Crain's Detroit Business, July 2, 2018 issue by Crain's Detroit Business

Food halls gather steam, eight planned locally Page 3

Wayne State pledges $1 million to improve heart health Page 6

JULY 2 - 8, 2018 | crainsdetroit.com

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Focus: Hope develops half-century strategic plan By Sherri Welch swelch@crain.com

NOT (JUST) ABOUT THE SHOES Ali Ammaweri works in StockX’s authentication operations, which makes sure collectible shoes and other items traded on the platform are genuine.

LARRY PEPLIN FOR CRAIN’S

Detroit-based startup StockX sales soar as it grows beyond sneakerheads By Chad Livengood clivengood@crain.com

When Detroit-based StockX partnered with Nike last year to exclusively sell the remake of the sneakers NBA superstar LeBron James wore his rookie year, the 46 pairs of retro shoes sold for an average $6,000 each.

For the first time, StockX went from being a secondary market for highly collectible sneakers to a frontline retailer, blurring the e-commerce lines of demarcation that separate Amazon from eBay in what the company dubbed the “LeBron IPO.” Seven buyers then turned around

and immediately resold the sneakers on StockX’s secondary market for an average $7,500, pocketing the profits above the initial public offering on the stock market of things co-founded by Quicken Loans Chairman Dan Gilbert. SEE STOCKX, PAGE 18

Hear more online  Listen to an extended interview with StockX CEO Josh Luber and COO Greg Schwartz on the Crain’s “Detroit Rising” podcast with senior reporter Chad Livengood at crainsdetroit.com/stockx

Focus: Hope is returning to its community advocacy roots as part of a plan to prepare the organization for its next 50 years. The nonprofit, formed in the aftermath of the 1967 uprising in Detroit, is also expanding career readiness initiatives to prepare Detroiters for e m p l oy e r- l e d workforce-training programs. The nonprofit Anthony: spent the past interim CEO, year retooling to Focus: Hope figure out the best way to meet its mission of reducing racism, poverty and social injustice through education and empowerment. Interim CEO Vernice Davis Anthony, a longtime board member, said late last week that Focus: Hope is at a pivotal point. “We have been recovering from what has been a major economic recession with funding shortfalls, shifts in employment trends and rapid technological changes,” Anthony said. The need for education, empowerment support, community advocacy and basic needs services “is vital now more than ever to this organization and this region,” Anthony said. SEE FOCUS: HOPE, PAGE 19

MERGERS AND ACQUISITIONS

INSIDE

Detroit’s new hotel market is building City’s new-found reputation as a tourist destination spurs hotel boom. Page 10 crainsdetroit.com

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NEWSPAPER

It’s a sellers’ market for deals as buyers bid up business values By Dustin Walsh

Need to know

Record performance, tax cuts and favorable economic conditions have created a mergers-and-acquisition environment for the ages. Yet those same factors are sidelining deals; business owners are enjoying success and don’t want to sell. The result is a lopsided M&A supply-and-demand ratio with a glut of buyers with an appetite for deals and a void of sellers. These factors have driven multiples — the multiple of a company’s earnings a buyer will pay

 Success resulted in decreased mergers and acquisitions

dwalsh@crain.com

 Experts say clients should consider selling  Market decline in near-future (18-month) outlook

— while the amount of deals remains low in Michigan and the Great Lakes region as a whole, according to Pitchbook data pulled by Cleveland-based Western Reserve Partners, a division

of Citizens Bank. In Michigan, there have been roughly nine middle-market — companies valued between $25 million and $1 billion — M&A deals since the start of the year for a total deal value of $2.2 billion. The median deal value was $140 million, up from $91.8 million in 2017, according to Western Reserve. In the Great Lakes region, the median deal value year-to-date is $155 million, up from $100 million last year. SEE M&A, PAGE 22

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

MICHIGAN BRIEFS

INSIDE

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

MSU: President will be chosen by June 2019

The tumultuous era of Michigan State University interim President John Engler is expected to come to an end next summer, the Associated Press reported. The university’s governing board revealed the timeline last Wednesday for selecting its next president. By June 2019, the choice will be revealed, trustees said. Engler, a former Republican governor of Michigan, was tapped to temporarily lead the university in February after former president Lou Anna Simon stepped down amid the crisis surrounding ex-sports doctor Larry Nassar, who sexually abused hundreds of girls and women while employed at Michigan State. Nassar, who also worked for USA Gymnastics, is now imprisoned, and Michigan State has agreed to pay a $500 million settlement to his sexual assault victims. Trustees Dianne Byrum and Melanie Foster will lead the search, with outgoing University of Virginia President Teresa Sullivan serving as an adviser. The process will begin in July and entail gathering input from community stakeholders, forming a search committee and hiring a search firm. “We are approaching this process as

one Spartan community and look forward to learning the qualities and characteristics our students, faculty, staff and other key stakeholders consider most important,” Byrum said in the press release. “We must find broad agreement and have a common understanding of the strengths, weaknesses, opportunities and challenges facing our community.” The announcement follows speculation about whether the embattled interim president would even survive the month. Engler has come under fire for suggesting in emails that Rachael Denhollander, one of Nassar’s most outspoken accusers, probably received a “kickback” from her attorney. Engler apologized eight days after media reports of the email and after 150 Nassar sexual abuse survivors signed a letter demanding his ouster. A public board meeting June 22 began with two trustees backing a motion to fire him, but it failed. Engler later reiterated his intention to lead the university as it mulls Simon’s successor. “My replacement will hopefully be found soon,” he said after the June 22 meeting. “I am enthusiastic about finding my replacement.”

Stryker to invest $109 million, create 260 jobs

Stryker Corp. will expand capacity of its medical-device products manufacturing facilities with a $109 mil-

LUCAS VALONE FOR CRAIN’S DETROIT BUSINESS

MSU’s search for a new president is expected to take about a year.

lion investment at its 79-acre industrial site in southwest Michigan that will create 260 jobs, according to the Michigan Economic Development Corp. The Michigan Strategic Fund last Tuesday approved a $2.6 million performance-based grant to support the expansion. Stryker plans to expand the company’s 433,000 square-foot facility in Portage, in Kalamazoo County, by another 253,000 square feet, with the investment and jobs being created by the end of 2025. The average annual salary for those positions is expected to be $73,000, the MEDC said in a news release. Construction is expected to begin this fall and be completed by the end of 2020.

Snyder signs $100 million ‘Marshall Plan’

The state is funneling $100 million this fall into Michigan’s public high schools to train students for high-demand jobs over the next five years, the Associated Press reported. Gov. Rick Snyder last week signed his workforce development Marshall Plan for Talent into law. The fund will bolster career-oriented school programs to maintain a pipeline for students from graduation to jobs in professional trade, information technology or other top career fields. Supporters say training students in technical and trade skills in lieu of promoting only a traditional K-12 education path is the key to filling the talent gap in Michigan.

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Snyder, a term-limited Republican, has made the Marshall Plan his top priority during his final year of leading a state that has seen a dwindling talent pool since the Great Recession.

Michigan children's hospitals rank in U.S. News list

The University of Michigan's C.S. Mott Children’s Hospital in Ann Arbor ranked as the best Michigan children’s hospital on U.S. News and World Report’s 2018-19 list. No Michigan children’s facilities made U.S. News’ national top 10, or “honor roll.” Those pediatric hospitals were the highest-rated across many of the 10 specialty categories that include pediatric cancer, cardiology and heart surgery, and diabetes and endocrinology. Boston Children’s Hospital was No. 1, followed by Cincinnati Children’s Hospital Medical Center. UM’s Mott hospital ranked nationally in all 10 specialties.

N O M I N AT I O N S A R E O P E N F O R Tell us what lawyers and firms meet the mark. This awards program honors stand-out achievements – the verdicts and litigations that made the most impact in the last year or so – as well overall excellence in the practice. Winners will be announced in the Sept. 24 issue. If you have a strong case for a candidate’s inclusion, nominate today. Participation is free and entries will be accepted until Monday, July 16.

C AT E G O R I E S : · Law Firm of the Year · Attorney of the Year · Non-Partner Associate of the Year · M&A Deal of the Year · Real Estate Deal of the Year · Verdict or Settlement of the Year · Business Litigation of the Year

State your case 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 // J U LY 2 , 2 0 1 8

COMMENTARY

RETAIL

New crisis looms for Detroit schools

Both The Detroit News and Detroit Free Press have struggled with the same ills that have plagued the industry: Print advertising and circulation revenue declines and losses that gains in digital readership and advertising have been unable to offset.

Two years after a brush with bankruptcy, Detroit’s public schools face a new crisis in deteriorating school buildings that could prove CHAD more daunting to LIVENGOOD fix. Detroit Public Schools Community District currently has nearly $530 million in capital improvement needs for more than 100 occupied school buildings spanning 10 million square feet. And the traditional means of paying for major repairs is unavailable because of a debt moratorium imposed by lawmakers in the district’s 2016 bailout. The moratorium effectively shuts the state’s largest school district out of the capital debt markets until existing bonds are retired by 2040 at the earliest, DPSCD Superintendent Nikolai Vitti said. A facility assessment by OHM Advisors and Alfa Facilities Solutions LLC concluded the price tag for replacing roofs, boilers, doors, windows and HVAC systems will rise to $1.5 billion by 2023 if nothing is done to put a dent in years of deferred maintenance. “When you look at the number of buildings and the number of square feet, it doesn’t take long to rack up tens of millions in renovation costs,” said Rhett Gronevelt, a principal at OHM Advisors and head of the engineering firm’s Detroit office. “The vast majority (of Detroit’s schools) are in a poor or maybe pushing unsatisfactory conditions.” One of the worst schools in the assessment was closed this spring because of mold. Palmer Park Preparatory Academy, an elementary school in one of Detroit’s most affluent neighborhoods, closed in March and the children were moved to another building for the rest of the school year after a roof leak caused harmful mold to grow inside the building. The district is working to get a new roof and make interior Nikolai Vitti: repairs, Vitti said. Trying to define OHM Advisors the problem. used a rating system for the condition of exteriors, interiors, plumbing, roofing, HVAC, electrical and other mechanical components of 106 schools to cost out and prioritize spending.

SEE JOA, PAGE 21

SEE SCHOOLS, PAGE 17

A rendering shows Ford Motor Co.’s ideas for a “Market Hall” with food retail and likely restaurants as part of a public, walkable space in Michigan Central Station in Detroit’s Corktown neighborhood. FORD MOTOR CO.

Detroit joins food hall trend By Annalise Frank afrank@crain.com

Corktown could be an ideal breeding ground for an urban cuisine trend that relies on heavy foot traffic and a sense of community. Food halls are an evolution of the age-old public market model, where prepared foods mingle with fresh produce, meats, crafts and shared seating. They’ve already arrived — the U.S. had 118 food halls at the end of 2017. That number is expected to balloon to 300 by the end of 2020, ac-

Need to know

 Restaurant spaces with multiple vendors, retail on the rise nationally  At least eight are in the works or under consideration in Detroit area  They offer chefs space to test their concepts, pay less than brick-and-mortar

cording to a 2018 study of the trend by Chicago-based Cushman & Wakefield Inc. New York City has nearly 30 open or planned, according to the report.

But food halls and modern-style market concepts have more recently spread to Detroit. Now at least eight are in the works or under consideration for downtown, the city’s neighborhoods and the wider metro area. “We could be talking about in six years’ time the (national) market size quintupling,” said Garrick Brown, national retail research director for Cushman & Wakefield, a commercial real estate company with an office in Southfield. “It’ll force the industry to define what this is, because right now

it’s kind of the Wild West.” The term “food hall” is increasingly meaning “a combination of prepared food vendors in a small space that share a large common space,” Brown said. The definition overlaps with that of a food market, which generally offers more retail and nonfood shopping. Both are in the Cushman report. This shared-space segment of the industry is ill-defined, but it’s thriving for a reason. SEE FOOD, PAGE 22

MEDIA

Fate of Detroit’s newspaper partnership unclear By Bill Shea bshea@crain.com

The business partnership that oversees the joint business functions of Detroit’s two daily newspapers could be dissolved this summer if it failed to achieve profitability in the past three years. The people who know whether the newspapers are financially safe under the terms of their joint operating agreement declined to disclose details. “We do not comment on our financial performance. Michigan.com continues to be fully committed to the

Need to know

Detroit Free Press, Detroit News could opt out of JOA beginning Aug. 3 

 Opt-out possible if there have been 3 years of consecutive losses  Officials won’t discuss if opt-out clause will be enacted this summer

performance of our JOA Partnership and both news organizations covering our great city and region,” said Aaron Velthoven, the partnership’s vice president of marketing and its spokesman, via email. Michigan.com, known legally as the Detroit Media Partner-

ship, manages the JOA. The current 25-year operating agreement, created Aug. 3, 2005, states that after 10 years either newspaper may opt out if the partnership has sustained three consecutive years of financial losses. That means the countdown on accruing annual losses began in 2015 and the ability to end the arrangement first becomes possible Aug. 3 — if there have been three consecutive years of losses. The terms of the JOA give either partner nine months to execute the opt-out clause. There are whispers in Detroit’s media circles that the newspaper part-

nership made money last year. If the partnership is in the black, the optout clause resets its three-year countdown, and the next early termination date would be in 2020.

The struggle

MUST READS OF THE WEEK Using video game ads to reach new home buyers

Eastern Market building to undergo renovation

New format, new leadership

United Shore Mortgage uses PistonsGT video game to reach consumers. Page 15

Viola Building’s $1 million renovation in Eastern Market begins. Page 17

ArtPrize in Grand Rapids changes to a biennial event amid operating losses. Page 20

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

Auto show to move to warmer months in 2020

By Annalise Frank afrank@crain.com

As of 2020, the North American International Auto Show will no longer take place in January, opting for a time of year when the weather is more likely to be warm. The Detroit Auto Dealers Association will announce plans for the Cobo Center event’s future, including new dates, on July 24, auto show spokesman Max Muncey confirmed to Crain’s on Thursday. Auto show leadership released a 24-second teaser Thursday for a longer, two-minute video trailer that will be part of the July announcement. The teaser says “Welcome to Detroit ... completely reimagined” and includes animations of walkable areas and tracks outdoors — and on Cobo Center’s roof. From the trailer, it appears the event would still be taking place on Cobo Center’s campus in the city’s downtown. NAIAS and Cobo signed an $11.8 million contract last July to keep the auto show at the Detroit riverfront event space through 2025. A Cobo Center representative declined to comment. The Detroit News first reported the coming change. The 2019 auto show will still take place in January and will run Jan. 1427. Crain’s reported in March that organizers had been considering moving

DETROIT INSTITUTE OF ARTS

NORTH AMERICAN INTERNATIONAL AUTO SHOW/DETROIT AUTO DEALERS ASSOCIATION

A video released Thursday teases the North American International Auto Show’s move from January to another date range in 2020.

NAIAS to October in 2020. The idea was propelled by a need for automakers and suppliers to showcase new technologies, such as autonomous cars, crash-avoidance systems and ride-sharing applications, that are better experienced outside Cobo’s walls, a source told Crain’s at the time. Southfield-based Denso International America Inc., which has been on the show floor for 14 years, had said it favored moving the Cobo Center show to October because it would “provide a lot of new and exciting opportunities.” Moving the show could also put space between NAIAS and the Consumer Electronics Show in Las Vegas, which typically occurs in January the week before the Detroit auto show.

Many automakers and suppliers are forced to choose one or the other to showcase technologies. NAIAS’ announcement of a revamp comes amid trying times: Three luxury auto brands, Audi, BMW and Mercedes-Benz, said they would skip the 2019 Detroit show. It’s part of a trend for auto shows globally, as automakers grow less enamored with the events, where they must compete side by side for media attention for their important products. In recent years, Mazda, Mini, Volvo, Porsche, Mitsubishi, Jaguar and Land Rover also pulled out of the Detroit auto show, citing costs or the decision to reallocate marketing money. Automotive News contributed to this report.

The Detroit cultural center design plan will encompass institutions from the DIA to the Hellenic Museum to the Detroit Public Library, along with other properties interspersed between them, including the Inn on Ferry Street, the Rackham Building and the Park Shelton building.

3 finalists selected to design cultural campus Need to know

By Tyler Clifford tclifford@crain.com

The Detroit Institute of Arts and Midtown Detroit Inc. whittled down their international design competition to three finalists that will conceive and offer landscape proposals for a connected cultural campus in Midtown. The participants, who will show off their blueprints to the public at the DIA early next year, come from as far as France. They are being asked to analyze a district that encompasses a

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JJTeams to offer proposals to create a

walkable cultural campus in Midtown JJPublic to get a look at the ideas in presentation, exhibit early next year JJWinning concept and team will be announced in March

dozen cultural and educational institutions and lay out a plan that enhances the area’s walkability, wayfinding and public art. The campus includes the DIA, Detroit Public Library, Charles H. Wright Museum of African American History, Detroit Historical Museum and College for Creative Studies. Each team includes Detroit-area firms as partners. The DIA and Midtown Detroit announced the competition in February. “This is a once-in-a-lifetime opportunity to reshape how our arts and cultural district operates, and we hope that the public will take advantage of the many planned opportunities to provide feedback on what they would like to see and experience,” Susan Mosey, Midtown Detroit Inc. executive director, said in a statement. The finalists are: JJAgence Ter of Paris, with team partners Detroit-based Akoaki LLC, University of Michigan Assistant Professor of Urban and Regional Planning Harley Etienne, Ann Arbor-based Rootoftwo LLC and German-based Transsolar KlimaEngineering JJMikyoung Kim Design of Boston, with team partners New York Citybased James Carpenter Design Associates Inc., Community Development Advocates of Detroit, Ann Arbor-based Quinn Evans Architects Inc., Detroit-based Giffels-Webster Engineers Inc., New York City-based Tillett Lighting Design Associates, Boston-based Cuseum Inc., Transsolar KlimaEngineering and Schlaich Bergermann & Partners of New York City JJTen x Ten of Minneapolis, with team partners MASS Design Group, Detroit-based D MET Studio, London-based Atelier Ten Ltd., Boston-based Local Projects, New York City-based HR&A Advisors and UM architecture lecturer Craig Wilkins The public can get a first look at the proposals at a Jan. 23 presentation at the DIA. Each proposal will be on display at the museum through April 2. The winning design will be revealed in March.

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CaringForKidsJuly.indd 1

for Moms and Babies Act improves maternity care for women. Tell us more about this initiative that you sponsored. Stabenow: We don’t have quality standards in Medicaid. Low-income moms getting their health care through Medicaid don’t have the same quality standards for prenatal care, maternity care and so on that we do for other systems. I’ve been working hard through the Moms and Babies Act to put in quality standards. Low-income moms that are already struggling can know that they’re going to have quality standards to make sure their health and their baby’s health will be maximized. Burns: How is the Children’s Health Insurance Program (CHIP) working, in your opinion? Stabenow: We call it MIChild in Michigan, and we have 100,000 children that get their health care through this insurance system. It’s for moms and dads that are working in jobs that don’t provide health care. Normally, CHIP is something that is authorized for one or two years at a time. We were able to get a 10-year extension.

intensive care, new operating rooms and a two-story lobby that’s grand. The families are the motivation behind the expansion. We built family-friendly rooms; parents can sleep with their loved ones getting the great care Children’s Hospital provides. Burns: You’re on the board of the Children’s Center of Wayne County; tell us about the Center. Maibach: Children’s Center of Wayne County is the largest children’s-orientated family services organization in the state. It deals predominantly with mental health issues with children. They’re unique in that they don’t just look at the child, they look at the family and those around the child when they’re providing the care. I got involved there over 20 years ago and through that engagement, helping them build a new center, I became the chair of that building and grounds committee. I ultimately became the president of the board. Today, I’m back to being a board member, helping in every way I can.

people. Murray-Brown: The first thing in the constitution talks about how important it is to be counted. Just recognizing that they can contribute by being counted is important for people in Detroit to know. Particularly in the city of Detroit, there are barriers to not just understanding the Census, but to recognizing that it is safe to be able to participate in the Census. There is this fear of how the information will be handled. Could it be hacked? This is something we want to be able to mitigate, to show that the information collected is private, confidential and not able to be hacked. One community that’s not counted is children; people often don’t recognize children. We’re looking for help from people to build awareness around the importance of completing the census. We know that this is a moment in time that happens every 10 years, but the implications of not getting it right last for 10 years.

6/25/18 11:41 AM

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

Wayne State contributes $1 million toward improving cardiovascular health in Detroit

By Jay Greene jgreene@crain.com

Wayne State University is gathering partners to determine the scope of a multi-pronged effort to improve cardiovascular health in Detroit and is spearheading the plan with a $1 million donation. So far, the American Heart Association, the City of Detroit Health Department and Henry Ford Health System have signed on to work on a public health improvement plan, with others expected to join. E. Roy Wilson, M.D., president of Wayne State, announced the plan in early May in a panel session on transforming health at the Mackinac Policy Conference. He pledged the seed money “along with the university’s extensive research expertise — to radically improve health outcomes in Detroit.” Wilson, whose university also is engaged in affiliation discussions with Henry Ford, also suggested a collaboration with hospitals and other universities to create a school of public health in Detroit. David Hefner, Wayne State’s vice president for health affairs, told Crain’s the university and its partners would like to involve all hospitals, including Detroit Medical Center, Beaumont Health and McLaren Health Care. He also would like to involve state health agencies, federally qualified health centers, behavioral health providers and the transportation and food industries. Hefner said the need for public health improvement is great. While the U.S. spends the most money on health care in the world, it ranks 42nd in life expectancy. That problem is even more pronounced in Detroit, where certain ZIP codes see a 13-year difference in life expectancy, he said. “We have to do something about that,” Hefner said. “We want to radically improve — not just incrementally improve — health outcomes in Detroit.”

David Hefner: Need for improvement is great.

Joneigh Khaldun: A lot to be developed.

Need to know

JJWayne State pledges $1 million as seed money to research, plan public health improvement project in Detroit JJParticipants so far include Henry Ford Health, Detroit Health Department and American Heart Association JJFirst chronic disease to be targeted is cardiovascular disease; Detroit has some of the highest rates in the nation

Hefner said the 20-year initiative will begin focusing on cardiovascular disease because it is by far the leading cause of death in Detroit, and the U.S. Interventions also can be measured over relatively short periods of time, he said. Over the summer, Wayne State will sign up universities, hospitals, medical groups and other health-minded organizations to the initiative, Hefner said. Additional funding will be sought, he said. Wilson said the school will convene a town hall meeting 3-5 p.m. Aug. 1 at Wayne State’s Integrative Biosciences Center, 6135 Woodward Ave. in Detroit, to take ideas and discuss the budding plan. He said the model could be used in other urban communities and to combat other chronic diseases that include diabetes and depression.

Improving public health Joneigh Khaldun, M.D., director

and health officer with the Detroit Health Department, said cardiovascular disease is illustrated in Detroit by high rates of obesity, diabetes, high blood pressure and stroke. “Detroit has the fifth-highest rate of obesity (in the U.S.). Thirteen percent of adults have diabetes and 45 percent of adults have high blood pressure,” Khaldun said. “Those are the diagnoses, but why do they exist? One has to look at that.” Khaldun said she is excited Wayne State wants to start a conversation about improving public health in the city using an approach that includes medical care, public health, food, transportation and housing. “There’s a lot to be developed and determined. I look forward working with them with the concept,” Khaldun said. Jessica Donze Black, the AHA’s national vice president of community health, said the goal of the association’s One Brave Idea initiative is to eliminate heart disease. She said she sees the Wayne-led initiative as a complementary effort. “It’s not about making Detroit a little bit healthier; it’s how do you make Detroit one of the healthiest cities in the country?” Donze Black said. Kimberlydawn Wisdom, M.D., Henry Ford’s senior vice president of community health and equity and chief wellness and diversity officer, said improvement can be found along the entire continuum of care and also in the larger community. “Hospitals can provide the highest level of care, but if we don’t look at other social determinants of health — such as housing instability, food insecurity and transportation — it doesn’t make that high-quality care as effective,” Wisdom said in a statement. Khaldun said there is great opportunity for schools, businesses, hospitals, medical groups and public

health experts to work together to improve health by addressing upstream the social determinants to health. They include intergenerational poverty, access to food and transportation, teen pregnancy, infant mortality and early child health. One of the more troubling statistics is the infant death rate in Detroit. “Some 13 babies (of 1,000) die before their first birthday,” said Khaldun, nearly twice the national average. “It is related to maternal health. A healthy mom is much more likely to deliver a healthy baby. We need to think more upstream at prevention to improve the health of our moms.” Efforts to reduce infant deaths in Detroit have been a long-standing goal for many groups. Khaldun said Detroit and Wayne County has more than 100 different programs to address infant deaths. “We have made a small improvement the last 10 years, a 1 percent decrease in infant mortality in Detroit. That is not enough. We need to think more robustly,” she said. Last fall, the city began a public-private partnership with many local businesses called Sister Friends Detroit. The program partners mentors with young pregnant mothers. Transportation and educational classes are provided. Detroit also has teamed with Wayne State and Detroit Medical Center in the Make Your Date program. The four-year-old partnership creates a wraparound service program that so far has helped more than 200 mothers with a nutrition plan, transportation and education.

Financial improvement Wayne State pledged $1 million for the project at a time when it is just recovering from several years of what most businesses would consider financial losses. Universi-

ty budgets are different, however, and can’t be analyzed in a profitand-loss manner, Hefner said. Still, Wayne State last year posted positive revenue in operations, said Hefner, adding that 2018, which ends Sept. 30, is expected to be more improved. “We are closing the gaps and doing better. We still have a ways to go” on a financial turnaround, Hefner said, adding that Wayne State wasn’t in a position two years ago to make the $1 million pledge. “Every university self-funds a portion of their research. It is part of our mission,” Hefner said. “It is not unusual. What is unusual here is you have a university president, who has been an NIH researcher on disparity and populations, and is committed to new research efforts.” Hefner said the $1 million pledge will come out of the university’s research budget. In 2017, Wayne State’s research budget was $156 million, up 6.1 percent from $147 million in 2016. “This is population health research and an investment in the community,” he said. Hefner said Wayne State hopes other organizations and foundations also contribute to the project, but the university doesn’t have a set fundraising target. Hefner said that once the plan to improve cardiovascular outcomes is solidified, the organization will need to hire a staff to administer and manage the program. “It is not just about the clinical side of cardiovascular health, but it is also lifestyle, access to food, transportation and safety,” he said. “We may need to target our efforts across a few ZIP codes and census tracts and redesign” care sites. Jay Greene: (313) 446-0325 Twitter: @jaybgreene

EY names 10 winners for regional Entrepreneur of Year awards By Kurt Nagl

Need to know

knagl@crain.com

Ten Michigan entrepreneurs last week won Ernst & Young LLP’s annual Entrepreneur of the Year Award for Michigan and northwest Ohio. Winners of the recognition this year, celebrated at the Detroit Institute of Arts, include nine male entrepreneurs and one female. Eight are from Southeast Michigan companies, including two from Detroit, and the other two are from Grand Rapids. Here is a list of winners: J Joe Hessling — 365 Retail Markets (Troy) J Jim Teets — ADAC Automotive (Grand Rapids) J Joey Agree — Agree Realty Corp. (Bloomfield Hills) J Jason Wenk — FormulaFolio Investments (Grand Rapids) J Damien Rocchi — Grand Circus Detroit LLC (Detroit) J Jeanne Jeup — Institute for Multi-Sensory Education (Northville) J Matt O’Bryan — KLA Laboratories Inc. (Dearborn) J Larry Brinker Jr — L.S. Brinker Co. (Detroit)

JJEight winners are from Southeast Michigan; two are from Grand Rapids JJRegional winners go on to compete for national title JJProgram recognizes innovation, financial performance, commitment to community

Ernst & Young LLP Ten Michigan entrepreneurs were selected last week as winners of Ernst & Young LLP’s annual Entrepreneur of the Year Award for Michigan and northwest Ohio. From left: Angie Kelly, EOY Michigan and northwest Ohio program co-director; Joe Hessling, 365 Retail Markets; Jason Wenk, FormulaFolio Investments; Joey Agree, Agree Realty Corp.; Larry Brinker Jr., L.S. Brinker Company; Bill Reminder, Truck Hero, Inc.; Jeanne Jeup, Institute for Multi-Sensory Education (IMSE); Brad Oleshansky, M1 Concourse LLC; Damien Rocchi, Grand Circus Detroit LLC; Matt O’Bryan, KLA Laboratories Inc.; Jim Teets, ADAC Automotive and Shannon Crone, EOY Michigan and northwest Ohio program co-director. J Brad Oleshansky — M1 Concourse LLC (Pontiac) J Bill Reminder — Truck Hero Inc. (Ann Arbor)

“We are proud to announce the 2018 winners, who boldly break the mold to create new solutions, innovations and possibilities that rede-

fine how we live, work and play,” said Debra von Storch, the program director. London-based EY selected 29 fi-

nalists for this year’s awards. A panel of independent judges selected the business leaders. The recognition does not come with a monetary award. In its 32nd year, the program recognizes entrepreneurs who excel in innovation, financial performance and commitment to the community. Honorees last year included more than a dozen up-and-coming business people. Regional award winners are considered for Entrepreneur of the Year National Awards, with those winners to be announced Nov. 10 in Palm Springs, Calif. Winner of the national award moves onto the World Entrepreneur of the Year Award in Monaco next year.

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

OPINION COMMENTARY

Too much, too soon C

ompanies all over the country are rushing headlong into new technology that will have profound implications on Detroit and its infrastructure. In Detroit, Bedrock is starting to use several autonomous vehicles to ferry its employees. I am sure that these shuttles are a glimpse of the future. In a decade or two, we will see hundreds of companies using them to move employees from one site to another. It will not be long before every university or airport has fleets of such shuttles. It will be an economical system. Unfortunately, that future is not yet here, and driverless shuttles are simply not ready for safe, general use. Companies that are promoting these vehicles seem oblivious to the inherent dangers the technology as it currently stands poses to other drivers, passengers and pedestrians — not to mention bikers in our many new bike lanes. Driverless vehicles need lots more testing on private proving grounds to demonstrate their safety and reliability under all sorts of circumstances. We should not allow our public roads to become private proving grounds for these vehicles. I certainly do not blame Bedrock, which is being promised far more than any of these autonomous vehicle producers can safely deliver. There have been crashes already that have killed and injured occupants and pedestrians on public roads. It is reckless to allow such unproven vehicles to operate on Detroit streets at this time. Driverless shuttles will happen, but before they do, we should make sure that they have been thoroughly

KEITH CRAIN Editor-in-chief

We should not allow our public roads to become private proving grounds for these vehicles. tested in all conditions, and that includes Detroit’s severe winter weather. In their enthusiasm for the future, companies are rushing into operation too soon. These vehicles should not be sold without meeting rigorous government standards. I only hope that Bedrock makes sure that the manufacturer has plenty of insurance to cover any potential litigation. Sadly, it is simply too soon and there are bound to be accidents as they use public streets for their proving grounds. Let us not always rush technology. The future will be here soon enough, and safely.

More on WJR Hear Crain’s Group Publisher Mary Kramer and Managing Editor Michael Lee talk about the week’s stories every Monday morning on WJR 760 AM’s Paul W. Smith Show.

LETTERS

Bike lanes go begging for bikes

Stop living in the past on transit

To the editor: I read with much pleasure Keith Crain’s comments about the new/expanded bicycle lanes along E. Jefferson. I am equally mystified. For the past few weeks, I have been silently (well, not entirely) grumbling about the reduction in car lanes so as to accommodate these new bike lanes. Commuter traffic to/from the east side, already hampered for as long as I can remember by ill-timed traffic lights, is now a stop-and-go jumble of angry motorists during peak rush hours. And this is in nice weather. I can only imagine the frustration (to say the least) as we get into the winter months. My guess is that your 20,000:1 ratio may be on the conservative side. To date, I have counted exactly zero bicycles between Alter and Rivard. Both west and east bound. And believe me, I have been looking. Build it and they will come? Please. John E. Park Jr. Grosse Pointe Farms

To the editor: Regarding Keith Crain's June 18 column on bike lanes: Wow, you sound like a crabby old man who is living in the past. The auto companies of the past blocked all means of public transportation back in the heydays of Detroit. What has that done? Restricted people from moving around the city. Besides cars, there are trains, buses, motorcycles, and yes, bicycles. People who need to move around the city will, yes even in the winter, ride bicycles. Fat tire bicycles allow you ride in the winter in the snow. I know this is your opinion, but open your eyes: There are people of all ages in this city. Not everyone has a car. Please attend some of the public planning commission meetings and educate yourself. Mike Olszewski Howell

COMMENTARY

Don’t criminalize state decisions

ichigan’s business leaders may ask what all the fuss is about as our attorney general prosecutes a fellow state official for alleged manslaughter in the Flint water mess. But they will understand when state officials increasingly avoid making tough decisions due to a fear of the overzealous use of criminal laws to regulate public official conduct. State government exists to protect the safety to nearly of 10 million Michiganders. Our regulatory laws are based on the belief that more than 47,000 state employees enhance the public health and safety through effective laws, licensing of professions, and enforcement. Think of the scope of government regulation — licensing activities and jobs, regulating industries (gambling, alcohol, medical marihuana, health care, automobile sales), prohibiting activities (speeding, drunken driving), promoting safety, enforcing criminal statutes, civil rights laws, financial regulations, and environmental standards (including water quality in Flint). The list goes on, and for every regulation we carp about, there are others we count on to protect our families and our businesses. We must recognize — and our attorney general does not — that in our highly regulated, complex state government, evidence can be uncertain, good-faith mistakes can be made, judgments can be wrong and people can be injured or even die because of a bad government decision. But Michigan public officials must be able to make decisions and sometimes take risks that prove to be wrong. All this requires substantive and legal knowledge, action, sometimes acting on less than clear evidence and exercise of judgment and discre-

OTHER VOICES Richard McLellan

tion by state employees. Arresting officials and making criminal charges when a government decision proves wrong has a chilling effect on all public employees who may now be reluctant to take the risk of making tough decisions. The Flint water situation has revealed a number of issues which we will have to address: J The inadequacy of criminal penalties to address what is at most the poor execution of existing state and local regulatory matters. J The lack of clarity on the role of multiple levels of government — federal, state and local — in protecting the public and the environment. J Conflicting roles of different state officials (and possible failure of the governor to provide leadership). An example here is Michigan’s emergency manager law focusing solely on government finances, while other state officials are struggling with competing public health and safety issues. So what are we going to do about this as a state? Here are some suggestions: J Eliminate the common law “neglect of duty” argument that the attorney general is using to second-guess official decisions. Such actions may also usurp the constitutional duty of the governor to “take care that the laws be faithfully exe-

cuted.” Relying on vague concepts from “common law” does not provide sufficient guidance to state and local regulatory officials. J Clarify our laws. One of the many casualties of term limits is the lack of lawmakers with deep knowledge of state laws and agency powers. The next governor and legislature should focus on the constant need to evaluate our laws and always seek to make them clear and effective. J Provide training for state officials. There is a school for new governors, state attorneys general, and new judges, but little training for new department and agency directors. Given the increasing complexity of the regulatory state, Michigan state government should invest in continuing training for its agency leaders. This especially important if the attorney general is seen as a hostile opponent instead of a trusted legal adviser. J Restructure the role of attorneys for state agencies. The state constitution requires a partisan elected attorney general, but it says nothing about the AG’s powers. The present AG’s policy of hostility to state officials suggests that the Legislature should consider adopting the federal model for government legal services — a strong AG who represents the people and the government overall. But we should also provide each cabinet member and major regulatory agency with his or her own unclassified appointed general counsel. I have pushed for this approach since I first drafted a proposed “Legal Services Act of 1974” and incurred the wrath of Attorney General Frank Kelley and later Attorney General Jennifer Granholm. It is time for others take up the cause. Richard McLellan is a longtime Lansing attorney active in state issues.

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

Bring Amtrak back to Michigan Central Station

hen Bill Ford laid out his vision for the Michigan Central Station, he held up the ferry terminal in San Francisco as a model: “The one that really caught my eye was the ferry terminal in San Francisco,” Ford said. “It’s a working ferry terminal, but it’s a meeting spot for everybody in that area. So people meet for coffee, they meet for lunch. They have some really fun and interesting retail experiences. It’s just buzzing with activity and buzzing with life. And I love that.” Could this signal an openness on Ford’s part to return intercity passenger train service to Michigan Central? Could Michigan Central become a functioning transportation hub once again? Perhaps these conversations are already taking place between Ford, Amtrak, the Michigan Department of Transportation and other stakeholders. If they aren't, maybe they ought to be. Running Amtrak trains out of Corktown accomplishes several strategic objectives for Ford, including:  Bringing regular, daily foot traffic in the form of rail travelers to the station to support cafes, bars and other retail businesses.  Exposing rail travelers to Ford’s future mobility technologies.  Showcasing Ford as a leader in historic preservation with a strong commitment to Detroit. For Amtrak, advantages include:  Furnishing more amenities for rail travelers.  Offering a competitive advantage, in the form of a beaux-arts architectural jewel, over other forms of intercity transportation.  Potentially growing traffic on the Chicago-Detroit corridor, already among the busiest passenger rail corridors in the nation outside the Northeast.  Possibility to connect to Canada’s VIA Rail system through the nearby Detroit River rail tunnel.  Ability to re-establish a passenger rail connection between Detroit and Toledo and from there to the East Coast. For passengers the benefits are clear:  More expansive waiting areas.  More on-site amenities.  More amenities within walking distance to the station, such as Mercury Burger Bar, Two James Spirits, Gold Cash Gold and Slows Bar BQ to name a few.  Easier connections to ground transportation, with a street configuration more welcoming to taxis, ride share services and passenger dropoff/pick-up. Until 1988, travelers between Detroit and Chicago were welcomed into stunning, grandiose high beaux-arts buildings at either end of the trip: Chicago’s Union Station and Detroit’s Michigan Central. For the Detroit region, what better way to welcome visitors arriving via Amtrak than with an opulent, fully restored crown jewel as your calling card? It boldly tells Detroit’s story to the world: that Detroit is truly America’s great comeback city. For this vision to be realized, there would have to be buy-in among Ford, Amtrak, MDOT, the owners of rail rights of way and other stakeholders. Most of all, rail passengers and the community at large would have to support restoring passenger service at Michigan Central Station.

OTHER VOICES Tim Hinkle

The rub might be that moving passenger service to MCS makes it difficult to preserve continuing Amtrak service to Royal Oak, Troy and Pontiac, due to the rail configuration near

downtown. However, thinking on a grander scale, why not work toward a shared vision for rapid, frequent regional rail services that connect Pontiac, Mt. Clemens and Ann Arbor/DTW to Michigan Central Station? From there, commuters could connect to the Amtrak intercity network. A system like this could be built using existing rail rights of way. Ford could be a mobility partner providing autonomous locomotive technology for the regional rail network, reducing the operating cost by many multiples. The Connect Southeast Michigan Plan allows for localized funding sources to study and plan transit en-

The bold move by Ford in purchasing and rehabilitating what was Detroit’s flagship symbol of decline is a signal that times have changed. hancements like this. A hub-spoke system, with regional rail lines feeding into an intercity hub, is similar to cities like New York, where New Jersey Transit and the

Long Island Railroad connect to Amtrak at Penn Station. Chicago is home to both Amtrak and Metra commuter trains. The bold move by Ford in purchasing and rehabilitating what was Detroit’s flagship symbol of decline is a signal that times have changed. It’s clear that the impossible is now possible. It’s time to dream big, challenge the conventional wisdom and think about how a reborn train station can best serve the needs of a resurgent region as a transportation hub as well as a future mobility lab. Tim Hinkle is a Detroit resident.

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Ideal participants have a minimum of seven years business experience, and/or manage a team, and who are on the fast track for increased responsibility at any level of an organization. Participants have represented mid-size enterprises, nonprofits, Fortune 500 companies and educational institutions. For more information, contact Keenan Covington at kcovington@crain.com or 313-446-0417. You can also visit www.crainsdetroit.com/leadershipacademy.

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

FOCUS

MEETINGS AND CONVENTIONS N

HOTEL BOOM OR BUST?

Downtown Detroit is having a hotel boom. Is demand enough, or does it risk becoming a hotel bust? Hotel operators are betting that Detroit’s ascendancy as a tourist destination will continue.

. BLVD ING ER K H T U TIN L MAR

E H H

GR AN DR IVE RA VE

C D B

Destination downtown

Recently opened or planned hotel developments in and near downtown.

A West Elm hotel, 130 rooms B Shinola Hotel, 130 rooms C The Siren Hotel, 98 rooms D The Element Detroit at the Metropolitan Building, 110 rooms

E Boutique hotel, 100 rooms F Crowne Plaza Downtown Detroit Riverfront second tower, 498 rooms G Book Tower, 200 rooms H Two District Detroit hotels, unknown number of rooms I Aloft Hotel, 136 rooms (opened 2014) J The Foundation Hotel, 100 rooms (opened 2017) K Former Detroit Police Department headquarters, 200 rooms (tentative) L Site of former J.L. Hudson’s department store, hotel component, unknown number of rooms (tentative) M Holiday Inn Express & Suites Downtown Detroit conversion to Hotel Indigo, 241 rooms N Hampton Inn development, 120 rooms

J F

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

SPECIAL REPORT: MEETINGS AND CONVENTIONS

Detroit as destination spurs boom in hotel projects Kirk Pinho

kpinho@crain.com

Ten years ago, Detroit’s hotel market struggled mightily with an average occupancy rate between 46 and 49 percent. Today, that number is in the low 70s, thanks partly to an apparently growing perception of the Motor City as a tourist destination, along with a rebound in the local and national economies. “It's all legit,” said Michael O’Callaghan, executive vice president and COO of the Detroit Metro Convention & Visitors Bureau. “We talk to a lot of meeting centers and leisure visitors to metro Detroit and the sentiment throughout the country for the most part is the buzz is that Detroit has become a great story, with the city kind of rising from the ashes and that it really is a place to see.” But with no fewer than 2,000 more rooms expected to come online amid a flurry of new hotel projects, the question has to be asked: How many can Detroit support?

Visitor numbers jump An increasing influx of visitors is no mirage, O’Callaghan said: A decade ago, 11 million or 12 million people visited the region. In 2017, that figure stood at more than 19 million. He pointed to recent features in Lonely Planet, The New York Times (which later in 2017 asked whether it is “the most exciting city in America”), “Good Morning America” and “The Today Show” highlighting Detroit as a good place for tourists to travel as helping fuel that perception nationwide. “When you have the recognition of major publications like that driving demand to a city, we have to deliver lodging experiences for those travelers,” said Andrew Leber, vice president of hospitality for Dan Gilbert’s Bedrock LLC real estate development, ownership, management and leasing company. So with apparently a growing market for leisure travelers and convention-goers, the question then becomes where the visitors to greater downtown Detroit lay their heads at night, as there are only about 5,000 hotel rooms in and around the central business district, ranging from the motels that dot east Jefferson Avenue and other major thoroughfares

Need to know

Detroit’s hotel market average occupancy rate is in the low 70s J

J Growing perception of the Motor City as a tourist destination J 2,000 more rooms expected to come online

to the city’s tallest building, the Detroit Marriott at the Renaissance Center.

Hotels on the docket Developers have taken notice in the increased demand for hospitality space. A Crain’s tally shows that no fewer than 2,000 rooms have been proposed or come online in the last few years, and there are easily hundreds more in the pipeline that have not yet been formally confirmed or announced, ranging from projects in Midtown to a host of others throughout the area. That means to maintain downtown occupancy rates, the increasing numbers of visitors will also have to continue to rise. Bedrock is developing not only the Shinola Hotel on Woodward immediately north of the J.L. Hudson’s department store site project, but also tentatively plans converting the former Detroit Police Department headquarters at 1300 Beaubien St. into a 200-room hotel and is considering a hotel component in a residential tower slated to soar 800 feet above the ground. The 98-room boutique Siren Hotel by New York City-based ASH NYC LLC recently opened, as did the Foundation Hotel in a former Detroit Fire Department building on Larned Street. A West Elm hotel is planned for Midtown and another 100-room boutique hotel is slated for 640 Temple St. In addition, the Ilitch family’s Olympia Development of Michigan plans at least two hotels in its sprawling District Detroit development area covering 45 to 50 blocks. Charles Skelton, president of Ann Arbor-based Hospitality Advisors Consulting Group Inc., believes in a purely philosophical sense that if a market is expanding by more than one-third in a short period of time, that “somebody is going to get hurt.” But that’s only philosophically. In

ANNALISE FRANK/CRAIN’S DETROIT BUSINESS

The Albert Kahn-designed former Detroit Police Department headquarters at 1300 Beaubien downtown opened in 1923.

reality, he thinks Detroit can absorb the new hotels being developed because they are generally smaller projects — 100 to 200 rooms at a time — rather than massive hotel projects with 800 to 1,000 rooms. “As long as we keep building the smaller, boutique-type properties, I’m not worried,” he said. Brandon Leversee, senior project manager for hospitality consulting firm HVS, agreed. “I don’t see a need or demand for box hotels, especially in a downtown,” he said.

Luring conventions? O’Callaghan and Leber do see a need for a big hotel to make the city more competitive in luring conventions.

“With just the RenCen, we are not as competitive as we should be with cities like Nashville and Cincinnati,” O’Callaghan said. And O’Callaghan, citing statistics from Destination Reports by hotel data firm STR Inc., said downtown hotels are generally performing better than others across the region. The average daily rate downtown was $172 per night last month, compared with $106 regionwide. And occupancy rates were 73.9 percent downtown, compared with 70.8 percent for the region as a whole. “Detroit truly has become a destination,” Skelton said. “Many years ago in the 1950s and 1960s, Detroit was a destination. Surprise, surprise.” Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

Detroit’s Renaissance Center

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

SPECIAL REPORT: MEETINGS AND CONVENTIONS Largest conventions 2018 Largest conventions and sporting events booked for 2018, ranked by direct spending estimated by the Detroit Metro Convention & Visitors Bureau. Event

Organizer

Dates

2018 Girls’ Junior National Championships

USA Volleyball

June 28-July 6

Room nights

72,180

Attendance

67,500

Direct Spending

$78,513,122

2018 Michigan State Women’s Bowling Championship

United States Bowling Congress

Feb. 17-May 13

3,710

11,000

$57,821,610

2018 Annual Fall National Conference & Exposition

National Black MBA Association, Inc.

Sept. 22-29

11,833

21,600

$39,585,584

2018 FIRST Championship

FIRST Robotics

April 25-29

20,000

40,000

$28,651,750

2018 NALC National Convention

National Association of Letter Carriers

July 14-20

17,013

7,000

$12,943,490

2018 NABJ Annual Convention

National Association of Black Journalists

July 28-Aug. 7

3,434

4,000

$10,633,942

2018 Battery Show

UBM Americas

Sept. 11-13

4,301

8,300

$9,694,020

2018 Nike Mid-East Qualifier

Capitol Sports Center

March 9-11

15,125

29,000

$9,539,174

UAW 37th Constitutional Convention

Coordinated Travel Services

June 6-15

8,643

5,000

$9,462,250

Youmacon

Nov. 1-4

3,648

25,000

$8,084,888

2018 NCAA Men’s Preliminary Rounds Basketball

National Collegiate Athletic Association

March 16-18

3,508

30,120

$6,616,520

2018 WBENC National Conference & Business Fair

Women’s Business Enterprise National Council

June 19-22

7,050

5,000

$6,241,192

SAE World Congress, WCX

SAE International

April 10-12

6,073

12,000

$6,168,804

2018 The Women of Color STEM Conference

Women of Color Advocacy Leadership Training

Oct. 9-14

1,845

5,500

$5,692,142

2018 Detroit Invitational Tournament

Capitol Sports Center

May 4-6

6,440

10,000

$4,023,497

2018 Spring Meeting Urban Land Institute

Urban Land Institute

May 1-5

3,544

4,100

$3,462,815

2018 Warrior AAA Invitational

Legacy Global Sports

Oct. 19-21

15,110

13,500

$3,377,970

2018 Nation’s Cup Tier 2

Legacy Global Sports

Nov. 23-25

7,110

10,600

$2,902,570

2018 PowerPlex

Plex Systems Inc.

May 14-18

2,159

2,400

$2,674,671

2018 Annual Convention

Michigan Reading Association

March 15-19

1,537

2,400

$2,661,825

2018 Career Development Conference

Michigan DECA

March 9-11

2,113

3,000

$1,961,802

2018 Society of Freshwater Science Annual Meeting

Utah State University

May 21-25

2,140

2,200

$1,054,920

2018 Hockey Fights Cancer

Legacy Global Sports

May 10-14

1,225

4,000

$907,850

2018 National Invention Convention and Entrepreneurship Expo (NICEE)

The STEMIE Coalition Inc.

June 1-2

1,325

3,000

$491,970

Source: Detroit Metro Convention & Visitors Bureau

Assembler Labs to focus on spinning out companies By Dustin Walsh dwalsh@crain.com

The founders of a Seattle marketing app startup have launched a new startup studio in Detroit. Ian Sefferman and Patrick Haig, who founded MobileDevHQ in Seattle before it was acquired by mobile marketing analytics firm Tune in 2014, will use their new venture, Assembler Labs, to generate and spin off startup ideas with hopes of hitting “home runs.” Sefferman most recently served as senior vice president of customer experience and Haig as director of product at Tune, a Seattle-based mobile marketing analytics company. Assembler Labs will serve as a breeding ground for new company creation, where Sefferman and Haig create startup ideas, validate them quickly, recruit entrepreneurs to manage the startups around the ideas and spin them out under investors. The group plans to focus in mobility, automation and financial technology, Sefferman said. The lab will operate much like Santa Monica, Calif.-based Science Inc., which incubated Dollar Shave Club, and New York-based Betaworks, which incubated Giphy and Bitly. Razor delivery company Dollar Shave Club was sold to Unilever for $1 billion in 2016. “The idea is pretty simple,” Sefferman said. “Come up with ideas, iterate on those ideas, build product, talk to customers and once we have an idea

Ian Sefferman: Believe in this concept.

Patrick Haig: Hashing out startup ideas.

that’s fruitful, we’ll recruit the best business talent to co-found the company.” Assembler Labs will then focus on finding investors. “We believe in this concept,” Sefferman said. “Even if we have a great idea, we need validation and there’s no better validation than an external funding source. If not, we’ll kill the idea.” Killing ideas is a staple of a startup studio, Sefferman said. He said the group expects 70 percent of all ideas will fail their feasibility standard, another 10 percent won’t get attention from a worthy co-founder and another 10 percent won’t attract an investor. Assembler Labs, which is bootstrapped from the proceeds of selling MobileDevHQ, is operating out of TechStars Detroit but is seeking space of its own. 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 // J U LY 2 , 2 0 1 8

CALENDAR UPCOMING EVENTS Tech Takeover: Industry 4.0 & The New Frontier of Innovation. 7:459:30 a.m. July 11. Automation Alley. Information about how companies can apply digital technologies on their factory floors. Hear case studies on how organizations are using the Industrial Internet of Things (IIoT) to accelerate innovation and growth, discover why every organization needs an augmented reality strategy. Speaker: Howard Heppelmann, divisional vice president and general manager, Connected Operations Solutions, PTC. Automation Alley. $10 members; $20 nonmembers. Phone: (800) 427-5100; email: info@ automationalley.com 1 Million Cups. 9-10:30 a.m. July 11. Oakland County Economic Development and Community Affairs. Two early stage startups will do a six-minute presentation on their companies to potential advisers, investors and fellow entrepreneurs. Free. Executive Office Building Conference Center, Waterford Township. Contact: One Stop Shop, phone: (248) 858-0783; email: smallbusiness@oakgov.com; website: 1millioncups.com/oaklandcounty Professional Edge Workshop on Crisis Communications. 8-9:30 a.m. July 12. Birmingham Bloomfield Chamber. A workshop on crisis communication plans designed to protect and defend an individual, com-

pany or organization facing a threat to its reputation. Free, but registration required. La Strada Dolci e Caffe, Birmingham. Contact: Kelly Bennett, phone: (248) 430-7688; email: kellyb@bbcc.com Tech Tuesdays: The Impact Of Robotics and Automation on Small Manufacturers. 8 a.m.-1 p.m. July 17. Lawrence Technological University. Session shares how companies are applying automation and robotics technology to improve the delivery of durable goods and at better margins. Presentations by Dan Radomski, mentor in residence, LTU Collaboratory; Corey Carolla, Red Rabbit Automation/Vickers Engineering; Mike Foster, Behco-MRM; Ryan Astor, ARM and LTU Robotics Engineering summer camp students. Lawrence Technological University. Free with online registration. Contact: Mark Brucki, email: mbrucki@ltu.edu. Website: ltucollaboratory.com/events/tech-tuesdays-robotics-and-automation/ Government Contracting 101. 9 a.m.-noon. July 19. Schoolcraft College. What does it take to become a successful government contractor? What services and resources are available to a small business pursuing the government market? Seminar will give insight to companies considering the field of government contracting. Schoolcraft College, Livonia. $45. Contact: Kara or Shannon, phone: (734) 462-4438’ email: ptac@schoolcraft.edu

Apprenticeship Info Session: Addressing the Manufacturing Talent Shortage. 9:30-11:30 a.m. July 24. Automation Alley. Information session to learn more about implementing a registered apprenticeship program and about ApprenticeshipUSA, a Department of Labor funded grant partnership between Automation Alley and the state of Michigan. Speakers: Marybeth Koski, Department of Labor, Employment and Training Administration; Collin Mays, talent development coordinator, Southeast Michigan Community Alliance (SEMCA) and Karol Friedman, director, partnerships and talent, Automation Alley. Michigan Manufacturing Technology Center, Plymouth. Free. Contact: Karol Friedman, email: podsiadlikl@automationalley.com Lead Your Company To The Top: Strategic Planning Workshop. 8:3010:30 a.m. July 25. Michigan Manufacturing Technology Center. Program to help determine performance in comparison to competitors while identifying potential areas for improvement. Free. Michigan Manufacturing Technology Center, Plymouth. Contact: Theresa Gaston, phone: (734) 4514208; email: inquiry@the-center.org; website: the-center.org Everything is a Presentation with Michael Angelo Caruso. 5:30-7:30 p.m. July 26. TiE Detroit. Speaker Michael Angelo Caruso, founder and president of Edison House, an international consulting firm specializing in

Market Strategies, Morpace to merge after acquisitions by California PE firm By Tyler Clifford tclifford@crain.com

Livonia-based Market Strategies International and Farmington Hills-based Morpace Inc. will combine to become the 15th-largest market-research firm in the country after both were acquired by a California private equity firm. Palo Alto, Calif.-based STG Partners LLC on Friday closed on the purchase for an undisclosed price. The merger, which will include a rebranding to be announced by the end of the year, will bring the company to more than 450 employees worldwide, Market Strategies President Melissa Sauter said. About 260 employees are currently in the Detroit area, she said. A purchase price was not disclosed. Sauter will become co-CEO of the new firm with Morpace President and CEO Duncan Lawrence. The collaborative is currently scouting a new headquarters in the Detroit area and plans to move out of their rental properties in their respective cities by the end of the year, Lawrence said. They did not disclose details of their current leases. The merged companies will have combined annual revenue of more than $120 million, Lawrence said. They did not disclose each company’s respective figures. Combined, the company is the 15th-largest market research firm in the country based on total revenue, Law-

Melissa Sauter: Merger will include rebranding.

Duncan Lawrence: Industry driven by technology.

Need to know

J STG Partners LLC buys metro Detroit marketing research firms for undisclosed price J Merger of Market Strategies and Morpace to include more than 450 employees J Companies plan to leave leased buildings to find a new headquarters in the Detroit area

rence said. Sauter said this merger was “meant to be.” “When you add in our combined firm’s deep industry knowledge, the result is better solutions and capabilities that continue to challenge our employees and help organizations solve complex business and marketing challenges,” she said in a statement. They did not give details about the kind or size of space that they are looking for, but the company is currently in active negotiations

with its real estate team, Sauter said. The firm expects to find a new home by year-end. New York City-based Jordan, Edmiston Group Inc. initiated the transaction and acted as financial adviser to Market Strategies and Morpace, the news release said. Three officials from both Market Strategies and Morpace, including the co-CEOs, will make up the executive leadership in the merger. Todd Mundorf was named COO, David Salkowski was named CFO, Phil Giroux was named chief administrative officer and Sharna Morelli was named chief information officer. “The research industry is increasingly driven by technology,” Lawrence said in a statement. “STG was uniquely attractive as a partner due to its success in the industry and demonstrated track record in applying technology to transform insights-oriented businesses.” Market Strategies and Morpace offer research in branding, customer experience, product development and segmentation, the news release said. They serve clients in automotive, retail, energy, financial services, health and technology industries among others. They list the Big Three, Detroit-based Blue Cross Blue Shield of Michigan and Detroit-based DTE Energy Co. among their clients. Tyler Clifford: (313) 446-1612 Twitter: @_TylerTheTyler_

Caruso

corporate and personal improvement. TechTown — The Garage. Free. Contact: Jacqueline Perry, phone: (248) 254-4087; email: jacquelinep@kyyba. com; website: detroit.tie.org

Social Media for Business Growth. 9-11:30 a.m. Aug. 15. Oakland County Economic and Community Affairs. Terry Bean, Motor City Connect, will present what works, what to avoid and how to use LinkedIn, YouTube, Facebook and Twitter. Topics include: three things to do Bean to find success on each platform, how to use status updates that gain attention, ways to manage priorities, how to make posting simpler and fastest way to grow an audience. $40. Oakland County Executive Office Building Conference Center, Waterford. Phone: (248) 858-0783; email: smallbusiness@ oakgov.com Measuring the Effectiveness of Goals with Metrics. 8:30 a.m.-10:30 a.m. Aug. 16. Michigan Manufacturing

Technology Center. Program helps assess a company’s performance, establish relevant business metrics and prevent goals from being missed in the future. Workshop is focused on achieving positive organizational change. Michigan Manufacturing Technology Center, Plymouth. Free. Contact: Theresa Gaston, phone: (734) 451-4208; email: inquiry@the-center.org; website: the-center.org Marshall Plan for Talent Workshop. 1-3:30 p.m. Aug. 16. Lawrence Technological University. Roger Curtis, director of the Michigan Department of Talent and Economic Development, will provide an overview of Gov. Rick Snyder’s Marshall Plan for Talent to prepare Curtis students and adults for jobs. Free with online registration. Lawrence Technological University. Contact: Mark Brucki, email: mbrucki@ltu.edu To submit calendar items visit crainsdetroit.com and click “Events” near the top of the home page. Then, click “Submit Your Events” from the drop-down menu that will appear. Fill out the submission form, then click “Submit event” at the bottom of the page. More Calendar items can be found at crainsdetroit.com/events.

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

United Shore uses PistonsGT to reach consumers Need to know

By Bill Shea bshea@crain.com

The Pistons Gaming Team — the esports video game squad sibling of the Detroit Pistons — said Tuesday that it has inked one-year corporate sponsorship deals with the new consumer-facing arm of Pontiac-based United Shore Financial Services LLC, and with a couple of real estate agents. The six-man video game team, known better as PistonsGT and operating out of a specialized gaming practice room inside the Palace of Auburn Hills, wears jerseys with United Shore’s FindAMortgageBroker.com branding across the chest during its matches that are streamed online as part of the NBA 2K League that launched in the spring, PistonsGT said in a statement. The deal, whose financial value wasn’t disclosed, also has the FindAMortgageBroker.com logo appear in the on-court apron signs displayed on the team’s virtual home court. The mortgage business also will own the “Uncut Gaming” digital content series, PistonsGT said. The behind-the-scenes series is player personality profiles and an inside look at professional esports gaming. Digital content and social media sponsorships have emerged as revenue streams for traditional and esports teams in recent years. FindAMortgageBroker.com also is now PistonsGT’s official mortgage partner, the team said. In the other deal, PistonsGT has signed an agreement with Noah Cohen and Melanie Bishop of Max Broock Realtors to become the team’s official housing partner. The NBA 2K League offers free team-provided housing for the players drafted by the 17 participating clubs, and PistonsGT players live in a fully furnished West Bloomfield Township living space for the sixmonth season (they fly to New York City to play). The house is a Cohen and Bishop listing, and expected to go back on the

JJUnited Wholesale’s new consumer-facing effort has its logo on video game team’s jerseys JJPair of Max Broock Realtors sign separate deal to sponsor team’s local house JJDeals are one-year sponsorships

The Pistons Gaming Team plays the NBA2K video game professionally, and it’s starting to draw in sponsors.

market after the season. Players next season likely will live in apartments in downtown Detroit, where the Pistons basketball team moved last season. Under the sponsorship deal, there will be a digital house tour series and the branding “PistonsGT Home Court presented by Max Broock — Noah Cohen & Melanie Bishop” for the home, including signage inside the house. “The home will provide necessary space needed to accommodate our Pistons GT players with plenty of room for individual time, rest and relaxation,” Mike Donnay, the Pistons’ vice president of brand networks who oversees the entire PistonsGT operation, said in a statement. Living in the house is PistonsGT top draft pick Ramo “Lets Get It Ramo” Radoncic, a Brooklyn native who got a $35,000 contract as a first-rounder. His five teammates are each paid $32,000 for their six months of play, and all the players get money to move to their new

cities, medical insurance, a retirement plan and a chance at $1 million in prize money. The United Shore deal with PistonsGT represents more than an esports marketing development. FindAMortgageBroker.com is the first consumer-facing effort by United Shore’s United Wholesale unit. The company, led by Mat Ishbia (a bench player on Tom Izzo’s 2000 Michigan State national championship basketball team), has several high-profile branding deals already, including the naming rights to the lawn at DTE Energy Music Theatre in Clarkston and to a minor-league developmental baseball league in Troy. Ishbia’s rapidly growing company is a wholesale lender whose clients are mortgage brokers that offer several different mortgages to consumers, making it basically a middle man in a complex space. Now, it’s going directly to consumers to bolster that wholesale

PISTONS GAMING TEAM

business by using the PistonsGT operation as a branding tool. “We’re constantly working to educate people about mortgage brokers and why they are the best option for getting a mortgage,” Ishbia, United Wholesale president and CEO, said in a statement. “We launched FindAMortgageBroker.com as a platform where people can easily find a mortgage broker in their local community. Partnering with PistonsGT is a great opportunity to get FindAMortgageBroker.com out to a larger audience and educate more potential home buyers that letting a local mortgage broker shop on their behalf is the most efficient and cheapest way to get their mortgage.” United Wholesale has grown to become the top U.S. wholesale mortgage firm for the past three years, according to Inside Mortgage Finance. Ishbia’s company had $30 billion in wholesale business in 2017, up from $9 billion when Ishbia took over in 2013.

Branding deals with PistonsGT are a way to reach a younger demographic of what the advertisers hope will be future home buyers. Forbes noted in a June 20 story that the NBA 2K League audience numbers are starting to sort themselves out after an uneven first few weeks. League-provided data showed 242,093 unique viewers for Week 5 matches, and 433,391 for the league’s mid-season tournament at the same time, according to Forbes. And it reported that average unique viewership has grown from 137,168 to 284,250 overall. “We understood very early on the tremendous power of the esports community, both locally and nationally. Matching this passion with our extensive market knowledge and experience allows us the opportunity to service a potential new audience of home buyers/sellers with a premium level of care,” Cohen and Bishop were quoted as saying in the PistonsGT statement. FindAMortgageBroker.com and Cohen and Bishop are part of a PistonsGT corporate sponsor roster that includes MotorCity Casino Hotel, Szott M59 Chrysler Jeep, Meretz Fitness Gaming, Microsoft Store at Somerset Collection, Alienware Corp., Varidesk, DxRacer and Razer. The esports teams cannot sell advertising in five categories that the NBA limits for itself for national deals: Salty snacks, apparel, energy drinks, insurance and basketballs. Bill Shea: (313) 446-1626 Twitter: @Bill_Shea19

Plante Moran quits as Rockwell Medical auditor By Jay Greene jgreene@crain.com

Plante Moran PLLC has resigned as auditor of Rockwell Medical Inc., a Wixom-based biopharmaceutical company, over concerns the Southfield-based accounting firm did not receive critical emails it considered reportable events from Rockwell before it completed a recent quarterly filing with federal regulators. The reportable event was two emails exchanged in late March between a Rockwell lobbyist and a federal regulator at the Centers for Medicare and Medicaid Services that indicated CMS was not prepared to approve special reimbursement for Triferic, the company’s flagship iron replacement drug for kidney dialysis patients. “We have carefully reviewed your concept and submitted materials. Unfortunately, given the other initiatives CMS has underway, we will not be able to pursue this model,” said Anand Shah, M.D., chief medical officer with CMS, in a March 27 email to Steven Stranne, M.D., a lobbyist and attorney for Rockwell with Polsinelli PC in Washington D.C. On March 24, Stranne wrote to Shah asking for an update on the October 2017 Rockwell proposal to conduct a demonstration to evaluate Triferic that

Need to know

JJAccounting firm Plante Moran notifies

Rockwell Medical it has resigned as auditor

JJCites missing emails to federal regulatory officials that cast doubt on whether Medicare will pay for key drug Triferic JJEx-CEO Rob Chioini and ex-CFO Thomas Klema have sued Rockwell board for firing and claiming governance fraud

Rockwell hoped would lead to a special reimbursement for the drug. Rockwell, which was founded in 1995 by former CEO Rob Chioini, had been counting on Medicare for several years to approve Triferic for reimbursement. The company (NASDAQ: RMTI) produces two main products, Triferic and Calcitriol. Triferic is used to replace iron and maintain hemoglobin in kidney dialysis patients suffering from anemia. The generic drug Calcitriol, active vitamin D injection, is used to treat secondary hyperparathyroidism in patients undergoing dialysis. Plante Moran suggested that the emails were either withheld from its audit process or Rockwell has a deficient financial reporting program. In a June 22 letter to Rockwell, Plante Moran said the firm had recently been

made aware of the two emails and that they had not been disclosed before the company’s Form 10-Q was submitted to the SEC. “This email and its contents are inconsistent with representations made to us by Rockwell, orally and in writing, in connection with our review procedures,” Plante Moran said in the letter. “Had we been made aware of this email, we would have informed you of the following matters.” Plante Moran listed several problems with its 10-Q filing, including uncorrected misstatements to the SEC that resulted in underestimated recommended reserves of about $400,000 and a deficiency in operation and effectiveness of Rockwell’s financial reporting system. Marc Newman, an attorney for Chioini, and former CFO Tom Klema with the Miller Law Firm in Rochester, said Plante Moran and Rockwell’s board were “well aware of the status of the company’s efforts to obtain approval for reimbursement by CMS” of Triferic. “The company appropriately disclosed and accounted for these risks,” Newman said. “It is also important to note that company founder Chioini, and long-standing CFO Klema filed a federal whistleblower complaint alleging that five of the eight members of

the Rockwell Medical board of directors have committed serious securities laws violations and engaged in a campaign of misinformation to discredit the plaintiffs in an effort to have them drop their lawsuit.” Kristin Lynn, a spokesman for Plante Moran, declined comment because of confidentiality agreements with Rockwell. A Rockwell spokesman was unavailable for comment. However, Plante Moran stated in its June 22 letter to the Rockwell audit committee that the 10-Q filing made to the SEC on May 15 was “inconsistent with the facts in existence at the time of the filing.” The inconsistencies include certification by Chioini, certification by Klema and notes to the first-quarter financial statements. “Had this email been disclosed to us, our communications to you resulting from our pre-filing review of the (first quarter) 10-Q would have included our view that the disclosures in the overview section of item 2 regarding Triferic should be clearer and more transparent regarding the status of Rockwell’s request for separate reimbursement with CMS and the prospects for reversal of CMS’s decisions,” Plante Moran said. In Plante Moran’s statement, the

company said it has completed financial statements for Rockwell in 2016 and 2017 without issues and had no disagreements on accounting principles or practices during that time. Rockwell said it is in the process of hiring a new auditor. In the meantime, the Rockwell board is reviewing the concerns described by Plante Moran and “has not made a determination as to whether the financial statements in the Form 10-Q should not be relied upon,” Rockwell said. Rockwell has financially underperformed for years, according to activist shareholders who pressed Chioini over the past several years to improve governance, strategy and operations. On May 22, the Rockwell board voted 5-3 to fire Chioini. The next day, Chioni filed an 8-K report to the SEC that stated his termination was improper because it was done during a special meeting he called on another matter. He filed the report with Klema, who also was terminated. Over the past two months, Rockwell’s share price has dropped from $5.94 on May 22 to $5.12 on June 15 to $4.67 last week. 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 // J U LY 2 , 2 0 1 8

Ann Arbor entrepreneur Dick Beedon dies By Tom Henderson

which he gleefully rang for the entire company to hear when a sale was closed.” Beedon’s last four years were something akin to a miracle. He nearly died in 2014 from a staph infection that led to septic shock. He spent four months in intensive care and by his count having defibrillators used on him 15 times to shock his system back to life. He arrived in New York on April 30 that year to call on a client. As he later told Crain’s, he felt bad, took a couple of Tylenols and went to bed. In the morning, he woke up with a temperature of 104 degrees, called his doctor and was told to get to the emergency room. Instead, he took the next flight home and went to the ER at the UM hospital, where doctors diagnosed a

severe staph infection that had begun to eat away at an aortic valve he’d had implanted 17 years earlier. “There was a leak where it had already eaten through. It was getting ready to blow, and if it had, I’d have been dead in minutes,” Beedon told Crain’s. Beedon remained in the hospital for more than five months, the first four in the intensive care unit. Two days after surgery to replace the valve, he went into total septic shock, had a heart attack and underwent a second operation. In subsequent months, he had a third operation on a perforated ulcer in his stomach and a fourth on an infected vein. “They had the paddles on me 15 times,” Beedon said. “And three times, they got my daughter out of school to come say goodbye to me

because I was going to die. The only thing that saved me was I was in really good shape when this happened.” Beedon had been swimming 3,000 meters a day, or about 2 miles, six days a week for years when the infection hit. In August 2014, Beedon stepped down as Amplifinity’s CEO. On Oct. 7, his wedding anniversary, he was released from the hospital and by December had recovered enough to attend a company board meeting in Chicago. “When Dick became ill, there was an outpouring of support from the community that was overwhelming,” Murray said at the time. “When he made his first visit to the office after leaving the hospital, it had such an emotional effect that he was finally able to come in and see everyone.” In 2015, Beedon founded the MacBeedon Group, a consulting company focused on helping young tech companies grow. He had also since 2015 been on the board of Shared-X, a San Francisco social-impact company whose goal is to help poor farmers around the world increase their crop yields and income. In April, the Shared-X board named its coffee and cacao innovation center in Peru after Beedon. Beedon is survived by his wife, Muffy MacKenzie; his daughter, Frances; two brothers, Jim of San Diego and Tom of Los Angeles; and a sister, Molly. Memorial contributions can be made to the Dick Beedon Innovation Center at gofundme.com/56cwdu or to the Dispute Resolution Center of Washtenaw and Livingston counties at thedisputeresolutioncenter.org/ donate.

dent, Aristeo Construction Co., Livonia, from executive vice president.

Firm PC, Canton Township.

SER-Metro Detroit, Detroit.

MARKETING

REAL ESTATE

J David Cox to president, North America, Search Optics, Ferndale, from head of connected car and Internet of Things, Connect-Auto, Edinburgh, Scotland.

J Drew Chorney to senior vice president, director of retail, Colliers International Group Inc., Detroit, from retail development team leader, JLL, Nashville.

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Richard “Dick” Beedon, a prominent Ann Arbor entrepreneur, died in his home June 17 of undisclosed causes. He was 64. Beedon was born to Amos and Mary Lou Beedon in Holland, Mich., where he developed good work habits by delivering the Detroit Free Press as a boy and a love for long-distance swimming, which remained a lifelong passion. After graduating from the University of Michigan, he took a sales job at IBM in southern California and later founded FANSOnly.com, now CollegeSports.com. After moving back to Michigan and marrying his wife in 2000, Beedon founded Ann Arbor-based uRefer.com in 2008, a company that used social media websites to help companies expand their businesses through customer and employee referrals. It later changed its name to Amplifinity Inc. Beedon was a successful fundraiser, raising seed funding for the company of $2 million and subsequent funding rounds of $3.5 million and $2.7 million. “Dick was a visionary entrepreneur and person of relentless optimism. His joy lit up a room and invigorated a company,” Jonathan Murray, the managing director of Pittsburgh-based Draper Triangle Ventures, told Crain’s. Murray had been one of Beedon’s investors when he was at Cleveland-based Early Stage Partners and again at Draper. “As a true entrepreneurial spirit, he realized that customers are the key to any startup,” Murray said. “That’s why he kept a gong outside his office,

ALY DARIN PHOTOGRAPHY

A near-fatal staph infection forced Dick Beedon to step down as CEO of Amplifinity in 2014.

PEOPLE ACCOUNTING J Angie Boloven to senior accountant, Cole, Newton & Duran CPAs, Livonia, from controller, Drew Technologies Inc., Ann Arbor. Also, Brian Sutton to audit associate from associate, Seber Tans PLLC, Kalamazoo. J Julie Killian to shareholder, Clayton & McKervey, Southfield, from principal/director of assurance.

CONSTRUCTION J

Michelle Aristeo Barton to presi-

HEALTH CARE Dave Spencer to chief marketing officer, Centria Healthcare, Novi, from vice president of marketing, The Money Source (TMS), Birmingham. J

LAW Sara Moore to senior attorney, Nemeth Law PC, Detroit, from associate attorney, Stelmock Law J

J Margrit Allen to county director, Center for Employment Opportunities, Detroit, from program manager and school administrator,

DEALS & DETAILS ACQUISITIONS & MERGERS Detroit-based private equity firm Huron Capital Partners LLC’s Drake Automotive Group Inc., Henderson, Nev., an aftermarket car accessories and restoration parts platform, has acquired DV8 Offroad, Riverside, Calif., a designer and distributor of offroad accessories and wheels. Websites: huroncapital.com, dv8offroad. com J Valvoline Inc., Lexington, Ky., supplier of lubricants and automotive services, has acquired a quick lube J

location at 31510 Ford Road, Garden City, that is now operating as a Valvoline Instant Oil Change service center. Websites: valvoline.com, vioc. com

CONTRACTS J Coretek Services, Farmington Hills, an IT professional services and consulting firm, has a partnership with Total Solutions Inc., Brighton, a consulting and application development firm, to offer clients access to technical experts. Websites: coretek. com, totalsol.com

EXPANSIONS J Crunch Fitness, New York, N.Y., a fitness chain, has opened a 25,000 square-foot gym at 24900 Haggerty Road, Farmington Hills. Phone: (248) 516-3177. Website: crunch.com/locations/farmington-hills J dSPACE Inc., Wixom, provider of tools for developing electronic control units, has opened a new production, testing and shipping facility at 29402 Lyon Pines Drive, New Hudson. Website: dspace.com J Spenga Inc., Glenview, Ill., a workout studio, has opened at 859 W. Eisen-

hower Parkway, Ann Arbor. Phone: (734) 666-8207. Website: spenga.com

NEW PRODUCTS J Carhartt Inc., Dearborn, a workwear brand, has released 1,000 Luke Cage x Carhartt limited-edition hooded sweatshirts. The sweatshirt is similar to the one worn by Marvel Studios’ superhero Luke Cage. It is available at Carhartt company stores. Websites: carhartt.com, marvel.com

Submit Deals & Details items to cdbdepartments@crain.com

SPOTLIGHT Jed Howbert to leave Detroit city post

A top official on Mayor Mike Duggan’s economic development team is leaving the administration to launch a real estate investment and development firm. Jed Howbert, group executive for Howbert planning, housing and development, plans to step down in August after four years in the Duggan administration. Howbert played a central role in development of Duggan’s $42 million Strategic Neighborhood Fund, bringing the Detroit Pistons back to the city, creating the framework for redevelopment on the east riverfront and the city’s acquisition of the former Detroit Terminal Railroad property from Conrail that will be used to construct a 26-mile nonmotorized path across the city.

Longtime New Detroit CEO to retire

Yet another metro Detroit nonprofit CEO has signaled her intent to retire. Shirley Stancato, president and CEO of New Detroit Inc. since 2000, plans to step down by year’s end. New Detroit’s board is Stancato forming a search committee to identify her successor. Named among Crain’s Most Influential Women in 2002, Stancato built a broad coalition of metro Detroit racial justice leaders during her tenure, bringing dynamic nonprofit leaders and a broader base of business representatives to New Detroit’s board, New Detroit Board Chair Rachel Tronstein Stewart said in a statement.

Ilitch spokesman leaving for MEDC

Doug Kuiper, the top spokesman for Detroit’s powerful Ilitch family and their corporate efforts since 2014, is leaving that role to become senior vice president of marketing and communications for the Michigan EcoKuiper nomic Development Corp. He starts Monday, the MEDC said in a statement. He’ll be paid $180,000 annually, the agency said. At the MEDC, Kuiper replaces Emily Guerrant, who was appointed Michigan State University’s vice president and university spokeswoman March 6 by interim MSU President John Engler.

July 2, 2018

CRAIN CRAIN’S DETRO I T ’SBDUETROIT S I NBEUSINESS S S // J U LY 2 , 2 0 1 8

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Viola Building’s $1M renovation in Eastern Market begins Need to know

By Kurt Nagl knagl@crain.com

A $1 million renovation of the Viola Building in Eastern Market began this week as its new owner eyes office tenants and a new retailer or restaurant on the ground level. The 27,000-square-foot building on the southeast corner of Gratiot Avenue and Russell Street sold for $1.99 million last December to 1404 Gratiot LLC, a business entity tied to real estate investor Manoj Manwani. The top four floors of the five-story building are being marketed as office space, and the 4,000-squarefoot first level and 3,000-squarefoot basement is targeted for new retail, said Steven Silverman of Friedman Real Estate, which is handling leasing of the space. Longtime retailer Discount Candles operates on the ground floor of the building, but has been on a month-to-month lease since the end of March, Silverman said. It is likely that the candle shop will lose its place in the building to make way for a new restaurant or retail shop. “If there’s an A-class tenant interested, we’re going to move them out of the building,” Silverman said. The new lease rate of $28 to $30 per square foot will likely price out the candle shop, said Mike Koenigbauer, of Friedman Real Estate. “When you buy a building for $2 million and spend hundreds of thousands of dollars on renovations, the price goes up,” Koenigbauer said. Discount Candles has operated in the building for more than 20

SCHOOLS FROM PAGE 3

The study found about $227 million in high-priority needs and another $182 million in improvements of medium priority. In some cases, this is maintenance that was deferred during the seven years the school district operated in a constant state of financial crisis under emergency management. Now the cost of those deferrals is coming into view. And the 50,000-student school district has limited financial resources and tools to rectify the problem. That’s because the Legislature’s 2016 rescue of Detroit Public Schools with a $617 million bailout doesn’t allow the new debt-free school district — Detroit Public Schools Community District — to issue new debt. Modeled after the bankruptcy of General Motors Co., the legislation split the district in two: DPSCD to operate the existing schools and DPS to collect taxes to service $1.63 billion in old debt from eight capital bond issues between 1998 and 2010. The old DPS also continues to collect the 18-mill non-homestead property tax on commercial and industrial property and second homes until 2024. That money, about $70 million per year, is dedicated to repaying the state’s general fund for the 2016 bailout. The 2016 bailout legislation included $150 million in startup costs for DPSCD to improve programs and facilities, including up to $25 million for deferred maintenance projects. DPSCD does have the ability to

J Candle shop likely to be replaced by new restaurant or retail tenant J Renovations scheduled to be complete by Sept. 1 J Goal is to have entire building leased out in next three to four months

A $1 million renovation of the Viola Building in Eastern Market began this week.

KURT NAGL/CRAIN’S DETROIT BUSINESS

years and has been a pillar of the community, said Star Lamar, co-owner of the store. It was set to close after its lease expired in March, but Lamar partnered with original owner Donna Adams and

worked out a deal with the building’s new owner to “carry on the legacy,” Lamar said. “We’re trying not to move and we’ve been working back and forth with the owner, and so far the own-

er has been graciously working with us,” she said. “But our plans for the future are that we may be moving. We’re hoping to stay here for as long as we’re able to.” Lamar declined to say how much

ask Detroit voters for a sinking fund millage of up to five mills, Vitti said. But, based on Detroit’s still-depressed property values, that tax would generate only about $20 million annually. “That’s, again, scratching the surface of what we need to do here,” Vitti said. Plus, Detroiters are already paying a whopping 96 mills in property tax, 13 mills of which are dedicated to paying off the old capital debts of the existing school buildings, some of which have been shuttered. Vitti is not advocating for a sinking fund millage or revisiting the 2016 legislation to give the new school district the ability to borrow for capital improvements. At this point, Vitti said he’s just trying to “define the problem.” State Budget Director John Walsh, who shepherded the DPS bailout legislation for Gov. Rick Snyder, said the district still needs to assess what it plans to do with 30 closed school buildings as well as those that are underutilized. In 2016, the Palmer Park elementary’s enrollment was 48 percent of its 1,115-seat capacity, according to the district’s annual financial report. “What I would like to see as a taxpayer — let alone somebody in Lansing — is what is their overall plan for the number of schools they need to effectively educate students?” Walsh said. “These are tough decisions. But at some point they’re going to have to say which buildings are going to remain open, which ones are not.” Closing more schools would disrupt neighborhoods and any academic progress being made, Vitti said. “Without thoughtfulness of offer-

ing something new and better, it’s going to replicate the decisions that were done in isolation by emergency managers,” he said. The Detroit district is still evaluating whether to sell its remaining vacant buildings, while some still need to be boarded up, Vitti said. The looming facilities crisis at DPSCD comes after Vitti has been on the job for just over a year, working to try “build systems of normalcy” for an organization that had been in perpetual free fall for the better part of two decades.

At the same school board committee meeting where Vitti laid out the sobering report from OHM Advisors, the superintendent offered a plan for creating career academies at all 22 of the district’s high schools — an educator’s response to the demands of employers. The academies would have programs revolving around high-demand career fields, such as engineering, robotics, health sciences and information technology. But creating that kind of workforce readiness requires stable learning environments.

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Right now, the Detroit school district is “juggling” students from one classroom where the roof is leaking to another classroom, Vitti said. “It interferes with day-to-day instruction, which then interferes with student achievement,” Vitti said. “There are critical components to creating a sustainable, long-term, strong school district that, right now, we don’t have immediate solutions to — and this is one of them.”

REAL ESTATE

SURVEY ANALYZE

the shop is paying in rent. Building renovations include replacing the roof and installing new windows, putting in a new HVAC system and fixing up the ground-level storefront. The project is expected to be complete by Sept. 1. Koenigbauer said the goal is to have the entire building leased out in the next three or four months. He said there has been high interest, but potential tenants want to see the finished product first. “By the end of summer, the entire building is going to be transformed,” Silverman said. The Viola Building previously belonged to Jordan Wolfe, a 2011 Crain’s 20 in their 20s honoree, who had owned several other buildings in the area. He and business partner Kyle Polk were planning a $35 million to $40 million development. Across Russell Street from the Viola Building, a $106 million mixed-use development called the Eastern Market Gateway is in the works. As for the candle shop, Lamar said they are looking for other locations in Eastern Market in case they are squeezed out of current digs. “People love this store,” she said. “You don’t know how many people want this place to be here.”

420 Howard St., Petoskey, MI 49770

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

STOCKX FROM PAGE 1

“We literally created day-trading in consumer goods,” StockX CEO Josh Luber said in an interview. “This is like oil futures and frozen orange juice — true commodity trading. People made thousands of dollars and never touched the product.” At less than 29 months old, StockX is one of Detroit’s fastest growing startups. The company launched with a few dozen employees inside Gilbert’s family of companies in February 2016 and is employing about 300 in Detroit and about 50 in Tempe, Ariz. The e-commerce website is a resale market for buying and selling highly coveted sneakers, handbags, watches and street wear after they sell out in retail stores. In standardizing the sale of unused merchandise, StockX sorts out authentic luxury goods from the counterfeit merchandise that has been known to flood eBay and other online marketplaces. But it’s the LeBron shoe experiment bypassing retailers like Footlocker, Finish Line and even Amazon where Luber sees the future in creating investment indexes for sneakers and other luxury consumer goods similar to those in raw material commodities on the stock exchanges in New York, Chicago and Tokyo. “We don’t do that at scale yet, but we will. That’s the evolution of the business,” Luber told Crain’s. “At some point, you’ll be able to invest in the Jordan Index or the Nike Index and then be able to day-trade sneakers without ever taking possession.”

Data integration jumpstarts business StockX is the brainchild of Luber and Gilbert, whose entrepreneurial ventures have strayed far away from the business, selling mortgages via the internet, that made him a billionaire. Three years ago, Gilbert approached an employee in one of his companies about how he could develop a better way for selling and buying luxury goods online. The unusual late Friday afternoon request came after Gilbert’s children bought sneakers on eBay. “My first thought was, you might have the wrong guy, as I was wearing loafers at the time," said Greg Schwartz, now the chief operating officer of StockX. “IAt the time, Luber was working for IBM and running Campless, a small startup data business listing the historical value of collectible sneakers with information largely based on sales data from eBay transactions. had this idea that, well, if you understood sneaker pricing, if you understood the asset price, you could very easily look at someone’s sneaker collection the way you look at a stock portfolio,” said Luber, a native of Philadelphia who counts 350 pairs of sneakers among his personal collection. Campless was to sneakerheads what Beckett magazine is to baseball card collectors and Kelly Blue Book is to vintage car aficionados. Before Campless, which morphed into StockX’s price guide, the sneaker resale market “was the Wild Wild West,” said Jordan Geller, a Portland, Ore., sneaker collector and reseller. “There was no telling what people would pay for a pair of shoes,” Geller said. “Now there’s actually a gauge, a

Need to know JJStockX is doing $2 million in sales daily after fewer than 29 months in business JJGilbert-owned stock market of things expanding from sneakers to other luxury goods JJDetroit company moved into new authentication center in Corktown last week

place where you can go and see what price the shoes are going for. That has really revolutionized the sneaker resale business.” In exploring Gilbert’s concept, Schwartz found Luber, who had become one of the foremost experts on sneakers and the subculture that encompasses collectible kicks. They flew him to Cleveland to attend a Cavaliers game with Gilbert, owner of the basketball franchise. During that meeting, Luber and Gilbert found commonalities in their concepts and decided to combine Luber’s sneaker data with the technical-know-how of Gilbert’s data-curating business. “We were basically trying to build the exact same thing,” Luber said. “That’s really the crazy part about this.”

Expanding the market StockX is not alone in trying to disrupt the retail and secondary markets for luxury sneakers and consumer goods. They have several online competitors, such as Stadium Goods and GOAT. The latter merged earlier this year with Flight Club, a hybrid online and retail after-market seller of sneakers that’s been around for 12 years. All of these online marketplaces are still operating at the whims of the shoemakers, which dictate when collectible shoes are released and at what quantities, said Kemar Newell, founder and CEO of JustFlip.com, another online StockX competitor. “This went from being a shadow economy to now in some gray area being validated publicly — and that’s not with the support of Nike or Adidas, the guys who have true control of the market,” Newell said. “We’re all realizing the consumer is the same across the retail and secondary channel. The problem is there is not enough inventory … on the primary channel, which causes these items to be highly valued on the secondary channel.” For StockX, what started as a stock market for sneakers has morphed into a broader, and widening, platform of creating a standardized secondary market for luxury goods. “We see a lot of opportunities to take these core verticals and expand horizontally to any category that isn’t a complete one-of-a-kind — like a house or a unique piece of art or anything that’s not totally commoditized, like a plastic cup,” Schwartz said. Company leaders have compiled a list of “literally hundreds” of consumers goods with limited availability that could be commoditized and sold on StockX, such as wine and prints of artwork, Schwartz said. StockX has begun selling the highend Japanese clothing brand Bape as well as Supreme, a coveted fashion line that has a variety of branded accessories. There limitations to what StockX can sell. The company recently turned away a request from a seller to sell a Supreme-branded pinball machine. “You can’t sell a pinball machine on StockX,” said Joe Boehm, StockX’s

LARRY PEPLIN FOR CRAIN’S

Kevin Irwin II (right), star of “MKT Watch,” and Kent Nichols, director, film the weekly web show on the sneaker market and StockX on the 10th floor of the Compuware building in Detroit.

CHAD LIVENGOOD/CRAIN’S DETROIT BUSINESS

Sadelle Moore, a sneaker authenticator, examines two different shoes under a black light to look for signs that one of the shoes is a fake. StockX checks for variations in stitching and trim of every pair of shoes sold on its secondary market e-commerce website.

StockX CEO Josh Luber holds a Cleveland Cavaliers replica 2016 NBA championship ring that was paired with a special release of Cavs superstar LeBron James’ rookie season Nike sneakers and a hardwood box made from the Cavs’ home court. The 46 pairs of highly collectible sneakers sold on StockX’s website for an averge of $6,000.

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

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senior vice president of operations who came to the company with a background in manufacturing and logistics. With each additional brand though, the company has to strengthen its knowledge base of the product and train authenticators in Detroit and Tempe to spot the fakes, Luber said. “For every single product, we have to find the expert for that product,” he said. The rate of fake items sent to StockX’s authentication centers is about 2 percent. When they started in early 2016, the fake rate was upwards of 15 percent, Luber said. “Everybody was testing us,” he said. “And now, if you have a fake pair of shoes you want to sell, go sell ’em on eBay.” Scott Newman, StockX’s new head of authenticating Bape clothes, moved to Detroit from Los Angeles, where was running a consignment shop and website for Bape and Supreme brand clothes. “I would buy Bape stuff from his website,” Luber said of Newman. Newman sold his stake in his small business and brought two of his employees to Detroit.

cramped space inside One Campus Martius, putting employees on Gilbert’s mock Cavs basketball court and converting a loading dock into an authentication center for processing hundreds of shoes, handbags and hoodies each day. On the 10th floor, a conference room for the company doubles as the production studio for the company’s YouTube show, MKT Watch. Employee Kevin Irwin II hosts the show and talks about the rise and fall of the value of sneakers the way a CNBC analyst talks about the ups and downs of a Detroit automaker’s stock. Last week, StockX moved its larger authentication center from a rented warehouse on Fort Street to 20,000-square-feet of space inside Quicken Loans’ data center building on Rosa Parks Boulevard in Corktown. In the older space, the company was authenticating 8,000 pairs of sneakers each day, Luber said. “It’s amazing to me that StockX is able to move as many pairs of shoes in and out of the door without having to inventory them in a warehouse,” reseller Geller said. Company execs believe StockX’s new space will tide them over for 18 to 24 months. Luber wants to build a consolidated headquarters and authentication center in Detroit, somewhere outside of the tight quarters of Gilbert’s Campus Martius office buildings. To expedite and simplify shipping, StockX is planning to add an authentication center on the East Coast later this year and then look to Europe and Asia, Schwartz said. “We see a massive opportunity when you start to look at Europe and Asia,” said Schwartz, noting StockX sold merchandise organically in 140 countries last year. But where exactly this business will be in five years is anyone’s guess. "We’re startup guys,” Luber said. “We look at where StockX is going to be in five days around here. Whether we get to be a true competitor with the New York Stock Exchange and NASDAQ within five years is TBD. “We’re just five days at a time at StockX.” Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

Growing quickly EBay has stepped up its efforts to root out fake merchandise. Last fall, the online marketplace giant launched an authentication service for luxury handbags for certain brands, such as Louis Vuitton, Gucci and Prada. “In regard to counterfeits, they are not welcome on eBay, and we’re committed to aggressively combating the sale of counterfeit goods,” a spokeswoman for eBay said in an email. EBay touts having 1.2 million sneaker listings on its website daily, selling a pair of shoes every 1.5 seconds. StockX’s quick rise to $2 million in daily sales has turned into logistical challenge for the company. In the past 12 months, the company tripled its workforce in Detroit and Tempe and has more than 100 jobs posted, Schwartz said. StockX has been working out of a

LARRY PEPLIN FOR CRAIN’S

Boxes of shoes at StockX.

FOCUS: HOPE FROM PAGE 1

To support new efforts and put the organization on financially stable ground, Focus: Hope laid off 31 employees this year. It also is looking to forge new training partnerships and cut costs and increase revenue by selling some of the 18 buildings it owns in the city.

Renewing advocacy Working with nonprofit consultancy and investment firm Mission Throttle, Anthony said, Focus: Hope developed a strong strategic plan to assure it can stabilize the benefits of the restructuring process and build a future that is “measurable, impactful and consistent with its mission and new vision of empowerment and education.” While the nonprofit has been focused on programs for many years, Anthony said they also need to look at other issues that affect area residents. “We see a need to be able to speak externally and influence some of the root causes of racism, poverty and social injustice in Detroit,” she said. “One of our goals is to be sure that people are informed and actively involved in the future of their community.” The organization recently named Jasahn Larsosa, who ran some of Focus: Hope’s neighborhood programs, as its first director of community advocacy and empowerment. His first charge is organizing a free, July 13 election forum for the 13th congressional district candidates on Focus: Hope’s campus, which will be open to the public.

Focus: Hope job programs JJCareer-readiness training for jobs in truck driving, manufacturing, laundry services and health care as patient sitters or patient care associates. Flex N Gate, Ascension Michigan and Henry Ford Health System are hiring employees who come through the readiness and subsequent skilled training. JJRetention-and-engagement support to ensure newly trained and existing employees stay in jobs JJSkilled training in industrial advanced manufacturing, information technology and production JJPre-apprenticeships and apprenticeships for CNC operators, network technicians and controls technicians.

Need to know JJFocus: Hope created three-year strategic plan for its next 50 years JJPlan includes return to advocacy roots, refocused training programs JJNonprofit intends to restructure employee base and buildings to reduce costs and forge new partnerships

“We certainly hope that as it’s going through its reinvention, that workforce (readiness and training) is part of that.” — Lavea Brachman, vice president of programs, Ralph Wilson Jr. Foundation

Restructuring plans “One thing we were doing in the past, because of our passion, was actually keeping employees in place (who) were not funded,” Anthony said, adding that Focus: Hope ended that practice. Focus: Hope laid off 31 employees this year as grants ran out, programs ended or as it incorporated greater operating efficiencies, Anthony said. The organization now has a staff of 179. The buildings on Focus:Hope’s northwest Detroit campus stand as a testament to the nonprofit’s heyday as a tier one automotive supplier and related job-training programs. But several of those buildings are underutilized. So a year ago, the nonprofit moved its administrative offices from its former headquarters building at 1355 Oakman Blvd. to its former machinist training institute building and sought an employer to lease the headquarter space. Shortly after Anthony became interim CEO earlier this year, Focus:Hope’s plans shifted to selling that building and at least another. She expects to close on the sale of the headquarters building within a month, she said. Focus: Hope also listed several other buildings for sale so it can explore revenue potential and the possibility of bringing new employers and training opportunities to its campus. Listings include: J A Southwest Detroit distribution site at 6353 W. Vernor Highway J About 292,000 square feet of industrial space at 1360 and 1400 Oakman Blvd., including the Center for Advanced Technologies, currently leased by Android Industries. The space previously housed the non-

profit’s tier one auto supplier business. Focus: Hope’s conference center is also in the building, along with space for youth programming. J About 112,540 square feet of industrial research and warehouse space in three buildings at 1200 Oakman. That space includes the former Machinist Training Institute. “We are not planning to sell all of these buildings,” Anthony said. “What is listed is created to get the best configuration for ourselves and our partners, space to grow and strengthen our impact through synergistic partners and help the community.” She added that Focus: Hope will remain in either the 1200 or 1400 Oakman buildings, possibly through a sale/leaseback of space. “The types of companies we’re talking (with) appreciate the value of Focus: Hope and actually see the asset having (us) here brings to their company,” Anthony said. “We are getting a very strong and positive response. It really lets us know things are really booming in Detroit.”

New and revised programs With dedicated federal dollars, Focus: Hope will continue operating its Head Start center for children, from birth to 5 years old, and the senior food program that co-founders the Rev. William Cunningham and Eleanor Josaitis were instrumental in establishing in Detroit and across

the country. The Detroit program now serves 44,000 seniors monthly. It also provides on-site services helping people apply for Medicaid, housing assistance and food assistance, along with basic financial literacy education, transportation assistance for training program clients and doula services and breastfeeding support for pregnant women and new mothers. “We’ve made a strategic decision that all of our programs will have a strong education component, but that’s not enough,” Anthony said. “You also have to empower people to be independently successful and be able to contribute...to the community, themselves (and) the economy.” With that in mind, the nonprofit this year expanded its workforce-readiness programs. The training provides academic enrichment and soft skills, such as helping job candidates show up on time, dress appropriately, work with direction and as part of a team, and exposes clients to the requirements, workplace environment and expectations for the jobs they are considering so they are prepared and more likely to stay in the jobs, Anthony said. Focus: Hope also expanded its retention support services to ensure newly trained and existing employees stay in jobs and launched a skilled training program for laundry services production worker. It’s now in the process of developing skilled training in robotics.

Donating to the cause The nonprofit has attracted $1.3 million in new grant funding from the Charles Stewart Mott Foundation, Magna Foundation and Ralph C. Wilson Jr. Foundation in support of those efforts. The Wilson Foundation’s $500,000 grant, donated in the spring, supports the employer-driven, workforce readiness training programs Focus: Hope is developing because it believes those soft skills are essential for people to succeed in the 21st century economy, said Lavea Brachman, vice president of the foundation’s programs. She said the gift is restricted to proof of concept for the employer-driven workforce work. “We certainly hope that as it’s going through its reinvention, that workforce (readiness and training) is part of that,” Brachman said. Focus: Hope also secured $2 million in new funding from the state to fund its robotics skilled training, work-readiness enhancements and logistics. And the nonprofit secured a $135,000 21st Century Learning Center grant from the Michigan Department of Education as renewed funding for the third year of the Children’s Defense Fund Freedom Schools after school and summer school reading enrichment programs it operates. Focus: Hope’s 2018 annual Heroes for Hope Gala, held April 20, attracted 630 guests in celebration of celebrate its 50th anniversary and netted a record $980,000. With that revenue, grants, continued support from board members and local corporations and new, undisclosed in-kind and cash support from Google, Focus: Hope is operating on a $28.5 million budget this year. Last year, Focus: Hope earned $30.9 million in revenue, according to a spokeswoman for the nonprofit. Sherri Welch: (313) 446-1694 Twitter: @SherriWelch

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ARTPRIZE

ArtPrize drew 500,000 people of all ages to Grand Rapids last year and boasted a $33 million economic impact.

ArtPrize changes format amid operating losses “We think we’ve laid the groundwork to generate new ways to inspire our visitors … artists … and the community. It’s important we keep the event engaging and intriguing and we surprise and delight people.”

By Sherri Welch swelch@crain.com

The nonprofit behind the annual international ArtPrize festival in Grand Rapids, which draws more than 500,000 visitors from near and far, is shaking things up in its 10th year. The organization announced last week that it plans to make the widely popular 19-day arts festival a biennial event and make room for a citywide art project commissioned by one or more artists dubbed “Project 1,” starting next year. The traditional free festival and new citywide art project will alternate years after this fall’s event, which takes place Sept. 19-Oct. 7. Why change the format when it’s been a success in terms of the number of people its drawn — 519,000 last year — and the $33 million economic impact organizers said it brought Grand Rapids last year? The goal is to change things up after the festival’s first decade and inspire even more conversation about contemporary art, Executive Director Jori Bennett said. “From the beginning, ArtPrize has always thought of itself as an evolving experiment,” she said. “We think we’ve laid the groundwork to generate new ways to inspire our visitors … artists … and the community. It’s important we keep the

Jori Bennett

event engaging and intriguing and we surprise and delight people.” Still, the shift comes following operating losses of $271,513 last year and $188,482 the year before when it paid off debt tied to early investments in an app to allow the public to vote and an online platform on its website that enables venues and artists to share information about their space and projects. Total reported revenue for ArtPrize hovered around $4.5 million between 2013 and 2015 before dropping to $3.56 million in 2016 and $3.34 million last year. Bennett attributed the 2017 loss to unanticipated production costs. She said the shift to the new format has nothing to do with them, though, and it won’t be any less ambitious financially than ArtPrize has been. The nonprofit behind both events, ArtPrize Grand Rapids, will shift the $500,000 prize budget for ArtPrize to

artist commission and production support for Project 1 and subsequent citywide commissioned public art installations. ArtPrize, which operates on an annual budget of $3.2 million-$3.5 million, already has more than 20 multiyear commitments from corporate funders and private foundations lined up in support of both events, Bennett said. She served as director of business development for ArtPrize from 2015 until she was named interim director in January and its fifth full-time director in April. Bennett succeeded Christian Gaines who resigned in January after leading the organization for five years. The multiyear funding commitments have come through the festival’s ability to demonstrate strong attendance, engagement through voting and impression rates on social media and how long people are

spending walking around the event, she said. “We wouldn’t be in the position to make this change if we didn’t have confidence and support from our funders.” During its first 10 years, ArtPrize has made changes to the festival from time to time. The festival launched in 2009 with a grand prize of $250,000, funded by the Dick and Betsy DeVos Family Foundation and awarded by public vote. Five years later, the festival added a juried grand prize as it grew its base of supporters. “The fun thing that came out of that was that people were able to compare and contrast what they liked with what the jury liked,” Bennett said. Since 2014, two grand prizes of $200,000 each, one by popular vote and one by jury vote, have been awarded. With two grand prizes, category prizes and a special juried award for the best-curated venue, the total amount awarded each year is $500,000. ArtPrize also awards $280,000 in grants to support artists, venues, curators and educators participating in the event. Before last year, the public could only vote on a winner from among the top 20 public choices, and the jury of art experts could only choose a winner from among its top 20. Last

Need to know

JJGrand Rapids program shifting to biennial format JJIntroduces new public art project in alternate years JJNonprofit has seen operating losses, changes in leadership

year the festival, which included the works of artists from more than 54 countries including a significant number from the Detroit area, opened up the voting, allowing both to vote on each other’s choices. Going beyond its 3-square-mile footprint in downtown Grand Rapids, ArtPrize also introduced satellite venues for art installations at places including Meijer Gardens and Site Lab. The launch of Project 1 is the next evolution, Bennett said. The nonprofit organizer will commission either a single artist or a handful of artists for the project. Leading the effort is Kevin Buist, who was promoted to artistic director from director of exhibitions early this month. “The artist or artists we select will potentially have their own following and could potentially be internationally renowned,” she said. “That’s going to draw a different spotlight to the city than ArtPrize (currently) does.”

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www.crainsdetroit.com Editor-in-Chief Keith E. Crain President KC Crain 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

The Detroit News and the Detroit Free Press have a joint operating agreement for the business side of their publications.

JOA

FROM PAGE 3

Ad revenue at U.S. newspapers last year fell to $16.5 billion and has been steadily declining since a peak of $49.4 billion in 2005, according to data from the Pew Research Center’s annual Project for Excellence in Journalism. Rick Edmonds, a media business analyst with nonprofit Poynter Institute in St. Petersburg, Fla., told Crain’s for a 2015 story that newspaper deals generally have been a failure. “Really, in most any place, it actually damages both newspapers,” he said. “There has been strong financial pressure to dissolve them.” More than 20 JOAs have been terminated, often with one paper going out of business or becoming an online-only news outlet. Such an example is Seattle, where the Post-Intelligencer became a purely digital newspaper in 2009, two years after a legal settlement ended a 26-year JOA with the Seattle Times, which remains a print daily. Other major markets that saw JOAs end include Denver, Miami, Cincinnati, Pittsburgh, San Francisco, St. Louis and Columbus. There are believed to be five JOAs still active. The intent of the operating agreements was to maintain two different editorial voices in a city, Edmonds said, but the business model hasn’t worked because savings realized from consolidations doesn’t offset competition. “In practice, even with these advantages, they continue to compete with each other for advertising and readers,” he said. “One just keeps withering away. It made most of them untenable over time.” In a conversation last week, Edmonds said his negative outlook on JOAs hasn’t changed, even if Detroit’s partnership is profitable. “The record continues to show they have not really brought sustain-

ability,” he said. “There’s barely enough business to support one paper in a given town much less two.” If Detroit’s dailies and Michigan. com, which handles advertising sales, marketing, printing and delivery functions of the partnership, have turned a profit, they did it through a blend of new tools and strategies outside of their core newsprint products and through old-school, corporate bloodletting. In recent years, they sought to increase revenue by investing in digital efforts to get their journalism in front of more eyeballs and have added money-making endeavors, such as events and custom content. They also reduced head count by the hundreds through rounds of buyouts, early-retirement incentives, layoffs and eliminating or not filling jobs. There have been mandatory unpaid furloughs and pay freezes. Newsroom labor contracts — the current three-year deals expire in February 2019 — have done little to stem the reductions. Functions such as copy editing and design at the Freep were shifted out of state. Moreover, the end of the JOA could hasten further declines or save one newspaper at the expense of the other. The smaller Detroit News is the likelier of the two to succumb. Free Press corporate parent Gannett Co. Inc. owns 95 percent of the JOA partnership and pays millions of dollars annually to subsidize The News, per the contract terms.

Whys and hows The JOA’s fate is in the hands of corporate owners: McLean, Va.based Gannett (NYSE: GCI) owns the Free Press, and New York City hedge fund Alden Global Capital LLC manages The News through its ownership of Digital First Media. Jon Wolman, publisher and editor of The Detroit News, declined to discuss the JOA. A message left via email with Digital First Media was not answered.

Gannett, while publicly traded, also declined to discuss the Detroit situation. “We don’t break out financial performance for individual operating units in our reporting,” a Gannett spokesman said via email. John Gallagher, president of Newspaper Guild of Detroit Local 34022, and a Free Press business columnist, said via email, “Gannett has never told the Guild whether Detroit papers are profitable or not. Can’t say if the JOA trigger point is coming or not. The company just doesn’t share any of that with us.” However, Gallagher did share insight suggesting the partnership may have been in the red years ago. “As I understand it, once, during the Great Recession when we agreed to the 6.5 percent pay cut, the company did plead poverty and under the bargaining rules allowed a national Guild financial rep to examine the books in confidence,” Gallagher wrote in his email. That rep then gave the local Guild just “yes” or “no” as to whether or not concessions were appropriate. “He said ‘yes,’ so we agreed then to the concessions. That’s the only time that has happened in my memory. The company has given no indication whether it’s making money today.” The level of profitability could drive a decision on the JOA’s fate. As majority partner, Gannett could view opting out of the partnership as a way to save money because it wouldn’t have to pay The News’ expenses or share any theoretical profits. The partnership also pays the owner of The News an annual sum beyond any profits. That amount will total about $45 million. When the JOA was modified in 2009 because the newspapers reduced the number of home delivery days, the payment amounts were modified, reducing them about $6 million in total. However, partnership executives over the years have said advertisers prefer two newspapers. The News traditionally caters to conservatives

CRAIN’S DETROIT BUSINESS

on its opinion pages, while the Free Press leans left. They also generate more ad revenue than a single newspaper would. Regardless of profits, the JOA expires in December 2025. At that time, either newspaper can end the partnership. If neither partner wants to end it then, it automatically renews through 2030.

Complicated history The current JOA supplanted the 100-year JOA formed by Gannett and now-defunct Knight Ridder Inc., the former Freep owner, that took effect in 1989. This agreement was born of a convoluted newspaper ownership history in Detroit: Gannett bought The Detroit News and other newspapers and several television stations for $717 million in 1986 from the Detroit-based Evening News Association. In 2005, Gannett bought the Detroit Free Press for $262 million from Knight Ridder and sold The Detroit News for $25 million in stock to Denver-based MediaNews Group Inc., which in 2013 became Digital First Media. Alden Global Capital in March 2010 acquired a large, non-controlling stake in MediaNews Group as its parent, Affiliated Media Inc., also based in Denver, emerged from bankruptcy. Digital First Media was formed in September 2010. It manages MediaNews Group and former Journal Register Co. newspapers, which were merged under the Digital First Media name. Alden, founded in 2007 by socalled vulture investor Randall Smith, has been under a barrage of national criticism for deep cuts at its newspapers despite a reported 17 percent profit margin and nearly $160 million in profits that are not being reinvested in the newsrooms. The Detroit News has been largely spared of these cuts because of its newsroom labor agreement. Bill Shea: 313 (446-1626) Twitter: @Bill_Shea19

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FOOD

Incoming halls

Halls and markets counteract some oft-cited restaurant industry pitfalls, according to the report and conversations with several operators. They give established and emerging chefs a more secure, less costly avenue for experimentation. And many offer educational services or act as incubator-style support systems. They give diners choices too. Unlike a traditional mall food court, though, they boast unusual concepts. Think cricket-filled tacos, nitrogen ice cream or sushi ingredients combined Chipotle-style. Design is paramount. Motivations are creativity and entertainment, over value.

Detroit Shipping Co.: Owners of a food hall made from 21 shipping containers expect to open July 23 in the Cass Corridor. The half-indoor, half-outdoor venue will have six food vendors and entertainment.

The following projects are open, in the works or under consideration:

FROM PAGE 3

Galley Group: Pittsburgh food hall concept creator Galley Group Inc. plans to open an incubator space with four chefs in the Bedrock LLC-owned former Federal Reserve Building in downtown Detroit this fall. Stone Soap: An east riverfront mixed-use project by Banyan Investments LLC would include an European-style food market of around 10,000 square feet. Options would be somewhat upscale and involve local food entrepreneurs, CEO Aamir Farooqi told Crain’s. The redevelopment of the vacant building is slated for 2020 completion.

Arriving in Detroit? Michigan Central Station’s grand, 110,000-square-foot concourse doesn’t appear to have much in common with a commercial space a 13th of the size that’s planned for a development on the nearby Tiger Stadium site. But both the Corktown depot’s new owner, Ford Motor Co., and The Corner developer Larson Realty Group are eyeing food hall-style venues to help anchor their footprints along Michigan Avenue. Ford Executive Chairman Bill Ford Jr. said in a previous interview that he imagines the redeveloped Michigan Central Station’s first floor as a walkable space open to the public, filled with restaurants, produce and retail. He told Crain’s he envisions the “market hall” as a gathering place similar to New York’s Hudson Yards and San Francisco’s Ferry Building — bustling complexes that include food halls. “There’s no question in my mind that a project like that, the community, the campus at large, the whole Corktown community is a perfect example of where a food hall not only would be needed, but would do well to serve that community...,” said Nicholas Giammarco, creative principal for Birmingham-based Studio H2G. The design firm has worked on food halls in Europe, Texas and Illinois. It’s also in talks for a downtown Detroit hall that would be announced in about a year. Bloomfield Hills-based Larson Realty’s $30 million mixed-use building will have an approximately 8,000-square-foot, window-lined corner space that could take shape as a food market/hall, Larson Realty President and CEO Eric Larson said. A single restaurant or bodega are also possibilities. According to Brown of Cushman &

M&A

FROM PAGE 1

However, Michigan is lagging behind the rest of the region in multiple value, with a median multiple of 9.9-times earnings before interest, taxes, depreciation and amortization, compared to 11.8-times EBITDA in the region. Still, Dave Dunstan, president and managing director of Western Reserve Partners, believes the state will catch up. “There’s some seasonability here, and more deals will get done in the fourth quarter,” he said. “There’s a reasonable level of activity, but there’s still a lot of business owners holding back on deals.” Business owners increasingly are delaying selling their businesses be-

Train station: Ford Motor Co. Executive Chairman Bill Ford Jr. imagines the first-floor concourse of the redeveloped Michigan Central Station in Corktown as a walkable space open to the public, filled with restaurants, produce and other retail. Ford is targeting a 2022 completion date. The Corner: The $30 million mixed-use development on the former Tiger Stadium site in Corktown could include an 8,000-square-foot food hall or market, but plans aren’t set. The developer, Larson Realty Group LLC, is still in talks with potential tenants, and it could instead build a large restaurant or corner bodega.

DETROIT SHIPPING CO. VIA FACEBOOK

A food hall and entertainment venue, called Detroit Shipping Co., is expected to debut in Detroit’s Cass Corridor in July with shared seating for six food options and two bars.

Wakefield, this is how shared food spaces will take shape in the city’s downtown and neighborhoods. He said developers of office and residential buildings often increase tenant interest when they anchor their projects with food halls. In urban areas with intersecting transit (a challenge for Detroit), they flourish. “You gotta have the right amount of density, because for these things to be profitable, they have to have heavy foot traffic,” he said. “But I’ve seen a number of office developers where typically their ground floor rent … I’ve seen them dropping (ground floor rent prices) for the right food hall operation, because it drives up

the rents they can earn upstairs.” Other examples are cropping up in Detroit, from Pittsburgh-based food hall concept creator Galley Group’s incubator space set to open downtown in the fall to Detroit Shipping Co., a food hall and gathering spot set to open July 23 in the city’s Cass Corridor. Several more are under consideration or planned. Two successful markets outside the region say they’ve seen recent interest from metro Detroit-based parties looking to learn and replicate. One of those is the 5-year-old Grand Rapids Downtown Market, which has seen rising sales as it helps restaurant startups through a variety

of food-business support concepts. It has a public market with food-stall vendors, an incubator space and a teaching kitchen, said Mimi Fritz, its president and CEO. The other is the 30-vendor, decade-old Chicago French Market owned by Sebastien Bensidoun. He said he’ll be watching Detroit with interest. “I think the momentum is just going to continue to accelerate (in Detroit),” Brown said. “The tricky thing is ... getting enough people in one spot to really be able to justify more food halls or bigger food halls. I think that’s still a work in progress in Detroit, but it’s coming.”

cause they survived the Great Recession, and business is good right now, said Matt Elliott, president of Michigan operations and Midwest region executive for Bank of America Merrill Lynch. “Most business owners have been at this for a while and have a high confidence in their ability,” Elliott said. “If they survived the Great Recession, they’re feeling they are good operators. So, they are walking into the next set of decisions — like additional hiring, investing in the business, etc. — with a lot of personal confidence. The only question they have is: ‘Do I have the chops to continue this, and can my team come far enough, fast enough to take on the challenges of business today?’” Consensus is that most feel they do have what it takes. According to an April PNC Bank survey of Michigan small business

owners, 88 percent are optimistic or moderately optimistic about the national economy, while 89 percent are optimistic or moderately optimistic about the local economy — both figures are historic highs. Sixty-three percent expect an increase in sales over the next six months, up from 56 percent a year earlier. But the next recession is on the horizon, said Raj Kothari, managing director of Southfield-based investment bank and advisory firm Cascade Partners, and those left on the sidelines may face regret. “Everyone is wondering when this (strong economic upswing) will stop,” he said. “Eventually it will. Maybe we’re 18 months or two years away from that. Everyone is forecasting strong growth. But the forward-looking picture is worse, and people are going to get burnt.”

Dunstan is out urging his clients to rethink a sale — if it’s even a consideration. “We believe there are lots of deals out there, but business owners aren’t pursuing them,” Dunstan said. “A sale in this environment is a very compelling option, and I think these owners have to ask themselves if the risk of delaying a deal today with the competitive threats and market uncertainty is worth it. These days won’t last forever.” The reality is business owners are generating healthy returns. But Elliott said the stock market is overheated. The Dow Jones is trading at a record over 24,000, so any gains from a sale leave a seller wondering what to do with their money. “If you’re an owner, your business is not only providing wealth, but it’s a stream of income,” Elliott said. “It’s difficult to replace that income with a

Hudson’s: Bedrock and billionaire developer Dan Gilbert’s $909 million Hudson’s site project downtown, slated for 2022 completion, includes a 20,000-square-foot “street-level market” that from renderings seems to offer more produce and food retail than restaurant vendors. Bedrock declined to comment. Greektown: A food hall-style space with six “curated” fast-casual food offerings, the Monroe Market, opened in May in Greektown Casino-Hotel in Detroit. The small restaurant spaces are operated by Greektown, as opposed to individual vendors. More downtown: Nicholas Giammarco, creative principal for Birmingham-based Studio H2G, said his design firm is in discussions with a developer to open a space that “builds the food hall concept on four pillars: social, culture, education and entertainment ...” A formal announcement is likely a year out. Asian Village: A market or food hall concept would anchor plans for the $50 million-$60 million mixed-use retail project taking shape in Novi.

financial asset in this market. They can’t just take a large slug of proceeds (from a sale) and make them work in the financial markets.” But he said he’s met with roughly 20 companies in the last two weeks that are all performing the “sell-side calculus” of whether the ownership wants to engage a buyer. “It’s a fascinating conversation,” Elliott said. “It’s as emotional as it is rational. For so many business owners, the business is their identity... They are concerned with legacy. Once you sell your business, you lose control of that legacy. And that’s difficult for many people. That calculus is what compels a family to sell more than how high the multiples are — and they are very high.” 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 // J U LY 2 , 2 0 1 8

THE WEEK ON THE WEB

RUMBLINGS

Developers buy 119 parcels for Fitzgerald revitalization

Howbert joins trend in jump to private sector

JUNE 22-28 | For more, visit crainsdetroit.com

he plan to revitalize Detroit’s Fitzgerald neighborhood is moving forward after development partners closed on the purchase of 119 additional parcels from the Detroit Land Bank Authority. Detroit-based developers Century Partners and The Platform LLC finalized the deal Friday as part of their Fitz Forward project that includes rehabbing 361 vacant or blighted lots in the north end neighborhood, including 102 renovated homes, said David Alade, co-founder and managing partner of Century Partners. It previously purchased nine lots from the land bank. Redevelopment of the properties — in the area bounded by McNichols Road, Puritan Avenue, Greenlawn Avenue and Livernois Avenue — is estimated to cost between $12 million and $14 million. It is expected to be complete in two to three years, Alade said. “Detroit is writing a very different story, but primarily in the downtown area,” said Michelle Bolofer, executive director of Century Forward, the development arm of the nonprofit company. “This is one of the first properties focusing on purely residential.” The project, which was announced in April 2017, is the main driver of a sweeping initiative from the city of Detroit to restore the historic neighborhood, which has been plagued for years by disinvestment and abandonment. Work at the 2 acre Ella Fitzgerald Park is expected to wrap up this summer, and the city is also working with nearby University of Detroit Mercy to attempt a revitalization of the neighborhood’s troubled commercial corridor. Contractors were working Wednesday to fix up the initial nine lots of the project. Of the nine, seven have houses that are being rehabbed for affordable housing, Alade said. Of the 361 parcels, there are 233 vacant lots to be revitalized, 92 homes to be sold at market value, 10 homes to be sold as affordable and 26 homes to be demolished. The affordable homes, earmarked for households earning 50 percent to 80 percent of the area median income, will be sold for $50,000 to $60,000 and are subsidized by a $1.6 million Community Block Grant from the city, said Patrick Linder, project manager for Century Partners. The renovation budget for these homes is around $140,000 per house, he said. Developers had originally planned to sell 20 percent of all of the homes as affordable housing. “We were given a specific allotment to provide affordable housing and we maximized the number of units we could redevelop with that,” Alade said. Alade said there are no plans for additional affordable housing. He said the renovation budget for market-rate houses ranges from about $60,000 to $200,000, depending on the unit, and their market value depends on renovation level and completion dates.

KURT NAGL/CRAIN’S DETROIT BUSINESS

The plan to revitalize Detroit’s Fitzgerald neighborhood is moving forward after development partners closed on the purchase of 119 additional parcels from the Detroit Land Bank Authority. Detroit-based developers Century Partners and The Platform LLC finalized the deal as part of their Fitz Forward project that includes rehabbing 361 vacant or blighted lots in the north end neighborhood.

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

25,000

The number of people expected to come to downtown Detroit for the USA Volleyball tournament at Cobo Center from last Monday to this Wednesday.

119

The number of parcels Detroit-based developers Century Partners and The Platform LLC recently bought to move their plan forward to rehab hundreds of vacant and blighted lots in Detroit's Fitzgerald neighborhood.

$8.8M

The cost to resurface a four-mile stretch of Mound Road between 14 Mile and 18 Mile roads this summer.

BUSINESS NEWS The Wellness Center at McKenny, a new integrated behavioral and physical health center that takes into consideration the social determinants of health, will open in Detroit July 13. J Ford Motor Co.’s open house at the Michigan Central Station drew more than 20,000 from June 19 to 25 as onlookers came for a glimpse inside the long-vacant train depot before it undergoes a massive rehabilitation. J Fans’ hopes for the Detroit Tigers have been reflected in the resale market for tickets. The average Tigers ticket on the secondary market now is $62.52, which ranks 17th-lowest among Major League Baseball’s 30 clubs, according to data provided by New York City-based TicketIQ. J The Tigers also last week fired pitching coach Chris Bosio for “insensitive comments” made to a team employee; specifics haven’t been disclosed. J J.C. Penney Co. plans to fill about 600 seasonal jobs in Michigan this summer for the back-to-school rush — up from 500 last year. J Quicken Loans Inc. is putting funding “in the seven figures” and its intellectual capital and skilled employee volunteerism behind efforts to end veteran homelessness across the country, starting in Detroit.

J Loc Performance Products Inc. plans to hire 700 and invest up to $96.5 million in the greater Lansing area and at its home base in Plymouth, armed with a new state grant and upcoming defense contracts. J After a demonstration last Tuesday, May Mobility Inc. officially deployed its fleet of autonomous vehicles in Michigan last Wednesday when the Ann Arbor company began transporting Bedrock LLC employees to and from a parking garage and their downtown Detroit offices. J The owners of Brush Park restaurant Grey Ghost aim to open their dive-inspired casual bar in August across the street, going for an “Up North” resort town bar or VFW hall vibe. J New York-based music-streaming company Spotify USA Inc. will open a regional sales office in downtown Birmingham. J Pop’s Italian Kitchen and Rosie O’Grady’s in Ferndale installed DogSpots, or rentable doghouses for owners who want to visit businesses and keep their canine in a safe spot.

et another top economic development official in Detroit has passed through the revolving door from the public sector to the commercial real estate development and consulting world. Jed Howbert, Mayor Mike Duggan’s group executive for planning, housing and development, will leave the mayor’s administration in August to start a real estate development company. He becomes at least the sixth key official to pursue development and consulting opportunities in the city. The others are: J George Jackson, the former president and CEO of the Detroit Economic Growth Corp. Jackson left his longtime position in March 2014 and later formed Ventra Group LLC, a Detroit-based development and con-

sulting company that has been working with the Ilitch family’s Olympia Development of Michigan on multifamily projects in The District Detroit. J Malik Goodwin, a former DEGC vice president of project management who left the organization in April 2015 to go work for Jackson. J Brian Holdwick, former vice president of business development for the DEGC who left in June 2015. He also went to work for Ventra. J Holdwick’s replacement, Moddie Turay, left the DEGC last year to work on real estate development in Detroit. J Rodrick Miller, who was chosen to replace Jackson in August 2014, launched his own economic development consulting company, Ascendant Global, in April 2017 after 2 1/2 years at the helm.

OTHER NEWS

J The Kresge Foundation is calling on nonprofits and other groups to apply for a share of $3 million that will help fund services at early childhood centers in Detroit. J Detroit Elite FC, a youth soccer training club, will host a regional qualifier of the U.S. Technical Soccer Championship later this year at Ultimate Soccer Arenas in Pontiac. J The international authority charged with overseeing construction of the Gordie Howe International Bridge has a new CEO, Bryce Phillips, just as construction is expected to commence in the coming months on the long-planned second Detroit River span. J Detroit Metropolitan Airport opened its first nursing room for mothers and has more planned. J Crews began last week to string barrels and place signs along a pothole-riddled four-mile stretch of Mound Road in Macomb County from 14 Mile to 18 Mile roads that is to be resurfaced. The repairs are scheduled to be complete by November. J Highland Park School District has left state financial oversight, making it the first time since 2000 that no city or school district in Michigan has an emergency manager.

Nailah Ellis-Brown used a secret family recipe to start her company.

JUSTIN MILHOUSE

Ellis Island Tea gets sweet spot on Sam’s Club shelves T

he recipe for Ellis Island Tea remained a family secret for three generations before Nailah Ellis-Brown decided to share it with the world — first by selling bottles of it out of her car in Detroit. Now, the Jamaican sweet tea has a prime spot on the shelf after Brown signed a deal with Sam’s Club to bring the beverage into the Arkansas-based retailer’s stores nationwide. As of May 15, Sam’s Club began stocking its 600 U.S. stores with 64-ounce jugs of the sweet stuff, according to a post on the company’s website. It sells online for $6.98 per glass jug. The tea is brewed with hibiscus, rosehips, mint, pure cane sugar and Member’s Mark Fancy Clover White Honey, which is a Sam’s Club store brand product. The recipe was created by Ellis-Brown’s great-grandfather, Cyril, who came to the United States

through Ellis Island more than 100 years ago — hence the tea’s name. After convincing her father to share the recipe, Ellis-Brown’s passion for selling the drink grew so strong that she decided to drop out of Howard University after just one semester to dedicate her time to entrepreneurship. “I would have graduated with about $100,000 worth of debt. It just didn't sit well with me that I would start that deep in the hole,” she told Crain’s earlier this year. “I thought, if I'm going to go after something so high-risk like entrepreneurship, why not go after it then?” Ellis-Brown, who was a 2015 Crain’s Twenty in their 20s honoree, rebranded the beverage from Ellis Island Tropical Tea last year through a small-business makeover program by MSNBC. Shortly after, she partnered with Sam’s Club to launch the product at its stores in Michigan, Ohio and Indiana.

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