Crain's Detroit Business, Sept. 24, 2018 issue by Crain's Detroit Business

DiChiera: An indelible imprint on Detroit Page 3 David DiChiera

SEPTEMBER 24 - 30, 2018 | crainsdetroit.com

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DETROIT HOMECOMING V CRAIN’S DETROIT BUSINESS SPECIAL REPORT

Over five years, more than 650 native Detroiters have returned to re-engage with their hometown. This week’s special report looks at what they’ve seen, what they’ve done and what the results have been. Page 10.

Aaron Eckels for Crain’s

swelch@crain.com

Are scooters a mobility solution?

city officials are scrambling to regulate — Ann Arbor confiscated dozens of Bird scooters that were left on city streets, sidewalks and bike lanes — and discover the role for the relatively affordable and undeniably fun devices in the broader conversation on transit. The novelty may wear off and left will be a horde of what were viewed as only kids’ toys 18 months ago.

Oakland County, home to one of the most sought-after retail corridors in the country, has launched a retail attraction and retention campaign to bolster interest in select downtowns. The initiative, the first of its kind for the county, comes as efforts to woo retailers to downtown Detroit continue, led by Dan Gilbert’s Bedrock LLC, Olympia Development for District Detroit, Midtown Detroit and others. It’s focused on drawing destination retail to 13 downtowns or Need historic corridors to know in Oakland  Effort is first County that are retail-focused the furthest effort for county, along in adopt- comes as ing the tenets of downtown Detroit the Oakland continues to woo County Main retail Street develop-  Focused on 13 ment program, downtown, historic making them corridors that are most attractive to furthest along in retailers. Main Street The county program launched the retail effort late this summer, tapping Cindy Ciura, principal of CC Consulting in Bloomfield Hills, who’s worked on retail attraction for Somerset Collection, Campus Martius in Detroit and The District Detroit, to help bring new retail to the downtowns. Occupancy in those downtowns isn’t an issue, said John Bry, principal planner and Main Street coordinator for Oakland County. “But you don’t want to wait until there are vacancies,” he said. “You want to keep it full ... to be proactive in continuing to promote the communities as good places to open.” Downtown Royal Oak, which is participating and has a 95 percent occupancy rate, is attractive for new restaurants and office space. But retail is under a little pressure, said Downtown Manager Sean Kammer.

SEE SCOOTERS, PAGE 51

SEE RETAIL, PAGE 52

Scooter riders plus pedestrians plus vehicles in downtown Detroit last week. LARRY PEPLIN FOR CRAIN’S

City leaders look to develop strategy for controlling the trend dwalsh@crain.com

Need to know

Bird, Lime have dropped 600 scooters in Detroit 

Despite a seemingly overnight explosion of dockless electric scooters on the streets of Detroit, city leadership is controlling the rollout of the new mobility option in an effort to develop a cohesive strategy. Detroit is essentially in a pilot program for the rentable scooters from Los Angeles-based Bird and crainsdetroit.com

 Each scooter is rented six to nine times a day, exceeded 50,000 rides total  City weighs potential to address transportation concerns for low-income residents

San Francisco-based Lime, currently capping the number of scootVol. 34 No. 38 $5 a copy. $169 a year.

ers in Detroit to 300 for each company, said Mark de la Vergne, chief of mobility innovation for the city. Bird landed in Detroit less than 60 days ago and Lime just over 30 days ago, but they’ve already made an impact. Each scooter is rented between six and nine times a day and they have exceeded 50,000 rides total, de la Vergne said. But as scooter mania floods several major U.S. metropolitan areas, 24, 2018 // S E P T E M B E R OIT BUSINESS CRAIN’S DETR

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LAW

of legal weed w frontsier The ne if Michigan see big risks, opportunitie Businesses will marijuana this November voters legalize recreational By Doug Henze

Special to Crain’s Detroit

NEWSPAPER

Oakland County launches retail attraction and retention plan By Sherri Welch

TRANSPORTATION

By Dustin Walsh

L.A. Insurance stops selling controversial 7-day plans Page 3

Business

give recreIf Michigan voters the high sign ational marijuana use opportunity this fall, it’ll bring both have and risk like few businesses who experts seen, say local legal growrepresent medical cannabis ers. to shape The state, still struggling use, policy for medical marijuana the Nov. will let voters decide during using 6 general election whether y should be cannabis recreationall legal. the first “Think if Michigan, for Alex said time, allowed restaurants,” with the Leonowicz, an attorney firm in law Howard and Howard You can Royal Oak. “It’s wide open. emergof an be on the ground floor get those oping industry. You only life.” portunities once in your with Benjamin Sobczak, a partner in law firm the Dickinson Wright entreDetroit and Troy, compares legalabout preneurs’ excitement ers ization to that of fortune-seek pushing west in the mid-1800s.(Calithe “Sometimes, it feels like said. fornia) Gold Rush,” Sobczaktoward Need to know “There’s just people running “Sometimes, it feels  Local lawyers see challenges, marijuana is the hills.” opportunities if recreational Michigan like the (California) One thing that makes legalized is investors Gold Rush. There’s an attractive market for legal risk for marijuana  Federal law still major running the number of potential an attorney just people businesses users, said Doug Mains, of Honigman toward the hills.” to in the Lansing office  Marijuana industry expected LLP. Cohn Sobczak Miller Schwartz and support many ancillary businesses medical Benjamin Michigan’s total of 280,000 only to who marijuana licenses is second “If you’re just a landlord is using your facility California’s, he said. estimated knows someone enterprise, that’s a 20California had an prior to al- for a criminal 400,000 medical users felony,” Mains said. year 1. Jan. the federal lowing recreational use A tug of war within idea recabout how to treat “When you factor in the coming this government reational probably is marijuana users has made pot for folks,” medical uncertain. year, that sweetens the market things more AdminMains said. “The potential President Donald Trump’s million.” legalized cangoes from 280,000 to 10 to istration has opposed a Honigman client Coalition But in March, Trump signed Like Alcohol, nabis. Regulate Marijuana bill including an updated spending recreational which pushed to get of the Rohrabacher-Blumeballot, proj- version the marijuana use on the Amendment. It prohibits $100 million nauer of Justice funds to ects annual revenues of passes, use of Department marijuana inin Michigan, if the measure go after the medical followed. Mains said. dustry, if state rules are shift from “We’ve seen a general — more reLegal risks the federal government said, estimatclients laxation,” Leonowicz five to seven years But attorneys are warning in ing that it may be legalthat they can put themselves before the federal government on cannabis. use. jeopardy by cashing in that even if izes marijuanaRohrabacher doesn’t The biggest danger is However, becomes use prorecreational marijuana recreational cannabis federal au- protect said. legal under state law, and distributors, Mains rge producers ducers ” he

INSIDE

Special Report: Law << The likelihood of legalized recreational marijuana raises a host of legal issues for businesses. Page 46

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MICHIGAN BRIEFS

INSIDE

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

Snyder’s office: State of emergency on road dispute would ‘do nothing’ A state of emergency would do nothing to resolve the weekslong standoff between a road construction group and labor union that has stalled more than 160 projects across the state, Gov. Rick Snyder’s office said last week. The opinion came a day after Warren Mayor Jim Fouts called on the term-limited governor to issue the decree for his city, which he said is “ground zero” of the $90 million I-696 project between Macomb and Oakland counties. The governor’s office received Fouts’ request in a letter late last Tuesday afternoon, Snyder spokesman Ari Adler told Crain’s in an email last Wednesday, and officials planned to respond. Fouts complained that the monthslong I-696 project, which has been stalled since Sept. 4, has led to a public safety crisis in Warren. Adler pointed out that the I-696 project is not scheduled for completion until November, which means that even if the road builders were working, the conditions Fouts cites in his request would still exist. A “defensive” lockout was instituted two weeks ago by the Michigan Infrastructure & Transportation Associa-

tion. More than 1,000 heavy equipment workers who are part of the Operating Engineers Local 324 have been off the job since Sept. 4. The state, which is not a party to the dispute and has met with the dueling groups separately in an effort to get workers back on the job, said in a statement that “neither side accepted our numerous offers to help find a resolution.” Adler said last week that the governor’s staff proposed that the groups revive the expired contract through December to finish construction projects that were scheduled this year. That would be followed by professional mediation.

Lambert aims to speed up acquisitions

Michigan’s largest public relations agency has rebranded to propel itself from entrepreneurial roots to national esteem. Grand Rapids-based Lambert & Co. simplified its name, previously Lambert, Edwards & Associates. It’s codified its business values, is “growing up,” and aims to accelerate an acquisition strategy that has landed it offices in Detroit, Lansing and most recently New York City, said CEO and co-founder Jeff Lambert. He transitioned from president to the new leadership position of CEO last year, as the firm brought on former banker and consultant Rob Dwortz as

CHAD LIVENGOOD/CRAIN’S DETROIT BUSINESS

Work has been halted or slowed on more than 160 road construction projects across the state due to an ongoing labor dispute.

president. Lambert timed the name transition with the 20-year anniversary of the company’s founding, Sept. 1. It introduced a new website and logo. The firm opened its first office out of state this year, through acquisition of New York City-based Owen Blicksilver PR. It now has 70 employees, including the 10 recently absorbed in New York. “Growing up” as a company — the biggest in the state by revenue, according to O’Dwyer’s rankings — has meant creating a strategic plan, key performance indicators and marketable “values”: “Tenacious, clever, playmaking, honorable and team-based,” according to Lambert and a news release. It

recorded more than $10 million in revenue in 2017. “We’ve traditionally gone with an acquisition every three to four years,” said Lambert, 46. “We’d like to accelerate to an acquisition every year.” That means another in early 2019, he said, likely somewhere in the Midwest. Before New York, it acquired Lansing-based Sterling Corp. in 2014, Atlanta-based IR Squared in 2011 (no office opened) and Detroit-based John Bailey & Associates in 2008.

Snyder signs research agreement on China trip

Gov. Rick Snyder said he was pro-

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moting the state’s leadership in mobility and autonomous vehicle technology development as part of a trade trip to China, the Associated Press reported. The office of Gov. Rick Snyder said he signed a memorandum of understanding last Monday with China’s Ministry of Science and Technology that seeks to “further advance innovation and cooperation within the automotive and technology sectors, including new energy and autonomous vehicle technologies.” The agreement to collaborate in automotive research, technology and innovation aims to accelerate the commercialization of emerging technologies. The Republican governor was on an eight-day investment mission to China, his eighth such trip as governor to Michigan’s third-largest export market. On Sunday, the governor and his delegation met with representatives from Chinese travel media outlets to discuss tourism and leisure travel opportunities in Michigan.

Driving a

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INSURANCE

L.A. Insurance stops selling controversial 7-day plans

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DAVID DICHIERA, 1935-2018

Blue Cross takes aim at ‘well-being’ By Jay Greene jgreene@crain.com

By Chad Livengood clivengood@crain.com

big visions for the city,” said Ethan Daniel Davidson, a director of the William Davidson Foundation. “Like his art, David embodied the ideal of harmony through time. His work touched upon that which is humane in all of us. David's contributions will long endure.” Basing MOT in Detroit shocked people at the time. It came just a few years after the 1967 uprising and took the sophisticated art form into Detroit’s largely vacant downtown.

Offering financial, emotional and family well-being services to employees is becoming nearly as important to companies as offering health insurance as they compete in a tight job market and seek to increase worker productivity and job satisfaction. Ongoing studies at Harvard University and OC Tanner Institute show that when individual employees experience well-being in their jobs and lives, they more often use their skills to further company goals and help customers, adapt more flexibly to change, and are more creative and proactive problem solvers. On Jan. 1, Blue Cross Blue Shield of Michigan plans to roll out a new virtual well-being proNeed gram to completo know ment its online JJThe Michigan wellness and Blues plans to add health education online well-being programs. The program webinars weekly webinars in January will be free for nearly all 6 milJJOffered free to lion individual individual and and group memgroup members to bers in Michigan complement basic and nationally, health and said Cindy wellness programs Bjorkquist, Blue JJWell-being Cross’ director of programs offer wellness profinancial, grams. emotional, social “This is a new and physical health added capability assistance for all individuals and group members,” she said. “We want to support employers going down this journey to help improve well-being.” In 2015, the Michigan Blues partnered with WebMD to offer an online health and wellness program as part of its health insurance product offerings. Basic member benefits include online health assessments, digital health coaching, access to personal health records, a 24-hour nurse helpline, case and chronic disease management. Bjorkquist said the weekly well-being webinars will be offered to employers on Tuesdays and to individuals and members on Thursdays by Matt Wozny, Blue Cross’ virtual well-being coordinator. Members who missed the live presentations can download the 15- to 20-minute recorded webinars and accompanying educational resources. Through the webinars employers can learn best practices to build, complement or enhance their own worksite wellness or well-being programs, Bjorkquist said.

SEE DICHIERA, PAGE 53

SEE WELL-BEING, PAGE 53

.A. Insurance has ceased selling seven-day auto insurance plans in Michigan under a settlement agreement its carrier reached with state regulators earlier this year to eliminate the controversial no-fault insurance product. The Royal Oak-based insurance agency and its carrier, Integon National Insurance Co., came under scrutiny last year from the state Department of Insurance and Financial Services for selling seven-day plans that allow drivers to legally register their vehicles before driving without coverage for the rest of the year. L.A. Insurance stopped selling seven-day plans Need Sept. 11 after the to know state gave InJJL.A. Insurance tegon six months stopped selling to develop a new short-term plans insurance prodearlier this month uct that complies with the no-fault JJState insurance requireregulators declared law's ment of continuweeklong coverage coverage, not compliant with ous said Randall no-fault law Gregg, senior JJPolicies had deputy director drawn criticism as and general a mechanism that counsel of DIFS. encouraged Integon is now uninsured driving offering a sixmonth insurance policy called New Horizons that is a membership-based affinity group policy, Gregg said. “The difference between this product and a seven-day policy type product is it’s renewable and people are going to get the invoices so they can continue to make the installment payments to continue their coverage,” Gregg told Crain’s. Integon is a subsidiary of Winston-Salem, N.C.-based National General Insurance Group. A company spokesperson could not be reached for comment last week. Crain’s first reported in March 2017 on the state insurance department’s efforts to ban seven-day plans administratively by declaring them not in compliance with Michigan’s unique no-fault auto insurance law because they expired after seven days. Integon had been selling its weeklong Jump Start Policy insurance plan in Michigan since at least 2011, according to public records. L.A. Insurance advertised the seven-day auto insurance plans for as little as $199, but the polices often cost more. SEE INSURANCE, PAGE 52

Michigan Opera Theatre founder David DiChiera died Tuesday after a more than yearlong battle with pancreatic cancer. MICHIGAN OPERA THEATRE

Michigan Opera Theatre founder brought opera back to Detroit By Sherri Welch swelch@crain.com

Michigan Opera Theatre founder David DiChiera was a pioneer in Detroit’s renaissance who brought opera back to Detroit, championed diversity in the art form and left an indelible imprint on the city he loved. DiChiera, who died Tuesday after a more than yearlong battle with pancreatic cancer, came to the area to teach music at Oakland University — later serving as chairman of music — but became a trailblazer in re-es-

tablishing Detroit as the region's cultural center. It was 1971, with the Detroit riots not distant in memory, when he created the Michigan Opera Theater in 1971, moving it downtown into the building now known as Music Hall Center for the Performing Arts. Not only did that save the historic site from demolition but it planted the seeds for Detroit’s entertainment district. “He invested in Detroit when many were moving away — he had

MUST READS OF THE WEEK Novi development gets closer to fruition

New health care facility planned in Royal Oak

Vacancy rates inch up in city’s high-rise buildings

Former Novi Expo site nearing final hurdle for $125 million development. Page 4

Henry Ford to open outpatient facility in downtown Royal Oak. Page 38

Detroit ‘Skyline’ vacancy rates tick up as office rents rise. Page 32

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Broadcasting entrepreneur Kevin Adell wants to turn the former site of the Novi Expo Center into a $125 million project with hotels, restaurants, an indoor skydiving company, a gym and more.

Former Novi Expo site nearing final hurdle for $125M redevelopment By Kirk Pinho

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Kevin Adell was fighting for the hearts and minds of Novi residents earlier this year in his effort to secure city approval to start the redevelopment of more than 20 acres of land. And now, five months after the start of a campaign to win rezoning for the site, the millionaire broadcasting entrepreneur on Kevin Adell: Got Monday may, at the 21.5 acres last, get one of rezoned last the final green month. lights needed to turn the former site of the Novi Expo Center into a $125 million project with hotels, restaurants, an indoor skydiving company, a gym and more. Last month, he notched a key planning commission victory in getting the 21.5 acres rezoned from its expo designation to a town center one, something that he has said was a hurdle to clear on its way to redevelopment. Now he awaits the City Council’s tentative approval of a planned rezoning overlay district during its Monday meeting. Adell, who also owns WFDF 910 AM and the Word Network cable television station, said in a text message earlier this month that final permit approval is slated for Oct. 10.

Taking it public Last April, Adell told Crain’s he spent thousands of dollars to fill 23,000 Novi mailboxes with some-

Proposed Adell Center tenants JJiFly Holdings LLC JJDrury Inn & Suites JJFairfield Inn and Suites JJCarvana Co. JJKrispy Kreme Doughnuts JJTexas Roadhouse JJPlanet Fitness

Source: www.adellcenter.com

Need to know JJCity may give tentative approval

Monday to start redevelopment of more than 20 acres of land JJ$125 million project would include hotels, restaurants, indoor skydiving company, gym and more JJBefore its demolition, the expo center had been vacant since 2005

thing akin to political campaign literature insinuating that city officials were shirking their civic responsibility by forgoing more than $3 million in tax revenue annually in “holding up” his planned Adell Center development at I-96 and Novi Road. That site, which boasts a 120-foot water tower emblazoned “ADELL,” has been the subject of redevelopment ideas for years, with different contractors and different planned uses and users. It sits unused, mostly fenced off, with an excavator sitting near the tower, waiting to be turned on. “Brought over to my site,” Adell said in a Sept. 12 text message to Crain’s with two attached photos of construction equipment.

Site ready for action Before its demolition, the expo center had been vacant since 2005, when the center’s event management company was moved into what is now the Suburban Collection Showplace at 46100 Grand River Ave. in Novi. Before the expo center opened in 1992, the property was headquarters of Adell Industries, a maker of automotive door guards, and later a Kahlua manufacturing center for Mohawk Liqueur Corp. Adell, who declined to comment for this story last week, has previously tried to convert the property, which has been owned by his family since 1965, into a pair of eight-story buildings with hotel and/or office uses, or health care users. He courted the likes of the Cleveland Clinic, which declined. He said Beaumont Health wanted to build a headquarters building there. Beaumont eventually chose Southfield. But in spite years of inertia, the site is now primed for serious construction activity, Adell told The Oakland Press last month. He told the daily newspaper that a groundbreaking ceremony would be held a week after the council approval and that construction would begin in the spring, with each project taking roughly a year to complete. Contractors on the project are the Southfield office of Los Angeles-based brokerage firm CBRE Inc., Birmingham-based Biddison Architecture + Design PC, Detroit-based law firm Bodman PLC and Wixom-based GreenTech Engineering Inc. Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

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Michigan-based Centria Healthcare has ambitious plans to expand its ABA therapy services for children with autism. In scaling its business, the company is setting the standard for autism care.

Centria: Growing a mission to serve people Crain Content Studio Centria Healthcare is providing autism therapy for more than 2,300 families across eight states. By 2022, the Novi-based company hopes to reach 20,000. “The fact is that across the country there are hundreds of thousands of individuals with autism who could benefit from intensive behavioral therapy,” noted Rick Loewenstein, Centria’s Chief Strategy and Growth Officer. “Our mission is to reduce all the barriers to them getting the treatment they deserve.” Centria is one of the nation’s largest and leading providers of Applied Behavior Analysis (ABA) therapy to children and young adults with autism and their families. Centria was founded in 2009 as a provider of home-based nursing, respiratory and rehabilitation services to children with special healthcare needs and individuals after catastrophic injury. One of the pediatric patients who needed ABA got the company started caring for children with autism. “We don’t like saying no to the people we serve,” said Alicia Kidwell, Vice President of Autism Services. “So we went searching for the resources we needed and made outstanding connections with experts in the field who guided us along the way.” The company began providing ABA services in Michigan in 2010 and by 2015, Centria was the largest single provider in Michigan — helping more than 230 families — and had expanded to Texas. In 2016, services extended to California, New Mexico, Oregon and Washington. Arizona and New Jersey came on board in 2017. Today, Centria has almost 3,500 full and part-time employees, including more than 2,200 based in Michigan. The company added 400 net new jobs in the past six months. Centria’s high level of quality is validated by industry accreditation from The Joint Commission (JCAHO) and the Behavior Health Centers of Excellence (BHCOE). Steven Merahn, M.D., FAAP, a pediatrician and Chief Medical Officer at Centria, notes that “there is no reason why we can’t deliver

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high quality behavioral analytic therapy to large populations of individuals with ASD across multiple states. Primary care networks do it for medical care, and Centria is applying the same approach to standards and best practices for children with ASD and their families.” One of the biggest barriers to Centria’s quest is delays in access to diagnostic services. According to data provided by the Behavior Analysis Association of MI (BAAM) in early 2018, there were delays of 9 to 12 months to get a diagnosis from most of the major health systems in Michigan. Centria has a team of specialists who help parents navigate that system to reduce the time it takes to get a diagnosis. “The good news is that the majority of children we help access diagnostic services don’t end up with an autism diagnosis,” added Merahn. “If they have other needs, we refer them to other services providers; we perform the service as a goodwill gesture to the parents and pediatricians because the Center for Disease Control (CDC) has made it clear that lost treatment opportunity for children with ASD has devastating consequences to families and the community.” When a child is diagnosed, Centria’s clinical approach to quality kicks in. Children with ASD receive a highly structured assessment of their strengths, challenges and behaviors and documentation of this assessment is used to create an individualized treatment plan. The company’s attention to detail with its treatment plans includes a clinical review process by supervising clinicians: every treatment plan is submitted for review by a supervisor. Each family is also assigned a client service manager, who functions as a relationship manager or care coordinator, so the clinician/behavior technician can focus on treatment. Centria’s Board Certified Behavioral Analysts (BCBAs) develop a Behavior Treatment Plan for each child, then utilize Centria’s specialized clinical technology platform for strict monitoring of therapy, communication and coordination among the child’s care team. Family members are engaged at least monthly to learn about

the child’s care plan and how they can sustain therapy even when the clinician or behavior technician is not there. Care is closely supervised, and fidelity checks are done to ensure the plan is being implemented as designed; children are reassessed every six months to keep plans updated. “Part of the whole scaling question is how do we create a sufficient critical mass of clinical expertise and talent that can really wash over this population and give them the therapeutic opportunity they deserve,” Merahn said. “We think that what we’re learning about how to deliver ABA, what we’re learning about the behavioral management of autism will itself contribute to and change the entire autism care system.” Centria is at an advantage because it already has a data set on more than 2,300 individuals receiving ABA services. That allows for a remarkable opportunity to analyze data and partner with academics, researchers and other experts to garner additional insights about how to shape and optimize the way children with autism are treated based upon what has been learned. Centria is using big data tools like machine learning and predictive modeling to optimize its standards to best improve outcomes. The company plans to move into its new Farmington Hills headquarters in the first quarter of 2019. Plans are in various stages of evaluation and launch to expand services to Colorado, Florida, Georgia, Illinois, Indiana, Massachusetts, Maryland, New York, North Carolina and Ohio. “In our case, growth is directly tied to an explicit social policy goal in 46 states,” added Loewenstein. Noted Kidwell: “Intensive behavioral intervention supports children having the best developmental experience possible and having the opportunity to learn to live independently and succeed in the world on their own terms. Given that intensive ABA is proven to reduce the needs for special services and supports, both in childhood and adult life for individuals with ABA, the work we do every day will have a positive impact on the communities we serve for decades to come.”

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Planning to retire, Authority Health CEO looks back By Jay Greene jgreene@crain.com

Veteran health care executive Chris Allen, founding CEO of Authority Health, has announced his retirement next April from the nonprofit health organization created in 2005 to address unmet health needs in Wayne County. Allen, 69, recalls the day 13 years ago when Gail Warden, former CEO of Henry Ford Health System, asked him to take a $285,000 grant from the state of Michigan and former Gov. Jennifer Granholm and “do what you can” to reduce the numbers of the uninsured. The uninsured rate in Wayne County was 12 percent in the mid-2000s. It dropped to 7 percent in 2017, after Michigan expanded Medicaid under Obamacare. “I was the original, the only employee,” Allen said with a laugh. “We now have a robust organization that had to be very entrepreneurial to do what we do. There were already some organizations doing work in Detroit. We wanted to do things differently to (improve) the health of the population.” From its humble beginnings with one employChris Allen: ee and $285,000 Helped found in the bank, Auorganization. thority Health, originally called Detroit Wayne County Health Authority, now has 50 employees and an annual budget of about $11 million. Warden, chairman of Authority Health, congratulated Allen on his accomplishments. “I am very proud of what Chris has accomplished at Authority Health,” Warden said in a statement. “When we were hiring the first CEO, we knew that Chris’ entrepreneurial instincts would overcome the fiscal challenges that have made this mission so innovative.” In a previous interview, Allen, a Crain’s Health Care Hero in 2018, said Authority Health was created after the late DMC CEO Arthur Porter, M.D., threatened to close Detroit Receiving and Hutzel Women’s Hospital in 2003. Granholm cut a deal with state Republicans to give DMC a $50 million bailout, fire Porter and hire Mike Duggan, now the mayor of Detroit, he said. As Duggan used the $50 million to turn around DMC, Allen slowly began to transform Authority Health into a multipurpose agency that seeks to address unmet needs of workforce development, housing, nutrition, health insurance enrollment, primary care and behavioral health integration. Three programs Allen said he is most proud of developing all have to do with expanding access and improving health outcomes to the underserved population in Detroit. The first is a community-based primary care medical residency program, the second-largest in the nation, with 71 current residents in the five primary care specialties of inter-

Need to know

JJ Chris Allen to retire in 2019 as CEO of Authority Health after 13 years JJ Accomplishments include developing 71-resident primary care residency program and creating a nurse-family partnership program to reduce low birth weight babies

nal medicine, family medicine, psychiatry, geriatrics and pediatrics. The six-year-old program, co-sponsored with Michigan State University College of Osteopathic Medicine, trains residents at several DMC hospitals, the Detroit VA, McLaren Macomb Hospital, Garden City Hospital and St. John Providence Hospital in Southfield. Another vital program to underserved populations, called the Detroit Nurse-Family Partnership, addresses the high rates of poor birth outcomes. This program provides inhome nursing care for first-time, low-income mothers from the beginning of pregnancy until the child is 2 years old. Families served by the program had 6.7 percent babies born prematurely, compared with Detroit’s 2015 average of 16.5 percent. “If a baby is admitted to a neonatal intensive care unit, there is a failure in the system,” Allen said. Another program still in development is Allen’s pet project: developing a population health database that can identify levels of chronic disease by ZIP codes. Once problems are identified, “We want to use our medical residents to go out and (help people) avoid further problems,” he said. Allen also said he hopes Authority Health moves forward with a pilot program to reduce incarceration of the mentally ill in jails. “Many in jail are mentally ill or homeless,” he said. “The idea is to team (those incarcerated)” with behavioral health providers to reduce recidivism rates. Allen said his one regret is not moving faster to get the six major nonprofit health systems in Southeast Michigan to work more closely together on community benefit projects through the Detroit Regional Health Collaborative. The former administrator at Hutzel Women’s Hospital said all health systems are required by the IRS to develop community benefit plans to identify underserved areas of need in their markets. But because health systems’ markets overlap, there is duplication of efforts, and sometimes vital needs go unmet. “We created a summary document and asked them to use just one template, pick a ZIP code and make changes,” he said. “We wanted to achieve coordination between the systems. We couldn’t get it done. It is a work in progress.” Warden said a search committee has been formed to identify Allen’s replacement. “We need a population health executive that appreciates community-based organizations and networks, hospitals and primary care,” said Allen. Jay Greene: (313) 446-0325 Twitter: @jaybgreene

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OPINION COMMENTARY

A tough way to get airline miles A

lthough a lot of a governor’s work is managing the executive branch and dealing with the Legislature, a big and important part of the goverKEITH nor’s business is CRAIN business. Editor-in-chief The governor is our state’s salesman-in-chief, particularly to countries and companies overseas. No one has done a better job of representing our state and selling its products and opportunities than Gov. Rick Snyder. He has been tireless in spreading the word about Michigan products and the opportunity for investment in Michigan all over the world. It has paid off handsomely. Michigan has benefited from all those sales calls, and he gets a bunch of frequent flyer miles. And if I know our governor, he has not even kept the miles for when he becomes, again, a private cit-

izen. He is just a straight shooter, and Michigan has been lucky to have him for the last eight years. Anyone who thinks it is glamorous to be on a state-sponsored mission has got to be kidding. It is back-breaking, thankless work and strange hotels with people you do not know and probably will never see again. And let us not forget a lot of toasts to prospects and customers for Michigan goods and services and investment. All this means long days and short nights. It is not fun, but it is important. Our governor has been on a lot of missions, and they have paid off. Whoever becomes our next governor will have some very big shoes to fill. Let us hope that the business momentum is not lost with the next governor. If you see our governor in these last few months he is in office, say thank you. He has worked hard, and it has paid off handsomely for the citizens of Michigan. We, regardless of our party, owe him a great debt. He has done a remarkable job.

COMMENTARY

City Council flexes its muscle with businesses

etroit City Council is back. Just months after shedding the last remnants of state control over the city’s operations, Detroit’s governing body is starting to flex its political muscle in what looks like an effort to placate allies and remind Detroit’s power brokers that the city’s resurgence hasn’t benefited everyone. Downtown has its trendy cafes, luxury retailers and iPhone-activated scooters. But most of Detroit’s neighborhoods are still marred by housing blight, schools with drinking fountains that have been shut off because of elevated lead levels and one in three residents living below the poverty line. City Council members have been using the growing disparity between downtown and the neighborhoods — the proverbial “two Detroits” narrative — to push an economic equality agenda that pits workers against businesses and creates a more activist role for the council. In June, City Council injected itself into the contract negotiations between janitorial service companies and the Service Employees International Union, advocating for a $15 minimum wage, which the janitors eventually won in a new four-year contract. Earlier this month, City Council turned away a $164 million, 500-room hotel project that Cobo Center needs to land convention business because council members wanted the Crowne Plaza's owners to sign a neutrality agreement with Unite Here Local 24 to unionize hospitality workers. The hotel’s foreign owners balked and say they’ll take their money elsewhere.

CHAD LIVENGOOD clivengood@crain.com

“This is simply about economic justice, creating economic opportunities for Detroiters here.” Mary Sheffield

Now, City Council President Pro Tem Mary Sheffield is pushing a new agenda that will probably be viewed by business interests as resembling the heavily regulated business climate of late 20th century Detroit. Sheffield wants stricter enforcement of the Coleman Young-era requirement that 51 percent of the work hours for all city contracts and taxpayer-subsidized real estate development projects go to Detroiters. She wants to extend the requirement to include city-funded demolition contracts. That wouldn't include most blighted housing demolitions that are federally funded. The councilwoman also is pushing to lower the $75 million threshold that requires real estate developers to forge a community benefits agreement with

the neighbors surrounding a new development. “This is simply about economic justice, creating economic opportunities for Detroiters here,” Sheffield said last week at a news conference in front of the Spirit of Detroit statute outside City Hall. “... If you’re a bona fide Detroit resident, you deserve access to a job. If you’re qualified, you deserve access to a job.” But the development hurdles Sheffield seeks to put up come as outside investors — the ones everyone says Detroit needs — are weighing whether to use a new federal tax incentive known as Opportunity Zones to make investments in Detroit real estate. At face value, Sheffield’s populist demands and her forthcoming “People’s Bills” seek to get more Detroiters working and get a share of the prosperity that is budding downtown. But they're an implicit suggestion that all of the various job-training programs Duggan’s administration has launched — Detroit at Work, Grow Detroit’s Young Talent, Motor City Match — aren’t reaching enough Detroiters fast enough. “We want an administration that has a mindset that you cannot build a city if you don’t first build its people,” said Damion Ellis, an economic policy adviser for Sheffield. Monday’s news conference for Sheffield’s rollout had the elements of a mayoral campaign that’s three years away — complete with a “Mary for mayor” chant. Duggan’s office pushed back gently, saying the 51 percent Detroit employee requirement is being enforced evenly

among city contracts for paving and underground water and sewer projects, as well as big development projects, such as Dan Gilbert’s skyscraper at the former Hudson’s department store site. Contractors were fined $5.2 million for Detroiters working only about 25 percent of the hours it took to construct Little Caeasars Arena. “We follow the executive order,” said Alexis Wiley, the mayor’s chief of staff. Duggan’s office also is trying to follow the budget prescription U.S. Bankruptcy Judge Steven Rhodes approved four years ago when the city emerged from bankruptcy. One aspect of Sheffield’s “People's Bills” is to cut the city’s $45 fine for unpaid metered parking to $30 and discount the fee by 50 percent if it’s paid within 10 days. The fines are widely cursed by motorists, but represent $2 million for the city's budget. Sheffield said the city should reconsider its tax breaks for corporations and a few unnamed “billionaires” in lieu of fining parking scofflaws. Duggan's office warned of what happened the last time a City Council made unchecked spending decisions. “We have to make sure that we actually look at the details,” Wiley said. “What may be labeled as the ‘People’s Bills,’ we have to make sure that doesn’t backfire and become the emergency manager’s bills.” But City Council’s ability to remind everyone who’s boss was on full display when it voted down a second 28-story tower for the Crowne Plaza, apparently over their desire for unionization at the big hotel next door to Cobo Center. And that was for a $164 million proj-

ect in which the property owner wasn’t asking for tax breaks, even for the skywalk they planned to build over Washington Boulevard to connect the new hotel to Cobo Center. In an interview, Sheffield said she supported Crowne Plaza’s second tower — “the hotel space is needed,” she said — but wanted to see the hotel operator raise wages and be neutral on its workers joining the union. “I think you can have both,” she said. “That was my hope — to have this expansion built, but also protect the workers that are there.” Sheffield argues City Council has been supportive of new business investment in the city. “We’re just taking a firm stance to make sure we’re supporting decent wages for people — and also the right to unionize, too,” said Sheffield. But after rejecting one project that sought no tax breaks, City Council now has to weigh $104 million in tax breaks for Ford Motor Co. to rehabilitate the derelict Michigan Central Station and subsidize the cost of the automaker’s $740 million Corktown makeover. Duggan’s office is pushing for approval within a month. The Crowne Plaza project twisted in the council’s wind all summer. Sheffield wouldn’t say how she’ll vote on Ford, but she said the 51 percent work rule for Detroiters will be enforced on the company. “We have not yet determined what the actual penalty will be,” Sheffield said. “But I think that’s something that we need to negotiate.” Going forward, everything with this City Council could be a negotiation.

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Opportunity abounds in Detroit — if you know where to invest

ll eyes are on Detroit. It’s the hip, new destination for millennials seeking out-of-thebox careers. It’s a travel destination for curious adventure-seekers. And it’s the perfect place for people to invest in residential real estate. As city, state and federal governments sink funds into Detroit, people are looking for investment opportunities — single-family, multi-family and small apartment buildings. The city’s recent announcement to ticket landlords for neglecting properties shows a major turnaround in the way we view Detroit’s real estate potential. At the same time, the Michigan Historic Preservation Network and the Detroit Land Bank Authority led a “vacant, not blighted tour” of homes in the Jefferson Chalmers neighborhood. Touring properties with potential is a huge message of where Detroit’s eyes are focused: on investment. The opportunities are ripe for the picking — if you know what to look for. The possibilities for strong, caprate income with massive appreciation potential only exists in neighborhoods; that’s where undervalued deals reside. Detroit is vast. If you don’t know the lay of the land, you might choose a bad block and be disappointed in your investment. Of Detroit’s 139 square miles of city, only a tiny percentage is already gentrified: Downtown and New Center, Midtown and Corktown. These areas get a ton of press and attention, because that’s where multimillion-dollar deals go down. The rest of the city has many pockets where investors are doing huge deals and making a ton of cash in aggregate. Maybe 1,000 investors are devoting $100,000 here and $50,000 there, adding up to millions upon millions of dollars of investment in the Motor City. Perhaps like Detroit itself, there is no one big story when it comes to residential real estate investment. These are small-potatoes opportunities in which average folks can participate. To me, this is the story of Detroit itself — little-known, under-the-radar, small-splash but significant. While people post on social media and national news reports on the turnaround of the Michigan Central Train Station, no one is telling the story of the house on the corner in Denby or Jefferson East, East English Village or the Belgian Triangle. It’s happening nonetheless — dollars in, title transferred, cleanup and restored, and poof! — you have a beautiful house where once stood an echoing, shell of a home. People live in it because they know it’s now safe and functional, and also affordable. This is what’s possible in Detroit. And it’s happening. Sure, there are areas of this city that will never revive. That’s because there are areas where the city doesn’t want a revival, where infrastructure taxes the city and the housing stock is too weak to invest in. If we don’t have population to inhabit certain areas, it’s not worth trying. But where there is potential — and that’s in a lot of locales — you want to pick the good choices, the right houses. You don’t want a house in the middle of a block pockmarked by vacancy and lacking pride of ownership, when you can purchase a house

OTHER VOICES Brent Maxwell

one block over with faithful, community-focused residents and a block that’s already coming back. We can’t give new life to a city from a couch in another state, investing over the internet. It takes the

hard-working core of people who love it here and chose to stay to bring it back. To show investors where to put their money and where to pass on by. The real estate rebirth of Detroit is a personal story. We have a stake in the success, or failure, of our neighborhoods. Now is the time to come together, to put our money where our mouths are. The government’s doing a great job of eliminating slumlords by enforcing the rental ordinance, and there are programs offering massive tax breaks for strategic investment locations. It’s all flowing now. It’s Detroit’s time. We just need to continue

It’s all flowing now. It’s Detroit’s time. We just need to continue pushing in the right direction. pushing in the right direction to help the market realize the city’s master plan of development and rebirth. Housing demands a lot. Detroit’s employees and services are stretched incredibly thin. Think of how much energy and resources they could pour into areas where people actually live if they didn’t

have to keep up the areas where they used to reside. We can help by selecting strategic properties to breathe new life into, avoiding those where potential is a distant memory. I see a new Detroit on the horizon. It’s a clean and functional city with affordable, safe rental properties, where families and millennials choose to live. It’s a place built by teamwork and belief, a place loved by those of us who never left, who can’t imagine abandoning our hometown, one of our nation’s original brilliant cities. Brent Maxwell is managing director of IPS Realty in Detroit.

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For J.D. Power 2018 award information, visit jdpower.com/awards. Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association.

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FOCUS

DETROIT HOMECOMING V

Detr The Michigan Central Station was the venue for the opening night of Detroit Homecoming last year. AARON ECKELS FOR CRAIN’S

From a simple idea, a growing legacy The expat connections made at Detroit Homecoming bring impact to the city

MARY KRAMER Group Publisher

etroit Homecoming started with a simple but elegant premise: Lots of successful people have come from our region and still have an emotional connection to their old hometown. If we could invite them back to see for themselves the challenges and opportunities in post-bankruptcy Detroit, good things might happen.

Five years later, we’re thinking at least $300 million worth of good things are happening, from big things like a planned $100 million, tax-advantaged Opportunity Fund targeting development in Detroit neighborhoods to smaller investments in neighborhood businesses and restaurants to infusions of talent and dollars for youth programming in the city. We’ve even had a handful of “alumni” just move home. And in November, we’ll have our first Detroit Homecoming online job fair, targeting alumni of area schools and universities who live outside the metro area. This year, nearly 250 “expats” registered to attend Detroit Homecoming V, bringing our total “unique visitor” count to more than 650 since 2014. About 35 percent of this year’s “class” were returning alumni. You have to earn a repeat invitation; we ask that people document what they have done — or are in the process of doing

— that benefits Detroit. And it’s fine if it benefits them, too. We pack the program with speakers and panels, load expats on buses and show them the best of the city and some of the challenges. We use great venues — like having dinner on the floor of the new Little Caesars Arena. We connect them to Detroiters over meals or a glass of wine. This year, 15 local homeowners hosted groups of expats for dinner, inviting friends and neighbors over, too. All told, it is a winning formula for economic development. So much so that Baltimore will stage its first-ever Baltimore Homecoming next week, with 150 registered Baltimore “expats” coming home to the city. The co-directors of that initiative attended Detroit Homecoming in 2016 and have been busy planning ever since. Their opening night program is a fireside chat with Cal Ripken Jr., who many expats revere for his 21 seasons with the

AARON ECKELS FOR CRAIN’S

A Detroit Homecoming House Party was held in Motown Studio A.

Baltimore Orioles as Al Kaline is revered in Detroit. Allegiance to our sports teams is a powerful emotional tug. Jim Hayes, the Detroit “expat” who went on to a publishing career in New York before returning to Detroit in 2013, knew that. His 10-year stint in Detroit was in the local sales office for Sports Illustrated. Jim and I originally thought we might produce Detroit Homecoming for three years before it morphed into another kind of “future of Detroit” kind of event. But after Year 2, Mayor Mike Duggan told us: Don’t stop now. We’re

seeing positive results. Also after Year 2, Dan Gilbert told us: Now you can start using Roman numerals to distinguish each year. (Good advice: we did.) This year, in just the first week after the event closed, we learned that at least four expats are considering investing in a new fund created by Michigan Women Forward to invest in women-owned or led businesses ($50,000 is the minimum investment). Another group has contacted the Detroit Economic Growth Corp. to identify an investment opportunity of at least 20,000 square feet in one of the

city’s 10 strategic neighborhoods. First-time attendee Rick Beyer returns to Detroit this week for more meetings to explore how his higher education technology platRick Beyer: To return to Detroit form, Lumerit, can “align with the city this week. of Detroit.” Beyer is CEO and majority shareholder in the Texas-based company. “We’ve developed a ‘global digital classroom’ to allow students to use the world as their campus,” Beyer said of the company. “They come into our Lumerit ecosystem, earn up to three years of college credits and can graduate from just about any college in America. We offer great flexibility for traditional students and working adults.” As college debt rises and national graduation rates are now measured over six years rather than four, “time-to-degree-completion is simply too long,” Beyer said. “We offer affordability and flexibility.” Earlier, Crain’s has reported on the Detroit Opportunity Fund launched by North Coast Partners LLC. The group includes three expats who hope to invest in multifamily projects in strategic neighborhoods the city has identified. They met their seed capital SEE LEGACY, PAGE 11

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Detroit Homecoming By the Numbers

Number of years since Detroit Homecoming was started

650-plus

Number of native metro Detroiter “expats” who have attended

Number of states represented by the expats

$300 million

Total of planned and pending investments in Detroit spurred by Homecoming

LEGACY FROM PAGE 10

AARON ECKELS FOR CRAIN’S

Detroit billionaire Dan Gilbert interviews billionaire Warren Buffett at Detroit Homecoming in 2014.

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AARON ECKELS FOR CRAIN’S

AARON ECKELS

Detroit Homecoming attracted Detroit native John Varvatos, who unveiled his first storefront in the city at the 2015 event.

Hall of Fame gymnast Wendy Hilliard was inspired to expand her foundation to Detroit at a homecoming event.

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AARON ECKELS FOR CRAIN’S

Two years ago, Steve Ballmer came home to Detroit Homecoming and he and his wife added Detroit to their three-city philanthropy footprint later that year.

AARON ECKELS FOR CRAIN’S

Billionaire developer Stephen Ross, a Detroit native, announced a $7.5 million investment during the Detroit Homecoming event last year.

investor last year at Homecoming IV. The list of outcomes, investments, mentoring of local entrepreneurs and more keeps growing. Last year, Century Partners, working on housing in the Fitzgerald neighborhood, found two expat investors. This year, 35 entrepreneurs were invited to attend to meet potential investors, mentors or door-openers. Amina Daniels, founder of Live Cycle Delight in West Village (fitness training, cycling and yoga), hopes to scale with additional locations. Homecoming was a chance for her to meet potential mentors — or investors. “I met some good people,” she said. “One group of guys seemed interested in investment. We’ll see.” We know it can take a while for good ideas to come to fruition. Two Detroit expats who attended Detroit Homecoming I in 2014 — Quintin Primo III and Gwendolyn Butler — vowed to find real estate investment opportunities for Chicago-based Capri Capital, which Primo co-founded and Butler serves as vice chair. Butler says they’re still “actively looking” to invest in multifamily and mixed-use developments. Former Donna Karan CEO Jeffry Aronsson, attending in 2014, also is working on a city-backed initiative to bring apparel design and production to Detroit. Another example: Two years ago, Steve Ballmer came home to the Detroit Homecoming, then in its third year. By the close of 2016, Ballmer and his wife, Connie, had added Detroit to their three-city philanthropy footprint, with a Detroit expat, Kylee Mitchell, representing the Ballmers’ philanthropic objectives to reduce the cycle of intergenerational poverty. How do you put a price tag on that? For all this, we thank the foundations and corporations for investing in this wild idea. Without them, it would not be possible. But they can see and feel the tangible outcomes; I think the return on the total investment over the years is about 300:1. When we started in 2014 to pull the funding to create Detroit Homecoming, I met with then-CEO of the Detroit Economic Growth Corp. George Jackson Jr. How many people — expats — would you be happy with to consider it a successful event? I asked him. Fifty, he replied. If they’re the right 50. I think we’ve had the right people — 650 or more and counting.

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SPECIAL REPORT: DETROIT HOMECOMING V

Distance between Ann Arbor, Detroit shrinking as entrepreneur links strengthen By Dustin Walsh dwalsh@crain.com

Bill Ford Jr. envisions the 104-yearold train depot in Detroit that Ford Motor Co. bought this year could create a mobility corridor on Michigan Avenue from Detroit to Ann Arbor. But the connection between those two cities — one that was tenuous at best only a year ago — is already beginning to blossom as Detroit’s entrepreneurial community grows. Ann Arbor-based Duo Security, which is being acquired by Cisco Systems Inc. in a $2.35 billion deal, recently opened its first Detroit office at the Julian C. Madison Building at 1420 Washington Blvd., transferring 30 of its staffers to the location with plans to grow that presence. A “unicorn” startup, Duo raised $70 million with a more than $1.17 billion valuation in 2017. Its co-founder Dug Song believes the success of the region is hinged on a confluence of Ann Arbor and Detroit. “Dan Gilbert’s move of Quicken to Detroit started this in a big way,” Song said. “We also saw Amazon, Microsoft and Facebook move in. Then we see this rise of all these small businesses and it just really seems like Detroit is a place of tremendous opportunities and

Bill Ford Jr.: Envisions mobility corridor

Bold Name: Sees opportunity to expand in Detroit.

Need to know

J Nearly 50 percent of the 29 Michigan’s venture capital firms have invested in companies in Detroit JJUM acquired Rackham Building, envisions a “more substantial” physical presence in Detroit

activity. Detroit used to be a place where you’d get big before you’d get loud, but now things are changing and there’s this kind of groundswell. Entrepreneurship is everywhere and we’re all starting to see that and should embrace it.” Ann Arbor’s established entrepreneur community, which sprung up from technology spun out of the University of Michigan, led to a crop of ven-

ture capital firms, growing since the mid-1990s. But they’ve also been focusing their attention lately toward Detroit. Nearly 50 percent of the 29 Michigan’s venture capital firms, most of which are located in Ann Arbor, have invested in companies in Detroit, said Emily Heintz, founder and managing director of Ann Arbor-based entrepreneur economic development organization EntryPoint and former associate director of the Michigan Venture Capital Association. “I definitely see the two communities slowly collaborating more,” Heintz said. “Detroit and Ann Arbor working together as a collaborative front only raises Michigan’s profile as we’re all working to build up the Midwest as an entrepreneurial hotspot.” The University of Michigan is following suit. Earlier this year, it acquired the rest of the Horace H. Rackham Education Memorial Building in Midtown, likely leading to a “more substantial” physical presence in Detroit for the maize-and-blue, UM President Mark Schlissel told Crain’s. Schlissel sees an opportunity to expand from UM’s tiny outpost at the Detroit Center on Woodward Avenue and make the 77-year-old Rackham building the university’s “home base” in De-

troit with a larger mission in Michigan’s largest city. Schlissel cited Ford’s planned $740 million investment in Corktown as a catalyst. “... But in the fullness of time, for example, as Ford does its building in Corktown and perhaps GM expands its footprint in town, I can see the university playing a more substantial role physically in Detroit going forward,” he told Crain’s. UM paid $5.1 million to the Rackham Engineering Foundation and the Engineering Society of Detroit for the east wing of the building (UM already owned the west wing for its extension service). Wayne State University’s Department of Communication Sciences and Disorders has a lease for space in the building that ends in July of next year. UM also acquired a parking structure from the Rackham Engineering Foundation. UM is also getting involved in Detroit’s schools, working with the public school district, the Kresge Foundation and others to open a unit of its school of education at the Marygrove College campus. Ann Arbor-to-Detroit is not a oneway street. Metro Detroit’s automotive industry started investing in Ann Arbor long before Detroit’s most recent entre-

preneur scene erupted. UM’s Mobility Transformation Center began researching new automotive technologies, such as connected and autonomous cars, years ago and received buy-in from the area’s largest automakers and suppliers, including Ford, General Motors Co., Delphi, Bosch and Denso. The opening of MCity, the world’s first controlled environment specifically designed to test the potential of connected and automated vehicle technologies, on campus opened up more connections between the two cities. Sandy Baruah, president and CEO of the Detroit Regional Chamber, said Ann Arbor’s talent and Detroit’s economic resurgence, thanks to a return of automotive sales, created a long-shuttered pipeline between the two communities. “When you really look at it, there’s been a symbiotic relationship develop between the talent that’s attracted to Ann Arbor and the university environment with the explosion of jobs and opportunity in Detroit,” Baruah said. “We’re really now seeing how these power centers in Michigan need each other and thrive off each other.” But Detroit and Ann Arbor have historically represented a disparate cul-

TRANSFORMING THE INDUSTRY & DETROIT

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James Chapman of Quicken Loans (left), Steve Vozar of May Mobility and Dug Song of Duo Security on a Growing Companies and Entrepreneurship panel at Detroit Homecoming last week. AARON ECKELS FOR CRAIN’S

ture and image — Ann Arbor, a city of intellectuals and entrepreneurs and Detroit, a monolith of decaying industry and blue-collar grit. Opposing ideas

were very visible to outsiders. In October 2017, successful investors from outside Michigan got a taste of the disjointed attitudes. Steve Case, CEO of

Washington, D.C.-based investment firm Revolution and co-founder and former chairman of AOL, led a panel as part of his Rise of the Rest tour that vis-

its startup hubs in the Midwest. He was joined on stage at the Michigan Theater in Ann Arbor by Dan Gilbert, Quicken Loans Inc. chairman; Ohio native J.D.

Vance, venture capitalist and author of “Hillbilly Elegy: A Memoir of a Family and Culture in Crisis”; and Mary Grove, director of global entrepreneur outreach at Google. “I did notice there is a tension in how you brand in the relationship between Ann Arbor and Detroit,” Vance said after a daylong tour of several successful startups in Ann Arbor. “That needs to be fixed and the two areas need to be viewed together more on a national scale.” Case said distinct regionalism can really hinder industry expansion, noting Silicon Valley used to just include San Jose, Calif., and surrounding communities, now it ranges from south of San Jose to north of San Francisco nearly 60 miles away. Gilbert agreed. “There’s nothing indigenous about technology,” he said at the event last year. “Geography is meaningless.” By comparison, Ann Arbor and Detroit city centers are only 43.5 miles apart. Song said the barriers are gone for good. “The culture in Detroit may have always been tied to autos and more topdown thinking, but that’s all starting to break down,” Song said. “There’s not many people drawing hard lines anymore. We’re erasing more of these artificial boundaries regionally every day. With that we’re seeing something more meaningful happen here.” Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh

WE BELIEVE IN — Freedom of Expression — An Informed Citizenry — Equitable, Inclusive and Participatory Communities.

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SPECIAL REPORT: DETROIT HOMECOMING V

Second Strategic Neighborhood Fund nets $32 million

By Kirk Pinho kpinho@crain.com

Strategic fund work is in progress in the Jefferson Chalmers neighborhood.

WHO WILL CHAMPION BOLD VENTURES?

DETROIT WILL. GET INVOLVED:

Visit. Support. Donate. Attend. Connect. If you want to be part of the innovation, creation, and success of the future, join MSU Entrepreneurship and Innovation as a mentor, student, or supporter. We’d

CRAIN’S DETROIT BUSINESS

Detroit’s second Strategic Neighborhood Fund is rapidly outpacing its predecessor for fundraising commitments from the private sector. The city says that since the $130 million Strategic Neighborhood Fund 2.0 was launched in April, it has commitments from foundations and private companies of more than $32 million, compared to the $16 million it raised in two years for the $42 million Strategic Neighborhood Fund 1.0. That puts the fund well on its way to its goal of $56 million in foundation/ corporate funding. The remaining $74 million would come from local matches plus state and federal dollars. The fund was a major topic of discussion on a panel at Detroit Homecoming’s real estate forum featuring Sterling Group founder and Chemical Financial Chairman Gary Torgow; Kresge Foundation Social Investment Officer Aaron Seybert; Clifford Brown, managing partner of Woodborn Partners; and Detroit Economic Growth Corp. President and CEO Kevin Johnson. Ryan Friedrichs, chief development officer for Detroit, declined to say which foundations and companies have made commitments or how much to finance the fund, which invests in Detroit neighborhood projects, pending necessary board approvals. “It is pretty striking the response we have been able to get,” he said. “It’s really a validation of the first Strategic Neighborhood Fund strategy.” The first fund was $42 million for three Detroit neighborhoods: Islandview/Greater Villages, Vernor/Southwest and Livernois-McNichols. The second is expected to be $130 million invested across seven neighborhoods: Grand River Northwest, Warrendale/ Cody-Rouge, Russell Woods/Nardin Park, Campau/Banglatown, Gratiot/ Seven Mile, East Warren/Cadieux and Jefferson Chalmers. The second fund is being invested in things like streetscape improvements, gap real estate financing, parks, single-family home stabilization and neighborhood planning. The Kresge Foundation made the first contribution to the second fund, of $15 million. Arthur Jemison, director of city services, said four neighborhood plans have been completed: Liver-

Need to know

 Strategic Neighborhood Fund 2.0 expected to be $130 million invested across seven neighborhoods  Puts fund well on its way to goal of $56 million in foundation/corporate funding  Remaining $74 million would come from local matches plus state and federal dollars

Arthur Jemison: Money meaningful for change.

Ryan Friedrichs: Validation of first fund strategy.

nois-McNichols, Vernor/Southwest, Islandview/Greater Villages and Grand River Northwest. Three more are in progress: Jefferson Chalmers, Russell Woods/Nardin Park and Campau/Banglatown, and the remaining three (Gratiot/Seven Mile, East Warren/Cadieux and Warrendale/Cody-Rouge) are expected next year. “The money is meaningful in the way neighborhoods are changed,” Jemison said. With $42 million from SNF 1.0, $130 million from SNF 2.0 and $250 million from the Affordable Housing Leveraging Fund announced in March, the projected investment in the neighborhoods will reach $422 million over the next five years. That investment is expected to leverage more than $600 million in private investments, pushing total neighborhood investment over $1 billion. The two neighborhood funds are administered by the city and Invest Detroit, while the affordable housing fund is administered by the city and the Local Initiatives Support Corp., Jemison said. Friedrichs said the combination of the second neighborhood fund and the affordable housing fund is beneficial when pitching the investment opportunity to foundations and companies. “That has been striking to both the foundation and corporate side,” he said. “You’re thinking about growth and inclusion, and how you really have affordability as you turn on the economic engines again.”

love to talk to you about the many ways you can get involved.

Michigan State University Entrepreneurship and Innovation 517.353.0644 | eship.msu.edu

KIRK PINHO/CRAIN’S DETROIT BUSINESS

Detroit Mayor Mike Duggan speaks in 2016 about the Detroit Strategic Neighborhood Initiative in the city’s West Village neighborhood.

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DETROIT MADE William “Bill” Davidson (1922–2009) was born in Detroit. A lifelong entrepreneur and philanthropist, Bill Davidson achieved tremendous success in international manufacturing and the sports and entertainment industries. In 2005, he established the William Davidson Foundation to support in perpetuity the economic, cultural and civic vitality of his hometown and the surrounding region. Today, the Foundation’s investments range from Detroit’s riverfront to the neighborhoods… from outdoor murals to museum galleries… from the sounds of the symphony to the music of Motown. Join us in supporting today’s Detroit-made leaders, artists, and entrepreneurs who are shaping our city’s future.

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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 // S E P T E M B E R 2 4 , 2 0 1 8

SPECIAL REPORT: DETROIT HOMECOMING V

Detroit Homecoming IV Michigan Central Train Station

Michigan EPIC Awards' Winner Best Corporate Event 2017 MARKETING & EVENTS

WITH A PURPOSE 4219 Woodward Avenue, Ste 304, Detroit, Michigan jrturnbull.com

CHAD LIVENGOOD/CRAIN’S DETROIT BUSINESS

Armando Arteaga (standing) is a co-founder of ToDoolie, a gig website that pairs college student workers with homeowners with household chores and tasks.

Bunker Labs aims to help veterans with startups By Chad Livengood clivengood@crain.com

The co-founders of a Detroit startup company that pairs college students with homeowners for household chores are finding that their gig economy online platform is best advertised in an analog format — old-fashioned paper fliers. ToDoolie, a service created by three Wayne State University students, began distributing 30,000 fliers around metro Detroit this month after Facebook and Instagram advertising didn’t produce the customer base the millennial business owners thought it would. “Contrary to what a lot of people think, we’ve actually tried Facebook ads and they did not work as well as we thought they were going to be,” said Armando Arteaga, a co-founder of ToDoolie. “Actually, word-of-mouth and doorknob fliers have been the most impactful marketing in our business.” Arteaga and his business partners Sergio Rodriguez and Jose Romo-Puerta are learning lessons in entrepreneurship on the fly as they attempt to scale their business from three separate co-working spaces in Detroit that offered free space. Rodriguez, a Wayne State graduate student, is stationed in TechTown. Romo-Puerta, a marketing student at Wayne State, is working out of Bamboo Detroit’s downtown office. And Arteaga, who got out of the U.S. Army in March, is stationed at WeWork’s Campus Martius building through Bunker Labs, a business support organization for military veteran entrepreneurs. Arteaga is one of eight military veterans who are part of Bunker Labs’ Veterans of Residence program that provides them free office space and support services for six months while they start or scale a business. WeWork provides Bunker Labs with free co-working space at its 1001 Woodward Ave. office. The veteran-owned businesses incubating at Bunker Labs vary from food, beverage and personal care startups to a Brighton-based company called Templar Life Safety that’s selling trauma emergency medical supply kits for schools, churches and public places in the event of a mass shooting. By being based at WeWork, Bunker

Labs is able to connect veteran entrepreneurs with other former servicemen and women, as well as individuals without military backgrounds who are working out of the shared downtown office space, said T.J. Typinski, a city leader for Bunker Labs Detroit. “A lot of these businesses, they just didn’t have a home to go to,” said Typinski, owner of The Dominant Approach, a digital marketing and design firm. “The value for these veterans, for these veter-preneurs, is to be able to work and collaborate with other veteran entrepreneurs — to be able to speak their language.” Shelly Rood, a 16-year military veteran from Harrison Township, is part of the second class of the Veterans in Residence program launched this month. She started a company called Mission: Ambition LLC that sells a subscription-based personal care box delivered monthly by mail to women in the military or law enforcement. Rood said working out of WeWork has given her the chance to network with businesspeople she wouldn’t have met working out of her home. “The hands I’ve been able to shake here in Detroit — you’re talking the real movers and shakers, the hustlers — I have made so many connections through Bunker Labs that I would not have been able to make on my own,” Rood said in an interview at Detroit Homecoming for the Crain’s “Detroit Rising” podcast. For fledgling startup businesses working on shoestring budgets, the free office space is invaluable. ToDoolie has generated $20,000 in total sales since May, Arteaga said. That works out to about 1,300 hours of student labor over the summer months. The company charges homeowners $15 per hour for college student workers, who do everything from painting and pulling weeds to raking leaves and household cleaning. ToDoolie just got free help from 11 programmers who volunteered to help build out its online platform, Arteaga said. And now they just have to wait and see how the flier campaign goes as work orders come in for fall leaf-raking followed by snow-shoveling this winter. “The fall, I think, is going to be a very big for us,” Arteaga said.

C R A I N ’ S D E T R O I T B U S I N E S S // S E P T E M B E R 2 4 , 2 0 1 8

SPECIAL REPORT: DETROIT HOMECOMING V

A big sale — and building businesses — in Detroit By Chad Livengood

Need to know

In 2010, tech entrepreneur Angel Gambino re-engaged with her hometown of Detroit after building a career across the globe at technology, entertainment and social media companies. With Detroit still reeling from the Great Recession, Gambino ignored the investment advice of others and began buying properties in Corktown, including a derelict factory on Rosa Parks Boulevard that dated to the late 19th century. “Everyone I talked to in 2010 told me I was absolutely nuts and it would take forever to come Angel Gambino: around,” said Shopping for new Gambino, a forventure. mer top executive at the UK social media website Bebo. “Everyone told me not to do it. But I believed it was the right thing to do … and I would figure it out." After nearly eight years of hobbling along with repairs and charging below-market-rate rent, the one-time brass factory and 3 acres Gambino bought at 2051 Rosa Parks Blvd. turned out to be a pretty good speculative bet by the Detroit native. In July, Gambino sold the building for an undisclosed amount to Ford Motor Co., which plans to tear it down and construct a new 500,000-600,000 square-foot mixed use building that will be part of its Corktown campus. In Corktown, the Dearborn automaker intends to develop self-driving cars and future innovations in the mobility of people and goods. Gambino, 46, was born in the city and grew up in Roseville. She picked Corktown to buy property because of its “sense of familiarity” for people who might desire to return to Detroit someday. “Since that’s where people grew up going to Tigers games, I thought this might be one of the first places people might go back to,” Gambino said in an interview on the Crain’s “Detroit Rising” podcast. Those days were “way before there were any of these cool restaurants and bars (in Corktown). ... It was way before Slow’s (Bar-B-Q).” Ford’s vision for Corktown is not too far off from the “smart mobility ecosystem” Gambino said the region should create in Detroit’s oldest neighborhood during a speech at the 2014 Mackinac Policy Conference. “I wanted somebody who would be committed to really taking it to the next stage,” Gambino said of Ford. Gambino housed her smart mobility firm, called The Alchemists Collective, at 2051 Rosa Parks — known as the The Alchemy building — working for clients such as Castrol and BP on new ventures in mobility technologies to diversify revenue streams for the petroleum companies in an era of increased electrification of vehicles. She also began building a new social media company, Sensai, which uses artificial intelligence to help companies boost their traction on social media marketing. “Sensai is really about creators, nonprofits, small businesses, other entrepreneurs like myself ... helping them to know what to post, when to post, what words to use” on Twitter, Instagram

The Alchemy building to Ford Motor Co. for undisclosed sum

clivengood@crain.com

JJTech entrepreneur Angel Gambino sold

JJShe’s building social media marketing and mobility startup businesses in Detroit

and Facebook, Gambino said. Gambino launched Sensai in May 2017 and the startup touts having high-profile clients like Olympic snowboarder Shaun White, country singer Tim McGraw and former Democratic gubernatorial candidate Abdul ElSayed.

“We were able to grow (El-Sayed’s) socials in such an extraordinary way that he went from an unknown to a very serious competitor to (Democratic nominee) Gretchen Whitmer,” Gambino said. One of Sensai’s local clients is fashion model Stefanie Kwiatkowski, creator of an open-toe grippy shoe for yoga and pilates. Kwiatkowski’s company, Barre’letixx, has used Sensai to boost online sales of the rubber, injection-molded shoe, which is manufactured in the Grand Rapids area. Sensai’s AI technology makes sug-

gestions on how to better format social media posts for growing Barre’letixx’s online followers and potential customer base, Kwiatkowski said. “It's like having an angel say, ‘No, no, child, don’t go down that path, go this way,’” Kwiatkowski said. Gambino splits her time between homes in Corktown and Grosse Pointe and San Francisco, where Sensai is based. Since selling the Alchemy building to Ford, Gambino has moved her companies into space at WeWork, and she’s looking for new office space. She’s currently trying to hire data sci-

entists for Sensai’s Detroit team, with plans of growing from four employees in the Motor City to 15 employees over the next 18 months. Gambino also is shopping for a new real estate venture, hoping to land in the city’s next up-and-coming neighborhood. “I’m looking right now to acquire more commercial and residential real estate in the city, preferably on the east side, where I’m from,” she said. Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

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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 // S E P T E M B E R 2 4 , 2 0 1 8

SPECIAL REPORT: DETROIT HOMECOMING V

AARON ECKELS FOR CRAIN’S DETROIT BUSINESS

Wayne State University President M. Roy Wilson (left) and Harvard University President Lawrence Bacow discuss the universities’ collaborative efforts on Sept. 14 as part of Detroit Homecoming V at the Lexus Velodrome.

Harvard president: Teachers hold key to knowledge economy

By Chad Livengood clivengood@crain.com

For Harvard President Larry Bacow, Detroit Homecoming V was a chance to recognize the people he considers most responsible for helping shape his lifelong trajectory into the upper echelons of higher education leadership. “I would not be the person that I am but for the wonderful teachers that I encountered in the Pontiac public school system — at every level,” said Bacow, who is trying to strengthen Harvard’s ties to metro Detroit. Born in Detroit and raised in Pontiac, Bacow used his appearance at Detroit Homecoming to make a trek back to his hometown to speak with students about his education journey that began in Pontiac High School and led to the three degrees from Harvard and a 40-year career that has largely revolved around teaching. He said there needs to be more focus on revitalizing the teaching profession as one means of addressing talent shortages in the knowledge economy. “We grossly undervalue teaching,” Bacow said. “We don’t pay them enough, we don’t recognize them enough, we don’t say ‘thank you’ enough.” A professor of environmental law and economics, Bacow spent 24 years on the faculty at Massachusetts Institute of Technology before he became the 12th president of Tufts University in 2001. He led the Medford, Mass., private school until 2011, when he joined Harvard’s faculty in leadership positions. Bacow became Harvard’s 29th president on July 1. “One of the most satisfying things about being president of Harvard is that I heard from 40 years of my former students who reached out to me and told me stories about things that I had forgotten that I said to them years ago,” Bacow said in an inter-

Need to know

 Harvard President Larry Bacow says teaching profession “grossly” undervalued  He credits childhood teachers in Pontiac for his career path  Bacow became Harvard’s 29th president in July

“One of the most satisfying things about being president of Harvard is that I heard from 40 years of my former students who reached out to me and told me stories about things that I had forgotten that I said to them years ago.” Larry Bacow

view with Crain’s. “They said, ‘You may not recall this, but you said this to me and it changed my life.’ Nothing is more satisfying than to have somebody tell you that.” Bacow said he wants business owners to recognize that teaching is the foundation for 21st century knowledge economy skills that they desire. “At the most basic level, we can’t continue to balance state and municipal budgets on the backs of teachers,” Bacow said. “... We need to have talented young people recognize that there’s nothing more satisfying than changing the life of a young person — and that’s what teachers do.” Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

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Detroit Homecoming V: Recap

Learn here, stay here, grow here Education experts, expats show business leaders how they can help build a talent pipeline By Laura Cassar, Crain Content Studio

Panelists share their thoughts on Detroit’s education report card. From left, Boston Chief of Education Rahn Dorsey; Dannis Mitchell, Diversity Manager for Barton Malow; Detroit Superintendent Nikolai Vitti; real estate developer and former teacher Monique Becker; and Dr. Barbara Ross-Lee, Detroit expat and physician.

n a knowledge-based economy, education is the most important capital a state, or a city, can own.

The importance of education, and of keeping educated talent in Michigan and in Detroit, was the focus of a series of forums at Detroit Homecoming V, a three-day, invite-only event held to encourage Detroit expats to invest in the city. In addition to spurring investment in the region, Detroit Homecoming each year gives expats and business leaders ideas for moving the city and state forward. It’s also a chance to put the state of our region in perspective — especially for those who moved away. University of Michigan President Mark Schlissel told Homecoming attendees that Michigan, once ranked 20th nationally in per-capita investment in higher education, now ranks 43rd. Michigan is 35th in the number of adults with a college degree and 30th in per-capita income. “The connection between these numbers is well-documented,” Schlissel said. “The most prosperous states are those that make the biggest investments in their students.”

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An educated workforce also generates higher tax revenue and lowers the needs for social safety nets, Schlissel said, Furthermore, college graduates experience better health, live longer lives, give more to charity and are more engaged with their communities. Finally, he said: a community of diverse, highly-educated talent is one companies want to invest in. As the state of Michigan disinvests in higher education, costs are passed down from taxpayers to students and their families — who feel the brunt of the state disinvestment in the form of tuition costs. Harvard University President Lawrence Bacow, an expat, agreed with Schlissel’s assessment of the devaluation of higher education. “It’s unfortunate. We are mortgaging our future while other countries are doubling down on investing in higher education,” said Bacow, who grew up in Pontiac. “University costs have gone up but the return on that investment has never been higher.” That ROI can be seen in the ratio of the earnings of university graduates to the earnings of those without a university diploma.

Wayne State University President M. Roy Wilson echoed the thoughts of Schlissel and Bacow. Wilson stressed the importance of communicating the value of education to the public. “Only 16 percent (of the public) now believes that a four-year degree will lead to a higher paying job.”

Leveling the playing field Panelists during the education forum shared ideas and programs designed to provide equal opportunity to all students intent on learning. “Talent is flatly distributed,” Bacow explained. “Opportunity is not.” University of Michigan wants to increase the level of aspiration for school children: The Go Blue Guarantee offers four years of free tuition and fees for state of Michigan students accepted to the university but with a family income under $65,000, Schlissel said. Also at U-M, students within the boundaries of the city of Detroit, Southfield or Ypsilanti school districts are eligible for University of Michigan’s

possibilities resonate beyond a degree: they’re about opportunity.

University of Detroit Mercy recently reset its tuition from $41,000 to $28,000 and saw its fourth largest increase in freshman enrollment.

“What I was (growing up and) learning in Birmingham, versus my cousins in Detroit, that trajectory then allowed me to go to University of Michigan. The connections U of M awarded

“By making Detroit teachers the best trained in the nation, we elevate everyone.” - Mark Schlissel, President, University of Michigan

“This is key in keeping local talent here. We need them,” said U of D President Antoine Garibaldi, sharing that 400 of the 600 incoming students are from Detroit’s three local counties.

K-12 opportunities

granted me a network I accessed because of my education,” Becker said. “I hope that the city is changing in the right direction. The future I envision is sending my kids to Detroit schools someday.”

On a Detroit level, where K-12 enrollment has increased year-over-year for the ﬁrst time in a decade, Nikolai Vitti, Superintendent of Detroit Public Schools Community District, is working to create a college-going culture. Key in this mission is offering college classes — Advanced Placement or dual degree courses — at the high school level, allowing students to see for themselves that they are college-ready.

One Detroit businessman is doing his part to keep talent in Michigan and grow his industry at the same time. Alan Jay Kaufman, President and CEO of H.W. Kaufman Group, parent company of Burns & Wilcox and a specialty insurance, reinsurance and real estate organization, saw a need in Michigan’s insurance talent base and stepped up to meet that need with a $1 million gift to the Eli Broad College of Business at Michigan State University. That gift supports an endowed professorship in Insurance and Risk Management at the college. “Michigan has high-ranking business schools and insurance is a significant part of business, but it was not being taught. The talent shortage of insurance people starts with a lack of insurance programs at our universities,” Kaufman said. “I had to convince the MSU president and provost of the importance and relevance of an insurance program.”

With the help of the philanthropic community, Detroit’s public school district recently announced the launch of a K-12 school at Marygrove College, teaming up with the University of Michigan to operate a teaching school similar to the way it would operate a teaching hospital, providing teacher residencies and ﬁeld experiences, and implementing research-based innovations in professional development.

With Kaufman’s efforts, Insurance and Risk Management is now offered as a minor at MSU, administered by the Department of Finance. Classes include Principles of Insurance and Risk Management; Financial Risk Management; and Crises, Insurance and Risk Management. Since its start in 2016, the program increased from seven students to 25; there are 47 students total in the insurance program classes.

“We need the best and brightest to go into teaching,” Vitti said, comparing the speciﬁc way to teach a student to read as precise of a skill as performing open-heart surgery. Schlissel agreed. “By making Detroit teachers the best trained in the nation, we elevate everyone.” Monique Becker, a former second grade teacher in Detroit who now works in real estate development, said these types of programs and

Education’s biggest advocates: Business leaders

According to Kaufman, this is only a first step in developing and keeping his industry’s talent in Michigan. President Mark Schlissel, University of Michigan

“One professorship is not enough but someone had to start,” said Kaufman, who said he prefers to lead by action rather than talk. “Insurance companies advertise at MSU, insure MSU, so why not get fully involved and step up with the business school? I encourage insurance companies and brokers to connect these dots.” With more than employees worldwide, H.W. Kaufman Group is the only company of its size based in Michigan and they are forced to do the majority of their recruiting from out of state. Kaufman said he is looking forward to the day that he can recruit locally. “Business is like a sport — the best talent wins,” he said. “We need to develop, and keep, our talent here. That’s what will make Michigan more successful.” At the conclusion of Detroit Homecoming’s forum on education, Kaufman encouraged the audience to take his lead.

Wayne State University President M. Roy Wilson, left, and Harvard President Larry Bacow talk about putting value back into higher education.

“If business leaders become education advocates in their industries, together we can build the next generation of leaders,” he said. photos by Aaron Eckels

C R A I N ’ S D E T R O I T B U S I N E S S // S E P T E M B E R 2 4 , 2 0 1 8

DETROIT MADE: DETROIT HOMECOMING V

‘Detroit-made’ makers

O Detroit D eetrroiit Mercy Merc helps b build ild your o r bo boundless ndless ffuture t r through: th > Exceptional Academics

> Vibrant Urban Setting

ne of the features of Detroit Homecoming V was “The Boulevard,” an exhibit of 32 Detroit busineses that are remaking the notion of making things in Detroit in sometimes surprising ways. These companies displayed “help wanted” signs about the kinds of business assistance they could most use, offering the Homecoming expat attendees the ability to get involved in hometown businesses, whether by investing, advising, or offering other aid. Over the next several pages, we profile a small selection of these companies, which show that the city is moving in directions well beyond its automotive roots.

University of Detroit Mercy • 4001 W. McNichols Road • Detroit, MI 48221-3038 • 800-635-5020

Alerje founder thinks there’s a smarter way to carry allergy medicine

Apply now at udmercy.edu and start building your boundless future today!

By Dustin Walsh

> Values–based Education > A Boundless Career and Life

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Javier Evelyn is allergic to pistachios, cashews, fish and casein — the main protein in milk. He’s not alone. Researchers estimate roughly 15 million Americans, including 6 million children, or one in 13, suffer from potentially deadly food allergies, according to the nonJavier Evelyn: profit Food AllerEpiPen is costly gy Research & and clunky. Education. And the problem is growing, with private insurance claims of anaphylactic food reactions rising 377 percent between 2007 and 2016, according to research by Fair Health Inc., a nonprofit that collects and analyzes data on privately billed health insurance claims. Meanwhile, the life-saving medicine epinephrine is in short supply. The U.S. Food and Drug Administration first declared a shortage in May and it persists today. Making the problem more frightening is how unprepared families are for a life-threatening reaction. Allergists at the Columbus, Ohio-based Nationwide Children’s Hospital in 2017 found that fewer than 40 percent of its patients carried epinephrine when they left the house and of those who did, roughly half were carrying medicine that had expired. Evelyn, 35, set out to solve this problem by founding Detroit-based Alerje LLC in 2016. The startup, which has raised more than $250,000 in funding, is working on a smartphone case that carries a slim epinephrine auto-injector. The case, paired with an app, will send alerts to 911 operators, parents, spouses or other caregivers if the auto-injector is removed from the case in an emergency. The mobile app will provide helpful lifestyle information, such as an allergen-safe recipe book and a label scanner that will alert the user to specific allergens. “Historically, I’ve never carried an EpiPen,” Evelyn said. “I always get the

Need to know

JJDetroit-based Alerje LLC founded in

2016

JJRaised more than $250,000 in funding JJWorking on a smartphone case that carries a slim epinephrine auto-injector

“We’re excited because the EpiPen shortage is creating discomfort among regulators, so the FDA is looking to streamline approvals.” Javier Evelyn

finger wag from family and friends, but they are costly and clunky. So I set out to change that and the most ubiquitous device is the smartphone. Most people never leave home without it.” EpiPen, the most widely used auto-injector manufactured by Pennsylvania pharmaceutical giant Mylan NV, measures 6 inches in length. It’s cumbersome to carry all the time, Evelyn said. Alerje’s preliminary design is for an auto-injector 2 inches wide and less than a half-inch thick, roughly the size of an expanded smartphone battery, Evelyn said. The company is currently working with the U.S. Food and Drug Administration on approval of the device, which is projected to happen in late 2019 or early 2020, Evelyn said. “This really couldn’t be better timing for us,” he said. “We’re excited because the EpiPen shortage is creating discomfort among regulators, so the FDA is looking to streamline approvals.” However, don’t expect Alerje to strike out on its own, a startup versus the Goliaths in the pharmaceutical space. The company is looking to create a distribution and branding agreement with a larger entity to commercialize its product. Alerje currently has three full-time employees and a part-time app developer.

C R A I N ’ S D E T R O I T B U S I N E S S // S E P T E M B E R 2 4 , 2 0 1 8

DETROIT MADE: DETROIT HOMECOMING V

Detroit Dirt lays groundwork for green-minded living By Sherri Welch swelch@crain.com

Base photo courtesy of Rock Ventures

Detroit: No. 2 in the world of “Best In Travel 2018 Top Cities”— Lonely Planet Detroit is pumping with a newfound energy you can see, hear, touch and feel. Now, it’s time for you to be part of its exciting revitalization. Detroit. It’s GO time.

DETROIT DIRT

Detroit Dirt Co-founder and president Pashon Murray.

Need to know

JJTurning food waste into compost takes about 10-11 months JJPiles heat up to 130-170 degrees and break down naturally JJWith annual revenue around $200,000, Detroit Dirt fielding retailers’ interest

“But in order for us to be successful, we need the capital behind us to take on those contracts.”

One person’s trash is another’s treasure, so the saying goes. Detroit Dirt LLC has built an environmentally conscious company on that premise. Co-founder and president Pashon Murray is also looking to educate consumers about zero-waste living through an affiliated nonprofit. Since its founding in 2010, the Detroit-based company has diverted more than 90 million pounds of waste from landfills by converting it to nutrient-rich compost and selling it through its website at www. detroitdirt.org to gardeners and urban farmers. With just three full-time employees and occasional part-time help, the company makes several trips each week to the GM Renaissance Center in downtown Detroit to pick up food waste from General Motors Co. and the 26 or more restaurants that operate there. It trucks 50-gallon to 70-gallon trash totes filled with organic waste back to 3 acres of property it leases in Southwest Detroit to spread it out in piles and begin a 10- to-11month natural composting process. The piles heat up to 130-170 degrees and break down naturally with occasional turning and sometimes worms to help speed the process, Murray said. Detroit Dirt also takes solid, organic waste from the Detroit Zoo, a product derived from food and herbivore manure that’s already begun breaking down after going through a biodigester to produce methane gas and bio fertilizer for the zoo. Typically, the waste that comes from the zoo every other week is ready to go in someone’s garden after another 30-40 days of decomposing on Detroit Dirt’s property, Murray said. It has contracted with Goodwill’s Green Works Inc. to package the compost, when ready, into eco-friendly boxes from Detroit-based Michigan Box Co. Detroit Dirt’s model has garnered national attention from outlets including Fortune, Time, Entrepreneur, Newsweek and Vanity Fair. Demand from local companies looking at more sustainable operating practices is picking up. Detroit Dirt gets calls daily from local restaurants and other green-minded companies like Little Caesars Enterprises Inc. and Shinola/Detroit LLC, asking if it can pick up their food waste, Murray said. To get more land for composting, it’s negotiating with the city of Detroit to purchase another 7 acres of property in Southwest Detroit near its current property. Murray said the deal is expected to go before the Detroit City Council in October. Detroit Dirt, which has annual revenue of about $200,000, is also fielding interest from big-box stores

Pashon Murray

like Meijer and Home Depot and others like Eastern Market Corp. interested in selling the compost. It’s hoping to secure a retail contract and launch a retail division next year, Murray said. “But in order for us to be successful, we need the capital behind us to take on those contracts,” she said. Underscoring the business, Murray said, is her passion to educate people about waste reduction. She has launched the Detroit Dirt Foundation to provide education programs and assistance with research on soil contamination and erosion. With a $50,000 planning grant from the Bosch Community Fund, Murray convened a small team with representatives from the University of Wisconsin and a former U.S. Environmental Protection Agency employee in California to help her develop the foundation’s focus and awareness and educational programs. A second grant of the same amount from Bosch received in mid-July is helping the Detroit Dirt Foundation raise additional money to fund its programs, Murray said. Sherri Welch: (313) 446-1694 Twitter: @SherriWelch

INVESTED IN DETROIT’S FUTURE Four years in, JPMorgan Chase’s $150 million commitment continues to help fuel Detroit’s comeback. We’ve been doing business here for more than 80 years, and believe in the city’s resiliency to rebuild a dynamic,modern economy. Working closely with civic, business and nonprofit leaders to address the city’s most pressing challenges, JPMorgan Chase investments in small business growth, commercial corridor development, workforce training, summer youth employment, and other efforts is spurring economic opportunity and revitalizing Detroit’s neighborhoods. We know there is much work to be done, but we’re as committed as ever to Detroit’s success.

jpmorganchase.com/detroit

#investinDetroit

C R A I N ’ S D E T R O I T B U S I N E S S // S E P T E M B E R 2 4 , 2 0 1 8

DETROIT MADE: DETROIT HOMECOMING V

Pingree Detroit footwear company stepping up its game Need to know

By Kirk Pinho

JJAnticipates hiring two new full-time employees

kpinho@crain.com

Nate Crawford II and Cody Teller have traded bullets for boot making. The Afghanistan war veterans — Crawford was in the U.S. Air Force, Teller in the Army — are now assembling high-end, hand-crafted leather shoes and boots for Pingree Detroit, a startup based in the city’s Milwaukee Junction neighborhood. With training and oversight from boot maker and College for Creative Studies adjunct professor Cinthia Montague, the two earn $13 to $15 per hour making the “Mayor” hightop shoe ($300, available Oct. 1) and the “Governor” boot ($400-$500, available in the first quarter). Fitting names for the footwear, given that the company takes its name from 19th century Detroit mayor and Michigan governor Hazen Pingree, said Jarret Schlaff, the president and CEO who with Kaleb Fulk co-founded the company in 2015. Also of note: Pingree was a Civil War veteran who co-owned the Pingree & Smith shoe-making company. None of that is lost on Schlaff, whose company gets much of its leather donated from automotive suppliers like Southfield-based Lear Corp. and others. “Pingree became mayor at such a time when the city didn’t have any money and people were starving,”

JJComing products include the “Mayor” high-top shoe, the “Governor” boot JJWill hold shoe-making event, take pre-orders in Campus Martius on Sept. 27-28

KALEB FULK/PINGREE DETROIT

Cody Teller (left) and Nate Crawford II (right) of Pingree Detroit received training from boot maker and College for Creative Studies adjunct professor Cinthia Montague.

Schlaff said. “He said, ‘Let’s meet the problems head on.’ We are hoping to create that kind of service-minded company.” Schlaff says Pingree Detroit is on track for more than $100,000 in sales revenue this year, and anticipates $464,000 next year as the Governor

boot, as well as messenger bags, hit the market in the first quarter. He also anticipates hiring two new full-time employees and having the products — boots, shoes, wallets and other leather goods — in more than 10 stores across the Midwest. About 25 pairs can be produced a

month. The company serves a critical need for former service members, Crawford and Teller said, noting that they had difficulty finding employment after leaving the military because of training. “What I did in the military doesn’t

really translate to anything outside in the civilian world,” Teller said. “Businesses, yeah, they’ll hire veterans if they are already trained for that specific job. I had no experience in this business before.” That’s where a 10-week training course kicked in, teaching Crawford and Teller the ins and outs of sewing leather. Crawford said Montague has been a guiding force for the small two-person shoe-making team. “I am artistically very creative. I used to draw,” he said in the small assembly area in the basement of the building at 6438 Woodward.“But I had no experience on a sewing machine whatsoever, and that’s a testament to her training.” A shoe-making event will be held in Campus Martius Park on Sept. 2728 from 11 a.m. to 3 p.m., during which pre-orders will be taken. Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

THRIVING CHILDREN. WORKING FAMILIES.

Detroit Oﬃce 28 West Adams Street, Suite 1650 Detroit, MI 48226

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With Detroit as a priority place for Kellogg Foundation investments, we are proud to partner to create lasting change for children. Hope Starts Here, a communityaction plan promoting early childhood education for all of Detroit’s children.

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The Cotton family supports Michiganâ&#x20AC;&#x2122;s continued investment in educating the future workforce by encouraging software development and programming skills in elementary schools, crafting educational infrastructure in vocational and trade schools at the secondary level, and fostering apprenticeship, journeyman and master-level programs for tradesmen at higher education institutions. Career paths tailored to the unique skills and abilities of our students will pave the way for a competitive advantage for Michiganders within our primary and secondary education systems.

C R A I N ’ S D E T R O I T B U S I N E S S // S E P T E M B E R 2 4 , 2 0 1 8

SPECIAL REPORT: DETROIT HOMECOMING V

Scenes from a Homecoming

he fifth installment of Detroit Homecoming brought more than 250 local natives back to their hometown for three days of discussions, tours and re-engagement. The Detroit expats got the opportunity to hear from local luminaries including Ford Motor Co. Chairman Bill Ford Jr., founder and chairman of Quicken Loans Inc. and Rock Ventures LLC Dan Gilbert and former Detroit emergency manager Kevyn Orr. They also attended smaller gatherings in residences across the city, house parties aimed at helping them get a feel for the city’s resurgence on an individual level.

AARON ECKELS FOR CRAIN’S

Nikolai Vitti, superintendent of Detroit Public Schools Community District, talks about education in Detroit on Sept. 14 at Detroit Homecoming V at the Lexus Velodrome.

LARRY PEPLIN FOR CRAIN’S

Detroit Tigers great Al Kaline at the Detroit Homecoming V opening event on Sept. 12 at Little Caesars Arena in Detroit.

LARRY PEPLIN FOR CRAIN’S

Dan Gilbert talks about the growth of Detroit-based StockX during the Sept. 12 opening night of Detroit Homecoming V at Little Caesars Arena.

Detroit Homecoming V attendees enjoy a performance by Bettye LaVette at The Corner ballpark in Detroit on Sept. 13. AARON ECKELS FOR CRAIN’S

AARON ECKELS FOR CRAIN’S

Detroit Homecoming V attendees were treated to a cycling demonstration at the Lexus Velodrome on Sept. 13.

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LARRY PEPLIN FOR CRAIN’S

Crain Communications Inc. President and COO KC Crain (from left), Detroit Mayor Mike Duggan and Ford Motor Co. Executive Chairman Bill Ford Jr. talk about Detroit and the automakers plans in Corktown on Wednesday during the Sept. 12 opening night of Detroit Homecoming V at Little Caesars Arena.

LARRY PEPLIN FOR CRAIN’S

About 400 Detroit expats, local executives and thought leaders gather at Little Caesars Arena on Sept. 12 for the opening of Detroit Homecoming V.

AARON ECKELS FOR CRAIN’S

Kevyn Orr, former emergency manager for Detroit, talks about the state of the city five years after bankruptcy during an event Sept. 13 at the Lexus Velodrome.

AARON ECKELS FOR CRAIN’S

Crain’s Detroit Business Group Publisher Mary Kramer leads a discussion Sept. 13 at the Lexus Velodrome on the business case for equity in entrepreneurship with (from left) LaJune Montgomery Tabron, Adrienne Bennett, Ron Bartell and Regina Gaines.

C R A I N ’ S D E T R O I T B U S I N E S S // S E P T E M B E R 2 4 , 2 0 1 8

SPECIAL REPORT: DETROIT HOMECOMING V

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Knight Foundation probes engagement, link to media trust By Sherri Welch swelch@crain.com

Trust in the U.S. media has been eroding as journalists’ motives and ethics are increasingly called into question and accusations of “fake news” mount. This presents a challenge to the media in its responsibility to inform the public and hold government leaders accountable. During Detroit Homecoming V, Olivier Kamanda, director Olivier Kamanda: of learning and impact strategy Engaged at the Micommunities ami-based John critical S. and James L. Knight Foundation, led a local media panel in a discussion on civic engagement in an era of fake news. He talked with Crain’s afterward to discuss why the foundation is focused on this topic and why it’s important to all Americans. Responses were edited for clarity and space. Why does Knight see civic engagement amid claims of fake news as an important topic and what is the link between the two?

Notable Women in Nonprofits champion the causes of their organizations, contribute to movements that lend to the vibrancy of the state and help lead the charge on solving pressing issues in our communities.

The foundation is really motivated by understanding what drives informed and engaged communities. We believe those are critical for a thriving democratic society. Communities need quality information in order to make the kinds of thoughtful, strategic decisions that shape the quality of people’s lives. The challenge we face is there’s a trust deficit between what had been media’s readers and supporters. That’s unfortunate, because we know that 80 percent of adults believe media is critical to a thriving democracy. But only 41 percent of people in 2017 trusted the media, down from 54 percent in 2003, according to a Knight Foundation poll. What’s driving mistrust?

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People’s political beliefs tend to correlate pretty strongly to whether they trust media. About 54 percent of Democrats have very or somewhat favorable opinion of the news media. That’s compared to 68 percent of Republicans who view the news media in an unfavorable light. But what’s driving mistrust is more complicated. It includes people’s sense of bias and their concerns around transparency in the media. Why should people be concerned about this?

A majority of Americans consider fake news to be a threat to our democracy. The information we get from news media and journalists is what allows us to make thoughtful decisions about our communities. If we can’t trust the news media or the information they are present-

ing, it makes it harder for citizens and community leaders to speak with consistent language and to have a base level of understanding about what the critical challenges are. That makes it hard to tackle some of the complex political and social challenges at the local and national level. We as citizens also rely on the media to hold government leaders accountable. If we continue to see that decline in trust in media, it makes it harder for media to play that critical role. Is Knight looking to address the mistrust in the media?

In 2016, Knight launched its trust, media and democracy initiative to understand what’s driving mistrust and what effect it’s having on our democracy. We have a wealth of research that came out of our partnership with Gallup and the Pew Research Center. Among the most recent findings was that although there is declining trust in media, 69 percent of adults think it’s possible to restore trust in the media and that transparency is the biggest influencer in trust, meaning that media that has a commitment to transparency are best suited to regain that trust and confidence. Is the foundation doing anything specific to address this in Detroit?

We have two big initiatives. One is the Detroit Journalism Cooperative, grants to nonprofit media outlets to promote cooperation and share resources. Initially it was created to connect community residents to stories around Detroit’s recovery, but has since broadened to focus on other areas of interest to Detroit residents. Detroit Journalism Engagement Fund is another investment, funded through Community Foundation for Southeast Michigan and includes some funding from the Ford Foundation. It’s focused on presenting the perspectives of diverse audiences, including people of color, women and low-income communities and broadening the reach of ethnic and minority newspapers. It’s important to have media reflect those constituencies to give them a voice in their local journalism. It adds to the quality and depth of journalism, the trust people have in local reporting. And it gives them power in sharing their concerns with other members of the community and government and political leaders. Those investments, which totaled about $2.3 million, were made to strengthen the local journalism ecosystem to withstand the threat to local journalism. The business model has been weakened in recent years, and we do see an overlap between strengthening those ecosystems and the ability to tackle fake news and misinformation as it relates to community engagement.

SPONSORED CONTENT

United Shore: A great career move for people of any background The nation’s top wholesale mortgage lender doesn’t care about your resume; they want to make sure their employees are a culture fit.

s there anything more frustrating than getting rejected for a job in a different industry because you don’t have experience in that specific field?

Probably not. And luckily for a lot of people throughout Metro Detroit who are looking to make a career change, United Shore has taken that into account. The Pontiac-based mortgage company, known both as a top national workplace and the No. 1 wholesale mortgage lender in the country, has made it a point to set a unique standard when it comes to the job history of its applicants. For most positions, United Shore doesn’t care what your background is. The company knows that the mortgage industry is a niche space that not everyone has worked in before. Job candidates don’t need prior mortgage experience because, once hired, the company’s team of more than 40 dedicated training professionals provides extensive initial, ongoing and real-time training to teach the skills and knowledge needed to be successful. The company even built out 12 state-of-the art training rooms in its new 600,000-squarefoot Pontiac headquarters solely to support its training initiatives. Instead of putting great emphasis on job history in its evaluation of job candidates, United Shore breaks it down into much simpler metrics to discover potentially impactful employees – it identifies people that are a culture fit.

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By that, United Shore means it values strong work ethic and a positive, hard-working, coachable attitude over an abundance of experience and a long list of credentials in the field.

women who had previously chosen to stay home with their children full time and were looking to re-enter the workforce.

“I don’t care about your resume. I don’t care about what school you went to. I don’t care about what you did at your last company,” United Shore President and CEO Mat Ishbia said in a 2017 interview with Business Insider. “[Work ethic and attitude] is what’s going to dictate your success at our company and your success in life.”

United Shore has created a reputation as a “destination company,” one that looks to add team members “from the time they’re hired until the time they’re retired.” If you’re looking to grow a successful and impactful long-term career, give United Shore a look. The only prior experience required: history of a strong work ethic and positive attitude.

United Shore puts its money where its mouth is, so to speak.

Check out United Shore’s job openings at www.unitedshore.com/beyouhere.

Ishbia mentions the company’s preference for promoting internal team members into leadership roles instead of bringing in “hired guns,” citing the company’s focus on its team members’ career growth. Through September, United Shore had promoted more than 700 team members since 2017 and plans for that number to exceed 1,200 by the end of 2020. One way United Shore facilitates the transition of professionals from different lines of work into its business is by running an annual 12month rotational program – dubbed as its Business Innovation Group (BIG) – that has a group of people spend time with various teams throughout the company to see where their skill set best aligns. A couple years ago, the company held a “Moms Back to Business” Career Fair specifically for

C R A I N â&#x20AC;&#x2122; S D E T R O I T B U S I N E S S // S E P T E M B E R 2 4 , 2 0 1 8

Detroit â&#x20AC;&#x2DC;Skylineâ&#x20AC;&#x2122; vacancy rates tick up as office rents rise By Kirk Pinho kpinho@crain.com

The office vacancy rate in Detroitâ&#x20AC;&#x2122;s most prestigious addresses has notched slightly upward as increasing rental rates are driving some tenants out of the downtown core, according to a new report. It is now 8.8 percent across 21 buildings, according to the Royal Oak office of JLLâ&#x20AC;&#x2122;s annual Skyline report, which

tracks leasing and rent trends in downtownâ&#x20AC;&#x2122;s best-known and priciest office properties. It was 7.5 percent a year ago, still a vast improvement over the 20 percent and higher vacancies from 2008-2011. Rental rates in those buildings have jumped nearly $1 per square foot, from $22.55 per square foot to $23.47 per square foot, a 4-percent bump, the report says.

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Rising rents in Detroitâ&#x20AC;&#x2122;s best known buildings are driving some tenants out and increasing the office vacancy rate. COSTAR GROUP INC.

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Those are likely to continue to climb as billionaire mortgage mogul and real estate developer Dan Gilbert has a pair of projects that will alter Detroitâ&#x20AC;&#x2122;s skyline in the coming years: the 800-foot residential/hotel tower under construction on the site of the former J.L. Hudsonâ&#x20AC;&#x2122;s department store on Woodward Avenue, and the Monroe Blocks project that is expected to break ground this year and add a 35-story, 518-foot office tower to downtown. The rents at those office properties are expected to be at least in the high $30s per square foot. The Hudsonâ&#x20AC;&#x2122;s project is slated to cost $909 million, while the Monroe Blocks project east of Gilbertâ&#x20AC;&#x2122;s One Campus Martius building is expected to cost $830 million. In addition, new office development in the Ilitch familyâ&#x20AC;&#x2122;s The District Detroit project is expected to have a role in driving up office rental rates in the future. Nonprofit tenants like United Way of Southeastern Michigan and the Local Initiatives Support Corp. and others have flocked north to areas like New Center where rents are more affordable. â&#x20AC;&#x153;Other companies (SEMCOG) have

Need to know

JJOffice vacancy rate in Detroit's most

prestigious addresses is 8.8 percent across 21 buildings

JJRental rates in those buildings have jumped nearly $1 per square foot JJNonprofit flocking north to areas like New Center for more affordable rents

publicly stated their uncertainty as lease expiration approaches,â&#x20AC;? Harrison West, senior research analyst for JLL in Royal Oak, said in an email. â&#x20AC;&#x153;As rents continue to climb in the coming years, we expect more of this activity.â&#x20AC;? Here are the buildings included in the report: JJ211 West Fort: 450,000 square feet, 79.4 percent leased JJ150 West Jefferson: 500,000 square feet, 94.1 percent leased JJOne Woodward: 360,000 square feet, 91.4 percent leased JJAlly Detroit Center: 980,000 square feet, 96.3 percent leased JJGuardian Building: 643,000 square feet, 95.9 percent leased JJChase Tower: 505,000 square feet, 100 percent leased JJFirst National Building: 850,000 square feet, 92.8 percent leased

JJChrysler House: 416,000 square feet, 97.4 percent leased JJOne Kennedy Square: 247,000 square feet, 100 percent leased JJ1001 Woodward: 305,000 square feet, 97.9 percent leased JJOne Campus Martius: 1.08 million square feet, 100 percent leased JJRenaissance Center, Tower 100: 588,000 square feet, 84.7 percent leased JJRenaissance Center, Tower 200: 593,000 square feet, 53.8 percent leased JJRenaissance Center, Tower 300: 585,000 square feet, 100 percent leased JJRenaissance Center, Tower 400: 576,000 square feet, 94.2 percent leased JJRenaissance Center, Tower 500: 307,000 square feet, 100 percent leased JJRenaissance Center, Tower 600: 307,000 square feet, 63.3 percent leased JJFord Field (office space): 331,000 square feet, 100 percent leased JJ1900 Saint Antoine: 99,000 square feet, 100 percent leased JJBrewery Park: 371,000 square feet, 82.1 percent leased JJFisher Building: 635,000 square feet, 87 percent leased

May Mobility to launch shuttles in Ohio By Tyler Clifford tclifford@crain.com

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Ann Arbor-based May Mobility is expanding with plans to be the first to roll out autonomous vehicles on public roads in the state of Ohio. The startup has teamed with the state transportation departmentâ&#x20AC;&#x2122;s OneDrive and city of Columbusâ&#x20AC;&#x2122; Smart Columbus mobility initiatives to deploy four of its shuttles in the capital cityâ&#x20AC;&#x2122;s downtown. Smart Columbus, which collaborates with Ohio State University and other local organizations, is backed by $50 million in grants funded in large part by the federal transportation department, a news release said. May Mobility declined to reveal the value of the deal or how much is invested into the deployment. The company has leased operational and shuttle storage space in Columbus to provide full service. How many employees it expects to hire in Ohio has yet to be determined; the company currently employs 47 in Michigan. â&#x20AC;&#x153;We want to make it as simple as possible to understand their transportation problems and provide that turnkey,â&#x20AC;? said Ben Thompson, May Mobility lead of business development. â&#x20AC;&#x153;Because we can be on public roads, we

MAY MOBILITY LLC

After preliminary testing, May Mobility plans to launch its first deployment for public use in Columbus, Ohio, starting Dec. 1.

don't need major infrastructureâ&#x20AC;? updates. In a series of phases, the public-private partnership calls for a preliminary testing period beginning Oct. 1, an official public launch Dec. 1 and later expansion to other communities. Unlike its fleet serving Bedrock LLC employees in downtown Detroit, the program will be open for public use, carrying riders to destinations along Columbusâ&#x20AC;&#x2122; Scioto Mile. The shuttles sport a large screen to display route information and

a panoramic glass roof that gives views of the cityâ&#x20AC;&#x2122;s skyline, a news release said. The shuttles will be the same six-seat vehicles built by Canadian manufacturer Magna International Inc. â&#x20AC;&#x153;Cities are seeking cost-effective transportation services that will improve congestion in urban cores, and self-driving shuttles can offer a huge relief,â&#x20AC;? Edwin Olson, founder and CEO of May Mobility, said in the release. Rides will be free for the first year until a sustainable fee is determined, Thompson said. To fulfill state regulations, an attendant will ride along in each of the shuttles using public roads. Ohio law requires autonomous vehicles to be staffed or closely monitored remotely. May Mobility opted to staff the cars, as it does in Detroit. May Mobility seeks to tap into Columbusâ&#x20AC;&#x2122; advancement in the connected city space. More than $500 million in public, private and academic funding has been poured into the cityâ&#x20AC;&#x2122;s regional smart city efforts. Once in full motion, May Mobility expects to run up to four shuttles 6 a.m.10 p.m. seven days a week. May Mobilityâ&#x20AC;&#x2122;s Bedrock service in Detroit has run 10,000 trips since it launched in June, the company said.

2017 Annual Report

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Perspectives

2017 Annual Report

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While our national discourse may be hostile, rancorous and fractious, the story at the local level is often inspiring. Case in point? Detroit. Three years after resolving the largest-ever municipal bankruptcy in the U.S., diverse stakeholders continue to build on the turnaround’s momentum. Detroiters’ intrepid spirit is reflected in new construction, in the renovation of buildings once fated for demolition, in new art galleries, retail outlets and eateries. Have no doubt, Detroit is rising. But the job of expanding opportunity is just beginning. There is a growing recognition that a genuine, sustainable and fair comeback depends on improving opportunity and quality of life across the city and especially in neighborhoods. That’s where the path to prosperity for Detroiters begins — or should. Research confirms that a neighborhood can launch children and families on a trajectory of success — or trap them in profound inequality. For too long, the latter has often been the reality in Detroit. That’s why we positioned neighborhoods as the center of our work in 2016. And it’s why, in 2017, the first full year of our neighborhood focus, we dared to think big. With Kresge’s Social Investment Practice, we’ve worked to stabilize a financial crisis at Marygrove College and support its reinvention. We’re looking to additional partners to jointly envision a cradle-tocareer campus — the city’s first and among the nation’s few.

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Read the report at annualreport2017.kresge.org. To receive a copy, send name and mailing address to media@kresge.org.

By Wendy Lewis Jackson and Benjamin S. Kennedy Managing Directors Detroit Program

We’ve advanced an initiative of three-year general operating support grants to community development organizations on the frontlines of revitalization. Collaborating with Kresge’s Education Program has led to investments in Detroit Drives Degrees, an initiative to increase the regional percentage of individuals with college degrees and high-skill credentials. Our collaboration with the W.K. Kellogg Foundation to provide high-quality early childhood programs resulted in the unveiling of the Hope Starts Here Detroit Early Childhood Framework, seeded with a $50 million combined commitment. Our partnership with Kresge’s American Cities Practice, the city of Detroit, and other philanthropies culminated in groundbreakings for the new 2.5-acre Ella Fitzgerald Park and the nearby HomeBase, which will provide office and community-center space for the Live6 Alliance and other organizations serving northwestern Detroit. Our gaze is fixed straight ahead. This next chapter in Detroit’s revitalization hinges on those who stayed during the city’s most difficult times, working in trust and partnership with newer arrivals. Together we’ll reimagine an equitable city. This is where we’ll build on the spark that’s been started and expand opportunity in what we know can again be a great American city.

C R A I N ’ S D E T R O I T B U S I N E S S // S E P T E M B E R 2 4 , 2 0 1 8

A home on 32nd Street is part of the crop of 60 acquired by Southwest Solutions for renovation.

$2.5M donation fuels homes project in Southwest Detroit By Annalise Frank afrank@crain.com

SOUTHWEST SOLUTIONS

A map shows the swath of land within the Chadsey-Condon neighborhood in southwest Detroit where nonprofit Southwest Solutions has acquired 60 single-family houses to renovate and then sell for around $35,000 to increase homeownership in the area. The plan also includes a mortgage fund fueled by a $2.5 million individual donation.

Southwest Solutions has received its largest individual donation yet: A $2.5 million sum that could triple the speed of a southwest Detroit revitalization project. The Detroit-based nonprofit has acquired and plans to renovate 60 single-family homes in the city’s Chadsey-Condon neighborhood on the edge of rapidly growing Corktown. Paired with a new mortgage fund, it aims to transition low-income renters into owners of affordable homes. Southwest Solutions’ programs span community engagement, neighborhood development, and family and financial services. It aims to wrap those up into a multi-pronged effort to assist those in and around the eight-block swath of houses. The donation from Judith Yaker creates the Sam L. and Judith Yaker Fund, honoring her husband, Sam Yaker, an affordable housing developer who died in 2016. The $2.5 million — plus an anonymous $100,000 from a colleague of Sam Yaker — will fund much of the nonprofit’s Newberry Homes project in the neighborhood west of booming Corktown. The gift will be used for mortgage lending, renovation work, to create a new Sam Yaker Park and Pavilion, and to provide financial advice to homebuyers. “If it’s done right it can be a model” for making renters into homeowners with philanthropy as a kick-starter, said Steve Ragan, Southwest Solutions’ senior vice president for development and external relations. “It makes sure the homes are improved and that we maintain them as affordable housing. They’ll also be building up equity. Building up home equity is one of the key methods of moving people’s financial wealth ahead.” The key is not just slapping down a mortgage, but providing financial counseling, giving that process more likelihood of success, he said. First priority for buying the homes will be given to current Newberry renters who meet eligibility requirements, said Libby Palackdharry, senior director of financial stability programs and operations for Southwest Solutions. The homes’ sale prices will be around $55,000, but they’ll be subsidized with a $20,000 soft second mortgage to $35,000. Southwest Solutions aims to keep mortgage payments at or

Need to know

JJSouthwest Solutions wants Newberry project to become model JJJudith Yaker gave in honor of husband Sam Yaker, an affordable housing developer JJHelps fund mortgage lending, renovations, blight removal and new park

below what the renters are currently paying per month, Palackdharry said. The mortgage payments will generate around $40,000 a year to cover expenses, according to a news release. The Newberry homes were built in 2000 and 2001 using low-income housing tax credits, according to the release. Southwest Solutions acquired them within the last year, Ragan said, from an investor in the previous project. As part of the deal, which the city of Detroit helped facilitate, Southwest Solutions committed to keep the houses affordable and improve them. A city of Detroit representative didn’t immediately respond to a request for confirmation of the details of the deal.

‘Novel concept’ Southwest Solutions’ Newberry plan was already in the works and the homes already acquired before Judith Yaker officially signed on, Ragan said. But the Yaker gift has shortened the timeline to 12-18 months, as opposed to three years or so, Ragan estimated. It has also allowed for more wraparound services and extra funding to create the park and remove more blight. “It was a novel concept that philanthropy could play a larger role in this and make it possible to really accelerate this,” he said. To Ragan’s knowledge, Yaker’s donation is likely the largest individual gift given for neighborhood revitalization in Detroit. But it isn’t just unique in its size, he said. “Often it’s difficult to attract individuals to these (community revitalization projects),” Ragan said. “It took a donor who’s willing to invest some time. It’s a little bit more complex than just giving money to a building or a scholarship fund, for example.” Southwest Solutions announced the gift earlier this month at its Celebration of Impact Gala. It raised about $600,0000 for general Southwest Solutions services. Annalise Frank: 313-446-1612 Twitter: @annalise_frank

“What if there came a time in Detroit when the best and the brightest never left our community?

…When they see the opportunity in their own backyard … when they realize they can reach the pinnacle of success right here? What if, a decade from now, this was not a welcome home, but simply a welcome to newcomers?” – Alan Kaufman, Chairman, President and CEO of H.W. Kaufman Group Addressing expats at Detroit Homecoming

THANK YOU

TO THE GENEROUS SPONSORS WHO SUPPORTED DETROIT HOMECOMING V

GUIDING BUSINESS THROUGH SCIENCE

Read all about Detroit Homecoming at detroithomecoming.com V

C R A I N ’ S D E T R O I T B U S I N E S S // S E P T E M B E R 2 4 , 2 0 1 8

New York-based media company Universal McCann plans to open a 150-employee office in the 850,420-squarefoot First National Building at 660 Woodward Ave.

GLOBAL THINKING. DETROIT ATTITUDE.

BEDROCK LLC

Universal McCann to open Detroit office, named Quicken Loans agency By Annalise Frank afrank@crain.com

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Detroit-based mortgage lender Quicken Loans Inc. has signed on a new New York-based media agency that expects to locate 150 employees in a new office downtown. Universal McCann and Quicken Loans agreed early last week to a “longterm” deal to bring the media company on as official agency of record, pushing the lender and its Rocket Mortgage brand’s media strategy forward, according to a news release. Quicken Loans declined to release terms of the agreement. Universal McCann’s new presence will supplement its existing office in Birmingham, which serves clients including FCA US LLC, said Scott Russell, president of its central region. Some — but not a substantial portion — of the Detroit employees will come from the Birmingham office, Russell said. “We’re really looking at this as an expansion, more than relocating,” he said. “We’re looking at the two offices working in a very fluid fashion.” Universal McCann likes being close to its clients, Russell said, and the downtown move puts it in Quicken Loans’ backyard. The new office will employ a mix of existing employees and new hires; he declined to specify numbers. It’ll start as a 40-employee team, mostly devoted to the Quicken Loans contract, in the 1001 Woodward Ave. building under Bedrock LLC’s management. Bedrock is also part of billionaire Dan Gilbert’s family of companies, alongside Quicken Loans. Next year the team would move into a permanent, 23,000-square-foot office in the Bedrock-owned First National Building, a 26-story Albert Kahn-designed tower on the edge of Campus Martius Park. It will aim to grow to 150 staff there. Bedrock declined to disclose lease terms. The move is part of the media company’s Midwest growth, under parent company Interpublic Group’s IPG Mediabrands. Mediabrands has around 400 employees in Birmingham; the number of employees specific to Universal McCann wasn’t immediately available. Gilbert’s lender selected Universal McCann through an extensive search process as it is “winding down” rela-

Need to know

 UM selected for “tech-forward” focus; to do media planning and buying  Agency to open 40-person office in First National Building in Detroit, building on Birmingham presence  Building owned by Bedrock, also part of Dan Gilbert’s family of companies

tionships with Chicago-based ad agency Eicoff and New York-based ActiveMedia, Quicken Loans Chief Marketing Officer Casey Hurbis said. “As we continue to grow and expand, we decided it was time to look for a new agency partner and we found the perfect one in UM,” Hurbis said. “They’re tech forward ... they are also a great cultural fit for us ... Working with an innovative, tech-forward agency like UM, we expect to see some exciting ideas and some different strategies.” Universal McCann will handle media planning and buying for Quicken Loans and Rocket Mortgage, working with Quicken Loans’ 240-employee inhouse marketing team, he said. Specifics on Universal McCann’s media plan are still being shaped. There are no plans for staff reduction or hiring at the lender as part of the new deal, Hurbis said. Last year, the Quicken Loans brand spent $328.9 million on measured media in the U.S., according to Kantar Media. The 850,420-square-foot, 98 percent occupied First National Building is also home to tenants including Central Kitchen & Bar, Roasting Plant and Honigman, Miller, Schwartz and Cohn LLP. United Way for Southeastern Michigan, another tenant, announced in August it plans to leave for the Fisher Building in Detroit’s New Center next year. Bedrock and related companies have purchased more than 100 properties in Detroit and Cleveland, totaling around 18 million square feet. Bedrock is landlord to 330 office tenants and retailers in Detroit's downtown core, according to the release. Microsoft officially moved into its new 50,000-square-foot office in May in the Bedrock-owned One Campus Martius and LinkedIn plans to move into the Sanders building on Woodward Avenue. —Ad Age contributed to this report.

C R A I N ’ S D E T R O I T B U S I N E S S // S E P T E M B E R 2 4 , 2 0 1 8

DELIVER MY RIDE LLC

Pontiac-based Deliver My Ride LLC launched a new website that it hopes will streamline the car-buying process for consumers and dealers.

Deliver My Ride updates platform to drive growth By Tyler Clifford tclifford@crain.com

Deliver My Ride LLC has refreshed its online platform as it works to make the car-buying process simpler and grow into new markets. After running a beta website for more than a year, the new version integrates live inventory with dealer networks that have signed with the e-commerce business, said Mike McInerney, who co-founded the company with Peter Karmanos Jr. early in 2017. The company hopes to streamline the process with technology to feed many people’s need for instant gratification. Customers can compare rides in a designated market area, finance and set up delivery at one place. Prior to the update, Deliver My Ride didn’t display cars on its website, which would direct consumers to dealerships. “I’m a senior and even I use the web to buy things,” Karmanos, the retired founder of Compuware Corp., said in a news release. “What do you think the next generations will demand from their car-buying experience? They do everything online because it’s efficient.” Deliver My Ride, which is based in Pontiac, is marketing itself as a tool for consumers and dealerships. It’s working with about 60 showrooms in the metro Detroit market, McInerney said. “We spent about a year and a half finding data for suppliers, mapping information and getting equipment,” McInerney said. “We’re selling cars off [the dealer’s] lot to people looking for a convenient way to buy.” McInerney and Karmanos partnered on the business with the goal to improve the point of sale for cars, which they found to be antiquated. McInerney, a legacy of the McInerney dealership family that has its roots in Detroit dating to 1964, said companies invest a lot in the products, but are not investing enough into selling. Without disclosing an exact amount, he said Deliver My Ride invested “significant” seven figures into the website redesign. Deliver My Ride is in the Mad Dog Ventures Management LLC portfolio, which held a $26.7 million funding round earlier this year. It is locat-

Fuel for Brands Creating exceptionally designed digital experiences, brand identities and print collateral to power Detroit’s most vibrant companies. octanedesign.com • 248.399.1322 • info@octanedesign.com

Peter Karmanos: Buying cars online is efficient.

Mike McInerney: Goal to sell 500 new cars a month.

Need to know

JJCar-buying platform markets cars for

60 dealerships in metro Detroit

JJDeliver My Ride plans to expand to Ohio, Indiana before going nationwide JJPontiac-based company looks to sell 500 cars a month in designated market areas

“I’m a senior and even I use the web to buy things. What do you think the next generations will demand from their car-buying experience? They do everything online because it’s efficient.”

RUSH TRUCKING CORPORATION EFFECTIVE. EFFICIENT. ALWAYS. SINCE 1984.

& TRANSPORTATION LOGISTICSare the bridge between

YOUR BUSINESS & YOUR CUSTOMER

Peter Karmanos

ed in about 8,000 square feet across two floors of the Riker Building in Pontiac with other Mad Dog businesses. “We have long-term projections: Our goal is to sell 500 new cars per month” per market, McInerney said. The service is available in metro Detroit with the goal of expanding to 80 markets across the country. That would mean 40,000 car sales per month at full scale. The company is looking to expand to Ohio and Indiana next before going nationwide. Being an online company, Deliver My Ride can avoid the capital required for brick-and-mortar operations. “We couldn’t scale the first product because there was too much manual labor,” he said. “Now we can just flip the switch and get it going.”

Our large large-scale scale manufacturing experience and expertise give us the unparalleled ability to execute 5,000 transactions every day, managing a complex supply chain with 18 operating locations across North America, more than 500 reliable drivers and 500 trucks equipped with the latest satellite and mobile technology. We deliver.

C R A I N ’ S D E T R O I T B U S I N E S S // S E P T E M B E R 2 4 , 2 0 1 8

KRIEGER KLATT ARCHITECTS

Henry Ford Health System will have about 200 employees in a new 145,000-square-foot building under construction in downtown Royal Oak.

Henry Ford to open outpatient center in downtown Royal Oak

By Kirk Pinho kpinho@crain.com

Henry Ford Health System will be the sole tenant in a new office building in downtown Royal Oak. The Detroit-based six-hospital health system and the developer said Wednesday that the 145,000-squarefoot Royal Oak City Center will be home to a new $70 million outpatient medical center for areas including women’s health, pediatrics, sports medicine, rehabilitation, radiology, primary care and outpatient surgery. The six-story building — construction on which started in Ron Boji: Henry May near 11 Mile Ford Health Road and Main approached him. Street — is expected to be complete in mid-2020 housing more than 200 Henry Ford physicians, nurses and support staff. About a dozen will come to the site from a 4,800-square-foot medical office building at 26300 Woodward Ave. that the health system owns; what happens with that property has yet to be determined. The remaining staff will be new hires, some of whom will be trained in other locations before transferring to Royal Oak, said Paul Szilagyi, vice president of primary care and medical centers for Henry Ford. He said the health system has “been looking for years for the right site to expand in the Royal Oak market.” “We already have a broad patient population there now. We are not able to serve that population as well as we would like to because the site is so small. This was the perfect oppor-

Need to know

JJ145,000-square-foot Royal Oak City

Center will be home to a $70 million outpatient medical center

JJSix-story building is expected to be complete in mid-2020 housing more than 200 physicians, nurses, staff JJIt’s part of a broader development that includes a new city hall, police HQ, parking deck, park

tunity that presented itself.” It will be among Henry Ford Health’s largest outpatient centers, Szilagyi said. “There will be thousands of people on an annual basis that we will bring into the community,” he said. The new office building is part of a broader development that includes a new city hall, police headquarters, 581-space parking deck and downtown park to be built in phases by Lansing-based developer Boji Group. Those project components are pegged to cost a total of at $57.2 million; the city has the authority to sell up to $73 million in bonds. Ron Boji, head of Boji Group, said the Detroit-based health system approached him after ground was broken in May on the speculative building. “I knew it was going to be the famous, ‘If you build it, they will come,’ and it happened,” Boji said. “It was a calculated risk when we started on speculation, but I knew it wouldn’t be on spec when it was scheduled to open. Did I think someone would take the whole thing at once, though? No, that would be pretty ambitious.” He declined to reveal how much Henry Ford will pay in rent, but said it is market rate. According to CoStar Group Inc., a Washington, D.C.-based real estate

information service, the asking rent for Royal Oak area office space is $19.63 per square foot. There are 210,000 square feet under construction, according to CoStar. Boji said the main entrance location had to be changed from the park to Second Street, which meant halting construction on the building for two months as it was redesigned to accommodate Henry Ford and a patient drop-off area. Construction will start again Oct. 15, Boji said. The Southfield office of Los Angeles-based brokerage CBRE Inc. and the Southfield office of New York City-based brokerage Newmark Knight Frank were the brokers on the lease, Boji said. The project has faced opposition for a variety of reasons. Opponents say it would worsen the city’s parking problems and harm existing businesses; they also contend it’s being financed in ways that are not allowed. An Oakland County circuit judge threw out a 2017 lawsuit filed by a group of downtown businesses; it is now at the Michigan Court of Appeals. It had originally been envisioned as a joint venture between Boji Group and The Surnow Co., which is based in Birmingham. But Boji bought out Surnow from the project late last year, he said. In May, the Detroit-based health system announced that it plans a $38 million medical center in a development known as the Village at Bloomfield on the site of the failed Bloomfield Park project in Pontiac and Bloomfield Township at Telegraph and Square Lake roads. The 83,000-square-foot facility is expected to open in the fall next year. Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

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SPONSORED CONTENT

Detroit Homecoming V: Recap

Real Estate 101 in the D Reconnecting and reinvesting to create One Detroit

By Leslie Schneider, Crain Content Studio

Peter Cummings, The Platform

When leadership at Chemical Bank Corp., a $20 billion financial institution currently headquartered in Midland, saw what was happening in Detroit, they decided to come where the action is, said Chemical Bank Chairman Gary Torgow, founder of the Sterling Group, a Michigan-based real estate, development and investment company. Detroit hasn’t had a powerhouse hometown bank since NBD was acquired some years ago, he said. Now, Chemical Bank is building a headquarters near the Fox Theatre that could cost between $50 million and $100 million. “Something is going on in Detroit today that is magical that we have not seen in many, many years,” Torgow said.

Creating vibrant, inclusive neighborhoods Already, there are billions of dollars in development underway in Detroit.

hen Peter Cummings and his development partners began working with Whole Foods Market in 2011 to build its first Detroit store, a Whole Foods executive projected it would generate perhaps $12 million to $15 million a year. Those projections were more than a little off. Since opening in 2013, Midtown Detroit’s Whole Foods has been generating $30 million annually, Cummings said. “Prior to that, I saw Detroit primarily as a series of challenges,” said Cummings, executive chairman of development firm The Platform. “But because of that experience, I started thinking of Detroit primarily as grossly underserved, particularly for the residents in the neighborhoods. We have more opportunities in Detroit than we have talent in the field able to take advantage of (those opportunities).”

Cummings was among 20 speakers Sept. 12 at “Real Estate 101 in the D,” a pre-session kickoff of Detroit Homecoming V. Detroit Homecoming is an invite-only event held to encourage Detroit expats to invest in the city. So far, the annual three-day event has spurred about $300 million

in pending and closed investments, said Crain’s Detroit Business Group Publisher and Detroit Homecoming Director Mary Kramer, who emceed the Real Estate event. Nearly 100 of

SPONSORED BY:

Detroit’s most successful expats along with some

resident entrepreneurs attended “Real Estate 101 in the D,” which took place in an alcove of the bustling historic Fisher Building, an Albert Kahn masterpiece in Detroit’s New Center that The Platform purchased with partners in 2015. Experts shared strategies for redevelopment; growth; preservation of affordable housing; community engagement; collaboration between public, private, and philanthropic groups; and a host of lucrative and forward-thinking opportunities.

Growing ‘One Detroit’ The prospects in Detroit extend beyond advancing real estate projects, said Randy Book, executive vice president of Colliers International. “It’s also for business. If you understand what we’re doing, there are great opportunities.” What developers, real estate firms and other businesses are doing is generating revenue, jobs and opportunities by: • revitalizing neighborhoods • adding hotel space and convention space • creating mixed-use spaces for local and national iconic brands and new restaurants • rehabbing historical architecture for a rapidly changing office market, and • helping residents unearth the resources to redevelop their own homes.

Much of that is housing. Developers recently completed more than 1,800 units of rental housing. Yet, with a 98 percent occupancy rate in the rental housing market, Detroit still is underserved. Currently, more than 1,900 units are under construction and nearly 2,500 are in the pipeline. Detroit’s Strategic Neighborhood Fund, run by the city of Detroit in partnership with Invest Detroit, has been a highly successful tool to help redevelop urban areas. The Fund has helped redevelop three neighborhoods and is looking at an additional seven, including stabilizing single-family homes and adding retail, mixed-use, multi-family sites and parks and streetscapes, said Arthur Jemison, Detroit’s chief of services and infrastructure. Mike Smith, vice president of neighborhoods for Invest Detroit, said Strategic Neighborhood Fund 2.0 will be a $1.01 billion initiative. “We are taking a step back and focusing on eight to 15 blocks at a time and really trying to … get them going,” he said. “What has happened here is an incredible collaboration between many partners, all of whom recognize the huge lift it’s going to take to make all this happen.” One example of vital collaboration is with Fitz Forward, a joint venture with developers Century Partners and The Platform - in partnership with community leaders, The Strategic

“ t

Neighborhood Fund, The City of Detroit, and Liberty and Chemical banks - in the Fitzgerald neighborhood. Fitz Forward bought 119 parcels to revitalize the community and plans to invest more than 300 additional parcels.

Doing well by doing good While philanthropic organizations can help “de-risk” neighborhood development, Aaron Seybert, social investment officer for The Kresge Foundation, said the only way to make development in Detroit sustainable is for those people who came in early and took real risk to make “gobs” of money. “We are welcoming those folks who want to come to town, do real work, bring capital with them and be invested for the long term,” he said. In 2015, Moddie Turay came to Detroit from Washington, D.C., for an interview and knew he needed to move. The founder and principal partner of Detroit-based City Growth Partners,

In August, The Platform also announced it would, in addition to building new residences, add a much-needed grocery store to the New Center neighborhood. Nearby, Henry Ford Health System is transforming 300 acres across from its flagship Detroit hospital. The development will include a new Cancer Pavilion, retail, housing and other mixed uses. Bob Riney, COO and president of healthcare operations for the hospital, said HFHS is also is working with community leaders and other partners to help current area residents find funding to rehab homes.

Revolutionizing retail and office space Even retail, mixed use and office building developers are revolutionizing the landscape. However, experts cautioned that for them to see success, it’s essential they understand the neighborhood and who retailers will serve.

“Something is going on in Detroit today that is magical that we have not seen in many, many years.” - Gary Torgow, Chairman, Chemical Bank

which is heading several redevelopment projects in Brush Park, said, “Detroit to me is the No. 1 city, from a development perspective, where you can do well by doing good.” Examples of doing good include exceeding the minimally required percentage of affordable housing in a development, which is 20 percent. Some projects are aiming higher, said The Platform development manager Myles Hamby. For instance, he said half the rental units at The Platform’s Islandview neighborhood project, on East Grand Boulevard, are designated as affordable.

Bedrock Detroit plans “to continue to add unique brands, authentic experiences and one-of-a-kind destinations that can’t be found anywhere else in the world and certainly can’t be duplicated online,” said Jennifer Skiba, vice president of leasing at Bedrock LLC. Another Bedrock goal includes a broad range of price points in retail, services and uses that meet the needs of the diverse customer base. Regardless of what’s been accomplished so far, Skiba said, “We’re really still in the first inning of what’s happening in Detroit. There’s a lot yet to come.”

Rebuilding

Detroit’s Future A sampling of projects underway in the city

LAFAYETTE WEST

Location: Lafayette Park Details: 372-unit multi-family site (60/sale; 314/rent) on 5.2 acres Developer: Ginosko Development Co., MJBennett PLLC Budget: $100+ million

THE BOULEVARD

Location: New Center Details: 231 units; 17,500 square feet of ground-level retail Developer: The Platform Budget: $58 million

THE COE

Location: West Village Details: Multi-family (eight townhomes, four apartments); mixed use; two retail spaces Developer: Woodborn Partners Budget: $4.1 million

HENRY FORD HEALTH SYSTEM CANCER CENTER Location: New Center Details:187,000-square-foot, six-story cancer pavilion Designer: SmithGroup Budget: $155 million

THE HUDSON’S SITE

Location: Downtown Details:1 million square feet of office, residential, retail and event space Developer: Bedrock Detroit Budget: $909 million

SHINOLA HOTEL

Location: Downtown Details: 130 rooms in eight-story building Developer: Bedrock Detroit Budget: N/A

GRATIOT

Location: Eastern Market Details: 200 residential units 40,000 square feet of ground-level retail Developer: The Platform Budget: $50 million

BRUSH HOUSE

Location: Brush Park Details: 168 units; 14,383 square feet of ground-level retail Developer: City Growth Partners Budget: $50 million

FORD MOBILITY CAMPUS

Location: Corktown Details: 1.2 million-square-foot project involves overhaul of train station and former book depository Developer: Ford Budget: $740 million Chemical Bank Chairman Gary Torgow addresses the crowd.

C R A I N ’ S D E T R O I T B U S I N E S S // S E P T E M B E R 2 4 , 2 0 1 8

KIRK PINHO/CRAIN’S DETROIT BUSINESS

The second phase of the Orleans Landing apartment project was to have 208 apartments and townhouses developed by St. Louis-based McCormack Baron Salazar Development Inc.

Second phase of Orleans Landing project scrapped By Kirk Pinho kpinho@crain.com

The previously planned second phase of the Orleans Landing apartment project on the east Detroit riverfront has been scrapped. That development, which was planned to go on land immediately south of the vacant Stone Soap Building on Franklin Street, was to have 208 apartments and townhouses developed by St. Louis-based McCormack Baron Salazar Development Inc. Richard Baron, a Detroit native who co-founded the company, said Wednesday that financing for the first phase of the project immediately to the east was tricky and it would have been a big headache to go through with the second phase. So instead of exercising an option he had to build on the publicly owned property, he took a pass. That decision was "made months ago," he said. “We just decided that it was a very difficult first phase in terms of putting the financing together and we needed to let the market settle,” he said. The Detroit Economic Growth Corp., which contributed financing and property to the first phase of the project, confirmed that it received a request to reassign the development option but declined to provide additional details

PROUD TO FUEL THE

UNBEATABLE SPIRIT OF DETROIT.

Huntington is pleased to sponsor Detroit Homecoming, because we know that when you invest in the community, the returns are guaranteed.

Need to know

JJSecond phase of Orleans Landing riverfront development scrapped JJDeveloper Richard Baron said financing proved too tricky JJDecision was made ‘months ago,’ he said

until it evaluates the request and presents it to the board for action. The Federal Housing Administration, the city, Invest Detroit, the DEGC, Michigan Economic Development Corp. and Goldman Sachs contributed financing to the $65 million project that started construction in October 2015 and opened a year and a half later. It has 278 units in the area bounded by Atwater, Franklin and Riopelle streets and the Dequindre Cut. The second phase was to go on publicly owned land between Atwater, Franklin, Riopelle and Rivard in an area that has seen lots of developer and investor interest. Last week, the Elevator Building on Franklin Street sold to a New York City investor for $2.125 million and Detroit-based Banyan Investments LLC, led by Aamir Farooqi and Scott Ord, plan a $27 million renovation of the Stone Soap Building into apartments, condominiums, retail and office space.

Detroit mobility festival to return downtown By Kurt Nagl knagl@crain.com

The Detroit Moves Mobility Festival will return for two days of activities and discussion centered on mobility and urban living in the Motor City. The free event, presented by the Quicken Loans Community Fund, is scheduled to take place Oct. 10-11 at Spirit Plaza in downtown Detroit, according to a news release. Local mobility companies are expected to participate, including General Motors Co.’s Maven, Ford Motor Co.’s Chariot, May Mobility, MoGo, Airspace Experience Technologies and America’s Automotive Trust. Crain’s Detroit Business is a sponsor of the event, and the Detroit Regional Chamber is helping produce it. Organizers expect around 1,000 people to attend over the two days. “Detroit Moves vividly shows how Detroit is quickly becoming the epicenter for changing the dynamics of transportation and mobility,” Helen Johnson, vice president of the Quicken

Need to know

JJFree event to take place Oct. 10-11 at Spirit Plaza as part of Mobility Week Detroit JJLocal companies, such as May Mobility, Maven and Chariot, to participate

Loans Community Fund, said in the release. Mobility companies and STEM educators will be at the festival offering demonstrations and discussing opportunities for careers in tech. In addition, there will be a scavenger hunt, pedal pubs and viewing of the “Detroit Skybridge” installation by local artist Phillip K. Smith. The event lands in the middle of Mobility Week Detroit from Oct. 7-12, according to its website. It includes six major events throughout the week organized by the Henry Ford Health System, Techstars Mobility, Detroit Moves, MICHauto Summit, CSforALL Summit and Cars in Corktown at the Factory.

C R A I N ’ S D E T R O I T B U S I N E S S // S E P T E M B E R 2 4 , 2 0 1 8

Detroit to share in $5.25M smart cities program By Tyler Clifford tclifford@crain.com

The John S. and James L. Knight Foundation has selected the city of Detroit to leverage self-driving cars for residents to access public transportation and job opportunities. The nonprofit has put up $5.25 million over five years to develop smart cities programs alongside autonomous vehicle deployments in five cities. It’s the largest investment Knight has made in efforts using digital technology to connect communities with its residents more efficiently, the nonprofit said. More than 70 cities are deploying self-driving vehicles pilots worldwide, but many are struggling to fully capture the technology’s long-term impacts, the Knight Foundation said in the release. According to a National League of Cities report that assessed the transportation plans of 68 large U.S. cities, only 6 percent of plans considered how driverless vehicles would affect urban mobility. “Self-driving cars have the potential to remake the face of cities. We want to work with city leaders to ensure those changes respond to residents — instead of putting residents at the whims of technology,” Sam Gill, Knight Foundation vice president for communities and impact, said in the release. “Further, by involving residents on the front end, cities can facilitate a smoother rollout of new technologies and programs on the back end.”

Need to know

J Detroit to help residents get access to/ from public transportation that connects Detroiters to employment hubs J

Five-year programs to begin this fall

J City’s Office of Mobility Innovation will administer project

Detroit will share the funding with Long Beach and San Jose, Calif.; Miami; and Pittsburgh, which were also selected to run pilots that focus on separate challenges. How much will be distributed to each city has yet to be determined, but the grants will last five years, Director of National Strategy and Technology Innovation Lilian Coral said. Each city will decide how the funds will be administered, whether through the government or a third party that will tailor strategies for residents. A better picture will be formed once the Knight Foundation finalizes contracts with the cities this fall, she said. “The focus of the projects will be designed with the communities. In Detroit, we want to focus on connecting the unemployed to employment and what role public transportation and mobility play,” Coral said. “We want to push this in a new way. If we design it all, we are telling the community what to do. It’s really about putting communities at the center.” Tyler Clifford: (313) 446-1612 Twitter: @_TylerTheTyler_

CITY OF AUBURN HILLS

A $20 million luxury apartment complex called Fountain Circle of Auburn Hills is being planned inside the city’s Downtown Development Authority District.

$20M apartment complex proposed for Auburn Hills By Kurt Nagl

knagl@crain.com

A $20 million, seven-building luxury apartment complex is being proposed for Auburn Hills. Farmington Hills-based Bacall Development LLC submitted to the Oakland County city an application for the project, according to a post published Thursday on the city’s development blog website by Steve Cohen, the city’s director of community development. The Fountain Circle of Auburn Hills would be developed on 16.4 acres of land on Auburn Road, in the city’s Downtown Development Authority District. The city purchased the industrial property from Mound Steel and Superior Concrete in 2012 and cleaned it up for development, according to Cohen. The project blueprint consists of 258 units ranging in size from 575 square feet to 1,375 square feet, with rent pric-

Need to know

JJFarmington Hills-based Bacall Development submitted plans to city JJSite is within Auburn Hills Downtown Development Authority District JJCity Council to make decision on proposal Oct. 22

es to be market rate and determined by other new complexes in the area. The “high quality interior and exterior” of the buildings would be constructed with masonry and stone veneers, the post said. Plans also calls for the developer to build a road through the development site, connecting Parkways Boulevard from Squirrel to Adams roads. A planning commission meeting is scheduled for 7 p.m. Oct. 10 and open to the public. City Council is expected to make a final decision on the application Oct. 22.

9,340

JOBS created/ retained

336+

PROJECTS supported

Learn more at InvestDetroit.com and InvestDetroit.vc

4,478

HOUSING units created

@InvestDetroitCDFI

C R A I N ’ S D E T R O I T B U S I N E S S // S E P T E M B E R 2 4 , 2 0 1 8

CALENDAR THURSDAY, SEPT. 27

YEARS OF CONNECTION

The city of Detroit and the University of Michigan have a long shared history, and that connection is stronger than ever in 2018. The university sponsors programs like PEERs, which funds performance residencies in underserved communities...the Detroit Neighborhood Entrepreneurs Project (DNEP), which pairs small businesses with U-M student teams to help overcome barriers to growth...and D-RISE, which offers on-campus summer internships to high school students through a Cass Tech/U-M partnership. And U-M alumni continue to make their mark on the city too, with the Fresh Corner Cafe, a mission-driven food service provider that works toward a fresher, healthier Detroit, and the Skillman Foundation, which ensures that Detroit kids have access to high-quality educational and economic opportunities.

Attracting and Retaining Top Talent Lunch. 11 a.m. to 1 p.m. Detroit Regional Chamber. Regional business leaders discuss strategies for attracting the nation’s top talent, while also retaining and growing Southeast Michigan’s current talent pool. Speakers include: Marcus Collins, chief consumer connections officer, Doner; Lisa McLaughlin, CEO and co-founder, Workit Health; Dan Ngoyi, director, talent acquisition, Quicken Loans Family of Companies. $30 members, $50 nonmembers. Greektown Casino-Hotel. Contact: Andrea Rayburn, phone: (313) 596-0340; email: arayburn@detroitchamber.com

UPCOMING EVENTS E n t re p re n e u r and Small Business Conference: Small Business Doing Big Business. 9 a.m.-4 p.m. Oct. 3. National Entrepreneurs Association. Event will focus on speRiley cific strategies e nt re p re n e u r s can implement to scale and generate larger profit margins. Topics include working with corporations, government contracting, joint ventures, funding large projects and digital marketing. Speakers include Joe Anderson, chairman and CEO, Tag

Connecting People by Embracing Civility and Living by the Golden Rule. 11:30 a.m.-1:30 p.m. Oct. 3. Detroit Economic Club. Gary Kelly, chairman and CEO, Southwest Airlines Co., talks about how hospitality and commitment to civility contribute to success. The Masonic. $45 members, $55 guests of members. Website: econclub.org Reintroducing Wayne State University: Transformation After 150 Years in the Heart of Detroit. 11:30 a.m.-1:30 p.m. Oct. 9. Detroit Economic Club. Wayne State UniWilson versity President Dr. M. Roy Wilson will share his perspectives on the importance of universities and on the transformation of Wayne State. Westin Book Cadillac. $45 members, $55 guests of members. Website: econclub.org 2018 MICHauto Summit. 9:30 a.m. Oct. 10. Detroit Regional Chamber.

Event includes automotive industry leaders, students and interns from regional universities, colleges and trade schools. The Beacon at One Woodward. $75 members, $125 nonmembers. Contact: Jordan Yagiela, phone: (313) 596-0384; email: jyagiela@detroitchamber.com Education 2.0: Engaging in the Race to Create a Future Workforce. 8-9:30 a.m. Oct. 17. Troy Chamber of Commerce. The future of higher education is in flux as colleges and universities take steps to create the next workforce. Speakers include: Marsha Kelliher, president and CEO, Walsh College; Ora Hirsch Pescovitz, president, Oakland University; and Peter Provenzano Jr., chancellor, Oakland Community College. MSU Management Education Center, Troy. $22 Troy Chamber members, $32 nonmembers. Contact: theteam@troychamber.com. Website: troychamber.com/events/education-2-0-engaging-race-create-future-workforce/ Robots Won’t Take Your Job, But They Will Change It. 11:30 a.m.-1:30 p.m. Oct. 23. Detroit Economic Club. Ranjit de Sousa, president, Lee Hecht Harrison, will talk about changes and trends. Westin Book Cadillac. $45 members, $55 guests of members. Website: econclub.org To submit calendar items visit crainsdetroit.com and click “Events” near the top of the home page. Then, click “Submit Your Events” from the drop-down menu that will appear.

DEALS & DETAILS ACQUISITIONS & MERGERS JJBurke

Porter Group, Ada, supplier of testing machinery, acquired WinterPark Engineering LLC, Auburn Hills, provider of engineering services for emissions and regulatory applications. Terms of the deal were not disclosed. Website: burkeportergroup.com JJRHP Properties Inc., Farmington Hills, owner of manufactured home communities, acquired Shady Park, Selbyville, Del., a community of 304 home sites. Website: rhp-properties. com JJInterVision Systems, information technology platform of Detroit-based private equity firm Huron Capital Partners, acquired Infiniti Consulting Group, Folsom, Calif., provider of cloud services and IT consulting. Website: huroncapital.com JJAncor Capital Partners, Southlake, Texas, a private equity firm, acquired STATinMED Research, Ann Arbor, a medical technology research company. Terms of the transaction were not disclosed. Website: AncorCapital. com, STATinMED.com

CONTRACTS

detroit.umich.edu

Holdings LLC; Alina Morse, founder, Zollipops; Rochelle Riley, author and columnist, Detroit Free Press and Dawn Verbrigghe, digital marketer and founder, Jottful. Lawrence Technological University. $97. Contact: ZaLonya Allen, email: supportstaff@ nationalentrepreneurs.org; website: nationalentrepreneurs.org

JJBirmingham-based Simon Group Holdings companies Vesta Modular, Birmingham, a modular housing provider, and Atlas Oil Co., Taylor, have partnered to provide modular housing for Atlas’ team members in

Odessa, Texas, because of limited housing and hotel options. Websites: vestamodular.com, atlasoil.com, simongroupholdings.com JJThe John Michael Kohler Arts Center, Sheboygan, Wis., an art museum, has selected Detroit-based website designer C/D/H’s Curia system as a platform for exhibition planning, development and management. Websites: jmkac.org, gocuria.com JJMore than 20 health care companies have formed the Da Vinci Project, a private-sector initiative, using Ann Arbor-based health care information nonprofit Health Level Seven International’s Fast Healthcare Interoperability Resources to improve data sharing. Website: hl7.org JJMorse Moving & Storage, Detroit, an Allied Van Lines Inc. agent, has been named the official mover of the Detroit Pistons and will be participating in marketing and promotional opportunities. Websites: morsemoving.com, nba.com/pistons, allied. com JJFormer Detroit Lions Linebacker DeAndre Levy, his wife, Desire Vincent Levy, and Detroit Hustles Harder, Detroit, an apparel brand, have a partnership for a T-shirt line, Our Issue, featuring a special edition artist T-shirt of the 2017 Our Issue Mural by Sydney G. James and AskewOne. Proceeds from shirts will benefit Enough SAID, Wayne County SAFE and the SASHA Center. Website: divisionstreetboutique.com/collections/ our-issue

EXPANSIONS JJCooper-Standard Holdings Inc., Novi, opened a new Japan headquarters and engineering center in Yokohama, relocated from Osaki. The approximately 5,400-square-foot facility employs 14 people and offers product development and engineering to support Japanese automakers. Website: cooperstandard.com JJAmerican Interiors, a workplace design and interior construction company, has moved from 30553 S. Wixom Road, Wixom, to a 21,000-squarefoot Green Learning Center facility at 29550 Hudson Drive, Novi. It employs 30 people and includes a learning center, design library, cafe, virtual reality hub, a cross laminated timber built mezzanine and an open work environment. Websites: Aminteriors. com and elevateic.com

NEW SERVICES JJStoneridge Inc., Novi, designer and manufacturer of automotive electrical and electronic components, modules and systems, launched a new corporate website, Stoneridge.com JJGSTV, Detroit, a video network, introduced Octane, an analytics service to connect behavioral data with national advertising campaigns. Website: GSTV.com

Submit Deals & Details items to cdbdepartments@crain.com

COME PLAY For those returning for the Detroit Homecoming, come have some fun at the new Beacon Park. This open gathering space offers community members, visitors and residents a place to relax, recharge and play. The DTE Energy Foundationâ&#x20AC;&#x2122;s investment in the park is part of its ongoing efforts to support Detroitâ&#x20AC;&#x2122;s revitalization. So come play at the corner of Cass and Grand River. Go to dtebeaconpark.com for more information.

C R A I N ’ S D E T R O I T B U S I N E S S // S E P T E M B E R 2 4 , 2 0 1 8

FOCUS LAW

The new frontier of legal weed Businesses will see big risks, opportunities if Michigan voters legalize recreational marijuana this November By Doug Henze

Special to Crain’s Detroit Business

If Michigan voters give recreational marijuana use the high sign this fall, it’ll bring both opportunity and risk like few businesses have seen, say local legal experts who represent medical cannabis growers. The state, still struggling to shape policy for medical marijuana use, will let voters decide during the Nov. 6 general election whether using cannabis recreationally should be legal. “Think if Michigan, for the first time, allowed restaurants,” said Alex Leonowicz, an attorney with the Howard and Howard law firm in Royal Oak. “It’s wide open. You can be on the ground floor of an emerging industry. You only get those opportunities once in your life.” Benjamin Sobczak, a partner with the Dickinson Wright law firm in Detroit and Troy, compares entrepreneurs’ excitement about legalization to that of fortune-seekers pushing west in the mid-1800s. “Sometimes, it feels like the (California) Gold Rush,” Sobczak said. “There’s just people running toward the hills.” One thing that makes Michigan an attractive market for investors is the number of potential marijuana users, said Doug Mains, an attorney in the Lansing office of Honigman Miller Schwartz and Cohn LLP. Michigan’s total of 280,000 medical marijuana licenses is second only to California’s, he said. California had an estimated 400,000 medical users prior to allowing recreational use Jan. 1. “When you factor in the idea recreational probably is coming this year, that sweetens the pot for folks,” Mains said. “The potential market goes from 280,000 to 10 million.” Honigman client Coalition to Regulate Marijuana Like Alcohol, which pushed to get recreational marijuana use on the ballot, projects annual revenues of $100 million in Michigan, if the measure passes, Mains said.

Legal risks But attorneys are warning clients that they can put themselves in jeopardy by cashing in on cannabis. The biggest danger is that even if recreational marijuana use becomes legal under state law, federal authorities still can charge producers and users. That can bring fines and/ or incarceration. “They have to be reminded it’s still a violation of the federal Controlled Substances Act,” said Alan Rogalski, a partner with Warner, Norcross & Judd in Southfield. “A lot of people are choosing not to hear it.” The risk isn’t limited to businesses and individuals in the industry.

“Sometimes, it feels like the (California) Gold Rush. There’s just people running toward the hills.”

Need to know

 Local lawyers see challenges, opportunities if recreational marijuana is legalized  Federal law still major legal risk for businesses  Marijuana industry expected to support many ancillary businesses

Benjamin Sobczak

“If you’re just a landlord who knows someone is using your facility for a criminal enterprise, that’s a 20year felony,” Mains said. A tug of war within the federal government about how to treat medical marijuana users has made things more uncertain. President Donald Trump’s Administration has opposed legalized cannabis. But in March, Trump signed a spending bill including an updated version of the Rohrabacher-Blumenauer Amendment. It prohibits the use of Department of Justice funds to go after the medical marijuana industry, if state rules are followed. “We’ve seen a general shift from the federal government — more relaxation,” Leonowicz said, estimating that it may be five to seven years before the federal government legalizes marijuana use. However, Rohrabacher doesn’t protect recreational cannabis producers and distributors, Mains said. “You run a little bit more risk,” he said. “They could absolutely be arrested for violating the Controlled Substances Act.” Neither medical nor recreational cannabis users in Michigan are protected from being fired by companies with zero-tolerance policies, Leonowicz said. SEE WEED, PAGE 47

GETTY IMAGES/ISTOCKPHOTO

C R A I N ’ S D E T R O I T B U S I N E S S // S E P T E M B E R 2 4 , 2 0 1 8

SPECIAL REPORT: LAW WEED

FROM PAGE 46

Business hurdles For business owners who want to enter the cannabis space, the list of potential challenges doesn’t end with federal fines or incarceration. They’ll have to jump through a specific set of state and local hoops to start an operation and stay in business, said Barton Morris, founder of the Royal Oak-based Cannabis Legal Group. Morris is hosting a business expo Oct. 11 at Cobo Center to provide instruction for potential industry players. “If they don’t maintain regulatory compliance, they’re going to lose their license,” Morris said. For the first two years after the state gets its recreational cannabis program up and running, those licenses would be limited to entities already possessing a medical marijuana license. Small players — with no more than 150 plants — would be exempt from having to have a medical license. To get a license, a company first would need a suitable production or sales facility in a community that allows such operations, Morris said. “The majority of communities in the state are not participating,” he said. “We’re going to give instruction (at the expo) in how to talk these cities into participating.” Finding the proper location in a participating community also is key, he said. “Cities are supersensitive about zoning,” Morris said. Cultivation operations typically must be in industrial or agricultural zones and an established distance from schools, parks and churches. The economics of starting a medical or recreational cannabis production operation also present a challenge, Morris said. “All of these operations require a significant amount of capital — potentially millions of dollars,” he said. “The equipment itself, that’s going to be several hundreds of thousands of dollars.” It could take a year to get through the license application process, Morris cautions. Then, plants will need time to grow before they begin to generate income. Businesses also will have to deal with IRS code Section 280e, which prohibits the deduction of normal business expenses — other than the cost of goods sold — by enterprises dealing in controlled substances. Businesses can have tax rates of 70 percent or higher. “This tax is really painful to people,” Sobczak said. “It kills operating margins.” To prevent money laundering, the IRS tends to keep a closer eye on cash businesses, Morris said. “All of these businesses can expect an IRS audit in three to five years,” he said. “That’s what we’ve seen in other states.” Cannabis businesses also face intellectual property issues, since national brand protection is provided by the U.S. government. It doesn’t recognize cannabis operations as legitimate. “Even if you’ve been a caregiver growing a specific type of marijuana for five years, you haven’t been able to trademark it,” Sobczak said. Businesses are trying to get around

Alex Leonowicz: Multiple calls a day about it.

Doug Mains: Real estate prices expected to rise.

Barton Morris: Cities sensitive about zoning.

Allen Rogalski: Not an industry for the timid.

ness; and JJLack of understanding of their own product. “People think just throw up some lights, water the plants and it will go,” Leonowicz said. “You’re Benjamin going to have a Sobczak: Tax terrible product rates kill profits. you’re not going to sell and get a reputation for having inferior cannabis.”

“Pick-and-shovel" opportunities

GETTY IMAGES/ISTOCKPHOTO

that by using state-by-state intellectual property protection, Leonowicz said. Cannabis businesses also face several other hurdles, Leonowicz said. They include: JJLimited access to capital, since

banks typically shy away, based on legal concerns; JJDifficulty in getting required insurance, with only a handful of participating underwriters nationwide; JJOpposition from community residents who disapprove of the busi-

Real Estate Experience

Despite those challenges, and the fact the state’s medical marijuana rules are under constant revision, entrepreneurs aren’t backing away, attorneys said. “The more sophisticated investors have thought through these issues and, nonetheless, they’re willing to push forward,” Rogalski said. “This is not an industry for the timid.” Mains estimated his firm gets four to five calls a week from potential cannabis clients, while Rogalski said companies seeking information about the industry frequently call him. Added Leonowicz, “I get multiple phone calls a day from individuals interested in getting into the cannabis space itself, or working with cannabis facilities. I’d even go as far as to say my phone rings all day.” As with the Gold Rush, when taverns and pick-and-shovel sellers

raked in their share of the profits from prospectors, the recreational cannabis industry is expected to support many ancillary businesses. “The big one we see is real estate,” Mains said. “Suddenly, a piece of property that may have been a vacant factory two years ago, its price has now quadrupled.” Specialized lighting or greenhouses targeted at grow operations are a few of the products on display at conventions, he said. There’s also money to be made as a secure transporter, Mains said. Michigan’s medical marijuana law requires them when taking the product from growers to processing facilities, he said. Home delivery services — operational in other states and now being considered by Michigan regulators — and developers of software that can handle online orders are other possible businesses, Leonowicz said. “Accountants, attorneys — those are all individuals that are going to be in demand, especially in an industry that’s so heavily regulated,” he said. “You’re going to need someone to assist you along the way.” Business people seem to be drawn to the cannabis industry by two factors: the ability to build wealth and a desire to bring about social transformation, Sobczak said. “There will be, absolutely, the marijuana winners of the universe and their grandkids will do well,” he said. “(But) I think a lot of people are doing this because they feel like they’re part of a good thing and a good change.”

In Your Corner.

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Concentration on acquisitions and dispositions and leasing of multi-tenant retail, office and industrial properties Represents lenders, investors, operators, developers and borrowers Construction loans and structuring joint ventures

First Tier Ranking in Real Estate Law and Real Estate Litigation

Contact Casey Koppelman at ckoppelman@varnumlaw.com

C R A I N ’ S D E T R O I T B U S I N E S S // S E P T E M B E R 2 4 , 2 0 1 8

Why the Lions are worth less than most other NFL teams By Bill Shea bshea@crain.com

Every fall, Forbes publishes its annual NFL team valuations, and every fall the Detroit Lions are near the bottom. Why is that? The obvious answer is that the onfield product has been, at best, mediocre. Sometimes far worse, and just occasionally pretty good. Everyone is aware that the Lions have a single playoff victory — in January 1992 — since winning the NFL championship in 1957. They’ve never been to a Super Bowl. But the team’s slow gain in value is more complex than just losing. A witches’ brew of on-field performance, being in Detroit instead of a more desirable market, and a lack of star players over the years has contributed to the sluggish team value, according to Marc Ganis, president of Chicago-based sports consulting firm Sportscorp Ltd. and known within sports business circles as the “33rd NFL owner” because of his knowledge of team and league thinking on many topics. “(Losing) hasn’t helped. But if the location were more geographically desirable — say the Bay Area or Florida — it wouldn’t matter as much,” Ganis said via email. “As we all know, Detroit has gone through a rough time. It’s coming back, of course, but geographic desirability plays a big role in the relative value of NFL teams. The brand has definitely suffered from

RICK OSENTOSKI/ASSOCIATED PRESS

The Detroit Lions have to reach far to catch up to NFL-leading teams such as the Dallas Cowboys, valued by Forbes at $5 billion.

Need to know

 Forbes estimates Lions are worth $1.7 billion  Insiders say team likely would sell for more  Slow value growth linked to losing, geography, spending

lack of success on the field, not being in the Super Bowl, and there haven’t been many players like Barry Sanders who captivated the football world. Many terrific players but not that many who became national stars like Sanders in recent years.”

Forbes pegged the Lions as worth $1.7 billion for the past two seasons. That ranks as the second-lowest value in the 32-team NFL, with only Buffalo worth less at $1.6 billion, and far behind the Dallas Cowboys’ league-leading $5 billion valuation. The Lions are part of a wider trend of flat NFL team values over the past two seasons, per Forbes. There are reasons to think Detroit’s value will increase. In the short term, the Lions have had winning records the past two seasons, and made the playoffs three times since 2011. They have a star in quarterback Matthew

Stafford, set a team record for Ford Field attendance in 2017, and play inside a world-class stadium that saw $100 million-plus in upgrades in recent years. Longer-term, experts and team owners have said they expect all teams to be worth more because of a couple of factors: New broadcast rights deals, and legalized sports betting. Many league observers expect the NFL to opt out four years early of its deal with AT&T’s DirecTV to air the “Sunday Ticket” satellite package of games, a relationship that pays the league an average of $1.5 billion annually now. The next deal could double that, Forbes said, and that money is shared equally among the teams. The NFL also could see values rise once newly legalized sports gambling takes shape. The league and its teams expect to be able to monetize games and data for bettors and services that cater to wagering. Until the gambling stuff takes shape, the broadcast rights remain the revenue backbone. In Forbes’ valuations, teams such as the Lions derive most of their value from the NFL’s revenue-sharing structure that’s fueled by billions of dollars from TV, satellite, radio, and mobile broadcast rights deals, along with revenue streams from corporate advertising and merchandise licensing. In 2017, that gave each team about $255 million out of a pool of $8.1 billion. Teams get to keep their revenue

generated from game day concessions, apparel sales, parking, and corporate advertising. Also baked into the Forbes estimates are how much value the team gets from its stadium, from being in its local market, and from its brand. The Lions derive one of the smallest brand values at just $93 million, or about 5 percent of their total value. By contrast, the Cowboys enjoy $925 million in brand value of their overall league-leading $5 billion value assigned by Forbes. The Cowboys, winners of five Super Bowls, are known as “America’s Team” and have a strong national reputation built on past success. The Lions have a poor overall reputation because of their lack of success — they’ve never played in a Super Bowl or enjoyed national attention beyond occasional jokes. One insider who specializes in valuing teams says the Lions are undervalued by Forbes, and that winning and losing is an overrated factor in team worth. “$1.7 billion sounds light,” said Michael Rapkoch, president of Addison, Texas-based Sports Value Consulting LLC. Among his clients is hedge fund billionaire David Tepper, who bought the Carolina Panthers for $2.3 billion earlier this year. Rapkoch said legalized gambling and competition among streaming services to put games on mobile devices will increase values. SEE LIONS, PAGE 50

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LIONS FROM PAGE 48

“It’s going to help generate additional cash flows for all the teams,” Rapkoch said. “There are going to be a lot more people interested in buying an asset like an NFL team. No NFL team has ever declined in value. It’s a secure asset, and they make money.” There also is a steady rise in the number of people who can afford to buy teams, too, Rapkoch said, even with the NFL’s strict ownership rules that require the general partner to have enough liquid wealth to buy 30 percent of a team (and it forbids corporate ownership, while limiting teams to 24 limited partners). Multiple bids for teams increases the sale price, and lifts value. The last sale before the Panthers was Terry and Kim Pegula buying the Buffalo Bills for $1.4 billion in 2014 from the estate of Detroit businessman Ralph Wilson. The Bills and Lions, along with the Cleveland Browns and Cincinnati Bengals, are the only NFL teams valued by Forbes at less than $2 billion — and all four are midsize Rust Belt cities just hours apart and have struggled with winning. The sort of losing that the Lions have done over the past six decades has crimped franchise value overall because Detroit doesn’t have the reputation or brand value like the Cowboys, Steelers, Packers and Patriots, but the win-loss column isn’t going to provide a discount, Rapkoch said. “People don’t look at the record and lower the price,” he said. A major sports banker said the Detroit market should be an upside for the Lions because of its easy proximity to financial centers such as new New York and Chicago. “If the Lions ever came on the market, there would be quite a bit of interest. You’re going to get a pretty good price,” said Sal Galatioto, president New York City-based Galatioto

Sports Partners and a key dealmaker in sales of teams such as the Golden State Warriors, Washington Redskins and Charlotte Bobcats. He said he likes the Lions brand, its loyal fanbase, and even the iconic uniforms and colors. “It’s still really a good brand,” Galatioto said, adding that clients have asked about the possibility of buying the Lions in the past. Of course, any talk of a team value is purely academic until the team goes on the market, and there’s zero indication the Ford family has any inclination to sell. And a team is only really worth what someone will pay for it. Lions majority owner Martha Firestone Ford, 93, has remade the front office and coaching staff since inheriting the team after husband William Clay Ford Sr. died at age 88 in 2014. He bought majority ownership for $4.5 million from a consortium in November 1963, taking control in January 1964. If the team sold today for $1.7 billion, the rate of growth from the purchase price is 37,677 percent. Even if not selling, the value of a team is important because it allows an owner to leverage a team for business purposes. Detroit Tigers owner Mike Ilitch, before dying at age 87 last year, used the baseball team and its revenue streams as a financial backstop to fund other parts of his business empire, public records have shown. There’s another factor in the Lions’ value situation: Ganis said Ford’s decision to reinvest in the team has slowed the team’s worth. The Lions have spent more than $100 million in recent years to upgrade Ford Field with new suites, clubs, lighting and sound systems and other perks. “Martha Ford has done an exceptional job turning the franchise around on the field and pumping team profits back into the stadium and other team facilities. She has chosen to improve the team and fan experience without looking for ways

to maximize prices or over-commercializing,” he said. “As a result, the team is well positioned for the future but the gross revenue and net operating income is dampened.” The Lions had just $4.1 million in operating income on $361 million in revenue, according to Forbes. Detroit’s operating income — defined by Forbes as earnings before interest, taxes, depreciation and amortization — was the lowest in the NFL by a wide margin. Second-lowest was $24 million for the Oakland Raiders. A season ago, Forbes estimated that the Lions had $48.1 million in operating income. That means this year’s estimate declined by 91 percent. Forbes estimated that the Lions ran an operating loss from 2010-14, but have been in the black since. The average operating income for 2017 was $95 million per team, Forbes estimated. The Lions’ $361 million in total revenue was the fourth-lowest in the league, but it did grow by $20 million over the season prior. The league average, per Forbes, was $427 million per team. The Lions have a standing policy of not commenting on their finances. “The Lions sit near the bottom of the NFL’s revenue hierarchy. Getting more revenue from non-NFL events is important, and Ford Field recently missed out on being among the four cities awarded future men’s basketball Final Fours by the NCAA,” Forbes wrote. The team leases Ford Field under a long-term deal with a public authority that allows it to keep all revenue from events at the 64,500-seat building that opened in 2002. The Forbes NFL estimates are for the 2017 season, and the team values are an enterprise value (equity plus net debt) and include the economics of the team’s stadium but not the value of its real estate, the financial news site said.

SPOTLIGHT Kelly Services chairman retires

Terence Adderley has retired as chairman of Troy-based Kelly Services Inc. after more than 60 years with the staffing company, the company announced last week. Adderley, 85, the son of company founder William Russell Adderley Kelly, served as CEO of the company from 1989 until 2006 after holding a series of managerial and executive roles that started in 1958 as manager of the company’s office in Louisville, Ky. The company has named its lead director, Donald Parfet, to the chairman role. The changes were effective last Monday, the company said in a press release. Parfet is founder and managing partner of the Kalamazoo-based life sciences accelerator Apjohn Group LLC.

Snyder press secretary to depart for Business Leaders for Michigan

Gov. Rick Snyder’s press secretary, Anna Heaton, is leaving the state government for a role with Business Leaders for Michigan. Heaton will join the nonprofit advocacy group as vice president of marketing and comHeaton munications in early October. She will replace Kelly Chesney, who stepped down from her role

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

with BLM in July to attend to family matters. Heaton’s last day in the term-limited governor’s office is Oct. 5. “Anna is passionate about Michigan and has a wealth of experience in strategically communicating complex policy issues,” BLM CEO Doug Rothwell said in a statement. “Having served in Lansing for the last eight years, Anna’s knowledge and perspective on our areas of focus will be a great asset to our organization.”

Ketai named chairman of Gilbert’s Bedrock

Jim Ketai has been named chairman of Dan Gilbert’s Bedrock LLC in a series of leadership changes at Detroit’s most influential real estate company. Bedrock shuffled a series of executives into new roles, changes that were announced Ketai internally last Tuesday, said Whitney Eichinger, vice president of communications. “It’s the next chapter for Bedrock,” she said. “Looking back at the 7 1/2 years (since it was founded) and all the growth, we have been looking over a period of time at how to best utilize the team members. We feel like these strategic moves are preparing Bedrock’s leadership team for the next stage of growth.” Ketai, 57, was CEO of Bedrock and will “focus on big-picture strategy and building strong relationships with external stakeholders,” Eichinger said, adding that he will also oversee the property acquisition team. He is also a co-founder along with Gilbert.

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Trish joins Phoenix Innovate as Executive Vice President, leading the non-profit division. Trish is a strategist and an implementer. A graduate of Michigan State University, Trish has been distinguished as a member of the Crain’s Detroit Business’ 40 under 40 class of 2013. She also volunteers her time as an advocate of many non-profit organizations including the Detroit Institute of Arts, The United Way of Southeast Michigan and Rebel Nell’s TEA Foundation.

Terry joins Phoenix Innovate, as Senior Vice President, Client Service in the mailing services division and will be consulting with and serving clients who employ direct mail tactics to meet their business objectives. A graduate of Wayne State University, Terry has extensive experience with both for-profit and non-profit clients in direct mail program strategy, mailing list strategy, ensuring optimal postage rates and the establishment and tracking of metrics for continued improved performance.

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

Lynda Zeller Michigan Health Endowment Fund Lynda Zeller has joined the Michigan Health Endowment Fund as a senior fellow in the behavioral health program. Previously, she was deputy director for behavioral health and developmental disabilities at the Michigan Department of Health and Human Services. In her role at the Health Fund, Zeller will help set program strategy, implement grantmaking, and support a portfolio of grantees working across the state of Michigan on behavioral health initiatives.

Page 2

DETROIT USINESS C R A I N ’ S D E T R O I T BCRAIN U S’ISN E S S B// SEPTEMBER 24, 2018

SCOOTERS

Scooter mania in Detroit: How they work California startups Bird and Lime have released 600 dockless electric scooters in Detroit, now averaging roughly 5,000 rides a day.

FROM PAGE 1

Several questions linger, even as visitors and residents continue to zoom around Detroit’s Central Business District at a top speed of 15 mph. If Detroit is truly positioning itself to be atop the heap of mobility innovation, where does “micromobility,” like the Bird and Lime scooters, fit in the mission? Can scooters exist as both a new, effective transportation option for affluent city dwellers and last-mile commuters and Detroit’s largely low-income residents? Robert Hampshire, associate professor at University of Michigan’s school of public policy and research associate professor at UM’s Transportation Research Institute, said micromobility options like scooters and dockless bikes can serve both effectively, but not without intentional guidance from government officials. “In coordination with cities and urban planners and the community, there can be a role,” Hampshire said. “But there have to be proactive steps to make that happen because these companies won’t care if they are left to their own devices.” Bird was unable to make a spokesman available before deadline and Lime did not respond to emails or calls. Hampshire recently co-authored a study that showed the use of dockless bikes and electric scooters, together with carpooling, could reduce the number of taxis on New York City streets by 40 percent. De la Vergne said progressive ordinances around new mobility options like scooters could address, at least theoretically, poverty brought on by the city’s transportation desert. The poverty rate for Detroit is the highest among the 20 largest cities in the U.S. at 35.7 percent in 2016, a 4.1 percent drop from 2015’s figure, according to the U.S. Census Bureau. “We’re always looking for safer, more affordable ways for folks to get around the city,” de la Vergne said. “That’s why we allowed (the scooters) in Detroit; to see how people use them and what we can learn.” The feedback has been positive, de la Vergne said, and the city is pushing forward this winter to develop a regulatory strategy around the scooters to improve equitable access to transportation.

Targeting accessbility On Tuesday, the Detroit City Council will offer free rides on the scooters at an evening council meeting at the Hillman Recreation Center South of Eight Mile Road on the city’s Northeast side. “We want our residents to gain experience and see if these are a viable transportation option for them,” said Detroit City Councilman Scott Benson, whose district isn’t currently served by the scooters. “Even if they are a lot of fun, we need to look at the practical use of these for our citizens in Detroit, and not just those downtown.” Benson said the City Council will adopt an ordinance for scooters before it breaks for Thanksgiving on Tuesday, Nov. 20. Benson is calling for 70 percent of the scooters to be distributed outside the 7.2-square miles of downtown. “These need to be available to everybody, not just the cool kids downtown,” Benson said. “And I’m interested in how we do that how we make these an available option for someone getting off the bus at Gratiot Avenue and get to Outer Drive and Mount Elliott.” The City Council will also likely establish a new cap on the number of dockless scooters the companies can

September 24, 2018 51

Electric scooters are emerging as startup heavyweights — Santa Monica, Calif.-based Bird recently hit a $1 billion valuation mark less than 16 months after being founded. Scooters from Bird, Lime and roughly a half-dozen others can be found in many major metropolitans such as Los Angeles, San Francisco, Seattle, Chicago, Indianapolis, etc. Want to join the trend and hop on a scooter? Here’s how. What you need: Bird and Lime require a smartphone and a download of their mobile app. The apps require a payment method, which can be pay-as-you-go with a credit or debit card on file or the purchase of credits with a card. Bird requires a scan of your driver’s license, Lime does not. Helmets recommended, but not required. Get your ride: A user opens the app to locate available scooters via GPS. Once located, users scan a QR code on the top of the scooter to unlock. Climb on and

Scooters left parked on the sidewalk in downtown Detroit. LARRY PEPLIN FOR CRAIN’S

distribute in the city as they look to expand to underserved areas. That figure is likely to be more than 600 like now, Benson said, but not enough to surpass demand. However, an agreement requiring 70 percent of scooters be outside of greater downtown would be the most stringent in the nation and may receive pushback from Bird and Lime if profitability suffers. Last week, the Oakland, Calif., City Council approved an ordinance requiring at least 50 percent of the rentable scooters be distributed in Oakland’s “communities of concern,” defined by a high concentration of minorities and low-income residents. The ordinance also creates specialty memberships for low-income riders with a rate “equivalent to” $5 annually for unlimited 30-minute rides. “It’s a significant portion of Oakland that has really been underserved historically,” Oakland Councilwoman Rebecca Kaplan, who co-wrote the ordinance, told Bay area public news network KQED. “We want to make sure that as new options like the shared scooters come about, that everybody has a chance to benefit.” Bird and Lime both appear to welcome the guidelines. “We are encouraged by the progress the city has made in establishing a framework that can work for everyone,” Bird representative Mackenzie Long told the East Bay Times last week. Bird and Lime now offer discounts for low-income residents in the cities they are available from their current pricing models of $1 to unlock and 15 cents per minute to ride. Bird waives $1 fee for low-income riders but maintains the 15 cents a minute rate. Lime offers a 50 percent discount to low-income riders. To qualify for Bird’s “One Bird” low-income program, individuals must be currently enrolled in or be eligible

for a state or federal assistance program, including Medicaid, SNAP or a discounted utility bill, according to the company’s website.

Cities step up oversight San Francisco banned scooters earlier this year, but recently selected dockless-scooter companies Skip and Scoot to participate in a one-year pilot project, thus eliminating Bird and Lime scooters from city streets. Charleston, S.C., also banned the scooters in August. San Francisco rated Bird the worst of all applicants in its review of companies vying to offer scooters. The criteria included safety, access for disabled and low-income users, sustainability, good labor practices and a positive relationship with the San Francisco community, CNBC reported. That could cause Bird to want to be more welcoming to Detroit’s demands, said Hampshire. “Cities have the power to mandate these options,” Hampshire said. “They can now say, ‘If you want access to downtown and the core of the city, then you have to provide access to these other (low-income) places.' ” Detroit City Council is also in the middle of creating a community board that will advise on the topics of scooter safety, equitable distribution and other matters related to scooters and transportation, Benson said. Benson said he’s also informing constituents of the companies’ charging program, which pay registered users between $3 to $15 to charge each scooter overnight. Other cities are taking a more draconian approach, deferring to outdated ordinances and transportation codes to ignore having to deal with the conundrum they pose. The Milwaukee, Wis., City Council banned the scooters in July as the use of the vehicles isn’t addressed by the Wisconsin Department of Transportation

and legislation on the matter likely won’t be addressed until next year, the Milwaukee Journal-Sentinel reported. Denver and St. Louis have also temporarily banned the scooters. On Sept. 7, Ann Arbor began impounding Bird scooters after the company dropped them into the city earlier this month. City Council members said the scooters were “improperly” parked and impounded two dozen scooters, the Detroit Free Press reported. According to an Ann Arbor ordinance, scooters can’t be parked on streets, sidewalks or bike paths, essentially negating the premise of the systems, where a rider leaves them at a public destination available for the next pa-

ride. Cost: Both Bird and Lime charge $1 to unlock, plus 15 cents per minute. Scooters can remain locked for use while not riding them, though the per-minute fee continues to tally. Low-income riders who have verified they are on government assistance programs can receive discounts. Bird waives the $1 unlock fee and Lime offers a flat 50 percent discount. Speed and distance: Both scooters top out around 15 mpg with a roughly 15-mile range per charge, though mileage may vary depending on charge level when rented. Parking: The scooters are dockless, meaning they can be parked wherever a ride is ended. However, the city requires they be parked upright on a sidewalk at least 6 feet from streets, driveways and other permanent objects. Hours of availability: The scooters are available for rent between 7 a.m. and sunset — registered chargers via the app get paid a small fee to charge the scooters and redistribute them throughout the city the next morning.

tron to rent. Gov. Rick Snyder signed a law in June changing the the Michigan Vehicle Code to allow “electric skateboards,” which includes any wheeled devices with a floorboard that do not exceed 25 mph, on roadways, effective Sept. 18. “These companies are cognizant of the bad rap they got from rollout in other cities,” Benson said. “They are startups and new, so they are learning. They are going a long way to making sure we have a positive experience, but that means we need a smart strategy that’s good for everyone.” Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh

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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 // S E P T E M B E R 2 4 , 2 0 1 8

RETAIL FROM PAGE 1

As the economy improves, rents in downtown areas are continuing to go up, and some retailers struggle with paying higher rents, Ciura said. “If you don’t make a concerted effort to retain your retail, a city could have a tendency to have much more office or service like hair salons,” and decreased foot traffic downtown, she said. Among those participating in the county-led retail effort are Berkley, Farmington, Ferndale, Franklin, Holly, Lake Orion, Pontiac, Rochester and Royal Oak. Those downtowns are in the midst of or have completed things like streetscaping, facade and signage improvements and public space upgrades such as parks and trails, Bry said. They are actively marketing through window displays and promoting downtown events through social media. Those things tend to make them more attractive to retailers. “They really all have a full plate of what they’re doing and could use some help in attraction and retention,” Bry said. Some of the municipalities aren’t sure where to look for potential new retailers or even what information retailers might want to hear, he said. The county is compiling information, largely from U.S. Census data, on things like population and income levels, household size and median incomes, along with other notable numbers such as the size of the crowds annual festivals and downtown anchors attract. And it’s connecting municipalities to retailers and developers through Ciura. Community leaders, business and property owners of the 13 Oakland County downtowns say they and the residents they talk to want a mix of niche, national retail with independent retailers and mom-and-pop stores in their downtowns, Bry said. To get the attention of those retailers, Ciura is marketing available spots to those already looking at the market and others interested in urban spaces around the country. Roughly a month into the effort, she is meeting with downtowns to gauge their needs, local brokers for available properties and national brokers

John Bry: Downtowns could use help.

Cindy Ciura: Going after online companies.

Participating downtowns

Oakland County communities that are at the highest level of the Main Street downtown development program are benefiting from the county’s retail attraction and retention campaign. They include: Berkley, Clawson, Farmington, Ferndale, Franklin, Highland, Holly, Lake Orion, Ortonville, Oxford, Pontiac, Rochester and Royal Oak.

and the retailers they represent. They range from apparel, accessories and shoe stores to health and furniture retailers that are looking for urban locations with residential and office components that bring built-in customer bases. “We’re going after some online companies that are now looking for brick-and-mortar locations, and there are some amazing concepts coming from overseas to our country,” Ciura said, along with retailers on the coasts in New York and Los Angeles that are starting to look at the Midwest. “If Oakland County weren’t progressive in (its) thinking, these opportunities that are cropping up … wouldn’t be looking at the county.”

Downtowns looking to step up Royal Oak has a downtown occupancy of about 95 percent, Kammer said, following the closure of businesses including Andiamo Trattoria in July, B Spot (which also pulled out of the Village at Rochester Hills) in late August and Blackfinn Ameripub last fall. Bar Louie is set to take the Blackfinn location on Main Street but hasn’t yet moved in. “We think having access to a retail recruiter through Oakland County might help increase the visibility of some of these sights,” Kammer said.

Attracting more retail to Royal Oak will add resiliency to the downtown, protecting it from hiccups in the market such as fads tied to certain types of restaurants, he said. “Any retail that we can attract that is a destination … is something we want to have. It helps with foot traffic.” Royal Oak has more than doubled its office objectives. “Now it’s time to accomplish our retail objective,” said Gary Baglio, president of the Royal Oak Association of Retailers and owner of Five15 Media, Mojo, and More. “With Detroit coming online, it’s definitely a great thing for all of us, including the suburbs.” Other participating communities, like Farmington, are looking for new retail and a developer to restore or renovate downtown spaces. Farmington has about 95 percent occupancy and a good mix of retail in its historic building stock, with some independent merchants and four new restaurants opening in the next few months, said Kate Knight, executive director of the downtown development authority. However, the city has several vacancies in the heart of its downtown at the historic Farmington Savings Bank site, known as the Village Mall. The mall itself is also currently on the market, she said. Its participation in the county’s retail attraction campaign already has brought the city a motivated, out-of-state developer who specializes in renovating or restoring historic properties as mixed-use, boutique urban projects. “They came to town looking at Midtown, Eastern Market (in Detroit), and they loved downtown Farmington,” Knight said. Prior to working with Ciura and the county, Farmington had gotten some low-level interest in the Village Mall property, but no action, she said. Over the last week, it’s gotten a flurry of activity with the out-of-state developer and two other local developers submitting offers. The asking price for the Village Mall property is $2.95 million, said Scott Elliott, senior managing director of Newmark Knight Frank. The mall consists of three connected buildings and one free-standing building, totaling 30,323 square feet retail, office and apartment space.

INSURANCE FROM PAGE 3

Earlier this year, L.A. Insurance paid the state $142,500 in fines for allegedly inflating the cost of seven-day insurance plans with sixmonth roadside assistance coverage that customers often didn’t know they were purchasing. Detroit Mayor Mike Duggan has called seven-day insurance a “scam” and a symptom of Detroit’s highestin-the-nation auto insurance rates. Under the settlement agreement, Integon made no admissions of fraud and didn’t have to pay any fines, Gregg said. “Compliance was the primary focus,” he said. Like any auto insurance plan that’s paid in installments, motorists can still drop the coverage at any point in the six-month term. “We can’t force consumers to make those payments and keep that coverage in place ... for the full sixmonth term,” Gregg said. “But under the code, those people are entitled to have a product that is renewable if

CHAD LIVENGOOD/CRAIN’S DETROIT BUSINESS

L.A. Insurance ceased selling seven-day auto insurance policies on Sept. 11 and removed advertising for its Jump Start plans from Detroit stores like this one at Seven Mile and Schaefer.

they continue to make those payments.” L.A. Insurance CEO Anthony Yousif did not return multiple messages

from Crain’s seeking comment about the end of seven-day insurance plans. But in prior interviews, Yousif has

The vacancies in downtown Farmington are largely independently owned, smaller spaces in unique, older buildings, Knight said, not white-box space a tenant can come in and customize. “It’s not as easy as recruiting a large, national retailer, nor are we seeking that.” Ciura is also bringing the city connections with smaller national retailers looking for historic downtown presence, Knight said. Even communities that aren’t part of the county’s retail attraction and retention effort are looking at it. Birmingham, which does its own retail attraction through the Birmingham Shopping District and has 96 percent occupancy downtown, isn’t currently a “Select” member of the county’s Main Street program, so it’s not eligible to participate in the retail effort. But it plans to inquire about both to see what they entail, said Ingrid Tighe, executive director of the Birmingham Shopping District. “We look at it as we want to do everything we can to promote downtown Birmingham. If this is an additional way to augment our current strategy, it’s something we’re willing to look into and consider,” she said. Regardless of whether Birmingham participates at the highest level of the Oakland County Main Street program, or not, the county’s effort with a retail consultant is a step in the right direction, she said. There are still some retailers and consultants around the country that aren’t familiar with the Metro Detroit market and don’t understand the difference between a Somerset and some of the municipalities, Tighe said. “Anything you’re doing to promote Oakland County and our municipalities on a national level to bring awareness to retailers is a positive thing.”

Region full of options Oakland County and its municipalities all see it as a plus that downtown Detroit is finding its way back, and that at the same time, places like downtown Royal Oak and Ferndale are continuing to rise, Bry said. That gives consumers options. “If we’re doing well in Oakland County, the communities around that are going to feel that as well and have a ripple effect,” Bry said. said the state insurance department was unfairly targeting his company, which has at least two dozen stores in Detroit alone and several more scattered across the suburbs in Macomb, Oakland and Wayne counties. “It’s going to really hurt the business. All the stores in Detroit are probably going to end up closing,” Yousif told Crain’s in a March 2017 interview. “The people who were buying the seven-day (plan) are going to end up buying more fake insurance because they can’t afford real insurance.” Within the past two weeks, L.A. Insurance has taken down advertisements of seven-day plans at several of its stores in Detroit. It's not exactly known just how many seven-day auto insurance policies have been sold annually in Michigan. Between July 2015 and June 2016, Secretary of State Ruth Johnson’s office audited 719,819 paper insurance forms and found 90,701 drivers submitted seven-day policies. Johnson’s office found 40,972 of those 90,701 policies — or 45 percent —

In Ferndale, for example, a mini commercial district that’s developing along Livernois is drawing small, independent retailers. Shoppers interested in that retail are likely to be drawn to the nearby “Avenue of Fashion” at Seven Mile and Livernois in Detroit, he said. “Shoppers are going for the experience in what all of those adjacent nearby areas have to offer. They’re all playing off each other.” Development in Ferndale could also help increase property values and small business development in the adjacent areas of Detroit, Bry said, as people and small businesses priced out of Ferndale consider nearby property in Detroit. It’s the same thing with downtown Detroit and the suburbs, Bry said. People living, working and staying in Detroit may visit suburban shopping districts as they look for more unique shopping experiences, he said. “When we’re marketing the region to potential employers and talent, having that diversity and uniqueness of all these great retail destinations ... is a massive selling tool for the entire region,” he said. Retailers like restaurant and craft beer bar HopCat can sustain multiple locations in places like Royal Oak and Detroit’s Midtown, Bry said. But the overall goal is to bring new retail to the region, Bry said. “When we can actually start having gains everywhere, that’s true economic development,” he said. Delivering unique, one-of-a-kind retail experiences is what today’s consumer expects, said Jennifer Skiba, vice president of leasing at Bedrock Real Estate, which has been working the past several years to bring retail to downtown Detroit. “Every community in Metro Detroit is answering this demand by cultivating local talent and recruiting new concepts and businesses to the entire region,” she said in an emailed statement. “As downtown and the surrounding areas continue to grow, in many cases we see both local and global brands deciding to double down and open more than one location. That sort of economic momentum is vital here and throughout Michigan.” Sherri Welch: 313 (446-1694) Twitter: @SherriWelch were canceled sometime after the vehicles were legally registered. But that figure did not account for an unknown number of seven-day policies that could have been submitted to the Secretary of State electronically. Johnson had called on lawmakers to ban the seven-day plans outright. The Secretary of State’s office had been considering the use of designated seven-day license plates for motorists to make it easier for police officers to spot a vehicle without current insurance coverage, “but it’s moot now,” spokesman Fred Woodhams said Wednesday. “Secretary Johnson is pleased to see that these policies are no longer available,” Woodhams said in an email to Crain’s. “... Johnson believes the state must have a real-time system to validate insurance policies for law enforcement personnel to help address the problem of uninsured drivers.” Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

C R A I N ’ S D E T R O I T B U S I N E S S // S E P T E M B E R 2 4 , 2 0 1 8

DICHIERA FROM PAGE 3

“The riots notwithstanding, Detroit ... needed to be again a major metropolitan center,” DiChiera told Crain’s in June 2017 of his adopted home. “It needed to have all of the cultural institutions a great city should have.” DiChiera, the son of Italian immigrants, was born in McKeesport, Pa., and raised in Los Angeles. He maintained a California connection through work with Opera Pacific in Santa Ana, Calif., where he was named founding general director in 1985. He worked with Opera Pacific until 1996, the year the Detroit Opera House opened. While working on operatic productions, DiChiera spearheaded the 1973 establishment of Music Hall Center for the Performing Arts. Three years later, MOT commissioned and staged its first world premiere, Thomas Pasatieri’s “Washington Square,” a performance that garnered national media coverage. DiChiera served as president of Opera America from 1979-83. In that role he led the development of innovative methods of funding new American musical theater works and began an initiative to support opera companies’ efforts to reach previously underserved segments of the population. Doors opened to him as he gained a national reputation. While still serving as head of MOT, DiChiera was named artistic director of the Dayton Opera Association in 1981— a position he held for 10 years — and founding general director of Opera Pacific in Santa Ana, Calif., in 1985. Heading more than one opera company allowed DiChiera the opportunity to collaborate with himself, he joked last year. He was the only general director in the country to have founded and led two opera companies in a unique collaboration. A cross-country, cost-sharing collaboration between the Detroit and Orange County operas enabled them to stage a new production of “Norma” by Vincenzo Salvatore Carmelo Francesco Bellini for Joan Sutherland, bringing one of the great divas of the 20th century to both cities. At the end of 1988, under DiChiera’s leadership, MOT purchased the historic Capitol Theatre in Detroit and launched fundraising to renovate it and reopen it as the Detroit Opera House.

WELL-BEING FROM PAGE 3

Depending on the company’s culture and employee participation rate, employers can potentially lower health care costs, increase employee productivity, job satisfaction, improve retention rates and reduce absenteeism. At least 50 percent of all health care costs can be attributed to unhealthy behaviors and lifestyle choices, according to the U.S. Centers for Disease Control and Prevention.

The well-being movement What is a well-being program? Experts say it is the natural evolution of wellness programs where employers offer services that go beyond physical health assistance to areas such as family, social and financial issues. It can include training to improve emotional health, social connectedness and happiness. Susan Morgan Bailey, director of total health and wellbeing at Troy-based Marsh & McLennan Agency Michigan

As a composer, David DiChiera’s music received critical acclaim. In October 2007, his opera “Cyrano” saw its world premiere at the Detroit Opera House and was later successfully presented by Opera Company of Philadelphia and at Florida Grand Opera in 2011.

MOT opened its new home to the public in 1996, becoming one of only a handful of American opera companies to own its own building. In addition to shepherding its physical location, DiChiera was a powerful fundraising force. Between 1989 and 2004, DiChiera led MOT in raising $70 million, enabling it to open the worldclass Detroit Opera House in 1996, and later, to renovate its six-floor Broadway Tower to create the Ford Center for Arts and Learning and construct a parking structure that’s now integral to the downtown entertainment district. DiChiera left the Dayton Opera Association in 1992. But he commuted cross-country to Opera Pacific up until 1996, when he resigned, shocking leaders of the California opera company. “I can produce opera anywhere,” he told them. “But what I needed to do in Detroit was help revitalize the city.”

For at least four or five years, the opera house stood mostly on its own in the Broadway location. But then in 2000, Comerica Park opened, followed by Ford Field, the Boll Family YMCA and several restaurants. Banks got more interested as they saw the crowds drawn to the area. The foundation was set for companies including Compuware Corp. and Quicken Loans Inc. to set up downtown. “I’m very proud of that,” DiChiera said last year. “We were there, and we began to be the catalyst for all the things that happened afterward.” His role in Detroit’s resurgence in the

arts was noted after his death last week. Gov. Rick Snyder tweeted out a statement, calling DiChiera “an incredible supporter of the arts and the city of Detroit.” Under DiChiera's leadership, MOT became one of the country’s top regional opera companies, earning an international reputation as a producer of rarely performed operas and a supporter of minority and new opera artists. Ensuring Detroit’s African-American community was represented on stage was a priority for DiChiera. “When you consider the city of Detroit which is probably 80 percent-plus African-American, it was just a no-brainer,” he told Crain’s last year. Young black students need to see people who look like themselves performing, and they need to feel their story is being told, DiChiera said. “You can’t even begin to realize the impact when you provide diversity throughout the arts. It opens doors,” he said. DiChiera and MOT staged the world premiere of Richard Danielpour's and Toni Morrison’s opera “Margaret Garner,” an opera based on a fugitive slave story in pre-Civil War America, in 2005 at the Detroit Opera House. As a composer, DiChiera’s music also received critical acclaim. Among his works, “Four Sonnets,” with verses by Edna St. Vincent Millay for soprano and piano, premiered at the Kennedy Center in Washington, D.C., before subsequent performances. In October 2007, his opera "Cyrano" saw its world premiere at the Detroit Opera House

LLC, said Blue Cross is taking an unusual step for a health insurer by offering well-being services. “They are trying to expand their reach” and provide added value to employers, Bailey said. “A lot of clients aren’t ready to invest in a full-time or part-time well-being coordinator. This brings resources to employers who might want to offer a menu of options to their employees.” Early last year, Marsh & McLennan launched its Well-Being University to help human resource and other executives at midsized employers learn about the value of employee well-being, how to launch or redeploy programs and benchmark outcomes. Nearly 100 of MMA Michigan’s 430 health benefit survey participants and clients have completed its well-being courses. Over the past several years, large corporations such as Ford, GM, Quicken, Dow, Meijer, Amway, Google, Aetna and Microsoft have adopted health and well-being philosophies. Experts say they are further ahead in developing well-being programs than smaller companies and have a competitive advantage.

Bailey said all national health insurers offer a wellness platform to educate members and help them track healthy behaviors. She said the Michigan Blues have taken wellness another step with the online well-being program. “What sets this apart (from what other health insurers are doing) is the live weekly webinars on the computer with a new topic every week that is focused on financial, emotional and physical wellness,” Bjorkquist said. Topics could include the benefits of sleeping and proper nutrition, the importance of making regular 401(k) contributions or how being mindful can help lead to being a better parent or spouse. Bjorkquist said it was her idea to add the virtual well-being program to the Blues’ health and wellness menu of services. Blue Cross approved the program after employer focus groups indicated 100 percent support for the programs. “Employers want improved productivity, retention and morale,” she said. “They can watch the webinars and make changes to improve their state of well-being.” Bailey said employer-based wellness

Leading the way

and was later successfully presented by Opera Company of Philadelphia and at Florida Grand Opera in 2011. The National Endowment for the Arts honored DiChiera with its Opera Honors Award, the nation’s highest award for lifetime achievement in opera. And the Kresge Foundation named DiChiera its Eminent Artist in 2013, recognizing his distinguished record of high-quality work and professional achievement in the arts, his impact on the arts and contributions to Detroit. At the behest of the president of Italy, in 2016 DiChiera received the Order of Merit of the Italian Republic, the country’s highest honor, in recognition of his “lifelong commitment to the dissemination of the Italian language and culture and his dynamic promotion of Italian opera through the world renowned Michigan Opera Theatre.”

Legacy lives on DiChiera handed over day-to-day operation of MOT to president and CEO Wayne Brown at the end of 2013 and became the opera’s full-time artistic director. He was the longest running director ever of a U.S. opera company. He retired fully in May 2017 following the close of the reprisal of his “Cyrano” and a 46-year career with MOT. The DiChiera Grand Salute, a tribute concert held the same month he retired, drew artists from around the world whose work DiChiera impacted. MOT “is my child — as any parent, it’s very difficult to let your children go on their own,” DiChiera told Crain’s last year, adding that he’d be watching over it from the wings. To ensure his name lives on and recognize his legacy, the Detroit Opera House name got an addendum last year: The David DiChiera Center for the Performing Arts. “David loved Detroit, and the role he played in its renaissance with the creation of the spectacular Detroit Opera House we call home is immeasurable,” MOT representatives said in a statement on the website. “His vision and commitment were beyond extraordinary, and his love for this city and all its residents was boundless.” DiChiera is survived by daughters Lisa and Cristina; three grandchildren; former wife Karen VanderKloot DiChiera; and sister Ellen DiChiera Blumer. Sherri Welch: (313) 446-1694 Twitter: @SherriWelch programs are holding steady but well-being programs are growing faster in numbers because of the holistic approach they take with employees. “We hear challenges from both sides of the equation. It takes resources to coordinate and bring information to employees and for employees it takes time to attend a lunch-and-learn or go to a seminar,” Bailey said. “A webinar is more convenient. You can watch the webinar at night. ... To change behavior, it takes a whole lot more than education.” Next year, MMA Michigan plans to supplement its well-being worksite and webinar class beyond classes on financial wealth, health benefit compliance and communication strategies to helping companies develop effective work cultures. “What are the factors of a strong culture that support having a healthy workforce?” Bailey said. “It is part of well-being we want to spend time on to help folks understand what influences creating a healthy culture.” Jay Greene: (313) 446-0325 Twitter: @jaybgreene

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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 // S E P T E M B E R 2 4 , 2 0 1 8

THE WEEK ON THE WEB

RUMBLINGS

Heidelberg Project to move HQ to namesake neighborhood

Buick City site not eligible for tax breaks

SEPTEMBER 14-21 | For more, visit crainsdetroit.com

he Heidelberg Project plans to move its headquarters to the Detroit neighborhood that is home to its famous, namesake art installation. The February move will help set the stage for “organic” development of an arts district in the neighborhood, with one artist then another and another moving in, Heidelberg President and CEO Jenenne Whitfield said. As an extension of that, artists visiting from other areas as they consider moving to Detroit will be invited to stay at Heidelberg’s new site rather than in an area hotel, she said. “We’ve always wanted to develop that area (and) ... have had a development idea in mind since the mid’90s,” Whitfield said. “But the bottom line is we’ve never really had a place to call home in that community.” The Heidelberg Project is already an anchor in the McDougall-Hunt neighborhood with its longtime arts installation there. But its purchase of the new property and its co-ownership of Spot Lite with Inner State Gallery — a building a couple of blocks away expected to open as an art gallery, bar, cafe and entertainment venue early next year — gives it brickand-mortar investment and a larger ownership stake in the neighborhood, she said. “That allows us to truly activate this space with artists where we’re not (subject) to being kicked out,” Whitfield said. An artists’ village or space where artists have ownership grounds artists in Detroit’s comeback, she said. The plan dubbed “Heidelberg 3.0” has been two years in the making. Artist Tyree Guyton and Whitfield in 2016 announced a plan to dismantle his outdoor art installation to shift to an arts community. Heidelberg’s new footprint at 3442 McDougall St. is a block off of Heidelberg Street and couple of blocks southwest of the famed Heidelberg art installation of found objects and paintings. It includes a 7,000-squarefoot building, adjacent house and six lots purchased for $490,000. Heidelberg completed the deal in June 2017 and has been leasing the space back to House of Providence, a home for foster children who are wards of the state, said Dan Lijana, a spokesman for Heidelberg. The arts education nonprofit plans to move its staff of eight and programs to the new building from the space it’s been leasing in West Village at Parker and East Lafayette streets for the past year and a half since its former headquarters on Watson was sold to Detrel LLC for $1.15 million. The owners of Grey Ghost restaurant subsequently leased the building and have opened Second Best bar there. Heidelberg is operating on a $1.1 million budget this year, marking the first time its operating budget has exceeded $1 million, Whitfield said.

BUSINESS NEWS J Ann Arbor real estate and property management firm Oxford Cos. has

HEIDELBERG PROJECT

The nonprofit Heidelberg Project will move its headquarters back to the Detroit neighborhood where it all began in 1986.

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

10,000

The number of side lots Detroit property owners have purchased so far from the Land Bank Authority, marking a milestone in its blight-fighting initiative.

The number of Detroit Public Schools Community District schools that have elevated lead and/or copper levels, after more results came back last week.

$2.5M

The donation fueling an affordable-homeownership project in Southwest Detroit that nonprofit Southwest Solutions wants to make a model for future, similar endeavors.

expanded its south side portfolio with the acquisition of a 10-story office tower. The $29.5 million purchase that Oxford led on behalf of a group of investors closed Aug. 20, investment manager Andrew Selinger said. He declined to name investors in the 777 E. Eisenhower Parkway building, which Oxford considers one of Ann Arbor’s “highest-profile office properties.” The seller of the property was not disclosed. J Gov. Rick Snyder is looking at the possible activation of National Guard heavy equipment operators as an option to resume more than 160 road projects across the Michigan stalled by a lockout. Snyder spokesman Ari Adler told The Detroit News that the governor “is looking at what options are available to finish projects as quickly as possible.” J Chinese e-commerce giant Alibaba Group Holding Ltd. has shelved its promise to create 1 million jobs in the U.S. due to the ongoing trade war between the U.S. and China, Chinese news site Xinhua reported last week. An Alibaba official had told Crain’s at a June 2017 event at Cobo Center in Detroit that the company was considering locating a distribution center in Detroit.

J The student-run Zell Founders Fund has invested $100,000 in New York-based organic snack brand SMPL, the Zell Lurie Institute for Entrepreneurial Studies at the University of Michigan announced. SMPL also launched its newest line of organic food bites, which it is marketing to what it describes as the modern lifestyle consumer. The brand utilizes a blend of fruits, nuts and other organic ingredients including chia and flax seeds in a single-serve resealable package for on-the-go eating. SMPL was founded in 2016 by Ellis Fried, who graduated from UM in 2017 with a bachelor of arts degree. J The Detroit Police Department plans to take over part of the city’s police towing operations after years of lawsuits and corruption involving towing businesses. The Detroit Board of Police Commissioners passed a resolution 7-2 Thursday allowing the department to provide towing service, The Detroit News reported.

he federal government’s new tax break on capital gains for investments in economically distressed areas appears to exclude one of Michigan’s long-abandoned industrial eyesores. Flint’s sprawling former Buick City factory complex that was shuttered 19 years ago is not eligible for the new Opportunity Zone tax breaks because there’s no people who live within the 400-acre site that is its own census tract, said U.S. Rep. Dan Kildee, D-Flint. Last year’s federal tax reform legislation stipulated that people have to live within an individual census tract in order for investors to qualify for a multi-year deferral and reduction of capital gains taxes. The once-bustling Buick City site — where the last Buick rolled off the assembly line on June 29, 1999 — is “ideally situated as an Opportunity Zone,” Kildee said. “We gotta fix that,” Kildee said. “It’s clearly anomalous that you would have one (distressed census tract) that had no people in it.” Gov. Rick Snyder’s administration designed three census tract neigh-

borhoods surrounding the Buick City site on Flint’s east side as Opportunity Zones eligible for outside investment, according to a tracking map created by the Economic Innovation Group, a Washington, D.C., nonprofit that has promoted the new incentive. Federal tax law allows investors to temporarily defer paying the capital gains taxes if the gains are invested in a so-called Opportunity Fund that’s used for real estate development in a designated Opportunity Zone. If the gains stay in a fund for five to seven years, the investor gets to write off 10 percent of the taxable gain. For investments of more than seven years, the tax law allows for a 15 percent write-off in taxable income from capital gains. Kildee said his office explored whether one of the neighboring census tracts along I-475 could be merged with the Buick City tract. “Apparently it takes an act of Congress to do that,” he told Crain’s. Kildee said he would sponsor a technical change to the tax law to get Buick City’s census tract included in the Opportunity Zones.

NONPROFIT NEWS J Regents at the University of Michigan plan to extend the contract of President Mark Schlissel for five years. The university’s governing board also is giving Schlissel a 3.5 percent raise, it said Thursday. His new base salary is $852,346. J The Detroit Institute of Arts welcomed a record 73,239 students on field trips last school year. The total was up about 6,000 from the previous year, the DIA announced last week. About 85 percent of those students come from Wayne, Oakland and Macomb counties, where free bus transportation is covered by DIA millage funds. The DIA spent about $1.7 million to cover transportation, programming and admissions for student field trips last year. J Four Michigan community mental health centers have been selected as the state’s first Certified Community Behavioral Health Clinics and are getting a boost in funding. U.S. Sen. Debbie Stabenow of Michigan on Thursday announced the designation for Easterseals Michigan in Auburn Hills, Kalamazoo Community Mental Health and Substance Abuse Services, West Michigan Community Mental Health System in Ludington and HealthWest in Muskegon.

OLYMPIA DEVELOPMENT OF MICHIGAN

A European-style promenade with festoon lighting, fresco dining, shops and cobblestone pavement is planned for the block between the Fox Theatre and the new Little Caesars headquarters in downtown Detroit.

M Den to open first store in Detroit next to Fox Theatre

niversity of Michigan President Mark Schlissel’s interest in strengthening the university’s presence in Detroit isn’t the only addition of the block “M” in Detroit in the works. The M Den, the university’s official merchandise retailer, plans to open a store in an under-construction shopping and dining avenue next to the Fox Theatre in downtown Detroit. Ann Arbor-based M Den will bring its first Detroit shop to Columbia Street, an incoming promenade that’s part of the Ilitch family’s District Detroit entertainment district. It’s expected to open next year. M Den has signed on for a 4,000-square-foot space with two storefronts on the ground floor of Little Caesars’ new $150 million home

with pizza-shaped windows, the release said. One storefront will sell M Den merchandise. The other will be called The Victors Collection by The M Den, with more high-end products for alumni. Scott Young and Ashley Ketko of CBRE Inc. represent The District Detroit in retail space leasing. M Den has been interested in opening in Detroit since Scott Hirth, president and co-owner, acquired the business with partners in 2013, the release said. Downtown Detroit will be its seventh brick-and-mortar location. The M Den started in 1976 as a sports shop in the maize-and-blue’s hometown, according to the release, growing into an official retailer for UM in 1992.

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UNLOCKING OUR CITY’S POTENTIAL