DB-Half Cover Wrap.qxp - Crain`s Detroit Business



DB-Half Cover Wrap.qxp - Crain`s Detroit Business
DB-Half Cover Wrap.qxp
5:10 PM
Page 1
JULY 22 – 28, 2013
www.crainsdetroit.com Vol. 29, No. 28
©Entire contents copyright 2013 by Crain Communications Inc. All rights reserved
Page 3
Restaurateur finds that
every cloud has a Silver Pig
A velvet glove
or an iron fist?
DMC, board at odds over
capital spending, charity care
Mechanic looks back on 50
years of tooling around
This Just In
IncWell set to announce
iRule as first investment
IncWell LP, a venture capital
fund announced in May by
former Chrysler Group LLC CEO
Tom LaSorda, is expected to
announce today that it has
made its first investment:
$100,000 in Detroit-based iRule
LLC, which
makes mobileand
control systems
home entertainment
joined a $1
million round with commitments from Detroit-based Detroit Venture Partners LLC, the
firm formed in 2010 by Josh
Linkner, Dan Gilbert and Brian Hermelin; and Detroitbased Ludlow Ventures LLC.
In 2011, iRule, co-founded
by Itai Ben-Gal and Victor
Nemirovsky, raised a seed
round of $500,000, led by Compuware Ventures LLC.
LaSorda’s partners in the
seed-stage fund include
Roger Penske, CEO of Bloomfield Hills-based Penske Corp.
The fund is small, less than
$5 million, but has grander
ambitions. LaSorda said he
wants to prove out the model,
then go out next year and
raise a much larger fund of
$25 million or so.
— Tom Henderson
First punch in Chapter 9 may lan
meaning of good-faith negotiat
evyn Orr brought out the big stick to fix the
city’s broken finances last week, but the counterresistance isn’t over.
Businesses, unions, pension funds, bondholders, insurers and other creditors made it
clear they are not about to let it pass easily that Detroit
initiated the nation’s largest-ever municipal bankruptcy
petition in court.
Attorneys told Crain’s that the first order of business for
Judge Steven Rhodes of U.S. Bankruptcy Court will be whether
Emergency Manager Orr really negotiated in good faith with
creditors and couldn’t make any agreement covering a majority of the estimated $18 billion in debt, before filing.
“The Bankruptcy Court, as part of the issue of eligibility, will probably have to consider all the issues around
that,” said Judith Greenstone Miller, a partner at Jaffe
Raitt Heuer & Weiss PC in Southfield.
“That includes both any questions about (Gov. Rick
Snyder’s) authorization (for Orr to file), based on the arguments around that in the state courts, as well as the
statutory requirements of the (Chapter 9 bankruptcy law)
to be eligible as a debtor to file.”
See Bankruptcy, Page 19
Keith Crain: Det
recovery has begun
Editorial: Better
crucial to future of
Full backing or b
The fate of 2 perce
obligations is draw
from investors hold
billion of the U.S. m
market, Page 19
Chapter 9 and v
a city contractor, w
paid? How do you h
100,000 creditors?
these and other qu
Page 20
Wings arena, M
the highest-profile
Detroit — the Woo
streetcar line and t
Wings arena distric
unaffected by the c
bankruptcy, those
Page 21.
Some bonds are
Detroit’s bondholde
fighting for owed de
special revenue bon
better prospect of p
Page 21
This year’s contest is fo
practices of nonprofits w
Enter today at crainsd
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5:06 PM
Page 1
www.crainsdetroit.com Vol. 29, No. 28
JULY 22 – 28, 2013
$2 a copy; $59 a year
©Entire contents copyright 2013 by Crain Communications Inc. All rights reserved
Page 3
Restaurateur finds that
every cloud has a Silver Pig
A velvet glove
or an iron fist?
McLaren sues
to revive plan
for hospital
in Oakland
DMC, board at odds over
capital spending, charity care
Mechanic looks back on 50
years of tooling around
This Just In
IncWell set to announce
iRule as first investment
IncWell LP, a venture capital
fund announced in May by
former Chrysler Group LLC CEO
Tom LaSorda, is expected to
announce today that it has
made its first investment:
$100,000 in Detroit-based iRule
LLC, which
makes mobileand
control systems
home entertainment
joined a $1
million round with commitments from Detroit-based Detroit Venture Partners LLC, the
firm formed in 2010 by Josh
Linkner, Dan Gilbert and Brian Hermelin; and Detroitbased Ludlow Ventures LLC.
In 2011, iRule, co-founded
by Itai Ben-Gal and Victor
Nemirovsky, raised a seed
round of $500,000, led by Compuware Ventures LLC.
LaSorda’s partners in the
seed-stage fund include
Roger Penske, CEO of Bloomfield Hills-based Penske Corp.
The fund is small, less than
$5 million, but has grander
ambitions. LaSorda said he
wants to prove out the model,
then go out next year and
raise a much larger fund of
$25 million or so.
— Tom Henderson
First punch in Chapter 9 may land over
meaning of good-faith negotiation
evyn Orr brought out the big stick to fix the
city’s broken finances last week, but the counterresistance isn’t over.
Businesses, unions, pension funds, bondholders, insurers and other creditors made it
clear they are not about to let it pass easily that Detroit
initiated the nation’s largest-ever municipal bankruptcy
petition in court.
Attorneys told Crain’s that the first order of business for
Judge Steven Rhodes of U.S. Bankruptcy Court will be whether
Emergency Manager Orr really negotiated in good faith with
creditors and couldn’t make any agreement covering a majority of the estimated $18 billion in debt, before filing.
“The Bankruptcy Court, as part of the issue of eligibility, will probably have to consider all the issues around
that,” said Judith Greenstone Miller, a partner at Jaffe
Raitt Heuer & Weiss PC in Southfield.
“That includes both any questions about (Gov. Rick
Snyder’s) authorization (for Orr to file), based on the arguments around that in the state courts, as well as the
statutory requirements of the (Chapter 9 bankruptcy law)
to be eligible as a debtor to file.”
See Bankruptcy, Page 19
Keith Crain: Detroit’s road to
recovery has begun, Page 6
Editorial: Better leadership is
crucial to future of Detroit, Page 6
Full backing or backing off?
The fate of 2 percent of Detroit’s
obligations is drawing scrutiny
from investors holding $900
billion of the U.S. municipal-debt
market, Page 19
Chapter 9 and verse: If you’re
a city contractor, will you get
paid? How do you handle
100,000 creditors? Answers to
these and other questions,
Page 20
Wings arena, M1 Rail: Two of
the highest-profile projects in
Detroit — the Woodward Avenue
streetcar line and the Detroit Red
Wings arena district — should be
unaffected by the city’s
bankruptcy, those involved say,
Page 21.
Some bonds are special: While
Detroit’s bondholders will be
fighting for owed debt, holders of
special revenue bonds have a
better prospect of payment,
Page 21
McLaren Health Care has filed a lawsuit in
Oakland County Circuit Court to reverse a denial by the Michigan Department of Community
Health of a certificate-of-need application to
build a new $303 million hospital in Independence Township.
Over the past 18 months, Flint-based
McLaren has been going through the state
CON process while trying to bypass Community Health and garner legislative support
for a bill to build the new hospital.
Under its original February 2012 CON,
McLaren asked to move 200 unused beds from
its McLaren Oakland Hospital in Pontiac to a
new hospital it plans to build on an 80-acre
tract it owns in Independence Township.
Community Health rejected McLaren’s
CON in June 2012. The 10-hospital system
then filed an administrative appeal that was
turned down in March. Community Health
made its final decision to reject the new hospital in May.
See McLaren, Page 22
Pasky to co-chair
new LithuanianU.S. biz council
A pilgrimage to her
grandparents’ homeland
in Lithuania in the mid1990s has turned into good
business for Strategic Staffing Solutions Inc. founder
Cindy Pasky and her appointment as co-chair of
Business Council.
Pasky, S3’s president
and CEO, is sharing the
leadership of the Washington, D.C.-based
council with S3 Executive Vice President
Denise Kurowski.
In addition to Detroit-based Strategic
See S3, Page 23
This year’s contest is focused on good management
practices of nonprofits with budgets of $3 million or less.
Enter today at crainsdetroit.com/nominate
Applications are due
AUG. 26
5:16 PM
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Page 2
July 22, 2013
Steelcase CEO Hackett to retire
from the hot seat next year
After nearly two decades in the
CEO chair at Grand Rapids-based
Steelcase Inc.,
said last week
during the company’s annual
meeting that he
will retire in
2014. After that,
he will assume a
new role as vice
chairman for a
year and will remain on the board
of directors, MLive.com reported.
“Jim Hackett helped change the
conversation at Steelcase from
merely selling office environments
to providing insights about how
spaces can impact performance,”
board Chairman Rob Pew said. “He
adopted design, and design thinking, as core beliefs and spread them
throughout the company.”
MLive said President Jim Keane
is seen as the most likely successor
to Hackett, 58.
WMU board approves alliance
with Cooley Law School
The board of trustees at Western
Michigan University last week unanimously voted in favor of a formal alliance with the Thomas M. Cooley Law
Gentex acquires Johnson Controls unit for $700M
Zeeland-based Gentex Corp., known for its self-dimming rearview mirrors, plans to acquire the HomeLink unit of Milwaukee-based Johnson Controls Inc. for
$700 million.
HomeLink traces its roots to the former Prince
Corp. in Holland, a supplier that JCI acquired in 1996.
HomeLink produces vehicle-based entry control systems for garage door openers, lighting and other applications. For the past decade, the products had been
integrated into mirrors produced by Gentex.
Gentex hopes to close the deal by Sept. 30, MiBiz
reported. Integrating the two companies could take
School, MLive.com reported. Western would become the 83rd public
university in the country with both
a medical school and a law school
accredited by the American Bar Association, said Jan Van Der Kley, vice
president for business and finance
and treasurer of the board.
The vote does not merge the two
institutions but would allow Cooley
to use Western’s name on its campuses. The law school has campuses
in Grand Rapids, Ann Arbor, Lansing, Auburn Hills and Tampa, Fla.
The affiliation will not take effect until the ABA and Higher Learning Council approve the name
change, Van Der Kley said. It is unclear whether Cooley would hold
any law classes on WMU’s main
campus in Kalamazoo, said Cheryl
Roland, executive director of uni-
12-18 months, Gentex Chairman and CEO Fred
Bauer said in a statement.
Gentex said annual revenue could rise about $125
million to $150 million after the integration of the
electronics business is complete. The supplier reported net sales of nearly $1.1 billion in the 2012 fiscal year. The acquisition is also expected to increase Gentex’s profit by 1 percent to 1.5 percent.
Sources told MiBiz that the deal makes sense because of the two suppliers’ already close relationship and the growth opportunities with the technology, as well as the HomeLink brand.
versity relations.
$1,000 settlement, $140,000
in legal fees, plus judge’s 2 cents
One can a imagine a moment
where Judge Paul Maloney of U.S.
District Court in Grand Rapids sat in
his chambers flipping through Roget’s Thesaurus and wondering,
“OK, now what word best sums up
my feelings about this request?”
The case involved a lawsuit by seven meatpacking workers at JBS
Plainwell in Allegan County who settled for about $1,000. Total. The attorneys involved requested fees totaling $140,000, The Associated
Press reported.
A request that Maloney proceeded to call, after much deliberation
and, presumably, gnashing of
teeth, “exorbitant.” He said dozens
of plaintiffs who remain part of the
lawsuit haven’t recovered anything yet. Fees won’t be addressed
until the case ends. The AP reported that Matt Turner of Sommers
Schwartz PC defended the request,
saying the seven plaintiffs benefit-
ed from legal work done so far for
the entire class of workers.
䡲 It employs more than one in
five workers in the state and is one
of Michigan’s big three — along
with automobiles and tourism. So
why shouldn’t it have its own economic index? The first Michigan
Ag and Food Index, released last
week during the Michigan Ag Expo
in East Lansing, found that agriculture and food businesses have a
brighter outlook for their industry
than they do of the state’s overall
Find business news from
around the state at crainsdetroit
Sign up for Crain's Michigan
Business e-newsletter at crains
䡲 A story on Page 1 of the July 15 issue, “DMC to build children’s out-
patient center in Troy,” should have stated that there was a dispute
over whether the center’s $42 million is part of Vanguard’s commitment to $850 million in capital expenditures on behalf of the Detroit
Medical Center by the end of 2017. The story, based on incorrect information supplied to Crain’s, said it was not. For more details, see story
on Page 3.
䡲 A story on Page 11 of the July 15 issue should have listed Vision Information Technologies Inc. executive David Segura as CEO rather than
Keeping automotive suppliers
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6:14 PM
Page 1
July 22, 2013
Page 3
DMC, board at odds over spending
Officials disagree on counting
Troy project as ‘routine’ cost
A dispute is brewing between
the Detroit Medical Center and Legacy
DMC, the community board created
to oversee $850 million in required
capital spending and charity care
by the DMC and its investor-owned
parent company, Vanguard Health
Systems of Nashville, Tenn.
And it’s over whether a proposed
$42 million pediatric outpatient
center for Troy constitutes a “routine capital expenditure.” (Crain’s,
July 15)
bought the nonprofit DMC in 2011,
it agreed to spend $500 million on
“specified capital projects” through
2017 and another $350 million on
“routine capital expenditures.”
So far, halfway through the fiveyear spending period, the DMC has
spent $315 million on capital projects and other routine capital projects, leaving about $535 million to
be spent.
In separate interviews with
Crain’s, Legacy DMC Chairman
Dick Widgren contended that the
$42 million cost shouldn’t count and
DMC CFO Jay Rising said it should.
“It is my opinion, and the board’s
opinion, that the ambulatory care
spending shouldn’t count” toward
the $350 million commitment for
several reasons, including it is not
for “hospital business,” said Wid-
gren, who also is
CFO of Detroitbased Urban Science Inc.
disagrees. “There
are two buckets
of spending. One
is specified projects, which has
a list of what
that can be. The
other is everything else,” he said.
“It can be renovations, equipment,
new construction, anything that is
Michigan men with Silicon
Valley ambitions, Page 9
See DMC, Page 22
Company index
These companies have significant mention in this week’s
Crain’s Detroit Business:
Former techie
feeds the Pig
Restaurateur aims
to keep presence
with aim to expand
Adapt or die.
It’s the lesson that Mindy Lopus,
president of Birmingham-based
restaurant group Silver Pig LLC,
lives by.
A techie by trade, Lopus closed
one technology company in 2002 after losing a patent infringement
lawsuit and sold another in 2008 to
return to school to study wine.
She then opened Tallulah Wine
Bar and Bella Piatti in downtown
Birmingham with her then-husband, Bob VanHellemont.
Now divorced, Lopus is working
to boost sales at Tallulah while operating the recently opened Red
Crown in Grosse Pointe Park, and
overseeing construction of a new
large-scale bakery and planning a
potential bistro there.
The trick for Lopus, experts say,
will be in learning to move away
from being hands-on to recruiting
and overseeing strong managers
for her businesses.
It’s something Lopus is grappling with. As she works to expand, she also is working to reverse declining sales at Tallulah,
which hit $2.1 million in its first
year of operation in 2010 but were
at $1.6 million last year — a possible sign that her lack of presence
at the restaurant is taking its toll.
Still, Lopus is philosophical.
“In any business, you have to
reinvent yourself when things
change,” Lopus said. “Change or
you will never succeed. It’s the
people that simply hang on who
end up with nothing.”
Lopus ran a $5 million technology company in Cary, N.C., Triangle
See Pig, Page 23
“In any business, you have to reinvent yourself when things change,” says Mindy
Lopus, who evolved from a tech executive into the head of Silver Pig LLC, a
Birmingham-based restaurant group.
After 50 years looking under
hood, mechanic looks back
Apart from traveling in his van and
riding some of the family’s many
ATVs, Randall plans to spend his reThoughts of the Cadillac brand con- Demand for auto
tirement enjoying the fact that, for the
jure up images of big cars represent- technicians is
first time in his life, all his tools are in
ing the changing eras of modern high — and
growing, Page 22 one place.
Randall first picked up a wrench
There’s also the big guy who worked
when he was 14 and got his first job in
on and under those cars. Like Lee Randall, who 1964 at the Dalgleish dealership in Detroit.
did just that for nearly 50 years.
“At that time, we did everything on a car. If
Randall, 68, retired in May after spending the you couldn’t do everything on the customer’s
last 33 years working for one employer, St.
Clair Shores-based Don Gooley Cadillac Inc.
See Mechanic, Page 22
Lee Randall spent the final 33 years of a nearly 50year career as an auto technician at Don Gooley
Cadillac in St. Clair Shores.
Ascension Health Michigan ......................................4
Axe & Ecklund ........................................................19
Bella Piatti ..............................................................3
Bona Fide Baking ....................................................23
Brooks Wilkins Sharkey & Turco ..............................20
Butzel Long ............................................................18
Clark Hill ................................................................18
Consumers Energy ..................................................17
Detroit Economic Growth ........................................21
Detroit Innovate ......................................................11
Detroit Medical Center ..........................................3, 4
Detroit Red Wings ..................................................21
Detroit Tigers ............................................................5
Detroit Venture Partners ..........................................11
Detroiters Working for Environmental Justice ..........17
Don Gooley Cadillac ..................................................3
DTE Energy ..............................................................17
Economic Alliance for Michigan ..............................22
Fox Sports Detroit ....................................................5
Henry Ford Hospital ..................................................4
Hour Media ..............................................................8
Howard & Howard Attorneys ....................................21
IncWell ..............................................................1, 11
iRule ........................................................................1
Jaffe Raitt Heuer & Weiss ....................................1, 21
Ludlow Ventures ......................................................11
McLaren Health Care ................................................1
Michigan Chamber of Commerce ............................17
Michigan Clean Water Action ..................................17
Michigan Economic Development ............................11
Michigan eLab ..........................................................9
Michigan State AFL-CIO ..........................................18
Miller, Canfield, Paddock and Stone ........................22
MSX International ..................................................23
Oakwood Healthcare ................................................4
Overbeke Michaud & Timmony ................................19
Pitch Black Media ....................................................8
Plunkett Cooney ......................................................20
Red Crown ................................................................3
Renaissance Venture Capital Fund ....................10, 11
Sachs Waldman ......................................................18
St. Joseph Mercy Oakland Hospital ..........................22
St. John Providence Health System ............................4
Silver Pig ..................................................................3
Solutions A la Carte ................................................23
Strategic Staffing Solutions ......................................1
Superior Capital Partners ..........................................9
Tallulah Wine Bar ......................................................3
University of Michigan ..............................................9
Vibe Credit Union ....................................................12
Workforce Intelligence Network ..............................22
Department index
BANKRUPTCIES . . . . . . . . . . . . . . . . . . 5
BUSINESS DIARY . . . . . . . . . . . . . . . . 13
CAPITOL BRIEFINGS. . . . . . . . . . . . . . 17
CLASSIFIED ADS . . . . . . . . . . . . . . . . 17
KEITH CRAIN . . . . . . . . . . . . . . . . . . . . 6
OPINION . . . . . . . . . . . . . . . . . . . . . . . 6
OTHER VOICES . . . . . . . . . . . . . . . . . . 7
PEOPLE . . . . . . . . . . . . . . . . . . . . . . 16
RUMBLINGS . . . . . . . . . . . . . . . . . . . 24
TALK ON THE WEB . . . . . . . . . . . . . . . 7
WEEK ON THE WEB . . . . . . . . . . . . . . 24
In focus
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5:17 PM
Page 1
Page 4
July 22, 2013
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When the Detroit Medical Center
and St. John Providence Health System
announced this year that they
would be laying off hundreds of
workers and managers to prepare
for lower inpatient volume and reimbursement cuts, most observers
predicted other systems would follow their lead.
But so far only one other system
— the University of Michigan Health
System — has initiated layoffs.
Most systems are going through
belt-tightening that could include
cuts to supply costs, job freezes
and a reduction in overtime hours.
Officials for Beaumont Health System, Henry Ford Health System, St.
Joseph Mercy Health System and Oakwood Healthcare said no reductions
have have occurred other than
through attrition. UM laid off 15
managers during its fiscal year
that ended June 30.
While Oakwood plans no layoffs,
CEO Brian Connolly said the
health system has suspended pay
raises for employees
conditions improve. New or
replacement positions also have
been frozen unless
needs, he said.
In a letter to
employees, Connolly said other actions have included reducing agency and overtime costs and reducing supply
and other controllable expenses.
Federal and state payment cuts
and lower patient volumes are the
cause for Oakwood and other systems, he said.
“There are a lot of unknowns as
well, including how insurance exchanges will work in Michigan
and the impact of Medicaid expansion or nonexpansion,” Connolly
said. “We are using every tool
available to manage costs so we
can continue to offer the high levels of quality, safety and service
patients expect of us.”
At Henry Ford, 100 employees at
Henry Ford Hospital in Detroit were
redeployed to open positions at other facilities, said Dwight Angell,
Henry Ford’s director of media relations. In addition, the system reduced costs by cutting staff overtime and using temporary workers.
Nationally, hospitals lost 8,000
jobs in May but gained 5,000 in
June, according to the U.S. Bureau of
Labor Statistics. Overall, the health
care industry added 20,000 jobs in
June, most coming from home care
and ambulatory care centers.
In April, Detroit Medical Center
CEO Joe Mullany announced the
layoffs of 300 employees or 2 percent of the DMC’s workforce, to
match the impact from the 2 percent Medicare reimbursement cuts
due to sequestration. The DMC recently announced a proposed
merger with Tenet Healthcare Corp.
At St. John, Crain’s initially reported that up to 350 employees
could be laid off at its five hospitals
by June as part of an annual corporatewide financial and efficiency
review. However, St. John reduced
its workforce by only 100 employees — 75 layoffs and 25 voluntary
resignations, officials said. The
layoffs cut $7 million in expenses.
“We are facing declining volumes
as well as sequestration shortfalls
and lower reimbursement from
Medicaid and Medicare and other
payers,” St. John said in a statement. “We must take the necessary
and difficult steps to make sure we
begin fiscal year 2014 with a budget
that reflects the expectation of reduced volume and operating income.”
Through Dec. 31, the first six
months of fiscal 2013, St. John Providence earned net income of $67
million, a 169 percent increase from
$24.9 million from 2012.
Warren-based Ascension Health
Michigan, which includes seven
hospitals outside metro Detroit,
also was reported to be considering 350 employee layoffs. But only
183 employees were laid off at Ascension divisions of Grand Blancbased Genesys Health System (100)
and Saginaw-based St. Mary’s of
Michigan (83), officials said. Officials at Kalamazoo-based Borgess
Health said no layoffs were made.
St. John, Genesys, St. Mary’s
and Borgess are part of St. Louisbased Ascension Health, the nation’s largest Catholic system,
with 113 hospitals in 23 states and
the District of Columbia.
This year, Ascension Health began its regular annual review with
its regional hospital divisions.
That review included looking at
payer mix, patient volume and employee productivity.
Sources within Ascension told
Crain’s that up to 5,000 employees
nationally could be laid off this
year at hospitals, based on financial and operational targets set at
the national office.
But Jon Glaudemans, Ascension’s chief advocacy and communications officer, said the number
was “many less” than that and that
the health system only acted as a
consultant to provide guidance and
direction to local hospital groups
on adjustments they could make.
Glaudemans said layoffs and associated expense reductions were
necessary because of reimbursement cuts from Medicare and Medicaid. He said Ascension also
needs sufficient operating capital
to make additional investments
for health care reform.
July 22, 2013
5:20 PM
Page 1
Page 5
Fox Sports Detroit roars over Tigers’ what’s your fancy?
success with record ratings, fee hikes
The Tigers, with a $150 million
payroll that included five participants in the All-Star Game last
week, were the top-rated local
prime time broadcast in the Detroit market on 27 of 43 days in the
first half of the season, FSD said.
Tigers telecasts also topped five
of the seven National Basketball Association finals games and four of
the six National Hockey League Stanley Cup Finals broadcasts locally,
the network said.
Because of the Tigers’ popularity, Fox Sports Detroit has been
charging up to 25 percent more
this season for a 30-second ad spot
than it did a year ago, according to
a person familiar with the rates
who spoke with Crain’s in February on the condition of anonymity.
Television industry metrics
show a new advertiser would be
charged a base rate of $610 per
household rating point in the Detroit market for a 30-second spot in
the evening time slot when Tigers
games typically are broadcast.
Each local ratings point represents 18,459 households in the Detroit area, according to Nielsen.
FSD is airing 152 of the team’s
162 games, with the rest broadcast
on national channels.
Bill Shea: (313) 446-1626,
[email protected]
What more could you ask?
Detroiters love to watch their
Tigers, and that’s been a financial
windfall for the baseball team’s local broadcaster.
The Detroit market leads all of
Major League Baseball in cable television ratings, and last week it topped
the country for the Home Run Derby and All-Star Game — events that
included Detroit Tigers players.
Southfield-based Fox Sports Detroit airs Tiger games under a longterm broadcast rights deal and,
thanks to viewer enthusiasm for a
team that went to the World Series
in 2006 and 2012, has been able to
boost ad rates and charges to cable
providers to air the network.
FSD expects to set its own
record for its Tigers and overall
revenue this year, said Greg Hammaren, Fox Sports Detroit’s vice
president and general manager.
The network’s revenue is pacing
at least 10 percent ahead of the 2012
season, Hammaren said. Citing
company policy, he declined to
provide specific dollar figures.
“We are double digits ahead of
last year,” he said.
“We are pacing extremely well
against our budgeted numbers for
baseball. It’s fair to say we will finish ahead of budget for the full
Tigers season. How far above budget is a little difficult to predict,
and it will depend on if there is a
close pennant race the last six
weeks of the season.”
The network is expected to see operating revenue rise to $154 million
in 2013 from $136 million in 2012 and
$119 million in 2011, according to the
New York City-based research firm
SNL Kagan. That ranks Fox Sports
Detroit 22nd in operating revenue
among the 38 regional networks
tracked by SNL Kagan.
FSD also increased the average
per-subscriber fee it charges to cable providers, such as Comcast
Corp., to $3.18 a month this year
from $2.86 on average in 2012, according to SNL Kagan data.
With 3.2 million households,
Comcast is the state’s largest carrier, so the per-subscriber fee
increase represents a roughly
$1 million revenue boost for FSD,
to $10.1 million.
Regional sports networks typically make the bulk of their revenue
from the fees they charge broadcasters to carry the live games. In the
case of Fox Sports Detroit, revenue
is 80 percent subscriber fees and 20
percent ad sales, Hammaren said.
The network also airs Detroit Red
Wings and Detroit Pistons games.
Pro sports account for 95 percent
of FSD ad sales, Hammaren said,
and the Tigers are half of that.
Among the largest advertisers
are the Southfield-based Sam Bernstein Law Firm, Allen Park-based
Belle Tire, Kent County’s Spartan
Stores, Comerica Bank, AT&T, MillerCoors, Comcast and Apple Inc.
Cable sports deals are attractive
to networks because they still can
charge a premium for ads, whereas
regular broadcast, cable and satellite shows suffer from more viewers recording on DVRs and fastforwarding through commercials.
Fans tend not to DVR sporting
events nearly as much because
they want to see the games live and
thus are exposed to commercials.
That, and a consistently good
team, account for the ratings.
Fox Sports Detroit averaged a
9.13 rating per game for 83 games
through July 11, before the AllStar Game, the network said. FSD
led all of baseball for the 2012 season with a 9.21 rating.
The numbers are based on data
from The Nielsen Co., a New Yorkbased audience tracker.
The next highest among regional sports networks in the first half
of this season was the St. Louis Cardinals, with an 8.27 per-game average rating on Fox Sports Midwest.
The average is for 29 MLB teams,
excluding the Toronto Blue Jays.
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125 Y E A R S
The following business filed for protection in U.S. Bankruptcy Court in Detroit July 12-18. Under Chapter 11, a
company files for reorganization.
Chapter 7 involves total liquidation.
Dexter Fuel Mart Inc., 12340 Dexter
Ave., Detroit, Chapter 11. Assets and
liabilities not available.
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First Tier Ranking
in Corporate Law and
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Christopher J. Salata
[email protected]
Metro Detroit
Grand Rapids
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5:57 PM
Page 1
Page 6
July 22, 2013
Better leadership is crucial to Detroit’s future
y the time you read
this, there will have
been thousands of
words written about Detroit’s
Chapter 9 bankruptcy filing.
What almost none of them
say is this: For the business
community, it’s, well, business
as usual.
People will come to work,
the Detroit Tigers will play on
and Dan Gilbert doubtless will
continue to buy buildings.
And, if all goes well, city
might end up with somewhat
improved core services.
But here’s what we hope isn’t business as usual when all
of this is said and done: the
leadership. Mayor and city
council interactions over
many, many years have ranged
from embarrassing to destructive. This has to end.
Because neither have properly executed their roles:
The city deferred pro-
gressively harder financial decisions until it lost control entirely to an emergency manager. The anger of many
residents about having an
emergency manager is understandable, but it’s been directed in the wrong places. The
blame belongs squarely on city
Basic services have declined to the point that many of
them have essentially disappeared except where residents
and businesses have ponied up
private funds to pay for them.
Some population and business
loss for Detroit was probably
inevitable, but there’s no question that poor leadership has
been a major factor in making
the city a less desirable place to
live and do business.
An atmosphere of pettyto-major corruption has ebbed
and flowed over the years,
making it hard to trust that decisions have been made for the
right reasons.
We hope this history is taken to heart by voters in the August primary and November
election. Detroit needs a mayor
and city council members willing to break the patterns of the
past and qualified to make
good decisions for the future of
the city.
Neither Kevyn Orr nor
bankruptcy will be forever. It’s
not too soon to plan for a postEM future.
Voices from biz: Sad about bankruptcy, but hopeful
Businesspeople offered a range
of reactions to Detroit’s Chapter 9
filing last week.
Darci McConnell, president and
CEO of the public relations agency
McConnell Communications Inc.,
worries that the
bankruptcy, for
could be a repeat of the automotive
bankruptcies — a
which she lost
several clients.
In 2008, McConnell had her best
year in business. The next year,
when General Motors Corp. and
Chrysler Group went into Chapter
11, she had her worst year since
launching the agency in 2004, McConnell said.
“I’m hopeful if there’s an impact, it’s limited and doesn’t mirror the auto” bankruptcies, she
Detroit’s economic woes have
been a problem for decades, McConnell said.
“From a PR standpoint, we’ve
struggled since the ’70s with this
stigma,” she said.
Today, some of her clients and
those she works think the Chapter
9 filing represents a bottoming-out
with better days ahead, while others a bitter of the process that led
the city here.
“I think it’s a mixed bag,” she
said of her client reaction.
“I am saddened from an emotional point of view, but I can’t
help but be
hopeful that it
will facilitate a
change,” said
WalkerMiller, president
and CEO of Detroit-based Walker-Miller Energy
Services LLC.
Her company,
which does energy-use audits and
makes recommendations for saving energy for homes and businesses, is a former TechTown tenant that moved out of the
incubator in March.
“As a realist, we are where we
are and we have to go on from
here,” Walker-Miller said. “As an
entrepreneur, it’s the city government that’s in trouble. It’s not
businesses. It’s not entrepreneurs.
My outlook is as bright as ever.”
“This was pretty much inevitable. … We need the police to
be able to work properly. We need
the fire department to work properly, and they can’t. They’ve been
hindered,” Grace Keros, owner of
American Coney Island in downtown Detroit, said in an interview
with Bloomberg News.
“It’s hard to see your hometown
have its financial eulogy, even
when you know
what will come
out of it will be
viable. It’s sad,”
said Sam Valenti
III, CEO of Valenti Capital LLC.
common-sense answer is: Clean it
up, boot it back
up, shock the world. It will be a
transformative event. There’s
enough undercurrent of enthusiasm and entrepreneurship to
make this a wildly successful reorganization.
“But for those of us who grew
up here, it’s hard to be just mercantile. For someone who is the
son of an immigrant who came
here and was successful, it’s
Other comments:
“Southwest Detroit is vibrant
and the only part of the city that’s
grown in the last several years. Because the majority of residents
there are entrepreneurial in one
way or another, I’m not sure there
will be a negative effect.”
But the community is a part of
Detroit. “And whatever needs to
be done in terms of help, I’m sure
Southwest Detroit can be counted
on to do whatever is necessary to
help in this situation.”
— Fern Espino, management
consultant and chair, Mexicantown
Community Development Corp.
“I’m not happy this happened,
but it’s the right thing to do when
you look at the amount of debt and
the percent of revenue that’s going
to service the debt. This will help
the city get back on its feet. It will
be painful but it’s absolutely the
right thing to do.”
— Mahendra Ramsinghani,
managing director of the Detroitbased First Step Fund
“Detroit was one of the greatest
cities in the world, but its foundation has been eroding for 40 years.
Bankruptcy will allow us to fix the
— Ted Serbinski, partner, Detroit
Venture Partners LLC
“Downtown is on the verge of
taking off. If the city can reset
their books and put the right resources in the places, it’s probably
a good time to invest. But you need
vision and tenacity.”
— Michael Ansley, CEO of Southfield-based Diversified Restaurants
Holdings Inc.
“When you get that crushing
debt lifted off your back, you can
actually focus and try to make
some sense out of the madness. It
was the obvious choice.”
— John George, founder, Motor City
Blight Busters, to Bloomberg News
Crain’s Detroit Business
welcomes letters to the editor. All
will be considered for publication,
provided they are signed and do
not defame individuals or
organizations. Letters may be
edited for length and clarity.
Write: Editor, Crain’s Detroit
Business, 1155 Gratiot Ave.,
Detroit, MI 48207-2997.
Email: [email protected]
KEITH CRAIN: Detroit’s road to recovery has begun
It finally happened. What everyone knew was going to happen,
The city of Detroit filed for bankruptcy.
Now we all start the road back.
And something very important
is going to happen.
The entire financial community
is watching Detroit. It is very interested in seeing how our emergency manager and staff handle
this bankruptcy.
I will not be surprised to see
many other cities file for Chapter 9
in addition to Detroit. Once they
realize just how we and the financial community handle this, they
will follow suit. All this will hap-
pen in the next couple of
I remember when an
executive for one of the
automobile companies
filed for divorce quite a
while ago. It was an unspoken rule that you
never divorce. After
this highly placed and
prized executive filed,
at least a half a dozen
more filed within the
year, once they realized it was OK.
Once the country realizes that
it’s OK to file for bankruptcy, others will follow suit.
Meanwhile, Detroit continues to
be a tale of two cities. The business
community keeps on
trucking. It is doing
what has to be done to
run its businesses,
whether they are local,
national or international. Nothing has changed
for business for quite
some time. It has been
functioning quite well
with a dysfunctional city
government for decades,
so it’s nothing new.
The city union leaders will be
screaming and shouting and filing
lawsuits, all to no avail. The city
government will no longer even be
run by an emergency manager. It
will be run by a federal judge who
has done this before, and he or she
will have the ultimate say.
The union leaders can scream
and shout all they want, but it’s
only for the benefit of their membership. They had their chance to
negotiate, and they passed up the
opportunity. It well might have
been political suicide.
Now they’ll have to stand there
with tin cups in their hands, taking
whatever that judge decides they
get. They will plead their cases, but
it’s the judge who will decide.
The city services will continue.
In fact, the citizens might just see
some improvement over the next
few months as the solvency of the
city improves.
There are a lot of folks and bondholders who are not going to be
happy. Sadly, they will be paying
for the sins and actions of people
for the last six decades. For many
who have been enjoying the fruits
of ill-conceived programs, that will
be abruptly coming to an end.
Meanwhile, tomorrow’s generation will be far better off and getting
a much better outlook for the future.
My only concern is that tomorrow’s leaders will not have learned
their lesson and will fall back into
the mistakes of yesterday’s leaders.
But first we have to clean up the
mess of a half-century’s financial
The journey has begun.
5:18 PM
Page 1
July 22, 2013
Page 7
OTHER VOICES: Biz courts hold great promise for state
One of the most significant state
legislative enactments pertaining
to the legal process in recent memory was the creation of specialized
business dockets for Michigan
courts for cases with a value
greater than $25,000. Recently, the
courts began to operate in Wayne
and Oakland counties, and those
in Macomb and Kent counties
have been in operation for a year.
As of July 1, 17 circuit courts were
designated as business courts.
Michigan Public Act 333 requires circuit courts with three or
more judges to create a business
docket, or court, with judges who
are exclusively assigned to hear
commercial litigation matters,
which are very broadly defined.
This will facilitate more timely, effective and predictable resolution
The business communiof complex business cases.
ty has long craved the apThe courts’ jurisdiction
plication of a consistent
includes virtually every
body of precedent to the
species of commercial disresolution of commercial
pute between private pardisputes. Having judges
ties. Their reach extends
who possess and will cultito cases involving corpovate the expertise to rerate governance issues;
solve business litigation
business contracts; all
is crucial to keeping
commercial transactions;
events arising out of busi- Norman Ankers Michigan a businessness or commercial insurfriendly state that attracts
ance policies; disputes involving entrepreneurial initiatives and
information technology, software capital.
or website development, mainteBut as is the case with much legnance and hosting; and commer- islation, the genius is in the implecial real-property disputes, among mentation. One of the key features
of the statute is that it directs busi-
Growing out vs.
growing in
From www.crainsdetroit.com
Re: Iowa firm’s travel guide bid was
higher than 2 from Mich., but offered
targeted distribution
Since Meredith has been doing
this for a couple of years, let’s give
them the benefit of the doubt and see
what evolves year to year. Michigan continues to offer “more stuff”
to see and do, and Meredith has to
be aware of that.
Freedom Trinity
Sounds like Pure Michigan made
the wise, growth-oriented choice. The
Meredith distribution potential is
Rita Brown
Re: X Games going to Austin, but
Detroit bid organizers look to future
ESPN followed the money and not
the fans and the athletes. Great effort by those organizing the Detroit
bid, and hopefully that momentum
can be harnessed toward something else positive for the city.
Michael McFall
Biggby Coffee
Ari Weinzweig
Tuesday, Aug. 6
Somerset Inn, Troy
7:30 – 10 a.m.
It is time to begin a new chapter in
the 312-year history of the city and
move forward with redevelopment
and smart redevelopment.
Justin Thompson
Reader responses to stories and
blogs that appeared on Crain’s
website. Comments may be
edited for length and clarity.
Gui Ponce
de Leon
$5.1M-$20M revenue
Up to $5M revenue
The Big
John and
Re: Gilbert team’s bid for jail site
focuses on entertainment
To register, please visit
or call 313.446.0300
$30.1M-$50M revenue
Re: Tigers games have highest cable TV
ratings in MLB at halfway point of season
Is there any real surprise? Mario
(Impemba) and Rod (Allen) are the
best! I feel like they are part of our
family. I’m actually disappointed
when we have a nationally broadcast game and we have to listen to
“strangers” talk us through the
Mary Martin
If the judges assigned to creating
and cataloging this body of business law precedent take their responsibilities seriously — and
there is every early indication that
they will, with judges reaching out
proactively to the commercial bar
for advice and guidance on how to
implement the statute’s mandates
— the legislation will have been a
spectacular success.
Norman Ankers is co-chairman
of the litigation department at
Honigman Miller Schwartz and
Cohn LLP and an adjunct professor
at the University of Michigan Law
School and University of Detroit
Mercy Law School.
Two approaches to growing a business:
Quite unfortunate that a guide
about Michigan could not be produced in Michigan.
ness court judges to publish as
many of their decisions on commercial matters at the trial court
level as possible.
It will be critically important for
the business court judges to follow
this mandate, which is designed to
allow businesspeople and the
lawyers who advise them to search
the county records for applicable
and consistent precedent and for
guidance on how these judges are
analyzing and deciding the important business issues before them.
This can also provide guidance
in the business decision-making
process that may prevent future
JEM Tech
Jami Moore
Social Entrepreneur
for Autistic
Jackets for
5:19 PM
Page 1
Page 8
July 22, 2013
MEDC defends awarding out-of-state bid to publish travel guide
Michigan guide ... made in Iowa.
The bid awarded to produce the
Pure Michigan Travel Guide went
to an Iowa publishing company at
a cost higher than the two bids
submitted from Michigan companies, but a major selling point for
the out-of-state company was its
ability to bundle the guide in Mid-
west and national magazines.
According to documents obtained
by Crain’s through the Freedom of
Information Act, Royal Oak-based
Hour Media LLC and Ferndale-based
Pitch Black Media LLC submitted bids
less expensive than the one from
Des Moines-based Meredith Corp.,
publisher of Midwest Living.
A Michigan Economic Development
Corp. spokeswoman said the value
of the Meredith bid centers on its
ability to get the guide to more outof-state target consumers.
Meredith has produced the guide
for the past 15 years. As part of its
winning bid, it packaged in more
than $800,000 of “added-value components,” including 1 million extra
copies attached to Better Homes
and Gardens, several free ads and
three complimentary mentions of
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Michigan in Midwest Living.
Hour Media’s bid was for
$1,298,000, while Midwest Living’s
bid was for $1,598,500. Both proposed printing 1 million copies of
the warm weather guide and 100,000
each of the fall and winter guides.
Pitch Black Media’s bid was for
$257,300 for the first year but did
not offer to produce a print edition
and was only offering to produce a
version of the travel guide for the
Internet, tablets and smartphones.
The net cost to the state also was
more expensive in Midwest Living’s bid. When subtracting ad
sales revenue, Hour Media estimated the net cost to the state for its bid
would be $665,500, while Midwest
Living’s total cost to the state was
estimated at $999,867.
Michelle Begnoche, MEDC public relations manager, said that the
bids for the content and price are
submitted individually and that the
price bid is not opened until the
content bids have been compared
and the MEDC determines which is
the best fit.
“Based on the content bid,
Meredith provided the only credible distribution plan,” Begnoche
wrote in an email.
That RFP included the requirement that the contractor show its
ability to match Travel Michigan’s
target market demographics and
supply a minimum of 650,000
copies of the guide by mail to those
target markets.
Begnoche also said Meredith
had the largest Michigan business
presence, with 282 employees,
which includes WNEM-TV in Saginaw.
“Ultimately, though, the ability
to distribute 650,000 copies of the
travel guide into the hands of consumers in key target markets for
the campaign was the critical factor in Meredith having the top
bid,” she wrote.
In Hour Media’s detailed breakdown of the costs associated with
its bid was this line item: “PR value of hiring a 100% Pure Michigan
publisher: Priceless.”
The bid noted that if the MEDC
wants to increase the amount each
traveler to the state spends, then
going with Midwest Living again
“won’t improve on the results. At
best, you’ll get what you’ve always
Hour Media proposed adding
the travel guide in bags attached to
various city magazines with more
affluent readers than those of Midwest Living. It also proposed dropping the travel guide in frequentflier lounges, inserting it inside
Midwestern copies of the Sunday
New York Times and placing it in
certain hotel rooms.
Representatives from Hour Media and Pitch Black Media did not
immediately return calls seeking
Because Better Homes and Gardens is also owned by Meredith
Corp., it also could offer a 1 million
bonus circulation of the travel
guide with that magazine.
The bid also included a spread
in Midwest Living’s “Best of the
Midwest” section, several free ads
and “three complimentary mentions” in the magazine, valued at
Chris Gautz: (517) 403-4403,
[email protected]
9:00 AM
Page 1
July 22, 2013
Page 9
New name part of campaign to
attract younger members,
Page 12
Mark Carroll,
Superior Capital
Partners LLC
Mark Carroll is managing partner of
Detroit-based Superior Capital Partners
LLC, a private equity firm that launched
in 2007 with a $50 million fund to
invest in distressed companies in need
of turnaround help. It and two affiliated
private equity firms in Detroit, Peninsula
Capital Partners LLC and Huron Capital
Partners LLC, have made the city a hub
for Midwest investment activity. Carroll
talked with Crain’s reporter Tom
Henderson about Superior Capital as it
prepares to raise a second fund.
There’s a certain irony in launching a
turnaround fund just before the start of
the Great Recession. You certainly ended
up with no shortage of turnarounds to
look at. We started investing in 2008,
when there were already significant
economic headwinds — although no
one knew the depths the recession
would hit. You’re worried about where
the bottom is. Yes, there were a lot of
opportunities, but you’re worried about
catching falling knives. We were very
The length of the recession and the
length of the recovery had to be
problematic. You want to be there for
companies that need funding to take
quick advantage of a recovery. But this
recovery was so slow, there wasn’t an
opportunity for quick recoveries.
But you didn’t start Superior with a
recession in mind. Yours isn’t a
recession-dependent business. In our
market, there are always deals to be
done. There are always companies out
there that have been mismanaged,
where you can use capital to solve
problems and fix management. It
wasn’t by design, but we’ve done one
platform deal a year and used them to
do a lot of add-on acquisitions. And
we’ve got one more platform deal we
hope to close on in the next two weeks
which will combine two companies, our
14th and 15th acquisitions overall.
I know lawyers urge extreme caution
when talking about new funds, but what
can you tell me about fund No. 2? As a
first-time fund, we know we need very
strong returns to raise a second fund.
So we’ve been very cautious about
getting the kinds of exits that put us
into the upper quartile of our peer
group. We have strategic buyers
actively calling us to sell them
companies, but we’re waiting for the
right deal. We think we’ll have our first
exit late this year or early next.
We’re not allowed to talk about new
funds, but usually strong exits are a
precursor to raising a second fund.
Our investors were happy we were
patient putting the first fund to work.
Not everyone in the turnaround
community can say that. A lot of
people did rush in to do deals and
caught those falling knives.
If you know someone
interesting in banking,
finance, technology
or biotechnology
Tom Henderson
should interview, call
(313) 446-0337 or
write thenderson
Michigan eLab founders (standing, from left) Rick Bolander, Doug Neal and Bob Stefanski gather with staff in incubator space that the venture capital firm
uses in Ann Arbor.
Silicon ... Michigan?
Founders of VC fund whose hearts are here hope to build bridge to the Valley
he business model for one of the
state’s new venture capital
firms can be summed up as simply as this: Silicon Valley meets
That refers to Michigan, the state, and the
University of Michigan, the university with $1.3
billion in research spending a year and spinoff companies looking for funding and management expertise.
Michigan eLab, which is raising a first
fund of $40 million, was launched last year
by four entrepreneurs with longtime ties to
Silicon Valley. Three of them also have ties
to UM.
With offices in downtown Ann Arbor and
San Mateo, Calif., eLab seeks to connect
those who got wealthy by starting or running firms in Silicon Valley with tech investment opportunities created by UM spinoffs.
“I was from Mt. Pleasant and my wife was
from South Lyon, and we didn’t want to live
in California,” said co-founder Doug Neal,
who said he got the idea for Michigan eLab
after working with would-be student entre-
■ That’s what Chris Rizik of the Renaissance
Venture Capital Fund sees Grand Rapids and
Detroit becoming in the next few years. That
prediction appears to be reflected by the
brisk pace of venture-capital-related activity,
Page 11
preneurs at UM.
“When students graduated, they had two
pieces of paper, a diploma and a plane ticket
somewhere,” he said.
For those who wanted to stay here and
turn their undergraduate research into businesses, “there wasn’t enough money and
there wasn’t enough management help,
which is why we decided to create Michigan
eLab,” Neal said.
He said his network of former colleagues
and the networks of his eLab co-founders will
provide coaching and executive expertise to
portfolio companies.
“We can provide capital and talent,” Neal
Michigan eLab’s fundraising so far includes a $2.25 million investment announced
last January from the Pure Michigan Venture
Development Fund. The $9 million fund is
overseen by the Michigan Strategic Fund,
which is part of the Michigan Economic Devel-
opment Corp.
Ann Arbor-based Resonant Venture Partners also got Pure Michigan Venture funding last January. The last two recipients are
scheduled to be announced as early as September.
Michigan eLab’s four founders have backgrounds that should open the doors to co-investments by other Silicon Valley VC firms
and high-net-worth individuals in the valley.
Neal, who will be eLab’s managing director, spent 15 years in Silicon Valley in leadership positions at Hewlett-Packard Co. and
Symantec Corp. and then as CEO of Mobile
Automation, a software security company
for mobile platforms that he co-founded in
After Mobile Automation was sold to iPass
Inc. in 2005 for $20 million, Neal returned to
Michigan to raise his family.
Since then, Neal has been on the review
board of the Michigan Pre-Seed Capital Fund, a
fund administered on behalf of the MEDC by
Ann Arbor Spark; helped found TechArb, an incubator in downtown Ann Arbor that houses
student-run startups; and, from 2009 until
this past June, was managing director of the
Center for Entrepreneurship at UM.
See Silicon, Page 10
9:01 AM
Page 1
Page 10
July 22, 2013
Silicon: VC fund brings a littleValley to the Great Lakes State
■ From Page 9
a seed round in 2001 for Milpitas,
Calif.-based NextG Networks, which
was sold to Texas-based Crown Castle International in December 2011
for $1 billion.
For that exit, Chou was named
last December as one of the top 100
venture capitalists in Silicon Valley by AlwaysOn, a networking website for the VC community.
Bob Stefanski, a UM engineering grad who also got his law degree from there, is a partner in the
Silicon Valley law firm of Reed
Smith LLP. He has been involved
portfolio companies public and is a
board member of the Center for Entrepreneurship.
Scott Chou, a venture capitalist since 1997
who specializes
in tech spinoffs
from universities and government labs, is
also a managing director at
Ventures. His first
investment at
Gabriel was in
The three other eLab founders,
who will be general partners, are:
Rick Bolander, who has a
master’s in electrical engineering
from UM and an MBA from the
Harvard Business School. He
launched Chicago-based Blue Sky
Ventures, a real estate investment
firm, in 1988 and in 1999 co-founded San Mateo, Calif.-based Gabriel
Venture Partners, an early-stage VC
firm that invests in clean tech and
information technology.
As managing director at Gabriel,
Bolander has helped take several
with UM’s Center for Entrepreneurship since its founding in 2007
and has been an adviser and mentor at TechArb.
In 1997, Stefanski helped found
Palo Alto, Calif.-based Tibco Software Inc., which has more than $1
billion in revenue. Since leaving
Tibco in 2008, he has served on the
boards of several Silicon Valley
Chris Rizik, fund manager and
CEO of the Ann Arbor-based Renaissance Venture Capital Fund, said
the leadership of Michigan eLab
Turn to the “deal-makers”
at Howard & Howard.
December, 2012
December, 2012
December, 2012
Laga, Inc.
HopBet, Inc.
November, 2012
August, 2010
October, 2011
December, 2011
July, 2010
November, 2011
August, 2011
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is solid.
“Doug is a real talented guy,
very smart, very thoughtful,”
Rizik said. Both men serve on the
board of the First Step Fund, a seedstage fund based in Detroit.
“What they are trying to do with
a connection between Michigan
and Silicon Valley is interesting,”
Rizik said. “It helps differentiate
Chou said the Ann Arbor connection makes sense because there’s
far less VC competition there “and
so much brainpower.”
“There’s so much good research,” he said. “Our strategy
harnesses the affinity network of
the University of Michigan. It
takes advantage of the brand of
both the school and the state.
“There are a lot of people out
there with Michigan ties, people
who love Michigan. Even those
who left. They’ll always take
your call. This is going to be exciting.”
Among those with state or UM
ties whom Chou hopes will be
open to taking calls are Google Inc.
founder and CEO Larry Page; Twitter CEO Dick Costolo; iPod creator
Tony Fadell; former Skype CEO
Josh Silverman; Sun Microsystems
co-founders Scott McNealy and
Bill Joy; Groupon co-founder Brad
Keywell; former Palm Inc. CEO
Donna Dubinsky; Craigslist CEO
Jim Buckmaster; and Microsoft
Corp. CEO Steve Ballmer.
“We want to invest in disruptive,
Neal said. “We don’t want to just
create a better social networking
Tom Henderson: (313) 446-0337,
[email protected] Twitter:
Michigan companies will have an
opportunity to be recognized for
their healthy workplace practices in
the second annual awards program
for wellness in the workplace.
Priority Health, with Crain’s Detroit
Business and MiBiz as media
sponsors, is seeking nominations
for Michigan’s Healthiest
Employers awards.
The awards recognize best practices
used by employers to create healthy
workplaces as determined by
Indianapolis-based Healthiest
Employers LLC, which has used its
methodology in 40 cities.
Companies can fill out a survey at
crainsdetroit.com/nominate. There
is no fee.
Southeast Michigan winners will be
announced Oct. 16 at a breakfast
preceding the fourth annual Health
Care Leadership Summit. A similar
event will be held in West Michigan
by MiBiz to recognize winning West
Michigan companies in January.
All winners will be profiled in a
supplement to run in Crain’s Detroit
Business and MiBiz on Oct. 14.
The deadline to enter is Aug. 16.
Questions can be directed to Crain’s
Deputy Managing Editor Daniel
Duggan at [email protected] or
(313) 446-0414.
July 22, 2013
9:02 AM
Page 1
Page 11
Fund by fund, metro Detroit rising
as an ‘epicenter’ of venture capital
Detroit Venture Partners LLC, a
venture capital firm that has filled
the Madison Building in downtown
Detroit with startup software companies, has closed on a first round
of nearly $21 million as it raises its
first formal fund
But DVP has ambitions far beyond what it can accomplish with
$21 million. It hopes to finish its
first fund at $60 million this year
or early next year and soon after
that begin raising a second fund of
$120 million or more.
“The intention was never to have
a boutique venture capital firm
where Dan (Gilbert) and I would
just invest our money. We always
intended to build a firm that can
stand with the Draper Fisher Jurvetsons,” said managing partner Josh
Linkner, referring to one of the
brand names of Silicon Valley. “We
want to build a nationally known
firm with a Midwest focus.
Until now, DVP — launched in
November 2010 by Linkner, the
founder of ePrize Inc.; Quicken Loans
Inc. founder Gilbert; and Brian Hermelin, co-founder and chairman of
Rockbridge Growth Equity LLC, a private equity firm in Detroit — had
raised money as needed from its
partners to invest in its portfolio
DVP’s closing continues a flurry
this year of VC-related activity in
and near Detroit.
“If you look at Michigan over the
next few years, you’ll see Detroit
and Grand Rapids both becoming
venture capital,
and you’re seeing the seeds of
that now,” said
Chris Rizik, CEO
and fund manager for the Ann
Arbor-based Renaissance Venture
Capital Fund, a
creation of Business Leaders for Michigan.
In May, Tom LaSorda, the former CEO of Chrysler Corp., announced he had co-founded Birmingham-based IncWell LLC, a
seed-stage investment capital firm
that will start with less than $5 million from prominent local business
leaders including Roger Penske. IncWell plans to go out to institutional investors next year to raise a
fund of $25 million or more.
In March, a new early-stage investment fund called Detroit Innovate was launched with a grant of
$5 million from the New Economy
Initiative for Southeast Michigan. The
fund hopes to raise up to $10 million more from private individuals
and institutional investors, including other state foundations.
It will operate as a sister fund to
the $5 million First Step Fund, another grant recipient of the New Economy Initiative. Both operate under
the umbrella of Invest Detroit, a nonprofit created by Business Leaders
for Michigan that manages $110 million in funds and tax credits to sup-
port business expansion and real estate development.
And in January, Ludlow Ventures
LLC, which is based in the Madison
Building and has co-invested with
DVP, announced it was raising a
limited-partnership fund of $15 million as founder Jonathon Triest
changed its model from a seed-stage
investment firm that raised money
from family members as needed.
“Ann Arbor has long had a welldeveloped and thriving VC community, but Detroit is a VC boom
town,” said Paul Brown, vice president for capital markets at the
Michigan Economic Development
Corp. “Detroit is
near the top of
cities creating
new tech jobs,
and VCs like Detroit
Detroit Innovate
and Ludlow VenBrown
tures are pouring in to mine those exciting young
“Like any gold rush, the first to
stake the claim are usually the ones
to make the money.”
Brown said the increase in Detroit VC activity is reflected in ap-
plications for funding from the
state’s Pure Michigan Venture Development Fund, a $9 million fund created to invest $2.25 million in each
of four new VC funds.
The first round of winners was
announced in January, with two
Ann Arbor firms getting the investments — Resonant Venture Partners
and Michigan eLab. Of the five applicants, none were from Detroit.
The second-round winners could
be announced as early as September. Of the nine companies that applied for that round, four were
from Detroit.
Detroit Innovate will be something of a more focused bigger brother to the First Step Fund. The First
Step Fund generally invests $50,000
in seed-stage companies throughout
Southeast Michigan across a range
of sectors. It has invested a little
more than $3 million in 51 deals
since launching three years ago.
Detroit Innovate will invest between $50,000 and $250,000 in earlystage but not necessarily seed-stage
companies in advanced manufacturing, transportation, enterprise
software and medical technologies,
with a heavy focus on Detroit.
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[email protected] Twitter:
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Page 1
Page 12
July 22, 2013
Renamed credit union aims to create a youthful vibe
There’s a new Vibe around
town, and it’s showing up on billboards, in TV and social media advertising and on signs in front of
the seven branches of what used to
be Telcom Credit Union, which now
proclaim “Vibe Credit Union.”
The new name became official
March 18. The marketing campaign
didn’t begin, though, until May 1.
So far, it appears to be paying
off. The credit union added 230
members in June.
Credit union officials hope the
campaign results in a younger
membership that is hungrier for
home, auto and business loans.
The name that was dropped reflected the credit union’s history
— in 1936, 10 employees of the
downtown Detroit office of Michigan Bell Telephone Co. founded the
Telephone Employees Credit Union after chipping in $10 each.
In 1982, after a consent decree by
AT&T to break Ma Bell into separate
companies following an antitrust
lawsuit filed by the federal government, the credit union changed its
name to Telcom. The name continued to imply — incorrectly — that
the credit union was only for members of the telecom industry.
The credit union, which has
Tom Reagan, CEO of Vibe Credit
Union: “For the survival of this
organization, we needed to attract
others. ... The name was a hindrance.”
32,000 members and $428 million in
assets, has been open to anyone in
the area for about 10 years.
Said Tom Reagan, president and
CEO of the Novi-based credit
union: “With the breakup of the
phone company in 1982, we lost
our bond with the phone company.
What we became was an organization that served the telephone employees of days gone by and their
family members.
“But for the survival of this organization, we needed to attract
others, and we were struggling to
do that for a long time. The name
was a hindrance.”
As the current membership aged,
the need for loans decreased. “And
Love your
but not your
we’re here to make loans,” Reagan
said. “We have the capacity to serve
more members and the capital to
serve more. If we were going to continue, we needed to be able to attract younger people, and we needed a brand that appealed to them.”
The Vibe rebranding is “a great
name. It sets a certain tone,” said
Gary Moody, the president and
CEO of Ferndale-based Credit Union
One. “Leaving the Telcom moniker
in the past is going to help the
credit union. A name like Telcom
limits your ability to grow and get
new customers.”
Moody knows about name
changes and rebranding. While
many credit unions have changed
their names through mergers or as
their membership evolved, Credit
Union One was at the forefront,
changing its name from Ferndale Coop Credit Union in 1984.
“When we changed our name,
we were an organization that wasn’t performing well,” said Moody,
who joined Credit Union One as legal counsel in 2004 and was named
president and CEO in 2006. “A
generic name gives you a more
open field of membership, and it’s
certainly served us well.”
In 1984, Credit Union One had
85,000 members and $185 million in
assets. Today, it has 16 branches in
metro Detroit,
one in Grand
Rapids and one
in Traverse City;
107,500 members;
and $810 million
in assets. That’s
a far cry from
1938, when 15
neighbors decided to form a
held a meeting in the basement of
a church and chipped in $158.
But a name change alone won’t
attract the younger customers
whom credit unions crave, Moody
said. They need to adopt the technology — mobile banking and
smartphone apps — that younger
would-be customers consider
“The biggest challenge is bridging that technology gap,” said
Moody, whose credit union also offers mobile banking on both Android and Apple platforms. “It’s
hard to execute right. You need to
maintain that credit union feel of
being locally owned and operated
while having all the bells and
whistles of large national banks if
you want to be relevant to younger
That need is being addressed by
Vibe management. Before it began
its marketing campaign, the credit
union finished a technology upgrade that now allows mobile
banking on Apple and Android.
Vibe is also about to expand its
footprint in Southeast Michigan.
The credit union has two offices
in Novi and single branches in
Berkley, Canton Township, Livonia, South Lyon and Southfield.
It plans to open three more — in
Sterling Heights on Van Dyke just
south of 16 Mile Road in August, in
downtown Birmingham on Maple
Road by the end of September and
in Royal Oak at Fifth and Main by
the end of October. The credit union
has hired about 15 employees in the
past six weeks to staff those branches and now has 125 employees.
While he has no immediate
plans, Reagan said, he would like
to see Vibe expand its footprint
further, whether through mergers
or organically. And he said he
plans to beef up commercial lending from what he said is “a few
million dollars a year” to “tens of
millions a year in the next few
years and increasing from there.”
“Our membership needs commercial loans,” Reagan said, “but
now they’re going elsewhere to get
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[email protected] Twitter:
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9:04 AM
Page 1
July 22, 2013
Page 13
Lutz Real Estate Investments, Birmingham, with Harrison Street Real Estate Capital LLC, Chicago, acquired
Fiat Group SpA, Turin, Italy, are opening a Mopar parts distribution center
in Pretoria, South Africa. Website:
Collections Online program, a multiyear global digitization and publishing program that brings together rare
primary source materials from the
nineteenth century and beyond. The
launch of the new archives brings the
total number available in the NCCO
program to eight, and the total
number of collections within the resource to more than 170. Website:
Abbey Glenn Apartments, a student
housing community adjacent to Baylor University, Waco, Texas. Asset
Campus Housing, Houston, was selected to provide property management and leasing services for the
property. Website: www.lutzinvest
TRW Automotive Holdings Corp., Livo-
Wakefield, Sutherland & Lubera PLC,
Nowak & Fraus Engineers, Pontiac, in
collaboration with Land Design Studio
PLLC, Southfield, and Landscape Architects and Planners Inc., Lansing,
Matrix System Automotive Finishes
LLC, Walled Lake, an aftermarket au-
St. Clair Shores and Troy, launched a
new website, www.wsl-plc.com. Telephone: (586) 552-8777 or (248) 457-9860.
were awarded a study contract with
the Michigan Department of Technology, Management & Budget for landscaping and site improvements for 16
department-owned buildings at the
state Capitol complex, Lansing. Websites: www.nowakfraus.com, www.ld
splanning.com, www.lapinc.net.
Gale Group Inc., Farmington Hills,
part of Cengage Learning Inc., announced an agreement with the Library of Michigan, Lansing, and Civic
Technologies, Los Angeles, to make
business resources, such as e-books,
forms and research databases, available at no cost to Michigan business
owners and entrepreneurs, and Civic
Technologies to provide business
market research data and software.
The services have been purchased
through funding allocated as part of
Gov. Rick Snyder’s economic gardening initiative. Websites: www.gale.
cengage.com, www.civictechnologies
.com, www.michigan.gov/libraryof
University of Michigan Health System,
Ann Arbor, announced a new collaboration with MidMichigan Health , a
four-hospital system with headquarters in Midland. UMHS is taking a
small minority interest in MidMichigan and will have two seats on the
MidMichigan board. MidMichigan
will use a new logo that incorporates
the UM block M. The systems are
working together to provide better
care, starting in areas such as cancer
and heart disease, as well as easing
access to UM specialty care for MidMichigan Health patients. Websites:
www.med.umich.edu, www.midmich
Michigan Mutual Inc., a residential
mortgage lender in Southfield and
Port Huron, will expand its metro Detroit headquarters at the Galleria Office Centre in Southfield. The company will add 10,000 square feet, for a
total of 50,000 square feet of office
space. The company also plans to hire
100 more employees this year. Website: www.mimutual.com.
Chrysler Group LLC, Auburn Hills, and
nia, has started production of its electrically powered steering belt drive
for the first time on a global vehicle
platform launching in China. The
company is manufacturing the technology at its facility in Anting. Website: www.trw.com.
tomotive paint manufacturer and a
Products, part of Quest Specialty
Chemicals, Charleston, S.C., introduced two new European-style
clearcoat paints. The MS-78 Euro
Clearcoat for National Rule and MSV23 2.1 VOC Euro Clearcoat for compliant regions are medium solids, Eurostyle clears with 2:1 mix ratio. When
used with Matrix System basecoats,
they provide a high-gloss appearance
and volatile organic compounds compliance, at a cost savings. Website:
Brinks Hofer Gilson & Lione PC, Ann
Arbor and Detroit, published the third
edition of its intellectual property law
primer, The Basic Principles of Intellectual Property Law. The primer,
originally published in 2006, has been
updated to reflect recent court decisions and changes in intellectual property as a result of the America Invents
Act of 2011. The principal author is
Steven Oberholtzer, managing partner of the Ann Arbor office and a
member of the firm’s board of directors. The publication is available at no
charge at the firm’s website,
SmartAuction, a unit of Ally Financial
Inc., Detroit, the online used vehicle
auction for eligible dealers, launched
a mobile app allowing users to search
for vehicles, communicate with sellers, negotiate pricing and make bids
over Android and Apple-based smartphones. Registered SmartAuction
users can download the app online at
the Apple Store or the Android
Shareholder problems?
Changing the Odds in Our Clients’ Favor
Brian E. Etzel
Kevin O’Shea
Marc L. Newman
Send news releases for Business
Diary to Departments, Crain’s
Detroit Business, 1155 Gratiot
Ave., Detroit, MI 48207-2997 or
send e-mail to [email protected]
crain.com. Use any Business Diary
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.
E. Powell Milller
Shareholder and partnership disputes
Minority oppression litigation
Breach of fiduciary duty
Richard “Tony” Braun
Corporate governance litigation
Corporate control contests
Securities fraud and derivative claims
• 281,000 square foot 14-story office
tower with 2-story annex
NSK Americas Inc., Ann Arbor, a division of NSK Ltd., Tokyo, added the following to the NSKHPS bearing series:
deep groove ball bearings, cylindrical
roller bearings, high precision angular contact ball bearings and ball
screw support angular contract thrust
ball bearings. The series will cover
more than 30,000 bearing sizes. Website: www.nskamericas.com.
North Troy’s only landmark building
Floor-to-ceiling glass line
Up to 90,000 square feet of
contiguous space in the tower
Up to 40,000 square feet of
contiguous space in the annex
• Recently renovated; impressive twostory lobby detailed with hardwood
panels and granite floors
Gale Group Inc., Farmington Hills,
part of Cengage Learning Inc. and
publisher of research and reference
resources for libraries, schools and
businesses, launched the next four
archives in its Nineteenth Century
This year’s Crain’s Best Managed Nonprofit Contest is focused on good
management practices of nonprofits with budgets of $3 million or less.
Applicants are asked to give examples of how they deploy their mission and
resources, among other information.
Applications are due Aug. 26. Finalists will be interviewed in person by
judges the morning of Nov. 5.
Applicants for the award must be a 501(c)(3) with headquarters in Wayne,
Washtenaw, Oakland, Macomb or Livingston counties. Applications must
include an entry form, a copy of the organization’s code of ethics, a copy of
the most recent audited financial statement and a copy of the most recent
IRS 990 form.
Previous first-place winners are not eligible; neither are hospitals, HMOs,
medical clinics, business and professional organizations, schools,
churches or foundations.
The winners will be profiled in the Nov. 25 issue, receive a special
“best-managed” logo from Crain’s for use in promotional material and
will be recognized at the Crain’s Newsmaker of the Year lunch early next
For an application form, please email YahNica Crawford at
[email protected] or visit www.crainsdetroit.com/nonprofitcontest. For
information about the contest itself, email Executive Editor Cindy Goodaker
at [email protected] or call (313) 446-0460.
Jayson E. Blake
Dennis Kateff
[email protected]
Efficient and flexible floor plates
accomodate a variety of space
Lower level can accommodate office
storage or computer/data center
On-site bank branch and ATM
Numerous nearby amenities
including fine and casual dining,
hotels, retail services, daycare, and
fitness center
Immediate freeway access to I-75
Ample, well-lit, high-ratio parking
Building and monument signage
DBpageAD_DBpageAD.qxd 7/10/2013 1:30 PM Page 1
9:04 AM
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July 22, 2013
Page 15
CRAIN'S LIST: LARGEST BANKS AND THRIFTS Ranked by 2012 deposits inside market
Phone; website
Top executive(s)
Deposits inside market
Number of offices
inside market
Deposits outside market
Number of offices
outside market
John Carter
market president
Michael Ritchie
Michigan market president
Matthew Elliott
market president for Michigan
Ric DeVore
regional president for Detroit and southeast
Alessandro DiNello
president and CEO
Michael Fezzey
regional president
Ken Marblestone
president, Michigan
David Girodat
president and CEO, eastern Michigan
Joseph Doyle
president, Michigan
Sandra Pierce
chairman and CEO
Kirk Albert
president, Michigan
Dan Pehrson
CEO, Michigan
David Provost
chairman, president and CEO
Timothy Marshall
president and CEO
Eugene Lovell
president and CEO
Bruce Thomas
president and CEO
Patrick Fehring
chairman, president and CEO
W. David Tull
chairman and CEO
Michael Goik
president and COO
Robert Chapman
Todd Clark
2723 S. State St., Ann Arbor 48104
(734) 214-3700; www.ubat.com
FNBH Bancorp Inc. (First National Bank in Howell)
Ronald Long
president and CEO
Dan Pienta
managing director
C. James Bess
president and CEO
William Kessel
president and CEO
John Mann
chairman, president and CEO
William White
chairman and president
J.P. Morgan Chase & Co.
611 Woodward Ave., Detroit 48226
(313) 256-8500; www.jpmorganchase.com
Comerica Bank
411 W. Lafayette, Detroit 48226
(248) 371-5000; www.comerica.com
Bank of America
2600 W. Big Beaver Road, Troy 48084
(800) 643-9600; www.bankofamerica.com
PNC Bank
755 W. Big Beaver Road, Troy 48084
(800) 243-7274; www.pnc.com
Flagstar Bancorp Inc.
5151 Corporate Drive, Troy 48098
(248) 312-2000; www.flagstar.com
Huntington National Bank
801 W. Big Beaver Road, Suite 500, Troy 48084-4724
(248) 244-3541; www.huntington.com
Charter One Bank
27777 Southfield Road, Lathrup Village 48034
(248) 226-7998; www.charterone.com
Fifth Third Bank
1000 Town Center, Southfield 48075
(877) 579-5353; www.53.com
TCF Bank
17440 College Parkway, Livonia 48152
(734) 542-2900; www.tcfbank.com
FirstMerit Michigan B
900 Tower Drive, Suite 100, Troy 48098
(248) 293-3040; www.firstmerit.com
KeyBank N.A.
100 S. Main, P.O. Box 8612, Ann Arbor 48107
(800) 539-2968; www.keybank.com
The Private Bank
38505 Woodward Ave., Suite 1300, Bloomfield Hills 48304
(248) 644-2301; www.theprivatebank.com
Talmer Bancorp Inc.
2301 W. Big Beaver Road, Suite 525, Troy 48084
(248) 649-2301; www.talmerbank.com
Arbor Bancorp Inc.
125 S. Fifth Ave., Ann Arbor 48104
(734) 662-1600; www.bankofannarbor.com
First State Financial Corp. (First State Bank)
24300 Little Mack Ave., St. Clair Shores 48080-3249
(866) 372-1275; www.thefsb.com
Michigan Commerce Bank
2950 S. State St., Ann Arbor 48104
(734) 887-3200; www.michigancommercebank.com
Level One Bancorp Inc.
32991 Hamilton Court, Farmington Hills 48334
(248) 737-0300; www.levelonebank.com
Crestmark Bancorp Inc.
5480 Corporate Drive, Suite 350, Troy 48098
(248) 641-5100; www.crestmark.com
United Bancorp Inc.
101 E. Grand River Ave., Howell 48843
(517) 546-3150; www.fnbh.com
The Northern Trust Bank Co.
10 W. Long Lake Road, Bloomfield Hills 48304
(248) 593-9300; www.northerntrust.com
Oxford Bank Corp.
60 S. Washington St., Oxford 48371
(248) 628-2533; www.oxfordbank.com
Independent Bank Corp.
230 W. Main St., Ionia 48846
(616) 527-5820; www.ibcp.com
CSB Bancorp Inc. (Chelsea State Bank)
1010 S. Main, Chelsea 48118
(734) 475-1355; www.csbonline.com
Dearborn Federal Savings Bank
22315 Michigan Ave., Dearborn 48124
(313) 565-3100
This list ranks banks and bank holding companies with a presence in southeast Michigan by their deposits in Wayne, Oakland, Macomb, Livingston and Washtenaw counties. Figures are from the FDIC's deposit market reports, which are based on the branch/office
deposits for all FDIC-insured institutions as of June 30. It is not a complete listing but the most comprehensive available. Companies are listed with the address and top executive of their main metro Detroit office. Actual figures may vary. NA = not available.
B Citizens Republic Bancorp Inc. was acquired by FirstMerit Corp., Akron, Ohio, April 2013.
9:06 AM
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July 22, 2013
John Ackerman to project manager,
Atwell LLC, Southfield, from licensed
Manufacturing is not
just coming back,
it’s moving forward.
Realtor, Century 21 Real Estate LLC,
Tampa, Fla.
Mark Donnelly to principal, Beringea
LLC, Farmington Hills, from senior associate, The Riverside Co., Dallas.
Brandon Booth to shareholder,
Howard & Howard Attorneys PLLC,
Royal Oak, from associate.
Matthew Schenk to partner, government and public affairs division,
Ottenwess, Allman & Taweel PLC, Detroit, from COO and chief compliance
officer, Detroit Water and Sewerage
Department, Detroit.
Dialogue Marketing, Troy, has
named Peter Schmitt as CEO. He
had been chief marketing and
Vargas, who is
pursuing other
Schmitt, 43,
earned a
degree in
marketing from
John Carroll University, University
Heights, Ohio, and a master’s
degree in finance from the
University of Wisconsin-Madison.
He is pursuing a master’s degree
in predictive analytics from
Northwestern University, Evanston,
Neapco Holdings, from senior manager/engineering head of the driveshafts business unit, American Axle &
Manufacturing Holdings Inc., Detroit.
Chad Ackley to ex-
ecutive vice president,
creative director,
Gerald Coster to vice president for
global manufacturing and purchasing, Neapco Holdings, Belleville, from
vice president of global supply chain
management. Also, James Geisendorfer to president, Neapco Asia, Shanghai, from vice president of global sales
and marketing, Neapco Holdings,
Belleville; and Arvind Srinivasan to
vice president, global engineering,
Doner Partners
LLC, Southfield,
from group creative
DDB Worldwide
Group, San Francisco. Also, Karen
Cathel and Sam Sefton to senior vice
president, group creative director,
from creative director; Stephen
Bantien, Scott Campbell, Paul Forsyth
and Alana Kulas to creative director,
from associate creative director; Laurie Irwin to senior vice president, director of broadcast production, from
vice president, executive producer;
and Jack Nelson to senior vice president, director of broadcast production, from senior producer.
Patricia Radice to
public relations
account manager,
Troy, from managing editor, Radiation Research
journal at Indiana
University School
of Medicine, department of radiology oncology,
Stephen Dooley to
vice president of client partnerships,
DLX Auto, Datalogix Inc., Birmingham, from president, Outdoor Hub
LLC, Bingham Farms.
Eric DeMont to senior vice president
of analytics, Mars Advertising Inc.,
Southfield, from senior vice president, director of analytics, MRM
Worldwide, Detroit.
Todd Bynum to manager, Dietz Trott
Sports & Entertainment Management,
Farmington Hills, from intern.
Evrod Cassimy to morning anchor,
WDIV-Channel 4, Detroit, from morning anchor and reporter, KCNC-TV,
Suzanne Chandler
to senior account
executive, Event
Source Inc., Royal
Oak, from resource development
Center, Detroit.
Mark VanderWerp
to manager of education and trainChandler
ing, Rose Pest Solutions,
supervisor, Grand Rapids.
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Announcements are limited to
management positions. Send
submissions to Departments,
Crain’s Detroit Business, 1155
Gratiot Ave., Detroit, MI 482072997, or send e-mail to
[email protected]
Releases must contain the person’s
name, new title, company, city in
which the person will work, former
title, former company (if not
promoted from within) and former
city in which the person worked.
Photos are welcome, but we cannot
guarantee they will be used.
5:20 PM
Page 1
July 22, 2013
Page 17
Debate begins over tougher air quality regulations
Energy companies, businesses
and environmental groups are
readying for a couple of years of
public policy wrangling at the federal and state levels over tougher
air quality regulations to be implemented by the U.S. Environmental
Protection Agency.
President Barack Obama said
last month the EPA will develop
proposed regulations by June 2014
that will reduce carbon dioxide —
gases that trap heat in the atmosphere and are blamed for global
warming — by 17 percent from 2005
to 2020.
After public comment, final regulations will be ready by June 2015.
States will have until the summer
of 2016 to develop a regulatory implementation plan that will allow
for some local flexibility.
Obama also called for
increased renewable energy production on federal
lands, higher energy efficiency standards and a
ban on public financing of
coal-fired plants overseas
with limited exceptions.
The government also
plans to help prepare communities to deal with
higher temperatures and rising sea
The White House said in a statement that the cost of U.S. weather
disasters in 2012 exceeded $110 billion and that climate change will
only increase the frequency and
intensity of these events.
While the Michigan Chamber of
Commerce praised the president
for his comments on the economic
value of natural gas production,
Jason Geer, director of energy and
environmental policy, said the effect of Obama’s speech could mean
the end of U.S. coal production.
“He is really going after coal and
the coal industry,” said Geer.
“This is very negative for Michigan and the Midwest. We are very
coal dependent because it is cheap
and affordable. The policies he put
forward are clear. He is putting
higher costs on the use of coal and
limits on existing facilities.”
Utility executives at DTE Energy
and Consumers Energy said they are
reserving judgment on the president’s plan until they see regulations.
Skyles Boyd, DTE’s vice president of environmental management and resources, said electric
utilities understand and support
the importance of addressing climate change.
But Boyd said any policy
changes to reduce carbon dioxide
from existing power plants should
“minimize the financial impact on
Regulations also should not hinder industry’s effort to achieve a
balanced energy production approach that includes coal, natural
gas, nuclear power and renewable
energy, he said.
Boyd said DTE CEO Gerry Anderson will represent the Edison
Electric Institute, an association of
shareholder-owned electric companies, in talks with the White
House and EPA.
“We think this (Obama’s climate
change address) has potential to
set energy policy going forward,”
Boyd said. “Ideally we would prefer congressional action, but it
probably will not happen in the
near future. We want to make sure
the regulations that come out are
Dan Bishop, media relations director with Consumers Energy, said
regulations governing coal plants
have accelerated recently and
have caused Consumers to invest
$1.1 billion on its plants.
“This investment is paying off.
Michigan’s air is the cleanest it has
been in at least 20 years,” Bishop
said. “The new carbon regulations
would be in addition to existing
regulations. We don’t know exactly
what they will be, but this would
result in an increase in rates.”
We think this
has potential to
set energy
policy going
forward. ... We
want to make
sure the
regulations that
come out are costeffective.
Skyles Boyd, DTE Energy
Nationally, carbon dioxide emissions are 15 percent below 2005 levels, with sulfur dioxide and nitrogen oxide emissions down 75
percent since 1990, said the Edison
Energy Institute.
But Nic Clark, director of Michigan Clean Water Action, said DTE’s
Monroe coal-fired power plant is
the nation’s sixth-most polluting
plant. Power plants and industrial
facilities in Michigan emitted
more than 90 metric tons of carbon
pollution in 2011.
“DTE has made some improvements on the plant, but we would
like to see DTE do more in renewable energy so they don’t have to
import as much coal from other
states,” Clark said.
Boyd said DTE has spent $2 billion on the Monroe plant the past
decade to reduce sulfur dioxide,
mercury, arsenic, lead and other
acid-creating gases. It also plans to
invest $1.5 billion by 2015 on renewable energy projects.
“The president now wants to focus on reducing carbon emissions,” Boyd said. “We have been
doing that through the use of nuclear plants, energy efficiency and,
more recently, by renewable energy.”
Because it has shifted away
from coal as a percentage of its
power generation, DTE has reduced carbon emissions by 17 percent since 2000, Boyd said.
Clark said reducing carbon
emissions in the U.S. will help reduce the effects of global warming
in Michigan.
“Last year, the cherry and apple
blossom crops were devastated by
extreme weather. We lost 90 per-
cent of our cherry crop,” Clark
said. “Climate change has the potential of affecting agriculture, our
harbors and the coastal economies
with tourism. We need to make
sure the EPA follows through on
what the president has said he
wants to do to address climate
Kimberly Hill Knott, senior policy manager with Detroiters Working
for Environmental Justice, said the
prospective health care costs of not
dealing with pollution problems
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need to be taken into account as
well as policy decisions are finalized.
“The utility companies will talk
about higher electricity costs (because of stricter regulations), but
higher health costs (from pollution)
should also be factored in because
that has a major burden on minority communities,” Knott said.
“Reducing carbon and other pollutants coming from these plants
will improve health for everyone
and reduce medical costs in the
long run,” she said. Power plants
account for about 40 percent of
U.S. carbon emissions.
For example, Michigan had
more than 14,300 hospital admissions for asthma in 2011, a condition that has been linked to higher levels of pollution, with an
average charge of more than
$15,000 for each stay, the White
House said.
Jay Greene: (313) 446-0325,
[email protected]
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Page 1
Page 18
July 22, 2013
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Amid legal efforts to
block right-to-work,
it remains the law
A decision this month
serts that the law should
by the Michigan Supreme
be thrown out because it
Court to deny Gov. Rick
was voted on by the LegSnyder’s request for an
islature while the doors
advisory opinion on the
to the Capitol were
constitutionality of the
locked, thus violating
new right-to-work law
the Open Meetings Act.
could lead to delays in the
Ingham Circuit Judge
state negotiating new
William Collette said in
union contracts with
court that the ACLU has
about 35,000 workers.
an uphill battle in winThree lawsuits have
ning the case but allowed
been filed over the law,
it to proceed, Klotz said.
Chris Gautz
which was signed in the
The third case against
midst of a heated lame-duck session the right-to-work law is in federal
last December. But none should court and was brought by several
cause much concern for employers groups backed by the Michigan State
in the private sector, several labor AFL-CIO.
attorneys studying the cases said.
The suit, Michigan State AFL“The law is currently in effect, CIO v. Callaghan, claims that the
and it remains a valid and enforce- state’s right-to-work law preempts
able law,” said Gary Klotz, a labor federal labor law and violates the
and employment attorney at Butzel supremacy clause in the U.S. ConLong PC.
The right-to-work law, which
Andrew Nickelhoff, general
went into effect March 28, bans the counsel for the state AFL-CIO and
practice of workers being forced to a shareholder with Sachs Waldman
pay money to a union as a condi- PC, said that Michigan lawmakers
tion of employment.
rushed the process and that
In its unanimous ruling July 5, enough areas of the law are probthe state’s high court said it was lematic that the entire law should
“not persuaded that granting the be held invalid.
request would be an appropriate
“It really overreaches into areas
exercise of the court’s discretion.”
covered by federal law,” he said.
Snyder requested the advisory
In the suit, the union says the
opinion Jan. 28 as lawsuits began state law attempts to regulate fedto emerge and also because he eral procedures covered by the Nawanted quick resolution to the is- tional Labor Relations Act.
sue of whether state employees are
If a business or union commits
covered by the law or governed by an unfair labor practice, the federthe Michigan Civil Service Commis- al law provides an ability to bring
sion, which the unions claim.
and remedy those claims. The
The state constitution tasks the state’s right-to-work law, the suit
commission with the authority to alleges, attempts to regulate that
“regulate all conditions of employ- federal law and therefore deprives
ment.” Attorney General Bill unions and their members of their
Schuette said in a brief he submit- rights under the NLRA.
ted in the case that logic says state
In his brief defending the law,
employees are covered by the Schuette noted that of the 23 other
right-to-work law and that allow- right-to-work states, 12 have laning a worker the choice to eschew guage identical or nearly identical
union membership is not a condi- to the language in Michigan’s law.
tion of employment.
The brief also says the AFL-CIO
The Michigan Court of Appeals is does not mention that the NLRA
expected soon to make a decision includes language that allows and
in that case, UAW v. Green, and protects a state’s ability to have a
that might be why the Supreme right-to-work law.
Court decided not to issue an adviKlotz said he thinks the unions
sory opinion on the issue, said will have a difficult time in federal
Tom Hathaway, a member of the court. He noted that a federal judge
labor and employment practice in Indiana rejected a similar chalgroup at Detroit-based Clark Hill lenge to that state’s right-to-work
PLC. The case moved to the Court law and that Michigan and Indiof Appeals after being dismissed in ana’s laws are quite similar.
Ingham County Circuit Court because
The only impact this could have
of a question of jurisdiction.
on businesses is if U.S. District
Without a Supreme Court opin- Judge Stephen Murphy III were to
ion, lawsuits proceed through the grant an injunction in the Michicourt system, most likely leading gan case. But Klotz said that is unto the Supreme Court. Snyder had likely, and Nickelhoff said the
hoped to skip those steps to AFL-CIO has not asked for one.
achieve faster clarity over the conHathaway said businesses need
stitutionality of the law because to be aware that until the case is
negotiations between the state and resolved, some doubt will remain
employee unions are set to begin at as to the ultimate outcome. But he
the end of this month and con- said he thinks the state will pretracts expire at the end of the year. vail and that the unions are trying
The side that loses in the appeals to delay the inevitable.
court is expected to take the case to
“This is going to be something
the Supreme Court, and it is un- that may be more sound and fury
clear whether the issue could be re- than the actual result,” Hathaway
solved before the end of the year.
Another suit over the law, Cook
Chris Gautz: (517) 403-4403,
v. Michigan, was brought by the [email protected]
American Civil Liberties Union and as- @chrisgautz
B r i e fi ng s
6:37 PM
Page 1
July 22, 2013
Page 19
Bankruptcy: First challenge may be over good-faith meaning
■ From Page 1
The U.S. Bankruptcy Code requires that a city bringing a Chapter
9 petition must either have reached
an agreement with its creditors to restructure its debt, or has “negotiated
in good faith” without being able to
reach an agreement, or that such a negotiation isn’t practical.
It’s the good-faith provision that
attorneys will likely launch in the
initial legal challenge, as bond insurers or city employees and retirees argue that Orr, as a former
bankruptcy attorney at Jones Day
appointed in March by Snyder, was
never serious about a workout with
credits that avoids bankruptcy.
Hitting an impasse
Orr said at a Friday press conference that the city has held more
than 100 meetings with creditors
prior to filing for bankruptcy, and
that negotiations will continue
even after the filing. In court Friday, he also asked the judge to approve an order requiring any challenges to be brought by Aug. 19.
“I’ve got an 18-month term to do
a lot of work, and I don’t have the
time to run in place,” he said.
“Anyone who thinks I wasn’t negotiating in good faith when they are
suing me, I ask you to look at that
context, that your decision instead
of coming to the table is to continually file suits against me — who’s
not operating in good faith?”
Michael VanOverbeke, general
counsel for the General Employees
Retirement System of the City of Detroit (listed as Detroit’s largest single creditor with a claim of just
over $2 billion) and partner at Detroit-based Overbeke Michaud & Timmony PC, said the retirement plan
is reviewing whether to challenge
in court Orr’s eligibility to file.
“The initiation of the process by
the EM was really just presentation to us (on the city’s debts, in
June). There was no negotiation
going on in the truest sense. Only
in the last session was it really
clear what they were looking for
from us, and that was two just
weeks ago,” he said. “We haven’t
even got to the presumption of
having had any meaningful dialogue. And we were a bit surprised
by the timing of this petition.”
Bond debt
Meanwhile, two holders of Detroit’s general obligation bonds,
BlackRock Financial Management Inc.
and Nuveen Asset Management LLC,
have come forward as creditors in
court , as have city bond insurers
Assured Guaranty Ltd. of New York
City and the National Public Finance
Guarantee Corp. of Armonk, N.Y.
The city is grappling with more
than $18 billion in debt, including
at least $5.4 billion in bond debt,
according to a proposal Orr gave to
creditors in June. Attorneys said
some of these creditors in the bond
markets, if not the pension funds
to whom the city reportedly owes
nearly $3.5 billion, are likely to
raise the eligibility question.
On Friday, the employee pension
plans and seven individual beneficiaries obtained a series of rulings
from Judge Rosemarie Aquilina of
Ingham County Circuit Court, who
Detroit scrutinized by $900B general-obligation bond market
The fate of a 2 percent sliver of Detroit’s
obligations is drawing scrutiny from investors holding a $900 billion chunk of the U.S.
municipal-debt market.
Before filing, Detroit Emergency Financial
Manager Kevyn Orr tried to persuade holders
of $369 million of unlimited general obligations, which are supposed to have the full
backing of taxpayers, to accept less than 20
cents on the dollar. The borrowings are part of
$17 billion in debt and long-term liabilities Orr
sought to restructure.
The approach by Orr is fueling debate about
the value of a market segment that investors
have considered the safest state and city debt,
and could signal higher bond costs for some issuers, starting with about $19 billion from
Michigan borrowers. Localities from California to Massachusetts use the bonds to borrow
for roads, schools and other infrastructure.
Michigan’s debt already is trailing the municipal market by the most in two years and
its borrowing costs are rising relative to similarly rated states as Detroit’s bankruptcy filing shakes investor confidence.
“Investors and analysts are going to rethink
the general-obligation pledge and what it really
means when an issuer is under financial stress,”
Ben Watkins, Florida’s director of bond finance,
found the bankruptcy filing unconstitutional and ordered that Snyder
direct Orr to withdraw it.
She also denied several requests
Friday by the office of Michigan
Attorney General Bill Schuette to
dismiss the cases. Schuette’s office
is asking the Michigan Court of Appeals to review Aquilina’s orders.
The pension plans argue that
bringing a federal bankruptcy petition is an attempt to subvert a provision in Article 9 of the state constitution protecting pension obligations
of public employees. But outside of
actual pension compensation, Detroit faces more than $5.7 billion in
unfunded health care liabilities,
which Orr probably is within his
authority to reduce or eradicate.
Orr has contended that legacy
costs absorbed nearly 40 cents of
every budget revenue dollar for
the city in its 2012 fiscal year.
“You could argue the unions who
are screaming about this now are
the ones who to a great degree created the problem for the city. They
helped by their political influence
to elect the people who were in office when these benefits were negotiated,” said John Axe, founder of
the Grosse Pointe Farms law firm
Axe & Ecklund PC, which specializes
in bond services for municipalities.
“Because they (city officials)
couldn’t have reasonably expected
that if they did a really good job negotiating those contracts in the
city’s best interests that they could
continue to be in public service.”
Holders of general obligation
bonds, or those to be repaid out of
city operating budget revenue, or
special bond certificates meant to
fund employee pension debt are
the least protected and most likely
to take a payment like the 10 cents
on the dollar that Orr has pro-
said in an interview. The bonds “have been the
gold standard of the municipal-bond market.”
The segment of debt in question makes up
almost 25 percent of the $3.7 trillion municipal
market. Lower-rated governments in particular may be penalized, Michael Zezas, chief
muni strategist at Morgan Stanley in New
York, wrote in a report after the filing.
While debt repaid with an unlimited pledge
on tax revenue has been viewed as a haven,
Detroit’s filing may change that, said Robert
Amodeo, who helps manage about $30 billion
of debt, including Detroit securities, at Western Asset Management Co. in New York.
“Detroit has the potential to be precedentsetting,” Amodeo said. “Looking ahead, people
understand that they should be compensated
for the potential additional risk. There will be
a tiering of demand, and with that there potentially could be wider spreads between the different types of general-obligation debt.”
Orr’s spokesman, Bill Nowling, said in an
interview before the filing that the city doesn’t
have any more capacity to increase taxes, and
that even if it did, more residents would leave,
making it more difficult to generate revenue.
Michigan premium
State officials are “washing their hands out
of Detroit and investors will remember that,”
Richard Larkin, director of credit analysis at
Iselin, N.J-based Herbert J. Sims & Co., said in
posed in recent creditor meetings.
“The only ambiguity for the
bonds with guarantees is if some of
the guarantors themselves may be
at risk of insolvency,” he said.
“Before the market downturn,
some of the insurers got into other
debt instruments and were insuring things that weren’t municipal
bonds. They’re still around, but
now some of those companies can’t
issue any new bond insurance for a
few more years, and their credit ratings are in trouble because of what
happened with those other investments.”
In trading late last week, investors demanded higher yields to
buy Detroit debt rather than top-rated municipals. Detroit unlimited
general-obligation bonds maturing
in April 2028 traded with an average
yield of 5.73 percent, about 2.3 percentage points more than benchmark munis, according to data compiled by Bloomberg LP. That was the
biggest yield gap since June 24.
an email after the city sought protection. Previously, Michigan “had a good reputation of a
state helping out its localities when they were
in difficulties,” he said.
“Investors will begin exacting a premium
from any borrower that has Michigan’s name
on it,” said Larkin. “From this point, Detroit’s
name in the muni market is probably mud.”
An additional 0.25 percentage point of yield
on $19 billion of debt would cost issuers in the
state $47.5 million a year, according to data
compiled by Bloomberg.
Brodie Killian, executive director of business services for the Plymouth Canton Community Schools, with 18,000 students, called the
city’s filing “an isolated incident.”
The district stands behind the unlimited general-obligation pledge that backs 95 percent of
its $280 million of debt, he said. Its bonds are rated A+ by Standard & Poor’s, fifth-highest.
Communities around Detroit will have to
pay more when they borrow, he said.
“There will be some tough days ahead for
Michigan issuers,” Killian said. “(But) the
state of Michigan as a whole and many of its
municipalities outside Detroit are very strong
credits and the national market shouldn’t be
afraid of Michigan issuers.”
In the week ahead, issuers from Michigan
have about $20 million of borrowings scheduled. Localities in the state have sold about
$3.5 billion of debt this year, down from $7.2
billion at this point in 2012.
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Court action
VanOverbeke of the general retirement system said it’s possible
the Aquilina ruling will make the
eligibility question for Orr moot,
but the pension plans are still reviewing all their legal options.
Outside of eligibility, Miller said,
Rhodes probably will have to consider in short order whether the
city can continue to enforce its recent settlement with holders of
credit default swaps. That’s because
bankruptcy filings traditionally put
a stay on litigation.
Chad Halcom: (313) 446-6796,
[email protected]
Staff writer Kirk Pinho contributed to this report
6:33 PM
Page 1
Page 20
July 22, 2013
UPCOMING Chapter 9 and verse: A bankruptcy FAQ
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organizations on events and
special subscription offers for their members.
Please visit their websites below.
Southfield Area Chamber presents a 3-part series to provide
business consulting and coaching from local experts.
July 24: Your Accounting Process and How It Relates to the IRS
July 31: Access to Capital to Grow Your Business
Aug. 7: Marketing and Your Social Media Presence
Register at www.southfieldchamber.com
Registration 8 a.m. • Meetings 8:30 – 9:15 a.m.
Chamber members: free • Non members: $5 each or $10 for
all 3 sessions. Northland Mall, space # 231 northeast corner.
Outside entrance is next to Medical Weight Loss.
Troy Chamber After-Hours Networking Event in
Partnership with the Rochester Regional Chamber
Sponsor: Clear Rate Communications
Featuring Royal Park’s “Best of Detroit Fare.” Cash bar,
appetizers included.
Aug. 13, 5 – 6:30 p.m.• Royal Park Hotel, 600 E.
University, Rochester. $12 per person ($17 to those
registering on the day of the event.) RSVP to
248-641-8151, [email protected] or
MSED Summer Event
21st Annual Marketing & Sales Professionals’ Golf
Outing to Benefit MSED Scholarships. Make an important
contribution to the future of our profession through
scholarships funded from the proceeds.
Aug. 15 • Noon – 7:30 p.m.
Twin Lakes Golf Club, Oakland Twp.
Individual golfer: $165 • Foursome: $600
Corporate foursome which includes foursome, hole
sponsorship and signage: $750. For information and
to register, visit www.msedetroit.org or call meeting
coordinators at (248) 643-6590.
Reinventing Macomb Chamber PAC event
WXYZ’s Chuck Stokes will moderate this event which
brings the business community together with local
elected officials for conversations that move the
community forward.
Aug. 23 • 8 a.m. • Gowanie Golf Club
24770 S. River Road, Harrison Twp.
$25 includes breakfast, no corporate checks accepted.
Visit www.macombcountychamber.com for more
The Greening of Detroit’s Live Love Local event.
This gathering brings together community partners, industry
leaders, farmers, environmentalists and foodies from
around the country. Sample local food from 25 of the area’s
hottest chefs. The day also includes hands-on environmental
activities for kids, tours of the Eastern Market and more.
edibleWOW will present the Local Hero Award.
Aug. 24 • Noon – 3 p.m.
Shed #5, Detroit’s Eastern Market, 2934 Russell St.
Tickets: $25 • Ages 6 -10: $10 • Ages five and under
are free. For more information and to purchase tickets visit
www.greeningofdetroit.com or contact The Greening of
Detroit at 1418 Michigan Ave., Detroit, MI 48216 or
(313) 237-8733.
WBEC Great Lakes Women’s Business Conference
Take the opportunity to achieve months of sales prospecting
as well as learn leadership and sales strategies through our
quality time sensitive workshops at this 2-day conference.
Sept. 24: Noon – 7:30 p.m.
Sept. 25: 8 a.m. – 5 p.m.
Suburban Collection Showplace, Novi
CEED members: $150 • non-members: $175
For information and to register, visit to
www.miceed.org or call (734) 677-1400.
Join the who’s who in healthcare at GDAHC’s Salute to
Healthcare Awards and dinner celebration.
Sept. 26 • 5:30 p.m. – 8 p.m.
International Banquet Center, 400 Monroe, Detroit
GDAHC members: $100 • non-members: $135
Register at www.gdahc.org
Sponsorship opportunities available. For more information
call 313-965-4123.
If you’re a contractor with the city,
what can you expect? Will you get
paid? How should you conduct your
In Chapter 9, municipalities
have the power to assume or reject
contracts or leases. If a contract is
rejected, it is treated as a pre-bankruptcy breach of contract, and
gives rise to an unsecured claim.
Last week, Emergency Manager
Kevyn Orr said ongoing contractor payments will be made on time
or perhaps ahead of schedule during the bankruptcy process.
The city plans to set up a hotline
for contractors to call.
But experts say there are increased risks of doing business
with a city in bankruptcy. Agreements that ensure payment, like
pre-payment or cash-on-delivery
work, are recommended.
Some vendors could find themselves in a high-speed workout
process with the city as it works to
shed debt. If the city doesn’t keep
up with payments, creditors will
evaluate whether or not they
would be required to continue to
provide services under those circumstances.
For contractors with a unionized workforce, cities in bankruptcies are permitted, subject to an order of the court, to reject collective
bargaining agreements.
Is there any change in how people
or businesses pay taxes?
There is no change to tax collection, either property or income
What happens next?
Already there is a flurry of lawsuits to block the bankruptcy, but
experts mostly consider those to be
The procedural details in a complicated bankruptcy are the next
steps. Filed last week with the petition were creditor lists and thousands of pages of supporting documents for Detroit’s Chapter 9 case.
Alice Batchelder, chief judge of
the U.S. 6th Circuit Court of Appeals, appointed U.S. Bankruptcy
Court Judge Steven Rhodes as the
judge for the case late Friday;
Rhodes must approve the petition.
On practical matters, city services will continue as usual and
city employees will be paid, Orr
said last week.
Then comes the line-by-line
renegotiation of debt and the city’s
finances via a reorganization plan.
Orr said the goal is for the city to
emerge from Chapter 9 in late summer or early fall of 2014.
What “tests” does Orr have to meet
for a Chapter 9 to proceed? What other approvals are needed?
There are five formal tests. The
first four: The city has to be a municipality; it has to meet state law
requirements for filing; it has to be
insolvent; and it has to want to file
a plan to adjust its debts. The fifth
test requires municipalities to
show that they have the agreement
of creditors or that they have a
good reason for not having it.
In a letter to Gov. Rick Snyder
and state Treasurer Andy Dillon
asking permission to file Chapter
9, Orr argues that he has bargained in good faith with creditors
willing to meet and that there are
impediments to bargaining with
others outside of bankruptcy
court. Creditors opposed to the filing likely will argue that Orr’s efforts don’t meet the “good faith”
Assuming the case proceeds, the
reorganization plan itself must
comply with the provisions of
Chapter 9. Among those are obtaining any regulatory or electoral
approval necessary to carry out
any provision of the plan.
An example would be the sale or
transfer of assets.
All fees paid in the case to consultants and legal teams must be
disclosed and deemed “reasonable.”
ceedings start.
How does the city even began to
work through a bankruptcy case involving 100,000 creditors?
That’s what the legions of attorneys and consultants are for. Doug
Bernstein, managing partner of
Plunkett Cooney PC’s banking,
bankruptcy and creditors’ rights
practice group in Bloomfield Hills,
said private firms are often used in
large bankruptcies to mail out notices to creditors or to set up websites for the bankruptcy.
“It may be unique to Detroit, but
it’s certainly not unique in New
York or Delaware,” Bernstein
What ripple effects does the bankruptcy have on other Michigan municipalities and on the state?
On Wall Street, the bankruptcy
could have consequences for the
ability of other municipalities in
Michigan, and the state itself, to
negotiate favorable borrowing
rates for general obligation bonds.
More will be known on the potential fallout as credit rating agencies file reports and analysts
weigh in.
Oakland County Executive L.
Brooks Patterson and Macomb
County Executive Mark Hackel
are planning a trip to New York
City to work to defend their counties’ AAA ratings. (For a differing
view, see story, Page 19.)
Will Detroit need debtor-in-possession financing?
In most large Chapter 11 bankruptcies, companies are able to
fund ongoing operations through
debtor-in-possession financing.
Lenders are willing to make what
are known as DIP loans because
they are considered senior liens on
the debtor’s assets.
“But cities don’t liquidate, they
operate,” said Matthew Wilkins, a
partner who specializes in bankruptcy in the Birmingham firm of
Brooks Wilkins Sharkey & Turco PLLC.
DIP financing is generally unavailable in Chapter 9 municipal
bankruptcies, through there is
some leeway for judges to approve
senior-debt financings after pro-
What about selling bonds?
said, “the bankruptcy filing may
actually make it easier for Detroit
to raise money through bond
How? Wilkins said most current
debt likely will be wiped off the
books at a very steep discount of
pennies on the dollar.
“The question is: Will there be a
market then for bonds issued by
the city of Detroit?” he said. “New
creditors will have priority over
old creditors, and with most of that
debt off the books, the people who
buy bonds might be willing to buy
Can Detroit expect aid from the
Amber McCann, press secretary
for Senate Majority Leader Randy
Richardville, R-Monroe, said there
has not been any discussion about
sending state financial assistance
to Detroit as it moves through
bankruptcy because the filing
came sooner than anticipated.
McCann said when the full Senate returns to Lansing in late August following the summer break,
Detroit’s bankruptcy will surely
be a major topic of discussion.
Sources: Crain’s research, Jaffe
Raitt Heuer & Weiss PC
g your
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New Bank?
Bankruptcy filing should not affect
arena district, M1 Rail projects
Two of the highest-profile projects in Detroit — the $137 million
Woodward Avenue streetcar line
and the $650 million Detroit Red
Wings arena district — should be
unaffected by the city’s bankruptcy, those involved said Friday.
That’s because Detroit’s Downtown Development Authority, which
is providing $9 million in funding
for construction of the streetcar
line and will own and partially finance the proposed hockey arena,
has a separate budget and revenue
stream from the general fund, said
Brian Holdwick, executive vice
president of business development
of the Detroit Economic Growth Corp.
“We don’t think (the DDA or
DEGC) are affected in any way, at
least not detrimentally,” said Bill
Nowling, spokesman for Detroit
Emergency Manager Kevyn Orr,
who has been overseeing the city
after being appointed by Gov. Rick
Snyder in March.
The DEGC is organized under
state law as a public nonprofit and
it remains a separate entity from
the city, which filed for Chapter 9
bankruptcy protection in federal
court in Detroit Thursday.
The DEGC provides staff for the
DDA, which is a city authority, under a professional services contract that’s paid by the city with
general fund dollars, Holdwick
said. Such contracts could be exposed to the vagaries of bankruptcy, but are not expected to be
among cuts made by Orr.
City general fund tax dollars are
not being used to finance construction of the streetcar line or the
hockey arena. Instead, it’s a blend
of mostly private financing with
some other public funding.
“We do not anticipate the city of
Detroit filing for Chapter 9 bankruptcy protection will adversely
affect the project,” M1 Rail President and CEO Matt Cullen said in
a statement Friday to Crain’s.
Hockey arena
In a nonbinding memorandum
of understanding unveiled in
June, the DDA said it intends to
use $284.5 million in property taxes captured within its 615-acre
downtown district to pay off bonds
issued by the state to build the
18,000-seat hockey and entertainment arena at Woodward and I-75.
The remainder of the arena
costs, or $365.5 million, will be
picked up by Olympia Development
of Michigan, the property development arm of Mike and Marian Ilitch’s $2 billion Detroit business
empire that includes the Red
Wings, Detroit Tigers and Little Caesars pizza chain.
The Michigan Strategic Fund will
issue 30-year bonds to cover the
public portion of the arena’s construction costs.
To pay off the bonds, the DDA intends to apply approximately $12.8
million annually (not to exceed $15
million) from a property tax capture in its district (tax increment financing), and another $2.15 million
in average annual payments made
by the DDA from other annual
property tax collection.
Lastly, Olympia will pay the
DDA $11.5 million annually under
a management contract.
The special tax capture has been
in place for more than two decades
and legally can’t be used for anything other than economic development.
“TIF dollars have never been allocated to general fund. Those are
dollars that shouldn’t be part of the
bankruptcy process. They’re not
entitled to those at all,” Holdwick
According to the DEGC website,
“funding for DDA programs comes
from a number of sources including grants, contracts, interest on
loans and captured tax increments
— increases in property taxes that
result from new investments — on
approved developments. Property
owners within the DDA district
pay a 1 mill property tax to fund
the basic operation of the DDA.”
The DDA is listed as one of the
city’s top 20 creditors, owed $33.6
million. The money is listed as a
loan, but no details are disclosed,
such as whether it was a single
loan or multiple loans, when it was
made, if the amount is the total
loan or just remaining principal
and what the money was used for.
Bill Shea: (313) 446-1626,
[email protected]
Crain’s reporter Kirk Pinho contributed to this report.
Special bonds have better chance of being paid
While Detroit’s bondholders will
be hat-in-hand fighting for owed
debt, holders of the city’s special
revenue bonds have a better
prospect of payment through the
Chapter 9 process.
Detroit’s special revenue bonds,
including the $5.9 billion bond
debt of the Detroit Water and Sewerage Department, are protected under Section 922 D of the U.S. Bankruptcy Code.
Payments on a special revenue
bond are guaranteed solely from
revenue generated from an entity
— such as the water department —
rather than from taxes, as is the
case with other bonds.
“The holders of special revenue
bonds are not subject to an automatic stay like other bondholders,” said Paul Hage, a partner at
Southfield-based Jaffe Raitt Heuer &
Weiss PC. “That means they (the
entities) are free to apply payments to the indebtedness.”
But legal arguments will be
raised and those payments will be
attacked by other bondholders,
said Timothy Wittebort, a partner
at Howard & Howard Attorneys PLC in
Detroit Water and Sewerage
Department insured bond debt:
National Public Finance Corp., a
subsidiary of MBIA Inc., and
Assured Guaranty Ltd. insure $4.3
Financial Guaranty Insurance Co.
insures $1.5 billion.
Berkshire Hathaway Assurance
Corp. then insures a wrap-around
on the original guarantee on nearly
$400 million of the FGICguaranteed bonds.
$476 million in bond debt,
which matures in 2041, is
Source: The Bond Buyer
Royal Oak.
Wittebort said Detroit’s pensioners will argue that the Michigan Constitution protects their
pensions and go after the revenuegenerating assets.
It states: “The accrued financial
benefits of each pension plan and
retirement system of the state and
its political subdivisions shall be a
contractual obligation thereof
which shall not be diminished or
impaired thereby.”
However, Hage and Wittebort
Let ours compete for
your business.
are unsure how Judge Steven
Rhodes of U.S. Bankruptcy Court will
rule because of the lack of historic
case law in municipal bankruptcy.
“This whole area of the law,
there is no precedent,” Wittebort
said. “If anyone says they know
what is going to happen, it’s a lie,
because no one has ever seen a municipal bankruptcy of this scope.”
Negotiations between Emergency Manager Kevyn Orr and
creditors to restructure the water
department by moving it to a new
authority occurred over the past
few weeks.
Orr’s new authority proposal included restructuring of the bonds,
which would result in annual revenue of $50 million paid to the city,
The Bond Buyer reported Friday.
But it’s unclear whether those
negotiations broke down before
bankruptcy or legally can continue during the bankruptcy process,
the lawyers said.
Standard & Poor’s and Moody’s Investors Service downgraded the department’s debt to junk status this
month, citing the threat of Chapter 9.
Dustin Walsh: (313) 446-6042,
[email protected]
Loan amounts: $1,000,000.00 and above.
Investment Real Estate
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Page 22
July 22, 2013
Mechanic: A wrenching tale of 5 decades of tooling around
■ From Page 3
repair order, you didn’t get the
job,” Randall said.
He soon moved to Coffey Cadillac in Detroit, which later became
Seymour Cadillac. With the exception of an ill-fated six-month attempt at running his own gas station in the 1970s, Randall spent the
rest of his career working in Cadillac dealerships, be it in the parts
department, handling warranty
claims, fixing cars or doing the
new-car prep work that occupied
his last 30 years on the job.
In 1980, he joined Don Gooley
Cadillac when Gooley opened his
first store, in Port Huron.
“He was my first employee,”
said Don Gooley, who, at 72, also
has been in the business 50 years.
Gooley said Lee was dedicated
and “a fanatic about everything he
did,” keeping careful records and
knowing everything that was going on, and that he’s been fortunate to have many longtime employees. “You can replace them in
body but not in soul.”
Randall followed the business as
it changed locations from Port
Huron eventually to St. Clair
Shores. For the past eight years,
Randall worked under Ken Failla,
the new-car manager.
Failla said Randall took pride in
his work, making sure that when a
car went out the door, it didn’t
come back, even for little things
like low air pressure in the tires.
“He didn’t get all ticked off and
throw things around. To him, it
was the job,” Failla said.
Demand is high – and growing – for auto technicians
Like so many other skilled trades fields these
days, automotive technicians are in high demand —
and there’s a talent gap between jobs posted and
available workers to fill them.
In Southeast Michigan, employers such as car
dealerships and body shops have posted 777 open
jobs in the first six months of this year, and this time
last year were seeking more than 1,200 mechanics
and technicians. That’s according to data tracked by
the Detroit-based Workforce Intelligence Network.
As is the case with industrial jobs like machining
and welding, for at least a generation parents have
discouraged their children from entering the auto
service world, pushing them toward white-collar
jobs even though many technical degrees yield better salaries than many college degrees, said Tony
Molla, vice president of communications for the
Leesburg, Va.-based National Institute for Automotive
Service Excellence, which certifies technicians.
Demand will grow in the future; about half of all
technicians will be eligible to retire within 15 years.
“If there is such a thing as job security, it’s in the
trades,” said Molla, also noting that garages compete for mechanics not just with each other, but also
If there was one thing that
ticked Randall off, it was when a
car came in from another dealer
whose techs hadn’t done their initial prep work — a task for which
the factory pays.
“They’re getting paid to do a job
and doing nothing,” Failla said.
That didn’t slow him down,
though. Randall was lifting 22-inch
chrome wheels right up until his
last day, a task for which many
younger wrenchers used hoists,
the aerospace industry.
The mean annual salary for automotive technicians, according to the U.S. Bureau of Labor Statistics,
is about $39,000, and Molla said that’s on the low side
compared to industry numbers he’s seen.
Al Lecz, director of employer strategies at WIN,
said all nine community colleges in the Southeast
Michigan Community College Consortium have automotive service training programs, with Macomb Community College’s Center for Advanced Automotive Technology premier among them. The nine colleges in the
consortium are Macomb, Mott Community College, Oakland Community College, St. Clair Community College,
Wayne County Community College District, Henry Ford Community College, Monroe County Community College, Schoolcraft College and Washtenaw Community College.
Other resources include the National Automotive
Technicians Education Foundation and NATEF-accredited schools; the Automotive Training Managers Council;
and automotive manufacturers, which operate internal training programs. General Motors Co.’s is
called the General Motors Automotive Service Educational Program.
— Gary Anglebrandt
Failla said.
“Finding someone with the
same owner for so many years,
that’s incredible. It shows the relationship between Mr. Gooley and
Lee,” he said.
Tony Molla is vice president of
communications for the Leesburg,
Va.-based National Institute for Automotive Service Excellence, the organization behind the “ASE certified”
tags for automotive service technicians. Molla looked Randall up and
saw that he was first certified in
1976, four years after the organization was founded.
It’s unusual for a technician to
last that long, he said, because
most of them can’t physically keep
up with the job. Sometime in their
50s, technicians usually move into
management or do something else.
“Think about that. In the space
of one career, he went from working on vehicles with points, plugs
and condensers to vehicles with
McLaren: Suit seeks to remove barrier to hospital
■ From Page 1
On June 13, McLaren filed a
claim of appeal before Judge
Colleen O’Brien in Oakland County Circuit Court.
“The argument we raised in the
appeal is that the (CON) standards
are not valid. The standards apply
to an existing hospital and we are
proposing a new hospital,” said
Greg Lane, McLaren’s chief administrative officer.
“We also believe Community
Health has a right to look at
demonstrated need beyond the
standards if there is a need. We
have support for a new hospital
from the community and we have
proved the need in studies.”
In its lawsuit, McLaren said the
CON bed standards don’t apply to
McLaren’s proposed hospital project because the regulations only
cover “adding beds to an already existing, licensed hospital, replacing
beds within a two-mile replacement
zone or relocating beds to an already existing, licensed hospital.”
Instead, the lawsuit said
McLaren plans to move the 200
beds “to a community where a licensed hospital does not exist.”
However, according to Community Health’s CON standards, hospital bed regulations apply to “beginning operation of a new
hospital,” as well as “the physical
relocation of hospital beds from a
licensed site to another geographic
location” that is more than two
miles for a county with more than
200,000 population, and adding
new beds to an existing hospital.
Community Health officials denied McLaren’s CON, in part, because it asked to transfer beds from
an existing hospital to a geographic
site more than two miles from its
McLaren Oakland Hospital.
The distance between McLaren
Oakland Hospital and the proposed
hospital site in Independence
Township is just less than eight
Bret Jackson, executive director
of the Economic Alliance for Michigan,
which opposes the proposed
McLaren hospital, said there are
six hospitals within a 22-minute
drive of Independence Township.
Those hospitals average a 53 percent occupancy rate based on 989 licensed beds.
Studies also show health care
costs increase in regions with excess beds and duplication of services, he said.
Lane said a study commissioned
by McLaren in 2011 concluded that
an unmet need exists for 161 hospital beds in the Clarkston/Independence Township community that
is growing and produces 25,000 annual patient discharges. The hospital would be at least five miles
from other hospitals and 25 minutes farther than 11 of the 15 hospitals in the area, he said.
Jack Weiner, CEO of St. Joseph
Mercy Oakland Hospital, said another hospital is not needed in the
market because health care reform
has continued to dampen inpatient
services. St. Joe is 14 miles south
from the McLaren proposed site
along I-75 off Exit 75 and Genesys
Health Park is 19 miles north off I-75
and Exit 108.
“With the pressure on cost containment, overall utilization has
gone down in the market the past
year,” Weiner said. “You have people (McLaren)
proposing solutions to problems that don’t
Weiner said
the majority of
patients come to
St. Joseph Mercy from the
pendence Township market area where McLaren
is proposing the hospital.
“There has been a major expansion in health care services there
with a surgery center, oncology center and diagnostics,” he said. “The
only thing not there is inpatient
beds and there is no need for them.”
In its lawsuit, McLaren is asking the court to reverse Community Health’s decision and enter an
order approving McLaren’s CON
Tom Cranmer, an attorney representing McLaren in the Troy office of Miller, Canfield, Paddock and
Stone PLC, said he believes the Circuit Court has the authority to
overturn Community Health’s decision based on state law.
Lane said he expects the court to
make a ruling by mid-fall. He
added that company officials con-
tinue to discuss with state legislators sponsoring a bill that would
allow for the hospital to be built.
Two other Detroit-based health
systems accomplished the same
CON bypass maneuver in 2002.
During a legislative lame duck
session, Henry Ford Health System
and St. John Providence Health System won special state legislative
approval to transfer beds from existing hospitals to new hospitals in
Oakland County.
In 2008, St. John’s 200-bed Providence Park Hospital in Novi opened,
followed by 300-bed Henry Ford West
Bloomfield Hospital in 2009.
Meanwhile, McLaren is moving
forward with plans to develop its 80acre site — the McLaren Health Care
Village at Clarkston — with health
care facilities, restaurants, retail
stores and other commercial activities.
Located at Exit 89 off I-75 at 5701
Bow Pointe Drive, plans for the
McLaren Health Care Village include senior housing, assisted living, restaurants, banking, retail
and joint ventures with medical device manufacturers and pharmaceutical companies, Lane said.
“We are having discussions
right now. We have people ready to
pull the plug once we get the hospital approved,” Lane said. “We
could break ground on an imaging
center and another health-related
building (this year).”
Jay Greene: (313) 446-0325,
[email protected]
electronic control systems,” Molla
said, referring to automotive ignition systems.
As in other skilled trades, guys
like Randall are becoming scarce as
they retire and fewer young people
enter the field, Molla said. The
shortage in mechanics mirrors
those of welders, machinists and
Randall no longer drives a Cadillac — he estimates he’s driven
25,000 in his lifetime — but said one
of his favorites was a 1979 Coupe
“Excellent car. It was beautiful,
it was big, good performance and
everything, and then from 1980 on,
it really went downhill, probably
almost up to 2000. Now the quality
is really excellent,” he said.
But as quality went up, the fun
went down as electronics took
over and diagnostic work meant
tearing apart a dashboard, steering column or seats rather than
getting under the hood.
So retirement suits Randall just
If he chooses to tinker with engines, his tools are all in one place in
his garage, which is just as perfectly
clean and organized as his home.
Contrary to some stereotypes of
mechanics, the best of them are
not the types to ever have carburetors and sway bar links sitting on
the coffee table, he said.
“The better ones have more stuff
and take care of it,” Randall said.
“Their houses look like the quality
of their work.”
DMC: Is a
cost really
a cost?
■ From Page 3
not part of the $500 million.”
Widgren said Legacy DMC
board members know the DMC
wants to strengthen its business
model by building ambulatory
care centers in the suburbs. The
Troy center is one of several
that DMC plans to build outside
Detroit over the next several
years, CEO Joe Mullany said.
“We are not opposed to that
because the centers will end up
sending specialty patients to
DMC and help them out with additional revenue,” Widgren said.
But Widgren, a former DMC
board member, said Legacy
DMC and the former DMC board
that negotiated the sale to Vanguard “always intended the capital projects to be spent on the
Detroit hospitals and Huron Valley-Sinai Hospital (in Commerce
Township). We would not accept
that spending as a reduction in
the $350 million.”
Rising said he respects Widgren’s opinion on what should
be counted as capital spending,
but “I don’t think that is the legal conclusion.”
The DMC considers the purchase of magnetic resonance
imaging medical devices, da
5:58 PM
Page 2
July 22, 2013
Page 23
Pig: Food group expands with bistros, bakery
■ From Page 3
Technology Services LLC, buying
computer mainframes and selling
them either whole or for parts until a copyright and trade secrets infringement lawsuit filed by EMC
Corp. led her to dissolve the company in 2002.
Lopus said after the suit was
over, she closed up shop and never
looked back.
“I essentially lost everything,”
she said. “But it didn’t kill me.”
Rebooting into restaurants
After licking her wounds, Lopus
started a technology consulting
company, Mindy VanHellemont LLC,
which she sold to her husband in
2008 to pursue her passion for food
and wine.
An oenophile at heart, Lopus attended the Culinary Institute of America in the Napa Valley and learned
about wine with the ambition of
starting a food and wine consulting company.
In 2009, she became a certified
wine specialist and went on to become a sommelier through the
Court of Masters.
Instead of starting a consulting
company, however, Lopus and her
husband spent $800,000 opening
Tallulah. With its light colors and
airy, West Coast atmosphere, Tallulah drew crowds with a farm-totable menu with entrees mostly
priced in the $20s that included
things such as steamed wild halibut with green garlic, maitake
Vinci surgical robots or any project that increases patient access to be a routine capital project.
“It will automatically count
toward the $350 million. The
bucket is very broad,” Rising
Last year, Widgren said, the
Legacy DMC board became concerned that
the medical
center was
planning to
claim ambulatory care
costs as routine capital
But plans to
build a center last year in Royal Oak were
shelved, and the discussion
never came up.
“We always expected at some
point (a discussion) would be
triggered. Now might be a good
time to try and understand
each other on this point,” Widgren said. “If they want to clarify this, that they believe the
$350 million should be reduced
by $42 million, we will have a
discussion with them about it.”
But Widgren said that if the
DMC intends to spend the balance of the $350 million on ambulatory care projects, “that is
not what any of us thought the
money would be used for. We
have a lot of capital needs to
upgrade the hospitals.”
Jay Greene: (313) 446-0325,
[email protected]
mushroom and lemon; and duck
breast with charred radicchio,
baby carrot and fig.
“You have to pay attention to
what the people want,” Lopus said.
“It’s not about what you want. You
have to look at the community and
figure out what’s lacking.”
Lopus and VanHellemont then
spent another $800,000 to open Bella Piatti across from the Townsend
Hotel. The couple divorcedlast
year, and Lopus got possession of
Tallulah’s success drew the eye
of Grosse Pointe’s Jon Cotton, who
persuaded her to bring her restaurant expertise to Grosse Pointe
She jumped at the chance.
“When I came out to Grosse
Pointe, it all came together,” she
In March, Lopus spent $400,000
to open Red Crown, a bistro located at 15301 Kercheval Ave. in a former Standard Oil service station
on the edge of Grosse Pointe Park.
The Cottons paid to get the property restaurant-ready, but Lopus financed the build-out.
Red Crown is modern in design
with hanging glass orbs, white
subway tile and two large garage
doors that open to a patio. It
serves American comfort food like
shrimp and grits with bacon and a
fried egg for $16, barbecue baby
back ribs for $18 and waterman
caramelized goat cheese and
smoked pecans for $9.
Now, Lopus is one month away
from opening a bakery and Great
Lakes Coffee outpost called Bona
Fide Baking Co. at 15215 Kercheval,
a short walk away from Red
Bona Fide Baking Co. will be
open for breakfast and lunch, serving as much farm-to-table cuisine
as possible. The bakery will also
make artisanal breads to service
Lopus’ restaurants.
“I was spending $20,000 a year
on give-away bread,” Lopus said.
Lopus is planning to sell her
bread on the wholesale market and
aims to unveil it during the Michigan Restaurant Show in October at
the Suburban Collection Showplace
in Novi.
Keeping up quality
If all goes well, Lopus says she
wants to build a casual wine bar in
the parking lot of the bakery. She
also built a commercial kitchen
next to Bona Fide Baking Co.’s
kitchen to accommodate future
If all goes according to plan, Lopus’ fledgling Silver Pigrestaurant
group could generate $4.5 million
in sales in 2014.
Lopus is dividing her time between Red Crown and Tallulah
and getting Bona Fide Baking Co.
off the ground, which restaurant
consultant Nicole Nassif, founder
of Ferndale-based restaurant con-
sulting firm Solutions A la Carte,
said can be a difficult challenge for
inexperienced restaurateurs to
Nassif said learning to manage
through other people will be paramount to Lopus’ success.
“When you only have one location, the decisions are easier because you are visualizing and
making them,” Nassif said. “Multiunit management takes a different
skill set because your job goes
from running everything intimately to making decisions through
other people.”
Patrick Coleman, who owns
Beans and Cornbread, Red Velvet,
Sidebar and the recently opened
Southern Nosh, all in Southfield,
said customers like to see the owner’s face when they visit an independent restaurant.
“Once you open a second place,
you can’t be in two places at once,
and sometimes people get a little
miffed when they don’t see the
owner,” Coleman said.
But Coleman warned that the
bigger obstacle is keeping an eye
on quality.
“My advice is to get a trusted
confidant, someone that emulates
you and understands your philosophy and mimics what you do,” he
said. “You need to find someone
who understands that this is how
we pay our bills.”
Nathan Skid: (313) 446-1654,
[email protected]
S3: Opportunities in Eastern Europe
■ From Page 1
Staffing, the council’s founding
members are Chevron Corp., Exelon
Generation, Thermo Fisher Scientific
Inc. (NYSE: TMO) and Western
Union Co.
The nonprofit council came together in April to promote commercial relations between the U.S.
and Lithuania by enhancing trade
and investment, and to advance
the relationship between the two
countries while educating the public about its importance.
It ensures that American executives and key Lithuanian and U.S.
government leaders have a forum
to advocate for further trade and investment opportunities in Lithuania and to amicably resolve issues
that might prevent future growth
in the two countries’ commercial
relationship, the council said on its
The council plans to sponsor
policy conferences, briefings and
major events featuring senior U.S.
and Lithuanian officials, academics and business leaders.
The relationships Pasky and S3
have forged in Lithuania are also
giving the company a base for expansion to other Eastern European countries.
S3 recently opened an office in
Latvia, where it is recruiting employees for several customers, including Skandinaviska Enskilda
Banken AB, a Swedish financial
bank serving corporate customers.
S3 is also exploring presences in
Poland and Romania.
A large U.S. agricultural company in Poland and a United Kingdom Bank in Romania “have approached us and asked if we would
be able to support them in those
markets,” Pasky said.
“So we’re exploring those markets. ... We’ve never gone into a
new market without already having established business with a
Pasky and her husband, S3
Chairman Paul Huxley, were following the Detroit Symphony Orchestra around on its European tour in
the mid-’90s when they decided to
detour to Lithuania.
Pasky’s grandparents had emigrated to the U.S. from the Eastern
European country in 1911.
While there, Pasky sought out
the Lithuanian prime minister
and began a dialogue that led to S3
opening an office in the country
around 1999 and a seat on the
prime minister’s economic advisory council.
“We were Eastern European pioneers,” Pasky said. “Everyone was
going to India in the late ’90s; we
weren’t big enough.”
But Pasky and S3 were right at
home in Lithuania.
“It was an opportunity for us to
make a difference there, and for us
to be part of a country as it rebuilds its economy from scratch,”
she said.
S3 provides contract staffing
and IT services, executive search,
vendor management programs
and call center services for customers in the financial, insurance
and energy industries.
Pasky said the company has
placed nearly 2,000 people in jobs
in Lithuania.
The company posted revenue
of more than $200 million last
year and is projecting $240 million to $250 million this year,
Pasky said.
Many Eastern European countries are poised to grow their
economies because of their access to the Russian market, said
Charlie Streeter, vice president,
sales and marketing for Warrenbased MSX International Inc.
MSX serves as a managed service provider, overseeing contract employees and contracts for
customers and providing contract staffing itself.
Among its clients is Poland,
which is a growth market, particularly for the auto industry, he said.
MSX has offices in Poland and also
in Moscow.
“Obviously, we’ll be moving
into other Eastern European countries as well,” Streeter said.
MSX looks to serve its customers not only in the U.S., “but
wherever they may be or where
we think they may be going,” he
Sherri Welch: (313) 446-1694,
[email protected]
GROUP PUBLISHER Mary Kramer, (313) 446-0399
or [email protected]
ASSOCIATE PUBLISHER Marla Wise, (313) 4466032 or [email protected]
EXECUTIVE EDITOR Cindy Goodaker, (313) 4460460 or [email protected]
MANAGING EDITOR Jennette Smith, (313) 4461622 or [email protected]
Hanus, (313) 446-1621 or [email protected]
PROJECTS Daniel Duggan, (313) 446-0414 or
[email protected]
SENIOR EDITOR/DESIGN Bob Allen, (313) 4460344 or [email protected]
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(313) 446-0325 or [email protected]
Amy Haimerl, entrepreneurship editor: Covers
entrepreneurship, second-stage companies and
small business. (313) 446-0416 or
[email protected]
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contracting and Oakland and Macomb counties.
(313) 446-6796 or [email protected]
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technology and biotechnology. (313) 446-0337 or
[email protected]
Kirk Pinho: Covers real estate and the city of
Detroit. (313) 446-0412 or [email protected]
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advertising and marketing, the business of sports,
and transportation. (313) 446-1626 or
[email protected]
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food industry and entertainment. (313) 446-1654,
[email protected]
Dustin Walsh: Covers the business of law, auto
suppliers and steel. (313) 446-6042 or
[email protected]
Sherri Welch: Covers nonprofits, services, retail
and hospitality. (313) 446-1694 or
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and utilities. (517) 403-4403 or [email protected]
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CHAIRMAN Keith E. Crain
TREASURER Mary Kay Crain
Executive Vice President/Operations
William A. Morrow
Executive Vice President/Director of Strategic
Operations Chris Crain
Vice President/Production & Manufacturing
Dave Kamis
Vice President/Chief Information Officer
Paul Dalpiaz
Vice President/Chief Human Resources Officer
Margee Kaczmarek
G.D. Crain Jr. Founder (1885-1973)
Mrs. G.D. Crain Jr. Chairman (1911-1996)
1155 Gratiot Ave., Detroit MI 48207-2732;
(313) 446-6000
Cable address: TWX 248-221-5122 AUTNEW DET
published weekly, except for a special issue the third
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Entire contents copyright 2013 by Crain
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6:22 PM
Page 1
Page 24
July 22, 2013
Sax theft
can’t silence
Vegas show
etroit musician
LaDarrell Johnson,
who goes by the
stage name Saxappeal, said
he was able to play his
scheduled show at Artifice in
Las Vegas last Friday, even
though his
prized saxophones
were stolen
out of his
car in
thanks to
an outpouring of community support,
he said.
Shortly after word got out
last week about the theft,
Johnson received a phone
call from the Detroit Saxophone Center offering to lend
him enough equipment so
he wouldn’t have to miss
any of his upcoming shows,
he said.
“There were tons of people who reached out to me
to see if they could donate
their instruments,” said
Johnson, a Crain’s “20 in
their 20s” winner this year
for his work as one of the
city’s up-and-coming jazz
In all, Johnson said he
lost about $12,000 worth of
Instead of turning bitter,
Johnson said, he understands that the theft was
about just one person looking for a quick payday.
“It doesn’t give me a bad
outlook on Detroit,” Johnson said. “There are going
to be bad apples in every
barrel in every city.”
Dinner, party, tour to mark
Henry Ford’s 150th birthday
The Detroit Economic Club
and its chairman, Bill Ford
Jr., are hosting the club’s inaugural Chairman’s Dinner
on the 150th birthday of
Ford’s great-great grandfather, Henry Ford.
The event is scheduled
for 6-11 p.m. July 30 at The
Henry Ford in Dearborn.
Tickets are $150 a person
for club members and $250
for nonmembers. A $250
member VIP ticket includes
a pre-event reception and
Model T rides. Details are at
Also on tap to celebrate
Ford’s birthday is a free celebration July 27 at Henry
and Clara Ford’s historic Fair
Lane estate in Dearborn.
The Edsel & Eleanor Ford
House in Grosse Pointe
Shores, which soon will
take ownership of Fair
Lane from the University of
Michigan-Dearborn, is hosting the daylong party, with
assistance from Henry Ford
Community College and its
culinary team. Details are
at HenryFord150.com.
The Fair Lane festivities
will continue July 28 with a
tour of more than a dozen
sites significant in Ford’s
life and a vintage car show
hosted by the Piquette Ts.
The car show is open to
Ford vehicles manufactured between 1903 and
1947, marking the founding
of Ford Motor Co. to Henry
Ford’s death, at a cost of $68
per car and $50 per additional passenger. For details, go to piquettets.org.
Report: Michigan’s Q2 VC
investing at just $3M
Four times a year, the
Washington, D.C.-based National Venture Capital Association, in conjunction with
PricewaterhouseCoopers and
Thomson Reuters, releases
quarterly statistics on venture capital activity by
In good quarters, local
venture capitalists and the
Michigan Venture Capital Association trumpet the news.
In bad quarters, they take
the position that you can’t
make assumptions quarter
by quarter, that you need to
take the long view.
The second-quarter stats
just came out. Hmmm, let’s
take the long view, ’cause
the short view wasn’t pretty.
According to the MVCA,
only $3 million was invested by state VCs in 10 deals,
which ranked Michigan
39th in the U.S.
California, as it is every
quarter, was No. 1, with $3.3
billion invested in 385 deals.
Massachusetts was No. 2,
with $773 million invested
in 84 deals.
In the five previous quarters, Michigan investments
had ranged from $17.7 million to $111.2 million.
Other Midwest states
fared better — Ohio had
$94.9 million; Illinois, $53
million; Minnesota, $26
million; Wisconsin, $11.4
million; and Indiana, $3.7
䡲 Kouhaila Hammer, presi-
dent and
CEO of
Dearbornbased Ghafari Associates LLC,
was named
board president of the
Society of
Detroit, effective July 1.
Scherzer could cash in for ’14
Pitcher Max
Scherzer’s performance
over the second half of
the season will be
critical not only for the
Detroit Tigers’ hopes of
winning the American
League Central, but for
his off-season financial
Bill Shea’s “Shea’s Stadium” blog on the business of
sports is at www.crainsdetroit.com/sheasstadium
Saturday fun on Belle Isle
The Belle Isle
Conservancy is teaming up
with the Detroit Recreation
Department and others to
bring island tours, kayak
and bicycle rentals, and
other programs to Belle
Isle one Saturday each
month for the remainder of
the summer.
Sherri Welch’s blog on “The Business of Being
Nonprofit” can be found at
Former ‘Pontch’
reopens after
he Crowne Plaza Detroit Downtown Convention Center, formerly the Hotel Pontchartrain,
opened at 2 Washington
Blvd. across the street from
Cobo Center, after a $5 million renovation to its rooms,
lobby and restaurant. The
new owner is the Mexican
and European investors
group Pontchartrain Detroit
Hotel LLC, operated by Equity
Hospitality Management and
franchised by an affiliate of
Denham, England-based InterContinental Hotels Group.
䡲 Ford Motor Co. purchasing chief Tony Brown is retiring after 36 years with the
company. He will be replaced by Hau Thai-Tang, vice
president of engineering, effective Aug. 1.
䡲 Southfield-based nonprofit management assistance company Detroit Executive Service Corps named
Keith Ramundo president and
CEO, effective Aug. 1. Ramundo, COO and vice president of client engagements,
succeeds board member
Suzanne Dibble, who had been
president and CEO as a volunteer.
䡲 Jack Martin, who had
been Detroit’s CFO, is the
new emergency manager for
the Detroit Public Schools.
Martin, who replaced Roy
Roberts, is former emergency manager of Highland
Park Schools.
䡲 Envisioning an enter-
tainment-heavy mixed-use
development on Wayne
County’s five justice department properties in downtown Detroit, Dan Gilbert’s
Rock Ventures LLC entered its
bid for the properties, including the half-built jail
䡲 New York City-based Elliott Management Corp. agreed
to extend until Sept. 15 a
standstill agreement with
Detroit’s Compuware Corp.
that was to expire July 15.
The agreement keeps Elliott
from taking further action
in its takeover bid for the
software services company.
䡲 The city of Detroit
agreed to have lifted a temporary court order that bars
New York City-based insurer Syncora Guarantee Inc.
from trying to curb the city’s
access to casino tax revenue,
Bloomberg reported.
䡲 Troy-based Flagstar Bancorp Inc. announced that it
could lay off as many as 300
employees in a move to out-
source some of its mortgage
䡲 ESPN chose Austin,
Texas, over Detroit, Chicago
and Charlotte, N.C., as the
North American host city
for its 2014-17 summer extreme-sports X Games.
䡲 The Detroit Lions and the
Big Ten Conference signed a
six-year deal for a college
football bowl game to be
played at Ford Field beginning in 2014. The bowl will
get a name once a sponsorship deal is signed, the Lions said.
䡲 The Detroit Region Aerotropolis Development Corp.
announced that it will call
itself VantagePort as part of a
rebranding marketing effort. Tim Keyes, former economic director for the city
of Romulus, was formally
named its first CEO.
䡲 Dearborn-based Severstal Dearborn LLC announced
the dissolution of Double Eagle Steel Coating Co., its joint
venture with U.S. Steel Corp.,
because of a decline in demand for electro-galvanized
products, the company said.
䡲 Japan’s Toray Industries
Inc. took a 20 percent stake in
Wixom-based auto carbonfiber supplier Plasan Carbon
Composites Inc. in a move underlining potential growth
for carbon-fiber parts, Plastics News reported.
䡲 St. Clair Shores-based
Prestige Automotive Group
paid $15 million to Bloomfield Hills-based Penske Automotive to acquire Rinke
Cadillac in Warren, then renamed it Prestige Cadillac.
䡲 Chen Chow Brasserie
closed in downtown Birmingham; the Asian-fusion
restaurant was the last remnant of the now-defunct Dali
Restaurant Group’s presence
䡲 Happy Asker, owner of
the Farmington Hills-based
Happy’s Pizza chain, was released on bond after federal
charges that he and others
kept fraudulent accounting
records and falsely reported
business taxes, the AP reported.
䡲 The University of Michigan Hospitals and Health Centers was ranked No. 1 in
Southeast Michigan on the
2014 U.S. News & World Report’s Best Hospitals list.
䡲 Detroit Metropolitan Airport will replace all lighting
fixtures in its parking structures with LED lights, saving 66 percent on its annual
electric bill. Macomb Township-based Rauhorn Electric
Inc. won the project bid,
pegged at $6.2 million.
䡲 Ascension Health of
Michigan announced that
Farmington Hills-based Duffey Petrosky & Co. has taken
over its advertising and
marketing duties.
䡲 The acquisition of the
Southfield-based global auto
information provider R.L.
Polk & Co. by Englewood,
Colo.-based IHS Inc. closed,
Automotive News reported.
䡲 Evanston, Ill.-based developer Bill Hults is leading a
group of investors who want
to convert the 3.5 millionsquare-foot former Packard
plant into a commercial,
housing and entertainment
complex, The Detroit News
䡲 The University of Michigan Medical School’s Faculty
Group Practice joined six of
the 32 other Pioneer accountable care organizations nationally in announcing plans to leave the
Pioneer ACO program.
䡲 The Oak Park City Council voted to allow up to 20
restaurants to sell beer and
wine by the glass.
䡲 The state Emergency
Loan Board approved a plan
to suspend health care coverage for Pontiac city retirees and raise their
monthly pension payments.
“Eastern Market BBQ”
is the Week 2 winner in the
Crain’s Detroit Business
Summer in the City photo
contest. The image was one
of two taken at Bert’s Marketplace at Eastern Market
by James Tocco of Grosse
Pointe. Judges said they
could “smell the smoke and
hear the sizzle” in a photo
that “screamed summer.”
“The great smells caught
my nose and lured me over
to Bert’s,” said Tocco, 59,
whose grandfather had a
fruit peddler’s truck route
based out of the market.
Tocco owns Designers & Partners LLC, a marketing design
firm in Warren.
Tocco wins a $50 gift certificate to The Whitney
Week 3 entries close at
noon Monday; the prize is a
set of ties from Cyberoptix Tie
Lab. You can enter at crainsdetroit.com/photocontest
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