MiBiz August 30, 2020 print edition by MiBiz

Initiative hones MichiganIsrael business connection

Craft distillers: ‘We need some help’

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AUGUST 31, 2020 • VOL. 32/NO. 23 • $3.00

SERVING WESTERN MICHIGAN BUSINESS SINCE 1988

Economists predict gradual economic recovery, though slower for some sectors

New $50 million VC fund aims to keep businesses local for next generation By MARK SANCHEZ | MiBiz msanchez@mibiz.com KALAMAZOO — A new $50 million venture capital fund that organizers launched in Kalamazoo seeks to offer opportunity to a new generation of business executives while keeping established businesses local. Formed by two business professors at Western Michigan University, the Sleeping Giant Capital Principled Impact Fund I LLC h a s a l re a d y secured “significant” commitments from investors, said Doug Lepisto, an associate professor at Lepisto the Haworth College of Business. “Our fundraising is really taking off now and we’ll have our first closing very soon. We’ve made significant progress toward that $50 million,” Lepisto said. “The big vision here is really trying to create a big win and solve a bunch of problems that we see in our community here in West Michigan.” Among those problems is the “tremendous number” of aging Baby Boomers who own a business, want to retire and lack a succession plan, Lepisto said. Fund organizers want to provide an option for those companies to remain locally owned, he said. “The risk for those companies obviously is not being able to survive, or maybe being acquired by private equity or other folks who maybe are not invested in our community and have the same long-term mindset that we have in thinking about the interest of jobs and the community first,” Lepisto said. “We have a vision from now that we can have all of these local companies stay.” See NEW VC FUND on page 18

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By MARK SANCHEZ | MiBiz msanchez@mibiz.com

E “an emotional rollercoaster,” said Jeffrey Sorensen, director of Holland-based LGBTQ resource center Out on the Lakeshore. “There were people who got up and told their stories about how these forms of discrimination have affected them, talking about either themselves or their children and their friends and family,” Sorensen said. “A lot of it was hard to hear but it’s the truth of the matter.” The ordinance language was based on a model provided by the Michigan Department of Civil Rights and states people may not discriminate on the basis of sexual orientation, gender expression and gender identity — among other characteristics

conomic conditions for Michigan and across the U.S. should keep improving through 2020 and into 2021, according to recent outlooks. However, some economists anticipate a “two-track” recovery with some industries recovering jobs faster than others, while unknowns related to a potential second wave of COVID-19 infections and federal relief add uncertainty to the equation. Banks, universities and state budget officials in recent weeks have released economic data tracking how Michigan is recovering from the pandemic-induced recession and where the state and country are headed with Real GDP and unemployment. University of Michigan economists predict Real GDP for the U.S. to rebound to an annualized rate of 20.9 percent for the third quarter as consumer spending, aided by federal stimulus funds, recovers to pre-pandemic levels. That level of GDP growth for the July-toSeptember period would follow a record 32.9-percent decline in the second quarter when the COVID-19 pandemic shut down much of the economy. Given the depth of the second quarter plunge, U-M economists predict full-year Real GDP to decline 4.9 percent for 2020. Daniil Manaenkov, a U.S. forecasting specialist with U-M’s Research Seminar in Quantitative Economics, called the third

See HOLLAND ORDINANCE on page 15

See ECONOMIC OUTLOOK on page 13

Out on the Lakeshore Director Jeffrey Sorensen (above) and business advocacy groups say Holland’s recently passed anti-discrimination ordinance will help retain and attract talent to the lakeshore community. MIBIZ PHOTO: SETH THOMPSON, GREEN FROG PHOTO

Biz groups back new Holland LGBTQ anti-discrimination ordinance By KATE CARLSON | MiBiz kcarlson@mibiz.com HOLLAND — Business leaders and elected officials in Holland say the city’s recently approved anti-discrimination ordinance codifying protections for the LGBTQ community will be beneficial for retaining and attracting talent. The Holland City Council’s Aug. 19 meeting stretched into the early hours of the next day after about 60 people voiced opinions for and against the ordinance during a four-hour public comment period. The Holland City Council ultimately voted 8-1 to approve the ordinance. The city council meeting — which was held in person with social distancing restrictions — was

‘Highest and best use’ A half dozen companies are operating or planning commercial cannabis growing facilities in Grand Rapids — repurposing industrial property while creating jobs By KATE CARLSON | MiBiz kcarlson@mibiz.com GRAND RAPIDS — Idled and deteriorating industrial buildings across the city are being transformed with multimillion dollar investments to support cannabis growing operations. Tw o c o m m e rc i a l g r ow i n g sites recently held ribbon-cutting

ceremonies in industrial corridors on the city’s south and northeast sides, while four additional sites have been licensed and are in various stages of development. Companies have promised hundreds of jobs to launch the grow operations. The buildings are spread across the city and comprise hundreds of See CANNABIS on page 7

GRAND RAPIDS COMMERCIAL CANNABIS GROW FACILITIES LICENSE APPROVED

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Fluresh LLC

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8/8/19

Green Skies - Healing Tree LLC

330 Ann St. NW

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Edenz LLC

925 40th St. SE

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Oak Flint LLC

701 Ann St. NW

5/14/20

Terrapin Investment Fund III LLC

2055 Oak Industrial Drive NE A

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SOURCE: CITY OF GRAND RAPIDS

Nonprofit analysis confirms racial disparities in income, public health PAGE 21

INSIDE:

Insurance SEE PAGE 9

MECHANICAL VENTILATION FOR COVID: WHAT’S NEXT?

f you own or operate any type of facility, in the last six months you read articles, attended webinars, and maybe even used Google to search “HVAC ventilation COVID.” Although you learned about the effectiveness of humidifiers, ultraviolet lights, and bipolar ionization, your operating budgets have tightened up and it is hard to know if these technologies will be right for you in the long run. You likely reverted to simple HVAC changes such as extending ventilation schedules; reviewing your HVAC control systems; inspecting outdoor air intakes and air filters; upgrading to MERV-13 filters; and manually increasing outdoor air damper positions. These are all examples of measures that have helped keep businesses going. Now may be the right time to further improve the way you go about increasing ventilation rates. Ideally, we can move away from arbitrary increases in ventilation and really start to make better changes. The following recommendations could be your next steps to improve how you add more outdoor air (OA).

ASHRAE 62.1 Ventilation ASHRAE 62.1 Standard for Ventilation and Indoor Air Quality has set the standard for ventilation for a while now. While building operators have attempted to increase ventilation rates to mitigate COVID risk, unless both actual and target airflow

rates are known, the increases will be somewhat of a guess. Using ASHRAE 62.1 can eliminate the guesswork. Determining ASHRAE 62.1 airflow rates does require some leg work to correctly input all parameters into your calculations, and prior knowledge of your building and the Standard is helpful. The payoff is that once the calculations are done, you then have a standard against which you can weigh actual OA rates. After establishing minimum OA quantities, you should adjust system-level flow rates to match. If you have OA flow stations that actively read airflow, these should be calibrated. If damper positions are the only indicator of OA quantity, actual flow measurements should be correlated to damper positions. Both ways allow actual OA to be compared to target rates. To take it a step farther, you can balance airflows at the zone/space level. This will help ensure the system’s ventilation is correct and each space is properly ventilated. Once base airflows have been established, it is easy to accurately increase ventilation airflow.

Enhanced Indoor Air Quality Mode Many facility managers have manual control overrides to bring in more outdoor air. This can be simple and is sometimes effective. Yet it is worth

considering if ventilation changes can be done in a way that also minimizes energy consumption while still being easy for the operator to enact. What if a simple push of a button in your control system automatically enabled an “emergency” or “enhanced” indoor air quality (IAQ) mode that increased outdoor air when the systems can handle it and when it is most cost-effective to do so? Incorporating this idea takes a little more understanding of your systems and more control programming, but it can have a substantial benefit both now and in the future. For implementation, you will need to customize control sequences to fit your system. But it does not need to be overly complicated. Demandcontrol ventilation can be automatically disabled; economizer enabling can be extended outside of normal temperature or enthalpy ranges; and the limits of increasing outdoor air can be set by factoring in loading on heating or cooling systems. This will help ensure you have system capacity and also help keep energy costs manageable.

Summary The good thing about perfecting your OA flow rates and creating automatic controls for enhanced IAQ is these measures will serve you well beyond any immediate COVID needs you face. Reestablishing ASHRAE 62.1 ventilation rates is a good practice often included in retro-commissioning, and having an easy way to increase ventilation at the push of a button while simultaneously minimizing energy consumption will be a benefit in emergencies. While there is no one-size-fits-all approach for HVAC, most facilities can customize these universal strategies to be effective regardless of system type, changes you may have already made to ventilation controls, or what the future of your facility looks like regarding occupancy levels and space usage.

FREE WEBINAR:

COPING WITH COVID-19: HEALTH INSURANCE Small businesses are the core of our community, employing more than half of the workers in West and Southwest Michigan. Local small business owners are struggling mightily during the COVID-19 pandemic. They’re feeling isolated and confused by the avalanche of information about statewide executive orders, SBA lending programs, banking requirements and how to take care of their employees, vendors and landlords. They need help, advice, resources and, importantly, a sense of connection with other small business owners who are experiencing many of the same issues. This free MiBiz webinar, hosted by MiBiz Senior Writer Mark Sanchez, features Shannon Enders of Lakeshore Employee Benefits, David Smith of The Employers’ Association, and Drew VanDyk of Olivier-VanDyk Insurance Agency Inc.

SEPTEMBER 9, 2020, 11 AM Sign up today at mibiz.com/healthcare-webinar WEST MICHIGAN BUSINESS NEWS AND INTELLIGENCE

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A previous rendering of Indianapolis developer Flaherty & Collins Properties’ proposed $268.5 million project at 201 Market in Grand Rapids that has been scrapped after the city and developers unsuccessfully pursued Transformation Brownfield tax incentives. COURTESY RENDERING

Standards ‘very high’ for Transformational Brownfield funding tool By KATE CARLSON | MiBiz kcarlson@mibiz.com GRAND RAPIDS — A tax incentive the city of Grand Rapids and an Indianapolis developer unsuccessfully pursued to transform publicly owned riverfront property has only been used twice in Michigan. Last month, the city terminated its exclusive development agreement with Flaherty & Collins Properties to develop 201 Market Ave. SW after selecting the firm in 2017, as MiBiz first reported. The city and developer were anticipating the $268.5 million project would qualify for the state’s Transformational Brownfield program, which was approved by state lawmakers the same year the city selected Flaherty & Collins. After engaging in pre-application discussions with the Michigan Economic Development Corp., it became clear that the significant residential component of the 201 Market project did not meet the requirements for the Transformational Brownfield program, said Grand Rapids Deputy City Manager Eric DeLong. Flaherty & Collins was proposing to construct 694 housing units catering to a variety of income levels and a 358-room hotel. “We have reviewed opportunities for use of this program, but have not found an investment project that meets specific Transformational Brownfield Program requirements for new investment and new job creation,” DeLong said. A significant amount of job creation is needed to qualify for the Transformational Brownfield tax incentives, said Lori Mullins, MEDC director of community development and incentives. “There are certain projects that just don’t include that,” Mullins said. “There might be a different tool that might be a better fit.”

Lansing-area economic developers have also looked into using the Transformational Brownfield tool, but similarly haven’t yet found a qualifying project. “Unfortunately, beyond several extremely preliminary discussions about the possible use of that tool for projects, we have never had any serious conversation about it,” said Bob Trezise, president and CEO of the Lansing Economic Area Partnership. “The standards are very high and very difficult to ever realistically meet.” The Brownfield Redevelopment Financing Act of 1996, which allows for the capture of incremental property taxes to help redevelop a site by cleaning environmental contamination, was later amended to include the Transformational Brownfield Plan. The change went into effect on July 24, 2017, and allows for the capture of five new sources of tax revenues associated with a project in addition to the property taxes: construction period income tax, construction period sales tax exemptions, construction period use tax exemptions, income tax capture and withholding tax capture. Instead of being limited to environmental factors, such as poor soil condition like a traditional brownfield plan, the eligible activities for Transformational Brownfield incentives include construction and renovation costs, Mullins said. Brian Prince, Flaherty & Collins’ vice president of development, criticized the Transformational Brownfield program when asked why the company didn’t secure the incentive for the 201 Market project. “Honest answer is that many feel that the program was only set up to help Dan Gilbert in Detroit,” Prince said in an email to MiBiz. Since it was created, the Transformational Brownfield Plan has been used for only two projects across the state, including one in downtown Detroit in 2018 for Bedrock Management Services LLC. (Gilbert founded Bedrock Management.) The second was approved last year for the redevelopment of a former paper mill in Vicksburg, a village of 3,400 people located 15 miles south of Kalamazoo. Mullins said no other Transformational Brownfield Plan applications have come before the Michigan Strategic Fund. “The two projects that have been approved are truly transformational and are bringing large amounts of investment and jobs to the communities that they are in,” Mullins said. “This gives the state as a whole the ability to use tax increment financing to support some of these projects that have a greater financing gap in what otherwise would have not been able to have been supported.”

MiBiz partners in launch of Tribal Business News By MIBIZ STAFF GRAND RAPIDS — Indian Country Media LLC is partnering with MiBiz Inc. to launch a new niche business publication. Tribal Business News will launch Oct. 1 and focus on tribal economic development, entrepreneurism and government and policy issues, the companies announced last week. The online niche business publication will offer a range of news, analysis and research on a paywall-protected website and daily e-newsletter. The company plans to launch a print edition and other specialty products in 2021. “The tribal economy is a $130 billion economic sector that’s hidden in plain sight,” said Tribal Business News Editor and Publisher Levi Rickert, a member of the Prairie Band of Potawatomi. “Most people equate tribes with casinos, but that is only a part of the picture,” Rickert

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added. “Over the past two decades, tribal investment in non-gaming economic development and the rise of entrepreneurism among Indigenous peoples have grown significantly, and that’s also spurring economic growth and new jobs Rickert for American Indians and Alaska Natives. We intend to shine a light on this emerging economy with Tribal Business News.” Rickert is also the founder, editor and publisher of Native News Online, a general news website covering Indian Country. With Tribal Business News, readers will have access to business journalism tracking startups, entrepreneurship, M&A activity, business best practices and other economic news designed for Native and non-Native business readers, he added.

Grand Rapids-based regional business publication MiBiz is a partner in launching Tribal Business News. As part of the partnership, three MiBiz Inc. executives will play key roles in the daily operations for the new publication: MiBiz Publisher Brian Edwards will serve as associate publisher of Tribal Business News, Editor Joe Boomgaard will take on managing editor duties and newsroom management, and Richard Tupica will become sales director. “The MiBiz team brings a depth of experience in business journalism and entrepreneurial publishing endeavors,” Rickert said. “I’ve enjoyed working with them to expand and enhance Native News Online in 2020 and look forward to their help in launching and growing Tribal Business News. They share the overall vision of changing the narrative about Indian Country by providing high-quality journalism that’s fair, balanced, accurate and insightful.”

Editor Joe Boomgaard / jboomgaard@mibiz.com Managing Editor Andy Balaskovitz / abalaskovitz@mibiz.com (energy, policy) Senior Editor Jayson Bussa / jbussa@mibiz.com (manufacturing, tech, sports) Senior Writer Mark Sanchez / msanchez@mibiz.com (finance, health care, life sciences) Staff Writer Kate Carlson / kcarlson@mibiz.com (real estate & development, small biz) Contributing Reporters Marla Miller, Jane Parikh Contributing Photographer Seth Thompson Copy Editor Claire Boomgaard VP of Production & Audience Development Kristi Kortman / kkortman@mibiz.com Senior Advertising Consultant Shelly Keel / skeel@mibiz.com Digital Specialist Danielle Affholter graphics@mibiz.com

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Michigan Israel Business Accelerator’s new initiative to help local companies harness innovation By JAYSON BUSSA | MiBiz jbussa@mibiz.com

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 highquality journalism, including web-only stories, breaking news, research and exclusive reporting on West Michigan business news that matters.

n a business climate in which manufacturers are pressured to stay up on the latest technology, there is little wonder why Michigan-based companies might look to Israel for best practices. In fact, one organization is making it easy for them to do so. The Michigan Israel Business Accelerator (MIBA) was established in 2007 and was developed both to create and strengthen economic ties between Michigan and Israel. Most recently, MIBA is planning to create workgroups consisting of both Michigan and Israeli businesses under what is called the Innovation vs. Corona initiative. This is where company leaders work to identify needs and highlight opportunities as Michigan begins to recover from the COVID-19 pandemic. The initiative formally kicks off on Aug. 31 with a series of virtual business-tobusiness meetings that will develop workgroups that Hiipakka focus on specific industry clusters. “T h is is big ger t ha n hand sanitizer and facema sk s a nd plex ig la ss,” MIBA CEO Scott Hiipakka told MiBiz. “How do we learn from the lessons of the past five months and t hen how do we br i ng Burdette together industry thought leaders a nd say: ‘We’ve clearly experienced some adversity, how do we learn from that adversity and how do we recover faster?’” “In Israel, a lot of its innovation is a result of necessity and survival,” added Hiipakka, whose organization features six full-time staff members, including two based in Israel. “Like it or not, in Michigan, we are now forced to adapt or our economy is going to suffer.”

Innovation in manufacturing

“The Big Three all now have a presence in Israel and so do, really, the majority of them. Every large company that exists in the United States has some form of office or representative in Israel to harness the opportunity to partner in innovation,” Hiipakka said.

The Michigan Israel Business Accelerator focuses on five different industry clusters: mobility, defense, cybersecurity/artificial intelligence, health and life sciences and food and agriculture technology. According to Justine Burdette, manufacturing is the common denominator of sorts. Established relationship “Woven throughout all of those (industries) Multiple administrations have peeked over Israel’s is advanced manufacturing,” said Burdette, vice shoulder for ideas and best practices over the president of technical services for The Right years. Hiipakka recalled when then-Gov. Jennifer Place Inc. and regional director of the Michigan Granholm took a trip to Israel for those exact purManufacturing Technology Center-West. poses, but the relationship between Michigan and Burdette witnessed Israel’s innovation firstIsrael didn’t really formalize hand in February when she until Gov. Rick Snyder took joined a delegation on a office. trip MIBA took there, which In early 2017, Snyder focused on Industry 4.0. led a seven-day investment “Whether it’s for your mission to Israel, a trip to food and the ag industry or probe for opportunities in for health and life sciences, everything from academic that backbone of manufaccooperation to cybersecuturing is woven throughrity collaboration. out that,” she said. “It’s very — SCOTT HIIPAKKA “Gov. Snyder, I think similar to us in Michigan. CEO of Michigan Israel Business because of his business We have a great diversity of Accelerator background perhaps, was manufacturing industries. fascinated with the innovaYes, we are very heavy on tion and opportunities he automotive, especially in saw in Israel,” Hiipakka said. Southeast Michigan, but the amount of stuff we Snyder went on to approach the Michigan know how to do and make in Michigan is, bar Economic Development Corp. and eventual none, some of the best in the country.” MIBA Board Chairman Mark Davidoff of The When it comes to manufacturing, Israel’s thrivFisher Group to create the formal relationship. ing market of tech startups has been enough to catch “There is just so much synergy that exists the attention of some leading business executives. between the two ecosystems across multiple Considered a hotbed for innovation — boastindustry clusters,” Hiipakka said of Michigan ing the largest number of tech startups per capita and Israel. “It was under his leadership that in the world — Israel has not only attracted the the relationship was truly forged. … Also, Gov. Big Three Detroit automakers but also a wide Whitmer’s first (international trade mission) as range of Tier 1 suppliers. a sitting governor was to Israel and MIBA played Last summer, Ford Motor Company opened a supporting role in that capacity.” up a research center in Tel Aviv. The facility conHiipakka said Israel’s economic dynamic tains a vehicle lab and serves as a hub for scouting draws parallels to what we see in Michigan. tech startups. Just before Ford Research Center “Everybody knows everyone in Israel,” he Israel opened its doors, Renault and Nissan also said. “For a population under 10 million peoestablished a similar automotive technology cenple, it’s a very connected country. It does remind ter. BMW, Hyundai, Bosch and Lear are among me of the Grand Rapids area. (That) ecosystem the other automotive manufacturers that have is also very connected.” established themselves in Israel.

“Like it or not, in Michigan, we are now forced to adapt or our economy is going to suffer.”

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EMBRACING CULTURE

Manufacturers can build a culture of resilience and innovation through empathy and communication allowing any ridicule, laughter or other negative behavior when people bring up concerns. He also emphasized the importance of creating positive two-way communication channels where all parties’ views are heard and respected. “You only have to speak sternly and shut someone down once for that to have ripples through your organization,” he said. “If you want the best of your people and the best of your thinking, that’s probably not the best way to approach it.”

AN EMPHASIS ON EMPATHY During the webinar, Holinski pointed to research conducted by Stanford University which found empathy was a hallmark characteristic of a successful leader. Holinski noted empathetic leaders tended to yield an innovative and resilient organization, whereas a lack of empathy created an atmosphere with low employee satisfaction and high turnover.

espite the upheaval caused by COVID-19, the global pandemic has opened the door for manufacturers to improve one of the most untapped methods of increasing company performance: culture. While executives tend to focus on more tangible aspects of a business, such as compensation and organizational structure, experts believe creating cultural engagement can improve financial performance as much as three-fold. With the nature of work in the manufacturing sector currently in flux due to COVID-19, these experts believe companies have an opportunity to make lasting cultural changes that could drive performance, innovation and resilience in the years to come. “Culture is a strategic lever that is underutilized by most organizations,” said Ed Holinski, a Cultural Advisor at Shepherd Advisors. “It should be reframed as a strategic priority that is essential for short term and long-term performance. If you don’t get culture right, even if you get all the other things right, it’s not likely you’ll get the performance from the organization.” Holinski was speaking during the third installment of the 2020 “Back to Manufacturing Basics” webinar series hosted by the Michigan Manufacturing Technology Center – West and MiBiz. As part of the webinar, Holinski, along with Justine Burdette, Vice President of Technical Services at The Right Place, Inc. and Regional Director of the Michigan Manufacturing Technology Center, spoke about the importance of understanding culture and its impacts on an organization. Though a nebulous concept in some cases, culture encompasses the entirety of an organization, Burdette said. Culture is visible in everything from

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how an organization treats its interns, to how it uses its founding principals to navigate forward during uncertain times. While much of an organization’s culture is driven by its leadership, particularly in larger companies, each person has an impact on improving culture. “It really doesn’t matter what your role is, you own a piece of culture and you actually have an ability to influence it,” Burdette said.

CREATING CULTURE For Holinski, creating a resilient and innovative culture comes down to listening, openness and empathy – particularly in challenging times such as the current global pandemic. “A lot of organizations are accustomed to one-waycommunications,” he said. “They really want people to understand where the organization wants to go. They’re hopeful they understand the purpose and the mission… but they’ve taken less time in listening to employees in a meaningful way.” Holinski stressed the importance of active listening as an essential building block of positive cultural shifts, noting that active listening goes far beyond calling on someone in a meeting just for the sake of it. Employees need to know they are heard and that their outlooks are validated and understood, even if those perspectives are not necessarily shared by company executives. Active and engaged listening will be particularly important as the current global pandemic subsides and more people return to work uncertain and potentially disgruntled about the path ahead, Holinski said.

“This crisis is certainly pressure testing leaders in a way they haven’t been tested before,” Holinski said. “It doesn’t mean that you need to puff your chest up and show how strong you are. Instead it means you need to be open and listen to people in a different way and connect with them.”

AN OPPORTUNITY FOR CHANGE While grooming empathetic leaders and improving two-way communication are essential to building an innovative culture, Holinski noted those improvements formed the building blocks of a larger goal of establishing a resilient culture going forward. Though the global COVID-19 pandemic has disrupted so many aspects of every-day business in the manufacturing sector, Holinski and Burdette both see the disruption as a perfect time to implement change. Manufacturers have an opportunity to “regenerate” their cultures on a foundation of communication and empathy, Holinski said. “This is not going to be the last time that we get hit with a shock like this,” he said “We will get through it and there will be others that come in behind it. As opposed to snapping back into place to what we knew before this event, we’ll be much better served to say ‘we’ll be ready for the next one, even readier than we were for this one because we’re going to have an adaptable culture.’”

Find the webinar recap at mibiz.com/backtobasics

Holinski also pointed to the importance of building psychological safety within the company by not

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Accelerator kitchen to offer food startups a place to scale up in Southwest Michigan By JAYSON BUSSA | MiBiz jbussa@mibiz.com BATTLE CREEK — Economic development organization Battle Creek Unlimited and St. Philip Roman Catholic Church in Battle Creek have come together for a project that embraces the identity of the Cereal City. Just recently, their Southwest Michigan Accelerator Kitchen project got a major boost forward. “Battle Creek has a history of food companies here — food is in the DNA of this city,” said Shabaka Gibson, vice president of Battle Creek Unlimited, a nonprofit that serves as the economic development arm for the city. “Because of that, we have a lot of food-related talent in the area and a lot of food business supporting assets. That combination has turned into a lot of really small, micro businesses that are getting started. “The impetus for doing this project was the fact that we had all these small food companies that had no place to grow.” The desire to support late first stage or early second stage food businesses has shaped the Southwest Michigan Accelerator Kitchen, a facility that will take residence in a historic, unused building owned by the St. Philip parish, located at 30 W. Van Buren St. in Battle Creek. Battle Creek Unlimited became involved with the project in 2018. Gibson and his team worked with St. Philip to shape the church’s original vision, which was an incubator kitchen and space for communit y programming that would focus on health and nutrition for

The Southwest Michigan Accelerator Kitchen, planned at the historic Tiger Room in downtown Battle Creek, aims to retain food-related talent in the area. COURTESY PHOTO AND RENDERING vulnerable populations throughout the city. Over the last two years, the groups raised private funds and applied for grant dollars to bring the new vision to fruition, but a recent one-to-one grant from the U.S. Economic Development Administration (EDA) pushed it over the finish line. The EDA awarded Battle Creek Unlimited $2.1 million for the project. The organization will now move forward with securing a general contractor and subcontractors to provide renovations to the five-story, 20,000-square-foot

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building called The Tiger Room, which is on the historic registry but has gone unused for decades. Gibson was hesitant to put a timeline on the project, but estimated that it could be completed by late spring or early summer of next year, or however quickly federal grant dollars allow them to move.

A home for food business Connie Duncan, project manager at St. Philip, explained that in addition to the church’s public programming, the original vision for the facility was to create an incubator kitchen where aspiring culinary professionals would have access to the resources to turn their raw ideas into a food business. However, with Battle Creek Unlimited involved, both sides of the partnership began to take notice that Southwest Michigan already had incubators and once new food business ideas were born, they had nowhere to go. “There really isn’t (an accelerator kitchen) in Southwest Michigan at all,” Duncan said. “We have all the incubator kitchens who are graduating folks and they don’t have anywhere to go. We want them to stay in Southwest Michigan and of course we want them to stay in the Battle Creek area, as well. This is the place to get support for that growing business so that it can sustain itself afterward.” The kitchen, which will be situated on the ground floor of the facility, will service two early stage food production companies and will also be home to product testing and workforce training. Ultimately, the accelerator kitchen will serve as a bridge for young food companies that still are not equipped to invest in their own facilities. At the same time, St. Philip is able to maintain its vision of serving the community by utilizing 2,000 square feet of space on the second floor for public programming. The remaining three floors will be leased to tenants, with hopes that the space will also be used by food companies. “We didn’t want to create programming in a facility where, after renovations, we had to continue looking for soft funds to support the programming,” Duncan said.

Community support

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Gibson and Duncan both cited community support for moving the project along. It’s impossible to talk about the vibrant food economy in Battle Creek without mentioning its cornerstone in Kellogg Co., which put its

stamp of approval on the accelerator kitchen with a $500,000 gift and also will serve as an active partner. “(Kellogg) did give us a lot of money, which is great, but the biggest value that they’ve given us is providing us with their time and their talent,” Gibson said. “That’s stuff that you can’t buy. We really appreciate that. And all the other food companies — the big ones and the small ones — they’re all very happy to see this happen because it strengthens the entire economy for this general area.” Kellogg Co. will offer subject matter expertise and also provide small-scale manufacturing support for accelerator participants through its pilot plant, which is located in the W.K. Kellogg Institute for Food and Nutrition Research in Battle Creek. “We’ve been proud to call Battle Creek home since the company was founded in 1906,” Kris Bahner, spokesperson for Kellogg, said to MiBiz in a statement. “Our founder, W.K. Kellogg, was a true visionary and food entrepreneur. Over a century later, his legacy lives on, and nowhere is it more prevalent than right here in our hometown, where we are a proud member of the community and an active part of the local food ecosystem. “Investing in the Southwest Michigan Accelerator Kitchen allows us the opportunity to embrace our entrepreneurial spirit, while also sharing our expertise with the next generation of food innovators in our community.”

“We have all the incubator kitchens who are graduating folks and they don’t have anywhere to go. We want them to stay in Southwest Michigan and of course we want them to stay in the Battle Creek area, as well. This is the place to get support for that growing business so that it can sustain itself afterward.” — CONNIE DUNCAN Project Manager at St. Philip Roman Catholic Church

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REAL ESTATE & DEVELOPMENT CANNABIS

we have boot-strapped this whole thing ourselves so far, but in order to execute this project we’ll have to seek some outside funding.” Access to capital is one of the biggest barrithousands of square feet of industrial property. ers to entry for cannabis businesses, especially Each of the six sites are licensed to grow up to smaller entities, because most banks are unwill1,500 plants, while five of them have applied for ing to work with a business that is still considered recreational grow licenses. illegal under federal law, said Ben Wrigley, partAfter securing industrial property, companer at Grand Rapids-based CannaLex Law. While nies then make large investments in the highlarge companies aren’t exclusively getting into the tech indoor growing process the line of busigrowing business, they have the upper hand with ness requires. In doing so, obsolete or underused capital resources to acquire property, Wrigley said. buildings are often rehabilitated while the opera“(Larger companies) also have the experience, tion can create up to dozens of jobs. which gives them a leg up over people who are tryOak Flint LLC is one of the six companies ing to get into this industry,” Wrigley said. “Small that has been approved for a medical cannabis businesses still want in and there are opportunities grow facility in the city, which is required before if you find the right spot, the right piece of property recreational approval. Oak Flint President John and work with your local municipality.” McLeod hopes to secure recreational licenses Pharmhouse Wellness is a locally owned canthis fall for what will be a growing and processing nabis business and its founder, Casey Kornoelje, is facility and provisioning center at 701 Ann St. NW. planning to open a grow operation at 819 Wealthy “That site was obsolete, there is no traditional St. SW. The company operates a medical cannabis user that is going to come in and take that site and provisioning center at 831 Wealthy St. SW. occupy that amount of square footage,” McLeod “The difficulty of locating a building is an obstasaid. “Its highest and best use is for cannabis.” cle right out of the gate,” Kornoelje said. “These Oak Flint plans to invest at least $20 million facilities also require significant capital investto renovate the deteriorating 260,000-square-foot ments, purchase of real estate, capital expenditure building situated on 11 acres in the city’s northwest of industrial equipment — it’s really expensive.” side. The goal is to have the first phase of cultivaThe city of Grand Rapids has proceeded into tion up and running in six months, McLeod said. cannabis regulation with caution, deliberat“When people talk about what the benefits ing for months over zoning and other regulaare to municipalities and the state for recreational tory details for both medical and recreational cannabis, they focus on the tax revenue,” businesses. McLeod said. “The real benefit of the recKornoelje wants to maintain business reational cannabis industry is rehabties in Grand Rapids rather than conbing these large underused sites sider locations where real estate and creating jobs.” is less expensive, he said. Oak Flint — whose retail busi“I believe in Grand Rapids and ness operates under the Cloud want to operate and invest here,” REAL ESTATE + DEVELOPMENT Cannabis Co. brand — also has he said. “When an opportunity Sponsored by a cannabis cultivation facility in presented itself to operate nearby ROCKFORD Flint and a provisioning center (to the provisioning center) it was CONSTRUCTION CO. in Muskegon Township. McLeod a no-brainer to pursue this.” expects about 100 people will be At 3,822 square feet, hired to work at the company’s Grand Rapids Kornoelje’s grow facility on Wealthy Street would grow facility once it’s fully operational. be relatively small compared to larger grow operThe first commercial cannabis grow facilities ations that can span several hundred thousand in the city were opened recently by Coloradosquare feet. Meanwhile, it’s easier for larger combased Terrapin Investment Fund III LLC at 2055 panies with more capital to create economies of Oak Industrial Drive NE and Fluresh LLC at 1213 scale, Kornoelje added. Phillips Ave. “The larger the facility, the cheaper it is for Fluresh opened its flagship medical provisionyou to produce more product,” he said. “For the ing center in February in Grand Rapids, located in mom and pops that want to grow, I think there’s the same building as its new grow facility, which opportunity but you’re going to be forced to play was formerly a Benteler Automotive plant. Some in a totally different market segment.” of Fluresh’s founders were from the area, which Like Pharmhouse Wellness, Fluresh also was was part of the decision to focus on Grand Rapids, challenged at first with finding locations for its said Fluresh CEO Tom Benson. They had planned all along to develop a grow facility at the site. “We developed an existing building with a storied history and beautiful interior,” said Chris Anderson, Fluresh’s general counsel and chief regulatory officer. “It was a complete overhaul of the facility that had been vacant for about 10 years.” Fluresh expects to create 100 or more jobs at the facility, Anderson said. Terrapin opened its growing and processing facility in June. The Colorado company paid $1.4 million for the building, which used to house the nonprofit Kid’s Food Basket. The company estimated it would hire 30 people to work in the 35,000-square-foot building. The three other grow facilities that have been approved by the city — owned by Green Skies Healing Tree LLC at 330 Ann St. NW, Edenz LLC at 925 40th St. SE, and Green Dragon at 2350 29th St. SE — are not yet fully operational. “Because of the intensity of the process, we’re not operational yet and are still working on renovating the building,” said Green Skies spokesperson Andrea Hendrick.

Continued from page 1

Fluresh LLC’s commercial cannabis grow facility is among six facilities operating or under development in Grand Rapids, bringing new life to industrial properties with promises of jobs. COURTESY PHOTOS

provisioning center and grow facility that met all of the city’s requirements. “We actually looked at a number of locations in Grand Rapids and were hoping to have multiple locations, but ended up just having the one location,” Benson said. “It was challenging on the grow side as well — we looked at a number of pieces of real estate but chose where we are for the location and the neighborhood. We thought it was an area that we could bring jobs to.” Kornoelje plans to invest $1 million to repurpose Pharmhouse Wellness’ building, and hire 10-15 people once the facility is operational. “It’s located in an industrial complex, which really intrigues me and I believe cannabis falls into that in a unique mixed-use kind of way,” Kornoelje said. Opening a grow facility makes sense for Pharmhouse because it will allow the company to control costs better by producing its own product and controlling the supply chain, Kornoelje explained. “The state of Michigan has an unpredictable supply situation for provisioning centers,” he said, “so this just allows a little more control.”

BUILDING MORE THAN A RESUME

Finance, property obstacles While Oak Flint has been self-funded to this point, McLeod said the company likely will need outside investors to complete the build out and renovation at 701 Ann St. NW. “Sometimes when that funding comes in it’s at ridiculous rates,” McLeod said. “Fortunately, Visit www.mibiz.com

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FOCUS: INSURANCE

Pandemic slows insurance M&A activity, though deals still flowing By MARK SANCHEZ | MiBiz msanchez@mibiz.com

ince forming two years ago, High Street Insurance Partners Inc. grew steadily through acquisitions. The Traverse City-based company acquired 13 insurance brokers and agencies in Michigan, Pennsylvania and New York. Six of those deals came in 2020 and were in the M&A pipeline before the COVID-19 pandemic hit this past spring. As the industry consolidation that’s been occurring for several years eases amid the pandemic, High Street Insurance Partners has seen no lack of opportunity to buy. High Street has a “very robust pipeline in the next few months as well,” with five more deals now under letter of intent that could close this fall, said High Street CEO Scott Wick, who formed the company in 2018 with Detroitbased private equity firm Huron Capital. “We feel very good about what we’ve been able to build in two years here,” Wick said. “We’re opportunistic and we continue to have Wick a nice organic strategy with our partners introducing us to other potential partnerships, and so we feel very good about where things are going and how things are progressing with our pipeline. It’s as full as it’s been.”

Deals slowed overall High Street pursues its M&A strategy this year in a softer environment, although deal flow through the first half of 2020 was still higher than four years ago. Optis Partners LLC, a Chicago-based firm that tracks M&A in the industry, counted 288 transactions in the first half of 2020, a decline from the 328 in the first six months of 2019. The second quarter alone had 126 closed transactions, the lowest deal volume since the fourth quarter of 2016 “as the COVID-19 pandemic creates uncertainty in the marketplace,” according to Optis Partners. The firm noted in a recent report on the second quarter that transactions “continued to be closed” despite the COVID-19 pandemic, although “a number of buyers dramatically slowed their M&A activity due to travel and meeting limitations and concerns over the certainty of revenue projections.” “We anticipate the slowdown in M&A activity to continue at least through the third quarter and possibly beyond until there is more certainty of the impact from COVID-19 and buyers can rebuild their M&A inventory,” according to the Optis Partners report. Even with the uncertainty over the economy, some acquirers in the industry are now beginning to return to the market, said Optis Partners Managing Director Tim Cunningham. He expects lower deal flow in the second half of the year and a “bit of a flight to quality” among active acquirers, he said. “Things have slowed down a bit. My experience now is the active buyers have gotten back in the game and I think they’ve become a little more selective at what they’re looking at,” Cunningham said. “There was always a robust market for the ‘A’ firms and the ‘B’ firms. I think because of the activity pre-COVID the ‘C’ firms were getting good valuation. The ‘C’ firms may not see that there

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is as much interest or that the valuations are going to be where they were before.” If a seller has not been inordinately affected by COVID or the economy — and does not have high exposure to industries hit hard by the pandemic, such as hospitality — valuations “are going to stay kind of close to where they were,” Cunningham said. Deal terms also could include more use of earnouts, he said.

DEAL FLOW

Insurance agency acquisitions over the past four years, as well as first-half activity since 2018.

Attention shifts to insurance Many of the top acquirers today are backed by private equity, which has been attracted to the brokerage industry by its predictable cash flows, reliable earnings, and “it doesn’t require any capital expenditures,” Cunningham said. “The private equity world has really fallen in love with insurance distribution,” he said. Cunningham estimates 25 to 50 private equity firms in the U.S. are now involved in acquiring insurance brokers. Aging Baby Boomers who want to sell and retire are also driving M&A activity, he said. Grand Rapids-based Acrisure LLC remains by far the largest acquirer in the industry. Acrisure closed 39 deals in the first half of 2020, according to Optis Partners. Since 2016, Acrisure closed on 393 acquisitions. The next largest acquirer in the same period was Columbus, Ohio-based Broadstreet Partners at 157 acquisitions. Most recently, Acrisure last month bought the insurance practice of Tulco LLC, a Pittsburgh-based provider of artificial intelligence and machine-learning technology. The $400 million deal followed a year-long partnership between Acrisure and Tulco and the formation of Altway Insurance, an AI-backed insurance brokerage initially focused on individual health benefits. In Grand Rapids, Brown & Brown of Michigan Inc. — a subsidiary of Daytona, Fla.-based Brown & Brown Inc. — acquired substantially all of the assets of insurance agency Buiten & Associates LLC. Buiten & Associates continues operating its office in Grand Rapids under the leadership of Paul Buiten, who said this month the sale to Brown & Brown was “the best cultural and strategic fit for our agency.” High Street most recently acquired Capital Insurance Group in Bloomfield Hills. That deal followed the acquisition of two agencies in Upstate New York: Boonville, N.Y.-based Tall Pines Insurance, and the book of business from a Verona Beach, N.Y. agency. Locally, the firm a year ago acquired Ottawa Kent Insurance Agency Inc., which has offices in Jenison, Sparta, Holland and Byron Center.

YEAR

DEALS

2016

461

2017

611

2018

643

2019

649

First half, 2018

300

First half, 2019

328

First half, 2020

288

TOP 10 ACQUIRERS THROUGH THE FIRST HALF OF 2020 BUYER

DEALS

Acrisure (Grand Rapids)

Broadstreet Partners (Columbus, Ohio)

HUB International (Grand Rapids)

Assured Partners (Lake Mary, Fla.)

World Assurance Associates (Tinton Falls, N.J.)

PCF Insurance (Woodland Hills, Calif.)

Patriot Growth Insurance Services (Ft. Washington, Penn.)

OneDigital (Atlanta)

Baldwin Risk Partners (Tampa, Fla.)

The Hilb Group (Richmond, Va.)

Risk Strategies (Chicago)

Gallagher (Rolling Meadows, Ill.)

SOURCE: OPTIS PARTNERS LLC 2020 SECOND QUARTER “AGENT AND BROKER MERGER & ACQUISITION UPDATE”

Looking for a peer group High Street has not experienced a slowdown in prospective sellers in the market, Wick said. He believes the economic conditions resulting from the COVID-19 pandemic may actually lead to more sellers that want to partner with a large firm. “In fact, I think because of what’s happening in the environment that we find a number of these potential partnerships or new partners are looking for a peer group and they’re looking for somebody to help them make sure they can get through the marketplace that exists today,” Wick said. “So, as a result of that, I think we’re having more conversations than we’ve had before. People are looking for help and they’re looking for guidance and they’re looking for a peer group to bounce ideas and thoughts and new ways to continue to help their clients.”

High Street seeks to acquire mature brokerages and agencies whose owners and management teams will stay with the firm and manage the business locally. High Street then consolidates backroom administrative functions and provides the acquired agency more resources and “deeper bench strength,” Wick said. As High Street continues down the M&A path, it intends to remain selective in the firms it buys, he said. “We’re going to be selective and continue to be disciplined in our approach,” Wick said. “It’s not something that we feel we need to do. We’re not in a hurry-up phase, we continue to be selective and we continue to find the right partners from a cultural fit that have a target customer very similar to the entire peer group as we do. That’s been a great recipe and we’re not in a rush.”

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FOCUS: INSURANCE

Health Alliance Plan’s West Michigan entry part of broader strategic growth By MARK SANCHEZ | MiBiz msanchez@mibiz.com

ealth Alliance Plan’s entry into the West Michigan market comes amid a broader strategic push to grow and become a larger statewide player for employee health benefits. Other market entries around Michigan will follow as Detroit-based HAP looks to build a broader footprint across Michigan with a “threeyear strategic, very aggressive growth opportunity,” said President and CEO Michael Genord. “Our value is statewide and for too long we focused on Southeastern Michigan,” Genord said in an interview with MiBiz. “We see the great opportunity that we can bring to the West Michigan market and all of Southwest Michigan, and then strategically being very thoughtful about building relationships across the state and expanding across the state.” HAP first moved into the West Michigan market this year with a Medicare Genord Advantage plan formed with Mercy Health that enrolled 1,700 people in its first year in Kent, Ottawa, Muskegon and Oceana counties. HAP now is introducing commercial health plans in West Michigan for small and large employers for 2021. Owned by Henry Ford Health System, HAP believes Anderson West Michigan can benefit from additional competition in the market, which is now dominated by Blue Cross Blue Shield of Michigan and Grand Rapids-based Priority Health. “Henry Ford Health System and HAP have always been a huge proponent of competition in the market. Where you bring competition, you drive innovation, you drive quality, and we know if you innovate and you drive quality, the end result is you have lower health care costs as we get further upstream in peoples’ health care journey,” Genord said. “This part of the area would benefit from additional competition in the market and diversity and bringing other thought leaders to the community to partner with organizations to deliver value disruption.”

Health plan market shares Across all health plans — HMO, PPO, point-of-service, and individual policies sold on the public health exchange — Blue Cross Blue Shield and Priority Health control much of the West Michigan health insurance market. Here’s a look at their market shares reported by the American Medical Association as of 2018 by metropolitan statistical area for all products. Health Alliance Plan intends to enter the markets in 2021 with small and large group plans. All products (HMO, PPO, point-of-service, individual policies) CITY

BCBS

PRIORITY HEALTH

Grand Rapids-Wyoming

57%

26%

Muskegon

65%

20%

HMO CITY

BCBS

PRIORITY HEALTH

Grand Rapids-Wyoming

34%

66%

Muskegon

46%

54%

CITY

BCBS

PRIORITY HEALTH

Grand Rapids-Wyoming

72%

10%

Muskegon

74%

PPO

Like-minded providers The third-largest health plan in Michigan, HAP this month began quoting large group health plans to employers in Kent, Ottawa, Muskegon and Oceana counties. HAP introduced two types of large group policies: preferred provider organization (PPO) and exclusive provider organization (EPO), which uses a PPO care network but lacks an out-of-network benefit. HAP’s extension across the state hinges on first forming ties with health systems and physician organizations. Those relationships will lead HAP’s entry into new markets, Genord said. He cited the four-county Medicare Advantage plan in West Michigan that resulted from Affinia Health Network, the physician organization at Mercy Health, reaching out to HAP. “When we have like-minded providers who want to sit down and invest time and energy in building products, in building relationships, and putting the patient and member in the forefront of what we do, we begin to look at those relationships,” he said. “The strategy of growth is definitely there, but it’s founded on building relationships and building in markets where we can add value. So, our strategy

AUGUST 31, 2020 / MiBiz

will unfold as we look at these relationships and where it makes sense, and where we have willing partners, and then we can add value to whatever community we go to.” In the small group market for employers with two to 49 employees, HAP intends to offer its 181,000-member HMO that comes with a limited care network in Mercy Health. HAP plans to seek state regulatory approval early in the first quarter of 2021 to extend the HMO coverage to West Michigan and wants to add to the care network with other providers in West Michigan, most notably Spectrum Health. HAP “continually” engages with Spectrum Health, said Genord, noting the Henry Ford Health System has an agreement in place with the Spectrum-owned Priority Health. “We are deeply committed and engaged to have a robust provider network in West Michigan, and that is going to have to include Spectrum at some point,” he said. “I think it’s fair to say that in 2021 you’ll hear about new providers that are working with us and that we have contracts with. I’m fairly confident in that.”

CEOs at the two health systems have had initial conversations about Spectrum becoming part of HAP’s HMO care network, said Spectrum Health Chief Financial Officer Matt Cox. Contract teams are scheduled to meet in October “to talk about opportunities,” Cox said. “We certainly are really early in the process,” he said. “We certainly like HAP and think that they’re a good company and have a good relationship with them. We’ll see where it goes.” HAP’s large group PPO product does include Spectrum Health in its care network. Genord declined to identify other West Michigan care providers that HAP seeks to add to its care network with a reimbursement agreement, although “we’re in some type of discussion” with several others.

More options HAP’s entry into West Michigan offers another viable option to consider for employee health benefits, although the absence of Spectrum Health in the small group HMO’s care network may limit

the health plan’s appeal for some employers until the two strike a deal, said Shannon Enders, managing partner at Lakeshore Employee Benefits in Norton Shores. “It’s pretty tough to offer a health plan in Western Michigan that does not include the Spectrum providers. So, hopefully that can get done,” Enders said during a MiBiz webinar on health insurance (see page 12). The PPO and EPO large-group products in West Michigan will use HAP’s existing care network and the network of Grand Rapids-based ASR Health Benefits, a HAP-owned third party administrator for employers that self-fund their health benefits. Despite that “big hang up” and gap in HAP’s HMO care network for small employers, Enders welcomes a new competitor to the market. “The Blues does a great job, Priority does a great job, but we could use some more competition. So, that’s probably going to be a good development and it’ll be interesting to see how that plays out,” Enders said. Genord said he does not see the limited care network for the small group HMO as a barrier for employers to consider HAP. “At the end of the day, what they (employers) want are health benefits that create value for their employees with a market-leading payer,” Genord said. “These employers want value, they want to be able to recover with the economy. So, where we thought there would be some trepidation, there is some excitement there about, ‘You have competitive rates, you can bring something different, we want to talk about it.’”

Pandemic dynamics While further disruption for employees in what has been a tumultuous year is “certainly a dynamic,” there are also potential opportunities to save employees money, said Margaret Anderson, HAP’s senior vice president and chief sales and marketing officer. “Where they can actually pass down those savings to help people out in the pandemic without compromising anything with respect to quality, there definitely is a willingness to listen and to look at things as an option,” Anderson said. “So, disruption certainly could be a concern, but I think folks are also trying to balance: ‘How could this potentially help our employees and help with the monthly cash flow crunch that people are feeling?’” The COVID-19 pandemic could also affect interest in HAP, said David Smith, vice president of compensation services at The Employers’ Association in Grand Rapids. The pandemic has caused plenty of stress and disruption in every business — some employers may feel reluctant to introduce even more disruption in the mix, Smith said during MiBiz’s webinar. Pricing will make the difference in whether employers consider the new player in the market, Smith said. A few percentage points in cost savings “probably means we’re going to stay with what we have,” he said. A larger increase of 10 percent or more could lure employers to consider the new plan in the market, Smith said. “West Michigan has had a lot of change already. COVID caused it. People aren’t changing just for the sake of changing. For small changes, for small differences, employers are looking to keep their employees as happy as they can,” he said. At Lakeshore Employee Benefits, “We’re seeing customer after customer saying, ‘Nope. Don’t even bring us anything. There’s no way we’re making changes” in either insurance carrier or benefit packages, Enders said. “I think they’re hunkered down in large part for employees’ peace of mind,” he said. Visit www.mibiz.com

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Do you care about your community? Are you looking for ways to help your community, both in this time of increased need and well into the future? Our communities thrive because of individuals coming together for the greater good. But it’s not always easy, and it can be difficult to know how to make the greatest impact. That’s where we come in. For almost fifty years, the Grand Haven Area Community Foundation has partnered with individuals, families, organizations, and corporations to help them realize their philanthropic intent. Whether you have a local cause you’re passionate about, you want to help the next generation further their education, or you want to assist an organization whose mission is to help others—we’re here to help you realize those goals.

Helping locally

Our mission remains to inspire philanthropy and support for-impact organizations so together we can care for our community. It’s people like you—people who want to make a difference—who make this possible. We’re funded by parents and students, business owners and employees, artists and musicians, nurses and doctors, manufacturing and trades, people from all walks of life who are united in their desire to make an impactful change in their community.

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2020 has been a challenge for us all, but we’ve been able to continue with our mission thanks to the generosity of our community. In the spring, we were part of a community coalition that granted over $900,000 to area organizations for basic needs of keeping people fed, housed and healthy, this summer we raised an additional $650,000 in Northern Ottawa County, and we will continue raising money to help our community recover and rebuild from COVID-19. This has been made possible by broad donor support, which has come in the form of donations of all sizes and has been an inspiring example of community coming together around a common cause to care for one another. One of the benefits of a community foundation is that our funds stay in our community, and we help support the most pressing causes in our area. So, a donation to your local community foundation truly helps your community. “In a world that has recently been sent askew in the eyes of our younger students, combined with the already existing need to support kids in the realm of social/emotional learning, the grant from the Grand Haven Area Community Foundation could not have come at a better time for Spring Lake Public Schools,” said Scott Ely, Curriculum Director for Spring Lake Public Schools. “The Community Relief and Recovery grant will allow Spring Lake

Public Schools to fully staff one social worker at each of our elementary schools next year, which allows us to dramatically expand our capacity to support students.”

Diversity, equity, and inclusion

There have been moments in our forty-nineyear history that we couldn’t have predicted, and no year has proven that like 2020. In addition to assisting local organizations with COVID-19 relief, we’ve partnered with organizations like Lakeshore Ethnic Diversity Alliance (LEDA), the Lakeshore Nonprofit Alliance, and Ottawa County to expand our work with diversity, equity, and inclusion. Together, we’re working to address systemic racism and the effects it has both individually and structurally on our community, while lifting up those who are most vulnerable to this injustice. We’re also working internally. Our board and staff have done various diversity, equity, and inclusion trainings, including implicit bias, with the team at LEDA.

Looking to the future

While a lot has changed this year, the core of who we are as an organization have remained

Grand Haven Area Community Foundation staff

the same. We continue to work towards a future that is equitable for all, especially for the next generation. In 2020, we awarded over $620,000 in scholarships to 220 students, 32 of whom will be the first in their families to earn a post-secondary degree. “As a first-generation immigrant, going to school without relying on financial aid or scholarships would have been nearly impossible,” said Len Tran, a scholarship recipient attending Grand Valley State University. “I am so eternally grateful that I’ve been given the opportunity to be able to pursue an education that my parents were never able to themselves.” We’re proud of our work in Northwest Ottawa County, and we look forward to the next fifty years. We invite you to join us. Every gift, every person, can make a difference. To learn more, or to discuss a plan that makes the most sense for you, call Chris Riker, Vice President of Advancement and Donor Services, at 616-842-6378, or email criker@ghacf. org. For more information, visit ghacf.org.

MiBiz / AUGUST 31, 2020

FOCUS: INSURANCE

Panel: Employers reluctant to change health policies during pandemic By MARK SANCHEZ | MiBiz msanchez@mibiz.com

ven with the economic downturn, uncertainty and high unemployment resulting from the COVID-19 pandemic, employers still need to look strategically at employee health care benefits to retain and attract talent. That’s one of the observations panelists made in a recent webinar MiBiz hosted on health insurance. In a tumultuous year filled with disruption, many employers are reluctant to introduce more by changing employee health benefits, panelists said. “I think any employer who thinks now’s our chance to hack and whack are very short-sighted,” said Shannon Enders, the managing partner at Lakeshore Employee Benefits in Norton Shores. He is seeing few employers interested in making benefit changes with upcoming policy renewals. “We’re seeing customer after customer say, ‘Nope, don’t even bring us anything. There’s no way we’re making changes,’” Enders said. “They’re hunkered down in large part for their employees’ peace of mind.” Health benefits can account for one-third of total employee compensation costs, said David Smith, vice president of compensation services at The Employers’ Association in Grand Rapids. Employers still need to look at health benefits strategically as part of the overall compensation package they offer employees, he said. “It’s more than just health care, but health care is a critical component in attracting and retaining talent right now,” Smith said during the webinar. “It’s really critical because we have to attract and retain the best talent if we’re going to remain sustainable in West Michigan and competitive.” As open renewal approaches for 2021 and the COVID-19 pandemic drags on, Smith as well said he expects few employers to alter their benefits for next year “unless there is a huge difference in coverage costs.”

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AUGUST 31, 2020 / MiBiz

Rate adjustments

This year continued a period of rate stability for employers. Fourth quarter policy renewals for small employers have come with rate adjustment typically in the single digits, VanDyk said. Policy renewals for larger employers have been “kind of all over the place, depending on experience” in an employer’s medical claims, he said. “If you end up with a lot of employees going to the doctor because they had a heart attack or a medical issue, that’s going to affect your experience and what you end up seeing in rates,” VanDyk said. His agency is also seeing more employers in the market considering self-funding their health benefits, or going to what’s known as level funding that’s “kind of that hybrid” between selffunded and fully insured coverage. For 2021, the Washington, D.C.-based Business Group on Health this month said large employers can expect the cost of health coverage to increase 5 percent, even after adjustments in benefits to manage costs. The expected increase for 2021 is slightly higher than what large employers have experienced the last few years, according to the company’s annual survey results. Statewide, proposed 2021 rate adjustments by the 16 health insurers that write policies for small employers in Michigan with two to 49 employees averaged a 1.5 Enders Smith VanDyk percent increase, according to a rate sumMiBiz recently hosted a webinar on health insurance and the mary issued by the Michigan Department shifting dynamics for employers as 2021 renewals come up. of Insurance and Financial Services. The panel featured Shannon Enders of Lakeshore Employee The small group market across Benefits, David Smith of The Employers’ Association, Michigan covers nearly 425,000 people. and Drew VanDyk of Olivier-VanDyk Insurance Agency Grand Rapids-based Priority Health, Inc. Register to watch the webinar at mibiz.com/ with nearly 57,000 people enrolled in healthcare-webinar. small group policies, proposed an average 2.6-percent increase. Blue Cross Blue Shield of Michigan, which Making major changes in benefits or switchhas more than 193,000 people covered in the ing insurance carriers would only add stress for small group market, proposed an average rate employees in an already stressful time, he said. increase of 0.9 percent, and HMO subsidiary Blue “It seems to be pretty status quo from those we Care Network, with more than 105,000 members, have talked to,” Smith said. “West Michigan has had proposed an average 1.9-percent increase. a lot of change already. COVID has caused it. People In the individual health insurance market aren’t changing just for the sake of change. For small that covers nearly 323,000 people, 11 participatchanges or small differences, employers are looking insurers proposed rate adjustments that avering to keep their employees as happy as they can.” age an increase of 1.4 percent statewide. In the tight labor market that prevailed in Priority Health proposed to trim individual polrecent years prior to the unemployment spike icy rates by a slight statewide average of 0.1 percent. during the pandemic, many employers had been Blue Cross Blue Shield, with about 47,000 considering or adding benefits on top of their individual policyholders, proposed a 1.7-perhealth insurance, such as vision, dental, shortcent average increase. HMO subsidiary Blue and long-term disability coverage and even Care Network, at more than 135,000 individual insurance for pets, Smith said. members statewide, filed a rate increase of 2.5 Many more employers of late also are benchpercent for individual policies, according to the marking their benefits to see how they compare state’s summary. against market norms and trends, said Drew

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VanDyk, a partner at Olivier-VanDyk Insurance Agency Inc. in Wyoming. Those companies want to know “where we are sitting to remain competitive to retain employees,” VanDyk said. “I have been seeing a lot of companies that are starting to benchmark their benefits. What they’re doing is taking a look at it and going, ‘How do I compare with other companies?’ We’ve been seeing a lot of companies do that,” he said. “It’s just a good overall 30,000-foot view of: ‘Where are we sitting and what we should be offering?’” An annual survey by The Employers’ Association shows health coverage this year cost employers an average $1,500 per month per employee for a family plan, and about $1,100 for a two-person plan, Smith said. An individual health plan cost about $500 per month, he said. Employees on average now pay 30-35 percent of the monthly premium for health coverage, Smith said. Employees enrolled in an individual plan pay 20-25 percent of the cost, he said.

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ECONOMIC DEVELOPMENT ECONOMIC OUTLOOK Continued from page 1

quarter outlook “optimistic, looking at some of the other forecasts that are out there.” U-M researchers expect Real GDP to then grow 3.6 percent in 2021 and 2.4 percent in 2022. The outlook assumes the issuance of few localized stay-at-home orders and closures of nonessential businesses because of a spike in COVID-19 cases. Recent outbreaks in Sunbelt states suggest that with modest restrictions, increased capacity at health care providers and better coordination in treating patients, “It is possible to go through a peak without severe restrictions on business and personal activity,” Manaenkov said. “This makes us hopeful that if we get further spikes this fall and winter, those will be managed without getting back to very severe restrictions we have seen earlier this spring,” Manaenkov said during a recent revenue sh a r i ng c on ference before t he state House Appropr iat ions Committee. Modest rest r ict ions Manaenkov will likely stay in place until a coronavirus vaccine is introduced and w idely distributed, probably i n m id-2021, Manaenkov said. The U-M outlook also presumes the continuation of higher unemployment benef its t hrough 2020 and into 2021, and Ehrlich that Congress will approve another round of stimulus payments and some sort of aid to state and local governments that face large budget deficits, Manaenkov said. U-M expects unemploy ment nat iona l ly to end 2020 at 9.2 perCurkovic cent for t he f u l l yea r. Unemploy ment gradually declines to 8.1 percent for 2021 and 6.9 percent for 2022, according to the university’s national outlook.

Banks: Economy will emerge from shadows In other economic forecasts, PNC Bank and Comerica Inc. each predict national Real GDP to rebound by around 15 percent in the third quarter, followed by smaller growth of less than 8 percent in the fourth quarter. The banks both predict modest GDP growth to start 2021 at between 2-6 percent. “The amount of uncertainty surrounding any economic forecast is huge at this time,” Comerica economists wrote in the monthly outlook issued Aug. 11. “However, there is one very important concept that we are certain about. We are certain that the U.S. economy will emerge from the shadow of the coronavirus pandemic and it will remain the global center for innovation and capital deployment.” Simila r to U-M’s out look, Comerica expects unemployment nationally to remain high at 8.9 percent for all of 2020 and 9.2 percent in 2021. The bank’s outlook says the “U.S. economy will be saddled with a lingering high unemployment rate as it digests the after-effects of the coronavirus catastrophe.” In Michigan, the economy fell further than the nation as a whole in the second quarter and could take three years to return to the peak of Visit www.mibiz.com

“We are certain that the U.S. economy will emerge from the shadow of the coronavirus pandemic and it will remain the global center for innovation and capital deployment.” — Comerica Inc. monthly economic outlook, August 2020

late 2019, according to Comerica’s statewide outlook. Comerica estimates Michigan’s economy declined at a nearly 41 percent annualized rate from April to June. Next year, Comerica’s outlook predicts 2.3 percent economic growth for the state for all of 2021. “Michigan and all other states face ongoing uncertainties about the path of the coronavirus pandemic, school closures, fiscal stimulus and the policy ramifications of the upcoming presidential election,” Comerica’s Michigan outlook states. “Our third quarter forecast shows an ongoing economic recovery beginning in Q3, but it is a slow recovery requiring more than three years to recapture peak GDP from 2019 Q4.” After a “quick partial reabsorption of furloughed workers this year,” Comerica expects Michigan’s “labor uptake to slow significantly in 2021,” keeping unemployment high at least through next year. Comerica predicts the state’s unemployment rate will steadily decline from 20 percent for the second quarter of 2020 to 13.3 percent by the end of 2021. U-M economists predict that by the end of the year Michigan will recover about 530,000 of the 840,000 payroll jobs lost during the pandemic, then another 120,000 by the end of 2021 and 70,000 in 2022.

‘Two-track recovery’ Meanwhile, some industries will recover jobs at a faster rate than others, with retail, leisure and hospitality sectors recovering the slowest, said Gabe Ehrlich, director of U-M’s Research Seminar in Quantitative Economics. “We’re really forecasting a two-track recovery,” Ehrlich said. The manufacturing sector, which is key to Michigan’s economy, has come back “more smoothly” than previously expected following the reopening of auto plants earlier this summer, he said. Ehrlich said the state’s unemployment rate — which ballooned to 19.9 percent — should drop below 9 percent by the end of the year. He expects unemployment to decline “more slowly” to 7.2 percent by the end of 2021 and 6.1 percent at the end of 2022. U-M’s outlook for Michigan also assumes federal assistance for states, which has been a major source of contention between Democrats and Republicans. Sime Curkovic, a professor of management at Western Michigan University’s Haworth College of Business, points to survey results this summer as evidence that the manufacturing sector has been recovering well. “What I’m seeing is that manufacturing is roaring back,” Curkovic said. “If we get a handle on COVID, there is every indication that we are going to be fully fine and back to normal.” However, some industries may never return to pre-COVID days, Curkovic said, and workers who lost their jobs may have to retrain or move to higher-growth sectors.

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ECONOMIC DEVELOPMENT

Out on the Lakeshore Director Jeffrey Sorensen reacts to Holland passing an anti-discrimination ordinance expanding local civil rights protections to the LGBTQ community: “The fact we made it as far as we did shows Holland is changing.” MIBIZ PHOTO: SETH THOMPSON, GREEN FROG PHOTO

HOLLAND ORDINANCE Continued from page 1 — in the areas of housing, employment, access to public services and public accommodations. “Any thing we can do to welcome all people and to be an inclusive community is the right thing to do for our community’s business growth and talent attraction,” said Lakeshore Advantage President Jennifer Owens. The renewed effort behind the Holland ordinance was due in part to Mayor Nathan Bocks winning the mayoral seat in last year’s Nov. 5 election. Bocks made diversity and inclusion a large part of his platform and was among the “yes” Owens votes for the antidiscrimination ordinance. “This sends a very clear statement to the community that we believe these are rights that should be protected and we wanted to have a local place where people can file these complaints,” Bocks said. Business owners have expressed to Bocks that lacking such an ordinance has made it harder to attract employees and new talent to the area, he added. “I’ve heard from employees as well saying, ‘Thank you, I feel more comfortable now knowing my sexual orientation is protected,’” Bocks said. “This is incredibly beneficial for employers a nd employees. I have ver y good friends who have moved away from the community because they did not feel comfortable here.” The ordinance offers some relief to LGBTQ individuals in the city

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because their employer can not fire them on the basis of their sexual orientation, gender expression or gender identity without violating local law. If someone in the LGBTQ community or one of the protected groups in the ordinance is denied housing, employment or access to public services and accommodations based on their identity, they can now file a claim on the local level with the city.

‘Important in our area’ Holland’s anti-discrimination ordinance aligns with ongoing efforts of local business advocacy groups and their members but now covers the whole city, said Caroline Monahan, director of marketing and communications at the Michigan West Coast Chamber of Commerce. “It all stems from companies in our area wanting to attract diverse talent and not only attract them, but create a community that’s welcoming to keep their families here,” Monahan said. “Everyone is embracing the fact that this is important in our area to maintain the thriving economy we’ve had for so long, and this makes it better to bring more people in and have more diversity of thought.” The interest of businesses in fostering welcoming work environments to a diverse workforce including LGBTQ people is increasing in Holland, Monahan said. “The answer is always: We need to go back to creating the community where people want to be,” Monahan said. “Within your own business culture, if you’re going to have diverse talent you need to accept you’re going to have a diverse work culture and look at how you can embrace

the differences of people who work for you.” Zeeland-based office furniture manufacturer Herman Miller Inc. has a long history of supporting the LGBTQ community and workplace protections for its employees. Most recently, the company publicly supported the expansion of the Michigan Elliott-Larsen Civil Rights Act to include protections for LGBTQ individuals. “No one in our community, state, or country should doubt that they can live confidently with the knowledge that their rights are protected in the eyes of the law — and we’re committed to being an organization where everyone can thrive,” said Ann Noe, Herman Miller’s inclusion and diversity program manager. If other states have anti-discrimination protections that local communities lack, it puts up a barrier to move a business here, said Anna Heaton, vice president of marketing and communications at Business Leaders for Michigan. “What we hear from some of our member companies is it’s definitely a talent issue,” Heaton said. “This has been a big year in diversity and inclusion efforts in terms of not just giving it lip service.” Business Leaders for Michigan has also supported statewide efforts to expand the Elliott-Larsen Civil Rights Act to include protections for the LGBTQ community. In July the group’s political action committee contributed $100,000 to a ballot initiative to expand Elliott-Larsen.

Holland’s reputation Sorensen said Holland’s reputation as a conservative city has caused some in the LGBTQ community to move away as well as outsiders choosing not to relocate there. The new ordinance

will have the long-term effect of people starting to feel more comfortable moving to Holland, being employed in Holland and visiting the lakeshore community, he said. “This is definitely a way to send that message that Holland has changed and is an inclusive and diverse community,” Sorensen said. Part of the change Sorensen is referring to is when a similar antidiscrimination ordinance was shot down in 2011. A recommendation from the city’s Human Relations Commission to include sexual orientation and gender identity in the city’s human rights ordinance was rejected 5-4 by the city council. “The fact we made it as far as we did shows Holland is changing,” Sorensen said. “The fact that the vote went through and passed with only one no vote — that shows the community truly is changing, and that the beliefs and values of the community have changed to become more inclusive of everyone who wants to live and work here.” In order to have a thriving, economically successful community, all members need to be able to fully participate, Noe said. “The reality is that we shou ld n’t on ly care about inclusion when it’s easy and conflict free, but rather ensure our commitment to inclusion pushes us to learn and grow beyond the bounds of our comfort to learn about other perspectives as well,” Noe said. “LGBTQ+ individuals are our neighbors, co-workers, friends and customers, and it’s great that Holland is finally ref lecting that in their policies.”

Why it matters In the year that Sorensen has led Out on the Lakeshore, he has heard several complaints from people who have lost their jobs because of their sexual orientation, as well as people who simply did not feel comfortable at work because of their gender identity or sexual orientation. “While some people can get by for the most part, at a certain level you want to be able to mention your spouse to your coworkers, or even if it’s your child that’s gay and you support them,” Sorensen said. “I’ve heard complaints of situations like that, where people have supported their children but don’t feel comfortable they can discuss it openly.” While efforts are ongoing to expand the state’s civil rights law to include LGBTQ protections, it was important for Holland to reinforce the message of inclusion and diversity on a local level,

“Anything we can do to welcome all people and to be an inclusive community is the right thing to do for our community’s business growth and talent attraction.” — JENNIFER OWENS President, Lakeshore Advantage

Sorensen said. Having the ordinance also will make it easier for residents to file discrimination complaints. “It’s more likely that person will actually follow through on a claim when they can do so at a local level because it’s the city hall they know, the people they know,” he said. “They feel much more comfortable than going to the state level to file a complaint.” MiBiz / AUGUST 31, 2020

ECONOMIC DEVELOPMENT

‘SO FAR APART’

U.P. tribe’s venture into cannabis highlights tension with state as potential compact talks continue By ANDY BALASKOVITZ | MiBiz abalaskovitz@mibiz.com

ince the Bay Mills Indian Community announced plans in August to launch a vertically integrated cannabis business, accusations about the state’s unwillingness to work with the tribe and the state’s own relative silence highlight what tribal experts say is a complicated web of state regulation and tribal sovereignty. At the heart of the issue is whether the state and tribes that operate cannabis businesses should sign compacts stipulating agreements involving revenue sharing and oversight, not unlike casino gaming compacts. However, Bay Mills has publicly said the state is unwilling to work with them while reports have suggested the state is seeking a blanket compact that would apply to all 12 federally recognized tribes in Michigan — a non-starter, as one tribal expert says. Further complicating the issue is that cannabis is still illegal at the federal level, and cannabis remains a controversial topic within tribal communities.

“It’s something that all sides want to happen, but it’s a slow process to begin with. It’s very politically fraught both within the tribes and within the state government, and it’s not entirely clear what a deal would look like.” — MATTHEW FLETCHER Professor and Director of the Michigan State University Indigenous Law and Policy Center

“The tribes are in this place where they’d really like to do it on tribal trust lands,” said Matthew Fletcher, a professor and director of Michigan State University’s Indigenous Law and Policy Center. “They want to participate in the internet business, local retail, manufacturing and production on their own land so they can be free of things like state regulation and taxation. The problem with that is that it’s still illegal under federal law.” The federal government isn’t helping. Since a 2013 Obama administration memo saying federal law enforcement wouldn’t interfere with state-sanctioned cannabis operations, the Trump administration has been mum on any formal guidance. Former Attorney General Jeff Sessions formally rescinded the guidance from the 2013 “Cole memo,” but Attorney General William Barr testified last year that the Department of Justice wouldn’t prosecute state law-abiding cannabis businesses. While other states including Washington and Oregon have signed compacts with tribes over recreational cannabis businesses, Michigan is relatively new to the adult-use market, which voters approved in November 2018. “The regulatory structure for doing a lot of this stuff is very unsettled,” Fletcher said. “Tribes will always take the position that the state doesn’t take jurisdiction over them. That’s why the tribes really have been trying to talk to the state to cut a deal. It’s something that all sides want to happen, but it’s a slow process to begin with. It’s very politically fraught both within the tribes and within the state government, and it’s not entirely clear what a deal would look like.” The office of Gov. Gretchen Whitmer did not respond to a request for comment, while Attorney General Dana Nessel declined to comment for this story. Marijuana Regulatory Agency Executive Director Andrew Brisbo declined to comment on Bay Mills’ proposal specifically and responded to a series of questions from MiBiz about tribal cannabis businesses generally with a statement. “The MRA has been exploring — and will continue to explore — options for tribal involvement in the marijuana industry, including through compacts,” Brisbo said.

Matthew Fletcher, a professor and director of Michigan State University’s Indigenous Law and Policy Center, says tribes and the state would benefit from cannabis compacts that are similar to casino gaming, yet there is no precedent while the industry’s regulatory structures are unsettled. COURTESY PHOTO

New front Indeed, cannabis represents an emerging front for state-tribal relations — there’s no precedent in Michigan for how such an agreement between the two entities would look. The model of a gaming compact would be ideal, Fletcher said, but federal law gives the “outer contours” of how gaming compacts are structured, unlike with cannabis. “With cannabis, there’s absolutely nothing,” he said. “It helps to have that frame.” One model could come from Washington, where 11 of the state’s 29 federally recognized tribes have signed compacts with the state over cannabis. The state has published a 21-page template for a marijuana tribal compact that involves retail sales, providing notice to local jurisdictions, taxation and record-keeping and dispute resolution. Tribes in Nevada and Oregon also have negotiated compacts with the state government, agreeing to minimum regulations and taxes that mirror the states’ policies. Fletcher said the state’s concerns at this point likely involve taxation, consumer protections and the fact that recreational cannabis is relatively new. Tribes, meanwhile, want to maintain sovereignty and the economic benefits that could be redistributed within the tribal community.

“All sides’ positions on this are so far apart,” Fletcher said. “It makes perfect sense they’re so far apart but still coming at it with goodwill — everyone wants a deal but doesn’t know how to do it.”

Other options Although cannabis may be a controversial topic among tribal members, it’s an economic development tool at its core and a way for tribes to diversify their economy particularly during the fallout of the COVID-19 pandemic when many of them closed their casinos for six to eight weeks, if not longer. Fletcher said Upper Peninsula tribes, in particular, are interested in cannabis because they don’t generate as much gaming or economic development revenue as downstate tribes. “They’re really desperate,” he said. Bay Mills recently detailed plans for a vertically integrated operation to grow about 10,000 cannabis plants on 110 acres of tribal land in the eastern U.P. The operation would include processing and a retail store open to tribal members and the public. Bay Mills Tribal Attorney Whitney Gravelle previously told MiBiz the plan is a demonstration of tribal sovereignty. The Brimley-based tribe was also the first in the state to legalize recreational cannabis on tribal lands, doing so in January 2019, two months after Michigan voters passed a referendum approving adult-use cannabis. “Bay Mills as a sovereign nation has always made its prerogative to control and regulate its own tribal lands,” Gravelle said. “By not opting into the state license and state jurisdiction, we’re able to control how we are regulating the product that we make.” Bay Mills has a “built-in advantage” of going it alone by operating under its own regulations and avoiding state taxes, which is expected to make the tribe’s product less expensive. But there remain unanswered questions about transporting those products off tribal land and engaging in tribe-to-tribe sales. Although Bay Mills wants to be an owner/operator, other tribes — including the Sault Ste. Marie Tribe of Chippewa Indians and the Little Traverse Bay Bands of Odawa Indians — have taken a different approach by leasing tribal land to cannabis companies. The state isn’t interfering in these arrangements, and it’s also giving tribes and companies a leg up if the surrounding municipality decides not to license recreational cannabis businesses. “We don’t begrudge anyone else who has found a different way into this industry,” Bay Mills Tribal Chairperson Bryan Newland said in a statement announcing the tribe’s cannabis venture. “At the same time, Bay Mills has no interest in turning over our sovereign lands to private, forprofit corporations who are regulated and taxed by the State of Michigan.” MiBiz Editor Joe Boomgaard contributed reporting to this story.

AUGUST 31, 2020 / MiBiz

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SMALL BIZ: COPING WITH COVID-19

Cusack Music supplies new market of quarantined guitarists

Couple comes out of retirement during pandemic to run historic Kalamazoo inn By KATE CARLSON | MiBiz kcarlson@mibiz.com KALAMAZOO — Laurel and Terry Parrott sold Kalamazoo House Bed & Breakfast in 2014 and moved to Arizona, but the pandemic has brought them out of retirement to return as innkeepers of the historic building. The Parrotts bought the bed and breakfast in 2007, and owned and operated it until they sold it to Steve Gibson and Stephanie Nelsen, who operated the inn until the pandemic caused many businesses to close in March. Gibson and Nelson didn’t have the financial ability to weather the pandemic, and formally returned the inn to the Parrotts as its land contract holders and owners. “In a few months of talking to them, we all came to the agreement that it would be good for us to take (Kalamazoo House) back because they just couldn’t withstand the losses,” said Laurel Parrott. The Parrotts, who own the 135-year-old home through an LLC, returned to Kalamazoo

House and started taking reservations on July 31. “We opened up with some trepidation,” she said. “We didn’t know if people would still be traveling, if we would get sick, or if people staying here would be fighting against the mask ordinance — but it’s been good. We’ve had really wonderful folks stay here who are open to the changes.” The Kalamazoo House offered guests the option of contactless check-in pre-pandemic, where guests receive a code to enter through the side of the building and see themselves to their room, Parrott said. This method of checking in to lodging is becoming more common in the hotel industry, she said. The Parrotts have also removed throw pillows and certain extra decorative items from common areas that can’t be easily cleaned, and have replaced comforters in guest rooms with triple sheeting. “We’ve always had high cleaning standards, but we’re doing a lot more intense

By JAYSON BUSSA | MiBiz jbussa@mibiz.com

Kalamazoo House Bed & Breakfast has reverted to its previous owners during the COVID-19 pandemic. COURTESY PHOTO disinfecting between guests, which takes more time,” Parrott said. “In the common areas, we’re hitting those common touch points multiple times a day and have sanitizer and wipes scattered throughout the inn with extra masks if someone forgets theirs.” Breakfast at the inn has always involved separate tables rather than communal seating, she said, but outside deck tables were added to offer open air seating. “That’s been really popular,” Parrott said. “We don’t know if it’s because people are nervous eating inside or if they just like eating outside, but people like it.” Since reopening, occupancy has averaged at around 20-25 percent. August is a slower month when they typically see

occupancy at around 50-60 percent. The inn, located at 447 W. South St. near downtown, has 10 guest rooms. “For some people, it gives them a sense of comfort knowing we only have 10 rooms and that we’re owner occupied,” Parrott said. “We’re worried about our own health as much as our guests’ health.” As restaurants and breweries reopen and activity ramps up again in Kalamazoo, Parrott said ownership could change once again to the pre-pandemic arrangement. “We’re certainly hoping once the uncertainty with COVID-19 calms down, the same owners will want to take back the inn,” she said. “But we have no guarantee of that at this point.”

Muskegon sparkling water company pivots to e-commerce during pandemic By MARK SANCHEZ | MiBiz msanchez@mibiz.com MUSKEGON — New investors were aligning this past spring to back a capital round for HyVIDA Brands Inc. Then along came the coronavirus, sending away prospective investors who decided instead to use their capital for existing portfolio companies because of the economic uncertainty from the pandemic. That caused Rick Smith to return to existing investors for capital and to reassess the path forward for the Muskegon-based maker of hydrogen-infused sparkling water. “Once COVID hit, everyone stopped investing,” said Smith, cofounder, president and CEO of HyVIDA Brands. “All of them said, ‘We like your product and we like what you’re about. We don’t know how bad this is going to impact the economy and we don’t know how this is going to impact retail sales.’” HyVIDA was able to secure a “decent amount” of additional capital from existing investors and their networks, Smith said. Operationally, the company scaled back plans to expand distribution on the West Coast and to focus primarily on Los Angeles and the Bay Area, delayed the introduction of a new flavor, and “doubled down” on e-commerce, Smith said. The e-commerce strategy worked. Sales of HyVIDA’s sparkling waters have since grown 140 percent in six months, Smith said. The company as well moved onto a business-to-business e-commerce platform, Faire.com, that sells to thousands of niche and boutique retailers across the U.S. and has generated repeat orders. HyVIDA also has been invited to sell on another e-commerce platform, bitewell.com, that’s designed for health and wellness brands recommended by nutritionists, Smith said. E-commerce sales since a year ago have doubled and HyVIDA partners also are “entertaining multiple licensing opportunities in the U.S., Europe and South America,” Smith said. “COVID impacted us a little bit and caused us to pivot and change and it made us stronger,” he said. “It made us learn and made us look at more pragmatic ways to get to the customer. We’re excited about the future.” Visit www.mibiz.com

Smith and his partners formed HyVIDA Brands in early 2018 after he learned about the health benefits of infusing hydrogen into water. They launched production that spring with a contract canner in New Jersey, and HyVIDA began selling in retail outlets in August 2018 with organic raspberry, organic lemon lime and unflavored products. In addition to online sales, HyVIDA today sells in hundreds of retail stores across the U.S., including niche and premium retailers and 40 Meijer Inc. stores, up from about 30 a year ago. Walkerbased Meijer is also testing HyVIDA in a healthy living section at its gas station and convenience stores, Smith said. The brand has “great traction” in the Midwest, he added. HyVIDA plays into a burgeoning market for sparkling water. Grand View Research Inc. expects the global market for sparkling water — estimated at $21.51 billion in 2019 — to grow at a compound annual growth rate of 11.8 percent through 2027 to $59.67 billion as consumers increasingly move to healthy alternatives to sodas and sugary drinks. “Moreover, this sparkling or carbonated water contains a good amount of minerals, such as magnesium and calcium, with a number of health benefits,” according to the Grand View research report. Infusing HyVIDA with hydrogen and magnesium differentiates the brand from others on the market, Smith said. He cites clinical studies affirming hydrogen’s health benefits as an antioxidant while promoting improved metabolism and clarity and alertness. HyVIDA plans to seek additional capital as investors begin to reengage. The wellness component of the company’s sparkling water can add to the appeal, Smith said. “It transitions us, to some degree, to a life sciences company,” he said.

HOLLAND — Live music stages in West Michigan and across the country have been largely empty over the last six months with the COVID-19 pandemic suspending traditional concerts. But that hasn’t stopped many musicians from honing their craft, and Holland-based Cusack Music is staying busy as a result. “We were already backlogged (before COVID-19) and orders kept coming in,” said owner Jon Cusack, whose business primarily specializes in manufacturing guitar effects pedals. “I think, because a lot of people were staying at home, they were playing more guitar and they started looking for guitar pedals. I think the guitar pedal market actually got a little bit of a bump from it.” Cusack Music manufactures its own brand of pedals, used by the likes of Anthony Armstrong of the hard rock band RED and Seth Morrison of Christian rock band Skillet. The company also works with roughly 40 different brands to manufacture everything from circuit boards and enclosures to entire pedals. Cusack Music, which also does business as Cusack Guitar effects pedals Manufacturing, has dabbled manufactured by Cusack in projects outside the realm Music in Holland. of audio electronics. In fact, the COURTESY PHOTO company’s involvement with a few medical device projects deemed a portion of its operations an essential business during the industry-wide shutdown. Still, Cusack’s bread and butter is the music industry and — despite the live music hiatus — demand is still high. “There are a ton of people in our industry who play in their bedrooms — maybe three quarters of them,” Cusack said. “They will put pedal boards together, jam with their friends and never play a gig. And, some of our market is live music and those guys weren’t gigging. Some of them — especially the touring guys — had to cancel their tours. Instead, they’re going through their gear and thinking, ‘Maybe I’ll make some changes to my rig.’ The shutdown gave people a lot more time to consider their stuff.” But addressing the influx in orders has not necessarily been easy as Cusack Music trudged through voluntary layoffs during statewide shutdown orders, which saw half of its staff step away. “We were already on a path to double (in sales) this year from last year,” Cusack said. “(The influx of orders during the pandemic) accelerated that, only we didn’t have the employees. “There was a two-month period where I wanted to hire, but because I’m already laying off half my staff, how do you hire in that environment? We tried our best to build (pedals) during that time and once the governor said we were good to go again, then we started hiring more to try to catch up on our backlog.” Cusack said he hired 10 additional staff members in July and started chipping away at the backlog while turning away new business. “I’m turning away work right now,” Cusack said. “I’m telling customers that we’re recovering from this shutdown and it’s going to be two months before I can even look at your project.” Cusack has also personally used his resources and expertise to help with pandemic-related projects. He recently collaborated with the Holland-based manufacturer of dispensing systems GP Reeves Inc., and other local companies, to create a line of hand sanitizer dispensers called Defense Dispense, as MiBiz previously reported. Cusack created the circuit boards for those products. Cusack also partnered with a local organization called 3DC19, a collective of individuals who honed 3-D printing capabilities to create personal protective equipment like ear savers, face shields and ventilator parts, distributing them for free to people who needed them. “When I have the opportunity to do something for the greater good, you kind of have to do that, especially if you have the resources,” Cusack said. “With my business, I have a lot of different resources. If I can use those to help people, I will.” MiBiz / AUGUST 31, 2020

FINANCE NEW VC FUND Continued from page 1

Lepisto manages the fund with Derrick McIver, who’s also an associate professor at the Haworth College of Business. The two also serve as co-directors at the Center for Principled Leadership and Business Strategy at the Haworth College, and are managing partners in the investment firm Sleeping Giant Capital LLC that’s affiliated with WMU. WMU created the Center for Principled Leadership and Business Strategy in late 2019 McIver with $6.5 million in donations from backers that include the Haworth family in Holland, Greenleaf Trust Chairman William Johnston in Kalamazoo, the Menard family of the Midwestern home improvement retail chain, and the Charles Koch Foundation. The new venture capital fund will work differently from a traditional venture capital fund. Lepisto describes the Sleeping Giant Capital Principled Impact Fund as having a community focus and mindset with long-term goals that go well beyond generating financial returns for investors. “We want to generate economic returns for our investors and for the College of Business. We want to generate social returns to make sure that capital stays local, those companies stay open, and there’s a benefit to changing peoples’ lives so they can actually buy a company,” he said. “We’re very interested in ensuring that there is a really well-represented, diverse cohort of aspiring owner/operators that come through this program because this is also a mechanism as we think about inequality and we think about being able to ensure everybody has the opportunity to be able to own capital.”

Small biz focus The fund intends to target small businesses primarily based in West Michigan with $1 million to $10 million in annual revenue, Lepisto said. The fund will buy out the owner and bring in new owner/ operators who were trained in a new program that the Haworth College of Business plans to launch this fall. The potential new business owners coming from the Haworth College program will go through a competitive process to earn backing from the fund, which would own the companies in which it invests, Lepisto said. The 10-year fund will seek to make one or two investments annually, he said. As the fund looks to back local companies transitioning to new ownership, organizers as well envision “creating a new career path” for experienced, mid-career business executives who would like to buy and run a company, Lepisto said. “There are a lot of great professionals out there who have maybe dreamed of being a CEO one day or running a company, but they know they’ll never get there by climbing a big corporate ladder, or they think about starting something from scratch in traditional entrepreneurship, but that seems too risky,” he said. “So, we want to provide a lifechanging opportunity for those aspiring owner/ operators.” The fund as well can provide an ongoing source of revenue for the Haworth College of Business. The fund has garnered “a lot of interest” from WMU alumni who are interested in getting involved as either investors or mentors for new business owners, Lepisto said. The mentorship aspect offers an opportunity “to really get involved beyond just writing checks that a lot of our alumni have really been responsive to,” he said. The new owner/operators that run the business in which the fund invests will take a greater equity position in the company over time. “At some point we would hope the owner/operator buys out the fund and then can be the sole owner of the business,” Lepisto said. “Ideally, we would want to see that transition.”

AUGUST 31, 2020 / MiBiz

Fifth Third CEO on pandemic driving digital banking: ‘It’s going to stick’ By MARK SANCHEZ | MiBiz msanchez@mibiz.com

The COVID-19 pandemic that shut down much of the economy in March had all businesses scrambling to maintain operations — if they were allowed to stay open — and keep employees safe. Banks closed their branch lobbies and directed customers to use drive-thru lanes or digital banking to handle transactions. As the economy rebounds, Greg Carmichael — chairman, president and CEO of Cincinnati, Ohio-based Fifth Third Bancorp, the market leader in West Michigan — recently spoke with MiBiz about how the bank has responded to the pandemic and the changes it’s driving for the industry. What’s been the most challenging issue in managing through this time? Trying to manage through the fact that literally the economy shut down overnight, so to speak, with very little notice. You had families with daycare issues, school issues, you go down the list, and we were trying to keep our operations up and running to service the consumers in a way that was appropriate and consistent with CDC guidelines. We had to deal with our employees’ family situations, personal situations, those at high risk, and figure out a way to keep our operations open. Our backroom operations and our banking centers never closed. We closed the lobbies, but the drive-thrus were open and we had to staff those. Working through the logistics of those challenges was huge. Supporting the CDC guidelines where we had to have proper hand sanitizer, facial coverings, plexiglass to separate our tellers — all that took time to put in place. And couple that with the uncertainty. How long is this going to persist? How long are we talking? What type of long-term changes do we have to make? Do we have our vendors and suppliers to supply us, all going through the same scenario? And some of them weren’t deemed essential.

What has been the single biggest change in how you connect and work with your customers? A lot more of the conversations have shifted to virtual. Up until more recently, a majority of the conversations would be a wealth management adviser talking to a private bank client about their financial needs and planning. Those things were being done virtually and most still are being done virtually. Going into the crisis we needed a lot less drive-thrus and less or smaller lobbies and so forth. With the pandemic, we had to adjust to accommodate longer lines in the drive-thrus and find more capacity in our drive-thru lanes, and adjust to call center volumes with staffing for calls coming in.

What are the permanent changes for the banking industry that will come from the pandemic?

Fifth Third Bancorp Chairman, President and CEO Greg Carmichael says the pandemic will bring a more widespread shift to digital banking services. COURTESY PHOTO about. The pandemic’s forced adoption of digital capabilities, virtual meeting platforms, and once that adoption was experienced, I think it’s going to stick because it’s that easy and that efficient.

How is the crisis changing how you work with commercial clients? The big shift there is the continued need for corporations to use their digital platforms their banks provide for doing their banking, and a lot less dependence on small businesses walking into a banking center and using some of the capabilities digitally that banks provide. RMs (relationship managers) are talking to their clients for review of financials (and) problem-solving virtually using WebX or Zoom. That’s going to stick and you’ll see less road time for RMs.

What’s not going to permanently change and remain in place? What hasn’t changed is it is still a people business. Banking is a relationship business. You hear a lot of bank CEOs say this. Our customers, both commercial and consumer, still want — when they have a complex problem, need advice, have an issue they’re trying to solve, have a dispute on their credit card — to talk to somebody. Or they have an error with their credit bureau, they want that cleared up. They don’t want to use your automated call platform. They want to talk to someone if it’s something that impacts them financially. If they can’t get a loan processed, or something’s getting hung up or there’s information that they can’t get to, they want to talk to somebody. It’s still a relationship game. The ways in which we handle that relationship continue to evolve and accelerate to digital capabilities.

Thinking back to March, what was the moment that told you just how serious this situation was and that you had to shift quickly?

On the consumer side of the house, those who were reluctant to use digital channels and those who would use digital channels for certain capabilities and certain features — ‘Did this check clear?’ or ‘What’s my account balance?’ — had more time on their hands. They were home and their kids were at home who could help them with the technology in some cases. So, you had the high-level adoption of our technology and digital capability. We saw our numbers jump up to 75 percent of all of our transactions going through our digital channels, which is above the 60-plus percent we were running prior to (the pandemic). I think that really sticks because it’s so easy and so efficient for the consumer to use digital channels for those types of transactions and save the in-person for interactions that really involve help to solve complex problems and providing advice to them.

When we saw New York unfold. Then you started hearing Gov. (Andrew) Cuomo talking about hospitals being overrun, out of capacity, makeshift hospitals, makeshift morgues. When you started hearing that, you said, ‘Oh, God. How many other cities are going to go through that if they don’t react quickly? Other cities that haven’t experienced that level of infection yet, how fast are they going to react and how quickly are they going to have to react to prevent the same thing from happening in their city?’ And then I said, every governor is going to want to be more aggressive here to show they are not being negligent in protecting their state. I knew when New York started becoming as bad as it was that other states were going to start to react very aggressively across our footprint and that was going to have huge ramifications, and this was going to be a lot worse than people anticipated it was going to be.

How does that affect your branch network?

How has this crisis changed you as a business leader?

That shift is here to stay and I think you’re going to see less foot traffic in our branches. That will equate over time to less branches as that adoption becomes more digital. It also requires banks to enhance their digital capabilities and their sales capabilities and to know their next product for their customers through digital capabilities. So we have to accelerate our capabilities there.

As a bank leader, I spend a majority of my professional hours managing risk, and after 10 years of Dodd-Frank and stress testing our business, we never stress tested for a pandemic. So, as a business leader, being able to adapt more aggressively on the fly and then more holistically thinking about any potential scenario that can impact our business, without leaving anything on the table, I just kick myself saying, ‘Why didn’t we model pandemic?’

I have to assume the pandemic has accelerated banking further into the digital age.

How many CEOS had a ‘pandemic’ on their checklist, though?

What’s interesting is we’ve been investing in these capabilities, but there’s never been a real catalyst to drive adoption until this pandemic came

Nobody. The government puts the stress test in front of us, and not one of them was ever a pandemic. Visit www.mibiz.com

FOOD BIZ

‘WE NEED SOME HELP’

Michigan’s craft spirits industry seeks relief to weather pandemic, stay competitive By JAYSON BUSSA | MiBiz jbussa@mibiz.com

hen the COVID-19 pandemic hit and the supply of hand sanitizer dried up, nearly every member organization of the Michigan Craft Distillers Association rolled up their sleeves to pivot from producing spirits to making hand sanitizer. Now, the local distillers that were quick to lend a helping hand could use some help of their own. “I think there was definitely a lot of kudos and appreciation expressed to our industry and thank yous for stepping up to the plate to help in the time of need, but now we’re all back to trying to do what we really want to do on a daily basis, which is make booze,” said Jon O’Connor, president of the MCDA and co-owner of Long Road Distillers LLC in Grand Rapids. “We’re back to doing that, but at the same time, there is a mountain of uncertainty staring us in the face.” Not unlike adjacent industries — craft beer and wine, restaurants and hospitality — local craft distillers have felt the crush of the COVID-19 pandemic and subsequent shutdowns. However, maneuvering an industry with heavy-handed regulation has made it tough for these businesses to find creative solutions to keep revenue flowing, which has left the $1.8 billion dollar industry shaken and stirred.

Dire straits

the mercy of a long, arduous process that the beer and wine industries are able to bypass. The three-pronged legislation looks to grant craft distillers the ability to self-distribute, ship and deliver spirits directly to retailers and customers on a limited basis. Both the beer and wine industries already have similar privileges. “As an industry, one of the things we continue to say is that we are not advocating to be treated differently or be given a favorable regulatory environment compared to our peer industries,” O’Connor said. “We just really want some parity.” While beer and wine makers are able to benefit from bringing new products to market quickly, distillers find themselves wrapped up in a process that requires them to apply to the federal government, get their label approved by both the federal and state governments, wait for the state’s vote on approval and then finally be listed in the state’s liquor price book that is published once every quarter. If these products require an aging process, it could be months, if not years, to reach the market. “We need some additional tools to get our products to market or you’re going to see a significant amount of people in this industry no longer be able to be sustainable,” O’Connor said. Self-distribution would be especially beneficial to the companies that don’t already distribute. Even small distillers could realistically forge relationships with retailers, restaurants and bars in their region to generate needed revenue through self-distribution. “That’s probably the difference between them staying in business and going out of business,” O’Connor said.

In an early spring report just as COVID-19 was tightening its grip on the country, the American Craft Spirits Association painted a grim picture for the roughly 2,000 small craft distillers around Other states act the United States. Relaxing the ban on self-distribution — at the Without government stimulus, 67 percent of very least during the pandemic — could be key distilleries polled by the organization said they to survival for distilleries. It’s also a step other would be forced to close within three months; 32 states have taken during the unprecedented pubpercent of those respondents claimed they would lic health event. only last a month or less. In Virginia, one of the strictest control states in The financial crunch is especially underthe country, the state relaxed its self-distribution standable for distillers that don’t distribute and regulations as the pandemic hit, allowing distillrely on their own tasting rooms to reach cuseries to fulfill orders through third-party carriers. tomers. The ACSA revealed that 87 percent of New York, California, Oregon and Pennsylvania craft distillery tasting rooms have closed for a took similar measures. Data presented by the period of time as a direct result of COVID-19 — ASCA revealed that distillers in those 38 percent did so proactively while states replaced most, if not all, of the 47 percent of the closures were money lost through tasting rooms government-mandated. while stimulating the greater econA more recent study released omy through their sales. by the Distilled Spirits Council of Michigan has worked to ease the the United States, which examined effects of the pandemic on bars, resfresh data more reflective of the Portion of sales that taurants and beverage producers marathon nature of the pandemic, craft distillers have through measures like social disdidn’t offer much more reason for lost because of the tricts and outdoor seating/alcohol optimism. pandemic, valued consumption. O’Connor admitted The report stated craft distillers at about $700 milthat those measures have certainly nationwide had seen a loss of 41 lion, per DISCUS helped, but that they are merely a percent of their sales, representing Band-Aid — one that will no longer more than $700 million, while 31 be an option as winter approaches. percent of their employees have been furloughed. Joel Bierling, owner of Comstock Park-based “We need some help,” O’Connor said. “We all Bier Distillery, called the ability to self-distribwant the industry to see the other side of this.” ute a “game-changing event” and said a hybrid of self-distribution and selling product via one of Providing parity the state’s three authorized distribution agents A bit of relief for the state’s craft distillers could would provide maximum benefits. potentially come via a piece of legislation the “Ideally, we would be able to self-distribute in MCDA helped introduce before the COVIDaddition to distribution through a distributor,” 19 pandemic. The bill, which has not yet been Bierling said. “We have strengths that they lack scheduled for a hearing, deals with limited — product knowledge, passion — and they have self-distribution. strengths that we lack — distribution network. With its status as a control state, the state We’d never be able to properly service the farof Michigan controls all sales and distribution flung parts of Michigan ourselves, but at least in of spirits through the Michigan Liquor Control our local areas, being able to hand a bottle to a Commission (MLCC), putting craft distillers at liquor licensee or customer directly would greatly

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Long Road Distillers LLC co-owner Jon O’Connor says manufacturers of craft spirits are struggling through the pandemic, but would benefit from state legislation granting the ability to selfdistribute. COURTESY PHOTO help our ability to sell our craft spirits.”

Cramp in cash flow In Michigan, the state serves as the industry’s only liquor wholesaler. As such, craft distilleries get paid for sales of products by the state. Unfortunately for the cash-strapped distilleries, those payments have not arrived quickly this year. O’Connor said that he normally gets paid in 30 to 45 days, but even before COVID-19 hit, those payments started to linger. At its worst, O’Connor said that he would see payments 50 to 60 days out. Bierling faced similar circumstances, saying that his last payment was June 10 and the MLCC consistently took six weeks to deliver payments. Bierling did point out that the MLCC let distillers defer their payments, but he didn’t know if that was a contributing factor to the delays. For producers, the late payments raise a red flag for a couple reasons. The state gets paid right when a case of spirits is delivered. Furthermore, the state has seen an increase in gross liquor sales, up $68 million in the first quarter of the year. That doesn’t paint a picture of a state department struggling to scrape together cash. MiBiz reached out to the MLCC and was provided with the following statement: “With regard to delayed payments to vendors (including craft distillers), the commission was running slightly over the customary 45-day processing time (at 50 to 51 days). This delay occurred about three weeks ago and lasted for a little over a week. This was due to staff taking one layoff day each week as required, during the 10-week Work Share program that the State of Michigan participated in. “The commission has promptly resumed processing vendor payments within 39 to 45 days. The Michigan Department of Treasury issues warrants on behalf of the commission within a 39 to 45 day timeframe, which is not uncommon. The commission recognizes the extraordinarily difficult time its vendors are experiencing during

this pandemic and is working diligently to ensure timely payment.” In regard to the self-distribution issue, the MLCC said it does not comment on pending legislation. Despite the MLCC’s claims of returning to a normal timeline on payments, O’Connor reported that many of his member organizations continue to see payments that are two weeks later than usual. “I don’t understand why it even has to be that long,” he said. “The state has the money — they collected it the day the product got delivered. My tax payments are due when they’re due and if not, I get a pretty hefty fine.”

Lead or lag? For Richard Anderson, co-owner of Iron Fish Distillery LLC in Thompsonville in northern Manistee County, COVID-19 not only amplified the lack of parity between the spirits and craft beer industries, but it raises the larger question about whether the state of Michigan wants to elevate the industry as a nationwide leader, and if so, what steps it will take to do it. “Whether it’s intentional or not, Michigan is making either an implicit or explicit decision about the leadership of this industry compared to other states,” said Anderson, whose distillery distributes in Michigan through Imperial Beverage and also ships to Illinois and Nebraska. “Does Michigan want to be a leader in the craft spirits industry or does it want to lag behind other states?” “There is a combination of policy and regulations that literally influence our ability to be one of the national leading craft spirit industries,” he added. “(Self-distribution) is one that is right at the doorstep, and while I think COVID amplifies the need for parity with beer and wine for sure, why wouldn’t the state want to take steps to grow an industry that is one of the most striking examples of how a sector is able to create employment in inner cities and unbelievably remote rural communities?”

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Selma Tucker is passionate about safe and affordable housing. He believes that if a family can’t access the housing market, where most middle-class wealth is held, it will be difficult for them to find stability and prosper. Selma regularly donates to Grand Rapids Community Foundation. He recently named the organization a beneficiary of his life insurance policy. His planned gift will help ensure the Community Foundation’s work to improve the lives of all people in the community continues well into the future. L E T U S H E L P YO U G E T S TA R T E D We’re here to help you understand your options and explore creative ways to leave your mark on the community and causes you love. Give us a call at 616.454.1751. grfoundation.org

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NONPROFIT ORGANIZATIONS

ALICE: Asset Limited, Income Constrained, Employed

63%

SOURCE: MICHIGAN ASSOCIATION OF UNITED WAYS

of Black households in Michigan fall below ALICE threshold

36%

of white households in Michigan fall below ALICE threshold

United Way analysis confirms racial disparities in income, public health outcomes By JANE PARIKH | MiBiz jparikh@mibiz.com

Households that earn more than the Federal Poverty Level but less than the basic cost of living represent the ALICE threshold. The federal povhe choices facing nearly two-thirds erty guidelines for a family of four in Michigan is of Black households in Michigan are $24,600, and the ALICE threshold for a four-perstark and unrelenting, with many son household with an infant and a preschoolforced to choose between paying for age child is $61,000, according to the Michigan a prescription or food, a utility bill or Association of United Ways. rent. The group releases a study on the condition of This is not news to Shannon BlackmonMichigan’s working families, which it has dubbed Gardner as she responds to a recent analysis ALICE households, every two years. The “ALICE by the Michigan Association of and Black Households Data” is an United Ways showing 63 percent analysis of new data points from of Black households statewide are 2018, said Mike Larson, presiunable to make ends meet. dent and CEO of the Michigan “For me, being a person of Association of United Ways. Sponsored by: color, it’s not new news,” said “Many of us assume there is GRAND RAPIDS Blackmon-Gardner, vice presian inequity issue around these COMMUNITY dent of community impact with things, but to have this data FOUNDATION the Grand Rapids-based Heart of makes it clearer and really drives West Michigan United Way. “It is it home,” Larson said. “We use new as we put it out to the community. Poverty ALICE data to help us dive deeper. It helps peoand racism have been connected since the beginple to understand and better educate themselves ning. I see it every day.” and others and transforms our organizations to She and others in the tailor our work around this new information. … nonprofit sector now aim Many of them are using it strategically to focus to “really drill this down and on issues in their community.” extrapolate the information This latest ALICE report is “clearly showing and put it out into commuinequities that are deeply rooted in our system,” nities,” she said. Blackmon-Gardner said. While the detailed data “I think one of the factors is unemployment,” about Black households are she said. “We know many people were losing released in a report every their jobs prior to COVID, and COVID increased other year, this year’s analythose numbers.” Blackmon-Gardner sis coincidentally comes at a time of civil unrest across the Pandemic relief U.S., she said. As the pandemic made its way into the U.S., The information about United Ways in Michigan established coronavithe disproportionately high rus relief funds that met the immediate needs of number of Black families those who had been struggling and those who who are struggling to make hadn’t sought assistance before. Larson said the ends meet is part of the stategroups raised and distributed more than $25 milwide United Way’s ALICE lion statewide. (Asset Limited, Income Larson The Heart of West Michigan’s fund began in Constrained, Employed) March and was discontinued in June. In July, Kent data. The findings indicate County administrators asked the Heart of West that 40 percent of all Michigan households did Michigan United Way to administer $9.5 milnot earn enough to cover basic expenses in 2018, lion received through the federal CARES Act to including housing, child care, food, transportaaddress ongoing immediate expenses of famition, health care, and a basic smartphone plan. lies in need. The 63 percent of Black households falling Blackmon-Gardner said the philanthropic below the ALICE threshold was nearly double sector will have to study the data to ensure that of white households, at just 36 percent.

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40%

of all Michigan households did not earn enough to cover basic expenses in 2018

11%

increase in number of Black households under ALICE threshold from 2010-2018

long-term stability for these families and individuals. While high unemployment will likely continue, she said expenses related to housing and transportation will increase, making it more of a challenge to meet these basic needs. She and Larson noted a shift from identifying short-term fixes to envisioning what recovery looks like. “The state and federal governments are not going to be able to fix the problem,” Larson said. “United Ways are making the shift and asking: How do we mobilize our resources as we move forward?” “We are looking at how we can invest in those areas to make sure people are able to meet their basic needs,” Blackmon-Gardner said. “We’re focusing on those serving the highest percentage of Black and Brown individuals who are struggling. We are really trying to advocate for the importance of this. We’re doing all we can to meet this inequity.”

increase in number of white households under ALICE threshold from 2010-2018

up nearly 14 percent of Michigan’s population yet represent 40 percent of COVID-19 deaths.

New practices

Blackmon-Gardner said the Heart of West Michigan United Way — like United Ways throughout Michigan — has already been using information on racial inequality in its plans and is reinforcing its commitment to race and equity. However, the latest ALICE data are raising awareness and shifting attitudes to better meet the needs of minority communities. Among the questions being asked: “How should we invest in these types of solutions so Black and Brown families can meet their basic needs?” Blackmon-Gardner said the Heart of West Michigan is doing an equity-focused review of its grant applications and processes to “see if there are inequities. We want to make sure we’re not limiting or considering certain applications based on any type of identity markers that are ruling them out. We want to try to make sure Early intervention, we’re investing in areas with higher populations COVID disparities of Black or Brown individuals.” Larson cites other issues such as inequities in Most United Ways have been doing work education. He said the ability of a child to grow up around diversity, equity, inclusion, and racism, and become a successful adult closely involves Larson added. opportunities to learn and thrive. Yet disparities “It’s always been our intent to get deeper continue among houseinto this,” he said. “There’s holds who have children always been intent around graduating with high this work, but we have to go school diplomas, he said. a lot farther.” “If we can’t start to Fo r t h e M i c h i g a n resolve things early on, Association of United Ways, we’re going to see them this means getting the not being as successful ALICE data into the hands as they get older,” Larson of nonprofits and others in said. “Sixty-one percent Michigan as a way to inform of all jobs in Michigan pay them “with the hope that it less than $20 an hour. It’s starts to change attitudes really hard to raise a family and changes the outcome of four with two little ones — MIKE LARSON of what’s currently happenon $20 an hour. The reality ing,” Larson said. “We obviPresident and CEO, Michigan is that this is not enough. ously use this data at the Association of United Ways These people are makpolicy level with local, state ing tough choices every and federal officials so they day and, in some cases, can look at policy shifts with you’ve got people working two jobs just trying issues impacting Black households. At the same to make it. time, we’re using it at the local level to inform “We’ve got some structural challenges that local legislators and even for-profit businesses.” exist. At the same time, we’ve got to work furBlackmon-Gardner said the ALICE data ther upstream to address these equity issues reflect inequities that have been going on for a early on.” long time. Additional data confirm that COVID-19 has “We’ve got to come together to advocate. We affected African Americans in Michigan at a can’t work in silos anymore,” she said. “It’s about much higher rate than other ethnicities in the this community undoing racism and making sure state. This prompted Gov. Gretchen Whitmer to communities we’re serving are thriving. create the Michigan Coronavirus Task Force on “COVID changed the way we operate, but Racial Disparities in April to study the causes of with this data and the civil unrest that’s going those differences and recommend actions to on, we are making sure we’re focusing on being address the historical and systemic inequities. equitable for everybody. We’ve got to change that According to the state, African Americans make lens. It’s uncomfortable, but necessary.”

“Many of us assume there is an inequity issue around these things, but to have this data makes it clearer and really drives it home.”

MiBiz / AUGUST 31, 2020

Q&A Bill Stough Founder of West Michigan Sustainable Business Forum Founder and former president of Sustainable Research Group It’s more than fitting that Bill Stough was the inaugural inductee into the West Michigan Sustainable Business Hall of Fame in 2014 — he has been a driving force in the sustainable business movement both in West Michigan and throughout the state. Stough’s passion for sustainability dates back to 1979, when he joined the West Michigan Environmental Action Council. More recently, Stough served as a founding member of the West Michigan Sustainable Business Forum and just wrapped up his role as president of Sustainable Research Group, which he founded and sold to Grand Rapidsbased energy consultancy Foresight Management. Stough is now selfemployed and recently reflected on his “long and extremely satisfying career.”

What got you interested in sustainability to the point that you made it your career? As a young idealistic person, I was looking for a meaningful career that I believed would leave the world in a better place because of my involvement. In that respect, I was lucky to find a college degree in urban and environmental planning at Williams James College (once part of Grand Valley State University), which solidified my passion for environmental stewardship and social justice. I was also lucky to find a string of organizations that allowed me to work in that field until I find myself here with you talking about a long and extremely satisfying career. What would you consider your biggest accomplishment over the years? I think the accomplishment that has the most lasting impact is the founding of the West Michigan Sustainable Business Forum. I was on the board of the West Michigan Environmental Action Council and convinced them to create a business subsidiary that would try to work with businesses as opposed to always being against them and, to my surprise, they agreed. From there, it’s been what (WMSBF Executive Director) Dan Schoonmaker has made it. Talk about the evolution you have seen in how manufacturers approach sustainability. What’s changed over the years in their approach? You have to separate these businesses in two categories. The large international companies — they get pressure from all sides, so they get it. When you get to the small, medium-size manufacturers, they have become more attuned to the sustainability imperative in the past five years. Two major issues have helped many manufacturers adopt sustainable business practices. The first is that a growing list of high-profile customers are demanding that their suppliers provide data and documentation on the environmental and human health impacts of their products. Secondly, a growing number of the best and brightest employees are not interested in working for a company that doesn’t have a sustainability vision or plan. They live their values and more likely than not these days go to companies that can articulate their sustainability strategy. How did the office furniture industry serve as an example for other industries in embracing sustainability? The office furniture industry was one of the first sectors to take the issues embedded in sustainability seriously. Again, initially it was a primary concern of their customers, evidenced now by a majority of office furniture bid documents that request information about the environmental and social impacts of their products and organizational values. As far back as 2006, BIFMA (Business and Institutional Furniture Manufacturers Association) began developing a state-of-the-art voluntary product sustainability standard with third-party certification branding. This was years ahead of other industry sectors and has since become the model for many other industries to replicate. How harmful is greenwashing to the overall sustainable business movement? What can be done to root it out? The act of falsely or insincerely marketing information that appears to be environmentally friendly but is just the same old approach with a green spin is extremely harmful as it always ultimately comes to light and customers are turned off and legal problems may also be on the horizon. Greenwashing is so easy to fix — just do the homework on the environmental impacts of your products. No one is perfect, so identify the strengths and weaknesses and celebrate the strengths and continually improve on the weaknesses. Where does Sustainable Research Group go from here and why was Foresight the right buyer for the business? It continues to develop into the nation’s premier sustainable business consultancy. The synergy between SRG and Foresight is enormous as each has skilled talent and areas of expertise that are complementary, yet not overlapping. I look forward to seeing how their combined talents will accelerate sustainable business practices in the future.

Interview conducted and condensed by Jayson Bussa. COURTESY PHOTO

AUGUST 31, 2020 / MiBiz

IN THE NEWS M&A

n Grand Rapids-based SpendMend LLC, which provides spending visibility and audit recovery services to the health care industry, acquired two related companies, TurnKey Pharmacy Solutions and Elevate340B, both based in Draper, Utah. The company plans to rebrand the firms as SpendMend Pharmacy, which will focus on compliance, optimization and growth services for 340B programs in the health care industry. The 340B program requires drug makers to provide discounted medication to hospitals and clinics providing care to uninsured or vulnerable patient populations. TurnKey offers 340B audit and compliance services and established Elevate340B to consult with hospitals to grow their use of 340B programs. Terms of the deal were not disclosed. n Grand Rapids-based law firm Miller, Johnson, Snell & Cummiskey PLC is acquiring Detroit-based law firm Lusk Albertson PLC in a deal expected to close Aug. 31. Lusk Albertson focuses its practice on the education sector. The combined firm will have 105 attorneys practicing at three offices statewide, and “represents an opportunity for Miller Johnson to establish an even stronger foothold in the greater Detroit market,” according to an announcement of the deal. Terms of the deal were not disclosed. Lusk Albertson partner Kevin Sutton will lead the Detroit office as managing member. n Grand Rapids-based Waséyabek Development Co., the non-gaming economic development arm of the Nottawaseppi Huron Band of the Potawatomi, closed on a deal on Aug. 20 to acquire Re-source Industries Inc., a family-owned manufacturer based in Muskegon. Previous owners Paul and Randi Kuyt plan to remain with the company, which will be renamed RSI of West Michigan. The company is a high-volume manufacturer of parts for a range of products, including ATVs, autos, snowmobiles and archery bows, and employs 44 people. RSI offers CNC machining and rapid prototyping and operates from a more than 40,000-square-foot facility on South Getty Street in Muskegon. Grand Rapids-based Calder Capital LLC sourced the deal for Waséyabek. n Grand Rapids-based private equity firm Blackford Capital has closed on the sale of Ellison Bakery, a maker of cookies and other baked goods that’s headquartered in Fort Wayne, Ind. Blackford Capital sold Ellison Bakery to Tilia Holdings, a Chicago private investment firm founded in 2017 that invests in the food supply chain and recently reported to federal securities regulators that it raised $99.7 million for a second fund. Blackford Capital acquired Ellison Bakery in 2017. Terms of the sale to Tilia Holdings were undisclosed. n Traverse City-based investment firm Boomerang Catapult LLC has sold Taste the Local Difference, a food marketing agency, to individual investor Jody Trietch, according to a report in the Traverse City RecordEagle. Trietch serves as CFO of Boomerang Catapult, which bought the organization from Groundwork Center for Resilient Communities in 2018. Under Trietch’s leadership, the company looks to expand its services beyond Michigan, according to the report.

EXPANSION

n Hudsonville Ice Cream has broken ground on a $35 million project that will add a new cold storage hub to its Holland headquarters. The family-owned creamery, which has been in business since 1926, is adding 156,466 square feet of freezer space to its 48th Street campus in a project slated to wrap up in the spring of 2021. Fort Wayne, Ind.-based Tippmann Construction is building the facility, which will feature a refrigerated dock and nine dock doors as Hudsonville Ice Cream works to accommodate the logistics that come with expanding its products into new stores and states with each passing year. n Wyoming-based Grand Valley Wood Products and Surfaces of Michigan will soon relocate and consolidate operations of the commercial millwork and countertop companies in southeast Grand Rapids. S. Hager Properties LLC purchased a 52,980-squarefoot building at 4030 Eastern Ave. SE on Aug. 7 for $1.7 million, according to property records. The company is registered to Shawn Hager, owner and president of Grand Valley Wood Products and Surfaces of Michigan. Construction and renovations are scheduled primarily for October with operations to start at the new location by the end of the year, Hager said. The companies currently operate in leased facilities.

HEALTH CARE

n Ascension Borgess in Kalamazoo this month opened an expanded surgical unit. The newly constructed surgical floor has about 38,000 square feet of space with 10 operating rooms, 18 post-anesthesia care stations and a new sterile processing department. Ascension Borgess also expanded its labor and delivery surgical services with the addition of two ORs and four antepartum rooms, allowing doctors to perform C-sections on the floor, rather than traveling to the hospital’s main operating unit. n Tasha Blackmon, president and CEO of Cherry Health, was named the recipient of the 2020 Athena Leadership Award from the Grand Rapids Area Chamber of Commerce. The Chamber presents the award at the 31st Annual Athena Awards Celebration held virtually at 4 p.m. on Sept. 24. The Athena Awards program began in Grand Rapids in 1989 to honor women and men for professional excellence and community service and to offer active assistance to women in their attainBlackmon ment of professional excellence and leadership skills. n Mary Free Bed Rehabilitation Hospital in Grand Rapids named Ingrid Cheslek as chief operating officer. Cheslek has more than 30 years of experience in health care. She joined Mary Free Bed in 2015 as chief nursing officer and in 2016 Cheslek was also named chief clinical operations officer. As COO, Cheslek oversees all aspects of the hospital’s operations. n Spectrum Health named Dr. Hossain Marandi as president of Helen DeVos Children’s Hospital in Grand Rapids. Currently the president of Peyton Manning Children’s Hospital in Indianapolis, Marandi has 18 years of experience at two children’s hospitals. His appointment follows what Spectrum Health in a statement described as “a rigorous national search and interview process with a cross section of community members and hospital leaders.” A pediatrician, Marandi succeeds Dr. Bob Connor, who retired in January after 15 years of leading DeVos Children’s Hospital.

INSURANCE

n Blue Cross Blue Shield of Michigan intends to give more than 180,000 individual policyholders a 30-percent credit on their health premiums this fall. The health insurer will apply $21 million in premium credits to November invoices for individual health and dental policies. The credit stems from lower medical claims during the COVID-19 pandemic, which for several weeks in the spring left care providers unable to perform nonessential procedures and surgeries. The premium credits — which are pending regulatory approval — include Blue Care Network, Blue Cross Blue Shield’s HMO subsidiary.

BANKING

n Independent Bank Corp. named Gavin Mohr as chief financial officer. Mohr starts Sept. 14, succeeding Robert Shuster, who since June has been interim executive vice president and CFO. Shuster will remain with the bank as a senior financial executive until about Oct. 31 to assist Mohr with his transition. Mohr previously served as the CFO of STAR Financial Bank in Fort Wayne, Ind.

NONPROFIT

n The Grand Rapids Community Foundation’s LGBTQ+ Fund has awarded $60,000 to Grand Rapids-based West Michigan Partnership for Children (WMPC) for its new Foster Care Affirming and Listening to our LGBTQ+ Youth (A.L.L.Y.) Project. WMPC’s goal with the A.L.L.Y. Project is to improve the experience in the Kent County child welfare system for persons identifying as LGBTQ+, create a gay/straight alliance for youths in foster care, and increase the foster care workforce’s understanding about the needs of youths who identify as LGBTQ+. The organization is launching the project in collaboration with Grand Rapids-based JF Consulting Services LLC. Visit www.mibiz.com

UPCOMING ISSUES

9.14.2020

Family Business Contract Deadline: 9.2.2020

9.28.2020

Diversity/Equity/Inclusion Contract Deadline: 9.16.2020 How should marketing change in the wake of COVID-19?

Aerospace suppliers brace for continued turbulence

PAGE 9

PAGE 5

MAY 11, 2020 • VOL. 32/NO. 15 • $3.00

SERVING WESTERN MICHIGAN BUSINESS SINCE 1988

Experts warn of possible mental health ‘aftershock’ from COVID-19

www.mibiz.com

EXPLORING WHAT’S NEXT Experts preview workplace changes as economy slowly re-emerges

By MARK SANCHEZ | MiBiz msanchez@mibiz.com

f the SARS outbreak 17 years By MARK SANCHEZ | MiBiz ago in Asia is an accurate indimsanchez@mibiz.com cator, behavioral health care providers could see a patient eople who have been working from surge in the coming weeks and home for weeks because of the months as the COVID-19 pandemic COVID-19 pandemic will return to a takes an emotional toll on people. decidedly different workplace than One-third of the people in Asia they had previously once the economy gets were unable to return to work full going again. time after the SARS pandemic, six Changes will span a range of workplace in 10 experienced fatigue, and half environments, including offices, shop floors, had difficulty sleeping. breakrooms and conference rooms. Wearing In Hong Kong, the suicide rate face masks and having more distance spiked nearly 32 percent for two between workers will become the norm, years after SARS. Hong Kong also along with routine temperature checks and experienced “increases in persistent continually cleaning and sanitizing the workdepression, anxiety, panic attacks, place, tools, equipment and workstations. psychomotor agitation, psychotic PAGE 12 PAGE 14 Those and other pracsymptoms, delirium, and suicidtices are all part of the proality,” accordMARCH 16, 2020 • VOL. 32/NO. 11 • $3.00 SERVING WESTERN MICHIGAN BUSINESS SINCE 1988 www.mibiz.com verbial “new normal” for ing to a white employers working to navpaper from Pine igate the deadly pandemic Rest Christian that has disrupted daily rouMental Health tines, thrown the economy Services on the into recession and may linpotential menSmall businesses around West Michigan have been affected in many ways GR debates increasing ger for many months until a tal health effects Kennedy sites for marijuana by the ongoing pandemic. While some are seeing increased business, most Eastburg vaccine is developed. of the COVID-19 businesses; equity, “As business leaders, you have to make pandemic. companies are being forced to deal with the fallout by getting creative, manlocal ownership sure you’re taking the responsibility for your The white report pulls data from aging cash and finding new ways to stay engaged with customers and cliconcerns remain employees,” Kentwood-based Autocam a number of sources to issue a call to Medical Devices LLC CEO John Kennedy action for care providers to prepare ents. In this Coping with COVID-19 special report, MiBiz speaks with two said during a recent back-to-work webinar for the “aftershocks” from the panBy SYDNEY SMITH | MiBiz dozen West Michigan companies to hear how they’re navigating the current hosted by Advantage Benefits Group Inc. “It’s demic and “minimize the fallout of ssmith@mibiz.com incumbent on us as businesses to make sure COVID-19 on mental health in our uncharted waters. SEE PAGES 12-19 communities.” See WHAT’S NEXT on page 8 GRAND RAPIDS — Following “ Th e w ar n in g sig n s are mixed messages from the Grand there right now that we could in Rapids City Commission late last Michigan experience a significant By MARK SANCHEZ | MiBiz month, marijuana advocates surge in behavioral health needs msanchez@mibiz.com hope city officials will ultimately that emerge out of this COVID criopen more properties for medisis,” Pine Rest CEO Mark Eastburg he coronavirus outbreak that’s batcal and recreational facilities. By ANDY BALASKOVITZ | MiBiz benefits for people in their state’s Program loan — told MiBiz. “We ought to be precall hosted by the West Michigan Policy tered Wall Street andactive caused supply On Feb. 25, the commission abalaskovitz@mibiz.com system. In Michigan, this means workwhich requires 75 pared asimplications a state and aofcommunity Forum. As of early May, Sturgis Molded Visit mibiz.com for ongoing coverage of the business COVID-19 in West Michigan. chain disruptions for some manuwent back and forth on appliers unemployed a result oftransthe panpercent of the loan for that in case that happens.” Products was running at about 10 perfacturers has yet toasinterrupt cations for both types of facilis some employers actions, express although demic could receive up to $962 aare week. to be used for payT he s t r e s s, a n x iet y a nd cent capacity involving transportation more conversations ties. The city has approved 24 PAGE 2 PAGE 13 concern about retainfederal areaccording available for roll in order to be depression the pandemic trigand medical devices. The company has occurring asThe part of duebenefits diligence, licenses for medical marijuana ing workers who are up to 39 weeks, while state benefits forgiven — faced gers can come from the loss of a about 200 employees. to earnM&A professionals. businesses, while another 14 APRIL 27, 2020 • VOL. 32/NO. 14 • $3.00 SERVING WESTERN MICHIGAN BUSINESS SINCE 1988 www.mibiz.com ing more income through were more workers backlash from job or income, grief, and uncer“I’ve called people and there has Deals that areexpanded in processtoinvolve a deeperand are waiting for approval. The unemployment benefits than their extended for 26 employees, since tainty about the future. At Pine been communication that said, ‘I make dive into due diligence inweeks. situations where city hasn’t finalized recrePresta normal paychecks, researchers say Media have shown conthe loan effectively Rest, “we’re experiencing a rise more by not coming in,’” Presta told one reports company is acquiring ational marijuana zoning reglong-term structural fixes are needed cern among employers who pay less means workers would be paid their in many of the stressors that are MiBiz. “That’s out there.” another that sources raw ulations and won’t start acceptto state and federal programs. than the amount of benefits worktypical wages. known to increase risk for suiSturgis Molded Products’ operamaterials or components ing applications until April 20. The $2.2 trillion CARES Act passed ers are receiving. In at least one case Kelly Presta, vice president at Sturgis cide,” Eastburg said. tors and first-line positions make By JESSICA YOUNG | MiBiz Ea rlier t his mont h at t he West Michiga n from China. Buyers are Hours after voting to delay in late March included provisions to in Washington state, a company Molded Products Co., shared these less than the maximum amount See MENTAL HEALTH on page 6 Symposium jyoung@mibiz.com Automotive Suppliers in Grand Rapids, asking for more informarecreational and pause mediadd $600 in weekly unemployment that received a Paycheck Protection concerns during an April 22 conference See UNEMPLOYMENT on page 5 Mike Wall, director of automotive analysis in Grand tion about supply chains, cal applications, the City he automotive industry is scrambling to strike Rapids at IHS Markit, forecasted light vehicle sales backup plans and the Commission reversed course SBA races to provide relief a balance between near-term execution and of 16.8 million units in the U.S. this year, in the segcapabilities of replacement after the six commissionto small businesses, but P E R I O D I C A L S unsteady industry disruption from the novel ment that includes cars, utility vehicles and pickup suppliers. ers could not agree on how to some hiccups remain Brown coronavirus outbreak. trucks. “It’s still very new. move forward. A last-minute That’s according to industry experts who say the Already, that outlook is changing as COVID-19 conEveryone’s trying to figure it out on the fly, dispute among commissioners By MARK SANCHEZ | MiBiz effect of the virus, which has been spreading around tinues to develop across the country, he told MiBiz. but if clients were selling source parts from also involved equity and local msanchez@mibiz.com the globe since late December and shut down producAs of this report, IHS Markit was still finalizing a China, you’re going to have to make sure ownership. tion in specific regions, has shifted forecasts for global revised sales projection, but Wall expects the new forethey have a backup supply-chain plan in Commissioners were conhe sheer volume of small automotive production and U.S. sales downward. cast to drop to 16.5 million units. case there is a major disruption,” said Mike sidering zoning amendments businesses that have Indeed, Gov. Gretchen Whitmer announced “Everything is happening so quickly and there is Brown, who leads the M&A practice at investrecommended by the Planning MARKcases SANCHEZ | MiBiz sought federal relief the state’s first two presumptiveBy positive so much volatility that given the circumstances, 16.5 ment bank Charter Capital Partners LLC in Commission that would have msanchez@mibiz.com loans illustrates the PAGE 11 in Oakland and Wayne counties on March 10, fol(million) will still be a very good year,” Wall said. Grand Rapids. eliminated a waiver process depth and scope of the economic See SHIFTING DYNAMICS on page 4 lowed by a state of emergency declaration. for sensitive land uses like reliSee DUE DILIGENCE on page 9 n normal times, Trinity Health’s seven pain brought on by the COVID-19 gious institutions and opened hospitals across Michigan generate compandemic. more properties for cannabis bined operating income of $9 million to The U.S. Small Business development. $10 million a month. Administration quickly blew Marijuana advocates have But the current operating environment through $349 billion in just 14 sought to relax distance requireis far from normal, and the COVID-19 pandays and approved loans for 1.6 ments in order to expand the Downtown Grand Haven. MIBIZ PHOTO: MARLA MILLER demic has pushed the Catholic health sysmillion small businesses nationnumber of properties qualified tem’s financial performance deep into the wide before halting new applifor marijuana business use, red. seeking a constitutional amendment cations April 16 for the Paycheck By ANDY BALASKOVITZ | MiBiz graduated, or progressive, income tax. schools and road and water infrastrucwhich they say could also help The operations for percent Trinity Protection Program. That’s as abalaskovitz@gmail.com to Michigan change Michigan’s flat 4.25 The Democratic-backed proposals have ture starting in 2022. The plan would address concerns over a lack of Health, the Livonia-based parent corporation many loans as the SBA processed income tax to a graduated structure failed to gain traction in the Republicanreduce the state income tax rate for local ownership. of Mercy Health in West Michigan Saint in the previous 14 years combined. s progressive political advobased on income. The Boardand of State held state House and Senate. individuals with income of $175,000 or Joe Neller, co-founder and Health Congress last week allocated cates seek lower state income Canvassers is Joseph expectedMercy to decide in the In t he late 1960s a nd 1970s, less and joint filers with income at or chief government affairs offiSoutheast another $320 billion for the PPP, tax rates for most Michigan coming weeksSystem whether in organizers can Michigan voters by wide margins below $350,000. According to organizcer at Dimondale-based Green Michigan, recorded a $50 $30 billion of which will go to federresidents while higher earncollect signatures in hopes of putting rejected ballot proposals for a graduers, 95 percent of Michigan residents Peak Innovations LLC, said the By MARLA MILLER | MiBiz the region’s busiest tourist towns, asfor Main Streets million loss for ally designated community develers pay more infrastructure needs, the question to votersoperating in November. ated income tax. Such a change would would pay a lower state income tax rate Planning Commission rejected mmiller@mibiz.com across the state are bearing the brunt of COVIDMarch, “and remember opment financial institutions, plus the state’s leading business group is “If this qualifies for the ballot, require a constitutional amendment. than they do now. a provisioning center proposed closures. in March half the banks and credit unions with less bracing for a highly contentious politfrankly, it would be war,” saidmonth Rich However, supporters say growing Of the 41 states with income taxes, by his company 19 because of the s the owner of longtime site’s downtown some restaurants and breweries have pivwas a normal than $10 billion in assets. Banks ical campaign. Studley, president and CEOmonth,” of the income disparities and declining pub33 have a progressive structure. Federal proximity toWhile a church, Grand Haven retailer Down To though Earth, theoted to takeout retailers deemed nonsaid President and CEO and credit unions with assets Organizers behind the Fair Tax Michigan Chamber of Commerce. lic services have shifted public opinion. income tax also follows a graduated even company had and delivery, Sholeh Veiseh has turned toahosting essential fall into more of a gray area. Some have shut Rob Casalou.has opposed between $10 billion and $50 billion Michigan campaign, which was For years, the Chamber The Fair Tax Michigan plan would raise model. waiver virfrom the church. tual fashion shows and offering sales onQUO down entirely, while others are transitioning online to TheLegislature operating for loss will get another $30 billion. announced in late February, are Casalou efforts in the state a See INCOME TAX on page 3 $1.5 billion in additional revenue for See STATUS on page 8 social media to bring in some revenue during the remain at least partially open for e-commerce. stems from the lost revThe legislation also directed coronavirus closure. Under a new executive order issued April 24, enue from canceling non-essential surger$60 billion in funding to the SBA’s Gov. Gretchen Whitmer’s initial executive those stores now have more clarity: Retailers sellies and procedures, combined with ramped Economic Injury Disaster Loan P E R I O D I C A L S order closing non-essential businesses through ing non-essential items can open for curbside up spending to test and care for COVID-19 program Congress set up earlier April 30 shuttered most storefronts on Washington pick-up and for delivery. patients. in the pandemic. See FINANCIAL CRISIS on page 6 Avenue, an established shopping district in one of Before running out of money See LAKESHORE RETAILERS on page 10 for the first round of the PPP, the SBA approved relief loans totaling $10.38 billion for nearly 43,500 PAGE 21 small businesses in Michigan. Executives at banks and credit unions say applications for the PPP came from across the economy, including Main Street-type businesses, companies up to the SEE PAGE 16 500-employee threshold, the hosBy JOE BOOMGAARD | MiBiz in-person dining and drinking in crews for to-go orders, curbside pickup In a survey compiled by Boulder, pitality sector, restaurants, manujboomgaard@mibiz.com their establishments in an effort to or home delivery of beverages and Colo.-based Brewers Association in facturers and retailers that have curb the spread of COVID-19. For food. Meanwhile, distilleries have early April, 14.1 percent of responbeen hurt by the pandemic and ichigan’s craft beverage the first time in many of their his- repurposed their stills to produce eth- dents indicated their business could resulting stay-at-home orders. industry is facing a chal- tories, the owners of breweries, dis- anol in an effort to answer the call to sustain for four weeks or less if the “If you connect enough dots, lenge with the economic tilleries, wineries and cideries have boost critical supplies of hand sanitizer. current conditions persisted. An addiand some you have to confallout from the corona- been forced to lay off staff members These scrappy and resilient com- tional 45.8 percent of respondents said nect more dots than others, virus pandemic that is unlike any — their companies’ direct connec- panies are finding revenue wher- their businesses could only sustain for you can almost see where every other in its history. tions with consumers in their tap- ever they can, but few could have one to three months if the social dissingle human being and every Many companies have been com- rooms and bars. prepared for such an abrupt sea tancing measures and restrictions on See SBA LOANS on page 8 pletely closed for weeks as a result The craft beverage companies that change that’s been brought on by sit-down service remain in place. of state-mandated orders to end all remain open are leveraging skeleton the pandemic. See CRAFT BEVERAGE on page 14

COPING WITH COVID-19

Former Muskegon coal plant to get new owners

Spectrum Health prioritizes buying local

STATUS QUO

— C ORON AV I RUS I N M IC H IG A N —

Virus concerns drive additional due diligence in M&A transactions

West Michigan will work differently post COVID-19

How employers can help with mental health

COVID-19 highlights structural changes needed for unemployment system, researchers say

Automotive analysts see shifting dynamics amid coronavirus spread

TRIAL BY FIRE:

Health systems face financial crisis brought on by pandemic

Construction industry adapts to new safety protocols

Michigan Chamber prepares for ‘war’ over graduated income tax proposal LAKESHORE RETAILERS ADAPT, MOVE ONLINE AS SOME SCRAMBLE TO STAY AFLOAT

Leaders push for action to raise wages

After unbridled growth, Michigan craft beverage companies gird for devastating lows

Business of Senior Care

PAGE 12

Contract Deadline: 9.30.2020

10.28.2020

M+A: Deals & Dealmakers Awards Contract Deadline: 10.14.2020

11.9.2020

Food Economy Contract Deadline: 10.28.2020

11.23.2020

Education & Talent Development Contract Deadline: 11.11.2020

Foodservice disruptions cause crisis for farmers

Industry 4.0

INSIDE:

10.12.2020

INSIDE:

Drinking economy SEE PAGE 14

12.7.2020

Construction Wrap-up Contract Deadline: 11.25,2020

12.21.2020

Crystal Ball Special Year-End Edition Contract Deadline: 12.9.2020

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