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Action Metro Health pursuing open-heart surgery program in GR Grand reboot eyes By MARK SANCHEZ | MiBiz msanchez@mibiz.com
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etro Health-University of Michigan Health likely will proceed with seeking state approval to perform open-heart surgery in Grand Rapids, a move that would bring more competition for the procedure to the local market. In a filing last week to the Michigan Department of Health and Human Services, Metro Health indicated it may pursue regulatory authority to launch coronary artery bypass surgery, cardiac valve repair or replacement, repair for birth defects of the heart known as
septal defects, and “other identified appropriate services.” Metro Health would spend $3.2 million to renovate and remodel space at its Wyoming hospital to perform heart surgeries, according to the Oct. 8 letter of intent to the state. The move comes nearly four years after Metro Health was acquired by University of Michigan Health System and Michigan Medicine, its academic medical center in Ann Arbor. “Michigan Medicine is world-renowned for cardiovascular care. This new program will bring that expertise to West Michigan, giving patients choice and access to the most sophisticated treatments and world-class cardiovascular
care. We are proud to help make this a reality,” Metro Health President and CEO Peter Hahn said in a statement to MiBiz. The letter of intent to the state signals a care provider’s interest in seeking a certificate of need (CON) to Hahn launch a new clinical service. Care providers typically will file a letter of intent that places them in line for state review during that quarter as the provider makes a final decision on whether to proceed.
See METRO HEALTH on page 3
Hikers in Pictured Rocks National Lakeshore in the Upper Peninsula. PHOTO COURTESY OF PURE MICHIGAN
With limited funding restored, Pure Michigan shifts focus to fall and winter tourism P
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he Pure Michigan campaign that touts the state as a travel destination should return soon to spur fall and winter travel and help tourism-reliant small businesses that were hit hard this summer by the COVID-19 pandemic. A s M ic h i g a n’s t ou r i s m industry continues to reel from
the pandemic, and with the restoration of limited funding, Travel Michigan Vice President Dave Lorenz sees an urgency to ramp the Pure Michigan campaign back up this fall — in some form — to support the tourism industry that’s populated by many small businesses. When working with limited funding, Travel Michigan would typically put its resources into the “big season” and promote See PURE MICHIGAN on page 15
downtown amphitheater By ANDY BALASKOVITZ | MiBiz abalaskovitz@mibiz.com GRAND RAPIDS — The business group that pushed several major developments over the past 25 years has multiple new priority projects, including a downtown Grand Rapids amphitheater. Grand Action, which reconvened earlier this year after a nearly three-year hiatus, is studying the feasibility of an amphitheater, expanded convention center space and a professional soccer field. On Oct. 2, the Grand Rapids-Kent County Convention/Arena Authority board approved a resolution authorizing the authority to “proceed with efforts to determine whether there is an appropriate site for the location of an amphitheater.” Grand Action has effectively taken over those efforts from a task force appointed by the CAA Board. Grand Action has “embraced this potential (amphitheater) project and likely will get involved in its planning and fundraising for it,” Steve Heacock, president and CEO of Grand Rapids Whitewater and CAA board member, said during the meeting. “We don’t know that for certain yet, but that’s a very, very good potential.” Heacock added that multiple studies over recent years have all concluded a downtown amphitheater would result in positive economic activity, and that “site selection is the next big step.” Two potential sites on Market Avenue along the Grand River have been previously mentioned: 201 Market SW, where the city recently walked away from a separate $270 million development deal, and 63 Market Ave. SW, the site of the former Charley’s Crab restaurant. The three development projects have been on the radar of civic leaders, developers and city officials for nearly five years. Grand Action, which dissolved at the end of 2017 and relaunched in March under new leadership, has retained consulting firm CSL to provide a new market feasibility study on the projects. The study is expected in late November. Grand Action 2.0 is led by Carol Van Andel, Dick DeVos and Tom Welch, regional president of Fifth Third Bank. DeVos is the only holdover from the previous Grand Action team that was also co-chaired by John Canepa and David Frey, both of whom retired. Formed in 1992, the original Grand Action group pushed major downtown developments such as Van Andel Arena, DeVos Place Convention Center, the relocation of Michigan State University’s medical school to Grand Rapids and the Secchia Center, the Downtown Market, renovation of DeVos Performance Hall and the Grand Rapids Civic Theater.
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West Michigan convention centers gear up for returning business By KATE CARLSON | MiBiz kcarlson@mibiz.com
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onvention centers across West Michigan are gearing up for business following recent orders from state officials, hoping to return as key drivers of economic activity in communities. While the pandemic-related shutdowns have caused financial pain for some facilities, reopening at even limited capacities will help signal the return of events more than six months after the pandemic swept Michigan. “People are going to kind of test it out and see how it goes,” said Bob Lukens, community development director for Muskegon County. “It will be a challenge for some of the facilities, but this industry is very quick to adapt, so I think we’ll be able to get back to meetings on even a limited basis.” Gov. Gretchen Whitmer issued an executive order on Sept. 25 allowing various entertainment venues, including convention centers, to reopen at 20 percent capacity, or 20 people per 1,000 feet. The Michigan Supreme Court issued a landmark opinion on Oct. 2 that appears to invalidate Whitmer’s order along with dozens of others. On Oct. 5, however, the Michigan Department of Health and Human Services issued an emergency order that maintains the same mask requirements and limitations on gatherings. Large venues’ capacities are capped at 500 people. The orders fall short of the 50 percent occupancy levels the Michigan Restaurant & Lodging Association advocated, but convention facilities are still planning around what’s allowed. Rich Mackeigan, regional general manager of DeVos Place and Van Andel Arena, will rely particularly on local events as booking Lukens ramps up. “Our opportunities are really at the (DeVos Place) convention center,” MacKeigan said during a recent meeting of the Grand Rapids-Kent County Convention/ Arena Authority. “That’s where our teams are working closely and aggressively. Katie DeWeerd, director of sales for the forthcoming Lakeshore Convention Center in Muskegon, saw renewed interest after the order in bookings at the new convention center, which is expected to open in January in downtown Muskegon. “We were having a huge uptick of interest and feeling like we were starting to get things booked and setting up
site visits, but as soon as the pandemic hit, a lot of the interest halted,” said DeWeerd, who also manages the Shoreline Inn & Conference Center in Muskegon. “Now we are starting to see some interest again.”
A ‘very good sign’ Lukens noted that business meetings, banquets and conventions are a big driver of Muskegon’s local economy during the winter months when summer tourism wanes. While the capacity limits aren’t as high as he’d hoped, reopening at all is a “very good sign,” he said. The convention center hotels in Muskegon have developed COVID-19 floor plans and worked on how to safely host meetings, DeWeerd said. She agreed that the initial reopening is crucial for getting planners in the mindset of re-booking events. “We’ve been trying to be more lenient with contracts and letting meeting planners know we’re able to change some of our clauses when they book,” DeWeerd said. “We had some groups with proposals for events saying they now have to move their event to another year now. We’re just trying to work the best we can with groups.” Since mid-March, between 75-100 events have been canceled or rescheduled at the Holland Civic Center, said Sales and Marketing Manager Jay Allen. Bringing back events would be welcome news for the civic center, which opened in 2018. After receiving a $719,000 subsidy from the city of Holland, the venue had a $95,000 budget deficit at the end of 2019. The COVID-19 related shutdown was a “big shock to the system” in just its second year of operating, Allen said. “Our main goal is to get some of our previous clients in doing regular meetings and banquets,” Allen said. He hopes capacity limits will increase, but the work has already started to showcase the facility for potential events. “Since (Holland Civic Center) is city-owned we want to make sure we follow safety guidelines to a T,” Allen said. “We have sanitizing machines to help clean a space quickly if we have to switch over to a new meeting in an hour.” Live entertainment events will likely have a slower return to the civic center, Allen said. The facility’s biggest event space has a 175-person capacity under the restrictions, and less than that in other meeting rooms. “This order will allow us to host smaller events than we hosted in the past,” Allen said, “but we’re excited to get people in the space again.”
METRO HEALTH Continued from page 1
A final decision on proceeding with a full CON application should come by the end of the month, said Keith Dickey, chief strategy officer for Michigan Medicine. Dickey said “it’s highly probable” Metro Health would proceed. “We’re actively doing the planning and assessment right now,” he said. “We are really talking deeply across our clinical leadership there and here to make sure that we have a high degree of confidence that we can stand up a really successful, strong program.” Metro Health has long sought to offer open-heart surgery. More than a decade ago, the health system unsuccessfully sought state approval to form an openheart program. The state rejected the bid when Metro Health failed to meet volume standards that were in place at the time under CON regulations. Since then, Metro Health has steadily built up heart and vascular services and was acquired by University of Michigan Health System. The state panel that oversees Michigan’s CON standards also seven years ago adopted quality measures that care providers must meet to perform open-heart surgery that replaced a volume-based metric. If Metro Health were to secure state approval, it would launch an openheart surgery program in Grand Rapids that competes primarily with Spectrum Health, which for more than two decades has operated the lone open-heart program in the local market. Grand Rapids is the largest market in Michigan without competing openheart programs, Dickey said. “It’s awfully large to have a single open-heart program,” he said. “Choice and competition in the market is a good thing for patients and employers. I think it creates value and forces everybody to up their game.” Other open-heart surgery programs in Western Michigan are based at Mercy Health Muskegon, Bronson Methodist Hospital and Borgess Medical Center in Kalamazoo, Spectrum Health Lakeland in St. Joseph, and in Lansing at Edward W. Sparrow Hospital and McLaren Greater Lansing Hospital.
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FOCUS: INDUSTRY 4.0
Ag 4.0: West Michigan farmers turn to evolving technology to bolster efficiency By JAYSON BUSSA | MiBiz jbussa@mibiz.com ALTO — A key aspect of Industry 4.0 technology is finding a way to automate processes that are repetitive, dull, dirty or even dangerous. Scraping cow manure from the alleys of large dairy barns certainly checks a few of those boxes, which is why the family at Swisslane Farms Inc. in Alto implemented a robotic system to do this dirty work for them. “Before, you’d have a person and a skid steer, or something like that, cleaning the alley ways,” said Anna Link, a junior partner and director of human resources and public relations at the farm, which was established in 1915. “It still needs attention. It still needs someone maintaining it. But now it’s done on a preventative maintenance schedule rather than every single day, three times a day.” Automation and technology doesn’t end there for Swisslane. The farm stands out as a prime example of how Industry 4.0 concepts and automation have made its way to the agricultural space. Sometimes referred to as Ag 4.0, this technological evolution has helped spark newfound efficiencies within these businesses. The classic — and perhaps outdated — view of today’s farmer often entails working hard manual labor from sun up to sun down. Not everybody attributes cutting-edge technology to these settings. However, Tom Kelly — CEO of Industry 4.0 knowledge hub Automation Alley in Troy — said it’s quite the opposite. His organization has consulted with farms and other food businesses to bring advanced technology to these rural settings. In fact, Automation Alley was fresh off an Industry 4.0 assessment with a dairy farm in the thumb of Michigan when Kelly spoke to MiBiz. “Agriculture is doing fantastic things in Industry 4.0,” he said. “In many ways, they’re ahead of manufacturing. Just think of John Deere — their tractors have been autonomous for years. “We think there is a lot we can learn from them and we think we can teach them some things about manufacturing,” he added. “But I love what’s happening in agriculture.”
Link said. “If you want this one thing, you have to take care of all the little things behind the scenes.” Each cow in the herd is outfitted with an ID tracker and a collar that essentially acts like a Fitbit. Swisslane workers are able to see how many times a single cow has chewed throughout the day, which can indicate an abnormality in feed intake. All of the information is accessible through a smartphone interface. “The thing about the robots is that we have so much data that we almost don’t know what to do with all of it,” Link said. “That allows us to customize that milking experience for every single cow, customize their herd health plan. The data points range from their weight to their milk speed, how many pounds of milk they produce per minute, how much feed they’re eating.” Link said Swisslane continues to seek out new ways to appropriately implement automation and technology into its operation. It has also experimented with a robotic feed pusher, which ensures that cows are able to reach their feed and eliminates an eight-hour-per-day job for a person on a tractor. The farm is also looking into automated ventilation and heat abatement systems to cool the cows in the summer months. This includes fans with misters that are on thermostats. “If we’re going to be a dairy farm, we need to continue to rely on technology because the cow is so habitual and they thrive when they have consistency,” Link said. “Any change in routine or a change in environment, that puts stress on the cow. We want to eliminate any disruption to their schedule.”
No more guesswork Just as technology has transformed the barns of Swisslane, automation out in the fields has had an even more pronounced effect. Precision agriculture technologies aren’t necessarily new and cutting-edge — GPS on tractors emerged in the early ’90s — but they’re not
Swisslane Farms Inc. in Alto has leaned on a variety of automation measures to improve efficiency. COURTESY PHOTO
used by all farmers despite driving real results. The tenets of precision agriculture include yield mapping, soil mapping, auto-guidance machinery steering and variable rate technologies (VRT). A study by the U.S. Department of Agriculture looked at cost savings sparked by these technologies specifically on corn farms. It showed that farmers that use VRT with soil mapping save around $20 per acre in costs. Yield mapping helps corn growers save $25 per acre. Kory Brodbeck, who works at Brodbeck Farms in Lake Odessa with his father Kevin and brother Kyle, is among the many to reap the benefits of VRT. This is where farmers take samples of the soil roughly every 2.5 acres, have it analyzed in a lab and then determine which nutrients it needs. This information goes into a prescription map that is uploaded to the spreader, which will automatically deliver the needed nutrients to each portion of the field. Beyond VRT and auto-guidance steering, Brodbeck and his family continue to explore possible technology to add at the farm, carefully assessing which would deliver the desired ROI. He has dabbled in drone imagery, where farmers use drones to survey the land, in some cases providing an accurate count of plants per acre. “This spring was a good example of when it could be very useful,” Brodbeck said. “We planted all our crops, got six inches of rain and we’re out there where some of the seed didn’t grow or some was a week behind. You can get out there and look.”
Brodbeck, 41, said he expects technology and innovation to continue advancing as newer generations of farmers move into the space. Right now, a third of the 3.4 million farmers in the U.S. are over the age of 65. “I’d say the younger generation is more up on (technology) for sure,” Brodbeck said. “There are a few older guys that have adapted well. In a lot of those cases, they have some younger guys on the farm. Overall I think the younger generation is looking more at that type of stuff.” Bruno Basso, a professor in the Department of Plant, Soil and Microbial Sciences at Michigan State University, works with hundreds of farmers across the state and country to enhance traditional yield mapping measures, using predictive tools and simulation capabilities. Through remotely sensed images that are frequently collected by his fleet of drones, Basso captures detailed images of the field, akin to an X-Ray of the human body. Through his program called SALUS (System Approach to Land Use Sustainability), Basso can help farmers forecast yield — not just for the season but even decades away. Additional features allow him to factor in weather events, like an extended drought, in order to play out every possible scenario. “Being able to know how much will be produced helps you know what needs to be applied in terms of nitrogen or how many seeds you need to plant and when you need to plant,” Basso said. “All these scenarios of ‘what if’ — they’re not being done by trial and error out in the field. You can simulate it.”
Efficiency and consistency While Link admitted Swisslane Farms isn’t necessarily a pioneer of advanced technology, the family farm certainly has a history of early adoption. Link said her father was always receptive to avenues that bolster efficiency while focusing on preservation of the land, including being an early adopter of artificial insemination and notill practices. About a decade ago, the family decided to expand operations and knew it was only possible by leveraging automation and technology. This led them to the centerpiece of the farm’s automation infrastructure with a robotic milking system by Iowa-based Lely North America Inc. The system features eight robotic milking units. The milking units were not only convenient and able to milk a single cow in the 2,000cow herd in under 10 minutes, but it allowed Swisslane to take a holistic approach to cow care through big data and providing workers with a snapshot of each cow’s activity and health throughout the day. Ultimately, a healthier cow leads to more milk, evidenced by the fact that Swisslane produces 20,000 gallons of it each day. “You can’t get better quality milk unless you’re focusing on every little detail of the cow,” Visit www.mibiz.com
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FOCUS: INDUSTRY 4.0
Q&A: The emerging technology transforming cannabis growing Even at the age of 25, Andrew Nikolopoulos has 10 years of experience in the growing space. The journey started in a high school program, where he worked at a greenhouse building irrigation systems and then transitioned to stints for irrigation and construction companies. At the age of 21, he brought all of those skills together to grow cannabis, creating his own caregiver grow operation. He is now the grower and part owner for Summer House, a planned 1,500plant cannabis grow and processing facility that will start its build out this fall in Muskegon Heights. He talked to MiBiz about how Industry 4.0 concepts and advanced technology have transformed growing.
In general, how much evolution have you seen in grow technology over the last decade? When I was first getting into (growing), you were seeing automation systems and stuff, but a lot of those automation systems were geared to largescale farmers. Now, since legalization, we’re starting to see a lot more new technology come to the field — some of it good and some of it bad. In just 10 years, we’re miles away from where we were.
Walk us through some important automation processes — is it as easy as setting it and forgetting it? Pretty much our whole grow operation is
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(automated). My main concern as a manager with my employees is that they’re checking systems. It used to be you had a singular controller for the AC, lights, dehumidifier and they’d all run separately. Nowadays, there’s something called a TrolMaster, and we can actually run all the low voltage through this controller from the lights and AC units and dehumidification systems and control it all with our phone and all on a singular platform. The same goes for fertigation and irrigation. There is a low voltage line coming from all of our solenoid valves, which are what zone off each part of the grow and each strain so we can customize what we’re giving them. That low voltage valve will run to our controller and we can control how much water each zone gets. A lot of the technology we get is actually from Big Ag, but it is slightly customized to the cannabis world. A lot of the soybean farms have fertigation systems that inject fertilizers in line with the irrigation system and we’re pretty much doing the same thing.
What does an advanced operation look like? What’s the future when it comes to technology and cannabis? They’re diving pretty deep into fully automatic greenhouses. You’re looking at a controller that can control when the shade flaps go on the green houses and when the fans kick on to vent the greenhouse. It can control the irrigation and stuff like that. They’re diving deep into that because everyone sees that will be the most viable future energy efficiency-wise.
How does automation and advanced technology influence quality? It can represent a lot in quality — just the consistency and taking out the human aspect of things. You’re going to have the correct pH and PPM every single time with those fertigation systems. If your AC goes out, a lot of these automated systems will automatically shut off your lights or dim your lights so you don’t burn your whole crop. There are some systems in place that will save you if there are errors or malfunctions in the mechanicals.
Are there processes that can’t be automated or at least should not be automated for quality purposes? Some people will try to automate the trimming side, as well. We are completely against that. As of right now, I don’t think there is a machine that can compete with the hand trim. So, that is the other aspect of automation that (growers) can include but that we choose not to because we want the superior end product.
will provide actionable,
What skills or knowledge makes a grower competitive in this space?
real-world information to help
There are three big things. There is the plant side of things and there is the construction side of things — which is learning building materials and how things are constructed — and then there is the irrigation side of things. Those three aspects are very important and if they can synergize then all of a sudden you can start understanding things on all the levels you need to.
manufacturers improve their efficiency, enhance quality and drive profitability.
How do they acquire that know-how? I’ve seen some people try to go the whole school route, get their master’s in botany and stuff like that. It transfers over for some people but for the majority of people, being there every day learning what’s going is going to work 100 times better than theory. Interview conducted and condensed by Jayson Bussa. COURTESY PHOTO
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Manufacturers explore Industry 4.0 as possible solution for talent shortage By JAYSON BUSSA | MiBiz jbussa@mibiz.com
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s executive director of the Manufacturing Growth Alliance, Jennifer Deamud helps connect small and medium-size manufacturers across Michigan with necessary resources to conquer challenges in the marketplace. Lately she has noticed a recurring hurdle starting to disrupt operations and has these businesses turning to Industry 4.0 for answers. “I can think of three manufacturers right now just over the past two weeks that have told me we are turning down orders or can’t fulfill orders because we don’t have the workforce, therefore we need to automate in order to accept and deliver on those orders,” Deamud said. “That’s been kind of the (thought) process: ‘We have sales and we have orders but we don’t have the workforce, so let’s automate and go down that path.’” The inability to bring in new talent — or even summon workers back to the Deamud job who were previously laid off — is becoming a glaring problem in manufacturing both here in Michigan and throughout the country. More than 400,000 people remain unemployed in Michigan where the unemployment rate contracted from double digits during the Kelly height of the pandemic and now sits at 8.7 percent. This is all happening while manufacturing jobs remain widely available throughout the country. According to the July edition of the U.S. Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey (JOLTS), the U.S. saw 408,000 Burdette manufacturing job openings in July. Still, manufacturers were taking on workers at a slower pace, hiring 321,000 workers in July compared to 432,000 in June. Chad Folkema, owner of Die-Matic Tool and Die Inc. in Wyoming, acknowledged that the industry is clearly short on talent, but his shop has been fortunate to sidestep the brunt of it. “We have been able to find some talented die makers and designers — I think some other shops are slow or afraid to reopen and that has created some opportunity (for us),” he said. “I have had an ad running for quite some time looking for a qualified maintenance person, with no luck.”
Automating the problem away Even if it only offers temporary relief for a longlingering problem, some manufacturers are turning to automation and Industry 4.0 technology to fill in where human talent is lacking. Deamud said she has heard from a number of manufacturers interested in this route. One manufacturer was having trouble finding workers to move production forward on its spray foam operation, she said. As a result, the company automated the process and instead of a person donning a full suit and respirator, team members could simply harness the technology. This one anecdote highlights the essence of Industry 4.0, which is to eliminate tasks that might be dull, repetitive, dirty or dangerous. “For this manufacturer, they identified a specific pain point in the production cycle where they could bring in automation and alleviate that one pain point,” Deamud said. In many instances, manufacturers do not immediately see a way to automate a process that was once executed and overseen by the skill and problem solving of humans. Visit www.mibiz.com
Tom Kelly, executive director and CEO of Troy-based Industry 4.0 knowledge center Automation Alley, said any process can be automated if manufacturers look at the problem from a different angle. “We try and teach small manufacturers that you have to look at the whole problem in a new way,” said Kelly, whose Automation Alley is a World Economic Forum Advanced Manufacturing Hub. “If I do something a little differently in how I assemble things, maybe I can automate other pieces of it which will allow me to do the assembly with the workers I have.”
‘Buyer’s market’ For small and medium-size manufacturers, cost is the common barrier to Industry 4.0 technology.
That argument, however, is beginning to lose its legs as technology evolves and becomes more affordable. Industry consultants say cost is not the primary barrier, but rather a lack of technical knowledge and knowing how to best implement Industry 4.0. “The small and mediums still view it as a rich man’s game,” Kelly said. “They’re not understanding that technology has gotten very, very inexpensive. You can get a collaborative robot these days for under $30,000 — that’s less than the cost of a person per year.” Justine Burdette, who advises manufacturers in her role as the regional director for the Michigan Manufacturing Technology CenterWest, noted that manufacturers can choose to invest in and test out individual components of
Industry 4.0 instead of overhauling their shop to create a smart factory right out of the gate. “It’s definitely a buyer’s market, for sure,” Burdette said. “If you have spare cash laying around or you want to make a small investment and see how it changes the dynamics of (the) shop floor, now is still a great time to do that.” And that investment can be made in a variety of ways. “(That can mean) adding a cobot or piece of automation or starting down that big data journey,” Burdette said. “Pulling data from just two of your machines. What are you getting? Spend time with that data. Does it help you make better business decisions in any way? Now is a great time to take a small bite, sit with it, work with it, bring people in — even from your own ranks — and ask them.”
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Selma Tucker is passionate about safe and affordable housing. He believes that if a family can’t access the housing market, where most middle-class wealth is held, it will be difficult for them to find stability and prosper. Selma regularly donates to Grand Rapids Community Foundation. He recently named the organization a beneficiary of his life insurance policy. His planned gift will help ensure the Community Foundation’s work to improve the lives of all people in the community continues well into the future. L E T U S H E L P YO U G E T S TA R T E D We’re here to help you understand your options and explore creative ways to leave your mark on the community and causes you love. Give us a call at 616.454.1751. grfoundation.org
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FOOD BIZ
West Michigan Food Processing Association helps companies tackle COVID-19 challenges By JAYSON BUSSA | MiBiz jbussa@mibiz.com
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As well, the West Michigan Food Processing Association broke ground on the FARM (food, agriculture, research, manufacturing) Incubator and Research Center, a 12,000-squarefoot facility to be located on the campus of Muskegon Community College. The $2 million project will serve as a development and training facility for the food processing industry. With 5,000 farms throughout the region, West Michigan accounts for 43 percent of the state’s food processing jobs. Still, local processors are missing out on plenty of additional opportunities since 80 percent of what is grown in Michigan is then sold and shipped to out-of-state food processors. Also, when the COVID-19 pandemic hit and people shifted to buying food from grocery stores instead of restaurants, it highlighted the importance of the food industry here at home. “(People) started to realize where the food comes from and that food processing is an industry and a force to be reckoned with,” Gerencer said. “The farmers in Michigan number into the hundreds of thousands and contribute $100 billion-plus to the state of Michigan, which is second to only the auto industry. For some people, that’s new news. “Part of the association’s role is to build awareness of what the food industry is in Michigan — in particular West Michigan — and what we can do as far as private-public partnerships to help our industry move forward.”
nder the guidance of Executive Director Marty Gerencer, the West Michigan Food Processing Association incorporated as a 501(c)(6) in February with a multi-pronged approach to support the food industry across a five-county region. However, one month and one grinding health pandemic later, the focus of the organization has temporarily shifted to help meet the more pressing needs of the area’s food processors. “The association quickly moved into COVID support,” said Gerencer, whose experience in the food industry includes a 20-year stint with Fremont-based Gerber Products Co. “We dropped everything we were doing and moved into how we could support the industry and West Michigan through what we could help with. They were glad to have our help — the small entrepreneurs as well as some of the larger Gerencer ones in the area.” Originally created out of the West Michigan Shoreline Food Processing Initiative, which was a project with broad support from Muskegon County community organizations like Muskegon Area First, the West Michigan Food Sponsored by: Processing Association DAN VOS COVID cramps picked a tough time to CONSTRUCTION Through working with incorporate and embark COMPANY area food processors, on an ambitious journey Gerencer identified a of serving as a conduit for number of common issues that have the industry and the resources to bolformed in the throes of the pandemic. ster local businesses. Worker volume is one such issue. Working primarily with food proSome food processors grappled with cessors in Newaygo, Oceana, Mason, workforce shortages, whether that Ottawa and Muskegon counties, the meant failing to recruit talent to open organization focuses on infrastrucpositions or having workers who were ture, education and training, product out sick or afraid to come into work development, logistics, healthy probecause of COVID-19. The workforce cessing and sustainability.
FOOD BIZ
issue was a persistent problem even before the pandemic hit. “We, overall, had a lot of labor needs in the food processing industry pre-COVID,” Gerencer said. “We’re talking about hundreds of jobs in the West Michigan area. With COVID, it just increased the issue.” Following health protocols handed down by the state government was another common issue for area processors, as was adopting effective food sanitation processes. Additionally, variable volume proved disruptive as institutions like schools and restaurants saw drastic drops in demand while retail demand shot up. “That changes the rules within the four walls of a food business when the supply chain changes,” Gerencer said.
In a pickle Ravenna-based Swanson Pickle Co., a Muskegon County producer of wholesale pickles for commercial distribution, experienced many of these issues firsthand. Swanson grows pickling cucumbers — in addition to some corn and soybeans — and also purchases cucumbers from 10 to 15 other Michigan growers. The company brings the cucumbers to the facility, sorts them by size and quality and then puts them into outdoor fermentation cases. From there, Swanson sells the product to a manufacturer for final flavors and packaging. Not unlike businesses in other sectors, Swanson Pickle had to wade through the confusion and uncertainty that came with such an unprecedented public health crisis. As a food producer, Swanson didn’t have to shut down even when most other industries were forced to do so by government mandates. “We felt very grateful that we never had to stop and were allowed to keep going, but at the same time, it was difficult,” said Katie Hensley, CFO of Swanson Pickle Co. Hensley belongs to the fourth generation of the family associated with the business. Her
Swanson Pickle Co. in Muskegon County has stayed open during the pandemic but has also faced challenges with variable demand. COURTESY PHOTO father, John Swanson, is president. “Like any other business that continued to navigate through, not only were the executive orders and rules (tough to keep track of ) but what’s the right thing to do to keep people safe and have a workforce that stays intact? That was really challenging,” Hensley said. The challenges with variable order volumes also affected Swanson’s operations. Because of the decrease in net demand, Swanson’s volume was down around 20 percent this year compared to 2019, Hensley said, adding that company sales also dipped. “The pickling industry, while there was a positive impact on the retail side, the overall net impact … was definitely a net negative because of the impact of restaurants and stadiums not being open,” Hensley said. Swanson Pickle Co. and many other farming and food processing companies saw some relief recently when the Michigan Economic Development Corp. (MEDC) and the Michigan Department of Agriculture and Rural Development (MDARD) announced that it had awarded Michigan Agricultural Safety Grants to 177 farms and 159 food processors throughout the state. Food processors received $10 million in total funding, which included a $25,000 grant to Swanson Pickle. The funding, which came from the federal CARES Act, can be used for COVID-19 testing, personal protection equipment and other facility needs.
“When Michigan was hit with one crisis after another, and when there were some troubling trends in food and agriculture nationally, we worked to ensure that Michigan’s food supply chain was safe and secure,” MDARD Director Gary McDowell said in a statement announcing the grant recipients. “And we all understood this could not be done if our essential workers became ill or felt unsafe in the workplace.”
“Part of the association’s role is to build awareness of what the food industry is in Michigan — in particular West Michigan — and what we can do as far as private-public partnerships to help our industry move forward.” — MARTY GERENCER Executive Director of the West Michigan Food Processing Association
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HEALTH BIZ
Michigan ranks second-lowest for hospital payments in RAND Corp. study By MARK SANCHEZ | MiBiz msanchez@mibiz.com
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ichigan ranked second-lowest in the nation for what employers and insurance carriers paid hospitals for care compared to payments hospitals received from Medicare from 2016 to 2018. The findings come from a study on U.S. hospital pricing by the Santa Monica, Calif.-based RAND Corp. and the Employers’ Forum of Indiana. The analysis found self-insured employers and health insurers on average paid hospitals in Michigan 190.1 percent of the Medicare rate for inpatient and outpatient care. That compares to the national average of 247 percent. Bret Jackson, president of the Novi-based business-labor coalition Economic Alliance for Michigan, views the report as “both good and awful all at the same time.” While Arkansas was the only other state to rank better than Michigan, hospitals here are still paid at nearly twice the Medicare rate than what self-insured employers and health insurance carriers pay for the same care, Jackson said. “We are very competitive being the secondlowest in the country for hospital prices,” he said. “At the same time, we pay 90 percent more than what the hospitals receive from Medicare and we’re getting nothing substantially different than those patients that have Medicare coverage.” Given the wide difference between what Medicare pays hospitals in Michigan and the average they receive from private payers, Jackson asserts that self-insured employers and private health insurers “are getting hosed,” although “other states are much worse off than we are.” The 190 percent of the Medicare rate that employers and insurers paid on average from 2016 to 2018 is also an increase from the 156 percent identified in a 2019 RAND study based on data from 25 states. “That should obviously ring alarm bells everywhere,” Jackson said. “That is very concerning.”
Competition Still, the Economic Alliance for Michigan is “thankful” that the state ranks so well, which
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Jackson attributes to a combination of factors including good competition compared to other states, particularly in urban areas like Detroit, Grand Rapids, Lansing, Flint and Saginaw. The state also has an “aggressive” insurance carrier in Blue Cross Blue Shield of Michigan that controls about two-thirds of the market, he said. “While that may not be great for some, it has allowed prices to stay down,” Jackson said. “And the other insurers in Michigan get to ride the wave a little bit.” Because of its large market share, Blue Cross Blue Shield carries significant negotiating power in crafting reimbursement contracts with hospitals, he said. Jackson also cites Michigan’s strong certificate of need (CON) program that’s intended to avoid costly redundancies in care within a market, and the state’s “very successful” Medicaid expansion in 2014 that eased cost-shifting to private insurers to cover losses incurred when providing care to people who previously lacked health coverage. The Michigan Health & Hospital Association also cited CON as a contributor to comparatively lower hospital prices in Michigan and how it “continues to play a key role in keeping costs low and quality high in our state,” CEO Brian Peters said in a statement. “At the same time, COVID-19 has shown that the same efficiencies that save employers and patients on costs can make crises even more difficult to navigate,” Peters said. “Overall, the RAND study shows that health care pricing is a delicate and difficult balancing act. Our member hospitals and health systems will continue to provide the highest quality care possible to every person who walks through their doors, and will continue to be good stewards of the dollars they receive, regardless of who is paying the bill.”
Hospitals criticize report The RAND report, which is based on an analysis of 2016-2018 claims data from 3,112 hospitals in 49 states, shows payments to hospitals nationally averaged 231 percent of the Medicare rate for inpatient care and 267 percent for outpatient care.
In Michigan, payments to hospitals for inpatient care averaged 204.4 percent of the Medicare rate and 176.6 for outpatient care. The American Hospital Association was quick to criticize the RAND report. In a statement the same day the report was released on Sept. 18, AHA Executive Vice President Tom Nickels countered that “RAND continues to make broad claims about pricing based on a cherry-picked and limited data set.” RAND collected data from a “hand-picked sample of employers and insurers whose claims represent just 0.7 percent of inpatient admissions and 1.8 percent of outpatients visits,” Nickels said. The RAND study also “again perpetuates erroneous suggestions that Medicare payments should be used as a benchmark for private insurers, in spite of Medicare reimbursing well below the cost of providing care,” Nickels said. Arkansas was the lowest-cost state from 20162018 for hospital payments at 186.2 percent of the Medicare rate, and West Virginia the highest at 350.7 percent, according to RAND. In the report, authors wrote that Medicare “sets hospital rates to approximate hospital operating costs.” The authors also questioned whether “it is reasonable and necessary for employers to be paying prices that are nearly 2.5 times as much as Medicare rates, especially when there are hospitals with similar quality scores that have lower prices.”
Direct contracting The report suggests self-insured employers may want to consider contracting directly with care providers. Authors cite the contract between General Motors and Henry Ford Health System for 24,000 salaried employees in the Detroit area as an example of direct contracting. “This process may require employers to think more judiciously about the prices that are being negotiated on their behalf, rather than outsourcing much of the work to brokers and TPAs (third-party administrators). As illustrated in this report, there are large potential savings at stake,” according to the RAND study. Jackson said making that kind of major change in employee health benefits may prove difficult for many employers that lack the scale needed.
STATE COST COMPARISONS Michigan ranks at the top of Great Lakes states in a recent RAND Corp. report on hospital pricing. Percentages are based on what hospitals in each state were paid from 2016 to 2018 for care by self-insured employers and health insurers relative to what they received from Medicare for the same care:
MICHIGAN: 190.1% PENNSYLVANIA: 206.2% OHIO: 235.1% ILLINOIS: 280.5% WISCONSIN: 290.5% MINNESOTA: 297% INDIANA: 303.5% “What I’m concerned about is that especially medium or small businesses just don’t have the leverage that a larger employer has to try and make a direct contract work,” he said. In markets that have only one health system and lack competition for care, there’s also “not even the ability or the incentive to make those types of arrangement work,” Jackson said. “When we solve the health care problem, we need to solve it for everybody. We can’t have a situation where there’s haves and have nots, even in the business community,” he said. “We are paying too darn much and not getting enough value for it.”
West Michigan hospitals Among West Michigan hospitals, Spectrum Health was paid 282 percent of the Medicare rate for inpatient and outpatient care, according to the RAND report. Mercy Health Saint Mary’s was at 191 percent while Metro Health was at 163 percent. Lakeland Medical Center in St. Joseph, which Spectrum Health acquired two years ago, was paid 200 percent of the Medicare rate, and private insurers paid Lansing’s Edward W. Sparrow Hospital during the 2016-18 period at 173 percent. In a statement to MiBiz, Spectrum Health said it believes data in the RAND study “to not be fully representative and was based on a very small data set for a very small percentage of our patients,” and that it was “not aware of any Michigan-based insurance provider that participated in the study.” “Health care pricing is a complex topic,” Spectrum Health said. “However, we caution that when comparing payments between commercial payers and Medicare, it is widely accepted that Medicare reimburses well below the cost of providing care. While cost studies are important, Spectrum Health strongly believes that price transparency should be paired with corresponding quality care and out-of-pocket-cost data. Without the full picture of cost and quality of care, consumers may make poor health care choices and pay higher costs, without seeing improvements in the care provided.” Dr. Rakesh Pai, president of Metro Health’s medical group and chief population health officer, said “many patients are financially harmed by receiving health care in the United States.” Metro Health is “doubling down on the quadruple aim” that includes a focus “on getting our cost structure right so that we can deliver cost effective care to our patients,” Pai said in a statement. “We strive to be a high value partner to employers and payers.” Visit www.mibiz.com
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SPORTS
West Michigan golf courses bounce back from shutdown with banner summer
Indian Trails Golf Course has had an “excellent year this year,” bouncing back in the summer months after being shut down early in the pandemic. COURTESY PHOTO
By JAYSON BUSSA | MiBiz jbussa@mibiz.com
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olf courses around West Michigan have experienced both ends of the spectrum in just the last six months. After the COVID-19 pandemic completely shut down all 749 courses in Michigan in the middle of spring, most of them bounced back in a major way once given the green light to reopen from Gov. Gretchen Whitmer. The reopening allowed hoards of cabin fever-stricken golfers to hit the links for what has been a banner few months. “We had an excellent year this year,” said Graham Rayburn, a manager at Indian Trails Golf Course, which is owned and operWhitten ated by the city of Grand Rapids’ Parks and Recreation Department. “I
would say, everything being equal, it was one of our busiest years.” Because of the socially distant nature of the game, courses had a relatively easy time adapting to the various protocols to create a safe environment for their patrons and staff. But, that’s not to say it was business as usual. Indian Trails, for instance, added several measures that limited the potential for transmitting COVID-19 among patrons. This included reducing club house capacity to four people, creating a walkup window, eliminating rakes in the bunkers, not allowing people to take flag sticks out of holes and thoroughly sanitizing carts between use. Despite the small changes, Rayburn said patrons were overwhelmingly happy to be golfing once again. And, as a course that is friendly for beginners to the game, Rayburn said he saw a mix of avid golfers and people trying out the sport as something to do to keep themselves busy during the pandemic. “I think there is a large segment of people that
figured out (during the pandemic) that golf is not any more expensive than going to the movies or going out to dinner, while in the past, maybe they thought golf was cost prohibitive,” Rayburn said.
Golf explodes across state, country Golf courses have undoubtedly seen an influx of greens fees unlike ever before this summer, but the prolonged shutdown of these businesses — especially in a more restrictive state like Michigan — has made year-to-date numbers look less impressive. In fact, Michigan is lagging behind its 2019 pace. According to data released in “Q,” the official publication of the National Golf Foundation, Michigan saw an 11 percent jump in rounds played in August compared to August 2019. Michigan also had a year-over-year increase in rounds played in June and July, but the state is still down 3.7 percent year-to-date compared to 2019. That’s a deficit the state could climb out of before the season officially closes in about a month, depending on the weather. When compared to nearby and less restrictive Indiana, the Hoosier state saw a 23.7 percent year-over-year increase for rounds played in August and is 15.7 percent higher year-to-date compared to 2019. Nationally, rounds were up 20.6 percent in August compared to the same time last year, while the number of rounds year-to-date has increased 6.2 percent. Last year saw 441 million rounds of golf played nationwide. Another factor playing against golf courses: They lost a majority of revenue from banquets and golf outings, which have not been prevalent this season. For Rayburn and Indian Trails, that revenue isn’t as crucial and the organization was able to shift some golf outings to the fall. Still, it was certainly a casualty for other courses. “Greens fee revenue is definitely the silver lining,” said Jada Paisley, executive director of
Paisley
the Michigan Golf Course Association. “It’s definitely up. And it’s the silver lining from losing 80 percent of banquet revenue and golf outing revenue. That’s going to be able to help a seasonal business such as a golf course be able to make it into 2021.”
Developing golfers With a larger market of engaged golfers, the onus is now on the courses to turn them into recurring clients. “Player development is always something that a golf course is looking to do, and I think people have realized that golf is truly a lifetime and a generational sport,” Paisley said. “You could be out there with your kids and grandkids. It’s just the only sport you can play from 5 to 85. I do think that there is an energized feeling that the golf courses have seen a resurgence of golf because it’s a fun sport.” One way the Golf Association of Michigan (GAM) has developed a new wave of golfers is through its Youth On Course Michigan program. Through the program, youths are able to play courses all around Michigan for just $5 while GAM subsidizes the greens fees in order to support participating courses. GAM Executive Director Chris Whitten said more than 6,000 kids have signed up for the program. Whitten said it’s also important to target golfers who may have been avid golfers in the past but have since stepped away from the sport. “We got to know what it was that made them leave golf the first time around and what we can do better as an industry to keep them here,” Whitten said. “I’m hoping that golf was the mental and physical respite from the stress we’re all under and people reconnect to being outdoors with friends.”
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REAL ESTATE & DEVELOPMENT
Businesses, property owners tackle indoor air quality in pandemic fight By KATE CARLSON | MiBiz kcarlson@mibiz.com ZEELAND — The time and money invested to renovate the MedViron LLC and Industrial Woodworking Corp. offices to prevent the spread of COVID-19 has been more than worth it for President and CEO Brad Davis. “I haven’t been doing this for 25 years to have something like this take my business down,” said Davis, who heads the Zeeland-based medical and industrial furniture manufacturers. “I’m happy with what we did — I would not take it back for a second.” Davis spent about $30,000 to fully renovate the office, stripping down outdated fixtures and replacing furniture to make the work space easy to clean. He also reconfigured what was previously an openconcept office and purchased Davis 84-inch-tall fabric-covered cubicles for his staff. He also invested in the building’s less-seen infrastructure to protect employees, including hospital-grade High Efficiency Particulate Air (HEPA) filters that cycle air every few minutes. Davis said several people have told him the precauHolman tionary office retrofits were “overkill,” but he is not alone in taking a closer look at HVAC systems as a health precaution in the COVID-19 era. CWD Real Estate Investment LLC has faced ongoing questions from tenants about steps the company is taking in its buildings to help stop the spread of COVID-19. Air quality is often a key topic in the conversation, said Cullen Hillary, CWD’s vice president of operations. Air cleaning technology is not enough to protect someone from contracting the coronavirus on its own, but can help when used alongside other best practices such as social distancing, according to the U.S. Environmental Protection Agency. CWD has been regularly replacing common area filters with the U.S. Centers for Disease Control and Prevention-recommended MERV13 filter. The company has also modified equipment occupancy schedules wherever possible to circulate fresh air, while offering to replace filters for tenants who are responsible for their own HVAC systems, Hillary said.
“Measuring air quality in a building by how many people get sick is not a new metric, but it’s more compelling now and more devastating for the property owner,” Holman said. The potential lost revenue from employees or customers contracting COVID-19 can cause a dramatic financial downturn, Holman said. The USGBC has held regular informational webinars related to indoor air quality in commercial buildings. “The interest has expanded, and the importance is more top of mind now,” Holman said. “What we’ve been saying at USGBC for years about indoor air quality importance is getting proven now. It’s almost a silver lining in some ways because people are looking at this with a new lens.”
Davis’ companies remained open during the pandemic as a producer of medical furniture for hospitals. After a manufacturing engineer tested positive for COVID-19, Davis credits the upgrades for preventing the spread in the office. “That meant what we did worked,” Davis said. “If we had not had those cubicles and air filtration, we would have all been sick.” He added that the upgrades have kept the 40-employee staff productive and free from health-related disruptions. “I listened to science,” Davis said. “It was either I took the bull by the horns and kept people employed and myself employed, or risked spreading the virus and shutting down.”
Retrofits at MedViron LLC and Industrial Woodworking Corp. offices in Zeeland. COURTESY PHOTO
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Uptick in HVAC interest According to CDC guidance issued on Oct. 5, inadequate ventilation can potentially contribute to an environment where COVID-19 is more easily spread by airborne transmission. Exposure to respiratory droplets carrying the virus is the main way people contract COVID-19, according to the CDC. Updated guidance says the virus can spread through airborne particles that can linger in the air for minutes or hours, even among people who are more than 6 feet apart under certain circumstances. There has “definitely been an uptick” in businesses showing interest in updating HVAC systems during the pandemic, said Cheri Holman, executive director of the U.S. Green Building Council of West Michigan. “At the USGBC we always wanted people to look at this — it’s always been a priority,” Holman said. “The technology and best practices already exist that will help building owners balance a healthy indoor environment with their energy efficiency goals.” Potential health benefits have always been a driver for investments in improved air quality technology, Holman said, which has become more obvious with the highly infectious COVID-19. Visit www.mibiz.com
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AT THE INTERSECTION OF INNO ATION AN COMMUNITY: IM ACT IN ESTMENT LOANS
On the corner of Portage Street and Lake Street in the Edison neighborhood of Kalamazoo, workers are putting the finishing touches on an attractive new multi-use building known as the Creamery. The building, which was partially funded with an innovative Impact Investment Loan program from the Kalamazoo Community Foundation (K CF), will soon house affordable apartments for low- and middle-income people, a YWCA 24-hour childcare center and a small business accelerator. “It’s exciting to see the Creamery project coming to life as we relaunch our Impact Investment Loan program, said Martha Gonzalez-Cortes, vice president of Community Investment for K CF. “We are hoping to see proposals for additional creative initiatives aimed at removing barriers for Kalamazoo County community members.
A( ERTISEME1T
With interest rates based on the Consumer Price Index + 1 percent and flexible loan terms, businesses and organizations can secure funding that may not otherwise be accessible.
In line with K CF’s strengthened focus on racial e uity in Kalamazoo, their investment priorities currently include increasing access to housing, supporting and expanding wealth-building in Black, Indigenous and People of Color (BIPOC) communities and developing nonprofit infrastructure. The housing accessibility component is especially relevant when it comes to the Creamery building.
"Achieving housing security for all community members is an undertaking that deserves creative and impactful solutions, GonzalezCortes said. “Through the Impact Investment Loan program, we hope to fund Those from the area will recognize the name organizations and entrepreneurs who are of the Creamery building as a reference to the expanding access to housing in Kalamazoo, lot’s former occupant, Klovergold Creamery, as well as those who may be experiencing which once produced dairy products such as a gap in funding to bring a project to milk in glass bottles. Prior to the Creamery, fruition. the site housed Union Brewing Company, a pre-Prohibition brewery that foretold Breaking down barriers Kalamazoo’s now-famous beer culture. Like its predecessors, the new Creamery One of the aspects of the Creamery that building is set to play a key economic role for appealed to K CF’s Impact Investment the Edison neighborhood — making it an Committee was the multipurpose nature of excellent candidate for K CF’s Impact the 60,000 s uare foot building. In addition Investment Loan program. to allowing more access to much-needed affordable housing, the Creamery’s inclusion Lifting up visionary ideas of the city’s first 24-hour childcare center is significant. Unlike traditional investing, impact investing seeks to support companies, organizations Area parents who have faced long waiting and funds that have measurable social lists and financial barriers to finding impacts. Partners who finance with an Impact affordable childcare have often been forced Investment Loan from K CF also benefit from to choose between going to work or caring the advantages of using a non-traditional for their children. lending source.
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OCTOBER 12, 2020 / MiBiz
The Center for American Progress found that a lack of childcare disproportionately affects women. More specifically, “they would increase their earnings and seek new job opportunities if they had greater access to reliable and affordable childcare. Having a childcare option with flexible scheduling expands possibilities for parents who are shift workers. The onsite small business accelerator also furthers the Impact Investment Committee’s goal of supporting opportunities for expanding wealth in BIPOC communities. The Edison neighborhood is Kalamazoo’s largest in terms of population, with US Census data showing 35 percent of community members identifying as African American and 1 percent identifying as Latinx. The small business incubator will provide entrepreneurs in the area with a place to develop their business ideas and feed into the growth of the local economy.
Seeking new avenues to equity
By funding projects such as the Creamery, K CF can advance racial e uity and connect community members with the resources they need to reach their full potential. K CF’s Impact Investment Committee will review applications four times a year using a Racial E uity Impact Assessment Guide to ensure alignment with investment priorities. Applications will be accepted on a rolling basis.
For more information and to a l , visit kalfound.org/Im a tInvestment or email im a tinvestment@kalfound.org.
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SMALL BIZ PURE MICHIGAN Continued from page 1
the state as a summer vacation destination. The agency has to change that strategy with the COVID-19 pandemic. “We don’t have that luxury this year. We need to do all that we can to help those businesses survive and those jobs continue to be there,” Lorenz said, adding that there will be “some activity” in the fall and winter to encourage safe travel. “If we don’t do that, it will be much more likely that we’re going to lose more of those small businesses that were able to survive this summer with limited activity because of the COVID restrictions.”
Fall, winter focus The 2020-21 fiscal year state budget that was agreed upon by lawmakers and Gov. Gretchen Whitmer and started Oct. 1 restored $15 million for Pure Michigan. That’s still well below funding levels for the campaign in prior years, which reached $35 million at its peak. For the fall and the coming winter, Travel Michigan will look to use social media, partnerships with news media and “non-traditional ways” to promote the state for snowmobiling, skiing and other cold-weather activities, Lorenz said. That’s similar to the strategy used over the last year when Pure Michigan was unfunded. The $15 million appropriation came after Pure Michigan ads went dark for a year. In addition to helping tourism businesses survive Lorenz the winter, Travel Michigan’s goal is to regain traction the promotion lost during the last year, Lorenz said. “We have slipped back,” he said. The amount lawmakers and the governor allocated for Pure Michigan in 2020-21 will mean other changes to the campaign as well. Travel Michigan already has decided not to mount a full national ad campaign next spring for the busy summer travel season, Lorenz said. Travel Michigan instead will only do regional and in-state campaigns with paid advertising to encourage travel next summer, he said. The agency possibly could do “very focused” ad campaigns in targeted markets nationally “where we feel we can optimize that investment for best return” and steer out-of-state travelers to Michigan for their 2021 summer vacations, Lorenz said. “We’ll be looking at this as we get closer to the warm weather season” in 2021, he said.
State travel and tourism officials are preparing to ramp up a fall and winter Pure Michigan campaign after lawmakers and Gov. Gretchen Whitmer agreed to $15 million in funding for the program this fiscal year. COURTESY PHOTO funding a year ago in a budget battle with the Republican-led Legislature. The two sides later agreed to appropriate $15 million to the campaign, which was subsequently eliminated when the state’s economy declined sharply with the onset of the pandemic and state budget cuts. The partial restoration of Pure Michigan funding and the state’s “renewed commitment” to the campaign drew praise from the Small Business Association of Michigan. “Over the years, Pure Michigan has done an outstanding job of highlighting all the reasons Michigan is an amazing place to live, work and visit,” SBAM President Brian Calley said. “Millions of trips have been booked because of this campaign and we’re glad to see our state leaders recognize the tremendous value in that.”
Hotel and lodging downturn
An annual analysis commissioned by the Michigan Economic Development Corp. estimated that in 2019, the $16.1 million spent on broadcast, print, digital and outdoor ads using the Pure Michigan brand influenced 1.9 million trips to Michigan. The estimated $2.3 billion in ‘New environment’ spending by those travelers generated $142 milEven if Travel Michigan had full funding for this lion in state tax revenue, according to the analysis year, a broad national campaign using cable TV by Indiana-based firm Strategic Marketing and and digital ads still may not have happened, Research Insights LLC. Lorenz said. Taking Pure Michigan ads back to Data from the national trade group reprea broad national stage likely won’t occur until senting the hotel and lodging industry across the COVID-19 pandemic wanes and a vaccine is the U.S. illustrate how hard the travel industry readily available. has been hit by the pandemic and Travel Michigan has to “look at restrictions. the new environment,” Lorenz said. The American Hotel & Lodging “It’ll be a while before people Association estimates that 38 perare totally comfortable with travcent of Michigan’s hotel jobs had Sponsored by: eling again,” he said. “Once things been lost through September, or SMALL BUSINESS do open up — and let’s just assume 20,655 of 54,211 jobs. ASSOCIATION the vaccine comes soon, it works, Another 44,863 of the 193,432 OF MICHIGAN (and) people are widely acceptjobs supported by the hotel sector ing and using it — that’s when the in Michigan have been lost, accordopportunity to encourage travel from far away ing to the Washington, D.C.-based trade group, will really hit. We don’t know when that’s going which has been advocating for Congress to enact to be, so the likelihood of us being able to do a another aid package that includes support for full-fledged national campaign would have been the industry. less likely anyway.” In a September survey, the association found Lawmakers originally allocated $37 milmore than two-thirds of 1,000 responding memlion for Pure Michigan in fiscal year 2019bers nationally now employ less than half of their 20 that ended Sept. 30. Whitmer vetoed the pre-COVID staff. Nearly three-quarters said they
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would have to make further layoffs without federal assistance. Half of the owners said they “are in danger of foreclosure by their commercial real estate debt
lenders due to COVID-19,” and two-thirds said they can only last six more months at their projected revenue and occupancy levels, according to the survey.
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SMALL BIZ: COPING WITH COVID-19
EXPERTS WARN OF RISING MENTAL HEALTH INDICATORS — AND HOW TO TREAT THEM By MARK SANCHEZ | MiBiz msanchez@mibiz.com
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any of us have had that awkward Zoom moment. The dog incessantly barks when a delivery person arrives during a virtual strategy meeting with co-workers, for example. Or a young son or daughter needs immediate attention and playfully interrupts your conversation with the boss. Rather than feel awkward, Robert Sheehan urges people to share the humor of the moment. Doing so can provide a small break from the heightened tension of the COVID-19 pandemic that’s disrupted daily routines and has driven up stress and anxiety. “The absurdity in some of the (virtual) meetings is helpful,” said Sheehan, CEO of the Community Mental Health Association of Michigan, citing both the tragedy and comedy of the prolonged crisis. “You don’t want to laugh at the damaging parts of it, but you do want to just laugh because there is a funny side to it,” Sheehan said. “And it does help us get through.” Finding ways to provide even a brief respite for employees is one tip mental health care professionals suggest for employers to ease stress
and tension, or break a sense of isolation that can occur from working at home. “People forget: Even simple connections to others is what keeps us buoyed, keeps depression away and keeps anxiety away, because we can talk to people that we love and care about,” Sheehan said.
Mental health indicators up As the pandemic continues, mental health professionals worry about heightened rates of anxiety, depression and substance use as people increasingly experience difficulty coping with fears of contracting a fatal illness or losing a job and the resulting financial stress. Community mental health agencies across the state report increased calls to suicide prevention lines and for counseling and substance use treatment. Some agencies report increases as high as 60 percent in calls to crisis or suicide lines, Sheehan said. “When a crisis situation becomes chronic, and you don’t see an end in sight, that’s when people struggle,” he said. Incident rates of depression, anxiety and suicide have risen during the pandemic, which mental health professionals worry will worsen in the months ahead, straining their ability and capacity to provide care.
Sheehan
Nykamp
At Pine Rest Christian Mental Health Services, outpatient visits initially dropped early in the pandemic because of stay-at-home orders, said Vice President and COO Bob Nykamp. Volume from July to September then rose 20 percent “from where we expected to be,” he said. Part of that increase may result from a higher awareness and a lessening of the stigma of behavioral health care out of the pandemic, combined with a pent-up demand that the pandemic unlocked, he said. “I think COVID has raised awareness on behavioral health issues to the point where people who might not have sought care from an outpatient perspective are now actually seeking care because their anxiety or depression has been exacerbated by COVID,” Nykamp said. “They were probably struggling with it prior to COVID, but just never sought care.” Inpatient volumes are up similarly at Pine Rest, which is seeking state approval to add 60 adult inpatient beds at its 68th Street campus in Cutlerville.
System stretched thin Nationally, the advocacy group Mental Health America recently reported that through August nearly 390,000 people who have used its mental health screening program since the pandemic
Krause
Muller
showed signs of moderate to severe anxiety and depression. That total is beyond what’s typically expected. More than 131,000 people had thoughts of suicide or harming themselves, according to the organization. The mental health system was already stretched thin prior to the pandemic, said Dr. Carey Krause, a psychiatrist and medical director for behavioral health in West Michigan for Mercy Health. People experiencing symptoms of a mental illness often wait weeks to get into care for an outpatient visit, and most beds for inpatient mental health care are usually full, Krause said. In the months ahead: “We have every reason to believe that the demand is just going to go up,” Krause said. Well before the pandemic, Mercy Health was planning to embed social workers with psychotherapy experience at primary care offices. A medical assistant who meets with a patient at the start of a doctor visit goes over a series of questions to screen for signs of depression and anxiety. If needed, the primary care doctor can then send the patient to meet with the office social worker for further evaluation and follow-up care. The initiative is in place at a handful of offices. Since the pandemic took hold, the initiative has taken on a heightened importance and Mercy Health has accelerated the rollout, Krause said.
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“We can impact more people, we can impact them proactively by asking the questions and really try to stay ahead of what is probably going to be an increase in the curve in depression and anxiety in the next several months.” —DR. CAREY KRAUSE Medical Director for Behavorior Health, Mercy Health
“Our thought is we’re going to be able to get to people who otherwise were not getting to in a typical behavioral health office because those waits can be weeks or months,” he said. “We can impact more people, we can impact them proactively by asking the questions and really try to stay ahead of what is probably going to be an increase in the curve in depression and anxiety in the next several months.”
Employers’ role Given what’s occurred and what’s expected, Krause suggests employers remind their employees of the mental health benefits they have as part of their health coverage, or about any employee assistance program in place. Managers and employees need to look out for one another as well by watching for coworkers who are withdrawn, not as talkative or engaged as they once were, increasingly taking sick days, or are more short-tempered or angry, Krause said. Sheehan advises employers to readily talk about the pandemic, rather than ignore the obvious, and to allow employees to vent their feelings and acknowledge their fears as a group, rather than as individuals through an Employee Assistance Program (EAP). “People think, ‘Well, I’m the only employee that has this problem. So, I’ll seek it,’” he said. “We’re urging small employers and large employers to talk about loss and anxiety as a whole and say, ‘We as an organization are going through this. We as an organization felt this. It’s normal and natural to feel it.’ Saying that kind of stuff is important.”
Substance use rising The pandemic has driven up substance use incidence rates as well. At Samaritas, a nonprofit whose services include treating substance use disorder, referrals have grown 20-25 percent from pre-COVID. A 50-percent increase over the next six months from pre-COVID levels “would not surprise me,” said Anthony Muller, vice president of substance use disorder services at Samaritas. “Things progressed to a certain point and then it’s just a breaking point. And, unfortunately, we are seeing the breaking point for a lot of people and we’re still not even near the end of the surge,” Muller said. That increase stems directly from the stress and isolation people have felt during the pandemic, Muller said. They resort to alcohol or other substances such as opiates or methamphetamine, he said. Samaritas, which is headquartered in Detroit, has 50 treatment locations across the state, some of which are in leased locations like churches and are open a few days a week. Samaritas in August opened a clinic in Holland and is working to open a Grand Haven satellite location in space leased from a local church. “We know stress and anxiety increases people’s triggers (and) increase their struggle to cope,” Muller said. “All of us had our world shifted a little bit.” Visit www.mibiz.com
Holland specialty market delays opening during pandemic, expands space By KATE CARLSON | MiBiz kcarlson@mibiz.com HOLLAND — Owners of a new specialty market pushed back the opening this spring of Market Zero in downtown Holland because of the pandemic, but they are already eyeing an expansion to the storefront next door. Owners Kylie and Kevin Knight delayed the opening nearly two months until May 15, partly as a safety precaution for their own family. “COVID-19 definitely played a big role in our delay,” Kylie Knight said. “I was also 8 months pregnant, so we just wanted to be extra safe before opening. We put the health of our child and employees first because we have so much first-hand contact (with customers).” The market at 62 W. 8th St. on the ground floor of The Lofts at West Eighth Apartments sells a variety of fresh to-go food, beverages, speciality market items, beer and wine. “During the summer we were consistently getting busier and sales were going up,” Knight said. “We missed out on not having Tulip Time crowds, but by word of mouth people were coming in.” Despite the loss of Tulip Time, which draws an estimated $48 million in economic activity, the Holland Farmers Market has been helpful in drawing customers downtown. However, the owners hope activity is maintained to avoid reducing store hours. “Otherwise, we’ve been pretty happy with the steady success we’ve been getting. Seeing the regulars come in on the same days lets us know we’re doing something right,” Knight said. “That’s definitely been a huge plus during the whole thing, seeing people coming back, and getting to know a lot of people on a first-name basis.” Meanwhile, the Knights are taking on an additional business venture with a crepe restaurant next door to Market Zero. The space was previously leased by a separate restaurant owner for a Crepe Craft, though those plans were abandoned because of a family emergency.
Market Zero in Holland delayed opening for two months at the start of the pandemic but is already eyeing an expansion in the space next door. COURTESY PHOTO
“People seemed really excited about the crepe concept, and we were also excited to have a crepery next door,” Knight said. “When we heard he wasn’t opening, we said, ‘We can do crepes, too.’” The Knights’ crepe restaurant will be called Kitchen Zero and is still under development, but the plan is to open in November. They plan to connect the two businesses to allow people to walk between the two spaces. “Opening during COVID-19 is not ideal, owning your own business during COVID-19 is not really ideal,” Knight said. “But we’ve been pretty lucky for all the support we’ve been getting and have been able to keep the lights on and pay our employees.”
After experimenting with formats, Grand Rapids Symphony readies for audiences By KATE CARLSON | MiBiz kcarlson@mibiz.com GRAND RAPIDS — Leaders of the Grand Rapids Symphony got creative over the past six months with new ways of sharing music with the community. But as capacity restrictions begin to lift on venues, the orchestra is gearing up again for in-person audiences. In late September, Gov. Gretchen Whitmer issued an executive order allowing various venues to welcome back guests at 20 percent of the facility’s capacity beginning Oct. 9. While the order and dozens of others are now uncertain after a landmark Oct. 2 Michigan Supreme Court ruling, the symphony is preparing live, in-person performances after months of virtual and limited events. The symphony’s first concert with an inperson audience is scheduled for Oct. 16 at St. Cecilia Music Center. The crowd capacity is limited to 50 based on Whitmer’s 20 percent capacity order, said Grand Rapids Symphony President and CEO Mary Tuuk. Crowds will be capped at 500 at the DeVos Performance Hall. “Our usual DeVos audience ranges between 1,000 and 1,500 people, so it’s definitely a big drop, but we are excited to get back to performing with an audience,” Tuuk said. It would have been easy for the symphony to go on hiatus this year as many orchestras have done, but Tuuk wanted to keep operations moving. “We were very deliberate in finding ways to keep going and delivering music,” Tuuk said. “This year will be forever remembered in our organization’s history.” After widespread shutdowns in March, the symphony developed a three-stage plan
The Grand Rapids Symphony has experimented with a variety of new formats but is preparing to welcome back in-person audiences. COURTESY PHOTO to continue operating without in-person concerts. The “From Our Home to Yours” series featured musicians performing from inside their homes during the spring and summer months. A video engineer created a virtual production that was available to watch online for free, Tuuk said. The Grand Rapids Symphony then held neighborhood concert performances in August to kick off its summer season. “Musicians would perform on their porches for small gatherings in their neighborhood,” Tuuk said. “Everything was outdoors, and we also did small pop-up concerts in city parks.” The symphony also offered “Sidewalk Serenades” where patrons could rent a small ensemble to perform outdoors for 30-minute sessions for groups of 10 or fewer people. Tuuk said about 60 packages sold and brought in some revenue in the absence of large concerts. “We then made the decision to postpone the artistic season we had planned for the year and reimagined a new season called ‘Pathways,’”
Tuuk said. “This is our path to full recovery post-COVID.” Patrons can subscribe to stream virtual, live performances by 15-17 symphony musicians as part of the series. The monthly performances take place at DeVos Performance Hall and St. Cecilia Music Center with a socially distanced orchestra, and every musician that is able wears a mask, Tuuk said. Musicians unable to play an instrument masked are tested the same week for COVID-19. All of the Grand Rapids Symphony’s roughly 50 contracted musicians, along with administrative staff, were fully paid through the 2020 fiscal year that ended on Aug. 31, Tuuk said. Staffing adjustments and a 5-percent pay reduction across the board followed for the current fiscal year. “We finished the prior fiscal year in the black,” Tuuk said. “This year will be more challenging because of the budget deficit we’re projecting with the loss of a lot of ticket revenue, but we have a plan with a special donor campaign to achieve a balanced budget.” MiBiz / OCTOBER 12, 2020
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FINANCE
State-backed seed capital fund hits the ground running By MARK SANCHEZ | MiBiz msanchez@mibiz.com
Funding diversity, filling gaps
A
Michigan Rise intends to invest $250,000 new capital fund seeded with into startups across funding rounds, startstate money got off to a quick ing with an initial investment of $50,000 start and has made investto $150,000, said Michigan Rise Director ments in a half dozen young Prem Bodagala. Investment prospects technology companies since generally have a product or service that’s launching two months ago. in pilot mode or generating early revenue, Administered by the Michigan State he said. University Foundation, Michigan Rise has Michigan Rise seeks to ensure fundat least a dozen more potential deals to fund ing goes to a diverse pool of startups. Of in the pipeline and is considering at least the investments made to date, 60 percent 30 more startups, a reflection of the high of the founders and leaders at the compademand for early-stage capital. nies Michigan Rise backed “can “The startup community be considered diverse,” Bodagala is growing and thriving,” said said. Michigan Rise Executive Director “That’s something we’re being Sponsored by: Jeff Wesley. intentional about also,” he said. TCF BANK “There’s no shortage of need Michigan Rise follows two out there. We have a significant prior early-stage funds the state pipeline of people we’re talking with around created since 2011 that collectively prothe state, and as we do this we’re trying to do vided $20.5 million in capital to 125 tech outreach around the state to make sure we startups, which went on to leverage the truly invest in those high-tech, high-growth investments to attract nearly $560 million companies and do it in a way that the whole in additional capital. state benefits,” Wesley said. “I think we’ve The early deal flow that averaged one had a big impact in a short amount of time.” investment per week after Michigan Rise’s The Michigan Strategic Fund Board in mid-August launch was the result of adminApril allocated $3 million and contracted istrators’ outreach and the need for earlywith the MSU Foundation to manage a new stage capital. Many angel and venture capipre-seed capital fund for tal investors — seeking to mitigate their risk five years. The MSF Board — have moved upstream to support compamay provide additional nies that are more developed, Wesley said. funding in subsequent That’s led to a funding gap at the preyears. seed and seed levels, he said. The MSU Foundation “The efforts throughout the state have matched the state fundcreated great momentum and I think ing with a $2.4 milthe startup community and focus on the lion commitment over Midwest with VCs continues to grow. The Wesley five years, starting with challenge with that is when you look at $942,000 in the first year the funding opportunities, they tend to of the contract, Wesley move to the better opportunities, which is said. kind of up the pipeline,” Wesley said. “It’s Michigan Rise forkind of the natural progression that others mally launched in midmove to the better startups, as there’s more August after working for opportunities.” four months to prepare The COVID-19 pandemic has driven the and lay the groundwork need for early-stage funding even higher, for investments. Bodagala said. The pandemic put the Bodagala “We had taken advanbrakes on series A financing and left many tage of that period between April and investors reluctant to do new deals as they August,” he said. “There were tons of comfocused instead on supporting their existpanies around the state that were connecting portfolio companies, he said. ing with us.” “That’s created some opportunities for 86 Repairs, a Grand Rapids-based serus as well,” Bodagala said. vice provider that acts as a third-party Michigan Rise matches investments contract maintenance manager for restauwith support such as mentoring and busirants, is among the young tech companies ness coaching from the MSU Foundation’s in which Michigan Rise invested. Red Cedar Ventures and the Spartan The Michigan Rise investment is part of Innovations subsidiary that vets and coma larger capital round 86 Repairs seeks to mercializes innovations by MSU students raise that will enable the company to conand faculty. Those groups can help startups tinue expanding its technology platform, with strategy, pursuing additional funding, co-founder and CEO Daniel Estrada said. sales and marketing plans, and access to a “Because we help restaurant operators broad network of peers and professionals lower costs and gain operational insights that include angel and VC groups in the they’ve never had before, 86 Repairs has state, Wesley said. grown over 30 percent this year despite a “We have a really deep bench of experivery challenging environment in our indusence because of our support from the MSU try,” Estrada told MiBiz. “We anticipate our Foundation. We bring a lot to the startups,” growth to accelerate even more in the comWesley said. “Engagement’s a big part of what ing months.” we’re doing because at the end of the day 86 Repairs is the lone West Michiganthat’s what seeds good opportunities, that’s based company Michigan Rise has backed what seeds good investments. Hopefully, the so far. Others are based in Detroit, Ann collaboration puts those companies in the Arbor and East Lansing. best place for success.”
FINANCE
WEST MICHIGAN INVESTORS JOIN GROWING INTEREST IN CRAFT DISTILLERY MARKET By MARK SANCHEZ | MiBiz msanchez@mibiz.com
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he 18 Michigan investors who invested in a Florida craft rum d ist i l ler a re backi ng a fa st-g row i ng industr y that offers plenty of opportunity. Nearly all of the investors involved in the $1.33 million investment in Key West-based Papa’s Pilar rum are from West Michigan, according to Dale Grogan, a managing director at Grand Rapidsbased investment bank Charter Capital Partners LLC. The group of investors was part of Papa’s Pilar’s equity offering that was significantly oversubscribed and drew strong attention from investors, Grogan said. Grogan sees in craft spirits an industry that’s “following exactly the same trajectory” as craft beer nearly a decade ago with high growth rates that helped to attract investors.
“We’re just scratching the surface in terms of where these craft distillers are going.” — DALE GROGAN Managing Director, Charter Capital Partners LLC
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“We’re very much in an upswing of this business. It’s not a difficult business to understand,” Grogan said. “There’s real interest in this space, and so if you can find that brand that has good management, coupled with good product and good distribution, then you have something really special there.” In Papa’s Pilar, investors connected with a brand that recorded strong growth in recent years, Grogan said. The brand carries other key investment attributes, including a quality product that spins an “authentic story Grogan that is identifiable with consumers.” The brand is based on a connection to Ernest Hemingway, the late American novelist and adventurer nicknamed “Papa” and who named his boat “Pilar.” The appeal around Papa’s Pilar’s brand “is it’s very easy to identify those people that want to see themselves as the adventurer sitting on their boat, fishing for marlin and drinking good rum,” he said. “It’s a very easy, authentic, understandable story,” Grogan said. The group Charter Capital Partners assembled invested in Papa’s Pilar through Charter’s Papa Fund LLC, a special purpose entity formed to make the investment. The offering was “definitely one of the fastest we’ve ever completed,” Grogan said.
Growth expected The quick success of the offering resulted from pent-up demand to invest during the COVID-19 pandemic, a product with a strong name-brand appeal, and simply that “this is a fun deal,” he said. “When I had talked to these investors, several of them — right off — said, ‘I love that brand. That’s my favorite rum,’” said Grogan, who expects craft spirits to remain a hot investment area for “quite a while.” “There’s nothing new to supplant it. There’s not that threat and you’ll start to see some real returns,” he said. “We’re just scratching the surface in terms of where these craft distillers are going.” Charter Capital Partners earlier this year put together a deal that raised $785,000 from 14 investors for craft spirits brands, including Papa’s Pilar. An annual report published by the American Craft Spirits Association shows the number of craft distillers across the U.S. grew 11.5 percent in a year to 2,046 as of August 2019, the most recent period for which data are available. The association reported craft distillers’ 2018 U.S. sales were $4.8 billion, a 27-percent increase from the year before. Market share for craft distillers as a total of the U.S. spirits industry increased to 3.9 percent in volume, from 3.2 percent a year earlier and 1.5 percent as of 2013. The American Craft Spirits Association’s 2019 Data Project added that the U.S. craft spirits market “is expected to continue to grow rapidly.”
MiBiz / OCTOBER 12, 2020
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v Sandy Ward and her late husband, Cedric developed a children’s program at Circle Theatre and supported many programs aimed at engaging people of color in community arts throughout their life together. With the help of Grand Rapids Community Foundation, Sandy will create a scholarship fund after her passing to support students involved in theatre. The fund will bear their names and honor Sandy and Cedric’s legacy, always and forever. L E T U S H E L P YO U G E T S TA R T E D We’re here to help you understand your options and explore creative ways to leave your mark on the community and causes you love. Give us a call at 616.454.1751. grfoundation.org
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OCTOBER 12, 2020 / MiBiz
L E AV E YO U R M A R K
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NONPROFIT ORGANIZATIONS
State lawmakers, nonprofits renew push to restore charitable giving tax credits
REPEALING CHARITABLE TAX CREDITS
Beginning in the 2012 tax year, Michigan no longer had tax credits for certain contributions to nonprofits. As a result, giving declined immediately after the credits were repealed. Lawmakers recently advanced legislation that would restore the credits for contributions to community foundations’ endowments, homeless shelters and food banks.
TOTAL AMOUNT OF $400 DONATIONS $1,000,000
2011
$1,000,000
$800,000
$800,000
$600,000
$600,000
$400,000
S
tate lawmakers advanced a pair of bills last month that nonprofit organizations across Michigan say would help restore charitable contributions to community foundations, homeless shelters and food banks. On Sept. 22, the state House passed H.B. 4993 and H.B. 6162, which would restore tax credits for certain charitable contributions to these three types of nonprofits. The credits were eliminated in broad statewide tax reforms of 2011. Both bills passed the House with wide bipartisan support, but face opposition from the state Department of Treasury over lost revenue to state coffers. Nonprofit advocates say the repeal, which took effect in 2012, had an immediate effect on the number and amount of contributions to these organizations. In the wake of the COVID-19 pandemic, nonprofits say restoring the tax credit would bolster donations in a time of need. “This is an important opportunity for Goorhouse the state to encourage charitable giving at a time when giving is so needed,” said Mike Goorhouse, executive director of the Community Foundation of the Holland/ Zeeland Area. “What makes both of these tax credits powerful is that they are accessible to so many givers.” As passed the House, the bills would amend the state Income Tax Act to issue a credit equal to 50 percent of the amount contributed to Caldwell community foundations’ endowment funds as well as “shelters for homeless persons, food kitchens, food banks, or other entities that work to provide overnight accommodations, food, or meals to indigent people,” according to a legislative analysis. The amount credited to taxpayers could not exceed $100 for individuals and $200 for joint filers. For estates or trusts, the credit couldn’t exceed 10 percent of the tax liability for the year or $5,000, whichever is less. The Behrens bills would also require the Department of Treasury to annually report the amount of tax credits claimed. The tax credits were repealed during the early years of former Gov. Rick Snyder’s administration as part of a 2011 bill package that replaced the Michigan Business Tax with the Corporate Income Tax.
“We know charitable tax incentives work — when they’re gone they do diminish giving. When incentives are in place and structured to create equitable opportunities for people to engage in philanthropy, it creates a long-term pipeline.” — KYLE CALDWELL President and CEO of the Council of Michigan Foundations
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2011
$400,000
2012 2013
$200,000
By ANDY BALASKOVITZ | MiBiz abalaskovitz@mibiz.com
TOTAL AMOUNT OF $200 DONATIONS
2012
$200,000
2013
NEW $400 DONORS
NEW $200 DONORS 2011
2011
$250
$500 $200
2010 2010 $400
$150 $100
$300
2012 $50
2012 2013
2013 SOURCE: DOROTHY A. JOHNSON CENTER FOR PHILANTHROPY | GRAND VALLEY STATE UNIVERSITY
Efforts to restore the tax credits passed the House in the 20172018 legislative session but failed to advance in the Senate. Bill supporters say incentivizing giving of smaller amounts leads to long-term contributions from relatively small donors. “We know charitable tax incentives work — when they’re gone they do diminish giving,” said Kyle Caldwell, president and CEO of the Council of Michigan Foundations. “When incentives are in place and structured to create equitable opportunities for people to engage in philanthropy, it creates a long-term pipeline.” Caldwell said the tax credits — which first took effect in the 1989 tax year — were meant to incentivize giving from first-time contributors.
First-time donors
Caldwell said while national trends show more large-scale donors generally, “Incentivizing giving early helps create that longitudinal sustainable funding we hope for all nonprofit organizations.” Additionally, incentivizing donations to endowed funds means they will compound with interest and grow with the market, Caldwell said. Goorhouse noted that as the credits were in place for more than 20 years: “Some consistently gave at the $200 and $400 levels but have also planned to make gifts to our community’s endowment through their estate plans. The tax credit provided the entry point for these supporters, which is so critical.”
Revenue concerns
According to a 2014 study by Grand Valley State University’s The Michigan Department of Treasury voiced opposition to Dorothy A. Johnson Center for Philanthropy, $200 donations the current bills during the committee process. In December declined 44 percent in the two years after the Michigan tax cred2019, Rachel Richards — former director of Treasury’s Office of its were repealed. The number of first-time donors at the $200 level Legislative Affairs — told a House committee the department’s declined 37.5 percent during the same period. “main concern is currently around the cost of the legislation.” (A The Johnson Center conducted a similar study a year earlier spokesperson told MiBiz last week that the department’s position that found a 51-percent decrease in $400 donations, a 28-percent hasn’t changed.) decrease in $200 donations, and a 27-percent decrease in all donaAccording to the House Fiscal Agency, the tax credits could tions under $400 immediately. The change resulted in a loss of reduce net income tax revenue for the state by “potentially $25 $1.15 million in donations the year after the repeal. million or more on a full-year basis, assuming contribution levMore than half of the community foundations surveyed in the els similar to those in tax year 2011.” The homeless shelter and Johnson Center report indicated the tax credit repeal had a “sigfood bank credits would account for most of that, or nificant” effect on their organization, according to nearly $20 million a year. The revenue losses would the study. be absorbed by the state’s general fund. The Battle Creek Community Foundation tesCouncil of Michigan Foundations officials tified in December that the organization has lost Sponsored by: believe the House Fiscal Agency’s analysis is inac$100,000 a year in contributions since the tax credGRAND RAPIDS curate and based on bills from a previous session its were repealed. The Grand Rapids Community COMMUNITY that would have included more nonprofit organiFoundation reported a drop in $200 donations FOUNDATION zations like museums and zoos. from 353 in 2011 to 170 in 2013, and a drop in $400 While the state is concerned about lost revenue, donations from 427 in 2011 to 91 in 2013. Overall, and likely more so as a result of the pandemic that has strained the GRCF saw a 70-percent decrease in the total value of gifts at the entirety of the state’s general fund, Goorhouse said encouraging $200 or $400 level from 2011-2013. charitable giving for community endowments and basic needs “We found that the biggest impact was a reduction in firstlike food and shelter is crucial at this point. time donors,” Johnson Center Executive Director Teri Behrens told “The last six months have been the perfect showcase (in an MiBiz this month. “We know that once a donor makes one contriunfortunate way) of the importance of local food banks and homebution to an organization, they are more likely to give again, often less shelters, as well as the critical role that endowments at comin larger amounts. The loss of new donors therefore can have bigmunity foundations play in helping communities be resilient ger and bigger negative impacts over time.” to fast changing needs,” Goorhouse said in an email. “It is not a “Renewing the tax credit has the potential of encouraging new pretty picture to think about our communities without food banks, donors to these organizations,” Behrens added, noting that a $300 homeless shelters and community foundation endowments these deduction on federal taxes was included in the CARES Act, which last six months.” could further incentivize giving.
NONPROFIT SECTOR NEWS
MiBiz / OCTOBER 12, 2020
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Q&A Liesl Clark
Director, Michigan Department of Environment, Great Lakes and Energy On Sept. 23, Gov. Gretchen Whitmer announced a target for Michigan to be carbon neutral by 2050. While that’s certainly a lofty goal, questions remain over what hitting the target will actually mean in practice. Over the next year, the Department of Environment, Great Lakes and Energy (EGLE) will submit a MI Healthy Climate Plan to Whitmer that essentially acts as a roadmap. It will begin to detail ways the state and private sector — including utilities and industrial and commercial entities — can start chipping away at the carbon reduction goal while also outlining strategies for offsetting carbon emissions. Whitmer’s announcement made Michigan the fifth state with a long-term carbon neutral target, and the first in the Midwest. EGLE Director Liesl Clark recently spoke with MiBiz to discuss the climate goal and the pandemic’s effect on the clean energy sector. What are the next steps in the MI Healthy Climate plan? We’ve been doing an inventory in state government and understanding what we affect as the state. We’ve also been doing a lot of modeling. By Nov. 1, we’ve asked applicants to file information with the governor’s appointment office. The governor will then be appointing the climate solutions council by the end of the year. They’ll meet in early 2021, and that group will advise EGLE on the plan. Major utilities in Michigan have been outspoken on clean energy and carbon reduction plans that have similar targets the state announced. How should other sectors — privatesector industries and transportation — be thinking about this goal? Mobility is a huge component of this. In the U.S., mobility surpassed power generation as the largest carbon emitter, and in Michigan power generation is still the largest. Since we are home to the advanced mobility sector and we’re leaders in innovation, and frankly we sell to the globe, our industry is uniquely positioned to be pivotal in moving forward climate solutions. Industry has also been a leader in the state as well. Certainly, the automakers to folks like Steelcase and Herman Miller — none of this is new to them. They’ve been doing this type of sustainability work for quite some time. Industry and mobility are a component of it, and local communities are a component of it. There’s a lot of work that’s happening at the local level across Michigan right now and we want to raise that work up and connect the communities that are interested and see it as an opportunity but aren’t quite sure what their next steps are. They’re more likely to see positive outcomes when they see communities like them taking similar action. What does this mean for companies that haven’t set sustainability goals, and will the state take action to offset private sector emissions? How the pieces fit together remain to be seen. We’re really interested in input. This is not something that will be a top-down mandate. The solutions will come bottom-up. I suspect there’s a lot of creative solutions across the state. I suspect a lot of those manufacturers are already purchasing power, so there are solutions just from the fact that utilities are setting some of the goals they’re setting. There will absolutely have to be additional thought, input and advice given in order to get us there. I think there are going to be a lot of different solutions coming together — we’ll have to knit them together to come up with a plan. The Energy Transition Impact Project aspect of this involves the Department of Treasury. Is this component about preparing communities for the potential revenue loss in cases where power plants are closing? Treasury thinks a lot about what the future holds for locals based on their tax structure and what’s going on in that local community. They had already been doing regular work trying to anticipate what sort of changes in tax structure this would cause in communities. It made sense for them to draw those pieces together and put an energy lens on it so they’re thinking about how the state could be most supportive through these transitions. There’s a flip side to that too, which is working communities through siting challenges. There are huge opportunities for local investment through the building of energy that we are going to need to keep moving us forward. That’s a great opportunity for communities to see initial investments. Thinking more short term, how does a plan like this help regain clean energy sector jobs that have been lost during the pandemic? Great question for two reasons. One is because we’ve seen a hit there with COVID. Second, all of the energy transition work we have to do has an economic lens around it. What we’ve seen because of the increasing changes in the renewables market and cost decreases in those energy sources is a huge opportunity for the state. It’s figuring out how to harness that opportunity so we’re building a Michigan that attracts the type of businesses that want to take advantage of a more diverse and sustainable energy portfolio. Another component is that this work is reflected in all communities — we want to make sure it’s a just transition at the same time. There’s a lot of aspects to it, and that economic lens is an important one as we find the path going forward.
Interview conducted and condensed by Andy Balaskovitz. COURTESY PHOTO
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OCTOBER 12, 2020 / MiBiz
IN THE NEWS M&A
n A Grand Rapids-area manufacturer of air distribution products for both residential and commercial HVAC clients has changed ownership. Hart & Cooley LLC — which was previously owned by Johnson Controls International plc — was recently acquired by Miami-based global private equity firm H.I.G. Capital, which will now operate it as its own entity. Hart & Cooley — which manufactures grilles, registers, diffusers, flex air duct systems, air filtration components, chimneys systems and other components — will maintain its headquarters at 5030 Corporate Exchange Blvd. SE, near the Gerald R. Ford International Airport. n DeWys Manufacturing Inc. of Marne announced that it has acquired Grand Haven-based metal fabricator ReFab LLC. DeWys Manufacturing, established in 1977 as a one-person metal shop, provides custom metal fabrication services. In a formal announcement of the deal, DeWys Manufacturing said the acquisition would allow it to expand its core capabilities — cutting, forming and welding — while also facilitating quicker turnaround times and the ability to meet the evolving needs of both current and future clients. n U FP Industries (Nasdaq: U FPI) — formerly known as Universal Forest Products Inc. — announced that its UFP Retail Solutions business segment acquired Matthew, N.C.-based Fire Retardant Chemical Technologies LLC (FRCT), which develops fire retardants and water repellents. Founded in 2014, FRCT found a niche in new and cost-efficient technologies for wood preservation. The company amassed $6.4 million in sales in 2019. n Small Business Deal Advisors of Grand Rapids worked with Ludington-based Foam Works, a young business specializing in spray foam and cellulose insulation, on a sale of the company to an individual investor. Foam Works was founded in 2017 by Dann and Julie Van Dyke, who together own property maintenance and construction company Cottage Works. The couple ultimately decided to sell Foam Works to focus on their other business. Terms of the deal were undisclosed.
REAL ESTATE/DEVELOPMENT
n Two West Michigan affordable housing projects have secured $1.9 million in a recent funding round from the Michigan State Housing Development Authority. MSHDA awarded a total of $17.8 million in Low Income Housing Tax Credits to 17 projects across the state that create or rehabilitate rental properties for affordable housing projects. The federal tax credits awarded by MSHDA allow developers to draw from their tax credit annually for 10 years. Samaritas Affordable Living in Muskegon received $1.02 million for 53 apartment units, and Belknap Place in Grand Rapids received $906,067 in funding to construct 50 apartments.
FINANCE
n A Grand Rapids-based capital fund that will invest nationally in second-stage companies owned by minorities has secured commitments now totaling $6.25 million, with potentially millions more on the way. Nearly $17 million in additional commitments are “in the final stages of the pipeline as well” for the New Community Transformation Fund LP, according to Managing Partner Skot Welch. If finalized and secured, the prospective invesWelch tors in the pipeline would bring the New Community Transformation Fund close to a goal to raise up to $25 million. n Grand Angels President Tim Parker has stepped down to run a community foundation in Wisconsin. Parker started Oct. 5 as president and CEO of the Community Foundation of North Central Wisconsin in Wasau, Wis. He’ll continue to assist the Grand Rapids-based Grand Angels, one of the most active angel investor groups in the Midwest, during the transition to new leadership. Parker, 52, recently became a grandfather and the foundation position moves him closer to family in Wisconsin.
The position also allows him to pursue an interest in philanthropy and “putting all of my full-time efforts into making a difference that’s going to impact communities locally in the long term,” Parker said. n Conquer Accelerator, a business accelerator run by the Michigan State University Foundation, has selected its first five cohort companies in Grand Rapids. Each of the five received $20,000 in seed funding and will go through a 10-week virtual business accelerator course this fall. The program also provides entrepreneurship training, mentorship, access to follow-on funding and other services. The five companies chosen for the Grand Rapids program are Airway Innovations, Building Catalyst, FirstIgnite, Lawnbot and The Patient Co.
EXPANSION
n Mercy Health Muskegon is finalizing the third and final phase of construction and renovation on the 10-story medical center at its Sherman Boulevard Mercy Campus. The project will move Trauma II Emergency Care from Hackley Hospital to the Mercy Campus’s Fazakerley Family Emergency Center. The Hackley Emergency Department will become an urgent care center and operate seven days a week for walk-in medical care for non-emergency minor illness and injuries such as sprains, wounds requiring stitches, rashes and illnesses such as cold and flu. The final phase of the Mercy Campus comes Oct. 19, when the Mercy Health Birth Center and the 10th floor medical surgical facility are fully open. n Hamburger Mary’s is set to open its first Michigan location later this month near Grand Rapids, bringing with it the karaoke, drag shows and drag queen bingo the restaurant franchise is known for. Local operators Doug Hanchett and Tom Zarkowski planned to open the first of two Hamburger Mary’s Michigan locations in Ypsilanti, but the focus shifted to Grand Rapids after pandemic-related complications. The restaurant — a staple in the LGBTQ community for decades — is set to open Oct. 28 at 6240 28th St. SE in Cascade Township. n Online retail giant Amazon.com Inc. is proposing a 113,000-square-foot package sorting and delivery facility in Walker, just north of I-96. According to documents filed with the Walker Planning Commission, the delivery and warehouse facility would include 1,098 parking spaces for employees and delivery vehicles, while the project would require “significant new public road construction.”
EDUCATION
n Davenport University expanded its mental health offerings with Pine Rest Christian Mental Health Services to include free counseling to students at all campuses in Michigan. Pine Rest offers the fall semester counseling through teletherapy. Davenport expects on-site appointments on the Lettinga Campus to resume in January. Pine Rest will provide assessment and treatment services to students including therapy at all university locations, drop-in appointments at the W.A. Lettinga Campus, training, support groups and group therapy, consultation and referral services and crisis response and support.
HEALTH CARE
n Spectrum Health formed a partnership with the developer of a meditation and mindfulness app to offer its 31,000 employees a free subscription. Under the pilot, Spectrum Health also makes the Headspace app available for more than 30 local school districts at no cost to administrators. Headspace provides users content and videos on stress and anxiety, work and productivity, and improving sleep. Spectrum Health said it plans to “greatly expand” access to the app during the fall. n Grand River Aseptic Manufacturing Inc. will produce a COVID-19 vaccine under development by a Belgian pharmaceutical company. Under an agreement with Janssen Pharmaceuticals Inc. — which is owned by New Brunswick, N.J.-based Johnson & Johnson — Grand River Aseptic will fill and finish the vaccine candidate that’s now in a Phase 3 clinical trial to study the safety and efficacy of a single vaccine dose compared to a placebo in preventing COVID-19. Visit www.mibiz.com
Associated Builders and Contractors Western Michigan Chapter (ABC/WMC) congratulates the following winners of the 2020 Annual Excellence in Construction Awards, recently held at the Getty Drive-In Movie Theater. The annual event highlights West Michigan’s most innovative and high-quality construction projects, safety efforts and tradespeople. The Excellence in Construction Awards are highly sought after year-over-year and highlight both individuals and companies in various categories from safety to general construction. The Safety Award of Excellence recognizes companies that exhibit a continued commitment to jobsite safety and incorporate these values throughout their corporate culture. Thirteen member companies chased the 2020 award, from which three finalists were selected in two categories – General Contractor/Construction Manager and Trade Contractor.
2020
We are construction. We are the men and women who build temporary hospitals and drive-through testing facilities for our community. We are the men and women who build sneeze guards and touchless doors. We are professional problem solvers who work safely and courageously to ensure the places you go keep you healthy and safe. ABC Western Michigan recognizes and thanks the thousands of local professional tradespeople and construction leaders who are guiding our industry through the pandemic. This year’s Excellence in Construction Awards are about all of us, together. Thank you.
The winner for SAFETY AWARD OF EXCELLENCE GENERAL CONTRACTOR/CONSTRUCTION MANAGER is Rockford Construction. THE SAFETY AWARD OF EXCELLENCE TRADE CONTRACTOR is presented to Windemuller.
PROJECTS. WINNERS PEOPLE. WERE CHOSEN FROM 25SAFETY. TRADE AND GENERAL CONTRACTOR CATEGORIES. CATEGORIES, WINNERS AND PROJECTS ARE AS FOLLOWS: CONCRETE: Kent Companies for Studio Park(ing)
NEW CONSTRUCTION $10-20 MILLION: First Companies, Inc. for Studio Park
ELECTRICAL: Buist Electric for Stryker Instruments
NEW CONSTRUCTION MORE THAN $20 MILLION: Pioneer Construction for Embassy Suites
EXTERIOR FINISHES: Architectural Metals Inc. for ADAC Automotive Corporate Headquarters
PLUMBING: Allied Mechanical Services for Ascension Borgess Surgery Addition and Renovation
FIRE PROTECTION: Total Fire Protection, Inc. for Stryker Instruments
PRECAST CONCRETE: Kerkstra for 601 Bond Apartments
GENERAL TRADES: EV Construction for Mercy Health Muskegon Campus Hospital Tower
PROCESS PIPING: Allied Mechanical Services for Grand Haven – Spring Lake Sewer Authority Wastewater Plant Improvements
GLAZING: Architectural Glass & Metals, Inc. for Viking Corporation New Headquarters HVAC: DHE for Portage North Middle School INTERIOR FINISHES: Sobie Company, Inc. for Canopy by Hilton Hotel
RENOVATION/ADDITION LESS THAN $1 MILLION: Lakewood Construction for Schaendorf Brewing Company RENOVATION/ADDITION $1-5 MILLION: Pioneer Construction for Amway Hotel Corporation IDC
LOW VOLTAGE: Grand Valley Automation, Inc. for Van Dyken Mechanical Office
RENOVATION/ADDITION $5-10 MILLION: EV Construction for Trinity Health – PBS-K Renovation
MASONRY: Integrated Exteriors for Stockbridge Apartments MISCELLANEOUS STEEL: FCC Construction Inc for FSU Katke Golf Learning Center
RENOVATION/ADDITION MORE THAN $10 MILLION: Owen-Ames-Kimball Co. for AC Hotel + 37 Ottawa
NEW CONSTRUCTION LESS THAN $1 MILLION: Pioneer Construction for The Listening Room
ROOFING SINGLE PLY: Langerak Roof Systems, Inc. for Amway- Buildings #17 and #26
NEW CONSTRUCTION $1-5 MILLION: Pioneer Construction for Black River Barn
STRUCTURAL STEEL: Pioneer Construction for Grand Valley State University Daniel and Pamela DeVos Center for Interprofessional Health
NEW CONSTRUCTION $5-10 MILLION: Wolverine Building Group for Harrison Park Apartments
CORRECTIONS TO PROGRAM The following entries were originally published with incorrect information. Here are the corrected entries:
We are construction. We are the men and women who PROJECT Van Dyken Mechanical Corporate Headquarters build temporary hospitals and drive-through testing facilities for our LOCATION Grandville community. We are the men and women who build sneeze guards BUDGET $2,359,000 and touchless doors. We are professional problem solvers who ARCHITECT Mathison | Mathison Architects July 2019you go keep you work safely and courageously to COMPLETION ensure the places TEAM Project Manager: Scott Walters healthy and safe. ABC Western Michigan recognizes and thanks Superintendent: John Serba the thousands of local professional tradespeople and construction project involved a complete renovation of the company’s former office space leaders who are guiding our This industry through the pandemic. This and a conversion of adjacent streamlined year’s Excellence in Construction Awards are warehouse about into all aof us, office headquarters. Van Dyken Mechanical, Grand Valley Automation and Mechanical Testing Services Inc. together. Thank you. are three businesses that occupy the building, allowing them to collaborate between services while optimizing space.
PEOPLE. PROJECTS. SAFETY.
NEW CONSTRUCTION: $1-5 MILLION Dan Vos Construction Co. PROJECT LOCATION BUDGET ARCHITECT
Gordon Food Service Square Roots Indoor Farm Wyoming $1,150,000 Concept: Via Chicago Architects Architect of Record: Dan Vos Construction Company September 2019 Project Manager: Scott Walters Superintendent: Chris Barry
2020
RENOVATION/ADDITION: $1-5 MILLION Dan Vos Construction Co.
COMPLETION TEAM
Square Roots is an indoor urban farm at Gordon Food Service in Wyoming, Michigan. The idea behind this facility was to grow produce like mint, chives, and basil in West Michigan year-round in high-tech, climate-controlled shipping containers.
580 Cascade West Parkway, Grand Rapids, MI 49546 (616) 942-9960 | abcwmc.org
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