Crain's Detroit Business, Nov. 7, 2016 issue

American Axle’s big buy, big risk

Denise Ilitch’s juggling act

Deal dilutes Dauch family’s control of company, Page 3

New role as chair of Horizon Global adds to portfolio, Page 3

NOVEMBER 7 - 13, 2016

Pistons move to Detroit may be mixed bag for investors

By Bill Shea and Kirk Pinho

Red Wings tickets

bshea@crain.com

Moving the Detroit Pistons downtown seems like a magnet for economic development, bringing more people and businesses into the planned entertainment district.

And it should be — but only for certain kinds of businesses.

The Pistons’ move, expected to be formally announced this month, is expected to help lure some of the investment promised when the Ilitch

Season ticket transition to new arena halfway done, Page 24.

family’s Olympia Entertainment announced plans for the 50-block The District Detroit residential development anchored by the new Little Caesars Arena. Little outside investment beyond the Ilitches’ own promised $1.2 billion investment in the district has been announced so far.

But sports teams don’t always provide the revitalization boost one might expect — especially for people hoping for a Target or Meijer, according to Robert Gibbs, a retail and urban planning expert who is managing principal of Birmingham-based Gibbs Planning Group Inc.

“Restaurants and bars will do much better,” said Gibbs, who also teaches in the Harvard University Graduate School of Design. “But the SEE PISTONS, PAGE 24

OLYMPIA DEVELOPMENT OF MICHIGAN

Adding 41 Detroit Pistons games and their accompanying foot traffic might not be the lure for additional District Detroit development some think it is.

Election 2016

5 races that matter

The presidential election and its twists and turns have made it easy to miss issues and elections that are important closer to home.

Here’s a look at five regional races that will affect businesses in metro Detroit:

1

OAKLAND COUNTY:

County executive race

What it is: Longtime Republican Executive L. Brooks Patterson faces opposition from Democratic former state Rep. and Farmington Hills Mayor Vicki Barnett, who is selling an economic message focused on transit and redevelopment rather than expressways and sprawl (a word Patterson embraces).

Why it matters: Patterson, who has consistently sailed to victory over 24 years in office, could face a challenge in an increasingly Democratic county and in an election where voters say they want a change.

2

MACOMB COUNTY:

Public works commissioner race

What it is: Another longtime incumbent, Democrat Anthony Marrocco, is facing major-league opposition from Republican U.S. Rep. Candice Miller.

Why it matters: Marrocco, who has been dogged by whispers of pay-toplay politics, has held the office for 24 years. Big money flows through that office: There have been $285 million in drainage projects funded through bonds issued by the county during the past 10 years alone.

Results Crain’s will cover the results live; follow @crainsdetroit on Twitter or visit crainsdetroit.com/

Endorsements

What it is: A 20-year, $3 billion tax proposal primarily aimed at creating new and better bus service in Wayne, Oakland, Macomb and Washtenaw counties. It would also add commuter rail service between Detroit and Ann Arbor and pick up the annual operating costs of the M-1 Rail streetcar line in Detroit.

Why it matters: Supporters say the millage will help provide modern transit options available in most major cities and improve workforce problems by helping potential workers get to available jobs reliably.

Opponents say the extra tax isn’t needed and commits the region to an outdated model of transit that could change with new technology.

By Chad Halcom

Views on local issues and races:

chalcom@crain.com

crainsdetroit.com/endorse

© Entire contents copyright 2016

by Crain Communications Inc. All rights reserved

NEWSPAPER

Authority millage

4

DETROIT: Proposal A

and B community benefits ordinances

What they are: This is a Detroit-specific ballot issue. Proposal A would require projects worth $15 million or more that receive $300,000 or more in tax abatements or incentives to make a binding “community benefits” agreement with a group of residents, businesses and nonprofits in the surrounding area. The developer would have to provide the agreed-upon benefits to the community.

Proposal B would make similar requirements, but would apply to projects of $75 million or more receiving more than $1 million in incentives, and the benefits would be negotiated by the city.

Why they matter: Developers oppose both proposals as impediments to development, but reserve their greater concern for Proposal A, which would apply to more projects. They argue that they will be stumbling blocks to redevelopment and that most major projects already include such agreements.

5

DETROIT: Detroit Public

Schools Community District board

What it is: The new board for the school district, which will leave emergency management at the end of the year, will be selected by voters from a 63-candidate field that includes most of the previous board members, as well as various slates that represent labor or business interests.

Why it matters: The board will hire a permanent superintendent and set the tone as the district returns to local control from state supervision, in a city where the quality of the school district seems a central economic issue and impediment to the city’s rebirth. (Full story below.)

DPS election fills with names, uncertainty

elections

crainsdetroit.com Vol. 32 No 46

3

WAYNE, OAKLAND, MACOMB AND WASHTENAW COUNTIES: Regional Transit

$2 a copy. $59 a year.

There may never be a better opportunity to reform the Detroit public schools. The ballot to elect a new school board features turnaround experts and strong financial stewards, but they face long odds in a sea of 63 names on the ballot.

Fixing the district, which has long struggled with declining enrollment, financial woes and corruption, and poor educational re-

sults, has emerged as one of the most critical economic issues facing the city as it tries to lure people to move back.

Local business leaders who spoke to Crain’s agreed on little about filling the seven board seats on the newly created Detroit Public Schools Community District — other than that they shouldn’t go back in time to previous officeholders.

Sorting through the ballot isn’t easy, but there’s clearly an old guard, a sizable group of candi-

dates with skeletons in their closets, and a group of challengers that have amassed some business backing. And that’s before you look at the slates the candidates themselves have organized into.

“The fact there are three different reform slates becomes an issue itself, right there. Who are those people?

They are apparently not overlapping,” said Bill Ballenger, publisher of the online Ballenger Report and longtime political observer.

SEE DPS, PAGE 22

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MICHIGAN BRIEFS MICH-CELLANEOUS

Meijer to drop plus-size clothing racks, prices Meijer Inc. is getting rid of its plus-

size department — and its plus-size prices for such apparel.

The Walker-based retailer announced last week its plans to put all women’s clothing, regardless of size, on the same rack in its stores, MLive. com reported. The clothing, sizes XS to 3X, will also be at the same price, even if it means Meijer pays higher production costs for the larger sizes.

The new policy is for Meijer brands as well as major label brands carried by the retailer and its competitors. Meijer began experimenting with the new approach in June at 15 stores, and will roll it out to all of its 230 Midwest stores by early 2017.

The decision comes as the average American woman now wears a size 16 to 18, motivating retailers to improve plus-size clothing options, The Wall Street Journal has reported.

MSU sends letters to protect trademarks Michigan State University sent 10 cease-and-desist letters to businesses and individuals between March and September, records obtained by the Lansing State Journal through a Freedom of Information Act request show.

Byron Center-based SpartanNash Co. is expanding its capacity in produce distribution and fresh-prepared foods with the acquisition of Indianapolis-based Caito Foods Service Inc. and its Blue Ribbon Transport business, MiBiz reported. The deal, for about $217.5 million in cash, is expected to close in early 2017.

J More Michigan hospitals this year, 29, received top ratings for patient safety by The Leapfrog Group than 2015, when 19 received “A� grades.

Leapfrog’s Hospital Safety Scores reflect how well hospitals avoid medical errors and patient harm. Nationally, Michigan ranked 19th this year for patient safety, with 36.7 percent of state hospitals earning an “A.�

Since the 2012 inception of the grade, four hospitals have gained straight A’s: Dickinson County Healthcare System in Iron Mountain, DMC Huron Valley-Sinai in Commerce Township, Henry Ford Allegiance Health in Jackson and University of Michigan Health System in Ann Arbor.

J Small manufacturers in Michigan can now apply for grants to improve their energy efficiency, the Michigan Agency for Energy said. The energy office has issued a request for proposals from companies with no more than 500 employees, who can apply for grants ranging from $25,000 to J

CRAIN’S DETROIT BUSINESS

Meijer Inc. plans to change its in-store location and pricing of plus-size clothing by early next year.

The letters are part of MSU’s efforts to protect its 30 trademarks registered with federal and state agencies, including its mascot’s image, its signature block “S� and the phrase “Go Green, Go White.� The university’s licensing office also sent more than 1,300 takedown requests last year for material that infringed on its trademarks on Facebook.

Dan Kelly, one of those who received a letter from the university, displayed an image of the Spartan helmet and wore a shirt bearing the same logo on the social media page for his MSU board of trustees campaign. Since receiving notice of the letter, he has taken down all of university logos from his page. The office’s director, Samantha Stevens, said the university didn’t take issue with Kelly’s shirt, but rather the use of the logos, which she said created the appearance that Kelly was endorsed by the university.

INSIDE $50,000 that will offset the cost of buying equipment. Up to $100,000 in funding is available via the U.S. Department of Energy. Applications are due Dec. 12. More details are in the request at www.michigan.gov/documents/energy/MEO_Retooling_ RFP_V2_538738_7.pdf.

J KION, the new owner of Dematic North America, intends to take advantage of Dematic’s engineering and research and development site in West Michigan, MLive.com reported.

Dematic designs and builds automated systems for warehouses, distribution centers and other sites with material-moving needs. Wiesbaden, Germany-based KION, which makes forklift trucks and automated material handling equipment, reportedly is buying Atlanta-based Dematic North America for $2.1 billion.

J Swiss giant Nestle plans to significantly increase the amount of groundwater it pumps from under the state in conjunction with a $36 million expansion of its Ice Mountain bottling plant near Evart, MLive. com reported. Nestle Waters North America is asking the Michigan Department of Environmental Quality for permission to increase allowed pumping from 150 to 400 gallons per minute at one of its production wells.

A citizens group that previously fought Nestle over groundwater

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BANKRUPTCIES

24

CALENDAR

20

CLASSIFIED ADS

21

DEALS & DETAILS

19

KEITH CRAIN

8

MARY KRAMER

9

OPINION

8

OTHER VOICES

8

PEOPLE

20

RUMBLINGS

26

WEEK ON THE WEB

26

COMPANY INDEX: SEE PAGE 25 wants more scrutiny.

J Star Line Mackinac Island Ferry said it plans to purchase several Arnold Transit Co. ferries after the latter company ceases operation in a few weeks. Financial details of the purchase were not disclosed, but Star Line said included will be five classic ferries, one freight boat, four docks including the main dock on Mackinac Island, one boatyard, along with parking lots and ticket booths in Mackinaw City and St. Ignace.

J Allen Park-based Belle Tire Distributors Inc. acquired its lone franchise location in Traverse City. Terms were not released. The northern Michigan store had operated as a franchise of Belle Tire since 1996, but its former owner is retiring.

3

C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 7 , 2 0 1 6

“I’ve been on public and private boards much of my life...”Denise Ilitch, Horizon Global Corp.

Experience puts Denise Ilitch in co-chairman’s seat

By Chad Halcom chalcom@crain.com

Denise Ilitch is going to have a busy week. And it’s only partly related to Election Day. The former president of Ilitch Enterprises LLC and co-owner of 220 Merrill Restaurant Hospitality in Birmingham will learn Tuesday whether she’ll be re-elected to a second eight-year term on the University of Michigan Board of Regents.

But the next big challenge follows immediately on Wednesday, when the board of directors at Troy-based Horizon Global Corp. holds a meeting

to review strategies for the coming year.

Horizon (NYSE: HZN), a manufacturer of various towing and trailering equipment brands, tapped Ilitch in July to co-chair the board along with company President-CEO Mark Zeffiro. Previously chairman of the board’s compensation committee, she succeeds Samuel Valenti III in the co-chairman’s seat and said she enjoyed the challenge of learning a new product market and the entrepreneurial spirit of the new company.

Ilitch joins an elite group of wom-

en, especially Michigan women, in corporate governance at the new post. Less than 2 percent of the 2,000-plus public companies listed on the New York Stock Exchange have a woman as chairman or co-chairman of their boards, she and her predecessor as co-chairman, Sam Valenti III, noted.

“Business principles (in board governance) are largely the same.

Yes, there are business products that have unique features that one has to learn. But I’ve been on public and private boards much of my life, and it’s a role I thoroughly enjoy. I enjoy

Tap brakes on car gains?

Analysts: Projected sales lag, election fallout could worry automakers, suppliers next year Between an unhappy electorate, indecisiveness from the Federal Reserve over interest rates and anemic economic growth, automotive analysts are stretching to remain positive as uncertainty grows over whether car sales have peaked.

Metro Detroit’s cyclical economy still depends on the auto industry, as the region has learned from decades of experience both bullish and grim.

The industry may start to plateau or decline next year from record levels because pent-up demand from the Great Recession is gone — those waiting to buy have now bought.

Experts predict U.S. car sales will contract slightly in 2017 — Southfield-based IHS Automotive Inc. is projecting sales of 17.4 million, and Troy-based LMC Automotive US Inc. projects 17.5 million — but the impact will be as clear as an iced-over windshield.

Last year, automakers sold the most cars in history at 17.5 million units in the U.S., outpacing the pre-recession record of 17.4 million in 2005. But 2016 and 2017 are expected to be flat, though near or meeting that historic high. That pla-

Mike Jackson: Need right car, SUV, truck mix.

Jeff Schuster: U.S. growth leveling off.

teau means the industry will have to focus on efficiencies or stealing market share to boost profits.

And with a plateau on the horizon, local auto companies could face a hiring slowdown as well.

Crain’s Senior Reporter Dustin Walsh chatted with two of the region’s top analysts — Mike Jackson, senior manager of North American vehicle production forecasting for IHS, and Jeff Schuster, senior vice president of forecasting at LMC — about what 2017 holds for the local economy and its largest industry.

SEE AUTOS, PAGE 23

the strategy and the chance to work with others within a collaborative company,” she said.

Leadership milestone If Horizon meets its revenue projections for the coming year, it will actually be the largest Southeast Michigan public company with a woman in that role other than General Motors Co. (NYSE:GM), where Mary Barra serves as both chairman and CEO. “I love that — for the example that SEE ILITCH, PAGE 23

LARRY PEPLIN

Denise Ilitch serves on the University of Michigan Board of Regents and is co-chair of the Horizon Global board.

American Axle to face new risks after Metaldyne grab

By Dustin Walsh

sume $1.7 billion in MPG debt.

American Axle is paying a 50 perAmerican Axle & Manufacturing cent premium for MPG, far higher Holdings Inc.’s bold move to acquire than 30 percent average premium in Metaldyne Performance Group Inc. in other recent auto supplier deals, aca $3.3 billion deal is an operational cording to data compiled by win.

Bloomberg.

The merged companies The tansaction will push will generate nearly $7 bilAmerican Axle’s net debt lion in revenue and reduce from 1.6 times earnings beAmerican Axle’s reliance fore interest, tax, depreciaon its largest customer, tion and amortization to General Motors Co. But at 3.5 times. what cost?

The deal announceLocal experts say the ment occurred only a day deal was expensive and after U.S. automakers recarries new financial risk, ported weak October sales along with the addition of David Dauch: even after offering deeply new, potentially challeng- “Multiple discounted prices. And ing board room dynamics customers in analysts are projecting a for the company led by the multiple regions.” flat year in car sales, yet late Richard E. Dauch and still above levels seen bethen his son David since the compa- fore the Great Recession. However, ny’s inception in 1994. the automotive industry is cyclical Under terms of the deal, which is and American Axle bought at the expected to close in the first half of peak, with another recession loomnext year, American Axle will pay ing in the years to come, said David $13.50 per share for MPG, with $1.6 SEE AXLE, PAGE 25 billion in cash and stock, and asdwalsh@crain.com

MUST READ OF THE WEEK How a 60-story skyscraper stacks up Dan Gilbert could propose a 60-story high-rise for the former Hudson’s site — which would make it the second-tallest in Detroit, Page 26

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C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 7 , 2 0 1 6

Proposed legislation clarifies insurance rules for Uber, Lyft

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calderonelight.com

LANSING — Bills in the Michigan Legislature that would impose new licensing regulations on ride-hailing companies like Uber and Lyft also would satisfy insurance industry concerns about coverage for drivers who offer rides for hire in their personal vehicles.

Among the requirements would be tiered minimum liability coverage amounts for drivers who work for San Francisco-based Uber Technologies Inc. or Lyft Inc., depending on whether the driver has logged into the companies’ smartphone apps or accepted rides. The proposed language attempts to clarify what’s required from both insurance carriers and drivers, since many personal auto insurance policies don’t cover rides offered for pay.

Many insurance carriers have started to offer riders or specialized auto policies that include coverage for Uber or Lyft drivers, though not necessarily yet in Michigan.

Transportation network companies like Uber and Lyft have agreed to the provisions, as have state and national trade groups representing insurance carriers. Bills pending in a state Senate committee are adapted from model language that was approved in 2015 by the Manasquan, N.J.-based National Conference of Insurance Legislators, a group of state lawmakers who focus on insurance policy, after ride-hailing companies and the insurance industry established the framework as part of a national compromise.

That language since has been adopted in 40 states, with Michigan in line, said Bob Passmore, assistant vice president of personal lines policy for Chicago-based Property Casualty Insurers Association of America.

Taxi companies aren’t opposing the legislation in its current form, since they believe requiring a state license of all transportation carriers — whether taxis, limousines or ride sharing — creates a level playing field. The bills would require limos and taxicabs also to carry insurance, though the minimum liability limit for taxis would be lower than for limos and transportation network companies.

Requirements for ride-hailing companies have been the most contentious, in part because insurers have to adapt to new technology. “With a commercial use comes a much higher risk profile,� said Dyck Van Koevering, general counsel for the Lansing-based Insurance Institute of Michigan, which represents the state’s property and casualty insurers. “Our concern has been that you have a personal insurance policy on a personal vehicle that’s being used for a commercial purpose, and it’s not being properly priced.�

LINDSAY VANHULLE

CAPITOL BRIEFINGS lvanhulle@crain.com Twitter: @LindsayVanHulle apps turned on but haven’t yet picked up a passenger. The Property Casualty Insurers Association of America, which helped negotiate the national compromise with transportation network companies, contends state laws with more specific guidelines about when coverage applies to ride sharing would prevent transportation network companies from contesting insurers’ coverage determinations and delayed benefits for crash victims.

Under Michigan’s legislation, drivers would need coverage of at least $50,000 per person and $100,000 for accident for bodily injury or death if they were logged onto the ride-hailing company’s app but not yet driving a customer, and at least $1 million while a driver has a for-hire passenger in the car. The language would be flexible enough that either Uber or Lyft, or individual drivers, could provide the required coverage. If drivers don’t purchase additional coverage, the ride-hailing company must provide it for them.

Limo carriers also would need minimum liability coverage of $1 million under the bill terms, while taxi operators would be required to have minimum liability coverage of $300,000. Currently, state law does not require taxis to carry any insurance coverage; instead, those decisions are left to municipal ordinances.

The city of Detroit, for instance, requires minimum liability coverage of $100,000 for bodily injury or death per person per accident and $300,000 for two or more people per accident.

Matt Oddy, operations manager of Checker cab company in Detroit, said he believes the legislation simply codifies existing practice into state law.

He added that a $1 million policy for taxis, especially in Detroit, is either not offered or would come with premiums so high that they would cost too much to purchase.

What covers who One of the main items to be resolved was whether personal auto policies would cover drivers for Uber or Lyft when they have the ride-hailing

BLOOMBERG

Uber and other ride-sharing companies have agreed to insurance provisions.

“The difference in the insurance is that the taxis have it in place all the time,� Oddy said, compared to drivers for Uber or Lyft, who only would be required to carry the $1 million policies when they have a passenger in the car.

Under the bill, a transportation network company would have to disclose to prospective drivers the coverage that the company provides and that their personal auto policies might not cover them while driving for hire.

Covering the gaps In addition, insurance providers wouldn’t be required to offer coverage for transportation network company drivers, Van Koevering said. “If you’re a personal auto policy writer (and) you have no commercial exposure or experience, you don’t have to completely alter your model,� he said.

In August, Farmers Insurance introduced ride-sharing coverage in Michigan, following its initial rollout in Colorado in February 2015. It’s now offered in more than 30 states, said Mariel Devesa, the Los Angeles-based company’s head of product innovation.

Farmers offers minimum coverage limits of $50,000 per person and $100,000 per accident, she said, though customers can choose to buy coverage with higher liability limits.

Ride-sharing coverage also is less expensive than commercial policies, Devesa said, with rates that reflect individual markets and the fact that drivers for ride-hailing companies typically drive less than commercial drivers. Farmers would not disclose the number of ride-sharing policies purchased to date, but said the company is happy with the number.

Lyft, for instance, says it offers coverage for drivers from the time they turn on the app until a passenger is dropped off at his or her destination.

Drivers are covered by their personal auto policies when they are not using the company’s app.

Lyft offers contingent coverage of up to $50,000 per person and up to $100,000 per accident for bodily injury coverage while the app is on but a driver has not picked up a passenger — the levels can vary based on state thresholds, Lyft said — and up to $1 million when a driver has accepted a ride and is carrying a passenger. Lyft’s coverage is provided on top of a driver’s individual coverage if he or she has elected insurance riders on their personal auto policies.

A spokeswoman for Lyft said the company supports Michigan’s legislation. “The intent and the way it is drafted is not to leave any gaps,� Brian Balow, a member with Bloomfield Hills law firm Dawda, Mann, Mulcahy & Sadler PLC, who represents clients in the automotive industry and on such issues as information technology. “From my reading of it, I think it does what it’s intended to do.�

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C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 7 , 2 0 1 6

Southfield hotel may reopen after owner’s deal with city

By Sherri Welch swelch@crain.com

A plan is in place to open the long-shuttered Plaza Hotel & Convention Center in Southfield as an extended-stay hotel.

But after six years of attempting to collect millions in back taxes and water charges while the 410-room, highrise hotel sat empty, the city of Southfield isn’t breathing easy yet.

The taxes and water bill on the property have been less than half of the $4.1 million owed the city and Oakland County through the 2014 tax year, per a settlement reached with owner Shefa LLC through a Chapter 11 case in U.S. Bankruptcy Court in Detroit.

But the reopening of the once-prominent hotel, across from the empty Northland Center and next to Providence Park Hospital, could still be at least a couple of years off.

Per the site plan Shefa submitted to the city in August, the ownership group has 18 months to begin a minimum of $2.1 million in infrastructure improvements on the property.

But the actual investment planned will be in the range of $12 million to $15 million, said Sidney Elhadad, a shareholder officer of Shefa.

Plans to reopen the hotel come six years after the city shut the hotel down, saying it was unsafe. Consumers Energy had cut off natural gas to the property because of unpaid bills, and the city turned off the water because of $113,560 in delinquent water bills.

Since then, millions of dollars in unpaid property taxes and water and sewer bills have piled up. As of March 30, the total owed to the city and county was $4.1 million, Oakland County Treasurer Andy Meisner said.

The county sought to foreclose, but actions taken by Shefa held up that process, he said.

The ownership group challenged the property tax assessments before the Michigan Tax Tribunal and took out an additional mortgage on the property with an Israel-based lender, which presented logistical challenges for the county to give notice of foreclosure, he said. In 2014, the Southfield-based company filed for Chapter 11 in U.S. Bankruptcy Court in Detroit.

“It was about delay and buying more time to speculate for the values to go up,” Meisner said.

There were liens and lawsuits filed against the hotel. “It was very much a quagmire to figure it out,” said Al Aceves, executive director of the Southfield Downtown Development Authority.

Shefa bought the hotel in November 2009 through a mortgage foreclosure on the property. Elhadad said the ownership group and hotel were victims of the downturn.

“When we took over in 2009-10, we took over at the worst possible time.

We didn’t have a choice to close it down,” he said.

This year, following court approval of Shefa’s plan of reorganization in February and mediation, Shefa paid the city $69,004 in 2015 taxes and water. And it paid more than $1.87 million to the county to cover delinquent taxes and water and fees from 20062014, Meisner said.

COSTAR GROUP INC.

The former Plaza Hotel is located on JL Hudson Drive in Southfield, off of Northwestern Highway and across from the Northland Center site.

“They want(ed) ... the city of Southfield to deal with them to put together an economic package,” said Meisner, who said he played a role in media-

tion, along with the city’s attorney, Doug Bernstein, partner in charge of the creditors’ rights group at Bloomfield Hills-based Plunkett Cooney PC. Shefa “knew there was very little good faith left, and they wanted the city’s consideration of economic incentives,” Meisner said.

Also as required under the reorganization plan, Shefa submitted a site plan for the redevelopment of the Plaza to the city in August, just before the six-month deadline to do so.

The plan lays out Shefa’s intent to reopen the property as a 220-room extended-stay hotel under a yet-to-beannounced national brand name.

With the shift from the current 410 rooms, the renovated hotel would offer large suites of about 700 square feet, Elhadad said.

“We’re talking about a three- to four-star hotel,” he said.

Renovations would begin within 18 months, per the site plan. Shefa has not approached the city for any sort of tax incentive, Elhadad said.

But after six years of what Meisner characterized as “delay tactics” to pay taxes and water and make any investment in the hotel, the city and county insisted on assurances being included in Shefa’s plan of reorganization.

The city and county required Shefa

to escrow $2.1 million to ensure it would make infrastructure improvements to the hotel — with no more than $100,000 going to “soft costs,” including architectural, environmental and/or engineering fees — and $84,000 to cover the estimated water and taxes due on the property the first year post-bankruptcy.

Power of attorney to transfer the deed to the property and the deed itself are also being held in escrow by a title company, a “fairly unique” provision in the context of a bankruptcy case, Bernstein said.

Sherri Welch: (313) 446-1694 Twitter: @Sherri Welch

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Carpool app maker SPLT top winner in Accelerate Michigan competition

By Marti Benedetti mbenedetti@crain.com

SPLT, the carpooling app maker that moved from New York City to Detroit last year, won the top prize of $500,000 at last week’s Accelerate Michigan Innovation Competition at Cobo Center.

Coming in second in the seventh edition of the competition was Troybased payment and accounting software maker Autobooks, which will receive $100,000. Ann Arbor-based mobile health engagement company JOOL Health won $50,000.

“We want to change the way people commute,” said Anya Babbitt, founder and CEO of SPLT. SPLT’s customers include organizations, corporations, universities and hos-

pitals, which use its app to find carpools to work. Among its goals is to help keep 4.5 million Americans from missing medical appointments.

“There’s a real need for this product for the underserved, especially in Detroit where people with a Anya Babbitt: medical apWants to help pointment call a underserved with taxi that never transportation. comes,” Babbitt, a Crain’s 2016 40 under 40 honoree, said during the company’s pitch.

The pitch competition included a broad range of information technology, life science, health care and consumer product companies in various stages of their business lives.

The one-day event involved a larger role for Ann Arbor-based Michigan Venture Capital Association, whose members served as judges in the preliminary pitches. Thirty-six companies were narrowed to 10 finalists.

Invest Detroit managed the event.

David Egner founded the entrepreneurial pitch competition in 2010 when he was with the New Economy Initiative, which has been a major financial supporter along with the Michigan Economic Development Corp., Invest Detroit and others.

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C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 7 , 2 0 1 6

2 boutique hotels latest projects in Kraemer’s building reputation

By Kirk Pinho kpinho@crain.com

A boutique hotel, Robert Kraemer says, is a lot like a craft beer: a unique experience.

The co-founder and principal of Detroit-based Kraemer Design Group PLC understands this fully as his company designs two new boutique hotels in Detroit, slated for Shinola/ Detroit LLC on Woodward Avenue, and West Elm, the contemporary furniture retailer, in Midtown.

The designs of the hotels, with 130 and more than 135 rooms, respectively, have not yet been fully fleshed out, but Kraemer promises one-of-akind designs and experiences with both.

"It’s very exciting, because you’re at the very, very early impetus of this," said Kraemer, who founded the company two decades ago with his wife, Maureen. "Both projects are in full design mode; both are going through the process of doing drawings."

Those are two of the most high-profile projects Kraemer Design is currently working on, but they are more notches in the belt for the company as architecture work has picked up in the past five or six years.

The company had $3.2 million in revenue in 2015, while this year it is on pace for $4.8 million, a 50 percent increase, Kraemer said. The company's payroll also has increased by 28 percent just this year, growing from 25 to 32 employees, only two of whom are administrative.

As developers around downtown plan a spate of new projects to bring more apartments and office space, the once-sleepy downtown and Midtown real estate markets have been as active as Robert Kraemer has seen in two decades.

Brian Rebain was also recently promoted to principal to help head up the company.

“Our goal would be to kind of match this year or better,” Robert Kraemer said. “We tend to try to grow (revenue) between 5 or 10 percent, and our growth probably measurably started about 5 years ago.”

In addition to its hotel work, which buoyed the business when multifamily projects were sparse, the company also has a reputation for its historic preservation and adaptive reuse projects, including the $94.5 million David Whitney Building on Grand Circus Park and the $53 million Broderick Tower redevelopments. And it was the company Dan Gilbert’s Bedrock Real Estate Services LLC tapped when it designed its 218-unit 28 Grand micro-apartment development — the first such project in the city — in Capitol Park, which is expected to take in its first residents in June.

That’s one of the more exciting projects Robert Kraemer said his team is working on because it's the first new multifamily building construction in the downtown core, at 28 W. Grand River Ave. “They have demonstrated a superior aptitude at historic preservation architecture, which is something that our firm focuses on,” said devel-

Robert and Maureen Kraemer founded their design company two decades ago. oper Richard Karp, principal of Lansing-based Karp + Associates.

Kraemer Design Group has done work for Karp, whose development

partners are Richard Hosey and Kevin Prater, on the Farwell Building at 1249 Griswold St., the Detroit Savings Bank Building project at 1212 Griswold and the Capitol Park Lofts project at 1145 Griswold.

“They have excellent skill set at multifamily rental, laying out apartments,” Karp said. “They have a lot of experience with hotel architecture, but for us, it is their historic preservation and multifamily experience, and they definitely excel in those areas.”

Among the awards Kraemer Design received for the David Whitney project were the Michigan State

Housing Development Authority's Governor's Award for historic preservation, the state chapter of the International Design Association's annual design award and the Michigan Historic Preservation Network's Tax Credit Project Award.

The Shinola hotel was announced in September and is slated for a 2018 opening with 130 rooms in the eight-story building at 1400 Woodward, while the West Elm hotel by the contemporary furniture retailer is planned to have more than 135 rooms plus a retail store on Cass Avenue.

Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

PHOTO BY KYLE EVANS DESIGN

Kraemer Design Group will design the Shinola/Detroit hotel on Woodward.

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OPINION

A reprimand for Mayor Duggan

P

re-bankruptcy Detroit had more than its share of questionable — even criminal — transactions linked to elected and appointed officials in City Hall and in the public schools. (Though Macomb County communities may be giving the city some competition.)

So in post-bankruptcy Detroit, transparency and ethical practices are critical to maintaining the trust of both citizens and investors. That’s why fixing problems at the city’s land bank is so important.

When a recent audit found that someone at the land bank authorized shifting money to camouflage the fact that the program had exceeded federal guidelines that capped demolition costs at $25,000 per home, the federal government suspended the program. Fix your mess, Washington told Detroit.

Using text messages obtained through Freedom of Information Act requests, Crain’s reported Mayor Mike last week that Mayor Mike Duggan Duggan has a learned of the suspension in Auresponsibility gust. But City Council learned of the to the people of suspension only in October.

The federal hand-s lapping Detroit, not should never have been kept secret bureaucrats in — not from the public or the City Lansing.

Council.

The land bank chairman claimed that state officials ordered the city to keep the suspension a secret, but the state says that’s not true. There is no excuse. Duggan has a responsibility to the people of Detroit, not bureaucrats in Lansing.

Demolitions are critical to reduce blight and strengthen Detroit's neighborhoods. But the land bank has been plagued by turnover at the top and questions about how the original demolition contracts were awarded. Now the rules have changed to limit the jobs any one contract can cover.

The millions of dollars spent so far make the land bank demolitions a target for pressure to play favorites in the contracting process.

The mayor needs to erase any actual or perceived questions about land bank operations. He needs to be more accountable and transparent. His reputation, and the future of the city, is riding on it.

Community benefits ordinance benefits business, politics Detroit faces a number of unique economic challenges that will require new strategies, new values and new economic approaches. “Business as usual” — isolated development projects predicated largely on public subsidies and tax abatements — is part of what got us into this mess. Business as usual will not get us out of it. A city cannot give away millions in money, land and other resources, demand virtually nothing in return and expect to have a vibrant economic future. The type of “community benefits ordinance” outlined in Proposal A points in a new and more promising direction.

Proposal A establishes the framework where large-scale developments seeking public subsidies for private enterprise will work with community members to ensure that public dollars produce real public benefits. It also provides the type of certainty businesses crave. Proposal A allows a developer to petition city

OTHER VOICES Peter Hammer

Professor, Wayne State University School of Law council for an exemption if goodfaith negotiations fail to produce an agreement or if the community fails to get to the bargaining table within a certain time frame. This and other parts of the ordinance ensure flexibility in reaching agreements.

Opponents of the community benefits ordinance need to be more forthcoming about the problems of development projects that need tax abatements in the first place. Tax

abatements are at best a very mixed bag. Communities that are economically prosperous do not use tax abatements. When tax abatements are provided, they benefit the business receiving the subsidy, but there is no guarantee that they will benefit the broader community. Wayne State Professor Emeritus Gary Sands aptly titled his study of property tax abatements in Michigan “Money for nothing.” Eggs laid by tax abatement geese are not that golden. This is what “business as usual” produces.

The greatest benefit of Proposal A is seldom mentioned. Proposal A not only changes business as usual, it changes politics as usual. There are political market failures as well as economic market failures. Political markets are likely to fail when decisions benefit a small elite while the costs or burdens are borne by many.

This is precisely the equation in most publicly subsidized development CONTINUED NEXT PAGE

LETTERS

Motor City ready to shift from neutral to ‘Mobility City’ Editor: To many, Michigan is deemed the global center for mobility. We already own auto R&D, autonomous vehicles, manufacturing, electric vehicles and advanced batteries, and we are one of the largest software development and cybersecurity centers in the world. State and local partners are “all in” to position Michigan as “Planet M,” and the city of Detroit is poised to play a critical role by providing a real-world test bed for game-changing mobility solutions. Dustin Walsh’s Oct. 23 Page 1 story (“City mobility stuck in neutral”) suggested that we are “stuck” in neutral. I say we are ready to shift into gear. But how?

First, we need funding to stimulate the pilots and deployments imagined for “Mobility City.” While disappointing that the city of Detroit didn’t win any of the $65 million in mobility-related federal grants that it recently competed for, the effort did create the building blocks for a regional mobility plan, developed dozens of new critical public and pri-

vate-sector partnerships, and created a soon-to-be announced “chief of mobility innovation” position, poising Detroit to become Mobility City.

Alongside federal funding, we need a combination of more public-private partnerships and regional planning and collaboration.

Both the “Grand Bargain” and M-1 Rail are examples proving we can develop innovative public-private partnerships. Now we need more corporate partners and philanthropic support coming together to provide seed money, matching funds and financing options. Columbus, Ohio, didn’t win the $40 million USDOT Smart City Challenge just because it had an “impressive team” and a “comprehensive plan.” It also included more than $100 million in funding from industry and philanthropic partners!

As for regional planning and collaboration, we’ve made great strides with several groups leading the way for mobility, but now it’s time for us to come together and work toward a

common vision. MichAuto’s mobility coalition, made up of 18 organizations including NextEnergy, has plans to do that. The group will bring together public-private focus and collaboration to enable economic growth and identify opportunities that can be solved through mobility projects and technology in the city.

Finally, we need time. It takes time to turn around a city and to build regional relationships. Detroit has rightly been focused on critical city services, and now it’s time to look, and move, ahead. Big changes require new leadership styles, and the collective wisdom to know there is not a single simple solution, but rather a portfolio of “ands” that need to be collectively supported and built over time.

It’s now time to shift from neutral to drive to create Mobility City. If we don’t do it now, or soon, we risk losing the critical mass of talent and leadership to pull it off.

Jean Redfield

President and CEO, NextEnergy

It ain’t over till it’s over Whatever your political persuasions, just about everybody is going to breathe a sigh of relief Tuesday night when the presidential election is finally over and we can all go back to our lives.

But pundits and talking heads will likely be telling us how Tuesday’s results will impact the presidential election in 2020. That’s when I probably will throw something at the television. Surely enough is enough.

So I have a modest proposal: Let’s enact a law that forbids anyone from writing or talking about the next election cycle for at least

KEITH CRAIN

Editor in chief

six months. Yes, it affects free speech. But I, for one, would like a respite.

Unfortunately, I fear that regardless of the election results, we’ll continue to have strong, partisan divi-

sions that will affect the ability for elected officials to govern.

This perhaps has been the toughest political cycle we have ever seen.

Sadly, there is no chance everyone will put their arms around each other on Wednesday, kiss and make up.

These divisions could last quite a while.

If you thought the cable networks would go back to telling us news about something besides politics, you will be sadly mistaken.

This is the end of one political season. And by week’s end, it will be the start of another.

May we all survive.

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For 25 years, orientation program has informed city newcomers For years, in the 1970s and 1980s, Detroit boosters blamed the media for the city’s poor image. The media often responded: We just hold the mirror and reflect reality.

One recommendation coming out of the massive “Detroit Strategic Plan” created in 1987-88 by Detroit Renaissance (the forerunner of Business Leaders for Michigan) was a program to help reporters and editors new to Southeast Michigan understand the city’s history and its problems in a larger context.

Wayne State University took up that challenge, and the Detroit Orientation Institute was born in 1991.

The institute is celebrating its 25th anniversary on Nov. 16, and it hopes some of the more than 3,000 alumni will show up for a reunion event

marking the occasion.

Though intended initially for media types, DOI quickly expanded to include new executives moving to key roles in the region. Detroit has been a tough sell for many employers. Helping a new executive understand our history and that the city had more going for it than its headlines suggest was important.

Alumni include Nancy Schlichting, soon-to-retire CEO of Henry Ford Health System, who moved to Detroit from Ohio; Paul Hillegonds, a former state lawmaker from Holland who took the top job at Detroit Renaissance; and dozens of report-

MARY KRAMER Publisher

ers and editors, including Charles Blow, who went from The Detroit News to The New York Times.

Early on, then-director of the program Elaine Driker asked me to help shape a segment on business. As I

recall, we called one session about downtown: “Where are all the stores?” We tried to answer that question with insights from retail analysts who recounted the demise of the Hudson’s store and how retail location decisions are made.

That was then — a downtown with vacant and low-rent storefronts (ex-Detroit Economic Growth Corp. chief George Jackson was quoted as calling it the “bad wig shop capital of America”), no trendy restaurants, no Campus Martius Park.

Today, it’s a different story, and it’s still being told by Jeri Stroupe, who leads DOI for Wayne State. Ses-

sions are held in the spring and usually fall; the next one-day “Detroit 101” will be held Dec. 7.

Even longtime residents of the metro area would find new insights in “Detroit 101.” Downtown today is dramatically vibrant compared to those early days of the institute. (P.S.: The wig shops are gone.)

Mary Kramer is publisher of Crain’s Detroit Business. Catch her take on business news at 6:10 a.m. Mondays on the Paul W. Smith show on WJR AM 760 and in her blog at www.crainsdetroit.com.

FROM PREVIOUS PAGE

deals. Those with political connections get special deals, while the public is left holding the bag. Proposal A would ensure that development deals receive the careful public scrutiny they deserve.

It should be remembered that strong, economically viable development projects do not need tax abatements. Public subsidies of business are not a right. When economic development is being subsidized by public dollars, the public should be assured that there will be real public benefits.

Businesses that embrace a similar positive vision of Detroit’s future will come and will be happy to negotiate community benefits agreements. This will be a useful sorting mechanism.

Backward-looking companies that need to be bribed to invest in Detroit are not the types of companies that we should be investing our future in. The real shakedown racket is embedded in the traditional model of tax abatement-driven development.

Proposal A presents us with a stark choice. Sadly, we know what business as usual will mean for the future of Detroit. The divide defined by the emerging Tale of Two Cities will grow and deepen, as will the economic and geographic gap between the 7.2 square miles of downtown, Midtown and New Center and the rest of the city.

There is a further danger that development strategies premised on desperation will condemn Detroit’s distressed neighborhoods to “investments” that simply invite the expansion of polluters in already heavily polluted zip codes or attract businesses that trade in the processing of toxic wastes, because that is the best that those in charge think we deserve.

To listen to all the expensive dark money ads against Proposal A or to read the glossy fliers being distributed in otherwise neglected neighborhoods, one would think that the sky was falling. We should remember that Chicken Little was wrong and that fear and desperation never built a great city.

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DMC health plan fetches $16M

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D.C.-based Medicaid HMO, for $16 million, according to a filing with the Michigan Department of Insurance and Financial Services.

Vanguard Health, the previous owner of DMC, acquired the plan, formerly called ProCare Health Plan Inc., in 2012 for $6 million. ProCare was renamed Harbor Health in 2014 after Dallas-based Tenet Healthcare Corp. acquired Vanguard.

Detroit-based Harbor Health is a profitable Medicaid HMO, recording $4.3 million in net income on total revenue of $36.6 million in 2015. For the first six months of 2016, Harbor earned net income of $2.6 million, up from $1.8 million during the same period in 2015, said DIFS. Total revenue also rose from $17.8 million to $28.1 million during the same periods.

For years, DMC was rumored to be in the market to purchase a Medicaid HMO in anticipation of an expansion in Medicaid in Michigan.

Since 2014, some 600,000 people have joined Healthy Michigan Medicaid. One in four Michigan residents are served by Medicaid.

But Harbor Health never achieved the membership that executives once hoped. Projections called for Harbor to increase its membership to 18,000 or more by 2015.

However, DIFS data shows Medicaid membership totaled only 7,973

by June 30, up from 6,515 on Dec. 31, 2015, and 3,300 in 2014. Harbor entered the individual health insurance market this year, garnering only 2,978 members. Harbor also sells a Medicare Advantage product with about 636 members, up from 126 last year.

Trusted Health, which also operates in West Virginia and Virginia, is chaired by Thomas Scully, former administrator of the Centers for Medicare and Medicaid Services under former President George W. Bush from 2001 to 2003. From 1995 to 2001, Scully was CEO of the Federation of American Hospitals, the association of investor-owned hospitals.

Scully, who owns 1.6 percent of Trusted, is also senior counsel at Alston & Bird LLP and is a general partner at Welsh, Carson, Anderson & Stowe, a private equipment investment firm focusing on health care.

Jay Greene: (313) 446-0325 Twitter: @jaybgreene

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SPECIAL REPORT: LAW

Mentorship muscle SBA sees strong early response to its newly expanded protégé program

By Chad Halcom chalcom@crain.com

Small business may be in the middle of a teachable moment, as October demand ramped up to participate in an expanded federal mentor-protégé contracting program, based on new rules from the U.S. Small Business Administration.

The SBA on Oct. 1 launched a web portal for small businesses to team up with other companies on federal contracts for which they may have the right skills but lack the capital, staff or proficiency with government practices to fulfill on their own. The small-business mentor-protégé program, traditionally available only to companies majority-owned by dis-

advantaged minorities or other groups, became more widely available to all qualifying small businesses under a new SBA regulation that took effect Aug. 24.

And demand has been healthy so far, said Holly Schick, director of the newly formed all-small mentor-protégé program at SBA. About 450 of the 5,000 disadvantaged businesses in the SBA's “8(a) program” had active mentor-protégé agreements at the time of the rule change, but 300 more have requested applications for the program online, and 20 have been approved for it, Schick said, just since it became accessible to other small businesses a month ago.

“And we’ve been doing this all as a soft launch; there have not been any announcements or blogs and tweets promoting this,” Schick said. “We are still in a period of testing the (online application) process and fixing glitches. We are hoping in November or December to be looking at some more formal and active marketing.

“We anticipate once we do that, these organically generated application numbers will start to go up. So we really don’t know yet what level of pent-up demand for this there might be.”

The small-business mentor-protégé program is a three-year collaboration (that can be renewed once for three more years) between

a qualifying small business and another, usually larger and more experienced mentor firm that can assist in filling its "development gaps" with managerial experience, past performance qualifications and federal project implementation skills.

Those kinds of collaborations sometimes run afoul of SBA rules on “affiliation,” or a larger business having too much ownership or control over a smaller one when vying for a set-aside federal contract. If SBA finds two companies are affiliated, or have a joint venture in some cases, they are combined via revenue or headcount to determine whether the applicant is still a small business

by SBA standards for its industry.

But in the mentor-protégé program, a larger company can own up to 40 percent of the protégé business, or form joint venture companies with the protégé for the purposes of contract bids, without being affiliated — so long as they comply with the other program guidelines for contract bids.

The original SBA program for qualifying disadvantaged companies remains intact, while the new and separate “all small” mentor-protégé program is available for all categories of small businesses and is structured to be as consistent with the original as possible, said Schick and Bret Wacker, attorney

Jimmy John’s case sets new order in noncompetes Backlash to the ultra-restrictive agreement has some lawyers being more careful in writing such pacts, Page 13

SEE MENTOR, PAGE 12

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SPECIAL REPORT: LAW

MENTOR FROM PAGE 11

CONGRATULATIONS TO THE WINNING IDEAS IN THE KNIGHT ARTS CHALLENGE DETROIT!

See their projects that will engage and enrich the city through the arts at knightarts.org

12-and-Under Super Cool Poetry Open Mic Alicia Diaz ARTS.BLACK A Host of People Barbara Barefield Beautifully Wrapped Bree Gant Britney Stoney CAN Art Handworks Wire-Car Auto Workers Association of Detroit (WAWAD) Detroit Youth Volume Midtown Detroit Emily Kutil Essay’d Final Girls Fringe Society Focus: HOPE Greg Baise, Gelsey Bell, Erik Ruin InsideOut Literary Arts Project Jeff Sturges Jehan Mullin Kristi Faulkner Dance Lawrence Technological University Detroit Studio New Music Detroit Nichole Christian

North Rosedale Park Civic Association Saundra Little and Karen Burton Seraphine Collective Step Afrika! USA Inc. The Aadizookaan The Hinterlands The Scarab Club of Detroit Shannon Cason Sidewalk Detroit and The Detroit Riverfront Conservancy What Pipeline WDET Young Nation Zimbabwe Cultural Centre in Detroit Big City Films Charles H. Wright Museum of African American History Detroit Historical Society Detroit Institute of Arts Detroit Public Theatre The Residential College in the Arts and Humanities at Michigan State University Museum of Contemporary Art Detroit

and government contracting practice leader at Clark Hill PLC. “The mentor doesn’t necessarily have to be a large business, it just has to be a company that can add value to the protégé business and its contract bid standing,” Wacker said.

“Typically it’s not a long approval process, it’s (a matter of) weeks. The program wouldn’t have much benefit if it takes too long to process an application, because contracting opportunities come and go. That’s what will motivate people to consider the program — because at the time you submit the contract bid you’d need to be already approved (for a mentor).”

The online portal calls for the protégé to apply, while the mentor provides supporting documents. Applicants must select their own mentor before applying, and Schick said the SBA is hoping to produce new materials within 30-60 days to help companies find their own mentor.

The SBA is hoping for completed applications to be viewed within four hours after they’re submitted, she said.

Erin Toomey, partner and head of the government procurement practice for the Detroit office of Foley & Lardner LLP, said the mentor in the

SBA program must demonstrate it will provide sufficient assistance for the protégé to make real developmental business gains during the period of the agreement.

She also said mentor-protégé is just one of several new rules that SBA finalized this year to make government contracting more accessible to small business. Among them: a new small-business subcontracting rule that took effect June 30 gives a small-business contractor an exemption to the federal limit on subcontracting for business given to “similarly situated entities.”

In other words, a small business that qualifies for special set-aside federal contracts through various SBA programs had to previously agree not to subcontract more than 50 percent of the value of the contract to other companies. But the

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Erin Toomey: New rules aim to enhance small-biz development.

new rule essentially states that other small businesses qualifying for the federal contract do not count toward the subcontractor limit.

Both new SBA rules are applying language of the 2013 National Defense Authorization Act, and both rules also eased restrictions on joint ventures bidding on small-business contracts.

The June 30 rule allows joint venture companies to count as a small business for government procurement purposes so long as each company within the venture qualifies under the industry category of the bid solicitation — even if collectively they exceed the SBA size threshold.

“It’s hoping to get small businesses to team together, and SBA essentially said if you have small-business joint venture partners, their numbers don’t affect your bid,” Toomey said. “If they’re individually small, then as a team they remain small.”

Toomey also said the new rules all seek to court greater small-business participation and development via contracting. She said she was not certain how much business interest in the new mentor-protégé agreement program would emerge, but added it’s still “not carte blanche” to pursue set-aside contracts and farm the work to a large company.

The Small Business Administration mentor-protégé application portal is at https://certify.sba.gov/.

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C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 7 , 2 0 1 6

SPECIAL REPORT: LAW

Navigating noncompetes Backlash to Jimmy John’s case has some lawyers being more careful in crafting pacts

By Paul Vachon

Special to Crain’s Detroit Business

Knowledge is power, and necessity requires any business that produces a product or renders a service to entrust certain employees with that information.

Whether it’s a software algorithm, a recipe for a new sugar substitute, or a highly accurate method for conducting a public opinion poll, intellectual property and/or trade secrets long have been considered among a company’s most valuable assets.

To protect a company’s secrets, staff members with access to proprietary data are often required to sign “post-employment restrictive covenants,” designed to prevent them from leaving the company and using their knowledge to benefit a competitor, typically forbidding the employee to work within the same industry.

Traditionally, noncompetes were somewhat rare and required only of high-ranking executives or employees working in development laboratories.

Recently, however, the tide has shifted to require midlevel and even low-wage employees to sign them — a trend that has generated controversy. The breaking point came in 2014 when Jimmy John’s locations in New York began to require new hires to sign agreements prohibiting them from working for another sandwich shop within 2 miles for two years after leaving, based on the thought that Jimmy John’s sandwich-making techniques were unique.

The extreme nature of the case appears to have prompted a backlash.

“I think we’re at a crossroads right now. Noncompetes were becoming more commonplace, but then came

the Jimmy John’s story,” said Kathleen Gatti, senior attorney at Nemeth Law PC, a Detroit-based law firm specializing in labor and employment cases.

“We’re seeing a backlash, at least for certain types of workers.”

Gatti noted the call-to-action document released Oct. 25 by the White House under Vice President Joe Biden’s name, warning of possible criminal prosecution for employers that exceed the true spirit of noncompetes and “collude to hold down wages.” It also admonishes state governments to promote greater transparency for companies that use noncompetes and that they ban them entirely for lowPeter Lucido: wage workers.

Wants rules for Last year an noncompetes. attempt was made in Michigan to do precisely that. Rep. Peter Lucido, R-Shelby Township, proposed legislation that would allow only “fair and reasonable” noncompete agreements in Michigan.

“We said for low-wage employees, have them instead sign a confidentiality agreement that would prohibit them from disclosing any proprietary information,” said Lucido. This less restrictive covenant would protect the former employer while not preventing the worker from finding employment.

“We even included a provision for recovering liquidated damages, SEE NONCOMPETE, PAGE 14

Recent court cases relating to noncompetes Jason Shinn, an attorney at Shinn Legal PLC based in Keego Harbor with experience in noncompete agreements, points out that Michigan law allows for their enforcement if they are viewed as reasonable. He offers a few recent examples, each of which illustrates specific circumstances as to when noncompetes are legal.

Delphi Automotive PLC v. Absmeier (2016): The U.S. District Court for the Eastern District of Michigan, enjoined a former Delphi Automotive employee from working in the field of autonomous vehicle technology and from disclosing Delphi’s confidential information for 12 months from his termination. In so doing, the court concluded, among other things, that Delphi Automotive would likely prevail on merits of its claims that its former employee breached the noncompete agreement when he accepted employ-

ment at Samsung, and that Delphi would suffer irreparable harm.

Edwards Publications Inc. v. Kasdorf (2009): The Michigan Court of Appeals enforced a noncompete agreement by the publication company when the defendant employee had, during a 13-year period, “developed and nurtured close and personal relationships with numerous business customers …, learning much about their operations, tendencies, and leanings,” and had left Edwards Publications to work for a direct competitor.

St. Clair Medical PC v. Borgiel (2006): The Michigan Court of Appeals enforced a noncompete restriction against a local doctor who signed an employment contract that “the employee shall agree not to embark on medical practice within 7 miles of either office for at least one year after the employer-employee relationship has ended.”

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SPECIAL REPORT: LAW

NONCOMPETE FROM PAGE 13

(but) the deal still would not pass,” he said.

Lucido’s opinion is that the strict enforcement of noncompetes on workers earning less than $35,000 is punitive and unnecessary, and ultimately destructive of Michigan’s economy as it forces willing workers to leave the state to find work.

While the appropriateness of noncompetes for low-wage employees is questionable, the situation becomes murkier when higher categories of employment are thrown into the mix.

Maureen Rouse-Ayoub, co-chair of the workplace law practice group at Detroit based Bodman PLC, points out that extremes like the Jimmy John’s case should not result in the elimination of noncompetes.

“The purpose of noncompete agreements is to protect all of a

Maureen Rouse-Ayoub: Noncompetes protect assets.

Raymond Sterling: State hurting because of noncompetes.

company’s especially valuable assets — confidential and proprietary information, as well as trade secrets. Going forward, attorneys will be more careful in crafting these documents on the specific industry and on the specific employee.”

Rouse-Ayoub said that in her practice she advises clients to require only employees with access to truly sensitive information to sign noncompetes. This more judi-

cious approach, however, may be the more the exception than the norm.

“The use of noncompetes in Michigan has gotten completely out of hand,” said Raymond Sterling, of Sterling Attorneys at Law PC, Bloomfield Hills, which represents employers and employees.

“Companies sneak these things into a job application or their employee handbook, where noncompetes should be negotiated,” he said.

“It’s come to the point where jobs are being driven out of the state, and Michigan is hurting economically because of it.”

Sterling, who monitors how court rulings related to noncompetes are trending nationally, said his observation is that while courts in most states are becoming increasingly skeptical of their increased use, Michigan is bucking the trend, and continues to take a pro-noncompete stance.

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C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 7 , 2 0 1 6

Adient envisions driver’s seats that pivot

By Lindsay Chappell lchappell@autonews.com

Now free of its large parent company, newly independent seat maker Adient is ready to being pouring more cash into future seat research and technology.

Adient — formerly the seat business of diversified Johnson Controls Inc. — believes it can accentuate its segment leadership by refocusing more of its revenue on next-generation seats, especially those for autonomous vehicles, said Jeff Stafeil, Adient CFO. “When it comes to capital expenditures, the cash necessary to grow in this business is around 3 percent to 3.1 percent of your sales,” Stafeil said in an interview with Crain's sister publication Automotive News on Oct. 31, the first day of business as Adient. “But for the past few years, we’ve been spending less than that.

“We’re now going to invest at that level again to support customer programs everywhere in the world. That Jeff Stafeil: “We’ll will include the technologies, fabe pushing the cilities and capitech envelope.” tal equipment to support what we do — which is produce about a third of the world’s auto seats.”

Before it broke away from JCI, the seating business was investing about 2 percent of sales in future development.

A small percentage increase translates to a huge amount of spending on a single vehicle component.

Adient does about $17 billion in global automotive original-equipment revenues. At that volume, the difference between 2 percent and 3 percent would mean an additional $170 million a year in development funding.

A key area for the additional investment will be seats for future generations of autonomous vehicles, the CFO said.

“The seat is going to be an incredibly important part of that journey to autonomous, and we’ll be there to play in it,” Stafeil said. “Not just fully autonomous vehicles but vehicles that have more autonomous features.”

Stafeil painted a picture of upcoming vehicles in which seats have the flexibility to sit farther away from the steering wheel.

“Maybe you don’t need to be positioned directly in front of the steering wheel at all times. Your seat could move back. It could pivot toward other passengers and maybe even fully turn around to allow you to talk to the people behind you,” Stafeil said.

That will require new solutions in seat tracks and new crash testing to make sure such flexible seats are up to safety expectations.

“If your seat has moved and your hands aren’t right there on the steer-

ing wheel or the infotainment and other controls, more of the vehicle controls will have to become part of the seat,” he said.

Adient plans to unveil a new vision in seating in January at the 2017 North American International Auto Show in Detroit.

“We’ve always been a good and profitable company that generated a lot of cash,” Stafeil said, referring to Adient’s history as a part of JCI. “We’re going to use more of that cash to grow now.

“We’ll be pushing the technology envelope as our customers migrate toward new vehicle developments.”

ADIENT

Adient is the new name for the seating business of Milwaukee-based Johnson Controls Inc., and it plans to move its operational headquarters from Wisconsin to a new location in Southeast Michigan.

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C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 7 , 2 0 1 6

Hospitals cutting admission time of psychiatric patients “An ER is the worst clinical place to have a behavioral health patient, with the stimulation and noise.�

By Jay Greene jgreene@crain.com

Emergency room physicians at

Henry Ford Hospital in Detroit strug-

gle daily with the high number of patients — averaging seven per day — arriving in the department with psychiatric issues.

Half of those patients require inpatient admission, but Henry Ford, like all hospitals in Southeast Michigan, including Beaumont Health, St. John Providence Health System and Detroit Medical Center hospitals, has problems getting psychiatric evaluations completed and then timely approval from mental health payers.

All the while, the patients and their families wait. And wait. “An ER is the worst clinical place to have a behavioral health patient, with the stimulation and noise,� said Stephanie Brady, St. John’s vice president of care transition. “They wait and wait, and it doesn't improve care. Patients, visitors and families get agitated.�

Over the past several years and for a variety of reasons, the number of hours that patients with psychiatric

Stephanie Brady, St. John Providence Health System

issues wait in the ER has doubled, sometimes creating patient safety issues, said Jennifer Peltzer-Jones, R.N., senior staff psychologist at Henry Ford's ER. “Every time you hear something about ER psychiatric boarding, all you hear is we (hospitals) need more psych beds,� said Peltzer-Jones, noting that isn’t always the case. “We admit them. But they have twice (the length of) stay in the ER� than medical patients.

Last fall, top executives at the health systems decided they needed to do something about extended ER stays for psychiatric patients and requested a meeting between hospital ER officials, medical directors and administrators for the mental health

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authorities in Wayne, Oakland and Macomb counties, Brady said.

The meeting led to the formation earlier this year of the Tri-County Mental Health Group, said Brady, who was appointed the group’s facilitator.

After studying ER patient flow, the amount of requested medical testing by mental health payers and the amount of time to gain reimbursement approval for admission, the group came up with a six-step standardized medical clearance policy that is beginning to be implemented, said Brady.

The policy works like this: For example, if the patient answers “no� to all questions, there is no need for additional testing and payer pre-authorization for admission can be sought, the group decided.

The questions are: J Is this a new psychiatric issue?

J Will any additional medical treatment be needed at the next step?

J Are vital signs abnormal?

J Is there abnormal physical or neurological exam?

J Is there also a medical complaint?

J Is the patient pregnant?

Peltzer-Jones said the medical clearance form is a checklist that helps ER staff determine whether a patient with behavioral health issues could be admitted or whether more testing is required.

She said it also streamlines the process by eliminating the need for time-consuming laboratory or other tests that mental health payers sometimes require before they approve an admission, she said.

Carmen McIntyre, M.D., chief medical officer with the Detroit Wayne Mental Health Authority, said the average 21 hours it took ERs in

early April to gain hospitalization authorization approval from Wayne County was “pitiful.�

However, after six months of using the medical clearance policy, McIntyre said, her data showed the average time for authorization was cut to about three hours. “If it is not a clear-cut decision, we can send out behavioral health professionals to do an assessment� at the hospital, McIntyre said. “The six basic questions solved a lot of it.�

But Peltzer-Jones said hospitals also need to do a better job at reducing the time for an internal psychiatric consultation at the hospital that ER nurses and physicians request as part of the evaluation process.

So far, Henry Ford has cut down the time it takes ER staff to call for a psychiatric consultation to about three hours from five.

As a result, Peltzer-Jones said, the amount of time it takes a hospital like Henry Ford to evaluate a patient for possible psych admission dropped from about an average of 12 hours to seven hours. “(Hospitals) improved internal time, and the medical clearance policy helped with efficiency,� she said.

Detroit Wayne has started using the medical clearance policy and is working with hospitals in Wayne County, McIntyre said. The other two counties, Macomb and Oakland, are both in the discussion and implementation process.

Oakland County Community Mental Health Authority is working on a pilot program in which Common Ground and St. Joseph Mercy Hospital in Pon-

tiac start using the policy by early next year, said Matthew Owens, Oakland's chief of network operations.

Owens said each county has a different process to authorize mental health admissions. For example, Oakland uses Common Ground to evaluate a psychiatric admission at its offices, which has lowered its rate to about 23 percent. “There (are) extensive ER boarding and wait times,� he said. “We are trying to create uniformity in the

tri-county, and we have reduced (wait times) just by having the mindfulness about timeliness.�

McIntyre said that so far Detroit Wayne has seen a slight uptick in the number of patients being hospitalized by using the new policy.

But, she said, “we are seeing a decrease in (readmissions). The right people are getting in and are not bouncing right back.’ The project also led to a greater understanding of the need to increase crisis center residential beds in Southeast Michigan, she said. Detroit Wayne is preparing a request for proposal, she said. “We are admitting 100 people per month into hospitals who could be in residential beds in the tri-county area,� McIntyre said.

Next steps Despite having an agreed-upon medical clearance policy between all three counties, Peltzer-Jones said full implementation is required because of the fluidity of patient flow across Southeast Michigan. “We had a patient on Monday that we waited eight hours for one of the counties to tell us it wasn’t their patient,’ she said. “We did the medical checklist, and we found no reason to do labs. But the insurer asked for labs anyway.�

Besides full implementation in Southeast Michigan, Brady said, the group would like to see the standardized medical clearance taken into all of Michigan's counties, work with hospitals, mental health authorities and include the freestanding psychiatric hospitals, group homes and crisis centers. “We are still in the beginning, and we need to implement standardized medical clearance for every payer,�

Brady said. “We still need to reduce the wait time for patients in the ER for developmentally disabled patients or pediatric patients. We still have challenges.�

Jay Greene: (313) 446-0325 Twitter: @jaybgreene

Lawrence Tech, St. John Providence get approval for nursing school in 2017

By Chad Halcom chalcom@crain.com

Lawrence Technological University

will launch a nursing degree program in fall 2017 at its Southfield campus, after the private university and St. John Providence Health System cleared a final state regulatory approval Thursday.

The Michigan Board of Nursing approved an application for the new program, which will admit 32 students per year for classroom instruction at the university plus clinical and laboratory instruction across the six metro Detroit locations of St. John, a division of St. Louis-based Ascension Health.

The Bachelor of Science in nursing will be a degree program within

Lawrence Tech’s College of Arts and Sciences, as a major in the Department of Natural Sciences. “Michigan and the nation as a whole are in the midst of a continuing shortage of qualified, welltrained nurses,� Lawrence Tech President Virinder Moudgil said in a statement. “We aim to help solve that problem with a nursing education program that will take full advantage of our 85year history as a technologically advanced university. Our founding motto, ‘Theory and Practice,’ is a perfect description of the kind of nursing education we will deliver with our partners at Providence.�

The university has named Therese Jamison, a veteran nursing specialist

and a nurse practitioner in cardiovascular services at St. John Macomb-Oakland Hospital, Warren, as program director and a professor of nursing. Jamison holds a doctorate of nursing practice degree from Vanderbilt University and a post-master’s certificate as an acute care nurse practitioner from the University of Michigan. “This partnership is part of our ongoing commitment to providing the training our future nurses need so they can deliver the high quality and compassionate care that patients expect and deserve,� said St. John Providence President and CEO Jean Meyer.

Chad Halcom: (313) 446-6796 Twitter: @chadhalcom

17

C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 7 , 2 0 1 6

DETROIT’S BUSINESS SCHOOL Mike Ilitch School of Business

CITY OF AUBURN HILLS

Construction of a three-story, 96-room Hilton Garden Inn is expected to begin in the spring and wrap up a year from this fall, according to a plan filed with the city of Auburn Hills.

Hilton Garden Inn in the works for Great Lakes Crossing Outlets

By Sherri Welch swelch@crain.com

Basil Bacall, the developer of three hotels already operating at Great Lakes Crossing Outlets in Auburn Hills, has a fourth hotel in the works for the outlet center.

Construction of a three-story, 96room Hilton Garden Inn is expected to begin in the spring and wrap up a year from this fall, according to a plan filed with the city of Auburn Hills.

If approved, the 67,740-squarefoot hotel will be built on excess land adjacent to Bacall’s Marriott TownePlace Suites, a three-story extended-stay hotel with 80 rooms that opened in April 2015.

The $8.2 million project at 3900 Baldwin Road is being developed by

Bacall’s Truss Hospitality Develop-

ment and Management LLC. Ann Arbor-based Bowers and Associates Inc. is the architect on the

project, which also includes the addition of 184 parking spaces, including 22 spaces within the shopping center’s parking lot.

The project is set to go before the Auburn Hills Planning Comission Nov. 16.

Concurrent with plans for the hotel, the commission will review a request to allow for a division of ownership between the two hotels, should Bacall choose to sell one or both of them, said Stephanie Carroll, manager of business development and community relations for the city. If approved by the Planning Commission, the hotel plan and land division

Vista Maria takes over foster care services from Holy Cross

By Sherri Welch swelch@crain.com

Holy Cross Services is exiting foster care in four counties and shifting those placements and clients to Dearborn Heights-based Vista Maria, which does nearly three times as many foster care placements in those counties.

Through the agreement, which came together over the past six or seven months following about five years of conversations, Vista Maria will become one of the largest providers of foster care services in Wayne County.

Vista Maria will refer its clients in need of detoxification treatment to Holy Cross, which provides substance abuse treatment as one of its core programs.

Child welfare agencies, especially those in Wayne County, do exactly the same things and are highly redundant, said Angela Aufdemberge, president and CEO of Vista Maria.

Eliminating those redundancies by specializing in certain service areas and then collaborating with other providers for services they specialize in creates a better system for clients, she said.

“Foundations and corporations expect nonprofits to look for ways to collaborate and improve dollars going directly to programs and to re-

duce administrative expense,” Aufdemberge said.

So, too, does the state, which awards many of the contracts that support child welfare services.

Over the past year, the Michigan

Department of Health and Human Services has begun shifting foster care

services to performance-based contracting that requires providers be able to meet a multitude of needs for their young clients, said Holy Cross COO Sharon Berkobien.

“Generally, in order to do that, you have to be either partnered with other organizations or be large enough on your own,” she said.

It made more sense to combine Holy Cross’ efforts with Vista Maria’s since the Dearborn Heights nonprofit already had a number of homes and other options for children, Berkobien said.

Vista Maria, which employs about 275 people, provides care, support, treatment and education for at-risk children and their families.

It will take on 13 employees from Holy Cross as it assumes oversight for 48 clients and 29 foster homes in Wayne, Oakland, Macomb and Washtenaw counties as they shift over the next month. Funding comes through a contract with the Michigan Department of Health and Human Services.

request are expected to go before the City Council for final approvals before the end of the month.

Bacall also owns and operates the Hampton Inn and Holiday Inn Express at Great Lakes Crossing Outlets, north of TownePlace Suites, along the mall’s ring road near I-75.

And about six miles to the south, he and his brother Mike are also developing two hotels as part of another $14 million investment through Opdyke Hospitality Investments LLC.

The four-story hotels under construction at 907 N. Opdyke Road, between Featherstone and Center roads, include a 90-room Staybridge Suites extended stay hotel and a 92room Holiday Inn Express & Suites.

They’re expected to be completed some time next summer.

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C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 7 , 2 0 1 6

Birmingham investor quietly buys another property in Detroit

Developers buy Brush Park property at auction

By Kirk Pinho kpinho@crain.com

By Kirk Pinho kpinho@crain.com

A New York City-based development company has purchased about a half-acre of property in Detroit’s Brush Park for redevelopment.

Farmington Hills-based Friedman Integrated Real Estate Solutions LLC, which coordinated the online September auction of the property at Division and Beaubien streets to Astral Weeks Development, said the sale included four properties, two of which have buildings on them totaling about 29,000 square feet.

Astral Weeks’ website says a project is currently in the pre-development phases and that it is the investor, developer and manager of the property.

The company has some ties to the area. Adam Schloff, its director of development and design, is a 2007 University of Michigan graduate, according to his LinkedIn page.

The minimum bid at auction was $500,000. The properties were owned by Brush Lofts LLC, an entity controlled by Jason Dean, according

COSTAR GROUP INC.

This building at 435 Division St. in Detroit’s Brush Park neighborhood was part of a four-property auction in September that resulted in New York City-based developer Astral Weeks Development as the new owner.

to CoStar Group Inc., a Washington, D.C.-based real estate information service.

The high bid at the auction was $1.4 million, Crain’s reported at the time. It is not known if that is the price Astral Weeks paid.

Several hundred million dollars of redevelopment projects are planned or underway in Brush Park, which is more than 100 acres.

A message was left with Rich Deptula, Friedman's national director of investment advisory services, who represented the buyer and seller in the auction. An email was sent to Astral Weeks seeking more details on what is planned for the property.

A Birmingham investor quietly purchased another property — at least his eighth in the past 18 months — in Detroit, this one the Detroit Fire and Marine Insurance Co. building in the financial district.

Hany Boutros, co-owner of Birmingham-based Mills Pharmacy + Apothecary, is tied to an entity that purchased the 12,000-square-foot building at 625 Shelby St. in June.

That entity, HB Hospitality Detroit LLC, is registered to Kelly Allen, a partner in the Adkison, Need, Allen & Rentrop PLLC law firm in Bloomfield Hills. The deed for the June sale lists the address for HB Hospitality Detroit as a Birmingham address owned by Boutros.

The purchase price for the building, built in 1912, is not known.

Plans for the building or his other properties are also not known. A message left with Boutros last week was not returned.

The previous owner was an entity called Sherlock Enterprises LLC, which is registered to Paul Huxley, CFO of Detroit-based Strategic Staffing Solutions.

Since May 2015, Boutros has pur-

COSTAR GROUP INC.

The 104-year-old building at 625 Shelby is 12,000 square feet. chased at least eight properties near the east Detroit riverfront, in Brush Park and now in the financial district, which have all seen ramped-up real estate investment in the past several years.

They are: 2952-2954 Woodward Ave.; 2130 Franklin St; 241 Chene St.;

249 Chene; 1949 E. Jefferson Ave.; 2100 Guoin St.; 211 Jos. Campau St.; and 625 Shelby.

Mills Pharmacy is expected to open a Midtown location on Cass Avenue this month.

Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB

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C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 7 , 2 0 1 6

DEALS & DETAILS ACQUISITIONS & MERGERS

Virginia Tile Co. LLC, Livonia, a ce-

ramic tile and natural stone products distributor, has acquired RBC Tile & Stone, Plymouth, Minn., a wholesale distributor of tile and stone. Website: virginiatile.com.

CONTRACTS

ManagedWay, Troy, a cloud services provider, announced it will use Windstream, Little Rock, Ark., a provider of advanced network communications, to provide optical wave services to connect select data centers in the metro Detroit market. Websites: managedway.com, windstream.com.

Fourmidable Group Inc., Bingham Farms, has been appointed as new management agent for Country Meadows, a 267-unit apartment community in Ypsilanti; Providence Tower, a 241-unit midrise building in Southfield; Water’s Edge Apartments, 192 units in South Lyon; and Woodland Heights, 187 high-rise units and 21 scattered homes in Pontiac. Website: fourmidable.com.

Siren PR LLC, a public relations firm, has been retained by Cranbrook Institute of Science, Bloomfield Hills, for communication strategy, media relations, advertising and collateral support; and retained by LIPR Financial Advisors, Troy, for media relations, social media and website management. Website: siren-pr.com.

Sanders Fine Chocolatiers, a division of Morley Candy Makers Inc., Clinton Township, has retained Plante Moran Cresa, Southfield, a commercial real estate consulting firm, to assist in determining the future direction of its real estate. Websites: sanderscandy.com, pmcresa. com.

Danlaw Inc., Novi, an automotive electronics and embedded engineering services supplier, has contracted with HiRain Technologies Co. Ltd. Inc., Farmington Hills, a development tool provider and automotive electronics products supplier for the Chinese auto industry, to provide its Mx-Suite embedded software test tools to Chinese OEMs and suppliers. Websites: danlawinc.com, hirain.com.

General Motors Co., Detroit, has contracted with IBM Corp., North

EXPANSIONS 3-Dimensional

Services

Group,

Rochester Hills, a prototype fabricator and manufacturing company, plans to expand its 100,000-squarefoot Lapeer affiliate company Urgent Design and Manufacturing facility by 65,000 square feet. Website: 3dimensional.com.

St. Joseph Mercy Oakland, Pontiac, a part of St. Joseph Mercy Health System, has opened a new cafeteria and education center within the south patient tower, including seven conference rooms, an auditorium

and simulation center. Website: stjoesoakland.com.

4Men, Harper Woods, a men’s clothing retailer, has opened a store with Joe Faris Motor City Design Co, Auburn Hills, a men’s clothing design firm, at Twelve Oaks Mall, 27500 Novi Road, Novi. Telephone: (248) 513-4769. Websites: 4menusa.com, joe-faris.com.

MDI Worldwide, Farmington Hills,

a designer and manufacturer of promotional signs and displays, is expanding its manufacturing and

warehousing facility at its Farmington Hills headquarters. Website: mdiworldwide.com.

NEW PRODUCTS

Altair Engineering Inc., Troy, added SimData Manager software from PDTec AG, Karlsruhe, Germany, to the Altair Partner Alliance online software portal. It also announced the addition of ProteusDS and ShipMo3D software from Dynamic Systems Analysis Ltd., Halifax, Nova Scotia. ProteusDS is used to test virtual prototypes of systems that are exposed to extreme wind, current and waves, and ShipMo3D models the interactions of ships and offshore structures with waves and marine environment. Websites: altair.com, pdtec.de, dsa-ltd.ca.

SolidThinking Inc., Troy, a subsidiary of Altair Engineering Inc., has launched the metal and polymer Click2Extrude suites of software to manufacturers. Website: solidthinking.com.

Mahle Industries Inc., Farmington Hills, an automotive engine components supplier, has developed a lead-free bearing system for heavy-duty truck engines. Website: mahle.com.

NEW SERVICES

Ziebart International Corp., Troy, has introduced iBart, software that it says allows franchises to capture large amounts of data efficiently and accurately. Website: ziebart.com.

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Castle, N.Y., to create OnStar Go, which will offer personalized content through the dashboard and digital channels supported by OnStar.

Websites: gm.com, ibm.com.

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20

C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 7 , 2 0 1 6

CALENDAR

WEDNESDAY NOV. 9

APACC Women’s Leadership Conference. 11 a.m.3:30 p.m. Asian Pacific American Chamber of Commerce. Topic: “Leading With Purpose.” Greektown Casino-Hotel, Detroit. $35 members; $45 nonmembers; $10 students. Contact: Van Nguyen, email: van@apacc.net.

THURSDAY

Business Leaders for Michigan. Discussion on how industries are being disrupted here at home and across the globe. Speakers include Patrick Doyle, president and CEO of Domino’s, and William Taylor, co-founder and founding editor of Fast Company.

Westin Book Cadillac Detroit. $125. Contact: businessleadersformichigan.com/event/ 2016-michigan-ceo-summit.

Ask Me Anything with Jason Mendelson. 3-5 p.m.

NOV. 10

5th Annual Michigan CEO Summit. 8 a.m.-2 p.m.

Ann Arbor Spark. Mendelson is co-founder of Foundry Group, an early stage venture capital firm in

ADVERTISEMENT SECTION

ACCOUNTING Alastair Morrison Senior Associate

The Siegfried Group

ENGINEERING & CONSULTING

Alastair Morrison, CPA, CA, joins Siegfried’s Detroit Market as a Senior Associate. He takes great pride in his work and has an analytic ability that enables him to adapt quickly to new situations. He earned his Bachelor of Business Science degree in accounting and finance from the University of Cape Town in South Africa. Most recently, he was the Director of Accounting and Finance at the Job Shoppe.

Carl Pfadt

Associate Manager The Siegfried Group

John Vidican Survey Project Manager Spalding DeDecker With 14 years of experience in the surveying industry and an additional 5 years in construction, he will help grow SD’s survey operations. Mr. Vidican holds surveying licenses in Michigan and Ohio. John’s primary focus will be client development in the energy sector. Prior to joining Spalding DeDecker, John was project manager for Atwell, LLC. John’s experience includes pipeline projects, topographic and boundary surveys, construction layout, well plats, safety standards, and quality control.

HEALTH CARE Steven J. Zawisa

Director of Financial Planning and Analytics Oakland County Community Mental Health Authority Zawisa joined OCCMHA in 2013 as a fiscal analyst for the Adults with Mental Illness (MI) Service Network Team. He provided fiscal and data decision support for MI programs, including Access, Crisis, State Facilities, and Community Hospitals. As Director, Zawisa’s duties will also include all of OCCMHA’s business operations and service delivery systems for people with a developmental disability, mental illness, substance use disorder, or children with serious emotion disturbance.

Carl Pfadt, CPA, joins Siegfried’s Detroit Market as an Associate Manager.

He has a passion for motivating the people around him and uses his mental agility to connect disparate ideas into cohesive solutions. He earned his Bachelor of Business Administration and his Master of Business Administration in accounting from St. Bonaventure University. Most recently, he was the Lead Corporate Auditor at General Motors Company.

PEOPLE ON THE MOVE

provides an opportunity to announce the selection, promotion, appointment, leadership or role responsibility expansion of an employee, colleague or team member across industries and sectors.

For more information or questions regarding advertising in this section, please call Lynn Calcaterra at (313) 446-6086 or email: lcalcaterra@crain.com

Boulder, Colo. Previously, he was a managing director at Mobius Venture Capital, a lawyer at Cooley LLP and a software engineer at Accenture. He also co-founded Shareholder Representative Services. He has co-written the book Venture Deals, Be Smarter Than Your Lawyer and Venture Capitalist and is an adjunct professor at the University of Colorado Law School, where he teaches a course on venture capital. Ann Arbor Spark. Free. Email: phillip.coleman@ annarborusa.org.

UPCOMING EVENTS

November Economic Development Forum.

8-9:30 a.m. Nov. 16. Troy Chamber of Commerce. Hear from local industry experts as they recap the past year and discuss opportunities and challenges they will face in the coming year. Speakers: Lindsey Williams, vice president of government affairs, Delphi Corp.; Thomas Shafer, president and COO, Talmer Bank & Trust; Chuck Ruiz, executive vice president, Basso Design Group; Stephanie Bergeron, president, Walsh College. Rehmann, Troy. Free for members; $10 nonmembers. An additional $5 will be charged to those registering the day of the event. Website: troychamber.com.

The National Conversation on Board Diversity.

7:30-9:30 a.m. Nov. 17. Inforum. On the same day in cities across the nation and throughout the world, business leaders will discuss one strategic question: “How can we harness investor influence, legislation, targeted publicity and other means to accelerate progress for women on boards?” Speaker Nancy Gioia, formerly Ford Motor Co.’s director of global connectivity, electrical and user experience, serves on two corporate boards: Exelon Corp., where she serves on the Finance and Risk Committee and the Generation Committee; and Brady Corp., where she is on the Compensation and Management Development Committee and chairs the Technology Committee. Michigan First Credit Union, Lathrup Village. $35 Inforum members; $45 nonmembers. Website: inforummichigan.org.

2016 2016 Crain’s Crain’s Health HealthCare CareLeadership LeadershipSummit Sum- . mita.m.-1 . 7:30 a.m.-1 p.m.17 Nov. . Crain’s 17. Crain’s Detroit Detroit Busi7:30 p.m. Nov. ness.

Business.

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14. Contact: Price increases Kacey Anderafter son, Nov.email: 14. Contact: cdbevents@crain.com; Kacey Anderson, email: phone: (313) cdbevents@crain.com; 446-0300. phone: (313) 4460300.

CFA Annual Forecast Luncheon. Noon-1:30 p.m. Nov. 18. CFA Society of Detroit. Kevin O’Leary of ABC’s “Shark Tank” will share his outlook for 2017. MotorCity Casino Hotel, Detroit. $45 members; $65 nonmembers. Website: cfasociety.org.

If America Doesn’t Stand for Free Trade, Who Does? 11:30 a.m.-1:30 p.m. Nov. 21. Detroit Economic Club. Australian Ambassador Joe Hockey

will argue that the United States’ global economic and strategic strength has been built on trading freely with other nations, and that free trade must continue if America is to continue as a global and regional leader. Westin Book Cadillac. $45 members; $55 guests; $75 nonmembers. Website: econclub.org.

Calendar guidelines. Visit crainsdetroit.com and click “Events” near the top of the home page. Then, click “Submit Your Events” from the drop-down menu that will appear. Fill out the submission form, then click “Submit event” at the bottom of the page.

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PEOPLE: SPOTLIGHT ITC Holdings names Blair president, CEO

Linda Blair has become president and CEO of ITC Holdings Corp. following the completion of the Novi-based company’s $11.3 billion sale last month to Canadian utility company Linda Blair Fortis Inc.

Blair, 46, succeeds Joseph Welch, who retired. Welch, 68, will remain chairman of ITC’s board.

A 2007 Crain’s 40 under 40 honoree, Blair most recently served as executive vice president and chief business unit officer for ITC Holdings.

Former DIA COO new Henry Ford Health VP Henry Ford Health System

named former Detroit Institute of Arts COO Annmarie Erickson as its new vice president of governance. She will join the health system Nov. 28, succeeding the retiring Edie Eisenmann.

Erickson left as executive vice president and COO of the DIA in June after 17 years with the museum, but remains a consultant there through December.

Ex-Free Press publisher becomes Inforum VP Carole Leigh Hutton, former editor and publisher of the Detroit Free Press, is returning to the city as vice president of business development and marketing for Inforum, a Detroit-based professional women’s alliance.

Hutton, who led the Free Press for 15 years, had served as president and CEO of United Way Silicon Valley in San Jose, Calif., for the past eight years.

Inforum named Cindy Goodaker, former executive editor of Crain’s and interim COO for Inforum since May, as vice president of signature programs and communications. The COO position was eliminated.

Inforum also named Kristen Linegar Mercer, who has been director of strategic initiatives, as senior director of operations, and promoted Tember Shea to director of inGage from manager of that program.

Destaco names Paul Destaco, an Auburn Hillsbased automation and workholding company, named Byron Paul president, replacing Mats Ceder, president since June 2014.

Paul’s previous positions include managing director for Asia Pacific and vice president of global strategy at John Crane.

JOB FRONT

POSITIONS AVAILABLE

ARCHITECT A national real estate development company seeks a highly motivated and organized individual to join their team as their architect in Bloomfield Hills, Michigan.

Responsibilities include: • • • • • •

Prepare schematic design and design development documents Prepare construction documents for interior build outs Prepare illustrations for use in presentations Work with clients to select finishes Maintain up to date plans for all properties Prepare preliminary conceptual site and building plans

Qualifications: • • • • •

21

C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 7 , 2 0 1 6 CRAIN’S DETROIT BUSINESS

November 7, 2016

Must be a registered Architect licensed in Michigan Minimum of 5 years experience in architecture Experience in space planning and interior design Proficiency with AutoCAD 17, Microsoft Word, Excel and PowerPoint Experience with Revit or other imaging programs is desirable.

TO APPLY: Please send resumé to: job.opportunity.re@gmail.com POSITIONS AVAILABLE

POSITIONS AVAILABLE

POSITIONS AVAILABLE

Principal Engineer/Job Code PE-01

APPLICATION DEVELOPMENT MANAGER

Work cross-func Cust & Harman dev team in analyz req & designing Android App/Svs for Automotive Infotainment proj ontime & high qual deliver to mult cust. Work with global SW dev team to dev new features debug issues& write test case for unit test. Lead/parti in meet’s b/w the Customer and Harman for design review & clarifi in specific doc. Integrate Dev customize & bug fix in Android Telephony fw and app’s. Lead comm on Android Fw & App S/W issue b/w Cust & Harman, incl reporting & investigating the issue identify prior update tracking & root cause doc. Dev and track KPIs for each SW release to ensure it meets the acceptance criteria. Interact with Test teams & peer teams to share knowledge in order to per dev and debug active. Support & mentor less exp peers by sharing knowledge in Android & related tools to carry out their active. Keep abreast of new tech & method for purpose of recomend changes that will benefit current & future cust pgms.

Applies intensive & diversified k’ledge of engineering principle & prac in broad areas of assig & related field in Android App FW. Req BE Comp Sci, Eng, Elec&Comm & 8 Yrs exp in SW dsgn & dev on Mob Smartphone and InVehicle Info platform as SW Eng/Sr. SW ENg and Lead, specific to Android App FW app dev. Alt: MS deg or foreign eq in in CompSci Eng/Elec/Telecom Eng. 3 yrs of ext exp in SW des & dev on Mob Smartphone &/ InVehicle Infotain pform as SW Eng/Sr SW Eng and Lead, specific to Android App FW and app dev. Exp must incl Min5 yrs of exp in Android App FW and App dev esp Telephony & Connectivity dom in Linux Platform. Min5 yrs hands on exp in Obj Oriented des and program (C, Java, Perl), Brew,OEM under Linux env . Exp in Des and buil large com SW in a realtime, emb, multi iface env in Android Sld be well ver with OS con, OO Des pat & o’view of the Sys lev comp on Linux for Android App Fw. Excel prob solv skill with good exp on using sys ana & profile tools for debug & perf optimiz Exper and strong work k’ledge in Android SDK, XML, Linux, Sharepoint, Eclipse, Git, Modem protocols/AT Commands & Proj mgmt tools such as MS Project.

Exp in design, develop & debug SW for embedded sys. Proven exp in the design & develop of apps. Req gathering analyze design & develop of apps for Mobile. Hands on expon code rev, unit test & bugfixing. Develop QtMobility Api’s with MMF & Gstreamer Backend for Meego (linux) . For Media recording & playback. Proficiency in writing code in mult enterprise program lang & tools such as C, C Qt , Symbian C, Java, Pearl , Script , HTML, XML and Python. Porting Gstreamer Fw and test cases. Prepare the Architecture for Gstreamer Fw. Writing Unit test cases. Ability to analy and design apps using OOPS methodologies Proven exp Gstreamer Framework arch. Proven exp in designing and implementing Symbian solutions & Developing Unit and Integration test cases for the APIs. Exp in creating Multimedia solution Comprising of Audio, Video, contents playback on Head unit Work on est, design, plan, schedule and dev of apps. Conduct arc design sessions with cust & provide solutions that leverage emerging tech. Analyze and break down problems, and solutions for problems. Exp with dev Linux based apps. Req: Bach deg (or foreign equi) in Comp Sci, Comp Apps, Info Systems, Electrical & Electronics or Electronics & Comm Eng. and 5 yrs of dev exp, with a proven track record of designing & develop comp sw apps in the Linux platform. Exp must incl: 5 years of experience as a Software Eng, Sr Dev/lead, designing highly scalable, multithreaded, SW apps. Alternative: Master’s deg or (foreign equivalent) in Comp Sci, Comp Apps, Info Sys, Electrical & Electronics Engineering or Electronics & Commu Eng and 2 years of exp as Sw Eng, Sr Dev/ Lead in same field and areas. Additional Requirements: Strong Knowledge in C, C , Qt , Symbian C , Java, Pearl , Script , HTML, XML and Python. Exp in dev Linux based apps Exp in archi Gstreamer fw for Audio/Video Playback. Exp in dev various libraries in Symbian Exp in creating Multimedia solution Comprising of Audio, Video, contents playback on Head unit.

Work location: Livonia, MI. May have long term assignments in other locations in U.S. including Novi, MI areas.

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Page 21

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22

DPS

FROM PAGE 1

“It becomes a total crapshoot, and you could have a group serving on the board who isn’t necessarily the best informed or qualified. Not only do the legacy candidates have a leg up, but it becomes a classic name (recognition) game.”

The Old Guard Among the 63 candidates are 10 of the 11 incumbents on the legacy Detroit Public Schools Board of Education, which has sometimes called itself the “Board in Exile” as the district has gone through four state-appointed emergency managers and a transition manager since 2009. Only Judy Summers is not on the Nov. 8 ballot.

Yet only seven seats are available on the new DPSCD board, created by a $617 million restructuring package passed by the state Legislature in June.

Members of the board have said previously the state resumed control of the district after the board elected in 2006 had not managed by late 2008 to eliminate a deficit that began during a previous turn of state-appointed oversight, from 2000 to 2005.

Susan Demas, publisher of Lansing political newsletter Inside Michigan Politics, said the incumbents are “not a lock” to take all seven seats, but enjoy a recognition advantage among so many unfamiliar names.

CEO Dan Varner of Excellent Schools Detroit, a coalition of business and nonprofit leaders and local school administrators that advocates to improve school performance and choice in the city, said the organization takes no position on any candidates and he wouldn’t personally support any individuals either. But he wouldn’t mind some degree of change.

“There are individuals in the current leadership that I think could make the change and serve students well. But as a composite, I’ve not been a fan of that board of education,” Varner said.

“I would instead encourage folks to dig deeply and find information on everyone they can on the ballot.”

Skeleton crew?

A local media collaboration among Bridge Magazine, WDET-FM, the Detroit Free Press and others found in October that 36 of the candidates, including eight of the 10 incumbents, had filed for bankruptcy, faced a foreclosure or an eviction, or lost civil suits in court over unpaid bills.

Two other candidates were tied to more than a half-dozen lost properties each, while 12 candidates had filed for bankruptcy, the investigation found.

But Penny Bailer, former executive director of City Year Detroit and the Michigan Metro Girl Scout Council and a school board candidate with some business-group backing, said she tries not to read too much into other candidates’ failings.

“Our hearts should go out to those who were maybe in that report only because in the 2008 crisis they lost a job or a home. They shouldn’t be seen now as a deadbeat,” she said. “I don’t know personally if that happened to

C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 7 , 2 0 1 6

people who were perfectly responsible people, or if a few were being dishonest in their dealings with others.”

DPS board slates

The A+ Team

Members of the board of the previous Detroit Public Schools district who are on the ballot this year:

The Detroit Regional Chamber’s political action committee endorsed Bailer and six other newcomer candidates from three different leadership slates, and the local business community, to make up the new board that convenes in January.

At least 13 candidates have organized into three slates touting their leadership experience and endorsements; the A+ Team collects four of those candidates and campaigns for transparency and accountability.

The Chamber PAC endorsed all four members of the “A+ Team” board candidate slate — Bailer, CEO Sonya Mays of housing development company Develop Detroit, curriculum specialist Mary Kovari of the Henry Ford Learning Institute, and the Rev. Kevin Turman of Second Baptist Church on Monroe Street — and three from two other slates.

Brad Williams, vice president of government relations for the chamber, said the organization tried to look at candidate viability as well as an openness to looking at chamber priorities — like greater oversight of individual school quality.

“There wasn’t a cognitive decision not to pick any incumbents, but we were so involved in the conversation in Lansing about bringing the DPS back to financial health. And while we didn’t get the perfect solution we wanted, we thought it was important (for candidates) to be involved in that conversation and interested in achieving that,” he said.

“And integrity was certainly important — we didn’t want to put our good name behind anyone that appeared to have any ethical concerns.

We’re not going to have 100 percent agreement on every issue, maybe with any candidate. But an openness, or eagerness to hear the perspective of the business community, and our ideas and concerns for the community, was very important.”

Mays said the A+ Team members have been busy meeting residents and building personal name recognition more than garnering high-profile endorsements — although its members do have several.

“We’ve tried to take our message directly to voters,” she said.

Mays also said she and the three other A+ Team members have organized around three issues: secure school environments for students and educators, retaining and supporting teachers, and public accountability.

5 for the Future A second candidate slate has garnered teacher and labor union support and advocates new “wraparound” services to promote child well-being.

They include former Detroit Receiving Hospital President Iris Taylor and Advocacy Coordinator Misha Stallworth of the Detroit Agency on Aging (who each got Chamber endorsements), plus church pastor Keith Whitney; education consulting firm president Deborah Hunter-Harvill;

The old guard

Herman Davis LaMar Lemmons Ida Short Patricia Johnson Singleton Reverend David Murray Tawanna Simpson Elena Herrada Annie Carter Wanda Redmond Juvette Hawkins-Williams A+ Team A self-declared slate that touts its business background: Penny Bailer Mary Kovari Sonya Mays Rev. Kevin Turman 5 For the Future A labor-backed slate touting progressive change, financial integrity and local control: Misha Stallworth Iris Taylor Angelique Peterson-Mayberry Deborah Hunter-Harvill Rev. Keith Whitney Freedom Team Educators and others advocating freedom to teach and lead for teachers and administrators: Leslie Andrews Ryan Mack Karen White Theresa Mattison

and Angelique Peterson-Mayberry, a UAW Ford community relations specialist.

Varner said he personally sees viable candidates from both the A+ and Future slates that could get recognition, but did not elaborate. Williams said the Chamber support sometimes overlaps with labor backing.

All five of the Future candidate slate, incidentally, come recommended by the local council affiliate of the

American Federation of Teachers-Michigan, along with Detroit Market President Ryan Mack of Operation Hope Inc.

and Markita Meeks, a medical technologist for the John D. Dingell Veterans Affairs Medical Center.

The Freedom Team Mack, endorsed by the AFT affiliate, is also a member of the Freedom Team slate, a third group mixing career educators with leaders in nonprofit and philanthropy programs.

With him are Leslie Andrews, director of community relations and corporate giving at Rock Ventures LLC, who also has a Chamber endorsement. Rounding out the foursome are Theresa Mattison, a retired DPS principal and teacher, and Karen White, a former district school principal and now associate superintendent for the

Archdiocese of Detroit.

The Freedom Team campaigns in part on freedom or autonomy for teachers, school administrators and students in district governance.

The Duggan vacuum Detroit Mayor Mike Duggan has taken no public position on school board candidates, although some candidates said he has personally voiced support to a few people, and observers believe he is watching the race closely.

Demas said Duggan’s silence leaves a “vacuum” in the race considering his past interest in strong oversight for the new district. But that might be a political calculation.

“He might be doing some things quietly for candidates, through backchannels. He’s certainly a highly skilled politician in that respect,” she said. “But it really could be an issue if he decided to take a strong stance by backing a slate, and then be unsuccessful, and then already have a poor relationship with the first new (district) board.”

Duggan himself told a Crain’s editorial board last month that he learned several political lessons, after advocating intensely for a separate version of the school restructuring legislation that included a Detroit Education Commission, which could decide where and whether schools can locate or expand in Detroit and set the criteria for closing schools that underperform. That version of the restructuring bills ultimately failed in Lansing.

“I sat personally with (a majority) of the representatives. They overwhelmingly told me we were trying to do the right thing, and then we still didn’t get the vote,” he said, adding that he might have overestimated Gov. Rick Snyder’s pull among Republicans in the House, who passed the version of the rescue package without an Education Commission.

“Next time we’ll come back and make sure we collect plenty of allies, on both sides of the political aisle,” Duggan said.

But he added that a comeback for the city cannot be complete without true school district reform.

“We have heard for a long time that people were leaving the city over schools and crime — and lately it’s more about schools than crime,” he said.

Ballenger said Detroiters may be skeptical that their votes will be all that meaningful, since the board has taken several turns under state management and still has budget oversight from the Detroit Financial Review Commission.

He also thinks the mayor is tracking the board race, but his lack of public support for anyone is conspicuous.

“You would think that Mike Duggan, if he’s the leader he purports to be, might step up and enter this election when he was so immersed in the details of the legislation that created it.

He seemed to think then that the district was really an impairment for him,” Ballenger said.

“But he could be embarrassed by being defeated, and for the mayor to put his prestige behind candidates who lose becomes a statement itself on the importance of the mayor. So

there is a political calculus there.”

Ready for acrimony?

Another panel of business, nonprofit, education and labor leaders, the Coalition for the Future of Detroit Schoolchildren, is taking no positions on any candidates in the election, even though the Coalition was an early advocate for ending emergency management and returning the Detroit school district to elected leadership in a March 2015 report.

Neither is the Business Leaders for Michigan roundtable of business leaders, said marketing Vice President Kelly Chesney.

John Rakolta, co-chair of the Coalition and CEO of Walbridge Aldinger Co., also said he has not heard whom the mayor supports and declined to take any position himself on candidates.

But he said the new board should be ready to make difficult and unpopular decisions that past school boards and appointed leaders have consciously avoided.

Those could include right-sizing building capacity — the district has seat capacity for more than 80,000 students even though only about 45,300 are enrolled — or quality assurance reviews of individual schools, to make sure that a larger share of per-pupil state funding in the new district’s 2016-17 operating budget actually goes toward classroom instruction.

“I hope there’s a parent or two that gets on the new board. It should be a diverse board of Detroiters with various backgrounds, and that the ethics policy of the new board is a strong one, and there are not any special interests (district suppliers, consultants or others) represented on the board. Whoever sits on the board has to be putting children first in decisions,” he said.

“And we have never closed a school for bad performance. We’ve closed schools for economic reasons, and have held off on performance closings, so now the board gets to deal with that issue — whose special interests will be affected by having to close badly performing schools.”

A September report from the state School Reform Office listed more than 45 school buildings within the district among the lowest-achieving 5 percent of public schools statewide, accounting for more than one-third of all Michigan schools in the report.

A new board will also be overseen for at least three years by the Detroit Financial Review Commission, which also monitors the city’s post-bankruptcy finances, until it shows consistent balanced budgets.

But the new board will hire the new district’s first superintendent, meaning it could have to take a focus on academic improvements before financial stability.

“But academics are going to have to change. We are trying to prepare these kids for a 21st century jobs market with a 20th century curriculum and a 19th century process. The way we teach was invented over 100 years ago, and these kids are learning more on their iPhones after school through the internet than they learn in class,” Rakolta said.

Chad Halcom: (313) 446-6796 Twitter: @chadhalcom

C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 7 , 2 0 1 6

ILITCH

in action for several months.

“It was not my intent to ever stay in the (co-chairman) role, but watching Denise work and interact up close with the other board members, I could see there was another layer of professionalism I hadn’t seen before,” Valenti said. “And I thought, ‘What a terrific addition and a place to turn for leadership.’”

FROM PAGE 3

it sets for other women, and for other (corporate) boards, to try to be as diverse as they can,” said Ilitch, who turns 61 on Tuesday. “But I’m really excited about the people at Horizon.

We have a talented group of people here that I think can take the company to the next level. It’s very high energy, and I think we’ve just been phenomenal in our focus on new technology. I’m excited to see how that technology affects future growth.”

“Since Mary Barra became chairman at GM, we’ve seen that (GM) board makeup shift to 50 percent women, and that’s a great change,” said Susy Avery, recently retired executive director of the Michigan Women’s Commission. “Denise also brings a lot of experience in both the private and public sectors to that role, and I think it’s a great choice for Horizon.”

Although the board still has to discuss strategy, Ilitch expects future growth at Horizon will come from a mix of small and large acquisitions, some organic sales growth as a fairly strong U.S. economy supports recreational vehicle accessory demand, and some expansion into new geographic and product markets. Ilitch said she is also excited about the company commitment to innovate and adopt new technology, into what might seem like an old economy manufacturing product.

Horizon Global’s Draw-Tite hitch business planned to unveil a carbon-forged design and other features during the Specialty Equipment Market Association show in Las Vegas over the weekend. Valenti also said the company has developed special sensors that can alert drivers to a hitch connection problem while on the road.

Horizon Global last month announced it had completed the roughly $190 million acquisition of the Westfalia-Automotive Holding GmbH and TeIJs Holding BV towing companies from a German investor consortium, led by DPE Deutsche Private Equity.

Shares of Horizon Global were trading around $19.80 last week, up from about $15.70 in the days before the Westfalia announcement

AUTOS FROM PAGE 3

Crain’s: You’re predicting a flat or slight contraction in auto sales in 2017. What are the root causes?

Schuster: The main cause of the

slowing of growth and expected contraction in the U.S. market is related to the cycle itself. We are seeing the U.S. leveling off at a high rate of demand after strong, progressive growth over the last six years. The overall economy is growing, and we don’t expect a contraction in the next 12-18 months, but growth has been tempered. Wild cards include pace of interest rate increase (low risk), credit tightening and increased interplay with the used car market.

Entrepreneurial roots

LARRY PEPLIN

Denise Ilitch says she doesn’t consider success a given. “I come from a sports background, and I don’t feel the game is over until it’s played,” she said. “I don’t take anything for granted at all in it.” in late August and a low ebb of under $8.25 last November. The company last week reported net income of $9.9 million, or 55 cents per share, on revenue of $465.6 million for the first three quarters of the year, compared with about $10 million, or 55 cents per share, on $454.2 million for the year-ago period — excluding Westfalia, which is expected to make Horizon Global about an $850 million annual business worldwide.

That puts it well on the way to Valenti’s goal of growing the trailer towbar company to $1 billion in annual revenue. Ilitch said Westfalia seems to have boosted investor interest in

recent months, and she sees the company reaching its sales growth goal on a combination of sales growth, new product lines and corporate acquisitions both large and small.

Valenti, who maintains a director seat on the Horizon board, said he knew Ilitch mainly through her involvement in charities like the LoveLight Foundation that she co-founded in 1992 before asking her to join the board when Horizon was spinning out from Bloomfield Hills-based TriMas Corp. (NASDAQ: TRS) in 2015.

He said the decision to make Ilitch co-chairman was only a recent one, after observing the new board

Crain’s: How will the U.S. presidential election affect the auto industry’s performance and overall economic growth?

Jackson: First and foremost, the

risk. Our view is that if Clinton wins, it will be status quo, and we will not likely see a significant departure from spending or plans. If Trump wins, there is more uncertainty around his fiscal and trade policies that could cause jitters in the financial markets and with economy growth.

election will be over soon, providing better direction for policy to shape the economic outlook. Our economics team has evaluated stated policy positions, and while campaign promises are not guarantees, under a (Hillary) Clinton presidency, we largely expect a status quo continuation of current policy. Under (Donald) Trump, there is less clarity, yet tax cuts have been promised even as spending is expected to rise. This may prime the economy in the short term, yet thereafter it would be expected to slow more quickly.

Schuster: The election is another

Crain’s: Will there be a contraction of spending from the supply base? A slowdown in hiring?

Jackson: We see suppliers looking

to optimize, hiring only as needed based on new programs and investments. Output for next year grows marginally and still faces additional pressure.

Schuster: I do think spending will be on watch in the near term, given the uncertainty in the market. I think

The eldest daughter of Mike and Marian Ilitch, Denise Ilitch was former vice chairman of Little Caesar Enterprises Inc. and president of Olympia Development before departing from the family company in 2004. She went on to launch Ambassador Magazine in 2006 and join the UM regents board in 2008.

An attorney of about 35 years, Ilitch was of counsel to Detroit-based Clark Hill PLC until about three years ago, serving in a business development and entrepreneurial assistance role at the firm.

The State Bar of Michigan reports that Ilitch’s law license lapsed, but she and Clark Hill both called that a paperwork oversight and said she was current on dues as of last week.

The magazine, a product of Hamilton Woodlynne Publishing LLC, which she co-owns with Dennis Archer Jr. and two other partners, was originally a quarterly publication that grew to become bimonthly. It has not had a print or digital issue since spring and its website and Twitter profile have both been inactive since July. But Ilitch said she hasn’t given up on Ambassador; instead she is working to adapt it to a new, hybrid digital format that will publish at least some dedicated online content.

“The world has changed, and we’re in the process of digitalizing the magazine,” she said. “It’s a work in progress, but we want to be able to write and share stories online, and do profiles and some features more that way, through the website and other platforms. But we’re still in the middle of that.”

Academic leadership Ilitch seeks a new term on the UM board along with fellow Democrat and incumbent Laurence Deitch,

the negative aspect of the market leveling off is overblown, but it is a risk as competitive pressure intensifies. That said, there remains a shortage of talent, so I do not expect to see hiring slow in the next year, especially in the engineering space.

Crain’s: What is the one major land mine to watch out for in 2017?

Jackson: We’re long past the re-

covery where a rising tide was lifting all boats. Now what is crucial is having the right car, SUV, truck mix (and related supplier contracts) relative to market demand.

Schuster: I think the (outcome of the) election is a big risk right now.

In addition, the pace of the economy and even the outcome of Brexit weighs on the global economy, spilling into North America.

23 law partner and chairman of the automotive industry team at Bodman PLC in Detroit, against eight challengers on the Nov. 8 ballot.

She has campaigned on a record of tuition cost containment, and said the university should convene a commission to study alternative revenue sources to shore up the general fund budget without needing tuition hikes. A 2015 pricing trends report from the nonprofit College Board ranked Michigan sixth in the nation for average in-state public university tuition and fees, at just over $12,000, and second in the nation for out-ofstate tuition.

“I’d like to see a model where when some of the research by a university has a for-profit component to it, or has (successful commercial spinouts of university intellectual property), then some dollars go into the general fund and help put education first for the students,” she said.

“These are the types of things I’d like to see the university lead, because this is not just a university problem, it’s a national problem.”

She also said the 220 Merrill building has office tenants along with the restaurant, owned with Zaid Elia, after completing a twoyear renovation. She declined to discuss in any detail her 2004 departure from the Ilitch family companies except to say she was “happy I was part of building our family’s businesses that have made such a difference in our community” and the experience has helped her grow other companies in the years since.

“I love what I do now, and I love being independent and being able to innovate and be part of other exciting companies,” she said. “I already feel very much a part of our family businesses.”

Ilitch also said she doesn’t consider success a foregone conclusion.

For example, this week she is still keenly focused on winning a second UM board term and fostering growth in her executive roles.

“I come from a sports background, and I don’t feel the game is over until it’s played,” she said. “I don’t take anything for granted at all in it.”

Chad Halcom: (313) 446-6796 Twitter: @chadhalcom

Crain’s: What part of the business should Southeast Michigan auto industry players be watchful for next year?

Jackson: Watch your exposure.

The same market conditions produce very different realities for automakers and the supply chain. Automakers can choose to drive throughout or constrain volume to bolster profitability. Automakers have a vested interest in ensuring profit by constraining supply to align with demand where suppliers benefit directly from volume.

Schuster: Southeast Michigan should be well positioned in the coming year. I think talent is a key issue ... and the availability of it. It is a job seekers’ market, and that likely won’t change in 2017.

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Red Wings halfway through transitioning season tickets to new arena Bill Shea

bshea@crain.com

The Detroit Red Wings say they are about halfway done with re-seating their season tickets holders from Joe Louis Arena to the new Little Caesars Arena in downtown Detroit.

The hockey team is offering its 3,500 full-season season ticket holders the chance to buy tickets by seniority at the new $627.5 million arena, a process that began in May and is expected to be finished by early next year. The new arena is to open in September.

Season ticket holders have been individually brought to a 10,000-square-foot arena preview center that’s set up inside Comerica Park. There, they’re shown sample seats, videos, a mock suite, models of the new 20,000-seat arena and surrounding The District Detroit development, and given the chance to buy tickets at equivalent sight lines to their current seats, the team said.

Fans are assigned a seat by the Red Wings.

“Our goal was to provide everyone with comparable sight-line seats to the best of our ability, and fans have been very pleased with their seats,”

PISTONS FROM PAGE 1

impact on retailers will probably be more negative than positive.”

The logic goes like this: A sports fan is oriented toward grabbing food and drink before or after a game, or maybe a souvenir T-shirt. Less likely is piggybacking a grocery shopping trip or a boutique visit.

Shoppers actually tend to avoid areas around sports arenas when games are taking place and those going to games tend not to go shopping before or after games, said Gibbs. So attracting new retail to the area might be actually hindered rather than boosted by a Pistons move.

Retail attraction has long been a problem for downtown Detroit because the nearby household incomes make such investment economically risky.

The total population in the onemile radius around the arena site, a key figure for retailers, is 16,894 and projected to decline slightly by 0.5 percent to 16,852 by 2021, according to data from ESRI Inc. provided by Gibbs Planning Group. The median household income in that radius is $18,342, projected to grow to $19,283 in 2021.

It doesn’t improve much the farther out you go from the site, with a projected 0.75 percent population dip by 2021 from 234,781 to 226,146 within five miles, according to the ESRI data. The median household income in that radius is projected to grow from $23,779 to $24,280.

Yet when it comes to the arena site, those numbers are only part of the story because thousands of people might travel well over five miles for games, Gibbs said.

The impact of the sports arena on nearby residential and office users would also be negative because of

OLYMPIA DEVELOPMENT OF MICHIGAN

The Detroit Red Wings say they are about halfway done with re-seating their season tickets holders from Joe Louis Arena to the new Little Caesars Arena in downtown Detroit. the team said in a statement.

So far, about 1,400 season ticket holders from Joe Louis Arena’s 100 level have been re-seated, the team said, and the 1,900 fans with tickets on the mezzanine and 200 level began the process Tuesday.

Additionally, season ticket hold-

ers now can opt to use a “Virtual Venue” tool at RedWingsSeasonTickets.com to buy season tickets at the new arena.

The team also has about 1,400 fans who have partial-season ticket packages rather than the full 41 regular season home games.

The re-seating isn’t an apples-to-apples arrangement because the two arenas have different configurations. For example, Joe Louis has 6,500 lower-level seats while Little Caesars will have 9,000.

Season ticket prices weren’t disclosed, but will increase “moderate-

increased vehicular traffic and more unseemly aspects of sporting events, such as broken beer bottles in the streets and other litter, he said.

“All in all, these entertainment and sports centers only benefit food and beverage,” he said.

But there are upsides.

Little Caesars Arena would have fewer “nights where the center is dark,” he said. “Just like when Comerica Park and Ford Field are closed, it’s a large, dark hole, so it will be lively on a much more regular basis, which is positive.”

Having a second pro sports team in the arena means about 100 nights, or more, are guaranteed to bring people downtown. The project developer, the Ilitch-owned Olympia Development of Michigan, has estimated that the 20,000-seat venue will host about 140 events a year, including major concerts.

That estimate doesn’t include the Pistons.

The Red Wings, a playoff team for 25 straight years, drew 821,107 fans for 41 regular-season games at Joe Louis Arena in 2015-16. A run to the Stanley Cup finals can drive that total to more than a million.

The young and rebuilding Pistons last season totaled 677,138 fans for 41 regular-season games.

When they win, they lead the NBA in attendance, as they did for years in the 2000s, attracting more than 800,000 fans during the regular season at The Palace of Auburn Hills.

Add in preseason and playoff games, and the Pistons also could bring more than a million more people downtown.

The Palace also attracted an additional 213,599 patrons for non-Pistons touring events last year, down from 279,098 in 2014 and 460,835 in 2013, according to Pollstar data.

Keeping those visitors downtown

to shop, work, and even live is another matter. Parachuting in for just the game puts money in the team owner’s pockets. If they have reasons to spend time downtown around the arena, or they want to live in the stadium district, then Detroit sees a financial benefit — but at the expense of other places where fans aren’t spending money or paying taxes.

While there are risks, Gibbs said, some companies are eager to get involved in The District Detroit because it will host two pro sports teams.

“The Pistons moving downtown will be attractive to new real estate developers and investors who will want to locate near the arena or along the M-1 Rail (streetcar). In fact, I hosted a New York developer yesterday that is seeking to invest in housing in Midtown, and he was attracted by the Pistons move,” he said.

ing the soccer project, said at the time of the announcement.

The competition Olympia’s effort to recruit investment in the District also faces competition from Dan Gilbert, the Quicken Loans Inc. founder who has bought more than 95 properties in and around downtown Detroit totaling more than 15 million square feet, with an investment of more than $2.2 billion. He’s also seeking commercial tenants for his buildings.

Another factor: Pistons owner Tom Gores and Gilbert in April jointly announced a plan to billion-dollar pro soccer stadium and mixed-used project downtown, possibly on the unfinished Wayne County jail site.

While the status of that project remains unknown, it certainly would compete for investment dollars.

“Sports and entertainment districts are the way of the future,” Matt Rossetti, president of Detroit-based Rossetti Associates Inc. that’s design-

Where are the investors?

Olympia, which declined to comment for this story, launched The District Detroit and the arena ground-breaking with fanfare in July 2014, with assurances that announcements of business investment by outside companies were just over the horizon. In January, Olympia officials said such announcements would come in six months for The District, which is forecasted to be a $2.2 billion overall project. Hints were that a grocery store — possibly a Meijer — and a hotel would be announced.

Eleven months later, no announcements have been forthcoming. The Pistons (and a separate practice facility in the District) would be the first, although the financial details of that relationship won’t be known until a deal is disclosed.

Sources have told Crain’s that the intense talks to lure the Pistons from Oakland County have monopolized much of Olympia’s attention.

Also, Wayne State University is building the 120,000-square-foot, four-story Mike Ilitch School of Business next to the new arena — but that’s thanks to $40 million from the Ilitches.

Certainly, the Ilitch investment in The District has been formidable.

Beyond the $627.5 million arena, Olympia has said it will spend $196 million immediately around the arena on office and retail space, restaurants, the Via concourse around the building, and a parking garage. Other spending includes $150 million for the Ilitches’ nine-story Little Caesars pizza chain headquarters, and some parking garages near Comerica Park.

ly” at the new arena, the team said.

A year ago, the team said all 52 corporate suites (and another eight that are for hockey only instead of for all arena events) and all 22 mini suites at the new arena have been leased under multiyear deals. The corporate suites lease for more than $300,000 a year, and the leases are for 7-10 years. They seat 30-40 people.

Cocktail napkin math shows that assuming 52 suites leased at $300,000 a year over seven years translates into $109.2 million in revenue (which typically is money paid over time rather than in a lump sum).

The mini suites are actually loge boxes for four-six people and lease for about $100,000 a season. That’s about $2 million a year in revenue.

Joe Louis Arena, the hockey team’s home since it opened in 1979, has 66 suites that are about half the size of the new arena’s suites. They also lease for about half the cost.

All of the current Joe Louis suite contracts were for one year, meaning there were no transfers to the new arena.

Chris Ilitch, who oversees the family business holdings for his billionaire parents, said in an Oct. 2 interview with CNBC that Olympia has 52 projects “on the board” that brings the total $2.2 billion. He also said 22 developers responded to an RFP on housing developments.

Olympia has pointed to that RFP response and insisted there is overwhelming demand for things like apartments, office and retail space. It expects at least 10 residential projects to happen in The District.

“We are out in the marketplace and we are reacting to this incredible feedback,” Steve Marquardt, vice president of Olympia Development, told Crain’s in January.

But no names have been unveiled, no investments disclosed. It’s unknown whether deals are in place and simply haven’t been announced, or if developers have been reluctant for some reason to sign on with final contracts with the Ilitches.

Perhaps it’s a case of trepidation by investors until they see someone besides the Ilitch family willing to spend money on the project.

Olympia is using CBRE Inc., the Los Angeles-based real estate brokerage with a local office in Southfield, to handle the retail leasing.

Bill Shea: 313 (446-1626) Twitter: @Bill_Shea19

BANKRUPTCIES The following business filed for protection in U.S. Bankruptcy Court in Detroit Oct. 28-Nov. 3. Chapter 7 bankruptcy involves liquidation.

Three Brothers Construction Co., 2 Crocker Blvd., Mt. Clemens, voluntary Chapter 7. Assets and liabilities not available.

Chris Ehrmann

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Tech innovators honored at Michigan Venture Capital Association awards dinner

By Marti Benedetti

She said Michigan, and particularly Detroit and Ann Arbor, are well positioned to collaborate on mobility with companies in and outside the state.

Retired General Motors Co. Vice Chairman Bob Lutz offered his take on the future of mobility. “We can no longer serve transportation needs by putting more cars on crowded highways,” he said during the program, adding that he sees the changing vehicle landscape happening in four stages. The last one — where people travel in modules — is 15 to 25 years out, he said.

“Stage one is now and cruise control and lane control are the start,” Lutz said.

University of Michigan Professor David Brophy received the Above and Beyond Award for his 35 years of

sharing his knowledge of the venture capital industry and connecting investors with entrepreneurs.

Evan Ufer, partner in Ann Arbor-based Plymouth Ventures, was given the Up and Coming Award as a young professional who is making a mark on the investment community in Michigan. He moved to Michigan from New York 2 1/2 years ago.

“I’m proud to be part of the Michigan venture capital ecosystem," he said.

According to the MVCA 2016 Annual Research Report, more high-tech startups have received venture backing in Michigan than ever before. In 2015, 74 companies received $282 million from Michigan venture capital firms, representing a 48 percent increase in the last five years.

good balance of other customers.” duce the rest in-house.

Dauch said American Axle is linThe MPG acquisition will take FROM PAGE 3 some of the sting out of GM’s deci- ing up new contracts with other cusSowerby, vice president and portfo- sion, which was made before the tomers to replace 90 percent of its lio manager at the Bloomfield Hills deal was announced. Nevertheless, lost GM axle revenue by 2020. office of Loomis, Sayles & Co. LP. American Axle is expanding out of GM’s axle business is a big-ticket “The debt load is going to put contract. its truck niche to pressure on the firm,” Sowerby said. produce compoLast year, “The debt load is “While Axle has been a great opera- GM’s truck axnents for crosstor, they are adding debt in the bot- les generated going to put overs. Dauch says tom of the seventh inning of the au- $1.91 billion, pressure on the he has signed up tomotive cycle. We’re going to see a 49 percent of new customers downturn in the cycle, and it will test American Ax- firm. ... We’re going for American Axtheir operating abilities.” le’s EcoTrac allle’s total sales to see a downturn But the transaction does solve one of $3.90 billion, sysin the cycle, and it wheel-drive of American Axle’s biggest long- according to tem, which standing issues: its reliance on its the company’s will test their debuted on the former parent, GM. presentation to operating abilities.” Jeep Cherokee.

GM now accounts for roughly investors last “We’ve got David Sowerby, Loomis, Sayles 66 percent of the company’s reve- week. multiple customnue. The integration of MPG will reers in multiple Ever since it duce GM to 41 percent of sales with was spun off by GM in 1993, American regions,” Dauch said. “We’ll be plans to reduce that further to 32 Axle has sought to diversify its custom- launching programs in 2018 through percent by 2020.

2020.” er portfolio — with mixed success.

Some of that reduction comes Dauch added that the MPG acAs of last year, GM’s share of from a loss of business with GM. American Axle sales totaled $2.57 quisition will allow American Axle to On Nov. 3, the company con- billion. expand in Europe, add powertrain Ford Motor Co., which previously components to its product portfolio, firmed it will no longer be the sole supplier of axles and driveshafts for had done little business with Ameri- and establish a niche in the foundry GM’s next-generation full-sized can Axle, will become its third-big- industry. gest customer after GM and FCA US pickups and SUVs. Steve Wybo, senior managing diWhen GM redesigns those trucks LLC, thanks to the MPG acquisition. rector of Birmingham-based adviso“We’ll have tremendous business ry firm Conway MacKenzie Inc., said in 2018, American Axle will supply 65 percent of the axles. A GM spokes- with Ford,” CEO David Dauch told the combined company should softman declined to comment on ru- Automotive News in a Nov. 3 phone en the blow of the impending auto mors that the automaker will pro- interview, “and we’ll start getting a sales downturn.

“When the softening (of the market) comes, they’re both better posiINDEX TO COMPANIES tioned,” Wybo said. “There will likely These companies have significant mention in this week’s Crain’s Detroit Business: be large-scale cuts to create cost savLawrence Technological University ..................16 Adient .................................................................... 15 ings and improve their bottom line, LMC Automotive US ..............................................3 American Axle & Manufacturing Holdings ........3 which should allow it to weather any Metaldyne Performance Group ..........................3 Bodman LLC .........................................................14 storms together.”

Michigan Venture Capital Association ........... 25 Clark Hill PLC ........................................................ 12 Dauch said the combined compaMillendo Therapeutics........................................ 25 Detroit Medical Center .......................................10 ny should create $100 million to Mills Pharmacy + Apothecary ...........................18 Detroit Pistons ...................................................... 1 $120 million in cost reductions by Nemeth Law PC ................................................... 13 Detroit Public Schools Community District ..... 1 2018.

Oakland Co. Comm. Mental Health Authority .16 Detroit Red Wings ...........................................1, 24 The transaction is a clear win for Olympia Development of Michigan ................. 24 Detroit Wayne Mental Health Authority .........16 MPG and its shareholders, who will Plaza Hotel & Convention Center .......................5 Foley & Lardner LLP ............................................ 12 also receive 0.5 share of the newly RetroSense Therapeutics ................................. 25 Fontinalis Partners ............................................. 25 combined company.

St. John Providence Health System .................16 Harbor Health Plan .............................................10 New York private equity firm Shinn Legal ........................................................... 13 Hilton Garden Inn ................................................ 17 American Securities Inc. hit a home SPLT ........................................................................ 6 Holy Cross Services ............................................. 17 run. The firm acquired Metaldyne Sterling Attorneys at Law PC ............................14 Horizon Global ........................................................3 LLC in 2012 for $820 million, three University of Michigan ..........................................3 IHS Automotive .....................................................3 years after high debt and the slumpVista Maria ........................................................... 17 Kraemer Design Group PLC ..................................7 ing sales forced it into Chapter 11 bankruptcy.

American Securities rolled two of its other suppliers, HHI Group Holdings and Grede Holdings LLC, into Metaldyne to form MPG in 2014, then launched a $150 million initial public offering later that year.

It reported net income of $125.3 million on revenue of $3 billion last year.

American Securities, now a 76 percent shareholder in MPG, will see a payout of more than $693 million, coupled with 25.6 million in shares, or 23 percent, of the new company, under the deal with American Axle.

American Securities also gets to pick three new members to the American Axle board, which will expand to 12 with the addition of MPG CEO George Thanopolis.

Dauch, and before that his late father, has enjoyed a favorable board.

The current board includes Dauch; Beth Chappell, president and CEO of the Detroit Economic Club; Bill Kozyra, chairman and CEO of Auburn Hills-based TI Automotive Ltd.; Peter Lyons, partner at Freshfields Bruckhaus Deringer US LLP in New York; James McCaslin, former COO of Harley-Davidson Inc.; William Miller II, head of asset allocation for the Saudi Arabian Investment Co.; John Smith, principal at Bloomfield Hillsbased Eagle Advisors LLC; and Sam Valenti III, chairman and CEO at Bloomfield Hills-based Valenti Capital LLC. Wybo said Dauch and his team will face a more challenging board in difficult times with the addition of the new members.

“Certainly, when a company is run more like a family company, its management will be under more scrutiny,” Wybo said. “But if you’re a good operator and you’re confident, you welcome not having a bunch of friendlies on the board.”

Dauch said he and American’s Axle’s board and management are “committed to our future with” American Securities.

mbenedetti@crain.com

Millendo Therapeutics, Fontinalis Partners and RetroSense Therapeutics were the top honorees last week at the Michigan Venture Capital Association’s 2016 Awards Dinner at the Rattlesnake Club in Detroit.

Ann Arbor-based Millendo Therapeutics, which works on finding drugs to improve the quality of life for patients with endocrine diseases, won the Capital Event of the Year Award as the state’s largest health care deal in 2016 and largest venture capital financing round in the state.

Detroit-based Fontinalis took the 100 Award as it closed on a $100 million capital fund, the largest raised in the state this year. Ann Arbor-based RetroSense, which aims to restore vi-

AXLE

sion to those with a retinal degenerative condition, won Exit of the Year because it was acquired for $60 million by pharmaceutical giant Allergan.

This is the first time in the awards’ 12 years that the event took place in Detroit.

In addition to giving out the awards, the event kicked off the partnership between MVCA and the North American International Auto Show in Detroit that could last a year

or longer, said Maureen Miller Brosnan, MVCA executive director.

“This year we were compelled to come to Detroit for our awards as it is breaking out mobility as an area to study,” Brosnan said. “The North American International Auto Show is partnering with us to drive the message home.”

Automotive News contributed to this report.

Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh

www.crainsdetroit.com Editor-in-Chief Keith E. Crain Group Publisher Mary Kramer, (313) 446-0399 or mkramer@crain.com Associate Publisher Ron Fournier, (313) 446-1674 or rfournier@crain.com Editor Jennette Smith, (313) 446-1622 or jhsmith@crain.com Director, Digital Strategy, Audience Development Nancy Hanus, (313) 446-1621 or nhanus@crain.com Managing Editor Michael Lee, (313) 446-1630 or malee@crain.com Managing Editor/Custom and Special Projects Daniel Duggan, (313) 446-0414 or dduggan@crain.com Assistant Managing Editor Kristin Bull, (313) 446-1608 or kbull@crain.com Digital Editor Carlos Portocarrero (313) 446-6056 or cportocarrero@crain.com News Editor Beth Reeber Valone, (313) 446-5875 or bvalone@crain.com Senior Editor Gary Piatek, (313) 446-0357 or gpiatek@crain.com Research and Data Editor Sonya Hill, (313) 446-0402 or shill@crain.com Newsroom (313) 446-0329, FAX (313) 446-1687, TIP LINE (313) 446-6766

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(313) 446-0325 or jgreene@crain.com Chad Halcom Covers litigation, the defense industry, education, Macomb and Oakland counties. (313) 446-6796 or chalcom@crain.com Tom Henderson Covers banking, finance, technology and biotechnology. (313) 446-0337 or thenderson@crain.com Kirk Pinho Covers real estate, city of Detroit. (313) 446-0412 or kpinho@crain.com Bill Shea, enterprise editor Covers media, advertising and marketing, the business of sports, and transportation. (313) 446-1626 or bshea@crain.com Lindsay VanHulle, Lansing reporter. (517) 657-2204 or lvanhulle@crain.com Dustin Walsh, senior reporter Covers the business of law, auto suppliers, manufacturing and economics.

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Single Copies (877) 824-9374 Reprints (212) 210-0750; or Krista Bora at kbora@crain.com To find a date a story was published (313) 446-0406 or e-mail infocenter@crain.com Crain’s Detroit Business is published by Crain Communications Inc. Chairman Keith E. Crain President Rance Crain Treasurer Mary Kay Crain Senior Executive Vice President William A. Morrow Executive Vice President/Director of Strategic Operations Chris Crain Executive Vice President/Director of Corporate Operations KC Crain Vice President/Production & Manufacturing Dave Kamis Chief Financial Officer Bob Recchia Chief Information Officer Anthony DiPonio G.D. Crain Jr. Founder (1885-1973) Mrs. G.D. Crain Jr. Chairman (1911-1996) Editorial & Business Offices 1155 Gratiot Ave., Detroit MI 48207-2732; (313) 446-6000 Cable address: TWX 248-221-5122 AUTNEW DET CRAIN’S DETROIT BUSINESS ISSN # 0882-1992 is published weekly, except for a special issue the third week of November, and no issue the third week of December by Crain Communications Inc. at 1155 Gratiot Ave., Detroit MI 48207-2732. Periodicals postage paid at Detroit, MI and additional mailing offices. POSTMASTER: Send address changes to CRAIN’S DETROIT BUSINESS, Circulation Department, P.O. Box 07925, Detroit, MI 48207-9732. GST # 136760444. Printed in U.S.A. Contents copyright 2016 by Crain Communications Inc. All rights reserved. Reproduction or use of editorial content in any manner without permission is prohibited.

26

C R A I N ’ S D E T R O I T B U S I N E S S // N O V E M B E R 7 , 2 0 1 6

THE WEEK ON THE WEB

RUMBLINGS

Chrysler museum to close Dec. 18

M

OCT. 29-NOV. 4

T

he Walter P. Chrysler Museum in Auburn Hills will close on Dec. 18 and be converted into office space for Fiat Chrysler Automobiles, the automaker said Friday. The 55,000-square-foot museum, which opened in 1999, houses 65 classic and historic vehicles.

COMPANY NEWS 

Farmington Hills-based Friedman

Integrated Real Estate Solutions LLC

about a month ago purchased out of foreclosure the Raleigh Officentre, a 297,000-square-foot pair of interconnected six-story buildings, the company said. The center had been owned by an entity called 25300 Telegraph Road Holdings LLC. The purchase price was not disclosed.  Basil Bacall, the developer of three hotels operating at Great Lakes Crossing Outlets in Auburn Hills, has a fourth in the works for the outlet center. Construction of a 96-room Hilton Garden Inn is set to begin in the spring and wrap up in late 2017, said a plan filed with the city. The $8.2 million project is being developed

by Bacall’s Truss Hospitality Development and Management LLC.  The Barbara Ann Karmanos Cancer Institute in Detroit raised more than $750,000 this year at its various 23rd annual Partners fundraising events, slightly lower than last year and in some previous years. Karmanos executives said the decline had noth-

ing to do with the departure of chief fundraiser Nick Karmanos last month.  With two months left in the year, the Detroit Zoo set a new yearly attendance record. Bolstered by the April opening of the Polk Penguin Conservation Center, it has attracted more than 1,478,760 visitors in 2016.  The Michigan Agency for Energy awarded St. Vincent de Paul-Detroit a $5 million energy assistance program grant to continue assisting families in danger of having electric and heat utilities disconnected.

OTHER NEWS

 Forty-five ideas will share more than $2.24 million in the 2016 Knight Arts Challenge. A full list of the grantees, announced by the Miami-based John S. and James L. Knight Foundation at an awards event in Detroit, is at knightfoundation.org.  Jacoby’s German Biergarten, the downtown Detroit watering hole and restaurant, has a new owner . It sold in September for $790,000 to LVT Properties LLC.  The new 28 Grand micro apartment building in Detroit’s Capitol Park is expected to start getting its first residents in June, developers said. The development is by Bedrock Real Estate Services LLC.  Horse racing fans will be able to watch 39 weeks of live racing next year at two Detroit-area tracks. The 2017 schedule, issued by the Michigan Gaming Control Board, includes 54 days of standardbred racing at Northville Downs and 36 days of thoroughbred racing at Hazel Park Raceway.  The Edsel & Eleanor Ford House in Grosse Pointe Shores was designated as a historic landmark by the Na-

tional Park Service.

A $20,000 grant from the Detroit Auto Dealers Association Charitable Foundation Fund will go to the Downtown Boxing Gym Youth Program to



launch an after-school computer coding program for students in seventh through 12th grades.  The federal government is recommending that former Detroit Mayor Kwame Kilpatrick’s restitution in his corruption case be reduced from $4.5 million to $1.6 million, AP reported.  Charles Busse, a Birmingham attorney and former member of the Warren City Council, pleaded guilty to bribery in a case involving a federal agent. Busse is accused of paying bribes to get deferrals of deportation and other benefits for his clients.  Clinton Township trustee Dean Reynolds was indicted on eight bribery charges as part of a corruption investigation, AP reported.  Mary Engelman, former executive director of the Greater Farmington Area Chamber of Commerce, was named executive director of the Michigan Women’s Commission. She has been government affairs and public relations director for Troy professional services firm OpTech LLC. 160  Fox 2 Detroit anAnqunette chor Jamison Sarfoh an150 nounced plans to retire from TV. Sarfoh, who has multi140 ple sclerosis, said she is taking a 130 leadership role with MILegalize to help legalize mari120 juana in Michigan.

110

The lowdown on Detroit’s high-rises Dan Gilbert’s team has two months to submit its plans for a new high-rise building on the former J.L. Hudson’s department store site in Detroit. Last week, Crain’s reporter Kirk Pinho learned from his sources that it’s possible the building, which would sit on the vacant 2-acre site on Woodward, could come in at 60 stories.

100 90

Here, we put that in perspective with the tallest buildings in the city — and beyond.

Note: Buildings here are measured by number of stories, though some buildings’ stories are taller than others. For instance, Ally Detroit Center has 43 stories, but is about 55 feet taller than the Penobscot Building, which has 47 stories.

80 70

Sources: Jones Lang Lasalle Detroit Skyline Summer 2016 report; Crain’s research

60 50 40 30 20 10

Guardian Ally Detroit Penobscot Building Center Building

Potential Hudson’s site project

Renaissance Center

One World Burj Trade Center, Khalifa, New York City Dubai

DeVos family has a piece of historic Cubs championship

ichigan’s wealthy DeVos family is among those celebrating the Chicago Cubs’ first World Series championship in more than a century.

It emerged in 2015 that the family, owners of Ada-based multilevel marketing company Amway and the NBA’s Orlando Magic, became a Cubs minority owner. They have a noncontrolling stake in the team, whose controlling owners, the Ricketts family, had sold minority interests in Cubs business entity Chicago Baseball Holdings to help finance the $375 million renovation of Wrigley Field, Crain’s Chicago Business reported.

The size of the DeVos stake wasn’t disclosed.

“We are pleased to have a very small piece of the Cubs and to be in partnership with the Ricketts, who have done a remarkable job with

the team, and are really committed to frankly making history,” Dick DeVos said in a March 2015 radio interview with Michael Patrick Shiels on “Michigan’s Big Show.”

The DeVoses were among six minority owners who bought into the team, initially anonymously.

ESPN confirmed their involvement.

The entire minority ownership group holds less than 10 percent of the franchise and has no voting rights but serves in an advisory role to the Ricketts family.

The DeVos family’s wealth stems from Dick DeVos’ 90-year-old father, Richard DeVos, who in 1959 co-founded Amway, which last year reported $9.5 billion in sales.

He broke into major sports ownership in 1991 when, for $85 million, he bought the Magic, a franchise now worth $900 million, according to Forbes.

This new stadium isn’t a keeper Detroit is getting a new stadium, Crain’s has learned. But it’s not what you think.

A building permit issued last week for Detroit-based Rossetti Associates Inc., the architecture firm for Dan Gilbert and Tom Gores’ plan to build a new Major League Soccer stadium downtown, allows the company to build “a temporary stadium mock-up on the roof” of the former Federal Reserve Building at 160 W. Fort St., where Rossetti has its offices.

But it’s not in any way tied to the $1 billion Gilbert-Gores plan, said Denise Drach, director of business development and marketing. It’s for an out-of-state client, although

she wouldn’t say who.

The mock-up will be about 12 feet long, 12 feet wide and about 15 feet high, Drach said.

A review of the permit and associated plans Friday said it will take about a month building, reviewing and making adjustments to the mock-up, then taking it apart and storing it in place until the spring, and then reconstructing for a client presentation and then removing it from the property.

It will be the first time the company, renowned for its stadium and arena work, has done anything like it, Drach said. Rossetti designed the Palace of Auburn Hills, among other places.

Program helps Detroit high school journalists find their voices Student journalists at 11 Detroit high schools are once again taking notes and tracking down sources for a collaborative news publication that aims to be, as its Page One tagline describes, “the student voice of Detroit’s high schools.”

Dialogue is produced by Crain Communications Inc. and Michigan State University to highlight the work of student journalists in the city. This is the second year of the Crain MSU Detroit High School Journalism Program. Crain employees mentor the students, brainstorming story ideas and editing final copy; MSU faculty members and students produce the print edition and website.

The first issue, published Oct. 26, features stories about mock elections at the schools, updates on sports teams and these stories:  An interview by Martin Luther King Jr. Senior High School students of Alycia Meriweather, Detroit Public Schools Community District interim superintendent.

The first issue of Dialogue, a student newspaper in Detroit.  The success of a 1-year-old paid internship program with Ilitch Holdings Inc., which placed 24 Cass Technical High School students in positions with the Detroit Tigers, Little Caesars pizza chain and other areas.  A partnership between the Wayne County Prosecutor’s Office and Com-

munication & Media Arts High School

that simulates a juvenile courtroom in the school’s Basic Law class.

Dialogue will be published four times this school year. It’s online at DetroitDialogue.com.

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