Crain's Detroit Business, March 4, 2019 by Crain's Detroit Business

Crain’s Forum Pages 15-19

Bill Ford Jr: VW, other automakers welcome in Corktown Page 12

MARCH 4 - 10, 2019 | crainsdetroit.com SPECIAL REPORT

IS THE DISTRICT DETROIT DELIVERING?

An aerial view of The District Detroit, which is anchored by Little Caesars Arena. LARRY PEPLIN FOR CRAIN’S

Residential portion of entertainment district lags

More inside

By Kirk Pinho

Terms show demands. Page 23

kpinho@crain.com

and Bill Shea bshea@crain.com

In May 2017, six men took turns speaking before a wide patchwork of building renderings. The key speaker, Christopher Ilitch, boasted of a half-dozen new and rehabilitated buildings intended to bring nearly 700 apartments to downtown Detroit in coming years. Ilitch was speaking at a press conference about the residential launch of

Map: What’s built, what’s not. Page 23 Slow progress was hurdle in refinancing. Page 24

his family’s District Detroit project, the sprawling sports and entertainment development unveiled in July 2014 and anchored by a new hockey arena that would be surrounded by what were branded as five distinct new neighborhoods to be created concurrently. They would be robust new residential, retail and office developments. “The District Detroit will be one of the most unique and exciting places in the country to live,” said Ilitch, scion of the powerful billionaire family that owns the Little Caesars pizza

chain along with a casino and the Detroit Tigers and Detroit Red Wings. Ilitch and his family’s Detroit-based Olympia Development of Michigan real estate company had teamed up with a pair of developers on the projects, three of which were to begin in 2017 and three in 2018 for a total of 686 new apartments. Today, more than 18 months later, there are no shovels in the ground, and it’s unclear if there will be any time soon. SEE DISTRICT, PAGE 22

JEWELRY

Jacques Panis launches local, lab-grown diamond company

By Sherri Welch swelch@crain.com

Jacques Panis is looking to do for Troy-based lab-grown diamond startup New World Diamonds LLC what he did for Shinola/Detroit LLC: create a sought-after luxury brand. The odds are in his favor, given that Shinola was known as an old shoe polish brand before Panis turned it crainsdetroit.com

into a high-end watch, bicycle and leather goods brand. It also helps that the market for lab-grown or cultured diamonds is forecast to rise as natural supplies of diamonds dwindle and consumer interest, especially from millennials, rises. “I would argue watches and jewelry ... have very similar product deVol. 35 No. 9

$5 a copy. $169 a year.

NEWSPAPER

velopment paths from sketches all the way to the finished product,” Panis said. But it wasn’t necessarily his experience in jewelry or watches that landed him the new job, he said. “It was more about my experience in building brands, marketing and driving the growth of a business ... I’m an entrepreneur.”

It was only a matter of months after his departure from Shinola that New World Diamonds’ parent company, Troy-based jewelry manufacturer Combine International Inc. and its founder, Shrikant Mehta, contacted him to lead the new company and its online retail platform, said Panis, 41. SEE DIAMONDS, PAGE 26

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Need to know

 Former Shinola president launches local, lab-grown diamond company  Looks to build New World Diamonds into luxury brand

Panis 2019 S I N E S S // M A R C H 4 , CRAIN’S DETROIT BU

FOCUS

LAW

WAITING GAME Delays, denials for visa petitions put local businesses in a bind By Doug Henze

Special to Crain’s Detroit Business

of foreign workers seekougher scrutiny by immigration officials trying to fill high-skill ing visas is tying the hands of businesses Visa petitions are requiring jobs, local immigration attorneys say. denials are on the rise. and delays and ion, documentat more by the Need to know In some cases, that scrutiny — backed and Hire JJEmployers are facing tougher scrutiny as they Trump Administration’s Buy American be driving pursue H-1B and other visas for foreign national American executive order — may attorneys ar- workers work across the U.S. border, those that order gue. President Donald Trump signed H-1B visas rose from 15.9 percent in wages and JJDenials of in April 2017, aiming to create higher 2017 to 22.4 percent in fourth-quarter while award- third-quarter workers, U.S for rates employment 2017, according to one report workers. ing visas to the most-skilled foreign the ad- JJLocal law experts are trying to help clients smooth “We know the government is following a partner at the process and prevent delays, but there aren’t ministration’s lead,” said Eli Maroko, and prac- many options Jaffe Raitt Heuer & Weiss in Southfield firm’s immitice group coordinator for the law everything gration practice group. “They’ve done package foreign na- In this local to discourage employers from hiring JJDelays, denials for visa petitions put tionals.” Page Citizen- businesses in a bind. This Maroko pointed to an analysis of U.S. by nonparti- JJRenegotiated NAFTA not likely to impact ship and Immigration Services data the National immigration rules. Page 11 san public policy research group that indicating Policy American for Foundation Law Firms in percent in JJCrain’s List of Largest denials of H-1B visas rose from 15.9 Michigan. Page 14 Southeast fourth the in percent third-quarter 2017 to 22.4 foreign naquarter of that year. Those visas allow in specialized in the tionals with bachelor’s degrees engineering or law to work, temporarily, fields such as chemistry, accounting, for evUnited States. fourth-quarter 2017 resulted in “requests the Meanwhile, 63,184 H-1B filings in to Maroko estimated adds $2,000 to $5,000 qualidence” — additional documentation outside experts to prove foreign workers comprocess, since businesses often hired 63,599 RFEs in 2017’s first three quarters ify for the visas. That’s compared to bined, the research group found. already facing labor shortages in fields These are extra hurdles for U.S. companies American said. The government isn’t saving such as engineering and IT, Maroko available, he argues. jobs, since domestic workers aren’t and the foreign nationals, which are the best “To be doing this much to discourage and send he said. “We educate them here brightest, is just complete foolishness,” rates have government concedes RFE and denial them away. It makes no sense.” The petitions still get but says the vast majority of H-1B increased since September 2017, additional information may have for requests receive that approved. Employers specialty occupation or done an inadefailed to establish a position as a other among relationship, yee quate job of showing an employer-emplo says. common missteps, the government benefits system is one of “Ensuring the integrity of the immigration in the effort to strengthen this administration’s guiding principles and protect American workers,” employment-based visa programs Collins. “USCIS has made a se-

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“To be doing this much to , discourage foreign nationals e best and the

C R A I N ’ S D E T R O I T B U S I N E S S // M A R C H 4 , 2 0 1 9

MICHIGAN BRIEFS

INSIDE

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

Flint-based Diplomat’s shares tumble

Diplomat Pharmacy Inc. is taking its medicine after announcing last week that it is delaying release of its fourth-quarter and full-year financial results, prompting its stock to lose over half its value. Flint-based Diplomat (NYSE: DPLO) saw its stock fall Feb. 22 to $5.87 — a decline of $7.59, or 56 percent, in one day. The stock closed last Thursday at $6.45 per share. The company’s decision to delay its earnings report is a red flag for Wall Street because it portends bad news for the firm and its investors. The postponement is due to the company’s auditors assessing a noncash impairment charge, Diplomat said in a news release Feb. 22, a Friday. The company also withdrew its preliminary 2019 full-year outlook after January results came in “significantly below expectations.” Full-year financial results for 2018, and the related conference call, have been pushed to March 15. The company said it expects to file its 10-K for the fiscal year that ended Dec. 31 shortly after. Diplomat said its previously announced outlook of 2018 revenues — $5.5 billion to $5.6 billion — and EBIT-

DA of $167 million to $170 million remain the same. “While we have made demonstrable operational and service improvements in our PBM (pharmacy benefit manager) business, we are still working through issues and headwinds, which we communicated in early January,” Diplomat Chairman and CEO Brian Griffin said in the release. “This is an important transitional year for the PBM business. We have a clear path to stabilization and growth but, as communicated earlier this year, our patience is not unlimited.” Griffin took the helm May 2018 when he replaced company co-founder Phil Hagerman, who retired in January. The non-cash impairment charge is related to its pharmacy benefit manager business, formed after the company acquired LDI Integrated Pharmacy Services for $595 million and National Pharmaceutical Services for $47 million in November 2017 and combined the two to form CastiaRx. The move made investors uneasy and happened as competition booms in the specialty pharmacy medications industry. The impairment charge is expected to be equal to a significant portion of the PBM’s “Goodwill and Definite-lived intangible assets,” which total approximately $630 million as of Dec. 31, prior to impairment charges, the company said in the release.

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RUMBLINGS

WEEK ON THE WEB

ables out of the nine: unemployment insurance claims, total state trade and hotel occupancy.

JOHN POTTENGER VIA MICHIGAN DEPARTMENT OF NATURAL RESOURCES

The Iron Belle Trail near Manistee.

Michigan economic index sees slight increase

Comerica Bank’s average Michigan Economic Activity Index saw very slight improvement in 2018 over the previous year. It averaged 118.6 points last year, a 0.2-point increase over 2017’s average, the bank under Dallas-based Comerica Inc. said in a news release last week. For comparison, 2017 was up one point over 2016. Between June and December, the Michigan index that measures economic momentum saw an increase two months: October and, more recently, December, when the index was up 0.2 points to 118.8. Overall, economic activity fell in the second half of last year.

The Michigan index hasn’t risen for more than three months in a row since the beginning of 2017. Consumer confidence is better since the end of the federal government’s partial shutdown in late January, though, Comerica has found. It expects to see some changes to already-reported index figures over the next couple months due to the shutdown’s impact on data. Comerica’s measurement of economic activity contains nine variables: nonfarm payrolls, continuing claims for unemployment insurance, housing starts, house price index, industrial electricity sales, auto assemblies, total trade, hotel occupancy rates and sales tax revenues. All data are seasonally adjusted. December saw three negative vari-

Michigan DNR offers grants for Iron Belle Trail projects

Officials are taking applications for the fifth round of funding to support work along the Iron Belle Trail, the Associated Press reported. The Michigan Department of Natural Resources said proposals are due March 15 for grants up to $50,000. Recipients will be announced in May. The trail offers two routes for hiking and bicycling that add up to more than 2,000 miles. Officials say the project is about 70 percent finished. This year’s funding will focus on segments ready to go into construction this year or next, along with project engineering, design and purchase of trail signs, DNR state trails coordinator Paul Yauk said. Partners, communities and eligible nonprofits can apply for grants. A funding match is recommended but not required.

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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 // M A R C H 4 , 2 0 1 9

LEADERSHIP

DEVELOPMENT

Women leaders look to open boardroom doors

COLLISION COURSE?

By Dustin Walsh dwalsh@crain.com

In a conference room on the 39th floor of Tower 200 in the Renaissance Center last week, 28 of Southeast Michigan’s most powerful women business leaders gathered. They are accomplished, many having busted glass ceilings on their way to the top of their respective fields. But a single door has been harder to break down — the corporate boardroom. So these 28 women signed on to learn the basics and add their names to a growing list of Michigan women leaders who are willing and ready to sit on for-profit company boards as part of a program put on by advisory firm Deloitte & Touche LLP. This program, the second cohort of the Deloitte Board-Ready Women program in Detroit since 2016, is deFCA

A rendering provided by FCA of what the new Mack Avenue Assembly Complex would look like once FCA invests $1.6 billion to convert the two plants, adding 3,850 new jobs to support production.

Mega projects in Southeast Michigan could run into skilled labor shortage By Chad Livengood | clivengood@crain.com and Kirk Pinho | kpinho@crain.com

iat Chrysler Automobiles’ ambitious plan to have Jeep SUVs rolling off the line of a new Detroit assembly plant fused together from two engine plants within 22 months could be on a collision course with escalating skilled labor demands for mega projects

 DTE Energy Co.’s new $1 billion natural gas power plant in St. Clair County.  Dan Gilbert’s $909 million skyscraper at the Hudson’s site, $830 million Monroe Blocks redevelopment and $553 million criminal justice complex for Wayne County.  The $4.4 billion Gordie Howe International Bridge.  Ford Motor Co.’s multi-year overhaul of its Dearborn campus and $740 million Corktown campus. “This one is coming quick,” said Dave Meador, vice chairman and chief administrative officer of DTE Energy, which plans to swap 50 acres of land at its Connor Creek complex with the city of Detroit as part of the 200 acres the city needs to assemble

for FCA by the end of April. “Given when they want to be in production, even if you ramped up apprenticeship and training programs tomorrow morning, there’s still going to be huge demand that’s going to put pressure” on the skilled trades, said Meador, who co-chairs Mayor Mike Duggan’s workforce development board. “I expect there’s going to be a lot of overtime and the trades are going to end up bringing in more help from out of state.” But Doug Maibach, chairman of Southfield-based construction company Barton Malow Co. and chair of the Associated General Contractors of Michigan's labor relations division, cautioned that the shortage of skilled trades may not be

in Southeast Michigan. FCA’s planned $1.6 billion conversion of its two Mack Avenue engine plants into an assembly plant will have to compete for skilled labor in a construction market that’s awash in other billion-dollar projects set to be in full swing over the next two years: as much of a problem as it might initially seem. “There is an incredible backlog of projects in this area, but they don’t all have the same demands at the same time. Still, the reality is that we don’t have all the trades we need,” said Maibach, whose company is the contractor on Gilbert’s Hudson’s site project. “From a construction workforce demand, it actually has fairly low employment because it’s a high-rise and you can’t physically stack the trades until much later in the project because it’s not feasible or safe,” Maibach said. Before FCA’s announcement last week — which is part of a $4.5 billion investment in five plants in Detroit,

Warren, Sterling Heights and Dundee — construction work originally projected to happen this year on mega projects in Southeast Michigan was already beginning to move into next year’s work schedules. Detroit-based construction giant Walbridge Aldinger Co. estimates 10 million craft work-hours that were supposed to be performed by skilled trades workers this year will shift to 2020, said Mike Haller, president of Walbridge. “There’s a bit of a lull in Southeast Michigan as we speak as it relates to putting construction in place,” Haller said. “That’s because of the delayed starts in a number of mega projects in Southeast Michigan.” SEE PROJECTS, PAGE 21

The planned skyscraper on the Hudson’s site (left), the planned Wayne County jail project, the Monroe Blocks development and the Michigan Central train station renovation are among the projects on tap for Southeast Michigan.

Need to know

 Deloitte launches second cohort to train women on board leadership  Only 22.5 percent of Fortune 500 board seats held by women  Previous cohort led to board seats for five SE Michigan women leaders

signed to prepare women business and nonprofit leaders in the region for board service through a series of tutorials and instruction from Deloitte advisers and women currently on boards. The fact is that men, particularly older white men, dominate board director seats across the private sector, though new seats are increasingly moving toward greater diversity. Men held 4,392 of the 5,670 total board seats in Fortune 500 companies in 2018, compared with just 1,278 board seats held by women, according to a recent Deloitte study. Nearly 60 percent of board seats are held by white men and Sandra the median age Bouckley: In of board direccurrent cohort. tors in Fortune 500 companies is 63 years old. And boards have been raising mandatory retirement ages to maintain those current board directors. Of Fortune 500 boards, 44 percent have a mandatory retirement age of 75 or older, up from only 11 percent in 2008. “It’s an old boys network, and for many of us there’s this door we want to enter, but the doorknob is on the other side of the door,” said Sandra Bouckley, CEO and executive director of Southfield-based engineering nonprofit SME and participant in current Deloitte Board-Ready Women program. “For so many board directors — they’re old — their only experience with women in the workplace is behind a secretary’s desk. SEE BOARDS, PAGE 26

C R A I N ’ S D E T R O I T B U S I N E S S // M A R C H 4 , 2 0 1 9

Early literacy supporters look to get on same page as 3rd-grade requirement looms By Sherri Welch

swelch@crain.com

Business Law Experience

In Your Corner.

Groups working to boost early literacy rates in Detroit are looking to get on the same page as a new state requirement nears for third-graders to read at grade level or be held back. Skillman Foundation, Kresge Foundation, W.K. Kellogg Foundation and 313Reads — the Detroit brand for the national Campaign for Grade Level Reading, which is led by United Way for Southeastern Michigan and early childhood nonprofit Brilliant Detroit — are supporting and leading literacy-building efforts in the city. “This is a big and important issue. ... Lots of people should be working on it,” said Punita Thurman, program director for the Skillman Foundation in Detroit. But the efforts they are supporting and leading have varying targets, measures and approaches. The groups plan to gather in March to look for opportunities to align their efforts. They will invite other funders, educational and city leaders to the table to identify what works and how to replicate it, address gaps, discuss collaboration on things like common measures and targets and shared resources and continue to measure progress on literacy rates. “All of these efforts are in service of helping kids. They don’t all target thirdgrade reading, but they all lay important foundations,” Thurman said. The working concept for the group is to create a space where they can learn from one another, identify gaps and amplify their collective impact, she said. That won’t be short-term work, but the looming literacy requirement for third-graders is creating a heightened sensitivity to the need. “It’s not something any one of us at the table can solve on our own ... so we should be working together,” Thurman said.

Reading rates

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Business, contracts, transactions, employment and private equity, with a focus on technology, internet and software companies Named in 2014 and 2015 to Detroit Techweek 100; Detroit area leaders significantly impacting business and technology Tier 1 Metropolitan Ranking in Commercial Litigation and Corporate Law 2019

The 2017-18 M-STEP test of third-graders in Detroit showed 15.7 percent were reading at grade level, said Terry Whitfield, program officer at Skillman. Within that, just 11.3 percent of third-graders in Detroit Public Schools Community District were reading at grade level, while 21.2 percent of third-graders in Detroit charter schools were reading at grade level. Statewide, just over 44 percent of third-graders were proficient in reading. During a community meeting in late December, Nikolai Vitti, superintendent of Detroit Public Schools Community District said while there are exemptions for students with special education needs and those who speak little to no English, the new law could mean as many as 90 percent of Detroit third-graders would be held back next year, according to a Chalkbeat report. Early literacy is a key focus of the state superintendent, governor, Michigan Board of Education and Michigan Legislature, said William DiSessa, a spokesman with the state’s Office of Public & Governmental Affairs, in an email. “The need to get all children reading

Wendy Lewis Jackson: Ensure coordination.

Tammie Jones: Reading predicts success.

Need to know

JJSkillman, Kresge, Kellogg and 313Reads seek to bring system-level stakeholders, funders together JJGoal is to align efforts, fill gaps and replicate successful strategies JJMove comes just over a year before new state third-grade reading law takes effect

at grade level by third grade is urgent,” he said. Michigan schools are using state funds to develop reading intervention programs, and districts have begun the required three-times-per-year assessments of K-3 reading skills during the school year to address issues earlier, DiSessa said. Not every goal gets solved by thirdgrade reading, but it is a bellwether to make sure kids are on track, Thurman said. Skillman is funding a multitiered approach, with support for the Teach313 quality teacher recruitment initiative, in-school and out-of-school tutoring and other efforts such as a summer reading program aimed at stemming reading loss over the summer. Skillman plans to make grants of up to $360,000 to four nonprofits for programs that improve reading proficiency for Detroit students in kindergarten through fourth grade this summer, working in partnership with city of Detroit Summer Fund Centers and a school, community center, library or place of worship. In school, Skillman is funding nonprofits like Michigan Education Corps and Soar Detroit. It is also providing grants to Center for Success Detroit and Brilliant Detroit for out-of-school programs that include literacy-building components, Whitfield said.

Hope Starts Here Through the $50 million Hope Starts Here initiative, Kresge and Kellogg are focused on early childhood education from age 0-8. Among the efforts the initiative is funding are supports for parents as their children’s first teacher, access to books and instructors to support improved literacy, said Wendy Lewis Jackson, managing director for the Detroit Program at Kresge. Coordination between funders focused on literacy is important to ensure the “literacy-rich environments” Kresge and Kellogg are seeking to foster with parents and caregivers continues when children get to kindergarten and beyond, she said. “One of the things we’re seeing in the research is if that if the hand-off from early education to kindergarten is not strong, it impacts the reading proficiency as kids move to first, second and

Punita Thurman: Efforts in service of helping kids

Terry Whitfield: Exposure helps proficiency.

third grade,” Lewis Jackson said. “You want to ensure there is coordination, a continuum that bridges early childhood to third grade.” Bringing stakeholders together ensures there is alignment on critical issues like the types of curriculum used, the kind of support provided to families to ensure children have access to books and other literacy tools like phonics and literacy games, said Lewis Jackson, who is also co-chairing a third-grade reading group for the Coalition for the Future of Detroit Schoolchildren, a collaboration of education, corporate, philanthropic and social sector leaders working to improve education in Detroit’s traditional and charter public schools. “We aren’t going to make progress if everyone has a different target. ... this (collaborative) approach is needed to make progress on the issue,” Lewis Jackson said.

313Reads The foundation-supported efforts and gathering next month build on the work of 313Reads. United Way and Brilliant Detroit assumed the group’s work following the dissolution of Excellent Schools Detroit in 2017, with a $500,000 grant from General Motors Co. funding the efforts. Launched by the Annie E. Casey Foundation more than a decade ago, the national Campaign for Grade Level Reading identified third-grade reading proficiency as a critical factor in whether kids graduate from high school, said Tammie Jones, vice president of education at United Way. United Way recognized the new Michigan proficiency requirement was going to have profound impacts on families and children, Jones said. As part of the national campaign, 313Reads lays out three key levers for third-grade reading proficiency: attendance, summer reading programs and supports like access to books and early literacy assistance, such as coaching parents to think about things like storytelling; there are also text “nudges” three times a week to remind parents to read with their children and look for opportunities to expand vocabulary such as naming things that start with the letter “s” at the grocery store. Brilliant Detroit, in partnership with Libraries Without Borders, is managing “wash ‘n’ learn” sites at two Detroit laundromats that have made space for laptops or computers equipped with ABCMouse software funded by United Way. Geared to kids ages 2-8, the software includes educational games, books, puzzles and songs that help kids learn to read through phonics and teach lessons in math, social studies, art, music and other areas.

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Pilot program would let ambulances take patients places other than hospitals By Jay Greene jgreene@crain.com

Kitch Drutchas Wagner Valitutti & Sherbrook

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Ambulance companies could be paid by Medicare early next year in a test program to transport seniors to non-hospital facilities, a proposal that partly had its origins in Michigan from Greg Beauchemin, CEO of Southfield-based Community EMS, an ambulance and consulting company. In 2014, Beauchemin laid out to Crain's an ambitious “mobile health initiative” designed to reduce unnecessary trips to the hospital for patients suffering non-urgent care situations, save the health system money and improve outcomes for patients. He discussed the initiative with Medicare officials several years ago when he unsuccessfully applied for a $370,000 innovation grant for the project. Last week, the Center for Medicare and Medicine Innovations issued a policy that would allow ambulance suppliers and providers to transport Medicare and Medicaid patients to areas besides the emergency room, such as a doctor's office or urgent care facility, or use telemedicine services, in a bid to reduce unnecessary trips to the hospital. Because the average cost of an ambulance run to a hospital is about $3,700, Beauchemin argued, Community EMS could make a house call for 10 percent of those costs, saving payers millions of dollars in unnecessary costs. For years, at least 50 percent of ambulance runs in Detroit are deemed unnecessary, he said. The Medicare pilot, which will begin to take applications to participate in the program this summer and begin in early 2020, is intended to create new incentives for ambulance companies in the traditional Medicare fee-for-service program. Medicare currently only pays for ambulance services to take patients to an emergency room, which runs against the public and private payer movement to create a value-based payment system that seeks to improve patient outcomes and reduces costs. “A payment system that only pays first responders to take people to the hospital creates the wrong incentive,” said Adam Boehler, director of the Medicare innovation center, in a statement to Modern Healthcare, a sister publication to Crain’s Detroit Business. “That leads to unnecessary ER visits and hospitalizations and ultimately that harms patients." The new Medicare ambulance policy also might help mental health providers and hospital emergency departments in Michigan with overcrowding and boarding issues of psychiatric in ERs, said Bob Sheehan, CEO of the Community Mental Health Association of Michigan. Last month, Crain’s reported that a coalition of mental health experts want to update the state mental health code in several ways. One is to allow ambulances to transport psychiatric patients directly to crisis centers that have pre-admission screening units. Paramedics could be trained to identify patients who don't require medical care. Those patients could then be transported to specialized outpatient centers that would evaluate them and either get them into a hospital bed or

Need to know

J Medicare to begin program that would pay ambulance companies to transport seniors to non-hospital facilities for primary or urgent care services J Community EMS in Southfield proposed the program several years ago as a way to save payers unnecessary expense and to generate new revenue streams J Program will begin as a pilot program in early 2020. It also could help mental health patients receive more prompt care

Bob Sheehan: Helps provide missing piece.

Nicholle Mehr: Company eager to participate.

into behavioral health counseling. “This would help to provide of the missing pieces in the nation’s and Michigan’ crisis mental health system,” Sheehan said. Nicholle Mehr, vice president of operations with Community EMS Michigan, said the company is eager to participate in the program that fits in perfectly with ongoing efforts to expand mobile health and community medicine. Last fall, Community EMS received an $8,200 grant from the Michigan Health Endowment Fund to help train 40 paramedics in community medicine. The funding pays to develop the curriculum, buys books and covers educator payroll costs, Mehr said. The company also began testing a community paramedicine program, similar to the one being offered by Medicare, at Beaumont Hospital in Farmington Hills. So far, Beaumont Mobile Medicine, a Community EMS subsidiary that serves Beaumont hospitals, has taken care of about 10 patients discharged from Beaumont in Farmington Hills, Mehr said. Beaumont garnered state Department of Health and Human Services approval for the program. For example, Beaumont Mobile sends an ambulance crew to the discharged patients home to make sure they are following physicians' instructions. Medics conduct a medication inventory to ensure safety protocols are being followed, Mehr said. “Paramedics find (that) 90 percent of the patients have medication discrepancies. They take (meds) they already have at home and they take what they are given at the hospital,” she said. “It might be different dosages or (prescriptions). We want to make sure they do everything right so they stay healthy and aren’t readmitted unnecessarily.” Mehr said the Beaumont community paramedicine program so far is promising. “We are hoping to expand this program with the Medicare policy,” she said. Another benefit to the Medicare policy will be to help reduce cost readmissions by patients.

In 2017 and 2018, Mehr said Beaumont Health and its eight hospitals incurred approximately $15 million in Medicare readmission penalties. Over the past seven years, many hospitals have been paying financial penalties to Medicare for avoidable patient readmissions within 30 days of discharge that exceeded the national average for congestive heart failure, heart attack and pneumonia. Readmission penalties were part of cost-containment provisions in the Affordable Care Act of 2010 aimed at reducing costs and improving quality. Readmission rates averaged more than 20 percent six years ago before the penalties kicked in. Hospitals' efforts cut that to 15.3 percent in 2017, but that still costs Medicare billions of dollars a year. “If we can help decrease the cost of care, not just for the hospital, but for (out-of-pocket costs of) the patients, this proposed model will reduce costs and help improve patient outcomes,” said Mehr.

Funding and delivery system changes Under the policy, ambulance providers would be paid the same reimbursement as to a hospital ER if they transport the patient to an alternative site such as a 24-hour urgent-care clinic, a diagnostic testing facility or a physician office. Moreover, an ambulance supplier or provider could also earn up to a 5 percent payment adjustment in later years of the model if they meet certain quality measures. Medicare said it would also invite state Medicaid programs and other private health insurers to adopt the program. If the program becomes standard Medicare policy, Community EMS could stand to grow by 20 percent to 30 percent, Mehr said. Community EMS Michigan has approximately 100,000 transports per year. In Michigan, Community EMS employs 484 workers, including 331 EMS providers (paramedics and emergency medical technicians). Overall, Community EMS has 192,000 ambulance transports with 2,000 employees, and also has operations in Ohio, Illinois and Connecticut. Another goal of the Medicare ambulance transportation policy is to reduce appropriate use of the hospital ER, improving care and saving costs. “Some seniors have problems getting to their doctor’s appointments,” Mehr said. “They will miss fewer appointments and receive the care they need, otherwise they could have a problem and end up back at the hospital.” Besides helping patients make doctors appointments, the Medicare transportation policy also could stimulate business at urgent care centers or other diagnostic centers, she said. “Beaumont is (opening) 30 urgent care centers in Michigan (over the next year). This is important for the (future) model of care.” Beaumont Health, a Southfield-based health system, owns Community EMS. Jay Greene: (313) 446-0325 Twitter: @jaybgreene

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Humes: We occasionally have infants with very complex heart problems; they will need multiple heart surgeries within the first year of life. They need to be watched very closely, but we don’t want to hospitalize them for months at a time. We developed an application that allows the parents to do a lot of the monitoring so we can take care of them from a distance. Burns: Any advice for parents/grandparents as it relates to cardiology and youngsters? Humes: I would tend to be very hopeful. Parents are often scared to learn that their child has a heart problem, but the future for them is often very bright. Virtually all of the things that we see in children, we can take care of. Burns: Care at Children’s Hospital stops at 18 but some patients have pediatric cardiologists follow them into adulthood. Humes: We have a separate service that we call the Michigan Adult Congenital Heart Disease Center where we continue to take care of not all, but many adults.

with the therapy area. It had everything including a large parking lot. We’ve hired the program leads for each of our programs — art, music, speech, occupation therapy, technology and life skills. We have the place ready to go. Burns: Tell us about the partnership between Children’s Hospital of Michigan Foundation and LifeLab Kids. Reddy: Children’s Hospital of Michigan Foundation played a big role in getting this place up and running. The meetings were very helpful to help me understand the nonprofit world better. I'm very new to this. While I have a good business background, I had no clue about this nonprofit space. The donation the Children’s Hospital of Michigan Foundation has given us helped us tremendously. Burns: How could an interested person find out more about LifeLab? Reddy: Visit our website, lifelabkids.org, or on Facebook or Instagram. Burns: How many students do you want to have? Reddy: We were looking to start with 50 but we do see enrollment happening fast.

nationally televised Rocket Mortgage Classic happening in June. Smith: I hope that people who really want to play that same track as the Rocket Mortgage Classic will urge their bosses, their CEOs, their owners to take a look at the possibility of joining us. And they can go to paulwsmithgolf.com or chmfoundation.org for more information or to register.

Upcoming children’s health summit Evidence-based research on mental wellness will be the focus of a daylong 2019 Child and Adolescent Behavioral Health Summit hosted by the Children’s Hospital of Michigan Foundation. Hear from local and national leaders in children’s health about suicide prevention, trauma, anxiety and depression, and the stigma of substance abuse during the May 14th event. See the agenda and register now at www.chmfoundation.

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OPINION EDITORIAL

LETTERS

Slow pace at District Detroit leaves big hole

For capital, think beyond traditional

ive the Ilitch family credit where it is definitely due. Mike and Marian Ilitch began investing in Detroit in the 1980s — when few others did. First the Red Wings, then the Detroit Tigers, each eventually with new homes to play in for loyal fans. The Fox Theatre remains a stunning showcase. The family, even after the death of patriarch Mike Ilitch, continued to double down in Detroit with a new headquarters for Little Caesars Pizza adjacent to the theater. It is no doubt confusing, perhaps painful, to the Ilitch organization when criticized for not doing more. As Kirk Pinho and Bill Shea lay out in the story on Page 1, big plans for development — housing and retail particularly — that Christopher Ilitch outlined as long as five years ago have not occurred. Why? Myriad reasons, but the primary reason could very well be the Ilitches’ longstanding reputation for wanting to risk little, control everything and benefit at the expense of their partners who actually put the equity together. Whatever the reasons, the slow pace of development leaves a big hole between bustling downtown and now thriving, can’tfind-a-parking-place Midtown. The city bet on more tax-producing development when it issued bonds for the hockey arena development, including at least three multifamily housing projects that didn’t happen. So last year, facing a deadline to refinance or start paying 10 percent interest on the bonds, the city added debt from an area with higher property valuations to the south and refinanced a larger debt package for which the city now repays at 5 percent. (Ironically, it’s the surging value of Dan Gilbert’s investments to the south of the arena that helped the city secure the lower rate.) How a privately owned company operates — its investments, its priorities — is not normally the public’s business. But given the public investment in Comerica Park, Little Caesars Arena and the help the company received from the city in assembling land, the public has a seat at this table. Especially since it appears the city’s Downtown Development Authority is going to be paying the Ilitches a $74 million refund once the bonds are paid off for hitting a development investment threshold of $200 million for projects that basically benefit them: parking lots vs. new housing development. If the Ilitch organization can’t or won’t develop what it promised, it should turn over the land — much of it bought from the city on favorable terms — to someone who will.

To the Editor: We were very excited to read “Capital for minority, women entrepreneurs increases but still a struggle to access” and to read the Eckblad Group’s Capital Access report that sparked the story. This is such important work and we are glad for the new learnings and attention on supporting small businesses in Detroit. There are countless benefits to the region when entrepreneurs of color, immigrants and women are able to access capital and support — the more thoughtful action we take here, the better. They should have the chance to partner with mentors and coaches, navigate — and trust — lending systems not originally built for them, and submit applications to non-biased lenders. Emerging entrepreneurs must learn the “what” and the “how” of all possible streams of funding, and have easy access to comprehensive information about best-fit funding options. We also agree that more collaboration within the ecosystem will benefit all. Build Institute suggests yet another opportunity: to think beyond traditional CDFIs and banks. In order to truly move the needle and build a system that supports all entrepreneurs, we must offer creative solutions and leverage successes earlier in the continuum, and acknowledge all sources of microlending. This means tracking loans and grants of $50,000 or less by CDFIs and nonprofits, crowdfunding opportunities and online lenders. J For example, through our partnership with KIVA, we helped connect $218K to 32 borrowers in 2018, and are on track for a 25 percent jump in both of these measures in 2019. To date, this includes $350,000 total in zero interest loans to 50+ Detroit entrepreneurs. J Build also now oversees all Detroit SOUP events, which over time have helped fund 50+ projects, including 30+ projects that would likely not have existed otherwise. J Further, by providing a diverse mix of funding opportunities, nonprofits like Build help get entrepreneurs “loan ready” for banks and CDFIs as they grow. We prep our grads for Comerica Hatch Detroit, Motor City Match, NEIDEAS, Sam Adams Pitch, Detroit Demo Days and others, which

To the Editor: In response to Chad Livengood’s Opinion article in Crain’s Detroit Business issue of Feb.18-24, “A new higher-ed goal — and a clear message,” I find it disappointing on the lack of what the real “clearer message” should be. Yes, a “messaging problem” does exist, and Gov. Gretchen Whitmer is the one to correct and fill that challenge by addressing some facts of our education system. Not an easy task since it requires backbone, stepping on diehard-in-the-trenches toes, and sticking to real changes to meet the value and goals that have been before us for decades. Consider these facts to make changes with our nation’s education system: Since the end of World War II, spending per-student in our nation’s

roads in our town. The screen at Cobo’s main entrance and a smaller sign on the corner of Larned and Washington Boulevard were built with the intention of promoting events at the center as well as selling advertising. Only after they were added to the Cobo façade did operators learn that the 1965 Highway Beautification Act prohibits any billboard larger than 1,200 square feet from facing a designated scenic highway, in this case, Woodward Avenue, nearly three blocks away.

I guess we can thank Lady Bird Johnson, who crusaded against big, gaudy billboards on scenic highways. But Woodward is a major commercial artery. And, if you stand at the corner of Jefferson and Woodward, you can’t miss the big electronic sign — it’s 4,800 square feet. The sign on Cobo’s northeast corner is smaller. It generates $500,000 a year in advertising revenue. Imagine what the bigger sign could do, without making downtown look too much like a smaller version of Times Square. My question is: Now that the block

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have led to $2+ million in new support for local, emerging businesses. We are all working hard to be thoughtful and to leverage limited resources to open new doors for Detroit residents. Collaboration is a core value for us, as is our belief that we need a mix of programs to address the unique, model market scenario we have in Detroit — particularly for entry-level access and microenterprises, and particularly for women and people of color. We are leaders in this lending work, too, and our entrepreneurs are slaying dragons every day. We can help them out by further embracing new, relatively untraditional resources. April Boyle Founder & Executive Director Build Institute

Money hasn’t solved educational woes

public schools increased by over 650 percent. Where did the money go? One place was to hire more personnel. From 1950 to 2009 there was a 96 percent increase in student count. During that same time there was an increase in staff by over 380 percent ... four times the increase in students. From 1992 to 2014, there has been a 19 percent increase in student count and an increase of 36 percent in staffing. Seems that the staffing increases have been a huge expense for taxpayers yet has not gained much student achievement. Perhaps showering our public schools with more and more money has been a costly failure. More money from taxpayers, yet same problems. Can we try something new? To reach some of the goals as stated in Chad Livengood’s commentary will surely require major changes to our entire system … administrators, teachers, methods. Yes indeed, there will be a lot of details to flesh out. Where the “rubber hits the road” may not be in more programs, more committees and more money, but changes within what we have to make what money we already have return more bang for our buck. Some people may not like the changes, but isn’t what is at stake here the success of our students? Let’s get serious with this decades-old issue. Marilyn Henry Canton Township

MORE ON WJR Listen to Crain’s Group Publisher Mary Kramer and Managing Editor Michael Lee talk about the week’s stories every Monday morning at 6:15 a.m. Mondays on WJR 760 AM’s Paul W. Smith Show.

Let’s get this changed

here has been a lot of news lately about Cobo Center. The TCF/ Chemical Bank naming sponsorship will be a great thing for the convention center and Detroit. Cobo just barely posted an operating profit the last two years and the $1.5 million-per-year sponsorship from the bank will definitely help with upkeep and future investment needs. But what surprised me is to learn that one of the best bets to generate revenue to support Cobo’s budget is denied to the operating authority that runs the place.

KC CRAIN Publisher

It’s the giant digital screen facing all oncoming traffic on Jefferson Avenue, one of the most heavily used

between Larned and Jefferson is technically a plaza, shouldn’t this mean Cobo is in the clear to use the sign for advertising? I’m not sure what designations or blessings need to be approved to get this altered — maybe it takes an act of Congress. But I’m sure the mayor and the governor can help. Let’s get this changed and give this very important city asset an opportunity to get on solid financial footing. And at the same time, give downtown a little of the sizzle of a “big city” vibe with messaging from an elite list of clients.

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Here’s how money to fix the damn roads might be found

arely has a catch phrase caught the attention of so many as Gov. Gretchen Whitmer’s campaign promise to “fix the damn roads,” and now it is time to see how she intends to carry out her pledge. Next week we expect Whitmer to reveal her recommendations for increased funding to fix Michigan’s long-neglected road infrastructure. The Citizens Research Council of Michigan has evaluated a number of road funding options in a new report. The stakes are high, with no easy route to improvement. The $1.2 billion the Legislature directed for repairs in 2015 from road-related taxes and the General Fund was not enough. It was a lowball estimate to begin with and has yet to fully materialize. Without more resources, the number of roads in poor condition will multiply quickly affecting the cost of vehicle ownership, hampering economic development and adding to the cost of doing business in Michigan. A few years back, Gov. Rick Snyder’s 21st Century Infrastructure Commission pegged the amount of new funding needed to bring most roads up to at least fair condition at $2.2 billion. The Senate Fiscal Agency’s report says that might be not be enough because roads have deteriorated further since that estimate. Regardless of the amount, we need a lot of money to make up for the lack of care in the past. What are the options for finding this much money? Michigan has long held to a user-fee concept, with the taxes people pay to drive — gas and vehicle registration — directed to build and maintain the system. But taxes levied at the pump and vehicle registration fees are already relatively high compared to other states after the 2015 changes, so increasing rates further will be tricky. As a first step, we need to disentangle fuel purchases from the state sales tax. Sales tax revenues fund schools and local governments with nothing going to highway investment. These both are important service providers that rely on state funding, but including fuels in the sales tax base makes it more difficult to raise the funds needed for roads. Replacing the sales tax levy on fuels with an equal gas tax rate increase would raise almost $900 million for roads. But this is still short of the identified need. Toll roads are a possibility, but we’re pessimistic. Michigan doesn’t get a lot of traffic passing through it like the Pennsylvania or Ohio turnpikes. That means we’d largely be taxing ourselves and unable to export much of the financial burden. And federal restrictions complicate the ability to convert interstates into toll roads. What else can we do? If roads are a high priority, then lawmakers should certainly seek to use all available resources to address this need. Identifying money that can be diverted to roads will not be easy, though. Michigan’s heavy reliance on earmarking means that most tax revenue is dedicated to a particular service. Revenues related to current and future economic growth are committed to funding many of the policy achievements of the Snyder administration. Therefore, new revenue diversions are likely to come at the expense of another state service. Let’s

OTHER VOICES Eric Lupher

not solve this problem by creating new problems. Bonding is an option, but not a panacea. It provides a one-time infusion of funding. Some roads will be fixed, but the needs are so much

greater than what can reasonably be borrowed. Without new funding, the amounts needed to repay the debt will leave little for road maintenance. Finally, raising new money should be only part of the equation. It is time to address what is done with revenues once they’re collected. State road taxes are the primary funding source for more than 600 state and local road agencies. The distribution of those funds treats a mile of twolane road the same as a four-lane road. It does not consider traffic volumes or the kinds of vehicles driving on those roads. And it certainly does not attempt to direct funding to the roads in the worst condition. As long

as this inefficient structure and formula are in place, Michigan taxpayers will not be getting the most of their road-funding tax dollars. We also need to take a long-term approach. Let’s increase funding in sufficient amounts to reconstruct roads to high standards and dedicate ourselves to maintaining them throughout their life cycles. Doing things on the cheap to stretch the scarce resources available to road agencies has ended up costing us more. Eric Lupher is president of the Citizens Research Council of Michigan.

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Without more resources, the number of roads in poor condition will multiply quickly affecting the cost of vehicle ownership, hampering economic development and adding to the cost of doing business in Michigan.

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

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FOCUS LAW

WAITING GAME Delays, denials for visa petitions put local businesses in a bind By Doug Henze

Special to Crain’s Detroit Business

ougher scrutiny by immigration officials of foreign workers seeking visas is tying the hands of businesses trying to fill high-skill jobs, local immigration attorneys say. Visa petitions are requiring more documentation, and delays and denials are on the rise.

In some cases, that scrutiny — backed by the Need to know Trump Administration’s Buy American and Hire J Employers are facing tougher scrutiny as they American executive order — may be driving pursue H-1B and other visas for foreign national work across the U.S. border, those attorneys ar- workers gue. President Donald Trump signed that order in April 2017, aiming to create higher wages and J Denials of H-1B visas rose from 15.9 percent in employment rates for U.S workers, while award- third-quarter 2017 to 22.4 percent in fourth-quarter 2017, according to one report ing visas to the most-skilled foreign workers. “We know the government is following the ad- J Local law experts are trying to help clients smooth ministration’s lead,” said Eli Maroko, a partner at the process and prevent delays, but there aren’t Jaffe Raitt Heuer & Weiss in Southfield and prac- many options tice group coordinator for the law firm’s immigration practice group. “They’ve done everything to discourage employers from hiring foreign na- In this package JJDelays, denials for visa petitions put local tionals.” Maroko pointed to an analysis of U.S. Citizen- businesses in a bind. This Page ship and Immigration Services data by nonparti- JJ Renegotiated NAFTA not likely to impact san public policy research group the National immigration rules. Page 11 Foundation for American Policy indicating that denials of H-1B visas rose from 15.9 percent in JJCrain’s List of Largest Law Firms in third-quarter 2017 to 22.4 percent in the fourth Southeast Michigan. Page 14 quarter of that year. Those visas allow foreign nationals with bachelor’s degrees in specialized fields such as chemistry, accounting, engineering or law to work, temporarily, in the United States. Meanwhile, 63,184 H-1B filings in fourth-quarter 2017 resulted in “requests for evidence” — additional documentation Maroko estimated adds $2,000 to $5,000 to the process, since businesses often hired outside experts to prove foreign workers qualify for the visas. That’s compared to 63,599 RFEs in 2017’s first three quarters combined, the research group found. These are extra hurdles for U.S. companies already facing labor shortages in fields such as engineering and IT, Maroko said. The government isn’t saving American jobs, since domestic workers aren’t available, he argues. “To be doing this much to discourage foreign nationals, which are the best and the brightest, is just complete foolishness,” he said. “We educate them here and send them away. It makes no sense.” The government concedes RFE and denial rates have increased since September 2017, but says the vast majority of H-1B petitions still get approved. Employers that receive requests for additional information may have failed to establish a position as a specialty occupation or done an inadequate job of showing an employer-employee relationship, among other common missteps, the government says. “Ensuring the integrity of the immigration benefits system is one of this administration’s guiding principles in the effort to strengthen employment-based visa programs and protect American workers,” said USCIS spokeswoman Jessica Collins. “USCIS has made a series of reforms designed to protect U.S. workers, increase our confidence in the eligibility of those who receive benefits, cut down on frivolous petitions, and improve the integrity and efficiency of the immigration petition process. USCIS continues to adjudicate all petitions, applications, and requests fairly, efficiently and effectively on a case-by-case basis to determine if they meet all standards required under applicable laws and regulations.” SEE VISAS, PAGE 11

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“To be doing this much to discourage foreign nationals, which are the best and the brightest, is just complete foolishness. We educate them here and send them away. It makes no sense.” Eli Maroko, a partner at Jaffe Raitt Heuer & Weiss

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SPECIAL REPORT: LAW

Renegotiated NAFTA not likely to impact immigration rules

VISAS FROM PAGE 10

H-1B slowdown The U.S. government grants a maximum of 65,000 H-1Bs each year to employers, with another 20,000 available to holders of advanced degrees. Because applications — which have totaled around 235,000 in recent years — far exceed available visas, the government holds a lottery during the first week in April. Only about half the application packages submitted are evaluated. Foreign workers who pass muster are eligible to start work in October. But the approval process has slowed to a crawl in the past six months or so, said Kate McCarroll, an immigration attorney who is a member with the Kerr Russell & Weber law firm in Detroit. “It used to be four to eight months was (the) processing time,” McCarroll said. “I had a case that was just approved that was pending for a year.” When the approval process drags beyond the October eligibility date, it can create difficulties for employers and foreign workers alike. For example, foreign nationals who graduate from a U.S. university and then gain employment through an Occupational Practical Training program would have to stop work if an H-1B visa wasn’t granted in time, said Reggie Pacis, a shareholder with the Butzel Long law firm in Detroit. OPT programs allow foreign graduates to extend their student visas temporarily to get work experience in their fields. An employer ready to hire a promising trainee on a permanent basis has to wait until the H-1B is granted. “The delay is causing the problem,” Pacis said. In addition to the practical problem of the employer losing a worker, at least temporarily, there’s a psychological side to the delay, McCarroll said. Employees awaiting visa status may struggle as they wonder what’s going on. “Employers are having to do a lot more comforting and hand-holding,” she said. “The only thing we can tell them is, ‘Your situation is normal. It doesn’t mean something is wrong. Just be patient.’” Because immigrant communities often are tight-knit, worries can snowball as word of delays spreads, she said. And H-1B delays aren’t limited to first-time work-seekers, McCarroll said. Foreign nationals wanting to change jobs or to renew a three-year visa with the same employer face the same critical inspection. “Logic would say: If I file the exact same case with the exact same supporting materials, I’d have the same result,” she said. “That’s not what we’re seeing.” Workers whose visas aren’t expiring but who have a better opportunity with another company sometimes feel they have to stay put. “The less I file, the less likely something could go wrong,” McCarroll said.

Few workarounds H-1Bs aren’t the only visas under the microscope, local legal experts say. TN (Treaty NAFTA) work permits, given to Mexicans and Canadians, and L1s, which allow for transfers from foreign company operations to U.S. facilities, also are getting a

By Doug Henze

Special to Crain’s Detroit Business

Eli Maroko: Has developed tactics to speed process.

Kate McCarroll: Approval process has slowed.

closer look. “It’s been much more difficult to get approved in an L1 category,” said Julianne Cassin Sharp, principal and immigration practice leader at Miller Canfield Paddock & Stone in Detroit. “In general, it’s just a challenging administration right now.” Businesses used to count on using L1s to fill positions, but now 50 percent of those filings get requests for evidence, she said. Those businesses are limited in their abilities to work around delays and denials. Short of seeking help from the federal court, employers and their attorneys don’t have the option of prodding the government to move faster. “Immigration operates behind an opaque curtain,” she said. “I can’t call somebody and say, ‘Hey what’s going on? Why is it taking so long?’ That just doesn’t exist.” In the past, an employer who desperately needed to speed the approval process along could pay its way out of the delay. “Premium processing” allowed the employer to get a decision in 30 days if it paid an extra $1,410.

“Immigration operates behind an opaque curtain.” Julianne Cassin Sharp, principal and immigration practice leader at Miller Canfield Paddock & Stone

That’s on top of normal filing fees of $2,500 plus $1,500 to $3,000 in attorney fees, Pacis said. “The last couple of years, the government has suspended that process,” Maroko said. The program was reinstated in January, but its suspension was another example of increased government scrutiny of employment petitions and contributed to delays and uncertainty for employers. Employees who lose U.S. work authorization may have to find employment elsewhere, or work from their home outside of the U.S. Pacis recalls a Canadian systems analyst who worked in the United States for several years, until, in 2017, the U.S. government told her she was no longer welcome. As a workaround, she filed for an H-1B — which was approved a year later. “(Sometimes) the company sets up an office outside the United States so employees can work there, which is a shame, because those tax dollars could be coming here,” Pacis said. “Really restrictive immigration policy fuels outsourcing.” Pacis said he understands the government’s worry, but disagrees with the solution, especially with limited resources. “They’re very concerned about fraud,” he said. “They’re very concerned about people getting immigration benefits that shouldn’t be getting immigration benefits. “If you’re looking for a needle in a

When President Donald Trump signed the United States-Mexico-Canada Agreement Nov. 30, it raised concerns among company leaders and the foreign nationals they employ about who would have legal work status in this country. But fears about the trade deal that Trump says is better for the United States than the North American Free Trade Agreement appear to have been overblown, since immigration rules would remain the same under the USMCA. “The political rhetoric was ‘Get rid of NAFTA as a whole,’” said immigration attorney Reggie Pacis, a shareholder with Butzel Long in Detroit. “The employer would be concerned, ‘Am I employing somebody illegally now? Can we still have this person doing the work they’ve been doing all these years?’” Canadian and Mexican workers with TN (Treaty NAFTA) visas, which allow them to work in the United States, would be affected. Significant changes could hit border cities, such as Detroit, particularly hard. “For the better part of a year, many Canadians and Mexicans were very much wondering if NAFTA

haystack, they’re making the haystacks bigger, so the needle is harder to find.” Maroko said his firm has developed some tactics aimed at smoothing the visa application process. One is to include extra information, based on past immigration questions, to shorten the approval time. Another is to encourage clients to pay higher wages to address concerns that employers were paying foreigners low-end salaries. “We know the government’s hot buttons now,” Maroko said. The government also plans to provide some relief to businesses in 2020, when it unveils an H-1B short form, Maroko said. Now, companies have to prepare the entire application package, with lottery losers spending time and money on something no one will read.

Tougher enforcement Along with stepping up scrutiny of visas, the government has sharpened its focus on I-9 enforcement, Sharp said. Employers must have a completed I-9 form, which verifies a worker’s identity and authorization to work in United States, on file for each employee. Immigration and Customs Enforcement (ICE) has doubled enforcement audits in the past few years and can levy fines of as much as $1,100 per employee for errors or missing information, Sharp said. “The fewer substantive errors there are, the smaller the monetary penalty,” Sharp said. “We advise our clients to conduct internal I-9 audits. Smaller companies can do it every couple of years. With larger, global companies, you’ve got to be constantly doing it.”

“We’re seeing a lot of engineers coming out of Mexico, more than I’ve seen in previous years. I think there would be tremendous pushback if it changed.” Kate McCarroll, an immigration attorney and member with the Kerr Russell & Weber law firm

would survive, so they filed for H-1Bs,” said Eli Maroko, a partner at the Jaffe Raitt Heuer & Weiss law firm in Southfield. H-1B visas, available for foreign nationals throughout the world, aren’t dependent on NAFTA. However, a draft of the USMCA reveals identical immigration law language to NAFTA, Maroko said. “It doesn’t change any of the TN … category at all — not even a word,” he said. In metro Detroit, hospitals are staffed with Canadian nurses, and auto suppliers use Mexican nationals, said Kate McCarroll, an immigration attorney and member with the Kerr

Russell & Weber law firm in Detroit. “We’re seeing a lot of engineers coming out of Mexico, more than I’ve seen in previous years,” she said. “I think there would be tremendous pushback if it changed.” Although then-Mexican President Enrique Peña Nieto and Canadian Prime Minister Justin Trudeau signed the USMCA, along with Trump, it still hasn’t received approval from Congress or its Mexican and Canadian counterparts. “The projection (for their approval) I’ve seen is sometime in the spring — but this NAFTA discussion has been going on for a while,” Pacis said. Meanwhile, the U.S. government has toughened its stance on TN visas. As of Oct. 1, immigration attorneys no longer can meet foreign workers at the border to help answer U.S. Customs officials’ questions. “They have stipulated foreign nationals are not entitled to counsel at the border and they’re right,” Pacis said. But he argues that those attorneys, in fact, represent the U.S. companies hiring the workers — and that should be allowed, he said. “(Having an attorney) was handy,” he said. “The candidates will know all about their profession, but not about the company.”

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CRAIN’S 2018 NEWSMAKER OF THE YEAR

Bill Ford: Ford would welcome other automakers in Corktown ‘ecosystem’ By Kirk Pinho kpinho@crain.com

Bill Ford Jr. said other automakers “could be” part of the tenant mix that makes up Ford Motor Co.'s inthe-works campus for autonomous and electric vehicles west of downtown Detroit. The executive chairman of the Dearborn-based automaker made the remark Monday afternoon at the Crain’s Detroit Business Newsmakers luncheon. In response to a question from KC Crain, publisher of Crain’s Detroit Business, on whether Volkswagen might be an eventual part of the Corktown mix, Ford said VW or other automakers would be welcome as part of the “ecosystem.” Earlier this year, Ford and VW announced that they will work together on commercial van and midsize truck production, Automotive News, sister publication to Crain’s Detroit Business, reported last month. “If they want to, sure,” Ford said. “As you know, we’ve already announced a partnership with VW on a lot of things, and we are talking with VW about future things. We just haven’t kind of crossed the finish line yet. Talks are going really well.

So yeah, it could be them, or actually anybody that wanted to come down and be part of this ecosystem, we would love it.” Emails were sent to Ford Land Development Co., the automaker’s real estate arm, as well as Wolfsburg, Germany-based VW. In addition to working together on commercial vans and midsized trucks, the companies also have a “memorandum of understanding to work together on electric and self-driving vehicle technology,” Reuters reported last month. However, the two companies disagree on how much VW is going to invest in Ford’s self-driving vehicle division, Reuters reported. During the event held at MotorCity Casino that drew about 550 people, Ford also said companies like “Tier one (auto) suppliers, software developers and a lot of startups” are expected to populate the 1.2 million-square-foot campus anchored by Michigan Central Station. In addition, he also expects to put “really interesting and fun restaurants, bars and coffee shops” in the area. “We want it to be a destination where, even if you don’t care about

PHOTOS BY LARRY PEPLIN FOR CRAIN’S

Bill Ford Jr. speaks with Crain’s Detroit Business Publisher KC Crain at Crain’s Newsmaker of the Year luncheon on Monday at MotorCity Casino Hotel.

the car industry, you want to hang out and really enjoy it,” Ford said. Ford’s planned $740 million investment in Corktown shocked the commercial real estate world last year when it was first revealed in March that the automaker was planning on buying and redeveloping Michigan Central Station, long a symbol of Detroit’s decades-long decline. Ford ended up paying $90 million for the vacant station that sits tucked back off Michigan Avenue in the neighborhood west of downtown. Ford finalized the depot purchase May 22, according to public

records. The company is seeking nearly $239 million in local, state and federal incentives for its planned campus, with the train station as the focal point of the 1.2 million-square-foot project that is expected to bring 5,000 autonomous and electric vehicle technology workers to the area. The 104-year-old depot is expected to be turned into about 313,000 square feet of office space, about 42,000 square feet of residential space spread across 40 or so units, 43,000 square feet of commercial space and 60,000 square feet of event space.

A nearby former Detroit Public Schools book depository, designed by Albert Kahn at 2231 Dalzelle St., is expected to be transformed into 205,000 square feet of office space and 20,000 square feet of commercial space. A former brass factory is set to be leveled starting later this year. What will rise in its stead is expected to be a 290,000-square-foot building with 247,500 square feet of office/lab space along with 42,250 square feet of commercial space. Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

C R A I N ’ S D E T R O I T B U S I N E S S // M A R C H 4 , 2 0 1 9

Evans: Jail deal may not be last for county with Gilbert By Chad Livengood clivengood@crain.com

Wayne County Executive Warren Evans is opening the door to the county selling the Guardian Building — and speculating that downtown real estate mogul Dan Gilbert might be interested in buying the 90-yearold iconic skyscraper. Last year, Evans sealed a deal to get an affiliate of Gilbert’s Rock Ventures LLC to build a $533 million jail complex at I-75 and East Warren in exchange for the county’s 15-acre former jail site along Gratiot Avenue and $153 million. Evans said Monday that Wayne County could do other real estate deals with Gilbert, with the county’s headquarters in the landmark 40-story Guardian Building being a possible asset to sell. “I’ve got a feeling that we’ll have more deals with Rock before my term is over,” Evans said at the Crain’s Newsmakers of the Year luncheon. Evans was named a Crain’s 2018 Newsmaker for landing the jail deal with Gilbert and getting the half-built jail his predecessor, Bob Ficano, started torn down. In an interview, Evans said officials at Gilbert’s Rock Holdings LLC have “talked about” the Guardian

Building “in the past.” He did not elaborate. “I don’t know if we’d get there,” he said. “It’s one of those things I can’t really talk about at this point.” Warren Evans: But Evans em“Talked about” Guardian building. phasized his focus is on getting the criminal justice complex built by 2022. “I am one that wants to get one deal done before we talk about another one,” Evans told Crain’s. “... But I wouldn’t be surprised if we did other business.” Officials at Bedrock LLC, the real estate arm of Gilbert's companies, declined to weigh in on Evans' speculation about potential future business deals. “As has been our long-standing policy, Bedrock and its affiliates will not comment on rumors or speculation of potential business deals that may or may not be accurate,” Bedrock spokeswoman Whitney Eichinger said in a statement. Wayne County spent $33.5 million in 2007 on the Guardian Building in a

24 Hours

$1.5M

deal that included the First Street Parking Garage and the one-time four-story Detroit Savings and Loan Building at 511 Woodward Ave. that hugs the eastern wall of the Guardian. The county paid Detroit-based Sterling Group about $14.5 million for the Guardian Building alone. Wayne County is currently in the process of trying to sell the 30,000-square-foot glass-covered bank building for $4.65 million to Zaid Elia of Birmingham-based Elia Group. Sale of the bank building is pending before the Wayne County Commission. The county paid $2 million for the bank building in 2007 and has an outstanding bond balance of $2 million, Evans spokesman Jim Martinez said. In 2007, the Wayne County Commission issued $60 million in bonds to purchase and renovate the Guardian Building. As of last November, Wayne County owed $46 million on those bonds, Martinez said. While the Guardian Building is viewed as an Art Deco architectural masterpiece, it’s not a very accessible building to the general public given its location at Griswold and Congress streets in downtown Detroit’s financial district.

CRAIN’S 2018 NEWSMAKER OF THE YEAR

COSTAR GROUP INC.

Wayne County spent $33.5 million in 2007 on the Guardian Building in a deal that included the First Street Parking Garage and the one-time four-story Detroit Savings and Loan Building at 511 Woodward Ave.

“It is not user-friendly for people who have to do business (with the county),” Evans said. “I mean, it’s a great building." Selling the Guardian Building would prompt the need to move the county’s headquarters elsewhere in Detroit. “The other side of the issue is the county seat, and now where else could you afford to go in Detroit?” Evans said. In 2015, the Bloomfield Hills-based turnaround firm O’Keefe LLC suggested in a pro-bono report that Wayne County move its offices to a consolidated campus in the New Center area. “The New Center area is ripe for

365 Days of Hope

such a move,” O’Keefe wrote in its report. “It is still located in the county’s historic home of Detroit. It is easily accessible from all of the major freeways, It is much less congested than the Central Business District. And it adds to the growing government center currently anchored by the State of Michigan in the Cadillac Tower.” With the jail project being the county’s main facilities priority, Evans suggested selling and moving the county's offices could still be years away. “It’d be a tough nut to crack,” Evans said. “But it’s not one I’d be scared to mess with at the appropriate time.” Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

Thank You

The Salvation Army is grateful and humbled by the outcome of our 32nd Annual Bed & Bread Club® Radiothon presented by Ford Motor Company Fund. It takes an Army to fight poverty, hunger and homelessness. We thank you for joining forces with us to tackle these issues head-on. Just like our neighbors in need who count on our trucks to be there 365 days a year, we are so thankful to be able to count on partners like you in Doing the Most Good.

Artichoke Garlic Foundation

Anonymous Bread Donor

Metro Detroit Advisory Board

Tim Allen Foundation

Dick & Gail Purtan Family Foundation

The Experience You Deserve!

salmich.org

Edsel B. Ford II Fund

C R A I N â&#x20AC;&#x2122; S D E T R O I T B U S I N E S S // M A R C H 4 , 2 0 1 9

CRAIN'S LIST: LARGEST LAW FIRMS

Ranked by number of attorneys in Southeast Michigan Rank

Company Address Phone; website

Top local executive

David Foltyn Honigman LLP B 2290 First National Building, 660 Woodward Ave., chairman and CEO Detroit 48226-3506 (313) 465-7000; www.honigman.com

Total local attorneys Other Jan. Staff Senior full-time Michigan Worldwide 2019/ Partners Associates attorney attorney attorneys Jan. Jan. 2018 2019 2019 2019 2019 2019 2019 2019 Representative clients

232 228

172

281

309

City Club Apartments LLC, Diplomat Pharmacy Inc., General Motors LLC, Huron Capital Partners LLC, Kellogg Co., RPT Realty, Quicken Loans Inc., Rockbridge Growth Equity LLC, Taubman Centers Inc., Trinity Health NA

Dickinson Wright PLLC 500 Woodward Ave., Suite 4000, Detroit 48226 (313) 223-3500; www.dickinsonwright.com

Michael Hammer CEO

177 175

134

227

507

Dykema Gossett PLLC 400 Renaissance Center, Detroit 48243 (313) 568-6800; www.dykema.com

Peter Kellett chairman and CEO

139 139

165

388

USAA, Ford Motor Co., JP Morgan Chase, General Motors, Toyota, CIBC Bank NA, Intl. Transmission Co.

Larry Shulman chairman

131 131

139

Bodman PLC Sixth Floor at Ford Field, 1901 St. Antoine St., Detroit 48226 (313) 259-7777; www.bodmanlaw.com

Comerica Bank; Archdiocese of Detroit; Blue Cross Blue Shield of Michigan; Lear Corp.; Ford family; Detroit Lions; Huntington National Bank; Cerberus Capital Management; Flagstar Bank; Letica Corp.

Michael McGee CEO

130 143

168

216

Miller, Canfield, Paddock and Stone PLC 150 W. Jefferson Ave., Suite 2500, Detroit 48226-4415 (313) 963-6420; www.millercanfield.com

Butzel Long PC 150 W. Jefferson Ave., Suite 100, Detroit 48226 (313) 225-7000; www.butzel.com

Justin Klimko president and CEO

127 129

127

145

Clark Hill PLC 500 Woodward Ave., Suite 3500, Detroit 48226 (313) 965-8300; www.clarkhill.com

John Hern CEO

116 108

151

642

Jeffrey Weiss CEO

110 113

110

Jaffe Raitt Heuer & Weiss PC 27777 Franklin Road, Suite 2500, Southfield 48034-8214 (248) 351-3000; www.jaffelaw.com

Sun Communities Inc., Redico, Strength Capital Partners, Toll Brothers Inc., The Detroit Zoological Society

Thomas Vincent Plunkett Cooney PC 38505 Woodward Ave., Suite 100, Bloomfield Hills president and CEO 48304 (248) 901-4000; www.plunkettcooney.com Mark Wisniewski Kitch Drutchas Wagner Valitutti & Sherbrook 1 Woodward Ave., Suite 2400, Detroit 48226-5485 firm manager and CEO (313) 965-7900; www.kitch.com

89 88

117

131

87 87

102

Howard & Howard Attorneys PLLC 450 W. Fourth St., Royal Oak 48067 (248) 645-1483; www.howardandhoward.com

Mark Davis president and CEO

80 77

146

Ascension Health, Farm Bureau, Henry Ford Health System, Tenet Health Systems, AIG, Coverys, HCR Manorcare, CienaHealthcare, Oakwood Healthcare System and ProAssurance BMO Harris Bank N.A., Konami Gaming Inc., Martinrea International Inc., Stryker Corp., ThyssenKrupp, BorgWarner Inc., SigmaTron

Zausmer, August & Caldwell PC 32255 Northwestern Highway, Suite #225, Farmington Hills 48334 (248) 851-4111; www.zacfirm.com

Mark Zausmer managing shareholder

75 71

James Hewson, Hewson & Van Hellemont PC 25900 Greenfield Road, Suite 650, Oak Park 48237 founding partner; Michael Jolet, (248) 968-5200; www.vanhewpc.com president Executive committee Giarmarco, Mullins & Horton PC 101 W. Big Beaver Road, 10th Floor Columbia Center, Troy 48084-5280 (248) 457-7000; www.gmhlaw.com Frank Angileri Brooks Kushman PC 1000 Town Center, 22nd Floor, Southfield 48075 president (248) 358-4400; www.BrooksKushman.com

69 51

State Farm Insurance Co., Michigan Department of Transportation, Philadelphia Insurance Co., Everest National Insurance Co., Auto Owners Insurance Co., ITC Holdings Co., EMC Insurance Co., Wal-Mart Stores Inc., Wayne County Corporate Counsel, Electric Insurance Co. NA

66 62

62 80

9 10 11 12 13 14

Harness, Dickey & Pierce PLC 5445 Corporate Drive, Suite 200, Troy 48098 (248) 641-1600; www.hdp.com

Executive committee

57 64

108

Ford Motor Co., Lear Corp., HoMedics, 5-Hour Energy, Meritor, Domino's Pizza, Masco, Schaeffler Group, Wayne State University, Joyson Safety Systems, Henry Ford Health Systems, Beaumont NA

Garan Lucow Miller PC 1155 Brewery Park Blvd., Suite 200, Detroit 48207 (313) 446-1530; www.garanlucow.com

John Gillooly chairman of the executive committee

54 66

Collins Einhorn Farrell PC 4000 Town Center, Ninth Floor, Southfield 48075 (248) 355-4141; www.ceflawyers.com

Neil MacCallum, chairman; Michael Sullivan, president

54 52

Secrest, Wardle, Lynch, Hampton, Truex and Morley PC

Bruce Truex president and comanaging partner

53 53

Kerr, Russell and Weber PLC 500 Woodward Ave., Suite 2500, Detroit 48226 (313) 961-0200; www.kerr-russell.com

Executive committee

53 48

AVL Test Systems, Michigan State Medical Society, Shanghai Zhongli Automobile Parts, Volkswagen Group, City of Royal Oak, Toyota

Varnum LLP 160 West Fort St., Detroit 48226 (313) 481-7300; www.varnumlaw.com

Richard Hooker, partner; Eric Nemeth, managing partner Michael Morse attorney, CEO, owner

43 42

166

43 NA

Auto accident victims and Social Security disability

19 19 21 21

2600 Troy Center Drive, P.O. Box 5025, Troy 48007-5025 (248) 851-9500; www.secrestwardle.com

The Mike Morse Law Firm 24901 Northwestern Highway, Suite 700, Southfield 48075 (248) 350-9050; www.855mikewins.com

This list is an approximate compilation of the largest law firms in Wayne, Oakland, Macomb, Washtenaw and Livingston counties. Total number of attorneys does not include of counsel. It is not a complete listing but the most comprehensive available. Unless otherwise noted, information was provided by the law firms. Firms with headquarters elsewhere are listed with the address and top executive of their main Detroit-area office. NA = not available.

B Formerly Honigman Miller Schwartz and Cohn LLP. Name changed to Honigman LLP effective Jan. 1. An expanded version of this list is available with a Crainâ&#x20AC;&#x2122;s Enhanced Membership at crainsdetroit.com/lists

C R A I N ’ S D E T R O I T B U S I N E S S // M A R C H 4 , 2 0 1 9

FORUM

Russ Kavalhuna:

Community college is the right investment. Page 18

MARCH 2019

WORKFORCE

Downtowns find they have the ‘cool’ factor

A view of Downtown Dexter. LON HORWEDEL FOR CRAIN’S

Granholm’s initiative evolves into rise of walkable cities with interconnected public spaces By Chad Livengood | clivengood@crain.com

ast year, the second-generation owner of a national archeological firm founded in Jackson 30 years ago that does site surveys for large infrastructure and construction projects moved his company’s headquarters 30 miles east to two Victorian homes in downtown Dexter. It was purely a decision driven by a shortage of highly specialized workers with advanced degrees in archeology, anthropology and historic architecture, said Andy Weir, president of Commonwealth Heritage Group, the firm his father founded in 1988.

Brandon Gabler, vice president of operations for Commonwealth Heritage Group, joined the archeological consulting firm in late 2017 after the company began moving its headquarters from Jackson to Dexter. CHAD LIVENGOOD/CRAIN’S DETROIT BUSINESS

Dan Gilmartin: Michigan’s future hinges on strong communities. Page 18

“We started having some real trouble attracting talent to our Jackson office, especially in mid-to-senior management,” Weir said. “Jackson was just kind of lacking. There wasn’t a very vibrant downtown. There wasn’t very good public transportation. The school system wasn’t great. There wasn’t a university nearby, which in our industry is a big thing.” In Dexter, Weir found a walkable and increasingly evolving downtown, a top-tier public school system and bedroom community proximity to all of the amenities of Ann Arbor and the University of Michigan — without Ann Arbor real estate prices. Weir also was able to use the new 16-employee headquarters in Dexter to recruit Brandon Gabler to be his vice president of operations and run the Dexter office and other talent who wanted to live in Ann Arbor and Ypsilanti. Gabler, who lives in Canton Township, had declined two years of persistent job offers from Weir because he didn’t want to commute 55 miles west to Jackson — and didn’t want to move his family out of the top-rated

Mat Ishbia: Why CEOs should spurn taxpayer incentives. Page 19

Plymouth-Canton school district. “I love being where I can walk to any number of good little restaurants — they’re not chains, they’re not just trying to bring a penny in,” Gabler said. “It actually feels like a community down here.” In other words, downtown Dexter is cool — a major change of working scenery compared to Gabler’s previous working environment in the Ann Arbor office of the national engineering firm HDR Inc. in the Avis Farms office complex. “It was this 1970s or ’80s monstrosity of a building with a hundred engineers and me,” Gabler said of his former employer’s office space. “It was very different.” Now, Gabler oversees archeological projects from a lab in a former carriage house in the heart of a rapidly changing downtown Dexter that’s adopted policies aimed at building greater housing, retail and office space density to meet 21st Century worker demands within the confines of a town that was platted three decades before the Civil War. SEE COOL, PAGE 16

Rob Cleveland: Give Michigan college students at ‘HUGE’ tax incentive. Page 19

C R A I N ’ S D E T R O I T B U S I N E S S // M A R C H 4 , 2 0 1 9

CRAIN’S FORUM | MARCH 2019 “(Cool Cities) was ahead of its time in that it was built around the beginning of the body of research that says this makes sense, this is important, you have to do this to have a successful economy. “What’s changed is the business community now understands that and it’s broadly accepted across the political spectrum.” Jeffrey Padden, chairman of the board at Public Policy Associates

Grandview Commons at Baker Road and Grand Street being built by Dexter-based A.R. Brouwer Co. is among the projects under way in Dexter. LON HORWEDEL FOR CRAIN’S

COOL

FROM PAGE 15

Placemaking is all the rage in economic development these days as companies and talented workers are navigating to locations that offer more than cubicle space. It’s a topic of near-constant discussion in business circles, including at the Detroit Regional Chamber’s Detroit Policy Conference last week. In many ways, the conversation around placemaking began in earnest 15 years ago when then-Gov. Jennifer Granholm introduced her “Cool Cities” initiative, said Jeffrey Padden, chairman of the board at Public Policy Associates, a Lansing consulting firm. “(Cool Cities) was ahead of its time in that it was built around the beginning of the body of research that says this makes sense, this is important, you have to do this to have a successful economy,” Padden said. “What’s changed is the business community now understands that and it’s broadly accepted across the polit-

ical spectrum.” Granholm’s Cool Cities program dished out grants to communities with projects designed to make downtowns walkable and interconnected with public spaces. The Democratic governor was sometimes ridiculed over the program. “The folks who were not ridiculing the program were the folks who were operating it at the local level — the local stakeholders loved it,” said Padden, whose firm conducted a review of the program’s grant winners and losers. Public Policy Associates’ study found communities that didn’t win Cool Cities grants found positive changes occurred in fostering collaboration and long-term community planning between businesses, the local schools and government, workforce development officials and other stakeholders. “Even the losers benefited,” Padden said. Dexter was not one of the communities that received a state grant from the Cool Cities program. But the vestiges of Cool Cities have shown up

in the Washtenaw County community’s master plan, which has encouraged middle-density mixed-use redevelopment in and around the quaint downtown on the banks of Mill Creek, which flows into the nearby Huron River. “Part of what replaced Cool Cities has just been the whole sense of place, placemaking initiatives and the whole missing middle conversation,” said Michelle Aniol, community development director for the city of Dexter. As a city, Dexter leaders took steps over the past decade to invest in its streetscape infrastructure, build a downtown creekside park and relocate its industrial businesses to a park on the outskirts of the city, Aniol said. Aniol said those moves helped foster three mixed-use residential and commercial projects that could add nearly 200 residential units to downtown Dexter. Two projects are currently under construction: the 76-unit Grandview Commons at Baker Road and Grand Street being built by Dexter-based A.R. Brouwer Co. and 150 Jeffords, a 22-unit mixed-used luxury condo building up-

hill from Mill Creek. A third project next to Mill Creek with up to 90 residential units with a mix of owner and rental condos as well as office and retail space is in the pipeline, Aniol said. As part of the construction of the Mill Creek park, the city worked with Washtenaw County to remove a dam and open up the waterway to kayaking. It now attracts kayakers who take a respite at a downtown coffee shop or bar, Aniol said. “It’s cool that way,” she said. Aniol said the lessons learned from the placemaking movement are starting to come to fruition in Dexter, as evidenced by the recent arrival of Commonwealth Heritage Group. “If you don’t continually reinvest, redevelop, breathe new life into your city, it dies,” Aniol said. “You can’t just do the streetscape, make everything look pretty and say, ‘OK, we’re done.’ It doesn’t work that way.” Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

150 Jeffords is a 22-unit mixed-used luxury condo building uphill from Mill Creek.

Grandview Commons is at Baker Road and Grand Street.

LON HORWEDEL FOR CRAIN’S

C R A I N ’ S D E T R O I T B U S I N E S S // M A R C H 4 , 2 0 1 9

CRAIN’S FORUM | MARCH 2019 COMMENTARY

Fiat Chrysler Automobiles, General Motors Co. and Ford Motor Co. have received billions of dollars in 20-year tax credits through the Michigan Economic Growth Authority program that incentivized the Big Three automakers to remain headquartered in Michigan.

Marshaling talent: A MEGA bargain for Michigan’s future

hen former Gov. Rick Snyder rolled out his “Marshall Plan for talent” last year, there were more than a few Lansing observers who scoffed at the notion that a $100 million, five-year plan to fix Michigan’s leaky talent pipeline could symbolically compare to the $12 billion the U.S. poured into rebuilding Europe after World War II.

Some journalists — myself included — stopped using the phrase “Marshall Plan” to describe the program because it seemed to stretch the historical definition of a Marshall Plan in terms of scope and focused public policy aimed at rebuilding something that’s broken. It was a scattershot set of grants aimed at fulfilling Snyder’s agenda of promoting lifelong learning and the notion that workers should be constantly updating their skills. But it was not nearly as robust as the governor’s office originally pitched to Amazon in a failed bid to lure the tech giant to Detroit. In today’s dollars, the original Marshall Plan would amount to $127 billion. Snyder’s “Marshall Plan for talent” is literally funded with loose change from the state budget — leftover one-time money that is by no means guaranteed to be renewed by the Legislature beyond a year or two. Michigan’s new Democratic Gov. Gretchen Whitmer has not said whether she’ll propose keeping the program in place when she presents her first budget to lawmakers on Tuesday. But Whitmer has begun drumming up support for her own talent development plan that entails a two-pronged approach of making college more affordable and getting more working adults into training programs or college to complete degrees or in-demand certificates. If her original estimates hold up, Whitmer’s new programs will cost up to $100 million per year. Making the programs sustainable could be the challenge as the state’s $10 billion general fund is hobbling along with less than 3 percent growth this century — it’s running $3.8 billion under inflation since 2000 — and Whitmer is still on the hook for fixing those

“damn roads.” The simmering budget fight in Lansing this spring may end up pitting education and talent development vs. filling potholes in the roads — and many other priorities for the governor and RepubliCHAD can-controlled LegislaLIVENGOOD ture. For Michigan’s business For leaders clamoring for a roMichigan’s bust across-the-board business solution to the talent leaders shortages beginning to clamoring plague your companies, for a robust here’s a potential solution: across-thePut some skin in the game. board No one wants to touch solution to the 6 percent corporate inthe talent come tax or meddle with shortages who pays the CIT or runs beginning their business profits to plague through the 4.25 percent your individual income tax. companies, But there’s a tax code here’s a expenditure that could be potential sacrificed to solely fund solution: talent development proPut some grams: Michigan Economskin in the ic Growth Authority tax game. credits. MEGA tax credits deplete the state’s general fund revenue by about $600 million annually — and will continue to do so through the end of 2029. For comparison of the magnitude of $600 million on the state budget, the Legislature appropriated a combined $599.93 million to subsidize the operations of the University of Michigan-Ann Arbor and Michigan State University this fiscal year. Fewer than 50 companies in Michigan are still entitled to MEGA tax credits under the much-reviled Michigan Business Tax. But they hold a $6 billion unfunded liability for Michigan taxpayers that’s no different than the liability of underfunded pensions and retiree health care benefits for government workers. And in the years following Snyder’s 2011 tax cuts for businesses, the refundable MEGA tax credits have contributed to a major shift in the share of the state’s taxes on businesses from about 13 percent two decades ago to 5 percent. If the remaining companies holding MEGA tax credits — namely General Motors Co.,

Ford Motor Co. and Fiat Chrysler Automobiles — were to agree to forfeit half of their tax credits for the next decade, it would produce about $300 million annually for 10 years that could be dedicated to talent development initiatives. That $3 billion could be put to work in education and job-training programs that both carry forward Snyder’s vision of more lifelong learning, while pursuing Whitmer’s policy of achieving a goal of having 60 percent of adults with a college degree or credential by 2030. A $3 billion, decade-long Marshall Plan for talent development would send a much clearer message to businesses globally about how serious Michigan is about replenishing the depleted human capital of its economy. And it’s a plan GM, Ford and FCA should sign on to — because their future depends on human capital. It also would be good politics in this age of populist outrage at corporations reaping record profits and paying little-to-no taxes. These century-old companies that are the lifeblood of our economy in southeast Michigan will not survive in their current form if they don’t become tech companies that also assemble automobiles. They’ll become tier one suppliers of Apple, Google, Amazon or some other artificial intelligence startup that hasn’t yet been created. GM knows it. Why else would Detroit’s hometown automaker plant its driverless car division, Cruise, in San Francisco? It’s not because California has a middle-class income-tax rate that is more than double Michigan’s rate of 4.25 percent. It’s because the automaker that’s been promised an untold sum of tax subsidies to stay headquartered in Michigan knows the talent needed to build the car of the future is not always near home. Ford is taking a different path in pursuing Executive Chairman Bill Ford Jr.’s vision of building a Silicon Valley of the Midwest in Detroit’s Corktown neighborhood. One looming question mark over Ford Motor’s $740 million plan to remake Corktown and its derelict Michigan Central Station train depot is whether it can fill the jobs. Bill Ford essentially has gambled that the Dearborn automaker can overcome the instate talent deficit by luring out-of-state minds to work in trendy offices originally built for an early 20th Century train company overlooking Roosevelt Park. Under the terms of its MEGA tax credits deal, Ford will get to collect a tax credit for that new arrival equal to the 4.25 percent in state

income tax they pay on their earnings. Ford Motor also is getting $239 million in additional tax breaks over 35 years to plant 2,500 tech workers in Detroit instead of Dearborn, Ann Arbor or California. When former Gov. Jennifer Granholm juiced the MEGA tax credits in 2009, the program changed from one that incentivized coming here to one that incentivized staying here. Granholm’s job retention tax credits worked, keeping the Big Three anchored in Michigan after GM and FCA took federal bailouts and went through bankruptcy. A decade later, the automakers have expanded payrolls and reinvested billions of dollars in tech centers and assembly plants in Michigan — as witnessed by the $4.5 billion investment plan for five Southeast Michigan auto plants that FCA announced last week. There’s almost no arguing about the success of Granholm’s gambit anymore. But should this tax subsidy remain on the books until 2029? What public policy purpose is it serving? And what good does it do if these companies don’t have a highly skilled workforce that can help reinvent their business models? Or could those tax dollars be better spent on an investment in the human capital needed at GM, Ford, FCA, the other dozen foreign-owned automakers with a presence in Michigan and all of their thousands of suppliers spread across the state? These are questions Whitmer and the Legislature should confront this year (before another divisive election year rolls around). The truth is, the state’s budgetary woes of the 2000s are just one recession away from returning. College scholarships like the ones Whitmer is proposing have a tendency to become the first to go in a budget crisis in Lansing (just ask Jennifer Granholm). More importantly, Michigan is already behind in the so-called “war for talent.” Bill Ford knows it. That’s why he’s rolling the dice on Corktown. GM CEO Mary Barra knows it. That’s why GM has set up shop in Silicon Valley. Michigan needs a real Marshall Plan for talent development that can outlast Whitmer and the Legislature’s time in office — and the next recession. And it needs one fast. 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 // M A R C H 4 , 2 0 1 9

Voices

“Approaching a community with your hand out for something you don’t need is wrong and sets us all back.” — Mat Ishbia, president and CEO of United Shore Financial Services See page 19

CRAIN’S FORUM | MARCH 2019

EDUCATION

Community college is right investment

ov. Gretchen Whitmer’s recent proposal to provide tuition-free community college makes sense, not just to expand opportunity for youth and adults, but to make sure that Michigan businesses have the talent needed to compete in our rapidly changing economy. And she is not the first to call for this. Republican leaders and business leaders said the same thing years ago.

In 2011, Gov. Rick Snyder proposed offering Detroit high school graduates a tuition-free path to an associate degree. Business leaders agreed. The Detroit Regional Chamber and city of Detroit created the Detroit Promise, guaranteeing a “last-dollar” funding model that covers tuition not already covered by grants and scholarships. A similar model is working well in Tennessee, where Republican Gov. Bill Haslam and a Republican Legislature instituted it in 2014. Nearly 20,000 students have enrolled through the Tennessee Promise, with awards ranging from $500 to $2,000 per year. Each student receives mentoring and must show satisfactory academic progress and participate in community service. We at Henry Ford College know this model works because we are proud to enroll the most Detroit Promise students of any college. With the help of the Detroit Regional Chamber, the business community and donors, we went a step further to increase students’ success by providing wrap-around services and educational coaches. Gov. Whitmer’s proposal would extend this life-changing model to include all Michigan citizens. I applaud her call for Michigan to increase the number of Michiganders with a post-sec-

ondary credential to 60 percent by 2030. Michigan’s 28 community colleges are the best place to deliver on this promise of access to career-preparatory education. Our community colleges provide in-demand, workready skills for well over RUSS 400,000 students every year. KAVALHUNA We engage our neighborhoods and regional emOur ployers through a broad community range of educational, arts colleges and culture, economic and provide service activities. in-demand, Our courses and activiwork-ready ties directly address the skills for skills gap that Michigan emwell over ployers struggle to bridge 400,000 and that economic develstudents opment professionals cite every year. as the biggest risk for the future of Michigan’s economy. We provide trade certifications, associate degrees and transfer paths through programs spanning liberal arts, health care, STEM, business and more. We partner with businesses and institutions to assess needs in real time and provide responsive training. This is the best way to help our citizens fill the 811,000 high-demand, well-paying career positions expected to be vacant in the next five years. A prime example of this visionary college-business partnership is Henry Ford College’s Power and Trades Pathways program with DTE Energy. Together, we are creating a workforce pipeline that will benefit the entire energy industry. Henry Ford College provides the instructional expertise and infrastructure for this program, which moves students from classroom to career in one year. More than 140 students have participated since 2017.

Henry Ford College.

This is a partnership where everyone wins: businesses; the state’s economy; colleges; and most of all, our graduates who will move on to great jobs in high-paying careers. Gov. Whitmer’s proposal will spur more win-win partnerships. The governor’s plan to support community college tuition also helps students seeking advanced degrees. In 2017, 52 percent of all baccalaureate degree earners in Michigan also earned credits at community colleges — at significant savings. Students at Henry Ford College can save more than $30,000 by spending their first two years in our programs. When they transfer to universities, we consistently hear that our students perform at or above their peers who enrolled at a university as freshmen.

Midcareer and nontraditional students would also be covered, and community colleges already have the experience to serve these populations. Students over age 21 are now the majority at Henry Ford College, and we have seen major increases in the number of high school students dual-enrolling. Our student body is more diverse than ever, and this is a permanent trend. We are also best placed to help students who are unsure about their future, or who need a second chance. We work with them to find the intersection of their talents, passion and viable careers. With more than 150 academic programs at our college and in-district tuition below $100 per credit hour, it’s hard to find a better value. At the same time, it is getting harder for us to provide that value. The state’s annual investment in community colleges has been stagnant for decades. State funding for Henry Ford College is 2 percent lower today than in 2002. During that time, the cost of living increased more than 54 percent. We have responded by improving our efficiency, cutting costs and exercising austerity wherever possible. We have kept our tuition low. All the while, we are investing in the technologies that students need for successful careers. With help from one-time capital outlay funds, we will invest $15 million in a new facility delivering education in skilled trades, automobile repair, manufacturing, cyber security and business entrepreneurism. Gov. Whitmer is not alone in calling for increased college access to bridge the skills gap. It was the business community and political leaders of both parties before her who saw tuition-free college as a wise investment. Let’s seize this uncommon consensus to help our state’s citizens achieve their dreams and find rewarding careers. Russ Kavalhuna is president of Henry Ford College.

PLACEMAKING

Michigan’s future hinges on strong communities

usinesses and communities agree on the need for a strong economy in Michigan, because we recognize our futures are inextricably linked together. You can’t have strong communities without strong businesses, and you can’t have strong businesses without strong communities.

Much recent conversation in Michigan centers on the need to invest in Michigan’s infrastructure. We fully agree about that need — but it can’t be just about pipes and roads. A community’s infrastructure is also the park we want our children to play in; the senior center that meets the needs of that growing population; walking, running and biking trails; the first responders who keep us safe; and the ambulance that gets us to care. A community’s infrastructure is the backbone of assets and services we expect as taxpayers.

DAN GILMARTIN

Our current fiscal policy does not allow the economic recovery the state has experienced to extend to its cities.

Our Michigan business community is in a worldwide competition for talent and the talent goes to the best places. Simply put, places that have invested in their community infrastructure services are winning the global competition for talent, in the United States and around the world. As the new Legislature and governor begin to chart a course for Michigan’s future, now is the time for new policies to open the door for our cities to invest in the infrastructure needed to attract the best and brightest — and by doing so, for our state to grow. We have several suggestions and solutions for such critical investments in our

shared futures: J Our current fiscal policy does not allow the economic recovery the state has experienced to extend to its cities. Michigan’s funding structure for communities is built in such a way that it doesn’t allow a community’s revenue to grow when the economy grows. While the state’s economy has improved, cities aren’t sharing in that improvement. A priority should be to resolve conflicts between current state tax laws so that cities can appropriately track with the state’s economy and share in a prosperous economy. J When we talk about making road improvements those discussions should also include investing in transit and all modes of transportation. It’s been said many times that metropolitan Detroit is the largest region in American without a working mass transit system. Today’s talent is drawn to communities with accessible mass transit systems. J Conversations should also involve ways to provide economic incentives to bolster our existing infrastructure. Our current system focuses on new development and a more balanced system

would also encourage use and redevelopment of existing infrastructure. J Additional solutions must include providing local governments with more ways to fund infrastructure and core services to attract business and talent; and offering communities tools to responsibly manage legacy costs while providing appropriate benefit packages for the workforce. Gov. Gretchen Whitmer and our new Legislature can be agents of change in this vital area by recognizing that investment in community infrastructure doesn’t just mean roads. It means better and smarter police and fire protection, improved sewer and water systems, better street lighting, vibrant parks, and all public transportation modes. Communities want strong partners in the business community and in our Legislature to fix Michigan’s broken municipal finance model and free our cities to grow in ways that will bring prosperity to the entire state. Learn more at savemicity.org. Dan Gilmartin is the CEO and executive director of the Michigan Municipal League.

C R A I N ’ S D E T R O I T B U S I N E S S // M A R C H 4 , 2 0 1 9

CRAIN’S FORUM | MARCH 2019 INFRASTRUCTURE

Why CEOs should spurn taxpayer incentives

ontiac became home for United Shore Financial Services LLC last year. The immediate pride and desire to see our home thrive made it feel like we’ve been here forever. Part of our move qualified for a nearly $2 million tax credit, but when it became clear that the money wasn’t necessary, it was easy to tell the community to keep it. United Shore didn’t need that money. Pontiac did. For us, the decision was a no-brainer because it was the right thing to do — both for our company and our community. United Shore was moving to Pontiac with or without that incentive. There was no sense in taking money away from a city that needs it. More businesses need to adopt this collective approach if we want to see our cities grow.

Some incentives and tax credits are important. They help bring businesses, jobs and opportunity to communities across Michigan. State organizations and local municipalities work alongside businesses to make transitions easy. It’s MAT imperative that businesses ISHBIA have the same collaborative outlook. Taking Approaching a communimoney from ty with your hand out for taxpayers something you don’t need is simply wrong and sets us all back. because you Especially when schools, can does roads and other services not help desperately need support. anyone. When we invest in the community, everyone benefits. A business’ bottom line isn’t the only thing that should matter to a CEO. At United Shore,

we play as a team. And we consider our team to be more than just our team members, it includes the city our headquarters is located in and the cities where our amazing 3,100 people live all around metro Detroit. That means we’re committed to seeing everyone rise together. A lot of cities in Southeast Michigan saw opportunities diminish and disappear over the last few decades, but the story isn’t over. Some cities, like Detroit, are growing, but they still need help. Together, we can restore opportunities, so everyone can thrive. To do that, businesses need to play their roles. Company relocations often come with pledges of job creation and local support. Those promises are often broken. At United Shore, we’re proud to provide entry-level job opportunities with training. The positions are often filled through local job fairs held in Pontiac and surrounding communities. In fact, since moving to Pontiac we’ve increased our team members from just over 2,400 to more than 3,100.

Companies focus on their core product and service every day, and they should. But that shouldn’t stop us from doing our part. Organizations with limited resources make positive impacts on people every day. In Pontiac, groups like CARE House of Oakland County, Lighthouse of Oakland County, Humble Design, Habitat for Humanity Oakland County, Grace Centers of Hope, and the Gary Bernstein Clinic are doing life-changing work. They need all the help we can give. While charitable support might not be the first thing people think of when they consider economic development, it matters. Of course, we’re watching the bottom line at United Shore. But some things are just as important, like growing a community that can sustain your company’s growth. Taking money from taxpayers simply because you can does not help anyone. Mat Ishbia is president and CEO of United Shore Financial Services LLC in Pontiac.

WORKFORCE

Give Michigan college graduates a ‘HUGE’ tax incentive

t’s remarkable how economic development, and the process of locating a new facility, has changed in the last decade.

Just 10 years ago, with a national unemployment rate of 10 percent, companies had little problem finding available employees, and most site location decisions were based on available buildings or land. Today, talent is the driving force in most, if not all, site searches. Talent was the key factor in the most publicized site selection in history, the recent Amazon HQ2 project. Quite simply, there are not enough people in most places to do the work companies need. It is a problem facing nearly every part of the country, and it is why communities are doing some radical things to attract and retain people. And it’s why Michigan needs to step to the plate and give young people one more reason to choose Michigan. Like most Midwest states (except you, Illinois), Michigan offers companies a “safe” place to locate. Moderate taxes, decent weather and an above-average business climate put Michigan in the mix for most site location projects. But we’re falling behind in a number of key areas, and we have to find a way to increase our population. We aren’t alone, and there is an arms race for talent. Larry Gigerich is a globally recognized site location consultant who is a member of the Site Selectors Guild and executive managing director at Ginovus, a site-location firm based in Indianapolis. In a Feb. 23 article, Gigerich implored the state of Indiana, “it is time to realign organizational structure and increase financial resources for talent development.” The people making the site location decisions have been screaming this to the masses, mostly on deaf ears. Many communities in Michigan have gone to extraordinary lengths, and become successful, at recruiting talent. In Benton Harbor, we have provided more than 4,000 community tours in the last 10 years to prospective employees. And in 2018, Cornerstone Alliance created a dual career program and partnered with Kinexus (our local Michigan Works office) to align career opportunities for the significant others of new people to our community. In order for Michigan to be a top 10 state, we

GETTY IMAGES/ISTOCKPHOTO

have to be aggressive, do things differently and understand our competition. The state of Michigan could jump to the top of any site search based on the ability to maintain the majority of its college graduates, and “Reverse ROB the Brain Drain.” CLEVELAND So, in an attempt to move the talent discussion It rewards along, I propose the Michthose igan HUGE Incentive students (Homegrown Undergrad who choose and Graduate Education to stay in Incentive). Michigan to Michigan’s HUGE Inwork and centive is a five-year inwho make a come tax phase-in for repositive cent graduates of Michigan impact on colleges and universities. the In the first full year followMichigan ing graduation, the eligieconomy. ble graduate would pay no Michigan income tax. In the following year, the graduate would pay 1 percent income tax, 3 percent the following

year, 3 percent the year after that and 4 percent in the final year of the incentive. The HUGE Incentive is different than traditional economic development tools, as it will go directly to individuals — not to companies. The incentive will be available to anyone who has graduated from a qualified Michigan university or college between Jan. 1, 2019, and Dec. 31, 2023, having earned an associate, bachelor’s, master’s or a doctoral degree. You must be a Michigan resident, and you must file a Michigan tax return. It’s that simple. If you graduate from a Michigan school, live in the state of Michigan and work in the state of Michigan, the state cuts you a break on the 4.25 percent income tax. The entire point of the Michigan HUGE Incentive is to give Michigan students a head start over their peers by providing tax savings that can be used to pay down student debt. For real world purposes, here are a few examples of the impact of Michigan’s HUGE Incentive. A marketing manager at General Motors in Detroit, making $50,000 annually, would have $7,375 more to pay down student debt than the exact same marketing manager at Caterpillar in Illinois because of tax savings. And, a project manager at Dow Chemical in Midland,

making $75,000 annually, will have $42,000 more to pay down student debt than the exact same project manager at Oracle in California. Michigan HUGE Incentive recipients will be ahead of same-situation graduates in nearly every other location in the country. The HUGE Incentive rewards our best and brightest. It rewards those students who choose to stay in Michigan to work and who make a positive impact on the Michigan economy. Many economic developers, workforce development professionals, legislators and educators have been a part of this discussion for a long time. Let’s be the first state in the Midwest to prove to our graduates that Michigan wants them to stay by passing legislation that makes it easier for them to pay down student debt. Let’s send a message to the rest of the country that we’ll happily take their best and brightest, educate them and then give them a reason to stay in Michigan. Most importantly, let’s take the conversation up a notch and lead. Rob Cleveland is president and CEO of Cornerstone Alliance, a southwest Michigan economic development organization based in Benton Harbor.

C R A I N ’ S D E T R O I T B U S I N E S S // M A R C H 4 , 2 0 1 9

SPOTLIGHT Truck maker names new CEO

After leading Hino Trucks, a Toyota Group company based in Novi, for six years, Yoshinori Noguchi will step down from his role as CEO of Hino North America. Shigehiro Matsuoka will serve as the new president and CEO of the medium and Matsuoka heavy duty truck manufacturer. Matsuoka assumed

his new role Feb. 1. Noguchi will serve as an executive adviser through March to ensure a “smooth transition,” a news release said. During his six years at the helm, Noguchi led six consecutive record years of truck and parts sales, and increased its dealer customer base by 20 percent. The company also launched its Connected Vehicle Strategy and Certified Ultimate dealer program, built a corporate office in Novi, and bought a new manufacturing facility in Mineral Wells, W.Va., according to the release.

New director for Arab American museum

Following an international search, the Arab American National Museum in Dearborn has named Diana Abouali as its new director effective April 1. Abouali succeeds interim director Lina Hourani-Harajli, COO of the muAbouali seum’s parent organization, ACCESS.

Hourani-Harajli stepped in to lead the museum after Devon Akmon, who’d served as director for five years, left in May 2018. Abouali brings experience working in higher education and cultural and museum sectors in the U.S., Palestine and Jordan.

DEGC bolsters team

The Detroit Economic Growth Corp. promoted its vice president of real estate and financial services to lead a team working on economic development and the city’s competitiveness. Kenyetta Hairston-Bridges has

served the DEGC for 14 years, according to a news release. Her new title is executive vice president of the economic development and investment services Hairston-Bridges team. The DEGC also made a new hire. BunLim Ly will join as vice president of global commerce and corporate attraction, reporting to Hairston-Bridges.

Advertising Section

PEOPLE ON THE MOVE

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. ACCOUNTING

ACCOUNTING

ENERGY

Baker Tilly

BDO

Detroit Renewable Energy

Baker Tilly is pleased to announce Lynn Myernick has joined as the Director of Business Development and Client Advisory Services. Lynn will be responsible for cultivating client relationships and expanding strategic partnerships. Lynn has over 20 years of experience in the financial services industry both in a new business development role as well as managing client relationships focusing on advising middle market business owners on how to grow and protect their business and personal assets.

Baker Tilly welcomes Lori Moore to the Southfield office as a Tax Senior Manager. Lori specializes in trust and estate planning and compliance, and trust fiduciary accounting. Lori has more than 14 years of experience in public accounting with a focus on minimizing tax implications for high net-worth individuals through the use of trusts as estate planning vehicles and she focuses on bringing a holistic viewpoint to her client’s needs.

BDO USA, LLP, one of the largest accounting firms in the country, welcomes Vincent Mercader as a Director in its Valuation & Business Analytics group. Mercader has approximately 17 years of consulting experience performing valuations for purposes related to buy-sell side/transaction advisory, litigation matters, tax planning, and financial reporting. Mercader will be servicing the Michigan, Ohio, and Eastern Pennsylvania markets and will be based out of the Troy, Mich. office.

Detroit Renewable Energy welcomes Todd Grzech as Chief Executive Officer. Grzech has 30 years of experience in industrial settings, with over 18 in power generation (renewables, gas, coal, and nuclear). He will be responsible for compliance and the financial performance of the DRE portfolio of assets. Prior to joining DRE, Grzech was President/CEO of PIC Group, Inc., and was previously with the US Department of Energy’s Savannah River Site where he led and managed strict operational standards.

Detroit Renewable Energy also welcomes Tom Cinzori as Chief Financial Officer. Cinzori has more than 25 years of financial experience and over 15 years of executive experience in a multitude of different industries and market segments. As CFO, he will emphasize trust-based, cross-organizational level relationships, focused on understanding business objectives and identifying opportunities. Prior to joining DRE, Cinzori was CFO for Bell Mountain Management, LLC.

CONSTRUCTION

FINANCIAL SERVICES

FINANCIAL SERVICES - BANKING

REAL ESTATE

Walsh Construction

P&M Corporate Finance (PMCF)

Credit Union Trust

Coldwell Banker Weir Manuel

Credit Union Trust has named John Landis Vice President & Senior Trust Specialist. Landis will oversee trust and investment sales, marketing, and product development. Organized by 7 Michigan credit unions, Credit Union Trust is a limited purpose bank and credit union service organization. It will serve Michigan credit union members through a network of organizing credit union branches. Credit Union Trust is located at 31155 Northwestern Hwy in Farmington Hills, MI, and plans to open in Q1-2019.

Karen Greenwood has been named 2018 REALTOR of the Year by Michigan REALTORS and 2018 REALTOR of the Year by the Greater Metropolitan Association of REALTORS (GMAR), distinguishing herself from Michigan REALTORS’ 32,000 members and GMAR’s 8,200 members, respectively. Karen is a member of the Coldwell Banker International President’s Circle, which represents the Top 10% of REALTORS nationally. She focuses her residential real estate efforts on the Woodward Corridor and Troy.

Middle market investment banking firm P&M Corporate Finance LLC (PMCF) is pleased to announce the promotion of Joe Wagner to Managing Director and Partner. He leads PMCF’s Distribution & Transportation team and co-leads its Diversified Industrials team, advising clients through sale and M&A transactions. He has a BBA with distinction from the Ross School of Business at the University of Michigan and an MBA with distinction from the Kellogg School of Management at Northwestern University.

NEW GIG? Preserve your career change for years to come.

Plaques • Crystal keepsakes Frames • Other Promotional Items

C O N TAC T

Teresa Miller joins Walsh Construction as Program Manager, responsible for leading the company’s Michigan-based commercial operations. With 24 years of experience, Teresa demonstrates ambition, leadership and dedication to her projects and personnel. She delivered a variety of high-profile projects by fostering client relationships, improving sales strategies and guiding teams to successful outcomes. Teresa is a registered architect and holds multiple degrees from the University of Michigan.

Laura Picariello Reprints Sales Manager lpicariello@crain.com (732) 723-0569

USINESS C R A I N ’ S D E T R OCIRAIN T B’SUDETROIT S I N EBS S // M A R C H 4 , 2 0 1 9

March 4, 2019

Page21 21

Advertising Section

CLASSIFIEDS Mike Haller: There’s a lull right now in trades work.

To place your listing, contact Kate Rozek at 313-446-0485 or email krozek@crain.com www.crainsdetroit.com/classifieds

Patrick Devlin: Could have manpower shortage.

PROJECTS FROM PAGE 3

Walbridge makes an annual estimate of work hours based on market demands and the construction timelines of known major projects, such as retooling auto plants, which the construction firm specializes in. As part of its investment in Detroit, FCA also plans a $900 million modernization project at the 27-year-old Jefferson North Assembly plant adjacent to the Mack Avenue facility, which has been partially idled since 2012. “The owners that hit the ground quickly right now, there’s a benefit because of the unemployment that currently exists in the building trades,” Haller said. The 10 million craft hours shifting to 2020 “is sizeable,” Haller said, amounting to more than 6,600 full-time skilled trades jobs for a year’s worth of work. “If everything breaks at once, at the same time, yes, we’re going to have a manpower shortage,” said Pat Devlin, secretary-treasurer of the Michigan Building and Construction Trades Building Council. Mark Stewart, chief operating officer for FCA North America, said the automaker wants to begin construction at the Mack Avenue plant by the second quarter. “We need everyone’s support so we can make that tight time line,” Stewart said. Doing so will depend, in part, on the Duggan administration’s ability to assemble the 200 acres of land needed for parking, parts deliveries and finished vehicle storage — and get approvals from City Council within a 60-day timetable spelled out in a memorandum of understanding signed on Feb. 26. Devlin cautions against reading Walbridge’s forecast as a “dire straits” outlook. But he said it’s an indicator of demand for carpenters, steelworkers, electricians and other workers. “These projections are new to the industry, and I think Walbridge has done a great job of at least giving us that foresight so we can prepare,” Devlin said. “Those numbers really play a vital role in what we’ve got to do in the workforce development.” A survey by the Associated General Contractors of America released earlier this year shows that 79 percent of Michigan’s 42 respondents in that organization are experiencing challenges filling all or some salaried and hourly trade positions and that 74 percent of the respondents expect their company’s headcount to increase. And a total of 66 percent said it will continue to be hard to hire (45 percent) or harder to hire (21 percent) this year. Skilled trades have been battered for years as the 2008 recession ground construction to a halt, causing workers to seek employment elsewhere or in different fields. In addition, emphasis on two- and four-year college degrees has caused unawareness of the benefits of a skilled-trades career for some students. Chad Livengood: (313) 446-1654 Twitter: @ChadLivengood

REAL ESTATE MISCELLANEOUS ù MARINA - 50 BOAT SLIPS AND WINTER STORAGE ù BOAT BROKERAGE AND NEW BOAT FRANCHISE - $2 MILLION

MARKET PLACE

Request for Proposal #2019-024 110091479-01 PUBLIC RELATIONS and COMMUNICATIONS

Huron-Clinton Metropolitan Authority (HCMA) is requesting proposals for public relations and communications.

Connect with Kate Rozek at krozek@crain.com for all your recruiting needs. *The Media Audit

110091597-01

Request for Proposal (RFP)

CONTACT: BURTONMAXWELL@YAHOO.COM

Crain’s readers are 75% more likely to be college graduates*

REQUEST FOR PROPOSALS

Proposals are due by Tuesday, March 19, 2019 by 1:00 PM (EST). The RFP and addenda are available on the Michigan Intergovernmental Trade Network (MITN) at www.mitn.info. The RFP may also be picked up from HCMA’s Administrative Office at 13000 High Ridge Drive, Brighton, MI 48114. Please direct all inquiries in writing to Heidi Dziak, CPPB, Senior Buyer at heidi.dziak@metroparks.com

JOB FRONT

The Detroit-Wayne Joint Building Authority (D-WJBA), owner/operator of the Coleman A. Young Municipal Center (Center) is seeking proposals from qualified firms who desire to provide General Contracting services for the replacement of the Center’s 1st floor revolving door(s) and curtain wall entry at the Randolph Street entry. The Center is a 745,000 square foot office building located in downtown Detroit. The D-WJBA anticipates the Scope of work to be accomplished will include: 1. Demolition and removal of existing 1st floor curtain wall, revolver and automatic operated man door. 2. Design and installation of new curtainwall and revolver(s) 3. Furnish and install associated electrical power/lighting and fire alarm associated with entry replacement. 4. Furnish and install adjacent flooring and ceiling repair inclusive of granite, tile flooring, plaster ceiling materials. 5. All construction coordination and permitting required. This proposal is based on Design Development documents only and the request is for general contractor services, fee, general conditions, permitting, bond and insurance. The RFP outlines the specifics of the project and the requirements for your proposal. All documents associated with this Request for Proposal, inclusive of Contract terms, Drawings, Specifications may be found online at the following address: https://hines.box.com/v/CAYMC-RandolphRevolverRFP

MISCELLANEOUS

A mandatory pre-bid conference is scheduled for Monday, March 18th, 2019 at 11:00 a.m. (EST) in the Erma Henderson Auditorium located on the 13th floor of the Center.

Chief Estimator for Ideal Contracting, LLC in Detroit, MI.

Interested firms must submit 4 sealed bid copies (clearly marked “RANDOLPH ENTRY - DO NOT OPEN”) no later than 3:00 pm Monday, April 1st, 2019 To: Detroit-Wayne Joint Building Authority Coleman A. Young Municipal Center 2 Woodward, Avenue, Suite 1316 Detroit, MI 48226 Attention John Rizzo, Construction Manager, Hines-Porcher

Duties: oversee assembly of final bid proposals & fee structures for struct’l & misc steel bids, incl’g preparing subcontractor bid packages; prep estimates for all stages of proj des’n & constr’n; dev value eng’g proposals; perform eng’g calcs & prov eng’g designs & details for temp bracings & bolted & welded steel connections; identify key steel framing elements missing from overall designs, & implement eng’g strategies to resolve des’n deficiencies & recommend tech’l solutions; dev constr’n schedules based on eng’g estimates; review client contracts for correct scope & schedules, & negotiate w/ suppliers & subcontractors; 5% dom travel. Req’s: Bach Deg in Civil or Constr’n Eng’g, or Constr’n Mgmt, or foreign equiv. 5 yrs exp in a cost estimation or proj mgmt pos’n in structural steel constr’n ind. 5 yrs exp w/ each of: managing structural & misc steel constr’n projects for commercial & indus’l bldgs, incl’g generating all req’d purchase orders & negotiating w/ customers & subcontractors; preparing cost estimates for struct’l & misc steel constr’n projects for commercial & indus’l bldgs, incl’g acct’g for contractual changes, quoting change orders, & tracking work directives; generating RFI’s, reviewing contract docs, & resolving des’n eng’g issues for steel & precast concrete-related projects; prepare & maintain proj schedules for steel & precast concrete constr’n projects using Microsoft Project, incl’g proj change orders & claims; preparing value eng’g proposals for steel & precast concrete constr’n projects. Exp can be acq’d concurrently. Resumes: Idc-hr@idealcontracting.com or fax 866-553-6204. Identify Chief Est’r pos’n.

CRAIN’S READERS ARE 4.5x MORE LIKELY TO INFLUENCE CORPORATE FINANCING DECISIONS

REQUEST FOR PROPOSALS

110091598-01

Request for Proposal (RFP) The Detroit-Wayne Joint Building Authority (D-WJBA) owner/operator of the Coleman A. Young Municipal Center (Center) is seeking Request for Proposals (RFP) from qualified firms who desires to provide security system contracting for Security Technology upgrades. The Center is a 745,000-square foot office building located in the heart of downtown Detroit. The DWJBA anticipates the Scope of Work will be accomplished: 1. Furnishing and installing Video Security and Access Control Systems inclusive of cabling 2. Upgrades to Video Management System 3. Acceptance testing. 4. Furnish and install all associated patch panels and other necessary rack equipment. 5. Definition and identification of all required power needs to for new and upgraded equipment for install by others. All documents associated with this Request for Proposal, inclusive of Contract terms, Drawings, Specifications may be found on line at the following address: https://hines.box.com/v/CAYMC-SecurityUpgradeRFP A Mandatory pre-bid conference is scheduled for Monday March 18, 2019 at 2:00 pm in the Erma Henderson Auditorium located on the 13th floor of the Center.

To find out more about our audience, reach out to Kate Rozek at krozek@crain.com

*The Media Audit

Interested firms must submit (4) four sealed bid copies (clearly marked “DO NOT OPEN”) no later than 3:00 pm Wednesday, April 17, 2019 Public Opening to Follow To: Detroit -Wayne Joint Building Authority Coleman A. Young Municipal Center 2 Woodward Avenue, Suite 1316 Detroit, MI. 48226 Attention: John Rizzo, Construction Manager, Hines-Porcher

C R A I N ’ S D E T R O I T B U S I N E S S // M A R C H 4 , 2 0 1 9

SPECIAL REPORT: IS THE DISTRICT DETROIT DELIVERING?

DISTRICT FROM PAGE 1

At least two developers have tried to work with Olympia on developing the district, and walked away. The Ilitches say they have invested $1.4 billion in the district and that it will have an economic impact of more than $2 billion by 2020 and bring thousands of jobs, but the lack of progress on housing is among the things that feed into a growing narrative that Olympia makes big development plans but are only truly committed to delivering on the pieces tied directly to their existing businesses, such as Little Caesars Arena, the new Little Caesars pizza headquarters, along with parking garages and lots. When The District Detroit project was first unveiled in 2014, it was a 50-block plan billed as transforming the mostly vacant swath of the city north of downtown from empty lots and derelict buildings — many long Ilitch-owned — into a bustling hub of entertainment, shopping, restaurants, housing, offices and public green spaces. The plan was a veritable city-within-a-city, and it was to be built concurrently with the arena by the Ilitch family, which owns much of the property in the area, and third-party developers. The promised neighborhoods that had names such as Cass Park Village and Wildcat Corner don’t exist, at least not yet. One, Columbia Park, was going to be busy streets and public green space behind the Fox Theatre. Instead, that area remains the expanse of Ilitch-owned parking lots that it’s been for decades. Those neighborhood names have been stripped from The District Detroit website, and Olympia hasn’t explained why. Failure to deliver five years after the district concept’s initial unveiling, especially housing, has also fueled criticism that the Ilitches took $200 million in public money to get a hockey arena built, but largely haven’t yet delivered on most of the rest of what was pitched to the public in the colorful renderings: housing, hotels and revitalized historic buildings. Wall Street, as revealed in interviews and within Detroit Downtown Development Authority documents, has noticed. Financiers’ apparent lack of enthusiasm for development delivered so far meant the DDA was unable to refinance its own $250 million in arena-related construction bond debt last year as easily as it originally thought it could. (See story, Page 24) Simply put, the bankers thought there would be more to The District Detroit, and thus more tax revenue to pay back the bonds, by now. Crain’s has examined documents and interviewed developers and other key figures over several months to construct an account of why The District Detroit has not yet become the bustling, vibrant residential and entertainment district promised. Multiple requests for interviews with Ilitch or other executives with the family’s Olympia Development real estate business weren’t granted. Olympia issued a statement that says, in part: “Several years ago, we painted a conceptual vision of what would become Little Caesars Arena and The District Detroit. In the past

A development team headed up by Emmett Moten Jr. was expected to start construction on the United Artists Building multifamily conversion in 2017. Work has not started. (Photo by Larry Peplin for Crain’s; rendering by Olympia Development of Michigan)

18 months, the award-winning Little Caesars Arena opened, numerous other projects have been completed or are underway, and The District Detroit is a reality. We are very proud of these accomplishments. As our vision continues to evolve, grow and expand, so does our confidence and excitement about the future of The District Detroit. We look forward to sharing these plans at the appropriate time.” (The full statement can be found on Crain’s website.)

Detroit-based American Community Developers was slated to renovate the Alhambra Apartments into 46 units, but backed out of the project and four others last year. (Photo by Larry Peplin for Crain’s; rendering by Olympia Development of Michigan)

Questions of control Those familiar with the Ilitch real estate development and business strategies laid out some simple explanations for why the district does not yet look like the original renderings. In the most generous of terms, the housing has been waylaid and hampered by delays in securing financing and because of disputes about Ilitch control and micromanagement of projects and abrupt changes in plans.

That prompted at least one developer to abandon its participation in the district. Other developers have privately said they either steered clear of working with Olympia Development, part of the Ilitch Holdings Inc. business empire that says it had $3.8 billion in revenue last year, because of the Ilitch control they said is involved and terms Olympia has demanded, or they have tried to work with Olympia and failed. (See related story, Page 23.) An eyeball test of the district shows several completed pieces, such as the arena, but there are the ubiquitous parking lots — well-maintained, fenced and nicely paved — that punctuate block upon block north of Grand Circus Park. That’s where the original vision encompassed bistros, cafes, shops and green spaces. Historic, solidly constructed buildings that the Ilitches have accumulated over the decades in the area in the blocks surrounding the arena generally remain boarded up or, in at least one case, entirely exposed to the elements. Others had been windowless for years until recently. While District Detroit progress seems slow to take shape, rival developers such as Dan Gilbert and others have projects actively coming out of the ground around it. “All of us have multiple projects going on, especially Dan Gilbert, The Platform, Sachse,” said developer Mike Ferlito, whose company built the ground-up $6 million Selden condominium development that houses the popular SheWolf restaurant north of The District Detroit. He’s also putting the finishing touches on the $13 million redevelopment of the Lawyers Building on Cadillac Square into the 45-unit The Randolph apartment building. The president of Detroit-based developer Ferlito Group praised the Ilitch family for the work they’ve done in the city, including the Fox Theatre redevelopment, moving Little Caesars downtown and building Comerica Park and Little Caesars Arena. “They should continue their promise to the city and the taxpayers and start building these residential and office buildings, because there is a huge hole between downtown and Midtown that needs to be filled,” Ferlito said. Olympia said it has delivered on many of its promises, but what it

points to is mainly inside the arena itself. The 2014 renderings suggested that far more than the arena and nearby offices and parking garages were coming to downtown. “Our initial plan was to open Little Caesars Arena and the development immediately surrounding the arena at one time,” the company said in its statement. “This was largely accomplished when the arena opened in September 2017, as well as the Via Concourse, dining and shopping opportunities (like Mike’s Pizza Bar, The District Market and the Team Store), Chevrolet Plaza, Budweiser Biergarten, and the surrounding office buildings at 2525 Woodward and 52 Henry Street.” The M Den and Frito Bandito have also been announced as tenants near the Fox Theatre. Prior to the 2014 district launch, Olympia paid University of Michigan professor Mark Rosentraub for a report that estimated the mammoth arena project would create 8,300 construction jobs and 1,100 permanent jobs, along with $1.8 billion in economic impact for the city, region and state. Such reports are commonplace to justify tax dollars for private projects, but decades of academic study nationally cast doubt on the economic sense of public subsidies for sports stadiums. Francis Grunow, chair of the Neighborhood Advisory Committee for what at the time of its formation was called the Arena District, said Olympia Development has “unequivocally failed” at delivering on what was sold to the public. “The District, as it has been dubbed, has not fulfilled the promises that were presented with the renderings and words of Olympia Development,” Grunow said. “We have fewer residents than we did since the Ilitches have been involved. We have fewer small businesses in the district since the Ilitches have been involved. ... Regardless of what you may think of the Red Wings or Tigers this year, they have unequivocally failed at delivering on the vision they presented, which was a livable, walkable community with local retail, businesses and a place where people want to be after the games and shows are over.” That perception of a lack of tangible momentum is having consequences not just on Temple or Charlotte streets, or Cass or Second or Adams avenues. Wall Street has noticed, too, when it came time to refinance bonds. (See story, Page 24.)

‘Extra hoops’ At the 2017 event where Ilitch’s projection of 686 apartments was rolled out, Detroit Mayor Mike Duggan and a top deputy, Arthur Jemison, talked about the importance of affordable housing. The aim in a city fighting poverty was to prevent a widening gap between “the haves and the have nots” as rents rise downtown. At the event, longtime Detroit developer Emmett Moten Jr. and affordable-housing development specialist Gerald Krueger discussed their efforts as part of plans to develop Olympia-owned property. Moten’s team is still working on lining up financing for its project, said Scott Allen, a seasoned developer who is also one of the investors along with Moten attempting to turn the historic Olympia-owned United Artists Building, a hulking structure at 150 Bagley St. into 148 apartments SEE DETROIT, PAGE 24

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District Detroit projects Completed 

Little Caesars Arena: 2645 Woodward Ave.

Wayne State University Mike Ilitch School of Business: 2771 Woodward Ave. 



Office building: 52 E. Henry St.

Parking garages: 128 W. Fisher Freeway Service Dr.; 123 Temple St.; 250 E. Fisher Freeway Service Dr. 

Surface parking lots: 127 W. Fisher Service Dr.; 2301 Clifford St.; 143 Montcalm St.; 215 W. Elizabeth St.; 145 Elizabeth St.; 205 W. Adams St.; 240 W. Adams St.; 151 W. Adams St.; 116 W. Columbia St.; 168 W. Columbia St.; 117 Columbia St.; 112 W. Columbia St.; 127 Columbia St.; 2130 Cass Ave.; 2055 Cass Ave.; 2121 Cass Ave.; 2220 Cass Ave.; 2301 Cass Ave.; 2501 Cass Ave.; 2721 Cass Ave.; 2756 Cass Ave.; 2955 Cass Ave.; 2961 Second Ave.; 200 Madison St.; 850 Witherall St. 

Under construction 

Little Caesars Global Resource Center: 2125 Woodward

Partially built

Some work started 

Detroit Life Building redevelopment: 2210 Park Ave.

 Women’s City Club Building redevelopment: 2110 Park Ave. 

Hotel Eddystone redevelopment: 110 Sproat St.

Announced, not started Detroit Medical Center Sports Medicine Institute: 2715 Woodward Ave. 

Detroit Creamery Co. Building redevelopment: 1922 Cass Ave. 

Non-Olympia projects Developments completed near the district 

James Scott House redevelopment: 81 Peterboro St.



The Scott at Brush Park: 3150 Woodward Ave.



Founders Brewing Co. project: 456 Charlotte St.



Briggs Houze redevelopment: 114 W. Adams St.



David Whitney Building redevelopment: 1 Park Ave.

Developments under construction near the district



Alhambra Apartments redevelopment: 100 Temple St.



Hotel Fort Wayne redevelopment: 408 Temple St.



City Modern



United Artists Building redevelopment: 150 Bagley St.



City Club Apartments: 1431 Washington Blvd.

Serious planning/discussion, not yet started 

Hotel across from Little Caesars Arena



Hotel on Hockeytown Cafe site: 2301 Woodward Ave.



Adams Tower: 100 E. Adams St.



Montcalm Tower: 131 E. Montcalm St.



I-75/Woodward overpass retail



Office building: 111 Henry St.



Super Block project: 2200 Woodward Ave.



Office building: 120 Henry St.



Fine Arts Building facade project: 44-48 W. Adams St.

Former Standard Accident Insurance Co. building redevelopment: 640 Temple St. 



Henry Glover House: 229 Edmund Pl.

Developments proposed near the district 

Chemical Bank headquarters: 2047 Woodward Ave.

Brewster-Douglass housing projects site redevelopment 

 American Community Developers Brush + Watson project

By Kirk Pinho kpinho@crain.com

Developers and others familiar with the development of The District Detroit say part of the reluctance to work with the Ilitches has been the control the family exerts over projects — down to bathroom tile and paint schemes. A hint of how much control they require is in a copy of a draft letter of intent for a development agreement from November 2017 obtained by Crain’s. It showcases some of the terms the Ilitches seek in partner companies. A source provided it along with a request for proposals seeking a developer for the Fine Arts Building facade and property to the north of it at 44-48 W. Adams St. on Grand Circus Park. It’s not known whether Olympia ever tapped a development group for the project. The undated, unsigned letter of intent says the developer would “comply with the standards established by ODM for The District Detroit for design, development, and programming.” Olympia has “approval authority” over “all major decisions” like the property’s brand and image; interior finishes; site plans and building heights; parking; leases and service contracts with third parties; and other matters. Under the letter, Olympia contributes the property to be developed but zero cash equity; the developer is responsible for equity sufficient to secure 75 percent loan-to-cost financing. For the first 40 years of the partnership, revenue and expenses are carved up 80 percent to the developer and 20 percent to the Ilitches. At that point, it becomes 70-30, with the developer receiving 70 percent and falling every 10 years until it’s a 50-50 partnership. The developer is responsible for cost overruns, and the business plan is subject to Olympia approval. The joint venture is responsible for an annual “district expense reimbursement” fee of an unknown amount to Olympia that goes up 3 percent every three years after the property is stabilized. “Stabilization” is not defined in the document, nor is what the fee pays for. The developer is required to “agree to cooperate with ODM in supporting both the core business of ODM and its affiliates in maintaining ... (business and community) relationships in the development and operation of the project” including “with unions, community groups, the city and others.” One of the issues not spelled out in the letter of intent that sources say constrains new development is that the Ilitches prefer to remain owners of the land and lease it to developers, a practice known a ground lease. That’s not uncommon, and it happens regularly with things like shopping malls. In the case of Olympia, the developer would pay the Ilitches an annual fee to lease the land, and the building would be financed by a lender and owned by the developer. But in the event of a developer default, Olympia wants right of first refusal built into a lending agreement on a building it doesn’t actually own, giving it the ability to assume the loan and take ownership of the building, rather than the lender. That can hamstring financing because lenders don’t like to agree to that.

C R A I N ’ S D E T R O I T B U S I N E S S // M A R C H 4 , 2 0 1 9

SPECIAL REPORT: IS THE DISTRICT DETROIT DELIVERING?

Lack of District progress hampered bond refinancing By Bill Shea bshea@crain.com

and Kirk Pinho

kpinho@crain.com

The lack of progress on development of the Ilitch family’s District Detroit hampered a $250 million bond refinancing late last year. The Michigan Strategic Fund, a state economic-development entity, issued $450 million in bonds to finance the Little Caesars Arena’s construction in 2013, and loaned that to Detroit’s Downtown Development Authority, which owns the building and leases operational control to the llitches. The DDA, created in 1978 and whose board is led by Mayor Mike Duggan, is the city’s economic development agency that supports private investment developments. The nonprofit Detroit

DETROIT FROM PAGE 22

with first-floor retail. “We are hoping to begin construction some time this year, probably the fourth quarter,” Allen said. “It’s a complicated deal to finance, and we’ve had to work through and jump through some extra hoops. We think we are on the right track. It involves HUD 221(d) (4), and it just takes a minute.” The Housing and Urban Development 221(d)(4) program is a 40-year multifamily construction loan that requires HUD evaluation of the market, demand and other issues pertaining to the project. But while Moten’s Bagley Development Group LLC is confident it can pull off its plans for the United Artists, what happens with the other three buildings targeted for renovation is uncertain. Detroit-based American Community Developers, Krueger’s company, bolted before finalizing agreements with Olympia over what has been portrayed by those close to the negotiations, in part, as tensions over control of the five projects it was handling and changes in plans: The redevelopments of the Hotel Eddystone into 96 apartments; the Alhambra Apartments into 46 apartments; Hotel Fort Wayne into 163 apartments; and construction of two new apartment buildings, One Eleven Henry with 80 apartments and Arena Lofts with 153 apartments. “For the two new construction buildings, Olympia decided that those building pads were best-suited for office rather than residential, so they elected to do that and end our involvement in those two developments. On the three historic properties, we could not reach an agreement on certain terms with Olympia which affected our ability to move forward,” ACD Vice President Mike Essian said in a statement to Crain’s. Little progress has been made on the Hotel Eddystone, the Hotel Fort Wayne and the Alhambra since ACD’ s departure. The Eddystone’s twin, the Park Avenue Hotel, was imploded in 2015, which the city permitted only because the Ilitches promised to redevelop the

Economic Growth Corp. staffs the DDA under a contract with the city. Of the $450 million, $200 million were bonds backed by Ilitch-owned Olympia Entertainment, which manages the arena. Those bonds were paid off entirely by the Ilitches in 2017, and became a debt on their private books. The remaining $250 million in bonds were backed by the DDA’s downtown property tax capture, which expanded to encompass the arena area. Those were short-term, tax-exempt bonds that had an automatic interest rate hike after five years. That rate would have gone to 10 percent Jan. 1 unless they were refinanced, according to DDA documents. The thinking at the time the bonds were first sold was that district proj-

ect would greatly increase the tax base, and the bonds could be refinanced at better rates. The DDA, according to board meeting records, last summer sought to refinance the bonds. There were nine responses, the DDA subsequently told Crain’s, but none offered the interest rates and investment grades the DDA originally believed it would get. So, the DDA and its advisers created a plan to issue new bonds for not only arena debt but also some older, unrelated project debt. That turned out to be more attractive to investors, and the DDA on Dec. 12 sold $311.5 million in tax-exempt bonds, using proceeds to pay back the state and to retire older DDA bonds. The interest payments, about $27 million annually, remain unchanged, the DDA said.

Eddystone within a year of the Little Caesars Arena opening. That deadline was in September 2018, with no apparent consequences. (ODM said in its statement that work on the Eddystone is “currently underway.”) The base of the building at 120 Henry is partially built, but winterized; it is now slated to be office space when it’s completed. Next door at 111 Henry, the project formerly known as Arena Lofts has also been reprogrammed as offices and is also wrapped in white tarps to keep out the weather. The lack of residential development has affected business owners in the district that had planned on having residential nearby. John Lambrecht, co-owner of Bookies Bar & Grille and owner of Grosse Pointe Farms-based Lambrecht Realty LLC, relocated his tavern to Cass Avenue, within a couple blocks of the future arena site, in 2009. The spot was picked, in part, as a bet on future Red Wings and concert crowds. Lambrecht said the business has enjoyed a nice revenue uptick since Little Caesars opened in September 2017, but there would be even more had the rest of the district been built — especially the housing. “Having the arena three blocks away has been good for business,” said Lambrecht. “But there are more pieces to the puzzle that need to get filled in, especially right now where the city has a great demand for people to live and work downtown. We should take advantage of the momentum that the city has right now. The Ilitches obviously have a vast amount of real estate holdings in prime development areas. And to a point, there is a responsibility they have to see those areas get developed because it will help the neighborhood and the city as a whole.”

borhood, directly across Woodward Avenue from the district. East of Woodward, the city’s spine, crews have been working for more than two years to build a 410-unit residential development on 8.4 acres of what was largely vacant land. Gilbert and other investors are behind the City Modern project, which expects to have some units ready for occupancy this year. Gilbert also has his eyes set on building more than 900 units on the former Brewster-Douglass housing projects site, as well, totaling 23 acres. All told, a couple of thousand apartments and other residential units are in the works, plus tens of thousands of square feet of retail space. Yet it’s not only Gilbert’s hefty wallet that’s paying for it. Six months before Olympia Development announced its residential launch, Detroit-based developers Broder & Sachse Real Estate Services Inc. and Woodborn Partners LLC completed the $65 million Scott at Brush Park a couple of blocks north of the arena, which brought nearly 200 apartments to the market before LCA opened. And American Community Developers — which exited its plans to create 538 new units in the District Detroit — now has a separate $46 million project to build 180 residential units in Brush Park. Half of those units will be designated affordable, and half of those deeply affordable, for those making about $16,000 to $28,000 a year with rent starting around $400 to $700 per month. (When the project was being announced in July on the vacant Brush Park land, Mayor Duggan pulled ACD’s Essian aside and lamented that his company was no longer working with Olympia on its projects, a person with knowledge of the conversation said. Essian declined comment.) ACD also has projects in neighborhoods including southwest Detroit, downtown, Midtown, New Center and around Oakman Boulevard. “ACD continues to work on many other exciting developments in the city of Detroit, and we look forward to several announcements in the near future. We wish Olympia Development nothing but the best and are supportive of their continued efforts

Surrounding projects Meanwhile, housing is being built east of Woodward — but not by Olympia or its partners. A handful of towering construction cranes dot Detroit’s dark February skyline. Cherry-pickers, road closures, fencing, structural steel and insulation, streets marked with muddied tracks from construction traffic — that’s all in the Brush Park neigh-

A $20 million development of 50,000 square feet of office space and 7,000 square feet of retail sits half-built at 111 Henry St. The project was originally slated to be apartments. (Photo by Larry Peplin for Crain’s; rendering by Olympia Development of Michigan)

on all their projects and to make The District Detroit a success,” Essian said in a statement. Other developers are working in the area, too, including Detroit-based City Growth Partners LLC and the Nyman family, which is working in the area straddling Midtown and Brush Park. Closer to the hockey arena, another group, also not working with Olympia Development, that includes Christos Moisides, David Sutherland and Gretchen Valade has commenced at 640 Temple. Unlike ACD, however, the 640 Temple group did

not work with the Ilitches. Nor did Ferlito, whose Selden condominium project north of the District wrapped up last year. Nor did Joel Landy, the longtime Detroit developer who has completed the redevelopment of the nearby Scott Mansion into multifamily residential after years of decay.

Cordish discussions The six residential projects that appear to have stalled are emblematic of a broader pattern for The District Detroit: Grand visions, but only partial execution.

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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 // M A R C H 4 , 2 0 1 9

Little Caesars Arena opened in September 2017 as home to the Detroit Red Wings and Detroit Pistons. (Rendering by Olympia Development of Michigan)

There have been serious discussions about high-rise buildings with Baltimore-based Cordish Cos. in the past. But that was before the developer of what it calls “Live!” mixeduse districts around sports arenas quietly stopped working with the Ilitches last year, according to sources familiar with the matter. Crain’s reported Cordish’s departure in September. In an interview last year, Chris Granger, group president of sports and entertainment at Ilitch Holdings Inc., said Cordish was still working with Olympia but didn’t go into detail. Multiple emails sent to Cordish over the past several weeks seeking an update weren’t returned. There were plans for a pair of residential high-rises overlooking Comerica Park in collaboration with Cordish, Crain’s reported a year ago. The Adams Tower would be on an Ilitch-owned surface parking lot and effectively wrap around the Grand Valley State University building — blocking its CoPa view — next to the Detroit Athletic Club. A source briefed on the plans said last year that the new tower would have baseball stadium-style seating for residents on its rooftop. The Montcalm Tower would be at Woodward and Montcalm Street, next to St. John’s Church. But so far, there has been no forward momentum on those projects now that Cordish has bowed out. Detroit-based Ventra LLC, former Detroit Economic Growth Corp. chief George Jackson’s company, had been serving as The District Detroit multifamily residential consultant but stopped working with ODM last year. In addition, there was to be a hotel that took the place of the Hockeytown Cafe across from CoPa, as well as one immediately across from the new hockey and basketball arena. Retail space that has been expected to line the Woodward overpass over I-75 has not moved forward. “The reality is that major development often takes time,” said Jemison, the city’s chief of services and infrastructure. “There are projects outside of The District Detroit that were announced several years ago that are still not under construction, due to a variety of unexpected factors. When you

There were two series of new bonds: One sale of $287 million for the arena debt matures in 30 years, while the rest mature in 2025. The DDA will pay a 5-percent interest rate, which is more expensive than the rate on the original bonds but less costly than the 10 percent rate in place if the bonds were not refinanced before Jan. 1. New York City-based Kroll Bond Rating Agency Inc. assigned a BBB-rating to the new bonds, which is a “medium-quality” investment grade, according to the agency’s rating scale. That’s nine steps below the top rating possible, and one step above “low-quality” investment-grade risk. There was “expectation of more growth in the tax base” than what’s occurred so far, Kroll Managing Director William Cox said in an interview with Crain’s. “Growth had not occurred to degree as originally expected,” Cox said. “If the growth has been as significant as originally expected, the rating may have been higher.” Cox cautioned that the progress so far isn’t bad.

“In terms of the projects that have been completed to date, and the tax base that’s resulted, it’s significant and the expectation is that (more) will continue to come online,” Cox said. “Much of the other development that’s down the road was not expected to occur at a much faster rate than is happening.” Downtown’s broader renewal helped the DDA get the bond conditions it wanted. “The development that’s occurred downtown in recent years is remarkable and strong,” Cox said. That downtown development includes the constellation of building renovations and new construction by Dan Gilbert, meaning the billionaire founder of Quicken Loans Inc. and Rock Ventures LLC's current and forthcoming investments helped the DDA get the bond deal it wanted. The DDA’s bond documents list the major Gilbert projects within its tax capture district. The taxable value in the DDA’s 700-plus-acre district has grown from $587.2 million in 2013 to $816.6 million last year, according to the agency’s records. It doesn’t specify how much of

that growth is from The District Detroit — the arena itself is publicly owned, so it’s tax-exempt — and how much is from other developments. Steven Kantor, the DDA’s financial adviser, said the agency didn’t expect the district to be finished by the refinancing date, and added that the December bond sale terms are proof that investors like what they see. “We never anticipated it would be completed,” he said. “The purchasing of the bonds was a ringing endorsement of the project, what has happened, and their expectations of what is happening.” Kantor acknowledged that the DDA didn’t get a better interest rate or rating because of uncertainty about the project. “The nature of the transaction is risky to the investor, revolves around future construction and population of the district and its continued development,” Kantor said. The DDA and its financing are at the mercy of what the Ilitches do or don’t do, but there is a covenant in their formal relationship that is telling. The 2013 deal between Olympia

and the DDA to build the arena at the largely vacant and blighted area of Woodward at I-75 obligated the family to spend at least $200 million on ancillary development within five years of the venue’s opening. But the Ilitches said they would accelerate that timeline and build the ancillary development concurrently with the arena. That was expected to make the district more than just an arena, but a destination to live, work and play. “We think the impact on our community will be exponential if it’s all done at once,” Chris Ilitch said in 2014. Building that $200 million worth of non-arena development, either directly or luring third parties to do it, triggers a clause in the DDA agreement that has the agency pay Olympia — once the arena bonds are paid off in 30 years — a $74 million reimbursement. DDA documents show that Olympia’s approved projects to meet that ancillary construction reimbursement include the $150 million Little Caesars headquarters, $55 million for two parking garages, and $41.2 million for an office building — now home to a Google Inc. operation — next to the arena.

take on a 50-block redevelopment, it’s not surprising that some aspects will move more quickly than others.” Crain’s reported in August that the company hired Keith Bradford, a former Walt Disney Co. executive who had been vice president of the rebranded and expanded Downtown Disney, to oversee The District Detroit and help it move along as senior vice president of operations and development. Olympia has also been on a hiring spree, seeking to woo real estate professionals from other companies in the region with pay 30 percent or greater than what they were making at previous positions along with other perks.

manager of communications and media, said in a statement at the time that the Ansonia and Atlanta “have been considered by numerous residential developers and found to lack viable redevelopment potential.” “Going forward, this area is envisioned for the type of high-density, mixed-use development that will contribute to Detroit’s globally recognized comeback and create additional construction and construction-related jobs.” Six months ago, it sought to tear down the Alden Apartments at 145 Temple St. next to where ODM erected a new parking deck, arguing the building is “structurally unsafe and not viable for redevelopment.” The Ilitches still take heat from preservationists for the 2005 demolition of the Madison-Lenox Hotel across from the Detroit Athletic Club in the run-up to Super Bowl XL, although that demolition was conducted by the city after the Ilitches had twice tried to gain approval from the Historic District Commission to level it. The city deemed it structurally unsound. Adams Theatre/Fine Arts Building on Grand Circus Park and the Chin Tiki restaurant in Cass Corridor, which was far less historic, are other examples of Ilitch buildings being razed to the ire of the preservation community. And more recently, in July 2015, the Ilitches’ Olympia Development of Michigan imploded the historic Louis Kamper-designed Park Avenue Hotel — which had “ZOMBIELAND” spelled out in graffiti across its top story. That demolition was allowed only because the Ilitches promised to redevelop the Hotel Eddystone by the time the arena’s one-year anniversary was marked. The building, however, still sits windowless, although crews were seen cleaning it out late last year and Detroit-based Kraemer Design Group has been hired to serve as a historic consultant on the project. City Council member Raquel Castaneda-Lopez has asked the city’s legislative policy division for a report outlining a list of commitments made by the Ilitches and to see what recourse the city has. In addition, ODM received approval from the Historic District Commission to start work on the Women’s City Club building at 2110 Park Ave. and the De-

troit Life Building at 2210 Park Ave., which are in the Park Avenue Historic District. The Women’s City Club building is being turned into 47,000 square feet of office space along with 10,000 square feet of first-floor retail in a project slated to cost $25 million, while the Detroit Life Building is slated to get a $17 million renovation to turn it into 32,000 square feet of office and 6,000 square feet of retail. “The Detroit Life building on Park Avenue is undergoing active construction and an architect and construction firm are now under contract for the renovation of the Eddystone,” Jemison said. “We expect to have an agreement in place in the next week to establish a firm timeline for this project.” Robert Gibbs, managing principal of Birmingham-based Gibbs Planning Group Inc., praised what Olympia has done so far with the district and predicted it will take a generation for the district to fill out but is critical of the destruction of historic buildings as part of redevelopment. “It is unfortunate that some of the historic buildings are being razed for parking and other uses,” he said via email. “Studies have shown that historic buildings increase property values and desirability, especially by millennials. Generally, the region should make more of an effort to preserve and adaptively reuse buildings. This would help make Southeast Michigan more competitive with booming cities such as Boston and Philadelphia.”

pected to open this year after two years of construction that was delayed by an issue involving the 234,000-squarefoot building’s unique glass facade that has triangular panels designed to look like pizza slices. The snag put the project at least nine months behind schedule. A source familiar with the project said Little Caesars employees are expected to start moving in starting in April. And the proposed $65 million Detroit Medical Center Sports Medicine Institute was announced in June and work is expected to begin early this year on the 127,000-square-foot building sandwiched between the Ilitch school and the arena on Woodward. It will treat athlete employees of the Red Wings and Tigers, as well as the general sporting public. It’s slated to open next year. DMC is taking 50,000 square feet in the building, and Grand Rapids-based law firm Warner Norcross + Judd LLP is taking another 30,000 square feet. Warner Norcross is just the second major office tenant not affiliated with the Ilitches to move into the district. The other is Google, which opened a 29,000-square-foot office next to the arena last year and has plans to expand it by an unknown amount. “As a result of these efforts, more than 20,000 construction and construction-related jobs and more than 3,000 permanent jobs have been created,” ODM said in its statement. “More than 200 new development projects have been announced. And more than $2.8 billion has been invested in the area. All of this investment directly led to the Detroit Downtown Development Authority’s highly successful bond refinancing, helping to give stability to the city’s development planning.” “Future developments in The District Detroit will only add to the area’s growth and revitalization, serving a significant role in Detroit’s amazing comeback. As our development plans continue to evolve, we are confident in our city, our community and in our collective future.”

Preservation and demolition New buildings are one thing, and preserving existing buildings is another. Historic preservationists have had a complicated, and at times testy, relationship with the Ilitch family over the last several decades. While they give credit to the family for the $12 million renovation of the Fox Theatre in the late 1980s, which won the National Preservation Award from the National Trust for Historic Preservation in 1990, in more recent years, the two sides have been at odds over tearing down old buildings instead of restoring them. That is a thread that has manifested itself in The District Detroit effort, largely as the Ilitches have sought to demolish more buildings in the area. Those moves have largely been stymied by Detroit City Council or administrative action. Two sources familiar with Olympia operations speaking on the condition of anonymity said Olympia’s decision matrix on whether a building should be torn down come to whether the property will be more profitable as parking or if it’s redeveloped. “Ninety-nine out of 100 times,” one source said, Olympia chooses parking. In 2017 it sought to tear down the Hotel Ansonia and Atlanta Apartments on Cass Avenue at the Fisher Service Drive, as well as a vacant apartment building at 427 Henry St. A house at 664 Charlotte St. also was slated for the wrecking ball. Ed Saenz, Olympia’s

What’s finished and nearly so The Ilitches have completed hundreds of millions of dollars in development in the district. (See map, Page 23.) The Wayne State University Mike Ilitch School of Business was largely bankrolled by a $40 million donation from Mike and Marian Ilitch to the Detroit university. Of that, $35 million went for construction of the 120,000-square-foot building at Woodward Avenue and Temple Street that opened last year. The remaining $5 million from the donation is for an endowment for the school itself. The $150 million midrise Little Caesars Global Resources Center is ex-

Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB Bill Shea: (313) 446-1626 Twitter: @Bill_Shea19

C R A I N ’ S D E T R O I T B U S I N E S S // M A R C H 4 , 2 0 1 9

BOARDS FROM PAGE 3

crainsdetroit.com Editor-in-Chief Keith E. Crain 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

REPORTERS Annalise Frank, breaking news. (313) 446-0416 or afrank@crain.com Jay Greene, senior reporter, health care. (313) 446-0325 or jgreene@crain.com Anisa Jibrell, breaking news. (313) 446-1612 or ajibrell@crain.com Chad Livengood, senior reporter, Detroit rising. (313) 446-1654 or clivengood@crain.com Kurt Nagl, breaking news. (313) 446-0337 or knagl@crain.com Kirk Pinho, real estate. (313) 446-0412 or kpinho@crain.com Bill Shea, enterprise editor, the business of sports. (313) 446-1626 or bshea@crain.com Dustin Walsh, senior reporter, economic issues. (313) 446-6042 or dwalsh@crain.com Sherri Welch, senior reporter, nonprofits and philanthropy. (313) 446-1694 or swelch@crain.com

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While they know on an academic and intellectual level they need to diversify their board, they have no bloody clue how to do that.” Deloitte is seeking to rectify the diversity disparity on boards across the country with Board-Ready Women programs in several cities across the country, including Detroit. “You simply can’t argue with the correlation of diversity of thought, experience and perspective and company performance,” said Mark Davidoff, managing partner of Deloitte’s Michigan operations and advocate for the local program. Fortune 500 companies with more women on boards perform better, according to a 2009 study by researchers at Harvard University. The companies ranked in the highest quartile of women directors reported a 42 percent greater return on sales and a 53 percent higher return on equity than those with fewer women directors, according to the study. “How narrow is that thinking and how limiting is it?” Bouckley said. “If I’m a shareholder, I want the broadest possible reach on my board. I want to build bridges, expand and grow and

DIAMONDS FROM PAGE 1

He joined New World Diamonds in July as its CEO and brought Chris Quezada — who’d been digital art director at Shinola when Panis was president — on board as creative director. In a matter of months, the pair developed a brand for the startup, creative images and messaging, the website and initial digital advertising strategies before launching NewWorldDiamonds. com in mid-November.

Market growth New World is entering the labgrown diamond market at a time when experts say it’s poised for growth. In its Revised Jewelry Guides issued late last July, the U.S. Federal Trade Commission removed earlier references to the need for diamonds to be a “natural” mineral, meaning a diamond is a diamond, whether it comes out of the ground or is cultivated in a lab like a cultured pearl, so long as it is “pure carbon crystallized in the isometric system” like a natural diamond. Many believe the move will level the playing field between mined and lab-grown diamonds. “It’s next to impossible” to tell the difference between a mined diamond and a lab-grown diamond when it comes to the four Cs of cut, color, clarity and carat and the fifth C of certification, Panis said, noting New World Diamonds are certified by independent labs. The FTC’s new guidelines, which took effect in mid-August, have given consumers a boost of confidence that lab-grown diamonds are diamonds, he said. NewWorldDiamonds.com is seeing tens of thousands of visitors a month. But the market is contracting beneath the surface. The prices for gem-quality lab-created diamonds sold as jewelry have dropped 30-40 percent over the last 2.5 years, Paul Zimnisky, a New Yorkbased, independent diamond and mining analyst and consultant, wrote

make the business as strong as it can be. I don’t want four guys that play golf together every Sunday.” Since the study’s release, companies have Francoise Colpron: Program worked to recruit more fehelpful. male board members. Women now account for 22.5 percent of Fortune 500 board seats, up from 15.7 percent in 2010. This translated to 40 percent of new board directors in recent years being women, leaving only three S&P 500 companies and only roughly 40 Fortune 500 companies with no women board members. Teresa Carroll, senior vice president and general manager of global talent solutions at Troy-based staffing firm Kelly Services Inc., participated in the first Deloitte program in late 2016 and joined the board of San Diego-based publicly held Bridgepoint Education Inc. in March 2018. “I’ve been fortunate to have mentors along my career path and have success in business,” Carroll said. “I wanted to help more than just my company, and health care and educa-

tion were a passion of mine.” Carroll is one of five participants in the first Deloitte program to join a board since its completion with another two waiting to get confirmed, Davidoff said. The Board-Ready Women program session last week was a primer, of sorts, on corporate governance — in fact, the presentation by Debbie McCormack, managing director of Deloitte’s Center for Board Effectiveness, was titled Corporate Governance 101. The instruction seemed quite basic: “Modern boards do not manage, they oversee;” the difference between board committees; the role of the directors; regulatory requirements; and the like. “The women in the room (last week) are in pretty high-powered positions ... but that doesn’t mean we understand the intricacies of the boardroom,” Bouckley said. “Just because you’re experienced and think you’re ready for the board, you need to understand what your role is once you get there and be ready to play.” Prepping the group for the work that comes with directorship enlightened the group, she said. Board directors spend an average of 74.4 hours annually in board meetings but an additional 158 hours annually reviewing materials, participating in informal meetings with management and

social events. That’s nearly five 50hour work weeks of board work on top of the demands of executive management at their respective companies. Yet these women understand the extracurricular time required, as the vast majority of them serve on nonprofit boards. Nonprofit boards, while still dominated by men, are more balanced in board gender diversity. Women hold 47 percent of nonprofit board seats, according to a February 2018 study by Indiana University. Francoise Colpron, president of automotive supplier Valeo North America and participant in the first cohort of Board-Ready Women, wanted to make the leap. “I received the invitation to participate ... at the perfect time of my personal and professional development,” Colpron said in an email to Crain’s. “I had already served on various boards of nonprofit organizations. However, I also had an interest in enhancing the diversity of thought and gender of corporate boards.” Colpron said the program helped in evaluating board opportunities. She landed a board seat for French rail transport company Alstom SA in July 2017.

in an August report. Last May, prior to the FTC’s revised guidelines, international diamond mining and retailer giant De Beers Group announced its plan to enter the lab-grown diamond space and in September began offering its lab-grown diamond jewelry to consumers at an estimated 65 percent to 80 percent discount. It’s a strategy that’s working to bring the price of lab-grown diamonds down, according to Reuters. But Zimnisky is forecasting growth for the market, driven by cost-efficiency gains tied to continued advances in lab-grown diamond production technologies and dwindling supplies of natural diamonds. While natural diamonds currently represent more than 95 percent of the diamond jewelry market, the annual supply of natural diamonds is forecast to decline over the next four years, Zimnisky said. He estimated the lab-grown diamond jewelry market at $1.9 billion today, with gem-quality, lab-created diamond production of diamonds for jewelry now exceeding 1.5 million carats of polished diamonds annually. And he forecast 22 percent growth annually to $5.2 billion by 2023 and $14.9 billion by 2035. The numbers differ, but New Yorkbased strategic market research company Research Nester is also forecasting growth for the market. It valued the market of lab-grown diamonds at $16.2 billion in 2015 and estimated its future growth at a compound annual growth rate of 7.4 percent between 2016 and 2023, reaching $27.6 billion in 2023. By contrast, the mined diamond market saw 2 percent growth in 2017 to $82 billion, according to the De Beers Group Diamond Insight Report 2018.

With the HPHT process, a diamond seed is placed into carbon, exposed to temperatures in the area of 1,500 degrees Celsius and pressurized to about 1.5 million pounds per square inch. The pure carbon melts and forms a pure carbon diamond as it cools. New World Diamonds’ parent company, Combine, spent four years prior to the new company’s launch perfecting its lab-grown diamonds, Panis said. It uses a second process called chemical vapor deposition to create diamonds. The CVD process begins with placing a small diamond seed in a sealed chamber and heating it until the internal chamber temperature reaches approximately 1,000 degrees Celsius. By heating ultra-rich carbon gases like methane in the chamber, the carbon atoms in the gas begin to separate and fall onto the diamond seed, building up layer by layer until they form a rough diamond. This process takes between six to 10 weeks to yield gem grade diamonds, New World Diamonds said on its website. Lab-grown diamonds have the same physical, chemical and optical characteristics as mined diamonds, and with variances in the manufacturing process can yield brilliantly colored diamonds that are rarely found in nature, Panis said. “We are very unique in that we are the mine to the market,” Panis said. “We make product from the diamond seed to the rough diamond to cutting and polishing them to the finished jewelry. “We own the entire diamond chain. That’s important, because it keeps us very, very competitive in the marketplace and allows us to deliver immense value to the consumer and to ensure quality.”

New World diamonds also cost 4060 percent less than earth-mined diamonds, Panis said. Panis and Quezada are spreading New World’s branding message through an online campaign on social media sites like Facebook and Instagram, through blogs on sites like pridezillas.com, “a wedding resource for the LBGT community,” through paid display ads on online ad networks and sites like Rizzarr.com, the trademarked “Millennial Marketplace.” “We believe that the thing that’s attracting people is the fact that the idea of spending three months of salary on a diamond is no longer resonating with consumers,” Panis said. “It’s also the fact that these diamonds are ethically sourced, conflict-free, environmentally friendly and affordable. Layered on top of all of that, consumers today want an element of transparency.” “People want to know what they’re putting in their bodies and what they’re wearing on their bodies,” he said.

Growing a diamond

Marketing strategy

Diamond makers use two primary processes to grow diamonds in a lab. The first, high pressure-high temperature method, creates extremely high pressure and temperature that mimics how scientists believe natural diamonds were formed deep in the earth.

Taking note of rising millennial interest in lab-grown diamonds as more environmentally friendly and less expensive, a trend reported last May by Forbes, New World is trumpeting the fact that its diamonds are ethically sourced, environmentally friendly and conflict-free.

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

Emerging business Combine and New World Diamonds aren’t the only local companies with a stake in lab-grown diamonds. Detroit-based private equity firm Huron Capital Partners LLC late last year made a “significant” equity stake in WD Lab Grown Diamonds, a Washington, D.C.-based producer of large, lab-grown diamonds for the jewelry, scientific and industrial markets. The transaction made the list of Crain’s Biggest Deals of 2018, with an estimated investment of $80 million. Huron invested in WD because of its extensive portfolio of exclusive global licenses with the Carnegie Institution of Washington centered on the patented Chemical Vapor Deposition process and other methods to grow gem-quality diamonds, said Michael Beauregard, co-founder and senior partner of Huron Capital. Anyone can buy the equipment needed to make diamonds, he said. “That know-how is very significant. ... it’s the recipe that counts.” Sherri Welch: 313 (446-1694) Twitter: @SherriWelch

C R A I N ’ S D E T R O I T B U S I N E S S // M A R C H 4 , 2 0 1 9

THE WEEK ON THE WEB

RUMBLINGS

Target to close in Sterling Heights

Parsing the dollars on Garden Fresh sale

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

arget Corp. is planning to permanently close one of its stores in Sterling Heights. The Minneapolis-based chain retailer will close its location at 35700 Van Dyke Ave. between 15 and 16 Mile roads on June 1, according to a notice filed with the state last week. The closure will affect 136 workers who do not have union representation or bumping rights. However, Target is offering to relocate employees to several other stores in the area, company spokeswoman Jacqueline DeBuse told Crain’s in an email. She said employees who decide not to transfer are offered a separation package based on years of service. “Target anticipates few involuntary terminations,” the notice to the state said. The company indicated that the closure is a result of declining profitability. “We have a rigorous process in place to evaluate the performance of every store on a regular basis, closing or relocating underperforming locations to maintain the overall health of our business,” DeBuse said in the email. “Typically, a store is closed as a result of seeing several years of decreasing profitability. The Sterling Heights store will remain open until June 1.” The store on the chopping block is smaller than the others in the area, including Target locations on Hall Road and Metropolitan Parkway. It is located along a busy Macomb County corridor, but tucked back from the corner behind a newly developed Holiday Inn hotel and a large, $12 million headquarters for Christian Financial Credit Union currently being constructed. The retailer announced in 2017 that is was closing two stores in Michigan — one in Benton Harbor and one at Eastland Center, the struggling mall in Harper Woods plagued by recent big-box closures. Target has around 30 locations and 4,500 employees in metro Detroit. DeBuse said there are no plans to open a replacement store for the one being closed. She added that the company is investing in other stores in the area and remodeled its Lakeside Mall location in 2018.

DETROIT NEWS J Detroit-style standard Buddy’s Pizza plans to open a downtown Detroit location. The Farmington Hills-based company plans to debut in the Bedrock LLC-owned Madison building near Grand Circus Park and Comerica Park in the end of summer or fall. It’s also planning locations this summer in Woodhaven and Plymouth. Recent growth comes after the chain took on a new majority investor, restaurant investment firm CapitalSpring. J The nonprofit Ruth Ellis Center is planning to build a 42-unit development with Illinois nonprofit Full Circle Communities Inc. to house LGBT youth and others who are at risk for experiencing homelessness. The model provides affordable housing, independent living and case management for tenants. The proposed project in the Piety Hill neighborhood of

Target is planning to close its store at 35700 Van Dyke on June 1.

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

$750

The new cost of an MBA per credit hour at the University of Detroit Mercy, down from $1,500.

8.5

The number of miles of I-75 being overhauled in Oakland County in a project that started last week, meaning lane closures and congestion.

$22.5M

The amount Southfield-based Diversified Restaurant Holdings Inc. paid for nine Buffalo Wild Wings locations in the Chicago area.

Detroit was awarded $1.48 million in low-income housing tax credits through the state. J The Urban Land Institute of Michigan will have its first-ever Spring Summit April 29-30 at Cobo Center in downtown Detroit. The state’s chapter of the real estate and land use organization announced last week that the event will focus on urban development, mixed-use development and real estate market trends. Last year, the national Urban Land Institute held its annual spring meeting downtown and drew 4,000 real estate professionals to the city. J A $12 million planned housing and commercial development led by Invest Detroit, nonprofit Cinnaire and the Southwest Detroit Business Association is using a tiered approach to aim to fit in with its architectural surroundings in southwest Detroit. It’s received the go-ahead from the Hubbard Farms Historic District Commission and Detroit zoning appeals board, and is now working on locking in financing for a vacant lot on West Vernor Highway near Clark Park.

METRO NEWS J The James Beard Foundation named nine chefs, restaurants and bakers in metro Detroit as semifinalists for its 2019 awards. Combination restaurant and butcher shop Marrow, which opened in Detroit’s West Village back in October, was nominated

for Best New Restaurant. Zingerman’s Roadhouse of Ann Arbor is a contender in the Outstanding Service category. Others are Lisa Ludwinski of Sister Pie in Detroit, Lena Sareini of Selden Standard in Detroit, Genevieve Vang of Bangkok 96 in Dearborn, Norberto Garita of El Barzon in Detroit, Anthony Lombardo of SheWolf in Detroit, Kate Williams of Detroit’s Lady of the House and James Rigato of Mabel Gray in Hazel Park. J Metro Detroit’s two big mortgage companies continue to climb the rankings of the nation’s top loan originators. Quicken Loans Inc. recorded $83.4 billion in loan generations in 2018, while Pontiac’s United Wholesale Mortgage produced a company record $41.5 billion in loan volume last year, marking a 41 percent increase from the year before, according to data published this week in industry publication Inside Mortgage Finance. J The automotive sunroof and panel systems subsidiary of Troy-based Inteva LLC plans to invest $13.9 million and hire 334 people in Oakland or Wayne counties after securing a new supply contract. US Roof LLC is seeking a lease of 70,000-100,000 square feet to house a technology center, office space, a lab, production and warehousing. The investment is supported by a $3.34 million grant toward the promised job creation approved last week by the Michigan Strategic Fund board. J General Motors Co. will use 100 percent renewable energy to power its global technical center in Warren and a large part of its Detroit-based world headquarters at the Renaissance Center. About 300,000 megawatt-hours of wind power, enough to power about 30,000 households per year, will come from DTE Energy Co.’s MIGreenPower program. Nationwide, GM said its renewable energy deals to date total 1.71 terawatt hours, more than any other automaker in the region. Ford Motor Co. previously signed a similar deal with DTE for 500,000 megawatt hours. J Novi-based cold food storage powerhouse Lineage Logistics has inked a deal to absorb one of its direct competitors — Chatham, N.J.-based Preferred Freezer Services — in a move that will stretch its global reach across 200 facilities, paving the way for more investments in both infrastructure and technology. The deal creates the world’s largest cold storage company, according to Lineage CEO Greg Lehmkuhl.

t’s not known what Campbell Soup sold Ferndale-based Garden Fresh Gourmet for last week, but a detail from the soup maker’s earnings report might be telling. Campbell said last week that it took a charge of $346 million to write down the value of the fresh-food division that included Garden Fresh. That division’s big components were the salsa maker and the Bolthouse Farms carrot brand. Campbell made a deal to sell Garden Fresh last week to Quebec-based Fontaine Sante, rebuffing a bid that involved Jack Aronson, the brand’s founder, along with other investors, Crain’s reported Tuesday. It’s not known how much of the writedown applied to Garden Fresh and how much applied to other parts of that business. That $346 million writedown, however, seems significant given that it came right after Garden Fresh’s sale, and Bolthouse Farms hasn’t been sold yet. It vastly outweighed the price that Campbell paid for Garden Fresh in 2015, $231 million.

GARDEN FRESH GOURMET

Garden Fresh Gourmet has operated as part of Campbell since 2015 when Campbell bought it from founder Jack Aronson for $231 million as it sought to expand its fresh foods offerings.

Campbell didn’t disclose a sale price for Garden Fresh, which means the dollar figure wasn’t “material” to the company’s earnings. Garden Fresh Gourmet has operated as part of Campbell since 2015 when Campbell bought it from Aronson for $231 million as it sought to expand its fresh foods offerings.

Billionaire and NBA team owner Mark Cuban is interviewed by Dan Gilbert, billionaire chairman of Quicken Loans Inc. and owner of the Cleveland Cavaliers, for a podcast called “The Speed of the Game.”

Gilbert launching ‘short, fun,’ entertaining’ podcast D

an Gilbert is getting into the podcast business. The billionaire chairman of Quicken Loans Inc. and owner of the Cleveland Cavaliers is starting a podcast called “The Speed of the Game” that will focus on entrepreneurship, sports, Detroit and apparently spotlight some of his own companies and investments. The first episode featuring billionaire Dallas Mavericks owner Mark Cuban will be available later this month on Apple iTunes and Spotify, said Andrea English, spokeswoman for Gilbert's Rock Ventures LLC. Gilbert announced the podcast last week at the Detroit Policy Conference during an on-stage interview with Ignition Media Group CEO Dennis Archer Jr. A promotional video for the podcast posted Feb. 19 on YouTube featured

clips of Gilbert interviewing Cuban, former NFL player and entrepreneur Dhani Jones, Michigan State University coach Tom Izzo and Shohini Ghose, a physics professor at Wilfrid Laurier University in Waterloo, Ontario. “We’ll keep it short, we’ll keep it fun, we’ll keep it entertaining,” Gilbert said in a promo video. “Because information’s moving so fast, at an increasing pace. If you’re not keeping up with the speed of the game, then you can’t play.” Another episode will feature StockX CEO Josh Luber, Gilbert’s business partner in the fast-growing “stock market of things” based alongside Quicken Loans at One Campus Martius. Podcast guests will range from tech entreprenuers, philanthropists and athletes to "somebody Dan believes is a unique and interesting human being," English said.

What would you like the power to do? At Bank of America we are here to serve, and listening to how people answer this question is how we learn what matters most to them, so we can help them achieve their goals. We had one of our best years ever in 2018: strong recognition for customer service in every category, the highest levels of customer satisfaction and record financial results that allow us to keep investing in how we serve you. That translates to a great team delivering the best capabilities for our clients and for our communities. We are proud to serve Michigan and help drive it forward by sharing our success, through the lending, investing, giving and volunteering that you need to remain vibrant and vital.

$19 Billion

$470 Million

$3.5 Billion

$472 Million

Total FDIC deposits1

Home loans2

Loans outstanding to commercial business

Credit provided during 2018 by Bank of America to small businesses in Michigan

$14 Million

$3.5 Million

106K

in grants and matching gi s during the last five years addressing economic mobility and community needs3

pledged by employees to local nonprofits and community needs in the last five years4

employee volunteer hours contributed locally during the last five years

Detroit is home for me and my team. We know this community and we are here to serve your needs and help you achieve your goals. That’s why we’re always asking:

What would you like the power to do? Let me know at: matthew.b.elliott@baml.com Matt Elliott Detroit Market President

As always, protect your personal data. For assistance with a personal financial issue, please visit your nearest financial center. Total deposits within this market as of June 30, 2018, which may be inclusive of Consumer, Global Wealth and Investment Management (GWIM), Global Banking, and Global Markets deposits. 2 Home loan dollars reflect a rolling 12-month total of First mortgage loan production figures including Consumer Banking and GWIM. 3 Community involvement amounts represent a cumulative 5-year period of contributions. 4 Employee local nonprofit pledges may include: disaster relief, deceased/retirement dollars, volunteer grants and volunteer service awards. © 2019 Bank of America Corporation. | Member FDIC | AR54YRJW | TAD-01-19-2357