Pages 1-24 - Crain`s Detroit Business

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Pages 1-24 - Crain`s Detroit Business
Somerset grabs
3 stores making
Michigan debuts,
Page 4
APRIL 4-10, 2016
Tax decisions
may pinch
Medicaid
Fed rulings could force state to dip into general fund
By Jay Greene
[email protected]
AARON ECKELS
Redefining rehabs
Real estate renovations are going far beyond standard-issue apartment conversions. In Rochester, a
century-old home is transforming into a French restaurant. In Dearborn, the former city hall is now artists’
space. And in Royal Oak, a pair of architects redeveloped a downtown building into their office and home.
These are what we call “cool rehabs,” and we show them off on Pages 8-10.
Michigan could lose two tax
sources this year that contribute
up to $700 million in state general
fund revenue used to help support
the state's fast-growing $13.6 billion Medicaid program.
Over the past 20 years, Michigan has increasingly relied on a
hybrid mix of taxes on mostly
health care companies to help
fund Medicaid, which now covers
about 2.3 million people, or about
20 percent of the state's population.
But this gravy-train arrangement — providing taxes of up to
5.5 percent of premiums or medical claims that the federal government has allowed states to charge
health care companies, self-insured employers and individuals
to boost Medicaid budgets — may
be coming to an end.
There are two primary reasons
for this. First, the U.S. Court of Appeals for the 6th Circuit in Cincinnati this summer could reverse a
2014 lower court ruling that upheld the state’s 0.75 percent Health
Insurance Claims Assessment tax
on medical claims.
This HICA tax, if upheld, would
raise $300 million next year, which
translates through 2-1 federal
matching formula into $900 million in state Medicaid funding.
The second reason is that the
Centers for Medicare and Medicaid
Services has told Michigan it will
not be able to use funds generated
by a 6 percent tax on HMO premiums for federal matching funds
SEE MEDICAID, PAGE 19
Brat Pops, tickets and trinkets: Sales influence whether Tigers revenue thrives
By Bill Shea
[email protected]
The Detroit Tigers last week trotted out the exotic and oddball
concession items that fans can eat
during ballgames this season —
including a battered bratwurst
patty that’s deep-fried and sold on
a wooden stick for $8.
They call it a Brat Pop, and depending on whom you ask, the
meat popsicle is either peak Midwestern ballpark gastronomy or
the lunch special of the apocalypse.
Opening Day
Here’s a rundown of Detroit’s home
opener
Opponent: N.Y. Yankees
Where: Comerica Park
When: April 8; 1:08 p.m.
Either way, it’s revenue.
The team’s executive chef, Mark
Szubeczak of Buffalo, N.Y.-based
concessionaire Delaware North
Sportservice, said a few hundred
such novelty items are sold each
game, adding up to several thousand dollars.
While that’s not much money
for a team whose record payroll
expense this season teeters on the
edge of $200 million, the Tigers
may sell enough artery-clogging
novelty foods to cover, say, catcher
James McCann’s $519,500 salary.
It’s the sale of oddball foods
along with tickets, trinkets, premium seating, suites, apparel, parking, programs, corporate sponsorships, booze and other in-game
ballpark sales that creates millions
of dollars of what’s termed local
revenue.
And local revenue can be a factor in whether Major League Baseball
teams thrive or wither compared
to their peers.
“Sports teams locally — particularly in the order of the National
Hockey League, National Basketball
Association and, finally, MLB —
rely heavily on their home gameday revenue such as concessions,
tickets, premium suites and park-
ASSOCIATED PRESS
The Tigers added a starter and an $18 million salary in Jordan Zimmermann, helping
push the team’s payroll near $200 million.
ing because their national television revenues are far less than the
National Football League,” said
Rochester sports entrepreneur
Andy Appleby, who has owned pro
baseball and soccer clubs.
MLB’s 30 clubs equally share 27
percent of the league’s estimated
$9.5 billion in overall revenue,
while the NFL splits 65 percent of
SEE TIGERS, PAGE 21
2
C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 4 , 2 0 1 6
MICHIGAN
BRIEFS
Flint official: State overruled
city decision to treat water
An official with Flint’s water plant
said last week that he had planned
to treat the drinking water with anti-corrosive chemicals after the city
began drawing from the Flint River
but was overruled by a state environmental regulator.
Mike Glasgow, then a supervisor at
the plant and now municipal utilities
administrator, said he received the instruction from district engineer Mike
Prysby of the Michigan Department of
Environmental Quality at a meeting to
discuss the final steps before Flint
switched from the Detroit water system as a cost-saving measure in April
2014, The Associated Press reported.
Glasgow said Prysby told him a year of
water testing was required before a
decision could be made on whether
corrosion controls were needed,
which the DEQ has since acknowledged was a misreading of federal regulations on preventing the lead and
copper pollution that reached some
homes, businesses and schools.
Meanwhile, the ongoing Flint water crisis has helped move Michigan
Gov. Rick Snyder, who once consid-
ered a run for the White House, to
the top of Fortune’s list of the world’s
most disappointing leaders. As Fortune says: “Good fortune can quickly turn sour after one bad decision,
and repeatedly making poor decisions can only make matters worse.”
Fortune assembled the list of
business and government leaders
worldwide, then asked readers who
is the most disappointing. Snyder
led late last week, trailed by Martin
Shkreli, founder and former CEO of
Turing Pharmaceuticals; New Jersey
Gov. Chris Christie; and Chicago
Mayor Rahm Emanuel. Others on
the list: Sepp Blatter and Michel Platini, former FIFA chiefs; Martin Winterkorn, ex-chairman of Volkswagen;
and Marissa Mayer, CEO of Yahoo.
Froot Loops an all-day
treat? Kellogg hopes so
Millennials aren’t supposed to
like breakfast cereal all that much,
dismissing it as too sugary, too processed and inconvenient. But they
also are embracing the likes of Froot
Loops and Smorz as indulgent
snacks, which is giving Battle Creekbased Kellogg Co. an opportunity to
reposition some of its brands for the
nation’s largest demographic.
As fewer people eat cereal for
breakfast, Kellogg is trying to boost
sales of its cereals with campaigns
that encourage consumption of cereal throughout the day, including
as snacks and for dinner, Bloomberg
reports. “It’s an alternative to a salty
or savory snack in the evening when
you’re looking for a little TV time,”
said Craig Bahner, president of Kellogg’s U.S. Morning Foods division.
The shift to 24/7 breakfast foods
has helped other companies, including Illinois-based McDonald’s Corp. Its
U.S. revenue and profits have surged
since last fall, when it began offering
some popular morning items all day.
improvement plan. NMU wants to
spend about $100 million to build
modernized housing and dining
facilities, The Mining Journal of
Marquette reported.
Bell’s Brewery is making changes to its packaging and logo. Officials of the Kalamazoo area-based
company said the plans will roll
out later this year, MLive.com reported. The new packaging will
display more prominently fan favorites like the Two Hearted Brook
Trout and the Oberon Sun.
A new currency parity policy is
taking effect for the Blue Water
Bridge, which spans the St. Clair
River between Port Huron and Sarnia, Ontario, AP reported. The Mich-
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Ferguson Development, told the
Lansing State Journal that the
project will be “a game changer”
for Lansing and nearby East Lansing and “a catalyst for other activities.” Plans include 129 townhomes and student housing that can
accommodate 1,200 people.
Northern Michigan University
plans to upgrade its campus in
Marquette over the next five years
as part of a $175 million capital
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INSIDE
THIS ISSUE
CALENDAR .........................................14
CLASSIFIED ADS............................... 17
DEALS & DETAILS.............................15
OPINION .............................................. 6
OTHER VOICES ................................... 7
PEOPLE ...............................................16
RUMBLINGS ...................................... 22
WEEK ON THE WEB ......................... 22
COMPANY INDEX:
SEE PAGE 21
Canada paying with Canadian
currency. The Canadian currency
rate for eastbound traffic will be
reviewed and adjusted either up or
down on April 1 and Oct. 1 of each
year. Details of tolls for crossing
the bridge are posted online. Corrections
A story on the “Pure Michigan” marketing campaign in the
March 28 issue misattributed the following quote: “Social media
has provided an opportunity for people to vent and to share their
thoughts, but unfortunately, more times than not, it’s not balanced with the positive. Every bad message in a marketplace is
just helping create distractions for the good things we’re trying to
say. If that positive information outweighs the negative, then
we’re going to be ahead of the game.” It should have been attributed to Identity President and founding partner Mark Winter.
The year-created date for University of Michigan spinoff Praktio
LLC in the list of university spinoffs in the March 28 edition should
have said 2014.
The headline on a March 28 story about Lycera Corp. should
have said upcoming trials will be on patients with ulcerative colitis.
3
C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 4 , 2 0 1 6
Detroit schools panel rekindles charter debate
State bill package would let commission decide where schools locate, which should close
By Chad Halcom
[email protected]
A recent addition to the pending legislation overhauling Detroit Public Schools is rekindling a long controversy on whether the
charter school model of education itself has
succeeded in Detroit.
The proposed Detroit Education Commission, as written into the Return to Excellence
bill package that cleared the Senate last
month, could decide where and whether
schools can locate or expand in Detroit and
set the criteria for closing any schools that
underperform. The House expects to take
up the reform legislation after it returns
from recess next week.
But groups like the Michigan Association of
Public School Academies and the Great Lakes
Education Project that advocate for charters
and school choice have already gone on an
offensive against the commission in talks
with legislators and the media, calling it a
threat to choice and a panel beholden to Detroit’s mayor and the traditional school district for its own future.
Advocates like the Coalition for the Future of
Detroit Schoolchildren, which proposed a version of the commission last year, say it
would focus not on finances, but outcomes,
and bring accountability. The 22-year-old
legislation that created today’s nearly 350
charters statewide spawned an ad hoc system where schools often proliferate where
they aren’t needed, they say, and authorizers
can lack incentive to hold them to higher
standards.
The commission was not originally a part
of the six-bill restructuring package that
would split DPS into two districts and retire
about $500 million in structural deficits. It
was added shortly before the Senate voted
21-16 to pass it in March, and the House appropriations committee will consider it this
Enrollment trends
Public and charter enrollment in Detroit
K-12 children living in Detroit:
Fall 2004: 186,482
Fall 2014(est): 134,689
K-12 enrollment in Detroit Public Schools:
Fall 2004: 141,406
Fall 2014: 47,238
Charter enrollment in Detroit:
Fall 2004: 35,919
Fall 2014: 52,420
SEE SCHOOLS, PAGE 17
Sources: DPS, U.S. Census Bureau,
National Alliance for Public Charter Schools
“When I started in the late 1960s, 13,000 people with developmental disabilities
MUST READS
OF THE WEEK
Big deals, real estate edition
Out-of-state buyers show appetite for big real estate
deals in Detroit, Page 11
Head of the class
UM Law School surprises with top rating for grads’
influence as judges. Page 22
Listen while you commute
Crain’s reporters go “Behind the Story” in our new
podcast. soundcloud.com/crainsdetroit
were living in institutions in Michigan. Today, there are zero.” Gerald Provencal
Provencal leaves mark at MORC
CEO known for push to close institutions, move residents into the community
By Sherri Welch
[email protected]
Gerald Provencal, longtime
president and CEO of Macomb-Oakland Regional Center, one of the region’s largest human services
agencies, retired last week after 44
years with the agency, the past 38
at its helm.
During his tenure, Provencal,
74, and MORC became known internationally as advocates for people with developmental disabilities, pushing for the closure of
institutions and reintegrating residents into the community.
He guided MORC through deinstitutionalization and conversion
from a state mental health agency
to a private nonprofit in 1996
during Gov. John Engler’s term.
The United Nations and more
than 55 countries have sent delegations to see the Clinton Township-based agency’s work. Among
them was Iraq, which sent a group
of six in mid-March.
Provencal himself has visited
two dozen countries at their expense to aid in putting similar
programs in place, from South
America, Europe and Eastern Europe to Australia and South Korea.
During his tenure, MORC was
recognized as one of the top U.S.
agencies in its field by the President’s Committee on Mental Retardation both under President
Jimmy Carter in the 1970s and
President Ronald Reagan in 1986.
And in 2000, President Bill Clinton
Gerald Provencal retired last week after 44 years
with the Macomb-Oakland Regional Center.
bestowed the Presidential Service
Award on MORC volunteer Ruth
Taylor for her work with the agency.
MORC, which provides services
SEE PROVENCAL, PAGE 20
4
C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 4 , 2 0 1 6
3 retailers to open their first
Michigan stores at Somerset
By Sherri Welch
[email protected]
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Three national retailers are
opening their first Michigan locations at Somerset Collection this
spring, beginning with Danish
footwear and leather goods store
Ecco last Friday.
Clothing
and
accessories
brands Vince and Vineyard Vines are
set to open in the Troy mall in
May.
Ecco opened on the third level
of Somerset North in the location
previously occupied by Journeys,
which has moved across the hall to
the former Foot Locker location,
said Peter Van Dyke, partner at
Berg Muirhead, speaking on Somerset's behalf.
Foot Locker moved to a larger
location adjacent to its luxury sister brand House of Hoops on the
third level of Somerset North.
Vince will bring its line of “everyday luxury essentials” clothing,
footwear and accessories for men
and women to the first floor of
Somerset South this May. The
store will be its first in Michigan
and second in the Midwest.
Vince is moving into a
2,700-square-foot location formerly occupied by Ralph Lauren
Home.
Ralph Lauren closed the home
goods section of its two-level
store and re-established its brand
at Somerset as Polo by Ralph Lauren, selling clothing, footwear
and accessories at its existing
store on the first floor of Somerset
South.
Another new clothing and accessories retailer, Vineyard Vines,
will open in May in the former A/X
Armani Exchange location on the
second level of Somerset South.
Armani continues to operate Emporio Armani and Giorgio Armani at
Somerset Collection.
203 dispensaries
submit bid to city
A total of 203 medical marijuana dispensaries in Detroit met the
March 31 deadline to submit bids
to operate in the city required by a
zoning ordinance, said Dave Bell,
interim director of the city’s Building Safety Engineering and Environmental Department.
The zoning ordinance, approved by Detroit City Council last
December, called for dispensaries
to submit bids between March 1
and 31 to operate in the city.
The ordinance requires that dispensaries operate in designated
zones such as 1,000 feet from drugfree zones, including arcades, child
care centers, educational institutions, libraries, outdoor recreation
facilities, schools and youth activity
centers, among other institutions.
Marti Benedetti
COURTESY OF SOMERSET COLLECTION
Ecco opened on the third level of Somerset North in the location previously
occupied by Journeys, which has moved across the hall to the former Foot Locker
location, at the Somerset Collection in Troy.
Vineyard Vines will offer its hallmark high-end ties, hats, belts,
shirts, shorts and bags for men,
women and children at the
4,338-square-foot store.
Changes are afoot with several
existing retailers at the Troy mall,
as well, said the mall's owner, The
Forbes Co., in a news release.
Lululemon, located in Somerset
Collection South, is nearly doubling its size as it moves into the
4,867-square-foot store that formerly housed MAC Cosmetics.
MAC Cosmetics is moving to
Somerset Collection North where
jeweler Rogers & Hollands operated
before closing.
Set to open in April, the new
MAC store will be the first in the
country to launch the brand's new
design, VanDyke said.
The Talbots women's clothing
store in Somerset South will also
be the first in the country to debut
the retailer's new design in July.
Also on tap this year is a redesign of the Somerset South Godiva
location.
Somerset Collection's ability to
attract luxury brands and its existing retailers' willingness to reinvest in their locations at the
mall is a testament to the strength
of the local market, said Nate
Forbes, managing partner of The
Forbes Co., in a written statement. Sherri Welch: (313) 446-1694
Twitter: @SherriWelch
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C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 4 , 2 0 1 6
OPINION
Medicaid funding
method on the line
M
ichigan spends $13.6 billion on Medicaid — health care
coverage for qualified low-income or disabled people. A
huge chunk of that sum comes from the federal government and is passed through Michigan’s budget, but it’s a huge general fund budget item, too.
For years, Michigan has used a mix of taxes to fund Medicaid
— mostly taxing health plans and self-insured employers and individuals. But as Jay Greene reports on Page 1, there are two challenges to that funding. First, an appeals court this summer could
disallow the state’s tax on medical claims, the so-called HICA tax.
Second, the federal government has told the state it can’t use taxes assessed against HMO premiums as matching funds for federal
dollars after Dec. 31.
Combined, the budget hole could be about $700 million. So the
options could include covering fewer people, cutting back on benefits or paying providers — doctors and hospitals — less.
The Small Business Association of Michigan is part of a broad
business coalition that would like to eliminate the HICA tax,
which one business group says has generated $1 billion for the
state. But the tax on HMOs might be preserved, says Tony
Stamas, SBAM’s vice president of government relations, if the
state understood exactly why the feds are disallowing it as a
match. Perhaps there are ways to tweak the tax in ways palatable
to federal regulators. “We may not have to throw everything
out,” he told Crain’s.
One option under consideration is continuing the HMO use tax
but have it channeled into the state’s general fund, rather than Medicaid specifically, to fit federal regulators’ concerns.
There’s yet another issue: whether the expansion of Medicaid has
slowed or reduced increases in health insurance premiums because
hospitals cut their uncompensated care case loads. SBAM supported Medicaid expansion in Michigan for that very reason. “(Expansion) has helped with uncompensated care,” Stamas said. But it’s
unclear if it has led to reduced costs for business. And it may not be
clear for a couple of years because most hospitals have multiyear
contracts with insurers. It's in the next generation of contracts that
any savings would be realized.
Meanwhile, the Flint water crisis has turned a spotlight to aging
infrastructure in water delivery across the state. Something will
have to give in a state budget buffeted by competing priorities.
Senate bills battle for education
The charter school lobby is fighting fiercely against legislation
that would create a Detroit Education Commission to open and
close publicly financed schools — traditional public or charter —
based on performance. The state Senate has approved the so-called
Return to Excellence bill package in March, but charter lobbyists
frame this as a battle to preserve school choice.
It is actually a battle to improve education outcomes for children and to wisely use the millions of dollars funneled through
both traditional public and charter schools in Detroit, where the
citywide “occupancy” of the public and charter schools is a little
over 60 percent. The commission is intended to rationalize
state-supported facilities. The commission has the support of the
broad-based Coalition for the Future of Detroit Schoolchildren,
whose members included Mark Reuss from General Motors Co.
and John Rakolta Jr. of the Detroit-based construction firm Walbridge.
There is a fear that a commission could be politicized, but that
would be tough to do if standards for schools were clearly set at the
outset.
What’s clear is that school choice alone is not the panacea; if it
were, Detroit wouldn’t be at the very bottom in most national rankings, failing its children at nearly every turn. Pure Michigan campaign extends to biz
M
any people know Pure Michigan only as the state’s successful tourism and travel campaign, which has attracted hundreds
of thousands of visitors to Michigan
since its inception in 2006.
But not many are aware that the
Pure Michigan campaign extends
into business and talent marketing initiatives for the state, as well
— helping drive further economic
development here.
Michigan has a great story to
tell, and we’re excited to tell it.
Our tourism ads run nationally
on television, but our business
marketing efforts are more targeted
and run primarily outside of Michigan to attract business investment.
Crain’s Detroit Business Publisher Mary Kramer shared this in her
March 13 blog, “Michigan needs a
Flint water counter-messaging
campaign,” where she implored
state officials to create a business-attraction campaign, utilizing recognizable, heavy-hitters in
business. We have this in motion
already, and to great effect.
OTHER VOICES
Steve Arwood
Arwood is the CEO of the Michigan
Economic Development Corp. and
director of the talent and economic
development department.
We have learned that business
leaders want to hear from their
peers about why they should consider Michigan, and our Pure
Michigan “What Happens When”
business marketing campaign
works to do just that.
For the past five years, we’ve
been working with Michigan companies to tell their success stories
worldwide. We feature prominent
business leaders from across the
state, like Quicken Loans Chairman Dan Gilbert and Domino’s
Pizza CEO Patrick Doyle, and share
how Michigan provides a competitive advantage. This campaign targets C-suite executives and site
consultants.
We’ve also invested significantly in
other campaigns such as “We Run
On Brainpower,” aimed at attracting
talent to the automotive industry,
and Pure Michigan Business Connect, helping small and medium
businesses within the state to grow.
So far, the results are telling.
Site Selectors have ranked Michigan among the top seven states for
major new and expanded facilities
and first among Great Lakes states
for three consecutive years.
Indeed, the Flint crisis and recent MEDC budget cuts are significant challenges, but we are proactively addressing them. This
week, we introduced a program
through Business Connect to help
businesses in Flint find procurement opportunities. The program,
will provide an opportunity for
sustainable revenue — something
they need more than ever. LETTERS
Ex-Port Authority director weighs in on goals
Editor:
As the former executive director
of the Detroit/Wayne County Port
Authority, I found your March 28
article “Port Authority goals:
Change law, boost traffic” quite interesting. It seems as though not
much has occurred at the new terminal since my departure.
During the three years of my
leadership, we had cruise ships,
Navy ships, tall ships and many
other vessels using the new port
terminal. It was a beehive of activity. It is a sad day when I hear that
the current leadership thinks
about selling the federally funded
terminal because they have no
cruise ship activity or initiatives of
their own. I question the passenger traffic that has been stated is
going through that terminal.
Furthermore, I take issue with
the statement about my administration trying to bond projects off
the waterfront. Any financing
project I was involved with was
tied to waterfront activity that was
pitched to us. It is laughable to
read that the Detroit Economic
Growth Corp. called our work unnecessary competition. I might
add that they were the only economic development organization
opposing us.
Yet, when we look at other port
authorities around our country,
they work hand in hand with their
cities and counties to provide economic development.
In fact, the port authority in
Cleveland has helped finance
many projects in its region.
Finally, it is my hope that Director John Loftis does not try to promote the sale of that beautiful
building and can deliver the cruise
ship business as I did. John Jamian
Former executive director,
Detroit/Wayne County Port Authority
7
C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 4 , 2 0 1 6
As with sports, a game plan can be key to business success
S
ports contests are often won
before the games even start.
The bright lights of a big game at
any level attract all the eyeballs,
of course, but the hard work
that’s done behind the scenes to
prepare mentally can sway momentum and give your team the
tactical advantage it needs to
win.
When you get to the most competitive level of sports, you realize that success often boils down
to the preparation (scouting reports, film sessions, game plans)
done by coaches and players before the game more than what actually happens during the competition. These small pieces of
the puzzle play their part in collectively developing a strategy
that allows your team to pin its
strengths against the opposition’s
weaknesses.
It’s amazing how much of sports
— which so often come down to
people being bigger, faster and
stronger than the opposition — is
really dictated by strategy, effort
and mental preparation.
The same principles apply to
the business world. Regardless of
the profession you’re in, much of
your success is driven more by
your preparation and game plan
than your actual ability level.
The world I know firsthand is
mortgages,
specifically
the
wholesale side. We partner with
mortgage brokers throughout the
country and aim to provide them
the best client service experience— with the goal of producing more volume than our competition. There are four of the
country’s top mortgage lenders
within 60 miles of one another in
metro Detroit — so we’re not only
competing for loans, we’re all try-
OTHER VOICES
Mat Ishbia
ing to recruit the brightest minds
and talented people onto our
teams.
The game plan starts up front
with the most basic of resources —
your people. The first step to sustaining a successful sports program, or company, is regularly
self-evaluating your team and recognizing what holes need to be
filled from a recruiting perspective. In-house training has to be a
major corporate priority, but team
growth and the constant infusion
of new, talented individuals is essential. Just as college coaches are
in a constant battle to sign the
most talented athletes in the
country, professional recruiters
are doing the same thing.
But once you have your new re-
cruiting class, it’s up to the signees
and coaches to maximize the talent and develop a strategy to accomplish its ultimate team goals.
Before one game is played — or
one sale is made — everyone
needs to be on the same page internally, and a game plan is absolutely critical if you’re going to finish the year in the No. 1 spot.
Team members and company
leaders have to work together to
strategically put themselves in the
best possible position to win. Just
like in sports, you’ve got to study
your competition — know how
their strengths and weaknesses
stack up against yours. Be aware of
the strategies or “pitches” they use
to win over clients, and be prepared to discuss how your business can top that.
Success doesn’t happen by accident. It happens when you have
the right game plan and put in the
necessary training before the big
game starts. Mat Ishbia is president and CEO
of United Shore Financial Services in
Troy and was a member of the 2000
Michigan State University national
championship basketball team.
TALK ON THE WEB
DPS principals, officials
face bribery charges
There was corruption before the
emergency managers got there and
corruption since.
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Murray Feldman to leave
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We could always count on Murray
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on his Feldman Report. Another
good one is leaving, it's a shame.
Steve
Laura Trudeau to retire
Sounds like a worthy cause to
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C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 4 , 2 0 1 6
SPECIAL REPORT: REAL ESTATE
F
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KIRK
PINHO
[email protected]
Reporter
Twitter: @twitteracct
[email protected] / Twitter: @kirkpinhoCDB
Lender dedicated
to underserved
communities
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Melinda Clemons is on the front lines of
commercial real estate financing in Detroit as a senior loan officer for the local
office of Washington,
D.C.-based Capital Impact Partners, a community development
financial institution
founded as NCB Capital Impact in 1981 as
part of the National
Consumer Cooperative Bank Act. It
Clemons
has
organized
more than $1.9
billion in loans since its inception. A
Detroit native, she previously
worked for Urban Partnership Bank, J.P.
Morgan Chase and Raymond James Financial Inc. She is a University of Michigan and Cass Technical High School
graduate. I talked to Clemons about
her job and the market.
Talk about the commercial real estate
financing market in Detroit, as you see it.
What’s exciting about Detroit is that
there are a lot of institutions in banking
that want to come into the market. But
half of those are still restricted and the
transactions still need subsidies to make
them work. You see LevelOne and Fifth
Third and Flagstar doing some projects
here. A large portion of lending is done
by CDFIs (community development financial institutions).
Tell us about CIP and what it does.
We are a CDFI, basically meaning we
have a mission from the government to
lend to underserved communities. We focus on community facilities — lending to
co-ops, charter schools, federally qualified health care centers, and have a
place-based strategy in Detroit only in
which we have lending products to increase density in neighborhoods. We
don’t do housing loans anywhere else in
the country.
We did Banner Foods on Schaefer Highway. We also apply every year for a New
Market Tax Credit allocation. Last year,
very few companies in the city got them,
but we put ours toward Banner Foods.
We also financed Detroit Edison Public
School Academy on Wilkins (in Eastern
Market), Presbyterian Villages, the Argonaut Building, the Woodward Garden Theater and Willys Overland project.
At what point will we see new development not having to use subsidies?
That’s the ultimate goal, but it’s when
we get rental rates to a higher level. Everyone a few years ago thought $2 per
square foot was a magic number — but
subsidies are still needed. I would say it’s
closer to $3 per square foot where we
won’t need them anymore. k
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PHOTOS BY AARON ECKELS
Tamás and Gail von Staden redeveloped the former Dobie Jewelers building in downtown Royal Oak into
workspace (for their Von Staden Architects LLC) and their home (for their family of four). Here’s their living
space, before and after. Retail space is on the ground floor of the Washington Avenue building.
A fine state of repairs
From a restaurant to living space to education center, redevelopments move outside the box
By Kirk Pinho
[email protected]
It seems that every week, plans for a
mixed-use development emerge in Detroit
or the suburbs, with developers mostly
scrambling to build rental housing stock.
Yet there are a handful who have
thought outside the box in recent years,
opting for unique conversions of old space
into something fresh — something wildly
different than its previous use.
Over the past two months, Crain’s surveyed real estate brokers, developers, architects and other experts for their favorite
outside-the-box redevelopment projects
in and around Detroit that have been
completed since 2014 (or will be completed soon).
Taking these recommendations, we’ve
identified four redevelopments that have
substantially — and successfully — reimagined space into such unique uses as a single-family home, a French-inspired restaurant, loft apartments with space for artists,
and a new education center downtown.
These projects stood out from the dozens suggested for consideration based on
a variety of factors, especially how substantially a building’s use was flipped on
its head. Architecturally, that in and of itself is a challenge, experts said.
Geoffrey Dancik, who is putting the finishing touches on the redevelopment of
the Chapman House in downtown Rochester into a French cuisine-inspired restaurant expected to open next month, said
maintaining the architectural integrity of
the 8,200-square-foot house at 311 Walnut
Blvd. was one of the biggest hurdles.
“The repurposed building had to meet
the modern demands of a restaurant and
special events venue, including accessibility and safety compliance,” he said of the
1917 house.
But even more challenging can be finding the financing to pay for such projects.
“You don’t see the ends of the spectrum
— for example, churches and strip clubs
— getting traditionally financed often,”
said Kevin Kovachevich, partner at Southfield-based Bernard Financial Group Inc.,
which originates debt for real estate projects and acquisitions. “There is a reason
SEE NEXT PAGE
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500 S. Washington Ave.,
Royal Oak
Chapman House,
Rochester
City Hall Artspace Lofts,
Dearborn
DNR’s Outdoor Adventure
Center, Detroit
Architects turn a downtown building
into office space — and their home.
A 1917 house has been restored and
will open as a French restaurant.
It used to be the Dearborn mayor’s
office. Now, it’s loft and artist space.
A 150-year-old downtown landmark
was saved from demolition.
PHOTO STORIES OF ALL 4 PROJECTS: crainsdetroit.com/coolrehabs
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C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 4 , 2 0 1 6
SPECIAL REPORT: REAL ESTATE
FROM PREVIOUS PAGE
those are the edge of the spectrum. They are atypical commercial real estate use. You can’t get
easy debt for specific, special-use
projects.”
David Di Rita, principal of Detroit-based Roxbury Group, the developer behind the transformation of the former Globe Trading
Co. building on the Detroit River
into the Outdoor Adventure Center
for the Michigan Department of
Natural Resources, called it “a
mark of progress” for Detroit
that multifamily and more traditional mixed-use developments
are becoming more “bankable.”
“We have proven out the market,” he said. “There aren’t a
whole lot of end users out there
for unique projects like the
Globe that are bankable.”
What follows are snapshots of
the four “cool rehabs” that
caught our attention, along with
their developers’ lessons for navigating the financing and historic preservation laws.
French cuisine
in a historic home
With the culinary leadership
team in place, the long-planned
conversion of the historic Chapman House in downtown Rochester is expected to be completed in May, when the new
restaurant with seating capacity
of around 260 opens.
Finishes and décor, all of
which seemingly gave a nod to
the property’s original condition,
were imported from around the
world to give the restoration its
authenticity.
During a tour in March, developer Dancik rattled off details of
a painstaking (and expensive,
though he wouldn’t disclose how
much) restoration process fluidly, as if he had memorized every
square foot of the space and
each step to the smallest detail.
(See details, this page.)
Work-life balance
in Royal Oak
Tamás and Gail von Staden
have one of the shortest commutes to work in town.
The husband-and-wife architecture team has to walk only a
few feet every morning to get to
its Von Staden Architects LLC office
on the second floor of the 500 S.
Washington Ave. redevelopment
in downtown Royal Oak.
They and their two children,
11 and 16, live in the 4,000-squarefoot single-family residential
portion of the building, which
features an architecture office on
the second floor and retail space
for Citizen Yoga and Rail & Anchor
on the first floor.
The garage is accessible from
an alley, and there are also a patio and green roof as part of the
$2 million development, completed in 2014.
The building's windows are
from the failed Bloomfield Park
development and were received
from one of the subcontractors
on the project, said Gail von Staden, principal of Von Staden Architects. She said she and her
husband’s relationship with contractors through their careers allowed them to keep project costs
down, as did Tamás’ “elbow
grease” on the project.
The biggest challenge wasn’t
financing or architecture-related,
she said.
“That we could remain married during it and run a business
at the same time,” she said with a
laugh. (See details, Page 10.)
Bringing the outdoors
indoors in Detroit
According to the DNR, the
boiler of the SS Columbia — which
for decades brought kids and
adults to and from the Boblo Island
amusement park on the Detroit
River — was built in the former
Globe Trading Co. building, now
the DNR’s Outdoor Adventure
Center.
After opening last year, the
43,000-square-foot building constructed more than 150 years ago
now serves the public in another
way: Educating people about
Michigan’s natural resources with
activities, events and simulators
built into the formerly blighted
building.
“It really was one of the most
photographed poster children of
our ruins of Detroit landmarks,”
said Rebecca Binno Savage, a historic preservation expert who
worked on getting the building
added to the National Register of
Historic Places and the historic
preservation lead for Detroit-based architecture firm
Kraemer Design Group PLC.
“I’m so happy to see it in use
again. It could have gone the way
of so many and just been demolished. Thank God.” (See details,
Page 10.)
City Hall Artspace Lofts
Conversion of the former Dearborn
City Hall into 53 lofts with space for
artists
Building address: 13615 Michigan
Ave.
Building city: Dearborn
Building size: 100,000 square feet
Year originally built: 1920s;
concourse in 1981
Contractors: Artspace Projects,
Minneapolis, developer; The
Monahan Co., Eastpointe, general
contractor; Neumann/Smith
Architecture, Southfield, project
architect; JDC Construction,
Washington, D.C., project manager
Building owner: City Hall Artspace
LDHA LP
Building purchase cost: $1.65
Did you know? A gun range was
housed on the fourth floor of an
annex building. Bullet-riddled walls
have been repaired in the
redevelopment.
Total project cost: $16.5 million
Sources: Artspace Projects,
Crain’s archives
Project completed: December
Renovation cost: $14.85 million
million
A furnished studio on the main floor of City Hall Artspace Lofts (above) was
once the mayor’s office. A spiral staircase was restored.
From city HQ
to artists’ canvas
What to do when you want to
move your city government operations to a more central location?
Ask the city of Dearborn, which
sold its old City Hall on Michigan
Avenue in the east downtown
area to a Minneapolis-based developer that converted the
three-building campus into 53
lofts.
Sure, lofts aren’t atypical conversions in the development
community.
But here’s what is: the original
space itself, and ancillary space
in the new development for entrepreneurs and artists; office
space for creative businesses and
nonprofits; and space for an artist-in-residency program and art
galleries.
The ensuing development, the
City Hall Artspace Lofts, welcomed
its first residents to the $16.5 million redevelopment of the 1920s
buildings Jan. 1. (See details, this
page.) Chapman House
Conversion of a nearly century-old
house into a French restaurant.
Building address: 311 Walnut Blvd.
Building city: Rochester
A privacy/acoustic fence behind the
Chapman House separates a
courtyard, intended for events, from
nearby homes and businesses.
Coconut husk, imported from the
Netherlands, covers the wall and is
designed to encourage growth by
climbing plants.
Building size: 8,233 square feet
Year originally built: 1917
Project completed: To be completed
next month
Renovation cost: Undisclosed
Building purchase cost: $759,000
Total project cost: Undisclosed
Contractors: Bentley Property
Holdings, Birmingham, developer and
general contractor; Quinn Evans
Architects, Ann Arbor
Building owner: Bentley Property
Holdings
Did you know? Workers removed
more than 2,600 five-gallon buckets
of concrete, coal, brick, sand and other
debris from the basement to make
the needed headroom for a private
tasting room, wine lockers, a walk-in
cooler and freezer and prep kitchen.
Sources: Geoffrey Dancik, co-owner;
city of Rochester.
10
C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 4 , 2 0 1 6
SPECIAL REPORT: REAL ESTATE
500 S. Washington Ave.
Mixed-use redevelopment of the former Dobie Jewelers building
with retail and office space and a single-family residence
Building address: 500-504 S. Washington Ave., Royal Oak
Building size: 13,000 square feet
Year originally built: 1920s-1930s
Project completed: 2014
Renovation cost: $1.35 million
Building purchase cost: $650,000
Total project cost: $2 million
Contractors: Tamás von Staden, Royal Oak, general contractor/
project manager; Von Staden Architects LLC, Royal Oak, project
architect; MA Engineering Inc., Birmingham, project engineer
Building owners: Tamás and Gail von Staden
Did you know? The building once housed printing presses for the
Royal Oak Tribune.
Sources: Tamás and Gail von Staden
A stairway built
from reclaimed
wood from Reclaim
Detroit leads to the
third-floor
conservatory on the
roof of the building,
at left. The
conservatory
overlooks downtown Royal Oak.
PHOTOS BY
AARON ECKELS
A three-story tree and wooden bridge
is a focal point inside the former Globe
Trading Co. building, which has been
transformed into an outdoor adventure
center on the Detroit riverfront.
Michigan Department of
Natural Resources
Outdoor Adventure
Center
Litigation Experience
In Your Corner.
®
Redevelopment of the former Globe
Trading Co. building on the Detroit
River into the new building for the DNR
Building address: 1801 Atwater St.
Ŷ Business litigation, contracts and
commercial matters.
Building city: Detroit
Building size: 43,000 square feet
Ŷ Construction law and litigation.
Year originally built: 1860
Project completed: 2015
Renovation cost: $12.8 million
Building purchase cost: $1*
Total project cost: $12.8 million
Contractors: Roxbury Group,
Detroit, developer; Walbridge
Aldinger Co., Detroit, general
contractor; Hobbs & Black
Architects, Ann Arbor, project
architect
Building owner: DNR
Did you know? Henry Ford was once
an apprentice machinist in the
building.
* The Roxbury Group purchased the
building from the city of Detroit for
$1, redeveloped it and sold it to the
DNR
First Tier Ranking in
Corporate Law and
Commercial Litigation
Ŷ
Detroit
Ŷ
Novi
Ŷ
Grand Rapids
Ŷ
Kalamazoo Ŷ Grand Haven
Ŷ
Lansing
Ŷ
Ann Arbor
Ŷ
Hastings
Contact Rich Hewlett at [email protected]
Sources: Michigan Department of
Natural Resources; David Di Rita,
Roxbury Group; Crain’s archives.
11
C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 4 , 2 0 1 6
2015 property sales value down;
60% of deals from outside state
By Kirk Pinho
[email protected]
Last year was active for large buyers of commercial real estate in metro Detroit, with everything from
downtown skyscrapers to sprawling
suburban apartment complexes to
massive Ann Arbor office building
portfolios dominating the investment sales market in 2015.
But there was about $106 million less spent in the top 10 real estate purchases compared to 2014.
Over the past several months,
Crain’s has been culling information from brokerage houses, databases and other sources to get a
snapshot of the year that was for
property sales in the five-county
region that includes Wayne, Oakland, Macomb, Livingston and
Washtenaw.
The total dollar value of the top
deals that closed between Jan. 1,
2015, and Dec. 31, 2015, was $664
million, down 13.8 percent from the
$770.2 million that was spent in the
top 10 deals that closed in 2014.
Yet still, investors from outside
of Michigan continue to see strong
investment return opportunities in
the local market, as six of the top 10
deals were to out-of-state buyers,
just one fewer than in 2014.
That's because they see their
dollars stretching more in the Detroit market, said Steve Morris,
principal of Farmington Hillsbased Axis Advisors LLC.
“Detroit appears to be a market
where they can come in and get a
better value than they could in other
major markets,” he said. “Their perspective of a better value is still at a
higher number than the educated
local investors.”
Gabe Schuchman, managing
director of Bloomfield Hills-based
real estate firm Alrig USA LLC, said
there is high investor demand for
properties that are in good condi-
“Detroit appears
to be a market
where they can
come in and get a
better value than
they could in
other major
markets.”
Steve Morris, principal, Axis Advisors
tion or can be renovated or built
upon cost-effectively.
“Product that falls in between
high quality or value-add is very
tough to move right now as both
investors and financing markets
are not stretching for mediocre
transactions as they did before the
Great Recession,” he said.
In 2014, there were 28 deals for
$10 million or more, with 17 of the
buyers being from outside Michigan. Those deals totaled $903.5
million. In 2015, the 33 property
sales for $10 million or more totaled $1 billion, with 15 going to
out-of-state investors.
One of the local buyers, Jeff
Hauptman, CEO of Oxford Cos.,
said the market for office sales is
strong in his company's home
base of Ann Arbor, where it has
about 2 million square feet under
ownership and management.
Oxford Cos. in June closed on
the $102 million purchase of the
McMullen Realty Co. Inc. office building portfolio consisting of 22 Ann
Arbor buildings with 704,000
square feet of space.
“Real estate is cyclical, and the
market is peaking for apartments
and retail, but we believe the timing is right to buy good, well-located office buildings,” he said. Kirk Pinho: (313) 446-0412
Twitter: @kirkpinhoCDB
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C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 4 , 2 0 1 6
CRAIN'S LIST: OFFICE LEASES
Rank Building
1 Ally Detroit Center, Detroit
2 615 W. Lafayette, Detroit
3 Dominos Farms, Ann Arbor
4 The First National Building, Detroit
5 2020 Taylor Road, Auburn Hills
6 100 Phoenix Drive, Ann Arbor
7 28405 Van Dyke Ave., Warren
8 26200 Town Center, Novi
9 0 Masco Drive, Livonia
10 3310 W. Big Beaver Road, Troy
11 Ally Detroit Center, Detroit
12 5800 Mercury Drive, Dearborn
13 5900 Mercury Drive, Dearborn
Lake Corporate Center, Van
14 Grace
Buren Twp.
Executive Drive, Farmington
15 27555
Hills
16 700 Tower Drive, Troy
17 4 Parklane Blvd., Dearborn
18 2875 W. Grand Blvd., Detroit
19 Northfield Plaza, Troy
20 26555 Evergreen Road, Southfield
21 150 W. Jefferson, Detroit
22 2701 Troy Center Drive, Troy
Ranked by square feet
Owner, owner city
B
B
C
D
E
Square
feet
Tenant
Broker
Bedrock Real Estate Services LLC, Detroit
Ally Financial Inc.
Bedrock Management Services LLC; Jones Lang LaSalle
321,000
Bedrock Real Estate Services LLC, Detroit
Quicken Loans Inc.
Bedrock Management Services LLC
183,000
Dominos, Ann Arbor
University of Michigan
Domino's Farms; Jones Lang LaSalle
167,016
Bedrock Real Estate Services LLC, Detroit
Bedrock Management Services LLC
151,000
Kojaian Management Co., Bloomfield Hills
Honigman Miller Schwartz and
Cohn LLP
TI Group Automotive Systems LLC
Newmark Grubb Knight Frank
143,908
Wickfield Phoenix, LLC, Ann Arbor
Truven Health Analytics
Signature Associates; Colliers International
140,549
Red River Asset Management LLC, New York City
General Motors Co.
Signature Associates; CBRE Inc.
111,221
JFK Investment Co, Detroit
Phoenix Integration Inc.
Colliers International
93,961
Schostak Brothers and Co. Inc., Livonia
Masco Corp.
Colliers International
91,220
Farbman Group , Southfield
Publicis Groupe
Farbman Group; Jones Lang LaSalle
78,061
Bedrock Real Estate Services LLC, Detroit
Quicken Loans Inc.
Bedrock Management Services LLC
76,000
B
Ford Motor Land Development, Dearborn
Carhartt Inc.
Plante Moran CRESA
70,773
C
Ford Motor Land Development, Dearborn
Carhartt Inc.
Plante Moran CRESA
70,707
Sovereign Partners LLC, New York City
Citimortgage
Jones Lang LaSalle; Signature Associates
68,000
Kojaian Management Corp., Bloomfield Hills
Allstate Insurance Co.
Colliers International; Allstate
61,142
Friedman Integrated Real Estate Solutions LLC,
Farmington Hills
Ford Motor Land Development, Dearborn
Benesys
53,770
DealerDirect LLC
Friedman Integrated Real Estate Solutions LLC; Jones
Lang LaSalle
N/A
Brian Najor, Birmingham
Detroit Police Department
Signature Associates; CBRE Inc.
50,000
Hayman Cos., Southfield
Fiserv
Hayman Co.; Jones Lang LaSalle
49,375
Time Equities Inc., New York City
Towers Watson Delaware Inc.
Newmark Grubb Knight Frank
49,267
C
C
B
B
B
C
52,393
Piedmont Office Realty Trust, Johns Creek, Ga.
CW Professional Services
Transwestern
48,915
Osprey Management, Brighton
Gestamp North America Inc.
Friedman Integrated Real Estate Solutions LLC
47,447
List is based on information from CoStar Group Inc., CPIX, Crain's research, from published information or as submitted by brokers, advisers or property owners. Crain's has tried to list all brokers
involved in a transaction, but in some cases brokers may have been omitted. Some leases were omitted because of a lack of complete information.
B Lease renewal.
C New lease.
D New lease. Building on Schoolcraft College campus to be built for Masco slated for completion in the spring of 2017.
E Extension.
LIST RESEARCHED BY KIRK PINHO
CRAIN'S LIST: LOCAL SALES
Rank Building
Buyer
Ranked by price
Seller
Broker/advisers
The Solomon Organization,
Nykel Management, Troy
None
1 Somerset Park Apartments, Troy
Summit, N.J.
Oxford Cos., Ann Arbor
McMullen Realty Co. Inc., Ann Arbor
CBRE Inc.
Realty Co. Inc. portfolio, Ann
2 McMullen
Arbor
Bedrock Real Estate Services LLC, iStar Financial, Detroit Police and Fire
Bedrock Management Services LLC;
3 Ally Detroit Center, Detroit
Detroit
Retirement System
Eastdil Secured
Hokanson Capital Inc.; Westcorp
Buzz Silverman
Berkadia
Cedarbrooke Apartments, Auburn Hills
4
Inc., Edmonton, Canada
ElmTree Funds, St. Louis, Mo. Northern Equities Group, Farmington
Marcus and Millichap Real Estate
5 30001 Cabot Drive, Novi
Hills
Investment Services Inc.
Lexington Realty Trust, New York Spirit Realty Capital, Scottsdale, Ariz.
NA
Faurecia building, Auburn Hills
6
City
Sovereign Partners LLC, New York
Bank of America, Charlotte, N.C.
CBRE Inc.
7 Bank of America building, Troy
City
Continental Management,
Slatkin Co., Bloomfield Hills
Signature Associates; Bloomfield Financial
8 Trilogy Residences, Belleville
Southfield
Bedrock Real Estate Services LLC,
AKNO Enterprises, Milan, Italy
Bedrock Management Services LLC
Tower, Book Building portfolio,
9 Book
Detroit
Detroit
Pacific Coast Plaza Investments Starwood Capital, Miami Beach, Fla. Friedman Integrated Real Estate Solutions
Mound Road, Sterling
10 44757-44833
LP, El Cajon, Calif.
LLC
Heights
GFI Capital Resources Group Inc.,
Marcus and Millichap Real Estate
Beachwood Apartments and Townhomes, Jacobson Bros. LLC, Birmingham
11 Harrison Township
New York City
Investment Services Inc.
DDI, China
Bedrock Management Services LLC; Jones
David Stott, Clark Lofts buildings, Detroit Bedrock Real Estate Services LLC,
12
Detroit
Lang LaSalle
Farbman Group, Southfield
TD Auto Finance LLC, Farmington
Farbman Group, CBRE Inc.
The Standard at Farmington Hills,
13 Farmington Hills
Hills
Time
Equities
Inc.,
New
York
City
First
Industrial
Realty
Trust, Chicago
CBRE Inc.
Airport
Park,
Romulus
13
Griffin Capital Essential Asset
General Development Co., Southfield
Trident Ventures LLC
Atlas Copco U.S. headquarters, Auburn
13 Hills
REIT II Inc., Los Angeles, Calif.
Healthcare Trust Inc., New York
Villa Healthcare, Skokie, Ill.
NA
Addington Place, Northville
16
City
Friedman Integrated Real Estate
The Hayman Co., Southfield
Jones Lang LaSalle; Friedman Integrated
17 Troy Tech Park, Troy
Solutions LLC, Farmington HIlls
Real Estate Solutions LLC
The Hayman Cos., Southfield
Associated Estates Realty Corp.,
Hancock Real Estate Strategies
Clinton Place Apartments, Clinton
17 Township
Richmond Heights, Ohio
Universal Properties Three LLC,
CW Capital , Bethesda, Md.
Friedman Integrated Real Estate Solutions
Seven Mile Crossing, Livonia
19
Southfield
LLC
Square
feet
Acres
Units
Price
Rooms ($000,000)
NA
NA
2,226
NA
$216.0
704,000
NA
NA
NA
$102.0
1,000,000
NA
NA
NA
$100.0
NA
NA
584
NA
$49.0
188,000
NA
NA
NA
$42.8
278,000
NA
NA
NA
$40.0
450,000
NA
NA
NA
$35.0
850,000
NA
NA
NA
$30.5
246,000
NA
NA
NA
$30.0
258,000
NA
NA
NA
$18.7
NA
NA
376
NA
$18.5
210,000
NA
NA
NA
$18.0
274,000
NA
NA
NA
$17.8
665,000
NA
NA
NA
$17.8
119,659
NA
NA
NA
$17.8
65,000
NA
NA
NA
$17.3
425,000
NA
NA
NA
$16.5
NA
NA
202
NA
$16.5
347,000
NA
NA
NA
$16.0
List is based on information from CoStar Group Inc., Crain's research, from published information or submitted by brokers, advisers or property owners. Crain's has tried to list all brokers involved in
a transaction, but in some cases brokers may have been omitted.
LIST RESEARCHED BY KIRK PINHO
An expanded version of these lists may be purchased at crainsdetroit.com/section/data_lists
13
C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 4 , 2 0 1 6
CRAIN'S LIST: INDUSTRIAL LEASES
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
Building
Ranked by square feet
Owner, owner city
Tenant
Broker
Square feet
Brownstown Business Center, Brownstown Twp. B
Ashley Capital, Canton Twp.
Dakkota Integrated Systems LLC
Newmark Grubb Knight Frank
637,609
Brownstown Business Center, Brownstown Twp. C
Ashley Capital, Canton Twp.
Hollingsworth Logistics Group
Newmark Grubb Knight Frank; Colliers
International
Colliers International; Shannon Shaya
548,874
451,000
Oakland Park, Highland Park D
Stuart Frankel Development Co., Troy Modular Automotive Systems LLC
Romulus Business Center, Romulus C
Ashley Capital, Canton Twp.
Hollingsworth Logistics Group
Signature Associates; Colliers International
386,026
Brownstown Business Center, Brownstown Twp. D
Ashley Capital, Canton Twp.
Thyssen Krupp Industrial Services
Colliers International
366,124
Brownstown Business Center, Brownstown Twp. C
Ashley Capital, Canton Twp.
Keystone Automotive Warehouse
Newmark Grubb Knight Frank; Binswanger
360,749
Pontiac Central LLC, Industrial Realty
Group, Los Angeles, Calif.
Ashley Capital, Canton Twp.
Fanuc America Corp.
Signature Associates
322,000
Plastipak Packaging Inc.
Signature Associates
225,765
19991 Brownstown Center Drive, Brownstown Twp.
Ashley Capital, Canton Twp.
Amazon.com
210,124
Romulus Business Center, Romulus D
Ashley Capital, Canton Twp.
Owens & Minor Distribution Inc.
Romulus Business Center, Romulus D
Ashley Capital, Canton Twp.
Hollingworth Logistics Group
Signature Associates; Newmark Grubb Knight
Frank
Jackson Cooksey; Newmark Grubb Knight
Frank
Colliers International; Cedarwood Realty LLC
Crossroads Distribution Center, Belleville D
Ashley Capital, Canton Twp.
AEL Span LLC
Ashley Capital
183,396
Northern Equity Group, Farmington
Hills
Ashley Capital, Canton Twp.
Magna Seating of America Inc.
Signature Associates
180,000
Norplas Industries, Inc.
Signature Associates
173,859
Crossroads Distribution Center, Belleville D
Ashley Capital, Canton Twp.
Exel Inc.
159,504
Brownstown Business Center, Brownstown Twp. D
Ashley Capital, Canton Twp.
Cabot Street Real Estate, LLC
Pontiac Centerpoint Campus Central, Pontiac
36445 Van Born Road, Unit 200, Romulus D
Cabot Drive, Novi
Brownstown Business Center, Brownstown Twp. D
54725 Grand River Ave., New Hudson
Oakland Park, Highland Park
Mound Business Center, Warren D
2020 Taylor Road, Auburn Hills
Warren Business Center, Warren B
195,886
Walbridge Aldinger Co., Detroit
Marada Industries Inc.
Signature Associates; Newmark Grubb Knight
Frank
Newmark Grubb Knight Frank; Signature
Associates
Signature Associates
Stuart Frankel Development Co., Troy
Android
Signature Associates
150,000
Ashley Capital, Canton Twp.
KUKA Systems Corp. North America
Signature Associates
147,389
Signature Associates; Newmark Grubb Knight
Frank
Newmark Grubb Knight Frank
146,068
143,908
CBRE Inc.
140,972
Hove Street Properties, Toronto,
Export Corp.
Canada
Kojaian Management Co., Bloomfield TI Group Automotive Systems LLC
Hills
Ashley Capital, Canton Twp.
IAC Warren
Allied Commerce Center, Livonia
209,450
158,736
151,686
List is based on information from CoStar Group Inc., CPIX, Crain's research, from published information or as submitted by brokers, advisers or property owners. Crain's has tried to list all brokers
involved in a transaction, but in some cases brokers may have been omitted. Some leases were omitted because of a lack of complete information.
B Lease renewal plus expansion.
C New lease.
D Lease renewal.
LIST RESEARCHED BY KIRK PINHO
CRAIN'S LIST: LARGEST GENERAL CONTRACTORS
Ranked by 2015 revenue
Rank
1
2
3
Revenue
($000,000)
2015/2014
Value of
new contracts
($000,000)
2015/2014
Barton Malow Co.
26500 American Drive, Southfield 48034
(248) 436-5512; www.bartonmalow.com
Ryan Maibach
president and CEO
$1,780.3
$1,498.0
Walbridge Aldinger Co.
John Rakolta Jr.
chairman and CEO
Company
Address
Phone; website
Local
employees
Jan. 2016
Total
new projects
2015/2014
Southeast
Michigan projects
started 2015
$1,882.2
$1,803.3
900
236
255
177
1,432.0
1,550.0
1,366.0
1,436.5
310
185
185
66
Sheldon Yellen
CEO
1,400.2 B
1,453.9 B
1,424.6
1,480.3
1,790
NA
94,865
4,034
Top local executive(s)
777 Woodward Ave., Suite 300, Detroit 48226
(313) 963-8000; www.walbridge.com
Belfor Holdings Inc.
185 Oakland Ave., Suite 150, Birmingham 48009
(248) 594-1144; www.belfor.com
4
Aristeo Construction Co.
12811 Farmington Road, Livonia 48150
(734) 427-9111; www.aristeo.com
Joseph Aristeo
president
410.0
315.6
367.9
353.6
310
456
320
NA
5
Commercial Contracting Group Inc.
4260 N. Atlantic Blvd., Auburn Hills 48326
(248) 209-0500; www.cccnetwork.com
William Pettibone
chairman
291.0
321.0
195.0
225.0
185
143
111
78
6
Walsh Construction Co.
3011 W. Grand Blvd., Suite 2300, Detroit 48202
(313) 873-6600; www.walshgroup.com
Sam Bahou
business group leader
251.3
350.1
NA
172.0
80
115
110
1
7
Roncelli Inc.
6471 Metropolitan Parkway, Sterling Heights 48312
(586) 264-2060; www.roncelli-inc.com
Gary Roncelli
chairman and CEO and Thomas Wickersham
president and COO
242.0
247.0
224.0
145.0
220
90
88
78
8
Ideal Contracting
2525 Clark St., Detroit 48209
(313) 843-8000; www.idealcontracting.com
Frank Venegas Jr.
chairman and CEO
239.0
192.0
274.0
168.0
365
879
828
859
9
Dearborn Mid-West Co.
20334 Superior Road, Taylor 48180
(734) 288-4400; www.dmwcc.com
Jeff Homenik
president
183.0
128.0
NA
NA
251
NA
NA
NA
Sachse Construction and Development Co. LLC
1528 Woodward Ave., Suite 600, Detroit 48226
(313) 481-8200; www.sachseconstruction.com
Todd Sachse
CEO and founder and Steve Berlage
president and COO
172.2
135.2
227.2
207.5
120
186
197
90
10
This list of general contractors is a compilation of the largest such companies in Wayne, Oakland, Macomb, Washtenaw and Livingston counties. It is not a complete listing but the most
comprehensive available. Crain's estimates are based on industry analyses and benchmarks, news reports and a wide range of other sources. Unless otherwise noted, information was provided by the
companies. Companies with headquarters elsewhere are listed with the address and top executive of their main Southeast Michigan office. Actual revenue figures may vary. NA = not available. If you
believe your company should be on this list, contact Sonya Hill at [email protected]
B In 2015, 88.05 percent of revenue for Belfor, a disaster recovery firm, was from construction management. The figure was 92 percent in 2014.
LIST RESEARCHED BY SONYA D. HILL
An expanded version of these lists may be purchased at crainsdetroit.com/section/data_lists
14
C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 4 , 2 0 1 6
CALENDAR
WEDNESDAY
APRIL 6
Inside the CEO Mind. 8-10 a.m.
Detroit Regional Chamber.
Kouhaila Hammer of Ghafari
Associates will provide insight on
the company’s culture and best
practices that led to its “Best and
Brightest” status 10 years in a row.
Dearborn Administrative Center.
$55; $30 for chamber members.
Contact: Marianne Alabastro,
phone: (313) 596-0479; email:
[email protected]
UPCOMING EVENTS
Pancakes & Politics. 7:30-9:30 a.m.
April 11. Michigan Chronicle. Gov.
Rick Snyder gives an update on the
state and region. Detroit Athletic
Club. $100. Phone:
(313) 963-5522. Website:
michiganchronicle.com/events.
MichBusiness Explore Speaker Series
Event. 8-9:30 a.m. April 12.
2016 PLAYOFFS AVAILABLE
CALL TODAY TO RESERVE
YOUR SEATS AND SUITES
MichBusiness. Speaker:
Millennial entrepreneur Jesse
Ford, managing director, The Work
Inc. Macomb-OU Incubator,
Sterling Heights. Free. Website:
michbusiness.com/events.
DEC Presents Peter Karmanos. 11:30
a.m.-1:30 p.m. April 14. Detroit
Economic Club. Karmanos is the
principal owner/governor and
CEO of the Carolina Hurricanes, as
well as the chairman and cofounder of MadDog Technology. The
Townsend Hotel, Birmingham.
$45 DEC members; $55 guests of
DEC members; $75 nonmembers.
Phone: (313) 963-8547; email:
[email protected]
The Rise of Snapchat. 11:30
a.m.-1:30 p.m. April 19. Adcraft
Club of Detroit. Imran Khan, chief
strategy officer for Snapchat,
discusses the rise of Snapchat
from its beginnings in 2011 to
more than 7 billion daily video
views in 2016. The Reserve,
Birmingham. $50; $40 members;
$25 junior and student members.
Contact: Melanie Davis, phone:
(313) 872-7850; email:
[email protected]
Women’s Power Breakfast. 7-9 a.m.
April 21. Gleaners Community Food
Bank. Brings together more than 600
of the area’s most powerful women.
Co-chairwomen are Faye Nelson, vice
president public affairs, president,
DTE Energy Foundation; Andra Rush,
chairman and CEO, Rush Trucking
Corp.; Nancy Schlichting, CEO, Henry
Ford Health Systems. Eastern Market
Shed 3, Detroit. $120 individual;
$1,000 table. Contact: Suzette
Hohendorf, phone: (313) 923-3535;
email: [email protected]
DEC Presents John Noseworthy.
11:30 a.m.-1:30 p.m. April 21.
Detroit Economic Club.
Noseworthy is president and CEO
of the Mayo Clinic. Cobo Center,
Detroit. $45 DEC members; $55
guests of DEC members; $75
nonmembers. Phone: (313)
963-8547; email:
[email protected]
Fuel: Detroit. 9 a.m.-5 p.m. April 21.
Fuel Leadership. Speakers include
Mark Kelly, commander of Space
Shuttle Endeavour’s final mission;
authors Marcus Buckingham and
Mitch Albom; Jacques Panis,
president, Shinola; lifestyle guru
Martha Stewart; Sarah Kay, founder,
co-director, Project Voice; Michael
Strahan, co-host, “Live With Kelly
and Michael.” Sound Board,
Detroit. $495 general; $895 VIP.
Contact: Jordan Broad, phone:
(248) 206-7065; email:
[email protected]
Next Steps to Improve Michigan’s
Economy. 10-11 a.m. April 22.
Automation Alley. Steve Arwood,
CEO of the Michigan Economic
Development Corp., discusses
MEDC’s plans to help grow
Michigan’s economy and what it
takes to continue the state’s
reinvention. Automation Alley,
Troy. Free with advance
registration; $10 walk-in
members; $15 walk-in
nonmembers. Contact:
[email protected];
phone: (800) 427-5100.
Breakfast of Champions. 7:30-9 a.m.
April 27. Leadership Oakland.
Barbara McQuade, U.S. attorney,
Eastern District of Michigan,
speaks on “Public Leadership
— Fighting for Justice.” MSU
Management Education Center,
Troy. $32 Leadership Oakland
Alumni Association members; $36
nonmembers. Website:
leadershipoakland.com/events.
DEC Presents Denise Morrison. 11:30
a.m.-1:30 p.m. April 27. Detroit
Economic Club. Morrison,
president and CEO, Campbell Soup
Co., is the speaker. Westin Hotel,
Southfield. $45 DEC members, $55
guests of DEC members, $75
nonmembers. Contact: (313)
963-8547; email: [email protected]
DEC Presents Dinesh Paliwal. 11:30
a.m.-1:30 p.m. May 9. Detroit
Economic Club. Paliwal,
chairman, president and CEO of
Harman International, is the
speaker. Cobo Center, Detroit. $45
DEC members; $55 guests of DEC
members; $75 nonmembers.
Contact: (313) 963-8547; email:
[email protected]
Pistons.com/premium
(248) 377-8477
Calendar guidelines. Visit
crainsdetroit.com and click “Events”
near the top of the home page.
Then, click “Submit Your Events”
from the drop-down menu that will
appear. Fill out the submission form,
then click “Submit event” at the
bottom of the page.
More Calendar items can be found
at crainsdetroit.com/events.
C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 4 , 2 0 1 6
DEALS &
DETAILS
15
CONTRACTS
Qualitech, Bingham Farms, a
technology integrator and
software reseller, was selected by
Adkison, Need & Allen PLLC,
Bloomfield Hills, a law firm, to
provide an Intel terminal server
for remote access as well as
installation services. Website:
qualitech.net.
Gale Group Inc., Farmington Hills,
part of Cengage Learning Inc. and a
publisher of research and
reference resources, announced
an agreement with the Egyptian
Specialized Presidential Council for
Education and Scientific Research to
deliver Gale resources to
academic institutions; schools;
and public, special and corporate
libraries in Egypt. Resources that
can be accessed locally through
the Egyptian Knowledge Bank
include the first module of Gale’s
Early Arabic printed books from
the British Library, National
Geographic virtual library and
Middle East collections from
“Archives Unbound.” Website:
gale.cengage.com.
EXPANSIONS
The Barre Code, Chicago, a fitness
franchise, has opened a new
studio at 831 S. Main St., Royal
Oak. Telephone: (248) 565-8372.
Website: thebarrecode.com.
AirTime Trampoline & Game Park,
Troy, has opened a location at
Twelve Mile Crossing at Fountain
Walk, 44255 12 Mile Road, Novi.
Telephone: (248) 918-0909.
Website: airtimetrampoline.com.
Legoland Discovery Center Michigan,
operated by Merlin Entertainment
plc, London, England, has opened
a location at Great Lakes Crossing
Outlets, 4240 Baldwin Road,
Auburn Hills. Website:
legolanddiscoverycenter.com/
michigan.
MOVES
Unique Systems Design Inc., a technical
fast-to-market solution provider, has
moved its headquarters and
engineering center from 2242 S.
Telegraph Road, Bloomfield Hills, to
43940 Woodward Ave., Suite 200,
Bloomfield Hills. Website: usdi.com.
Comprehensive Payroll Co., a
provider of services to small and
midsize businesses, has moved
from 23650 Woodward Ave., Suite
100, Pleasant Ridge, to 26075
Woodward Ave., Suite 150,
Huntington Woods. Website:
cpayrollco.com.
Deals & Details guidelines. Email
[email protected] Use
any Deals & Details item as a model
for your release, and look for the
appropriate category. Without
complete information, your item will
not run. Photos are welcome, but we
cannot guarantee they will be used.
The Leader in
Complex Business Litigation
16
C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 4 , 2 0 1 6
Crain’s seeks
Health Care
Heroes
Do you know a Health Care
Hero? Crain’s Detroit Business is
seeking nominations for Health
Care Heroes, a special report on
health care professionals that will
run in the July 18 issue.
The program will honor medical innovators and patient advocates dedicated to saving lives or
improving access to care.
Winners will be chosen in five
categories:
Corporate achievement in health
care: Honors a company that has
created an innovative health benefits plan or solved a problem in
health care administration.
Advancements in health care:
Honors a company or individual
responsible for a discovery or for
developing a procedure, device or
service that can save lives or improve quality of life.
Physician: Honors a physician
whose performance is considered
exemplary.
Allied health: Honors an individual from nursing or allied
health fields who is deemed exemplary by patients and peers.
Trustee: Honors leadership
and distinguished service on a
health care board.
A panel of health care judges
will choose the winners.
The deadline for nominations is
May 16. They can be made at
CrainsDetroit.com/nominate.
Questions? Contact Michael Lee
at (313) 446-1630 or [email protected]
crain.com.
“Marilyn was a pioneer, a visionary and a leader.” The Mars Agency
Mars Agency founder Barnett dies at age 83
By Bill Shea
[email protected]
Marilyn Barnett, an advertising
industry pioneer for women who
founded The Mars Agency 43 years
ago in Southfield, died of cancer
March 28. She was 83.
“Marilyn was a pioneer, a visionary and a leader. She saw opportunity where others didn’t,"
Mars posted on Facebook. "And
because she had the courage to
follow her dreams and ignore
those who said it couldn't be done,
this great company stands stronger than ever today."
“All of us at The Mars Agency will
continue to be inspired by her unwavering commitment to excellence, innovation and creativity."
The agency, which has been
noted for its work in shopper marketing, marked its inaugural
Founder’s Day to honor Barnett in
each of its 10 North American offices on Oct. 30.
She was Mars’ chairman of the
board and company president,
but had stepped away from dayto-day operations. Her son, Ken
Barnett, is the company’s global
CEO and has been with the firm
since 1976.
Her awards and honors over the
years have included membership
in the Adcraft Hall of Fame, Oakland County Executive of the Year,
Michigan’s Top 25 Women Business Owners and many others.
Barnett was a model, doing
on-camera work for the Farmer
Jack grocery store chain and Oldsmobile and American Motors Corp.
before quitting to start her own
agency.
“I did all of the Farmer Jack
commercials," she told Crain’s for
a 1996 profile. “I used to sit on a
bale of hay, talking to the farmer.”
Mars would pick up Farmer
Jack, which closed as a chain in
2007, as a client in 1995.
She launched
the company,
then known as
Mars Advertising
Inc., in 1973 with
$22,000,
two
telephones and
three employees.
“At the time,
Marilyn Barnett:
super markets
Launched the
were not in the
company in 1973.
electronic media,”
Barnett
said in the 1996 interview. “They
weren’t on television at all. They
were print-oriented. At the outset
in the pioneering stage, it was
Farmer Jack’s. We had wonderful
success and started talking to other supermarket chains around the
country.”
She was a Wayne State University
graduate with Bachelor of Arts degrees in psychology and communications.
Mars Agency rebranded two
years ago in an effort to better convey the marketing products delivered to clients, Crain’s reported at
the time. When the company
launched, Mars stood for “marketing, advertising, research and service.”
The company had $59 million
in global revenue last year, of
which $55 million was domestic,
according to data from Advertising
Age. Mars ranked as the 176th largest U.S. ad agency in 2014 by revenue at $58 million. The 2015 rankings are not yet available.
In recent years, new client wins
have included New Berlin, N.Y.based Greek yogurt giant Chobani
Inc.; wireless services provider Cricket Wireless; Waterbury, Vt.-based single-serve coffee machine maker
Keurig Green Mountain Inc.; and Kansas City, Mo.-based greeting card
company Hallmark Cards Inc.
Detroit’s ad community praised
Barnett's legacy.
Marcie Brogan, founder and
chairman of ad agency Brogan &
Partners in Birmingham, said:
“When I started Brogan & Partners, Marilyn ran the only female-owned ad agency listed by
Crain’s. Many years later, she and I
were still the only ones … a reflection of our industry’s continuous
— and continuing — lack of gender and racial diversity.”
Others had similar sentiments.
“As a woman who started an
agency in the early 1970s, she broke
down barriers and innovated in
ways that set your shop up for longterm success," said Tim Smith, president and CEO of Detroit-based ad
firm Skidmore Studios. “She was
someone who was able to lift up and
shake up the ad business when it
needed it most.” Bill Shea: (313) 446-1626
Twitter: @Bill_Shea19
ADVERTISING SECTION
CONSTRUCTION
ADVERTISING &
MARKETING
Marcy McCausland
Chief Accounting
Officer and Controller
JR Thompson and
Competition Graphics
Marcy McCausland has
been appointed Chief
Accounting Officer and Controller of J.R.
Thompson and Competition Graphics. A
30-year veteran of financial management,
McCausland will be responsible for financial
statements, cost accounting, payroll,
accounts payable and receivable, budgeting,
tax compliance and special analyses. JRT is a
creative marketing services firm specializing
in communications, digital and technology
services. CG is a leading supplier of
automotive and motorsports graphics.
Trudeau to retire from Kresge
Foundation at year's end
Laura Trudeau, managing
director of the Kresge
Foundation's Detroit program
and a grant-maker instrumental
in many of the city's significant
revitalization
projects over
the past 15
years, plans to
retire at year's
end.
For the
remainder of
the year,
Trudeau, 62,
Laura Trudeau
will be a senior
adviser to
Kresge President and CEO Rip
Rapson, and as an executive-onloan, working with the coalition
supporting Regional Transit
Authority of Southeast Michigan
and M-1 Rail(to be renamed QLine).
Wendy Lewis Jackson and
Benjamin Kennedy, deputy
directors of Kresge's Detroit
grant focus area, will serve as its
interim co-managing directors,
taking on oversight of the
program and its $31 million
annual grant budget.
Trudeau joined Troy-based
Kresge in 2001 after a 28-year
career at National Bank of Detroit
— now J.P. Morgan Chase. As
leader of Kresge's community
development program and, later,
its Detroit program grant area, she
has overseen the investment of
more than $425 million in grants
and loans.
Maggie DeSantis to head
LTU center in Midtown
Longtime community activist
Maggie DeSantis will head a new
REAL ESTATE
Randy Palermo
Chris Greene
President
Chief Financial Officer
LaSalle, Inc.
Continuum Services
The LaSalle Group, Inc. is
excited to announce Randy
Palermo as its new
President. Randy has been
with LaSalle since 1993 and has been integral
in the company’s growth for the past 25
years. As LaSalle begins a new chapter at its
new headquarters in Farmington Hills, its
growth has been rapidly expanding. With an
increased workload and more clients than
ever, Randy’s promotion from Executive Vice
President to President comes at a critical
time in the company’s success.
PEOPLE:
SPOTLIGHT
Continuum Services, a
Michigan-based, singlesource commercial facilities
services and maintenance
organization, is pleased to announce the
promotion of Chris Greene to chief financial
officer. In this new role, Greene will be
responsible for all accounting and finance
functions, including planning and
implementation of growth, acquisition and
profitability strategies; financial analysis; risk
management; forecasting and the
development of financial plans and
performance measures.
For more information or questions
regarding advertising in this section, please call Lynn Calcaterra at
(313) 446-6086 or email: [email protected]
economic development program
at the Lawrence Technological
University Detroit Center for Design
+ Technology in Midtown.
DeSantis, 65, founder-CEO of
the Eastside
Community
Network and
who stepped
down recently,
will launch
Building the
Engine of
Community
Development in
Maggie DeSantis Detroit, a
program to
pair neighborhood redevelopment
programs with philanthropic and
educational resources, and help
provide training for their leaders.
Donna Givens succeeded
DeSantis as Eastside CEO.
Visteon names interim CFO
Visteon Corp. named William
Robertson, vice president and
corporate controller, as interim
CFO. Robertson, 54, replaces
Jeffrey Stafeil. Stafeil announced
in January his plans to leave the
Van Buren Township supplier. 17
C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 4 , 2 0 1 6
CRAIN’S DETROIT BUSINESS
April 4, 2016
SCHOOLS
“If a school doesn’t meet standards for a certain
period of years, the authorizers can close them.
And the solution should be holding authorizers
accountable, rather than creating more
regulation.” Mark Ornstein, Detroit 90/90
FROM PAGE 3
month.
Steven Rhodes, the transition
manager who began overseeing
Detroit Public Schools this month,
supports establishing a commission led by a “cross section of Detroiters who have a vested interest” in its education system.
“The advantage of a (commission) is its ability to rationally organize and allocate the public and
charter educational assets in the
city so that education in Detroit
can compete with education elsewhere,” he said in a statement to
Crain’s last week. “Once that is
done, I believe Detroit will be in a
better position to attract families.”
But CEO Mark Ornstein of Detroit 90/90, the nonprofit charter
management organization that
oversees the University Preparatory
Academy and University Preparatory
Science & Math charter school districts in the city, said the current
commission proposal is far-reaching and may have other priorities
besides academics when it reviews
charter schools.
“If the commission starts working with a focus on helping the
DPS survive and turn itself around
financially — well, the reason that
it struggles financially is a loss of
market share. People have voted
with their feet (by leaving DPS).
Potentially, you could hurt charters as a whole industry if you step
in with that priority,” he said.
“I support helping the DPS survive, but the charter authorizers
are charged with getting the school
to perform. If a school doesn’t
meet standards for a certain period of years, the authorizers can
close them. And the solution
should be holding authorizers accountable, rather than creating
more regulation.”
At issue is an accumulation of
charter schools across the city —
VACANT LAND
some academically exceptional,
and others that have struggled to
meet state standards — ever since
the legislation in 1994 that created
the current framework for them.
Total K-12 enrollment at DPS was
about 45,786 students this winter,
compa.red with about 160,000 in
2002, according to recent school
district data. That’s about a 72 percent decline, even though the total
school-age population within Detroit has fallen about 45 percent
over that same period.
At the same time, about 50 charter holders operating 100 schools
within Detroit schools’ boundaries
enroll more than 40,000 students of
their own, according to data from
the Education Trust-Midwest. Gary
Naeyaert, executive director of the
Great Lakes Education Project,
which advocates for charter
schools, said the latest total Detroit student headcount is actually
closer to 50,000, outpacing DPS.
And where students go, money
follows. Ornstein estimates the
Detroit 90/90 schools enrolled
about 3,500 students combined
for the 2015-16 academic year —
which at $7,391 per-pupil school
aid this year translates to about
$25 million in state funding alone.
Grand Rapids-based National Heritage Academies, the state’s largest
charter management organization
with more than 45 for-profit
schools statewide, previously has
reported enrolling more than
30,000 students statewide and operating about 20 schools across
Southeast Michigan.
The loss of market share is one
of many financial stresses that has
left the traditional public school
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Page 17
district scrambling. Rhodes had
previously said Detroit schools
would run out of funds to pay
teachers by April 8, before the
Legislature in March passed a
$48.7 million rescue bill that will
keep the district operating through
the end of the current school year.
The reform bills in the House
propose a seven-member commission, filled with appointees by Detroit Mayor Mike Duggan, that
would monitor both charters and
traditional public schools. Two
members would be teachers or administrators from traditional public
schools and two from charter
schools, one each would be a parent
of a charter or traditional school
student, and one would be a person
experienced in managing school accountability systems and performance improvement metrics.
Among other things, the commission must review the siting of
proposed new charter or traditional public schools and make a
set of siting recommendations
based on demographics, existing
school seating capacity, “academic
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FROM PAGE 17
opportunities (already) available”
in the immediate area, and other
factors.
The commission also creates an
“A” to “F” grading system that the
state School Reform/Redesign Office
must review and adopt or change,
to monitor school performance.
If a school rates an F for three
consecutive years or any three of
the past five years, the reform officer has the power to close it. If a
school consistently rates an A or B
grade it can expand without much
oversight, but everyone else would
be subject to close scrutiny under
the siting guidelines.
Charter school advocates say
market forces and regular reviews
by the public colleges and school
districts that authorize charters already shutter the underperforming schools. At least 80 schools
have gone out of business statewide since the current charter law
took effect, including 17 since June
2014, according to an August 2015
report from the Michigan Department of Education.
Of the most recent closures, 15
were due to lack of financial viability, academic viability, or both; one
never managed to open and one
merged with another school.
But Education Trust, which
publishes an annual report evaluating the 40 universities, community colleges and school districts
that authorize charters statewide,
notes that 67 percent of charters
statewide did worse than DPS itself in the portion of African-American eighth-grade students meeting state standards on the former
Michigan Education Assessment
C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 4 , 2 0 1 6
“We will continue to articulate the truth, which is
we need a rationalized school district community
with efficiencies and resources in it to focus on
academic improvement. We do not come from an
ideological intention or focus, and this is not a
choice issue.” Tonya Allen, co-chairman, Coalition for the Future of Detroit Schoolchildren
Program, or MEAP, test in 2013.
And DPS itself ranked last among
20 major urban areas for African-American eighth-grade scores
on national tests that year.
“What’s clear is this: No one, including the governor and state superintendent, has the authority to
revoke a chronically low-performing authorizer’s ability to open and
expand public schools in Michigan, despite the fact that such authorizers receive millions of taxpayers’ dollars annually,” the
report says. “Michigan lacks a clear
regulatory framework or law that
outlines performance standards
for authorizers and the consequences for not meeting them.”
About 20 charter districts outperformed DPS in that report, with
schools like University Preparatory
Science & Math and National Heritage’s Detroit Enterprise Academy
and Detroit Premier Academy scoring
more than one-third of students
proficient in 8th grade math. About
40 trailed DPS, with Detroit Leadership Academy, Allen Academy and Detroit Academy of Arts and Sciences
scoring less than 10 percent proficient in 8th grade math that year,
according to Education Trust.
The report gives four out of 16
charter authorizers of a combined
80 schools a D or F grade, based on
performance standards set for
schools, improvement to chronically failing schools and their decisions on charter school openings and quality of operators.
The A and B grade authorizers,
meanwhile, are responsible for
about 217 schools statewide in that
report — but the data isn’t broken
out by school location, and the Detroit commission wouldn’t necessarily use the same criteria.
Partly at issue, some critics say,
is that authorizers themselves receive a small percentage of state
per-pupil school aid funding for
the students that each charter enrolls, possibly making some institutions reluctant to close them.
But charter advocates say the
proposed DEC is designed to put
self-interest ahead of charters. The
bills authorize a commission to exist up to 10 years, but its renewal
after the first five years is contingent on whether it is “effective in
achieving a turnaround in the (traditional) district,” including its finances, and whether it improves
all public school enrollment and
academics.
Ralph Bland, CEO of Detroit-based nonprofit charter management organization New Paradigm
for Learning, authorized by DPS and
two universities to operate five
schools in the city, said he supports
the concept of a commission to di-
rect new schools to communities
where they are needed, rather than
where any corporation can find viable real estate to place them.
“We definitely need some cohesiveness and alignment with closing
and opening schools, and there
needs to be a source of direction so
we are all on one page, as far as
where schools go and where the
need for schools will be,” he said. “I
think the reality is more DPS schools
should close, and that some charter
schools should close.”
Tonya Allen, a co-chairman of
the coalition that originally proposed a commission last year, said
charter schools within Detroit can
be authorized by any of 14 different entities statewide, and their
current business model can cause
them to overpopulate in areas with
high population and high parent
dissatisfaction.
The city already has the second-most charters per pupil of any
community in the country, she
said, and she’s heard the charter
advocate arguments, but that all
schools need accountability.
“We will continue to articulate
the truth, which is we need a rationalized school district community
with efficiencies and resources in it
to focus on academic improvement. We do not come from an
ideological intention or focus, and
this is not a choice issue,” she said.
“We already have more choice
than anybody. It’s about increasing
outcomes.”
Naeyaert said the legislation
creates too many layers of bureaucracy, both for DPS and the charter
community. He also expects the
new panel will have its priorities
largely dictated by the mayor and
subordinate the charters to the
traditional district’s bottom line.
“That’s too many bodies. It’s going to lead to a lot of finger-pointing and slightly differing agendas,
and it isn’t going to improve academic performance,” he said. “It
isn’t necessary, and just creates a
lot of cooks in the kitchen.” Chad Halcom: (313) 446-6796
Twitter: @ChadHalcom
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C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 4 , 2 0 1 6
MEDICAID
FROM PAGE 1
after Dec. 31.
This HMO use tax raises $600
million annually, which provides
$400 million for Medicaid and
$200 million for school funding.
With federal matching, the $400
million earmarked for Medicaid
magically multiplies into $1.2 billion in total state Medicaid funding.
The third tax Michigan imposes on health care companies is on
hospitals, nursing homes and
ambulance companies. The socalled Quality Assurance Assessment Program, or QAAP tax,
which is not in jeopardy, generates an additional $1.1 billion.
Matching funds raises this
amount to $3.3 billion.
In all, Michigan total taxes on
health care organizations and
medical claims amount to $1.8 billion. When federally matched, this
totals $5.4 billion, or 40 percent of
the Medicaid program’s $13.6 billion budget.
“There is a perfect storm brewing about how you finance Medicaid. We have relied on provider
and use taxes” for the past several
years, said Rick Murdock, executive director with the Michigan Association of Health Plans. “The use
tax is a huge part of financing,
but it will no longer be available
as a matchable expense” after
Dec. 31.
As a solution, several key state
legislators in the House and Senate are working on a plan that ultimately may require Michigan to
come up with additional general
funds to continue serving about
2.3 million Medicaid beneficiaries
at the same benefit level.
Sen. Ken Horn, R-Saginaw,
has been appointed by Majority
Leader Arlan Meekhof to lead a
subcommittee to develop a
solution to the Medicaid financing problem.
While Horn declined to comment, sources told Crain’s that one
working plan calls for the HMO
use tax to continue but not be
used directly for Medicaid. Instead, the HMO tax could be repurposed and used as general
fund revenue, which could then
free up other general funds to be
used for federal Medicaid matching dollars.
“Horn is looking at a solution
for both doomsday scenarios,”
said Murdock, referring to the possibility that the state could lose
both the HICA and the HMO use
tax. “We need a financing option
for Medicaid.”
California recently faced a similar situation and came up with an
interesting solution that taxes
health plans, but gives the insurers
tax credits to hold them harmless
for the $1 billion in taxes.
It is waiting to hear from the
federal government whether it will
be allowed to use the alternative
health plan tax plan to fund its $85
billion Medicaid program that
covers 13.5 million people, or
more than one-third of the state’s
population.
Laura Appel, vice president of
federal policy and advocacy with
the Michigan Health and Hospital Association, said the Medicaid funding problem in Michigan is very
serious.
“We have actively been a part of
the case since the beginning,” she
said. “We rely heavily on the taxes
to fund the Medicaid program.”
But Appel said “there is a strong
feeling we are living on borrowed
time. If we were to lose millions of
dollars in tax revenue to fund
Medicaid, it is not real tricky what
will happen next.”
Appel said the state would be
faced with either covering fewer
people, offering fewer benefits or
paying providers less.
“The state will probably have to
take a tough look at all three of
those things,” she said, noting that
paying providers less will make
worse the shortage of doctors and
dentists.”
But not all are bemoaning the
potential end of the HICA tax.
Bret Jackson, executive director
of the Economic Alliance for Michigan, said the alliance has fought
against the HICA tax since it began
in 2011 because it increases employers’ health care costs.
“Employers have paid $1 billion since Michigan began the
tax,” said Jackson, noting it increases costs for businesses, including fully insured companies
and small groups.
He said the companies accrue
no benefits by paying the tax. The
largest payer, he said, is the UAW
Retiree Medical Benefits Trust, which
provides care for 288,000 retired
autoworkers in Michigan.
However, Jackson said he has
no solution to replace the HICA
and HMO use tax. “The HICA tax
needs to go away, and we want
to make sure Medicaid is fully
funded,” he said.
But if the 6th Circuit Court overturns Michigan’s HICA tax, which
some say is possible yet unlikely,
the state Legislature will have to
come up with $300 million in replacement general funds to garner
the federal matching dollars — on
top of the $600 million for the
HMO tax, Murdock said.
“We have to find a solution.
There is a ticking time bomb, and
we need a long-term solution to
Medicaid,” Jackson said.
Because of a U.S. Supreme
Court ruling in March — Vermont’s
Alfred Gobeille v. Liberty Mutual
Insurance Co. — Michigan’s HICA
case, Self-Insurance Institute of
America v. Rick Snyder, was sent
back to the 6th Circuit Court for
reconsideration.
Mike Ferguson, president of
the Self-Insurance Institute of America, which filed the lawsuit in
2012 against Michigan, said the
institute is concerned that other
states could follow Michigan’s
lead in assessing taxes on self-insured companies.
The Illinois Legislature is considering a bill similar to Michigan’s
to institute a 1 percent HICA-type
tax on medical claims of self-funded employers. “We are fighting to
beat that back,” he said.
Ferguson said the institute argued in the Michigan HICA case
that a provision in the federal Employee Retirement Income Security Act disallows the tax because it
places undue administrative burdens on self-insured plans.
“We lost at trial court, lost the
appellate level and filed an appeal with the U.S. Supreme Court,”
Ferguson said. “At the same time,
the Vermont-Liberty Mutual case
was going through the 2nd Circuit. The Supreme Court took the
Liberty Mutual case and put our
case aside.”
What happened next was the
Supreme Court ruled in favor of
Liberty Mutual and ordered the
6th Circuit to reconsider the Michigan HICA case.
Does Ferguson have a suggestion on how Michigan can replace
the HICA tax if overturned?
“That is up for them to figure
out,” he said. “If the state believes
there is a positive effect to the revenue stream, they can pass a
broad-based tax across the population.” Jay Greene: (313) 446-0325
Twitter: @jaybgreene
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C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 4 , 2 0 1 6
PROVENCAL
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105
ER
S
ENGINEE
RS
60
DES
IG
N
145
INSPIRING
RESULTS
for those with developmental disabilities in Macomb, Oakland,
Wayne and nine other counties almost entirely with federal Medicaid dollars passed through the
state and county mental health
authorities, has topped Crain’s list
of the largest nonprofits in the region for well over a decade. It operates on an annual budget of
about $200 million and employs
320 people.
As he prepared to pass oversight
of the agency to its next executive
director last week, Provencal
spoke with Crain's about his career and the changes he’s seen in
services for the developmentally
disabled during his career.
What first attracted you to advocacy for the developmentally disabled?
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My mother used to say you have
to look out for the little guy. When
in college at Western Michigan University, majoring in sociology, I
went to work at the state hospital
in Kalamazoo as an attendant in
1966. I learned almost the moment I was there that it was no
place for people to live. Once you
walked through that door, you
were locked in. Your life was the
bedroom and the day room, maybe pacing or sleeping off the medication. You didn’t have to be divinely inspired by your parents to
know there had to be something
better for these people. (Then),
during the last semester of my senior year, I had this instructor in
social work who was a macho guy,
and he spoke to me. He had a big
heart and started talking about
community activism and how we
could all make a difference. It just
spoke to me.
You’ve made a career of moving the
developmentally disabled out of institutions and back into the community.
Why were you opposed to institutions?
Agencies in this state and other
states by 1972 were still relying on
institutions as the major home for
people with disabilities. We said
no; they should live among us. Institutions were not just passé, they
were damaging to people because
they stunted their intellectual and
emotional growth by limiting their
exposure to the average people in
a community and kept them from
developing like the rest of us develop. We all learn from copying
our neighbors, others who have
succeeded in business.
During your tenure at MORC, has
there been an increase or decrease in
developmentally disabled people
needing services?
There’s increase in the number
receiving services and whose families want and need those services.
The only services the state offered
during the ’50s and ’60s were institutional services, state group
homes and training schools. They
were not programs that would
provide services in your home.
Families in the past would have
“The irony is that
it was common
for people to pay
more to have their
dog boarded than
the state was
paying for people
with disabilities
to live in the
community at
large. It was a
sickening
disparity between
people and
possessions.”
Gerald Provencal
kept their son or daughter at home
and just lived with the burden of
that. Today, they know regardless
of the disability, he is entitled to
services paid through the state.
More people today are asking because they realize there’s something out there — education for
people who are school age, inhome services and group and foster homes.
As an example of how far things
have come: In the ’70s while I was
running (an early) group home
program in Plymouth, I had $4.28
per day per developmentally disabled person to cover everything:
room, board, supervision, transportation to vocational workshops
and leisure activities, spending
money, clothing. At the same time,
my wife and I got interested in
dogs and began boarding dogs. We
were charging $4.50 per day for a
standard-size dog. The irony is
that it was common for people to
pay more to have their dog boarded than the state was paying for
people with disabilities to live in
the community at large. It was a
sickening disparity between people and possessions.
Have we moved away from institutionalization for the developmentally
disabled today?
When I started in the late 1960s,
13,000 people with developmental
disabilities were living in institutions in Michigan. Today, there are
zero. We were obsessed with getting people out of the institutions
and moving them into the community. But there are still states
that use institutions, including
New York, New Jersey, California
and Illinois. When I started, the estimate was there were 250,000
people across the country living in
institutions. And a similar number
lived in private institutions like
nursing homes. Today there are
something like 35,000 people nationally living in institutions.
There are still things to be done for
them.
Aside from being an advocate, are
there any other ways you’ve helped
spur deinstitutionalization for the developmentally disabled?
We’re activists here; that in-
cludes lawsuits. I’ve been an expert witness in 20 lawsuits filed in
federal court by groups like the
American Civil Liberties Union and
parent associations. The 14th
Amendment assures each citizen
of equal protection under the law.
And our people have been denied
equal protection under the law.
They weren’t allowed to attend
school and housed in institutions
they didn’t choose. In every single
case, the state lost in court or
agreed, signed a consent agreement and moved people out of institutions.
And your work gained international
attention?
People started to see around the
country and the world that we
weren’t just talking about community placements. We were doing it,
and doing it quickly. We became
obsessed with closing institutions
and opening communities: group
homes, foster homes, any kind of
residential option that would meet
the needs of a person and that
they would prefer. Fifty-five countries have sent delegations here to
see how we have built this program up or we have gone there at
no taxpayer expense, with the
overseas groups paying. It really
starts with the compulsion to
change an old system that had
been unintentionally hurting
them.
What’s your most memorable experience during your tenure?
I worked in Paraguay with a
friend of mine for one day about
eight years ago. We were told about
two fellows who had autism and
lived in an institution. Their level
of disability was such that they
were being taken advantage of
sexually by other men in their unit.
We met with the people and
worked with some Catholic nuns
who formerly had run a leper colony and still had the house. We
worked with the nuns to open a
group home for those two men
with autism in that house, within
48 hours. They had clothes, were
fed properly and didn’t have to
look over their shoulder fearing
someone was going to assault
them. Nobody paid us; we paid
our own way down there. I’ve had
hundreds of experiences, but that
one really stuck out.
What are your plans after retirement?
I will remain on the board at
MORC. And I’m looking at three
other boards. I’m still going to do
international travel on a volunteer
basis. There are people I’ve worked
with before in other countries
where we’ll be implored to come
and show them how to do something. I’m dreading walking out of
here. Any of the things I come up
with to occupy my time will pale to
what I’ve been able to do here. But
one has to have the grace to leave
and help someone else to take
over. I believe it was my greatest
gift to be in a position to do something about this. Sherri Welch: (313) 446-1694
Twitter: @sherriwelch
21
C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 4 , 2 0 1 6
Chief: DPD oversight cost city more than $50M
By Robert Snell
[email protected]
Detroit spent more than $50
million reforming the police department and jail operations
during 13 years of federal court
oversight, Detroit Police Chief
James Craig said Friday.
That figure, including $15 million paid to a federal watchdog,
emerged one day after U.S. District Judge Avern Cohn issued an
order saying the Detroit Police Department “has met its obligations”
for improvements under an
agreement with the U.S. Justice Department.
The figure puts a price tag on a
long, controversial and briefly
scandalous court oversight of the
police department following complaints about excessive force, illegal arrests and improper detention in holding cells.
The amount included almost $7
million for a computerized offi-
cer-tracking system and an
$87,825 monthly fee paid to court
monitor Robert Warshaw of New
Hampshire-based Police Performance Solutions LLC. He was appointed to monitor the Detroit
Police Department’s progress in
2009 and replaced Sheryl Robinson Wood, who quit after text messages showed a personal relationship between her and then-Mayor
Kwame Kilpatrick.
“Looking back, we can honestly
say becoming a constitutional police department is important to
the community that we serve, but
it was a costly undertaking,” said
Craig, who was hired in 2013.
Early on, Craig focused on implementing reforms in hopes of
ending the prolonged court oversight.
He blamed delays prior to his
arrival on the Kilpatrick-Robinson
Wood relationship, a “revolving
door” of police chiefs and the fi-
nancial incentive for Warshaw.
“There were a lot of contributing factors outside the control of
the department,” Craig said.
In 2014, Cohn terminated the
sweeping 2003 decree that included oversight by Warshaw after the
federal government found substantial compliance by the city.
For the past 18 months, the government still was able to keep an
eye on police by reviewing internal audits and other steps.
Craig is focused on sustaining
the reforms, he said.
“We have seen other departments, and some have relaxed and
not sustained this culture of accountability,” Craig said. “We’re
not going to do that.”
Despite spending millions fixing the department, the city has
still not equipped all uniformed
officers with body cameras. Craig
said the department was discouraged from buying cameras for all
TIGERS
FROM PAGE 1
its $12 billion in revenue, according to Forbes.
What that means is local revenue
kept by baseball teams is vitally important for the club’s bottom line,
especially since, unlike the NFL,
baseball doesn’t cap its player salaries. Detroit upped its payroll this
season so far to $192 million, up
from $172 million a year ago.
“For clubs that are willing to expand player payroll to their most
competitive levels, being able to
tap revenue streams that are directly beneficial to the club become all the more important,”
said Maury Brown, a sports business financial analyst who writes
for Forbes.com.
By generating more local revenue,
teams can opt to spend it on players,
farm systems, managers, equipment, ballpark improvements, or
whatever they want, ideally to improve team performance or the
game-day experience for fans.
Atop whatever they can peddle
to fans at the stadium, teams also
increasingly seek lucrative local
cable TV deals. Southfield-based
Fox Sports Detroit currently pays
the Tigers $50 million a year for local broadcast rights, and Detroit
gets among the best local TV ratings in baseball.
The money the Tigers get from
MLB is the shared revenue from
MICHAEL LEWIS II
The Smokehouse Burger, made of cheddar cheese, house-smoked pulled pork,
crispy onion straws, jalapenos and barbecue sauce is one of 18 new menu items
available at Comerica Park for the 2016 baseball season.
the enormous national network
television broadcast deals, merchandise licensing from items
such as jerseys and caps, and from
the digital operations at Major
League Baseball Advanced Media.
The Tigers, who open their
home schedule Friday against the
New York Yankees, had an estimated
$268 million in total revenue last
season, which ranked 14th among
MLB’s 30 clubs, according to
Forbes.com. Ten years ago, Detroit’s revenue was $170 million.
At the top of the 2015 revenue list
were the Yankees, naturally, with
$516 million; and trailing everyone
were the attendance-challenged
Tampa Bay Rays, at $193 million.
The Tigers had an estimated $11
INDEX TO COMPANIES
These companies have significant mention in this week’s Crain’s Detroit Business:
Alrig USA LLC .........................................................11
Economic Alliance for Michigan ........................19
Axis Advisors LLC ..................................................11
The Forbes Co. ...................................................... 4
Capital Impact Partners ......................................3
Macomb-Oakland Regional Center ....................3
Chapman House ................................................... 8
The Mars Agency .................................................16
City Hall Artspace Lofts ....................................... 8
Michigan Association of Health Plans .............19
Detroit 90/90 ...................................................... 17
Michigan Health and Hospital Association .....19
Detroit Public Schools ..........................................3
Oxford Cos. ............................................................11
Detroit Tigers ......................................................... 1
Somerset Collection ............................................ 4
DNR Outdoor Adventure Center ........................ 9
Von Staden Architects LLC ................................. 9
million in operating income last
season. Two seasons ago, Forbes
estimated that the Tigers lost $20.7
million, so $11 million in income
would represent a $31.7 million
year-over-year swing in profitability — an improvement unexplained by Forbes or the team.
The Tigers have a standing policy of not discussing their finances,
so it’s unknown if the team operates entirely on its own financially,
or if it requires subsidies from
owner Mike Ilitch’s $3.3 billion
business holdings.
It is known that the team’s business department is charged with
finding new revenue streams,
something every professional
sports team seeks.
Ilitch hasn’t shied from large-market spending on players for his midmarket team, making the need for
cash all the more acute.
Since buying the club for $85
million in August 1992, he’s laid out
more than $1.8 billion on player
salaries. Of that, $1.4 billion has
come since 2006 — but still has yet
to translate into a World Series title.
The team was marred by injuries
in a disappointing 2015 season in
which it finished 74–87, last in the
American League Central Division.
Despite the Tigers’ subpar re-
officers while under court oversight. Warshaw said implementing the technology would have
prolonged the court’s oversight,
Craig said.
Warshaw could not be reached
for comment Friday.
Craig hopes to implement body
cameras for all uniformed officers
this year.
Last week, Detroit police officials traveled to a small town near
Dallas, Texas, to see how one municipal department utilized a
brand of body cameras.
Craig ultimately wants an integrated system that would include
in-car and body cameras to provide a full view of an officer’s contact during traffic stops and interactions with the public.
“We have not found a perfect
solution,” Craig said, “but we are
going to move forward even if we
don't have a fully integrated program.” cord, after four consecutive playoff seasons, Detroit still finished
ninth in all of baseball with 2.7
million in attendance, despite 17
teams playing in 12 larger markets.
Last season, the Tigers averaged
33,654 for their 81 games at 41,574seat Comerica Park. Seating was
adjusted this offseason to 41,297.
Ilitch, 86, green-lighted several
offseason player acquisitions by
new General Manager Al Avila, including a six-year, $132.75 million
deal in January for free-agent outfielder Justin Upton, and a five-year,
$110 million contract for pitcher
Jordan Zimmermann. The wobbly
bullpen, long a target of fan and media ire, was bolstered with closer
Francisco Rodriguez and his twoyear, $13 million contract.
Avila was promoted to GM in
July after Ilitch fired Dave Dombrowski, who had been in the role
for 13 years. Avila, who joined the
Tigers with Dombrowski in 2002,
also has put new emphasis on advanced performance metrics and
hired several stat wonks to crunch
the numbers.
Will the spending and statistical
analysis get the Tigers over the
hump for their first World Series victory since 1984? It’s obviously too
early to say (although boo-birds will
be calling for manager Brad Ausmus
to be fired before the first pitch).
ESPN’s power rankings on the eve
of the season — Detroit opens on
the road against the Miami Marlins on
Tuesday — put the Tigers at No. 15
and predict an 83-79 record with a
second-place finish in the division.
Sports Illustrated, meanwhile,
predicts an 80-82 season with a
third-place divisional finish.
The Tigers will rely on the pricey
newcomers and high-paid proven
veterans such as Miguel Cabrera
and Justin Verlander (both earning
$28 million this season) to prove
they’re better than mediocre. And
they will rely on fans’ pocketbooks
to ensure the bills are paid. Bill Shea: (313) 446-1626
Twitter: @Bill_Shea19
www.crainsdetroit.com
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or m[email protected]
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CRAIN’S DETROIT BUSINESS ISSN # 0882-1992 is
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p
22
WEEK
Gentherm acquires
Ohio company
G
entherm Inc., the Northville-
based supplier of heating
and cooling technology for
automotive seating, acquired
health care and industrial warming
and cooling product maker
Cincinnati Sub-Zero Products Inc.
Terms were not disclosed. Cincinnati
Sub-Zero will operate as a subsidiary
of Gentherm, maintaining its
Sharonville, Ohio, headquarters
plant as well as its testing laboratory
in Sterling Heights.
COMPANY NEWS
Detroit-based ride-sharing
company SPLT, Ann Arbor-based
life sciences company Genomenon
Inc. and Detroit-based software
maker EntroCIM were the winners
at the annual Google Demo Day
in downtown Detroit. Google
officials in Mountain View, Calif.,
will choose one of those three to
fly to Silicon Valley to make
pitches for capital to would-be
investors on May 4.
Livonia-based lithium-ion
battery maker A123 Systems LLC
signed on as a corporate sponsor
of the inaugural LPGA Volvik
Championship, scheduled for May
23-29 at Travis Pointe Country Club
in Ann Arbor. Financial terms of
the deal were not disclosed.
California-based grocer
Trader Joe’s said it plans to move
its Northville store less than a
mile south on Haggerty Road to
the newly developed Northville
Park Place shopping center. The
new store is set to open early in
2017.
Ann Arbor-based Hygieia, a
medical device company, has
teamed with Detroit-based Blue
Cross Blue Shield of Michigan to
launch a demonstration project to
help about 1,000 diabetic patients
more effectively manage their
disease. The study will test Hygieia’s
patented “d-Nav service” for
patients with Type 2 diabetes.
The city of Detroit’s
administration said Findlay,
Ohio-based Marathon Petroleum
Corp. is reworking an emissions
request for its Detroit refinery,
promising a lower level of
pollutants and spending $10
million to get there, AP reported.
Detroit-based Fontinalis
Partners and Durham, N.C.-based
SJF Ventures led $8 million in
funding to TransLoc, a Durhambased provider of cloud- and
app-based transit technology to
municipal transit agencies and
universities across the U.S.
OTHER NEWS
More than a dozen current
and former Detroit Public Schools
officials were charged with crimes
— including bribery — stemming
from a federal corruption
investigation, AP reported. The
U.S. attorney’s office in Detroit
C R A I N ’ S D E T R O I T B U S I N E S S // A P R I L 4 , 2 0 1 6
ON THE WEB
MARCH 26-APRIL 1
Detroit Digits
A numbers-focused look at last
week’s headlines:
$30 million
The amount of redevelopment costs
targeted for the site of Peabody’s
Restaurant in Birmingham. Alden
Development Group wants to build
a five-story mixed-use structure on
the site on Woodward Avenue near
Maple Road.
3,100
The number of Dan Gilbert’s
employees that he said live in
Detroit. His Quicken Loans Inc.
moved from Livonia to downtown
Detroit in 2010, when just 77 of his
employees lived in the city, he said.
18
The number of new menu items to
be offered at Comerica Park
concession stands for the Detroit
Tigers’ 2016 season. Among the new
items are a “brat pop” and a
mac-and-cheese hot dog.
said the leaders facing charges
include 12 current and former
principals, an administrator and
vendor. Earlier, Gov. Rick Snyder
signed into law $48.7 million in
emergency funding to keep the
financially troubled DPS open
through the end of the school year.
Murray Feldman, Detroit’s
longest on-air TV personality, is
exiting WJBK Channel 2/Fox 2 in
May after 40
years, sources
told Crain’s.
According to
media reports,
morning anchor
and
entertainment
reporter Lee
Thomas and
Murray Feldman: feature reporter
To leave Fox 2 this Jason Carr also
are out at the
spring.
station.
The Michigan Economic
Development Corp., the Michigan
State Housing Development Authority
and the Grandmont Rosedale
Development Corp. announced a
$15,000 crowdfunding campaign
for a pathway through the
Grandmont Rosedale community.
The state restored most of
Pontiac’s control over city
finances, citing progress made
following seven years of oversight.
The change means stateappointed City Administrator Joe
Sobota will soon resign.
Detroit could set aside $30
million this year — three times as
much as initially planned — to
cover an estimated $500 million
pension shortfall, city CFO
John Hill said.
Detroit Pistons owner Tom
Gores and Columbus, Ohio-based
Huntington Bank unveiled a plan to
make $25 million available in the
form of loans and grants for
businesses, entrepreneurs and
residents of Flint and Genesee
County affected by the ongoing
drinking water crisis.
The Detroit Sports Commission,
in partnership with Olympia
Entertainment and the Detroit
Skating Club, submitted a bid to
host the 2018 U.S. Figure Skating
Championships. The competition
will take place Jan. 3-7 and serve
as the final qualifying event
before selection of the U.S.
Olympic figure skating team.
A historic Farmington Hills
orphanage site vacant for more
than 10 years is on its way to a
new life as a senior housing
community. Farmington Hills
officials approved a Planned Unit
Development for the 31.5-acre
former St. Vincent and Sarah Fisher
site at 12 Mile and Inkster roads.
A restitution fund will cover
funeral expenses for victims of
Farid Fata, the former Oakland
County oncologist who misled
people into believing they had
cancer, The Detroit News reported.
Fata was sentenced in July, months
after pleading guilty in Detroit
federal court.
Robert Dye, chief economist
for Comerica Bank, warned that the
Michigan economy is losing
momentum and faces
manufacturing headwinds, based
on the release of the bank’s latest
Michigan Economic Activity
Index. It fell by 1.2 percentage
points to a level of 126.5, the first
decline since February 2015.
However, he said he expects the
index to rise by year’s end.
The Southeast Michigan
Purchasing Managers Index was up
sharply in March, rising 7.1 points
to 59.1, recovering from a 5.1-point
drop in February to hit the highest
mark in six months.
A Southfield arts commission
has started a fundraising
campaign to recoup money spent
on a sculpture displayed at the
former Northland Center, AP
reported. The city acquired artist
Marshall Fredericks’ “The Boy and
Bear” and other public art last
year from the mall's courtappointed receiver for $500,000.
OBITUARIES
Gordon Guyer, former
president of Michigan State
University (1992-93), died March
30. He was 89.
Jim Harrison, the Michiganbred novelist, poet and outdoors
enthusiast who was best known
for the historical saga Legends of
the Fall, died March 26. He was 78.
Curtis Hertel Sr., a former
Michigan Speaker of the House
and former executive director of
the Detroit-Wayne County Port
Authority, died March 27. He
was 63. RUMBLINGS
UM law school has most
influential grads, study says
T
he University of Michigan
Law School produces the
most influential bench of
federal judges across the nation,
according to a new study from a
legal research and analytics firm
— an impressive feat, since none
of the current U.S. Supreme Court
justices earned law degrees there.
“Surprised? So were we,” states a
website post from San Franciscobased Ravel Law last week about its
new Ravel Influence Score, which
tracks all federal judges by rulings
they wrote and the number of
times those decisions were cited
in other opinions.
On this index, the UM school
led with a 41.43 score, with
University of Chicago Law School
following at 35.47. Harvard Law
School and Yale Law School, alma
maters of nearly the entire
Supreme Court bench, were third
and fourth at 29.89 and 27.87.
“With Michigan law, we found
that several graduates with very
high scores were powering the
school’s ranking,” the website says,
citing such UM alumni as Chief
Judge John Walker, 75, and Judge
Amalya Kearse, 78, both of the 2nd
U.S. Circuit Court of Appeals in New
York. Also mentioned were David
Ebel on the 10th Circuit Court and
Anthony Scirica at the 3rd Circuit.
The study counted only law
schools that have produced 10
more judges and assigned a score
to each based on how frequently
their opinions were cited
elsewhere, meaning more prolific
and longer-serving judges were
likely to raise a school’s average.
Kearse, incidentally, ranks as
the second-most influential
federal judge who has never
served on the high court, in a
separate report from Ravel.
Bigger guns could mean big
pact for General Dynamics
Sterling Heights-based General
Dynamics Land Systems and
Kongsberg Protech Systems USA of
Virginia might both be in the
pipeline for a new multibilliondollar U.S. Army production
contract, if a plan to upgrade the
weapon turrets on Stryker
vehicles gains traction.
Friday was the deadline for
defense contractors and suppliers
to submit information to the U.S.
Army Tacom Life Cycle Management
Command in Warren, in response
to a March industry request for
information on products and
systems for an “upgrade to the
entire Stryker family of vehicles”
that will be “focused mainly on
lethality improvements.”
Specifically, the Army wants to
see what technology is now or will
soon be available both for
upgrading .50-caliber machine
guns on Strykers to something
heavier, as well as converting
flat-bottom Stryker hulls to a
double V-hull configuration.
Previous double V-hull upgrades
have been awarded to GDLS, and
the Army last July approved a
request for 81 Strykers in the 2nd
Cavalry Regiment in Europe to go
from .50-caliber to the much larger
30 mm weapon. Kongsberg Protech
said in December that GDLS selected
its Protector Medium Caliber Remote
Weapon Station as a 30 mm turret for
the Europe upgrade.
“The next round of upgrades is
intended to improve the lethality
of the Stryker formation, so it’s
important to find solutions that
work well in concert, and go
beyond just making an individual
vehicle more lethal,” Army Col.
Glenn Dean, project manager for
the Stryker Brigade Combat Team,
said in a March statement.
GDLS began producing
Strykers for the Army in 2000,
typically with a 12.7 mm,
.50-caliber machine gun, and the
Army has more than 4,000 of
them worldwide. Analysts have
said a broader upgrade could
easily surpass $3 billion in cost.
Plus Capital founder to
keynote MGC symposium
Adam Lilling, a 1992 business
school graduate at the University of
Michigan and the founder and
managing partner of Plus Capital, a
venture capital firm in Santa
Monica, Calif., that focuses on
early-stage companies, will be the
keynote speaker to kick off the
35th Michigan Growth Capital
Symposium May 17-18 at the
Marriott Eagle Crest in Ypsilanti.
Lilling has founded several tech
companies and served as a board
member for several others. In
2010, he co-founded Launchpad
LA, a mentorship organization for
young entrepreneurs. In 2013, he
founded Plus Capital, which has
11 portfolio companies.
The symposium attracts
hundreds of investors and service
providers from around the country
to hear pitches for capital from
Midwest entrepreneurs. The event
also includes a variety of panel
discussions on topics ranging from
health care reform to challenges
facing medical software startups to
keys to licensing technology.
Local speakers will include Julia
Owens, president and CEO of Ann
Arbor-based Millendo Therapeutics
Inc., which in January announced it
raised a VC round of $62 million,
largest for a drug development
company in state history; and Tom
Shehab, a principal in Ann Arborbased Arboretum Ventures LLC,
which last September raised $220
million, the state’s largest VC fund.
For information or to register,
go to MichiganGCS.com. DBpageAD_DBpageAD.qxd 4/1/2016 3:00 PM Page 1
GC
GC SUMMIT KEYNOTE SPEAKERS | MAY 17
THE TALE OF
TWO TIPSTERS
Cynthia Coo p e r an d Sh e rron Wat k in s s h are t h e ir sto r i es o n how t hey
uncove re d two of t h e worst accoun t in g s c and a l s i n hi sto r y.
Cynthia Cooper
Cynthia and her team
unraveled the fraud at
WorldCom, to date one
of the largest corporate
frauds in history.
Sherron Watkins
Known worldwide as the Enron
whistleblower, Sherron Watkins
sounded the alarm that marked
the beginning of the end for the
corporate giant.
General And In-House Counsel
Summit Agenda
T U E S DAY, M AY 1 7
BREAKOUT SESSIONS:
• Contingent staffing
3 - 8 : 3 0 P. M .
W EST I N B O O K CA D I L L AC
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• Avoiding securities fraud
KEYNOTE PRESENTATION:
“After the Scandal: Lessons Learned”
REGISTER:
C RA I N S D E T R O I T.C O M / E V E N T S
AWARDS PRESENTATIONS:
Crain’s Lifetime Achievement plus the
winner of the Rising Star award will be announced
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