Crain's Detroit Business, Dec. 17, 2018 issue by Crain's Detroit Business

Cadillac Tower sells to Zaid Elia Page 5

DECEMBER 17 - 23, 2018 | crainsdetroit.com

LOCAL EXPERTS PREDICT WHAT 2019 HOLDS IN STORE FOR DETROIT IN THE OUTLOOK REPORT. Pages 8-15 POLITICS

HEALTH CARE

Snyder aide Rich Baird comes out from behind the curtain

Beaumont to outsource home health, hospice By Jay Greene jgreene@crain.com

JAKE MAY/MLIVE

Rich Baird, senior adviser to Gov. Rick Snyder, has worked throughout Snyder’s tenure as a de facto deputy governor of the state, whether it was dealing with the Flint water crisis or weekly meetings with Detroit Mayor Mike Duggan.

Snyder’s right-hand man served as emissary, deal-maker, talent scout By Chad Livengood

ich Baird’s skin is a lot thicker these days after eight years as a student of government. The former PricewaterhouseCoopers LLP executive’s faithful service as the right-hand man for outgoing Gov. Rick Snyder has been a

ride through the making of laws, Detroit’s landmark bankruptcy, some well-intended ideas gone awry and the tsunami of turmoil that engulfed his hometown of Flint — and nearly took the Snyder administration with it. Whenever there was a controversy or a fire to put out during Snyder’s

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unconventional tenure as Michigan’s chief executive, Baird was typically on the scene, serving as an emissary, a deal-maker, the talent scout and, in the eyes of some people, a de facto deputy governor of Michigan. For the past six years, Rich Baird’s trail has run from the governor’s office and courtrooms to Detroit Mayor

Mike Duggan’s office and Flint City Hall. And for most of that time, he has spurned attention from journalists who have been curious about his wide-ranging assignments from the governor. Rich Baird has seemingly been everywhere: SEE BAIRD, PAGE 20

INSIDE

RecoveryPark secures funds to grow jobs << Goal is to develop commercial hydroponics operation. Page 3

Beaumont Health plans to sell as much as 90 percent of its seven-county home health and hospice business and has created a joint venture called Beaumont Home Health and Hospice LLC with Ohio-based Alternate Solutions Health Network, Crain’s has learned. Under the terms of the joint venture agreement, the transaction would be completed Jan. 1 when those Beaumont employees making the change would become Alternate Solution employees, according to five sources familiar with the deal who asked not to be identified. Beaumont Home Health employs about 1,000 full-time equivalents and serves about 12,000 patients in Southeast Michigan. The joint venture with Alternate Solutions, however, wouldn’t include Beaumont’s durable medical equipment, home infusion and personal assistant services, three sources said. Officials for Beaumont declined interview requests, but provided a statement to Crain’s. Alternate Solutions executives did not respond to requests for comment. “Beaumont Health is exploring a joint venture opportunity to provide additional home health and hospice services in Southeast Michigan,” said a statement from Beaumont. “Partnering with a specialized provider that has home health and hospice expertise would improve our ability to serve current and future patients. A partnership would also allow us to present new career development opportunities for our home health and hospice team members.” Four of the sources, who are Beaumont employees, told Crain’s that home health and hospice staff were told of the joint venture and company transfer during meetings in late November and this month as Beaumont employees begin to sign job offers and transition to the new company. The sources said Alternate Solutions executives explained that Beaumont was making the change because the eight-hospital system has had “difficulties with reimbursement.” SEE BEAUMONT, PAGE 22

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MICHIGAN BRIEFS

INSIDE

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

Legislature OKs bill to limit tougher regulations

Democratic Gov.-elect Gretchen Whitmer and other future governors would have a tougher time adopting stricter environmental and other state regulations under a Republican-backed bill sent to Gov. Rick Snyder last week, the Associated Press reported. He vetoed similar legislation in 2011, but this measure — unlike that one — includes an exception that would let regulators still impose rules tougher than federal standards if there is a “clear and convincing” need. The bill cleared the GOP-controlled House on a narrow 57-51 vote in the lame-duck session, with Democrats and some Republicans in opposition. Democrats said Michigan should be free to impose more stringent water and air pollution regulations than the federal government. They pointed to the need to strengthen the limit for perfluoroalkyl and polyfluoroalkyl substances, or PFAS — industrial compounds that have been found in high levels in communities across the state.

Statewide partnership pledges $2.6 million to opioid fight A

statewide

collaboration

launched early this year to stem the opioid addiction epidemic in Michigan has expanded and stepped up its support with $2.6 million in new commitments. With the latest round of funding, the Michigan Opioid Partnership will focus on piloting medication-assisted treatment (MAT) through hospitals paired with behavioral therapy provided by community clinics to the highest-need areas of the state, including Southeast Michigan. “There’s huge urgency on this,” said Katie Brisson, vice president, program, at the Community Foundation for Southeast Michigan, a member of the partnership. “When we stepped back to say, ‘Where can this partnership make the most difference right now?’ ... This culture change in emergency rooms (rose to the top) based on proven success in other communities.” With MAT — a holistic treatment approach that has shown success in places like Massachusetts and California — patients start the medication before leaving the emergency room and immediately are connected to a community-based treatment clinic for behavioral therapy. This “warm hand-off” could include them being taken to the places they’ll get therapy “to make sure that relationship is built and that it’s the beginning of the process, not the end,” Brisson said.

BLOOMBERG

A statewide collaboration launched to stem the opioid addiction epidemic in Michigan has expanded and stepped up its support with $2.6 million in new commitments.

Mackinac oil pipeline bill passed by Legislature

The Michigan Legislature approved a bill last week that would allow the replacement of a 65-year-old oil pipeline in a key Great Lakes waterway, voting to create a state au-

thority that would oversee the construction of a tunnel to encase a new segment of pipe, the Associated Press reported. Most Republicans in the GOP-controlled chambers and some Democrats supported advancing the legis-

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lation to Gov. Rick Snyder, who plans to sign it quickly despite criticism that his administration should not tie the hands of Democrats who will take over the governor and attorney general offices. The outgoing Republican governor is working on several fronts to finalize an October agreement with Canadian oil transport giant Enbridge to replace the underwater segment of its Line 5 in the Straits of Mackinac, where Lakes Huron and Michigan converge. The pipeline carries oil and natural gas liquids between Superior, Wis., and Sarnia, Ontario. The measure would create the three-member Mackinac Straits Corridor Authority, which would be required to sign an agreement for the construction, maintenance and operation of the utility tunnel by Dec. 31 after Snyder appoints its members. The massive engineering project is expected to take seven to 10 years to complete, at a cost of $350 million to $500 million — which the company would pay.

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AUTOMOTIVE

REDEVELOPMENT

Gloom sets in How a drive led to $35M for neighborhoods for suppliers even with strong sales By Chad Livengood clivengood@crain.com

By Dustin Walsh dwalsh@crain.com

Automotive suppliers are facing a crisis of confidence heading into 2019. The business is currently performing well but a greasy fog of pessimism is enveloping its leaders as sales begin to slow and the White House’s trade disputes rage on. The Original Equipment Supplier Association’s Automotive Supplier Barometer, a quarterly survey meant to measure the anecdotal outlook for industry, fell to its lowest level in years recently. The barometer, which surveyed 102 companies between Oct. 24 and Nov. 16, dropped to 39, the lowest level since the 2011 9.1-magnitude earthquake and subsequent tsunami struck the northern coast of Japan and cut off the parts supply of dozens of plants. The months following the Lehman Brothers collapse during the Great Recession in 2008-2009 were the only other time the barometer was lower.

Mayor Mike Duggan planted a seed in Chemical Financial Corp. Chairman Gary Torgow’s mind three years ago during a car ride through the northwest Detroit neighborhood where Torgow grew up. While driving by Marygrove College in the Fitzgerald neighborhood, Duggan told Torgow and his business partner, David Provost, the best way they could invest in Detroit’s nascent revitalization

Need to know

JJ7 corporations donate $35 million toward Detroit neighborhood redevelopment

JJChemical Bank’s philanthropy started three years ago in Fitzgerald neighborhood JJDonations are personal for Chemical Bank chairman and Flagstar Bank’s CEO

would be to adopt a neighborhood and focus on stabilizing housing. For Torgow and Provost, who at the time were running Talmer Bank

two years before it merged with Chemical Bank, it was a lightbulb moment. They are, after all, in the residential mortgage business. “We just thought it was the perfect way for us to invest in housing,” Torgow told Crain’s. “Banks can do a lot of charitable and communal work, but housing and neighborhoods are such a key to what we believe in and what we do, that it just seemed like that was a really good place for us to invest.” Talmer Bank made $1 million in

forgivable loans to homeowners in the neighborhood surrounding Marygrove College in an effort to subsidize the cost of renovations for houses in an area that was teetering on the edge of becoming blighted. Three years later, under the banner of Chemical Bank, Torgow helped lead a $35 million fundraising campaign from seven corporations with significant operations in Detroit that will capitalize Duggan’s Strategic Neighborhood Fund. SEE REDEVELOP, PAGE 19

NONPROFITS

RecoveryPark secures short financial reprieve

Need to know JJTrade group’s barometer hits lowest point since Japan earthquake, tsunami JJGloom creeps in though sales are still strong and talent at a premium JJDisruption ahead from electrification, mobility cause trepidation

But you wouldn’t know it from the way the business is going now. Yet the industry is in the midst of a glut of program launches, with dozens of new and refreshed vehicle models launching. And suppliers remain in a hiring frenzy for newer, better skills despite the gloom hanging over the industry. “What we’re seeing coming through is the worry of the unJulie Fream: known,” said Industry worried OESA CEO Julie about unknown. Fream. “It’s the accumulation of all the unknowns that is creating this uneasiness in the marketplace, and that’s creating volatility.” The volatility suppliers are worried about is coming from the White House around trade, according to the survey results. Roughly three-quarters of those surveyed say changes in trade policy are the greatest threat to the industry over the next 12 months. President Donald Trump continues to threaten a 25 percent tariff on imported vehicles, under the guise of a national security threat, in an attempt to force more domestic production. A 25 percent tariff on imported steel and a 10 percent tariff on imported aluminum were implemented in March and continue to plague industry bottom lines. SEE SUPPLIERS, PAGE 17

RECOVERYPARK

After shutting down the high-tunnel growing operations, it is continuing to grow baby leaf lettuce over the winter through its small-scale hydroponics operation.

Operation has funds until April as it seeks to round out $13.7M for hydroponics By Sherri Welch swelch@crain.com

It’s still operating on the brink financially, but RecoveryPark has secured a short reprieve that will give it until April to round out financing for a $13.7 million plan that would bring commercial hydroponics and new jobs to Detroit. RecoveryPark hit a tipping point earlier this year as operating funding began to dry up completely following several years of operating losses. Through a combination of cost-cutting, seasonal layoffs, $500,000 in new private loans, $100,000 in grants from small foundations and personal donations, and increased revenue this year, RecoveryPark has money to operate until April 1, President and CEO Gary Wozniak said.

It laid off five of its 14 employees this fall as it wound down farming in its high tunnels, electing not to heat the giant tents this winter after paying Gary Wozniak: $45,000 last winHopes to bring ter, Wozniak said. employees back. “We needed to cut costs to save money and be better aligned with the vegetables that would be in the marketplace” this winter, he said, noting demand falls during the winter for the root crops grown in the high tunnels. “We hope to bring the employees back in the spring if they haven’t found something new.”

Need to know JJ RecoveryPark has funds to operate until April as it seeks to raise the final third of $13.7 million needed for Detroit commercial hydroponics plan JJHas operated at a loss for several years JJSees promise in small-scale hydroponics operation it now operates to employ people with barriers

RecoveryPark had $635,000 in total income in fiscal 2018, up from $400,000 the year before, Wozniak said. But expenses last year totaled $970,000, with $3.79 million in debt and just $1.64 million in assets. RecoveryPark launched 10 years ago with a goal of creating jobs for people returning from prison and others with barriers to employment.

After shutting down the high-tunnel growing operations, it is continuing to grow baby leaf lettuce over the winter through its small-scale hydroponics operation. Its building and high tunnels are just northeast of Eastern Market, on land farmed in the late 1800s by seed manufacturer D.M. Ferry & Co. Its for-profit hydroponics company, RecoveryPark Farms, is supplying lettuce to about three dozen local restaurants currently through an exclusive distribution agreement with Del Bene Produce Inc. Four of its nine remaining employees are involved in the hydroponics, and the rest in fundraising, bookkeeping, land maintenance and business modeling for the greenhouses. A third of the nine are returning citizens. SEE RECOVERY, PAGE 20

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Parkerâ&#x20AC;&#x2122;s Alley is named after Thomas Parker, who owned a small parcel at 1413 Farmer St.

KIRK PINHO/CRAINâ&#x20AC;&#x2122;S DETROIT BUSINESS

Retail alley behind Shinola Hotel downtown gets a historic name By Kirk Pinho kpinho@crain.com

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The retail alley behind the new Shinola Hotel downtown, set to open to the general public Jan. 2, will pay homage to one of the cityâ&#x20AC;&#x2122;s first black landowners. Parkerâ&#x20AC;&#x2122;s Alley is named after Thomas Parker, who owned a small parcel at 1413 Farmer St., which is encompassed by the alley thatâ&#x20AC;&#x2122;s being activated akin to The Belt at The Z parking deck with shops and restaurants. Parker owned the parcel from 1809 to 1816, according to a story earlier this year in the Detroit Metro Times. Parker paid $1 for the property â&#x20AC;&#x201D; Lot 70 in Section 7 of the Plan of Detroit â&#x20AC;&#x201D; the Shinola Hotel website says. The Metro Times story says he sold it for $1,500 to John R. Williams, who would go on to serve several terms as mayor from 1824 to 1846, according to the Detroit Historical Society. Parker obtained it after the Great Fire of 1805 destroyed the city and an act of Congress allowed parcels in the territory to be distributed as part of the cityâ&#x20AC;&#x2122;s rebuilding. The project is a joint venture between Shinola/Detroit LLC and Dan Gilbertâ&#x20AC;&#x2122;s Bedrock LLC real estate development, ownership, management

Need to know JJRetail alley behind the new Shinola Hotel downtown to pay homage to one of the cityâ&#x20AC;&#x2122;s first black landowners JJSet to open to the general public Jan. 2

and leasing company. The alley name will be painted in it on Monday, said Whitney Eichinger, vice president of communications for Bedrock. â&#x20AC;&#x153;I think it is an incredible gesture that the Shinola Hotel and our developers, the creative side, the team decided to honor the name and the man of Thomas Parker in a very public way,â&#x20AC;? said Elliot Broom, the hotelâ&#x20AC;&#x2122;s general manager. â&#x20AC;&#x153;As a result of this, a lot of people are going to learn a little more about Detroit history than they knew before.â&#x20AC;? The businesses that will have entrances on the alley are MadCap Coffee Co., which is slated to open next month; Lip Bar, a luxury cosmetics company that is opening in January; the florist Posie Atelier, which opens Monday; the Berkley-based juice maker Drought, which is already open; the Brakeman beer hall, which is expected to open in spring; and Evening Bar, a craft cocktail and small

plates bar that opens later this month. Other retail and food and beverage offerings in the hotel are womenâ&#x20AC;&#x2122;s fashion retailer Madewell; fragrance maker Le Labo; Detroit-based clothing retailer Good Neighbor; and Italian restaurant San Morello. The 130-room hotel, which was announced in September 2016 as part of the Detroit Homecoming event produced by Crainâ&#x20AC;&#x2122;s, is at the corner of Woodward and Grand River avenues across the street from the site of the former J.L. Hudsonâ&#x20AC;&#x2122;s department store. Southfield-based Barton Malow Co. is the general contractor on the project while Detroit-based Kraemer Design Group is the architect. New York City-based Gachot Studios and Architecture also worked on the project. Construction began in January 2017. Designed by Baxter, Oâ&#x20AC;&#x2122;Dell & Halpin, the hotelâ&#x20AC;&#x2122;s main building at 1400 Woodward Ave. was built in 1915. Previous occupants included T.B. Rayl Co. Hardware, Robinsons, Meyer Jewelry Co. and Eastern Wig & Hair Co. LLC. Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

KC Crain named publisher of Crainâ&#x20AC;&#x2122;s Detroit, Rudy named associate publisher

WHEREVER YOUR TRAVELS TAKE YOU. Experience travel the way it should be.

Crain Communications has announced key appointments of veteran executives at its city/regional publications in Detroit, Cleveland, Chicago and New York. KC Crain, 39, a member of the third generation of family ownership of Crain Communications, has been named publisher of Crainâ&#x20AC;&#x2122;s Detroit Business. He will continue to serve as president of the parent company. Lisa Rudy, 55, director of sales for Crainâ&#x20AC;&#x2122;s Detroit Business and Crainâ&#x20AC;&#x2122;s Cleveland Business, has been named associate publisher for both titles. Kristin Bull, 45, custom publishing director for Crainâ&#x20AC;&#x2122;s Detroit Business, will assume additional responsibility for content strategy for Crain events in Detroit in 2019. And Frank Sennett, 50, director of custom publishing and digital strategy for Crainâ&#x20AC;&#x2122;s Chicago Business, has been named director of digital products and strategy for all four city titles. Mary Kramer remains group pub-

KC Crain

Lisa Rudy

lisher overseeing the four Crain city titles. â&#x20AC;&#x153;Mary is doing a great job managing our four regions, and these changes will help us improve our communication across the brands. Our role in each city has never been more important, and weâ&#x20AC;&#x2122;ll continue to serve these audiences with great content.â&#x20AC;? Rudy joined Crainâ&#x20AC;&#x2122;s in 2016 with a deep background in media advertising sales in radio, digital and print. She was previously general sales manager at WWJ 950 AM and five

years as publisher of Metro Times, Detroitâ&#x20AC;&#x2122;s alternative weekly. Bull joined Crainâ&#x20AC;&#x2122;s in 2013. Previous experience includes editing roles at the Kansas City Star, writing for Kristin Bull the Detroit Free Press and editing and writing for the online Patch network. She also is vice chair of the Rochester Hills Community Schools board of education. Sennett joined Crainâ&#x20AC;&#x2122;s Chicago Business in 2014 as head of digital strategy and added responsibility for custom media created specifically for its business clients a year later. Before joining Crainâ&#x20AC;&#x2122;s, Sennett was president and editor-in-chief of Time Out Chicago. After its sale in 2013, he was interim COO of RogerEbert.com.

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Cadillac Tower downtown sells; plans not yet finalized

By Kirk Pinho kpinho@crain.com

Cadillac Tower is under new ownership following a Friday sale to Zaid Elia. The 40-story building on Cadillac Square, just a stone's throw from Campus Martius Park, is the latest deal for the Birmingham-based investor who has been making inroads in Detroit's downtown commercial real estate and restaurant scene. While specific plans for the 425,000-square-foot building have not yet been determined, Elia said it is “ideally suited for a mixed-used development consisting of a hotel and apartments.” He declined to reveal the purchase price. Elia said he has had studies done on a potential hotel/apartment component and it could accommodate up to 305 hotel rooms, a restaurant, lounge, banquet space and 160-180 apartments if it is redeveloped with those uses.

Need to know JJ Sale of downtown skyscraper to Zaid Elia closed Friday JJ Plans for 40-story building not yet finalized JJ Could include redevelopment into hotel/apartments

“At this point, I am exploring different options for the property,” he said. “It is an iconic location in the heart of the central business district and the last large block of space that is currently on the market.” He added: “In the last week or so, I have fielded calls from various parties asking to purchase the property or enter into a joint venture on the project. I have also spoken with both local and out-of-state brokers inquiring about leasing big blocks of space to prospective office tenants.” Current tenants include engineering firm Mannik & Smith and the Detroit Public Lighting Authority, plus several other smaller ones, Elia said. The building is just 18 percent occupied. The average office rent is just shy of $17 per square foot, according to CoStar Group Inc., a Washington, D.C.-based real estate information service. Notice was sent to office tenants of the sale to Iconic - Cadillac Tower LLC, an entity registered to Michael Romaya, Elia’s attorney in the Novi office of Grand Rapids-based Varnum LLP. Southfield-based Farbman Group brokered the deal between Elia and Brooklyn-based Capital Invest Alliance, the building's previous owner. Elia also owns or co-owns Parc restaurant at Campus Martius Park, the Ford Building on Griswold Street downtown, the Anchor Bar on Fort Street and the 220 Merrill restaurant in downtown Birmingham. In addition, he is pursuing a deal to purchase the Wayne County-owned building at 511 Woodward Ave. next to the Guardian Building. Cadillac Tower, built in 1927 by John Barlum, has had a turbulent ownership history this century. In 2003, it was purchased by New York City-based Northern Group Inc. for $15.4 million. Then in 2009,

“At this point, I am exploring different options for the property.” Zaid Elia

the company lost control of it under order from a federal judge after a $17.5 million loan on the building went into default, and a financial overseer from Farbman Group was appointed, Crain’s reported.

Cadillac Tower was just one of five buildings Northern Group bought between 2003 and 2007 and let slip into foreclosure. In all, $95 million in unpaid loans were left behind. It sits next to where Dan Gilbert plans the $830 million Monroe Blocks development on a 3.5-acre swath of mostly vacant property east of Campus Martius. A groundbreaking ceremony for the Monroe Blocks project took place Thursday.

The 40-story Cadillac Tower building is on Cadillac Square in Detroit.

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OPINION ANALYSIS

Partisan town is still trying to figure out Rick Snyder

ANSING — Gov. Rick Snyder’s Relentless Positive Action is on a collision course with Relentless Partisan Action in the Republican-controlled Legislature. And the form of RPA that prevails at the end of this wild and contentious lame-duck legislative session could ultimately cement Snyder’s legacy as governor — a tenure bookmarked by sweeping business tax cuts, Detroit’s bankruptcy and nascent rebirth and Flint’s disastrous water crisis. The businessman-turned-governor’s often mystifying relationship with Republican legislators is facing its biggest test yet as GOP legislative leaders try to push through an aggressive set of bills to scale back the executive branch powers of an incoming Democratic governor, attorney general and secretary. Like much of his tenure in office, Snyder is frustrating Republicans, Democrats, lobbyists and reporters alike in his final weeks in office with noncommital answers to questions about what will be his last hurrah. “I don’t think about legacy,” Snyder said last Tuesday at a roundtable with reporters. That’s not what some others in Lansing are saying. “If he signs some of these bills, I think it would certainly damage his legacy,” said state Sen. Curtis Hertel Jr., an East Lansing Democrat. “He’s never been overly partisan. But I don’t worry about the governor’s head or his heart. I worry about his backbone, and I hope he’ll stand up and do what he

CHAD LIVENGOOD clivengood@crain.com

thinks is right.” Snyder, for his part, is steadfastly refusing to show his hand on whether he’ll sign the controversial legislation that’s attracting national media attention because it reinforces the partisan political discord that the civility-promoting governor has shunned. The outgoing Republican governor said his signature can’t be day-traded on controversial bills that would give the Legislature attorney general-like powers to intervene in state lawsuits or yanking campaign finance oversight from Secretary of State-elect Jocelyn Benson. “I’m not a horse-trader,” Snyder said Tuesday. “I’ve never been known for that.” Snyder entered his fourth and final lame-duck session as governor hoping to get legislators to approve two tax increases to fund environmental cleanup and underground infrastructure projects: an 11-fold fee hike on trash haulers for the tipping fees they pay at landfills — from 36 cents a ton to $3.99 — and a statewide municipal water fee of an average of $20 per year for house-

We will miss him when he is gone I

remember what seems like a century ago, when this guy shows up on our editorial front steps and tells us that he is running for governor. We spent a couKEITH ple of hours listenCRAIN ing to him, and alEditor-inthough he made a chief great deal of sense, we sort of concluded that he would never get the nomination, much less become the next governor of Michigan. We watched with much interest, and although we were pulling for him and endorsed him, we still thought him a long shot. Well, we watched this inexperienced politician win, and win re-election. And the state of Michigan has been better for having Rick Snyder in the governor’s office. Sadly, too many people will remember only the problem in Flint that will color his eight years in office. But we should also remember all he has accomplished. Ironically, Snyder will be leaving of-

fice with the same sort of controversy as always. Whatever he decides, it will not make everyone happy, but he will act as he has always acted during the last eight years, according to his conscience. We, the citizens of Michigan, have been well served by that focus. Republicans are trying to pull a fast one and leave our executive branch somewhat weaker than before. We’ll see how our governor reacts in his last few days in office. Thankfully, he has never shied away from controversy. Our newly elected governor will be facing an opposition party in the Michigan Legislature, which may be good or bad, depending on your point of view. Only time will tell. It will be a dramatic change regardless of your political preferences. We are very appreciative of the time and effort that our governor has devoted these last eight years. His attitude and philosophy have served this state and its citizens well. So too, we wish our newly elected governor well. All citizens should hope for continued prosperity for our state. And whatever the governor chooses to do next, we wish him well. We shall miss him.

holds and $400 annually for businesses. At the end of the third week of lame duck, Snyder’s trash fee increased appeared to be dead after not getting passed out of at least one chamber. The House passed a bill that stripped out the fee structure the governor wanted — a legislative tactic that keeps it alive for potential negotiations ahead of the Legislature's planed Dec. 20 adjournment. “It’s a challenge to get those done,” Snyder conceded. “Anytime you’re asking for fees, it’s a challenging environment. I don’t think it’s assured that they’re going to get through.” But Snyder and Republican legislators have been at a crossroads before. In the 2012 lame-duck session, after Snyder uttered the now-infamous words that right-to-work was “not on my agenda,” he went along with a rushed passage of that law making union membership optional in the state where the modern labor movement was born. In 2014, after winning re-election, Republicans denied Snyder his longsought tax increase to fix roads and infrastructure. He settled for a sales tax ballot proposal — that later went down in flames — and eventually got a much smaller tax increase the following fall. “Snyder and the Legislature are about as strange bedfellows as you can get — and yet it works,” said Republican strategist Greg McNeilly, chairman of the Michigan Freedom Fund, a conservative political organization. “That’s something on a mechanical side all

parties ought to applaud because we don’t see it happening elsewhere, particularly in Washington. And I think we should celebrate when government works.” While the governor and Legislature from the same political party have “two different world views,” they are still trying to find solutions to their differences, McNeilly said. “People may not like the solutions, but that’s a different argument altogether,” McNeilly said. While Democrats think Snyder has robo-signed every Republican bill that’s come his way, the ink has not dried up in his veto pen. Snyder has vetoed bills allowing concealed guns in schools, easing regulations on e-cigarettes and the release of ballast water by Great Lakes ships. On Tuesday, the Legislature sent Snyder a trial balloon he has popped before: Legislation prohibiting state agencies under incoming Gov. Gretchen Whitmer from adopting any regulations that are stricter than federal rules without a “clear and convincing” argument on the merits of stricter regulations. Snyder previously vetoed similar legislation back in 2011. “I take each piece of legislation seriously,” Snyder told reporters. “I will look at it and if I believe it’s in the best public policy interest of our state, I’ll look to sign it. And if it’s not, I won’t sign it.” Democrats in the Legislature angered by the GOP majority’s actions in the first two weeks of the lame-duck session — such as gutting voter-initiat-

ed minimum wage and paid sick time laws, bills that Snyder signed Friday — appear unwilling to help Snyder with his priorities, meaning he’ll have to get Republican votes. It remains to be seen whether Snyder would strike a deal with Republicans for the revenue he needs for environmental cleanup projects and expanding recycling programs in exchange for the GOP’s bills curtailing the next administration’s powers and stripping local governments of control over everything from puppy sales and tree cutting on private property to restaurant grading systems. Unprompted at last Tuesday’s meeting with reporters, Snyder harkened back to his self-imposed prohibition on horse-trading. “Don’t view this as something like someone’s going to show up and ... go do a bunch of other things that I don’t like so I can get something that I like,” Snyder said. “That’s not how I operate.” A longtime aide to Snyder in both business and the governor’s office said in a recent interview that his governing style upended the status quo in the capital city. “When we first came up here, everybody said, ‘Rick Snyder’s going to have to learn Lansing,’” said Allison Scott, executive director to the governor. “And I said, ‘I think Lansing’s going to have to learn Rick Snyder.’” In many ways, Lansing is still trying to figure him out. 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 // D E C E M B E R 1 7 , 2 0 1 8

TALK ON THE WEB

LETTERS

Re: Keith Crain: The Memories of Olga Schools need better fighting has already The article on Olga Loizon was ter- funding system rific. In the mid-’60s, prior to the begun founding of Olga’s Kitchen, I used to As President and CEO of the Small “What they are doing smacks of cheap politics, and if the shoe was on the other foot, I have no doubt that they would be yelling bloody murder.” Yes, the Republicans would be yelling bloody murder, and the Democrats wouldn’t care, and they would do whatever was beneficial to Democrats. Plus they would have a leftist press running cover for them. It’s about time that Republicans fight like Democrats. Michael The Democrats didn’t change all the rules to disembowel the Republicans when the Dems controlled the Legislature and governor’s office. And it was the Republicans who changed the rules to keep Oakland County Republican following the 2010 census when Dems were in charge of the redistricting mechanism. The GOP legislature changed the rules so that Oakland County Republicans still could control it, even though they didn’t think it an unfair system when they were in control. Finally, it was the GOP-controlled Senate in the 1990s that began the practice of not confirming the sitting Democratic president’s judicial nominees. The Dem-controlled senate during the Reagan and Bush administrations worked hard to confirm with a few exceptions. However, it is the sore-loser/sore-winner Republicans that began the practice of not doing so, whining that the Dems had better play fair when the roles were reversed during the second Bush administration, and then not even taking up a Supreme Court nomination for a year in the hopes (realized) that a Republican (ultimately Trump) would be elected. So, be men and admit that the GOP is a bunch of sore losers and sore winners. It is the GOP that is breaking the 230-year tradition of peaceful succession between opposing parties. Nathaniel That is what politics is all about. Team A blocks/supports stuff that Team B want/promised. This is new? William

Re: Whitmer stresses roads, Asian carp threat in meeting with Trump

stop at a Birmingham Deli for breakfast on my way to work every day. Olga and her husband were frequently also there and I recall chatting with them many times about her culinary skills. She was and is a terrific and determined woman with a wonderful attitude toward life and living. If anyone deserved her kind of success she most certainly did. Truly an iconic woman to be admired. Stephen M. Bean, President Universal Coin Laundry Machinery LLC, Royal Oak

Business Association of Michigan, I see every day how a high-quality K-12 education is essential to providing students with the skills needed to compete for jobs in our state and for Michigan’s small businesses to compete in a global economy. Tom Watkins’ recent op-ed rightly points out that Michigan’s students continue to fall behind their peers around the globe, and that K-12 education must be the top priority of the incoming Whitmer administration and Legislature. The new administration’s first objec-

tive must be creating a new, fairer school funding system that meets the unique, individual learning needs of all students and provides the support services necessary to prepare them for college and jobs. There is no one-sizefits-all approach to educating our kids, and a new school funding system is needed that serves all students, regardless of zip code, income, learning challenges or other circumstances. That’s why I’m proud to serve on the School Finance Research Collaborative, a diverse, bipartisan group of business leaders and education experts from across Michigan who agree it’s time to change the way Michigan’s schools are funded. The School Finance Research Collaborative has completed Michigan’s first compre-

hensive school adequacy study, providing a roadmap to fixing Michigan’s broken school funding system and making it fair for all students. Right now, Michigan’s school funding system fails to meet the needs of far too many students, and now is the time for action to give all Michigan students the opportunities for college and careers they deserve. Rob Fowler, President and CEO Small Business Association of Michigan School Finance Research Collaborative member Send your letters: Letters to the editor may be submitted to Crain’s Detroit Business by emailing malee@crain.com

Protect and Grow Your Assets: Business and Personal Learn how we can help protect and maximize your value by contacting Reuben Rashty, Managing Director, Fifth Third Private Bank for Michigan,at 313-230-9026.

Your Fifth Third team will guide you through a tailored business and personal planning process, and introduce additional resources as needed to fit your unique goals and circumstances. • Wealth planning*

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For sure we need the roads fixed! ADA3 She’s got it; Fix the damn roads. JOHN

Interactive weather-triggered billboards part of $2.3 million Pure Michigan winter campaign Love it. Winter is one of the four seasons Michigan does so well — that’s if you truly like winter and not a summer version of winter. E M Parmelee

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*Fifth Third does not provide tax, legal, or accounting advice. Please contact your tax advisor, accountant, or attorney for advice pertinent to your personal situation. Fifth Third Private Bank is a division of Fifth Third Bank offering banking, investment, and insurance products and services. Fifth Third Bancorp provides access to investments and investment services through various subsidiaries, including Fifth Third Securities. Fifth Third Securities is the trade name used by Fifth Third Securities, Inc., member FINRA/SIPC, a registered broker-dealer and registered investment advisor. Registration does not imply a certain level of skill or training. Investments, Investment Services, and Insurance: Are Not FDIC Insured | Offer No Bank Guarantee | May Lose Value | Are Not Insured By Any Federal Government Agency | Are Not A Deposit Insurance products made available through Fifth Third Insurance Agency, Inc. Deposit and Credit products offered by Fifth Third Bank, Member FDIC. CS4675

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FOCUS

SPECIAL REPORT: OUTLOOK 2019

hat’s in the forecast for Michigan business in 2019? ¶ We asked some of the most interesting, influential and well-connected people we could think of to talk about the outlook for the year ahead. Whether there will be an economic slowdown — or worse — and where they see resilience in the economy.

Detroit’s ongoing comeback, and what could hinder it. What our streets will look like as more electric and autonomous vehicles begin to use them. (And maybe there will be more scooters?) Who will be counted in the 2020 Census, and why it matters. It may not be blue skies ahead, but the report is at least partly sunny.

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RYAN LaFONTAINE, CEO, LaFONTAINE AUTOMOTIVE GROUP

Battening down the hatches for a possible downturn By Dustin Walsh dwalsh@crain.com

Automotive dealers — those that survived the Great Recession — have enjoyed a succession of record automotive sales in the U.S. in recent years. But the industry is cyclical. Car sales are often the first victims of a fickle global economy, and the peak years are giving way to slowing sales and the looming threat of recession after nearly a decade of economic expansion. Ryan LaFontaine, CEO of Highland-based LaFontaine Automotive Group, knows a storm is coming,

sometime, and he’s working to ensure his 20-dealer company is protected from wreckage. LaFontaine said the company has spent the last 18 months investing in its parts, service and body shops as well as shoring up back office operations, such as reducing vendors and renegotiating lease rates. “We have a diverse lineup of brands and that’s helpful, but we really need to make sure our business model is secure. We can’t outrun interest rates or bad sales years. Us being smart in our backyard, really looking at the aspects we can control is preparing us. A downturn is an op-

“We have a diverse lineup of brands and that’s helpful, but we really need to make sure our business model is secure.”

ORIGINAL IMAGE LAFONTAINE AUTOMOTIVE GROUP

portunity to grow if we prepare properly. We have 20 dealerships and, historically, each one had its own set of vendors with contracts being negotiated individually. We’re working to change that. Wherever we’re buying in bulk — cleaning suppliers, paper, etc. — everything that has a controllable expense is being looked at. We’re creating a more centralized approach. We’ve identified our top 50 vendors and looked for preferred vendors where we could negotiate a contract for all 20 of our dealerships. While others may be behind the curve, this allows us next year or the year after or the year after to focus on any blocking and tackling to sustain our business model.”

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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 // D E C E M B E R 1 7 , 2 0 1 8

SPECIAL REPORT: OUTLOOK 2019 SHERIF MARAKBY, CEO, FORD AUTONOMOUS VEHICLES LLC

From Corktown, Ford readies for autonomous vehicles By Chad Livengood clivengood@crain.com

“We are planning to accommodate vehicles that can have goods or they can have people.”

On the streets of Miami this fall, Ford Motor Co.’s teams developing autonomous vehicles learned a few lessons about how users interact with self-driving vehicles for passenger service and delivery of goods. Not everyone, for example, is comfortable leaving a high-rise apartment building and walking down to the curb to pick up a pizza being delivered by a vehicle with no driver, said Sherif Marakby, CEO of Ford Autonomous Vehicles LLC. “We learned a lot from that from people who are experiencing the service,” Marakby said. “We also learned a lot ourselves about what to deliver, how to deliver it, when to deliver, what are the challenges — and that’s all different than anything we’ve done before.” In other words, Ford isn’t designing and building vehicles that customers just jump into to run errands. They’re designing vehicles that run the errands for customers — and

that’s exposing a whole new set of challenges that Ford employees are navigating inside a 111-year-old onetime hosiery factory in Detroit’s oldest neighborhood. Marakby’s team took lessons learned in Miami back to their new office space in Corktown known as The Factory, where they’re in a race with other automakers to get autonomous vehicle passenger and delivery service ready for mass service in U.S. cities by 2021. Ford’s teams developing the strategy and user experience for autonomous and electric vehicles made a big move in 2018 from traditional corporate office space in Dearborn to The Factory, the automaker’s first building in Corktown in what will become a 1.2 million-square-foot campus anchored by the Michigan Central Station by 2022. At The Factory, Ford’s computer engineers and strategists are building high-definition mapping for the artificial intelligence platform Argo AI LLC that will propel the still-unan-

nounced vehicle the automaker plans to deploy at scale in three years for both ride-hailing and delivering goods. The automaker has completed more than 1,000 test deliveries for Postmates and Walmart for autonomous grocery delivery as well as Ann Arbor-based Domino’s Pizza for pizza delivery. The early testing is helping Ford’s AV team flesh out what combinations of passengers and freight may not be compatible, such as humans and hot pizza, Marakby said. “We’re working to figure that out. We clearly want the best service for the autonomous service. Hopefully that will not happen, where we have (a passenger) with a pizza in the back. But we are planning to accommodate vehicles that can have goods or they can have people. Obviously we have to be careful what we have in those vehicles so that we can get the best service for people that are in that car. ... And we’re figuring out what goods we’re going to deliver and what goods we’re not going to deliver.”

ORIGINAL IMAGE BY LARRY PEPLIN FOR CRAIN’S

NIKOLAI VITTI, SUPERINTENDENT, DETROIT PUBLIC SCHOOLS COMMUNITY DISTRICT

Detroit could seek private investment for school buildings By Chad Livengood clivengood@crain.com

Detroit’s schools chief is quietly pitching a concept to business leaders to consider renovating or constructing a new school building in the city. The Detroit Public Schools Community District’s limited ability to issue bonds to finance new construction or the renovation of aging school buildings has Superintendent Nikolai Vitti kicking around the idea of private businesses owning and shouldering the capital expenses of a school building — either as philanthropy or an investment in a neighborhood. The Legislature’s 2016 bailout of Detroit’s public school system’s operating debts restricted its ability to ask voters to issue new bond debt to fix buildings. That’s left the financially stabilized school district without the ability to address some $530 million in capital needs that range from new roofs and boilers to windows, flooring, bathrooms and parking lots at nearly 100 school properties across Detroit. Moody’s Investors Service said in November the school district’s lack of access to bond markets could require a second state bailout of the 50,000-student school district. In the absence of direct state assistance or a change in state law to allow the Detroit school district to get state-backed bonds, Vitti is floating the idea of creating a private ownership model for the district that mirrors how some charter school buildings are owned and maintained. Vitti won’t say if he has any commitments from Detroit business executives, leaders of philanthropic foundations or real estate developers to adopt a Detroit school in 2019. “No one that I’m going to name,” Vitti said. “I’ve had conversations. I think everyone conceptually gets it. I think we need to move into what

“We’re not going to see neighborhoods being completely restored or revitalized if we’re not, at the local level, supporting the improvement of buildings.”

ORIGINAL IMAGE BY ANNALISE FRANK

school would we do this in and what neighborhood.” The second-year school superintendent says he has briefed the Detroit Board of Education about the still-conceptual idea of seeking pri-

vate investment of schools. “We’ve had, I’ll call it, high-level conversations, even out-of-the-box ideas of allowing private industry to own a building and it be only a traditional public school. Or invest in the rehab of a

building. ... We’re not going to see neighborhoods being completely restored or revitalized if we’re not, at the local level, supporting the improvement of buildings, as far as schools are concerned. Ultimately, new Detroit resi-

dents are not going to send their children to Detroit schools and not deeply invest even in the neighborhood if they’re not investing in their schools — and that’s not going to happen unless we have newer buildings.”

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SPECIAL REPORT: OUTLOOK 2019 DENNIS BERNARD, FOUNDER, BERNARD FINANCIAL GROUP

What could delay Opportunity Zone investments? By Kirk Pinho kpinho@crain.com

While Opportunity Zone investments are triggering investor interest, it’ll take some time for the true scope of their effects to start playing out in Detroit and other areas. That’s according to Dennis Bernard, the founder of Bernard Financial Group, a Southfield-based commercial real estate finance firm. The investment tool created under the federal tax reform legislation passed by Congress last year allows capital gains to be diverted into so-called Opportunity Funds, which are allowed to invest in low-income Census tracts — known as Opportunity Zones — that have been strangled of investment in recent years and decades. The funds can invest in things like real estate and businesses. The upside for Opportunity Fund investors is a deferred and reduced capital gains tax. The win for the urban areas is the added capital flowing through private enterprise within their borders. However, timing — Bernard says he and brokers he has spoken with have noticed a slowdown in the market since August, but is quick to say that it is not slow — and location could delay their execution.

“Real estate needs density.”

ORIGINAL IMAGE CONTRIBUTED

Many of the zones in Detroit designated by Gov. Rick Snyder and approved by the U.S. Treasury Department are in the greater downtown, including the central business district. However, they are also in areas like Pontiac, Highland Park, Mount Clemens, Sterling Heights, Ferndale, Oak Park, Dearborn Heights and elsewhere in the tri-county area. “Real estate needs density. It’s a fundamental concern of commercial real estate, whether it’s having enough rooftops for (creating) more rooftops, for more retail, whether it’s an intersection of highways for office or industrial. Some of these zones are in locations that don’t necessarily have that right now, and how much speculative building does a developer and his investment partners want to do in those locations and this stage of the cycle?” For example: Ford Motor Co.’s $740 million investment into a Corktown campus anchored by Michigan Central Station makes the neighborhood “a helluva lot more interesting” as a target of Opportunity Fund investment “once Ford is actually in the ground,” Bernard said. “Opportunity Zones are good, but I would not expect a panacea.”

MARK DE LA VERGNE, CHIEF MOBILITY OFFICER, CITY OF DETROIT

DIANA HUSSEIN, COMMUNICATIONS SPECIALIST, UNITE HERE

By Dustin Walsh

By Bill Shea

The ‘microtransit’ options New kind of labor movement you’ll see on city streets soon gains steam in 2019 dwalsh@crain.com

Mobility and the city of Detroit dominated headlines in 2018. From Ford Motor Co.’s $740 million play to turn Corktown’s Michigan Central Station into a mobility epicenter to the unleashing of more than 1,000 electric scooters on city streets to the systemwide rebranding of the Detroit Department of Transportation into ConnectTen, Detroit is a hotbed for the next transportation economy. Mark De la Vergne, chief mobility officer for the city, is at the center of all of it. Mayor Mike Duggan hired De la Vergne two years ago to help Detroit transition from the Motor City to a

“There’s no one silver bullet.”

functioning multi-modal city, complete with better operating buses, bike lanes and the next generation of mobility options. While the big projects and flashy headlines dominated the conscience of Detroiters last year, De la Vergne said 2019 will be defined by executing the fundamentals. The city will begin implementation of mobile ticketing for DDOT and Smart bus service, expanding its car share pilot with General Motors’ Maven and battling congestion with traffic signal technology. “There’s no one silver bullet. Part of our strategic plan is bringing all the city’s departments to work together with one goal: To improve what we have and make it safer and easier for people to get around the city. One of the things we’re really starting to focus on is looking at how the curb is used. There’s more and more demand for that space; i.e. people looking to park, valet, drop offs, deliveries, whatever. That greater demand creates more traffic congestion. We already put out a (request for proposals) for a ‘microtransit’ option. How can we use a shuttle-type service to clear up that space? There are a lot of first-mile/last-mile issues that impact employers with that congestion. The idea of using a smaller shuttle vehicle (serves) a smaller demand, but removes more vehicles from the curb area as well. We’re looking to work with a provider to provide a traditional shuttle service at first, then layer an autonomous shuttle program eventually.” ORIGINAL IMAGE BY KWABENA SHABU CCSD/CITY OF DETROIT

bshea@crain.com

Diana Hussein feels optimistic about the labor movement in 2019 after victories at the polls and on the picket lines this year. The Dearborn resident is the communications specialist for the Unite Here union that represents 265,000 hotel, food service, laundry and casino gaming workers, and she’s been bouncing around the country to help with the messaging for strikes in Detroit, Atlantic City and elsewhere. Recently, Detroit’s Unite Here Local 24 staged a month-long strike at the Westin Book Cadillac that led to wage increases. “There’s a lot of momentum right now for the labor movement led by, obviously, working people of the labor movement. It’s been something that’s been growing in general because there’s been an insane rise in income inequality. Workers are finally realizing that ‘Hey, we actually have power we can leverage and take on this income inequality in ways that we haven’t been able to rely on with the bosses and politicians.’ “When you look specifically in Detroit, using the strike at the Westin Book Cadillac as an example, just under 200 workers walked out on strike. They were part of a broader national Marriott strike, nearly 8,000 workers in total. This is a local in Detroit that had not been on strike in over 30 years. It has a newer president who’s been president for two years, Nia Winston, who came up through the rank and file. To organize and lead this strike to victory is really remarkable. These are workers who really didn’t know what action meant to be on strike. It’s a very big risk, but right now we’re in a place where there’s no other choice. Workers have to take their lives into their own hands and fight for what’s right and fair until you win. “It’s definitely reflective of a broader regional and even national kind of movement that’s happening with working people fighting back. It’s more significant than 10 years ago in the labor movement, or 20 years ago. There’s more of an understanding of the power that people have in their own hands. It’s exciting because of Detroit’s histoORIGINAL IMAGE CONTRIBUTED

ry with the labor movement. “It’s an opportunity for a kind of a new labor movement. There’s still amazing work from the UAW and the trade unions, but it’s really cool to see the low-wage workers of hospitality and the custodians taking the lead, too. It definitely leaves room for workers of all different classes to all take the lead themselves. “Looking into 2019, there’s more union members running and winning elected office. It’s time that we have more people in office that understand the experiences of the people they’re supposed to represent because they’ve experienced it, too.”

“It’s an opportunity for a kind of a new labor movement.”

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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 // D E C E M B E R 1 7 , 2 0 1 8

SPECIAL REPORT: OUTLOOK 2019 DEVITA DAVISON, EXECUTIVE DIRECTOR, FOODLAB DETROIT

Food entrepreneurs will drive neighborhood change By Sherri Welch swelch@crain.com

Partnerships between food entrepreneurs and community development corporations on new projects in Detroit neighborhoods are expected to pick up in the coming year. And that could make for more equitable neighborhoods down the road, said Devita Davison, executive director of FoodLab Detroit. Successful food businesses can change a neighborhood, attracting interest from new residents, tourists and eventually, investors. Giving food entrepreneurs an ownership stake at the onset of the development process could be a bulwark against displacement, Davison said. She points to a development at Mack and Van Dyke avenues on Detroit’s east side as one example of these kinds of partnerships. Led by local CDC MACC Development, the project opened last spring with a coffee shop, laundromat and community space called The Commons — a place former Microsoft Corp. CEO Steve Ballmer and his wife Connie visited while in Detroit in November. On the city’s west side, Grandmont Rosedale Development Corp. transferred a building it once owned into a land trust and entered a contract with Detroit Vegan Soul to purchase it within 10-15 years, Davison said. FoodLab Detroit is also working with Grandmont Rosedale Development to look at the feasibility of building a neighborhood food hall, she said, with FoodLab serving as the master leasing agent. The two are looking for five small food businesses to occupy the hall and take an ownership stake in the building as a cooperative in the coming years. “This is a trend that is happening all around the country, where food retail is being used as a development mechanism ... (to) transform communities. People will travel to go to the

“We’re asking ourselves (in Detroit) how that can be prevented. How can we create neighborhoods but not gentrify those neighborhoods?” ORIGINAL IMAGE BY FOODLAB DETROIT

latest, greatest restaurant. People will even buy homes in communities that have clusters of restaurants and grocery stores. But in other areas in ... New York and California that are already gentrified, food was a tool used to attract (early) development. We’re asking ourselves

(in Detroit) how that can be prevented. How can we create neighborhoods but not gentrify those neighborhoods? Food entrepreneurs will play an increasing role in helping deploy anti-gentrification strategies in Detroit neighborhoods by working with (nonprofit) devel-

opers and originating equity agreements. Detroit’s philanthropic community is really thinking about ways we can deploy anti-gentrification strategies ... (and) funding organizations that are spearheading these conversations.”

McKEEL HAGERTY, CEO, HAGERTY INSURANCE AGENCY

A recession won’t ding the classic car market By Tom Henderson thenderson@crain.com

During the recession of 1979-80, as his customers were laid off and his revenue plummeted, Frank Hagerty decided that he needed to differentiate his auto-insurance company. Today, The Hagerty Insurance Agency in Traverse City is the world’s largest provider of specialty insurance for collectors of vintage automobiles, with about 1.5 million customers and employing 1,200, about 800 of them in Traverse City, and the rest in offices in Ann Arbor, Golden, Colo., Toronto, London and Duesseldorf, Germany. But it does far more than just offer insurance. Among its offerings is the Hagerty Drivers Club, a community for automotive enthusiasts; the Hagerty Valuation Tool, which provides current values for classic vehicles and offers market-trend insights; a magazine for car enthusiasts called the Hagerty; the Barn Find Hunter, a show on YouTube with more than 500,000 subscribers; Hagerty Plus, a roadside service; and DriveShare, a peer-to-peer classic vehicle rental marketplace. Frank’s son, McKeel, is now the company’s CEO. A car-buff to the core, at the age of 13, he used his lawn-cutting money to buy a rusted-out 1967 Porsche 911S coupe that was sitting in a snowbank for $500. He and his father spent two years restoring it in their garage. Gleaming red, it is now worth about $500,000, and McKeel still drives it. Though he spoke with Crain's recently on a day the Dow dropped 800 points, he was bullish for what 2019 holds for his main business, and for his other business, Grand Rapids-based venture-capital firm Grand Ventures, which he co-founded. Even

“Our customers hold on to their cars because they have an emotional attachment to them.”

ORIGINAL IMAGE BY HAGGERTY INSURANCE AGENCY

in the event of a recession, the tax cut for businesses and for high-net-worth individuals earlier this year should have a positive effect on funding for early stage tech companies, despite an economic downturn, Hagerty said. “We’ve been through a couple of recessions. The economic crisis of 2008 was almost an existential crisis. What we discovered was our car market is amazingly resilient. Our customers hold on to their cars because they have an emotional attachment to them. If we do head into a

recession, I don’t see it having much of an effect, at all. We do insure multi-million-dollar cars, but our average car is worth $30,000. Millennials, our future customers, will be buying affordable collectible cars. Old Mustangs, vintage Toyotas, Ford Broncos.” In the venture capital space, “I see a lot of ongoing strengths, not just in Michigan but in the Midwest. The whole notion that the Midwest is overlooked by West Coast funds is starting to change. Funds are starting to see real opportu-

nities in the Midwest. And you’re starting to see the idea of larger corporations looking to early stage companies as part of their R&D, which makes it a very interesting environment. And as wealthy people harvest tax savings, they may want to put part of that to work in early stage companies. I encourage people to go to their local tech accelerators, to visit their local demo days. See what’s happening. I’d like to encourage them to think of venture capital as not just an investment but as a habit.”

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SPECIAL REPORT: OUTLOOK 2019 MARIANNE UDOW-PHILLIPS, EXECUTIVE DIRECTOR, CENTER FOR HEALTHCARE RESEARCH & TRANSFORMATION

State should focus more urgently on public health By Jay Greene jgreene@crain.com

If a patient has an ailment and is lucky enough to have a doctor or nurse to see for a diagnosis, the medical appointment is useless if the patient lacks transportation to the clinic. The same is true if the patient makes it to see the medical professional and gets a diagnosis, but is too depressed or anxious to follow the instructions because the appointment did not accompany a behavioral health evaluation and treatment. Like a three-legged stool with one weak leg, health care delivery is only as good as the sum of its parts. Because

the delivery system is so fragmented, patients without transportation, housing, or medical or behavioral providers stand little chance of improving in the long run. Spending money upstream on helping patients seek care or maintain health can lower costs downstream, experts say. Otherwise, costs increase and outcomes fall. For Marianne Udow-Phillips, executive director of the Center for Healthcare Research and Transformation in Ann Arbor, the overarching theme for 2019 will be a focus on the social determinants of health and on integrating medical, dental, behavioral, social

services, housing and transportation. The Michigan Department of Health and Human Services is developing a sustainability plan to continue a threeyear, $70 million pilot program past its 2019 expiration date. Funded by the Affordable Care Act, the Blueprint for Health Innovation is being tested in five Michigan regions: Washtenaw and Livingston counties, Genesee County, Jackson County, Muskegon County and 20 counties in northern lower Michigan. The goal of the state program is to coordinate care for all patients and link medical practices, hospitals, payers, housing agencies and social service organizations.

Other developments in Michigan in 2019 will include three regional pilot programs that are expected to test integration of Medicaid physical and behavioral health, expansion of opioid treatment and use reduction programs and a renewed focus on public health, Udow-Phillips said. “I am very excited about (the potential for Michigan to) tie medical care systems, primary care with patient-centered medical homes, human services, behavioral health, food nutrition problems, housing and transportation so we can intervene earlier for really complex patients.

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JUSTIN WOLFERS, PROFESSOR OF ECONOMICS AND PUBLIC POLICY, UNIVERSITY OF MICHIGAN

ORIGI

‘Problems in the undercurrent’ of the U.S. economy By Dustin Walsh dwalsh@crain.com

Economics is called the dismal science. Its disciples study, explain and predict the consequences — often painful — of policy, business and society writ large. But the U.S. has been the recipient of a near-10-year economic expansion, defying many economists’ forecasts.

Of course, that doesn’t mean they are any less worried. Justin Wolfers, economist and professor of public policy at University of Michigan, is optimistic about the U.S. economy, but pessimistic about whether it’s helping those most in need. “We’re always scared. There’s always the question of how far can the economic expansion go without run-

ning into a bottleneck. If you look at any economic indicator, it’s been one big straight line improving at a gradual pace for eight years. The best prediction is what’s been happening recently, is what’s going to happen tomorrow. The fundamentals look good, but that’s why we didn’t need to add fuel to the fire. The short-run effects of the (corporate) tax cut is a form of stimulus. This is entirely the

wrong time for a stimulus. The tax cuts are useful to grow the size of the pie, but there’s no sign of an investment boom. It’s a bit of a shame, but it’s been bad for income distribution. The underlying trend is the size of the pie is growing. But you have to make sure the share of the pie is going not just to the wealthy. But that’s a political problem. One side is for a bigger share for labor and one is a bigger

“This is entirely the wrong time for a stimulus.”

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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 // D E C E M B E R 1 7 , 2 0 1 8

SPECIAL REPORT: OUTLOOK 2019 “Flint was a wake-up call on multiple levels that we need to invest more.” “As we think about what happened on Flint and with PFAS (polyfluoroalkyl substances)” still looming in Michigan drinking water, “there should be a renewed and expanded focus on public health. Public health needs to be integrated (with the larger health care delivery system). “We are not investing as a country. Flint was a wake-up call on multiple levels that we need to invest more.” ORIGINAL IMAGES CONTRIBUTED

share for capital. There’s no great value in eliminating globalization. But it is true globalization has a greater impact on American low-skilled labor. There are really rich people that are now enjoying more. There’s a big pot of money to give away and that doesn’t solve the low-wage growth for the working class. So while things look good, there are problems in the undercurrent.”

ROULA DAVID, COO, 1XRUN

2019 could be turning point for creative communities By Annalise Frank afrank@crain.com

Roula David sees her Eastern Market art festival’s trajectory as a microcosm of Detroit’s. Next year Murals in the Market, and Detroit, move further down their paths of reckoning with development. Real estate investment in the Eastern Market neighborhood has accelerated more quickly than expected, and it may affect the scale of 4-yearold street party Murals in the Market next year, executive director David said. The COO of Detroit-based art printing company and Murals in the Market producer 1xRun helps coordinate projects at the intersection of art, government and business, including murals for Wayne State University’s Mike Ilitch School of Business and the Detroit government’s public art program City Walls. “It’s one thing to say, ‘I’m going to go paint a mural on a (building of a) meat packer that’s been packing meat there for 50 years,’” David said. “It’s different to say, ‘I’m gonna go put a mural on a (building of a) developer that just spent $20 million.’” David said she sees people move to Detroit because of its creativity and affordability. But 2019 could be “real scary,” she said, if space gets more expensive for artists and they start moving out to nearby Ferndale

“The way I see the next year is, we’re in a really, really, really delicate time.” ORIGINAL IMAGE BY JESSE CORY

or Southfield. How can the city’s creative communities — especially creators of color and others who feel

they lack representation — continue to play a central role in Detroit’s redevelopment?

“We’re still going to have a great party ... the scale of how many murals we’re going to do is still TBD and it has a lot to do with development. And it’s happening throughout Detroit and it’s a question that I know a lot of artists ask themselves and a lot of developers ask. “The way I see the next year is, we’re in a really, really, really delicate time. Because if people disrupt the fabric of what makes Detroit awesome for the sake of development, they’re gonna have a place that said, ‘Oh, we really wanted this, but then we became this.’ All of a sudden ... it looks like a postcard for Banana Republic. “We’re starting to have those right conversations. There’s a framework being placed. Detroit’s creative community right now is really strong … but if we’re not cautious, we’re going to miss protecting what that is. It has to happen right now. That’s what this next year, two years, three years needs to be. If not, we’re going to be like, ‘Oh my God, what happened, how did we miss that?’”

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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 // D E C E M B E R 1 7 , 2 0 1 8

SPECIAL REPORT: OUTLOOK 2019 DONNA MURRAY BROWN, PRESIDENT AND CEO, MICHIGAN NONPROFIT ASSOCIATION

L. B

Making sure immigrants are counted in the 2020 Census

By Sherri Welch

swelch@crain.com

As the 2020 U.S. Census nears, Michigan’s nonprofit sector is being asked to help engage populations that are typically undercounted. During the last census, Michigan’s total population was actually overcounted. But undercounts happened among young children, low-income people, the homeless, people of color, immigrants and undocumented people, said Donna Murray-Brown, president and CEO of the Michigan Nonprofit Association. The current administration’s immigration policies and a new question on citizenship for the 2020 census are having an even more chilling effect on many undocumented and immigrant people’s views of census participation and how the information they provide will be used by the government, as Crain’s reported in the fall of 2017. With one of the country’s largest Mid-

dle Eastern communities and significant Hispanic populations in Detroit and Grand Rapids, Michigan could see even worse undercounts in immigrant and undocumented populations. That’s important to the entire state because federal funding supporting services for those populations and the public as a whole, such as housing assistance, health care and highway construction, hinges on population counts. Michigan stands to lose about $1,800 in federal funding per year for every person not counted, Murray-Brown said. Because of the trust they’ve built in their communities, grassroots nonprofits are uniquely positioned to help educate hard-to-reach populations about the importance of being counted, the legal challenges several states have filed against the citizenship question, how to fill out the census form and to prepare them for “enumerators” from the U.S. Census Bureau who may knock on their doors to spur participation, Murray-Brown said.

“What we can do is get the immigrant communities to think about the cost of being invisible.” ORIGINAL IMAGE BY MICHIGAN NONPROFIT ASSOCIATION

DAN GILBERT, FOUNDER AND CHAIRMAN, QUICKEN LOANS

Dan Gilbert says his biggest Detroit real estate projects will weather a recession By Kirk Pinho kpinho@crain.com

Dan Gilbert says he doesn’t like to prognosticate too much in the short term about economic conditions. But even if a recession hits in the next year or two, as many economists have predicted, he says that won’t have much of an impact on his smattering of splashy downtown Detroit building projects because much of his new developments are self-financed, at least initially before permanent financing is secured. That’s because, he says, it simplifies the process and he can be more nimble. “Makes things easier, less covenants, and that’s worked out pretty

ORIGINAL IMAGE BY GETTY IMAGES

“We’ve had no problem getting financing when we are done.”

good,” he said during an interview last week following a groundbreaking ceremony for his latest splashy project, the $830 million Monroe Blocks development east of his Quicken Loans Inc. headquarters. “We’ve had no problem getting financing when we are done.” So expect his construction spree to continue, he says — on a $95 million expansion of One Campus Martius, the $909 million development on the J.L. Hudson’s store site to the north with what is expected to have the state’s tallest building, and Monroe Blocks, which is slated to be complete in 2023. He has other things on his plate next year in real estate development, too, not the least of which is what to do with the former Wayne County Consolidated Jail site on Gratiot Avenue at I-375, which was leveled this year. The plans for that property, which comes in at about 15 acres, should be released in the next three months. “We are working on some really exciting, unique things which I can’t talk about yet. It’s really exciting. It’s all connected — there might be some office and residential — but there’s another theme, and I hope it comes to fruition.”

The W.K. Kellogg Foundation and others have granted over $4 million to support an MNA-led campaign to provide grassroots nonprofits across the state with the information and funding they need to engage undercounted populations. For nonprofits serving populations that are typically underrepresented in the census, “getting people counted is a way to ensure that funds that flow to them continue,” Murray-Brown said. “The citizenship question is there. What we can do is get the immigrant communities to think about the cost of being invisible, that is, the loss of funding that’s supporting them. What nonprofits will need to move forward is the census tracts for their communities for populations that were historically undercounted during the last census. MNA will be providing that information for them. We have hubs that are situated across the state; we are zeroing in on those (populations).”

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KRIS SMITH, DIRECTOR, DETROIT SPORTS COMMISSION

Marquee sports events will bring attention to Detroit By Bill Shea bshea@crain.com

While Detroit hasn’t landed another Super Bowl or Final Four, the city and region will host other notable events in 2019. Detroit Sports Commission Director Kris Smith said January will bring the 2019 U.S. Figure Skating Championships at Little Caesars Arena in Detroit and at the Detroit Skating Club in Bloomfield Hills — heralding the event’s return for the first time since the infamous Nancy Kerrigan knee-bashing attack at Cobo Arena in 1994. When summer comes, the inaugural Rocket Mortgage Classic will debut June 24-30 at the Detroit Golf Club. Michigan hadn’t been a PGA Tour stop since Grand Blanc’s Buick Open ended in 2009. Looking farther ahead, Smith said the commission will again work try to attract the NFL’s annual college draft, which draws several days of events and coverage. There’s no timeline for an RFP for the draft, but the commission is working closely with the Detroit Lions to land the event. The commission plans to seek a future Big Ten Conference men’s and women’s tournament, too, Smith said, because metro Detroit has second largest Big Ten alumni community outside of Chicago. Smith also is keen to explore professional video game events for the city and region because they’re a new frontier that attracts both large audiences and advertising sponsorship dollars. Aiding bids will be more hotels and hotel rooms coming online, Smith said. Detroit has been told a lack of rooms has hurt their chances at events like the NBA All-Star Game and Final Four. ORIGINAL IMAGE BY SCOTT HASSE

Smith, 42, has been in his current role since January 2017. The Detroit Sports Commission was launched in 2001 to market the city for amateur and college sporting events, acts as a go-between for media and corporate relations and provides organizational services. The commission is a 501(c) (3) nonprofit subsidiary of the Detroit Metro Convention & Visitors Bureau. For 2019, Smith is especially excited about the new Rocket Mortgage Classic because of the attention it will bring the city and region. “For us to be able to have a PGA Tour event in the city event, that’s a tremendous opportunity we’ve never been able to do before, and we’re looking to highlight it in 2019,” he said. “When you think about the opportunity for media coverage, not just the live TV coverage but the impressions that you’ll have, those opportunities are invaluable for our community. The more times we can place our city’s name in a publication or in the media, that usually pays off for us. I can also see the business community being able to use the classic to bring in potential tenants for facilities in the community.”

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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 // D E C E M B E R 1 7 , 2 0 1 8

SPECIAL REPORT: OUTLOOK 2019 L. BROOKS PATTERSON, OAKLAND COUNTY EXECUTIVE

Will Brooks Patterson leave office early? By Kirk Pinho kpinho@crain.com

L. Brooks Patterson knows his time as Oakland County executive is nearing an end. But he’s not going down without a fight. With an incoming Democratic board of commissioners — something the longtime suburban GOP bulwark has never had to deal with in what was formerly a Republican stronghold — Patterson is preparing for a last stand as he nears his 80th birthday, the midway point in his seventh term as the county’s top elected official, and a crucial decision about whether to complete that term. He also faces the state’s core city of Detroit, which has been picking off new corporate headquarters, new regional offices and new investment that for decades prior would have flocked north of Eight Mile. “Detroit has emptied out, and most of the residents brought their politics with them,” Patterson said of the county’s political winds leaning

“When you think about the opportunity for media coverage ... those opportunities are invaluable for our community. ”

to the Democrats, which control four of the six countywide elected offices. “I don’t understand that phenomenon with high crime, high taxes and little services. Nobody is under investigation for corruption here ... If Detroit empties out and they come out here in mass numbers, I feel like the governor of Texas standing at the gates.” Patterson, who turns 80 on Jan. 4, says he would feel comfortable working with the incoming Democratic majority on the 21-member board

but would also flex his muscle when he feels it’s needed. “I will negotiate and if I have to I’ll drop the veto, but I don’t want to operate government by veto.” He said in a Dec. 4 interview that he hadn’t yet decided whether to step down this year, before the GOP loses its majority, so that Republicans can appoint his heir apparent, who would have to run for the seat in 2020. But that decision is looming. Patterson has faced health challenges since a nearly fatal car accident in

“At some point I’m going to have to surrender my office. I don’t own it. I merely rent it.”

Auburn Hills in August 2012. “At some point I’m going to have to surrender my office. I don’t own it. I merely rent it. It’s owned by the people. The people have been gracious enough to return me to the office, and resigning this year is an option I’m exploring.”

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CALENDAR UPCOMING EVENTS 2019 Michigan Economic Outlook. 11:30 a.m.-1:30 p.m. Jan. 8. Detroit Economic Club. Speakers include: Kevin Johnson, president and CEO, Detroit Economic Growth Corp., and Jeff Mason, CEO, Michigan Economic Development Corp. MotorCity Casino Hotel. $45 members, $55 guests of members. Website: econclub.org Global Business Outlook for 2019 and Beyond. 8-11 a.m. Jan. 17. Automation Alley. A discussion on the shifting dynamics of the global economy and how companies can best position themselves to take advantage of the opportunities and challenges of doing business in the

SPOTLIGHT U.S. and overseas. Speakers: Paul Traub, senior business economist, Detroit Branch, Federal Reserve Bank of Chicago; Scott Sneckenberger, partner, Plante Moran; John Caldwell, executive director, Investment Specialist, Private Bank, J.P. Morgan; Thomas Murray, president and CEO, Hosco and Paul Ryznar, founder, president and CEO, Light Guide Systems. Automation Alley. Member Price: $30 member; $50 nonmember; $40 walk-in member; $60 walk-in nonmember. Contact: Lisa Lasser, email: lasserl@automationalley.com 17th Annual NAIAS Breakfast. 7:30-9:30 a.m. Jan. 18. Inforum. Features a cross-industry panel that will focus on artificial intelli-

gence and how innovations made across industries are being investigated and used in aut o m o t i v e . Speakers: Jason Mars, CEO and c o - f o u n d e r, Clinc, and proMars fessor of computer science, University of Michigan and Alisyn Malek, COO and co-founder, May Mobility Inc. Moderator: Carla Bailo, president and CEO, Center for Automotive Research. Detroit Marriott at the Renaissance Center. $75 nonmember; $1,000 table sponsor. Website: inforummichigan.org

Patriotism vs. Nationalism — The New American Challenge. 11:30 a.m.-1:30 p.m. Feb. 7. Detroit Economic Club. Marc Morial, president and CEO, National Urban League, will discuss the distinction between the America of yesterday, and the promise of tomorrow’s America. The Masonic. $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. Fill out the submission form, then click “Submit event” at the bottom of the page. More Calendar items can be found at crainsdetroit.com/events.

DEALS & DETAILS MERGERS & ACQUISITIONS J Bluewater Technologies Group Inc., Farmington Hills, provider of audiovisual and event technology services, has acquired AR3 Enterprises, Northville, an audiovisual technology consultancy. Website: bluewatertech.com J Lake Michigan Credit Union, Grand Rapids, has agreed to purchase the Rochester Hills branch of CCF Bank, a subsidiary of Citizens Community Bancorp Inc., Eau Claire, Wis. The purchase and assumption agreement includes approximately $35 million in deposits and approximately $300,000 in fixed assets. LMCU has agreed to pay a 7

percent deposit premium, or approximately $2.45 million. All loans associated with this branch will remain with CCF Bank. Websites: lmcu.org, ccf.us J Universal Logistics Holdings Inc., Warren, a trucking company, acquired Riverside, Calif.-based Deco Logistics Inc. and Oaktree Logistics Inc., combined doing business as Container Connection, a shipping company, for $60 million. Websites: universallogistics.com, containerconnection.com

CONTRACTS J Espresso Public Relations LLC, Detroit, a public relations firm, has been named the agency of record for

Lyft, Detroit office, an on-demand transportation company; Warmilu LLC, Ann Arbor, a non-electric warming technology manufacturer; Loaded Links Iconic Haute Dogs, Troy, a restaurant; Proud Detroiter, Detroit, a clothing store; HandyPro International LLC, Farmington, a residential and commercial handyman services provider; Metropolitan Museum of Design Detroit, a mobile design archive; and Fink + Associates Law, Bloomfield Hills, a law firm. Website: espressopublicrelations.com J Centerplate Inc., Stamford, Conn., a hospitality provider, has entered an early, multi-year contract extension with Cobo Center, Detroit, a convention center. Web-

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To place your listing, visit www.crainsdetroit.com/people-on-the-move or for more information, please call Debora Stein at (917) 226-5470 or email dstein@crain.com. NONPROFITS

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Roxanne Brinkerhoff has been named CEO of the Detroit Institute for Children (DIC), which provides therapeutic services to children with special needs at nearly 150 K-12 schools and Early Childhood programs across Southern Michigan. With almost 20 years’ experience, providing visionary leadership in the field of child and family services (including with Girl Scouts and The Guidance Center), Roxanne is looking forward to helping DIC increase its impact within the greater special needs community.

Disability Attorneys of Michigan, a leading Social Security Disability law firm, today announced that Attorney Adam Banton will be named as the new Partner of the law firm, effective January 1, 2019. Adam brings nearly a decade of experience fighting for the rights of disabled people throughout Michigan. He joins Attorney and Founder Stu Johnson and Attorney Samantha Ball as Partners of the firm.

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

sites: cobocenter.com, centerplate. com J BMG Media Co., Birmingham, a website designer, has redesigned and launched Zynga.com for Zynga, San Francisco, a gaming company. Website: bmgmediaco.com J Genesis Innovation Group’s cultivate(MD) Capital Fund II LP, Holland, an investment fund focused on early stage health care companies, has invested in SpinTech Inc., Bingham Farms, a software company, for development of software for brain scan MRIs. Websites: genesisinnovationgroup.com, spintechimaging.com J Unique Fabricating Inc., Auburn Hills, an auto parts maker, is getting a $73 million loan from Citizens Bank, Providence, R.I., for expansion and to refinance debt. Websites: uniquefab.com, citizensbank.com J Meritor Inc., Troy, an automotive supplier, has a strategic supply agreement with The Manitowoc Co. Inc., Manitowoc, Wis., provider of lifting equipment for the construction industry, for drivetrain products, including planetary axles. Also, several Meritor products have been selected as standard position and as preferred options on all Wabash National Corp., Lafayette, Ind., dry and refrigerated van trailer products. Websites: meritor.com, ir.manitowoc.com, wabashnational.com

EXPANSIONS J Blackford Capital, Grand Rapids, a private equity firm, has opened an office at 150 West Second St., Suite 400, Royal Oak. Phone: (616) 3251281. Website: blackfordcapital.com J Domino’s Pizza, Ann Arbor, a pizza company, has opened a store in Port Louis, Mauritius. Website: dominos. com

NEW PRODUCTS J Swift Biosciences Inc., Ann Arbor, a developer of molecular biology technology for genome research, released its Normalase Kit, to optimize sequencing results after next-generation sequencing library preparation. Website: swiftbiosci.com

Submit Deals & Details items to cdbdepartments@crain.com

Ascension MacombOakland hires cardiology chief

Former DMC heart chief Ted Schreiber has been hired as chief of cardiology at Ascension Macomb-Oakland Hospital. Schreiber succeeds Lingareddy Devireddy, who headed up the Warren hospital’s cardiology Schreiber service line for the past 19 years. In October, Schreiber resigned as president of Detroit Medical Center’s cardiovascular center after complaining for several years about quality issues at the downtown medical center. He and several other cardiologists said staff layoffs and lack of rigorous quality assurance were affecting patient care at DMC.

Kowalchik to take over as CFO of Kenwal Steel

Kenwal Steel Corp. announced Laura Kowalchik as its new CFO, replacing Frank Jerneycic, who retires at the end of this year after 10 years with the full-service, flat rolled steel service center. The appointment was effecKowalchik tive last week. Kowalchik, 49, brings global automotive and industrial finance, and accounting leadership to Dearborn-based Kenwal, it said in a news release. She most recently served as CFO of Urban Science, a Detroit-based global automotive retail consultancy, the release said. She previously served as vice president, corporate controller and chief accounting officer of Ann Arbor-based bearing supplier Kaydon Corp. and Dura Automotive Systems LLC in Auburn Hills, where she held the same title.

Former Johnson & Johnson exec to lead Loyola High School

After nearly three decades with pharma giant Johnson & Johnson, Detroit native David Smith is returning to his old stomping grounds to unlock a new career trajectory. Smith, 58, will lead Loyola High School, the allSmith male academy on Detroit’s northwest side, as its new president. He will assume his new role July 1, succeeding the Rev. Mark Luedtke, a Jesuit who led the school for the past five years and who will begin preparations for his final vows. “We selected Dave because of his passion for Catholic education and for his people-first leadership style,” Cathy McNamara, chair of Loyola High School’s board of directors, said in a statement emailed to Crain’s.

C R A I N ’ S D E T R O I T B U S I N E S S // D E C E M B E R 1 7 , 2 0 1 8

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GM announced earlier this month a plan to lay off 6,000 workers next year along with the potential closings of five plants, including its Detroit/Hamtramck and Warren Transmission plants.

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An early projection by LMC Automotive forecast those tariffs to cut U.S. auto sales by 2 million vehicles, though that’s yet to be seen. General Motors Co. and Ford Motor Co. have both said the steel and aluminum tariffs have shaved $1 billion from profits this year. Compounding the supplier sector’s problems is the hard shift away from sedans in the U.S. by domestic automakers — Ford and GM are both ending most car production for the U.S. market in the coming years. Sprinkle in slowing sales in the U.S. and an unexpected sales slump in China — auto sales fell 11.6 percent in September, the largest drop in seven years — and the worries add up. But this hasn’t slowed the entire industry’s demand for more skilled workers as it looks to increase electrification and autonomous vehicle efforts. “We’ve seen this bipolar nature of the modern auto industry play out all year,” said Mike Wall, director of automotive analysis for Southfield-based IHSMarkit. “The macro tells one story, a weakening in China, tariff and trade issues, problems in Europe, etc. but they also don’t have the right labor and staffing. There are storm clouds gathering, certainly, but these companies also need to prepare where they want to take their companies in the next 10 or 15 years, and that takes new labor and talent.” This is evident across the entire manufacturing sector, not just automotive, as job openings for U.S. manufacturers reach 4 percent in October, according to Labor Department data. That’s the highest job openings per filled jobs rate since 2000. There were roughly 332,000 open manufacturing jobs in October, compared to about 8 million total jobs. Roughly 60 percent of the suppliers survey for the OESA Barometer said they have a moderate to wide gap in skills within their organiza-

Mike Wall: Sees bipolar nature in industry.

Glenn Stevens: Suppliers deal with pressures.

tion and nearly all of them have a desire to rectify that problem. Most are adapting skill sets internally, i.e. training employees for future jobs, while others are reorganizing their workforces like their automotive customers. GM announced earlier this month a plan to lay off 6,000 workers next year along with the potential closings of five plants, including its Detroit/Hamtramck and Warren Transmission plants. Yet it continues to hire in areas of electrification and autonomous vehicles as part of its future strategy — the company has more than 200 job openings at its San Francisco autonomous-driving operation. This is evident in the workers suppliers need most, according to the study. Of those surveyed, 80 percent indicated engineering talent as the most critical shortage, followed by hourly skilled-trades workers. “All these changes at the automakers are the primary drivers for suppliers to follow suit,” said Glenn Stevens, executive director of Michigan’s auto industry promotion effort MichAuto and vice president of automotive and mobility initiatives at the Detroit Regional Chamber. “Like the (automakers), these suppliers, who by the way make 77 percent of the components in a vehicle and own 50 percent of the intellectual property, are dealing with external pressures, too, but also with the need to change.” Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh

NOTABLE WOMEN IN MICHIGAN

At companies across Michigan, Notable Women argue high-stakes legal cases, support initiatives that foster the development of students, broker complex real estate deals and recruit the brightest professionals. These women also mentor, teach and volunteer in their communities. Through this series, Crain’s Detroit Business will recognize leading women in business.

BE ON THE LOOKOUT

FOR THESE UPCOMING FEATURES IN THE NOTABLE WOMEN SERIES: NOTABLE WOMEN IN REAL ESTATE // PUBLISH DATE: FEB. 18 NOTABLE WOMEN IN HR // PUBLISH DATE: MARCH 18 NOTABLE WOMEN IN STEM // PUBLISH DATE: MAY 27 NOTABLE WOMEN IN EDUCATION // PUBLISH DATE: SEPT. 23 NOTABLE WOMEN IN LAW // PUBLISH DATE: OCT. 28 If you’d like to nominate a woman you know, stay tuned at www.crainsdetroit.com/nominate

C R A I N ’ S D E T R O I T B U S I N E S S // D E C E M B E R 1 7 , 2 0 1 8

Whitmer weighs break-up of ‘enormous’ department By Chad Livengood

enrollment, Pallone said. The combined agency and the fact it consumes two out of every five dollars of the state budget has brought on additional scrutiny from the Legislature, which holds the purse strings. Before the merger, the two departments could spread out the financial pain for capital investments in IT infrastructure with separate appropriations committees in the Legislature, Lyon said. “And now the pain comes through one place,” Lyon said.

clivengood@crain.com

Gov.-elect Gretchen Whitmer is considering whether to break up the 14,000-employee state Department of Health and Human Services that Gov. Rick Snyder merged four years ago before the agency and its leadership became ensnared in Flint water crisis criminal prosecutions. “I’ve considered it,” Whitmer said Friday in an exclusive interview with Crain’s. “Breaking it up is almost as hard as keeping it together and making it work … if not harder in some respects.” “We’re going to have a thoughtful plan of how we improve on what we’re doing, whether it’s as one department or two,” the East Lansing Democrat added. Critics question whether the department has become too big for one person handle in light of a recent damning audit of the agency’s child protective services bureau and the pending criminal trials of its director, Nick Lyon, and chief medical officer, Eden Wells, over the public health department’s response to a deadly bacterial outbreak in Flint. “(The merger) was not something I was thought was a great idea when it was undertaken, and I was concerned about it,” said Whitmer, a former state senator from East Lansing. “I think there are some glaring things that are not working." For perspective, the Michigan Department of Health and Human Services is a $25 billion-a-year enterprise — comprising of 43 percent of the state budget — that would on its own be the state’s second-largest health insurance company, not far behind Blue Cross, and Michigan’s 15th-largest employer, according to Crain’s Book of Lists data. The DHHS workforce is nearly as large as the combined workforces of Consumers Energy Co. and Dow Chemical Co. And the daunting task of managing a behemoth state agency with a 160page organizational chart pays an annual director’s salary of $175,000 — far less than that the $400,000-plus salaries that some CEOs of metro Detroit’s largest charities earn annually to manage thousands of fewer workers. “To find highly qualified individuals at the prices the state wants to pay for a job that’s incredibly complex, has massive responsibilities and now where a prosecutor can send you to jail or ruin your reputation for decisions you make will be really interesting for Governor-elect Whitmer,” said David Waymire, partner in the Lansing communications firm Martin Waymire. Splitting DHHS back up into two or more departments has been quietly discussed around Lansing in the weeks since Whitmer won the governor’s race. “It’s an opportune time for the incoming administration to at least look at it,” said Rick Murdock, a former executive director of the Michigan Association of Health Plans who now consults for companies with business before DHHS. During her campaign for governor, Whitmer talked about creating a state department of water, suggesting portions of DHHS’s public health and epidemiology could be moved to a new department. Whitmer said Friday she’s still committed to creating a cabinet-level position focused on mental health

New boss in offing

CHAD LIVENGOOD/CRAIN’S DETROIT BUSINESS

Gov.-elect Gretchen Whitmer is considering whether to break up the 14,000-employee state Department of Health and Human Services that Gov. Rick Snyder merged four years ago.

CHAD LIVENGOOD/CRAIN’S DETROIT BUSINESS

Gov. Rick Snyder’s 2015 merger of the state departments of Community Health and Human Services created a 14,000-employee mega department of Health and Human Services housed in multiple office buildings in Lansing.

and wants to draw more focus on poverty in Michigan, which the current department is immersed in with one-quarter of the state’s 10 million relying on state aid for health insurance, child care and food assistance. The incoming governor said she has a “landing team” camped out at DHHS to assess challenges and make policy recommendations. Whitmer said her decision on whether to keep the department intact or split it into two will hinge upon finding the right director or directors. “It’s an enormous department (with) critical services that vulnerable populations rely on,” Whitmer said. “So it’s important to get it right.”

A mega-merger At the start of his second term in

2015, Snyder merged the Human Services and Community Health departments under one roof in an effort to cut the bureaucratic red tape that citizens often faced in applying for and obtaining cash and food assistance, Medicaid insurance or behavioral health services. The Republican governor called it a “river of opportunity” approach to delivering government services that focused on the whole person instead of individual programs. “For me, it’s always been about what can we do to help the person and less about how many state workers can we save by doing this,” Lyon said in an interview. In the Medicaid program, for instance, the Human Services department handled Medicaid enrollment, while Community Health administered the program — causing recipi-

ents to get bounced between the two. “It was totally confusing,” said Jim Haveman, who preceded Lyon at the Department of Community Health. “And now there’s just one department people have got to deal with.” Lyon, who previously served as a budget and policy director for the Department of Community Health during the Granholm and Snyder administrations, said the combined agency is “much less bureaucratic.” The combined agency’s application for cash, food or medical insurance assistance has been slashed from 42 pages to 18 pages. Haveman, who supported Whitmer for governor, and other allies of Snyder have been advising the incoming governor against breaking up a department they spent years stitching together. “To do that, you’ve got to do it without bringing back all of the bad behaviors you had before you brought them together,” said Rich Baird, transformation manager for Snyder who recently worked on a project to reform case worker and supervisor processes in the child protective services bureau. One of the main goals of the merger — integrating behavior and physical health in the Medicaid program — has yet to be accomplished. “As much as there’s been this larger holistic approach to trying to create a mega department to serve the whole individual in its social service needs, we still have silos within that department,” said Dominick Pallone, the current executive director of the Michigan Association of Health Plans. MAHP represents ten of the 11 health insurance companies — all but Blue Cross Blue Shield of Michigan — that operate managed care programs through Medicaid for DHHS. The health plans have struggled to get the department to make necessary technology upgrades for management of Medicaid eligibility and

Whitmer’s transition office said last week Lyon won’t remain the director and that announcements on how she’ll organize health and human services programs won’t come until after her Jan. 1 inauguration. Lansing insiders are urging her to reconsider the sheer size of one mega state department. “The employee size itself, I don’t know how anyone can be successful managing that,” Pallone said. “It’s nothing against Nick or anybody personally over there — you could have had anybody in that position. It simply had become too unwieldy and too big to know everything that was going on.” That dynamic, that DHHS is too big for a director to know everything that’s going on in a 14,000-employee organization, has essentially become part Lyon’s criminal defense in Genesee County Circuit Court. Attorney General Bill Schuette is seeking prison time for Lyon and Wells for not alerting the public about a Legionnaires’ outbreak that killed 12 people and sickened 79 others who came in contact with Flint’s tainted drinking water in 2014 and 2015. After a judge bound Lyon over for trial in August, one of his attorneys, John Bursch, said the size of the department can’t make him “vicariously liable” for the deaths of two elderly men who contracted Legionnaires’ disease given the number of employees below him that were involved in investigating public health problems surrounding Flint’s water. Lyon declined to discuss the case, except to say he believes he’ll be vindicated. “I’m very confident in the legal positions that we have and that the justice system will work fairly,” he said. Snyder has kept Lyon and Wells in their appointed jobs full-time while they’ve gone through year-long preliminary examinations and publicly defended them as recently as last week. “She’s not been found guilty of anything,” Snyder said of Wells after revelations that she’s moved into a newly created $180,000-a-year physician job within the department. But some observers of the department have wondered whether the integration of behavior and physical health programs was slowed by the fallout of the Flint crisis, which resulted in Schuette filing criminal charges against 15 state and Flint government employees. “The Flint water crisis kind of created that caution to not make any other abrupt changes as that was going on,” Murdock 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 // D E C E M B E R 1 7 , 2 0 1 8

REDEVELOP FROM PAGE 3

American Axle & Manufacturing, Blue Cross Blue Shield of Michigan, Fifth Third Bank, Flagstar Bank, Huntington Bank and the Penske Corp. joined Chemical Bank in donating $5 million each toward the fund, which will be spent in seven neighborhoods on parks, streetscapes in shopping districts, single-family homes and affordable higher-density housing. When added to $15 million the Kresge Foundation already contributed to the fund, the $50 million is halfway to Duggan’s goal of raising $100 million in private donations toward neighborhood redevelopment initiatives designed to leverage new investments. Torgow, Blue Cross CEO Dan Loepp and Huntington Bank Chairman and CEO Steve Steinour cochaired the fundraising effort on Duggan’s behalf. “I really felt this was the right time and the right move Gary Torgow: and something Right time, right corporate Demove. troit must invest in,” said Torgow, who grew up on Griggs Avenue near Wyoming and Curtis in the Bagley neighborhood north of Marygrove College. The chairman of Chemical Bank, which is relocating its headquarters from Midland to Detroit, said it was “easy” to convince his competitors to contribute to the cause because it is “critical” to make the city’s neighborhoods vibrant again. “The leadership of those banks are like-minded, they want to do the right things,” he said. “They were easy and interested and forthcoming and very willing to be good partners and good stakeholders without giving particular publicity for one bank or the other. It was pretty remarkable.” The seven neighborhoods that will see improvements funded by the SNF are: JJGrand River Northwest JJJefferson Chalmers JJRussell Woods/Nardin Park JJBanglatown/Campau JJWarrendale/Cody-Rouge JJGratiot/7 Mile JJEast Warren/Cadieux/East English Village Like Torgow, Flagstar Bank CEO Alessandro DiNello said his bank’s philanthropy is personal. DiNello’s parents immigrated to Detroit from Italy in 1951, settling in a house on August Avenue, near the area of Gratiot and Seven Mile that will benefit from the neighborhood redevelopment fund. “They did so because they felt safe, they thought they could get a job, they thought they could raise a family,” DiNello said of his parents. “That’s what we need to get back to. We need to get back to that feeling that people want to live in our neighborhoods. “Without a collaborative effort like this one, that probably isn’t going to happen,” DiNello added. Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

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BAIRD FROM PAGE 1

J He recruited the top minds to Snyder’s team, convincing Jones Day bankruptcy attorney Kevyn Orr to camp out in Detroit for a nearly two-year bankruptcy reorganization project that defied political gravity. J He set up Snyder’s now-defunct Education Achievement Authority school reform entity — and later was involved in dismantling the EAA after it became entangled in mismanagement and corruption. J In 2016, Baird planted himself in Flint during the height of the city’s lead-tainted water crisis, living in rooms he rented off Craigslist and serving as the governor’s personal representative at a time when hatred for Snyder was at a fevered pitch. J He has served as Snyder’s ambassador to the Manoogian Mansion, holding meetings every Thursday morning with Duggan for the past five years and forging an early peace treaty in 2013 between the emergency manager and a newly elected mayor who vowed to dispose of the EM. J During and after the bankruptcy, Baird mediated negotiations with stakeholders, including creation of the Great Lakes Water Authority, a regional entity that spun off suburban water and sewer operations from the Detroit Water & Sewerage Department. J In the four years since Detroit emerged from bankruptcy, Baird has continued to be the go-to troubleshooter for state-city issues, serving as a self-described “field commander” in Detroit’s failed bid for Amazon’s second headquarters. J Baird played a central role in striking key deals for construction of the Gordie Howe International Bridge, including securing funds for Detroit to relocate Delray residents who live near the planned bridge plaza. “He’s the person we turn to when we’re stuck,” Duggan said of Baird. “The fact that he’s down (in Detroit) every day, he understands what we’re trying to do and why, it has made him very effective as an honest broker with a lot of different major deals.” Baird’s broad role in the Snyder administration “created a vacuum, a mystery around him” that was widely misunderstood, Lt. Gov. Brian Calley said. “It’s hard for this town to understand that there’s this person that you’ve never heard of that has a lot of influence. What’s going on there?” Calley said in an interview. Before Snyder took the oath of office on Jan. 1, 2010, incoming Chief of Staff Dennis Muchmore gave Baird the ubiquitous title of “transformation manager.” “What’s transformation manager mean?” Baird asked Muchmore.

RECOVERY FROM PAGE 3

RecoveryPark is operating on a budget of just under $1.2 million for fiscal 2019 which began Oct. 1. That includes the costs of training and equipment and supplies that will be needed for the first greenhouse, Wozniak said. “I’m a recovering addict and returning citizen,” Wozniak said. “People like me need access to permanent employment.”

C R A I N ’ S D E T R O I T B U S I N E S S // D E C E M B E R 1 7 , 2 0 1 8 “Absolutely nothing,” Muchmore replied. “Or it could mean absolutely everything,” Baird said. The latter turned out to be true. “Rich Baird has been one of the most important, impactful and effective members of this administration,” Calley said.

The recruiter Baird, 62, retired from PricewaterhouseCoopers on June 30, 2010, after three decades at PwC and one of the accounting giant’s predecessors, Coopers & Lybrand, where he hired Snyder in 1982 to work in the firm’s Detroit office. Snyder has been Baird’s colleague, a client when he ran Gateway Computers, confidante and friend ever since. Baird volunteered for Snyder’s gubernatorial campaign. In the transition, Snyder tapped Baird to lead the recruitment of state agency directors and top aides — a natural fit for the guy who was PwC’s global managing partner for human resources. Two positions proved to be the most difficult to fill: the Department of Corrections director and the state budget director. The corrections director job would be filled a month into Snyder’s tenure with the appointment of then-Jackson County Sheriff Dan Heyns. For the budget director job, Baird was not satisfied after interviewing nearly two dozen in-state candidates. “I did not come away with the sense that any of them really understood what it was going to take to not only deal with the budget and fill what we knew was a deficit, but also knowing how the governor was going to approach policy and budgeting,” Baird said. On a Saturday afternoon in November of 2010, Baird called former Gov. John Engler for advice on outof-state candidates for the job. Engler, who was then CEO of the National Association of Manufacturers, came back to Baird with a list of five well-regarded state budget officers across the country. At the top of the list was Utah’s budget director, John Nixon, then the president of the National Association of State Budget Officers. “(Engler) said, ‘You won’t get this guy, but you should start with him and talk to him about the other candidates — because he knows all of them,’” Baird said. Baird sent Nixon an email — and within an hour Utah’s budget guru called the Michigan headhunter on a Saturday night. Nixon, a devout Mormon with six children who were ages two to 14 at the time, wasn’t interested in uprooting for the Midwest. But cajoling is Baird’s specialty. “I said, ‘It seems to me that you’ve retired in place. How exciting could

it be? Why don’t you at least come out and talk to us? We’ll make you part of the biggest comeback in the history of the country,’” Baird said. “And he laughed.” Nixon relented, flying to Detroit to meet with Baird and the top members of Snyder’s cabinet — Calley, Muchmore, Treasurer Andy Dillon and Strategy Director Bill Rustem. He also met with members of Snyder’s transition team: Business Leaders for Michigan CEO Doug Rothwell and Meijer Inc. Vice Chairman Mark Murray, a former state budget director and treasurer under Engler. When Nixon came back the following weekend with his wife to meet with Snyder, Baird called in a favor from Honigman corporate attorney G. Scott Romney, son of former Gov. George Romney and a fellow Mormon and Republican. Baird asked Romney if he’d take the Nixons to his Mormon church. “The Romney name is like gold in Utah,” Baird said. On New Year’s Eve 2010, Nixon flew to Michigan and set to work on a grueling mission: Produce a twoyear budget in six weeks that eliminates a $1.5 billion budget deficit and lets the state slash business taxes. “Rich is a compelling guy. I realized they had built a first-class team. And I thought, this is something I want to be part of,” said Nixon, who returned to Utah in 2014 to become

chief administrative officer of the University of Utah.

While companies like Flex-N-Gate hire people coming out of prison, they don’t necessarily offer the support services those people need to transition back into regular society, Wozniak said. “We do that. We provide both the job and the support services for up to three years to get people back to 100 percent functioning in the community.” While they stave off the closure of the nonprofit, Wozniak and his team are working with Birmingham-based Mid-States Advisors Inc., Plante Mo-

ran PLLC, Montana-based Evergreen International and Guaranteed Lending Specialists LLC to line up financing of $13.7 million to build the first of seven to 10 planned greenhouses and to acquire about 15 acres of land from the city to do it. The first greenhouse would be built on land it owns at the intersection of East Palmer and Dubois streets, about one block north of RecoveryPark’s building at Chene and East Ferry streets. The plan calls for construction of several greenhouses on 19 acres over five to seven years,

creating 170 full-time, hydroponics-related jobs for people with employment barriers. The operation would build to offering living-wage jobs as it ramped up and as envisioned, would ultimately transfer ownership of the hydroponics operation to employees. So far, RecoveryPark has lined up tentative commitments for twothirds of the $13.7 million. The bulk, $8.2 million, would come through loans approved by two out-of-state banks, contingent upon the U.S. Department of Agriculture and the U.S.

Even after Snyder tried to tamp down the NERD Fund controversy, Baird remained a frequent target of Democrats and the governor’s political enemies. In August of 2014, the critics pounced after MIRS news service discovered Baird was claiming tax principal homestead exemptions on a $500,000 home in Clinton Coun-

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Small Business Administration agreeing to secure the loans. “Because we’re an urban project that’s hiring a challenged workforce and providing product in a market that’s generally not well-served by the type of produce we sell, the RecoveryPark model falls within the sweet spot of those federal guarantee programs,” Wozniak said. The big hurdle is always getting bank approval, said Patrick Kenney, managing partner at Maine-based Guaranteed Lending Specialists, who said he has more than 30 years of ex-

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Rich Baird, 62, retired from PricewaterhouseCoopers in 2010 to go to work for Gov. Rick Snyder.

‘Great idea’ gone bad Baird never intended to be part of Snyder’s administration. Initially, Snyder asked Baird to work as a consultant for six months to help put together a new government. Baird says he “resisted” becoming an employee of the State of Michigan. “I’m not a bureaucrat,” Baird recalled telling the governor. “I don’t want to stay on.” “He said, ‘Well, I’ll pay you out of the NERD Fund,’ which we thought was a great idea at the time,” Baird added. And that’s how Baird got on the radar of reporters like me. For most of Snyder’s first three years, Baird was paid $100,000 annually from the New Energy to Reinvent and Diversify (NERD) Fund, a not-for-profit organization that could accept limitless donations without having to disclose the donors. The arrangement raised the specter of whether special interest groups with a policy or legislative agenda were funding the salary of an influential member of the governor’s inner circle. “It wasn’t special interests that gave to the NERD Fund — it was Democrats, a whole bunch of them,”

MLIVE/JAKE MAY

Baird said. But Democrats had a field day, raising transparency questions about the secrecy of the fund and the source of Baird’s pay while being listed as a state employee with an office across the hall from the governor’s suite. To this day, the identity of the donors who contributed $2.2 million to the NERD Fund remains a secret. In October 2013, Snyder shuttered the NERD Fund, put Baird on the state payroll — at $140,000 a year — and started a new nonprofit organization that has voluntarily disclosed its donors and expenses. But Baird insists his NERD Fund employment arrangement was devoid of conflicts. “If I’m a tool of the special interest, then somebody should be shot because I made exactly one-twentieth of what I made in my old life at PricewaterhouseCoopers,” Baird said.

‘Hated being called a tax cheat’

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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 // D E C E M B E R 1 7 , 2 0 1 8 flagged the fact that Michigan — under Snyder — was now taxing pension income for individuals born after 1946. “She said, ‘Are you crazy? You’ve got to move your pension away from Illinois and to Michigan — and you’re going to get taxed on the pension,’” Baird recalled. “I said, ‘I know. I was at the scene of that crime.’”

‘EAA was not a failure’

ty’s Bath Township and his longtime residence in suburban Chicago. Tax laws limit the property tax break to just one home. Baird also was still driving around a vehicle with an Illinois license plate, even after he had changed his voter registration to Michigan and got elected a precinct delegate to help re-nominate Calley for lieutenant governor at a GOP state convention — and vote for Snyder that fall. The double tax exemption turned out to be an error made at the Bath Township clerk’s office, but Baird was wounded by the news stories. “I hated being called a tax cheat,” he said. Baird was so incensed about Democrats suggesting he was dodging tax collectors that he left the president of the Michigan State AFLCIO an angry voice message on a Saturday night threatening to sue her for “personal attacks, character assassinations and innuendo.” The labor federation publicly released a recording of the call, drawing more attention to Baird two months before Snyder’s re-election. “He’s very stubborn,” Muchmore said of Baird. “He doesn’t hide his feelings very well. If he’s got a bone to pick, you’re going to know about it.” Baird paid more than $16,700 in back taxes on the Bath Township home, which he had made his principal residence while his wife and family remained in Illinois. That move, Baird said, triggered a call from his accountant, who

Baird’s activities stretched well beyond recruitment and the confines of governing inside the Lansing bubble. Snyder made turning around Detroit and its long-failing schools a top priority. For the city’s schools, a succession of state emergency managers was not working, and Snyder wanted to try something new. The governor tasked Baird with helping to create a new entity that would take over 15 persistently failing schools in Detroit in an effort funded in large part by billionaire Detroit native Eli Broad to demonstrate a different style of education with longer school days, year-round instruction and no grade levels. The result was the Education Achievement Authority, which was organized as an intergovernmental agreement between Eastern Michigan University and Detroit Public Schools, which was run by an emergency manager at the time. From the outset, the EAA was troubled. The school reform entity struggled to meet payroll and manage expenses in the absence of authority to borrow money like normal school districts do. John Covington, the former Kansas City schools superintendent who was hired to be the EAA’s chancellor, was “a good blueprinting guy ... but not an operations guy,” Baird said. Baird said Covington’s insistence that the EAA be a closed shop for the American Federation of Teachers triggered an unnecessary “war” with the union and legislative Democrats, who dredged up thousands of pages of emails that revealed the early dysfunction and stumbles of Snyder’s school reform project. “I ultimately rolled over on that,” Baird said. “I’m really sorry I did, because over the years, I’ve worked with the (AFT), and we’ve been able to find common ground.” In 2013, as Snyder was seeking legislation to expand the EAA to 50 failing schools across the state, Baird said he experienced an “epiphany” that the EAA was faltering when a highly skilled information technology director quit after one week on the job. “I called her and I said, ‘What’s going on?’ And she said, ‘There’s so many things that are wrong, I can’t fix them and I’m not going to fool

perience in commercial lending, much of it tied to loans that secured backing from the USDA. “We’re not at all concerned RecoveryPark won’t meet program guidelines” for securing loan guarantees from the USDA and SBA, he said. “It’s not a typical small manufacturing firm you see every day. ... The USDA and SBA like these kinds of things. It’s different and something they can point to with pride.” RecoveryPark also secured $1.25 million in private equity commitments from one local investor and

one out of state. It’s seeking $4.25 million in private investment and seeking contract concessions achieved through the conversion of debt owed to vendors and contractors for things like design and greenhouse construction into an equity position in RecoveryPark Farms. “Collectively, we believe April 1 is a reasonable deadline to complete the capital raise,” Wozniak said. “We thought, incorrectly, that foundations would step up to the plate more quickly than they have. We had to do a little bit of a pivot to

anybody into thinking I can,’” Baird said. Baird asked David Behen, the state’s chief information officer at the time, to audit the books of the EAA. “He did a thorough investigation — as good as anything a PwC or a Deloitte would have done,” Baird said. The audit revealed duplicate IT contracts and a “consistent lack of controls” that allowed vendors to get paid without contracts. That caused Baird to turn to a former PwC partner, Tom Golden, who co-authored a guide to forensic accounting. Golden’s investigation led to an FBI and state police probe that rooted out a corruption scheme involving an EAA principal who was driving a Maserati and pocketing tens of thousands of dollars in bribes from a vendor. A dozen principals in DPS were eventually charged for taking bribes from vendors in a pay-to-play scheme that had been going on in Detroit schools for years. The corruption scandal, Covington’s mismanagement and controversial frequent travel to conferences coupled with declining enrollment and rampant staff turnover eventually caused the Snyder administration to fold the EAA schools back into DPS in 2016. “It clearly didn’t work,” said David Hecker, president of the AFT Michigan. “But I’ll give Gov. Snyder credit for realizing it didn’t work.” Baird insists the “EAA was not a failure.” “If we had done some things differently, I’m convinced the EAA would have been the trigger to create some real revolutionary change in school districts across the state,” Baird said. “It was always designed to be Stage One of a statewide focus.”

Defending the EM law For eight years, Snyder wore his “relentless positive action” mantra on his sleeve, while Baird worked to enforce it. On the Thursday after Detroit’s November 2013 mayoral election, Baird brokered the first meeting between Mayor-elect Mike Duggan and Kevyn Orr, who had been running the city for nearly eight months as emergency manager. Baird hand-wrote a pledge for the two men: Both agreed to keep their disagreements private “and the only time that we’re going to publicly talk about the other person is when we have something good to say.” “I made them sign it,” said Baird, who declined to show me a copy of this peace accord. At that meeting, Duggan and Orr agreed to share power for the next year — Orr would manage the bankruptcy and supervise police chief James Craig, while Duggan would run city departments. Baird cautioned Orr on how the get into the marketplace we are in now with private investors and debt.” RecoveryPark is now having good success with out-of-state lenders and with private equity partners, he said. “We believe with both of those, we’re going to take it over the top.” Through its financial struggles, RecoveryPark is tracking the people who’ve cycled through its farming employment program since 2016. The program provides three years worth of supportive services. RecoveryPark itself assists them with things like transportation vouchers,

arrangement could play out. “You’ve heard about if you give a mouse a cookie, he’s going to want a glass of milk,” Baird recalled telling Orr. “Mike Duggan will want the barn, the dairy farm, the production facility and the supply chain — it won’t stop with the milk.” Since Orr left town at the end of the bankruptcy four years ago this month, Baird has remained Snyder’s point man in Detroit, holding court with the mayor every Thursday morning. Duggan even gave Baird his own mayor’s office ID badge that lets him bypass security. “I think Rich Baird has been as big a part of the progress Detroit has made in the last eight years as any other person, including Kevyn Orr, Mike Duggan and Rick Snyder,” Calley said. “Rich Baird has been that impactful.” Baird credits the bankruptcy’s success to both Duggan’s management and turnaround skills and the talents Orr and his Jones Day legal team brought to the restructuring of a city that was drowning in debt and political dysfunction. The same cannot be said for Flint, where Baird ran a “Mission Flint” program in 2016 trying to chart new initiatives in education, economic development and social services for his hometown in the wake of the water crisis. Baird, the longtime human resources professional, is blunt in his assessment of how Flint’s water became tainted with lead under the watch of Snyder-appointed emergency managers. “The reason it didn’t work in Flint is because we did not always have the right emergency manager that looked at this as a partnership as opposed to a dictatorship,” Baird said.

Rumor has it With just two weeks remaining in Snyder’s term, the only transforming Baird is working on is stepping back into semi-retirement. Snyder appointed Baird to an eight-year term on the Eastern Michigan University Board of Regents, and he’s planning to do some long-overdue traveling with his wife next year. And even though he’s already got walk-in privileges at the mayor’s office, Baird said he isn’t going to join the Duggan administration. “I think Mike was the one spreading that rumor,” Baird said with a laugh. In an interview, Duggan didn’t deny he has tried to make Baird more than a weekly visitor to Coleman A. Young Municipal Center. “Yeah, I’m recruiting people all of the time,” Duggan said. “But you know, I think he’s earned retirement.” Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood opening a bank account and cleaning up their credit. And it connects them with other community supports such as housing assistance or supportive programs for people with addictions. Of the 20 who’ve come through the program so far, none has been re-arrested or wound up back in jail or prison, Wozniak said. One has retired, and the other 19 are employed full-time. Sherri Welch: (313) 446-1694 Twitter: @SherriWelch

www.crainsdetroit.com Editor-in-Chief Keith E. Crain President and Publisher KC Crain Group Publisher Mary Kramer, (313) 446-0399 or mkramer@crain.com Associate Publisher Lisa Rudy, (313) 446-6032 or lrudy@crain.com Managing Editor Michael Lee, (313) 446-1630 or malee@crain.com Product Director Kim Waatti, (313) 446-6764 or kwaatti@crain.com Digital Product Manager Carlos Portocarrero, (313) 446-6056 or cportocarrero@crain.com Creative Director David Kordalski, (216) 771-5169 or dkordalski@crain.com Assistant Managing Editor Dawn Riffenburg, (313) 446-5800 or driffenburg@crain.com News Editor Beth Reeber Valone, (313) 446-5875 or bvalone@crain.com Special Projects Editor Amy Elliott Bragg, (313) 446-1646 or abragg@crain.com Design and Copy Editor Beth Jachman, (313) 446-0356 or bjachman@crain.com Research and Data Editor Sonya Hill, (313) 446-0402 or shill@crain.com Newsroom (313) 446-0329, FAX (313) 446-1687, TIP LINE (313) 446-6766

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C R A I N ’ S D E T R O I T B U S I N E S S // D E C E M B E R 1 7 , 2 0 1 8

BEAUMONT FROM PAGE 1

Over the past decade, Medicare has cut home health and hospice payment rates several times. Since 2014, Medicare, which is home health industry’s largest payer, has reduced home health payments by more than $520 million. For fiscal 2019, the Trump administration has proposed to further cut home health payments, converting to an unspecified bundled post-acute care payment model and spending more on fraud investigations of home health companies. Medicare now pays for up to 60 days of home health services if a physician certifies the patient needs the services and submits a plan of care. A patient can get another 60 days if the physician believes it is necessary. The average payment is $2,961.38 per 60-day period, but margins have been razor-thin in recent years.

The health system has been in talks to create a joint venture that would take its home health operations.

Mergers becoming industry norm In May, Beaumont Health’s Paul LaCasse, D.O., executive vice president of post-acute care and diversified business operations, told Crain’s that Beaumont had never considered selling or contracting out its home health and hospice business. LaCasse said that was a core business critical to helping the health system manage patients after they are discharged from hospitals, and said the home health business was growing at a 5 percent annual clip. In 2017, Beaumont Health consolidated its home health, hospice, home infusion, durable medical equipment and private-duty nurse services into Beaumont Home Health. The companies were previously part of Beaumont Health System, Oakwood Healthcare and Botsford Hospital, legacy organizations that merged in 2014 to form Beaumont Health. “We believe home health is an essential piece of what we do,” LaCasse told Crain’s. “As we think about the future, volume-based care to value-based care, we want to increase the amount of care we do at home.” Employees told Crain’s that Beaumont never gave staff any reason to believe a sale or joint venture was coming, although managers knew for months. However, one early sign happened last year when Beaumont brought back in house some formerly contracted out home health and hospice staff as employees. It is unclear what changed Beaumont’s strategy, sources said. Beaumont Home Health was profitable, but under budget this year as referrals were down because referring physicians at system hospitals were sending more patients to other home health agencies, two sources said. Barry Cargill, executive director of the Michigan Association of HomeCare and Hospice, said there have been many mergers and acquisitions among home health and hospice companies the past several years. He said Medicare reimbursement cuts and rising costs are forcing companies to improve efficiencies, reduce workforce costs and develop size for economies of scale. “The future of home care is pretty good (with aging baby boomers). There is a strong market now and through 2025, but (companies) need to (manage) efficiently,” Cargill said. “Medicare is a big payer. With reimbursements being cut, it has resulted in agencies finding a need for effi-

BEAUMONT HEALTH

In 2017, Beaumont Health consolidated its home health, hospice, home infusion, durable medical equipment and private-duty nurse services into Beaumont Home Health.

ciencies. One way is to grow larger.” Cargill said he has heard talk that Beaumont Health has been considering leaving the business because it lacks the size and expertise to manage in a consolidating and highly competitive industry. If so, it would be the first major health system in Michigan to do so, he said. “I am not aware of other hospitals or health systems (in Michigan) that have sold their home health business. Large hospital systems are making decisions whether to partner with outside vendors instead of (managing within) their own system,” he said. Other health care systems in Michigan that operate their own home health and hospice subsidiaries or companies are Henry Ford Health System, Ascension Michigan, Spectrum Health, McLaren Healthcare and Trinity Health. Ascension recently announced expansion of its post-acute care services, and other health systems have worked to improve management services and linkages between inpatient discharges, home health, hospice and rehabilitation services. One Beaumont source said only nine of 110 Beaumont office staff will be retained by Alternate Solutions, including some supervisors and schedulers. Three sources said more than 100 of Beaumont’s home health and hospice intake staff, quality assurance staff, medical records, office support and at least four education specialists would be laid off. “We were told at the meeting they would not be needed with the new company because they have those people already” at Alternate Solutions’ corporate office in Kettering, one nurse source said. More than 20 nurses have resigned in the past two weeks, two sources said. Many other senior nurses and other clinical workers with seniority will likely resign as they find new jobs, they said. “For younger nurses,

it is a pay raise for them,” one source said. “Alternate is hiring a lot more assistants.” Two sources also told Crain’s that Beaumont plans to notify patients soon that Beaumont home care and hospice will continue as an entity but will be managed by another company. The sources said the transaction allows Alternate Solutions to use the Beaumont brand name, but everything else will be different. It is also unlikely Alternate Solutions will seek Joint Commission accreditation as Beaumont Home Care has now because of costs and strict regulations, three sources said. Crain’s also spoke with a Beaumont home health patient who said she was told by her caregiver of the coming changes but had not received any official notification from Beaumont. She said she was worried inexperienced staff would replace her regular nurses and aides.

Other deal details If the deal becomes final as described to them, three sources told Crain’s that home health nurses, physical and occupational therapists, social workers and other caregivers could have their pay cut 20 percent to as much as 40 percent compared with Beaumont’s current salary scale. One source said the pay cuts could amount to $8,000 to $10,000 per year. Health insurance benefits, vacation time and quarterly bonuses also would be reduced. For example, Beaumont employees can accrue up to six weeks of paid vacation a year, but the home care nurses have had vacation time scaled back, holiday days down to two from six and quarterly bonuses eliminated, sources said. However, some employees with more than four years with the company could have up to four weeks of vacation pay, depending on seniority.

In a document handed to Beaumont nurses and others at the meeting in Southfield last month and obtained by Crain’s, Alternate Solutions executives explained to nurses and other caregivers they would be paid on a productivity scale based on points. Productivity incentives linked to salaries have become common in the home health industry. For example, minimum productivity for nurses would start at 24 points per week, six points per day and four designated days per week. Start of care for a day visit for a home health nurse would be worth two points and $100. Recertification or resumption of care would be worth 1.5 points or $75. For an occupational therapist, recertification would be worth 1.5 points or $82.50 and follow-up occupational therapy visits and discharges would be $55 each. However, two Beaumont sources said Alternate’s plan is for follow-up visits on patients to be conducted by physical or occupational therapist assistants or licensed practical nurses, who would be paid $35 per visit. If an assistant is unavailable, however, a registered nurse or physical therapist would be required to conduct the visit but be paid at the lower assistant rates. A knowledgeable home health executive, who asked to remain anonymous, said most home health agencies pay based on point scales or visits. He said it also is common for some home health visits to be made by assistants, depending on the need. However, he said it is “draconian” to pay highly skilled registered nurses or physical therapists, some of whom have doctoral degrees, the rate of assistants for follow-up visits. Because none of the Beaumont hospice nurses signed up for the joint venture, three sources said, Beaumont and Alternate granted hospice nurses various benefit and pay concessions. They included giving hospice nurses four weeks of vacation to start, additional holidays and nearly their same Beaumont equivalent wages. Two Beaumont home health nurses told Crain’s that the health system’s nurse council met with Beaumont executives last week to discuss pay and benefits for the home health staff. The council asked for the same pay and vacation arrangement for home health nurses that hospice nurses were granted in talks the previous week. At Friday deadline, two sources said Beaumont and Alternate still were considering other concessions for the home health staff. However, Beaumont executives told some nurses they could reapply for Beaumont jobs and keep their accrued benefits if they accepted a job transfer to anoth-

BEAUMONT HEALTH

er position before the end of 2019. Cargill said several home health companies in Michigan have developed a variety of formal and informal partnerships with hospitals to improve patients’ post-acute care experience and reduce inpatient readmissions. All home health agencies work closely with hospitals to ensure good communication on post-acute care transfers and care delivery, he said. Some companies such as Residential Home Health and Great Lakes Caring Home Health and Hospice have contracted with hospital systems to manage their home health or hospice services. For example, Crain’s has reported that Residential is working with Mary Free Bed hospital in Grand Rapids. Residential also has joint ventures in Illinois with Edward Hospital in Naperville, Elmhurst Memorial Healthcare and DuPage Medical Group in Downers Grove, and Allegheny Health Network in Pittsburgh. In the previous interview, LaCasse said: “Part of the strategy is to keep the patient in the network. We can oversee quality and safety (better) in the home health division. We work with doctors to try and reduce readmissions. It all makes sense to increase services within the network.” It is unclear how closely Beaumont will work with Alternate Solutions. However, two Beaumont nurses said that Alternate executives have told them they will have discharge employees working at Beaumont hospitals to help guide or recommend inpatient discharges to the joint venture company. Another factor for Beaumont and other hospitals to consider when changing post-acute care services is financial losses they can incur because of Medicare’s readmission penalties. Last year, Medicare’s readmission rule reached its maximum penalty and deducts a full 3 percent from Medicare payments for those hospitals that fully fail to meet their readmission targets. As a result, most hospitals lose money when they need to readmit certain patients within 30 days of discharge. Health systems typically operate home health companies to help manage post-acute care and reduce readmissions. Despite significantly reducing readmissions, Beaumont Hospital in Royal Oak lost $2.4 million in Medicare reimbursement in 2018 with a 17.6 percent readmission rate, slightly above the national average of 15.3 percent. While those rates are lower than in previous years, Beaumont still lost money based on the formula Medicare uses. Jay Greene: (313) 446-0325 Twitter: @jaybgreene

C R A I N ’ S D E T R O I T B U S I N E S S // D E C E M B E R 1 7 , 2 0 1 8

THE WEEK ON THE WEB

RUMBLINGS

$830 million Monroe Blocks project breaks ground

Gilbert thinks DetroitWindsor deserved HQ2

DECEMBER 7-13 | For more, visit crainsdetroit.com

ew York City and Washington, D.C., be damned: Dan Gilbert continues to think Amazon made the wrong decision in not picking Detroit and Windsor for its so-called “second headquarters.” The billionaire founder and chairman of Quicken Loans Inc. and Rock Ventures LLC implied that brass from the Seattle-based company that, as of Thursday, had a market capitalization of $806 billion, didn’t visit the city as it was mulling responses from more than 200 in North America late last year and early this year. “We tell everybody, you just can’t understand what’s going on here unless you’re on the ground,” Gilbert said last week in an interview. “It doesn’t matter what you say, or

an Gilbert has officially broken ground on a $830 million redevelopment of a 3.66-acre swath of downtown Detroit to the east of his Quicken Loans Inc. headquarters. The project by his Detroit-based Bedrock LLC real estate development, management, leasing and ownership company is slated to feature a 35-story office tower and 482 residential units, including a 17-story residential tower, plus retail and other uses in a total of 1.4 million square feet across a series of buildings. The office tower — the first high-rise office tower to be built downtown in a generation — is slated to be 847,000 square feet. The project is also anticipated to include 117,000 square feet of retail space spread across the two phases. A 1,200-space below-ground parking deck is also planned. The office space is necessitated by a largely full roster of office buildings in and around Campus Martius, most of which are owned by Gilbert. The founder and chairman of Quicken Loans and Rock Ventures LLC has spent the last several years assembling a vast swath of Detroit real estate totaling more than 100 properties and 15 million square feet in and around downtown. “If we want to show people (office tenants) around Detroit, there really is nowhere to go,” Gilbert said during an event at the site that lasted more than an hour and featured several speakers. “We have to build and continue to grow.” Construction is expected to be complete in 2022. “This is not just about a bunch of buildings ... it’s about an ecosystem to live, work and play,” Gov. Rick Snyder said during the event. Last week’s groundbreaking took place on Block A, the block at Campus Martius and Monroe Street. Block A represents about two-thirds of the Monroe Blocks project and will be anchored by the 35-story glass and terra cotta office tower offering a combination of large floor plates, tall ceiling heights and access to sunlight “currently unprecedented in Detroit,” officials said in a news release. The office tower is also designed to be Detroit’s first WELL Certified building, a standard that measures the impact of a building on both humans and the environment. Mayor Mike Duggan noted the site has been vacant for more than four decades and the new building will signal a sharp departure from the property’s recent history. “Fourteen thousand jobs going onto a site that has been vacant for more than 40 years,” he said during the event. “It’s been remarkable, the pace of change. The historic nature isn’t lost on me.”

BUSINESS NEWS J Detroit-based Hamilton Anderson Associates has opened a new office in Atlanta as the first of what could be several other new offices around the country. It plans to create 20-25 jobs there next year after eliminating 11 architect and designer positions in Detroit last month.

the videos you send.” Amazon last month selected the NYC-DC hydra as its HQ2 following a more than year-long process that was riven with criticism from some who saw it as nothing more than the company pitting cities against each other in a race for massive tax incentive packages. The splashy 243-page Detroit-Windsor bid package, which also included a hype video, didn’t make the shortlist of 20 cities from which Amazon ultimately made its final selection. “I think they would have made a better choice coming here,” he said. But, Gilbert understands business is business. “They are a private company and can do whatever they want, and best of luck to them.”

SCHMIDT HAMMER LASSEN ARCHITECTS

The Monroe Blocks project is to include 117,000 square feet of retail space spread across the two phases.

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

$22M

The asking price for the Fowler Building downtown, which was purchased for $700,000 six years ago

$2.6M

The amount of money committed to the Michigan Opioid Partnership for fighting the prescription drug epidemic in the state

$60M

The cost of a new high-end residential development going up in Detroit’s Lafayette Park

J Grand Rapids-based HopCat is changing the name of its legendary Crack Fries over sensitivities to its connection to crack cocaine. A new name has not been chosen. “Rest assured, the recipe and ingredients are not changing,” CEO Mark Gray said. J Prep work for a $60 million to $70 million residential development in Lafayette Park is scheduled to begin in January after several months of amassing land and striking an important deal with a neighboring church. Once complete, the highend Pullman Parc would fill 4 acres on Detroit’s near east side with 180 apartments and 81 for-sale homes. J The New York-based investment group that paid $700,000 six years ago for the Fowler Building downtown is seeking a big payday. Sequoia Property Partners has listed the 55,500-square-foot building at 1225 Woodward Ave. for $22 million, a possible return on investment of $21.3 million.

J Grand Rapids-based Madcap Coffee Co. plans to open a new shop next month at the new $25 million Shinola Hotel development in downtown Detroit. It will be its first location outside of Grand Rapids. J Tooling Technology LLC is relocating its headquarters from Ohio to Macomb Township in a $19.9 million move it says will create 100 new jobs over five years. The automotive supplier plans to uproot from Fort Loramie to Michigan, where 257 of its total 650 employees work out of four different locations.

OTHER NEWS J Gov. Rick Snyder’s administration moved Chief Medical Executive Eden Wells into a newly created physician position within the Department of Health and Human Services five days before a Genesee County judge ordered her to stand trial for involuntary manslaughter in Flint’s water crisis. The move will make it more difficult for Gov.-elect Gretchen Whitmer to fire Wells outright after she takes office on Jan. 1. J Quicken Loans Founder and Chairman Dan Gilbert and his wife, Jennifer, have pledged $12 million to fund pioneering gene therapy research aimed at finding a cure for neurofibromatosis type 1. Their oldest son, Nick, was born with the disease, a nerve disorder that causes tumors to grow anywhere in the body. J The PGA Tour Rocket Mortgage Classic, scheduled for June 27-30 at the Detroit Golf Club, has put tickets on sale in time for holiday gift-giving. The limited sale will run through Dec. 23. J The city of Detroit increased its residential snow plowing budget by 20 percent and bought equipment to help keep protected bike lanes clear. This winter, snow plowing contractors must clear 16-foot-wide paths — up from 10 feet — on residential streets to allow easier two-way passage.

CHAD LIVENGOOD/CRAIN’S DETROIT BUSINESS

Gov. Rick Snyder, a one-time chairman of Gateway Inc. and former venture capitalist, rejects characterizations that he has run state government like a business.

Snyder: I haven’t run government like a business O

utgoing Gov. Rick Snyder says he’s not focused on his legacy, but the former Gateway Inc. chairman and venture capitalist wants to correct the widely accepted perception that he has run the state of Michigan like a business. In a wide-ranging exit interview with Capitol reporters last week, Snyder rejected a characterization that he ran the state like a business for the past eight years. “I’ve never run it like a business because the motive is not profit,” said Snyder, who signed a $1.8 billion annual tax cut for corporations in his first year in office. “The motive is to help people. That’s their characterization. I think that’s totally inaccurate.” “The things I do is not about anybody making money or anything like that,” the two-term Republican governor added. Snyder, an accountant by training, said he’s established “business practices” within the state government bureaucracy, such as his focus on data, metrics and dashboards to track progress of state programs and initiatives

and building a $1 billion rainy-day surplus fund. The governor offered the Detroit bankruptcy as an example of how he has not run government like one of his businesses. “That was not about money to me. The citizens of Detroit deserved better services,” Snyder said. Detroit’s Chapter 9 bankruptcy was ultimately run similar to a Chapter 11 corporate bankruptcy, led by a team of top-notch business bankruptcy attorneys from the global law firm Jones Day, accountants from Ernst & Young and restructuring consultants from Miller Buckfire & Co. and Conway Mackenzie Inc. And while Snyder told reporters he hasn’t thought about his legacy, he talked about Detroit’s historic trip through bankruptcy court like it was indeed part of his legacy. “And I did, I believe, some extraordinary things that not many people believe would be done or would have done themselves — and that was to take care of the citizens of Detroit,” Snyder said.

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