MiBiz March 16, 2020 edition by MiBiz

Former Muskegon coal plant to get new owners

Spectrum Health prioritizes buying local

PAGE 12

PAGE 14

SERVING WESTERN MICHIGAN BUSINESS SINCE 1988

MARCH 16, 2020 • VOL. 32/NO. 11 • $3.00

STATUS QUO

www.mibiz.com

— C ORON AV I RUS I N M IC H IG A N —

GR debates increasing sites for marijuana businesses; equity, local ownership concerns remain

Virus concerns drive additional due diligence in M&A transactions

By SYDNEY SMITH | MiBiz ssmith@mibiz.com GRAND RAPIDS — Following mixed messages from the Grand Rapids City Commission late last month, marijuana advocates hope city officials will ultimately open more properties for medical and recreational facilities. On Feb. 25, the commission went back and forth on applications for both types of facilities. The city has approved 24 licenses for medical marijuana businesses, while another 14 are waiting for approval. The city hasn’t finalized recreational marijuana zoning regulations and won’t start accepting applications until April 20. Hours after voting to delay recreational and pause medical applications, the City Commission reversed course after the six commissioners could not agree on how to move forward. A last-minute dispute among commissioners also involved equity and local ownership. Commissioners were considering zoning amendments recommended by the Planning Commission that would have eliminated a waiver process for sensitive land uses like religious institutions and opened more properties for cannabis development. Marijuana advocates have sought to relax distance requirements in order to expand the number of properties qualified for marijuana business use, which they say could also help address concerns over a lack of local ownership. Joe Neller, co-founder and chief government affairs officer at Dimondale-based Green Peak Innovations LLC, said the Planning Commission rejected a provisioning center proposed by his company because of the site’s proximity to a church, even though the company had a waiver from the church. See STATUS QUO on page 8

By MARK SANCHEZ | MiBiz msanchez@mibiz.com

Visit mibiz.com for ongoing coverage of the business implications of COVID-19 in West Michigan.

Automotive analysts see shifting dynamics amid coronavirus spread By JESSICA YOUNG | MiBiz jyoung@mibiz.com

he automotive industry is scrambling to strike a balance between near-term execution and unsteady industry disruption from the novel coronavirus outbreak. That’s according to industry experts who say the effect of the virus, which has been spreading around the globe since late December and shut down production in specific regions, has shifted forecasts for global automotive production and U.S. sales downward. Indeed, Gov. Gretchen Whitmer announced the state’s first two presumptive positive cases in Oakland and Wayne counties on March 10, followed by a state of emergency declaration.

Ea rlier t his mont h at t he West Michiga n Automotive Suppliers Symposium in Grand Rapids, Mike Wall, director of automotive analysis in Grand Rapids at IHS Markit, forecasted light vehicle sales of 16.8 million units in the U.S. this year, in the segment that includes cars, utility vehicles and pickup trucks. Already, that outlook is changing as COVID-19 continues to develop across the country, he told MiBiz. As of this report, IHS Markit was still finalizing a revised sales projection, but Wall expects the new forecast to drop to 16.5 million units. “Everything is happening so quickly and there is so much volatility that given the circumstances, 16.5 (million) will still be a very good year,” Wall said. See SHIFTING DYNAMICS on page 4

he coronavirus outbreak that’s battered Wall Street and caused supply chain disruptions for some manufacturers has yet to interrupt transactions, although more conversations are occurring as part of due diligence, according to M&A professionals. Deals that are in process involve a deeper dive into due diligence in situations where one company is acquiring another that sources raw materials or components from China. Buyers are asking for more information about supply chains, backup plans and the capabilities of replacement suppliers. Brown “It’s still very new. Everyone’s trying to figure it out on the fly, but if clients were selling source parts from China, you’re going to have to make sure they have a backup supply-chain plan in case there is a major disruption,” said Mike Brown, who leads the M&A practice at investment bank Charter Capital Partners LLC in Grand Rapids. See DUE DILIGENCE on page 9

Michigan Chamber prepares for ‘war’ over graduated income tax proposal By ANDY BALASKOVITZ | MiBiz abalaskovitz@gmail.com

s progressive political advocates seek lower state income tax rates for most Michigan residents while higher earners pay more for infrastructure needs, the state’s leading business group is bracing for a highly contentious political campaign. Organizers behind the Fair Tax Michigan campaign, which was announced in late February, are

seeking a constitutional amendment to change Michigan’s flat 4.25 percent income tax to a graduated structure based on income. The Board of State Canvassers is expected to decide in the coming weeks whether organizers can collect signatures in hopes of putting the question to voters in November. “If this qualifies for the ballot, frankly, it would be war,” said Rich Studley, president and CEO of the Michigan Chamber of Commerce. For years, the Chamber has opposed efforts in the state Legislature for a

graduated, or progressive, income tax. The Democratic-backed proposals have failed to gain traction in the Republicanheld state House and Senate. In t he late 1960s a nd 1970s, Michigan voters by wide margins rejected ballot proposals for a graduated income tax. Such a change would require a constitutional amendment. However, supporters say growing income disparities and declining public services have shifted public opinion. The Fair Tax Michigan plan would raise $1.5 billion in additional revenue for

schools and road and water infrastructure starting in 2022. The plan would reduce the state income tax rate for individuals with income of $175,000 or less and joint filers with income at or below $350,000. According to organizers, 95 percent of Michigan residents would pay a lower state income tax rate than they do now. Of the 41 states with income taxes, 33 have a progressive structure. Federal income tax also follows a graduated model. See INCOME TAX on page 3

Leaders push for action to raise wages PAGE 21

INSIDE:

Business of Senior Care SEE PAGE 16

MEET THE TEAM! DeGraaf Interiors, Inc.

Hudsonville 616.662.0140

Eckhoff & DeVries Painting & Wallcovering Grand Rapids 616.452.7611

Fisher Door & Hardware

ON YOUR NEW DENTAL PRACTICE IN JENISON! "The team at First Companies really captured our vision and helped design and build a pediatric dental practice that is perfect for children and their families. They constructed a high-quality space and completed the project within the time frame they promised. Everyone we worked with was very professional." — CHRISTY VOLLMAR & MEGHAN CONDIT, PRACTICE OWNERS

Wyoming 616.249.2200

Flairwood

Norton Shores 231.798.8324

Glass Images

Holland 616.928.1033

Gnass Masonry Byron Center 616.583.2363

ARCHITECTURAL DESIGN BY:

K&S Plumbing Caledonia 616.698.6790

Mast Heating & Cooling Zeeland 616.772.2252

ROC Construction Hudsonville 616.318.0307

Schepers Brothers Commercial Interiors Grand Rapids 616.455.5318

Westmaas Electric Grandville 616.247.1185

Grand River Pediatric Dentistry_MiBiz_3.2.20.indd 1

MARCH 16, 2020 / MiBiz

Real Estate, Construction & Property Management ALL UNDER ONE ROOF www.FirstCompanies.com | 616.698.5000 3/6/2020 10:57:04 AM

Visit www.mibiz.com

INCOME TAX Continued from page 1

Published since 1988 MiBiz® is a registered trademark of MiBiz, Inc.

Building a campaign The Fair Tax Michigan plan was announced in late February, creating a relatively tight timeStudley Isely Lupher Isaguirre Snyder line for collecting signatures if the petition language is approved by the Board of State said, “particularly given the states that border “The last thing in the world we need now is Canvassers. The group would need 425,059 us.” an unforced error to inflict this self-inflicted valid signatures by July 6. The increase, he added, could lead to a wound on Michigan’s taxpayers and job providFair Tax Michigan campaign manager Eli roughly 6 percent state income tax rate for ers,” he said. “This proposal, if it qualified for Isaguirre said the coalition of grassroots groups some earners, higher than Indiana’s flat 3.23 the ballot and is approved, would be economic across Michigan has been focused on educapercent rate and Illinois’ flat 4.95 percent rate. development suicide.” tion policy and responding to a lack of legislaHowever, Illinois voters will decide on a graduWhile Michigan’s income tax is flat, supporttive action on a graduated income tax. ers of a graduated structure say inequities come ated income tax in November. The Illinois plan Detroit Action, a community action group as higher earners receive various exemptions. would raise rates up to 7.99 percent for the highof “black and brown working-class Detroiters,” Isaguirre countered that there’s no data to est earners. says education funding is a key need reflected support the notion that peo“Am I against a graduated income tax? No, in the plan. Detroit Action is ple or companies would leave but it has to be thought out,” Isely said, nota member of the campaign’s Michigan. He added that ing that a phased-in approach would be crusteering committee. Michigan’s crumbling roads cial. “There’s unintended consequences that “We need a tax system and lack of education fundare very very dangerous as you change taxes. that isn’t flat but that’s fair,” ing are already keeping comWill it cause the earth to crumble? No. Will it said Detroit Action Executive panies from locating here. make it harder for our economic development Director Branden Snyder. “A people? Yeah.” number of our communiEric Lupher, president of the nonpartities are really struggling with Experts weigh in san Citizens Research Council, noted state a lack of resources that come Public policy and economic income tax makes up about one-third of all from years and years and years ex per t s have ex pre s se d state revenue, but almost 75 percent of it goes of divestment and years of tax mixed reactions to the camto the general fund budget. While the revenue breaks going to billionaires paign. W hile he supports as proposed would go toward “two significant and corporations. It’s a vision the concept of a progressive shortfalls” in school aid and road funding, “it of abundance versus a vision income tax, as is done at the would create a budget nightmare as we try to of scarcity and fear constantly federal level, the Fair Tax deal with those other functions” included in pushed down our throats.” Michigan proposal as drafted the general fund. Snyder expects the could have unintended conLupher also noted that 33 of the 41 states Michigan Chamber to “use all sequences, said Grand Valley with an income tax have a graduated structure. of its weight to stop this. They State University economist “If you drive them out of Michigan, where believe in the status quo.” Paul Isely. are they going to go? The odds are pretty good Studley confirmed the “Generally, economists that if you leave Michigan because you don’t expectation, calling it an like progressive tax systems. like this tax system, you’re going to end up in “urgent priorit y” for t he — RICH STUDLEY Having a graduated income another one with a similar tax system,” he said. President and CEO of the Chamber if it moves fortax is a stabilizing policy,” While Michigan voters rejected graduated Michigan Chamber of Commerce ward. He said it’s too soon to said Isely, who is also assoincome tax proposals decades ago, the state’s tell how much the Chamber ciate dean of undergraduate economic environment has changed, Lupher would spend fighting the programs at GVSU’s Seidman said. effort. College of Business. “Michigan then was a high-tax state, and He called the current flat tax “fair and relaThe structure is counter-cyclical, meanthe idea that we’d be an even higher-tax state tively simple” because the more you make, the ing if incomes drop during a recession, indifor some didn’t play well,” he said. Michigan is more you pay. viduals could pay less in taxes as a percentnow a low-tax state and residents frequently cite “The fact is, every day in Michigan our cities age of their income. However, as written, the failing schools and infrastructure. and state are in a fierce competition with other proposal would lead to a roughly 20 percent “If the proponents of this can clearly draw a cities and states for jobs. Our flat-rate income increase in taxes for higher earners — “not a tax has proven to be a competitive advantage,” line between our contributions to government small amount,” Isely said. And it would hapStudley said, calling the graduated income tax through the tax system and what you get for it, pen quickly. plan “especially poorly timed and counterprothere might be an appetite for it,” Lupher said. “That’s a big enough change that it will ductive” amid national and global economic “On the other hand, tax is still a four-letter word generate activity toward tax avoidance,” Isely uncertainty. in this state, and it’s an uphill climb.”

“The last thing in the world we need now is an unforced error to inflict this selfinflicted wound on Michigan’s taxpayers and job providers. This proposal, if it qualified for the ballot and is approved, would be economic development suicide.”

MiBiz hires Balaskovitz as managing editor By MiBiz Staff GRAND RAPIDS — MiBiz Inc. has hired journalist Andy Balaskovitz as managing editor of its West Michigan business publication. After being a contributor for the last five years, Balaskovitz has taken over the day-to-day newsroom operations for MiBiz, with responsibility for the print and digital versions of the publication. As a regular MiBiz contributor, Balaskovitz covered policy and energy issues, which he will continue in his new role. Balaskovitz has served as a journalism felBalaskovitz low for Midwest Energy News since 2014, and

Visit www.mibiz.com

before that was managing editor for alt-weekly Lansing City Pulse. He is a graduate of the journalism program at Michigan State University. The addition of Balaskovitz to the MiBiz team continues the company’s strategic investment in the newsroom following the launch of a paywall earlier this year. “Andy’s hire comes as a part of our continued investment in oldschool business journalism that sets MiBiz apart from other local media,” Publisher Brian Edwards said. “We are committed to providing readers with in-depth business reporting, analysis and scoops that they won’t find elsewhere in the West Michigan media.” Editor Joe Boomgaard will remain active in overseeing the MiBiz newsroom and help the publishing company execute on new strategic growth initiatives.

Publisher Brian Edwards / bedwards@mibiz.com Associate Publisher Denise Montambo / denise@mibiz.com Editor Joe Boomgaard / jboomgaard@mibiz.com Managing Editor Andy Balaskovitz / abalaskovitz@mibiz.com Senior Writer Mark Sanchez / msanchez@mibiz.com (finance, health care, life sciences) Staff Writers Sydney Smith / ssmith@mibiz.com (real estate, economic development) Jessica Young / jyoung@mibiz.com (manufacturing, agribusiness, nonprofits) Contributing Reporter Marla Miller Copy Editor Claire Boomgaard VP of Production & Audience Development Kristi Kortman / kkortman@mibiz.com Senior Advertising Consultant Shelly Keel / skeel@mibiz.com Digital Specialist/Ad Traffic Coordinator Danielle Affholter graphics@mibiz.com

Circulation For address corrections or subscriptions, contact MiBiz at 1-877-443-1977 or subscribe@mibiz.com

MiBiz ISSN 1085-4916 • USPS 017-099 Established 1988 MiBiz is published every other week by MiBiz, Inc., P.O. Box 1629, Grand Rapids, MI 49501. Telephone (616) 608-6170. Fax (616) 608-6182. E-mail: info@mibiz.com. Subscription changes: subscribe@mibiz. com. Periodicals Postage is paid at Grand Rapids, MI. POSTMASTER: Send address changes to MiBiz, P.O. Box 1629, Grand Rapids, MI 49501. Subscriptions are available without cost to qualified readers. Paid subscriptions are available to those not meeting qualified circulation requirements. Paid subscriptions are $99/year. Single copy and back issues (when available) are $3 each, plus first class postage. Call 1-877-443-1977 to order.

Reproduction or use of any portion without permission of the publisher is prohibited.

MiBiz / MARCH 16, 2020

MANUFACTURING SHIFTING DYNAMICS Continued from page 1

To calculate domestic sales data, IHS Markit is focusing particularly on consumer confidence, economic development, GDP performance, job creation and job growth. “The (stock) market has only just recently melted down, so that’s where that impact and influence on the consumer is going to be important to watch,” Wall said. Similar dynamics inform IHS Markit’s global light vehicle production foreWall casts as well. However, the formula is more complex and will take more time to compute. “There are definitely some downside risks to the production forecast, for sure,” Wall said. “It’s just a matter of trying to quantify that right now.”

Production effects Production where the coronavirus started spreading in China — a region that dealt with a dramatic decline in vehicle production last year because of economic headwinds, trade tensions and lending crackdowns — is dipping further and faster than IHS Markit forecast the rest of the world for 2020 U.S. vehicle at the moment. The sales, which was effect of coronavirus revised downward on China and other from 16.8 million global markets will units because of outweigh any modcoronavirus est production gains that were predicted in the Americas, according to Wall. As of earlier this month, he had forecasted global production to drop to at least 87.2 million units in 2020, down from 88.9 million units last year. “There are gigantic efforts being taken to ensure the state of the supply chain,” Wall said. “We still have shipments coming in — they’re starting to get leaner but through monumental effort, so far, so good on that front.”

16.5M

Based on a rating of “component risk” and the size of purchases, IHS has pinpointed some global OEM plants that appear to be more exposed to shortages from production in the Hubei province of China, the epicenter of the coronavirus outbreak. Ford Motor Co. plants in Turkey and Romania and a General Motors plant in Egypt are among the most at risk. The top components that are produced in the Hubei region and shipped throughout supply chains include brake calipers, HVAC control panels, brake actuation systems and exhaust manifolds, according to the data.

Shifting demand Disruptions like coronavirus affect some vehicle types more than others in the domestic sales market. For example, during the Great Recession, pickup truck sales dropped because of fewer industrial sales, the consumer credit crisis and increased gas prices. At the same time, car sales jumped. During the recovery, while cars and utility vehicles pivoted market positions dramatically, pickup truck sales ticked up and then remained reliably steady. For now, Wall expects each segment to continue along trend lines — utility vehicle sales upward, cars downward and pickup trucks steady — but it might be too soon to predict the fundamental effects of coronavirus and the corresponding economic consequences on market segments. Last week, crude oil prices dropped to half of what they were in January. The sharp decline is tied to coronavirus and how governments and individuals react to its spread, quarantines and social distancing. The outbreak has lowered demand for travel and, as a result, dwindled demand for oil amid an oversupply in the market, according to a recent report from the University of Alabama. Shifting market segments, if they happen, could affect an already vulnerable crossover utility vehicle (CUV) market. New model launches of CUVs are growing faster than the consumer segment, according to IHS Markit. In 2017, 95 vehicle models sold in the U.S. were classified as CUVs, up from 23 models in 2002. This year, automakers will try to sell 120 different models of CUVs. “Based on U.S. sales, we’re not growing the segment enough to absorb all that,” Wall said. “Planning volumes are going to be super critical, probably more than ever. This is one of those

“We have to keep our eye on the credit ball. Cutting rates and trying to make sure we keep the credit markets functioning is the number one thing of importance to keep us from resembling more of that 2008 downturn.” — MIKE WALL Director of Automotive Analysis at IHS Markit

segments that everybody wants to be in because nobody wants to be in sedans where volumes are collapsing, but I’m going to keep beating this drum because it is a risk out there for suppliers.”

Watching credit Going forward, automakers and suppliers should continue to watch the speed at which coronavirus spreads and the corresponding effects on global economies, according to Wall. While consumer confidence is a coincidental indicator, job growth and job creation on a month-to-month basis can be a more reliable predictive measure, he said. Specific to the automotive sector, Wall favors tracking used vehicle prices to take a quick pulse of the industry as a whole. “If we start to see used vehicle prices collapse or go down significantly, that makes it tougher to sell new vehicles,” he said. But ultimately, the “big linchpin” indicators to watch will be related to credit, according to Wall, who said 85 percent of vehicle sales are financed. “The hope among all hopes is this does not translate into a credit crisis, which is not in our forecast,” Wall said. The Federal Reserve Open Market Committee reduced the federal funds rate by a half percentage point this month, the largest decrease since the 2008 financial crisis. “We have to keep our eye on the credit ball,” Wall said. “Cutting rates and trying to make sure we keep the credit markets functioning is the number one thing of importance to keep us from resembling more of that 2008 downturn.”

WEST MICHIGAN’S LEADING COMMERCIAL ROOFING AND SHEET METAL CONTRACTOR

A SUBSIDIARY OF EAST MUSKEGON ROOFING AND SHEET METAL • EASTMUSKEGON.COM • 231.744.2461

MARCH 16, 2020 / MiBiz

State escalates coronavirus response after first confirmed cases

fter announcing Michigan’s first two presumptive positive cases of COVID-19 on March 10, Gov. Gretchen Whitmer’s administration released a series of “community mitigation strategies” that span the state’s economy and population to prevent the spread of the virus. The 11 new recommendations apply to employers, schools, community organizations and “individuals of all ages, backgrounds, and health profiles,” according to the state. Officials have released more than 60 recommendations as of press time involving individuals, assisted living facilities, schools and universities, workplaces, faithbased organizations and mass gatherings. As a result, most colleges and universities across West Michigan have canceled physical classes in favor of online course delivery. As well, a string of local business events, social gatherings and concerts have also been postponed, including the Association for Corporate Growth Western Michigan Chapter’s Outstanding Growth Awards that had been scheduled for March 18. The NBA G League, which includes the Grand Rapids Drive basketball team, also suspended its season indefinitely. While Michigan residents have been preparing for the spread of coronavirus for weeks, “Michigan must take further action to avoid a rapid increase in cases in the state,” Dr. Joneigh Khaldun, chief medical executive and chief deputy for health at the Michigan Department of Health and Human Services, said in a statement. “Community mitigation strategies are crucial to slowing the transmission of the virus in Michigan, particularly before a vaccine or treatment becomes available.” The mitigation strategies issued as this report went to press include: • Learn about the signs and symptoms of COVID-19, which include fever, cough and difficulty breathing. • Stay home when you are sick, and individuals at risk of severe illness should consider staying at home to avoid others who are sick. • Regularly clean and disinfect frequently touched surfaces, such as doorknobs, keyboards, cell phones and light switches. • Communicate and reinforce best practices for washing hands and covering coughs and sneezes. • Be sure to maintain a supply of medications, food, and other essentials in your house. • Cancel or postpone large gatherings, conferences and sporting events, including events with over 100 people. • Reduce in-person gatherings and activities, especially for organizations with individuals at risk of severe illness. Consider offering video or audio of events. • Consider tele-learning or tele-work opportunities, where feasible. • Limit non-essential work travel. • Monitor the situation if you care for a loved one living in a care facility, ask about the health of the other residents frequently, and know the protocol if there is an outbreak. • Limit visitors at hospitals and other facilities to only those who are absolutely necessary and implement screening of visitors for temperature and respiratory symptoms. — Reported by Andy Balaskovitz

Visit www.mibiz.com

MiBiz / MARCH 16, 2020

MANUFACTURING

High-end upcycling breathes new life into industrial machines By JESSICA YOUNG | MiBiz jyoung@mibiz.com

udsonville-based Banyan Tree Fabworks is turning distinctive historical machinery into statement-furniture. That includes a conference table built from an Oliver Machinery industrial table saw, a coffee table fashioned from a vintage International Harvester engine and a bar made atop the hood of a 1955 Cadillac. The inspiration and elements of the company’s high-end furniture come from a desire to save relics of the American Industrial Age, according to Greg Davis, vice president of Banyan Tree Fabworks. Obsolete industrial equipment is often cumbersome to recycle and landfills receive more than 10 million tons of steel each year, according to the U.S. Environmental Protection Agency. Hence, the increasing popularity of upcycling — turning by-products, waste materials or unwanted products into something of greater value. “What we’re trying to do is just preserve some stuff because a lot of it just gets scrapped or crushed, melted down and recycled, which is wonderful, but we’re trying to preserve the history of some of these pieces,” Davis said. However, the products produced by Banyan Tree Fabworks aren’t made from common yard sale finds. The company hunts down heavy-duty, often high-priced, industrial equipment from around the country and each part has its own character and flair, according to Davis. “Some of these old industrial machines, pieces, articles, and awesome machinery — they have a function to them, but they also have form and more of an artistic component,” he told Banyan Tree Fabworks manufactures cusMiBiz. “We like to find things that are unique and tom-designed furniture pieces using recycled interesting.” industrial equipment. The Hudsonville-based Often the materials that intrigue the fivecompany operates out of a 25,000-square-foot person team at Banyan Tree Fabworks lived past fabrication shop and showroom. COURTESY PHOTOS lives in the automotive industry. Most elements that the company uses in its tables, desks and other furniture pieces are from equipment. like tables made out of bulldozer track chain or “We got some gigantic bearings from a coal woodworking equipment from old factories that mining company,” he said. “Everybody has seen made wooden furniture.” small bearings, but we’ve got some that are This style of handcrafting and manufacturing almost three feet in diameter. In some respects, comes with a hefty price tag. Individual pieces it’s very, very basic things, but everything is on a range from $2,000 for a “gear impeller” coffee much-magnified scale — and it’s just cool.” table to more than $10,000 for big-ticket items. One desk was made from a 650-pound indus“There are a lot of people that do what we call trial joiner that had been stored in a garage in a sweaty or patina pieces, and that means taking Boston suburb, according to Davis. Others, like something that’s old and used up and just kind of the Cadillac bar, are made from the bulk of a dusting it off,” Davis said. “We have a high-qualvehicle body. ity finish. Everything we try to do is very metic“Every piece has a funny story of how we ulous on the details and in making sure came to acquire it,” he said. everything is just right.” The company makes strictly The company is using one-of-a-kind pieces and has trade shows and events like no plans of becoming a highthe Barrett-Jackson classic car volume producer, according to auction, held every January Davis. in Scottsdale, Ariz., to get its “We want to keep it fun furniture in front of the right and not make it hard work,” M A D E I N audience. he said. MICHIGAN “That (auction) is kind of One designer works with a MIBIZ SERIES FEATURING our target because it (attracts) crew of two builders to handLOCALLY MADE PRODUCTS high net worth individuals,” craft the products, but no one Davis said. “There are people on the team has formal trainout there who have crazy money, and so droping, Davis said. They work out of a 25,000-squareping $5,000 or $10,000 on a piece of furniture is foot fabrication facility and showroom that was nothing to them.” originally designed as a prototyping shop to Banyan Tree Fabworks sold six pieces of fursupport the company’s affiliated business, Blue niture at the auction and caught the attention of Banyan Equity, and its investment companies. some “very large designers” who work in com“When we started, we weren’t super busy mercial spaces, according to Davis. with supporting the investment companies and “That’s always what we’ve been shooting for,” we’ve got a couple of people that are very crehe said. “If we can sell a few pieces a month, that’s ative and talented at making stuff,” Davis said. what we’d like to do.” “They started making a hodgepodge of things

MADE IN MICHIGAN

MARCH 16, 2020 / MiBiz

Visit www.mibiz.com

West Michigan manufacturers invest in upskilling existing workers By JESSICA YOUNG | MiBiz jyoung@mibiz.com

hile the labor crisis lingers in West Michigan, manufacturers are spending millions of dollars on upskilling their incumbent employees to keep

up with growth. Manufacturers nationwide are set to spend $26.2 billion on training initiatives for employees in 2020, according to the Manufacturing Institute. In Michigan, internal upskilling and training programs have been growing across the state throughout the current economic expansion. The upskilling programs at Marne-based metal fabricator DeWys Manufacturing Inc. develop “organically” based on the skills needed in the company’s shop, according to Laura Preuss, director of workforce development at DeWys. “(Upskilling) allows the company to fill positions differently than ever before,” Preuss told MiBiz. Workforce development at DeWys, which the company calls DeWys University, started with onboarding training for welders in 2012 and has grown to cover all aspects of the company, including a new leadership and management training that the company has developed in the last 18 months. The company’s investments in training grow by about 5 percent on a year-over-year basis, according to Preuss. While she did not disclose how much the company has spent on developing the DeWys University programming, she said the firm does not cap spending on workforce

training nor does it have a specific budget that it must work within. “It’s not about if we’re going to do it or how much money is involved,” Preuss said. “Our return on investment is looked at from the numbers … every month. From profits to our utilization numbers to our quality numbers, if our numbers are doing well, that’s a reflection of how we’re performing inside the company.” DeWys has three full-time trainers and three part-time trainers on staff at the company. The vast majority — around 80 percent — of the company’s 220 employees have been through some form of skills training at DeWys University, Preuss said. About 40 percent of the programming is focused on upskilling existing employees and the rest is training for new hires. “It’s something we have decided as a company is part of our values,” Preuss said. “This has become who we are.”

Funding plan? The state of Michigan has also invested heavily in workforce development programs. The Michigan Economic Development Corp., which is supported through public and private funds, is the state’s economic development agency and marketing arm for workforce development efforts. The MEDC also provides an online interface, Pure Michigan Talent Connect, that facilitates matching job seekers with employers as well as training opportunities. The state also operates 16 independent regional Michigan Works! centers that receive local, state and federal support. Through Michigan Works!, the state has given more than 3,136 companies awards averaging

EVERYTHING BEGINS WITH DESIGN

hen it comes to manufacturing, a low-cost product does not have to be synonymous with a low-quality product. That was a main takeaway from a recent webinar hosted by the Michigan Manufacturing Technology Center-West, MiBiz and The Right Place. The webinar on Design for Manufacturing and Assembly — often referred to as DFMA — brought together West Michigan manufacturing executives to discuss the importance of intentional product design in manufacturing. The DFMA process involves designing products for ease of manufacturing and assembly, with the distinct goal of streamlining assembly operations, minimizing components and reducing scrap. While that definition may seem simple, it requires companies take a deep dive into their operations and potentially alter some of their foundational practices. By some estimates, only half of all smalland medium-sized manufacturers use DFMA

Reduce costs. Improve quality. Change Culture. Learn how RoMan Manufacturing achieved manufacturing success and opened new market opportunities by implementing Design for Manufacturing and Assembly in this free online video of our recent webinar. Watch at mibiz.com/backtobasics. To access expertise and help on beginning your own DFMA journey, download the 2019-2020 Training Catalog from The Center-West. For more information, contact The Center West at 616-301-6247 or via email.

Visit www.mibiz.com

more than $31,000 each to spend on talent development through its Going Pro program. West Michigan employers have historically received the biggest slice of the state’s Going Pro funding. Nearly $10 million was distributed to employers in Allegan, Barry, Ionia, Kent, Montcalm, Muskegon and Ottawa counties in 2019. Employers that receive the funds must also match the state’s investment with cash or inkind contributions in support of the training project, effectively doubling total investment in the training. More than 350 companies in West Michigan applied for 2020 Going Pro funding, according to West Michigan Works!. However, Gov. Whitmer line-item vetoed $37.3 million in funding for the Going Pro program last October in a budget fight with Republicans. The funding has yet to be restored. However, lawmakers last week negotiated a deal with the governor that ties partial restoration of Going Pro into the state’s emergency coronavirus response. The bill, which passed in the state House on Tuesday, includes $15 million in Going Pro funds as well as funding for the state’s Pure Michigan tourism campaign, school programs, pending legal settlements and partial restoration of many more of the budget items that were vetoed in October. As of press time, the bill was expected to pass in the Senate and be signed by Gov. Whitmer.

Staying competitive Muskegon-based tool manufacturer Anderson Global Inc. will spend about $316,000 on training in 2020, according to Angel Ball, human resources director at the company.

Anderson Global sticks tightly to its annual training budget and any workforce development grants it receives are “on top of that,” Ball told MiBiz. The company received $114,890 in Going Pro funds in 2019. “Because the competition is so crazy with China and Mexico and other low-wage nations, we have to keep up on the latest and greatest to be competitive,” Ball said. Continuous training opportunities also help with employee retention, she added. Anderson Global has provided on-the-job apprenticeships for more than 40 years but has more recently developed upskilling programs. Most of the company’s 100 employees now go through skills training each year, according to Ball. Anderson Global also pays for some of its employees to attend Muskegon Community College. However, as growth in the manufacturing sector slows, the company has started to apply for more state and federal grant funding to develop its workforce programs. “The automotive industry has not had as profitable of years recently, so we’ve been applying for the grants to invest more in our incumbent workers,” Ball said, adding that the company has been training its manufacturing workforce in “technology that is changing,” including computer-aided design (CAD) programs. While it’s tough to calculate a direct return on investment for skills learned, Anderson Global often correlates increased efficiencies to its training programs, according to Ball. “What we put into training is an essential component in staying competitive in this international marketplace,” she said.

principles, but when they are implemented the results can be extraordinary. That was the case for RoMan Manufacturing, a West Michigan manufacturer of transformers. RoMan Manufacturing used DFMA to shave 55 percent of its cost of goods from a resistance welding transforming line. It also reduced machining time from 2.5 hours to 45 minutes and reduced assembly time from 13 hours to under three hours, said Chad Schondelmayer, operations director at RoMan Manufacturing. “We took cost out, took variability out and we created a pretty robust product,” Schondelmayer said. “Get that stigma of low-cost equals low quality out, because if you follow the process and do your homework during the launch phase, this product doesn’t have to be lower quality. It’s actually higher quality because we eliminated several variable points.”

DIVING INTO DFMA For RoMan Manufacturing, the company’s DFMA journey began in 2017 as a way to combat lower-cost competitors entering its sector of the automotive market. “Our DFMA process really started out as a defensive maneuver to counteract something that was trying to commoditize a product we built on quality,” Schondelmayer said. “We had very good and loyal customers, but that can only go so long. Quality can only get you so far until price starts to put pressure on you.” RoMan manufacturing executives took note of the coming trends and CEO Bob Roth issued a directive: Cut costs by 40 percent in 24 months. Schondelmayer and other executives set

conversation with the customer can help solve some of those roadblocks you may come across,” he said.

A CULTURE OF CHANGE

to work implementing a DFMA strategy. They codenamed it “Project 4024” and hired a consultant to help them develop a roadmap and to educate the team. From there, the Project 4024 team created a cross-functional “quality function deployment” (QFD) group to speak with RoMan’s customer base about improving product design. “That was a big opening for us down the road, “ Schondelmayer said. “Some of the feedback we got was that some of our assumptions about what the customer wanted were wrong.” Following conversations with customers, Project 4024 created an “activity-based costing team” (ABC) to determine all of the costs associated with creating the product in detail. With both the QFD and the ABC teams having completed their goals, Project 4024 mixed the teams and instituted a final DFMA group, which took the information gathered through the QFD and ABC processes and set to work redesigning the product. Ultimately, RoMan’s Project 4024 team was able to complete the DFMA process in 14 months Throughout the process, Schondelmayer noted the importance of remaining engaged with RoMan’s customer base. “If there’s something holding you up, that

Outside of the cost savings and reductions in production time, Schondelmayer also indicated the DFMA process ushered in a period of change at RoMan Manufacturing. Now, the company actively looks for ways to improve its organization through DFMA. “What (the DFMA process) did was now it’s become a culture of change at RoMan,” Schondelmayor said. “The 4024 process is our DFMA process and its the word we use when we want to look at something in a different way.” Whereas RoMan Manufacturing’s first foray into DFMA was meant to defend its domestic market, the manufacturer intends to use DFMA to develop more offense-minded strategies. Specifically, the company plans to take its lowercost product and enter into international markets, Schondelmayor said. Jess Cruz, senior business development manager at the The Center-West experienced in DMFA, understands that it’s easy for small- and medium-sized manufacturers to believe they have already maximized efficiencies with their products. However, he stressed the importance of digging in and thinking about improving products as early in the production cycle as possible. “There are very intelligent companies in West Michigan,” Cruz said. “We’re talking about finding a different way and a better way to apply the methods that have been proven. It’s out there. It’s a matter of embracing it and moving your organization forward.”

MiBiz / MARCH 16, 2020

ECONOMIC DEVELOPMENT STATUS QUO Continued from page 1

From left: Tom Welch, Carol Van Andel and Dick DeVos. COURTESY PHOTO

Grand Action reboots to tackle new transformational projects in GR By MARK SANCHEZ | MiBiz msanchez@mibiz.com Grand Action resumes operations in a far different Grand Rapids than 28 years ago. Now at the helm are Carol Van Andel, Dick DeVos and Tom Welch, the regional president of Fifth Third Bank. They serve as co-chairs of Grand Action 2.0, which intends to “foster publicprivate collaborations on transformational projects that benefit health, education, science, the arts, economic vitality, and the residents of the region.” Grand Action was first formed in 1992 and went on hiatus in early 2018 with the retirement of co-chairs John Canepa and David Frey. Over 25 years, Grand Action pushed major downtown developments such as Van Andel Arena, DeVos Place, the move of Michigan State University’s medical school and development of the Secchia Center, and the Grand Rapids Downtown Market. Van Andel spoke with MiBiz about what to expect from Grand Action 2.0.

Why did Grand Action decide to come back now from hiatus? We had a lot of encouragement from the community to bring Grand Action back together, and we’re seeing a need for the public-private partnership in the community. A couple of years ago when they decided to disband, Grand Action wasn’t seeing any projects or need at that time. Now, by popular demand, they’re asking Grand Action to resume and, hopefully, keep the momentum and the collaboration going in the community to ensure continued success of economic development.

How is downtown Grand Rapids different today than in 1992 when Grand Action started? I think it’s just so vibrant, and there’s always something. You have options. You could be doing something every night. That’s the difference. It’s a vibrant city, and it’s a city where people have lived their whole life, this is where their roots are, and they want to continue to see that. We’re going to feed off of that momentum. There are many exciting other projects that I think we can add that will enhance the community and the surrounding projects that were already completed by Grand Action back then.

How does the past work by the original Grand Action play into today? In many ways, the development that we’re seeing in downtown Grand Rapids, I have to say, is a direct result of the collaboration sparked by the original Grand Action group. Many of the projects that were built in the last 25 years followed the development of the arena, the convention center, the Medical Mile and Downtown Market. So we’re really excited about the transformation that has already occurred, and we’re really excited about the transformation that’s next to come.

Is it big brick-and-mortar projects that Grand Action wants to advance, or do you see the organization extending into other types of projects? We may assess other development possibilities or projects under way. The mission of Grand Action 2.0 is to identify public-private partnerships that can transform our community, and look for ways to assist those opportunities in a way that’s beneficial for all. The Whitewater project (on the Grand River) is going to bring in a whole new level of excitement, too, which will bring in more visitors and tourism. These things that are outside of the box are innovative and just as important as brick and mortar. If the right one is out there, we’re going to choose it.

How will the different generation of business leadership today play into how Grand Action 2.0 will look at projects and focus its time and energy? We have invited some of the next generation to serve on our executive committee. What I may think would be an important project, they might think differently, so I’m really looking forward to hearing their voice and what they see for the future because obviously they’re going to be filling our shoes. A lot of the younger or next generation — many love the downtown area. They like the walkability to be able to go to restaurants, so livability is important. We really want to stress livability, and also a welcoming culture for everyone.

Is it just downtown, or do you see Grand Action 2.0 giving more attention to the neighborhoods? It won’t be just downtown. We definitely will look at other areas. Where will some of the projects be best suited or placed? Location will be important.

MARCH 16, 2020 / MiBiz

“In a place like Grand Rapids, there are a lot of churches. (The Planning Commission’s recommendation) does open up more eligible properties, but I think it’s going to come down to individual property considerations in most cases, and whether the surrounding neighbors have an issue with it, whether it’s a church or anything else,” he said. Green Peak is still actively looking for a location in Grand Rapids. Meanwhile, the industry will face the “status quo” related to zoning rules and applications, said Kristin Turkelson, acting planning director for the city. The city continues to process and accept medical marijuana applications under the current ordinance. H o w e v e r, t h e C i t y Commission did not set a public hearing date on the proposed zoning amendments that will affect both Neller medical and recreational marijuana businesses. As of now, the city does not have a recreational marijuana ordinance, but it does have a licensing ordinance that is set to begin accepting applications for recreational businesses on April 20. “We’re in the process of identifying what needs to happen between now and (April 20) in light of that deadline, but without an ordinance in place,” Turkelson said.

“None of the people who are in the process who got their medical license should be penalized,” said Chris Silva, a board member of the Guild. “Those folks should be allowed to qualify for (recreational) if applicable.” Recreational sales are an important aspect for the long-term success of marijuana businesses, Silva said. The city needs to open up land use in a “meaningful way” because of the competition for real estate seen during the medical marijuana application process, he added. “If you don’t open up land use in a meaningful way, you’re never going to have locals,” Silva said. “The ability to lock up real estate through some sort of local connection can only push so far if the other guy is a millionaire.” The Guild has pushed for eliminating the church buffer requirement, as well as the buffer requirement for parks and neighborhood frontage.

Other communities

Amid Grand Rapids’ uncertainty, recreational marijuana businesses have opened elsewhere in West Michigan. In Muskegon, Park Place Provisionary launched recreational marijuana sales in January. Muskegon has a marijuana overlay district where the businesses operate. Muskegon Tow nship approved recreational businesses in October, and the first dispensary is expected to open next month in the northwest corner of the township. Trustees there limited the number of licenses available and mandated that dispensaries operate in specific areas. Muskegon Township Opening up the process allows for seven dispensary licenses, and an The Planning Commission’s recommendations unlimited number of licenses for growers, are aimed at increasing available parcels for processors, safety compliance facilities and marijuana facilities. secured transporters. Part of the City Commission’s concerns Silva, who also does marijuana consulting, stemmed from the ordinance no longer givhas served clients in Lansing, which does not ing waivers for sensitive land uses, including have any waivers in its process. For both medichurches and substance use disorder facilities. cal and recreational marijuana businesses, the State laws only say marijuana facilities cannot city has a 500-foot buffer for parks and religious be located in areas zoned exclusively for resiinstitutions. dential use or within 1,000 feet of a K-12 school. “They have very competitive licensing, but “The main points of concern (for the City they also have way more locals involved,” Silva Commission) were around which sensitive said. “They have a pretty decent adult-use sysuses would be sensitive uses, tem. They’ve limited them and which would not be anyper ward, which actually more,” Turkelson said. isn’t the best but it’s better She added t hat t he than nothing.” Planning Commission had In Battle Creek, the city a “very thoughtful discusa l low s for re c re at ion a l sion” earlier this year over growing, processing, transsensitive land uses. Planning por ters, reta i lers, sa fet y Commission members said compliance facilities and these types of properties microbusinesses. There is should be part of the special no cap on the number of land use process instead of facilities allowed, but there considered separately with are some zoning and setwaivers. back restrictions, including Green Peak was under a that retailers and micropurchase agreement for its businesses are permitted proposed medical marijuana in commercial districts, but busi ness locat ion when must be at least 1,000 feet the Planning Commission from other marijuana dis— CHRIS SILVA denied its waiver because of pensing facilities. Growers Board member of the West the nearby church. and processors are permitMichigan Cannabis Guild “I wish they had (gotted in industrial zones, and ten rid of waivers) sooner need to be 1,000 feet from so our property would have churches, daycare centers, been made eligible,” Neller said. “I think every schools, parks and residential areas. municipality has to take it on a case-by-case Overall, the Guild would like to see opportubasis. The church we were located next to didn’t nities created for everyone, but the “harsh realhave an issue with it — I’m sure that’s not the ity” is that it’s “a very capital intensive, insanely case with every location in the city.” expensive” industry, Silva said. The West Michigan Cannabis Guild has also Like other companies, Green Peak is hoppushed for more opportunities for local owning Grand Rapids opens up more properties ership of marijuana facilities. Increasing the for both medical and recreational marijuana number of eligible properties is a key way to do operations. that, supporters say. “We are going to look at the changes they When the City Commission first voted to continue to make to see if the property we had pass a moratorium on Feb. 25, a group of locals can become eligible again,” Neller said. “We were working their way through the medical hope to be operational in Grand Rapids at some marijuana process. point in the future.”

“If you don’t open up land use in a meaningful way, you’re never going to have locals. The ability to lock up real estate through some sort of local connection can only push so far if the other guy is a millionaire.”

Visit www.mibiz.com

FINANCE Continued from page 1

On March 10, Gov. Gretchen Whitmer announced the first presumptive positive cases of coronavirus in Michigan, in Oakland and Wayne counties. Brown describes a situation in which one client under a letter of intent that sources a small product from China for its biggest customer had to arrange for a backup supplier in the U.S. that’s more expensive. If the company has to switch to the backup supplier, it would generate less margin for the business, a potential downHill side in the deal that required pricing out the margin difference during due diligence, he said. “It’s a little more work for everybody,” Brown said. “If we have a domestic client that sources everything domestically, it’s a plus.” Due diligence in any deal Larsen typically involves questions about a seller’s top suppliers, according to M&A professionals. Amid the outbreak, diligence has been going further and into indirect ties to the supply chain of a supplier, experts said. As the outbreak evolves, deals may take more time and move a little slower. “Any time you have an episode like this, it’s going to extend that. More questions are asked,” said Scott Hill, a partner in the corporate practice team at Varnum LLP in Grand Rapids. “You always ask about your top 10 suppliers. Do you have sole-source suppliers? Now it’s more of a geographic reach. It’s not just a numbers game of where the supply is coming from. It’s, ‘OK, which countries? Have you had an impact? What’s your inventory level? We’re actually going to do a full inventory now.’ And those things take time.”

No real slowdown Sellers are not the only ones asking more questions in due diligence, Brown said. Banks that are involved in financing deals also now want to go deeper into a seller’s supply chain and backup plans. “They’re going to want a downside scenario. ‘All right, what happens if you have to shut down for a month? Or if you can’t get this part for a month? What does that mean for our credit exposure?’” Brown said. At law firm Honigman LLP, “we have not seen any real impacts” on domestic M&A from the outbreak in terms of deal flow in the middle market, the timeline to get deals done or in financing, said Tracy Larsen, managing partner of the firm’s Grand Rapids office. The outbreak may potentially slow international deals because of travel restrictions, Larsen said. While there are more questions during due diligence for companies that source from China, “we just have not seen any real slowdown” in deal flow, “even in manufacturing where significant components come from China,” Larsen said. Investment bankers and commercial bankers that Larsen talks to regularly share that view, he said. “While it gets talked about a lot, there’s not really any impact on domestic middle-market M&A. Banks appear to be open for business and aggressive to lend, and the rates have gotten better. We’re still anticipating a very significant year for transactions,” Larsen said. “At this point, the discussion has been more from a planning perspective and a general interest perspective than people actually trying to get out of transactions or get out of financings because of the virus.”

affect M&A and real estate transactions and business operating lines of credit. In a March 9 updated outlook, Comerica Inc. called February a“turning point” for the U.S. economy. Findings for March “will begin to show us the impact of the global coronavirus outbreak on the U.S. economy,” Comerica economists wrote in the updated outlook that assumes a further lowering of interest rates. Comerica raised the chance of a U.S. economic recession within six months to 40 percent, and to 45 percent within 12 months. “We are forecasting very cool, but positive, growth for the U.S. economy through the first half of 2020. We expect to see an above-trend rebound visible by early 2021. However, it would be an oversell to call it a V-shaped recovery,” according to the outlook. In a joint statement issued March 9, five federal agencies urged lenders “to meet the financial needs of customers and members affected by the coronavirus.”

Visit www.mibiz.com

“While it gets talked about a lot, there’s not really any impact on domestic middlemarket M&A. Banks appear to be open for business and aggressive to lend, and the rates have gotten better. We’re still anticipating a very significant year for transactions.” — TRACY LARSEN Managing Partner of Honigman LLP

BUILDING ON OUR PROMISES.

For over 100 years we’ve been listening, planning, and redefining what’s possible. We see construction as more than our job. It’s our promise to build only the best for those who live, work, and learn every day.

‘Be prepared’ The bigger issue is whether the outbreak becomes severe enough in the U.S. that it weighs down the economy and results in tighter credit that would

“The agencies recognize the potential impact of the coronavirus on the customers, members, and operations of many financial institutions and will provide appropriate regulatory assistance to affected institutions subject to their supervision,” according to a statement from the Federal Reserve, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corp., the Consumer Financial Protection Bureau, the National Credit Union Administration and the Conference of State Bank Supervisors. Hill at Varnum said the coronavirus outbreak has been used “as an excuse” in one transaction to delay financing. Amid the economic fallout from the outbreak that has spread to the U.S., “a dose of caution is important here,” Hill said. “This is an opportunity to be prepared,” he said, “and if you’ve done good planning ahead of this, you’re certainly more well positioned than others.”

www.triangle-inc.com

DUE DILIGENCE

Construction Commitment Unparalleled

Muve Health - locations nationwide MiBiz / MARCH 16, 2020

REAL ESTATE & DEVELOPMENT

Opportunity Zones attract affordable housing developers By SYDNEY SMITH | MiBiz ssmith@mibiz.com GR A N D R A PIDS — Developers beh i nd t wo affordable housing developments in Grand Rapids credit their locations within Opportunity Zones for helping make the projects feasible. West Garfield Apartments, being developed by Grand Rapids-based LINC Up, and Eastern Lofts, a project by MVAH Holding LLC in partnership with LINC Up, were awarded additional points when receiving lowincome housing tax credits because of their locations within the city’s established Opportunity Zones. “The fact that they were DeRoo in an Opportunity Zone helped make them viable projects for us,” said Jeremy DeRoo, executive director of LINC Up. Enacted as part of the federal Tax Cuts and Jobs Act of 2017, Opportunity Z ones a re desig ned to spur private investment in Bryker low-income census tracts. West M ich iga n ha s 26 Opportunity Zones, which communities began marketing to potential investors last year. To receive the full tax benefit, investors needed to have invested by the end of 2019 but the benefits still remain significant for qualiOwens fied investors. Commercial real estate industry watchers say more developments will begin to crop up in 2020, as people begin to better understand

Opportunity Zones, particularly since the Internal Revenue Service updated guidelines about them a couple of times last year. “If anything, communities have gotten more educated over the last year, and that’s continuing,” said Ryan Bryker, principal and manager for the Muskegon office of accounting firm Rehmann LLC. “I think there’s more activity to come, more qualified Opportunity Zone funds. There’s definitely more coming.” About a year ago, Rehmann participated along with other local groups in a learning session for potential investors in Opportunity Zone funds in Muskegon. A lot of activity with Opportunity Zones took The $6.5 million West Garfield development includes 26 residential units at 100 Burton St. SE. The place in the first half of 2019 because of a June units are available to residents making 30-60 percent of the area median income, and will rent deadline imposed for gains recognized in 2018, for between $550-$800 per month. COURTESY RENDERING Bryker said. Investors in an Opportunity Fund in 2020 will get a 10 percent reduction in capital gains “That’s what we’re seeing coming: more tax, instead of a 15 percent reduction that solid investments that can stand alone,” he ended in 2019. said. “The qualified Opportunity Zone is more “The 5 percent isn’t going to change people’s like icing on the cake in many cases.” plans that significantly,” Bryker said. Lakeshore Advantage Corp., the economic The cit y of Grand Rapids selected development organization for Ottawa and Opportunity Zones strategically by Allegan counties, also has received identif ying low-income neighborinterest from companies that want hoods likely to receive significant to invest in the region’s Opportunity investment in the future, DeRoo Zones, said President Jennifer said. Owens. “The fact that has been levOne of Holland’s Opportunity REAL ESTATE — RYAN BRYKER eraged to establish significant Zones includes the decommis+ DEVELOPMENT Principal at Rehmann LLC affordable housing now, prior sioned James DeYoung coalSponsored by ROCKFORD to those investments entering fired power plant on the Lake CONSTRUCTION CO. the community, is a significant Macatawa waterfront. The city looking at major cities, but is hopeful that could way of preventing gentrification and other stakeholders recently change yet this year. Owens said investors and and ensuring that existing populations can finished a visioning process for the site, and will communities were uncertain how the program participate in future benefits,” DeRoo said. now begin assessing the value of the property. would continue because of multiple updates to “Affordable housing is a great opportunity to “That really calls for a significant mix of the federal guidelines. start with.” potential private and public investment,” “If we can really have surety that the rules Soon after the creation of Opportunity Owens said. “We hope that will help us attract are done, no further changes, there’s a longZones, investors who created funds were developers to look at the site.” term commitment to this program, I think unable to deploy them as quickly as they had Not many developers outside of the area we’ll see some developments for sure,” she hoped because the investments needed to be have inquired about the location, Owens said. said. vetted to make sure they are viable, Bryker said. She believes bigger Opportunity Funds are

“That’s what we’re seeing coming: more solid investments that can stand alone. The qualified Opportunity Zone is more like icing on the cake in many cases.”

Promote your company with

reprints SEPTEMBER 3, 2013

VOL. 25 • NO. 23

SERVING WESTERN MICHIGAN BUSINESS SINCE 1988

Faith-based philanthropy drives local affiliate of National Christian Foundation By JANE C. SIMONS | MiBiz jsimons@mibiz.com

‘We’ve made some bad beer’ Quick decisions, making messes and staying humble drive explosive growth for Founders Brewing Co.

By NATHAN PECK | MiBiz

“The ‘uber’ beer geeks took notice. They shouted about us, and that allowed us to move in a positive direction. The attention put us in the limelight and made us the darlings of the industry,” ike Stevens, president of Founders Brewing Co., can Stevens explained. “The beer geeks are the reason this beautiful laugh now about some of the poor choices the Grand little disaster we call the craft beer industry exists.” Rapids-based craft brewer made over the years. Yet, by the mid-1990s, the company was also butting up He even cops to perhaps the worst sin of all for against a series of constraints: a small production space, a lease a craft brewery. on a space that was too small for the growing business, and an “We’ve made some bad beer,” Stevens said with organizational structure that had Engbers and Stevens handling a laugh. too much of the day-to-day operations. It’s not the sentiment that one would expect to come from the brewer of one of the world’s top-rated stouts, but it was the company’s willingness to try new ideas and fail that marked the To address those concerns, the late businessman Peter Cook, a point at which Founders Brewing Co. transitioned from a smallmentor to Stevens, pressed the company to formalize its relascale, also-ran to an internationally renowned brewer of some tionship with its board. Cook pushed them to focus on the of the boldest beers on the market. core of their business and leave other concerns to their growIn the mid-1990s, Founders Brewing was in trouble. In its ing staff. small production and taproom space on Monroe Avenue just “He wasn’t into discussing finances — he didn’t really underblocks from downtown Grand Rapids, co-founders Dave Engbers stand what we were doing,” Stevens said. “We and Mike Stevens realized that going with what the were undercapitalized, he told us. ‘Don’t worry industry demanded at the time was not leading about the mess you’re creating, that’s what investhem to success. Tossing out the accepted playtors are for.’ When you have drive, when you book, the duo instead opted to make the beers they have a product that is selling, don’t look back — were seeking: big, bold and unlike other offerings let others clean up your mess.” currently on the market. The effect was two-fold: Engbers and Stevens As part of that shift, Founders’ taproom became had to formalize their roles within the organizaa testing ground where the company released its tion, and the company began to bring in experts new and experimental brews. Some flopped. A few grabbed drinkers’ attentions. Today, a handful — MIKE STEVENS to handle areas where there were deficiencies. of those beers are among Founders’ most popuFounders Brewing Co. Whereas the two frequently touched all aspects of their business, they were forced to step back. lar brands: Dirty Bastard, Breakfast Stout (and its Their board had always included investors, but amped-up, barrel-aged brother, Kentucky Breakfast they now had a group with expertise that could Stout) and Double Trouble. But back then, they were help guide them forward. only experiments written in chalk on the daily specials board. “It held me accountable to shareholders and the people who “We tried making a lager when we shouldn’t have. We’ve done have a stake in the business,” Stevens said. “It made me better. some things with spices that didn’t turn out well,” Stevens said. Dave and I had to be better.” “But if we didn’t do that, we wouldn’t have made KBS.” But the transition was at times difficult. In pockets across the U.S., on blogs and message boards, “Personally, I’ve had more roles here than anyone. When Founders’ beers began attracting the attention of a growing numwe started, there was just three of us. We all helped … brewing, ber of craft beer aficionados. As the company’s beers started winning awards, the American drinker began turning away from the pale, fizzy domestics in favor of bolder craft brews. See FOUNDERS BREWING on page 12 npeck@mibiz.com

BUILDING MORE THAN A RESUME Instead of the standard 9-5, tradesmen and women are choosing to write a different story - one built on refined skill-sets, creativity, attention to quality and grit.

MARCH 16, 2020 / MiBiz

Make messes

“It feels like we’ve been building the plane while flying it.”

hilanthropic families throughout Western and Northern Michigan are putting their faith into action with their money. And they’re turning to a local affiliate of the National Christian Foundation (NCF) to help them. Locally, 350 families served by the organization’s West Michigan office contributed $36 million to individual “Giving Funds” at NCF and recommended more than $31 million in grants in 2012 to charities of their choice, said Jamie Kuiper, president of NCF’s West Michigan office headquartered in Grand Rapids. “That’s a lot of money,” Kuiper said. “Our office is the third largest NCF office in the country measured Kuiper by fund balance.” Kuiper declined to identify any of the 350 families. “We have some major donors, but I can’t tell you who they are,” he said. “They want to remain anonymous, and we provide a mechanism for anonymous giving.” Mike Stevens, president Founders BrewingGiving Co. NCF’sofdonor-advised Funds offer PHOTO: JEFF HAGE families an “easy-to-establish, low-cost, flexible” vehicle for charitable giving that’s an alternative to establishing a private foundation, according to the organization. Donors’ efforts have helped to make the Atlanta-based National Christian Foundation 19th largest philanthropic 2014 OUTSTANDING GROWTHthe AWARD organization in the United States, according to a 2012 article in The Chronicle of Philanthropy. In late July, officials with the NCF announced that they had reached a milestone their giving history when Grand Rapids-based craft brewerin founded in 1997 by Mike Stevens andthey Dave Engbers granted their four billionth dollar

FOUNDERS BREWING CO. ■

to the Association of Faith Churches and The NCF West Michigan affiliate has Ministers International, a Minnesota- an 18-member board which includes Jerry based international ministry that plans Jonker, chairman of the board and a partto use the money to support an orphan- ner in Grand Rapids-based Home Acres age in Thailand that provides housing and Supply Co.; Wendell Christoff, co-owner schooling for children rescued from the of Litehouse Inc., a salad dressing, sauce sex trade. and dip manufacturer with operations That grant was recommended by giv- in Lowell; and James Dally, a Kalamazoo ers in Midland through their Grounds for businessman. a Better World Giving fund. The group is Dally said the ability to have direct served by the NCF’s Eastern Michigan involvement in where his donations are office located in Birmingham. going and the asset-based giving approach “We are a well-kept secret,” Kuiper said. are appealing to him and his family. “A big part of it is our business model. Our However, his faith in God is what really local operating budget is about $360,000. led him to the organization. He said he was SERVING WESTERN MICHIGAN BUSINESS SINCE 1988 We don’t spend much on marketing.” referred to NCF by successful friends who The local affiliate had total revenue of were also involved in faith-based giving. more than $499,000 and expenses of about “Biblically, it’s very clear that ‘he that $384,000 in 2011, according to the most refreshes others will be replenished,’” recent IRS Form 990 available. Dally said. “I’ve applied those biblical Donors to NCF are attracted to the principles to what I do.” mission andBy ministry of the organizaWhat Dally does is manage several NICK MANES | MiBiz tion foundednmanes@mibiz.com in 1982. The three Christian West Michigan-based businesses. He is the financial experts who laid the groundwork founder and owner of Biddergy.com, an A West Michigan medical device development for the NCF were looking for a way to “simonline consignment and business liquidaand manufacturing company is consolidating to plify the process of giving, multiplyitsthe tion auction Kalamazoo and expanding operations, while website; Adventure Learning still planning to leave a footprint in Grand Rapids. results and glorify the Lord.” Centers, which operates child care centers Oshtemo Township-based Keystone “We went on to introduce one of the first in Solutions Portage, Caledonia and Kentwood; and Group invested about $500,000 into a new Christian-focused donor-advised Mavcon a construction and develop24,000-square-foot facilityfunds, with a clean room Inc., in what we nowKalamazoo call the Giving said company. All three businesses are where itFund,” will move all ofment its product development and manufacturing Larry Burkett, a best-selling author andoperations. based at offices in the Kalamazoo/Portage With theofnew building up and running, entrepreneur, who is one NCF’s founders. area. Keystone plans to consolidate all of its manu“We also developed special resources and expertise as well as facturinga to the siteexpertise and moveinout of aThe facility asset-based giving, tax smart the character and integrity of the individnear thewhich GeraldisR.the Ford International Airport in Rapids. way to donateGrand non-cash assets such as real uals involved with NCF is what Dally said Having two separate manufacturing facilities estate and business interests.” keeps him involved. made it difficult to show customers Keystone’s full The localset of affiliate was originally Founder Burkett said over the past three capabilities, said Robert Nesky, Keystone’s founded in 2000 asofthe Michigan decades, NCF has become the nation’s director salesWest and product development. “Our intention was always to have largest the business Christian Foundation, but joined forces provider of donor-advised funds IN givers. roof, but it has taken to actuwith the NCFunderneath because ofone the resources and a while focused primarilyMADE on Christian ally put that together,” said Nesky, noting that the expertise it provided. “Any charity MICHIGAN that doesn’t violate our consolidation plan had been in the works for some “The reason for“It’s thea affiliation with NCF statement is eligible to seekGroups fundKeystone Solutions time. good thing we waited because our busi- of faith provides product was that the tools they are able to offerWe giving afrom said. “Ourdevelopdonors ness has actually expanded. now have largerus,” Kuiper ment services and contract the two older facilities ers are muchfacility morethan sophisticated,” Kuipercombined.” are people who share our worldview as it manufacturing at a new The Grand Rapids location stemmed from a said. “We were one of the first two or three relates to material possessions and what 24,000-square-foot , ISO previous acquisition. affiliates. Now there 28.” operates in a variety God of has called us13485-certified to do.” facility with Whileare Keystone sec-

FEBRUARY 17, 2014 VOL. 26 • NO. 9

Keystone relies on product development business to drive contracts

■ Originally located in the Brass Works Building on North a clean room in Kalamazoo. tors ranging from automotive and aerospace to Monroe Avenue; moved to 235 Grandville Avenue in 2007 renewable energy, majority Michigan. of its business The about firm, MiBiz, whichvisit was founded ■ Sold 111,000 barrels of beer in 2013 COPYRIGHT 2013 © MIBIZ. Print subscriptions are free to qualified individuals who are employed in Westthe and Southwest For further information www.mibiz.com. ■ Volume grew 63% comes from serving West Michigan’s burgeoning in 1997 and had revenues of ■ Off-premise sales were up 46% medical device industry. around $5 million last year, ■ On-premise distribution rose 58% The company, which employs around 10 engiconsolidated its manufacturing under one roof with the new facility, but still plans to maintain a ■ The Association for Corporate Growth West Michigan will neers, had around $5 million in sales last year, but presence in the Grand Rapids area, where it is a member of MiDevice, a consortium of medical present its 2014 Outstanding Growth Award to Founders has grown about 30 percent over the past five years, device manufacturers. Keystone offers clients a full range of product design, contract manuBrewing Co. on March 18. The event runs from 5:30-8 p.m. Nesky said. at the Amway Grand Plaza in Grand Rapids. Visit acgwmich. facturing and logistics services. It mainly serves the medical device, automotive, aerospace and org for more information. While the business is currently about evenly renewable energy sectors. 200,000 180,000 160,000 140,000

FBC BARRELS PRODUCED

120,000

190,000

2014 proj.

112,000

100,000 80,000

70,886

60,000 40,000 20,000

40,937 17,330 6,127 11,898

24,501

0 2007 2008 2009 2010 2011 2012 2013 2014* SOURCE: FOUNDERS BREWING CO.

split between product development and contract manufacturing, executives want to put more emphasis on the manufacturing side as part of the consolidation. Operating in an ISO 13485-certified facility, Keystone plans to grow the product development side of its business, which should translate into additional opportunities in contract manufacturing, Nesky said. “(Product development), more and more, feeds into our contract manufacturing, specifically when it comes to medical devices,” Nesky said. “By expanding our facility and having us underneath one roof, we’re not jockeying around to two different facilities. It really helps show (our customers) what our infrastructure is, and it paints a much better picture for them that as they develop their products, Keystone could also be the contract manufacturer of some of those products. It has had an immediate impact on our business and our pipeline.” Many of Keystone’s clients value that they can work with a single company to develop a product, manage the manufacturing and production

process, and then distribute it, according to previous MiBiz reports. “There are several companies on the west and east coasts that compete with them because that’s where the big medical technology companies are based,” Hank Brown, former CEO of Tangent Medical Technologies in Ann Arbor, said in a previous MiBiz report on the company. “Keystone is a unique brand in the Michigan market.” Tangent worked with Keystone to develop a new kind of catheter called NovaCath. Keystone executives make it clear that the firm is not an OEM, but is instead focused on both design and manufacturing. The products they make do not contain the Keystone brand, but rather the names of its clients, who also entrust the company to handle the logistics of distributing the products directly to hospitals and other medical facilities. While the company is moving the vast majority of its business to the Kalamazoo area where the

company was founded in 1997, Keystone still sees significant value in the Grand Rapids market. For that reason, the company plans to open an office primarily focused on sales at a to-be-determined downtown location in the first or second quarter of this year, Nesky said. The reasoning behind keeping a presence in Grand Rapids, Nesky said, is primarily due to Keystone having a number of customers in the area. The company is also involved in organizations such as MiDevice, a consortium of two dozen medical device-sector firms led by The Right Place Inc. “Keystone is a great company with terrific leadership and we congratulate them on the planned downtown office,” said Eric Icard, a business development manager at The Right Place who leads the MiDevice consortium. Both Nesky and Keystone founder and President Jim Medsker “have been strong advocates for medical device manufacturing in West Michigan and are extremely active in MiDevice.”

If your company has been featured in MiBiz, the exposure you received reached more than 35,000 business executives in Western Michigan. Now you can share the news about your company by ordering MiBiz reprints.

ROCKFORDCONSTRUCTION.COM

For more info, call MiBiz today: 616-608-6170 Visit www.mibiz.com

Lott3Metz partners with Detroit firm Crutcher Studio By SYDNEY SMITH | MiBiz ssmith@mibiz.com GRAND RAPIDS — Lott3Metz Architecture LLC and Detroit-based Crutcher Studio Inc. have formed a partnership to propose larger developments in Southeast Michigan. The two firms announced the partnership this month and plan to “positively contribute to Detroit’s urban revolution.” The newly combined firms will be known as Lott3Metz Crutcher Architecture. Both Ted Lott and Greg Metz, founding principals of Lott3Metz, have ties to Detroit, and had been friends with Ken Crutcher, the founding principal at Crutcher Studio. About a year ago, they met to discuss a collaboration that would allow Lott3Metz to pitch projects Lott in Detroit, and help Crutcher Studio to grow and pursue larger projects. “We’ve been focused on community, and that’s where we live. We live in Grand Rapids,” Lott said. “We want to be focused on our community and live with our work. Ken looks at Detroit the same Metz way.” The partnership, which is not a formal merger or acquisition, will offer design and planning services for new construction, renovations and historic preservation of

commercial and residential projects. Crutcher Studio was founded in 1998 with expertise in interior design, landscape design, mechanical, plumbing, electrical, structural and civil engineering. Founder Crutcher, a Detroit native, is a former professor at Lawrence Technological University and Eastern Michigan University, and previously served as vice president of the Detroit chapter of the National Organization of Minority Architects. Since its founding, Crutcher Studio has completed various residential and commercial projects in Southeast Michigan. “This is going to give us the opportunity to be more selective in our clientele and the projects we go after, and get us to the next level,” Crutcher said. “This is a collaboration of equals. It’s not an acquisition, it’s a collaboration. We’re building something from the ground up.” The details of the partnership are still being fleshed out, Lott said. Working in both areas will require flexibility by Lott3Metz, and the firm will support Crutcher with “back-of-house” work, Lott said. “We are learning what this new business is going to be,” Lott said. “We committed, all of us, to be very open-minded about how we’re going to work together.”

Growing market Gaining access to new projects in the Southeast Michigan market comes as the broader architecture and construction industry continues to move in positive territory. The latest Architectural Billings Index from the American Institute of Architects registered 51.3 for the Midwest in

January, signaling growth in a “strengthening” Driving collaboration market. Nationwide, billings increased for the The principals at Lott3Metz Crutcher fifth consecutive month to a reading of 52.2. Architecture have yet to identify specific project “Business conditions continue to recover proposals, but their aim is for Crutcher to help from the soft patch they experienced in the Lott3Metz with Detroit spring and summer connections and to proof 2019, and firms are pose bigger developments becoming more optimisin the state’s largest city. tic about future work. In Te c h n o l o g y h a s addition, the value of new helped make the distance design contracts was parbetween the two firms ticularly strong in January, “irrelevant,” Crutcher said. as clients began to kick off The partnership also new projects for the year,” amplifies the work of a the AIA wrote in its report. minority-owned archiAs well, construction tectural firm, Metz said, spending nationwide as the African American increased 1.8 percent in presence in the architecJanuary from the prior tural community is not month, and was up 6.8 large. Fewer than 1 in 5 percent from a year earlier, — KEN CRUTCHER architects identifies as a according to an analysis of Founding principal, Crutcher Studio person of color, accordfederal data released this ing to national data month by the Associated from Washington, D.C.General Contractors of based nonprofit National America. Public construcCouncil of Architectural Registration Boards. tion projects were up 12.6 percent on the year, For the three partners, the collaboration is while educational construction spending rose 4.1 very personal, said Metz, who earned his archipercent. Among private nonresidential projects, tectural degree from the University of Detroit. commercial construction for retail, warehouse The collaboration provides him the opportunity and farm structures declined 5.5 percent yearto return to the city. over-year, while construction for manufacturing The friendship among the three is what facilities was up 5 percent. makes the collaboration unique, Lott said. However, AGC’s outlook was tempered by “We’re coming together because we want to, “growing uncertainties related to the coronaviand because we see the possibilities and benefits rus and its impact on the supply chain for conof it as equals,” Lott said. struction components.”

“This is going to give us the opportunity to be more selective in our clientele and the projects we go after, and get us to the next level. This is a collaboration of equals.”

Ocean Sounds

Seashell not Required

@FlyGRFord Visit www.mibiz.com

MiBiz / MARCH 16, 2020

ENERGY

Former Muskegon coal plant site preps for next phase under new owners By ANDY BALASKOVITZ | MiBiz abalaskovitz@mibiz.com

McKittrick said the Cobb plant was “clearly one of the larger ones we’ve done. There’s just an absolute abundance of these coal plants shutting down. It’s a fantastic opportunity to repurpose those sites.” Forsite also decommissioned Consumers’ former J.R. Whiting plant near Monroe and is “heavily marketing” it for redevelopment. Whereas the Cobb site has valuable port access, the Whiting plant is near “massive rail infrastructure” near the interstate. “It’s another example of repurposing infrastructure to attract industry,” McKittrick said. Consumers Energy spokesperson Roger Morgenstern said the utility has been “pleased with Forsite’s work on both sites.”

evelopers are finalizing the decommissioning of the former B.C. Cobb coal plant in Muskegon as the 115acre site assumes new ownership and a sole focus as a port terminal facility. The Cobb plant at the eastern end of Muskegon Lake — built in 1948 and retired in 2016 as part of Consumers Energy’s long-term clean energy plan — was demolished earlier this year after crews systemically tore down its 680-foot smokestack. The plant also symbolizes a broader shift for the utility industry away from coal, which is forcing communities to consider new uses for the hulking, contaminated structures. Muskegon is among the ‘Highest and first along the West Michigan best use’ shoreline to grapple with At the Cobb site, which is sitrepurposing coal plants, along uated among wetlands makwith Holland, Grand Haven ing new construction chaland West Olive. lenging and cost prohibitive, “It was a very large underMcKittrick maintains the site taking to decommission that is ideal for port activities. structure,” said Tom McKittrick, “That entire site is effecCEO of North Carolina-based tively sediment,” he said. Forsite Development Inc. “Using it for surface storage, Consumers paid Forsite — TOM MCKITTRICK sea containers and higher $1 million in 2017 to take CEO of Forsite Development Inc. value products is, I believe, ownership of key portions the highest and best use for of the property and assume that site.” clea nup responsibi lit ies, Maintaining it as a port also works toward which included a “massive amount of asbeslocal officials’ goal to consolidate industrial tos abatement,” he said. Once decommissionactivities at that end of Muskegon Lake. ing is finalized this month, Forsite will sell the Verplank CEO Ron Matthews said the plan property to Ferrysburg-based Verplank Dock is to “immediately activate the dock with Co. Terms of the deal were not disclosed. construction aggregates, our main line of Forsite has been scouting retired coal plants business.” across the U.S. for potential redevelopment.

“That entire site is effectively sediment. Using it for surface storage, sea containers and higher value products is, I believe, the highest and best use for that site.”

Foresight Development has completed a project to demolish the former B.C. Cobb power plant on Muskegon Lake and remove the 680-foot smokestack. The company is in the process of selling the property to Ferrysburg-based Verplank Dock Co., which will use it for storing aggregates. COURTESY PHOTO

He also cited planned investments in Wisconsin to expand operations at Port Milwaukee. Last month, Gov. Tony Evers announced a $4.9 million grant to support a new agricultural commodity bulk vessel facility there. Port Milwaukee’s combined tonnage increased 11 percent in 2019, according to reports. “Hopefully some cross-lake short-sea shipping will take off as well,” Matthews said. Verplank acts as a shipping logistics company. Together with The Mart Dock and Port City Marine Services, Verplank operates ports in Holland, Grand Haven, Ferrysburg, Muskegon and Manistee as the West Michigan Port Operators. Verplank has leased dock space since 1989 at the Cobb site, which Matthews said is the deepest and longest dock in West Michigan.

Sponsored by:

CHOICE C O N F E R E N C E

Presented by:

ARE YOU RUNNING YOUR BUSINESS OR IS YOUR BUSINESS RUNNING YOU? Gino Wickman April 29, 2020 7:30am – 12:00pm The Grand Rapids Downtown Market

Get tickets at eoc2020.eventbrite.com

MARCH 16, 2020 / MiBiz

Supporters:

He hopes to consolidate some of the aggregate handling at docks elsewhere on Muskegon Lake to the Cobb site where it’s closer to the highway. Developers and local officials also have maintained that the Muskegon port can support agricultural processing and shipping. “There’s an abundance of Michigan agricultural products shipped out of the state to be processed,” McKittrick said, adding that the city’s “heavily underutilized” wastewater treatment capacity supports agribusinesses. “Muskegon is in a unique position.”

Power infrastructure Although the generating plant is gone, an important electricity substation remains at the Cobb site that distributes power and controls power voltage across the region. Forsite owns that land, but the substation and equipment is owned by Consumers and transmission operator ITC. Consumers will retain ownership of about 60 acres east of the former plant that is capped and stores fly ash produced while the plant was operating. The property was capped in the early 2000s, but redevelopment plans there never came to fruition. Consumers also has plans to close eight smaller bottom ash ponds that were not part of the Cobb property sale. The bottom ash will be transported to a Consumers landfill near Saginaw. McKittrick said assuming ownership of the coal ash sites would likely have been “very complex and very expensive,” particularly given uncertainty around federal coal ash regulations. Despite the site’s electricity infrastructure and vacant coal ash storage sites, it’s unclear whether future renewable energy generation — such as solar power — could be built there. Morgenstern said the eastern property has land use restrictions based on its former use as a landfill, and any redevelopment would require state approval. The property also can’t be used for future fossil fuel generation, “but there are no prohibitions on renewable energy generation,” Morgenstern said. “No alternative uses are proposed at this time.” Visit www.mibiz.com

Utilities oppose bipartisan solar bills backed by installers, clean energy groups By ANDY BALASKOVITZ | MiBiz ABalaskovitz@mibiz.com

ichigan’s two major investorowned utilities remain opposed to a series of bills that supporters say are needed to grow the state’s nascent solar industry. Over the past month, the state Senate Energy and Technology Committee has taken testimony on three bills that include reinstating Michigan’s net metering program, which pays utility customers who self-generate power for the excess electricity sent back to the grid. The legislation would also lift the 1 percent cap on customers who can participate, and require the Michigan Public Service Commission to study the costs and benefits of solar. Senate bills 596, 597 and 598 are sponsored by Sen. Tom Barrett, R-Potterville, Sen. Ed McBroom, R-Vulcan, and Sen. Jeff Irwin, D-Ann Arbor, respectively. For more than a year, clean energy advocates and solar installers have battled with utilities over the rate at which customers are credited for power they send back to the grid. Under net metering, which is being phased out under 2016 energy reforms, customers are credited at the full retail rate of power, or about 15 cents per kilowatt hour. Brandon Hofmeister, senior vice president of government, regulatory and public affairs at Jackson-based Consumers Energy, told the Senate committee late last month that it will operate under the net metering program through 2020. But the utility says power generation is cheaper when done on a large scale. Forcing the company to buy power at retail rates from net metering customers is more expensive and shifts costs to all other ratepayers. Hofmeister added that the net metering program was created in 2008 when solar prices were much higher and was meant to help advance the industry. “Now, 12 years later, thankfully solar prices have decreased dramatically,” Hofmeister told the committee. “Moving back to that old system of net metering would not be the right system. It might promote clean energy, but at the cost of … affordability, fairness and pricing, as well as potentially reliability.” Consumers says it plans to offer its solargenerating customers two options in the future: credits at competitively bid prices for solar or wholesale market prices other energy providers get. Additionally, these market prices would fluctuate and include higher rates when the solar power is most valuable such as on hot summer days. Detroit-based DTE Energy was the first Michigan utility to move from net metering to a new distributed generation program that uses an “inflow-outflow” methodology. The MPSC spent months setting rates for DTE’s program, which fall roughly in the middle of wholesale and retail rates. Although DTE’s clean energy plan to reach net zero carbon emissions includes ramping up solar investments, “We will not support policies that artificially support one technology and one group of customers at the expense of our broader customer base,” Renze Hoeksema, DTE’s vice president of corporate and government affairs, said in written testimony. However, solar installers and other advocates say this has created more uncertainty about recovering solar investments. They also argue that retail-rate credits are fairer based on the value of the power that’s sent back to the grid, often during times of high demand. “We came together under the philosophy that if residents want to be part of the energy solution, we should invite them in,” Irwin said of the bills last month. “Maybe even more importantly, Visit www.mibiz.com

the way the tariff was developed creates a very unpredictable environment.” Backers of the legislation include the Michigan Energy Innovation Business Council, the Great Lakes Renewable Energy Association and several solar installation companies. Advocates also say lifting the cap on who can participate — set at 1 percent of a utility’s peak load — is necessary as solar costs decline. The MPSC reported in December that the number of small-scale solar installations (the most common) enrolled in net metering increased 57 percent in 2018. A year ago, installations reached nearly 5,400, or 43.5 megawatts of capacity. “For the first time in 12 years, I see our survival at risk with the cap on interconnection,”

Mark Hagerty, president of Michigan Solar Solutions LLC, testified before the Senate Energy and Technology Committee on Feb. 11. Hofmeister said the utility would still interconnect customer solar installations if the 1 percent cap is met, even though it’s not legally required. Advocates say the promise doesn’t add certainty beyond the cap. Laura Sherman, president of the Michigan Energy Innovation Business Council, said meeting the cap is causing concern in the industry. “These bills do not simply represent something that would be nice for the industry — Michigan’s solar installers are facing serious, real and imminent threats to their businesses, jobs and livelihoods,” Sherman said last month. “These bills address those threats.”

“These bills do not simply represent something that would be nice for the industry — Michigan’s solar installers are facing serious, real and imminent threats to their businesses, jobs and livelihoods. These bills address those threats.” — LAURA SHERMAN President of the Michigan Energy Innovation Business Council

We are here to make your project easier. With engineering, architectural, infrastructure, and environmental services in-house and 14 ofﬁces for local attention, Fishbeck is your all-in-one solutions provider.

800.456.3824 fishbeck.com

MiBiz / MARCH 16, 2020

HEALTH BIZ

Spectrum Health venture capital arm adds ‘buy local’ focus By MARK SANCHEZ | MiBiz msanchez@mibiz.com GRAND RAPIDS — Spectrum Health Ventures LLC’s latest investment follows a new corporate strategy from its parent health system to buy locally more often. To the corporate venture capital arm of Grand Rapids-based Spectrum Health, that means giving more attention to investment prospects in Michigan when scouting for deals. While Spectrum Health Ventures will still pursue deals nationally, managers have added a “buy local” element to their focus. “We will be more deliberate about looking for investments in Michigan, and specifically in West Michigan,” said Spectrum Health Ventures Executive Director Scott McLean. “I’ve been purposeful in trying to find new avenues to find deal flow that is specific to West Michigan.” Spectrum Health Ventures’ investment in eVideon Inc. fits into that added focus. A Grand Rapids tech company that provides an in-room, interactive platform to give information to hospitalized patients, eVideon was the first Michigan-based investment for Spectrum Health Ventures. Formed in 2017 with a $100 million commitment from the health system, Spectrum Health Ventures McLean has invested $20 million across 24 deals. That includes investments made directly in companies, plus deals made through investment syndicates and strategic partnerships, McLean said. Since forming, Spectrum Health Ventures has received 739 investment pitches from prospects. Of those, only about a dozen made it into the deal pipeline, and “historically when we looked at those, we never really gave much consideration if they were Michigan-based,” McLean said. Spectrum Health Ventures at any given time has an active pipeline of 10 to 20 companies under consideration for an investment. Historically, maybe “one or less” of those prospects was based in Michigan, McLean said. In one sign of the added focus, the current prospect pipeline of 13 companies has three Michiganbased businesses, McLean said. “By virtue of what rocks we’re looking under, we’re just finding more Michigan-based (companies),” he said. That look by the venture capital arm comes as parent company Spectrum Health pursues a new corporate strategy that places a higher emphasis on buying goods and services from Michigan firms. “Any time we can create a new company that’s going to create new jobs, specifically aligned with health care, we’re interested in learning more and making investments in it,” said Matt Cox, CFO at Spectrum Health. “Investing locally and growing businesses locally is a differentiator for Grand Rapids.” Spectrum will be a “significant part” of the New Community Transition Fund, a new venture capital fund in Grand Rapids organized by The Right Place Inc. to invest in minority-owned enterprises, Cox said.

‘Uncovered gem’ Spectrum Health has been a customer of eVideon for several years. The company’s platform provides entertainment and information to patients via a bedside video screen or TV. The platform offers an array of content such

MARCH 16, 2020 / MiBiz

Spectrum Health Ventures invested in Grand Rapids-based eVideon Inc., a tech firm that developed an in-room interactive platform to provide information to hospital patients. COURTESY PHOTO as post-discharge instructions, videos on how to rebandage and care for a wound or incision from surgery, movement limitations following joint replacement surgery, or how-tos on using

crutches properly. The platform can also help hospital staff with workflows. McLean said eVideon stood out as Spectrum Health Ventures reviewed and analyzed the

health system’s supply chain for potential investment prospects. “It was just kind of an uncovered gem. We jumped at the opportunity,” he said. “It intersects

Health system strategy supports more local procurement By MARK SANCHEZ | MiBiz msanchez@mibiz.com GRAND RAPIDS — At $6.9 billion in revenue for its most recent fiscal year, Spectrum Health holds significant economic clout and buying power in the Michigan economy. The Grand Rapids-based health system now looks for more opportunities to put that buying power to work locally. One element of a 10-year corporate strategic plan for 2020 to 2030 developed under President and CEO Tina Freese Decker calls for Spectrum Health to support the regional economy and “to build and partner innovatively,” said CFO Matt Cox. “We just do our best to try and buy local where we can and that’s an effort that we’ve really ramped up. We’re getting a lot more intentional about it now,” Cox said. “It’s much more natural to do it with our friends and neighbors that are located in Michigan, and even better in Grand Rapids.” Spectrum Health began executing last summer on that aspect of the strategic plan by looking at its supply chain. That includes where it buys medical supplies and equipment and orthopedic implants such as hip and knee replacements, to food services, construction contractors and even parking valets. In medical equipment and supplies, Cox gave supply chain managers the task of looking at “what is manufactured in Michigan? What could be manufactured in Michigan? And they started conversations.” “There are some additional local manufacturers that we talked to,” he said. “We’re certainly looking at what can be manufactured locally as opposed to imported.” Spectrum Health annually spends “hundreds of millions” of dollars on supplies, equipment and services, Cox said. Across a region that includes Grand Rapids and stretches from Ludington in the north to St. Joseph in the southwest part of the state, Spectrum Health spent $2.3 billion on goods and services alone from vendors in 2018, according to data provided by the health system. Cox cited some examples to MiBiz where Spectrum Health’s new strategy to buy more locally has already been implemented. • The health system this year formalized an agreement with Grand Rapids-based Life EMS Inc. for patient transports between the

Throughout its operations, Spectrum Health is looking for ways to buy more from local companies. That includes at its Michigan Street Market and Grill inside Butterworth Hospital, which buys products from a range of West Michigan firms. COURTESY PHOTO Butterworth Hospital and Blodgett Hospital campuses, moving the business from a national firm. • Preferred Construction Group LLC, a minority-owned company, now supports many of Spectrum Health’s small projects throughout the system. • In food services, which Cox calls a “natural area” to buy more locally, Spectrum Health’s Michigan Street Market and Grill in the downtown Butterworth Hospital campus uses Tolman’s Wholesale Meats in Hudsonville for meats sourced from within 250 miles of Grand Rapids. That’s resulted in a six-fold increase in spending with Tolman’s since Spectrum opened the Michigan Street Market and Grill in 2019. • In 10 months, Spectrum Health has purchased 57,000 boxes of sushi from the minority-owned Anu-Sushi of Michigan LLC, which transitioned from an incubator kitchen to a facility in Kentwood and hired more staff from the Burmese refugee community. • Spectrum Health as well uses Grand Rapids bakery Field and Fire LLC for bread at the Michigan Street Market and Grill. • To push the buy local approach, the health system collaborates with the Good for Michigan program to advance best practices doing social good and Local First to support local business development. • Spectrum Health is “actively looking for new partnerships” and plans to collaborate with Start Garden “to support the growth and development of local businesses” in food services, Cox said. “We’ve just scratched the surface on what’s possible,” Cox said of the buy-local emphasis. “Now that we’re focused on it, I suspect there’s going to be a lot more opportunities.”

Visit www.mibiz.com

“We will be more deliberate about looking for investments in Michigan, and specifically in West Michigan. I’ve been purposeful in trying to find new avenues to find deal flow that is specific to West Michigan.” — SCOTT MCLEAN Executive Director of Spectrum Health Ventures

very well with some of our priorities and goals. We want to focus on buying local, we want to focus on boosting the local economy, and this is a great reflection of that.” Terms of the investment in eVideon were undisclosed, but “it’s definitely seven figures,” McLean said. Spectrum Health Ventures invests in health care companies that have developed and brought an innovation to market that can improve the cost and quality of care. Investments are geared for B or C capital rounds with companies that need growth capital, have market traction and revenues of $3 million to $4 million or more, and have reached profitability or “have clear line of sight to it,” McLean said. The investment from Spectrum Health Ventures comes as eVideon prepares to launch a new suite of products known as Smart Room. They include a digital display mounted just outside of hospital rooms that shows patient precautions and requests, and an in-room electronic white board that can replace dry erase boards and integrate with medical records. “This funding will significantly impact our ability to innovate and serve our hospital partners with cutting edge technology like the Smart Room,” eVideon CEO Jeff Fallon said in a statement. A representative from Spectrum Health Ventures will join eVideon’s advisory board and board of directors, providing insights that will allow the company to “more meaningfully evolve our offerings and continue to address the needs of patients and providers alike,” Fallon said.

New investments The deal with eVideon was one of two recent investments for Spectrum Health Ventures, which brought together a coalition to lead an investment round in Tampa, Fla.-based Professional Credentials Exchange LLC. The company works to simplify the process involved in health care practitioner credentialing, reducing the time and effort required. Professional Credentials Exchange plans to initially launch a statewide pilot in Michigan and has several additional regional markets it plans to open later in the year, according to an announcement on the investment. As it looks for further deals in Michigan, Spectrum Health Ventures intends to do more as well to lead capital rounds and bring together investment syndicates that focus on health care. “There’s a lot of good investors that we intersect with,” McLean said. “If we’re going to be looking at deals in Michigan, it’d be natural for us to take more of a leadership role, and assuming we take more that leadership role, absolutely we’ll be planning to pull in others from around the country.”

Investments drive 2019 profit gains for Priority Health, Blue Cross By MARK SANCHEZ | MiBiz msanchez@mibiz.com

trong investment income lifted earnings in 2019 for the state’s two largest health insurers, Blue Cross Blue Shield of Michigan and Priority Health. Profits grew 37 percent over the previous year for Grand Rapids-based Priority Health, which recorded $188 million in net income last year across all lines of business. The earnings came on revenues of $4.17 billion from commercial, individual, Medicare and Medicaid health policies, with $118 million in operating income and higher investment earnings of $69.7 million. “2019 was another great (year) and great performance keeps us well-positioned for continued growth across all markets,” said Mary Anne Jones, senior vice president for finance and operations for Priority Health. The 2019 results compare to net income of $137.2 million (excluding taxes) in 2018 on $3.82 billion in revenues. Priority Health in 2018 generated $113.8 million in operating income from Jones underwriting health policies and $25.3 million in investment earnings. Priority Health’s primary 544,000-member HMO business made $145.6 million in net income in 2019 on higher revenues of $3.4 billion, generating $83.1 million in operating income and $61 million in investment earnings. Loepp Investment income primarily drove the higher revenues in 2019. “It was a great year in the market,” Jones said. Knowing that “the market is a little fickle,” as demonstrated by the volatility on Wall Street amid coronavirus concerns, Priority Health does not count on large investment returns each year, she said. Priority Health’s 2019 operating income from underwriting HMO policies declined by $19.3 million from the prior year, a result of a reduction in premiums the last two years in policies for small employers and individuals, Jones said. For 2020, Priority Health reduced rates for smallgroup policies an average of 1.6 percent statewide. Rates approved by state regulators last fall for policies in the individual market dipped an average of 0.1 percent. Priority Health aims to continue delivering either rate reductions or increases within the inflation rate, Jones said. “We’ve been successful so far and our goal is to continue to find ways to keep (health coverage) more affordable,” she said. The second-largest health plan in Michigan to Blue Cross Blue Shield, Priority Health grew total enrollment during 2019 by 6 percent, or nearly 42,000 members, to 739,289 as of Dec. 31. The acquisition of Detroit-based HMO Total Health Care that was effective Jan. 1, 2020 — plus a strong open enrollment period in late 2019 — pushed enrollment to about 967,000 at the beginning of the year, Jones said. Priority Health and Blue Cross Blue Shield of Michigan combined hold a large majority of the market for health benefits in West Michigan.

year earlier because of lower rates, and $603 million in investment income that was more than six times higher than 2018. The results include all of the for-profit subsidiaries of the nonprofit mutual insurer, including the Lansing-based worker’s compensation carrier AF Group, which made $116 million in 2019. “We are moderating or lowering our health insurance rates for individuals, small employers and seniors while keeping our profits low, but positive,” Blue Cross Blue Shield President and CEO Daniel Loepp said in a statement. “We are giving back to Michigan to strengthen the safety net and protect the vulnerable. And we are leveraging our investment holdings and non-health subsidiaries to strengthen our financial foundation and take pressure off our health insurance business for profitability.” Loepp’s total compensation declined 37 percent in 2019 — to $12.1 million — based on the company’s financial performance. Results for 2019 compare to Blue Cross Blue Shield’s $566 million in net income for 2018 that came on total revenues of $29.3 billion, with $632 million in operating income and $96 million in investment earnings.

Moderating rates The rate moderation for health insurance in recent years also contributed to Blue Cross Blue Shield’s lower operating gain, said Paul Mozak, senior vice president for finance and chief risk officer. “Based upon some strength we had in 2018, we continue to moderate our pricing across the board, especially in the individual and smallgroup markets, and with those price changes it reduced the operating margin,” Mozak said.

Blue Cross Blue Shield of Michigan’s annual rate adjustments for health policies averaged 1.2 percent since 2015, Mozak said. The insurer has reduced rates nine times during the same timeframe, “allowing for us to moderate costs for small businesses,” he said. Blue Cross Blue Shield hopes to maintain rate moderation, Mozak said. “This moderation approach gives small employers more predictability in their cost planning and more affordability for their employee benefits,” Mozak said. For small businesses that renewed health policies Jan. 1, Blue Cross Blue Shield raised rates a statewide average of 3.7 percent. HMO subsidiary Blue Care Network increased rates for small employers by an average of 5 percent for 2020. In the individual health insurance market, rates for Blue Cross policies declined a statewide average of 1.2 percent for 2020 and declined 7.7 percent for Blue Care Network. Blue Cross Blue Shield had 5.38 million members in all 50 states at the end of 2019, up by more than 35,000 from a year earlier. In health insurance, Blue Cross Blue Shield of Michigan recorded an underwriting gain of $165.5 million on $9.23 billion in revenues for last year, according to a filing with state regulators. When combined with $507.4 million in investment income and taxes, Blue Cross Blue Shield recorded net income of $905.3 million on its health insurance business in Michigan in 2019. That compares to an underwriting gain on health policies of $194.1 million on $9.08 billion in total revenues and investment income of $124.9 million in 2018, when Blue Cross Blue Shield of Michigan reported $559.4 million in net income for the health insurance business.

You see it every day. West Michigan is at the center of the Laker Effect. Here, you’ll find Lakers contributing their skills and drive to its considerable growth — as analysts and engineers, biochemists and health professionals, leaders of business and community. Every day your support for Grand Valley demonstrates the power of what can be.

‘Giving back to Michigan’ Blue Cross Blue Shield reported $818 million in net income for last year that came on total revenues of $30.2 billion — up 45 percent from net income of $566 million on total revenues of $29.3 billion in the prior year. The 2019 results included lower operating income of $248 million, down 60 percent from a

gvsu.edu/OurLakerEffect T H E P OW E R O F W H AT C A N

MiBiz / MARCH 16, 2020

Visit www.mibiz.com T H E C A M PA I G N F O R G R A N D VA L L E Y S TAT E U N I V E R S I T Y

FOCUS: THE BUSINESS OF SENIOR CARE

Rule change brings flood of nursing home proposals Projects come as panel crafts new regulation, estimate on the need for new beds By MARK SANCHEZ | MiBiz msanchez@mibiz.com

n updated state estimate on the need for more nursing home beds has led operators to propose dozens of projects in Michigan that call for hundreds of new beds. The flood of letters of intent and applications in late December and January came after the Michigan Certificate of Need Commission projected demand for nearly 3,000 more licensed nursing beds across the state. However, that figure is now considered as overestimating the actual market need. That resulted in a temporary amendment to state regulations that would require an occupancy rate of 85 percent in a given market before the state will consider licensing additional beds. The occupancy requirement reduced the statewide bed need to about 300. “Everyone on the committee understands the problem with the current methodology,” said Don Haney, the administrator of Thornapple Manor nursing home in Hastings. Haney chairs an advisory committee that’s now crafting a new standard for state regulators when weighing applications for nursing home projects. The advisory committee includes developing a methodology that more accuHaney rately depicts how many nursing home beds are needed in Michigan. It would replace the methodology adopted in 2019 that led to the roughly 50 nursing home proposals to the state through January. “When we looked at that, that’s kind of when everybody said, ‘That’s not necessary. We don’t need that many beds in the state right now,’” Haney said. The advisory committee could finalize recommendations in April for a new review standard and methodology to determine bed need, Haney said. They likely will include a permanent occupancy threshold within local health care planning areas around the state to prevent an excess capacity of beds, which can drive up costs, he said. Statewide, nursing homes average an occupancy rate of nearly 81 percent, Haney said, adding some markets are as low as 71 percent while others are as high as 96 percent. The advisory committee looks to craft new criteria that would allow for projects in markets that need more nursing home beds, but without leading to projects in areas that now have plenty of capacity. The goal is to make sure “there is a bed need where there is high occupancy and there truly is a need for more beds, and that it is acknowledged and that planning area gets more beds,” Haney said. “We’re in agreement with what high-level principles should be included in a new methodology,” he added. “The devil’s kind of in the details on some of the nuances, and then testing the different models we’re looking at over a

MARCH 16, 2020 / MiBiz

period of time to make sure this will hold up over time and truly give a better picture of what the needs in the state are.”

Ongoing process The effort to craft a new review standard for Michigan’s certificate-of-need regulations — which are used to review proposed nursing home projects — goes back a year. The CON Commission was scheduled last the opposite view and voiced support for the spring to form an advisory committee for a occupancy requirement. scheduled three-year review of the nursing home Patricia Anderson, executive vice president of bed standard. reimbursement for the Health Care Association When the commission sought experts to serve of Michigan, argues that “Michigan is a signifion the advisory committee, not enough voluncantly over-bedded state right now.” teered, said CON Commission Chairman James “To add nearly 3,000 beds to the system when “Chip” Falahee. That led to a delay in appointing we are already so significantly over bedded, it just the advisory committee until late 2019. didn’t make any sense,” said Anderson, who also In September, Michigan Department of serves on the advisory committee. Health and Human Services staff proposed The proposed occupancy amendment to the — and the CON Commission adopted — the existing nursing home standard could take effect updated projection on how many new nursing in late May or early June, unless rejected by state beds were needed across the state. The measure lawmakers, Haney said. took effect Nov. 1. The department developed the Trilogy Health Services earlier this year subprojection with Paul Delamater, an associate promitted several letters of intent and applications fessor at the Carolina Population Center at North to the state for nursing projects. They include Carolina University, who often performs statistithree developments in Kalamazoo County at cal analysis for the state. $36 million each. One proposal is for a facility When the 12-member advisory committee on Oakland Drive in Portage with 58 beds, 54 finally was seated in December, and soon con“home for the aged” beds and 24 independent cluded the new projection adopted was flawed, living apartments. members moved to propose the 85 percent occuTrilogy Health Services’ other two propospancy requirement to prevent the overdevelopals in Kalamazoo County are on Angling Road ment of nursing homes. in Portage and Hudson Street in Kalamazoo, That temporary measure, now going through each with 58 nursing home beds, 41 beds in a a public comment period before it’s finalized and home for the aged and 24 independent living put in place, drew strong objections from one apartments. nursing home operator that proposed multiple Trilogy Health Services proposed similar projects under the idea that 2,800 new beds were projects in Muskegon and Ottawa counties. The needed across Michigan. company operates nursing In written testimony homes in Ohio, Indiana, submitted at a Feb. 11 Kentucky and Michigan. public hearing, Louisville, It has a dozen locations Ky.-based Trilogy Health in Michigan, plus another Services LLC urged the under construction. advisory committee to Existing campuses in West table the occupancy Michigan are in Belmont, requirement until its work Battle Creek, Byron Center is complete later this year. and Grand Rapids. “Trilogy believes this In Ottawa County, stand alone and temporary measure ignores the — PATRICIA ANDERSON Trilogy Health Services submitted proposals for results of the existing bed EVP of reimbursement at Health Care two projects in Holland need methodology and fails Association of Michigan and one on 32nd Avenue to promote access to high Hudsonville. As in other quality care for Michigan’s counties, each are for $36 most vulnerable residents,” million, 58 nursing home beds, 41 beds at a wrote Peter Massey, vice president of development home for the aged, and 24 assisted-living apartand construction at Trilogy Health Services. “This ments. Trilogy also has a proposal to the state measure simply enables existing providers to avoid for the same kind of project on Terrace Street in making market-competitive investments in their Muskegon. properties that would benefit the quality of life of Two more projects were proposed in their residents.” Kalamazoo Country by other operators. Medilodge of Kalamazoo proposed developing Competing views a $15.4 million addition with 60 beds that would The Health Care Association of Michigan that expand capacity at its 111-bed nursing home on represents nursing homes across the state took 11th Street. Progressive Quality Care, based in

“To add nearly 3,000 beds to the system when we are already so significantly over bedded, it just didn’t make any sense.”

Parma, Ohio, also proposed an $18.7 million, 123-bed facility on Gull Road. In Kent County, Progressive Quality Care also submitted a proposal for a $16.6 million, 100-bed nursing home on Del Mar Drive in Wyoming, and a $17.3 million, 100-bed proposal for a location on 44th Street in Kentwood. The company also proposed a similar project in Holland Township in Ottawa County. There were other projects proposed as well in Kent County. Southfield-based Ciena Healthcare has proposals for a $16 million, 120-bed facility on Celebration Drive in Grand Rapids. Ciena also has proposed a $14 million project to expand a nursing home in Grand Haven in neighboring Ottawa County. Brighton-based Nursing Centers of Michigan LLC has proposals to the state for two locations in Kent County: 150 beds for $18 million at 17 Mile Road and U.S. 131 in Cedar Springs, and 100 beds for $12 million on East Beltline Avenue near 4 Mile Road in Grand Rapids.

‘Not the case anymore’ Which of those projects goes forward depends on a review by staffers at the Department of Health and Human Services and the timing of a decision. Projects that require CON approval are judged by the standard in place at the time a decision is made, not when applications were filed, Falahee said. The state considers those proposed projects as the advisory committee continues working on a new review standard for nursing homes, and as the overall industry adapts to changes that have been keeping down occupancy rates, even as the population ages. “There’s a change going on within nursing homes and who stays in nursing homes,” Falahee said. “There are different ways to get that care.” Those changes include evolving care models and a greater emphasis for people to remain in their homes longer, Anderson said. The emergence of assisted living, greater access to inhome care providers, and advances in care and technology have furthered that trend. Any CON standard and methodology to determine bed need the advisory committee ultimately crafts must consider the changes occurring in long-term care, Anderson said. “People are aging in their homes longer, and when they need services, they can access them in their homes,” she said. “People are falling into the other long-term care options before they require the most clinical level of care, which is a nursing facility. “Thirty years ago, nursing facilities were the only option. That’s not the case anymore with these other settings.” Visit www.mibiz.com

Developers try to fill needs in affordable senior housing By SYDNEY SMITH | MiBiz ssmith@mibiz.com GRAND RAPIDS — Local developers are working to increase access to affordable housing for seniors who want to remain in their neighborhoods. Nonprofit housing developer LINC Up recently partnered with a local developer on a new affordable housing project called MoTown Square, a 51-unit assisted living facility proposed for 240 Hall St. SE in Grand Rapids. The aim of the project is to allow the senior population to remain in their neighborhood with an affordable housing option. “(Seniors) tend to be overhoused; they have large, VerWys three-bedroom homes with stairs that aren’t ideal for seniors to live in,” said Jeremy DeRoo, executive director at LINC Up. “Yet there’s such an undersupply for alternative housing in the neighborhood, that for people who want to stay in the neighborhood where they’ve always lived, they just can’t find places.” The project is for people ages 55 and over who qualify for Medicaid and make between 30 and 60 percent of the area median income. The demand for housing for seniors persists around the country, especially in cases where residents are not yet willing or needing to transition into a care facility. According to a 2019 study by NORC at the University of Chicago, a social research organization, the population of middle-income seniors who have limited housing options will double between now and 2029. This population might not have the financial resources to pay for private senior housing options, according to the study. In 2019, 11.6 million (81 percent) of middle-income seniors without equity in housing had an annual income and assets of $60,000 or less, which is below the projected annual cost of $62,000 for assisted living rent and out-of-pocket medical spending. The number of people who do not have income that rely on Medicaid will continue to increase also, said Harold Mast, who worked as the executive director for Genesis Nonprofit Housing Corp. and now does consulting for affordable housing across Michigan. Mast is consulting with LINC Up on the MoTown Square project. “Those are the people this project will target, to keep them out of a nursing home or to help them transfer from a nursing home if they no longer need that level of care,” Mast said. “Lots of facilities call themselves affordable, but affordable is a hard word to define. You have to make it affordable to people who are living on Social Security, or Social Security plus a small pension. There are lots of seniors in that category.” The National Investment Center for Seniors Housing & Care, a nonprofit that compiles data on senior housing for investors, reported in 2019 that the number of new units being brought online in the greater Grand Rapids area is the highest since it began tracking data in 2006. In Grand Rapids, the occupancy for senior housing developments stood at 91.6 percent, higher than the national average of 87.8 percent. Many developers have acknowledged the growing number of seniors by adding new senior housing developments, but are not able to provide housing that would be affordable to lower income seniors. “As they age, they have a choice: either living at home as long as they can and using some of their income to buy services, or moving into a nursing home because nursing homes are covered by Medicaid,” Mast said. “A lot of these people don’t need to be in a nursing home. What’s being built, most of it, even though it’s called affordable, is not affordable to this level of income.” Visit www.mibiz.com

These types of housing developments are particularly difficult to fund, Mast added. While providing housing is standard for developers, there is also the need to build in services for the people living in the developments. The Michigan State Housing Development Authority has an affordable assisted living program aimed specifically at developments for lower income seniors. Mast said it is difficult to get state approval on those projects because MSHDA is “pretty specific” about what it wants. Developers often turn to the federal lowincome housing tax credit program administered by MSHDA. LINC Up expects to apply for the tax credits in the April funding round for MoTown Square. Another nonprofit housing developer, Grand Rapids-based Inner City

Christian Federation (ICCF), was awarded the tax credits for a senior housing development near the corner of Division Avenue and Wealthy Street. The project calls for between 50 and 65 apartments for older adults who can still live independently. Ryan VerWys, president and CEO at ICCF, said the goal is to complete the project within the next three to four years. “We believe strongly that everyone should have a place to call home in their community,” he said. “We recognize that there are a variety of different challenges our neighbors face, not only related to income, but also different stages of life.” ICCF completed a market study for the development, which showed the need for housing that supports older adults is going to increase during

the next 10 to 20 years, and that these seniors will be looking for different types of housing than previous generations, specifically housing offered in more urban environments. Amplify GR, another Grand Rapids-based nonprofit developer, has proposed 59 senior apartments as part of a larger plan in the Boston Square neighborhood. Similar to LINC Up, the aim is to allow seniors already living in the neighborhood the chance to remain in a familiar area. Providing the opportunity for people to stay in their neighborhoods increases their sense of freedom and quality of life, LINC Up’s DeRoo said. “We’re looking at addressing that by providing an affordable assisted living option for people to be able to retain that independence at an affordable rate,” DeRoo said.

KEEPING WEST MICHIGAN SENIORS SAFELY IN THEIR HOMES TANDEM365 is a collaborative venture that assists hospitals, doctors, family members and individuals in need of healthcare services that are not traditionally provided elsewhere. Our program participants are medically complex and often elderly. Our services help them remain independently in their homes and manage their conditions most appropriately. TANDEM365 has been providing care since 2014 and we serve more than 1,000 patients throughout Kent, Allegan, Ottawa and Kalamazoo Counties. We utilize highly skilled staff to assist patients who require high-touch, patient-centered methods of care. All of our services are based on an initial assessment and evaluation by our health professionals. Our services are currently a covered benefit under the Priority Health Medicare Advantage plan and Blue Care Network plan. Private pay is also available. For more information on our services, please visit TANDEM365.com or call 616.588.5290.

MiBiz / MARCH 16, 2020

FOCUS: THE BUSINESS OF SENIOR CARE

Tandem365 looks to expand ‘innovative’ care model in West Michigan By MARK SANCHEZ | MiBiz msanchez@mibiz.com

Tandem365 is open to people enrolled in Medicare Advantage health plans with Priority Health or Blue Care Network, the HMO subsidiary of Blue Cross Blue Shield of Michigan that signed on in the last year. The health insurers pay Tandem365 a monthly flat fee for providing services to Medicare Advantage enrollees who meet eligibility criteria for the program. Tandem365 now serves more than 1,100 clients across its four-county service area. In six years, Tandem365 has avoided hundreds of ER visits and hospital admissions. Under the care model, Tandem365 clinicians maintain regular contact with clients to monitor their conditions and coordinate their ongoing care. Social workers conduct a comprehensive assessment on new clients that includes identifying the social determinants of their health and other issues in the home. Staff also provides assistance with adhering to their care regimen and prescribed medications, and can arrange for other assistance for things such as routine household chores and daily tasks. “They assess the member, they study the pattern of utilization that a member has had in the past and they put a plan in place to address that, 24 hours a day, seven days a week,” said Janet Scovel, director of Medicare care management at Priority Health.

Innovative model Priority Health was an early supporter of Tandem365, viewing the program as a way to provide better care and quality of life for ailing

members in frail health — and at a better cost. Scovel called it a “very innovative and creative model.” “In all of the factors that are addressed with the program, it exceeds our members’ expectations through the promotion of their satisfaction,” Scovel said. “They have an improvement in their quality of life because with the close monitoring and the quick response of the Tandem team, these folks are able to spend more time in their own home, with comfortable surroundings, enjoying their time, as opposed to bouncing in and out of the hospital environment of the emergency room.” When a client has an issue and needs assistance, they call Tandem365. An operator triages their situation and turns them over “to the right, appropriate person,” perhaps a clinical care manager or the nurse assigned to their care team, Toland said. If needed, an operator dispatches its team of paramedics to the home, or an ambulance for an emergency medical issue as a 911 call. Paramedics that are part of Tandem365’s response team assess the client’s condition and provide the care they need at the moment. If necessary, they will transport members to an ER. Of the 971 times paramedics were dispatched in 2019 following a call for assistance, clients were transported to the hospital 14 percent of the time. That compares to a transport rate of more than 70 percent when Life EMS responds to a 911 call, according to Tandem365 director of operations Phil Fennema.

THE SHERIDAN AT BIRMINGHAM LUXURY SENIOR LIVING AND CARE

fter extending into Kalamazoo in 2019 and preparing for a Newaygo Cou nt y loc at ion t h i s spr i ng , Tandem365 wants to grow further. Montcalm and Ionia counties are eyed in 2020 for Tandem365, an organization that began six years ago in Grand Rapids t h roug h a pa r t ner sh ip bet ween long-term ca re prov iders. The company offers a new model to care for elderly people who are in ill health and want to remain in their own homes. The rationale behind the push to expand: The aging population creates a steady Toland need for the type of care Tandem 365 provides by using care teams of nurses, paramedics, medical assistants, therapists and social workers. The care enables clients who are in frail health and generally have multiple chronic medical conditions to remain in their homes, rather than move to Scovel a nursing home. The model is also meant to avoid costly emergency room visits and hospitalizations. “We have a pretty aggressive strategy for this year to be in those two additional counties [Ionia

and Montcalm],” said Tandem365 President and CEO Teresa Toland. “There’s a bigger population that needs to be taken care of.” Tandem365 began nearly six years ago in Kent County and soon expanded into neighboring Ottawa County. Allegan County came next in 2015, followed by Kalamazoo last August. Once Ionia and Montcalm counties are on board this year, Tandem365 aims to extend into Muskegon County, probably in 2021, Toland said. Tandem365 started when a group of four senior living long-term care providers came together at the urging of Mercy Health Saint Mary’s to rethink the care model for elderly persons with medical conditions that required ongoing management. The founding partners who each own a 20 percent stake of the organization are Sunset Retirement Communities and Services, Clark Retirement Community, Porter Hills and Holland Home. Out of that process came Tandem365, which enrolled its first client in April 2014. The organization coordinates medical, behavioral health and social services for older people who generally have multiple chronic conditions such as congestive heart failure, COPD, emphysema, dementia, kidney failure, Parkinson’s and diabetes. Oftentimes the patients are in frail health, lack a social support network and need daily or weekly assistance at home. “We care for the person as much as they need us, or as little as they need us,” Toland said.

SEEK POSSIBILITIES 18

MARCH 16, 2020 / MiBiz

Visit www.mibiz.com

“…these folks are able to spend more time in their own home, with comfortable surroundings, enjoying their time, as opposed to bouncing in and out of the hospital environment of the emergency room.”

<engine/> is proud to help senior care services and facilities, such as Resthaven, extend their reach through a great website.

— JANET SCOVEL Director of Medicare Management at Priority Health

“Usually, our patients call us when they really don’t know what to do,” Fennema said. “If we didn’t exist, if we weren’t present, those 900-and-some urgent assessments that we did probably would have been either EMS calls or the patient would have been transported to an emergency department.” Clinically, emergency room use among P r ior it y He a lt h m e m b e r s s e r v e d b y Tandem365 is 20 percent to 30 percent lower than a patient population “with the same burden of illness” that’s not enrolled in the program, Scovel said. Hospitalization rates as well are 15 percent to 25 percent lower for Tandem365 enrollees, she said.

Lessons learned In six years, more than 2,000 Priority Health Medicare Advantage members have been served by Tandem365. They generally are people with high-risk, medically complex chronic illnesses in advanced stages who are able to keep their condition stabilized with the care coordination and household assistance the program provides, Scovel said. Many enrollees otherwise would live in a nursing home. “That’s a pretty big satisfier for our members who want to remain at home,” Scovel said. Seeing the value the program offers, Priority Health welcomes Tandem365’s extension into new markets, although there are limits on how quickly it can expand. Tandem365 needs to have enough clients in a new area to hire and set up the care teams required, she said. “The growth needs to be controlled and sustainable, of course,” Scovel said. “But we certainly want to be able to close gaps for our entire membership across the state of Michigan.” Priority Health is looking at ways to take the lessons learned through Tandem365 to develop ot her i n it iat ives across its membership. “We’re kind of noodling on what we’ve learned and looking at perhaps different ways to offer service using what we’ve learned,” Scovel said. As Tandem365 expands and serves more people, it has had to adapt. What worked five years ago for 200 clients and a staff of eight clinicians doesn’t quite work as well today, as Tandem365 cares for nearly 1,200 people and has a staff of 35. Rather than the past practice of dividing care teams’ base by providers, with nurses handling all of the case management, staff now looks at whether a nurse or a paramedic is best suited to manage care for clients and “what needs to be in place at which time.” “We’ve almost had to resize the care model for each stage that we’ve gone through,” Fennema said. “Going from finding the right care, for the right patient, at the right time and with the right providers with 300 people on service looks different than with 1,200.” Visit www.mibiz.com

For more information about our web development, digital marketing and SEO services, contact Jesper Dinesen at 616/457-0300 or jesper@runengine.com.

Affordable, common sense websites.

<engine/> | Grand Rapids, MI | runengine.com MiBiz / MARCH 16, 2020

NONPROFIT ORGANIZATIONS

Volunteer-powered coalition helps Kent County residents file tax returns By JESSICA YOUNG | MiBiz jyoung@mibiz.com

owered by hundreds of highly trained volunteers, the Kent County Tax Credit Coalition helps working individuals and families in the region receive important refunds during tax

Somehow, Brame — who was expecting a refund — left the office still owing the tax preparer $500. “I’ll never forget the day,” she said. “I walked out holding my two kids and I can tell you exactly where I was. The name is changed now, but it is vivid in my mind. I walked out, I was crying and my daughters wanted to know why I was crying.” The worry “must’ve still been on my face” the next day, Brame said, because a coworker at the school asked her what was wrong and offered to take a second look at her return. “This is how I know what happens at the paid tax places,” she said. “(The coworker) got me the Earned Income Tax Credit and instead of owing $500, I was able to buy a car.”

season. Every year millions of dollars in tax refunds and credits go unclaimed by people who are eligible for them, according to the Internal Revenue Service. That’s why, since 2002, the Kent County Tax Credit Coalition (KCTCC) has helped more than 93,500 low- to middle-income taxpayers in Kent County claim nearly $100 million in tax refunds and credits through its free tax preparation and filing service, according to Brenda Accessing the EITC Brame, KCTCC program manager. “Right now, when more people are going to The Earned Income Tax Credit or EITC, which two or three jobs just to make it work, it’s impor- was enacted by Congress in 1975, reduces the tant they get all of the tax refunds and credits amount of taxes owed by low- to moderateincome working individuals and they deserve,” Brame told MiBiz. couples, particularly those with “It makes such a difference in children. Michigan is also one of our community.” 25 states that offers residents an Q u a l i f y i n g i nd i v idu a l s Sponsored by: additional state EITC credit. and families with a household GRAND RAPIDS The refund is determined by income of $56,000 or less can get COMMUNITY the taxpayer’s income and numtheir taxes prepared and filed FOUNDATION ber of children; however, some for free through the program. individuals without children Most KCTCC clients spend tax refunds locally on necessities like food and are also eligible. The average amount of EITC clothing, home and car repairs, or medical received per claim nationwide was about $2,476 treatment, which stimulates the local economy, in 2019, according to the IRS. However, the agency estimates that more than 20 percent of Brame said. Brame’s motivation to help people through people who qualify for the credit do not claim it. More than $11 million in federal EITC dolKCTCC comes from her own lived experience of paying hundreds of dollars to commercial tax lars go unclaimed in Kent County every year. KCTCC, which is based at Heart of West preparers, often for inaccurate returns. In the late 1980s and early 1990s, Brame was Michigan United Way in Grand Rapids, uses 14 a single mother working as a paraprofessional community sites throughout Kent County and in the Grand Rapids Public Schools during the hundreds of volunteers to ensure more people day and evening shifts at Hudson’s, or The J.L. in the region are accessing the EITC and other Hudson Company, a retail department store credits that they’ve earned. “It’s great when you can tell someone that chain that was based in Detroit. Finding the time to responsibly prepare they’re going to get a refund, especially if they and file her income taxes on top of the chal- didn’t know they were going to get one,” said lenges of her daily routine was always a bur- Nancy Mroczkowski, a KCTCC volunteer. den, Brame said. The hurdle compelled her to “That’s the nice thing, when we can help someuse the commercial tax preparers that often body make it through another year.” The program mobilizes about 200 volunteers pop up in empty storefronts around low-income each year who are trained to be IRS-certified tax neighborhoods. preparers for free by KCTCC. “One year, I got burnt,” she said.

NONPROFIT SECTOR NEWS

“It’s a skill learned,” said Brame, who added that many of the volunteers use the training and certification to advance their own careers. “Once I give you a skill, I cannot take it back.” Many of the volunteers who power the program are financial or legal professionals or retirees with finance backgrounds. Some of West Michigan’s largest companies, including Wolverine World Wide Inc., GE Aviation Systems LLC and Steelcase Inc., also partner with the group.

In February, the finance department at Steelcase hosted its 9th annual “community tax day” with KCTCC, during which around 30 volunteers from the company prepared and filed 113 tax returns. The tax refunds and credits generated from that single event totaled $233,000. “Those dollars are all brought back to our community, and every time you spend a dollar in our community, that means that someone else has a job,” Brame said.

“As we make

investments in our community, we have to ensure that financial opportunities are available to all.” Reneé Williams

Meet our One Hundred New Philanthropists Reneé Williams partners with Grand Rapids Community Foundation to leave a personal legacy. She says that financial stability is essential for creating a thriving community. Learn more about how you can make an impact through philanthropy by contacting Jenine Torres at 616.454.1751 or jtorres@grfoundation.org.

MARCH 16, 2020 / MiBiz

Visit www.mibiz.com

Economic, community development officials call for action to raise wages By JESSICA YOUNG | MiBiz jyoung@mibiz.com

significant and expanding group of people in Michigan are working but still not bringing home a paycheck big enough to cover their basic expenses. Now, economic and community development leaders from around the state are calling on state policymakers to make raising income minimums a state priority. As the United States continues riding an economic expansion that has lasted more than a decade, Michigan’s overall economy is strong. However, many are being left behind, said Maribeth Groen, marketing manager at Heart of West Michigan United Way. “For the past few years, we have been raising awareness around people who are working hard but still struggling to make ends meet,” Groen told MiBiz. According to a study released last year by the Michigan Association of United Ways, 14 percent of Michigan’s population lives below the federal poverty level. Another 29 percent are “asset-limited, income-constrained, employed” (ALICE), a measure of people who earn more than the federal poverty level but less than the cost of living in their area. Together, this means that 43 percent of Michigan households could not afford necessities like housing, child care, food, transportation, health care and technology in 2017, the most recent year for which data are available. “The data shows we need to work even harder to ensure that people and families are not struggling to live in our community,” Groen said.

Challenges remain Unemployment is still hovering around an all-time low in Michigan, but in some counties, including five in Southwest Michigan — Calhoun, Branch, St. Joseph, Cass and Berrien — unemployment actually increased in 2019. At the same time, average weekly wages went down in Calhoun and Ottawa counties. In St. Joseph County, where 47 percent of the population earns wages below the ALICE threshold, both residents and village officials say the recent shuttering of an International Automotive Components plant in Mendon means uncertainty for the community and other businesses in the area, said Annika Doner, outreach director at Priorities Michigan. The plant closure will affect about 240 workers in the area. “Many employees have worked there for decades because the pay is better than that of other jobs in the area,” Doner said. Still, the average wage for a union employee at the plant was only $20 an hour, she added.

Low-wage jobs The ALICE study lays out an average “survival budget” for a single adult or a family with two young children based on costs in each county in the state. According to the research, an average single adult living in Michigan needs to bring home a little more than $20,000 while the family of four would need more than $60,000 per year to cover the costs. Even without the cost of child care, which is often the top expense in a young family’s budget, a family of four would still need one wage earner making an average of at least $23 per Visit www.mibiz.com

“The data shows we need to work even harder to ensure that people and families are not struggling to live in our community.” — MARIBETH GROEN Marketing Manager at Heart of West Michigan United Way

hour to keep from falling behind. Low-wage jobs dominate the employment landscape. A recent analysis by the Brookings Institution found that 44 percent of a ll American workers earn a median wage of just $10.22 an hour, or $18,000 a year. In Michigan, 61 percent of all jobs pay less than $20 per hour, according to the ALICE data. At the same time, the cost of the average family budget in Michigan increased by 27 percent from 2010 to 2017, which compares to 12 percent inflation nationwide over the same timeframe. The state’s per capita income from wages and employer-provided fringe benefits is 14 percent below the national average, according to Priorities Michigan. By comparison, in 2000, before the auto industry endured a decade of turmoil, wages and benefits for Michigan workers were 1 percent above the national average. And despite a strong statewide recovery from the Great Recession, the income of the median household in Michigan, adjusted for inflation, is still well below what it was in 1999.

A call to action Even in an election year, when economic disparities are hot political topics, as many as 57 percent of Americans said they do not expect their finances will improve in the near future, according to a survey by Bankrate LLC. A large group of economic and community development leaders from around Michigan issued a call to action last week urging state economic policymakers to make rising income for all an economic priority. The leaders who authored the call to action — including Birgit Klohs of The Right Place Inc., Tony Lentych of the Traverse City Housing Commission, Faye Alexander Nelson of the W.K. Kellogg Foundation and Jennifer Owens of Lakeshore Advantage — came together because of a common concern that “in every region of the state,” too many people are struggling economically. “We believe a primary goal of state economic policy should be rising household income for all Michiganders. Rising household income for all is different from the most oftenused measure for economic success, low unemployment,” they wrote in the letter. A low unemployment rate will not increase wages, benefits and hours enough to substantially dent the proportion of households unable to pay for the basics, according to the group. Raising wages is the “prime economic challenge of our times,” they added. “There isn’t a single county in Michigan that has fewer than 30 percent of households that are unable to pay for basic necessities right now,” said Groen of Heart of West Michigan United Way. “This is a time when we all need to come together to turn that tide. When more individuals and families are stable, our community as a whole will prosper.”

BE THE FIRST TO KNOW Rely on MiBiz to break through the noise, go beyond the easy stories and deliver top-notch local business news and information not available from any other source. For a $99 annual subscription, or $10 per month monthly subscription, get 24/7 access to high-quality journalism, including web-only stories, breaking news, research and exclusive reporting on West Michigan business news that matters. Visit mibiz.com/subscribe to sign up today.

mibiz.com/subscribe/e-newsletters

West Michigan Business News & Intelligence

MiBiz / MARCH 16, 2020

Q&A Leigh Schultz

Senior principal attorney, Miller Canfield Paddock and Stone PLC Leigh Schultz, a senior principal attorney in the Kalamazoo office of Miller Canfield Paddock and Stone PLC, has been fielding calls from her clients about what action they need to take regarding COVID-19, commonly known as coronavirus. The U.S. Centers for Disease Control and Prevention states the new coronavirus has been detected in 100 locations internationally at the time this article was published, including in the U.S. Schultz told MiBiz that because of the spread of the disease, employers should take care to inform their employees about workplace policies meant to keep people healthy. What conversations are you having with your clients around coronavirus? We’re getting calls from clients asking whether or not they need to take affirmative steps in their workplaces, either to notify employees of policy changes or policy requirements as far as time off, as far as keeping their workstations clean, any travel-related restrictions, steps the employer may need to take in the event that this truly becomes a pandemic. We are getting questions just asking what they should be doing right now to communicate with their workers about the coronavirus and about what we need to do to be proactive in our workplace. Is this something employers have dealt with before? I haven’t had it become an issue, even with the H1N1 (swine flu) or SARS-Cov-2 outbreak, because they really didn’t infiltrate the U.S. the way there was talk that they might. I’ve never had a pandemic health concern that has really (raised) my clients’ attention before. What are the immediate steps employers should take in response to coronavirus? The primary thing we’re talking to the clients about is taking steps to notify their employees that if they’re sick, they should stay home. If they’re feeling any symptoms, they should stay home. They should not expose others in the workplace, and (employers should) communicate whatever leave policy that particular employer might have available to them. They should encourage employees to wash their hands regularly, clean their workstations regularly and let them know that as an employer, they’re also taking steps to do additional cleaning and disinfecting of the workplace to ensure it stays as clean and safe as possible. Employers could put in that communication that they encourage not a lot of hand-to-hand contact with other employees. Certainly any business-related travel to areas where infections have been occurring should be discouraged, if not prohibited by employers. Can employers take a do-nothing approach at this point? Most people who have coronavirus are still experiencing mild flu-like or cold-like symptoms. I don’t know that all employers need to get out there and do mass communications for that, especially if you have a workforce that doesn’t travel. A workforce where you do have a lot of business-related travel or large gatherings somewhere, we may end up wanting to cancel those gatherings or conferences. I do think that even now it would be a good idea, for employers who would like to be proactive, to issue a communication about the importance of washing hands regularly, keeping your workstation/work area clean, and staying home if you feel sick. Most employers provide paid time off for sickness, in accordance with the Paid Medical Leave Act and simply under their policies, so they should remind their employees to use that time if they have any concerns about their health. What policies should employers be aware of? Policies related to time off. There’s the Family Medical Leave Act, and Michigan has the Paid Medical Leave Act. The FMLA says that employees are eligible for time off if employees or their family members have a serious health condition under that law. If an employee or their family member has a medical condition that qualifies as a serious health condition, they could be eligible for time off. Then we have the Paid Medical Leave Act. That entitles eligible employees to up to 40 hours of paid time off per year for any sickness, for themselves or their family member, as defined by the law. What changes can employers make internally? There’s policies that employers have on things like working from home, telecommuting, and I think employers are looking at positions that could possibly be performed from home if need be, so we don’t have to have people coming into the workplace. If this truly becomes a pandemic, employers are encouraged to perhaps be a little bit more flexible on the implementation of some of their policies to ensure that employees aren’t exposed unnecessarily. Should employers be restricting travel at this point? Most clients are taking the position that employees should cease traveling to any region where there has been a true outbreak, and that would be the international regions. There are states now in the U.S. where there have been reported cases. Travel to China, Italy and other international destinations is something most employers are putting a stop to. And there are the U.S. imposed travel bans that apply. You have also focused on nondiscrimination policies in your talks with clients. Why is that? Employers certainly want to make sure people aren’t assuming that because somebody is of a certain race or national origin that they would have a higher chance of exposure. We still have to be mindful of nondiscrimination laws and respect diversity in the workplace, and not allow people to treat each other differently for fear of anything. There’s no basis for anyone to assume that because someone is a certain race or national origin that they have a disease. When it comes to checking on employees, what can employers ask? When it comes to determining whether someone should be working or not working, before a pandemic breaks, we’re not supposed to ask employees questions about potential medical conditions. They shouldn’t be walking around asking, ‘Do you have symptoms?’ But they can certainly ask general questions. ‘If we do have this outbreak and it does become a pandemic, will you have difficulty getting to work because of public transportation issues or otherwise?’ Overall, how do your clients seem to be thinking about coronavirus? I’m finding that most people at this point are not panicking. The reports are that most of the symptoms are exhibiting themselves in more mild symptoms and (people) might not know they have the condition. I don’t think employers yet, at least in this region, are feeling overwhelmingly concerned about it. They’re mindful of it, they’re thinking about it, they’re certainly proactive and care about protecting their workers, but they’re not panicking. Interview conducted and condensed by Sydney Smith. COURTESY PHOTO.

MARCH 16, 2020 / MiBiz

IN THE NEWS M&A

n Construction management firm The Christman Co. of Lansing has acquired MEDCO Construction, the construction arm of Dallas-based health system Baylor Scott & White Health. Baylor Scott & White Health operates the largest nonprofit health care system in Texas. MEDCO served as the in-house construction partner for Baylor Scott & White for more than 55 years and built medical centers for the company. Christman Co., which generates more than $1 billion in annual revenues and maintains an office in Grand Rapids, plans to expand its services in Texas and surrounding areas with the acquisition. Terms of the deal were not disclosed. n Lansing-based Neogen Corp. (Nasdaq: NEOG), a food and animal safety products manufacturer, has acquired the food safety assets of Australia-based Cell BioSciences, its fourth international business acquisition this year. Cell BioSciences is a supplier of food safety and industrial microbiology products. The deal gives Neogen a direct sales presence across Australasia for its entire products portfolio. Neogen will rebrand the business under its own name and operate from Cell BioSciences’ location in Melbourne, while the company looks to centralize its operations in a future location, according to a statement. Terms of the agreement were not disclosed. n Chicago-based Boyd Group Inc. acquired eight collision repair centers in Michigan under the Vision Collision and McFall’s Collision & Frame Service brands in the Lansing and Flint areas, according to a statement. The deal also coincided with the purchase of six repair locations in Indiana. The Boyd Group operates non-franchised collision repair centers under the Gerber Collision & Glass brand, and operates several brands that sell automotive glass. Terms of the deal were not disclosed. n Grand Rapids-based drug developer Tetra Therapeutics has secured a new equity investment from Japanese pharmaceutical company Shionogi & Co. Ltd. The deal involved Shionogi increasing its equity stake in the company by 50 percent. As well, Shionogi has an option to complete a structured buyout of the remaining equity in Tetra if certain conditions are met in the company’s Phase 2 trial of its BPN14770 compound in treating Alzheimer’s disease. The results of that Phase 2 trial, dubbed Picasso AD, are expected later this month. Advisers on the deal included Cooley LLP, Honigman LLP and Nomura Securities International Inc. Terms of the transaction were not disclosed. n Stevensville-based Boelcke Heating Co. has been acquired by employee John Nedoba, according to a statement. The sale allows former owner Dave Boelcke to retire from the company. Grand Rapids-based Calder Capital LLC served as the M&A adviser to Boelcke in the sale. Terms of the deal were not disclosed.

INVESTMENT

n Grand Haven-based UV Angel secured a private equity investment from Bloomfield Hills-based Lionfish Investments to commercialize a new product that cleans the air in hospitals and other facilities. UV Angel Air uses the company’s ultraviolet light technology in ceiling light fixtures. Air goes in one side of the fixtures, passes under the ultraviolet light, and then exits clean on the other side. UV Angel Air also has applications in other settings beyond hospitals such as commercial buildings, schools, and perhaps even cruise ships. n Grand Rapids-based Charter Capital Partners worked with an interested investor to start a small fund to put money into an out-of-state distillery that has ties to Michigan. Charter-HN Spirits Fund LLC recently closed on the first $785,000 raised from 14 investors, according to a regulatory filing with the U.S. Securities and Exchange Commission. The fund, consisting of individual investors and family offices, reported that it wants to raise a total of $2.5 million. Charter-HN Spirits Fund is the first foray into the craft distilling industry for the Grand Rapids-based investment bank and was set up for a specific investment, Managing Director Dale Grogan told MiBiz, noting the fund has already invested in three separate spirits brands.

EXPANSION

n Grand Rapids-based Jedco Inc., a producer of complex sheet metal and machined fabrications, is expanding and planning to move from its current location in 2021 to support the company’s “tremendous growth” over the last few years. The Michigan Strategic Fund Board is contributing more than $1.9 million in collateral to a $16.7 million loan that Jedco and its NTN LLC subsidiary is receiving from Macatawa Bank. Jedco applied for the funds

under the Michigan Economic Development Corp.’s Capital Access Program, which began in 2009 and assists small business and lending institutions by providing collateral support or loan participation. n Ada-based Dan Vos Construction Co. is building a new 18,000-square-foot, two-story headquarters on its existing property. The new facility is 50 percent larger than the company’s current offices and will provide room for the firm to grow, CEO Dan Vos told MiBiz. The company completed the design and is working on the construction of the new building, which showcases what the firm has to offer. Dan Vos Construction’s 95 employees will move into the new headquarters in late April. A spokesperson declined to say how much the company is investing in the project. n Hiring an M&A adviser in the Chicago area expands Grand Rapids-based business broker Calder Capital LLC into new markets in the Midwest. Shane Kissack will work markets in northern Illinois and southeast Wisconsin, seeking to represent middle-market companies that are pursuing a sale. Kissack, an entrepreneur who’s started and sold two businesses, is the first adviser for Calder Capital outside of Grand Rapids. Calder Capital focuses on representing smaller businesses and handling deals with a transaction value of $1 million to $20 million. The firm said it sees opportunity in the market that includes Chicago to represent small business owners seeking a sale and an exit.

REAL ESTATE

n Spectrum Health continues to amass more properties in the Monroe North business district near its planned $100 million Center for Transformation and Innovation, as MiBiz exclusively reported. Since the middle of January, the Grand Rapids health system has scooped up three additional properties in separate transactions for a total of $5.45 million, according to property records. The recent property acquisitions suggest Spectrum Health could be expanding its vision for the area around the Center for Transformation and Innovation, but for now, the health system is keeping mum. According to a spokesperson, Spectrum Health is continuing to finalize details in its plans for the properties and expects to share more information later in 2020. The acquisitions include 648 Bond Ave. NW, 711 Ionia Ave. NW, and 750 Ottawa Ave. NW, according to property records.

ENERGY

n Muskegon-based Chart House Energy LLC, in partnership with Maryland-based New Energy Equity, will install enough solar panels to offset nearly 47 percent of the electric consumption for the city of Muskegon Heights. The city will save more than $100,000 annually through electricity savings, according to project officials. The solar panels will be spread across five city-owned properties. The 645 kilowatts of solar will be installed at City Hall, the Department of Public Works, a water filtration plant and a pumping station. Construction is expected to start next month, pending final permitting and hiring, and may be completed by the end of June. New Energy Equity will finance the projects under an agreement that includes no upfront costs to the city.

MANUFACTURING

n Grand Rapids-based Tier 1 automotive supplier Gill Industries Inc. plans to hold a public auction of some of its manufacturing equipment next month. The public auction, which is scheduled for 10 a.m., Tuesday, April 28, is the latest step in a string of recent restructuring efforts involving the company’s manufacturing plants and operations. At the public auction, Gill intends to sell off presses and other machinery from its Bond Avenue NW facility and assembly assets from another manufacturing operation at Avastar Park on Alpine Avenue in Walker, according to Maynards Capital LP, an appraiser and liquidator with operations in Southfield that will administer the sale. n Caledonia-based Aspen Surgical Products Inc. named Jason Krieser as CEO. Krieser had served as interim CEO for seven months through the 2019 sale of Aspen Surgical Products by Hill-Rom Holdings Inc. to Boston-based Audax Private Equity for $170 million in cash. He also led the company in the December deal for Redmond, Wash.-based orthopedic products manufacturer Beatty Marketing & Sales LLP. Krieser aims to grow the business in what an announcement called a “meaningful way through acquisition, product line extensions, and new channel development.”

Visit www.mibiz.com

4 WAYS TOAVOID INHERITANCE DISPUTES IN YOUR FAMILY M ost people don’t anticipate an inheritance dispute in their family, but when it happens, it can destroy family relationships. There are common scenarios that lead to inheritance disputes. David Skidmore and Laura Morris are probate litigation attorneys with Warner Norcross + Judd, and they represent individuals and families in inheritance disputes across the state of Michigan. With this article, they share lessons learned from their past cases and ways to avoid inheritance disputes in your family. Here are four ways to help avoid an inheritance dispute in your family:

1. Choose an Estate Planning Pro. Inheritance disputes arise from poorly drafted documents. If a will or trust is unclear, then family members may disagree over how to interpret it, with each member favoring a self-interested interpretation. That disagreement may turn into a lawsuit. Even if your family agrees on how the unclear language should be interpreted, it may still be necessary to have the Probate Court make a ruling on the issue. Your intentions are more likely to be upheld if they are clearly expressed in well-written documents, prepared by a premier estate-planning attorney. Not every attorney creates the same quality work product. “Pennywise and pound foolish” applies to the client who saves money on a bargain attorney, only to receive inferior documents which spawn an expensive legal proceeding. Work with an attorney who specializes in estate

planning ideally, an attorney who only does estate planning. A well-written estate plan drafted by a reputable and skilled estate planner, who worked with the client over time and documented the client’s intentions as they changed, is difficult to challenge.

2. Don’t Involve Your Beneficiaries in Your Estate Planning. Inheritance disputes arise when someone believes that a person was unduly influenced to change his or her estate plan. Undue influence, if proven, will invalidate a legal document including an estate plan. To avoid undue influence disputes, your beneficiaries should not participate in your planning. Otherwise, there may be a question whether this beneficiary improperly influenced you. Under no circumstances should a beneficiary attend meetings with you and your attorney or be present when you sign the estate plan. Michigan law presumes that a document resulted from undue influence if it benefits a person who is in a confidential or fiduciary relationship with you, such as your agent under a durable power of attorney, or a family member who is informally managing your finances. Hence, a person who has legal, financial or caregiving authority over you should have no involvement in your estate planning. After the estate planning is signed and complete, it is okay (and actually encouraged) to share the plan with your family so everyone knows what to expect.

3. Document Your Intentions with Joint Accounts.

Inheritance disputes arise over who should receive the funds in a joint account at the death of the first owner. In Michigan, there is a presumption that if you add another person to your bank account as a joint owner, that you want the other named owner to receive all of the funds at your death. For spouses, this is typically the intent. However, when a parent adds just one child to the account, disputes arise over whether the parent intended to leave the account to just the child listed or for the funds to be split equally between all of the children. Most people assume that a person’s estate plan dictates what happens with funds in a joint bank account at death, but that is not the case unless the will specifically identifies the intent with each joint account created. Joint account disputes pit siblings against one another and can be avoided by informing your estate-planning attorney of the creation of a joint account and simply documenting your intentions as to who is to receive the funds in the joint account at your death. This simple step can avoid a lawsuit.

signing. The likelihood of a challenge is significantly increased if there is a change to the estate plan that deviates from a prior estate plan or disinherits a child or other family members. The most effective way to ensure your estate plan does not get challenged on the basis of a lack of mental capacity is to undergo a detailed cognitive evaluation as close to the time you sign your estate plan as possible. David and Laura are trial attorneys who help individuals, families, trustees and charitable organizations through a myriad of complex and routine inheritance disputes, charitable gift disputes, probate matters and elder law issues. Please contact David Skidmore or Laura Morris at dskidmore@wnj.com or lmorris@wnj.com for help in a current or future probate matter.

4. Dementia + Estate Planning = Get a Cognitive Evaluation. Inheritance disputes arise when a person who has been diagnosed with dementia or is showing sign of cognitive decline engages in estate planning. A legal document, including an estate plan, can be set aside if the individual did not have sufficient mental capacity to understand what he or she was

www.wnj.com

UPCOMING ISSUES

Hudsonville community bank completes $8 million raise

State maps optimal EV charger network

PAGE 2

PAGE 7

SERVING WESTERN MICHIGAN BUSINESS SINCE 1988

JANUARY 7, 2019 • VOL. 31/NO. 6 • $3.00

Law tying state rules to federal standard no big deal, biz groups say

www.mibiz.com

With $77M investment, Ablative could draw attention to Michigan’s life sciences industry

By ANDY BALASKOVITZ | MiBiz By MARK SANCHEZ | MiBiz Netherlands-based Gilde Fund in Kalamazoo co-led the venabalaskovitz@mibiz.com msanchez@mibiz.com Healthcare led the Series D financing ture capital round, which includes an round in Kalamazoo-based Ablative unnamed major strategic investor and KALAMAZOO — The $77 million usiness and environmental Solutions, which developed a cathseveral local investors, some of whom investment in Ablative Solutions Inc. groups were equally surprised eter system to treat uncontrollable have backed the company since its ranks as the largest known venture at one of Rick Snyder’s final acts hypertension by deactivating nerves beginning in 2011. Ablative Solutions of Kalamazoo capital deal ever in Michigan, possias Michigan governor: Signing a bill in renal arteries. The investment will fund the comdeveloped a catheter system to bly helping draw more attention to making it more difficult for state agenPetoskey-based BioStar Ventures, pany over three to four years through treat uncontrollable hypertension the state’s life sciences research and cies to adopt rules stricter than federal Michigan Accelerator Fund 1 in Grand a pivotal late-stage clinical trial in the by deactivating nerves in renal development. regulations. Rapids, and Novus Biotechnology See ABLATIVE SOLUTIONS on page 5 arteries. COURTESY PHOTO But while environmental groups say the move jeopardizes natural resources and public health, business advocates downplay the concerns. “I think everyone was a little surprised he signed it,” said Jason Geer, director of energy and environmental policy with the Michigan Chamber PAGE 11 of Commerce. Sponsored by state Rep. Triston www.mibiz.com By SYDNEY SMITH | MiBiz Cole, R-Mancelona, ssmith@mibiz.com H.B. 4205 prohibits Geer state agencies from GRAND RAPIDS — Executives at nonadopting rules more stringent than profit development organizations think federal law “unless the director of the dissolution of the Kent County Land the agency determines that there Bank Authority will affect their operais a clear and convincing need to tions, even if some of the specific effects exceed the applicable federal stanwill remain unknown until the agency is dard.” The law also exempts emerGroups still hope to form healthWest Michigan manufacturers mostly are keeping the status quo with their pre-employment drug screenofficially closed. gency situations and special educaplans if appeal proves successfuling practices even after Michigan voters legalized cannabis use in November. MIBIZ FILE PHOTO: KATY BATDORFF The Kent County Board of Commissioners tion programs. on Dec. 20 voted to dissolve the Kent County “It just requires that if a departBy MARK | MiBiz Land Bank Authority, which is operating as ment wants toSANCHEZ promulgate a rule more msanchez@mibiz.com Innova-Lab, after a lengthy discussion of stringent than federal, they just need the organization’s mission. Ultimately, the to explain it,” Geer said. “I don’t see remedy everIt’s comes, Thewhy Employers’ majority of commissioners decided the land this asf aa hindrance. showing Association still wants to offer members bank had completed its initial mission, espewe’re going beyond federal standards an option forwe’re employee cially in light of improvements in the real and justifying why doinghealth it.” coverage. The association was all set this past estate market since 2011. While more than a dozen states spring to launch an association health plan. Still, the end of marijuana proHowever, nonprofit developers who have similar laws that apply to enviManufacturers face questions Partnering with insurer Priority Health, The hibition will not mean a free-forhave come to rely on the Land Bank to ronmental standards, Michigan’s Employers’ Association planned to offer HMO over drug policies after all for citizens, according to Tami clear messy titles argued the organization applies across all state agencies. and point-of-service products to member VandenBerg, board member of still can play a role in the current market, Snyder vetoed similar legislation in Michigan legalizes marijuana employers, according to a filing with state MI Legalize, an organization that particularly given the affordable housing 2011, saying at the time he was conregulators who approved the coverage last fall. helped bring the legalization inistruggles in the region. cerned it would state’s Then came a“inhibit March 28the federal court ruling By JESSICA YOUNG | MiBiz tiative to voters. “It doesn’t seem like it cost the county ability to work withabusinesses and order by that struck down 2017 executive jyoung@mibiz.com The Michigan Regulation and really anything to have it in place,” said citizens to ensure regulatory President Trumpthat and our subsequent rules issued VandenBerg Taxation of Marihuana Act allows Jeremy DeRoo, executive director of LINC structure fits Department Michigan’s unique proby the U.S. of Labor that broadow that all adults in Michigan can legally individuals 21 years of age or older UP, a Grand Rapids-based real estate develfile.” In a bill-signing statement last of small ened the ability use marijuana, employers are weighto possess, consume, transport or process limited oper. “It seems to be more of an ideological month, Snyder said businesses his previous toconjoin together ing how the new law — and misunderamounts of marijuana or marijuana concentrate. difference between some of the commiscerns were addressed and that state health to form association standings about it — could affect their Smoking marijuana remains illegal in all public places. sioners and the role of a quasi-government rules can still be stricter “when accomplans. workforces. “People get a little too excited,” VandenBerg agency in the real estate market.” panied by the appropriate explanation “We ended up pulltold MiBiz. “You’re not going to be arrested for it. As it stands, the current Land Bank and support.” ing that off the table after Proposal 1 to legalize recreational cannabis passed 56 percent to 44 percent on the November That is a huge, huge win. That doesn’t mean you has 12 months to handle its liabilities and Geer wasn’t the only surprised thatone result from the court,” Jason Reep, presiballot and went into effect Dec. 6, making Michigan can smoke in your apartment if your landlord isn’t fulfill its agreements before it concludes. that Snyder backed said the bill. dent for The Employers’ the only state in the Midwest where adults can allowing that.” What happens after the Land Bank ceases See FEDERAL on page 3 Reep STANDARD Association, based in See LAND BANK on page 2 legally consume marijuana at any time. See DRUG POLICIES on page 4 Grand Rapids. The Employers’ Association stands among a handful of organizations in Michigan that P E R I O D I C A L S had their plans scrapped by the federal court ruling. Reep still holds out hope for launching PAGE 18 an AHP if an appeal turns out successfully. That could occur if the Department of SERVING MICHIGAN BUSINESS SINCE 1988 www.mibiz.com LaborWESTERN prevails in appealing the ruling by U.S. District Court Judge John Bates of the District of Columbia. As well, Congress could enact

Grow Michigan plans second mezz fund JULY 8, 2019 • VOL. 31/NO. 19 • $3.00

3.30.2020

Transition/Succession Planning Real Estate Spotlight: Barry County Contract Deadline: 3.18.2020

By SYDNEY SMITH | MiBiz ssmith@mibiz.com GRAND RAPIDS — The opportunity to lease brand new office space in the heart of downtown Grand Rapids offered Van Wyk Risk Solutions the chance to grow into a new location. This month, Van Wyk will be the first tenant to move into the new Warner Building, located at 150 Ottawa Ave. NW in downtown Grand Rapids. After outgrowing its space on Wealthy Street in East Grand Rapids, the insurance agency will occupy 17,500 square feet on the 10th floor of the Warner Building. Although the company viewed about 20 different potential office locations, the Warner Building came out on top because of its location, quality and amenities, and because it offered the firm the chance to move into new Class A office space, said Max Van Wyk, chairman and CEO of Van Wyk Risk Solutions. “When you’re starting from scratch in a space, I think it’s always easier and more convenient to have new space, because you can build it out the way you want it to be,” Van Wyk told MiBiz. “We needed to look at spaces where we could accommodate everyone in a central location and provide the amenities our employees deserve.” The vacancy rate for office space in the central business district and suburban market in Grand Rapids remained below 10 percent for the first time in 30 years, according to a report from the Grand Rapids office of Colliers International. The report highlighted the need for more new construction or renovations in older buildings, as companies continue to seek out amenity-rich offices to attract and retain their employees.

Education & Talent Development Deep Dive: Immigration Part 2 Real Estate Spotlight: Berrien County

6.8.2020

Industry 4.0

Contract Deadline: 4.1.2020

Commercial Lending Report Deep Dive: Immigration Part 3

4.27.2020

Contract Deadline: 5.27.2020

Drinking Economy Real Estate Spotlight: Mason County Contract Deadline: 4.15.2020

5.11.2020

NAIAS Report/Auto Industry Forecast Real Estate Spotlight: Kalamazoo County Contract Deadline: 6.10.2020

Deep Dive: Immigration Contract Deadline: 4.29.2020

6.22.2020

Court ruling dashes plans for new AHPs

Amenity-rich Class A office space still in demand in GR, suburban markets

Contract Deadline: 5.13.2020

4.13.2020

SERVING WESTERN MICHIGAN BUSINESS SINCE 1988

‘FLIGHT TO QUALITY’

5.26.2020

See CLASS A OFFICE on page 9

Closing of Kent County Land Bank presents unknowns for nonprofit developers

Could better commuter transit aid talent attraction?

PAGE 20

BUSINESS AS USUAL?

WATERLOGGED WONDERLAND

Corporations re-examine their Unseasonably rainy weather coupled with near record-high shareholder Great Lakes water levels have left many West Michigan business commitment

owners hoping the region will PAGE 10 dry out in time to salvage the season for visitors and tourists. SEE PAGE 12 SEPTEMBER 3, 2019 • VOL. 31/NO. 23 • $3.00

STORY AND PHOTO BY MARLA MILLER

Lawmakers push economic case for ‘licenses for all’

M&A remains active among West Michigan manufacturers

See AHPs on page 7

By JOE BOOMGAARD | MiBiz jboomgaard@mibiz.com GRAND RAPIDS — Tensions between Michigan craft beverage producers and the state regulatory agency appear to be ratcheting up with the filing of a new federal lawsuit, MiBiz has learned. In the case filed last week in the U.S. District Court for the Western District of Michigan, Sawyer-based Greenbush Brewing Co., Hudsonvillebased Farmhaus Cider Co., the Michigan Cider Association and Grand Rapids-based Vander Mill LLC are suing the Michigan Liquor Control Commission. The parties allege the

PAGE 11

INSIDE:

West Michigan Deals SEE PAGES 11-21

agency’s enforcement actions and licenses, was in violation of state law Regardless of the federal question revisions stateBALASKOVITZ liquor code enacted regarding the state law, Greenbush By to ANDY | MiBiz over its bonded transfers of cider, last fallabalaskovitz@mibiz.com are unconstitutional, and that which it purchased from Vander Mill. owner Scott Sullivan said the comthe state laws are preempted by federal In the court documents, Greenbush pany met the requirements in the laws regarding production sale aresaid the enforcement division told the revised Michigan Liquor Control GRAND the RAPIDS — Cityand officials of alcohol, particularly which is at acompany it “was required to ferment Code that would allow it to particireviving plans forcider, a solar project classified as wine. pate in the bonded transfer of wine. former Grand Rapids landfill as theevery drop of wine that it sold,” seized Plaintiffs, who say their businesses Greenbush produces some of its own city sorts through broader questionsall of its cider inventory and told the are being financially harmed because company to stop using its small winewine and cider under the new definiBy JESSICA YOUNG | MiBiz about potential generation at seven of the actions, also allegeproperties. the new law maker license, effectively barring the tions, thereby qualifying it under state jyoung@mibiz.com other city-owned is unconstitutionally law to be eligible for bonded transfers. The Grand vague, Rapidsleaving Office ofproducer from selling all cider and wine. beverage producers open to “arbitrary “This has happened to a number hen Grand Rapids-based Sustainability is leading an Energy The lawsuit challenges the constiand capricious” actions. of breweries before us, and for whatMulti-Automatic Tool and Advisory enforcement Committee that, amongtutionality of the seizure, which was Theother lawsuit stems is from the MLCC theeffected without a search warrant. The ever reason, no one has been willSupply Co. started searchtopics, considering enforcement division’s finding on June ing to stand up and take MLCC head ing for prospective acquisipotential for solar projects to helpstate currently is holding about $7,200 19 thatmeet Greenbush, which holds both in Greenbush’s property, according to on,” Sullivan told and MiBiz. “IfCulver, I thinkright, formed their own company to Cedar Run Decoy founders Corey Lucas, left, Boyd tions several years ago, the move came as a 100-percent renewable microbrewer and small winemaker SeeinLAWSUIT on pagePHOTO: 3 JESSICA YOUNG stores today. a reaction to many of the company’s cusenergy goal for city operations bycourt filings. produce traditional waterfowl gear not found tomers buying directly from small shops. 2025. Convinced that he needed to diverA study conducted by the U.S. sify his business in order to compete, Department of Energy’s National President James Byl went looking for Renewable Energy Laboratory opportunities, but it looked at eight sites — including took a few years for the Butterworth Landfill on the the pieces to fall into city’s southwest side — for potential place and find the solar installations. After faulty modright target. eling this summer produced results By JESSICA YOUNG | MiBiz “We hunt and we spend a lot of time out there “I began to look showing most projects would have jyoung@mibiz.com talking about how we can do things better and how three years ago, but the cost the PAGE 4 city over the 25-year life of some of the products we were using just weren’t companies that I saw the projects, officials are revisiting BATTLE CREEK — Cedar Run Decoy Co. LLC aims working for us,” Lucas said. “We wondered why at the time just didn’t the study, said Alison Waske Sutter, SEE PAGE 16 to provide hunters with new ways to get back to we couldn’t just simplify things, get back to the seem to be the right who leads the sustainability office. Byl the basics of waterfowling. basics.” fit,” Byl told MiBiz. “We anticipate the results will The startup grew out of the frustration owners As a result, the experienced hunters decided “Five, six, seven years ago, coming out of show it does make sense economiCorey Lucas and Boyd Culver experienced in tryto team up and build their own products, at first the recession, I think I needed a few years cally and financially for us to install ing to find traditional gear — think hand-carved for themselves and now for others hunting from to rebuild as well. Now, banks are willing to solar at some facilities,” Waske Sutter decoys common in their grandfathers’ generation the potholes of the prairies to the big waters of the lend and it seems like a good time.” told MiBiz. — amid the motorized cheap plastic products freGreat Lakes region. In July, Multi-Automatic, a minorityThe biggest of the eight is the quently stocked at most sporting goods shops. owned wholesale distributor of machine Butterworth Landfill site, which See CEDAR RUN DECOY on page 6 could potentially host a 15-megaSee M&A ACTIVITY on page 5 watt project, according to studies. The city pursued a 2.25 MW project there in 2016, but the plan was abandoned after the developer “disappeared” and stopped communicating, city officials said previously. $2 million, according to federal securities filings. The city hopes to issue a request Partners hope to incentivize developers to add ‘hundreds’ of units The group as of early July said in the filing that it for proposals by the end of the year had secured more than $1 million from investors. for a new project that would simiBy SYDNEY SMITH | MiBiz and securing local planning approvals from a The six investors in the fund include the larly be developed by a third party. ssmith@mibiz.com municipality, said Ryan Kilpatrick, executive direcCommunity Foundation, Holland-based finanFor at least some of the remaintor of Housing Next, an initiative focused on supcial/investment services firm Brooks Capital ing sites, however, Waske Sutter HOLLAND — A new fund aims to cover pre-develporting housing solutions in Ottawa County. Management LLC, the West Coast Chamber of anticipates the city building and opment costs to incentivize developers to add “Very often, the development community is Commerce, and members of the Padnos family owning the solar projects. affordable housing in the Holland and Zeeland going to build what they know is successful in a who own Holland-based Louis Padnos Iron and The federal study looked at areas, MiBiz has learned. market,” Kilpatrick told MiBiz. “It’s a risk and it Metal Co. Two other investors asked to remain seven city-owned sites: the Lake The goal for the Holland/Zeeland Housing Pretakes a lot of front-end work to convince a municanonymous. Michigan water filtration plant in Development Fund Inc. is to create projects that ipality that it’s the right project. Our goal would be The capital should be enough to accomplish the Ottawa County, the Market Avenue would make financial sense for a public or private to position a development appropriately for the mission of the fund, said Mike Goorhouse, presiretention basin, City Hall, the Grand developer to take on after pre-development work right group.” dent and CEO of the Community Foundation. The Rapids Police Department downis completed. Housing Next, the Community Foundation of investors are hoping to initiate “hundreds” of units town station, the Bridge Street Fire The pre-development work can include site the Holland/Zeeland Area and several investors across the targeted communities, he said. See SOLAR on page 3 control, environmental inspections, site planning helped organize the fund, which is targeting to raise See HOUSING FUND on page 15

Manufacturers prepare ahead for cyber threats

‘BACK TO THE BASICS’ Startup CedarINSIDE: Run Decoy brings traditional waterfowling Commercial gear back to the market

Lending Report

New fund aims to spur affordable housing development in Holland

Great Lakes VCs invest locally

7.6.2020

New $20M PE firm to target rural Michigan companies

Grand Rapids explores potential for Craft beverage producerssolar suepower MLCC,at allege 8 sites unconstitutional state laws, enforcement

PAGE 8

West Michigan’s Tribal Economy

INSIDE:

Multifamily development SEE PAGE 12

Contract Deadline: 6.24.2020

sales@mibiz.com | editor@mibiz.com | 616-608-6170 MiBiz / MARCH 16, 2020

YOU KNOW WHAT IT TAKES TO RUN A BUSINESS.

And we’re here to help make it happen. Whether you’re a company of one or a large scale operation, running a business is no small task. It takes passion, drive and dedication. As your business evolves, we’re here to offer experienced guidance and dedicated support to help you. 53.com/CommercialBank

Fifth Third Means Business

Fifth Third Bank, National Association. Member FDIC. 24

MARCH 16, 2020 / MiBiz

Visit www.mibiz.com