Crain's Detroit Business, July 23, 2018 issue by Crain's Detroit Business

Southeast Michigan’s top-paid nonprofit CEOs Page 10

JULY 23 - 29, 2018 | crainsdetroit.com

United Shore bets on costly amenities at new HQ Page 3

AUTOMOTIVE

DETROIT AUTO SHOW LOOKS TO CAST NEW LIGHT

CRAIN’S DETROIT BUSINESS PHOTO ILLUSTRATION

June show could re-engage patrons, automakers; and no more black-tie at Charity Preview? By Dustin Walsh dwalsh@crain.com

Detroit will play much larger role in the North American International Auto Show in 2020. Organizers confirmed the show will move from January to June 8 that year, a move that will transform the look and feel of the auto show as well take portions of the show out of Cobo Center and into the city. The decision 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 when experienced instead of seen in static displays, said Rod Alberts, executive director of the show and president of the Detroit Auto Dealers Association, which puts on the show. “When we talk with stakeholders, they see a change in the industry; the

Need to know  Last winter North American International Auto Show is Jan. 2019  New timing should lower automaker costs and entice return of German car makers  Warmer weather could provide more casual, festival atmosphere

way automation is changing how they engage with customers,” Alberts said. “This allows us to take advan-

SPORTS BUSINESS

tage of that trend and of Detroit... show Detroit in a light that most people round the world don’t see — just how beautiful Detroit is in June.” Automakers and the suppliers that produce the technology recognize the public must get hands-on with the future of automotive if they want to drum the excitement typically seen at auto shows, Alberts said. More than half of those surveyed by the Pew Charitable Trusts said

they would not ride in a driverless car if given the opportunity. Concerns over safety and loss of control dominate their worries with the few accidents from autonomous cars dominating headlines. For example, in March, an Uber self-driving SUV killed a pedestrian crossing the street in Tempe, Ariz. “The (customer) engagement side of this is a big deal,” Alberts said. SEE AUTO SHOW, PAGE 21

HEALTH CARE

Losing bids? Many blame hotel space Proton cancer therapy Lack of hotels, Ford Field auxiliary spaces ruin Final Four bid Need to know

By Bill Shea bshea@crain.com

Lack of large hotels, issues with Ford Field auxiliary spaces ruin Final Four bid 

When it came to bidding for the Final Four, Detroit had room at the inn, but not enough inns. The chief reason the city’s bid for any of the men’s basketball Finals Fours for crainsdetroit.com

 2,000 hotel rooms coming, but not in time for this Final Four selection 

Other major sporting events planned

Vol. 34 No. 29 $5 a copy. $169 a year.

NEWSPAPER

2023-26 failed was because the city doesn’t have the capacity to book 400 rooms for each team in separate hotels, the NCAA told Detroit Sports Commission Director Kris Smith, he said. That’s despite an additional 2,000 local hotel rooms under construction or planned. Failing to land the college basketball championship is the latest in a series of sports event defeats for the city: Detroit didn’t get the Major League Soccer expansion team it’s been seeking for two years, and the NFL rejected its bid to host its annual draft for 2019 and 2020. The NBA also has signaled that the city’s hotel room inventory isn’t up to snuff for hosting an all-star game, Detroit Pistons executives have said. SEE FINAL FOUR, PAGE 20

competition beams up By Jay Greene jgreene@crain.com

Competition is getting ready to heat up in Michigan for a controversial new form of cancer therapy. Michigan’s only active center for the treatment, called proton beam therapy, in Royal Oak celebrated its first anniversary, while a second center in Flint may open this fall, some three years after it was completed. All that’s happening as a federal report questions proton beam therapy’s value over traditional radiation therapy. Beaumont Health’s Proton Therapy Center in Royal Oak treated more than 107 patients since it opened June 28, 2017, far surpassing its conservative projection of 40 patients, said Craig Stevens, M.D., Beaumont’s

chairman of radiation oncology. Stevens said Beaumont attracted more than double the patients it projected its first year because its ProteusOne machine “works really well.” He said doctors were able to treat a wider range of cancers because they were able to configure it to do the work. ProteusOne is developed by Ion Beam Applications S.A. of Belgium. “We were able to do more types of patients and larger numbers. We did more head and neck and less gynecology than we expected,” Stevens said. “We actually didn’t do as much lymphoma treatments. Tumors in the heart are greater to treat with protons because the heart dose with protons are much less than X-rays.” SEE PROTON, PAGE 17

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 3 , 2 0 1 8

MICHIGAN BRIEFS

INSIDE

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

Michigan State AD signs on to $750,000 salary

As Michigan State University’s new full-time athletic director, Bill Beekman will earn an annual salary of $750,000 and be eligible for a maximum yearly bonus of $100,000. The five-year contract for Beekman, approved unanimously last Tuesday by the board of trustees, comes with a host of other benefits, including complimentary season tickets for football, basketball and hockey games, membership to a country club and travel and entertainment compensation, according to a copy of the contract released by the university. Beekman became interim athletic director in early February after Mark Hollis retired in late January amid the Larry Nassar sexual assault scandal. Interim President John Engler said at the time that Beekman would be a temporary hire and the university would seek someone externally for the role. This week Engler defended the reversal by saying Beekman has knowledge of the university that could not be found in other prospective hires. An undergraduate alumnus of MSU, Beekman joined the university as an administrator in 1995. He as-

CALENDAR

CLASSIFIEDS

DEALS & DETAILS

sumed the role of vice president and secretary of the board of trustees in 2008. His pay bump puts him in the top tier of competitor schools and is close to the paycheck earned by Hollis, who in 2017 made a salary of $667,000 and a bonus of $222,000, The Detroit News reported.

KEITH CRAIN

OPINION

OTHER VOICES

WSU president to visit cities on cycle trip

The initiative would create a “superagency” and empower it with executive, legislative and, to some extent, judicial functions “with virtually no checks and balances,” Peter Ellsworth, an attorney for Citizens Protecting Michigan’s Constitution, told the court during a special session that last 80 minutes. He said it would make a “fundamental” constitutional revision and should be kept off the ballot. “It is truly a radical departure from what we have had over the years in Michigan,” Ellsworth said. A lawyer with Republican Attorney General Bill Schuette’s office made similar arguments, but Graham Crabtree — an attorney for the group behind the measure, Voters Not Politicians — said nothing in the constitution restricts the subject matter or scope of an amendment. He also said the initiative is an amendment and not a revision because it addresses the single subject of redistricting.

Summer isn’t the offseason for Wayne State University President M. Roy Wilson. For him, fitness and recruitment are a year-round endeavor. Wilson, 63, is preparing to embark on a five-day, 500-mile bicycle ride to four cities in Michigan for a campaign started last summer and dubbed Road Warrior bicycle tour. The idea was born during Wilson’s time as the University of Colorado’s chancellor in Denver, where the bicycle culture has long thrived. “One of the things I recall from the excursions was conversations with local people and perspectives I would gain,” he said. Amid recent political tensions across the nation, Wilson considered the importance of listening to people outside of the university’s primary Southeast Michigan market. So, last year, he started the campaign and traveled 400 miles visiting St. Clair, Midland and Dewitt.

WAYNE STATE UNIVERSITY

Wayne State University President M. Roy Wilson (left) is set for a 500-mile bicycle trip to small cities outside of Southeast Michigan for a unique outreach campaign started last year.

For this year’s tour, Wilson is to depart early Monday morning and return to the university’s campus July 27. Cities scheduled for the trip are Marshall, Holland, Owosso and Imlay City, where he will meet with residents, alumni, prospective students, parents and elected officials at a local restaurant or pub.

Court hears arguments on redistricting proposal

The Michigan Supreme Court last Wednesday heard arguments about whether voters in November should be able to pass a constitutional amendment that would change how the state’s voting maps are drawn or whether such changes could only be adopted at a rarely held constitu-

tional convention, the Associated Press reported. The proposed ballot measure would empower an independent commission to draw congressional and legislative districts every decade instead of the Legislature, which is now controlled by the Republicans. It is a bid to stop partisan gerrymandering, which critics say hurts democracy and denies citizens fair representation. The proposal was certified for the ballot after the state appeals court last month deemed a challenge to be without merit. But a Michigan Chamber of Commerce-affiliated group appealed to the high court, where justices nominated or appointed by Republicans hold a 5-2 edge.

PEOPLE

RUMBLINGS

WEEK ON THE WEB

NONPROFIT ROLL CALL:

WHO’S THE BEST-MANAGED? Nonprofits are the heartbeat of counties across the country. They provide resources to those most in need, bring attention to pressing issues, and help inspire others to make positive change. Now, it’s their turn to be recognized. Nominate the best-managed nonprofit in the Metro Detroit area. We want to know which nonprofits are making the most out of their data – collected or received from outside sources – to make smarter and more impactful management decisions. Applicant must be a 501©(3) with headquarters in one of the following counties:

◆ Wayne ◆ Washtenaw ◆ Oakland

◆ Macomb ◆ Livingston

The deadline to nominate is Monday, Aug. 20 and finalist interviews will be conducted on the morning of Tuesday, Oct. 23.

Place your nominations today 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 3 , 2 0 1 8

ANALYSIS

5 years later, Detroit is alright but not OK Earlier this month, Silicon Valley’s preeminent venture capital firm Sequoia Capital came to Detroit in search of investments. Its representatives remained mum on their intentions, but noted the city’s role in mobility presented opportunities they didn’t want to miss. Five years ago — Detroit filed its infamous Chapter 9 bankruptcy on July 18 — an investment from Sequoia was unthinkable. Detroit’s $14 billion in long-term debt and $327 million budget deficit in 2013 left the city and its businesses with little confidence. City workers, including police and fire-

DUSTIN WALSH dwalsh@crain.com

fighters, saw pay cuts. City services were dismal at best. Now things are looking up, relatively speaking, with a massive influx of

investment from outsiders like FlexN-Gate, which built a 450,000-squarefoot auto parts plant in the I-94 Industrial Park on Detroit’s near-east side with plans to hire more than 400 employees, and Ford Motor Co., which is planning to spend hundreds of millions of dollars to transform Michigan Central Station to house 5,000 workers in Corktown. Countless other retail, tech and restaurants now call Detroit home. These are reasons to celebrate: Detroit is finally getting the R-E-S-P-EC-T it deserves. But you’d have to see the city through some very rose-col-

ored glasses to believe its made anything but incremental steps since emerging from bankruptcy. Detroit Public Schools remain nearly ruined — more than 90 percent of its eighth-grade students are not proficient in mathematics and reading — and the region’s auto businesses on which Detroit’s future is so reliant are facing unprecedented disruption. Detroit’s future may hold opportunity; but it’s anything but written, and a new international bridge does not prosperity make. This city’s success remains under the guillotine.

Salary growth for the region, which is likely higher in the city itself, remains well below the national average. It saw the steepest decline in the second quarter of 2018, -0.8 percent, of any major metropolitan area in the country, according to a recently published report from PayScale.com. We’ve seen many new companies wax poetic about committing a portion of new jobs to Detroit workers, Flex-N-Gate as an example. But even those companies find it challenging because of a lack of skills held by city residents. SEE WALSH, PAGE 20

FINANCE

United Shore bets on costly amenities at new Pontiac headquarters By Annalise Frank afrank@crain.com

United Shore Financial Services LLC spent $17.3 million on a philosophy: Make the workplace a campus for socializing, errands and wellness, and your labor force will pay you back. The company, home to the top U.S. wholesale mortgage firm, uprooted from its 275,000-square-foot Troy base in June. It opted for a costly redesign with an open layout and room to grow. The mortgage lender invested $45 million renovating its new 600,000-square-foot Pontiac headquarters. Of that, nearly 40 percent went toward amenities and design features aimed at making employees happier. “The philosophy is, everything you would do on your way to and from work, you have here,” President and CEO Mat Ishbia said Monday in an interview at the new headquarters, the former Hewlett

United Shore’s new headquarters has a $2.9 million indoor basketball court that’ll also be used for team building.

Need to know

 Wholesale mortgage mogul Mat Ishbia’s company moves to new Pontiac HQ  Of $45 million spent for renovations, $17.3 million went to amenities, aspects aimed at employee satisfaction

Packard Enterprise building at 585 South Blvd. “Grind for eight full hours for us ... We don’t want you here for 18 hours. That’s the concept, everything is here. This is a part of your ... lifestyle.” The priciest element is a $2.9 million indoor basketball court that’ll also be used for team building. The facility also has a Starbucks, a spot for food trucks, putting greens, a doctor’s office, a hair salon, a third-floor training center, an outdoor amphitheater, exercise facilities and meeting rooms themed after Michigan cities. SEE UNITED SHORE, PAGE 22

ANNALISE FRANK/CRAIN’S DETROIT BUSINESS

MUST READS OF THE WEEK Back in the game Serial entrepreneur Jennifer Baird wins investment with new software that aims to predict post-surgical problems. Page 4

jgreene@crain.com

Team’s television ratings fall 44 percent from last season as wins become scarce. Page 7

Mobiliti acquires Condor Mobility as fledgling business looks to find the right formula. Page 14

McLaren Oakland to open $14 million inpatient cancer unit By Jay Greene

Tigers ratings in the tank

Early M&A in automotive subscription business

HEALTH CARE

Food grants take aim at healthy fare Hummus maker, Baobab Fare among recipients of Good Food Fund grants. Page 4

McLaren Oakland in Pontiac will become the first hospital in the 13-hospital system based in Grand Blanc to add an inpatient cancer unit under the Karmanos brand, Crain’s has learned. The $14 million project is a complete renovation of the hospital's sixth floor west tower to create a 21bed, 19,000 square-foot cancer unit, said Margaret Dimond, CEO of 328bed McLaren Oakland. The unit is expected to open by early September with an open house Aug. 14.

Need to know

McLaren Karmanos’ 15th cancer unit will feature 21 private beds, its own ICU and dedicated staff 

 Types of cancers treated will include breast, lung, ovarian and cervical with more advanced care performed at Karmanos’ main hospital in Detroit

The Barbara Ann Karmanos Cancer Institute was acquired by McLaren in 2014 with a promise to invest at least $80 million into the Detroit-based hospital and Southeast Michigan operations. Over the

past five years, McLaren has converted 14 cancer units into Karmanos centers under Gerold Bepler, M.D., CEO of Karmanos. The Pontiac unit will be the 15th and first new one. “Opening an oncology unit brings us closer to our strategic goal of setting new standards of health care for the community and our patients,” Dimond said. “We are committed to providing exceptional inpatient cancer care to those requiring surgery or hospitalization for disease complications.” SEE MCLAREN, PAGE 18

C R A I N â&#x20AC;&#x2122; S D E T R O I T B U S I N E S S // J U LY 2 3 , 2 0 1 8

Entrepreneur back in game with medical software By Tom Henderson thenderson@crain.com

Jennifer Baird is back in the game. A serial entrepreneur with a long record of raising substantial sums of money for early-stage technology companies, Baird has closed on a seed-funding round of $2.36 million for her newest venture, Ann Arbor-based Fifth Eye Inc., a spinoff from the University of Michigan. Fifth Eye is developing software to warn medical professionals that certain patients who seem to be doing well after an operation are actually, based on almost imperceptible changes in their vital signs, at risk for serious deterioration in their conditions. Baird said she has already begun meeting with area venture capitalists for a follow-up Series A round of $7 million to $10 million that she hopes to close by the end of the year. Detroit-based Invest Michigan, with an investment of $200,000, led the round, which was joined by the Biosciences Research and Commercialization Center at Western Michigan University and 33 angel investors, including a group from the Lansing-based Capital Community Angels. â&#x20AC;&#x153;Jenâ&#x20AC;&#x2122;s got a strong team coming out of UM that has been working on the technology for four or five years and has got a lot of previous funding. You have to be impressed by the knowl-

Jennifer Baird: Closes on newest venture funding.

Jeff Basch: Serves as CFO at Fifth Eye.

Need to know

ď § Fifth Eye is developing software for patients after surgery ď § Designed to detect imperceptible changes in vital signs that presage deterioration ď § Company gets $2.36 million seed-funding round

edge and track record the team has,â&#x20AC;? said Charlie Moret, Invest Michiganâ&#x20AC;&#x2122;s president and CEO. â&#x20AC;&#x153;The leadership team knows how to execute. Iâ&#x20AC;&#x2122;m very bullish on the team and the technology.â&#x20AC;? Baird said the technology has received $4.5 million in grants since research began in 2014. Bairdâ&#x20AC;&#x2122;s biggest fundraising success was with Ann Arbor-based Accuri Cytometers Inc., which made desktop instruments for cellular research. She

joined the startup as president and CEO in 2004, raising $27 million from angel and venture-capital investors over the years, keeping the company alive until it could Mark Salamanbegin generating go: Used AI to revenue. In 2011, analyze data. it was sold to New Jersey-based Becton, Dickinson & Co. for $205 million. That fall, Baird and her co-founder, Colin Rich, were honored as entrepreneurs of the year at the annual awards dinner of the Michigan Venture Capital Association. Baird next was president and CEO at Ann Arbor-based Accio Energy Inc., a company that made wind-power generation systems that didnâ&#x20AC;&#x2122;t use wind turbines. Instead, it pumped water through recycled aluminum tubes as the wind blew, with the flow of water creating a charge that could be stored. Shortly after joining Accio, she raised a $1.9 million seed round for the company and later raised another round of $750,000. In 2014, the U.S. Department of Energy awarded Accio $4.5 million to develop large-scale, offshore generation systems.

In 2015, Crainâ&#x20AC;&#x2122;s named Baird as one of 25 women to watch in technology. In 2016, Crainâ&#x20AC;&#x2122;s named her as one of the stateâ&#x20AC;&#x2122;s 100 most influential women. Baird and company founder Dawn White pulled the plug on Accio in April 2017. â&#x20AC;&#x153;It was high-risk, high-reward. The bottom line is it is a good story for renewable energy,â&#x20AC;? said Baird. â&#x20AC;&#x153;The industry made a tremendous amount of progress in reducing the cost of offshore solar. It got to where it made no sense for us to offer incremental savings instead of dramatic savings.â&#x20AC;? Fifth Eye will be based in Menlo Innovations in downtown Ann Arbor. Menlo is a software development company that designed the human interfaces for Accuri Cytometersâ&#x20AC;&#x2122; devices. Menlo will develop the software Fifth Eye hopes to begin selling to healthcare institutions next year. â&#x20AC;&#x153;We are taking the same approach with Fifth Eye that we did with Accuri,â&#x20AC;? said Rich Sheridan, CEO of Menlo Innovations. â&#x20AC;&#x153;We are placing a bet on success by trading some cash for investment in the company.â&#x20AC;? Jeff Basch, who was CFO at Accio, has joined Baird as CFO at Fifth Eye. â&#x20AC;&#x153;Although it didnâ&#x20AC;&#x2122;t work out at Accio, we wanted to take another swing of the entrepreneurial bat,â&#x20AC;? he said. Mark Salamango, the chief technology officer, is one of the three UM re-

searchers who used artificial intelligence to analyze University of Michigan patient data to develop the proof-of-concept that shows predicting a patientâ&#x20AC;&#x2122;s crashing, known as hemodynamic instability, is possible. The technology combines the much better signal-to-noise ratio in current electrocardiography with machine learning and the ability of computers now to affordably process large volumes of data in real time. Salamangoâ&#x20AC;&#x2122;s two research partners, who are also co-founders of Fifth Eye, are Ashwin Belle and Bryce Benson. Baird hopes to have a software product in the marketplace by the end of next year. That will require approval by the U.S. Food and Drug Administration following patient trials. Fifth Eyeâ&#x20AC;&#x2122;s algorithms have been developed using patient data and didnâ&#x20AC;&#x2122;t involve patients themselves. â&#x20AC;&#x153;The UM Hospital is expected to continue in that process, and we hope to enlist other healthcare institutions as well,â&#x20AC;? said Baird. â&#x20AC;&#x153;A big reason Jeff and I felt comfortable in taking this on is we talked to a dozen clinicians, and they assured us this would make their jobs a lot easier. A lot of them volunteered to help. Weâ&#x20AC;&#x2122;ve got hospitals around Michigan and the Midwest asking if they can help.â&#x20AC;? Tom Henderson: (231) 499-0191 Twitter: @TomHenderson2

Hummus maker, Baobab Fare among recipients of food fund grants By Annalise Frank afrank@crain.com

A city of Detroit employee's hummus-making operation is among the 10 healthy food businesses that have earned equal shares of $100,000 in grants through the Michigan Good Food Fund. The fund, launched in 2015, awards enterprises dollars and loans to scale operations in ways that increase access to fresh food and help underserved areas. It has invested more than $11 million in 28 recipients so far. Partners in the fund are the Fair Food Network, Capital Impact Partners, Michigan State University Center for Regional Food Systems and the W.K. Kellogg Foundation.

Need to know

Fund awards food businesses dollars and loans to scale operations ď §

ď § Recipients should increase access to fresh food, help underserved populations ď § Detroit-based Sweet Potato Delights to use grant for bigger equipment as it preps to launch in Meijer stores

This latest round of funding, called the Catalytic Investment Awards, went to East African restaurant Baobab FareAn East African restaurant, cafĂŠ and shop set to open in Detroit's New Center area and three other Detroit-based businesses plus one from Flint, one from Ann Arbor and four from outstate. They'll likely receive SWEET POTATO DELIGHTS

GET A HEALTHIER OUTLOOK ON CHILDHOOD Tune in to WJR 760 AM for Caring for Kids, a monthly radio program focused on highlighting individuals and organizations addressing issues and efforts locally, regionally and nationally, that are having a significant effect on the health of the children in our area.

LISTEN TO WJR AM LIVE ON Tuesday, July 24, 2018, 7â&#x20AC;&#x201C; 8 p.m. For more information and to listen to past shows visit:

h p://chmfoundation.org/caringforkids/ Brought to you by:

Detroit-based Sweet Potato Delights makes three types of hummus and sells at Honey Bee Market in southwest Detroit, Western Market in Ferndale and Market Square Grocery in Birmingham.

their $10,000 each by mid-August, said Mary Donnell, program manager of the Michigan Good Food Fund. One of the Detroit recipients is Sweet Potato Delights, run by nutritionist and veteran Velonda Anderson and her husband Jerome Anderson. Velonda Anderson, 61, makes hummus at night after her day job as Women, Infants and Children program manager for the city of Detroit. Anderson originally launched Sweet Potato Delights in 2013, selling muffins, cakes and other baked goods. She started making her popular hummus commercially in 2016 in three flavors: regular, roasted beet and spicy black bean. She now sells at Honey Bee Market in southwest Detroit, Western Market in Ferndale and Market Square in Birmingham. "Honey Bee moves four cases a month, 12 units a case," she said. "Which is amazing for a smaller place like ourselves." Sales rose from $1,000 in 2016 to

just more than $3,000 in 2017, and Anderson said she expects to at least double last year's figure this year. The $10,000 grant will support bigger food processors needed to accommodate larger orders and growth and creation of an internship, she said. Sweet Potato Delights needs to start making bigger batches: It signed on to sell its hummus in the urban-style Meijer Inc. store called Bridge Street Market when it opens in Grand Rapids in about a month â&#x20AC;&#x201D; and likely more small-scale Meijer stores later down the line. (Detroit is slated to get a small-format Meijer as part of an East Jefferson development next year.) The previous Catalytic Investment Awards were announced in November 2016, giving $380,000 to five food retail enterprises. This time around, they widened the pot to include caterers, restaurants, retailers and others. Another round is coming later this year that will award around $400,000,

Donnell said. The fund will likely send out applications in September. Other winners of the current round of $10,000 grants, according to a news release, are: ď § Fresh Corner Cafe: A caterer and fresh-food distributor based in Detroit that works with schools, community centers, seniors, hospitals and others. ď § Guerrila Food: A Detroit-based operation that uses city-grown produce and offers farm-to-table food in the Pink Flamingo, an Airstream trailer converted into a mobile restaurant. It also caters and hosts workshops. ď § MaMang: A Flint-based company that serves slow-cooked Vietnamese food at the city farmers market. It aims to expand to its own location in Flint. ď § Mighty Fine Poultry Processing LLC: An Ann Arbor meat processor that wants to bring more locally grown poultry from small-scale farmers to the market. It's planning a commercial kitchen and shop. ď § The COGIC Community Center Forward Center for Healing and Cultural Advancement: This Battle Creek group is planning a food co-op and promotes fresh fruits and vegetables through a community garden. ď § Malamiah Juice Bar: A business in Grand Rapids Downtown Market and local cafes and markets that makes juice, acai bowls and nut butters. Some of its products can be bought under the Supplemental Nutrition Assistance Program (SNAP). ď § The Mason Jar CafĂŠ: A breakfast and lunch restaurant in Benton Harbor that's planning a second location and advertises its food as "farm-to-table." ď § The Redheads: A plant-based food manufacturer in Traverse City that works with nearby farmers, making products such as pesto and cherry chipotle hummus.

Since 2016, the Detroit Regional Chamber has led a call to restore civility in public discourse.

Incivility remains the biggest threat facing the U.S. Gov. Rick Snyder, 2017 Mackinac Policy Conference

Join Gov. Rick Snyder, the Detroit Regional Chamber, and more than 200 Michigan leaders and sign on to:

An Open Letter Regarding Civility We, the undersigned, representing a diverse group of citizens dedicated to the principles that made this country great, do hereby commit to standing up for civility in public debate and discussions of policy. The United States is a great nation because we can find ways to work together, create solutions and solve problems. Our great country is increasingly at risk of losing its way as we see debate and discussion turn into personal attacks and vicious threats. Discouraging people from public engagement while leaving issues unaddressed is not the America we know it to truly be. We stand committed and we stand together to focus discussions and debates on the issues at hand. We are not saying we will always agree on the solutions to problems, or even on what the most important problems are. We stand ready to speak up for what we believe in and advocate for the best solutions we can support. But â&#x20AC;&#x201D; most important â&#x20AC;&#x201D; we stand together for civility and we encourage others to join us. Michigan can show the world how we can disagree without being disagreeable, how we can debate without personal attacks, and how we can solve more problems together than we can apart.

Go to: CivilityforUs.com Thank You to Our Civility Partner

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At midseason, Tigers’ TV ratings have tanked By Bill Shea bshea@crain.com

The Detroit Tigers have seen a 44 percent year-over-year slide in local TV ratings because fans have abandoned the struggling team to watch or do something else. Going into this week’s All Star break, the 97 Tigers broadcasts on Southfield-based Fox Sports Detroit averaged a 3.0 household rating, according to Nielsen Co. viewership data provided by Need the regional to know sports network’s JJRatings for L.A.-based netTigers games on work parent, Fox Fox Sports Detroit Sports. That are down 44 ranks 17th percent year-over- among the 29 year U.S. regional sports networks JJRating going (Toronto isn’t ininto All Star break was 3.0 household cluded). One houseaverage hold rating point JJTigers games in the Detroit peaked with a 9.59 market equates rating in 2013 to about 18,000 households, and there are nearly 1.8 million TV households in the region. So, about 53,300 local households are tuning into Tigers games airing on Fox Sports Detroit this season. Five years ago, it was more than 170,000 households. Last year, it was 80,000 households. FSD’s 151 Tigers broadcasts for all of last season — a few games each season are played on other networks — averaged an overall 4.48 household rating, sixth among MLB’s 29 U.S. teams. Detroit currently is down 33 percent from that full-season figure. The reason for the sharp decline is obvious: The Detroit Tigers are losing a lot of games as they commit to rebuilding with young, inexpensive players. Still, the Tigers and all other U.S. MLB teams rank No. 1 in their respective markets for prime-time broadcasts. In other words, when the Tigers are on TV after work in the evening, they still draw the best cable audience in metro Detroit, just not as commandingly as in the past. The Tigers have been in ratings decline since peaking with a Major League Baseball-best 9.59 average rating, an astounding number that coincided with their last trip to the American League Championship Series. The decline from then to now is 69 percent. However, the TV ratings numbers don’t paint a full picture of the audience for Tigers games. Some fans have migrated in recent years to mobile and online streaming services, and those numbers aren’t reflected in the TV data. Fox Sports said it didn’t have streaming data available for the Detroit market, but the audience has grown steadily since the technology was introduced. The streaming audiences don’t entirely offset the losses of traditional TV-watching fans. The Tigers ratings also don’t reflect people watching games at bars, restaurants, hotels and other out-ofhome locations. There’s no audience data for non-home viewing available yet because the ability to measure it still is being developed, said Mike Mulvihill, Fox Sports’ executive vice president of research.

AP PHOTO/CARLOS OSORIO

Detroit Tigers starting pitcher Michael Fulmer after giving up a three-run home run to former Tiger Ian Kinsler against the Los Angeles Angels earlier this season. Fulmer might also be one of the Tigers’ stars who will soon be “former.”

“We’re coming to understand there’s a significant audience watching in places other than in their own home,” he said. In the meantime, the Tigers’ audience could further decline if the team keeps losing, and there’s nothing to suggest Detroit is suddenly going to start winning a lot more games. The early-season narrative of an over-performing team — the old sportswriter cliches like moxie, grit, hustle, scrappy applied — gave way to the stark reality of what’s happening. The Tigers are not very good and

have lost 20 of their past 25 games going into the weekend series against Boston, the best team in baseball. The Tigers also are on pace to lose 94 games, which wouldn’t be as bad as 2017’s 98-loss season. It could get even worse as the July 31 trade deadline approaches. Last summer, the Tigers jettisoned some of their top talent — Justin Verlander, J.D. Martinez, Justin Upton, among others — via trades to gather young prospects for the future. Now, second-tier talent, such as pitchers Francisco Liriano, Mike Fiers and

Michael Fulmer, along with outfielder Nicholas Castellanos, could be dealt. Will fans stick with Tigers broadcasts if the bench becomes even more threadbare? Probably. Detroit’s current TV rating is less than half of the MLB-best St. Louis Cardinals, who averaged a 6.73 household rating so far this season on Fox Sports Midwest. At the bottom of the RSN ratings are the Oakland A’s with a 0.69, which is actually up 15 percent over last year on NBC Sports California, according to the Nielsen data. There was one team with a worse ratings slide so far this season than the Tigers: The Baltimore Orioles’ household average dropped 50 percent to a 2.88 rating on Mid-Atlantic Sports Network, according to the audience data. The dreadful O’s were 28-69 (.289) heading into the All Star break. It’s not only on TV that the Tigers are losing audience. They’re down about 6,500 fans per game at Comerica Park, from last year’s attendance average of 28,661 to this year’s 22,152. The MLB average is 28,546 per game. Detroit may be a contender again in four or five years, and that improvement should coincide with the team’s next broadcast rights deal. The current 10-year pact runs from 2011-2021 and has FSD pay the Tigers $50 million annually. That figure could double under the next deal, but audience will be a factor in how

much money the team gets. Another factor hangs over the next deal between the network and Tigers: FSD and its 21 sister regional sports networks owned by Fox will be sold to satisfy federal antitrust concerns as part of The Walt Disney Co.’s proposed $71 billion cash and stock acquisition of major pieces of Twenty-First Century Fox Inc. No potential buyers have formally emerged, and it’s unknown if the RSNs will be sold as a group or pieced off in clusters or even individually. The Tigers may end up bargaining with a new RSN owner with different ownership objectives than Fox. Philadelphia-based Comcast Corp. last week ended its competition with Disney to buy 21st Century Fox, but it’s a candidate to buy the regional sports networks. FSD also has the broadcast rights for the Detroit Red Wings and Detroit Pistons. FSD has about 3.6 million subscribers in Michigan. Fewer than 2,000 Michigan households don’t have access to the network, the network has said. Data from Kagan, a media research group within S&P Global Market Intelligence, predicted before the baseball season that FSD would generate $240 million in overall revenue against $190 million in operating expenses, the majority from Tigers games. Bill Shea: (313) 446-1626 Twitter: @Bill_Shea19

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C R A I N ’ S D E T R O I T B U S I N E S S // J U LY 2 3 , 2 0 1 8

OPINION COMMENTARY

Schuette once opposed a ‘Fortress America’ approach

ill Schuette, the Republican gubernatorial frontrunner whose candidacy is rooted in an endorsement from President Donald Trump, once was opposed to the economic protectionist philosophy that has fueled Trump’s rise and the growing global trade war he’s waging with allies and enemies alike. In 2000, Schuette penned a guest column in the Boston Herald in which he blasted the “defeatist isolationism” of perennial presidential candidate Pat Buchanan, who was a voice of opposition to free-trade agreements long before Donald Trump commercialized the slogan“Make America Great Again.” Schuette broadly defended the global economy, which was being built at the time through expanded trade and a slow, but steady decline of American manufacturing of consumer goods and car parts that could be made more cheaply elsewhere. “A Buchanan ‘Fortress America’ approach to trade and immigration challenges would result in a second-rate economy and smaller and fewer paychecks for those who need it most — middle-income Americans,” Schuette wrote at the time. “Fortress America” is the anti-interventionist philosophy that aviation hero Charles Lindbergh advanced to keep America out of World War II. Lindbergh was part of a group called “America First,” which quickly disbanded after Japan bombed Pearl Harbor in December 1941 and Detroit started pumping out the war machines. Buchanan revived the “America First” term in his 1992 presidential campaign as he railed against the economic globalism that fostered the 1994 North American Free Trade Agreement. Trump then capitalized on an “America First” theme throughout his 2016 presidential campaign in which he routinely trashed NAFTA and Michigan automakers, like Ford Motor Co., that set up factories in Mexico for cheaper finished vehicle assembly. In an interview, Schuette rejected a suggestion that Trump is carrying on with a “Fortress America” approach to trade where Buchanan never could get started. “I don’t believe that at all,” Schuette said in an interview for the Crain’s “Detroit Rising” podcast. With Trump backing his campaign in the Aug. 7 primary over his chief GOP rival, Lt. Gov. Brian Calley, Schuette has urged a just-wait-and-see approach to the president’s economic strategy. “What he’s trying to do is rebalance trading relationships and get a better deal for American workers, American farmers,” Schuette said. “And I think that’s why people in Michigan voted for President Trump.”

CHAD LIVENGOOD clivengood@crain.com

Schuette’s Feb. 6, 2000, column in the Boston newspaper was his response to a speech Buchanan gave in which he quoted Schuette’s late-stepfather, Carl Gerstacker, a former chairman of the Midland-based Dow Chemical Co. Gerstacker gave a speech in 1972 in which he talked about his dream of buying and moving Dow’s headquarters to an island “owned by no nation,” free of government regulation, comments Schuette said Buchanan “yanked out of context.” “He trashed my stepfather, which I thought was really rude,” Schuette said. In the column, Schuette offered a vision for Michigan to be the “center pivot” of free trade between Canada, Mexico and the rest of Latin America — an apparent reference to the NAFTA pact that Schuette had supported as the state’s agriculture director under former Gov. John Engler as a way to open up new markets for Michigan farmers. “Buchanan seems unable to grasp that present-day American patriots, with a global view of the economy, will keep the workplaces in Massachusetts, Michigan and the Silicon Valley thriving,” Schuette wrote. “In this new century, a state like Michigan can play an economic ‘center pivot’ and be a conduit of commerce between Canada to the north and Latin America to the south. The United States can use its productive talents and technological advantages to maintain a strong economy and to ensure we have good jobs and good paychecks for working families.” Schuette’s language in the column is remarkably similar to his platform 18 years later to be Michigan’s “jobs governor” with a “paycheck agenda.” It’s almost as if Schuette has been plotting this run for governor for a while. “I understand the significance of Detroit playing center pivot to the world between Canada and the rest of South America, Latin America,” Schuette told me before I brought up the 2000 newspaper column. Even as Trump’s tariffs rattle Michigan businesses that rely heavily on exporting and importing products, Schuette displays a sense of optimism that this trade war won’t go the way of the Smoot-Hawley Tariff Act of 1930, which is credited with prolonging the Great Depression. SEE SCHUETTE, PAGE 9

Let's not lose the charm Anyone who spends time in Detroit has to marvel at the amount of construction going on in our city. It is nothing short of spectacular. But at the same time, there is something I hope does not happen to our community. I remember when my friend Edsel Ford was chairman of the yearlong Detroit 300 celebration in honor of the city’s tricentennial in 2001. There were a lot of activities, but the thing that hit home again and again is the rich history our city has observed over the centuries. Along with our history are lots of buildings. Today, many of them are being restored and turned into wonderful examples of architecture that will never be duplicated. That hasn’t always been the case here. Many historic buildings have rotted and been demolished. I have never thought of myself as a history buff, but I must admit that I hope we don't lose more magnificent examples of our history. In our haste to rebuild, we have to be careful that we don't put a wrecking ball to our past. I have to give kudos to Dan Gilbert, who seems to be sensitive to the history of our city and is trying to

KEITH CRAIN Editor-in-chief

restore, when possible, rather than demolish and rebuild. This may be a simple and often impossible wish; but when you drive around our city, there are many examples of architecture that shouldn’t fall to the wrecking ball. I understand that, all too often, it is simply impossible to preserve our history but only suggest that when it is possible, we should try. There are, of course, lots of financial incentives available to folks who are interested in restoring rather than replacing. In a bit of irony, Crain’s offices are on the site of the old Stroh Brewery, which was demolished and became Brewery Park. Although it would have been hard to transform the brewery to a different use, it was a big part of the city's history. Luckily,

I have never thought of myself as a history buff, but I must admit that I hope we don’t lose more magnificent examples of our history. In our haste to rebuild, we have to be careful that we don’t put a wrecking ball to our past. we have lots of photos of the brewery in our lobby to remember the past. While we are celebrating our renaissance, let us not forget our history.

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

Some want to make our problems worse To the Editor: Crain’s July 16 editorial “Let’s take rhetoric down a notch” closes with: “But the over-the-top, violent rhetoric that this protest brought to the fore is only going to make our prob-

lems worse.” It’s about time we wake up to the sad reality that many, including some educated in our “finest” universities, are convinced that civility, respect for opposing views and dispassionate reasoning are weapons of an oppressive system. “By any means necessary” is one of their mantras, and that includes

threats, slurs, intimidation and sometimes worse. Such people want “to make our problems worse” because they believe it’s to their advantage, and pretending otherwise puts those who believe in civil debate at a big disadvantage. Tom Doran Plymouth

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 3 , 2 0 1 8

Small-group, individual rate proposals lowest in decade By Jay Greene jgreene@crain.com

Average small-group insurance rates are projected to drop by 0.2 percent for 2019, while individual market rates on the Obamacare exchange average only a 1.4 percent proposed rate increase, according to the Michigan Department of Insurance and Financial Services. Despite uncertainty in the insurance markets because the Trump administration has taken steps to shift costs to policyholders, the nine individual plans offered on the exchange range show price changes that range from a decrease of 2.5 percent to an 11 percent increase.

Need to know

JJMichigan proposed health insurance

rate increase lowest in many years

JJSmall-group rates average a 0.2% cut; individual rate increase only 1.4% JJRates approved usually in August for open enrollment beginning Nov. 1

The 17 small-group plans range in price from a 9.5 percent cut to an 8.5 percent increase. “Michigan consumers are very fortunate to have such a strong lineup of insurers for the Michigan Health Insurance Marketplace,” DIFS Director Patrick McPharlin said in a state-

ment. “Michigan’s competitive market coupled with improved claims experience has led to providers proposing moderate rate changes for 2019. Some proposed rate filings even indicate a decrease in rates for the 2019 plan year.” For the individual market, nine health insurers are offering plans on the Obamacare marketplace: Blue Care Network, Blue Cross Blue Shield of Michigan; McLaren Health Plan Community, Meridian Health Plan of Michigan, Molina Healthcare, Oscar Insurance Co., Physicians Health Plan, Priority Health and Total Health Care USA. For example, Blue Care Network

is offering an average 1.1 percent increase in the small group market and a cut of 2.7 percent in the individual market. Priority Health is offering a cut of 2.6 percent in the small-group plans and a 2.5 percent cut in average individual plans. Health Alliance Plan is offering to cut small-group plans by 6.2 percent while not proposing to increase individual rate plans, on average. McLaren is seeking an 11.1 percent individual increase and a 5.9 percent increase for smallgroup plans. DIFS said that in 2018 some 414,000 people were covered in the

small-group market and 343,000 people were covered in the individual market on the Obamacare exchange. More than 80 percent of individuals buying coverage received federal subsidies that cut their premiums by substantial amounts. DIFS is seeking public comment on the proposed rate changes until July 23 at HealthRateComments@ michigan.gov. The state usually posts final prices in early August. Open enrollment for Michigan’s federally facilitated health insurance marketplace begins Nov. 1 and closes Dec. 15. Policies start Jan. 1, 2019.

Crain’s seeks Best-Managed Nonprofits Crain’s Best Managed Nonprofit program this year will focus on how nonprofits are using data to solve issues and better meet their missions. This could include how an organization is collecting and acting on its own data or on shared data collected by another source. All applications must include the following: JJA completed nomination form. J A copy of the most recent audited financial statement. J A copy of the most recent IRS 990 form. JJA copy of the organization’s code of ethics. Applicants for the award must be a 501(c)(3) with headquarters in Wayne, Washtenaw, Oakland, Macomb or Livingston counties. First-place winners within the last 10 years are not eligible; neither are hospitals, HMOs, medical clinics, business and professional organizations, schools, churches or foundations. The deadline to nominate is Monday, Aug. 20. Finalists will be interviewed by judges the morning of Tuesday, Oct. 23. Winners will be profiled in the Dec. 10 issue, receive a “best-managed” logo from Crain’s for use in promotional material and will be recognized at Crain’s Newsmaker of the Year lunch early next year. For information about the program, email senior reporter Sherri Welch at swelch@crain.com or call (313) 4461694. For technical questions, contact Keenan Covington at kcovington@ crain.com or (313) 446-0417.

SCHUETTE

HEALTHY ENVIRONMENT, HEALTHY ECONOMY. At DTE Energy, we don’t believe we have to choose between a healthy environment and a healthy economy. We are committed to reducing carbon emissions by more than 80%, while offering reliable and affordable energy to our customers. Better economy, better environment. We can have both.

FROM PAGE 8

“Nobody wants Smoot-Hawley and retaliation and all of that,” Schuette said. “Everybody clearly understands the significance of trade and not wanting to have retaliatory trade practices. In the end, I think it will be a good deal.” If Schuette wins the Republican nomination on Aug. 7, he’ll end up owning Trump’s positions on trade in the fall general election — and his own. Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

Learn more at empoweringmichigan.com/mi-power.

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FOCUS

NONPROFIT COMPENSATION

Top-paid nonprofit CEOs by category

Arts and culture: Dominic Dimarco

Business organizations: Doug Rothwell

President, Cranbrook Educational Community

President and CEO, Business Leaders for Michigan

2016 total compensation: $509,387

2016 total compensation: $795,133

Dimarco was the top-paid arts and culture executive in the region in 2016. In addition to overseeing the pre-K through 12 college preparatory schools on Cranbrook’s Bloomfield Hills campus, he provides oversight of the Cranbrook Academy of Art and Art Museum, Cranbrook Institute of Science and Cranbrook House and Gardens. He received a 1.2 percent base pay increase in 2016 and a $50,000 bonus.

Rothwell has led Business Leaders for Michigan since 2009, when it shifted from the Detroit-focused organization Detroit Renaissance to a statewide roundtable of CEOs from the state’s largest companies promoting policies to create jobs and expand Michigan’s economy. His base pay increased 0.2 percent in 2016, and he received a $100,000 bonus.

Fundraising Foundations: Susan Burns

President, Wayne State University Foundation and vice president for development and alumni affairs, Wayne State University 2016 total compensation: $296,525 Burns is one of most senior fundraisers in the region. She returned to Wayne State early in 2016 to lead the university foundation after leading the St. John Hospital Foundation and affiliated Providence Health Foundation for seven years. It was a homecoming for Burns, a WSU alum who led its foundation for another seven years previously. At WSU, she’s helped it hit its $750 million comprehensive campaign goal.

Grantmaking foundations: Rip Rapson President, Kresge Foundation

2016 total compensation: $812,958 Rapson heads up the largest local foundation in the region and one of the largest in the country, with a $3.8 billion endowment. He’s a leader in the national foundation community and has brought the foundation’s resources to bear in Detroit, helping to bring the local markets back to the city and to spur new investment, while also directing support for the arts, neighborhood revitalization and early childhood education and care. In 2016, his base pay increased 6.4 percent.

Health Care: Dan Loepp

President and CEO, Blue Cross Blue Shield of Michigan/Blue Care Network 2016 total compensation: $13.4 million Loepp earned double the compensation of the next highest-paid nonprofit executive on Crain’s list in 2016 — but the enormous Blues are’t really like any other nonprofit on this list. His base pay didn’t change in 2016, but he received a $10.38 million bonus that year. Loepp led the health insurer’s conversion from the state-legislated nonprofit insurer of last resort to a nonprofit mutual insurance company at the end of 2013. Since then, his total compensation has increased 247 percent from $3.86 million in 2012.

Social services: John Thorhauer President and CEO, United Methodist Retirement Communities

2016 total compensation: $456,778, net of compensation reported as deferred on a prior year 990 Thorhauer has led United Methodist Retirement Communities, which provides a continuum of senior care and housing options at eight Michigan campuses, since October 2005. Under his direction UMRC collaborated with Presbyterian Villages of Michigan on an affordable senior community on Detroit’s east riverfront. He is now leading a $26 million project to renovate and expand the Kresge Healthcare and Rehabilitation Center in Chelsea.

Other: Kevan Lawlor

President and CEO, NSF International 2016 total compensation: $2,146,384, net of compensation reported as deferred on a prior year 990 Lawlor has led University of Michigan spinoff NSF International for the past 15 years. The global nonprofit, which competes with for-profit companies, helps develop food and water safety standards and to test against national and international standards. His base pay rose 16 percent in 2016, and he received $914,147 in bonus/incentive compensation.

CEOs’ paychecks grow most quickly since recession By Sherri Welch swelch@crain.com

Turnover among nonprofit CEOs in Southeast Michigan is pushing annual salary increases to a level not seen since before the Great Recession nearly a decade ago. Local nonprofit CEOs saw a median salary increase of 4.6 percent in 2016, while statewide nonprofit CEOs saw a median increase of 3.2 percent, according to Crain’s annual survey of salaries at large nonprofits. That tracks with the 3 percent-4.5 percent average increases for local nonprofit CEOs that compensation experts said began in 2016 and have continued every year since. “Tax-exempt boards traditionally have been very conservative,” said Paul Creasy, partner, Avon, Ohiobased Organizational Consulting Group LLC. “They’re loosening up a bit now, getting more relaxed about the economic environment,” and acknowledging they may have to give bigger raises to remain competitive, he said. The local increases mirror a national trend reported by the Chroni-

Paul Creasy: Boards more relaxed.

Ed Steinhoff: Seeing a lot more turnover.

cle of Philanthropy last fall based on 2015 data as reported in the 2017 GuideStar Nonprofit Compensation Report. Pay increases for nonprofit CEOs and executive directors at some large nonprofits topped 4 percent nationally in 2015 for the first time since before the recession, according to the report. Median pay increase for nonprofit CEOs nationally that year were 3 percent, up from 2.6 percent in 2014 and 1.6 percent in 2010. Given that large nonprofits compete nationally for their executives, the pay practices of local nonprofits

Bill Weatherston: Market more competitive.

reflect the national market, experts say. Crain’s statewide list of the 123 top-paid nonprofit CEOs in Michigan in 2016 showed a median base pay increase of 3.2 percent that year, with median base pay of

$243,973. Compensation data for 2016 is the most current available because nonprofits can get extensions from the Internal Revenue Service of up to 11 months after the close of their fiscal year to file their annual 990 forms to the IRS. On those forms, nonprofits must report compensation data for their CEOs, other officers, board members and five highest-paid employees. The Crain’s list includes compensation data from social services agencies, health care, grantmaking foundations, fundraising foundations,

arts and culture organizations and business groups, reported to the Internal Revenue Service on calendar 2016 and fiscal 2017 990 forms or provided separately to Crain’s as they complete their 990s. The list does not include higher education, because many of the state’s colleges and universities are subsidized by the government. In 2015 and 2016, it was clear that boards were starting to see that to remain competitive, they had to start increasing compensation, said William Weatherston, vice president of Troy-based executive search firm Harvey Holhauser. “And I think that still represents the positioning of the board at this stage of the game. They’re trying to find their way in what’s become a more competitive market.”

High CEO turnover The nonprofit labor market has heated up in the last couple of years as it has for all employers, said Ed Steinhoff, Ann Arbor-based managing director at Pearl Meyer & Part-

Need to know

JJAnnual salary increases for nonprofit CEOs rising to level not seen since before Great Recession JJMedian salary increases for highest-paid local executives were 4.6 percent in 2016, according to Crain’s compensation survey JJHigh turnover, hot job market spurring competition, higher pay

In this package

JJCEOs’ paychecks grow most quickly since the Great Recession. This page JJWhen the chairman and CEO are the same people. Page 11 JJSome nonprofits to face new taxes on employee pay. Page 12

ners LLC, whose clients range from large health insurance companies, health systems and universities to midsized hospitals and smaller foundations and social services organizations. SEE PAYCHECKS, PAGE 12

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SPECIAL REPORT: NONPROFIT COMPENSATION

When chairman and CEO are the same person By Sherri Welch

$4.17 million, said John Bebes, partner at Plante Moran, Charity Motors’ auditor. Management and general expense were 7.7 percent of total expenses. Last year, Charity Motors took in 5,332 vehicles, roughly a quarter of them in other states. Yatooma said roughly 1 percent of them were scrapped. And the remaining vehicles, about 5,279, were sold to low-income individuals last year. Since its founding 23 years ago, Charity Motors has contributed over $114 million to nearly 1,500 charities and sold vehicles at half the fair market value to just under 207,400 people, Yatooma said.

swelch@crain.com

Norman Yatooma, a newcomer to Crain’s list of the top-paid nonprofit executives, has a dual role at the Detroit-based, national vehicle donation program Charity Motors. He’s not just the chairman. He’s also the nonprofit’s top executive. And that’s something that could bring inherent conflicts of interest, according to some nonprofit experts. While there are no legal issues with holding both roles in a nonprofit, and the practice is common in the for-profit sector, having someone wear both hats at a nonprofit is uncommon among larger, well-established nonprofits and generally not a good practice, said Leslie Lenkowsky, senior counselor to the dean of the dean of the Indiana University Lilly Family School of Philanthropy and retired professor of philanthropic studies. The job of a nonprofit’s board, is, among other things, to hold the management accountable and exercise oversight over them. “That’s very hard to do when the chairman is also the CEO,” Lenkowsky said. “How is a board going to have a degree of independence to question the CEO, if the chairman — a key member of the board — is also the CEO?”

Norman Yatooma

The background

Need to know

After its launch in 1995-96, Charity Motors contracted with outside vendors for things like management of its vehicle donation program and legal services. Bobby Ivory Jr., then-chairman of the nonprofit’s board, took the additional title of president and oversight of operations from 1997-2003. Before Yatooma was named as its top executive, Charity Motors chose to terminate the contract with a consultant overseeing its vehicle lot and general operations “because I felt we could do things a bit more efficiently,” said Ivory, who is creative director of Ivory Coast Media in Southfield, the current vice chairman of the nonprofit’s board and the only founding board member remaining. “Having had that experience of being at the helm and dealing with legal issues as well as staff issues, to have someone (like Yatooma) with that level of skill and commitment seemed to be very attractive to myself and the rest of the board,” Ivory said. “He actually seemed a bargain because he assumed a lot of those (operational) responsibilities.” In 2015, Charity Motors’ three board members besides Yatooma voted to begin paying him to manage the nonprofit’s operations as president and general counsel. Beyond Ivory, the board includes Matt Friedman, co-founder of public relations firm Tanner Friedman and board secretary; and Treasurer Edwin Murray, a Detroit pastor. Yatooma, who chaired the board, recused himself during the conversations about him becoming the paid president and about his compensation, Ivory said. As the president, Yatooma has overseen Charity Motors’ national expansion, which has taken it into 38 states over the past three years. He also oversees advertising, human resources, CFO duties and legal duties

The view from outside

JJNorman Yatooma, newcomer to Crain’s

list of the top-paid nonprofit executives, is chairman and CEO of Charity Motors JJDual role is uncommon for well-established nonprofits JJExperts caution there could be inherent conflicts of interest

and 17 employees, including the paid operations director who directs the vehicle donation program. In setting Yatooma’s compensation, Charity Motors consulted with Plante Moran PLLC, its auditor, on best practices and connected with a third-party compensation expert to align with protocol required by the Internal Revenue Service. In 2016, the first full year Yatooma served as CEO for Charity Motors, he received a $239,000 salary and $24,585 in nontaxable benefits for working 40 hours a week as CEO of the nonprofit, ranking him the 12thhighest-paid social services executive director or CEO on Crain’s list. “Having talked with Plante Moran, we were confident and comfortable with the information they gave back to us. I felt it placed us in the best position to have someone we trust, and I personally know who is committed to helping people and not simply lining his own pockets,” Ivory said. Yatooma “has been doing a fantastic job ... getting us into 38 states is a tremendous accomplishment,” the vice chairman said. “I’m personally satisfied with the research we’ve done to make sure that things are being done above board.” While serving as the top executive of Charity Motors, Yatooma said he works an additional 40 hours a week at his law firm, Norman Yatooma & Associates P.C. in Bloomfield Hills. Separate from all of that, Yatooma is president and founder of Yatooma’s Foundation for the Kids, volunteer-

ing 15 hours each week, according to the 990 filed for that charity. Ivory said he’s not concerned about Yatooma splitting his work week between Charity Motors and the law firm “because I know he’s not doing it by himself.” “As well as the staff at Charity Motors, there’s the people at his firm who are also working along with him to get these things overseen,” Ivory said.

Charity Motors model and revenue In response to declining vehicle donations in its home market of Southeast Michigan and a desire to continue providing low-income people with cars for half the fair market price, Charity Motors began expanding its vehicle donation program into other states in 2015. It did so through relationships with nonprofits, towing companies and auction houses, becoming the de facto charity vehicle donation program for other nonprofits around the country. After donated vehicles are sold to low-income people, the proceeds — net of administrative fees to Charity Motors — go to a charity of the donor’s choosing. In 2016, the year of its most recently reported financial results, Charity Motors reported total revenue of $6.67 million, $7.3 million in total expenses and a loss of $609,673. It ended the year with just under $640,000 in net assets/fund balances. After bumping up in 2014, revenue declined in 2015 and 2016. Expenses outpaced revenue every year between 2013 and 2016. Of the $5.9 million in program-related expenses reported for 2016, grants to charities and subsidizing the cost of selling donated vehicles to low-income individuals for half the market value accounted for

It’s impossible to say if a particular situation presents any conflicts of interest when looking in from the outside, Rick Cohen, COO and chief communications officer of the National Council on Nonprofits, said in an email. “We don’t know what internal controls the organization has on paper, nor whether or how they follow any written policies.” But in an instance when a nonprofit has a chairman serving as its top executive, it’s important to have a strong policy in place to identify conflicts and the process for dealing with them, Cohen said. For Charity Motors, for example,

that could include a recusal process and competitive bids if legal services above and beyond those Yatooma and his associates are already providing are ever needed. Conflict-of-interest policies aside, other experts warn there are inherent conflicts in such a dual role. In its Principles for Good Governance and Ethical Practice, Washington, D.C.-based Independent Sector says that concentrating authority for a nonprofit’s governance and management practices in one or two people removes valuable checks and balances that help ensure that conflicts of interest and other personal concerns do not take precedence over the best interests of the organization. Nonprofits are nonprofit for a reason; they are not owned by shareholders. Rather, their assets and operations are held in the public trust by the board, said Jenifer Gager Holland, associate vice president, consulting and learning practice, at BoardSource, a Washington, D.C.based nonprofit that focuses on nonprofit board leadership and practices. With Yatooma holding dual roles at Charity Motors, “it’s really the central question of is the board doing its job to demonstrate whether any real or perceived conflicts of interest have been addressed?” she said. Sherri Welch: (313) 446-1694 Twitter: @SherriWelch

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SPECIAL REPORT: NONPROFIT CEO COMPENSATION

Some nonprofits to face new taxes on employee pay By Sherri Welch swelch@crain.com

New taxes on nonprofit compensation will add up to several million dollars, collectively, for the Southeast Michigan nonprofits — mostly health systems — paying employees more than $1 million a year. But individually, nonprofits are viewing the new tax as just another cost of doing business. “We think while every dollar is important, as a percentage of net revenue, the impact is ...relatively low,” compared with other issues health care is facing such as drug costs, government reimbursement and the impact of tariffs on supply costs, said John Kerndl, executive vice president and CFO of Beaumont Health. The new tax will be a consideration, and if there’s a way in Lynne Huismann: the future to mitigate it, obviously, Some nonprofits Beaumont would have more pursue that, exposure. Kerndl said. “(But) ultimately, our compensation plans are going to be what they are. ... It’s absolutely the cost of doing business now.” Passed as part of tax reform, nonprofits that pay any of their five top-compensated employees (as listed on their 990s) $1 million or more in taxable income will now be subject to a 21 percent excise tax on that compensation, in line with the federal corporate tax rate and requirements for publicly held companies. Taxable income includes base compensation, bonus/incentive pay and other compensation as reported on the 990 form, said Lynne Huismann, partner at Plante Moran PLLC. Licensed medical and veterinary professionals are exempt. Even if the top five change from year to year, once a person is considered a “covered employee” with compensation subject to the tax, they remain a covered employee. Nonprofits will also be subject to the

PAYCHECKS FROM PAGE 10

The turnover is a continuation of a trend Crain’s noted in its 2017 nonprofit compensation report. On Crain’s list of the top 10 compensated CEOs in Southeast Michigan (or fewer where there were natural cutoffs) by nonprofit area, 10 of the 57 CEOs have since departed. So far this year, Crain’s has reported turnover in the top executive spot at nearly two dozen nonprofits in the region. “We are seeing a lot more turnover in (nonprofit) executive positions than we have had in the past. It kind of goes along with a stronger economy,” Steinhoff said. “There are a lot more opportunities, (so) people are more likely to jump.”

Making their numbers Beyond salary increases, nonprofit executives will likely see higher payouts this year for incentive pay for hit-

GETTY IMAGES/ISTOCKPHOTO

Need to know

JJNew tax on nonprofit compensation of

$1 million or more will add up to several million dollars collectively for local health systems, nonprofits JJBut nonprofits viewing tax as the cost of doing business JJStill waiting for guidance from IRS on the new tax

tax for “golden parachute” payments of more than three times the annual salary of a departing employee earning more than $120,000 each year. The tax applies to nonprofits operating on calendar 2018 or fiscal year starting in 2018. A March 2017 analysis done by the Wall Street Journal found at least 2,700 nonprofit employees were paid more than $1 million nationally in 2014. Although any type of exempt organization can be affected, health care and higher education nonprofits, where the size and complexity of the organizations often drive higher compensation for key employees, are expected to have the most exposure, Huismann said. The compensation paid to some university coaches could be subject to the tax. Certain universities, however, may end up being exempt due to their governmental status, she said. The Internal Revenue Service was expected to release guidance on the

new excise tax by the end of June but has not yet released it. To get an idea what the impact might be on local nonprofits, Crain’s analyzed the 2016 compensation, the most recent publicly reported figures, of the five highest-paid employees at nonprofits that also paid one or more of their employees more than $1 million in taxable compensation. Nonprofit colleges and universities are not included in the analysis. Most nonprofits that had employees at that pay level are health systems, but they also include the Kresge Foundation and the environmental nonprofit NSF International, which helps develop standards for food and water safety and tests against them. All compete with for-profit companies for the talent that commands those salaries.

Who would owe the new tax While Dan Loepp, the CEO of Blue Cross Blue Shield of Michigan was the highest-paid nonprofit executive in the state, with 2016 compensation of $13.4 million, the organization won’t be impacted by the new tax because it is recognized as tax-exempt only by the state and not by the IRS. It already pays federal taxes but is exempt from Michigan corporate taxes as a nonprofit mutual insurance company. It pays city and local property taxes, a

Nonprofit turnover High turnover among nonprofit CEOs is creating competition and driving salary increases. Nonprofits that have seen new CEOs or announced turnover this year include:

JJEdsel & Eleanor Ford House and Henry Ford Estate Inc.

JJAffirmations

JJHaven

JJAscension Michigan

JJJunior Achievement of Southeastern Michigan Inc.

JJArab American National Museum JJBoys & Girls Clubs of Southeastern

JJDetroit Parent Network

JJFocus: Hope

JJMichigan Science Center

Michigan

JJMosaic Youth Theatre

JJCapital Impact Partners

JJNeighborhood Service Organization

JJCharles H. Wright Museum of African American History

JJNew Detroit

JJCollege for Creative Studies JJCreative Many JJDetroit Area Agency on Aging JJDetroit Historical Society

ting prescribed goals, Steinhoff said. Half of the nonprofit CEOs on the list of the highest paid in Southeast Michigan received bonus or incentive

JJScarab Club JJSME JJSouthwest Solutions JJTurning Point JJUnited Way for Southeastern Michigan

compensation in 2016. The use of long-term incentives, which measure performance over a set period — typically three years —

1.25-percent premiums tax instead of the 6 percent corporate income tax and federal taxes. The employer of the second-highest-paid nonprofit executive in the region, CEO Phil Incarnati, McLaren Health, likely would be subject to the new excise tax, based on his 2016 salary. Assuming Incarnati is still being paid similarly this year now that the excise tax has taken effect, the health system would see an estimated extra tax bill of at least $1.15 million on his taxable income which included: $1.76 million in base pay, $1.55 million in bonus/incentive pay and $3.16 million in other compensation. Based on 2015 and 2016 compensation data, Crain’s estimates McLaren could see an estimated total excise tax of about $1.5 million on the compensation of its five top-paid employees. “The excise tax is simply another incremental cost that we have to account for in our budgets,” said Kevin Tompkins, senior vice president, marketing and planning. Henry Ford Health System would have nearly the same estimated liability, extrapolating from 2016 figures. CFO Robin Damshroder in May told Crain’s the system expects to see a slight impact from the new tax, but is benefiting from other parts of the tax reform. and pay for performance at the end of that period, is also on the rise, Steinhoff said. Long-term incentives have been offered by large health insurers, health systems and a few other large nonprofits for 10-15 years. Now, more midsized nonprofits are beginning to include them in the compensation packages of their CEOs to focus executives on long-term performance. Such packages are also considered a retention tool.

Recruiting premium Beyond salary increases and more incentive payouts, experts point to significant increases in the compensation of new CEOs coming into organizations that had founders at the helm or other CEOs with long tenures. “If an executive has been there a while ... you may even find they’re getting behind the market,” Steinhoff said. When it’s time to replace them, nonprofits are finding they may have to pay more to entice a new CEO, he

“But we get a decline in the tax rate on taxable entities, so one (will net) out the other,” she said. Trinity Health CEO Richard Gilfillan’s 2016 compensation would result in an estimated excise tax of just over $306,000 for his compensation, alone. “There are many unanswered questions about this tax, and we expect the IRS will provide more guidance,” said Eve Pidgeon, Trinity’s manager, communications and public relations. “At this time, there could potentially be tax implications for us related to as few as five and as many as 15 employees across our entire 22-state system.” Trinity has no plans to avoid the tax and does not expect any issues with the “golden parachute” provision, she said. Two UM spinoffs are on the list of top-paid nonprofit CEOs in Michigan, but only one, NSF, would face the excise tax with estimated liability, based on reported compensation for 2016 paid to its CEO Kevan Lawlor, in the neighborhood of $107,500. Altarum Institute’s CEO Lincoln Smith’s taxable income, net of benefits and deferred compensation reported in a prior year, does not hit the $1 million threshold, Sarah Litton, manager, communications and public affairs, said in an email. The Troy-based Kresge Foundation pays just one of its employees in excess of $1 million in taxable income: its chief investment officer who oversees how the foundation’s $3.8 billion endowment is invested. Kresge does not anticipate making any “golden parachute” payments. Based on its estimate of actual compensation and incentives paid in 2018, the foundation estimates its excise tax will be about $75,000, said Jennifer Kulczycki, director of external affairs and communications. She said Kresge will budget accordingly for the cost of the excise tax, and it has no plans to outsource the position, a strategy at least one expert mentioned as a possibility when Crain’s reported on the changes for nonprofits coming as part of tax reform. Sherri Welch: (313) 446-1694 Twitter: @SherriWelch said. That’s a shift from the past when incoming CEOs were typically paid less, unless they were more experienced. Executives with management and fundraising experience are commanding more now, Weatherston said, noting that some nonprofit clients have paid 10 percent to 15 percent more for a new executive director or CEO. Often, nonprofit CEOs haven’t really thought about their own personal benefit, Creasy said. “They buried themselves in their work and accomplishments ... (but) within a few years of retirement, (they) are finding they don’t have much in the way of assets,” Creasy said. Part of the emphasis for increased compensation and benefits is to overcome that sort of risk, Creasy said. The new CEOs coming into the sector are pushing for more benefits, and boards are recognizing the need for them, he said. Sherri Welch: 313 (446-1694) Twitter: @SherriWelch

C R A I N ’ S D E T R O I T B U S I N E S S // J U LY 2 3 , 2 0 1 8

Top-paid nonprofit executives Crain’s compiles an online database of compensation of the top executives at prominent Southeast Michigan nonprofits and other major nonprofits in Michigan. This year’s review focused on compensation data for calendar 2016, which is the most recent available, given that nonprofits can get extension of up to 11 months after the close of their fiscal year to file their 990 tax forms. It includes large nonprofits and smaller organizations that in our judgment merited inclusion, such as civic and business organizations and smaller nonprofits whose CEOs earned compensation commensurate with their peers at larger nonprofits. The total compensation for some executives, where noted, is net of deferred compensation reported on a prior-year 990 to give a more accurate picture of that executive’s actual compensation and a truer ranking. Crain’s list does not include some organizations that compensate their top executives at comparable levels to peers on the list because their 990 filings were not yet completed and they did not provide separate compensation data to Crain’s. Those organizations include Ascension Michigan and the St. John Hospital Foundation/Providence Health Foundation. Other foundations with top-paid executives operated as units of the organization they raise money for, such as Beaumont Health, rather than as independent nonprofits. They do not separately report compensation data. Published here are some of the top-paid executives in Southeast Michigan by category. An expanded version of this list is available with a Crain’s Enhanced Membership at crainsdetroit.com/lists. Arts and culture 2016 top executive

Organization

2016 base compensation

2016 bonus and incentive

2016 Total Compensation

2015 Total Compensation

Dominic Dimarco

Cranbrook Educational Community

388,059

50,000

509,387

499,161

Patricia Mooradian

The Henry Ford

340,495

67,500

448,330

450,452

Ron Kagan

The Detroit Zoo

385,718

22,461

433,0531

467,3591

Salvador Salort-Pons

Detroit Institute of Arts

372,954

402,357

716,1623

Anne Parsons

Detroit Symphony Orchestra

325,096

15,000

398,730

446,149

2016 top executive

Organization

2016 base compensation

2016 bonus and incentive

2016 Total Compensation

2015 Total Compensation

Doug Rothwell

Business Leaders for Michigan

539,257

100,000

795,133

786,898

Sandy Baruah

Detroit Regional Chamber

362,477

107,312

510,928

690,116

Jeffrey Krause

SME (formerly Society of Manufacturing Engineers)

319,470

97,875

470,087

349,032

Beth Chappell²

Detroit Economic Club

285,600

346,698

327,853

Rodrick Miller²

Detroit Economic Growth Corp.

284,363

341,255

333,430

2016 top executive

Organization

2016 base compensation

2016 bonus and incentive

2016 Total Compensation

2015 Total Compensation

Susan Burns10

Wayne State University Foundation

296,525

320,598

Jill Hunsberger

Eastern Michigan University Foundation

184,101

210,836

147,566

Paul Miller

Presbyterian Villages of Michigan Foundation

147,171

15,069

162,240

156,0647

2016 top executive

Organization

2016 base compensation

2016 bonus and incentive

2016 Total Compensation

2015 Total Compensation

Richard (Rip) Rapson

The Kresge Foundation

702,780

0.00

812,958

766,732

Audrey Harvey

Blue Cross Blue Shield of Michigan Foundation

273,008

203,293

716,128

685,775

Mariam Noland

Community Foundation for Southeast Michigan

546,363

627,964

676,022

Tonya Allen

The Skillman Foundation

413,080

467,088

433,308

Douglas Bitonti Stewart

Max M. & Marjorie S. Fisher Foundation

406,300

40,229

446,529

415,700

2016 top executive

Organization

2016 base compensation

2016 bonus and incentive

2016 Total Compensation

2015 Total Compensation

Dan Loepp

Blue Cross Blue Shield of Michigan

1,540,000

10,380,000

13,420,000

9,030,000

Philip Incarnati

McLaren Health Care Corp.

1,762,990

1,548,156

6,658,3264

6,612,381

Nancy Schlicting², 9

Henry Ford Health System/Henry Ford Health System Foundation

1,481,602

2,366,503

4,746,145

4,766,978

John Fox

Beaumont Health

1,681,311

965,357

3,119,371

2,315,9025

Wright Lassiter²

Health Alliance Plan of Michigan

1,232,452

965,938

2,550,153

2,310,1266

2016 top executive

Organization

2016 base compensation

2016 bonus and incentive

2016 total compensation

2015 total compensation

John Thorhauer

United Methodist Retirement Communities

370,581

64,578

456,7781

501,417

Herman Gray²

United Way for Southeastern Michigan

354,887

65,625

455,170

589,306.827

Roger Myers

Presbyterian Villages of Michigan

337,198

34,826

384,614

347,818

Sam Beals

Samaritas

247,450

22,482

366,284

262,575

Scott Kaufman

Jewish Federation of Metropolitan Detroit/United Jewish Foundation

336,890

346,183

340,536

2016 top executive

Organization

2016 base compensation

2016 bonus and incentive

2016 Total Compensation

2015 Total Compensation

Kevan Lawlor

NSF International

588,830

914,147

2,146,3841

1,673,9451

Lincoln Smith

Altarum Institute

358,050

543,171

1,158,0481

1,039,7271

W. Clark Durant

The New Common School Foundation

474,000

517,669

545,418

Larry Alexander

Metropolitan Detroit Convention and Visitors Bureau

397,905

417,562

396,058

Kristen Holt

GreenPath Financial Wellness

204,547

42,000

262,4505

475,7765, 8

Business organization

Fundraising foundations

Grant-making foundations

Health care

Social services

Other

1 Total compensation as listed is net of deferred compensation reported on prior year 990. ² CEO is no longer in this position. 3 2015 compensation paid to former Director Graham Beal.

4 Figures for 2016 provided by McLaren Health Care Corp.; 990 is still being completed.

8 2015 compensation paid to former President and CEO Jane McNamara.

5 Partial year salary.

11 Schlicting’s compensation was paid out through Henry Ford Health System

6 2015 compensation paid to former President and CEO James Connelly.

12 Compensation from nonprofit. Susan Burns succeeded Chacona Johnson effective Feb. 8, 2016.

7 2015 compensation paid to former CEO Michael Brennan.

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 3 , 2 0 1 8

Detroit-based Basco of Michigan Inc. plans to redevelop the Busy Bee Hardware properties at the northeast corner of Russell Street and Gratiot Avenue in Eastern Market for $6 million. ANNALISE FRANK/CRAIN’S DETROIT BUSINESS

Developer Basco to renovate Busy Bee properties By Annalise Frank

Need to know

Detroit real estate investor Roger Basmajian has signed on to restore the Busy Bee Hardware buildings at the corner of Gratiot Avenue and Russell Street in Eastern Market. Basmajian’s Detroit-based real estate firm, Basco of Michigan Inc., is investing $6 million to build out three or four ground-floor commercial spaces and 10 residential units, likely apartments, on the second floor. Century-old mom-and-pop outfit Busy Bee Hardware closed last summer and its third-generation owners, siblings Richard Crabb and Sandy Novak, sold its swath of buildings just south of I-75 and Eastern Market proper to Basmajian. Basmajian, whose official Basco titles are president and CEO, bought

Market buildings after century-old hardware store closed

afrank@crain.com

JJRoger Basmajian bought Eastern

JJBasmajian’s Basco of Michigan Inc. to deliver 10 residential units, retail spaces in $6 million project JJWants to restore buildings historically, keep some murals

a total of approximately 20,000 square feet at 1401 Gratiot Ave., 1409 Gratiot Ave., 1413 Gratiot Ave., 1415 Gratiot Ave. and 1417 Gratiot Ave., and a parking lot at 2326-2336 Russell St., in January, according to Basmajian and Detroit property records. He declined to disclose the purchase price. The Detroit News reported at the time that the sale was worth about $2.6 million.

Basco is the developer on the project and has contracted Stuckey Vitale Architects of Royal Oak. It hasn’t yet chosen a general contractor, Basmajian said. The brick buildings are easily recognizable — they’re slathered with murals. “We have quite a bit of brick work and restoration to do and wherever we don’t have to disturb the artwork that’s been applied to the building over the years, we want to save a lot of that, which is going to be an interesting proposition, given how much restoration we have to do,” he said. “But we’ll definitely save significant chunks of the back and the east side and whatever we can.” The developer hasn’t chosen tenants or finalized residential unit pricing, he said, but has had interest from

restaurants for the corner space. Basmajian said he’d also like to see some “eclectic” retail, perhaps a gallery or two; “something that fits Eastern Market properly.” To start, the parking on Russell Street, behind the buildings, will remain a surface lot. Later, depending on permitting, it could get two to three stories of raised new construction, Basmajian said. Basco has already overseen some stabilization work. It expects to officially break ground in the spring and complete the project by the end of 2019. Basmajian wants to bring the buildings’ “historic character back” and try to fit into the existing Eastern Market atmosphere. Annalise Frank: (313) 446-0416 Twitter: @annalise_frank

More Eastern Market projects JJSanford Nelson acquired a 142,500-square-foot Eastern Market portfolio over the last 18 months and told Crain's that he wants to preserve the neighborhood's identity as he redevelops. JJA $1 million renovation of the Viola Building just south of the Busy Bee properties started in June JJAcross Russell Street, a $106 million mixed-use development called the Eastern Market Gateway is in the works. JJASH NYC bought about 110,000 square feet along Adelaide Street earlier this year from Santemp Co. It envisions a mixed-use redevelopment of six buildings between Orleans Street to the east and just west of Riopelle Street.

Fledgling car subscription service Mobiliti buys Condor Detroit By Dustin Walsh

Need to know

Plymouth-based vehicle subscription startup Mobiliti LLC acquired competing Detroit competitor Condor Detroit, the company said in a press release. The deal represents early consolidation in a fledgling automotive finance category in a market where business models are still being figured out and future customer demand has yet to be proven. Terms of the deal were not disclosed. Condor founder Tarun Kajeepeta will become Mobiliti’s COO, and its head of operations Aaron Bedell will become Mobiliti’s director of dealer services in the Midwest, the company said in a release. Mobiliti currently has 175 subscribers, including Condor’s 75 metro Detroit subscribers, and projects to generate $4 million in revenue in

local competitor Condor Detroit

dwalsh@crain.com

JJCar subscription service Mobiliti buys JJTerms of the deal were not disclosed

JJCondor founders to join Mobiliti in executive roles

LARRY PEPLIN FOR CRAIN’S

Tarun Kajeepta (left), founder of Condor Detroit, will become COO of Mobiliti, and Aaron Bedell will become director of dealer services in the Midwest.

the next 12 months. “Condor has quickly built a vehicle subscription service with a strong tech-

nology platform and a robust growth trajectory,” Chance Richie, CEO and co-founder of Mobiliti, said in a state-

ment. “Adding the Condor team’s experience and customer focus to the Mobiliti family allows us to quickly enter the market in Michigan and further support our ambitious national growth plans for 2018 and beyond.” Both Mobiliti and Condor offer subscription programs that promise a speedier, more flexible experience for their members, who pay a flat monthly fee — insurance and maintenance included — to drive a new or used car whenever they want, for as long as they want. Condor launched its vehicle subscription service in Southeast Michi-

gan in December, and Mobiliti began in Austin, Texas, on May 1. Mobiliti works with former General Motors financing arm Ally Financial, which will offer fleet financing to dealerships in the program. Dealers maintain ownership of the vehicles, while Mobiliti maintains the customer interactions via its mobile app or website. Condor worked differently, owning its vehicle fleet at launch. Mobiliti said it will initially maintain that business model in metro Detroit for existing customers and move new customers to its business model via its mobile app and Condor’s website. Mobiliti recently signed agreements with Tamaroff Auto Group in Southfield and Clarkston-based Bowman Auto Group to allow subscribers access to a variety of cars on their lots. 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 3 , 2 0 1 8

CALENDAR

DEALS & DETAILS

TUESDAY, JULY 24

THURSDAY, JULY 26

Apprenticeship Info Session: Addressing the Manufacturing Talent Shortage. 9:30-11:30 a.m. 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

Everything is a Presentation with Michael Angelo Caruso. 5:30-7:30 p.m. TiE Detroit. Speaker Michael Angelo Caruso, founder and president of Edison House, an Caruso international consulting firm specializing in corporate and personal improvement. TechTown — The Garage. Free. Contact: Jacqueline Perry, phone: (248) 254-4087; email: jacquelinep@kyyba.com; website: detroit.tie.org

WEDNESDAY, JULY 25 Lead Your Company To The Top: Strategic Planning Workshop. 8:3010:30 a.m. 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

UPCOMING EVENTS All Small Mentor Protege Program. 9 a.m.-noon July 31. Schoolcraft College. Class provides an overview of the Small Business Administration All Small Mentor-Protege Program and its qualifications. Expectations for participation, program restrictions and benefits to both the protege and mentor are explained. Joint ventures, teaming and subcontracting are also covered. Free. Schoolcraft College. Contact: Kara or Shannon, phone: (734) 462-4438; email: ptac@schoolcraft.edu; website: schoolcraft.edu/ college-events/2018/08/23/col-

lege-events/government-contracting-101

ACQUISITIONS & MERGERS

Mobility — Three Important Trends for 2018. 3-5 p.m. July 31. Jacapps Inc. A networking and informational event with executives from software company Jacapps giving brief updates on 2018’s mobile trends. Presentations include: media consumption trends: Fred Jacobs, founder; what are apps for business? Paul Jacobs, president; smart speaker update: Bob Kernen, COO. Free. Jacapps, Bingham Farms. Contact: Christopher Dinnan, phone: (248) 858-1922; email: dinnanc@oakgov.com; website: eventbrite.com/e/ te ch248-sp e cial-e vent-mobili ty-three-important-trends-for-2018registration-47517246363

J Gordon Advisors PC, Troy, a certified public accounting and business consulting firm, acquired Tobias, Vandeputte & Skulsky PC, Troy. Gordon Advisors will absorb the 12-person team into their current team of 60 and will continue operations at one location in Troy. Websites: gordoncpa.com and tobiascpa.com J LeadGen Network Organization Inc., Brighton, a marketing company, acquired Billy.com from MediaBoost Inc., San Jose, Calif. Billy.com uses technology that connects consumers with professional service providers across the country. Websites: Billy.com

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 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

CONTRACTS J MMS Holdings Inc., Canton Township, a clinical research organization, has an agreement with Gemphire Therapeutics Inc., Livonia, a biopharmaceutical company, supporting data in achieving its primary endpoint — the reduction of triglycerides by gemcabene in patient trials. Websites: mmsholdings.com, gemphire.com

EXPANSIONS J Kraig Biocraft Laboratories Inc., Ann Arbor, developer of spider silk based fibers, has opened a Prodigy Textiles Co. Ltd. facility in Quang Nam prov-

CRAIN’S IS THE HOME FOR

NOTABLE WOMEN IN MICHIGAN

At companies across Michigan, notable women navigate company restructurings, argue high-stakes legal cases and find efficiencies in manufacturing processes. These women also mentor, teach and volunteer in their communities. Through this series, Crain’s Detroit Business will profile more than 200 women in business this year.

BE ON THE LOOKOUT FOR THESE UPCOMING FEATURES IN THE NOTABLE WOMEN SERIES: L TA B

WOMEN IN TECH NO

AUG. 13

L TA B

WOMEN IN MARKETING NO

OCT. 8 NOMINATIONS OPEN AUG. 1

DEC. 10

NOMINATIONS OPEN AUG. 1

If you’d like to nominate a woman you know, stay tuned at www.crainsdetroit.com/nominate

ince, Vietnam. The facility will support planned growth in Vietnam through a first phase of operations and for future expansion on land located nearby. Website: KraigLabs.com.

NEW PRODUCTS J Cebos Ltd., Farmington Hills, a management software provider, introduced a new version of CEBOS Quality Management Solution software that includes new applications for risk management and team performance management and a faster upgrade process. Cebos is a division of QAD Inc., Santa Barbara, Calif. Website: cebos.com J Meritor Inc., Troy, a commercial truck supplier, launched 20 bearing and seal kits and 70 individual bearings covering Meritor and Dana axles for customers requiring aftermarket parts engineered to exacting specifications. Website: meritor.com

STARTUPS J Family law attorney and mediator Susan E. Paletz has launched Mediator To Go, Farmington Hills, providing mediation services at locations convenient to attorneys and clients in Oakland, Macomb and Wayne counties. Website: MediatorToGo.com

Submit Deals & Details items to cdbdepartments@crain.com

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 3 , 2 0 1 8

Accelerate Michigan puts focus on relationships in pitch competition By Tyler Clifford tclifford@crain.com

The Accelerate Michigan Innovation Competition is returning for a ninth season with a new format for entrepreneurs to pitch for $1 million in cash and prizes. Organizers of the annual event, scheduled for Nov. 13 at the new Lexus Velodrome in Detroit, say the new structure intends to give more face time with investors. The event will allow space for the investors to make their case to entrepreneurs, as well. “We are emphasizing one-on-one meetings this year and making sure we give the finalists the opportunity to engage” investors, Invest Detroit Ventures Senior Vice President and Managing Director Patti Glaza said. “We’re trying to drive investors, mentors, accelerator programs, business services and talent that can really develop the companies. It’s to create a support infrastructure and relationships that can help them be successful.” Glaza expects to see the “typical” amount of 160-180 submissions, from which dozens of semifinalists will be chosen. Businesses have until Aug. 31 to apply for the competition

ACCELERATE MICHIGAN

Winners take the stage last year at the Masonic Temple in Detroit for the 8th Annual Accelerate Michigan Innovation Competition.

and must register by Aug. 15 to be eligible. The agenda includes meetings with entrepreneurs, angel investors, venture capital firms, business acceleration resources and experts at the velodrome, the release said. About 50 investors have attended in years past.

“This helps entrepreneurs to better themselves and their businesses whether they win the cash or not,” said Chris Rizik, CEO of Renaissance Venture Capital Fund and member of Invest Detroit’s board. “These are meetings that would be really tough to get otherwise.”

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

CONSTRUCTION

ADVERTISING & MARKETING Angela Wagner

Blake Zuidema

President

Director, Auto Technical Services

R.J. Conlin Marketing & Design

Donielle Wunderlich Senior Project Manager Elected to Board of Directors

AUCH Construction AUCH Construction, a Pontiac based construction services company founded in 1908, has announced that Donielle Wunderlich has been elected to its Board of Directors. Wunderlich, who joined AUCH in 1997, will, in addition to her role in company operations, continue with strategic planning and corporate governance. She is active in the industry having served on the Construction Association of Michigan’s Board of Directors as well as the Board of National Association of Women in Construction.

AUTOMOTIVE

R.J. Conlin is pleased to announce that Angela Wagner has been promoted to President. Angela will lead the Ann Arbor based agency with a focus on delivering a full-range of marketing, brand development, and digital services. She possesses a unique blend of strategic, management, branding and creative experience. Under Angela’s leadership, R.J.Conlin Marketing & Design will start an exciting new phase in its 30-year history.

Novelis Zuidema leads and coordinates the development of customer technology programs for Novelis, the world’s leading supplier of aluminum sheet to the automotive industry. He also manages a growing team of Novelis engineers in Novi. Zuidema has more than 35 years of R&D experience in the raw materials sector of the auto industry. Most recently, he was a Sr. Director at ArcelorMittal in its Global R&D organization. Blake holds a doctorate in Metallurgical Engineering from the University of Michigan.

Invest Detroit’s venture team ID Ventures puts on the pitch competition to showcase Michigan’s entrepreneurial ecosystem. Semifinalists, which will be selected Oct. 3, get to pitch judges at a large seated dinner that is open to the public. “We decided to mix things up this year. The velodrome has a great forum for these one-on-one meetings,” Glaza said. “Around the center, they have these individual areas where the companies can have these oneone-one meetings that allows people to interact and engage in a more open setting than the pitch rooms we had in the past.” The grand prize is $500,000, with an additional $250,000 in grants and $250,000 in investments on the table. Last year Orbion Space Technology, a satellite systems maker in Houghton, took home the biggest check. Entrepreneurs can apply for the Accelerate Michigan Innovation Competition at acceleratemichigan. org. For sponsorship opportunities, contact Randy Hyder at randy.hyde@ investdetroit.com. Tyler Clifford: 313-446-1612 Twitter: _TylerTheTyler_

PEOPLE BANKING/FINANCE J Ryan Goldberg to executive vice president and director of Retail Banking, Flagstar Bank, Troy, from executive vice president and head of Priority Banking and Branch Small Business, Regions Bank, Birmingham, Ala. J Jerome Pender to chief information officer, Credibly (formerly Retail Capital LLC), Troy, from group chief information officer, operating partner and managing director, Z Capital Partners LLC, Chicago.

NONPROFIT J Alicia Torres to CEO, Payformance Solutions, Ann Arbor, from chief financial officer and senior vice president of new ventures, Altarum, Ann Arbor.

REAL ESTATE J Jon Tallinger to chief growth officer, Class Appraisal LLC, Troy, from vice president, sales and marketing.

RESTAURANTS

KNOW SOMEONE ON THE MOVE? For more information or questions regarding advertising in this section, please call Debora Stein at (917) 226-5470 or email: dstein@crain.com

J Patricia Lopez and Corie Barry to board of directors, Domino’s Pizza Inc., Ann Arbor.

RETAIL J Rebecca Eve Schweitzer to marketing and merchandising manager, Beaver Tile and Stone, Farmington Hills, from independent marketing and content consultant, Sterling Heights.

To submit news of your new hires or promotions to People, go to crainsdetroit.com/peoplesubmit and fill out the online form. Please limit submissions to management- or partner-level positions.

SPOTLIGHT Airport authority gets new interim CEO

The Wayne County Airport Authority named its vice president of public safety Chad Newton as its new interim CEO, with current interim leader Genelle Allen set to return to her job as chief operating officer for the Newton county. Allen was to step down last week after six months in the post, the authority said in a news release. She joined in January as interim CEO on an unpaid leave of absence from her job as Wayne County COO. The leave was originally set for 60 days, Wayne County spokesman James Martinez said in an email, but it was extended as the airport authority worked on its transition plan.

SME seeks new leader

SME’s CEO will part with the Southfield-based nonprofit manufacturing association next month. Jeff Krause will leave Aug. 15, having served as executive director and CEO for nearly four years, SME anKrause nounced in a news release. The nonprofit, formerly the Society of Manufacturing Engineers, is hiring an executive recruitment firm to help search for his replacement. Under Krause’s direction, the association increased revenue 22 percent, grew its student training partnership to 46 schools and moved headquarters for the first time in a half century.

Lions name charity operations head

The Detroit Lions have hired nonprofit veteran Jen McCollum to lead the team’s community outreach and philanthropic foundation. In the newly created role as senior director of community relations, McMcCollum Collum, a 35-year-old native of Grand Blanc, is charged with generating revenue and developing programming for Detroit Lions Charities, as well as managing relationships with the Detroit Lions Legends and the Detroit Lions Women’s Association, according to a news release. Lauren Clayborne, who became the team’s director of community relations in 2016, will maintain that role and now report to McCollum, team spokesman Ben Manges said. McCollum comes most recently from the nonprofit Northern Virginia Family Service.

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 3 , 2 0 1 8 CRAIN’S DETROIT BUSINESS

July 23, 2018

PROTON FROM PAGE 1

Meanwhile, McLaren Health Care Corp.’s proton beam center, which was completed two years before Beaumont opened its center, expects to finally open in late summer or early fall, causing Grand Blanc-based McLaren to scramble to hire consultants to complete the project, said Greg Lane, McLaren’s chief administrative officer. Various issues caused the delay, including the bankruptcy of the company that McLaren planned to develop the center with. One of five subcontractors also dropped out of the project, Lane said. In 2015, McLaren completed its $50 million, three-room proton beam center and received a federal permit from the Food and Drug Administration to treat patients. However, Texas-based ProTom International Inc. filed for bankruptcy. McLaren was forced to take over project management of the center next to its 458-bed McLaren Regional Medical Center in Flint. Lane said the delay, which included completing the center’s control system and re-manufacturing some mechanical parts, bumped up the cost of the center about 25 percent to $65 million. “We are a couple years behind, but we have a good team now,” Lane said. “You just pick up the Yellow Pages and pick up these parts and find engineers with particle therapy” experience.

MedPAC report Because Medicare’s payment rates are substantially higher for proton beam therapy than other types of radiation therapy, the Medicare Payment Advisory Commission, or MedPAC, called proton therapy “low-value care” in a June annual report because of high prices and limited clinical use. MedPAC noted from 2010 to 2016, spending and volume for proton beam therapy in fee-for-service Medicare grew rapidly, driven by a sharp increase in the number of proton beam centers and Medicare’s relatively broad coverage of this treatment. During that period, spending rose from $47 million to $115 million. Proton beam therapy — initially used for pediatric cancers and rare adult cancers that expanded to common conditions as prostate and lung cancer — offers little clinical advantage over alternative treatments for these types of cancer, MedPAC concluded. But Stevens said MedPAC’s evaluation is outdated and doesn’t directly apply to Beaumont’s proton center, which he says is state-of-the-art with what is known as pencil beam scanning. He said doctors only conduct cancer treatments that are proven to be clinically effective over traditional radiation therapy. One of the reasons Stevens disputes the MedPAC report is that Beaumont regularly conducts comparison treatment plans and shares them with health insurers as part of the prior approval process. “There are a handful of cases like chordomas, left-sided breast and lung cancer, head and neck, where (proton) is treatment of choice,” Stevens said. A chordoma is a primary malignant bone cancer that develops slowly and is most commonly found at the base of the skull and in the lower spine. Stevens said Beaumont’s ProteusOne is accurate up to 2 millimeters

Need to know

Beaumont Health’s proton beam center celebrates first year with double number projected patients 

 McLaren’s proton beam center could open by this fall after three-year delay  MedPAC report describes proton therapy as “low-value care;” Beaumont, McLaren disagree

and can deliver up to three times as many proton doses to the tumors and avoid healthy tissue because of its accuracy. “(MedPAC) tried to apply the standards used for drug approval to radiation therapy,” said Stevens. “In general you would agree that less dose better than more dose. The trick is to prove that clinically. You wouldn’t pick an X-ray plan with a higher dose.” Stevens said the MedPAC report is flawed because radiation dosage wasn’t addressed. “I talked with Blue Cross a couple weeks ago and they look at dose to normal structures,” he said. “You look at radiation dose for breast cancer. They most live for decades after treatment. You look at an acceptable dose to the heart for breast cancer treatment, if you can get the heart dose down under 70 percent, as we did a couple weeks ago, that is great.” Stevens said Beaumont radiation oncologists plan to submit several papers that will document the benefits of lower doses. McLaren doctors also plan to conduct research and publish papers. However, Stevens acknowledged that using proton beam treatment for prostate cancer is not always the best clinically. In addition, some lung cancer and head and neck cancer cases can be treated in other ways. “Lung cancer, it depends on the location of the tumor and toxicity,” he said. “Some lung cancers are of no advantage to X-rays. .... Not all head and neck cases get proton.” Beaumont Health’s radiation oncology department, which Stevens heads up, also offers a variety of other radiation treatments that include adaptive radiation therapy, image-guided radiation therapy, highdose rate brachytherapy and intraoperative radiation therapy — all intended to destroy cancer with precision and fewer side effects. “The crux (of the issue) is sparing normal tissue and doing comparative evaluations,” he said. “Lower doses (of radiation) means lower toxicity.” Stevens did acknowledge that proton therapy costs more initially than radiation therapy. The equipment is more expensive and the steps taken to get the patient ready for treatment are also more complicated. However, Stevens said long-term costs are lower with proton beam therapy because of fewer treatments and less radiation dosages. He also said cure rates are better for some cancers, including adult brain and spinal tumors and pediatric cancers. He said proton beam therapy is comparable to alternative treatments for prostate, lung and liver.

Long, winding road In Michigan, proton beam therapy — an alternative to traditional radiation treatment that precisely targets cancer cells and avoids healthy organs and tissues — goes back to 2008 when competition began in earnest to be the first hospital to open a center. Hospitals competing for that included Beaumont, McLaren, Henry Ford Health System, St. John Provi-

dence Health System and the University of Michigan. A consortium of hospitals, led by Henry Ford and UM Health System, even considered building a $300 million carbon ion therapy cancer center. Plans were tabled during the 2008-2009 recession. The Beaumont single-room center is one of only 25 active proton beam centers in the U.S., although there are 11 under development at costs that range from $30 million to more than $200 million, according to the National Association for Proton Therapy. One reason Beaumont’s proton patient volume doubled expectations is that Stevens was able to recruit two leading radiation oncology specialists to Michigan. They are Peyman Kabolizadeh, M.D., a sarcoma expert who recently completed a fellowship at Massachusetts General; and Rohan L Deraniyagala, M.D., a head and neck cancer specialist who recently completed a fellowship at University of Florida Proton Therapy Institute. Deraniyagala is a graduate of Wayne State University School of Medicine. “(We attract patients) much the way MD Anderson gets patients,” Stevens said. “When you write papers that talk about treatment of diseases, a subgroup of patients will seek you out. That happens to me with lung cancer, and combine that with new technology,” he said. Beaumont developed a steady patient pipeline. Patients have come from Michigan, Ohio, Pennsylvania, Missouri, California and Hawaii. Stevens said the proton center hit revenue projections for the first year and is estimating 225 patients for year two, double the number of the first year. Beaumont projected it will eventually treat 300 to 500 patients per year. “We treat until 8 or 9 p.m. at night and start at 7 a.m.,” he said. The McLaren Proton Therapy Center uses a Radiance 330 synchrontron, which was made in Russia and shipped to McLaren in 2010, and also uses pencil beam scanning to increase the accuracy and effectiveness of the proton energy beam. The system, like Beaumont’s, also uses independent cone beam CT imaging system that helps the physician visualize and control the location of the proton beam during active treatment sessions. Lane said the delay allowed McLaren to expand the types of cancer treatments it can offer patients. When the center opens, the plan is to offer treatment for prostate cancer and certain types of solid tumors in head and neck. Later, McLaren plans to add treatment for breast and lung tumors. “We will open the first room, and the second room will come on six to nine months after that,” Lane said. “We will hold off on the third room. We talked about pediatrics, but we don’t have a timetable for that.” Lane said McLaren has not changed its projections for volume, despite the delay and the competition from Beaumont. In 2015, McLaren projected it would serve about 100 patients per year at full capacity. “We have competition, but the need is there. You look across the country and some centers are doing outstandingly well,” Lane said. “The proton industry has not done a good job in publishing research. We believe proton offers an increase in types of tumors treated over time.” Jay Greene: (313) 446-0325 Twitter: @jaybgreene

Page 17

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DEGC to roll out supplier program

MCLAREN FROM PAGE 3

Plans for the cancer unit include single-bed rooms for privacy with extra space for family waiting and sleeping areas. The unit also includes rooms for an intensive-care unit and an intermediate-care unit staffed with clinicians who specialize in critical care. One of the hospital’s six operating rooms will be outfitted for cancer surgery. Dimond said 50 to 60 nurses, pharmacists and other employees are being hired to staff the new unit that projects to be 90 percent to 100 percent occupied once all 21 beds are open in the next six months. The new staff is being trained in Karmanos-styled care at the Detroit main hospital, she said. “Everything is in one unit. The ICU, two step-down beds ... and a (sixbed) acute care center to avoid going to the ER,” said Dimond, adding daily volume for the care center is expected to be three to 10 patients. The cancer care center will be inside the oncology unit for cancer patients who sometimes need minor treatments including for pain, vomiting and diarrhea, said Justin Klamerus, M.D, president of Karmanos Cancer Hospital. “Oftentimes quick intervention can prevent hospitalizations,” he said. “We send home about 90 percent (of patients).” Dimond said types of cancers treated at McLaren Oakland will include breast, lung, ovarian and cervical. “Most complex care will be done in Detroit” at the Barbara Ann Karmanos Cancer Hospital, she said. McLaren Oakland will closely collaborate with Karmanos in Detroit along with other surgical and gynecological cancer programs in Flint, Farmington Hills, Clarkston and Bay City, Klamerus said. In May, Karmanos announced plans for a $47.5 million renovation to its Lawrence and Idell Weisberg Cancer Treatment Center in Farmington Hills.

Partnering with private oncology group McLaren also scored a win by recruiting superstar hematologic oncologists Jeffrey Margolis, M.D. and Adhil Aktar, M.D., to oversee cancer treatment in Pontiac. Margolis and Aktar, who will oversee daily operations at McLaren Oakland, will create a team approach with physicians, nurses, dietary, pharmacists and social workers seeing patients with daily multidisciplinary rounds, Dimond said. Margolis also is president of Michigan Healthcare Professionals PC, a multispecialty group based in Farmington Hills with more than 350 doctors in 100 practice locations. He said McLaren's new cancer unit model and research opportunities with Karmanos led to the partnership. "I have always been most concerned about providing the best care and seeking out partners to help you do that," Margolis said. "One thing Karmanos decided to do is to create the best facilities to care for patients and attract the patients there.” Margolis said Michigan Healthcare has 18 medical oncologists who are on staff at multiple hospitals in Southeast Michigan, including Ascension Michigan's St. John Hospital and Providence Hospital, Beaumont Health and St. Joseph Mercy Hospital in Pontiac. Margolis said that once he started talking with Klamerus, Dimond and

By Kurt Nagl knagl@crain.com

Margolis said another reason he became involved with McLaren is the opportunity to “have increased access to Karmanos’ clinical trials for additional treatment options” for the group’s patients. “Karmanos has a very large research footprint with phase-one trials, bench research and access to novel therapies,” such as stem cell treatments, Margolis said. “There is a tremendous amount of clinical research only offered through Karmanos.” Klamerus said over the past four years the number of trials and patient enrollment have grown tremendously at Karmanos. “Because we are (a designated comprehensive cancer center), we need to do catchment area research and population health research,” Klamerus said. “As that program takes on more counties in Michigan, Pontiac and other areas, it leads us to develop programs for early detection and risk assessment to improve the gaps.” Founded in 1953, McLaren Oakland has a medical staff of 300 physicians and outpatient centers in Clarkston and Oxford and a nursing home in Lake Orion. The former Pontiac Osteopathic Hospital also features emergency, trauma and stroke care, cardiology, minimally invasive robotic surgery and orthopedic services. Karmanos Cancer Institute is the largest cancer care and research network in the state. It also is affiliated with Wayne State University School of Medicine.

The Detroit Economic Growth Corp. is launching a new capacity building program for local suppliers. The public-private economic development nonprofit released a Need request for pro- to know posals last week JJNew program in search of a would mentor and vendor to run train up to 40 local the program as it suppliers looks to redesign JJGoal is to its D2D busi- strengthen n e s s - t o - b u s i - business-to-business operation. ness sector by The DEGC is building capacity seeing a vendor of local suppliers to recruit Detroit-based sup- JJProposals due pliers that have Aug. 15; contract to the capacity to be awarded later scale rapidly and this year accommodate demands from large local buyers, according to the RFP. The program will support as many as 40 suppliers — 20 per sixmonth cohort — in its first year. Bigger picture, the organization is hoping to ramp up its D2D initiative of growing the economy by keeping business local. It says that growing the local business-to-business sector could generate $2.5 billion in revenue for companies and support 7,700 local jobs. The goal of the new program is to increase a suppliers’ volume by at least $100,000 within one year after it completes the program. Peer-to-peer mentoring and coaching from experts are central components. Participants would learn about buyer requirements, accreditation, bidding and pitching, resource management, building relationships and tailoring products, according to the RFP. The vendor would also be responsible for devising a business curriculum to facilitate the supplier’s growth, delivering a mentorship program tapping into buyers and business leaders, and reporting to the DEGC on the suppliers’ business. Proposals are due Aug. 15. A oneyear contract is expected to be awarded in the third quarter of this year. The program redesign is aimed at improving “effectiveness in addressing local supply chain leakages,” according to the document. In its new direction, the D2D program will be “driven by the needs of Detroit’s large buyers,” and will target disadvantaged business enterprise suppliers, according to the RFP. D2D is funded primarily through donations made to the nonprofit Detroit Economic Growth Association, which is staffed by the DEGC.

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

Kurt Nagl: (313) 446-0337 Twitter: @kurt_nagl

MCLAREN

McLaren Oakland hospital in Pontiac will feature the first newly created Karmanos-branded hospital cancer unit under McLaren.

Margaret Dimond: All in one cancer unit

Justin Klamerus, M.D.: Trials growing

others about the new unit at McLaren Oakland about six months ago, the executives decided to create a unit similar to Karmanos Detroit and also John Hopkins Hospital, where Margolis completed a fellowship in hematology and oncology. “This is a very different model. When you look at the system, most (hospitals) have a cancer center floor. This is a hospital within a hospital,” Margolis said. “You get admitted to the hospital, and if you get sick, you get transferred to an ICU in the hospital.” But Margolis said patients at the new unit at McLaren Oakland will be moved into the unit's own dedicated ICU if the need arises. Under the partnership arrangement, Klamerus said McLaren has signed a management contract with Margolis' Cancer Care Management Group LLC, a year-old group that is not part of Michigan Healthcare. He said McLaren often looks to independent physician groups for referrals and partnership opportunities, but with a new unit being built from scratch, the need was even greater. "With the volume you need to support the inpatient facility, we needed a larger group," he said.

Cancer Care Management initially will supply 11 oncologists to McLaren Oakland, increasing over time with surgeons and other specialists Jeffrey Margolis, as they are credentialed and M.D.: Very needed for different model growth, Margolis said. The group serving McLaren will include Margolis' father, Harold Margolis, D.O., a medical oncologist. "We will look to improve the patient experience, outcomes, and have the floor and hospital run in an efficient manner," said Margolis, adding his team will strive to give patients a 'hotel-like' experience. Klamerus said McLaren also has three employed medical oncologists that will also help staff the new oncology unit. Dimond said McLaren has two ambulatory care centers in Clarkston and Bloomfield Hills, where the employed oncologists practice, that refer to McLaren Oakland. “We are adding the next piece when (cancer patients) need inpatient care.”

Karmanos research expands into Pontiac area As a designated comprehensive cancer center with the National Cancer Institute, Karmanos has one of the nation’s largest clinical trials programs where patients can access the latest cancer-fighting drugs. Nearly 20 percent of cancer patients treated in Michigan visit Karmanos, Klamerus said.

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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 3 , 2 0 1 8

WALSH

Median household income for metro Detroit, despite being home to some of the largest employers in the nation, remains near the bottom in the U.S. at about $56,000. Only Orlando, Miami and Tampa, Fla., perform worse.

FROM PAGE 3

The contractors that constructed Little Caesars Arena signed an agreement with city officials, in exchange for $250 million in tax-exempt bonds and other incentives, to maintain an employment base consisting of 51 percent residents of Detroit. They failed to do so and were fined more than $5.2 million, a pittance for the incentives they received. The residents of Detroit, 79.7 percent of whom are black, are certainly not dancing in the streets thanks to new investments. Roughly 38 percent of the jobs in the city are considered high-skill, requiring at least an associate’s degree. That compares with 35 percent in Wayne, Macomb and Oakland counties, excluding Detroit, according to the Detroit Workforce Development Board. And with 63 percent of working Detroiters possessing no more than a high school diploma, those jobs go to suburbanites; 71 percent of all jobs in the city in 2014 (the most recent data available) were held by nonresidents. This leaves a labor force without labor. So much so that it’s crippled Detroit residents’ ambitions and many stopped looking for work all together. And despite several ribbon cuttings and bold headlines, the city’s labor force participation rate — those of working age who could be employed — is the lowest in the nation among major metropolitans at 55.2 percent in 2016, according to the U.S. Census Bureau. Post-bankruptcy investments have

FINAL FOUR FROM PAGE 1

As for the NCAA, it prefers that each participating team — players, coaches, staff, etc. — be housed in its own hotel, Smith said. However, Detroit’s bid included splitting each team over two or three hotels. He said Detroit has the hotel rooms available, just not in four hotels. “Unfortunately, in Detroit we’re not able to do that for all for (four) teams,” Smith said. The winning cities were, he added. The NCAA also was cautious about banking on future hotels. “The (site selection) committee has been burned in the past in other communities in what would be finished,” Smith said. “It’s still a risk they didn’t want to take.” There are about 5,000 hotel rooms in the greater downtown, ranging from the Marriott at the Renaissance Center to the little motels on Jefferson Avenue. In the last couple years, about 350 new rooms have been added to the downtown core, between The Foundation Hotel, The Siren Hotel and the Aloft hotel at the David Whitney Building. Another NCAA concern was the auxiliary spaces inside 64,500-seat Ford Field, the proposed Final Four venue. Final Fours since the mid-1990s have been staged in large enclosed stadiums rather than basketball arenas. Ford Field hosted the event in 2009. The Detroit Lions, the stadium’s operator and tenant, spent $100 million in 2016-17 to upgrade Ford Field's suites, scoreboards, lighting and sound system and to create new clubs and other premium spaces. However, Smith said the NCAA wasn't satisfied with those stadium spaces for games and related events. The hotels and stadium were not

JEFF KOWALSKY/BLOOMBERG

Downtown Detroit is booming, but many residents still struggle with poverty, poor housing and an inadequate public school system.

allowed the region’s poverty rate — those living below the poverty line, which is a sliding scale depending on factors like household size — to shrink in recent years, dropping several percentage points since emerging from bankruptcy in December 2014, according to the Census Bureau’s American Community Survey. But at more than 30 percent, it remains the highest in the nation. For context, Chicago’s is 18 percent; Birmingham, Ala., is 24

percent. Median household income for metro Detroit, despite being home to some of the largest employers in the nation, remains near the bottom in the U.S. at about $56,000. Only Orlando, Miami and Tampa, Fla., perform worse. So on July 18, the power players involved in Detroit’s historic bankruptcy gathered at Republic Tavern on Grand River and Cass avenues to cele-

brate the city’s new lease. There’s no reason they shouldn’t have. Since emergence, the city has balanced its budget several years in a row, vastly improved city services and received more than a few upgrades from credit agencies. These are all signs of a functioning city. But they’d be remiss if they forgot that Detroit has so very far to go to be top performer. Inequality, income and otherwise, remains a top priority.

issues in 2003, when the NCAA awarded Detroit and Ford Field the 2009 Final Four. But, Smith said, the event and requirements have grown since then. “It really came down to splitting hairs. The competition came down so close that they had to be extra picky about each individual community. We had the number of rooms they needed. It was a wish-list item of keeping them in fewer hotels,” he said. “We were at the table until the very end.” A message was left for NCAA officials. On Tuesday, the NCAA announced the winning cities — Houston (2023), Phoenix (2024), San Antonio (2025) and Indianapolis (2026). Dallas and Los Angeles were among the finalists failing to land Final Fours. When the NCAA awarded Detroit the 2009 Final Four, the other winning cities for that multi-year bid included Houston, San Antonio and Indianapolis — the same cities granted the championship games this time, with Phoenix replacing Detroit. Each has held multiple Final Fours except for Phoenix, which hosted one other.

General Motors Co. MSU and the Big Ten would have been hosts for the proposed Ford Field Final Four. Quarterbacking the pitch effort was the Detroit Sports Commission's Detroit Sports Organizing Corp., formed in October to act as ambassa-

negative loomed over Detroit’s bid: Michigan State University as the host school. MSU has gotten intense criticism nationally for its handling of the Larry Nassar gymnastics sex abuse scandal, and the city’s Final Four bid effort included lobbying by Izzo along with interim MSU President John Engler and former Athletic Director Mark Hollis. However, the sports commission said Thursday that MSU’s problems were not among the reasons the NCAA gave for not awarding Detroit a Final Four.

Pitching the officials

— Kris Smith, Detroit Sports Commission Director

Organizers filed their bids a year ago, and the NCAA visited Detroit for a formal site visit in early June. Officials toured Ford Field; the West Riverfront grounds, for a potential music festival; various hotels; Hart Plaza, Comerica Park, for a proposed tipoff tailgate; and Little Caesars Arena, the home of the Detroit Pistons. Among those participating in the visit were Michigan State basketball coach Tom Izzo, University of Michigan Athletic Director Warde Manuel, representatives from other universities and representatives from the business community, including Quicken Loans, Ford Motor Co. and

“It really came down to splitting hairs. The competition came down so close that they had to be extra picky about each individual community. We had the number of rooms they needed. It was a wish-list item of keeping them in fewer hotels. We were at the table until the very end.”

dors with NCAA decision makers and others who award sporting events. The 16-member committee is made up of political, civic and business leaders and executives from Detroit’s four pro-sports teams. The Detroit Sports Commission, a nonprofit subsidiary of the Detroit Metro Convention & Visitors Bureau launched in 2001 as the Detroit Metro Sports Commission, markets the city for amateur and college sporting events, acts as a go-between for media and corporate relations and provides organizational services. During the pitch, one potential

Hosting big games The loss of this NCAA Final Four bid isn't the end for Detroit. Smith said, hotel rooms and the stadium interior spaces are obstacles that can be overcome for future bids. And in April, the NCAA awarded the 2020 Frozen Four men’s ice hockey tournament to Little Caesars Arena along with seven NCAA championship events in golf, wrestling, fencing and bowling. Those stem from the sports commission’s August 2016 submission of 54 applications to bring 15 college championships in nine sports. Detroit also has major events, such as the Belle Isle Grand Prix and golf majors at Oakland Hills Country Club in Bloomfield Township. A PGA Tour event is coming to Detroit in 2019. Detroit also has a long history of hosting major sporting events, including two Super Bowls and two WrestleMania events, four baseball all-star games and other rounds of the NCAA basketball tournament. Little Caesars hosted the first two rounds earlier this year and will again in 2021. The Palace of Auburn Hills hosted the NCAA men’s regional games in 2000, and Ford Field hosted the re-

The schools need a bona-fide solution. Poverty must be addressed. For while the grand bargainers have moved on, most of Detroit has not. The investors from Sequoia Capital may have only seen Detroit’s best parts, what is defined in the city’s comeback story. But they are savvy enough to understand whether a region can create and sustain talent and prosperity. We’ll have to wait to see if these early investors in Apple, Google, YouTube and Instagram will reward Detroit’s potential with an investment. But our business and political leaders shouldn’t be satisfied. Because to paraphrase the late author Elmore Leonard, while other cities get by on their good looks, Detroit has to work for a living. So, get the people working or reap a future we just narrowly escaped. Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh gionals in 2008. Regionals also took place at the Pontiac Silverdome in 1988 and 1991 and at the Jenison Fieldhouse, former home of Michigan State’s basketball teams, in 1963. Detroit also hosts a college football bowl game and the MAC’s football championship. For the future, the city is seeking an expansion Major League Soccer team, and Lions officials told the NFL they want to host the league’s college draft, which has jumped cities in recent years. The Detroit Pistons also filed a bid to host an NBA all-star game at LCA, an event that also would hinge on more downtown hotel rooms coming online.

Not giving up There are no college championship bids in the pipeline right now because the NCAA has completed its latest cycle of picking sites, Smith said. However, the commission intends to bid on future NCAA tournament rounds, men’s and women’s Finals Fours and any other event they feel benefits the community, he added. In the meantime, the commission plans to analyze the failed Final Four bid to glean lessons for future applications. Of course, Detroit’s post-recession comeback narrative will remain part of the bid process. “The NCAA was here when Detroit had its downturn (in 2009). That’s fresh in their minds,” Smith said. “One of the narratives that we tried to convey to the NCAA is that when they bring their Final Four and championships to Detroit, they’re making a forever impact on our community, our youth and on everything we do in our community.” Bill Shea: (313) 446-1626 Twitter: @Bill_Shea19

C R A I N ’ S D E T R O I T B U S I N E S S // J U LY 2 3 , 2 0 1 8

AUTO SHOW FROM PAGE 1

Driving down fees Costs also deeply influenced the decision. Behind closed doors, automakers have long complained about the costs of the Detroit Auto Show, with every automaker attempting to out gun the next with bigger and brighter displays, made possible by the eightweek to 12-week load-in time the show’s January date. The nearly three-month setup for the January show left automakers employing contractors through Halloween, Thanksgiving, Christmas and New Year’s that caused serious spikes in costs from overtime and holiday rates, Alberts said. In June 2020, he said, the time automakers will have to erect displays and product move-in will be reduced to three weeks, leading to smaller, more efficient displays. Automakers are expected to save upwards of 40 percent between smaller displays and by eliminating much of the labor tied to the January show. “That’s what the automakers want,” Alberts said. “Look at other shows and how they’ve evolved. They are more streamlined and efficient. Geneva has a good formula. It’s about engagement and less about the production. That’s okay.”

How the venues might look Moving the North American International Auto Show to the summer opens possibilities for a festival atmosphere and wider interaction with downtown public space, which in turn could make the show a more vibrant event for automakers and attendees. www.crainsdetroit.com

Campus Martius

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

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Spirit Plaza

Festival-like atmosphere The 2020 auto show is expected to make use of Cobo Center, Cobo Center’s roof and potentially include outdoor installations and events, such as concerts in Hart Plaza, Campus Martius Park and other locales near the riverfront. None of which is finalized, Alberts said. Organizers are also looking at ways to utilize the Detroit River, including employing the use of water taxis to ensure attendees can get to the show. In addition, the auto show — which is expected to receive an as of yet-to-be-determined name change ahead of the 2020 event — will have an abbreviated press week schedule, likely combining one of the press preview days with the industry preview for auto industry workers. The organization is also considering ditching the black-tie requirement for the Charity Preview, Alberts said. The move to June is also designed to consolidate automakers’ product unveils back into the show itself. In recent years, many have chosen offsite locations to reveal new products, seeking to maximize coverage without competing with other companies’ products. Mercedes, BMW and Audi announced earlier this year they would skip the 2019 auto show as automakers rethink marketing strategies and new ways to unearth media exposure. Alberts hopes fundamentally changing the auto show into a festival-like event will lure automakers back. “(The German automakers) are vitally important to any show,” Alberts said. “We’ve been in contact with them as recently as this week. I believe they’ll be back in 2020. They like June.” The June auto show will compete with Detroit’s busy spring schedule, including the Chevrolet Detroit Grand Prix, Movement Electronic Music Festival and Detroit’s sports teams, including the Detroit Tigers and potentially the Pistons and Red Wings if either team makes a playoff run.

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NORTH AMERICAN INTERNATIONAL AUTO SHOW RENDERINGS

“When you have a nine-day show with a couple of weekends, everyone will have an opportunity to see it,” Alberts said. “People are going to come downtown; it’s June.” The show may also get more walkthrough traffic from those working

downtown, as the warm weather sees more foot traffic in the city. The 2019 auto show will be the last held in January and will run Jan. 14-27. “Tradition that carries on too long could be a mistake,” Alberts said. “We’re making a change when our

equity is very strong. The timing couldn’t be better to do this with changes in the industry and Detroit’s transformation. We’re excited.” Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh

CRAIN’S DETROIT BUSINESS ISSN # 0882-1992 is published weekly, except 1st issue in January and last issue in December, by Crain Communications Inc. at 1155 Gratiot Ave., Detroit MI 48207-2732. Periodicals postage paid at Detroit, MI and additional mailing offices. POSTMASTER: Send address changes to CRAIN’S DETROIT BUSINESS, Circulation Department, P.O. Box 07925, Detroit, MI 48207-9732. GST # 136760444. Printed in U.S.A. Contents copyright 2018 by Crain Communications Inc. All rights reserved. Reproduction or use of editorial content in any manner without permission is prohibited.

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 3 , 2 0 1 8

UNITED SHORE FROM PAGE 3

A massage parlor, game room and snack-filled VIP room are part of the lender’s competitive, reward-based strategy to promote productivity, said Laura Lawson, chief people officer for United Shore. It has also given out flights, Apple watches and cruises.

Connected campuses United Shore’s design decisions follow an established workplace trend of retail and tech giants — Nike Inc. and Google LLC, for example — as employers seek to retain talent through imbuing their campuses with more empathy and personality. These amenities aren’t always worthwhile on their own, said Marick Masters, a professor of management at Wayne State University’s Mike Ilitch School of Business. Their efficacy depends upon a pre-existing culture with two central tenets: “One is, what does the employer do to engage people and involve people and make them feel meaningful to begin with?” Masters said. “The other aspect of it is to ensure you’re providing sufficient opportunities for them to develop professionally and grow on the job.” Ishbia and Lawson said United Shore has these building blocks. Around 60 percent of team members came referred by other employees. The company’s campus resources are paired with a focus on training and on personal growth, including through regular employee-led meetings with leadership called “YourTimes,” they said. The company has 40 full-time trainers and aims to log 100,000 training hours in 2018.

Return on investment Ishbia can’t prove more amenities build more productivity. “The best part is you can’t, which is why my competitors won’t do it,” he said. “You can’t say, ‘What’s my return on investment?’ That doesn’t actually

CREDIT

United Shore says it has created the space with a focus on how employees connect with each other.

United Shore has moved into its new Pontiac headquarters after an extensive renovation by the mortgage wholesaler.

deliver success. What delivers success is getting 2,600 people to actually feel and care about our clients like I would,

as the owner.”" United Shore’s biggest business is wholesale mortgage lending, so it

doesn’t generally compete in the same sphere as Detroit-based retail lending giant Quicken Loans Inc. But they do compete with each other when it comes to talent. Ishbia called United Shore a better place to work than Quicken Loans in a March interview with Crain’s. The company founded by billionaire Dan Gilbert is also known for its amenities, including its own indoor basketball court. A spokesman didn’t return a request for comment on how much extra Quicken Loans spent during build-out.

By the numbers After hiring 643 so far this year, United Shore has a workforce of 2,600, up from around 1,950 last May.

A third floor of the United Shore headquarters is under construction. When it’s finished, the building will fit around 4,500 staff. The company could also expand the building, which sits on about 60 acres. For the move to Pontiac, the lender received $1.9 million in brownfield financing from the state of Michigan. United Shore’s United Wholesale Mortgage has grown to become the top U.S. wholesale mortgage firm for the past three years, according to Inside Mortgage Finance. The company had $30 billion in wholesale business in 2017 and is on track for $41 billion in 2018, Ishbia said. It saw around $1 billion in revenue in 2017, and Ishbia said he expects $1.3 billion-$1.35 billion in 2018.

Skyscraper in Detroit’s Financial District for sale By Kirk Pinho kpinho@crain.com

A skyscraper in Detroit's Financial District is being marketed for sale. The owner of the 26-story building at 211 W. Fort St. at Washington Boulevard is being marketed by Chicago-based Cushman & Wakefield Inc., which has a local office in Southfield. It is one of the more notable buildings downtown to be listed for sale in recent memory and, when coupled with auto supplier Adient plc’s recent decision to shelve plans for a central business district headquarters in the Marquette Building at 243 W. Congress St. across the street, effectively makes a large portion of two blocks of key downtown real estate up for grabs. Two real estate sources familiar with the matter said the ownership group is asking $125 per square foot for the 441,000-square-foot, 55-yearold skyscraper. That would put the asking price at $55.13 million. A third source said the ownership group includes principals from Minskoff Grant Realty & Management Corp., which is based in White Plans, N.Y. An email was sent to President and COO Jean Minskoff Grant, a member of the Minskoff family of New York City real estate developers.

City records list the owner as 211 Fort Washington Associates LLC, an entity registered to Krystal Rappuhn, principal of Detroit-based Beanstalk Real Estate Solutions, which is the building's property management company. A message seeking comment was left with Rappuhn on Friday morning. A Cushman & Wakefield marketing brochure says the building is 75 percent leased, with existing tenants paying an average of $22.94 per square foot for a net operating income of $4.8 million, more than 90 percent of which is secured by leases with the U.S. General Services Administration. GSA tenants represent 64 percent of the leased space, the brochure says. An email was sent to Cushman & Wakefield seeking more details. The GSA has been in the process of consolidating agencies into federally-owned buildings in an effort to save money, although it's not known which, if any, GSA tenants at 211 West Fort will be moved to other downtown buildings such as the Patrick V. McNamara Federal Building at 477 Michigan Ave. or the IRS Detroit Computing Center at 985 Michigan Ave. Cushman & Wakefield says the property, which was designed by

Federal tenants About 285,000 square feet, or 64 percent, of 211 W. Fort St. is occupied by U.S. General Services Administration entities:

COSTAR GROUP INC.

The 441,000-square-foot skyscraper at 211 West Fort Street is for sale; two sources say the owners are asking for about $55 million, or approximately $125 per square foot.

JJU.S. Attorney's Office (108,419 square feet) JJU.S. Bankruptcy Court (67,387 square feet) JJU.S. Customers & Border Protection (32,179 square feet) JJU.S. Department of Labor (22,337 square feet) JJU.S. Passport Office (19,400 square feet) JJSeven other federal tenants (34,692 square feet)

Source: Cushman & Wakefield

Harley, Ellington, Cowin and Stirton, has a large upside. “The property has been owned by the same family since its construction and has historically been known as a ‘government’ building with little proactive marketing to the tenant and brokerage community,” the marketing brochure says. “Despite the lack of marketing, 211 West Fort has historically performed adequately thanks to its stable roster of committed GSA tenants. Today, however, the property is primed to quickly reach full occupancy with a focused leasing effort targeting users unable to find Class A occupancy options elsewhere.” The downtown Detroit Class A office vacancy rate is just 9.3 percent, according to a second-quarter report from the Royal Oak office of brokerage firm JLL. The average asking rent is $23.95 per square foot, the report says. Other recent high-rise or skyscraper offerings include the Buhl Building on Griswold Street along with its parking garage; both were purchased by Dan Gilbert in December for $38.5 million; and the Ford Building at 615 Griswold St., which sold to a pair of Birmingham developers for $16.35 million a year ago.

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 3 , 2 0 1 8

THE WEEK ON THE WEB

RUMBLINGS

Regional transit fails to get support for November

NFL shared revenue for Lions hit record $255M

JULY 13-19 | For more, visit crainsdetroit.com

The 1.5-mill regional transit tax plan proposed by Wayne County Executive Warren Evans failed to get enough support from Regional Transit Authority of Southeast Michigan members and won't go to the November ballot. The four-county RTA board met last Thursday to consider the $5.4 billion, 20-year Connect Southeast Michigan plan, but it failed to make it out of committee in the face of opposition from Macomb and Oakland counties. "We are disappointed we couldn't reach a consensus on a master plan for 2018," RTA Chair Paul Hillegonds said during the meeting. " ... I don't think there's anyone around this table who doesn't believe we have to do better in the region." Advocates of expanded transit are hopeful the push has ignited a fire that will reap rewards in 2019-20. The plan would have raised funds to pay for faster bus service along metro Detroit's major roadways and establish long-sought commuter rail service between Ann Arbor and Detroit. Approval from the board of representatives from Oakland, Wayne, Macomb and Washtenaw counties would have brought the proposal before voters in November. The proposed county-wide tax for the four counties would have generated $170 million per year for daylong operations of "premium" service buses along five major corridors, rush-hour service along 10 other routes and new express service from all four counties to Detroit Metropolitan Airport in Romulus. "There are a lot of subtexts to why weren't able to go forward" with the RTA proposal, Hillegonds said after the meeting. "One of them was concern about confusion of the cause with renewal votes for existing millages. Another is continuing conversations over the financial data supporting the plan." The "existing millages" are for Suburban Mobility Authority for Regional Transit, the current bus system that covers parts of Detroit and the suburbs. Evans' plan was aimed at filling gaps in its coverage. Macomb County Executive Mark Hackel raised concerns about the new RTA millage proposal posing a risk to the existing system: A 1-mill SMART millage is up for a four-year renewal vote on the August primary ballot in Macomb County. Macomb County is "laser-focused" on getting its SMART millage past voters, as SMART has seen mounting opposition of late, said John Paul Rhea, director of Macomb County's Department of Planning and Economic Development. The RTA proposal has added to the confusion and negative sentiment, he said. Wayne County and city of Detroit executives expressed disappointment over the result and urgency to improve transit in a region that's missing out on deals with big players like Amazon.com Inc., and resulting in some Detroiters taking hours-long bus trips and walking miles to make it to jobs in the suburbs.

DETROIT CITY FOOTBALL CLUB

A rendering of the ice rink-turned-soccer venue that Detroit City Football Club plans to open Oct. 1, according to a newsletter last week from the club. The facility at 3401 E. Lafayette St. will offer drinks, food and TV screens at its clubhouse bar overlooking two artificial turf soccer fields.

Detroit digits

$4 million

The estimated cost for Holland-based JR Automation to expand operations and create 100 tech jobs.

2023

The year by which delayed construction of the $4 billion Gordie Howe International Bridge is expected to finish

29th

Detroit's ranking among U.S. TV markets for the FIFA World Cup final

"Let's not lose sight of the fact that Connect Southeast Michigan was an achievable, reasonable solution to a problem this region has struggled with for 50 years," Wayne County Executive Warren Evans said in a statement. Detroit COO Dave Massaron called it a "missed opportunity," saying the city and Wayne County also would be looking more seriously at realistic options for a two-county transit plan between Wayne and Washtenaw, cutting out the two opposing counties.

BUSINESS NEWS J A man who witnesses identified as the owner of The Detroit Mercantile Co., Robert Stanzler, was arrested for simple assault last Tuesday after allegedly spitting at a man who was working as a security officer for an event near the Eastern Market store. Stanzler later publicly apologized, J Z-Modular LLC, a construction startup based in Chicago, is consolidating its metro Detroit presence into a Troy office as the company anticipates growth. J A city of Detroit employee's operation, Sweet Potato Delights, is among the 10 healthy food businesses that earned equal shares of $100,000 in grants through the Michigan Good Food Fund this summer. J Detroit has selected a developer for a $6 million renovation of the vacant Holcomb Elementary school in the Old Redford neighborhood. Southfield-based Anchor Team and Brigh-

ton-based DDC Group were selected. Printed tickets will no longer be accepted for entry to sports games at Little Caesars Arena starting with the 2018-19 season. Instead, fans will have to use digital tickets on their phones. J Detroit City FC plans to open its ice rink-turned-soccer venue Oct. 1 with two indoor fields and a restaurant-bar. J

hanks to the Green Bay Packers, we have a little insight into the Detroit Lions’ finances. Because the Packers have shareholders, they must disclose basic financial information. That data shows this nugget: Green Bay received $255 million as its portion of the NFL’s shared national revenues in 2017, according to an ESPN report on the disclosure. That means each of the league’s 32 teams, including the Lions, got about $255 million. That’s separate from the money the teams generate locally for themselves. The NFL salary cap this season is $177.2 million, so every team’s player payroll is (theoretically, not accounting for taxes) covered by their shared national revenue pool. Labor is the biggest expense for each NFL club. The shared national revenue comes mostly from the league’s batch of broadcast rights deals as well as licensing rights fees and

some other streams. Teams shared about $8.1 billion for 2017, ESPN said, and that’s up from $6 billion four years ago. The $255 million per team is up from $244 million in 2016, a 4.5 percent growth rate. Since 2013, when teams each got about $187.7 million, the shared revenue has grown 36 percent. That nearly mirrors the increase in estimated overall revenue the Lions generated. Forbes estimated that the Lions had $254 million in revenue in the 2013 season and $341 million for the 2016 season (reported in 2017). That’s a 34.2 percent growth. The Lions’ revenue estimate for the 2017 season won’t be published by Forbes until later this year. Per team policy, the Lions don’t comment on their finances. Forbes estimated Detroit had $48 million in operating income on $341 million in revenue for 2016, which means they were three straight years in the black after five years of losses.

OTHER NEWS J Detroit lost out to Houston, Phoenix, San Antonio and Indianapolis on hosting men's basketball Final Fours by the NCAA in 2023-26. J Detroit selected Southfield-based Anchor Team and Brighton-based DDC Group for a $6 million renovation of the vacant Holcomb Elementary school in the Old Redford neighborhood. J The inaugural Detroit Art Week debuted this weekend with more than 100 artists expected to display work across more than a dozen locations. J The Detroit Economic Growth Corp. is launching a new capacity building program for local suppliers and seeking a vendor to run it. J United Methodist Retirement Communities Foundation won a $2.5 million grant from the Edward N. and Della L. Thome Memorial Foundation to support the expansion and renovation of a rehabilitation center in Chelsea. J Blue Cross Blue Shield of Michigan faces a $105 million payment cut based on the Trump administration's announcement last week that it has frozen the program that transfers money from health insurers with healthy patients to those that have sicker and more expensive members. J Mona Hanna-Attisha, the pediatrician praised for her work in exposing the Flint water crisis, and Michigan’s first female African-American county prosecutor are among those set to be inducted into the Michigan Women’s Hall of Fame this year. Agatha Biddle and Clara Stanton Jones are being honored in the historical category, according to a news release from Michigan Women Forward, the Lansing-based nonprofit that oversees the hall of fame. Biddle was an Odawa chief who helped negotiate the 1855 Treaty of Detroit, and Jones was the first African-American to become president of the American Library Association in 1976.

KIRK PINHO/CRAIN’S DETROIT BUSINESS

Wrecking crews take their first swipes Thursday at the tallest part of the half-built Wayne County jail structure, on Gratiot Avenue near I-375 in downtown Detroit, as Bedrock LLC continues demolition.

Demolition ramps up on Wayne County’s fail jail

emolition at the unfinished Wayne County jail site ramped up last week as crews targeted the top of the structure and continued clearing away debris at the base in downtown Detroit. A fleet of heavy machinery could be seen at the 15-acre site, at Gratiot Avenue and I-375, where demolition work first started earlier this month. Demo is expected to continue through the fall, Bedrock spokeswoman Whitney Eichinger said. Crews also must work below the ground, where tunnels and other infrastructure were built for the jail project. Eichinger said there is no update on what will be built on the site. Crain’s reported in May the devel-

opment would involve retail, office and restaurant space. Wayne County approved last month plans to build a $533 million criminal justice complex at East Warren Avenue near the I-75 service drive to replace the one on Gratiot. The move paved the way for the demolition of the “fail jail,” which has been an eyesore and symbol of municipal mismanagement at the foot of downtown for years. As part of the deal with the county, Dan Gilbert’s Rock Ventures is building the replacement jail and acquiring the Frank Murphy Hall of Justice, Division I and II jails and the Juvenile Detention Facility following the expected 2022 completion of the new complex.