3

-15.1

164 245

100

Motor carrier

Lynn Terry president

94.6

101.3

-6.6

159 162

100

Truck sales, parts and service

Wolverine Truck Sales Inc. 3550 Wyoming Ave., Dearborn 48120 (313) 849-0800; www.wolverinetruckgroup.com

Systrand Manufacturing Corp. 19050 Allen Road, Brownstown Township 48183; (734) 479-8100; www.systrand.com

Sharon Cannarsa president and CEO

81.2

69.2

17.3

274 217

100

Precision machining and assembly of automotive products

TTi Global Inc. 6001 N. Adams, Suite 185, Bloomfield Hills 48304; (248) 853-5550; www.tti-global.com

Lori Blaker owner, president and CEO

78.0

82.7

-5.7

200 200

Staffing, learning, outsourcing, research and consulting

Margery Krevsky Dosey CEO

64.5

62.0

4.0

65 65

100

Full-service talent management and event staffing agency

Productions Plus - The Talent Shop 30600 Telegraph Road, Suite 2156, Bingham Farms 48025; (248) 44-5566; www.productions-plus.com

MVC 27087 Gratiot Ave., Roseville 48066 (586) 491-2602; mvcusa.com

Linda Torakis president

60.0

53.0

13.2

14 14

Automotive decorative trim components including chrome plating, paint, injection molding, stamping, tool building

Motor City Stamping Inc. 47783 N. Gratiot Ave., Chesterfield Township 48051; (586) 949-8420; www.mcstamp.com

Judith Kucway CEO and CFO

58.1

74.0

-21.5

280 400

Stamping plant; automotive welding, assembly, dies and prototypes

ARC Supply Chain Solutions Inc. 13221 Inkster Road, Taylor 48180 (877) 272-3523; www.arc-scs.com

Greta Elliott president

56.3

53.7

4.9

39 40

Third-party logistics service, freight bill audit and payment, freight optimization

G-TECH Services Inc. 17101 Michigan Ave., Dearborn 48126 (313) 441-3600; www.gogtech.com

Mara Kalnins Ghafari secretary

53.4

56.0

-4.6

476 527

Technical staffing firm specializing in the placement of engineers, IT, and finance and accounting professionals on a contract and directhire basis

Tanya Bartelo owner

41.6

41.3

0.6

26 23

Seko Worldwide Detroit 6800 S. Cypress, Romulus 48174 (734) 641-2100; www.sekologistics.com/ detroit

Global logistics provider, including air, ocean and domestic transportation, as well as customs brokerage services and export crating

CrossFire Group 691 N. Squirrel Road, Suite 118, Auburn Hills 48326; (248) 364-0007; www.xfiregroup.com

Deborah Schneider co-founder and CEO

30.0

36.0

-16.7

NA NA

100

Staffing, payroll, executive search and other HR-related services

Automotive Quality & Logistics Inc. 14744 Jib St., Plymouth 48170 (734) 459-1670; www.aql-inc.com

Sangeeta Ahluwalia CEO

30.0

28.0

7.1

221 346

Provides staffing and service to the automotive manufacturing facilities and their suppliers

This list of woman-owned businesses is an approximate compilation of the largest such businesses headquartered in Michigan. Percentage of the company that is woman owned may not be solely held by the leading shareholder. Number of full-time employees may include full-time equivalents. It is not a complete listing but the most comprehensive available. Crain's estimates are based on industry analyses and benchmarks, news reports and a wide range of other sources. Unless otherwise noted, information was provided by the companies. Alliance Technology Solutions, which was No. 23 on last year's list declined to participate this year. BlueWater Technologies Group Inc., Global Supply Solutions and Millennium Software did not respond before the publication date. NA = not available.

B Marian Ilitch is the chairperson of the company after the death of husband, Michael Ilitch, on Feb. 10, 2017. Excludes revenue from Detroit Tigers. C Crain's estimate. D From Forbes. Net of stadium revenue used for debt payments.

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

Hospitals, health plans show profitability, but future uncertain By Jay Greene jgreene@crain.com

Michigan hospitals and health plans showed improved profitability in 2016 and 2017, according to a report. But there are signs the improvements may be coming to an end. Despite a 2.6 percent drop in inpatient days, metro Detroit’s 33 hospitals increased operating income by $105 million in 2016, generating a 5.5 percent margin with net income of $655.5 million, according to the 2017 Michigan Health Market Report. The other 64 hospitals in Michigan also improved their bottom lines, increasing net income by 32 percent in 2016 to $1.1 billion from $846 million in 2015, said the report by Minneapolis consultant Allan Baumgarten. Michigan’s 17 health plans also did well, increasing net income by 24 percent to $313 million in the first three quarters of 2017 from $253 million for the same period in 2016. The HMOs increased enrollment by 1.6 percent, adding 54,000 members in the first nine months of 2017 in Medicare, Medicaid and individual policies. “Coverage expansions (under the Affordable Care Act) have provided a significant boost in revenues, particularly for hospitals and clinics seeing large numbers of previously uninsured patients,” Baumgarten said in his report. “Health plans have also benefited by increased enrollment and revenues from new enrollees in individual and Medicaid plans.” But the gravy days for hospitals and health insurers the past five years could be coming to an end, some experts tell Crain’s. For example, Moody’s Financial Services projects nonprofit hospital margins to drop from an average of about 2.5 percent nationally as federal and commercial reimbursement tightens, inpatient volume continues to drop and uncompensated care is on the rise again. Crain’s reported last week that St. Louis-based Ascension Health, the nation’s largest nonprofit health system with 140 hospitals, including 14 in Michigan, recorded a drop in margins to under 1 percent during the first six months of 2018 from 3.7 percent in the same period the prior year. The income drop is leading to layoffs in Michigan and elsewhere, sources told Crain’s. Financial numbers for the hospitals came from 2015 and 2016 Medicare cost reports and are the latest data available. Health systems usually will complete audited statements for 2017 from April through July. Health plans report quarterly financial reports to the Michigan Department of Insurance and Financial Services. Data through the third quarter, which ended Sept. 30, is the latest available. Health insurers were led by Blue Cross Blue Shield Mutual and Blue Care Network, the Blues’ nonprofit health plan. Blue Care saw net income increase by 40 percent to $155 million for the first nine months of 2017, up from $94 million for the same period in 2016. Its parent, Blue Cross Blue Shield, turned around a loss of $62 million for the first nine months of 2016 to a net income gain of $357 million for the same period in 2017. Data from other health insurers include: J Priority Health reported net income of $106 million, for a 4 percent

BEAUMONT HEALTH

Beaumont Health, an eight-hospital system with 36 percent market share in inpatient days, increased net income to $360.5 million in 2016 for a 9.5 percent margin from $301.6 million in 2015.

margin, during the first nine months of 2017. Enrollment increased 6.5 percent to 653,000. J Health Alliance Plan reported net income of $7 million in 2016 for a 0.4 percent margin. Enrollment declined nearly 9 percent. J McLaren Health Plan reported net income of $16 million in 2016 for 1 percent margin. J Meridian Health Plan of Michigan reported a $10 million net loss for 2016. Enrollment increased 2 percent. J Overall, Michigan’s 17 health plans increased enrollment by 1.6 percent during the first nine months of 2017 to 3.45 million, mostly from new Medicaid patients. HMO margins averaged 2.3 percent in the nine-month

period, up from 1.9 percent for 2015.

Most hospitals increase profitability Beaumont Health, an eight-hospital system with 36 percent market share in inpatient days, increased net income to $360.5 million in 2016 for a 9.5 percent margin from $301.6 million in 2015. St. John Providence Health System, which is owned by Ascension Health, reported $65.7 million net income in 2016 for 3.2 percent margin. St. John earned a 3.7 profit margin in 2015. Grand Blanc-based McLaren Health Care Corp., which owns 14 hospitals in Michigan, recorded net

income of $207 million in 2016. Metro Detroit’s three McLaren hospitals increased net income by 337 percent to $83 million in 2016 from $19 million the year prior. Net income for investor-owned Detroit Medical Center, which is owned by Dallas-based Tenet Healthcare, dropped 23 percent to $103 million in 2016 for a 6 percent profit margin from $134 million in 2015, according to Medicare cost reports. Tenet doesn’t break out individual financial data on its hospitals in its quarterly reports to shareholders. Henry Ford Health System, which owns six hospitals and a health insurance company, reported $1.2 million net income in 2016 on net pa-

tient revenue of $2.8 billion. Its hospitals in West Bloomfield Township and Wyandotte lost $40 million, according to the report, which did not include Henry Ford’s physician and health insurance subsidiaries. Those earned more than $10 million. In 2011, the three largest hospital systems in metro Detroit — Beaumont, Ascension Health’s St. John Providence Health System and Henry Ford — controlled 49 percent of the market based on net patient revenue. By 2016, the three largest systems had 73 percent of the market with Beaumont at 36 percent, St. John at 19 percent and Henry Ford at 17 percent. Baumgarten suggests more hospital consolidation will take place. “The Tenet hospitals (DMC) comprise the fourth-largest system here (16 percent in 2016), and there has been speculation that Tenet might deal away one or more of the hospitals here, as it has done in some of its other local markets,” Baumgarten said. Tenet and DMC officials have told Crain’s that they consider DMC to be a core health system and have no plans to sell. However, several health systems, including McLaren, have expressed interest in buying all or part of the six-hospital DMC system. Michigan health systems with the best profit margins in 2016 were: Spectrum Health with 9.1 percent; Munson Healthcare with 9.0 percent; Livonia-based Trinity Health with 6.8 percent; and the University of Michigan with 6.5 percent.

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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 // M A R C H 5 , 2 0 1 8

CALENDAR THURSDAY, MARCH 8 Embracing Emerging Technologies to Diversify Business. 9:30 a.m.-3:30 p.m. 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

UPCOMING EVENTS 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 Great Lakes Business Intelligence & Big Data Summit. 8 a.m.-5 p.m. March 15. WIT. Includes keynotes from industry experts, case study sessions, vendor software demonstrations, hands-on workshops and networking opportunities. Attendees will learn about the latest business intelligence and big data software, best practices and success stories. Troy Marriott. $169. Contact: Erin Adair-Guy, phone: (248) 641-5900 x244; email: eguy@witinc.com; website: greatlakesbisummit. com 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;

PEOPLE email: cpo-events@umich.edu; website: positiveorgs.bus.umich.edu JVS Business Connections: Networking for Introverts, Extroverts and In-between-verts. 7:30-8:45 a.m. March 21. JVS. Speaker: Abby Kohut. Topics: How to explain what you do so people will remember you, how to identify the right networking opportunities for you, what “paying it forward” is all about, why networking is simply making new friends and how to turn your networking magic into long-term relationships. JVS, Southfield. Free, but registration required. Contact: Angela Bevak, info@jvsdet.org CEO Luncheon featuring Steve Tobocman. 11:30 a.m.-1 p.m. March 21. Troy Chamber of Commerce. Featured keynote: Steve Tobocman, director of Global Detroit. Maggiano’s Little Italy, Troy. $28 Troy Chamber members; $38 nonmembers. ConJessica Steve Tobocman tact: Minnick, phone: (248) 641-1606; email: jessica@troychamber.com; website: troychamber.wpengine. com/events/ceo-luncheon-steve-tobocman-global-detroit/ Digital Marketing Secrets Revealed. 7:30-11:30 a.m. March 22. Detroit Regional Chamber. Digital marketing leaders from the Detroit region will look at the current digital marketing landscape as it pertains to topics such as the new Facebook algorithm, online reputation management and influencer marketing. Greektown Casino-Hotel. $55 members, $99 nonmembers. Contact: Jim Connarn, phone: (313) 596-0391; website: detroitchamber.com/digital-marketing State of the State: Now and in the Future. 11:15 a.m. March 27. Detroit

ARCHITECTURE

Regional Chamber. Gov. Rick Snyder will discuss how the state has grown over the past eight years while also looking at the long-term impact of those accomplishments. Following his remarks, Snyder will participate in a moderated discussion with business leaders from three key industries to project how Michigan will continue to grow over the next five years. MGM Grand Detroit. $65 members. Contact: Marianne Bogard, phone: (313) 596-0479; email: mbogard@detroitchamber.com

J Ed Doyle to vice president of operations, JGA Inc., Southfield, from director, store design and construction, Art Van Furniture, Warren. J Kendall Ruhberg to associate principal and senior vice president, HKS Inc., Detroit, from vice president.

GOVERNMENT J Mark Lloyd to director, Planning and Building, Grand Blanc Township, from principal planner, Giffels Webster, Birmingham.

Positive Links Speaker Series: Technology and Happiness: The Social and Emotional Costs of Being Constantly Connected. 4-5 p.m. April 3. Ross School of Business. Elizabeth Dunn, a professor in the Department of Psychology at the University of British Columbia, will describe new findings from the UBC Happy Lab, showing that being constantly connected to the internet may carry hidden costs for individuals and organizations. Michigan Ross Campus. Free. Contact: Jacob Feinberg, phone: (734) 764-0544; email: cpo-events@umich. edu; website: positiveorgs.bus.umich. edu

INFORMATION TECHNOLOGY Chris Burrows to senior vice president, security services, CBI, Detroit, from chief information security officer (CISO), Oakland County, Pontiac.

LAW J Kristin Lefere to senior attorney, CND Law, Cole, Newton & Duran CPAs, Livonia, from associate attorney, Mizerowski Thon & Parker PC, Plymouth.

Success Is In Your F.A.C.E. — Lessons in Focus, Awareness, Communictions and Execution. 9-11:30 a.m. April 4. Oakland County Department of Economic Development & Community Affairs. Speaker: Terry Bean, founder of Networked Inc. and Motor City Connect. Oakland County Executive Office Building Conference Center, Waterford. $40. Phone: (248) 858-0783; Email: smallbusiness@oakgov.com

NONPROFITS Linda Zublick to executive director, Grosse Pointe Theatre, Grosse Pointe, from marketing coordinator, C&G Newspapers, Warren.

SERVICES J Miguel Gomez to quality program manager, Michigan Manufacturing Technology Center, Plymouth, from quality assurance manager, Federal-Mogul Corp., South Bend, Ind.

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.

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

ADVERTISING SECTION

To place your listing or for more information, please call Debora Stein at (917) 226-5470 or email: dstein@crainsnewyork.com

Andy Leavitt Partner

Kandler Reed Khoury & Muchmore Leavitt provides strategic counsel and professional lobbying expertise in key areas including financial services, agriculture, labor, workforce development, technology and municipal operations. He also is responsible for helping lead business development for growing KRKM’s client base and strategic relationships in Michigan and D.C. Leavitt previously served as chief of staff to Congressman Dan Kildee and Michigan Senate Minority Leader Jim Ananich, and as staff to U.S. Sen. Debbie Stabenow.

Howze to lead Davenport’s metro Detroit schools

Lisa Howze has been tapped to lead Davenport University’s metro Detroit campuses. Howze, who departed as Detroit Mayor Mike Duggan’s chief governmental affairs officer in early February, will oversee the Grand Rapids-based u n i v e r s i t y ’s Warren camLisa Howze pus and its newly created campus in Midtown. Davenport announced last year its plan to relocate its Livonia campus to the city of Detroit. Howze, 44, assumed the newly created role of vice president for Detroit campuses and strategic partnerships on March 1. Her term will run for two years with the option to extend for another year, she said. Warren Campus Director Paul Beasley will report to her, and she will report to university President Richard Pappas. Howze will be responsible for building relationships to help launch the new campus in Midtown.

Former OCC chancellor appointed to county post

Ousted Oakland Community College Chancellor Timothy Meyer has been appointed to an executive economic development position for Oakland County. Meyer begins his role as deputy county executive for the Department of Economic Development & Community Affairs on March 5 after being appointed by County Executive L. Brooks Patterson. Meyer replaces Matthew Gibb, who left the county in late January and is now campaign director for Lt. Gov. Brian Calley’s campaign for governor. Meyer was removed suddenly from OCC’s helm in May.

CCS fundraiser to leave for DIA

www.crainsdetroit.com/onthemove

CONSULTING

SPOTLIGHT

ACCOUNTING Andrew Bernhard Director, Business Development

RSM US LLP Andrew has nearly 20 years of experience as a strategic business leader in automotive and management consulting, with a background focused on helping companies improve the value of their products and services. He focuses on new product development, operational assessments to drive business development and sales efforts to automotive and technology clients. In his current role, he is responsible for growing RSM’s presence in Metro Detroit, primarily within the automotive and technology sectors.

TECHNOLOGY Chris Burrows Senior Vice President of Security Solutions

CBI Chris Burrows has joined CBI, a Detroit based Cyber Security Services company. Chris has 27+ yrs of experience in risk management, InfoSec, and IT operational roles. He will provide CISO level advisory services to help clients discover security gaps within their organizations and help develop, improve, and manage their compliance standards or business continuity plans. Before joining CBI, he served as the CISO at Oakland County.

KNOW SOMEONE ON THE MOVE?

For more information or questions regarding advertising in this section, please call Debora Stein at (917) 226-5470 or email: dstein@ crainsnewyork.com

The College for Creative Studies’ top fundraiser, Nina Holden, is leaving the organization to lead fundraising efforts for the Detroit Institute of Arts, effective March 31. Holden, 47, succeeds Peggy Falcon, vice president of development, who has retired. As senior vice president and chief development officer at the DIA, Holden will lead the museum’s fundraising team and work with its board and director to raise money for its operating enNina Holden dowment. As vice president for institutional advancement at CCS since 2007, Holden has helped to raise more than $90 million.

ETROIT C R A I N ’ S D E T R O CI RAIN T B’SUDS I N EBSUSINESS S // M A R C H 5 , 2 0 1 8

Page 2

DEALS & DETAILS ACQUISITIONS & MERGERS JJLaForce Inc., Green Bay, Wis., a provider for commercial door opening products, services and security solutions, has acquired Electronic Security Systems Inc., Warren, a provider of customized security services. There will be no immediate changes to services for customers or vendors. Websites: laforceinc.com, essmirku.com. JJUniversal Logistics Holdings Inc., Warren, a provider of customized transportation and logistics solutions, has acquired Fore Transportation Inc., Harvey, Ill., which operates over 150 trucks and offers a full suite of intermodal logistics solutions, including local and regional drayage services, yard services, chassis rental, and repair and maintenance. Websites: universallogistics.com, foretransportation.com. J Flagstar Bancorp Inc., Troy, announced that its wholly owned subsidiary Flagstar Bank FSB, is purchasing a mortgage warehouse loan portfolio from Santander Bank, Boston. Terms of the transaction were not disclosed. Websites: flagstar.com, santanderbank.com. Two Merrill Lynch private wealth adviser groups, Locniskar Group, Detroit, and Pursel Bucher Group, Troy, have merged to form the Locniskar Pursel Bucher Biddinger Group. The new group is based in Troy. Website: pwa.ml.com/locniskarpurselbucherbiddinger.

CONTRACTS Haymarket Media Group, London, U.K., publisher of SC Magazine, has selected Security Vitals, Pontiac, a cybersecurity solutions firm, to conduct the magazine's product reviews beginning in 2018. Reviews will be conducted through collaborative efforts between Security Vitals and Merit Network Inc., Ann Arbor, a nonprofit, member-owned organization governed by Michigan’s public universities. Security Vitals will utilize Merit Network’s Cyber Range to conduct the monthly product reviews. Websites: haymarket.com, scmagazine. com, securityvitals.com, merit.edu. JJPaul Eichenberg Strategic Consulting, Novi, a consultancy specializing in automotive supplier strategy, has selected Bianchi Public Relations Inc., Troy, as its PR agency of record. Bianchi PR is helping the company with public relations, media relations and brand awareness within the global automotive supplier sector. Websites: chief-strategist.com, bianchipr.com. JJQuicken Loans, Detroit, announced a partnership with Airbnb, San Francisco, Calif., enabling the property rental company's hosts to use rental income on a primary residence — from leasing all or part of their home to Airbnb guests — to refinance their mortgages. Websites: quickenloans. com, airbnb.com. JJMaison Birmingham, Birmingham, a custom design-build studio specializing in cabinetry and kitchen and bathroom concepts, will become the first official Michigan showroom display for Denver, Colo.-based VintageView wine racks. Websites: maiJ

sonbirmingham.com, vintageview. com. JJNear Perfect Media, Bloomfield Hills, a public relations firm, has been named the agency of record for Blo Blow Dry Bar, Detroit; Kyle and Samantha Busch/Kyle Busch Motorsports, Mooresville, N.C.; Mr. B’s Gastropub, Royal Oak; and Red Dunn Kitchen, Detroit. Website: nearperfectmedia.com. JJAlly Ventures, the investment arm of Ally Financial Inc., Detroit, has made an investment in Greenlight Financial Technology Inc., Atlanta, Ga., creator of a debit card for kids, teens and college students. Also, Ally’s SmartAuction has entered into an agreement with Nissan Motor Acceptance Corporation and Infiniti Financial Services, Dallas, Texas, to list off-lease Nissan and Infiniti vehicles for sale on its online wholesale auction platform. Websites: ally.com, allyventures. com, greenlightcard.com, nissanfinance.com, infinitifinance.com. J Montgomery Consulting Inc., Huntington Woods, a fundraising and nonprofit management consulting firm, and Bidlack Creative Group, Ann Arbor, a design and communications company, have formed an alliance to help educational institutions and nonprofit organizations to communicate more clearly and fundraise more effectively. Websites: montgomeryconsultinginc.com, bidlack.com J JDC Events LLC, Washington, D.C., an event design firm, selected Connect Space Inc., Ann Arbor, a cloud technology firm, to enhance client engagement prior to, during and post event through technology. Websites: jdc-events.com.

YOU MADE NEWS IN CRAIN’S

JJzipLogix LLC, Fraser, a real estate technology company, released zipCRM, a customer relationship management system which sends emails and newsletters to leads, tracks conversations and pulls contact information. Website: ziplogix. com

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

Reprints, E-prints and more! Contact Laura Picariello lpicariello@crain.com or (732) 723-0569.

JOB FRONT

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POSITIONS AVAILABLE

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Call Chuck 248-821-0752 INVESTMENT PROPERTY

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MARKET PLACE LEGAL SERVICES - IMMIGRATION

WATERFRONT PROPERTY

J AxleTech International, Troy, a supplier of vehicle drive train systems and components, has changed its name to “AxleTech.” The company has also debuted a new brand mark along with the name change. Website: axletech.com. JJFabian, Sklar & King PC, Farmington Hills, has changed its name to Fabian, Sklar, King & Liss PC, as Jason Liss has become a shareholder of the law firm, which specializes in fire injury, explosion and property damage cases, including property damage and insurance claim denials. Aaron Herskovic also joined the firm as a shareholder. Website: fabiansklar.com.

JJPet Supplies Plus, Livonia, a pet retail franchise, expanded its inhouse pet food line, Redford Naturals, to include Redford Naturals Dry Cat Food, a food that is free from corn, soy, wheat and artificial preservatives, colors and flavors. Website: petsuppliesplus.com

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March 5, 2018 17

Immigration Law Firm, AV-rated Antone, Casagrande & Adwers, P.C. Dedicated to Business, Employment, and Family Immigration Matters 31555 W. 14 Mile Rd. Ste. 100, Farmington Hills, MI 48334 (248) 406-4100 www.antone.com Call or email today for information on a custom advertising plan!

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POSITIONS AVAILABLE

REAL ESTATE ATTORNEY Grand/Sakwa Properties, a Farmington Hills-based real estate investment, development and management firm with over 6 MM sq. ft. of assets, is seeking an experienced Real Estate Attorney to serve as its corporate counsel. The candidate will be responsible for drafting purchase and sale agreements, commercial leases, loan documents, and other transactional documents for a portfolio of residential, industrial, and commercial properties. The candidate should also have experience with legal work that pertains to general real estate matters such as title review, zoning, entitlements, and incentives agreements. Admission to the Michigan Bar and 5+ years’ experience as a commercial real estate attorney preferred.

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NOTICE OF PUBLIC HEARING

The Crain’s Reader 26.5% influence the purchase of office/industrial and commerical space. Help them find you by advertising in Crain’s Real Estate Section. 313.446.6086 • FAX: 313.446. 034 7 E-Mail: cdbclassified@crain.com

All Citizens are advised that the Detroit Transportation Corporation (DTC) has prepared an application for State of Michigan financial as-sistance for fiscal year 2019 as required under Act 51 of the Public Acts of 1951, as amended, and for federal assistance as required under the federal transit laws, as amended. The DTC is requesting estimated total capital funding through the following sources: Section 5310 for DTC Accessibility and Equipment Upgrades and facility improvements totaling $500,000 (FTA amount of $400,000 and MDOT amount of $100,000). Section 5307totaling $500,000 (FTA amount of $400,000 and MDOT amount of $100,000), and Section 5337 totaling $1,500,000 (FTA amount of $1,200,000 and MDOT amount of $300,000) to keep the system in a state of good repair by renovating and rehabilitating the people mover equipment and facilities. And $5,600,000 of Operating Assistance for the Michigan Department of Transportation Notice of these federal funds has been published previously in the Transportation Im-provement Plan (TIP) prepared by SEMCOG. The DTC ensures that the level and quality of transportation ser-vice is provided without regard to race, color, or national origin in accordance with Title VI of the Civil Rights Act of 1964. For more information regarding our Title VI obligations or to file a complaint, please contact the DTC at the address listed below. The proposed application is on file at the DTC and may be re-viewed from Thursday March 1, 2018 – Monday April 2, 2018 between the hours of 9 a.m. and 4:30 p.m. Written comments or requests regarding the application and/or written requests for a public hearing to review the application must be received by Tuesday April 2, 2018. If a hearing is requested, no-tice of the scheduled date, time and location will be provided at least ten (10) days in advance. Submittals should be sent to Mr. Oliver Lindsay, Grant Manager, Detroit Transportation Corporation, 535 Griswold Street, Suite 400, Detroit, MI 48226 or 313-522-8445. Barring any changes made in response to the written comments, this document will become final.

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

HYPERLOOP

AUTO SHOW

“I think everybody is pretty amazed at kind of the audacity of (Elon Musk’s) proposal,” said Michael Kirk, principal of Detroit-based Neumann/Smith Architecture, which worked on train stations in Dearborn and Troy. Musk, the founder of Tesla and SpaceX, detailed the Hyperloop concept in a 58-page white paper in 2013; HTT and others like Hyperloop One have been working on similar proposals since then. “I think technically, if he’s talking truly about hyper-speed, 700 miles an hour, I don’t think you would be doing that above ground in Michigan just because there would be too many issues with weather and movement of the track due to the freeze-thaw. A tunnel would be a far more stable environment.” It would also likely be more expensive. HTT, which has recruited a stable of experts to work on the proposal by providing an equity stake in the company rather than pay, is proposing an aboveground system, while Musk’s proposal calls for underground tunnels. The Washington Post reported last month that Musk’s The Boring Co. received approval from local officials Nov. 29 to do a small amount of excavation work in a Washington, D.C., parking lot next to a McDonald’s that could make way for a Hyperloop station. An above-ground system would almost certainly face land acquisition difficulties. And an underground system would have tricky easement issues to contend with, Kirk said. And none of that is factoring in the

Moving the show to October also would put space between NAIAS and the Consumer Electronics Show in Las Vegas, which typically occurs the week before the Detroit auto show. Many automakers and suppliers are forced to choose one or the other to showcase technologies. Several have chosen CES in recent years. For example, in 2012 Mercedes-Benz skipped NAIAS to unveil a self-driving car concept. In 2016, Audi AG sent a driverless car from Los Angeles to Las Vegas, live-streaming the trip for all the world to see, and Fiat Chrysler chose to debut its Chrysler Portal concept at CES in 2017 instead of NAIAS. But by moving to October, NAIAS then gets closer to rubbing up against

FROM PAGE 1

FROM PAGE 3

HYPERLOOP TRANSPORTATION TECHNOLOGIES RENDERING

A rendering of the concept for a Hyperloop station as proposed by Hyperloop Transportation Technologies.

enormous cost, which may be far greater than public estimates. Musk estimated in 2013 a $11.5 million-per-mile cost for a San Francisco-to-Los Angeles route, yet Hyperloop One, another company attempting to make Hyperloop a reality, internally estimated $84 million to $121 million per mile, Forbes reported in October 2016. In short, there will be nothing fast or easy about traveling fast or easy. But still, MDOT is open to at least exploring a study with HTT, the emails reveal. MDOT Director Kirk Steudle “gave me the ‘OK’ if your team would like to initiate direct contact with him to start things off,” Rob Barnes, planning manager for MDOT’s Bureau of Transportation Planning, wrote in a Feb. 20 email to three Hyperloop representatives. He wrote to Steudle earlier in the day that he was contacted by a former colleague in Colorado who now works with HTT.

“They requested involvement by MDOT in a fully funded feasibility study that is about to commence involving a hyperloop corridor between Cleveland and Chicago,” Balmes wrote to Steudle. “They informed me that Michigan will be part of the study of options with a potential link from Toledo to Detroit, and then westward across southern Michigan to the Indiana border.” In a summary of a Feb. 16 call with Balmes and Hyperloop, Steudle was described as “likely to be supportive of a Hyperloop study.” HTT said last month it has signed “official agreements” with the Illinois transportation department and North Ohio Areawide Coordinating Committee to start conducting a feasibility study on building a system that would provide 28-minute commutes to Cleveland from Chicago. Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

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The North American International Auto Show is held in January at Cobo Center.

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the show in Frankfurt, Germany in September and the Paris Motor Show in October. Aisin Seiki Co. Ltd., which operates as Aisin World Corp. of America in Northville, supports the move to October, but has reservations about its ability to participate fully in all the shows around that time. “The proposed October dates are likely to make life easier for the Aisin team to participate at NAIAS given the current proximity to CES. However, Aisin also participates in other top global shows like Frankfurt, Paris and Tokyo... So there are always going to be challenges, just at different times,” Aisin spokesman Joe Rohatynski said in an email to Crain’s. The potential move was first reported by The Wall Street Journal.

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DMC

FROM PAGE 3

DMC officials referred comments to Tenet corporate in Dallas. Tenet spokesman Dan Waldmann told Crain’s the company could not comment beyond what it said in the SEC filing. He said Tenet would provide updates on the issue in future filings. “We are cooperating fully with the DOJ” and the U.S. attorney’s office in Detroit, said Waldmann, Tenet’s senior vice president of public affairs. At issue is a settlement agreement Tenet signed with the Department of Justice tied to allegations at two Atlanta-area subsidiaries. In 2016, Tenet signed a nonprosecution agreement with the Department of Justice and paid a $514 million fine related to resolving criminal charges and civil claims over a scheme by those subsidiaries to pay kickbacks in exchange for patient referrals. The NPA runs through Feb. 1, 2020, and covers all Tenet’s 74 hospitals, including DMC, and other holdings in the U.S. Tenet said in its 10K filing that the company could have “breached the terms of the (non-prosecution agreement) by failing to promptly report ‘evidence or allegations of actual or potential violations of the Anti-Kickback Statute’ to the DOJ as required by the non-prosecution agreement.” Tenet has acknowledged to the SEC that it “did not promptly report that Crain’s Detroit Business had published an article in August 2017 alleging that Detroit Medical Center’s termination of the employment

PENSION FROM PAGE 3

The Duggan administration’s plan calls for gradual $5 million annual increases in general fund expenses for pensions, starting with $35 million this year and doubling by 2025. The remaining balance owed would come from the pension savings fund. “We wanted to allow the city to grow the amount that would come out of its budget every year until 2033, which is a long slope that we thought we would be able to manage,” said John Hill, the city’s chief financial officer. The pension savings fund, formally known as the Retiree Protection Fund, was set up to try to ensure future administrations and City Councils don’t attempt to tap it for a different use in the event of another financial crisis. Detroit created an irrevocable trust through the Bank of New York dedicated to paying pensions — an approach that won plaudits and a credit-rating boost from Moody’s Investors Service. “The most important part is the money can only be used for pension payments,” said Khouri, who chairs the Detroit Financial Review Commission that is expected to release its oversight of city finances by next month. Bank of New York will invest the funds in securities and municipal bonds, which are generally secure investments with yields of 3 percent to 4 percent, Hill said.

Hanging onto the cash City officials opted for the trust fund investment approach instead of making advance payments now to the 24,000-member General Retirement System and the 14,300-member Police and Fire Retirement System.

of 14 nurse practitioners and physician’s assistants was due, in part, to the company’s concerns that their prior employment did not comply with the Anti-kickback Statute, the Stark law and the False Claims Act.” The three federal laws regulate various aspects of hospital billing and attempt to prevent improper payments or other inducements to doctors for patient referrals. The False Claims Act imposes liability on people or companies who defraud governmental programs such as Medicare and Medicaid. Federal fraud investigators are highly attuned to any arrangement hospitals might have with physicians that would lead to paying doctors for patient admissions or diagnostic services performed by the hospital, health care lawyers have told Crain’s. For example, blatant violations would be a hospital paying fees for admissions or services, but could also include offering doctors office leases at below market value, or free or discounted services like advanced-practice providers’ coverage of private doctors’ patients. Tenet’s SEC filing also acknowledges that it did not report to the DOJ “a document request from the U.S. Attorney’s Office for the Eastern District of Michigan and the Civil Division of the (Department of Justice) requesting that the company produce documents related to a civil investigation of DMC for potential violations of the Stark law, the Anti-kickback Statute and the False Claims Act related to the allegations contained in the Crain’s article.” Waldmann declined to comment on when Tenet knew of the federal Both pension funds have performed well in recent years, with the General Retirement System netting a 14 percent in the fiscal year that ended June 30, 2017 and police and firefighters’ pension fund yielding a 12 percent return, according to annual reports. The funded level of both Detroit retirement systems have also rebounded in recent years as the pension funds reaped gains from a booming stock market and shed many of the riskier real estate investments the funds’ trustees got into before state intervention began in 2012. The General Retirement System was 67 percent funded at the end of its 2017 fiscal year, up from 53 percent in 2014 before the bankruptcy was finalized and 4.5 percent cuts in base pensions for retirees were imposed. At the end of fiscal 2017, the Police and Fire Retirement System was about 78 percent funded, up from 74 percent in 2014, according to its annual report. Under Detroit’s bankruptcy debt-cutting plan, retired police officers and firefighters did not see any reduction in their base pension, but their automatic 2.25 percent annual cost-ofliving increases were reduced to 1 percent to improve the fund's health. With the pension funds on seemingly better financial footing, some city employees have questioned why the Duggan administration isn’t just putting surplus funds directly into the two pension funds. “Certainly we would have preferred that they put money in the fund,” said John Serda, chairman of the Detroit Police and Fire Retirement System and a police department captain. “But we also understand they’re under no obligation to do so.” Serda praised the Duggan administration for being “forward thinking” now about long-term pension liabili-

The layoffs last year saved DMC an estimated $2 million per year in salaries and benefits.

investigation or whether there were concerns about potential civil violations related to the use of the advanced practice providers. At the time, Tenet officials told Crain’s the layoffs were part of a normal evaluation of health care worker efficiency and department needs. ties during this period of post-bankruptcy relief from paying on debts owed to workers. He also understands the city wants financially flexibility; there’s no legal obligation to make payments to the trust fund over the next six years. “It would have been an advantage when the market is strong, but maybe not so much when the market weakens,” Serda said. The city’s use of the trust fund that yields less investment returns than the profits the pension funds have reaped in recent years was based on lessons from Detroit’s bankruptcy, Hill said. “If we put it into the pension plan and they had a few years of losses — which they’ve had before — then we’re done,” Hill said. “We still have to make those payments, and we don’t have the money we put in.” Khouri, whose department has been heavily involved in Detroit’s financial problems since the failed 2012 consent agreement, also praised Detroit officials for their budgetary preparation. “It is very difficult for any government organization to see a problem in 2024 and put cash into it today,” he said. Patrick O’Keefe, a local financial turnaround consultant who has studied Detroit’s fiscal problems for years, said the city's approach to the long-term pension payments coming due is “smart.” “What Mike (Duggan) is banking on is the tax base will continue to get bigger and they'll continue to generate more revenue,” said O’Keefe, CEO of O’Keefe & Associates in Bloomfield Hills. “When you get to 2024, he’ll hopefully have enough cash to pay the $143 million, because he doesn’t have it now.” Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

Tenet officials told Crain’s they were unaware if any of the advanced practice providers performed services for private doctors that violated the company’s anti-fraud policies and denied the layoffs were connected to any concerns about potential federal investigations. A Tenet spokesman cited Tenet policy that hospital-employed non-physician providers are prohibited from performing “any service for which a physician is responsible” in which “any physician receives payment.” The layoffs saved DMC an estimated $2 million per year in salaries and benefits. But six sources who requested anonymity told Crain’s last summer that DMC and Tenet officials had been concerned that the staffing model it had been using for years to allow advanced practice nurses to service private practice physicians at some of its six hospitals could potentially run afoul of federal anti-kickback, false claims act and Stark law provisions. For example, if private physicians also billed for inpatient services they didn’t perform themselves and DMC-employed advanced practice nurses provided the services free or for less than market value to the doctors, the practice could be viewed by federal fraud regulators as an inducement for patient referrals, health lawyers told Crain’s.

Next steps Tenet said it has hired an outside law firm to review the company’s compliance with its reporting obligations. It is not known when the

compliance law firm was hired, but one health lawyer, who asked to remain anonymous, said it probably occurred when Tenet signed the NPA in late 2016. The Justice Department informed Tenet this year that it will wait until a retrospective review is complete before making a decision on possible punishment for the breach in reporting. Waldmann declined to say whether Tenet had the outside compliance law firm review DMC practices for compliance with federal statutes. Sources told Crain’s such a review happened in early 2017, after Tenet signed the NPA. But the DOJ also told Tenet that it “does not intend to prosecute the company or (DMC) for the underlying conduct that gave rise to the (non-prosecution agreement) for purposes of enforcing the breach provision of the NPA.” The DOJ said it will consider other remedies “short of prosecution” if it determines there were violations of federal law. Tenet said it believes that the review and discussions with the DOJ will continue into the second quarter and does not expect that the remedy for the NPA breach will have a material effect (on revenue, profitability or stock prices) on the company. Under the terms of the NPA, Tenet has agreed to cooperate with the government’s ongoing investigation and enhance their compliance and ethics program and internal controls. Jay Greene: (313) 446-0325 Twitter: @jaybgreene

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Taxes expected to increase nonprofits’ stress By Sherri Welch swelch@crain.com

Historically, the U.S. government has provided tax-exempt status to 501 (c)3 or “charitable” nonprofits in part, because the sector is reducing the burdens of government by providing services it does not. Those nonprofits are organized for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition. “This is the social compact: government sacrifices revenues to have

NONPROFITS FROM PAGE 1

During her years at Treasury, it was always clear which people coming to talk tax policy were from nonprofits. They were quieter and more demure, while corporate representatives were loud and demanding, Madrigal said during a recent tax reform presentation hosted at the Detroit Athletic Club by the Community Foundation for Southeast Michigan. With so much at stake, nonprofits can no longer sit on the sidelines and trust their interests will be protected, “particularly when there are very strong voices from the corporate sector advocating for their own interests,” she said. Without strong advocacy for the sector, charitable nonprofits’ ability to meet their missions will erode with their tax exemptions. “If you can tax the endowment income of a charity, what does tax exemption even mean?” Madrigal said.

the nonprofit sector provides services at a lower cost,” said Kyle Caldwell, executive director of the Dorothy A. Johnson Center for Philanthropy at Grand Valley State University in Grand Rapids, in an email. The freedom from some taxation for charitable nonprofits is also grounded in the country’s belief that government should not impede free speech and the right to assemble, Caldwell said. The tax exemption is designed to ensure that government does not restrict those first-amendment rights.

Still, “tax-exempt” nonprofits have long been required to pay payroll taxes and “unrelated business” income taxes on revenue not related to their mission. And in the 1960s, the IRS imposed an excise tax on private foundations which typically make grants from the interest spun off by investing permanent endowment funds. But the tax on private foundations wasn’t viewed as a regular tax, said Washington, D.C., attorney M. Ruth Madrigal, who served as an attorney and policy adviser in the Office of Tax Policy at the U.S. Treasury Depart-

ment for six years before becoming a partner at Washington, D.C. law firm Steptoe & Johnson LLP. Foundations didn’t fight it because it was meant to raise funds for oversight of the nonprofits, something they deemed in the best interests of the sector as a whole to stop bad actors, she said. “There’s definitely a lot of bitterness in the private foundation community” that the tax was never appropriated for that oversight and instead goes into the general treasury, Madrigal said. For their part, states provide charitable nonprofits

Overall, charitable nonprofits — which are responsible for payroll taxes and taxes on businesses they run and for private foundations an excise tax but are otherwise exempt — now face three new taxes and a change in the way a fourth is figured that could see them paying more.

Taxing “exempt” organizations There are many intricacies to tax reform that nonprofits will need financial experts to help navigate. But overall, charitable nonprofits — which are responsible for payroll taxes and taxes on businesses they run and for private foundations an excise tax but are otherwise exempt — now face three new taxes and a change in the way a fourth is figured that could see them paying more. Exempt nonprofits that pay any of their five top-compensated employees more than $1 million in annual compensation will now be required to pay a 21 percent tax on that compensation, in line with the federal corporate tax rate. Local nonprofit executives with compensation of more than $1 million include the heads of local health systems and University of Michigan spinoffs NSF International — which helps develop standards for food and water safety and tests against them — and health care think tank Altarum. All compete with for-profit companies for talent. They will also be subject to the tax for “golden parachute” payments of more than three times the annual salary of a departing employee. Medical professionals and veterinarians providing medical services were excluded from the tax in the days leading up to the speedy passage of tax reform in December. They’re often highly paid employees of nonprofit hospitals and salaries over $1 million aren’t unheard of. Nonprofits that employ other highly paid professionals aren’t so

ERHUI1979 VIA ISTOCK

lucky — for example, investment managers who sometimes oversee nine-figure endowments, Madrigal said. People with those skills are handsomely compensated in the private sector. Affected organizations will have to compare the added cost of paying someone in-house for specialized skills like managing the investments of an endowment, vs. contracting that out. The new compensation tax is expected to hit the largest nonprofits but nowhere near the number as the employee benefit taxes, she said. Even tiny nonprofits that provide employee benefits such as bus passes or pay for carpooling expenses or parking will now be subject to a 21 percent tax on the total amount they spend on those qualified transportation benefits. The tax act also changed the rules for for-profits, taking away their ability to deduct those things, Madrigal said. The provision of an on-site premise athletic facility is now also taxable for nonprofits if the same benefit would not be deductible by a for-profit employer. But Madrigal said the IRS doesn’t believe there will be any cases of that. Certain private colleges and universities with 500 or more tuition-paying students will now be

subject to a 1.4 percent tax on the net investment income from endowments and any other assets not directly used for educational purposes. Those educational institutions can figure out if they’re subject to the tax by deducting their buildings and other educational assets and dividing the remaining asset number by their total number of students. If it’s $500,000 or more and the college or university has at least 500 tuition-paying students, they’ll pay the tax, Madrigal said. The net effect of taxing a college or university is to make fewer resources to serve students. The money paid for the tax will translate to either a cut in services or increases in areas such as tuition, she said. The endowment tax is coming initially only for those private colleges and universities, but “it’s very, very easy for me to think this could expand,” Madrigal said. Tax reform has also changed how the tax on the unrelated businesses nonprofits operate to support their mission is figured. Goodwill Industries of Greater Detroit is one example of a nonprofit with multiple business lines in manufacturing, industrial materials recovery and upscale thrift shops.

The unrelated business income tax on nonprofits was put in place in the 1950s to level the playing field between them and for-profits operating the same types of business. Previously, nonprofits subject to the tax could lump their unrelated business income and expenses together in figuring out the tax they owed. And sometimes a money-losing line of business might offset a money-making line, reducing the overall tax load. With the tax bill, nonprofits will now have to figure out the tax they owe on each individual unrelated business or trade. The upshot is nonprofits will pay tax on all profitable businesses, Madrigal said. And for those with more than one unrelated business, they’ll have to figure out how to allocate expenses across those businesses.

Speaking up On the donor end, the tax incentive for charitable gifts is no longer as big an incentive to give. “The only way a person can be connected to your mission is based on your relationship and the story you’re telling,” said Donna Murray-Brown, president of the Michi-

exemption from property and other taxes. “The Tax Cuts and Jobs Act begins to apply pressure to nonprofits to pay taxes and possibly create a context where we may see declines in charitable donations,” Caldwell said. “These financial pressures might not just influence the provision of services, but also change how nonprofits are able to exercise their first-amendment rights and liberties.” Sherri Welch: 313 (446-1694) Twitter: @SherriWelch

gan Nonprofit Association. Nonprofits also need to be sharing their stories with legislators. It’s always been important for nonprofits to be a voice for their communities and to stay on top of policy issues that impact the people they serve, she said. Now it’s even more important that nonprofits advocate, as they face both federal funding cuts and direct hits to their revenue streams. “We need to make certain we, both charitable organizations and foundations, are unified and ... loud,” Murray-Brown said. MNA will travel to Washington, D.C. March 12-14 with the Council of Michigan Foundations and other local and national foundation leaders for the annual “Foundations on the Hill” event to take the sector’s issues to congressional leaders. The following week, on March 20, MNA is hosting “Nonprofit Legislative Day at the Capitol” in Lansing to educate nonprofits on lobbying and advocacy and give them the opportunity to meet with their state legislators. Aside from contacting legislators, nonprofits should stay in the loop on the new rules the IRS and treasury introduce and comment on them to prevent them from becoming an administrative burden, Madrigal said. Through a partnership with the National Council of Nonprofits, the Michigan Nonprofit Association shares policy alerts with real-time opportunities for commenting on new rules that impact nonprofits, Murray-Brown said. It may be wishful thinking, Madrigal said, but “I would argue (nonprofits) should be starting to talk to their legislative representatives about rolling these taxes back at the earliest opportunity.” It’s not impossible. Senate Majority Leader Mitch McConnell was able to add a caveat that private colleges and universities subject to the new excise tax on their endowments must have at least 500 tuition-paying students, a measure that had the effect of exempting Berea College in his home state of Kentucky, through language in a bipartisan budget agreement in February. The National Council of Nonprofits is looking at the opportunity to do just that through a new technical bill that’s in the works to fix some of the errors/ oversights in the tax bill, said Murray-Brown, a director of the Washington, D.C.-based organization. There’s no strategy yet to do that, and it’s not clear the bill could be used to roll back the new taxes on nonprofits. “But we’re looking at it,” Murray-Brown said. Sherri Welch: (313) 446-1694 Twitter: @SherriWelch

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ISHBIA FROM PAGE 1

Ishbia, who is co-owner and top executive at United Shore, is quick to praise what Gilbert and Quicken have done. He’s also quick to politely say United Shore is a better place to work. Why challenge Gilbert and Quicken? It’s not because the two companies compete in the mortgage business. They’re in different spheres. But there’s one place they do, and that’s talent. Both employ thousands of people locally and are drawing from the same pool. Ishbia in an hourlong sit-down interview with Crain’s said his company deserves attention for how employees are treated and for becoming what industry data shows is the No. 1 wholesale mortgage company in the nation. He’s especially proud of his effort to create an employee-centric workspace that provides a vast array of perks but also is intended to ensure they maintain a healthy worklife balance. Ishbia, who was a bench player on Tom Izzo’s 2000 Michigan State national championship basketball team, wants his 2,400 staffers working only 40 hours and to never eat lunch at their desk while working — they need to mingle with co-workers or get outside if it’s nice, the philosophy goes. Like Quicken, United Shore has picked up workplace awards, and he wants more people to know about it. “We’re an underdog story, and people don’t know what were doing,” Ishbia said. “I want more people to know about us and to come join us. We don’t get the press or notoriety. In our market, the best place to work, we believe, is here.” He’s clearly irked by what be believes is disingenuous workplace-quality boasting by Gilbert and Quicken. That’s why he’s willing to make what amounts to mild criticism. “If it was genuine, what they were saying. What we do sounds like what they do, and it’s not like it at all,” he said. “You can talk to hundreds of people that worked there that work here, and they can tell you. Some might tell you that there’s things they do better than us, and god bless ‘em. We’re not the best at everything. Quicken’s a fantastic company. They’re done great things for a long time, I’m sure. But, there’s a difference. There’s a difference working here than there. We have to make sure that message is out there. We want the best people to work here.” Aside from talking to Crain’s last week, Ishbia, 38, has done some public-facing branding: He bought the naming rights to the lawn at DTE Energy Music Theatre in Clarkston, and to a minor-league developmental baseball league in Troy. Ishbia’s also been the subject of a number of profiles and he’s written op-ed pieces for Crain’s and other publications. He was a Crain’s 40 Under 40 honoree in 2011.

Different animals While Ishbia wants more notice for his company, consumer-facing branding campaigns are a waste because United Shore and Quicken are different creatures. While they’re both in the same industry, the two don’t directly compete for clients. Instead, Ishbia’s rapidly-growing company is a wholesale lender whose clients are mortgage brokers that offer several different mortgages to consumers. Quicken offers home loans directly to con-

because they know they’re not going to compete with them in another origination channel,” Cecala said. Ishbia’s hundreds of sales staffers are on the phone daily with brokers pushing the company’s home loans, and his philosophy is that hiring the best people to talk to those brokers means word-of-mouth will grow his business. He said that’s the strategy they’ve used so far, and it’s worked. There’s where Ishbia and Quicken do compete. Talent.

“We’re an underdog story, and people don’t know what were doing. I want more people to know about us and to come join us.” — Mat Ishbia

Quest for talent, attention

UNITED SHORE

sumers, and spends heavily on local and national advertising, such as spots during the Super Bowl. Among mortgage insiders, United Wholesale is as well known as Quicken. “They’ve made a name for themselves in the mortgage industry. Everybody knows they’re the big broker wholesaler out there,” said Guy Cecala, CEO and publisher of Inside Mortgage Finance, an industry journal based in Bethesda, Md. He sees an uphill battle for United Wholesale in trying to gin up much brand recognition away from Quicken, which by the nature of the retail mortgage business and Gilbert’s long-established Detroit profile, will continue to command eyeballs. “They’ve got a lot bigger profile, and it’s a sexier story,” Cecala said.

Taking over After his college basketball career, Ishbia opted to work for his dad’s 12-person mortgage company in 2003. He quickly worked his way up from delivering faxes, and came to lead the company’s refocus that evolved it from a sleepy little shop to the biggest at what it does. After shedding its consumer lending arm in 2014, United Shore’s primary business unit is United Wholesale Mortgage, which company founder Jeff Ishbia put son Mat in charge of as president in 2013. United Wholesale has grown to become the top U.S. wholesale mortgage firm for the past three years, according to Inside Mortgage Finance. Ishbia’s company had $30 billion in wholesale business in 2017, up from $9 billion when Ishbia took over in 2013. Today, the wholesaler is twice the size of the next largest wholesale originator, Texas-based Caliber Home Loans at $14.4 billion. Competitors in Michigan include Troybased Flagstar Bank (seventh, $5 billion) and Ann Arbor-based Home Point Financial (13th, $3.2 billion). United Wholesale has about 15 percent of the wholesale mortgage market, up from 3 percent in 2013. Ishbia’s goal is to double current market share in the next few years. By contrast, Quicken’s retail mortgage business saw $86 billion in production in 2017, which is down $10 billion from the year before but up from $30 billion in 2011. Quicken has about 5 percent of the $1.8 trillion retail mortgage market. While it’s the No. 2 retail lender after Wells Fargo & Co. ($94.6 billion) based on full-year 2017 production, it was the biggest in the fourth quarter last year. Because Quicken is privately held, it doesn’t disclose how much revenue it makes off its mortgage business. Ishbia’s company was willing to provide a glimpse of its numbers: For

2017, the company did $1 billion in revenue, and forecasts $1.25 billion for this year. That reflects a continued revenue growth trend: Last July, United Shore ranked 7th in Crain’s annual Fast 50 report that ranked local companies on revenue growth from 2013 to 2016. United Shore increased revenue from nearly $500 million in 2013 to nearly $860 million in 2016. Both companies share a challenge: Inside Mortgage Finance data shows that home-purchase mortgages grew nearly 11 percent to $1.1 trillion worth of business last year, while re-finances fell nearly 37 percent to $662 billion — a trend expected to continue this year. United Wholesale and Quicken have relied on refinancing as a significant share of their business. Quicken is more exposed to such shifts because it deals directly with consumers, Cecala said, and its heavily advertised Rocket Mortgage app is aimed at home purchases instead of refinancing. As for United Wholesale, he said, it can rely on its scale to weather a shift from refi to new loans. Last year, United Shore did $17.1 billion in purchase mortgages and Quicken did $24.8 billion, according to Inside Mortgage Finance data.

How it works United Wholesale relies on the nation’s 25,000 mortgage brokers as clients, Ishbia said. The brokers are the middle men who provide retail clients with mortgage options from multiple lenders — United Wholesale is one of them — so that consumers can find the best rate and terms. And much like construction contractors, brokers can get discounts not available to the public from mortgage retailers, Ishbia said. Continued growth of the broker sector, which has rebounded after the mortgage crash and subprime crisis, is one of the reasons United Wholesale has grown rapidly. “As more and more people become aware of how mortgage brokers simplify the mortgage process by shopping on their behalf and finding cheaper pricing, you’ll continue to see wholesale market share grow and UWM’s loan volume will grow right along with it,” Brad Pettiford, communication strategist at United Shore, said via email. Cecala, the Inside Mortgage Finance publisher, said United Wholesale moved solely into a decimated sector on the rebound, which most banks still avoid, and relies on good customer service to build a loyal network of brokers to fuel the growth. “By limiting themselves to the broker market, United Wholesale has created a lot of loyalty among brokers

While they’re not battling for the same clients, the two firms are both hiring from the same metro Detroit talent pool. And that’s one front where improved name recognition could help United Wholesale, Ishbia said, but the company doesn’t appear to struggle to fill jobs. The firm gets seven applications for every opening, Ishbia said, and that’s up from 1.5 per job a few years ago. Talent is the one topic where Ishbia will make a mild criticism of Gilbert and Quicken. He doesn’t believe Quicken’s employees are treated as well his United Wholesale staff. Ishbia said the industry is rife with stories about Quicken employees working 12-hour days to make their numbers, and Gilbert drew fire for encouraging his staffers to sell mortgages to their families at Thanksgiving dinner. Crain’s has written at times about the criticism of Gilbert and how Quicken employees are treated, and he’s responded with a defenses of his company and its policies. A Quicken spokesman said Gilbert and company President Jay Farner were traveling and unable to comment. Like United Wholesale, Quicken has its share of workplace and customer satisfaction awards, too. Quicken, based in downtown’s One Campus Martius, has about 13,000 employees in Detroit (with an additional 4,000 Gilbert employees in the city with his other companies). United Shore has 2,400 employees and has outgrown the 275,000 square feet of funky, buzzing office space at 1414 E. Maple Road that it bought for $3 million in 2012. Last year, United Shore announced it was spending $80 million to buy and renovate the 600,000-square-foot Hewlett Packard Enterprise building at 585 South Blvd. in Pontiac. As part of the workplace enjoyment focus Ishbia touts, United Shore is adding a host of perks to its new headquarters. Among them are a full indoor basketball court, fitness center, massage rooms, outdoor volleyball court, indoor and outdoor putting greens, convenience store, game room, outdoor amphitheater and a escape room. The relocation is expected to be complete by August. “We wanted to do extra great things for our people,” Ishbia said. His profile, and that of United Wholesale, remains much smaller than Gilbert and Quicken. Gilbert has a diverse portfolio that includes $2.2 billion worth of Detroit real estate purchases — part of his desire to help revitalize the city while making money — along with casinos and a variety of non-mortgage investments. Ishbia said he has no plans to do anything but grow United Wholesale. While he doesn’t rule out of future side businesses or projects. “I think it’s hard to be great at 30 things,” Ishbia said. Bill Shea: 313 (446-1626) Twitter: @Bill_Shea19

www.crainsdetroit.com Editor-in-Chief Keith E. Crain President KC Crain Publisher/Editor Ron Fournier, (313) 446-1674 or rfournier@crain.com Group Publisher Mary Kramer, (313) 446-0399 or mkramer@crain.com Managing Editor Michael Lee, (313) 446-1630 or malee@crain.com Product Director Kim Waatti, (313) 446-6764 or kwaatti@crain.com Digital Product Manager Carlos Portocarrero, (313) 446-6056 or cportocarrero@crain.com Creative Director David Kordalski, (216) 771-5169 or dkordalski@crain.com News Editor Beth Reeber Valone, (313) 446-5875 or bvalone@crain.com Special Projects Editor Amy Elliott Bragg, (313) 446-1646 or abragg@crain.com Design and Copy Editor Beth Jachman, (313) 446-0356 or bjachman@crain.com Research and Data Editor Sonya Hill, (313) 446-0402 or shill@crain.com Newsroom (313) 446-0329, FAX (313) 446-1687, TIP LINE (313) 446-6766

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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 // M A R C H 5 , 2 0 1 8

THE WEEK ON THE WEB

RUMBLINGS

Big Sean, Emagine to open Detroit movie theater

PawnGuru collects $2.5M in Series A round

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magine Entertainment Inc. and Detroit rapper Big Sean formally announced a joint venture to build a new movie theater and music venue in Detroit last Wednesday. The effort, reported by Crain’s last Tuesday, was months in the making and began with discussions between Paul Glantz, founder and chairman of Troy-based Emagine, and Sean “Big Sean” Anderson in the fall last year, Glantz said during a media event at the Emagine theater in downtown Royal Oak last Wednesday morning. "This is more than a dream come true," Big Sean said during the 15-minute news conference prior to an event that showed “Black Panther” for free to about 900 Detroit school students. “I feel like one of the aspirations when you do something creative, like music or any type of business, is to be an owner in something. This is something outside of music that I’m actually an owner in. I think it’s important to show the kids of Detroit, the people of the city, that you actually can be an owner … I hope it’s a good example of bossing up and doing what you will.” The theater will be called the Sean Anderson Theatre Powered by Emagine, according to a company representative. Details about the theater, including its location, are still being finalized, but Glantz said in an interview Tuesday night that it is expected to be 1012 screens with the capacity to seat 1,000-1,300 people. It would open by early 2020 and also include a music venue that could also host events such as lectures, seminars and comedy shows, Big Sean said. A site has not yet been selected, although an entity tied to Glantz has been buying property in Detroit’s Milwaukee Junction neighborhood in recent months near East Milwaukee and Brush Street. “We are looking around right now and we have a few options we are really interested in,” Big Sean said. “Definitely looking at downtown, Midtown, but wherever we choose, we hope everyone will come out and make an effort to really support it.” Detroit has few movie options. There is Cinema Detroit on Third Avenue, Bel Air 10 on Eight Mile Road on the city’s northeast side, the Detroit Film Theatre at the Detroit Institute of Arts, and the Redford Theatre on the northwest side.

BUSINESS NEWS J The U.S. attorney’s office in Detroit is investigating possible federal civil violations of anti-kickback, false claims and self-referral laws at Detroit Medical Center, according to a federal securities filing last Monday by Tenet Healthcare Corp., DMC’s Dallas-based parent company. J Matthew Gibb turned down an economic development adviser role with the city of Flint after criticism of possible conflict of interest, according to a letter sent to Crain’s. J Tickets for the Detroit Tigers’ 2018 Opening Day went on sale on Jan. 28, and they’re still available — another indicator that it’s a new, probably painful era for the team and its fans.

LARRY PEPLIN FOR CRAIN’S

Detroit rapper Big Sean and Paul Glantz, founder and chairman of Troy-based Emagine, announced a joint venture to build a new movie theater and music venue in Detroit last week.

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

The number of animals to which the Detroit Zoo is offering homes after the abrupt closure of Bat Zone. It had housed around 250 animals in Pontiac.

$1.9 million

The amount United Shore is getting in state brownfield financing for its headquarters relocation from Troy to Pontiac.

The number of franchise Blink Fitness gym locations Saginaw native and ex-MSU Spartan basketball star Draymond Green has signed a deal to open in Michigan.

J Pittsburgh food hall concept creator Galley Group Inc. plans to open its fourth incubator in the former Federal Reserve building in downtown Detroit. Four chefs will serve food for yearlong terms in the market-style space. J Broder & Sachse Real Estate Services Inc. plans to move its acquisition, development and property management operations from Birmingham to the Arts League Building in downtown Detroit. J Little Caesars Arena was set to host 20 college basketball teams for the Horizon League Championships tournament starting last Friday, but professional video gamers were to warm up the arena Thursday night to play for cash prizes in the “NBA 2K18” esports championship. J Orangetheory Fitness plans to open a fitness center in the former Haberman Fabrics building in downtown Royal Oak. The owners of Bright Ideas Furniture bought the building in February and plan to also move there. J Icahn Automotive Group LLC added four more service centers in metro Detroit to its portfolio and will turn them into Pep Boys Service and Tire Centers. J Grupo Antolin received approval

for a bigger state grant for its plans to hire an additional 210 workers at its Shelby Township auto interiors plant. J Detroit Diesel Corp. is seeing slower than expected growth for its medium-duty engine production and is dialing back its Redford Township expansion plan. J The Detroit Red Wings sent forward Tomas Tatar to the expansion Las Vegas Golden Knights before last Monday’s trade deadline in return for a trio of draft picks. J Michigan First Credit Union sued Palace Sports & Entertainment and the Detroit Pistons, alleging the team breached a 2016 sponsorship agreement. J Designhaus Architecture plans to build a $2.5 million, four-story building in downtown Auburn Hills for its new headquarters, a restaurant and six loft-style apartments. It was one in $17 million in construction projects approved last week by the City Council.

outhfield-based PawnGuru Inc. has raised $2.5 million in a Series A funding round. Detroit-based Impact Detroit Ventures, an early investor in the company, and Oakland, Calif.-based Impact America Fund led the round, with more support coming from an angel investor, a news release said. PawnGuru will use the money to grow its online marketplace domestically and internationally. The fintech firm has about 3,000 pawn shops operating on the website and an additional 1,500 are expected to be rolled out by the end of the year. About 38 of the participating pawn shops are in metro Detroit, co-founder Jordan Birnholtz said. “What we are building toward is to make it possible for consumers to see the selection of items available at all pawn shops near them,” he

said. “Next year’s is to make it possible to make [products] be deliverable.” Birnholtz said the service differs from buy-and-sell sites such as San Jose, Calif.-based eBay Inc. because it connects brick-and-mortar pawn shops to the online market. There, consumers can compare offers from multiple shops, which the release said can differ from store to store by as much as 270 percent. The goal is to give negotiation power to under-banked consumers. Users can also buy items from local shops that can be retrieved in just a couple of hours, Birnholtz said. PawnGuru employs a dozen people between its Southfield and Ann Arbor offices and plans to add one to two more. The company did not disclose revenue figures.

OTHER NEWS J Grand Valley State University President Thomas Haas plans to retire next year after leading the school for more than a decade. J Detroit Mayor Mike Duggan endorsed former Senate Minority Leader Gretchen Whitmer for the Democratic nomination for governor as she unveiled a campaign headquarters in northwest Detroit last Wednesday. J William Blake, a former 36th District Court officer, faces four felony counts of embezzlement over $50 by a public official. J “Final warning” notices for Detroit QLine riders not paying fares have escalated to misdemeanor citations that could cost violators up to $500 and potential prison time. J Vice President Mike Pence planned a trip to Detroit last Friday to promote the Republican-authored tax code overhaul and raise campaign cash for GOP congressional candidates and incumbents. J The Royal Oak-based Michigan Muslim Community Council named its first executive director, Sumaiya Ahmed Sheikh. J Henry Ford College’s board of trustees named five finalists for its presidential position. The list includes Tom Watkins, who resigned as Detroit Wayne Mental Health Authority CEO in August.

LARRY PEPLIN FOR CRAIN’S

New legislation would allow liquor licenses for concessions in a state-owned office building of more than 1 million square feet, and also make an exception for that building on a state requirement that concessions in state-owned buildings be owned or operated by someone who is blind. Cadillac Place, the former General Motors Co. headquarters, is the only building that meets that threshold.

Bill would exempt Cadillac Place from blind-vendor law Y

ou might soon be able to get a little boozy at the Cadillac Place office tower in the New Center area. New legislation would allow liquor licenses for concessions in a stateowned office building of more than 1 million square feet, and also make an exception for that building on a state requirement that concessions in state-owned buildings be owned or operated by someone who is blind. The only state-owned office building that meets that threshold is Cadillac Place, the former General Motors Co. headquarters. Crain’s wrote about the law and its effect on the 1.4 million-square-foot Cadillac Place’s retail space in August as the New Center area sees increased real estate development and

retail activity by groups such as Detroit-based The Platform LLC, Midtown Detroit Inc. and others taking advantage of the QLine rail project and an active greater downtown development market. The law is causing difficulty getting Cadillac Place’s retail space leased to tenants because retailers generally like the foot traffic restaurants bring, and the state has had difficulty filling space with blind restaurant owners. The tie-barred bills, Senate Bills 803 and 804, have been referred to the Committee on Regulatory Reform. They were introduced last month by Sen. Dave Hildenbrand, R-Lowell. A message was left with him Friday morning.

KIRK PINHO

Join Crain’s real estate insider Kirk Pinho and a group of powerhouse experts as they share perspectives on the future of Detroit’s real estate market, what factors are impacting development in the area and how changes in the market can directly affect your business.

Thursday, March 22

8-10:30 a.m. Garden Theater, Detroit Individual ticket: $80 Reserved table of 10: $850

PANEL 1: FOLLOWING (AND ATTRACTING) THE MONEY Downtown Detroit’s resurgence is news everywhere from the New York Times to CNBC. But it still lags other cities in outside investment from REITs, hedge funds and others with deep pockets. What will it take to get Detroit to the next level? PANELISTS:

*This special discount is only available to young professionals ages 21-35. You may be required to show ID at the event.

Sonya Mays, president and CEO, Develop Detroit Inc.

Are you a Crain’s Detroit Member? Email us at cdbevents@crain.com to receive your individual ticket discount.

Clifford Brown, managing partner, Woodborn Partners LLC

Young Professional (30% Off) $56

Dennis Bernard, founder and president, Bernard Financial Group Dan Mullen, president, Bedrock LLC

PANEL 2: THE BIG PICTURE: ECONOMIC OUTLOOK FOR DETROIT COMMERCIAL REAL ESTATE An economic outlook for Detroit’s real estate market: What are the economic issues that will affect the region? Is it purely the performance of the automotive industry, or have we moved beyond that? What other outside factors will play a role? PANELISTS:

Keona Cowan, senior vice president, Invest Detroit Paul Traub, senior business economist, Federal Reserve Bank of Chicago, Detroit branch

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