Crain's Detroit Business, April 2, 2017 issue by Crain's Detroit Business

What free NCAA pizza costs Little Caesars — and why it pays Page 3

Signs point to a billboard comeback downtown Page 8

APRIL 2 - 8, 2018 | crainsdetroit.com

Big business grows from shared classes By Chad Livengood clivengood@crain.com

A small group of public schools in Michigan that wrestled for years with declining enrollment, stagnant state aid and budget deficits have made a business worth more than $100 million out of educating private school and homeschooled students at taxpayer expense. Enrollment in a state program known as “shared time” in which public schools teach elective classes to non-public school students has soared

by 174 percent in the past eight years after Gov. Rick Snyder and the Legislature loosened restrictions. Now, Snyder wants to rein in the programs as the cost of subsidizing elective courses in private schools and online classes to homeschool children is expected to balloon next year to $135 million, depleting the pool of available funds for all Michigan schools. It amounts to about $90 for each of the 1.46 million children in Michigan’s public school systems. SEE SCHOOLS, PAGE 21

Shared-time students on the rise

Enrollment of private school and homeschool students in shared-time classes offered by public schools has increased 174 percent over the past eight years after the Legislature and Gov. Rick Snyder expanded the boundaries for school districts to market their classes, creating a whole new line of business for some districts. 20,000 Shared-time students

BUSINESS OF EDUCATION

15,000 10,000

Insurers aim patients away from hospitals By Jay Greene

5,000

HEALTH CARE

jgreene@crain.com

2010-11

2011-12

2012-13

2013-14

2014-15 2015-16

2016-17

2017-18

SOURCE: Michigan Center for Educational Performance and Information

ENTREPRENEURSHIP

CATERING TO A GROWING CROWD

Health insurers are increasingly creating programs to encourage patients to move away from hospitals and instead use lower-priced outpatient providers or in-home services to reduce costs and hold down premiums. The insurers are requiring prior authorization for services done at hospitals for administration of intravenous drugs and favoring outpatient providers or home infusion services done by a visiting nurse. They also are with providers for joint replacement sur-

Need to know  Blue Cross, Priority Health aims to move services away from higher-cost hospitals  Hospitals expected to make changes in operations  Employers, patients driving change to lower costs and increase convenience

manufactures balms used to condition and style men’s beards. This month, the company began stocking its products on roughly 100 Walmart store shelves and is expected to ramp up production to supply 750 Walmart stores across the country.

gery at a flat rate. That’s changing how hospitals do business. Employers are demanding health insurers restrain rising costs, and patients also are realizing they pay more out of pocket with high-deductible benefit plans if they go to higher-cost settings. Hospital officials agree that some services can be delivered in lower-cost outpatient settings, but caution that some higher-risk patients should be allowed to continue to be seen by hospital providers. Blue Cross Blue Shield of Michigan and Priority Health are among the insurers working to shift certain kinds of care out of the hospital. Peter Schonfeld, the Michigan Hospital Association’s COO and senior vice president of policy, said hospitals will be hurt financially by the Blue Cross policy, and some hospital-owned infusion centers might close in areas without high numbers of commercially insured patients. He said hospitals also could be financially hurt by the bundled payment program as they cut prices or lose patient volume.

SEE BEARDS, PAGE 20

SEE INSURERS, PAGE 22

Jon Koller, proprietor of Beard Balms LLC, in his Corktown shop. LARRY A. PEPLIN FOR CRAIN’S

Detroiters hope to pull in some of the billion-dollar beard care market By Dustin Walsh

Behind the dance studio, next to the wood shop and tucked into a walk-in closet-sized workspace at Corktown’s quirky shared-workspace incubator Ponyride, Jon Koller twirls his chest-length beard.

Here, dressed in a construction-grade Carhartt bib and a t-shirt, Koller waxes poetic about Civil War general Alpheus Starkey Williams — who is immortalized with a monument on Belle Isle — the sebaceous glands of wool-bearing sheep and the staying power of fashionable

crainsdetroit.com

Vol. 34 No. 13 $5 a copy. $169 a year.

dwalsh@crain.com

NEWSPAPER

beards, a trend that’s transcended the machine shop to the pages of GQ. Koller, 33, is serious about bearded generals and sheep and lanolin, the complex compound sheep excrete to protect its wool, because it’s important to his future. Koller is the proprietor of Beard Balms LLC, which

INSIDE

A Q&A with economist Lawrence Summers Summers talks about the trade policies << of the Trump administration, the forces of disruption in the auto sector and brittleness in the U.S. economy. Page 16

C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 2 , 2 0 1 8

MICHIGAN BRIEFS

INSIDE

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

Former MSU dean faces criminal charges

A sexual-abuse scandal at Michigan State University widened last week as authorities charged a medical school official with failing to keep former sports doctor Larry Nassar in line and accused him of groping female students and storing nude student selfies on his campus computer, the Associated Press reported. William Strampel, 70, is the first person charged since a broad investigation was launched in January into how Michigan State handled complaints against Nassar, who for years sexually abused girls and young women, especially gymnasts. Strampel was dean of the College of Osteopathic Medicine until December, when he took a medical leave. He was Nassar’s boss, yet he failed to enforce restrictions on him after a female patient in 2014 complained about sexual contact, authorities alleged. Strampel was arraigned last Tuesday by video from jail on four charges. The complaint charges Strampel with fourth-degree criminal sexual conduct, neglect of duty and misconduct of a public official. It alleges Strampel solicited nude photos from at least one female medical student and said he used his office to “harass, discrim-

inate, demean, sexually proposition, and sexually assault female students in violation of his statutory duty as a public officer.” Strampel’s computer contained approximately 50 photos of female genitalia, nude and semi-nude women, sex toys and pornography. “Many of these photos are of what appear to be ‘selfies’ of female MSU students, as evidenced by the MSU clothing and piercings featured in multiple photos,” according to the complaint. He is also accused of grabbing students’ buttocks at the college’s annual ball and a scholarship dinner. The maximum penalty for the charges ranges from one year in jail to five years in prison. His preliminary exam is set for May 3. East Lansing District Judge Richard Ball set a $25,000 personal recognizance bond and determined that Strampel is not a flight risk. The charges against Strampel are the first after Attorney General Bill Schuette assigned Bill Forsyth as special prosecutor to investigate MSU’s handling of the Nassar case. The charges come as Nassar victims continue their effort to sue the university and expect the university to file an amended motion to dismiss their lawsuit. Forsyth also asked the Department of Attorney General and the Department of Licensing and Regulatory Affairs to take action against Strampel’s medical license.

CALENDAR

CLASSIFIEDS

DEALS & DETAILS

KEITH CRAIN

OPINION

OTHER VOICES

PEOPLE RON FOURNIER

GERALD R. FORD INTERNATIONAL AIRPORT VIA FACEBOOK

The Gerald R. Ford International Airport in Grand Rapids announced it has started reconstruction work on its terminal apron. The $30 million project is expected to take two years. His lawyer, John Dakmak, denied ed in seven phases over two years to his client ever inappropriately allow for adequate gate space for air touched medical students or re- carriers as the busy summer travel ceived sexual favors in exchange for months approach. Construction boosting their standing in school. started this week, the airport said. He told reporters that Strampel inThe project will remove aging constructed Nassar of protocols to ad- crete pavement and replace it with here to in 2014 after a patient com- new concrete, making way for future plained, and that Strampel “followed airport development, according to a up” with Nassar. news release. The airport is also installing new LED lighting in the apron area to reFord airport starts $30 duce energy usage, as well as upgradmillion repair project Gerald R. Ford International Air- ing the stormwater drainage system port in the Grand Rapids area has and underground utilities. It also recently completed an exstarted work on a $30 million project to repair the area where aircraft are panded airport viewing park and the parked, loaded and refueled, the As- first phase of its gateway redesign project. sociated Press reported. The Gerald R. Ford International Construction on the terminal apron at the airport will be complet- Airport Authority manages the air-

RUMBLINGS

WEEK ON THE WEB

port, which is the second most-used in Michigan. It saw 2.8 million passengers in 2018.

Michigan orders 210 marijuana shops to close

The Michigan Department of Licensing and Regulatory Affairs has ordered the closure of 210 dispensaries and other medical marijuana businesses that failed to apply for a state license by a mid-February deadline, the Associated Press reported. LARA disclosed the figure last Thursday, two weeks after it began issuing cease-and-desist letters. More than 150 of the shops are in Detroit. Michigan is in the process of licensing marijuana businesses under a law enacted in 2016. Emergency rules issued in December allow businesses to stay open while seeking a license if they have the approval of their local community. But if they have not applied as of Feb. 15 or their municipality has not approved an ordinance, they must close.

Crain’s 40 under Forty alumni represent some of the most influential, successful professionals in Michigan. No, they don’t just work for large corporations or institutions, either. These individuals are leaders in civic life, at nonprofits and in creative fields; they are the boots on the ground that are willing change into existence. Do you know an under-40 like this? Nominate them for inclusion in our 2018 class today! The chosen 40 will be featured in a special issue on Sept. 3 and honored at our annual event in November.

HURRY – THE DEADLINE TO NOMINATE IS MONDAY, APRIL 9. To nominate, visit crainsdetroit.com/nominate

C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 2 , 2 0 1 8

PHILANTHOPY

Detroit’s grants team grows, pull dollars into city By Sherri Welch swelch@crain.com

The city of Detroit has built its development and grants compliance muscle to a team of nearly two dozen people, a third of them raising new public and private support for city initiatives. That’s a record fundraising contingent for the city and among the largest dedicated municipal fundraising

efforts nationally, said Detroit’s Chief Development Officer Ryan Friedrichs. The goal? Capitalizing on rising interest nationally in the city’s comeback. And there’s evidence it is succeeding in bringing in outside money rather than just the usual local philanthropic stalwarts in a city that in the past had trouble actually spending the dollars it did get.

Last year, programs and initiatives in Detroit attracted over $202 million in public grants and private investment, according to the city. Grants and low-interest loans from private foundations and companies totaled $67.4 million, with more than two-thirds of that coming from out-of-state funders. “The goals are now bigger and bolder,” Friedrichs said.

The city is going to pursue funding from even more sources, foundations that have not been in Detroit before, to fund efforts like the $250 million Affordable Housing Leverage Fund. “We are lucky we have a lot of foundations here ... but we also have a lot of need,” Friedrichs said. “What we’re trying to do is bring that new funding to the city and not SEE GRANTS, PAGE 19

RESTAURANTS

THE BIG BENEFIT OF FREE PIZZA By Bill Shea bshea@crain.com

Little Caesars may spend what one pizza industry insider says is about $4.3 million on its March Madness giveaway on Monday, but it will see millions more worth of free exposure. The Detroit-based chain’s “If Crazy Happens” promotion offered a free $5 Hot-N-Ready lunch combo — four deep-dish pepperoni slices and a Pepsi product — if a No. 16 seed in the NCAA men’s basketball tournament beat a No. 1 seed, something that hadn’t happened in 135 games.

And then it did: The nationwide pizza combo giveaway was triggered on March 16 when No. 16 University of Maryland-Baltimore County upset top-seeded University of Virginia in the first round. The giveaway is timed to take place on the same day as the national championship game to be played at the Alamodome in San Antonio. The number of gratis slices is limited by the fine print. It says the giveaway must be redeemed between 11:30 a.m. and 1 p.m. (local time) Monday at participating U.S. Little Caesars locations. It cannot be redeemed online or via

Need to know

JJDetroit pizza chain may spend

estimated $4.3 million on its giveaway JJCompany will reap up to estimated $7 million in exposure JJGiveaway is timed for the day of the national championship game

delivery, and anyone in line must have placed their order before 1 p.m. that day. The free pizza deal is limited to one per family, with no substitutions or different toppings.

Little Caesars has declined to discuss how many pizzas it expects to give away, its costs or if it had insurance on the promotion. Crain’s was told by a source familiar with how the company’s economics work that Little Caesars spends about $1.50 in food costs for the lunch combo — the beverage portion is subsidized by Pepsi — so when combined with labor costs and loss of traditional sales, the cost for each participating store will be about $1,000. SEE PIZZA, PAGE 20

COMMENTARY

DUSTIN WALSH dwalsh@crain.com

Incentives: More about politics than impact

isconsin Gov. Scott Walker has yet to clutch an oversized pair of ceremonial scissors and cut a red ribbon in Racine County to celebrate his state’s win of an economic development chased nationwide. One could speculate he can’t collect on the polished media event for the plant, which will cost $4 billion in state tax incentives, until taxpayer anger over Wisconsin’s disintegrating roads subsides. How could he explain the gap in state road funding while touting the $30 million in Foxconn-related road work tied to the project? Michigan missed out on Foxconn’s $10 billion investment that plans to employ 13,000 people to build liquid-crystal display screens. Gov. Rick Snyder missed his opportunity to hold those scissors alongside Foxconn CEO Terry Gou. We should be thankful. New research by Kalamazoo-based W.E. Upjohn Institute for Employment Research calls into question whether the economic incentives offered by states and cities to big outof-state companies — Michigan offered Foxconn $3.7 billion — is worth the economic squeeze to taxpayers. The short answer is no. While these incentives offer political capital, more often than they not fall short in creating meaningful employment growth, compared with investing in business services for small- and medium-sized companies. “Scott Walker will get a number of big ribbon-cutting ceremonies that’ll be covered by the news media; then he can take credit for creating all those jobs,” said Timothy Bartik, senior economist and lead author on the study. “We can present evidence all day about how services for small and medium companies are more fruitful, but the public doesn’t reward it and politicians respond to public pressure.” Michigan’s economic development leaders weren’t swayed by the loss of Foxconn, offering up another massive incentive package to Amazon Inc. in failed bids by Grand Rapids and metro Detroit. SEE WALSH, PAGE 22

MUST READS OF THE WEEK 7-day insurance persists as L.A. Insurance pays fines

Relentless and positive but not much action

Bringing them in from around the world

Not much action on state’s move to clamp down on the policies. Page 4

Chad Livengood: On Asian carp, state’s actions doesn’t measure up to the threat. Page 7

How Detroit City FC, a semi-pro team, lures top-tier pro teams to come to the Motor City. Page 12

C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 2 , 2 0 1 8

7-day auto insurance persists as L.A. Insurance pays fines By Chad Livengood clivengood@crain.com

YOU MADE NEWS IN CRAIN’S Contact Laura Picariello at lpicariello@crain.com

Share your success with custom Reprints, E-prints and more!

Seven-day auto insurance policies remain available for purchase in Michigan one year after state regulators moved to curtail the plans and cracked down on L.A. Insurance agents who paired the short-term coverage with roadside assistance plans that customers didn’t know they were buying. The Michigan Department of Insurance and Financial Services put Integon National Insurance Co. on notice on March 15, 2017, that it would terminate the North Carolina-based insurance carrier’s ability to sell seven-day plans through L.A. Insurance. The regulatory action against Integon has since languished in administrative law proceedings and officials won’t comment on the status of the case, which has been entangled in the ongoing debate over reforming Michigan’s no-fault auto insurance law. But the insurance department recently reached a settlement with eight L.A. Insurance employees who were accused of inflating the cost of weeklong auto insurance policies by “sliding” in roadside emergency assistance coverage without the knowledge of customers. Separately, an administrative law judge fined two other L.A. Insurance agents for similar “sliding” schemes that inflated the cost of seven-day insurance plans, bringing total fines against the Royal Oak-based insurance company’s agents and stores to $142,500, state records show. L.A. Insurance agents Ronnie Kassab, Renault Kassab, Steven Kado and Alana Gardon and three insurance agencies in Lansing where they worked agreed to pay a combined $77,500 in fines and refund drivers who were wrongly charged for Nation Safe Drivers Auto Club roadside assistance, according to a March 6 order signed by Teri Morante, chief deputy director of the state insurance department. In a separate order Morante signed March 6, L.A. Insurance employees Jennifer Essak, Laurence Essak, Pierre Putruss and Brandon Kiminaia and three separate agencies agreed to pay a combined $55,000 in fines and refund drivers who were charged for the roadside assistance plans. “It was cheaper to settle than keep fighting. The attorney fees are astronomical,” L.A. Insurance CEO Anthony Yousif told Crain’s. “It was easier to settle.” L.A. Insurance hired prominent Lansing attorney John Pirich of the Honigman law firm last year to defend a dozen agents who faced allegations of

CHAD LIVENGOOD/CRAIN’S DETROIT BUSINESS

The seven-day insurance plans L.A. Insurance sells in Detroit and surrounding suburbs have come under scrutiny by state officials.

deceptive business practices, including allegations of manipulating insurance quotes for drivers in a welfare-towork program to hide charges for roadside assistance plans that weren’t an approved use of taxpayer funds. Kado’s license to sell insurance was suspended for a year. Gardon and Renault Kassab’s licenses were suspended for three months, according to the order. Laurence Essak and Putruss agreed to four-month suspensions of their insurance licenses, while Jennifer Essak acccepted a nine-month suspension and their three agencies in Ypsilanti and Owosso will be on probation for one year. Kiminaia was selling insurance without a license, according to Morante’s order. The insurance department brought a third case of deceptive business practices against L.A. Inusrance agents Sonny Kassab and Sandy Kassab, who ran two stores on Detroit’s west side. On March 22, state insurance Director Patrick McPharlin enforced an administrative law judge’s ruling that Sandy Kassab pay $7,000 in fines and $300 in restitution to three customers who were sold roadside assistance plans without their knowledge. Sandy Kassab’s license to sell insurance was suspended for a year. Administrative Law Judge Thomas Halick ruled Sonny Kassab’s license be suspended for eight months and ordered him to pay $3,000 in fines and $300 in restitution to three customers. The judge’s order also suspended the license of the two L.A. Insurance agencies at 10231 Livernois and 17516 Livernois for eight months. In many cases, the roadside assistance coverage doubled the actual cost of the premium for seven days of auto insurance that L.A. Insurance marketed for $199 in Detroit, according to the state’s complaints filed against multi-

Nomination deadlines near for Forty Under 40, Best in Class The deadline to nominate an outstanding young leader in business for Crain’s Forty Under 40 is April 9. Since 1991, Forty under 40 has recognized uncommon levels of achievement by business leaders under the age of 40. Winners are selected based on factors such as financial impact and community leadership and will be profiled in the September 3 issue of Crain's Detroit Business. An awards event honoring their achieve-

ments will be held in November. To nominate, go to crainsdetroit. com/nominate or contact special projects editor Amy Bragg (abragg@crain. com; 313-446-1646) with questions. Nominations for Best in Class: Real Estate, a new program recognizing excellence in real estate and the year’s most impactful deals and projects, are also due April 9. Visit crainsdetroit.com/nominate for more information.

ple L.A. Insurance agents. Yousif said his company’s insurance agents ask all customers whether they want to purchase a six-month roadside assistance plan through Boca Raton, Fla.-based Nation Safe Drivers. “We changed our practices three years ago,” Yousif told Crain's. McPharlin said the agents agreed to settle, pay the fines and restitution to customers and change their sales practices, while neither admitting to or denying the allegations. “DIFS is pleased with the outcome of these enforcement cases,” McPharlin said in a statement. “We remain focused on continuing our efforts to provide regulatory oversight of the insurance and financial services industries while protecting Michigan citizens.” Yousif said his company’s carrier, Integon, continues to negotiate with DIFS over the future of selling seven-day insurance plans. L.A. Insurance has about 30 locations in Detroit and several stores scattered across first-ring suburbs in Macomb, Oakland and Wayne counties. The company markets Integon’s seven-day insurance plans as a “jump start” coverage to let drivers purchase proof of insurance that’s needed to register their vehicle with the secretary of state’s office. Critics say the plans provide a legal loophole in the state’s no-fault insurance law, which requires continuous coverage of vehicles in operation. Detroit Mayor Mike Duggan has called seven-day insurance a “scam.” Integon, a division of Winston-Salem, N.C.-based National General Insurance Group, has been selling its weeklong insurance plan in Michigan since at least 2011, according to public records. Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

BANKRUPTCIES The following businesses filed for bankruptcy protection in U.S. Bankruptcy Court in Detroit March 23- 29. Under Chapter 11, a company files for reorganization. Chapter 7 involves total liquidation.  PrintXpress Inc., 7120 Chase Road, Dearborn, voluntary Chapter 11. Assets and liabilities are not available.  Northland Tire & Service Inc., 21125 Greenfield Road, Southfield, voluntary Chapter 7. Assets: $200; liabilities: $31,000.

SPONSORED BY:

CaringForKidsMarch.indd 1

have all the opportunities that children diagnosed today have. At UPAC, I am managing the operational piece of the program. I work with families and help them get into services. I really see the value of customer service and know what families are looking for and what they need, so that is the expertise I bring. Burns: Tell our readers some of the things you want our community to know not only about your services but about things related to autism that may be new in the last few years? Clancy: The biggest thing that has changed in the community is being able to offer services to kids with autism that they previously didn’t have the opportunity to get. When we provide treatment to children with autism at UPAC, it’s based on Applied Behavior Analysis, an evidence-based procedure. We work on skills that help kids with their quality of life like how to communicate and play better. We have all levels of severity of autism, and we have an individual treatment plan for each of these kids and really try to work on the things that will be the most meaningful to them. Burns: What is the age range of kids that you are seeing? Clancy: We are starting to get kids that are as young as 18 months. We really don’t have an age cap but for the most part kids get access to the benefit up until 18 with private insurance and up to 21 with Medicaid, so we tend to see less people in those older age groups. Learn more at upautism.com

Jim Hughes is executive director of CATCH Charity for Children, dedicated to pediatric patients at Children’s Hospital of Michigan and Henry Ford Hospital. Burns: You’ve been director of CATCH for 27 years; share the kind of work the charity does. Jim Hughes: CATCH was founded by Sparky Anderson, the late, great manager of the Detroit Tigers when he was managing the team in 1987. CATCH is more commonly known as Sparky Anderson’s Hughes Charity for Children. The purpose is to raise money through fundraising events and an annual giving program to fund items and services that help improve the quality of life of patients and their families at Children’s Hospital and Henry Ford Hospital. We are special-event driven. Burns: When Sparky was the manager of the Tigers he would bring a young player unannounced to Children’s Hospital. It was usually a player he was trying to mentor in what to do to be a good citizen. He didn’t have any media there. Sparky was so happy when he did it and it impressed the young players so much. Hughes: That is so true, you just nailed it. The key thing you said is “unannounced.” When Sparky passed away in 2010 and we were putting together a tribute video for him, we could find very few photographs of him at either hospital, simply because he did it unannounced and he didn’t want the fanfare. Burns: Can you share an example of what the funds go to? Hughes: That’s the beauty of this charity: we fund things where there’s no other source of funding. For example, the mother of a 6-year-old Children’s Hospital patient had cardiac issues and got a call while she was in the hospital that they were shutting off her electricity for non-payment. The social workers at Children’s worked with DTE and CATCH dollars were used to turn the electricity on which was important, because the child was on a ventilator running on a battery backup with about six hours left. Learn more at CatchCharity.org

3/28/18 2:25 PM

C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 2 , 2 0 1 8

OPINION COMMENTARY

EDITORIAL

Aim for thoughtful Eight Mile: Pathway to prosperity bills following Nassar E

n the post-Larry Nassar world, Michigan lawmakers want to set things right for sexual misconduct victims as well as punish abusers and penalize institutions that should have prevented the abuse in the first place. So there is much to like in a package of bills passed by the state Senate that are pending in the House, including mandatory reporting of abuse allegations and stronger criminal penalties. But we differ with the bills that would alter Michigan’s civil liability rules by extending the period in which civil lawsuits can be filed. The bills would apply to businesses, nonprofits, governments and religious organizations and would allow claims to be filed for acts that date to 1997. This could unleash a flurry of civil suits on old claims for which no criminal charges were ever filed. It could also invite new claims from people who are alleging acts that took place years ago but they never stepped forward until now (possibly prompted by trial lawyers' ads that will undoubtedly flood the airwaves.) The Michigan Chamber of Commerce notes it would be difficult for many organizations to defend themselves because records — such as personnel files or other evidence — may have been purged. The bills have not prompted a huge outcry from business because of the optics — who wants to be positioned as being against the victims in the horrific MSU assault case? You can be for the victims and thoughtful legislation. Meanwhile, MSU and lawyers representing the more than 200 Nassar victims are proceeding with mediation under Layn Phillips, a former federal judge in Oklahoma. Mediation promises speedier settlements. In the end, would that serve victims better than a lawsuit that drags on for years?

LETTERS

Clean energy would pay dividends Perhaps DTE hasn’t gotten the memo yet, but Tucson Electric and Colorado’s Excel Energy have already accepted bids for both 24/7 wind and solar power, with storage included, that were less than gas or any other fossil fuels. Drop fossil fuel’s massive subsidies and clean energy would outbid gas, oil or coal right now. Of course that doesn’t include the half trillion dollars in economic damage burning fossil fuels does to our economy every year and the over 200,000 Americans who are killed annually by carbon pollution from burning fossil fuels. Other fossil fuel “externalities” are the worsening climate disasters that now cost U.S. taxpayers hundreds of billions every year (GAO, National Geographic) totaling $1.2 trillion and climbing (NOAA). Fifty-eight U.S. cities have now committed to going 100 percent clean energy, and a number of them have already hit their target. Stanford University’s Solutions Project website shows how every state in the U.S. and every country in the world can be 100 percent clean powered 24/7. The argument that natural gas is “clean” is bogus because the methane produced makes gas as bad a greenhouse gas producer as coal (Scientific American). And we already are over the danger line for atmospheric CO2/ GHG emissions. We need to phase out all fossil fuels, worldwide, in about a decade if we are to avert “catastrophic” global warming, according to the

National Academy of Sciences. Taxing fossil fuels out of existence would pay for itself in health benefits alone. Clean energy has saved Americans over $88 billion in the past 8 years (Nature, the world’s most highly-cited peer-reviewed science journal), but we’re still paying over $800 billion annually in medical bills for carbon-caused illnesses (Forbes). If we gave all the money from an annually increasing carbon tax on all fossil fuels directly to every taxpayer, we’d create millions of good-paying, local, permanent (40-year) clean-energy jobs, about 150,000 of them in Michigan (solutionsproject.org). This isn’t just economic theory: For the past decade, British Columbia has used Carbon Fee and Dividend: All fossil fuels pay the fee and all taxpayers get equal monthly “carbon dividend” checks, which increase every year as the tax goes up. Switch to cheaper clean energy and you don’t pay the fee, you just get the ever-increasing “dividends” as clean energy prices continue to fall. In the U.S, this is projected to increase GDP $75 billion-$80 billion annually. See the Citizens Climate Lobby website to see how this policy, implemented by Congress, could use the U.S. economic clout, rather than toothless international agreements, to make other nations reduce their emissions as fast as we do. Lynn Goldfarb Lancaster, Pa.

ight Mile Road is one of metro Detroit’s most historic and iconic thoroughfares and was, until the completion of I-696 in the late 1980s, the principal connector of east to west and everything in between. However, it also came to symbolize the socioeconomic dividing line between city and suburb, the “haves” and “have nots,” a road to other roads to somewhere else. Today, it is so much more. Eight Mile is “us.” It is Tom Petzold, President of Petzold Enterprises, Inc. and owner of the Belmont Shopping Center at the corner of Eight Mile and Dequindre, a 150,000-square-foot neighborhood shopping center he and his family have owned since 1958. It is Saad Abbo, president of U.S. Ice, on Eight Mile near Wyoming, a successful Chaldean family-owned business. It is mom and pop shops and auto service centers. It is major corporations such as 3M. Eight Mile is a hub of business, diversity, opportunity and, yes, challenges. On April 20, our Annual Leadership Luncheon will host more than 600 leaders from across the region to celebrate 25 years that the Eight Mile Boulevard Association has been working to promote, revitalize and serve as a conduit for sustainability and growth. The event will feature the Big 4

OTHER VOICES Cindy Thomas

(Wayne County Executive Warren Evans, Macomb County Executive Mark Hackel, Oakland County Executive L. Brooks Patterson and Detroit Mayor Mike Duggan) discussing both progress and problems that affect our region’s success, with a focus on perhaps our greatest impediment to competitiveness: developing a skilled workforce to meet the demand of the employers of today and tomorrow. This year’s theme: “How Can Education and Business Work Together to Make Southeast Michigan Go and Grow?” The discussion will home in on other issues stalling our momentum. Regional transportation: How can we ensure all of us can get to work no matter where we live? Immigration — one of the foundations on which this country was built and key to enhancing our workforce. Insurance rates that unduly penalize us, especially those in lower income brackets

or located in Detroit. 8MBA provokes these discussions, but regional collaborations and tangible actions are essential to follow through, and evidence can be found along the Boulevard. From their offices on Eight Mile, Laura Kopack, director of government affairs and community relations for the Mechanical Contractors Association, is leading the charge in fostering apprenticeships for careers in the skilled trades — an area in dire need of new professionals. Through façade improvements and retail mixes, Mr. Petzold’s tenants are attracting and retaining workers at his shopping center. Mr. Abbo’s summer training programs lead to full-time jobs for those in surrounding neighborhoods. The city of Farmington Hills collaborates with Oakland Community College to offer wrap-around training and apprenticeship programs. Eight Mile Road is many things to the many people who live, work, and travel to and through every day. Eight Mile is not the line that divides us; it is the seam that unites us, the essential artery that runs through the very heart of our shared community. Working together, we can all make it a road best traveled. Cindy Thomas is executive director of the Eight Mile Boulevard Association.

The end of transparency in Detroit?

have been a pretty big fan of our mayor, Mike Duggan, ever since i spent time with him at the Detroit Medical Center and watched him manage hospitals — and unfamiliar environment for a guy who came from government. I think he has done a great job as mayor these past few years, but I must admit I do have some nagging reservations. I have been a user of City Airport for decades, and although I don’t keep an airplane there anymore, I have always felt it was a great asset for our city. I was pleased that the mayor commissioned a study of the longterm uses for the airport and looked forward to reading the results. I was not all that happy to learn that the study made no recommendation on maintaining the airport for aviation. But later I learned that the mayor’s office eliminated a large part of the report that did strongly suggest that the airport is an asset that can't be replaced and that the city should keep it as an airport. I was stunned to learn that our mayor’s office edited out part of the report that they clearly didn't like or agree with. That is simply wrong — very wrong — and something that I would have expected under Cole-

KEITH CRAIN Editor in chief

man Young’s administration, not Duggan’s. They mayor's office says the consultant went farther than was re-

I was stunned to learn that our mayor’s office edited out part of the report that they clearly didn’t like or agree with. That is simply wrong — very wrong — and something that I would have expected under Coleman Young’s administration, not Duggan’s.

quested for this phase of the contract. But why go to so much trouble to hide good advice? This would seem to be a simple case of censorship by the mayor’s office to eliminate unfavorable conclusions that they didn’t want made public. That is not the way we would hope the mayor runs his office. I had always hoped that this mayor believed in complete transparency, but it would appear that that is not the case. As Detroit grows and prospers, we should expect nothing but the best from our elected officials. Considering all the misinformation coming out of Washington, we should expect our locally elected officials to meet a higher standard. Transparency is right at the top of our list. No one in our community seems to be too upset with this re-evaluation, and it may be an insignificant slip. But we should hope that it is not the norm. We elected and re-elected our mayor to run our city to very high standards. Censorship is not included in those standards. At the Detroit Medical Center, Duggan had an independent board of trustees. The City Council should perform that same task. Let us hope that both the mayor and council do their jobs in the future.

C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 2 , 2 0 1 8

On Asian carp, relentless and positive isn’t enough

hree words come to mind in summarizing Michigan Gov. Rick Snyder’s years-long effort to stop the voracious Asian carp from entering the Great Lakes: Relentless positive inaction. Snyder has been relentless in sounding the alarm bells about the real economic threat the invasive fish species poses to the multibillion-dollar sport and commercial fishing industries in the vast bodies of water surrounding these two pleasant peninsulas. As always, the self-described nerd governor has remained positive, even as the federal government and two Great Lakes states — Illinois and Indiana — have slow-walked the threat. But there’s been little action during Snyder’s seven-plus years in office to prevent Asian carp from escaping the shipping waterways around Chicago that connect the Mississippi River and Great Lakes basins. Snyder is hoping to change that before he leaves office in December — despite the limitations the governor of Michigan has in telling any other governor what to do. “We’ve been talking about this for too long, in my opinion,” Snyder said Tuesday at a summit on Asian carp at the Detroit-Wayne County Port Authority’s glass window-lined banquet room along the banks of the Detroit River. “This process has dragged out. It’s time for action — and it’s time for innovative action.” In an effort to facilitate the “innovative action,” the Snyder administration sponsored a crowd-sourced challenge offering prize money for ideas on how to keep Asian carp from penetrating the series of locks in the Chicago Sanitary and Ship Canal that the fish have been swimming through en route to Lake Michigan. Snyder on Tuesday sat as a judge in a “Carp Tank” pitch competition that was put on by the Michigan Department of Natural Resources and Michigan Economic Development Corp.’s

Edem Tsikata of Boston accepts the grand prize at the “Carp Tank” pitch competition from Gov. Rick Snyder on Tuesday at the Port Authority in Detroit. GOV. RICK SNYDER’S OFFICE

CHAD LIVENGOOD clivengood@crain.com

Pure Michigan Business Connect. Approximately $500,000 in prize money was awarded to the top four ideas submitted on how to deter Asian carp from getting through the Brandon Road Lock and Dam on the Des Plaines River in Joliet, Ill., that connects the Mississippi River and Great Lakes basins. The Asian carp prevention ideas are meant to supplement the U.S. Army Corps of Engineers' $275 million plan to rebuild the lock to create an engineered passageway that can better control the flow of water and creatures swimming along barges that carry everything from Michigan soybeans to iron ore to markets abroad. Snyder and the panel of judges awarded a $200,000 grant to Edem Tsikata, a software consultant at Harvard Medical School in Boston. Tsikata pitched an idea to install underwater propellers that emit high-frequency sounds and cavitation bubbles that could essentially scare away big head and silver carp that jump into boats at the sound of boat propellers on the Illinois River. “As the carp approach, the acoustic signal will become so intense that it will turn around,” Tsikata said. The other top contenders pitched a variety of ideas: J A high-velocity system of flushing carp and other fish out of a shipping lock. J A Nature Conservancy official proposed killing all carp — and other organisms — in the lock waters with a chlorine and de-chlorinate the

chamber before releasing the barge and water. J A Utah trio of researchers proposed facial-recognition photography of carp to identify them among other fish as part of a larger effort to divert them to traps for catching. “It was great to see some real innovative ideas about how to prevent the Asian carp from coming into the Great Lakes,” Snyder said after the event. “... I think we’ve collected a lot of great ideas that, with further development, can be important to helping address this issue.” The biggest challenge is scrounging up the funding for the lock project in Illinois, with little hope the federal government will pay full freight. “The process through the federal government has taken so many years,”

Snyder said. “And we need to accelerate that.” In an attempt to forge a nonfederal solution, Snyder has committed $8 million in operating costs for the new lock over five years once it’s built to cover Michigan’s 40 percent of the Great Lakes surface. Snyder has secured similar agreements from the states of Wisconsin and Ohio as well as Ontario through the Great Lakes Basin Partnership. The three states and Canadian province control 90 percent of the surface water of lakes Erie, Huron, Michigan, Ontario and Superior. Illinois and Indiana remain holdouts. “That’s the reason why we continue to make inquires at the appropriate level to see if we can get their support,”

said Keith Creagh, director of the Michigan DNR. But Michigan isn’t about to chip in $110 million for the capital construction of a shipping lock in Illinois, Creagh said. “I don’t see us taking on 40 percent of the $275 million,” Creagh said in an interview. The governor hinted there could be a public-private partnership in the works to bridge the gap in federal and state-level funding. “We actually have partners that we’ll be talking about relatively soon that could help cover the capital cost,” Snyder said. Then, maybe, there will finally be action to make sure Asian carp are never seen jumping out of the water along the Detroit RiverWalk.

Time to step up to protect Thunder Bay sanctuary

he Thunder Bay National Marine Sanctuary in Lake Huron is the nation’s only freshwater marine sanctuary. It’s popular — attracting tourists and school children interested in Great Lakes maritime history and learning more about “Shipwreck Alley” where more than 100 ships met their tragic fate. It has spurred economic growth in Alpena which hosts the Great Lakes Maritime Heritage Center. Boat tours running from Alpena and up the shoreline to Mackinac City enable visitors to see preserved shipwrecks and the scenic bays and islands. Adventurous scuba divers can explore many wrecks. Last year, the Trump Administration’s Department of Commerce announced a “review” directed to cut down the size of the Thunder Bay National Marine Sanctuary by 90 percent and potentially open up these Great Lakes waters to oil drilling. This proposal was a bad idea from the start. What are they thinking? There was no controversy or problem waiting to be solved. Because both federal law and state law prohibit offshore oil drilling in the Great Lakes, that supposed justification for the Commerce Department’s review is

OTHER VOICES Howard Learner

puzzling. There’s broad Michigan support and pride for the Thunder Bay National Marine Sanctuary. People visit and like it. There is a clear and direct solution in this case: the National Marine Sanctuaries Act (16 U.S.C. 1434 (b)) provides that Michigan Gov. Rick Snyder can certify to the secretary of commerce that any proposed changes to the Thunder Bay National Marine Sanctuary are “unacceptable.” It’s time for Snyder to publicly step up and inform Commerce Secretary Wilbur Ross that his federal agency’s misguided review to reduce the Thunder Bay National Marine Sanctuary by 90 percent and potentially open it to oil drilling is “unacceptable.” It’s time to bring this bad idea to its well-deserved end.

NOAA, THUNDER BAY NATIONAL MARINE SANCTUARY

A diver photographs the German freighter Nordmeer, which ran aground in 1966 and sank in 40 feet of water, in Lake Huron.

The Environmental Law & Policy Center and 14 Great Lakes groups filed joint comments with the U.S. Department of Commerce urging that it not cut the size of this popular National Marine Sanctuary. Michigan Senators Gary Peters and Debbie Stabenow and bipartisan Representatives Jack Bergman, Debbie Dingell, Daniel Kildee, Brenda Lawrence, Dave Trott and Fred Upton sent a joint letter to Ross stating: “We write to express our strong opposition to reducing the boundaries of the Thunder Bay National Marine Sanctuary … The expansion of this sanctuary in Lake Huron in 2014, which was the result of a rigorous ap-

proval process with extensive public input, is critical to Michigan’s economy and heritage.” The Thunder Bay National Marine Sanctuary has helped revitalize local economies in our state. The tourism and recreational opportunities supported by the sanctuary have generated over 1,700 jobs, $100 million in sales, and $39.1 million in personal income to residents, according to a 2005 study. The Thunder Bay National Marine Sanctuary protects a treasure trove of 100 significant shipwrecks that sunk in the treacherous waters and are preserved by the cold fresh water. This Na-

tional Marine Sanctuary draws visitors to explore “Shipwreck Alley” and offers a window into Great Lakes maritime history. In 2014, following participatory processes with input from a broad range of stakeholders, the Thunder Bay National Marine Sanctuary was expanded from 448 square miles to include 4,300 square miles. That wasn’t controversial. Protecting the Thunder Bay National Marine Sanctuary is good for jobs, good for economic growth and good for the environment as the Michigan Congressional delegation letter explains. The National Marine Sanctuary status helps preserve and protect this historical maritime commerce site for visitors today and for future generations. Gov. Snyder should end the uncertainty about the Thunder Bay National Marine Sanctuary by publicly informing the Commerce Department that its review and proposed changes are “unacceptable.” Let’s protect the Thunder Bay National Marine Sanctuary for all. Howard Learner is the president of the Environmental Law & Policy Center, which works to protect the Great Lakes and the Midwest’s natural resources.

C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 2 , 2 0 1 8

FOCUS

Au re so ne

REAL ESTATE

SIGNS OF THE TIMES

By A

Spec

A to d It entr that sets cutt M mer wor mad Feno virtu In troit raise “I busi Dad ness food grew A spire Mat line. “T Moo bou the h hats

“W rea rea th an An pe rea wh th to

Zach

Music Hall for the Center of the Performing Arts holds one of downtown Detroit’s only sign permits for its video sign, visible from the I-375 exit to Madison Avenue. The nonprofit’s president and artistic director, Vince Paul, said he originally put up the video sign as a way to welcome visitors to Detroit. LARRY PEPLIN FOR CRAIN’S

Billboard and outdoor advertising has virtually disappeared from Detroit’s central business district. But the rules could change soon.

By Ashley Catherine Woods

hold their breath.

Billboard and outdoor advertising has virtually disappeared from Detroit’s central business district, part of an uneasy truce negotiated between outdoor advertising companies, downtown landlords and the city. At issue is a proposed city ordinance that would set new guidelines and restrictions for all those involved in out-of-home advertising. Long in the making, the new ordinance would finally regulate a commercial industry that has — in order to survive — operated mostly outside the law. In the meantime, a growing industry has stalled while the actors

Where the billboards went

Special to Crain's Detroit Business

Historically, downtown Detroit was a center of commerce — and advertising. “Downtown Detroit once looked like Times Square, with billboards dotting nearly every building and advertising everything from Model Ts to Stroh’s to cigars,” says Dan Austin, senior account executive at Van Dyke Horne Public Relations and author of several books on Detroit’s architectural history. “When you look back at those photos, it gave a real sense of

Need to know

JJDetroit’s zoning code prohibits large

outdoor advertisements in the central business district

JJAfter years of lax enforcement, city ordered illegal billboards taken down at end of 2017 JJNew ordinance in the works could change the rules, but it’s unclear how or when

vibrancy and commerce, hustle and bustle.” Some of these painted relics, dubbed “ghost signs,” hawking everything from soda pop to long-shuttered saloons, can still be seen on old build-

ings — preserved reminders of the thousands of businesses that launched in Detroit during the early 20th century. Then, as well as now, leasing out a building’s exterior wall for off-premise signage (that is, signage advertising someone else’s brand) could be a significant income stream for property owners. Candice Simons, owner of Brooklyn Outdoor, an up-and-coming national outdoor advertising agency based in Eastern Market, works directly with building owners across the country to lease out exterior walls for billboards and painted signs. SEE SIGNS, PAGE 10

Z labo sicia dise und Ano him A plat virtu thei W wor mur V ality but ply nolo — li ing ality of th pho cou C ate real to a scan thei mar to m on-s Th

its

lly

the that arly

ut a emrtisbe a per-

ooknaency dithe s for

E 10

C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 2 , 2 0 1 8

Augmented reality is coming soon to a mural near you

By Ashley Catherine Woods Special to Crain’s Detroit Business

A different kind of mural is coming to downtown Detroit this spring. It’s the imaginative creation of two entrepreneurial brothers who realized that, together, their very different skill sets could generate a product on the cutting edge. Mahmoud “Moody” Mattan immersed himself in technology while working in San Francisco, where he made investments as an associate at Fenox Venture Capital and launched a virtual reality division for Powis Parker. In 2016, Moody returned to the Detroit area, where he was born and raised, to launch his own startup. “I always wanted to start my own business,” he said. “That came from my Dad. He’s always owned different businesses. A restaurant, a travel agency, a food distribution company — and we grew up working for them.” Another member of his family inspired him, too — his brother, Zach Mattan, who had launched a clothing line. “Turns out that’s pretty difficult,” Moody said, laughing. “Nobody bought the clothes, but people loved the hats and the pins that went on the hats.”

LARRY PEPLIN FOR CRAIN’S

Moody (left), Zach, and Malik Mattan at rear of The Elephant Room. An augmented reality mural (pictured below) is planned for the wall behind them.

“We had a lot of cool reactions from really young kids, they were wowed and amazed by it. And then older people, they were really not sure what’s going on, so they were wowed, too.” Zach Mattan

Zach pivoted his idea and began collaborating with graphic artists and musicians to create specialized merchandise, like pins, T-shirts and stickers, under the label Electrifly Collective. Another Mattan brother, Malik, joined him as a co-founder. And Moody launched BrandVR, a platform for businesses to integrate virtual and augmented reality into their consumer marketing products. When the brothers decided to work together, the idea for a moving mural was born. Virtual reality and augmented reality are often used interchangeably, but they aren’t the same thing. Simply put, virtual reality refers to technology that is completely immersive — like putting on a headset and seeing a different world. Augmented reality positions something virtual atop of the real world — like using your phone’s camera to see how an AR couch might fit in your living room. Companies like Brand VR can create augmented reality products in real life by assigning a digital marker to a real-life object. When a viewer scans the object using an app on their mobile phone, it activates the marker, which can be programmed to move, create sound or transform on-screen. The brothers’ first big project is an

An augmented reality mural in downtown Denver by artist Chris Dyer.

augmented reality mural that will be equipped with digital markers — allowing passersby with mobile phones to activate the designs on their screens. After raising a successful crowdfunding campaign via Patronicity, Electrifly Detroit is working with local muralist Phyber to create the mural. Using BrandVR’s app and technology, the mural will come to life. “We were inspired by everything going on in Eastern market with Murals in the Market, and everything going on in Detroit with the street art scene,” Moody said. To the naked eye, it’s a mural. Through a screen, it will be a magical, moving masterpiece. “I think of it more as public art than an advertisement,” Zach said. He recalls the reactions that the Electrifly designs made at last year’s Dally in the Alley festival in the Cass Corridor. “We had a lot of cool reactions

ELECTRIFLY

from really young kids, they were wowed and amazed by it. And then older people, they were really not sure what’s going on, so they were wowed, too.” The augmented reality mural will be displayed on the exterior wall of The Elephant Room at 439 Congress in Greektown. Formerly Mr. Steven’s, the building is undergoing a total renovation. The team is pushing for an opening date in early June, Elephant Room General Manager James Droze told Crain’s. “We ran into Moody and Zach Mattan at Dally in the Alley at their Electrifly booth,” Droze said. “After seeing their app, we started talking about how we could apply that technology to something bigger, like a mural. We had a wall to feature the work in a high foot traffic area, as lines for shows at The Shelter generSEE MURAL, PAGE 10

LARRY PEPLIN FOR CRAIN’S

A digital rendering of the mural after it is installed at The Elephant Room.

C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 2 , 2 0 1 8

SPECIAL REPORT: REAL ESTATE SIGNS

for appropriate accessory signage,” said Francis Grunow, an urbanist and consultant in Detroit. “But my general feeling is less is more in most cases.” The preservation advocacy group Preservation Detroit would also support a sign ordinance with parameters “that are not detracting to the structure or surrounding landscape,” the group said in a statement sent to Crain’s. “Preservation Detroit recognizes the position of loyal, long-term proprietors in the central business district who rely on signage to engage clientele or generate advertising revenue.” Many are also frustrated with the reports of property owners leasing exterior walls of abandoned buildings. “One bad egg is all it takes to spoil a good thing and an initiative,” Paul said. “We’ve got people doing outdoor advertising to avoid having to sell or develop their building. They are forcing the city to take action.”

FROM PAGE 8

“You have these building owners and not all of them are Dan Gilberts and Ilitches,” she said. “They just have one to two buildings where they’ve put the sweat equity in.” She says the guaranteed monthly income of an outdoor advertising lease can often provide cash-poor owners the resources to redevelop buildings and incubate new businesses. “Say we generate a lease for five years,” Simons said. “They have $24,000 a year of guaranteed income. A building owner can whitebox and release one floor a year on that income and secure tenants. The ripple effect that signage has on business and the local economy is massive.” One small problem: In downtown Detroit, most of those signs aren’t legal.

Code red Detroit’s zoning code prohibits large outdoor advertisements in an area stretching from the Detroit River to Grand Boulevard on the east and west sides. The ordinance, conceived alongside casino legislation in the early 1990s to keep Detroit from looking like Times Square, was selectively, if ever, enforced. Building owners could theoretically apply for an official permit to host an off-premise sign, but the process was confusing enough to deter many of them from attempting it, and it’s unclear how often the city granted permits for off-premise outdoor advertising after the ordinance. “We wanted to put up a billboard for ourselves on the east side of the building, and I was trying to fill out the sign permit,” said Vaughn Derderian, whose family has owned downtown Detroit’s Anchor Bar for decades. “It’s incredibly complicated and obtuse, and I just figured it would be easier to put up the sign and wait for someone to give me a violation so I’d know what I have to fix.” (He never got around to putting up the sign.) Permits for outdoor advertising in downtown Detroit were rare — but a few do actually exist. Music Hall for the Center of the Performing Arts holds one of downtown Detroit’s only signage permits for its video sign, visible from the I-375 exit to Madison Avenue. The nonprofit’s president and artistic director, Vince Paul, said he originally put up the video sign as a way to welcome visitors to downtown Detroit. “I wanted to light this town up!” said Paul. “Nineteen million cars a year — it's the busiest exit to a local road. It was happening and nobody was harnessing it.” He says the sign and other outdoor advertising on Music Hall’s buildings allow the nonprofit to increase the frequency of their cultural and educational programming. “It had a huge impact on our ability

MURAL FROM PAGE 9

The mural isn’t just about aesthetics. Visitors will be instructed via signs to download an app to view the mural’s augmented reality features. Downloading the app will also unlock a special coupon at The Elephant Room. It’s a marketing tactic

Looking ahead

Bill Jackson, director of the Outdoor Advertising Association of Michigan, represents some of the biggest outdoor advertisers in the game, companies such as Outfront and Lamar. Jackson said those large actors refrained from signing billboard leases in the city due to the ordinance. “They aren’t going to conduct themselves in illegal behavior so they aren’t going to enter that marketplace,” he said. Jackson got wind that some of the outdoor billboard companies who had erected signs in violation of the ordinance were petitioning the city to rewrite their laws to make the signs legal. He called foul. “It’s a market entrance strategy,” Jackson said. “Come into a market-

place, display a lot of wall signs, then you force the city’s hands.” That perspective explains why the OAAM would support continuing the ban on outdoor advertising in Detroit, although they are open to other solutions. He also suggests that the city of Detroit “turn the clock back to zero,” which would invalidate previous leases and allow all outdoor advertising companies the chance to enter the market and make deals at one time. “The city needs to create a fair playing field where the companies who were operating illegally and irresponsibly aren’t rewarded,” Jackson said. Some would argue that the present-day ordinance allowing only a few permit-wielding building owners to earn revenue from outdoor advertising is, by definition, unfair. Lauren Hood is the former director of the Live 6 Initiative and an experienced consultant in Detroit’s community engagement and development spheres. “I think the ordinance allows a small group of people to corner the market on advertising profits,” she said. “Which is inequitable in practice.” And there’s yet another group of stakeholders with perspectives to consider: preservationists, who are concerned downtown Detroit may well look like Times Square again without some sort of constraint. Some point out that billboards don’t fit the historic character of downtown Detroit. But others, publicly, have advocated for a solution that allows for some outdoor advertising while respecting the buildings and environment that makes the city special. “I believe there is a way to be sensitive to our historic structures yet allow

No one knows for sure whether the new ordinance will continue the ban on outdoor advertising, allow all the signs back or (more likely) attempt some sort of compromise between factions. The City of Detroit did not respond to numerous calls to comment, with Roach saying only that the Planning Department is working on developing a new ordinance. Meanwhile, Detroit’s City Council passed a resolution asking for a new ordinance to be ready by summer 2018. Paul believes that the ordinance should be applied on a district-by-district basis, so that the central business district and theatre district downtown could operate by different rules than Detroit’s neighborhoods. “I will not support anyone who wants to get in the way of building a thriving entertainment district,” he said. “And if I had to tolerate the bad apples to keep Detroit’s progress moving forward, I’d say, don’t stop our progress to punish a few bad actors. But they’re punishing all of us instead of punishing them.” Simons said the Detroit area has already lost out on advertising campaigns — and revenue — by upholding the ban. “If they can’t use us in their media mix, they’ll pull their budgets from the market,” she said. “If they can’t get those crown jewel assets, they’ll pull their money out and go to Chicago or LA or another place that will take their money.” Still, her conversations with the city, which she characterizes as positive, leave her feeling hopeful that the city will reach some sort of compromise. “Not everyone is going to get everything they want, that’s the nature of the world. But we all should be able to play nice in the sandbox.” There’s also something very Detroit 2.0 about this particular problem. As Paul deadpans: “Isn’t it wonderful that the city of Detroit has enough money to consider whether we want outdoor advertising or not?”

nology into their products. Imagine a product on a supermarket shelf that could reveal a video when scanned with an app, or a poster that contains a coupon code for a passerby to unlock. “Moody and Zach made everything very approachable, so we weren’t skeptical at all,” Droze said. “We’re happy with the direction it’s going, and if the weather holds, and

that’s a big ‘if’ in Michigan, we expect to begin the mural on April 1.” Beyond Detroit, the brothers are working on augmented reality mural projects in Denver and Miami. Zach’s Electrifly is technically a customer of Moody’s BrandVR platform. But the two brothers acknowledge that they are often working in sync. “We help each other out a lot,”

Zach said. Moody chimes in. “A few years ago, we were in the Bahamas for a family trip over the holidays. The weather was horrible, so we bought a container of hookahs. We created a hookah distribution business on the beach of the Bahamas because it was Christmas and raining,” he said, laughing. “That’s just the kind of family we are.”

Detroit looking up Woodward was packed with signs in the 1910s.

to serve the community,” he said. “Now they’re trying to take that away.”

Beauty of a big idea In a digital age, buying billboards might seem like a counterintuitive — even outdated — advertising strategy. But in a world where customer awareness is increasingly difficult to win and valuable to monetize, a fivestory-tall poster isn’t just an advertisement. It’s a statement, an Instagrammable expression of brand identity commanding attention and social media exposure. And the best billboards blur the lines between art and urban life and commerce, creating virtual installations that stimulate the streetscapes around them. Big billboards are big business. The Outdoor Advertising Association of America says that ad spend on outdoor campaigns grew from $5.9 billion in 2009 to $7.6 billion in 2016. That’s why ad agencies will plan outdoor ad campaigns on behalf of brands with the aim of fostering a “media mix” — targeting strategic locations, and audiences, along expressways and in the suburbs, plus a few prized locations in central business districts like Detroit. For companies like Amazon and Apple, billboards in downtown areas are more than just tactical buys — they are expressions of corporate solidarity with the youth-fueled creative movements happening in cities. “They want to be seen, they want to be bold, they want to be in the suburbs and downtown,” said Simons. “The downtown locations are the crown jewels.” that Moody believes can drive foot traffic to the bar. “Since the coupon deal (is) exclusively available through the app, it’s going to be seeing a lot of interest,” he said. “The mural going to look good and bring them a lot of new customers.” That’s BrandVR’s premise — that companies big and small can integrate digital markers and AR tech-

As Detroit’s downtown revitalization drew worldwide attention, a few billboards went up downtown. Downtown Detroit was suddenly a place to make deals. By 2016, as many as 60 signs were displayed in the central business district. And the city began to feel the pressure to enforce its almost-forgotten ordinance. “The issue was brought to our attention by owners of legally established signs, members of City Council and others,” city spokesman John Roach told the Detroit Free Press last winter. That’s why, at the end of 2016, after months of writing tickets to landlords with outdoor advertising and facing criticism from all sides, the city of Detroit issued a decree for downtown building owners to take the signs down by the end of 2017.

Market forces

LIBRARY OF CONGRESS

C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 2 , 2 0 1 8

Albert Kahn Associates to move from namesake building to Fisher Building By Kirk Pinho kpinho@crain.com

The Albert Kahn Associates architecture firm is moving from the Albert Kahn Building to the Fisher Building in May. The company, whose namesake was perhaps the most important architect in Detroit history, is taking about 33,000 square feet spread across the fourth Need floor of the Fisher to know Building, plus the entirety of the JJArchitecture 18th and 19th firm takes 33,000 square feet in 1928 floors of the 1928 skyscraper on Detroit skyscraper West Grand BouJJAlbert Kahn levard, said Alan Building to be Cobb, president converted into 200 of Albert Kahn apartments, Associates. first-floor It is vacating restaurants the Albert Kahn Building at 7430 JJAbout 100 Second Ave. as employees will an unidentified make the move buyer plans to convert it into 200 or so apartments plus first-floor restaurant space, Cobb said. “We are growing, hiring in all disciplines. We didn’t want to be locked into the Albert Kahn Building that’s being converted into residential,” he said. “We are growing (our space) by about 10 percent. It will adequately handle the people we have now.”

COSTAR GROUP INC.

Albert Kahn Associates is taking 33,000 square feet in the Fisher Building in Detroit’s New Center area, with about 100 employees moving there in May.

COSTAR GROUP INC.

The Albert Kahn Building has been home to the Albert Kahn Associates architecture firm since 1931, President Alan Cobb said.

The 290,000-square-foot building is owned by a joint venture between Detroit-based The Platform LLC, New York City-based HFZ Capital Partners and New York City-based Rheal Capital Management, which is

owned by Detroit native John Rhea. The Platform is run by Peter Cummings and Dietrich Knoer. The joint venture purchased the building along with the iconic 635,000-squarefoot Fisher Building in 2015 for $12.2

million and had planned a largescale redevelopment of the Kahn building. “Peter and Dietrich made us an offer we couldn’t refuse,” he added. The building, which has been the

Office building plan scrapped from Dearborn redevelopment

Experience

In Your Corner.

Ŷ Commercial litigation, from standard breach of contract claims to complex ERISA fraud claims

By Kirk Pinho kpinho@crain.com

The Michigan Strategic Fund has approved a reduction in scope of Southfield-based Redico LLC’s redevelopment of the former Montgomery Ward department store site in Dearborn. The three-phase project was anticipated to include a three-story medical office building, a 96-unit senior housing facility and a two-story office building. The medical office building, called Dearborn Town Center, was completed in 2010 with Beaumont Health and Midwest Health Plan as anchor tenants; and the affordable senior housing facility, now with 77 units, is under construction with an anticipated completion date in December. However, because the city has an abundance of office space, the office building is being scrapped, according to an MSF board memo. Redico received a $5.83 million Michigan Business Tax brownfield credit for the $40.78 million project at Michigan Avenue and Schaefer Road in 2008. The company is developing the senior housing, called Dearborn Town Center Senior Living, with Bingham Farms-based MHT Housing. Ground was broken in November. The department store was demolished a decade ago after being vacant since 2001.

company’s home since 1931, was put up for sale last summer. “I’ve always wanted the office to be in the Fisher Building. Since I have been president, I really wanted this to happen,” Cobb said. About 100 employees will make the move; the firm employs a few dozen others in Brazil and Florida. Albert Kahn Associates designed its new offices and Oak Park-based PCI Industries Inc. is the construction manager. Cobb declined to reveal the build-out cost. Leasing has been ramping up in the Fisher Building in recent months.

Ŷ Substantial experience litigating civil and criminal tax issues, specifically, cases that arise under the Michigan Tobacco Products Tax Act Ŷ Assists in many debtor/creditor rights cases, bankruptcy proceedings, and has represented numerous creditors committees

First Tier Ranking in Six Areas of Litigation

Contact Will Thompson at wlthompson@varnumlaw.com

Ann Arbor

Detroit

Grand Haven

Grand Rapids

Hastings

Kalamazoo Ŷ Lansing

Novi

C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 2 , 2 0 1 8

How Detroit City FC lures in big overseas clubs By Bill Shea bshea@crain.com

How does a semi-pro soccer club in Hamtramck land home matches with a first-tier Mexican team and with Germany’s legendary second-division punk rock team? The answer for Detroit City FC is a combination of reasons: The foreign teams are seeking to bolster their brands among Need U.S. fans by playto know ing here, and the JJForeign teams German team, are seeking to the famed FC St. bolster their Pauli from Hambrands among U.S. burg, is a kindred fans by playing spirit when it here comes to its fans’ progressive social JJUpper-tier clubs activism. from North Upper tier America and clubs from North Europe have taken America and Eunote of Detroit rope have taken City’s grassroots note of Detroit success City’s grassroots JJFC St. Pauli from success in buildHamburg is a ing a powerhouse kindred spirit when club with a large, it comes to its loyal following — fans’ progressive it averages more social activism than 5,000 fans per match at Keyworth Stadium, and has topped 7,000 at times. The team’s attendance rivals that of clubs in upper-tier U.S. pro leagues, and its reputation has grown exponentially. This year’s DCFC schedule includes a July 10 match against Club Necaxa of Liga MX, the top Mexican league and the most-watched soccer league in the U.S. thanks to the country’s large Latino population, and FC St. Pauli on May 19. That game will be carried on Fox Sports Detroit, the first time a DCFC match has aired live on TV. Foreign teams playing exhibition matches in the United States and other growing soccer markets such as China is an increasingly common business strategy. “They’re looking to raise their profile in the United States,” said Detroit City FC co-founder and CEO Mann. Global powerhouse teams such as Manchester United and Real Madrid are doing the same by playing in North America — including possibly again at Michigan Stadium this summer — in the elite International Champions Cup exhibition tournament. Landing a match with FC St. Pauli is especially thrilling for Detroit City because the clubs share similar political and culture values. “Thankfully, I think we’ve built up some credibility on that side of the Atlantic,” Mann said. “We were able to talk them into coming over here.” The FC St. Pauli match was organized through Match IQ GmbH, a Hamburg soccer consultancy that handles such services for Germany’s top clubs. The match with Club Necaxa originated with talks with a sports player agent about a year ago, Mann said. Club Necaxa intended to play a series of U.S. matches, but ended up scheduling only Detroit, Mann said, while FC St. Pauli has a second match and other goodwill and business plans scheduled while visiting the U.S. Three days after the match in Hamtramck, FC St. Pauli will travel west to play the Portland Timbers 2, the second-tier United Soccer League club owned by Major League Soccer’s

DETROIT CITY FC

Upper tier clubs from North America and Europe have taken note of Detroit City’s grassroots success in building a powerhouse club with a large, loyal following.

Foreign relations Detroit City FC’s two international friendly matches at Hamtramck’s Keyworth Stadium are scheduled for: J

FC St. Pauli, 6 p.m., May 19

Club Necaxa, 7:30 p.m., July 10

Portland Timbers. “Given the popularity of European clubs in the U.S., which frankly dwarfs the popularity of our domestic leagues, a cottage industry has developed with these summer tours,” Mann said. “For us it is a matter of developing a reputation across the Atlantic and being able to convince clubs to come play us if we can cover their costs. They all have slightly different motivations for why they are willing to come play us though.” One of DCFC’s several corporate sponsors, Detroit-based Strategic Staffing Solutions, is underwriting some of the FC St. Pauli match as the game’s presenting sponsor. Detroit City has non-disclosure agreements with both teams that mean the financial terms of the Club Necaxa and FC St. Pauli cannot be made public, Mann said. “We’re addressing certain aspects of their travel and their time here,” he said. Mann did allow one detail: Detroit FC doesn’t split its match ticket sales with visiting international clubs, but it does give up a portion to Chicago-based U.S. Soccer because it’s the sanctioning body that provides the referees for such games. Detroit City expects to have a $1.5 million operating budget for the entire 2018 season. The club, which owners say is profitable, intends to move to a higher, professional tier of U.S. soccer next season. Its current league, the National Premier Soccer League, is the fourth tier of the U.S. soccer organizational pyramid and is one level below professional soccer with paid players. DCFC has been in the NPSL since debuting in 2012.

The club’s international opponents this season boast impressive profiles. Club Necaxa, founded in 1923, last season averaged 18,505 fans at Estadio Victoria, which seats 23,851. The team plays in Aguascalientes, a city of nearly 1 million people founded in 1575 in what is now the central Mexican state of the same name. Club Necaxa is in the 18-team Liga MX, Mexico’s top flight soccer league and the most-watched fútbol league in the U.S. — significantly more than Major League Soccer and the English Premier League TV audiences — with an average of 1.1 million viewers per match on Univision. Necaxa has won Mexico’s top-tier championship three times. FC St Pauli, which dates to 1910, plays in the 18-team German second division, known as 2. Bundesliga. It averaged 29,359 fans per match at 29,546-seat Millerntor-Stadion in Hamburg, a city of 1.8 million people in north central Germany. The club has won 10 titles across several German second and third-tier leagues over its history. Pitting itself against upper-tier clubs from North America and elsewhere helps not only improve DCFC’s soccer on the field, but adds to the team’s reputation in the soccer world. “I think the quality of international friendlies is reflective of the success, acumen and relevancy of Detroit City FC,” said U.S. soccer hall-of-famer and TV analyst Alexi Lalas, a Birmingham native who attended Cranbrook Schools in Bloomfield Hills. “It is also a response to the current value and future potential of metro Detroit as a soccer community. Detroit is obviously becoming increasingly more attractive to soccer brands and businesses for what it is, and what it can be.” Detroit City in past seasons has hosted Glentoran FC from Northern Ireland’s top division, and England’s FC United of Manchester, a sixth-tier semi-pro club.

“We’re the only team I know of that builds in these international matches into our season ticket packages, and not an add-on,” Mann said. “It’s a marketing tool for us but also part of our commitment to being the highest value sporting event in town. And single-game ticket sales for St. Pauli are the fastest we’ve ever seen for a non-playoff match and should sell out well in advance of the match with over 1,000 St. Pauli fans anticipated to come from across North America for the match.” Both DCFC and FC St. Pauli have dedicated fanbases who are part of club decision-making, with the German club known for its left-leaning politics and causes (and for sporting the Jolly Roger flag). Both clubs rely on merchandise sales as a revenue stream, too, and boast intense match-day atmospheres. “We’re delighted to be guests of the supporter-built soccer environment of Detroit City FC, which fits very well with the member-driven culture of FC St. Pauli. This is a real friendly and we’re very excited about it. I hope we can recreate a tiny part of FC St. Pauli’s magnificent support in the States,” said FC St. Pauli team President Oke Göttlich, via email. He called the U.S. trip and matches “very special” and a chance to discuss soccer issues. “It gives us an opportunity to expand on past discussions between two soccer cultures and exchange lots of ideas,” he said. “Topics such as fair competition in professional soccer leagues based on salary caps and the draft system and the alignment of U.S. soccer with global transfer windows are just some of the issues we’ll touch on in organized debates about the particularities of U.S. soccer and the European system. He also noted that FC St. Pauli has a large U.S. fanbase. “Anyone familiar with the commitment of our North American fans will know that meetings with our supporters will be a key aspect of this

trip,” Göttlich said. “We’re also planning to organize club concerts with associated musicians in Detroit and Portland during the tour. And we’re looking forward to talking to lots of club representatives and the very active fan bases in Detroit and Portland.” Mann expects international matches to remain a part of DCFC’s future. “Given the popularity of European clubs in the U.S., which frankly dwarfs the popularity of our domestic leagues, a cottage industry has developed with these summer tours,” Mann said. “For us it is a matter of developing a reputation across the Atlantic and being able to convince clubs to come play us if we can cover their costs. They all have slightly different motivations for why they are willing to come play us though.” DCFC is still taking calls from domestic and international teams seeking a date for a friendly match, Mann said, but the team is careful in who it chooses to play. The objective is to schedule non-league matches with teams that share similar values to Detroit City, and fulfill goals such as providing local Latino fans with a chance to see a big league Mexican team in the case of Club Necaxa. “I’ll take the calls, but we’re deliberate in who we’re gonna play,” Mann said. “It’s got to be clubs we identify with.” Once DCFC turns pro, the club may possibly play international matches overseas or in Mexico rather than just hosting them, Mann said. Until then, the schedule in the current fourth-tier format is too tight to allow overseas play. DCFC starts its season on April 14 with an exhibition match against Western Michigan University at home. League play begins May 13 against AFC Ann Arbor on the road, and the club’s first NPSL home match is May 25 against FC Columbus. Bill Shea: 313 (446-1626) Twitter: @Bill_Shea19

EK E W

! T F LE

DON’T GET LEFT OUT OF THE WINNER’S CIRCLE.

TELL US WHY YOU’RE THE BEST IN CLASS.

We’re launching a slate of recognition programs honoring the “Best in Class” in three Metro Detroit business sectors: real estate, law and finance. The awards will honor stand-out achievements – the deals and developments that made the most impact in the last year or so – as well overall excellence in the field.

NOMINATIONS ARE NOW OPEN FOR BEST IN CLASS: REAL ESTATE in the following categories: • Broker of the year • Developer of the year • Project of the year • Young gun of the year – Candidate should be under the age of 35 on June 25, 2018 • Deal of the year, by project type Lease / sale; office / industrial / retail

Winners will be announced in our June 25 issue. If you’re up for the challenge, the competition is free and entries will be accepted until Monday, April 9.

Place your nominations at crainsdetroit.com/nominate.

C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 2 , 2 0 1 8

Grosfield Building to be renovated in $4M project By Annalise Frank

afrank@crain.com

The partially collapsed Grosfield Building in Southwest Detroit could be getting new life as 20 lofts and ground-floor retail or restaurant space. Detroit-based Warehouse Development, which specializes in historic renovations, is doing preliminary work and plans Need to redevelop four to know buildings at 3365 JJTotal of four and 3363 Michibuildings in gan Ave., just southwest Detroit west of Corkto be redeveloped town. The $4 million JJ20 lofts, retail or Grosfield Lofts restaurant space project includes planned the three-story, JJWarehouse red-brick GrosDevelopment field Building, specializes in which has a dishistoric renovatinctive corner tions turret and dates back to at least 1893, and two other buildings along Michigan Avenue. The three total approximately 27,000 square feet. Architect John Biggar and former Crain's Twenty in their 20s honoree Brian Mooney co-own the companies leading the project: developer Warehouse Development, construction manager Integrity Building Group and architectural firm StudiozONE, Mooney said. The team’s list of projects includes the Grand Army of the Republic Building and restaurant Wright & Co., both in Detroit. Work is expected to officially begin in a month or two and take nine to 12 months to complete. Ground floor space along Michigan Avenue could be used for four retail shops or a larger restaurant concept, Mooney said, adding that he’s already had interest in the latter. A fourth building behind the three along Michigan is 4,000 square feet and could be used for either restaurant space or another, larger residential unit, Mooney said. Presales will start in the next two weeks for the 20 planned for-sale units, which will average 770 square feet and range in price from around $175,000-$250,000, said Jerome Huez,

Detroit-based Warehouse Development plans to redevelop the Grosfield Building in a $4 million project at 3365 and 3363 Michigan Ave. in Southwest Detroit.

KURT NAGL/CRAIN’S DETROIT BUSINESS

Work on the Grosfield Building redevelopment project on Michigan Avenue west of Detroit’s Corktown is expected to start in one or two months and take nine to 12 months to complete.

president of Detroit-based The Loft Warehouse, which will be marketing the lofts for sale. Nineteen units have one bedroom and one bathroom, and one is a studio. Adjacent parking will provide 30-40 spaces. Huez said they’re marketing the units as “affordable” for younger prospective homeowners aiming to move close to the city’s downtown and participate in the neighborhood’s economic growth. Grosfield Lofts’ price tag will include rebuilding a collapsed back section of the corner structure. The development team started work last year stabilizing the building — whose integrity is still “solid,” Mooney said — and removing and cleaning original bricks for reuse.

STUDIOZONE

“The rest of the building’s in great shape,” he said, adding that they’re looking to preserve “anything that is of historic value or interest ... A lot of original windows, original tin ceilings, original hardwood floors.” The project is seeking approval from the city for a Neighborhood Enterprise Zone tax abatement, which applies to development and rehabilitation of housing in certain financially challenged neighborhoods, and possibly a historic tax credit. According to city property records, the 3365 Michigan Ave. parcel was most recently sold in 2010 to Khalil Khalil for $30,000. The developer and Khalil are partners in the project under Grosfield Lofts LLC, Mooney said.

Ann Arbor tech firm plans to add 300 jobs with expansion By Kurt Nagl

Need to know

knagl@crain.com

Software developer Nexient is digging deeper roots at is Ann Arbor-area technology hub with a planned $4.17 million expansion expected to create 300 high-skilled jobs over three years. The Silicon Valley-based firm is growing operations in Pittsfield Township, citing a strong talent pool as a driver. It has doubled its capacity there since opening in 2010. “Ann Arbor has everything we need for rapid growth: a highly educated workforce, a reasonable cost of living, a thriving business community and an attractive quality of life that makes it easy to recruit,” Nexient CEO Mark Orttung said in a written statement to Crain’s. The Michigan Economic Development Corp. is also providing a $1.5 million Michigan Business Development Program performance-based grant to support talent recruitment and company expenses such as annu-

JJSilicon Valley-based Nexient employs 250 in Ann Arbor JJMost clients are outside Michigan JJ$4.17 million expansion planned over three years

NEXIENT

Nexient is planning to more than double its employee count over the next three years with a $4.17 million expansion boosted by a $1.5 million grant from MEDC.

al lease costs, computers and other equipment, said Trevor Friedeberg, director of business development

projects for the MEDC. Nexient’s clients are mostly outside Michigan in finance, health care,

software, travel and hospitality, media and retail. The grant was awarded to convince the company to expand at its Michigan site. Alternatives included growing in Indiana or locating its developers on-site with customers, according to the MEDC. Friedeberg said the type of incentive and amount of money offered to businesses that are contemplating opening or expanding in-state is based on potential return on investment and the number of jobs the move would create. “When a project like this comes to us, when there’s strong out-of-state competition, we’re able to look at dif-

ferent tools and find a way to use them to make sure the project does happen in Michigan,” he said. Friedeberg said the typical cost for the MEDC to create one job is around $7,000. If Nexient hires 300 new employees, the cost would come out to $5,000 per job. Nexient rebranded itself from Systems in Motion in 2016, when it expanded from 35,000 square feet to 75,000 square feet after running out of space and taking over the lease next door. The company employs around 250 in Ann Arbor and has capacity for 600, said Chris Ulbrich, who handles public relations for Nexient. It employs more than 400 designers and developers in Midwestern delivery centers. In 2009, the MEDC awarded the company a seven-year, 100 percent Standard MEGA Tax Credit, an economic growth incentive and attraction tool under a now-repealed tax law.

For the first time in a generation, metro Detroit is flush with capital. How can your business tap into it? And what will it mean for the region when – not if – we have another recession? Finance NEXT is a look at the future of metro Detroit’s economy and what that means for your business.

Thursday, May 10 8-10:30 a.m. Somerset Inn, Troy Individual ticket: $80

WHAT DOES THE NEXT RECESSION LOOK LIKE?

What did we learn 10 years ago? There’s more flexibility and discipline in the system – but has there been too little capital investment? Where is the risk and who will be affected?

Reserved table of 10: $850 Young Professional (30% Off): $56 Are you a Crain’s Detroit Member? Email us at cdbevents@crain.com to receive your individual ticket discount.

HOW TO TAP INTO NEW CAPITAL FOR YOUR BUSINESS Experts say it’s a better time than ever for businesses to access capital. Is it true? Why and what’s changed? More importantly, how can business owners tap into it?

C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 2 , 2 0 1 8

A few questions for: Economist Lawrence Summers means taking a view of education that is operationally focused to prepare workers. So working with the private sector to create these programs is critical. We also have to make strategic investments to community colleges for the right kinds of workers.

Economist Lawrence Summers believes the U.S. is propelling itself toward another recession. One that is weaker, but far longer than the Great Recession a decade past. Summers has become an outspoken expert on the economy and an adversary to policies the Donald Trump administration says will propel it forward. He served as the 71st secretary of the U.S. Department of Treasury under President Bill Clinton and as the director of the White House National Economic Council in the Barack Obama administration. He was chief economist of the World Bank 19911993 and president of Harvard University from 2001-2006, where he now serves as president emeritus and an economics professor. At an event at Macomb Community College’s Clinton Township campus last week, Summers spoke to Crain’s Senior Reporter Dustin Walsh about the trade policies of the Trump administration, the forces of disruption in the auto sector and brittleness in the U.S. economy.

How do we tackle wage stagnation, particularly in the areas that have been left behind as business and population consolidates into more populous regions?

A host of things, including wage subsidies to employers in targeted areas to support those left behind and maintain growth. We could also consider an adjustment to get people to move to areas where their income is greater. You’ve been a vocal opponent of the Trump administration’s trade policies. Can you explain why?

We’ve been on an economic upswing for a number of years. When will we see a recession?

The next few years. Not next year, but in the coming years it’s likely. How bad will the next recession be?

Employment figures are going up, but the economy has a real brittleness. We’ve kept interest rates artificially low for so long, we won’t be able to reduce them in a downturn. And because of the recent tax cuts, we’re handicapping our ability to spend our way out of it. The next recession, therefore, will be longer, deeper than it should be.

BLOOMBERG

Economist Lawrence Summers spoke at an event at Macomb Community College’s Clinton Township campus last week. The last recession hit Detroit hard, but technology is continually disrupting the way this region’s primary auto sector operates. What are your thoughts on the future of this region?

The forces of technology will mean fewer people in manufacturing, not just here but in Germany and Japan, too. It’s not realistic to aspire to bring those jobs back. There are profound changes coming with electric vehi-

cles and autonomous vehicles. Jobs will be different. Traditional manufacturing jobs will cede to manufacturing sensors and other high-tech products. Other jobs will be in managing congestion with better logistics than we’ve ever had before. That’s going to create a lot of new opportunities for places like Detroit. New technology can create large scale opportunities, but it’s crucial for this

region to ride with where the industry goes. Those new jobs require new skills and talk to any company and talent remains an issue. How do we ensure our educational institutions meet demand?

Markets are potent tools. Institutions have the incentive to operate in a way that meets demand. That

The recent tariffs are ill-conceived. We have to remember 40 times as many people work in steel using than steel-producing firms. This policy is a jobs destroyer, even before we get to retaliation by other countries. The rationale is on the edge of absurdity. I mean, we have two times as many manicurists as we do steel workers. It makes very little sense to engage in this activity. Is there any good news for the U.S.?

The U.S. has the best universities in the world. We maintain an advantage in the technology that will define the 21st century. For all of our problems, I’d rather play our hand than Europe’s or Japan’s or China’s. They need transformational changes and often have political systems less conducive than ours for success.

Fisher House approved for veterans coming to Detroit By Sherri Welch

Need to know

swelch@crain.com

Veterans and their families coming to Detroit for medical treatment at the John D. Dingell Veterans Affairs Medical Center will soon have a home away from home to stay during treatment. The U.S. Secretary of Veterans Affairs and the Maryland-based Fisher House Foundation have approved a Fisher House in Detroit near the local VA facility. The house is the second approved for Michigan, with another in the works for Ann Arbor, as Crain’s reported in October. Congresswoman Debbie Dingell, D-Dearborn, helped secure the Fisher House designation for both sites. It comes with a undisclosed sizable grant from the Fisher Foundation to cover a large portion of the costs to build the home. The total costs for the Detroit site and timeline are not yet known, as its location is still being finalized said Alyssa Mengason, a spokeswoman for the Detroit VA. The VA has selected an undisclosed site from among the cityowned parcels the city offered and is working to purchase it. In October, Bill Browning, chief of volunteer and community relations for the Detroit VA, said the city of Detroit had identified city-owned parcels of land that would provide a safe location for a Fisher House within walking distance of the Detroit VA, on John R

JJ“Home away from home” to be located near Detroit VA hospital JJIt will be the second in Michigan; Ann Arbor effort underway JJDetroit VA is finalizing purchase of site within walking distance of hospital

JOHN D. DINGELL VETERANS AFFAIRS MEDICAL CENTER

The Veteran Affairs department is working to purchase an undisclosed site near the John D. Dingell Veterans Affairs Medical Center in Detroit for the new Fisher House.

Street between East Warren Avenue and Mack Avenue. A local committee of representatives from the VA and local veterans services organizations is being formed to lead the Detroit project.

Typically, the committee creates a 501(c)3 nonprofit to raise up to 50 percent of the project’s costs. But there’s some also discussion about the possibility of bringing the Detroit Fisher House fundraising under the umbrella

of Fisher House Michigan, a nonprofit that’s raising money for the state’s first Fisher House set for Ann Arbor. “There’s a lot of discussion that needs to happen; perhaps we’ll consider that or do something on our

own,” Mengason said. The Fisher House Foundation pledged $3.5 million to the Ann Arbor house, and the nonprofit Fisher House Michigan is working to raise $3.5 million to round out the costs to build the new site and to create a $1.5 million endowment to help support any other out-of-pocket needs of people staying there beyond housing. Last fall, the organization said it planned to break ground on the 16to 20-suite site in 2019 and complete it within nine months to a year, said Mark Palmucci, a retired Borders executive who serves as vice president of the board of directors for Fisher House Michigan. Once the house is built, the VA will fund the ongoing maintenance and operation of the Fisher House. As of last October, Fisher House Michigan had raised just more than $1.2 million in the year since the project was approved. Sherri Welch: (313) 446-1694 Twitter: @SherriWelch

C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 2 , 2 0 1 8

CALENDAR

DEALS & DETAILS ACQUISITIONS & MERGERS Air Filtration Holdings LLC, Chicago, manufacturers of air filtration products for use in commercial and industrial systems, along with Edgewater Funds and Duchossois Capital Management, both of Chicago, acquired RoboVent, Sterling Heights, a provider of industrial ventilation and filtration solutions for welding, metal cutting; dust collection and lubricant mist collection; and general ventilation. Websites: robovent.com, edgewaterfunds.com, dcmllc.com J Detroit-based private equity firm Huron Capital Partners LLC's information technology services platform InterVision Systems, Santa Clara, Calif., has acquired Indianapolis, Ind.based Bluelock, provider of disaster recovery and infrastructure solutions. Websites: huroncapital.com, bluelock.com, intervision.com J RHP Properties, Farmington Hills, owner of manufactured home communities, has acquired Brookside Country Club, 421 home sites, in El Monte, Calif. Website: rhp-properties.com J Troy-based Flagstar Bancorp Inc. has closed on a previously announced transaction to acquire eight Desert Community Bank branches in San Bernardino County, Calif. Websites: flagstar.com, dcbk.org J Rehmann, Troy, a financial services firm, has merged with Trivalent Group Inc., Grandville, a managed IT service provider. Websites: rehmann. com, trivalentgroup.com J YES Communities, Denver, Colo., owner and operator of manufactured home communities, has acquired 10 manufactured home communities in Michigan, including three in Kalamazoo, and one each in Holt, East Lansing, Holly, Novi, Lansing, Ypsilanti and Wayland. Website: yescommunities.com J

CONTRACTS JJStrata Oncology Inc., Ann Arbor, a precision oncology company, announced that Aurora Health Care, a Milwaukee, Wis.-based health care system, and University of Texas Health Sciences, Houston, a health care educator, have joined the Strata Precision Oncology Network. Websites: strataoncology.com, aurorahealthcare.org, uth.edu JJCKC Agency, Farmington Hills, a public relations firm, has added four clients, including Girl Scouts of Southeastern Michigan, Detroit; Motor City Comic Con 2018, Farmington Hills; New Radio Media, Farmington Hills, and National Council of Jewish Women of Greater Detroit, Southfield. Websites: ckcagency.com, gssem.org, motorcitycomiccon.com, newradiomedia.com and ncjwgds.org JJPACCAR, Bellevue, Wash., manufacturer of medium- and heavy-duty commercial vehicles, has renewed a long-term contract with SEG Automotive North America, Novi, starter and motor generator manufacturer. Websites: seg-automotive.com, paccar.com JJzipLogix LLC, Fraser, a real estate technology company, has an agreement with SmartMLS, which covers Connecticut, to allow access to their forms libraries through zipForm Plus. Website: ziplogix.com

J Open Dealer Exchange LLC, Southfield, a vehicle finance software company, and RouteOne, Farmington Hills, provider of automobile financing systems, has formed an alliance for providing financing and aftermarket protection products to car shoppers. Websites: opendealerexchange.com, routeone.com J Federal-Mogul Powertrain, designer and manufacturer of powertrain systems and a division of Federal-Mogul LLC, Southfield, and DongFeng Motor Parts and Components Group Co. Ltd., an auto parts supplier and a subsidiary of DongFeng Motor Corp., Shanghai, China, plan to establish a piston manufacturing joint venture in Shiyan, China. Websites: federalmogul.com, dfpcgroup.en.gasgoo.com, dfmc.com.cn

EXPANSIONS J Atlas Oil Company, Taylor, a fuel distributor, launched a Chemical Transportation Division in Houston, Texas. Website: atlasoil.com J Ross Mortgage Corp. opened a location at 401 S. Old Woodward, Suite 455. Phone: (248) 792-8022. Website: rossmortgage.com J TRIARQ Health, Troy, a physician practice services company, is expanding its bundled payment partnership, The Alliance, to Ohio, Florida, Alabama and Texas. Website: triarqhealth.com J BorgWarner Inc., Auburn Hills, a powertrain supplier, opened a 69,965-square-foot production plant in Rayong, Thailand, to produce advanced turbocharging solutions. Also, BorgWarner’s Eco-Launch, a stop/ start solenoid valve and hydraulic accumulator, is available on the Ford 8-speed, front-wheel drive, midtorque transmission used for a variety of vehicles in North America. Website: borgwarner.com JJBrightway Insurance, Jacksonville, Fla., an insurance company, has opened Brightway, The Raylight Agency, in Brighton, operated by agent Razur Rahman. Website: BrightwayRaylightAgency.com, Brightway. com JJPet Valu Inc., Ontario, Canada, a pet supplies chain, has opened a store at 523 W. Main St, Milan. Phone: (734) 508-6563. Website: petvalu.com JJLear Corp., Southfield, supplier of automotive seating and electrical systems, has expanded its automotive seating structures manufacturing facility in Valença, Portugal. Production space has been expanded by more than 11,000 square meters and office space by 1,200 square meters, resulting in total area for production of more than 20,600 square meters and total office space of 2,000 square meters. Website: lear.com

MOVES JJBBG,

Dallas, Texas, a commercial real estate valuation firm, has moved its Michigan office to 42 Watson St., Detroit, from 17199 N. Laurel Park Drive, Suite 404, Livonia. Phone: (248) 496-6787. Websites: bbgres. com

NEW PRODUCTS JJLifeSecure Insurance Co., Brighton, has launched critical illness insurance to help offset out-of-pocket medical costs and other related expenses. The

product is available to individuals, families and employers and their employees in 16 states. Website: yourlifesecure.com J Meritor Inc., Troy, manufacturer of automobile components for military suppliers, trucks, and trailers, has introduced a line of gear sets at aftermarket prices for Meritor 145 and 160 series axles, to ensure better gear mesh, smooth operation and durability. Website: meritor.com J Gravity Software LLC, Detroit, a business management software company, released a time and billing module, allowing professional service firms to automate operations from time entry to client payments. Website: go-gravity.com J Simplify Healthcare Inc., Southfield, a health care technology company, has launched eMedicareSync to streamline the Medicare plan benefit process. Website: simplifyhealthcare. com J Federal-Mogul Corp., Southfield, will mark the 100th anniversary of Anco, founded as the Anderson Company in South Bend, Ind., in 1918 and acquired by Federal-Mogul in 1988, with the return of “Big Yellow,” the display cabinet for shops and technicians. Also, Anco recently released a new conventional wiper blade for light vehicles, Anco 97-series. Websites: federalmogul.com, FMmotorparts.com, ancowipers.com J Acromag Inc., Wixom, a designer and manufacturer of industrial electronics, measurement and control products, introduced an SP230 series of isolated signal splitters/duplicators designed for easier installation and setup. Website: acromag.com J Motor Information Systems, Troy, supplier of automotive data, has launched Motor TireTech, providing complete, accurate and up-to-date OEM tire specifications for North American passenger cars, light duty trucks and vans. Website: motor.com JJMeritor Inc., Troy, a commercial truck supplier, announced that EX+ L air disc brakes will be standard on all wheel positions for Daimler Trucks North America’s Freightliner Cascadia model beginning in the second quarter of 2018. Website: meritor.com JJGeometric Results Inc. (GRI), Detroit, a managed service provider, has launched Envision, which uses algorithms and predictive analytics to allow clients to understand their data compared to larger, external data sets. Website: GeometricResultsInc.com JJFordDirect, Dearborn, a joint venture between Ford Motor Co. and its franchised dealers, has introduced Maestro, a mobile sales app for Ford and Lincoln dealers that allows a single salesperson to handle an entire transaction from vehicle selection to final contract. Website: forddirect. com

NEW SERVICES JJNew Radio Media, Farmington Hills, a digital streaming entertainment company, launched a digital streaming entertainment network offering online audio and video content accessible across connected platforms. Thirteen shows are available through the app NRMStreamz and the New Radio Media website, newradiomedia.com.

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

TUESDAY, APRIL 3 Positive Links Speaker Series: Technology and Happiness: The Social and Emotional Costs of Being Constantly Connected. 4-5 p.m. 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, Elizabeth Dunn 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

FRIDAY, APRIL 4 Success Is In Your F.A.C.E. — Lessons in Focus, Awareness, Communications and Execution. 9-11:30 a.m. 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

UPCOMING EVENTS Create Raving Fans Lunch and Learn. 11:30 a.m.-1:30 p.m. April 11. Troy Rotary Club. Panelists include: Ara Topouzian, president and CEO of Troy Chamber of Commerce; Shawn Lee, founder and owner of Shawn Lee Studios in Southfield and director of photogAra Topouzian raphy for TEDx Detroit; and Candice Simons, president and CEO, Brooklyn Outdoor Advertising. Bank of America Plaza, Troy. $20 (includes lunch). Contact: Rene Pothetes, phone: (248) 972-8126; email: rene@ michaelangelocaruso.com; website: portal.clubrunner.ca/1475/Event/creating-raving-fans Business Banking Seminar: Social Media Strategy. 6-7:30 p.m. April 12. DFCU Financial. Seminar will discuss how to achieve specific objectives by platform, how to develop a paid social media campaign and measuring social media success. DFCU Financial, Livonia. Free. Contact: Lauren Steinhelper, phone: (313) 322-8258; email: lauren.steinhelper@dfcufinancial.com; website: dfcufinancial.com/businessbanking Washtenaw Contractors Association Membership Meeting. Noon1:45 p.m. April 13. WCA. Topics: Olympia Development’s continued plans for The District Detroit and Eastern Michigan University’s construction plans. Weber’s Inn, Ann Ar-

bor. $35 members; $70 nonmembers. Contact: Gretchen Waters, phone: (734) 662-2570; email: gwaters@wcaonline.org The Next Big Thing: Adcraft Luncheon with Brian Cooley. 11:30 a.m.-1 p.m. April 18. Adcraft Club Detroit. Brian Cooley, editor at large, CNET, takes a look at what consumers will respond to — and when they probably won’t. Learn about the innovation fuelBrian Cooley ing and creating new ways people consume content, go about their lives and discover loyalty to brands. San Marino Club, Troy. $50 members; $75 nonmembers. Contact: LaVar Harris, phone: (313) 872-7850; email: lharris@adcraft.org; website: adcraftdetroit.com Inside the CEO Mind. 8 a.m. April 19. Detroit Regional Chamber. Consumer Energy’s President and CEO Patti Poppe shares her journey in the energy and automotive industries. Townsend Hotel, Birmingham. $30 memPatti Poppe bers; $50 nonm e m b e r s . Contact: Maggie Greaney, phone: (313) 596-0482; email: mgreaney@ detroitchamber.com The Plan for a Stronger Michigan. 11:30 a.m.-1:30 p.m. April 24. Detroit Economic Club. Business Leaders for Michigan has unveiled its “Plan for a Stronger Michigan” which identifies key steps to growing good paying jobs and accelerating our state’s economic turnaround. Speakers: John Rakolta Jr., chairman and CEO, Walbridge, and Doug Rothwell, president and CEO, Business Leaders for Michigan. The Masonic. $45 members; $55 guests of members; $75 nonmembers. Website: econclub.org Women’s Business Symposium Greater Detroit. 10:30 a.m.-3 p.m. April 27. Comerica Bank. Speaker is Cookie Johnson, philanthropist, entrepreneur and author. MGM Grand Detroit. $75. Contact: Wendy Holmes, (248) 371-5503; email: wholmes@ comerica.com ; Cookie Johnson website: events. comerica.com/wbsmi18 To submit calendar items visit crainsdetroit.com and click “Events” near the top of the home page. Then, click “Submit Your Events” from the drop-down menu that will appear. Fill out the submission form, then click “Submit event” at the bottom of the page. More Calendar items can be found at crainsdetroit.com/events.

C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 2 , 2 0 1 8

Trump nominates Rakolta for ambassador to UAE By Chad Livengood clivengood@crain.com

WALDBRIDGE GROUP

John Rakolta, Jr. has been chairman and CEO of Walbridge Aldinger Co. since 1993.

President Donald Trump on Wednesday nominated Detroit businessman John Rakolta Jr. to be U.S. ambassador to the United Arab Emirates, a prominent appointment for the chairman and CEO of the construction giant Walbridge Aldinger Co. A major Republican Party donor and fundraiser, Rakolta's appointment to be the U.S. ambassador in the oil-rich Persian Gulf state is subject to confirmation by the Senate. A White House announcement of Trump’s nomination of Rakolta highlighted his work as a co-chair of the

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

FINANCIAL SERVICES

HEALTH CARE Henry Boutros Vice President

Illuminate HC Henry Boutros, Board Chair of the Health Care Association of Michigan, has been appointed Vice President at Illuminate HC. Boutros has served as CEO of Brighton, MI-based NexCare Health Systems since 2005, along with past executive positions in rehabilitation and skilled nursing. His new role is to provide resources and support to Illuminate HC operations in Michigan and to help advance the company’s initiatives to modernize post-hospital care delivery.

Daniel Miller Chief Financial Officer

International Bancard (IB) Detroit-based, International Bancard, an industry-leading payment acceptance provider, has announced the addition of Daniel Miller as the company’s Chief Financial Officer (CFO). Miller brings with him an extensive background in acquisitions, corporate finance, operations and strategic planning. With more than 15 years of experience in both the financial and operational fields, Miller will manage all financial aspects of the company, including expansion through acquisitions.

HEALTH CARE Nancy Erwin Vice President of Human Resources

Illuminate HC Nancy Erwin, Director of Human Resources at Ciena Healthcare in Southfield, has been named Vice President of HR at Illuminate HC, a Chicago-based post-hospital care provider with aggressive acquisition plans in Michigan. Erwin has held similar executive roles since 1993. She will be responsible for developing and implementing new approaches to benefits, wages and staffing models that will aid in Illuminate HC’s mission to modernize post-hospital care delivery and elevate skilled care’s status.

TECHNOLOGY Dan Garrison Detroit Office Managing Director

Accenture Dan Garrison is the Office Managing Director for Accenture’s Detroit office. In this role Dan is responsible for growing sales and revenue across Accenture’s business offerings, developing the company’s local workforce, managing office operations and positioning Accenture’s brand in the community. Dan also oversees Client Delivery for Accenture Digital across North America. He has been with Accenture for over 20 years and has extensive experience with complex system delivery across industries.

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

Rakolta played a central role in lobbying the Republicancontrolled Legislature to relieve the school district of $617 million in debt piled up by a seven-year succession of stateappointed emergency managers. Coalition for the Future of Detroit School Children, a group of business, civic, education and faith leaders that led an effort in 2015 and 2016 to rescue Detroit Public Schools from financial collapse. Rakolta played a central role in lobbying the Republican-controlled Legislature to relieve the school district of $617 million in debt piled up by a seven-year succession of state-appointed emergency managers. He has recently been publicly advocating for reforms in special education funding to make it more equitable for traditional school districts like Detroit Public Schools Community District. Rakolta has been chairman and CEO of Walbridge since 1993, succeeding his father, John Rakolta Sr., who had been with the company since 1946. Rakolta's son, John III, is now executive vice president of the company, which is headquartered in downtown Detroit. The 102-year-old construction company, which builds manufacturing plants, hospitals and government facilities, reported $1.5 billion in revenue in 2017, a 3.4 percent increase from the prior year, according to Crain's list of largest family-owned companies. Rakolta, who previously served as an honorary consul for Romania, declined comment Wednesday on the ambassadorship nomination. Nominees for ambassadorships don't normally comment publicly while they are subject to Senate review. Rakolta is the third metro Detroit businessman to be nominated by the Republican president for an ambassadorship. In November, Trump nominated The Suburban Collection Chairman and CEO David Fischer to be the U.S. ambassador in Morocco. Last month, Trump nominated Ann Arbor real estate consultant Joseph Cella to be ambassador to Fiji. In December, former U.S. Rep. Pete Hoekstra of Holland was sworn in as Trump's new ambassador to the Netherlands. Hoekstra was a cochair of Trump's successful 2016 Michigan campaign. Fischer and Rakolta each contributed $250,000 to Trump's inauguration committee. Rakolta was finance chairman of Mitt Romney's two presidential campaigns in 2008 and 2012. Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

SPOTLIGHT UM's top fundraiser to retire

The University of Michigan's top fundraiser, Jerry May, plans to retire at the end of the year. His retirement will be timed with the end of the Victors for Michigan campaign, a $4 billion drive that's been underway since 2013. Under the direction of May, who has served as vice president for development for UM for the past 15 years, the university has exceeded the $4 billion goal it set for its current Victors for Michigan campaign. May also oversaw UM's earlier $2.5 billion campaign, which exceeded its target with a total of $3.2 billion raised when the campaign closed out in December 2008. The university said it plans to launch a search for May's successor soon. May returned to UM as its top fundraiser at the end of 2003 after holding the same role at Ohio State University and serving as president of the Ohio State University Foundation 1992-2002. There he oversaw the most successful campaign in the school's history, raising $1.23 billion, UM said on its website.

Cranbrook art director resigns

Chris Scoates, director of the Cranbrook Academy of Art and Art Museum, has resigned effective June 30. A native of England who graduated from Cranbrook Academy of Art, Scoates has led it since August 2014. He is departChris Scoates ing to lead the Museum of Arts and Design in New York. The board of governors of Cranbrook Academy of Art and Art Museum plans to launch a search for Scoates' successor soon, said Julie Fracker, director of communications for the museum.

Former WXYZ anchor leaves retirement for radio

After he said he was retiring from Detroit TV news to spend more time in Nashville to pursue a music career, it turns out Stephen Clark is not going so far after all. Stephen Clark The former longtime WXYZ-Channel 7 anchor will sign on Monday morning to 104.3 WOMC as co-host of "104.3 WOMC Mornings with Stephen Clark and ..." A co-host was expected to be revealed later, the Southfield station announced. A show logo hints that his co-host will be a woman. Clark can be heard on the heritage classic hits station 6-10 a.m. on weekdays.

April 2, 2018

DETROIT BUSINESS C R A I N ’ S D E T R OCIRAIN T ’BS U SINE S S // A P R I L 2 , 2 0 1 8

Page1919

GRANTS FROM PAGE 3

just compete locally, to cut the local philanthropic pie more, but to try to grow it.” Because of the revitalization happening in the city, it’s become a magnet for investment from outside of Detroit, said Jim Ferris, director of the Center on Philanthropy and Public Policy at the University of Southern California. Detroit is not the only city pursuing public and private grants and investment, he said. But “Detroit has put a lot of effort into it, and it’s been a success.” Detroit has a spotty history on coordinating grant-seeking. Detroit had an office of the foundation liaison staffed by David Smydra, during Mayor Dennis Archer’s 19942001 term, but that office didn’t operate during the Dave Bing and Kwame Kilpatrick administrations. And city departments were applying for grants independently of one another in the years before the bankruptcy. To help strengthen and coordinate CRAIN’S DETROIT BUSINESS/ANNALISE FRANK its fundraising muscle, the Ford, The Motor City Match entrepreneurship program has been one of the programs for which the city has lured outside funding. Kresge and Skillman foundations tions and companies was fairly static rection. They’ve kind of come in with made a $1.1 million grant to the of hiring three more development Detroit Development Fund. “The goal of our team is not to just last year, decreasing to $26.62 million more support,” Friedrichs said. Community Foundation for South- employees: two to seek traditional east Michigan in 2014 to support an funding from public and private support more funds going into city from $26.78 million the year before. The city is budgeting to take on $2 Out-of-state funders provided over million of the $10.2 million cost of assessment of what each city depart- funders and one specializing in loan coffers, but to help Detroit compete nationally for resources that improve 60 percent of the total private sup- Grow Detroit’s Young Talent in the ment was doing in regards to grants and investment capital. It will operate on a $3.1 million the lives of Detroiters,” Friedrichs port coming to the city last year, up coming fiscal year. and to create a framework to coordibudget in the coming fiscal said. “And that can mean partnering from 31. 5 percent in 2016. nate it, Friedrichs said. The key to sustaining efforts supyear, down from a com- departments with community orgaThat led to the creation of ported through short- and midterm bined budget of $3.8 mil- nizations via a memorandum of un- Looking forward grants management and grants and investments is braided lion for the two offices this derstanding.” development offices in late Investment is pouring into Detroit funding that combines federal grants Within the total, public support to support its rebound, but how will and city funds, Friedrichs said. year, Friedrichs said, as a 2014 and early 2015. Both result of efficiencies such as rose $18.1 million between 2016 and the city sustain those programs when city offices were created as “Grant funding from foundations shared administrative as- 2017. Private support from founda- grant and loan dollars run out? part of the city’s bankruptcy is never going to be long-term.” sistants, elimination of va- tions and companies rose to $67.4 milplan, Friedrichs said. “Philanthropy has really not pulled cant grants management lion last year from $39 million in 2016. Grants management moniout of any programs we asked them Sherri Welch: 313 (446-1694) Funding from Michigan founda- to support. ... It’s really the other di- Twitter: @SherriWelch positions and collecting tored grant compliance and data for grant application spending, making sure doland reporting one time and lars were spent on time, Ryan Friedrichs: something the city strug- Began as a one-man keeping it in a single system. gled with before its bankfundraising team “We view the city’s caruptcy. pacity to raise philanthropFriedrichs came on board in 2015, serving as a one-man ic grants and to fully expend and POSITIONS AVAILABLE POSITIONS AVAILABLE fundraising team for a time until the maximize federal dollars as a critical city began ramping up its develop- capability to enable Detroit’s recovSOFTWARE ENGINEER ADVISORY ery,” said Skillman CEO Tonya Allen. ment staff the following year. Autodesk’s Novi, MI office has multiple Advisory Manager, Corporate & Business Strategy (Mult. Pos.) PricewaterhouseCoopers “We are inspired by the growth in This January the city merged the openings for SOFTWARE ENGINEER: DeAdvisory Services LLC, Detroit, MI. Provide strategy, mgmt, tech. & risk consulting services velop, create, & modify general web/ grants management and develop- revenues materialized by this office, to help clients anticipate & address complex bus. challenges. Req. Bach’s deg. or foreign cloud-based comp apps software using ment offices to gain efficiencies from which we believe will improve living equiv. in Bus Admin, Info Systems or rel. + 5 yrs post-bach’s progress. rel. work exp.; OR a JavaScript & Java technologies. Master’s deg. or foreign equiv. in Bus Admin, Info Systems or rel. + 3 yrs rel. work exp. their related focus. The merged office conditions for Detroit residents.” Travel req. up to 80%. TO APPLY E-mail resume to: Increasing trust, confidence and now employs 20 and is in the process occupation.specialist@autodesk.com & indiApply by mail, referencing Job Code MI1698, Attn: HR SSC/Talent Management, 4040 W. credibility in the city “will help leverage cate job code KB044. Boy Scout Blvd, Tampa, FL 33607. additional and much-needed public, private and charitable investments to fuel Detroit’s trajectory,” she said. Part of the strategy that Friedrichs’ Grants the city and third-party team has helped institute is keeping partners like the Detroit Employa reserve of city match money that ment Solutions Corp have secured can leverage private money, he said. from funders outside of Michigan It’s also looking for opportunities over the past two years include: LEGAL SERVICES - IMMIGRATION J $6.5M to $18M in 2017 from JPwhere private investment can leverWATERFRONT PROPERTY WATERFRONT PROPERTY Immigration Law Firm, AV-rated age federal dollars. Morgan Chase, W.K. Kellogg FounAntone, Casagrande & Adwers, P.C. 658 FT WATERFRONT It’s only been a couple of years, but dation, Wilson Foundation, Fifth Dedicated to Business, Employment, the development and grant teams’ Third for the Entrepreneurs of ColLAKE MICHIGAN and Family Immigration Matters efforts are paying off. or Fund supporting Detroit 31555 W. 14 Mile Rd. Ste. 100, In 2017, the city and third-party small-business development Farmington Hills, MI 48334 J $1.5M in 2017 from Bloomberg groups like the Detroit Employment (248) 406-4100 www.antone.com Service Corps attracted $202.18 milPhilanthropies to support an “Inlion in public and private funds, up novation Team” to bring data, from $155.7 million the year before, analysis and measurement to city SURVEY Friedrichs said. The city operated on initiatives. J $400,000 in 2017 from Art for a $1.91 billion budget in 2017. The total raised includes a mixture Justice Fund for Project Clean ANALYZE of grants and low-interest loans to Slate, which supports workforce •Ultimate Exclusive Privacy support projects that are adminisreentry and expungement of crim•26.5 Acres MATCH tered by community organizations. inal records for Detroiters. J $4 million in 2016 from the They include: Grow Detroit’s Young •14 Sites Possible Talent program, which is run by the Rockefeller Foundation, JPB FounDetroit Employment Solutions Corp; dation, Kresge Foundation, Knight (231) 409-9119 Motor City Match and Motor City ReFoundation for Reimagining the Call anytime between 7am and 10pm Store, which are run by the Detroit Civic Commons revitalization work Email: joe@joeblachy.com Website: joeblachy.com Economic Growth Corp.; and the Enin the Fitzgerald neighborhood. CrainsDetroit.com/JobConnect | trepreneurs of Color Fund, run by the 420 Howard St., Petoskey, MI 49770

JOB FRONT

Major grants

MARKET PLACE

REAL ESTATE

Joe Blachy

C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 2 , 2 0 1 8

PIZZA

“Heading into Final Four weekend, we estimate the exposure value at this point to be between $6.5 (million) and $7 million.”

FROM PAGE 3

If most of Little Caesars’ approximately 4,300 domestic stores participate, that’s $4.3 million in costs for the lunch giveaway. That cost is offset by the free brand exposure the contest generated. “Heading into Final Four weekend, we estimate the exposure value at this point to be between $6.5 (million) and $7 million,” said Eric Wright, president and executive director of research at Ann Arbor-based Joyce Julius & Associates Inc., which measures the impact of sponsorships across all forms of media. That estimate is news coverage and social media mentions of Little Caesars in connection to the promotion, Wright said. The exposure value is calculated by comparing the results to the cost of reaching a similar size audience through paid advertising, he added. About $2 million of the exposure value comes from social media alone, and the total benefit for Little Caesars will increase through a spike during Monday’s giveaway, Wright said. How much of a spike remains to be seen. The estimated $4.3 million is a modest expense for a chain the size of Little Caesar Enterprises Inc. The chain was founded by the Ilitch family in Garden City in 1959 and relocated to Detroit in 1987. It doesn’t disclose finances but is estimated to be the nation’s fourth-largest pizza chain by revenue at $3.4 billion last year, according to industry trade magazine Pizza Today. Another industry publication, Franchise Times, estimated Little Caesars did $4.25 billion in sales and

— Eric Wright, president and executive director of research at Joyce Julius & Associates Inc.

About $2 million of the estimated exposure value for Little Caesars comes from social media alone.

has 4,323 U.S. locations, of which 91 percent are franchised. Monday’s pizza giveaway is largely borne by the franchisees, who typically spend $334,000 to $1.37 million to open a Little Caesars carryout location, according to the chain’s franchise information posted online. Todd Messer, executive director of the Auburn Hills-based Independent Organization of Little Caesars Fran-

BEARDS FROM PAGE 1

Koller and competitors are all seeking ways to groom a place in the growing men’s shaving goods industry, which is expected to reach $3.37 billion by 2020, according to a January forecast by Euromonitor. “In the ‘50s era of no beards, everyone was involved in military battles,” said Koller, who is also a practicing licensed structural engineer and University of Michigan graduate. “Shaving together was part of the daily routine for military men. And there was Fidel (Castro) with his long beard. Commies wore beards. Safety razors were new. But historically, shaving is the aberration. That era is over and now it’s really easy to grow an awesome beard.” Data supports its ease, or its fashion. According to a survey last year by Simmons Research, 39 percent of men in the U.S. have facial hair, up from 24 percent in 2012. Meanwhile, 20 percent of U.S. men, or roughly 24 million men, don’t shave at all. This has led to the rise of products like beard balms, oils, shampoos and conditioners, which are growing at an annual rate of nearly 4 percent, according a 2017 report by Euromonitor. Meanwhile, products used for shaving grew at less than half that rate. Detroit’s Beard Balm, where Koller is the only full-time employee alongside a part-time worker, has the capacity to produce 30,000 1.5-ounce tins of balm — which come in four varieties — per month. Koller said the company hopes to ramp up to supply 750 Walmart stores with each receiving between 100 to 200 cans monthly. Koller sells his balms for $9 and

LARRY PEPLIN

Jon Koller is convinced that beards are here to stay.

$18, depending on variety, on his website. The $9 balm retails for $12.99 on Walmart’s website. Koller met Walmart at a trade show in 2016, not long after the company announced a “Made in America” program to source $250 billion in products made domestically by 2023. Walmart said the program will create 1 million new U.S. jobs with 250,000 in direct manufacturing and 750,000 in support and services. Walmart signed to source Beard Balm last year after Koller met with buyers at the retail company’s Bentonville, Ark. headquarters. “Their commitment to American-made products is why we’re doing business with them,” Koller said. “For them, to turn that boat around, to source a quarter of their revenue from U.S. producers and make the

LITTLE CAESARS

chisees, deferred all comment on the promotions to Little Caesars corporate headquarters, but did say via email that “the franchisees are excited about it.” There has been one hiccup amid that excitement and goodwill, however: Monday falls during the Jewish holiday of Passover, and those following its strictures are forbidden to eat leavened bread during that time

— including pizza. Elliott Ring, a CPA from Oak Park, emailed Crain’s to express his disappointment that he can’t eat the free lunch combo Monday. He did say he understood why the chain chose the date, but suggested vouchers for those who can’t eat pizza for religious reasons that day. “I think it stinks that they could not come up with an alternative plan

cost work is huge. They dedicated extraordinary resources to allow us to communicate and work with them.” But the rise of the beard also means Koller’s products are competing with dozens of other similar, cheaper products on Walmart shelves. Art Natural’s Beard and Stache Balm, for example, retails for $5.74. Koller, however, isn’t fretting about competition. “Most of the products suck,” Koller said. “Look at this first ingredient. Water? Put that down. When consumer take one look at the ingredients, they’ll buy our balm. It’s not even a question.” Beard Balm contains only four ingredients — Dr. Bronner’s Magic Soap Co. coconut oil, from a fair trade plant in Sri Lanka; pharmaceutical-grade lanolin, sourced from U.S. sheep; beeswax, sourced from Southeast Michigan; and kosher-certified grape seed oil.

said. “Walmart is great, they are jampacked with discount brands. They take your product at high volume, break you down to a base price and then try to reproduce your product. I don’t want to compete in that market.” Koller knows competing on Walmart shelves is a volume play and he’s currently in talks with other local cosmetics brands to create a partnership, legal structure yet to be defined, where several companies could take advantage of retailer contacts and logistics. “Creating a group of us would provide greater control of back-of-thehouse operations, like logistics,” he said. “Involving the larger Detroit cosmetics industry would solve many things for us. Look at The Lip Bar (a lipstick maker in Detroit). That product is the best around. They have a contract with Target. We have one with Walmart. Could we help each other get into both stores and create efficiencies? Instead of marketing, I’m focused on getting us to talk to each other, because scale wins. That’s how we all succeed without throwing away who we are.” Melissa Butler, founder of The Lip Bar, did not respond to an inquiry for comment.

How to scale But Walmart isn’t the path for everyone in Southeast Michigan’s beard products scene. Ferndale-based Detroit Grooming Co. declined to sell its products at Walmart and Meijer, said Michael Haddad, president. Haddad said Detroit Grooming is currently in talks with several luxury department stores to supply its own “beard butters,” which are similar to Koller’s balms but with more and different ingredients, such as almond oil and shea butter. Detroit Grooming’s butters retail for $15.95 for a two-ounce canister and $24.95 for a four-ounce canister. “For brand protection, we didn’t want to mess with Walmart,” Haddad

Always in fashion? But how long will men love the beard? The biggest threat to both Beard Balm and Detroit Grooming is a shift in men’s facial hair choices, where the beard goes the way of the many cupcake shops that once were popular throughout the U.S. — they disappear. Haddad said that fear is very real and why Detroit Grooming diversified its men’s care offerings beyond

knowing that it is the Jewish holiday of Passover, where we do not eat leavened products,” he said. “I think they should create a voucher for those of us that cannot participate that day. It would not put so much pressure on each and every location to be up to their standard of operations (running out of food is never a good plan for a food establishment).” Ring said his lunch plan is to eat matzah and other Passover food in his office instead of Little Caesars slices, which he eats more often from a store not far from his office during the summer and fall when he’s less busy with work. Several Twitter users also complained about the giveaway occurring on Passover. It did not appear that Little Caesars social media team had responded to any of those Passover tweets directed at the company’s Twitter account. The company didn’t respond to questions about the contest’s timing with Passover. Bill Shea: (313) 446-1626 Twitter: @Bill_Shea19 beard-related products. The company has 130 SKUs, including branded deodorants, shampoos, colognes, soaps, razors and apparel. “We’ve pinned ourselves to have something to do with beards, but we’re really married to the concept of a grooming company that can change with the ebbs and flows of trends,” Haddad said. “While (Jon) has always wanted very few items available everywhere, we’re in the business of brand building. We go beyond the product side and into other things that are part of a brand.” Alun Withey, a associate research fellow at the University of Exeter in England, who has focused much of his academic career on beard research, told CNBC in a 2016 interview that beard care products are the fastest growing industries in the U.S. and the U.K., and that isn’t likely to change. “In the 18th century, (beards) disappeared and around 1850 they were back with a vengeance,” Withey told CNBC. “If you go back 300 to 400 years ago, trends will last for decades.” The current beard trend is roughly 30-years ongoing with historical cycles lasting at least a half-century, he said. Koller is certainly convinced beards — and his products — are here to stay. He can’t imagine a scenario where they go out of fashion or where the economy could impact the sales of his beard balms. “While so much fashion is about budgets, beards are not,” he said. “What’s the first thing a man does when he loses a job? He stops shaving. The economy tanking would be just fine for me.” Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh

C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 2 , 2 0 1 8

SCHOOLS FROM PAGE 1

The program was created to spur innovation and offer classes that would otherwise be inaccessible at some schools. But its expansion is also taking money from a finite pot at a time when Michigan’s public schools are falling behind the nation. Brighton and Berkley’s school districts have built the largest enterprises providing private schools with instructors who teach art, music, foreign language, physical education and advanced placement courses inside parochial and private school classrooms across Southeast Michigan — and beyond. The schools providing the classes take a prorated share of those students’ $7,800-per-student in state aid. Brighton Area Schools has the state’s largest program, teaching courses to students in 173 school districts across 23 counties. The district has agreements with private schools as far away as Bay City, Midland and rural Muskegon County, according to a Crain’s analysis of state enrollment data. Berkley’s shared-time program extends to students living in 114 school districts and a dozen counties in southern Michigan. This use of public dollars for educating parochial school students, which has been upheld as constitutional by the Michigan Supreme Court, has allowed the private schools to tap taxpayers to pay for elective courses while allowing public schools to receive the financial benefits. “Brighton and Berkley have just figured out they can be a staffing agency for these private schools,” said Craig Thiel, research director at the Citizens Research Council of Michigan. Shared-time students now account for 24 percent of Brighton’s 7,900 students and 26 percent of Berkley’s nearly 5,700 students. A Crain’s analysis of shared-time enrollment data shows 57 percent of 102,000 private school and homeschool students in shared time are taking classes through 15 school districts. Brighton and Berkley combined have 20 percent of the shared-time students. Across metro Detroit, the school districts in Clarkston, Oxford, Avondale, Redford Union, South Redford and Madison Heights have sharedtime programs that exceed 10 percent of their total enrollment. Madison Academy, a charter school in Flint, gets half of its 822 students through shared-time, enrollment data shows. “It wasn’t intended to, in some cases, approach 10, 20 or 30 (percent)” of enrollment, State Budget Director John Walsh told Crain’s. “We believe this has grown beyond anyone’s expectations, certainly the governor’s.” Snyder has proposed capping shared-time enrollment for districts at 5 percent, slashing the cost by half to $67 million and prohibiting public schools from offering kindergarten classes to non-public school students.

Minecraft classes The Snyder administration has also taken aim at some of the courses being offered through shared-time agreements. Oxford Community Schools, which gets 14 percent of its students through its shared-time program, has course offerings for homeschool students including classes in horsemanship, archery, dodgeball and the video game Minecraft. Center Line Public Schools offers homeschool students courses in fencing at Renaissance Fencing Club in Troy, a

15 districts serve 58% of share time students Since Gov. Rick Snyder and the Legislature loosened restrictions on shared-time classes, a small group of school districts have created a new line of business offering elective courses to private school and homeschooled students. The top 15 school districts in Michigan offering shared time courses have nearly 58 percent of the students, a Crain’s analysis shows. DISTRICT

Shared-Time Students

Brighton

1934

Berkley

1475

Clarkston

831

Oxford

823

Niles

772

Avondale

577

Total Enrollment

Shared-Time Percentage

Number of Districts

www.crainsdetroit.com

Counties

7934 5684

24% 26%

173 114

23 14

8100 6035

10% 14%

93 114

11 8

4312 3917

18% 15%

98 85

21 12

3773 15100

14% 3%

89 59

8 13 6

South Redford

529

Grand Rapids

506

Carrollton

446

2170

21%

Redford Union

415

3086

13%

Madison Academy (Flint)

414

822

50%

Berrien Springs

388

4236

Hamilton

386

3036

13%

Center Line

220

2710

Madison Heights

210

1582

13%

Source: Michigan Center for Educational Performance and Information

class in outdoor survival skills and a “virtual” physical conditioning class. Berrien Springs Public Schools in southwest Michigan offers courses in family adventure trips to Washington, D.C. cultural museums and whitewater river rafting on the New River Gorge National River in West Virginia. “There are areas that might be considered a stretch in terms of traditional education,” Snyder said last week at an event in Detroit. “It’s being utilized by a relatively small number of districts. So those resources are then being taken away from being available for all districts to help with general education." School leaders in Berkley and other districts are miffed by Snyder’s efforts to reduce the program after he authorized its expansion in two separate actions in 2012 and 2013. “We were encouraged to do this by (Snyder) loosening the law,” said Dennis McDavid, superintendent of Berkley School District. “They added kindergarten last year, and the governor wants to pull that back now.” Kindergarten, which is not a legally required grade level, has given some private schools the ability to get the class entirely paid for through the shared-time program. “It does relieve the cost for a non-public school,” said Brian Broderick, executive director of the Michigan Association of Non-Public Schools, which represents 380 parochial schools with 85,000 students. “And it’s a win for the public school district because they can count those kids.” In Carrollton, the school district north of Saginaw along the banks of the Saginaw River faced a $600,000 budget deficit five years ago, Superintendent Tim Wilson said. The 2,100-student school district’s foray into shared-time partnerships with private schools in six counties has allowed it to add elementary Spanish and middle school art, more AP high school classes and turned the deficit into a $600,000 budget surplus, Wilson said. “It’s not right to punish a district that’s been building a program, doing what they were supposed to and say, ‘Sorry, you can’t do this anymore,’” said Wilson. “That would be devastating to our district if we didn’t have it.”

A business decision For Berkley’s leaders, the expansion into teaching elective courses in private schools was a business decision driven by stagnant enrollment in its older suburbs and state revenue that

has remained relatively flat, rising just $10 per child more this school year than the funding level ten years ago. The breaking point came in 2011, when Snyder and the Legislature imposed a $470-per-student cut to shore up a billion-dollar budget deficit. “When the $470 cut hit, we thought it was incumbent on us to do something,” said Larry Gallagher, deputy superintendent of finance for Berkley schools. “We can’t just stand pat and just cut and have 32 kids per class.” The cut came down in the 20112012 school year. In 2012, the governor and Legislature authorized the first expansion of shared-time programs to let schools operate anywhere in their counties. “About the time this law expanded, it was an opportunity,” Gallagher said. In the fall of 2011, Berkley schools had the equivalent of 128 full-time students through a long-standing shared-time program that had been limited to children who live within the four square miles of the district’s boundaries in Berkley, Huntington Woods and Oak Park. It amounted to less than 3 percent of its enrollment. With authorization from Lansing, school leaders in Berkley sent letters to every private school in Oakland County, set up meetings and pitched their curriculum for classes in the arts, foreign language, physical education and college-prep honors and AP classes. “It was just one-on-one meetings, word of mouth and customer service,” Gallagher said. In 2013, the Legislature and Snyder went a step further by granting schools the ability to market their shared-time courses to non-public schools in counties that bordered their own intermediate school district. That opened the gates for Berkley, Brighton, Avondale, Carrollton and other school districts to start creating more robust programs. Last fall, Berkley had 1,475 students through shared-time — an 11fold increase from six years before. The district’s overall enrollment has increased nearly 24 percent since 2011, defying the overall trend of declining enrollment in K-12 public schools across the state. Berkley School District now has a workforce of 190 contract teachers working in 41 different private schools throughout Southeast Michigan. It rivals the 285 teachers Berkley employs in its 11 school buildings. The district has a full-time sharedtime program coordinator and has

contracted with retired educators to serve as mentors and evaluators of its instructors in the private schools. “It’s a business,” McDavid said. “It’s real work, and it takes a lot thought and lot of energy — and we’ve hired people to do those things.” The contract teachers are not part of the local teacher unions in Berkley and are not paying into the state retirement system, making the arrangement financially feasible, Gallagher said. “Someone who might have been the Spanish teacher before is still the Spanish teacher, but just getting their check from Berkley schools,” he said. Some teachers work in two or three private schools during the week, creating efficiencies that Berkley officials contend wouldn’t exist if they were limited to Snyder’s proposed 5 percent cap, which would lower their full-time equivalent shared-time enrollment from 1,475 to 284 students. “At that 5 percent, you lose those economies of scale,” McDavid said. “I think that’s going to kill shared-time completely.”

Leapfrogging across state Although the law was supposed to limit public schools to offering shared time in “contiguous” counties, some school districts have found a way around that. Brighton has leapfrogged across the state, forging agreements with school districts several counties away from Livingston County to provide sharedtime teachers, Thiel said. Thiel has first-hand experience with Brighton’s programs. The school district has at least 10 teachers working inside Lansing Catholic High School, where Thiel’s son attends school. “Brighton has the infrastructure to hire the teacher, pay the teacher, place the teacher in the private schools — and those teachers never set foot in a Brighton school,” Thiel said. “And my kid never sets foot in a Brighton school.” Brighton school officials did not return messages from Crain’s last week seeking comment. McDavid, the Berkley superintendent, said he doesn’t understand the sudden opposition from Snyder, a former businessman and venture capitalist. “To me, this is very entrepreneurial,” McDavid said. “It’s the free-market system at work.” Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

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

REPORTERS Tyler Clifford, breaking news. (313) 446-1612 or tclifford@crain.com Annalise Frank, breaking news. (313) 446-0416 or afrank@crain.com Jay Greene, senior reporter Covers health care. (313) 446-0325 or jgreene@crain.com Chad Livengood Covers Detroit rising. (313) 446-1654 or clivengood@crain.com Kurt Nagl Breaking news. (313) 446-0337 or knagl@crain.com Kirk Pinho Covers real estate. (313) 446-0412 or kpinho@crain.com Bill Shea, enterprise editor Covers the business of sports. (313) 446-1626 or bshea@crain.com Dustin Walsh, senior reporter Covers economic issues. (313) 446-6042 or dwalsh@crain.com Sherri Welch, senior reporter Covers nonprofits and philanthropy. (313) 446-1694 or swelch@crain.com MEMBERSHIPS CLASSIC $169/yr. (Can/Mex: $210, International: $340), ENHANCED $399/yr. (Can/Mex: $499, International: $799), PREMIER $1,299/yr. (Can/Mex/International: $1,299). To become a member visit www.crainsdetroit.com/ membership or call (877) 824-9374 ADVERTISING Sales Inquiries (313) 446-6032; FAX (313) 393-0997 Director of Sales Lisa Rudy Director, Crain Custom Content Kristin Bull, (313) 446-1608 or kbull@crain.com Senior Account Manager/Political Specialist Maria Marcantonio Advertising Sales Lindsey Apoctol, Heidi Martin, Sharon Mulroy, Diane Owen, Kate Rozek Classified Sales Kate Rozek, (313) 446-6086 Events Director Kacey Anderson Director of Marketing Christina Fabugais-Dimovska Senior Art Director Sylvia Kolaski Media Services Director Hussein Abdallah, (313) 446-0400 or sabdallah@crain.com Integrated Marketing Specialist Keenan Covington Sales Support Suzanne Janik CUSTOMER SERVICE Single copy purchases, publication information, or membership inquiries: Call (877) 824-9374 or customerservice@crainsdetroit.com Reprints: Laura Picariello (732) 723-0569 or lpicariello@crain.com Crain’s Detroit Business is published by Crain Communications Inc Chairman Keith E. Crain Vice Chairman Mary Kay Crain President KC Crain Senior Executive Vice President Chris Crain Secretary Lexie Crain Armstrong Chief Financial Officer Robert Recchia G.D. Crain Jr. Founder (1885-1973) Mrs. G.D. Crain Jr. Chairman (1911-1996) Editorial & Business Offices 1155 Gratiot Ave., Detroit MI 48207-2732; (313) 446-6000 Cable address: TWX 248-221-5122 AUTNEW DET CRAIN’S DETROIT BUSINESS ISSN # 0882-1992 is published weekly by Crain Communications Inc. at 1155 Gratiot Ave., Detroit MI 48207-2732. Periodicals postage paid at Detroit, MI and additional mailing offices. POSTMASTER: Send address changes to CRAIN’S DETROIT BUSINESS, Circulation Department, P.O. Box 07925, Detroit, MI 48207-9732. GST # 136760444. Printed in U.S.A. Contents copyright 2018 by Crain Communications Inc. All rights reserved. Reproduction or use of editorial content in any manner without permission is prohibited.

WALSH FROM PAGE 3

Grand Rapids’ The Right Place Inc.’s unsuccessful bid for Amazon’s socalled “HQ2” included a $2 billion tax incentive package offer for the online retail giant to build a headquarters on a 92-acre industrial park in the Grand Rapids suburb of Wyoming and a nearly $1.7 billion offer for vacant land at Gerald R. Ford International Airport in Cascade Township. We still don’t know the size of Detroit’s offer. The Michigan Economic Development Corp. cites a nondisclosure agreement the agency entered into with Dan Gilbert’s Rock Ventures LLC. Gilbert, founder of Quicken Loans Inc., and his companies led Detroit’s bid for Amazon HQ2, offering several of his downtown buildings for office space in a bid to lure the online retailer. But the state has succeeded in attracting Amazon to bring three shipping warehouses in Livonia, Romu-

INSURERS FROM PAGE 1

Mark O’Halla, COO of McLaren Health Care Corp., a Grand Blancbased nonprofit system with 13 hospitals, said health systems will need to adjust to insurers moving patients to outpatient settings. “We are having to switch gears. It will change the way we do business because we won’t have the volume coming in” for some procedures, O’Halla said. “Insurance companies and Medicare are pushing more (patients) to outpatient settings.” Rob Casalou, president and CEO of Mercy Health and St. Joseph Mercy Health System in Ann Arbor, said every hospital administrator is trying to lower inpatient costs because employers want it and insurers are offering special contracts that pay lower prices while tacking on incentives for quality. “The reason why hospitals enjoyed higher reimbursement for infusion is because we incur costs that others don’t,” said Casalou, adding that hospitals operate 24-hour emergency departments and incur millions of dollars in uncompensated care. “Now (Medicare and Medicaid) and commercial payers are saying that inflates care,” Casalou said. “The whole debate is changing in front of us.”

Blue Cross, Priority infusion policies Blue Cross, which started its prior authorization policy Jan. 1 for about 4,000 patients, will only cover infusion services if done at home, at a physician office or an outpatient center not owned by a hospital. Priority began its infusion therapy policy last year for about 400 patients; its policy is similar to the Blues’ except it exempts children and cancer treatment. Blue Cross allows doctors to request exemption from the policy based on medical necessity. James Forshee, M.D., chief medical officer with Priority Health, said the Grand Rapids-based insurer has just begun to bundle payments for joint replacement and use prior authorization for sites of care that are expensive, such as hospitals. “We began our (infusion) policy last year,” Forshee said. “We identify cost differences and a facility that is hospital-based is significantly more expensive for services. Is it the right care? There is some very high-cost pharmacy and infusion care, and we are direct-

C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 2 , 2 0 1 8 ing to the study, by placing more pressure on future government budgets. This is important because research estimates show that a 10 percent cut in K-12 education spending will decrease future wages by 8 percent. So while wages are raised by 0.2 percent by luring new companies with tax

lus and Shelby Township. The tax incentive package for the Livonia site totaled $17 million. These incentives certainly have some positives — average incentive packages result in a 0.2 percent rise in wages locally, according to the study. There are more 1,000 people working in Livonia, earning at least $12.50/hour at Amazon. Nationally, states and local governments offered incentives totaling $45 billion in 2015, a figure that has more than tripled since 1990, according to previous Upjohn research. To be fair, Michigan’s incentives have only increased 16 percent since 1990. But this blanket approach to rolling out the red carpet to anyone and everyone looking to open a new business or factory is often myopic, Bartik said. Specifically, incentives cause budget constraints down the road that most often affect education and services for the most vulnerable low-income residents. Economic development tax incentives account for a 11 percent cut in K-12 spending, accord-

Research estimates show that a 10 percent cut in K-12 education spending will decrease future wages by 8 percent. So while wages are raised by 0.2 percent by luring new companies with tax incentives, it’s a net loss once you expand the time line out far enough.

ing that care to lower-cost settings.” Infusion therapy is an alternative to taking pills or liquid drugs by mouth. It is administered through an IV. Traditionally, infusion therapy was done only in hospitals, but now it is conducted in lower-cost outpatient infusion therapy centers, a physician office or in homes by specially trained nurses. Conditions treated by infusion include cancer, gastrointestinal tract diseases, Crohn’s disease, multiple sclerosis, congenital diseases, serious arthritis, kidney disease, diabetes, congestive heart failure and some types of immune deficiency disorders. Kevin Klobucar, Blue Cross’ executive vice president of health care value, said employers and public and private health care payers all are pushing for lower costs and to have patients treated at lower-cost settings. “We haven’t done a lot of mandates from inpatient to outpatient freestanding sites, but we decided to start first with home infusion,” said Klobucar, adding that Blue Cross is studying similar pharmacy programs to lower costs. “Patient safety is the most important thing on our mind,” said Klobucar, adding: “Next is patient convenience and cost.” Atheer Kaddis, Blues’ vice president of pharmacy services, said Blue Cross estimates it will save 30 percent to 50 percent over hospital infusion centers. “Employers were demanding this approach. Everybody is concerned about pharmacy costs,” Kaddis said. “This is a very small subset of our members” affected by the infusion change, Klobucar said. “These drugs are used for diseases that are not very common, and some have very high costs.” For example, some types of inflammatory bowel disease and Crohn’s disease infusion treatment can cost $20,000 to $50,000 annually. In 2015, Blue Care Network began its prior authorization policy for infusion service and in January the policy took effect for Blue Cross’ PPO plan, Kaddis said. “This whole program is just an expansion of our prior authorization program,” he said. Last year, Blue Cross contacted 269 members about the policy change. Of those, 173, or 64 percent, agreed to get their infusions at a doctor’s office, freestanding infusion center or their home. Blue Cross learned many people were driving long distances to a hospital. “They were not aware (they) could get infused drugs in the home setting,” Kaddis said. “The home infusion companies we contract with are

high quality. These are caring nurses.” Klobucar said Blue Cross believes the new policy has been accepted by most of its members and that Blue Cross will expand the prior authorization program for outpatient services over time. Blue Cross officials showed Crain’s an email from one mother who was happy with the policy that prohibits her coverage at a hospital-based infusion center. She said her son now has in-home infusion therapy and he “is able to sleep later, eat breakfast and takes naps during the infusion. He’s no longer nervous about missing school, his grades or teasing.” But Tom Luch, who has been on infusion with the drug Gamminex since 2011 for an inflammatory disorder of the nervous system, is one unhappy Blue Cross member. He had been receiving four-hour infusion treatment once every three Saturdays at Beaumont Infusion Center in St. Clair Shores at 11 Mile Road and Harper Avenue. “Blue Cross forced me to do this to save money. I am probably going to get my infusion at home, but I don’t want to. They treat me very well at the clinic. My blood pressure goes down when I am there,” said Luch, a 6-foot3, 300-pound auto worker. Luch has a disorder of the nervous system called chronic inflammatory demyelinating polyneuropathy. Patients with the condition are treated with corticosteroids, immunoglobulins or plasmapheresis to reduce limb weakness, tingling and hand and feet numbness, among other symptoms. “My body pretty much is attacking itself,” he said. Luch said Beaumont’s infusion center administrator has appealed the Blue Cross decision, but without luck. “The letter from Blue Cross said hospital infusion services are not covered and I need to pick something else,” Luch said. “They got my doctor wrong, and they said the Blue Cross approved medicine (Gammaagard S/D) is not what I have been taking. This is the older, cheaper medicine. I took it six years ago and got sick.” Kaddis promised to look into Luch’s situation. He said he wasn’t aware any patients had problems with receiving the correct drug or continuing with their same physician. It is Blue Cross’ intention is to deliver the same drug to patients at home or in other non-hospital settings, he said. Luch said Blue Cross contacted him later and they promised to approve his preferred drug, Gamminex, and allow him to continue to see the same neurol-

incentives, it’s a net loss once you expand the time line out far enough. Plus, incentives are often inefficient at creating jobs. Only 20 percent of new jobs created via a tax break package can be credited to the incentives themselves, according to the Upjohn study. That’s because incentives play only a minor factor in a company’s decision to locate in a certain geography — access to talent, climate, transit and shipping routes play a greater role. Sussing out the math used in the study means U.S. states and local governments spend more than $30 billion in incentives annually to create zero jobs. Bartik isn’t saying incentive packages are all bad, but they are mostly not careful. “Michigan does a really good job in other areas, like business services,” he said. “We have some customized jobs training programs, business incubators and services to local businesses that are all really effective. But I don’t get calls to talk about those. I get calls to talk about Foxconn. I’ve never had a reporter call me to talk

about extension services or customized jobs training.” To be clear, I’m as guilty as the next reporter of shrugging off small programs for big incentive plays. But Bartik’s point stands. The public gets excited about big wins with big companies and big numbers. It’s far less exciting and sexy to report, discuss and analyze the impact of an incubator in Ann Arbor or a skilled-labor program in Detroit. It’s time we open up that dialogue. Economic development is “Moneyball.” It’s progress built by getting lots of businesses to first base, and helping them move around the horn. It’s about establishing and growing local companies that can compete alongside Amazon or Foxconn or whatever the next shiny prospective development may be. It is time to end the economic home run derby, and it’s high time for our government leaders to put down the damn oversized scissors.

ogist he had been seeing at Beaumont. In a statement, Beaumont said it is listening to patient concerns and is advocating for them with Blue Cross. “Patients trust our infusion team to deliver high-quality, compassionate care,” said spokesman Mark Geary. “We share MHA’s concerns about reducing access to infusion services.” Schonfeld said the association asked Blue Cross to delay the infusion policy, discuss concerns hospitals have about possible negative outcomes, the ability for patients to choose and alternatives to banning coverage of hospital-based infusion. “They felt they followed their process. ... We can carve infusion treatment to lower cost of care, a site or vendor, if it is done with (consideration of) chronic care needs and social determinants of health,” Schonfeld said. “Some drugs require compounding and there is a need for a pharmacist to (mix it). Some patients may be not getting that higher level of attention by a pharmacist.” Schonfeld said the Blue Cross policy may work in rural areas for convenience where driving distances are longer to hospitals or hospital-owned infusion centers. But if an emergency occurs, it could take ambulances longer to get there, he said. “As we move to affordability, we need to find a balance in this,” said Schonfeld, adding: “There is a need to measure appropriate care in the right setting.” Schonfeld said the association would like Blue Cross to share its data on alternative treatment, especially where there might be variations of care when moving patients out of hospital-based settings. “If you give hospitals data, they will design that right type of care for the more difficult patients. We keep that volume. We accept there will be lower reimbursement,” he said.

has already lowered its prices for hospital colonoscopies in response to Priority’s cost estimator, said Forshee, declining to name the system. Health insurers also are using telemedicine that can make health care more convenient to members and help reduce primary care and specialty consultation costs. But health care costs and prices have continued to rise, leading employers to ask for more direct action by insurers. Carsten Beith, Cain Brothers’ managing director of health systems in Birmingham, said recent moves by insurers are seen as one of the first major steps toward addressing hospital costs, which account for 32 percent of all health care expenditures. Beith said employers that use health insurers as third-party administrators are asking for lower costs and to manage utilization rates, especially of hospital outpatient surgery centers that are sometimes 30 percent higher than freestanding centers. “There is no question that employers want to drive down inpatient costs,” Beith said. “MRI costs are dramatically different, and where insurers can push patients into lower-cost settings, they are doing it.” Beith said employers also are allowing insurers to create more narrow provider networks that limit patient choice because the networks can negotiate lower rates. Hospitals have taken notice that health insurers are directing patients away from inpatient settings and have begun to cut costs or invest more in outpatient care. Moody’s Investors Service said in a recent report that hospitals that don’t adapt could get squeezed out of the care continuum as insurers grow and direct more care to lower-cost settings. Some systems like Ascension Health Michigan, one of the state’s largest nonprofit systems, and investor-owned Detroit Medical Center have laid off hundreds of inpatient employees as inpatient volumes have declined. Ascension is looking to sell some of its 141 hospitals nationally and seeking to boost outpatient and telemedicine services. Forshee said he believes hospitals are moving from their traditional strategy that admitting patients can drive revenue and profits. “That is less and less becoming the equation for financial success,” he said.

Moving care Over the years, insurers have worked with employers to create benefit plans that offer employees or members lower copayments if they visit lower cost urgent care or outpatient centers, use generic drugs and restrict unnecessary back or spine surgeries. The increase in high-deductible health plans has created incentives for patients to seek lower prices. Priority Health also offers a cost estimator tool that has helped members avoid $6 million in costs last year by using price information and going to lower-cost outpatient settings, Forshee said. At least one major health system

Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh

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

C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 2 , 2 0 1 8

THE WEEK ON THE WEB

RUMBLINGS

MARCH 23-29 | For more, visit crainsdetroit.com

Chuck Woolery, local company sue over Australian Dream spots

EMAGINE

Emagine is planning a new $15 million theater in Hartland Township, with a planned opening by Thanksgiving or early December.

Richard and Susan Rogel give $150M to Michigan Medicine

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

$150 million The gift businessman Richard Rogel and his wife, Susan, donated to the University of Michigan Comprehensive Cancer Center — the largest ever to Michigan Medicine.

$150 million gift from businessman Richard Rogel and his wife, Susan, that will go to the University of Michigan Comprehensive Cancer Center is the largest ever to Michigan Medicine, university officials said. UM regents also voted Thursday to change the cancer center’s name to the Rogel Cancer Center. The gift is intended to support cancer research and help train the next generation of researchers. Rogel, who also is co-chair of UM’s Victors for Michigan campaign, told Crain’s that he decided to donate the entire amount for several reasons. One was how much he has been impressed with UM’s cancer physicians and researchers and their dedication to improving patient care. “I spoke one time with Max Wicha (founder and director emeritus of the cancer center) and he said something very interesting to me,” said Rogel, a 1970 graduate of the UM business school. “You will never understand what this is about until you tour the clinics. I did, and you could tell how much he cared for patients. As I became involved in fundraising and the more I met (cancer researchers), the more impressed I became.” The previous largest gift to Michigan Medicine was a $100 million donation that came in two parts from shopping-mall pioneer A. Alfred Taubman to the A. Alfred Taubman Medical Research Institute. The largest single donation to the university was the 2013 gift of $200 million by real estate mogul Stephen Ross to the Ross School of Business and the university athletic program. Rogel is president of the investment firm Tomay Inc. of Avon, Colo. In 1982, he founded Preferred Provider Organization of Michigan, the state’s first PPO, and it was recognized by Inc Magazine as one of the nation’s fastest-growing private companies. He later sold the company. As part of the Victors campaign, the Rogels had already donated $50 million, which included $10 million to Chinese studies. He said he decided later at a meeting in Aspen to up the amount by $110 million to rename the center. “I thought that would be pretty cool,” Rogel said.

Business news

J The Oakland County Health Division cleared a third business to reopen in Franklin Village Plaza last week, after toxic chemicals were found in the building in March, forcing all five tenants to shut down.

70 miles

The length of a new fiber internet ring that Comcast Business has installed around Detroit.

300

The number of jobs Silicon Valley-based software developer Nexient plans to create at its Ann Arbor-area technology hub with a planned $4.17 million expansion. J The Kroger Co. of Michigan is now offering delivery from 94 stores across the state through grocery delivery service Instacart. It joins the ranks of Meijer Inc. and Nino Salvaggio International Marketplace in grocery delivery. J A 110,000-square-foot building once home to Sam's Club in Waterford is being repurposed into a boating sales, service and storage center called Tommy's Michigan. J Plymouth-based Adient Ltd. plans to continue developing innovations and seating configurations for future vehicles through a new partnership with the American Center for Mobility in Ypsilanti Township. J Quicken Loans Detroit Demo Day will return for a second round in June with a new funding model that aims to make it a more level playing field for entrepreneurs to compete for $1 million in awards. J Emagine Entertainment Inc. is continuing expansion with a scheduled groundbreaking of its newest theater — a 55,000-square-foot, $15 million complex in Hartland Township. J The Michigan Strategic Fund approved a reduction in scope of Southfield-based Redico LLC's redevelopment of the former Montgomery Ward department store site in Dearborn. J Lumen Detroit, the anchor restaurant for DTE Energy Co.'s Beacon Park in northwest downtown, opened last week. J Dearborn-based workwear brand Carhartt Inc. and Boston-based sporting brand '47 partnered on a three-year deal to launch a line of gear for the Detroit Tigers and Boston Red Sox.

Other news

The Detroit Tigers' Opening Day game scheduled for last Thursday was delayed to last Friday, but some J

celebrations endured and venues including Beacon Park in northwest downtown Detroit extended the festivities to Friday, as well. J Veterans and their families coming to Detroit for medical treatment at the John D. Dingell Veterans Affairs Medical Center will soon have a home away from home to stay during treatment — a Fisher House facility. J President Donald Trump nominated Detroit businessman John Rakolta Jr., who worked on the bailout of Detroit Public Schools, to be U.S. ambassador to the United Arab Emirates. It is a prominent appointment for the chairman and CEO of construction giant Walbridge Aldinger Co. J The Michigan Department of Transportation is promising "smoother riding" conditions as it prepares to spend $5.8 million to repair sections of Ford Road in Dearborn and Dearborn Heights, and Telegraph Road in Redford Township and Detroit starting April 6. J The University of Detroit Mercy has fired head basketball coach Bacari Alexander after a season defined by controversy and uninspired performance. J Businesses working hand in hand with government and nonprofit programs can open more employment opportunities to people with disabilities — and help fill a shortfall of available workers, Lt. Gov. Brian Calley said last week. He spoke alongside Michigan Supreme Court Justice Richard Bernstein at a discussion at DTE Energy Co.'s headquarters in downtown Detroit. J Gov. Rick Snyder last week urged metro Detroit leaders to reach a consensus on putting a regional transit plan before voters in November, calling Southeast Michigan "one of the worst areas in the country for regionalism." He spoke at the Detroit Regional Chamber's "State of the State" event. J The Wayne County-owned building at 511 Woodward Ave. next to the Guardian Building is up for sale again. There is no asking price for the squat, 30,000-square-foot building, which Southfield-based Farbman Group is marketing. J The nonprofit Heidelberg Project is funding a $185,000 pilot Heidelberg Arts Leadership Academy with a goal of cultivating students' artistic and leadership skills and helping inspire change in their communities. J More than 17,000 Detroit households could face water shutoffs next month as the city's water department resumes its program to manage delinquent accounts, the Associated Press reported.

Obituary

J Tina Co, co-owner of the nowclosed China Ruby restaurant that opened in 1988 in downtown Ferndale, died March 23 at 52.

ormer game show host Chuck products. But Nature’s Health Woolery and a Redford Town- couldn’t afford the fee, so it entered into an agreement with ship-based media compaWoolery and Two and Two ny he co-owns are suing a in March 2013 to give 5 perhomeopathic remedies cent of the proceeds upon manufacturer known for its sale, which it planned to selling its wares on TV. do in five years, according The longtime host of to the suit. “Love Connection” and Woolery and Two and original host of “Wheel of Two are represented by Fortune” entered into a Farmington Hills-based contract through his Two Schwartz Law Firm PC. and Two Broadcasting NetThe suit alleges Nature’s work LLC with Nature’s Chuck Woolery: Health Connections Inc. to Agreed to percent Health has refused to sell the company, which has endorse its products, such of proceeds upon seen sales spike thanks to as Australian Dream arthri- sale of company Woolery’s endorsement, tis cream. “He participated in approximately despite multiple offers. Woolery and Two and Two are sua dozen television spots, a dozen radio spots, multiple photo shoots ing for breach of contract to recoup holding (Nature’s Health) products the $300,000 they would have typiand served as the face of the compa- cally charged for services. A message left with the defenny on its website,” reads the suit filed in U.S. District Court in Detroit dant’s attorneys was not returned. Woolery also hosted “Scrabble” Thursday. “He provided valuable public relations/promotion services from 1984-1990 and “Lingo” from for (Nature’s Way’s) benefit through 2002-2007. He also scored a Top 40 hit in 1967 with his band The guest appearances on shows.” Woolery typically charges $300,000 Avant-Garde for the song “Naturally a year to use his celebrity to hawk Stoned.”

Honigman hires lobbyist to co-lead Lansing office

etroit law firm Honigman Miller mer chief of staff for Gov. Rick Snyder. The practice also inSchwartz and Cohn cludes former U.S. Sen. Carl LLP has hired former lobLevin, former lobbyist Joe byist Peter Ruddell to coGarcia and Andrea Hansen. lead its Lansing office. Before joining RWC in Ruddell, who previously 2011, Ruddell worked on sevserved as a partner at Laneral campaigns, including sing-based law firm RWC serving as an aide to former Advocacy, will replace John Pirich at Honigman’s Michigan Senate Majority Lansing office. Pirich Leader Dan DeGrow. Rudplans to retire later this dell was instrumental in year after 29 years at the passing the Dr. Ron Davis firm. Pirich helped recruit Peter Ruddell: Smoke-free Air Law in 2009 Ruddell to Honigman and Will co-lead the that banned smoking in busiwill remain active in his firm’s government nesses, including restaurants and bars. transition, the firm said in relations and Ruddell also served on the a press release. regulatory practice 21st Century Education Ruddell will co-lead the Commission. firm’s government relaHe earned a bachelor’s and law detions and regulatory practice with Dennis Muchmore, who was the for- gree from Michigan State University.

‘Spirit of Detroit’ sculptor to be celebrated The Marshall M. Fredericks Sculpture Museum will be in town May 12 to host a fundraiser to celebrate the 60th birthday of the Spirit of Detroit. Created by the late Marshall Fredericks, the giant bronze sculpture was installed in 1958 in front of the Coleman A. Young Municipal Center in downtown Detroit. The museum, housed on Saginaw Valley State University’s campus, has more than 2,000 objects created by

the artist during his 70-year career on display. Among them is the original plaster head belonging to the Spirit of Detroit’s figure and a plaster quarter-scale model. The museum’s fundraising dinner will take place at One Woodward Avenue, within view of The Spirit of Detroit. Tickets are $250 and $60, with all proceeds benefiting the museum.

DON’T MISS THE BOAT!

Every year, Crain’s Detroit Business covers the Detroit Regional Chamber Mackinac Policy Conference in a special issue. This year, we’re stretching to new heights and distributing our Mackinac Report issue starting Tuesday, May 29 at coffee shops, bars, hotels, restaurants – anywhere and everywhere around the island. We’ve even secured venues for live events, meet-ups and interviews!

WANT TO BE A PART OF THE ACTION?

Learn about our unique advertising opportunities, including: • Live events and parties throughout the island • Display advertising • Digital advertising • Email newsletter sponsorship • Sponsored content

BONUS DISTRIBUTION: Reach more than 2,000 attendees and visitors on the island

• Cover wrap

REGULAR DISTRIBUTION: Reach more than 23,000 Crain’s Detroit Business readers

…and much more!

• Print inserts

PRINT DATE: May 28 | CLOSE DATE: April 26 For advertising opportunities, contact Lisa Rudy at lrudy@crain.com