MiBiz June 21, 2021 print edition by MiBiz

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SPECTRUM, BEAUMONT FOLLOW HEALTH CONSOLIDATION TREND By MARK SANCHEZ | MiBiz msanchez@mibiz.com

he proposed merger between Spectrum Health and Beaumont Health could add fuel to the years-long trend of consolidation in the health care industry. The deal, which was announced Thursday and could close as soon as this fall, would create the largest in-state health system in Michigan with 22 hospitals, 305 outpatient care centers and about $13 billion in operating revenue. The combined company would have more than 7,500 employed, affiliated and independent physicians, more than 64,000 employees, and about $13 billion in operating revenue. Much of the industry consolidation that has occurred over the years involved small community hospitals joining larger health systems. In fact, Grand Rapids-based Spectrum Health grew to 14 hospitals across West Michigan through acquisitions in markets such as Ludington, Greenville, Fremont, Zeeland, Hastings and St. Joseph. However, the latest proposal involves joining two major health systems in geographically different markets to create a health care powerhouse in Michigan. That’s a difference that Michigan Health & Hospital Association CEO Brian Peters considers “emblematic of what we have long thought would be the next logical evolution” in health care consolidation. “We’ve talked for a while now about the fact that the number of small, independent hospitals is continuing to dwindle as many of them have joined larger, multi-hospital systems. What we’ve said is really the next shoe to drop is the mega-merger — these large multi-hospital systems joining with other similar organizations. In this particular instance, you see a perfect example of that,” Peters said.

BHSH system Spectrum and Southfield-based Beaumont last week signed a letter of intent to “explore creating a new health system.” They aim to complete due diligence, integration planning and regulatory reviews in hopes of closing the merger by this fall. Since Spectrum and Beaumont each operate in distinct markets without any overlap, Spectrum Health President and CEO Tina Freese Decker expects the deal to clear the required regulatory reviews. See SPECTRUM-BEAUMONT on page 8

A DEAL IN THE MAKING

Behind the scenes of Herman Miller’s seven-month courtship of Knoll STORY BY JAYSON BUSSA • ILLUSTRATION BY KAYLEE VAN TUINEN

See page 4

GOP lawmakers push corporate income tax cut, tax credits for businesses By MARK SANCHEZ | MiBiz msanchez@mibiz.com

epublican lawmakers are advancing bills that would reduce Michigan’s corporate income tax rate by 20 percent and create tax credits for businesses that lost at least a quarter

of their revenue during COVID-19 restrictions. The legislation is designed to help businesses recover from the pandemic through tax relief instead of new state grant or loan programs. A lower tax burden would free up needed cash flow while avoiding at times burdensome grant or loan application processes, according to bill supporters.

2020 nonprofit donor trends reflect tumultuous year PAGE 21

INSIDE:

Transportation SEE PAGE 10

“When you try to do grants and programs that have all of this criteria, you’re imposing a paperwork burden on them that most are not familiar with or not equipped to navigate. Those businesses that do have that kind of expertise, which tend to be larger, usually gobble up that limited amount of money very quickly,” said Charles Owens, director of the

Michigan chapter of the National Federation of Indep endent Businesses (NFIB). “When you use the tax system to help small businesses, that’s a pretty straightforward process. It’s a rather simple calculation,” he added. Owens cited Gov. Gretchen Whitmer’s Michigan Economic See TAX BILL PACKAGE on page 19

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Recognizing Pride as more than a gesture in West Michigan

f you were wondering why numerous businesses and almost every major corporation changed their logo on June 1 to reflect a rainbow theme, it’s because we’re in the middle of Pride month. Since the late 1970s, the rainbow flag has been a symbol of pride for the LGBTQ community, and each June marks the anniversary of the Stonewall Inn uprising, which took place 52 years ago in New York City. In June 1969, members of the LGBTQ community fought back against police who were raiding the gay bar — a now-historical act that marked the beginning of a decades-long effort for basic rights for LGBTQ people. This year, several cities in West Michigan — including Holland, Grand Haven and Lowell — have recognized Pride month in a more public way than ever before. Many local Pride festivals were rescheduled or held virtually this year because of COVID-19, but the city of Lowell carried on and held its first Pride event ever. As well, officials in Holland and Grand Haven issued proclamations recognizing June as LGBTQ Pride month for the first time in their respective cities. “The response to this was overwhelmingly positive,” Holland Mayor Nathan Bocks said of the Pride proclamation he and the City Council issued on June 2. “We wanted to send a really clear message that everyone is welcomed and valued.” Holland also recently passed an anti-discrimination ordinance in August 2020 that codified protections for the LGBTQ community on a local level. It was a significant shift from 2011 when a similar anti-discrimination ordinance was voted down by the City Council and then-Mayor Nancy DeBoer. “We recognize we’re a stronger community when everyone feels welcome in the community and we can have everyone contributing and making this a strong fabric of Holland,” Bocks said. The Grand Haven City Council has voiced support for Pride month in the past, but this is the

first time it has passed an official resolution, said Grand Haven Mayor Robert Monetza. “It’s important because it elevates the consciousness of it,” Monetza said. “These are members of our community, our neighbors, and productive and important citizens, but they suffer in silence in many ways. It’s important to elevate and recognize and accept these folks as our fellow citizens.” However, gestures from businesses to display a rainbow flag or change a social media picture are increasingly criticized as the bare minimum. Large corporations like American Airlines, Wells Fargo and Walmart have also been criticized for making Pride month social media posts while also contributing financially to anti-LGBTQ causes or politicians. While the “rainbow washing” in full force this month has been exhausting, it is different and more meaningful when small businesses — particularly in smaller, conservative towns — put out a rainbow flag this month, said Nicole Lintemuth, a Lowell resident who organized the city’s first Pride event. “When you’re in a small community, you know the people who own these businesses,” Lintemuth said. “This is the person you live down the street from and work with. It’s easy for a corporate board to slap a rainbow on their social media, versus a store that has a lot of respect in the community that has been around for years and says, ‘Hey, we’re going to recognize this.’” By organizing Lowell Pride 2021 Better Together, Lintemuth intended to show that there’s an LGBTQ presence even in a small community. “I live here currently, and have been here for a little over four years,” Lintemuth said. “In my childhood I was in the U.P. in a very small town, so I know what it’s like to grow up in the closet.” While the 2,500 people who attended the

NOTEBOOK Kate Carlson writes about real estate & development and small biz 616-608-6170 kcarlson@mibiz.com

Lowell Pride event exceeded Lintemuth’s expectations, she also knew the area has a big LGBTQ presence. “It was super exciting to see, and especially after last year when a lot of us were homebound,” Lintemuth said. “It was such an amazing day and there were so many families there and so many kids in Lowell that will get to see this Pride happening and allies and adults around them that support them.”

Inclusion attracts talent

Aside from criticism over “rainbow washing,” though, business advocates in recent years have increasingly recognized LGBTQ inclusion as imperative to retaining and attracting talent. That’s why some of the largest companies in Michigan — names like Blue Cross Blue Shield of Michigan, Kellogg Co., DTE Energy, Consumers Energy, Whirlpool Corp. and Herman Miller Inc., to name a few — have endorsed a ballot initiative to expand the state’s civil rights law to include protections for LGBTQ individuals. “As economic developers, we ensure current and future generations want to live and work in our vibrant economy,” Lakeshore Advantage President Jennifer Owens said in a statement. “Emerging workers have choices to make about where they want to live. Welcoming all people and being inclusive is the right thing to do for our community’s business growth and talent attraction.” Bocks agrees that community opposition to LGBTQ equality ultimately comes with a price. “If you can’t respect the LGBTQ community just because it’s the right thing to do, there is a strong economic price for that as well,” Lintemuth said. “We in the LGBTQ community know the places that are safe and the ones that are not, and the ones that are silent.”

A recap of recent stories from MiBiz.com.

GR amphitheater project builds momentum Officials in Walker and Grand Rapids took separate steps last week to advance plans for an amphitheater and other amenities at the 201 Market Ave. SW property near downtown Grand Rapids. The latest developments involve mov ing the Kent County Road Commission from 1500 Scribner Ave. NW in Grand Rapids to the WalkerView Industrial Park. The plan was recently approved by the Walker Planning Commission. The city of Grand Rapids would then move various public service operations from 201 Market to the Scribner Avenue property to make way for the amphitheater and other developments. The Grand Rapids City Commission last week approved Visit www.mibiz.com

Western Michigan University receives $550M gift With the Empowering Futures Gift, anonymous donors will provide $550 million to Western Michigan University over the course of 10 years. The gift will provide $300 million to the Western Michigan University Homer Stryker M.D. School of

Publisher Brian Edwards / bedwards@mibiz.com Associate Publisher Denise Montambo / denise@mibiz.com Editor Joe Boomgaard / jboomgaard@mibiz.com Managing Editor Andy Balaskovitz / abalaskovitz@mibiz.com (energy, policy) Senior Editor Jayson Bussa / jbussa@mibiz.com (manufacturing, tech, sports) Senior Writer Mark Sanchez / msanchez@mibiz.com (finance, health care, life sciences) Staff Writer Kate Carlson / kcarlson@mibiz.com (real estate & development, small biz) Contributing Reporter Josh Spanninga VP of Production & Audience Development Kristi Kortman / kkortman@mibiz.com Digital Specialist Danielle Affholter / daffholter@mibiz.com Graphic Designer Kaylee Van Tuinen / kvantuinen@mibiz.com Senior Advertising Consultant Shelly Keel / skeel@mibiz.com Sales & Marketing Associate Lauren Frailey / lfrailey@mibiz.com Director, Finance & Administration Tarah Buchan / tbuchan@mibiz.com

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BIZ BRIEFS an amended option agreement to purchase the Scribner Avenue property for $7.45 million. The agreement sets a Sept. 30, 2023 closing deadline for the entire 14.2-acre property. “This is another important, incremental step in the potential redevelopment along this portion of the Grand River and Market Avenue corridor,” Grand Rapids City Manager Mark Washington said last week.

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Medicine (WMed) while $200 million will go to the university for various initiatives, including need-based financial aid. The additional $50 million was awarded to the WMU athletics program. Administrators expect the first round of funds to be available for the next fiscal year. While the donation will go to fund scholarships, advance medical education and research, support faculty expertise, increase athletic competitiveness and fuel numerous other initiatives, diversity, equity and inclusion stands as the primary focal point of the Empowering Futures Gift.

Senate advances bills backed by biz, housing coalition The state Senate passed a bipartisan package of bills last week that would

allow municipalities to award a range of tax incentives to developers for affordable housing projects. Local and statewide groups under the Housing Michigan Coalition — including the Grand Rapids Area Chamber of Commerce, Home Builders Association of Michigan, Michigan Municipal League and Housing North — are backing the legislation. The six-bill package gives local governments more flexibility and control over affordable housing programs while expanding “workforce housing” for people who may have difficulty obtaining market-rate housing but make more than what qualifies for affordable housing. Bill language also sets parameters for local governments to customize legislation to meet their needs for different levels of affordability.

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MiBiz / JUNE 21, 2021

MANUFACTURING

Public filings shine unusual spotlight on $1.8B Herman Miller-Knoll deal By JAYSON BUSSA | MiBiz jbussa@mibiz.com

s a transformational merger between two office furniture giants heads for final approval, the details of their seven-month courtship offer insight into a deal that could change the industry’s landscape. Zeeland-based Herman Miller Inc. in April shocked the industry when it announced it would purchase long-time competitor Knoll Inc. in a $1.8 billion cash-and-stock deal. The pending deal, which is up for shareholder votes at both companies on July 13, was the result of back-and-forth proposals that began in December 2020 and nearly fell apart because of eleventh-hour renegotiations just four days before news of the merger became public. A prospectus filed in late May with federal securities regulators included a thorough record of the deal-making process, outlining both major — and seemingly minor — meetings, negotiations and discussions. One West Michigan-based securities attorney who regularly reviews filings of this nature told MiBiz the uncharacteristically robust S-4 filing with the U.S. Securities and Exchange Commission contained the longest background section he had ever read. Meanwhile, the blockbuster deal developed several months into a global pandemic that threatened to shake the foundation of the office furniture industry as employees worked remotely en masse. As shareholders at both companies prepare to vote on the deal, Herman Miller now seeks to address any new dynamics that may emerge. “This shows a lot of confidence by Herman Miller in the future of the furniture industry, which is an industry that was hit significantly by COVID in general,” said Elisa Berger, vice president of Grand Rapids-based M&A and investment banking firm Charter Capital Partners, which specializes in working with clients in the contract furniture space. “Ask someone in March or April of 2020 what the office furniture industry was going to look like in the next five years, and I don’t think anyone would be confident in their answer,” Berger said. “For me, this is a signal that Herman Miller sees a future in this industry.”

Knoll receives a lifeline The prospectus detailed efforts by Knoll executives and its board of directors to deal with the economic hardships brought on by the COVID-19 pandemic, even before Herman Miller entered the picture. In April 2020, just a month into the pandemic, Knoll’s board determined that the company could potentially be in an uncomfortable liquidity position by the end of the year, possibly in violation of its financial covenants. Despite cost-cutting measures, East Greenville, Pa.-based Knoll saw that its worst-case scenario emerged as the most likely trajectory. At a May 5 board meeting, the company’s internal auditors resolved to include a going concern warning in Knoll’s next quarterly report, indicating the grave uncertainty over the company’s future. But the office furniture maker would find a lifeline in European investment firm Investindustrial Acquisition Corp. (NYSE: IIAC), which owns a portfolio of businesses in the health care, technology and manufacturing sectors. In fact, Knoll rebuffed a previous attempt by Investindustrial and a sponsoring

JUNE 21, 2021 / MiBiz

company to purchase Knoll through an all-cash offer in January 2019. Knoll declined at the time, claiming the price didn’t match the company’s intrinsic value. The investment group, which would factor into the eventual Herman Miller deal, later purchased 4 percent of the outstanding shares of Knoll’s common stock and provided a standing offer to serve as a source of financing for Knoll, if needed. In time, Knoll took Investindustrial up on that offer for financing, closing in July 2020 on a $164 million investment agreement in which Investindustrial acquired 164,000 shares of Series A convertible preferred stock. The Knoll board believed the investment would fortify the company’s balance sheet, enhance its ability to execute on its strategic plan in the uncertain economic environment, and explore other opportunities that might arise, according to the prospectus.

Herman Miller pursues deal Herman Miller laid the groundwork for the blockbuster deal during a regularly scheduled meeting with members of the company’s management team and representatives from Goldman Sachs Group Inc., its long-time financial adviser. At an Oct. 12 board meeting, Herman Miller management and Goldman Sachs personnel presented a financial analysis of Herman Miller’s potential acquisition of Knoll. The board asked executives to reach out to Knoll and explore a potential deal. Eight days later, Herman Miller formed a board subcommittee to consider the potential acquisition of Knoll, and met to discuss the strategic rationale for the potential deal and to review deal terms. Herman Miller President and CEO Andi Owen also called Knoll CEO Andrew Cogan to discuss a potential business combination. During the call, Owen shared her great respect for Knoll and that she believed there was a “compelling strategic logic” to bring the two companies together given their complementary product portfolios, similar digital initiatives and shared commitment to design, according to the filing. This ushered in a volley of proposals that started in December of last year, beginning with an all-stock offer that failed to ignite negotiations. After Owen and Cogan spoke by phone on Dec. 18, Owen delivered a non-binding proposal to Cogan that called for the exchange of 0.5 shares of Herman Miller common stock for each share of Knoll common stock. The offer implied an enterprise value for Knoll of $1.42 billion, and Knoll shareholders would own approximately 30 percent of the combined company. Herman Miller’s proposal also indicated the company’s belief that the proposed business combination would yield $80 million to $100 million in annual synergies. Knoll turned down the offer, calling it “sufficiently distant” on price and saying the company would not engage in further discussions, according to the filing. However, a determined Herman Miller was able to spark discussions on Feb. 1 of this year with a second proposal: A cash-and-stock offer that called for the exchange of $11 in cash and 0.32 shares of Herman Miller common stock for each share of Knoll common stock, implying a $1.65 billion enterprise value for Knoll. In that deal, Knoll’s shareholders would then own 22 percent of the combined company. While Knoll’s board found the second offer to be insufficient, it opted to pursue discussions on the

Herman Miller Inc. President and CEO Andi Owen oversaw the company’s seven-month effort to acquire Knoll Inc. COURTESY PHOTO rationale for the proposed transaction. That led to a Feb. 25 teleconference meeting involving representatives from both sides, including Cogan and Owen. Both parties resolved to go back to their boards to continue considering a potential transaction. Knoll issued a counterproposal in early March that placed a $1.91 billion enterprise value on the company before a third proposal by Herman Miller pushed negotiations to the due diligence phase. This March 12 proposal included $11.50 in cash and 0.33 shares of Herman Miller stock per share of Knoll common stock in a deal valued at $1.82 billion. Knoll also communicated with its previous suitor, Investindustrial, to see if the investment group still had any interest in acquiring Knoll. Representatives from Investindustrial conceded that they would not be able to submit an offer that would prove competitive with a strategic buyer’s bid that would offer significant synergies. However, Investindustrial did say it would support such a deal as long as it was consistent with its view of Knoll’s fair value.

A deal in peril The deal nearly died roughly one month into the due diligence process when concerns arose during a special meeting with the Herman Miller board and its advisers. Herman Miller had discovered that Knoll’s internal projections and other findings throughout the due diligence process “would increase integration costs above what the Herman Miller team had expected or otherwise limit the achievable synergies in unanticipated ways.” On April 14, Owen contacted Cogan to inform him certain value assumptions made by Herman Miller had not been supported by due diligence and instructed representatives from Goldman Sachs to reach out to Jeffrey Harris, lead director of Knoll’s board, with those same concerns. Goldman Sachs representatives told Harris that Herman Miller’s estimates on short-term cash flows, the timing of synergies resulting from combining the businesses and other matters differed from the actual findings, meriting a downward adjustment of $3.20 per share, even though Herman Miller wasn’t necessarily proposing that exact price reduction. The late-game renegotiation proved to be a deal breaker: The Knoll board voted unanimously on April 14 to shut off Herman Miller’s access to a virtual information room and cease negotiations while instructing Herman Miller to return or destroy all information provided by Knoll. In an email to Goldman Sachs representatives, Harris wrote: “Knoll was not looking for a buyer and would only consider a potential transaction if the process would be expedited with minimal distraction for the Knoll Board and Knoll management and if the value to Knoll’s stockholders was sufficiently compelling.” After seeing its concerns rebuffed, Herman Miller submitted a revised proposal on April 15, which Knoll rejected, leading to another call

between Cogan and Owen. Cogan expressed that the “back and forth had not been received well by the Knoll board.” Owen contacted Cogan later that day with a “best and final offer” of $11 in cash and 0.32 shares of Herman Miller common stock for each share of Knoll common stock to push the deal’s value back up to $1.82 billion. On April 15, Knoll’s board of directors unanimously voted to accept the proposal. With the deal, Herman Miller also will buy outstanding shares of Knoll’s preferred stock from Investindustrial for $253 million in cash, or $25.06 per share. Investindustrial, which aggressively lobbied directly with Herman Miller throughout the proceedings for preferred stock as opposed to cash, agreed to vote its shares in favor of the deal.

Effects at home Herman Miller clearly didn’t land a COVID discount on the purchase of Knoll, whose stock bottomed out at just less than $9 per share in April 2020 in the early stages of the pandemic. The stock eventually recovered to $19 per share in March 2021, and jumped 35 percent upon the merger announcement. Herman Miller’s stock dropped around 8 percent upon the announcement but has since rebounded. While it remains unclear how the combined business would address redundancies in function, the local region is positioned well to benefit from the merger, according to Jennifer Owens, president of economic development firm Lakeshore Advantage. “It’s always great to be the home for the company that is acquiring versus one being acquired,” said Owens, whose organization focuses on helping companies grow in both Allegan and Ottawa counties. “That, I think, puts our community in a better position and the leadership and headquarters will still remain here with Andi Owen as the head of the new consolidated business,” Owens said. Lakeshore Advantage’s two-county jurisdiction has seen additional blockbuster deals in the past. In 1996, Johnson Controls Inc. acquired Hollandbased Prince Automotive, a manufacturer of products for auto interiors, from the Prince Holding Corp. for $1.35 billion. In 2019, Tokyo-based Hitachi Ltd. purchased custom automation systems provider JR Automation for $1.42 billion. “In those cases, we’re really working to build relationships with the out-of-state and out-of-country headquarters and making sure we’re more than just a dot on the map and they understand the value proposition of West Michigan and that we want to be that company’s partner in growth,” Owens said. Owens also said that the community at large would benefit from serving as the home base for the newly crowned leader in office furniture. “I think it definitely increases the awareness of our community as a place to grow, design and make products,” she said. Visit www.mibiz.com

Manufacturing veteran starts recruiting firm to meet industry’s talent needs By JAYSON BUSSA | MiBiz jbussa@mibiz.com BYRON CENTER — As a veteran of the machine and cutting tools industry, Jeff Swift launched Swift Placement and Consulting this month to meet t he talent needs of a niche manufacturing segment. Swift broke into the business at the age of 17 when he completed a machinist apprenticeship. He would later embark on a long career primarily in machine tool sales and executive roles. Brown His most recent stops were as vice president of sales at Los Angeles-based advanced machine solutions provider Ellison Technologies Inc., and he held the same role at Hoffman Estates, Ill.-based DMG MORI USA Inc., which he recently left to start his new venture. Swift W hile at DMG MOR I, Swift noticed that the recruiters on staff struggled to find workers who fit the company culturally, often bringing on employees who jumped from job to job. Swift eventually carried out his

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own headhunting duties to meet the needs of his sales teams. “I love the industry, but this is the part that we really struggle with,” Swift said. “No one really knows our niche business — no one understands what we’re looking for. You can’t just throw someone in there that doesn’t fit that culture. “That’s what I wanted to do: Change things and help the industry because we’re really struggling to grow our younger generation, too.” Based out of his home in Byron Center, Swift teamed up with machine and cutting tools manufacturers across the country that readily brought him positions to fill. While he currently is a oneman operation, Swift said he plans to hire another person in the coming months. “The kryptonite is turnover in our industry,” Swift said. “These customers are spending $500,000, $600,000 or $1 million on a machine and all of a sudden the salesperson is gone.” However, Swift recruits and places more than just sales executives. He specializes in high-end machinists, manufacturing engineers, automation engineers, service managers and C-level executives. In a climate where finding general labor is tough enough, sourcing a skilled machinist can be like spotting a unicorn. While his extensive network is certainly a help, Swift said he is careful to avoid overpromising in this tricky labor market. “I’m setting expectations right away,” Swift said. “If I have a customer that wants me to do 10

placements, I’ll say, ‘Hey, give me the top three most urgent areas that you want and then let’s start there and really try to focus on that.’”

A ‘scary time’ While Swift’s company focuses on a specific segment of manufacturing, it reflects the ongoing labor dilemma across the broader industry. Cindy Brown, vice president of talent initiatives for West Michigan economic development firm The Right Place Inc., said the combination of agencies like Swift’s, statewide job training programs, and the efforts of companies’ in-house human resources departments show an “all hands on deck” approach to quell the labor problem. According to a joint study released last month by Deloitte and the Manufacturing Institute, the industry is expected to see 2.1 million unfilled jobs by 2030, which could cost the U.S. economy up to $1 trillion. The survey of U.S. manufacturers showed that 36 percent of respondents are finding it hard to recruit talent right now compared to 2018, even though the candidate pool is twice the size as it was three years ago. Brown said the most pressing need is for entrylevel shop floor workers, but the necessary skills to fill open positions is slowly changing. “As we’re moving toward Industry 4.0, there are companies that have smart robotics and smart automation. Skill requirements are different,” she said.

“They always say that it’s a career lattice and not just a career ladder. Manufacturers need talent at different levels. The entry level is where you see the most need right now.” W hile many employers blame enhanced unemployment benefits as a reason for sidelining capable workers, Brown said that higher pay from companies also isn’t necessarily the silver bullet to attract workers. “Along with pay, people want to feel valued,” she said. “They want to know the job they’re doing means something to the company. Or we hear that candidates want flexibility, and flexibility can mean different things. … The more (a recruiter) can get to know the hire and what they are motivated by, that helps.” Matt Tyler, president and CEO of New Troybased Vickers Engineering Inc. in Southwest Michigan, said his precision machining business expects significant growth through 2023. He is concerned about whether he can find the talent to fill the new positions. Vickers Engineering, which supplies the automotive, agriculture, military, and oil and gas industries, currently employs 175 people. That number is expected to grow to 200 people before the end of the year. “It’s a scary time right now because of the market conditions and the labor conditions,” Tyler said. “We’re in the same boat as everyone else. It’s tough, for sure.”

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MiBiz / JUNE 21, 2021

HEALTH BIZ

Priority Health portal designed to resolve tension between insurers, physicians By MARK SANCHEZ | MiBiz msanchez@mibiz.com

s state lawmakers consider more controls over prior authorizations that health insurers require before covering certain medical care, Priority Health has launched a new system designed to make the process easier for physicians. The electronic portal that Reston, Va.-based Altruista Health Inc. designed for Priority Health

automates the prior authorization process, providing physicians a quicker response on whether a patient’s procedure, diagnostic test, hospital admission or medical equipment is covered. A physician’s request is automatically approved if it aligns with a health plan’s criteria for medical necessity. The portal can also request further information from a physician electronically, eliminating the need for calls or faxes between offices. The portal may direct that added data to the insurer’s staff for

review. Doctors can also check the status of a prior authorization request. Altruista’s GuidingCare Authorization Portal — designed with Priority Health and its parent corporation, Spectrum Health — also features a care management component that gathers realtime data that track decisions and identify trends. That gives Priority Health added ability to review and decide whether to discontinue prior authorization for specific tests, procedures or hospital admissions.

The Grand Rapids-based Priority Health implemented GuidingCare’s health care manag ement system in October 2019 and the utilization management program last September. Based on early data, Priority Health in May removed about 20 items Donnelly from its prior authorization list, said Ann Donnelly, Priority Health’s vice president of care and utilization management. “Now we have data that’s going to say, ‘If we’re going to turn something on for prior authorization, what value is that bringing to us? Is it worth the administrative cost for all of the stakeholders to go through McKitterick that process, or should we turn it off?’” Donnelly said. “We have information so we can adjust,” Donnelly added. “We now have the data that shows us by service how many prior authorizations are coming in, how many are we approving, how many are we denying, and what’s their cost. We can make educated decisions on the value of asking for that prior authorization, and if there’s no value in it, then why are we asking physicians to jump through them?” Priority Health processes roughly 3,500 prior authorization requests a week, and 80 percent are approved.

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Altruista worked directly with Priority Health and Spectrum Health to customize the prior authorization portal. The company works with more than 50 national and regional clients across the U.S. By automating the workflow, the portal can create efficiency, reduce the administrative burden for doctors and health plans, and improve response times, said Mike McKitterick, executive vice president of clinical services at Altruista Health. “It’s really helping to standardize those processes and create some efficiencies so that the transactions that come out of the approvals and denials are more predictable so providers very quickly pick up on what the standard of care is and what’s likely to be approved or what’s not likely to be approved,” McKitterick said. “Over time that helps the evidence-based care that the criteria is built on.” Health insurers routinely use prior authorization as a check against high costs and to ensure physicians use care practices that are supported by evidence and are not ordering what they consider medically unnecessary. The process can often frustrate physicians who view it as intrusive and causing delays in needed patient care, adding to the tension that can occur between providers and insurers. In partnering with Altruista Health, Priority Health looks to maintain the checks and balances of prior authorization with an automated process for physicians to use when seeking coverage approvals for their patients. “We’re trying to walk that fine line,” Donnelly said. “We recognize the providers are on the front Visit www.mibiz.com

“We recognize the providers are on the front lines of delivering high quality care to our members, and we value that partnership with our providers. We wanted to help solve that problem, reduce that burden and make their lives better.” — ANN DONNELLY VP of Care and Utilization Management, Priority Health

lines of delivering high quality care to our members, and we value that partnership with our providers. We wanted to help solve that problem, reduce that burden and make their lives better. I know they don’t like having to ask.” Priority Health’s turnaround time on prior authorization requests after automating the process is now less than three days. Turnaround times previously varied based on the type of request. “And as we continue to look at our data and identify what we might be able to turn off or move to auto approvals, those times are going to come down and come down,” Donnelly said.

Physicians push reforms Priority Health’s adoption of the Altruista platform came as physician organizations have pushed to rein in prior authorization requirements that they say have gone too far and in some instances delay needed care or threaten patient safety. Frustrations with prior authorization requirements have even been cited as a contributing factor to physician burnout. The Michigan State Medical Society has pushed for legislation in Lansing that would create new rules for prior authorization practices in the state. A bill that unanimously passed the state Senate in April includes language requiring health insurers to make a standardized electronic request process available by Jan. 1, 2023. Senate Bill 247, sponsored by Sen. Curtis VanderWall, R-Ludington, is awaiting action in a House committee. Michigan State Medical Society Chief Operating Officer Kevin McFatridge said the organization is still awaiting feedback on Priority Health’s portal, but that “electronic prior authorization process is where things are headed.” “If the system is user-friendly, based on current evidence-based protocols, and more timely in issuing a decision, conceptually it is a good thing. It still does not address the number of required prior authorizations and whether those that are approved almost all of the time truly provide a value or cost savings to care delivery,” McFatridge wrote in an email to MiBiz. “It bears repeating: These requirements can create hassles for patients and add to physicians’ burden. Prior authorization rules vary by different payers, which require inconsistent workflow processes and submission of additional information through a manual process.” Visit www.mibiz.com

SpartanNash joins telemedicine rush with affordable service By MARK SANCHEZ | MiBiz msanchez@mibiz.com BYRON CENTER — SpartanNash Co. has jumped into the rapidly growing telemedicine arena with a new service that emphasizes affordability. SpartanNash partnered with the Land O’ Lakes, Fla.-based Bonum Health LLC on a telemedicine service that charges a $29 fee for a single virtual doctor visit for minor ailments, or a monthly subscription that provides five visits a month for one adult and dependents for $11. SpartanNash believes those prices give the telemedicine service an edge over virtual care offerings by health systems and medical practices, said SpartanNash Director of Pharmacy Eddie Garcia. “You won’t find one that you can take a telemedicine Garcia visit for $29,” Garcia said. “We were adamant that we wanted to be more affordable than what was out there in the market today.” Customers can access the service through the pharmacy section of the websites for SpartanNash’s retail stores — Family Fare, Martin’s Super Markets, D&W Fresh Market, VG’s Grocery, Econofoods, Family Fresh Market and Forest Hills Foods. Users can either download an app or create a telemedicine account. “The SpartanNash partnership with Bonum Health promotes equitable access to U.S. boardcertified providers and allows any guest who may be uninsured, under-insured or simply looking for cost savings with immediate, high-quality care,” SpartanNash President and CEO Tony Sarsam said in a statement announcing the new service. SpartanNash’s entry into the burgeoning telehealth sector last month was largely driven by customers asking pharmacy staff questions about proper medicines to treat health issues. The company wanted to offer affordable options for accessing care in cases when customers needed more than what a store pharmacy could provide. Garcia said these inquiries often lead to the need for a doctor visit.

“The convenience is there and the cost is very affordable. It’s time. People are used to doing this.” — EDDIE GARCIA Director of Pharmacy, SpartanNash Co.

“A lot of these people don’t have a personal physician,” he said. “If they go anywhere, they’re going to the emergency room or they’re going to a clinic that may or may not be open at the time they come by our stores. This offers an opportunity for them to get that service at an affordable rate.”

Pandemic drives telehealth The Byron Center-based SpartanNash, which has more than 150 retail stores, had considered launching a telemedicine service prior to the COVID-19 pandemic. Garcia was a “non-believer” prior to the pandemic given the previously infrequent use of telemedicine visits. The rapid growth of telemedicine during the pandemic “made me a believer in the service,” he said. “Once physician offices actually closed, people needed to have an option. That’s when we started thinking about this and we finally just found the right partner,” said Garcia, who has known Bonum Health President Ashton Maaraba for more than two decades. “The convenience is there and the cost is very affordable,” Garcia said. “It’s time. People are used to doing this.” Bonum Health is a subsidiary of health information technology company Trxade Inc. (Nasdaq: MEDS) that serves retail pharmacies. The pandemic that began in the spring of 2020 elevated telemedicine to a standard component of health care delivery. A recent white paper by United Kingdombased Juniper Research noted that New Yorkbased platform Teladoc Health Inc. at one point

SpartanNash Co. has partnered with Bonum Health LLC on an affordable telehealth platform. COURTESY PHOTO during the pandemic hosted 20,000 virtual visits daily, 60 percent of which were with new patients. Another report, by eMarketer.com, said the number of adults in the U.S. who accessed a doctor through a virtual visit nearly doubled to 41.7 million from 2019 to 2020. Researchers predict that to grow to 48.1 million in 2021 and 57.3 million in 2022. An eMarketer analyst noted in a February report that COVID-19 “has permanently altered our healthcare system and the use of telemedicine is here to stay, even after the pandemic.” SpartanNash doesn’t have a specific target for the number of customers who use the new telemedicine service through Bonum Health, but Garcia hopes participation gradually grows month over month “and that it doesn’t plateau.”

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HEALTH BIZ SPECTRUM-BEAUMONT Continued from page 1

“We believe that this combined organization will really benefit patients and members in the state of Michigan,” said Freese Decker, calling the merger “a fantastic opportunity to transform health care in Michigan.” “Spectrum Health and Beaumont share similar purposes, missions, visions and values. We have a long track record of providing exceptional clinical care for our communities, as well as a strong focus on academic research,” Freese Decker told MiBiz last week. “So, together we are uniquely positioned to deliver greater value and exceptional care that is accessible, (and) it is equitable and affordable, while maintaining our unwavering Fream commitment to our local communities in Michigan.” Freese Decker would run the new health system, which would take on the temporary name of “BHSH System” and have dual headquarters in Grand Rapids and Southfield. C re at e d t h r ou g h t he 1997 merger of the former Freese Decker But ter wor t h Hospita l i n Grand Rapids and Blodgett Memorial Medical Center in East Grand Rapids, Spectrum Health consists of 14 hospitals, a large group medical practice, and a network of outpatient care centers across the region. Beaumont Health has eight hospitals in the Detroit area, plus 155 outpatient sites, nearly 5,000 physicians and 33,000 employees. The health system also partners on a medical school with Oakland University. The combined health system would have equitable corporate governance. Spectrum and Beaumont each would appoint seven seats to a 16-member board. The board would also include the CEO and a final appointment after the new health system is created. Local boards would remain in place. In West Michigan, that would include oversight boards for BHSH Spectrum Health West Michigan, BHSH Spectrum Health Lakeland, and Priority Health.

Strength in scale Part of what drives consolidation between large system mergers today is the same element that makes a small hospital merge into a larger partner: a need to generate economies of scale and efficiencies, Peters said. Peters believes the Spectrum-Beaumont plan “is very likely to spur a conversation” at other health systems about resource adequacy and staying competitive in the new landscape. The COVID-19 pandemic and the resulting financial stress on many health systems may drive the trend even harder, he said. “It doesn’t matter how large you are, even the larger health systems have some vulnerability in terms of financial status and the operational viability when hit with a crisis like the COVID-19 pandemic,” Peters said. “And there is strength in scale.” Mike LaPenna, a health care consultant and the principal of Grand Rapids-based LaPenna Group Inc., also believes that the proposed deal could prompt other large players in Michigan to pursue a merger.

JUNE 21, 2021 / MiBiz

Spectrum Health’s Butterworth Hospital in Grand Rapids. PHOTO COURTESY OF SPECTRUM HEALTH

Many health systems are already involved in some form of consolidation talks, LaPenna said. “This is going to cause something to happen,” he said. “This will signal that there is going to be a big and important statewide system — at least in Detroit and Grand Rapids — that will be competing for linkages to Kalamazoo, Lansing, and all points in the northern tier of the mitten. Other discussions will accelerate to achieve scale and prevent being marginalized over the next couple of years by the largest of the health systems. “So, if my board was in pre-pre-merger talks with another system or hospital, now might be the time to speed it all up.” Rob Casalou, president and CEO in Michigan for Trinity Health, similarly told MiBiz that the merger could spur “more serious discussions” at other health systems in the state about consolidating. “It will cause other discussions to start in the state,” Casalou said. “For us right now, I don’t think there’s a direct impact. We just want to maintain our already good relationship with the new combined system.” Trinity Health is the parent corporation for Mercy Health Saint Mary’s in Grand Rapids and Mercy Health Muskegon.

Market effects? The potential market price effects of the SpectrumBeaumont plan, or any health care merger, remains a key question. Analyses over the years have reached varied conclusions on the effect mergers have on costs and pricing. Some studies have shown that greater concentration within a market drives up prices, though the American Hospital Association has conducted analyses disputing that notion. Still, the new health system would have considerable clout in negotiating contracts for reimbursement payments from health insurers. Michigan’s largest health insurer, Blue Cross Blue Shield of Michigan, said it intends to look at the merger for any potential fallout. “These are two organizations where Blue Cross has deep partnerships and with whom we have worked over many generations on behalf of our members and customers. This proposed arrangement is very complex with potentially significant implications,” Andy Hetzel, Blue Cross Blue Shield of Michigan’s vice president for corporate communications, wrote in an email to MiBiz. “We will be assessing the impact it may have on our members and the health care market in Michigan.”

Because Spectrum and Beaumont now operate in separate markets, LaPenna doesn’t necessarily expect costs to swing a certain way. “Let ‘em merge. It’s not going to cost anybody anything, I don’t think,” LaPenna said. Asked about the negotiating and pricing posture the new health system would have, Freese Decker emphasized that the focus for Spectrum and Beaumont “is delivering great value to our community.” “We’re trying to be affordable,” she said. “Our focus is affordability (and) greater value for our communities that we are serving. We want to transform health care. We want to reduce the total cost of care.”

Opportunity for Priority One of the potential beneficiaries of the merger is the Spectrum-owned Priority Health. The connection to Beaumont would give Priority Health a foundation to make further inroads in the Detroit-area health insurance market that’s largely controlled by Blue Cross Blue Shield, LaPenna said. That can create greater competition between Priority Health and Blue Cross Blue Shield. “My impression is this is a great thing for Priority Health,” he said. “Beaumont is now a platform for Priority on the east side of the state.” Quite often when seeking quotes for clients in Southeast Michigan, Bob Hughes, principal of Advantage Benefits Group Inc. in Grand Rapids, sees how Priority Health still experiences a lack of familiarity in the market. Hughes believes the merger of the two health systems can accelerate Priority Health’s growth in Southeast Michigan. “The perception when you bring up Priority, even when they have better rates, is, ‘Who are they? Who’s in the network?’ Their network’s gotten a lot better over the years and it’s really a viable option, but even with that there’s buyer reluctance because people aren’t familiar with it like the Blues,” Hughes said. “Now that they would have Beaumont under their wing, that’s going to add to the credibility factor.” An annual report by the American Medical Association indicates that Blue Cross Blue Shield holds more than a two-thirds market share in the Detroit area. Spectrum Health owns a 93.9 percent stake in Priority Health, Michigan’s second-largest health plan with 1 million members statewide that generates a majority of the parent health system’s revenue and earnings. Spectrum Health in 2020 recorded operating income of $295.5 million on nearly $8.3 billion

“This will signal that there is going to be a big and important statewide system — at least in Detroit and Grand Rapids — that will be competing for linkages to Kalamazoo, Lansing, and all points in the northern tier of the mitten.” —MIKE LAPENNA Principal of LaPenna Group Inc.

in patient revenues. That includes $188.9 million in operating income earned by Priority Health in 2020, plus a $24.8 million operating loss at Spectrum Health Lakeland in St. Joseph that operates as a separate division from the health system’s other hospitals. For the first quarter of 2021, Spectrum Health recorded $88.4 million in operating income on $2.21 billion in revenue. The quarterly results included $59.1 million in operating income at Priority Health on $1.421 billion in revenue. A deal with Spectrum comes after Beaumont and Advocate Aurora Health, a nonprofit 28-hospital system based in Downers Grove, Ill., ended merger discussions last fall that had been met with opposition from Beaumont doctors. Beaumont has since added more system physician representatives to its board, going from three to six, “and they really helped us understand the perspective of physicians and what would be important to them in structuring a deal of this type,” said Julie Fream, Beaumont’s board chair. At least three physician representatives would be included on the board at the new health system. Beaumont physicians are “excited, and with their excitement, we think we really have the right thing for both organizations to move forward,” said Fream, who would chair the board of the new health system. Visit www.mibiz.com

7.5.2021

Industry 4.0: Automation Contract Deadline: 6.23.2021

UPCOMING ISSUES

7.18.2021

West Michigan Tribal Economy Contract Deadline: 7.7.2021

8.2.2021 Insurance

Contract Deadline: 7.21.2021

8.16.2021

Automotive Supplier Outlook Commercial Lending Quarterly: Growth Lending Update Contract Deadline: 8.4.2021

8.30.2021

Education/Talent Development Grand Rapids explores reviving formal arts council

Open-heart surgery partnership a ‘game-changer’

PAGE 21

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APRIL 12, 2021 • VOL. 33/NO. 13 • $3.00

SERVING WESTERN MICHIGAN BUSINESS SINCE 1988

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Drinking Economy

Gender disparities in the workforce ‘uncovered further’ by COVID-19 pandemic

CRAFT BREWERS RETOOL TO MAINTAIN PROFITABILITY

By KATE CARLSON | MiBiz kcarlson@mibiz.com

en and women both experienced steep declines in employment at the beginning of the COVID-19 pandemic, but on average, the workforce for men is back to pre-pandemic levels in Michigan while women have left the workforce at disproportionate rates. The pandemic’s negative effect on working women is amplified for working mothers, especially for women of color, according to a state Women in the PAGE 6 PAGE 22 Michigan Workforce report released atSINCE the MARCH 29, 2021 • VOL. 33/NO. 12 • $3.00 SERVING WESTERN MICHIGAN BUSINESS 1988 www.mibiz.com end of March. “Traditionally we have been facing this issue for a long time, it’s just the pandemic that Fauble is pushing it to the forefront,” said Blanca Fauble, chief development officer for the nonprofit Michigan Women Forward. “It’s always been there, it’s just now that it’s been uncovered further.” Part of the problem is that more women City Built Brewing Co. CEO Ed Collazo. PHOTO BY STEPH HARDING than men are in low wage jobs. Because of the lack of workplace protections that lower wage jobs tend to have, employees in these roles were the most at risk for losing their jobs for longer periods of time during the pandemic. According to 2018 data from the Brookings By MARK SANCHEZ | MiBiz the Center for Transformation Institution, close to half of all working women msanchez@mibiz.com and Innovation that will rise on a in the country — 46 percent, or 28 million — From left: Award-winning designer Joey Ruiter sits on his NOMOTO motorcycle concept at his design studio in Ada. A rendering of Buell 4.8-acre site along North Monroe worked in jobs that paid low wages averaging PHOTO BY KATY BATDORFF. COURTESY RENDERING Motorcycles’ 1190 Super Touring bike. Ruiter and Buell recently formed a new collaboration. GRAND RAPIDS By — The eight-story $10.93 an hour, while 37 percent of all workKATE CARLSON |Avenue MiBiz and Ottawa Avenue just office tower Spectrum Health plans east of the Grand River. The $60 ing men earn low wages. These percentages kcarlson@mibiz.com ot many designers — ifare anyeven — feahas turned over the years with his transto build will bring a major new redemillion to $80 million project higher for Blackheads and Latina women everal Michigan communities ture a portfolio of workinquite like portation curiosities. velopment and hundreds of employwill house about 1,200 Spectrum the workforce, of which 54 percent and 64 are at risk of losingadministrative crucial federalstaff — execJoey Ruiter. In 2019, teamed up with fellow conees to the Monroe North neighborHealth percent, respectively, are Ruiter low wage earners. funding under changes From award-winning“(The officepandemic) ceptualhas designer D. Koolhaas to host hood near downtown Grand Rapids. utiveproposed leadership, human resources, openedRem our eyes to PAGE 4 PAGE 26to a aproject their designation metropolifurniture designs he an things,” exhibition called at the Spectrum Health aims totobegin legal andasfinance — now worklot of different Fauble said.DISRUPTORS “From tan areas, officials say in the city. calls Snoped, a reimagined, black aluminum Los Angeles-based Petersen Automotive construction late this summer on which ing atlocal 26 leased offices See WOMEN IN THE WORKFORCE on page 17 OCTOBER 26, 2020 • VOL. 33/NO. 1 • $3.00 SERVING WESTERN MICHIGAN BUSINESS SINCE 1988snowmobile that rides like a cafe racer, the www.mibiz.com would negatively affect services and economic Museum, showcasing conceptual approaches development efforts. Grand Rapids-based Ruiter is not your typical to automotive design. The White House Office of Management nine-to-five office furniture designer. As a self-described minimalist in his P E R and Budget (OMB) is considering a proposal In fact, it’s his work with cars, motorcycles, trade, Ruiter generally begins each of his to redesignate 144 U.S. Metropolitan Statistical boats and other transportation elements that projects by first stripping an object down to Areas as “Micropolitan has grabbed attention from nationwide media its core only to build it back up in unique and Statistical Areas” that are and enthusiasts alike. unexpected ways. based on smaller popula“Some of my work is provocational,” Ruiter One such example is his NOMOTO, a By MARK SANCHEZ | MiBiz developers say is critical for both The issue has become increasingly importion sizes. The proposal said. “It’s a piece of art. People will look at it motorcycle concept where a metal, graffitimsanchez@mibiz.com businesses and households. tant during the pandemic as companies conwould affect metropoliand I want them to ask questions and for it to clad body completely camouflages the bike Eliminating the so-called duct business v irtua lly and students learn tan areas in Niles, Battle raise emotions.” against typical urban settings. The bike is also ichigan and the nation need the same “digital divide” must become as remotely, Klohs said. The pandemic brought Creek, Jackson, Midland, With his studio located in Ada, Ruiter’s fully functional. By JAYSON BUSSA | MiBiz kind of concerted effort to deploy important as extending electrigreater awareness to the issue and how in some Bay City and Monroe. bread and butter might be lending designs to The Consumer Car is another highlight jbussa@mibiz.com broadband internet access as 90 years cal and telephone service areas thetop digital divide “is more like theportfolio. Grand Beginning with a 1993 Currently, some ofinto West Michigan’s furniture manuin Ruiter’s ago when America set out to electrify rural markets in the 1930s, Birgit Canyon,” KlohsInc., said. By JAYSON BUSSA | MiBiz Metropolitan Statistical facturers — names like Steelcase Herman Ford Festiva GL chassis and drivetrain, Ruiter PAGE 16 Hackbarth PAGE 18 ichard Reiffer and his staff rural areas following the Great Depression, ecoKlohs, CEO of The Right “OurFurniture children shouldn’t jbussa@mibiz.com Areas must contain a U.S. MillerPlace Inc. and Nucraft Co. — but hebe sitting in cars in the See RUITER on page 3 at Grand Rapids-based nomic developers say. Inc. in Grand Rapids, said durparking lot of a restaurant to get Wi-Fi so they can Census Bureau-delineated urban area with a Klohs Fusion IT LLC tend to The COVID-19 pandemic has heightened the ing a recent virtual panel disdo their homework. I think that’s just Third World,” population of at least 50,000, while micropoltake a proactive approach need to fix a lack of affordable high-speed internet cussion at the Michigan Economic Developers Klohs said. itans are areas with populations of 10,000 to See MEDA on page 3 when it comes to advising clients access in some markets of the state that economic Association’s annual conference. 50,000. on digital strategies. The OMB’s proposed change would So when COVID-19 transitioned increase the minimum population to qualify into a full-blown pandemic in early By MARK SANCHEZ | MiBiz if they get the dual-dose vaccine from Pfizer Inc. or company has 127 stores in Michigan, Indiana and as a Metropolitan Statistical Area from 50,000 March, the team was already tellmsanchez@mibiz.com Moderna Inc. The amount will more than compenOhio, more than 2,300 employees, and is one of the to 100,000. ing the midsate employees for the time they may need to leave nation’s largest tire dealers. OMB published a notice on the proposed size companies growing number of employers are work to get vaccinated, company officials say. “We want all of the employees of all types to change on Jan. 19, kicking off a public comment it works with to offering incentives to their workers “We want to make sure all of the employees be able to do that so that they feel when they are period that ended March 19. OMB will consider start facilitating who opt for getting a COVID-19 vacwho want the vaccination can get it and feel safe, at work it’s safe to be at work,” Barnes told MiBiz. recommendations from a review committee effective remote cine, including with extra paid time off and that they don’t have to choose between stay“We want to make sure we create a safe working and public comments, and any revisions will work. or small cash bonuses. ing on the clock and earning an hourly wage versus environment for all and we don’t want any of our be announced in a final notice. The potential Fusion IT, At automotive repair center Belle Tire, employtrying to get the vaccination,” said Don Barnes III, teammates to hesitate.” changes could go into effect in 2023. which works See VACCINE INCENTIVES on page 9 ees are paid $25 for each vaccination visit, or $50 total president of the Allen Park-based Belle Tire. The See MSA AND CENSUS on page 5 with businesses Reiffer By KATE CARLSON | MiBiz on an ongoto — such housing, including kcarlson@mibiz.com ing basis as a managed service high-density rentals. P E R I O D I C A L S provider (MSP), even developed The Lansing-based Michiest Michigan citwhite papers to serve as a refergan Municipal League has ies are examinence for effective work from home stepped in to help local goving new polistrategies. ernments solve their housing cies to expand “We started warning our clients puzzle. The MML plans to issue affordable housing and create early and most of them acted on guidance in early 2021 on code a supportive environment for it to get equipment if they didn’t reform that can help increase developers as studies show an already have equipment capable affordable housing units. ongoing need for more units. of running their remote work,” said That includes incentivizing The renewed discussions Reiffer, the company’s vice presiaffordable housing developers this year among city officials dent of strategic initiatives. “For a PAGE 4 SEE PAGE 10 through tools like brownfield in Grand Rapids, Holland, while there, the backlog to get lapcredits, streamlining zoning Kalamazoo and Grand Haven tops was about six months.” codes and a refined applicacome as the COVID-19 panThe ongoing pandemic has tion process. demic has driven high unemushered in a tidal wave of remote “What happens is you have Drew Phillippy is president of Grand Rapids-based Purple East, which ployment and financial strain, working for companies that were developers sinking a lot of recently emerged from bankruptcy under a new law meant to help small raising concern among offieither forced to send workers home money into the process and businesses. cials who say it could exaceror did it out of precaution. Many it makes it harder for them to bate the need for affordable of these companies’ MSPs have build housing developments housing. become the brain trust for workaffordably,” said MML Policy Cities are attacking the from-home setups and strategies. Research Director Shanna problem in a variety of ways, Draheim. including revamping outdated Meanwhile, studies conUneven footing zoning codes to make it eastinue to show a need for affordWith remote work a growing trend ier for developers to include able housing throughout the before the COVID-19 pandemic, affordability in housing develregion. A recent Housing Next many companies already had a opments, as well as prioritizing study shows at least 5,340 more rough infrastructure in place to affordable or mixed-use housrental units and 3,548 more For small businesses facing bankruptcy, the new make the transition smoother, ing for incentive tools such as owner-occupied units are Reiffer said. brownfield credits. needed in the next five years federal Small Business Reorganization Act is proving Still, some businesses had to Despite the effort being in Grand Rapids to meet housto be a cost-effective and timely lifeline. A Grand swiftly make up ground while some made to add more housing ing demand. Housing North, a Rapids retailer offers an early test case. SEE PAGE 14 of it was dictated by their respecstock at varying price points, nonprofit that spans 10 countive industries. housing advocates and local ties in the northwestern Lower planners are still confronting Peninsula, showed last year See WORK FROM HOME on page 12 STORY BY ANDY BALASKOVITZ // PHOTO BY KATY BATDORFF a stigma associated with — the region would need about See HOUSING on page 11 and community opposition

Kalamazoo County regroups after housing proposal fails

ooking back on a 2020 plagued by the COVID-19 pandemic, Ed Collazo didn’t sound like a business owner who just saw his company’s revenue plummet by half a million dollars for the year. “2020 was a blessing, dude,” said Collazo, CEO of Grand Rapids-based microbrewery City Built Brewing Co. There is certainly no disputing that top line revenue for virtually every craft brewery took a hit in 2020, a year when brewpubs and taprooms were either shut down completely or See PROFITABILITY on page 14

Deborah Prato takes helm at The Rapid

Also Inside: n Craft beverage roundtable, page 11 n Suppliers see highs and low in pandemic, page 12 n Group seeks affordable health plans for craft beverage workers, page 13

Federal proposal to change some metropolitan areas’ status could jeopardize 8-story Spectrum Health development to ‘breathe more life’ into GR district crucial funding and economic development Spectrum expects to save about $15 “I think it’s certainly going to

Design Disruptor

Natalia Kovicak takes helm at GR Econ Club

Ruiter leaves his Panel: Rural broadbandJoey development should mirror electric grid build-out minimalist mark on the Michigan

vehicle and furniture industries and starts a new collaboration with Buell Motorcycles

million annually in rent. Spectrum Health hopes the project will lead to further redevelopment and “breathe more life” into the Monroe North business district that most recently saw a former industrial site transformed into the 246-room Embassy Suites hotel, said Spectrum Chief Financial Officer Matt Cox.

Ada-based designer

Managed service providers play key advisory role in shift to work-from-home

infrastructure planning would get boost from Biden plan

transform the neighborhood. It’s going to bring even more life into a neighborhood that’s growing now, and I think more development will happen as a result of us being there than if we weren’t there,” Cox said. The center also will house a training and a learning center in a first-floor meeting space for up to See SPECTRUM OFFICES on page 3

Cannabis startups seek entry to market outside of retail

Experts seek federal guidance as employers offer COVID-19 vaccine incentives

West Michigan cities weigh policy changes to bolster affordable housing

Geography adds to talent challenges for northwest Michigan manufacturers

INSIDE:

Utilities & Energy

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9.13.2021

Family Business

Contract Deadline: 9.1.2021

By JAYSON BUSSA | MiBiz jbussa@mibiz.com

‘Substantial and far-reaching’

Cybersecurity standards to reshape defense manufacturing

Contract Deadline: 8.18.2021

9.27.2021

Cannabis Cannabis Roundtable

Contract Deadline: 9.15.2021

10.11.2021

Real Estate: Industrial

Contract Deadline: 9.29.2021

10.25.2021 Cybersecurity

Contract Deadline: 10.13.2021

11.8.2021

Education/Talent Development Contract Deadline: 10.27.2021

11.22.2021

INSIDE: Solar industry on edge

Mergers & Acquisitions PAGE 7

SEE PAGE 16

Commercial Lending Wrap-up Contract Deadline: 11.10.2021

12.6.2021

Construction Wrap-up

Contract Deadline: 11.24.2021

12.20.2021

Crystal Ball 2022

Contract Deadline: 12.8.2021

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MiBiz / JUNE 21, 2021

FOCUS: TRANSPORTATION

GR, Wyoming, Kentwood seek development opportunities along South Division corridor By KATE CARLSON | MiBiz kcarlson@mibiz.com

lanning officials in Grand Rapids, Kentwood and Wyoming hope a nearly completed study will help spur redevelopment along South Division Avenue after a highly touted bus rapid transit project failed to deliver on its economic development promises. Involving local residents and community leaders to share their vision for the future was a key aspect to the study known as Division United. “What do people who live there want to see and how do they want to flourish?” asked Nick Monoyios, planning manager at the Interurban Transit Partnership, commonly known as The Rapid. “Oftentimes it’s easy to bring in a group of planners with idealistic ideas of what it should be and it’s easy to omit and keep to the side people who live there and what they want.” For Angelica Velazquez, owner of La Casa de la Cobija clothing store at 2355 S. Division Ave., the most important corridor improvements will avoid displacing residents. “We want this to be inclusive of the people and keep the people here who live here,” Velazquez told MiBiz. “Equal opportunity is what we want to see. We deserve a better quality of life, we deserve to live better.” The roughly 18-month-long study is effectively complete as the process moves into the implementation stage. The study was funded by a $686,000 grant from the Federal Transit Administration, a $174,000 grant from the Michigan Department of Transportation, and $25,000 grants each from the cities of Grand Rapids, Wyoming and Kentwood. Local officials say the study was driven by the lack of economic development that was promised along the corridor after The Rapid’s Silver Line bus rapid transit route launched in 2014. “(The Silver Line) was touted as a spark to spur redevelopment along that corridor,” said Terry Schweitzer, community development director for the city of Kentwood. “What we had found subsequent to the introduction of that service is ridership has gone up but we have seen little to no redevelopment along that corridor.” The Rapid and other community leaders say they were naive to believe economic growth along the Silver Line route would occur without intentional coordination, Monoyios said. “Right now there are more cars on Division than there are people,” Monoyios said. “That, by the nature of economics, doesn’t stimulate economic growth. We want to see if we can fill those

JUNE 21, 2021 / MiBiz

Commercial fleets poised to bolster electric vehicle market By JAYSON BUSSA | MiBiz jbussa@mibiz.com

Storefronts along the South Division Avenue corridor where officials in Grand Rapids, Kentwood and Wyoming hope to spur new, “incremental” development. PHOTO BY KATE CARLSON asphalt parking lots with commerce, a sense of community, and public space.”

Seeking density, equitable outcomes The Division United study seeks ways to activate and add density to the areas around Silver Line stations from Wealthy Street in Grand Rapids to 60th Street at the border of Kentwood and Wyoming. The initiative focuses on transit-oriented development that provides people with a choice of housing and employment around stations. “The Rapid sees this as an opportunity to showcase the reason why we build and provide transit, which is for the benefit of what is outside of the street,” Monoyios said. “That’s kind of the big vision here, and our North Star was to ensure equitable outcomes.” The study made specific suggestions for 11 of the 34 stations along the Silver Line, including a set of zoning recommendations for each area, site plans for the immediate station area, and one to three recommended special projects. Many recommendations focus on enhancing non-motorized travel and moving away from the “drive through” mentality that characterizes the corridor today. The community sees Velazquez’s store on Division as more than just a place to buy formal wear — it is also an unofficial community gathering place. But people need more opportunities to gather along the corridor, Velazquez said. “Everything is centralized downtown,” Velazquez said. “I want to see a historical place where we can sit down, see our kids play, and we want to feel confident walking around and enjoy concerts and have dinner in the place we live.” Velazquez also hopes to see a community youth center developed in the area, as well as affordable housing options that give residents opportunities to own their own homes and build wealth. Velazquez, who is also on the Garfield Park Neighborhood Association board, is encouraged by the inclusive nature that the Division United planning effort has had, but she wants to see action and results. “It can be little by little, but I want to see the progress and say, ‘We did that,’” she said. “Sometimes we’re working in circles. The city and people with the money know what we need. I’m hungry to pull many people in to come and start some opportunities in this community.”

First steps The three municipalities along the Division Avenue corridor are now left to largely implement the study’s recommendations, including focusing on “incremental development” along the Silver Line. This involves small-scale projects that are locally owned and maintained.

IncDev Alliance, a nonprofit that trains small developers on projects nationwide, was contracted to lead workshops last fall on how to achieve such developments. The process involved more than 100 local community members participating in education sessions. “The benefit of having smaller sites and having them redeveloped is you’ll see some localized involvement from people who already live or work in that corridor,” Schweitzer said. “If you have an economic downturn, franchises might be more apt to move elsewhere, whereas local developments are seen as being stronger.” Division United study leaders reached out to small business owners and people who were interested in doing small-scale development projects to attend the workshop. Incremental developments could include small housing projects or a live-work space with a local retail component. “This doesn’t have to be something that happens to you, it’s something that you can be calling the shots on,” said Hank Kelley, transportation and planning supervisor with the city of Grand Rapids. “In a way, that was the big conversation in this whole project.” Residents want to continue living in the area but also want to see some improvements and access to better amenities and jobs without being displaced, Kelley said. Additional workshops may also occur based on local interest. “I was surprised by the number of people that participated in the incremental development workshops and the interest in doing something along Division Avenue, not just in Kentwood but in Wyoming and Grand Rapids, and ideas were brought up that I don’t think we have ever considered,” said Lisa Golder, economic development planner with the city of Kentwood. “There is a whole economic development toolkit to incorporate and recommend tools for financing incremental development and how to get people involved.” The study also recommends removing barriers to economic development by streamlining zoning codes to promote more density, including changes to setback requirements, increasing building heights, and increasing lot coverage. The study also recommends zoning that supports accessory dwelling units and multiplexes. Officials from The Rapid, Grand Rapids, Kentwood and Wyoming are all hoping to use the template of the Division United plan in the future when it comes to collaborative planning. “This is a little bit of a unique process with three partner cities,” said Wyoming City Planner Nicole Hofert. “The Rapid did some neat things throughout the process like actually connecting with people who live and work along the corridor. I think that shows a real desire to understand what the community needs are across all three communities.”

s the consumer vehicle market gradually transitions to electrified models, automotive experts say the commercial fleet segment has the potential to transform the sector more rapidly. Corporations and municipalities are increasingly considering electrification as they begin to rethink the fuels for their fleets. Whether fleet operators are motivated by the financial bottom line, anticipated emission mandates or public opinion, industry analysts suggest that mass adoption by commercial fleets is on the near horizon. “When you look at commercial fleets and public fleets, there is no question that electrification — or some form of electrification, not necessarily full electric vehicle — is definitely where everyone is looking for a variety of reasons,” said Glenn Stevens, executive director of statewide auto industry association MICHauto. According to the federal Bureau of Transportation Statistics, plug-in hybrids and allelectric vehicles accounted for just 2.1 percent of the light vehicle market in 2019. However, experts say commercial fleet adoption could accelerate the slow-moving consumer market. “Adopting (full-electric) or some form of electric vehicles on fleets can help you drive scale, and a lot of people think that it really can be a big influence on trends to come,” Stevens said. “We know that consumer electrification is hot with the OEMs now, but fleet management and conversion is a logical place to start.”

A push to electrify According to Stevens, the widespread adoption of electric or hybrid commercial fleet vehicles can be far less cumbersome compared to consumer vehicles. For example, many fleet vehicles travel along fixed or predictable routes and return to a specific depot or location to charge. This means a fleet manager doesn’t have to rely on the availability of consumer charging stations. Fleet vehicles also are used frequently, which helps a business or municipality recoup upfront costs relatively quickly through savings on fuel, plus electric vehicles cost less to maintain compared to internal combustion models. This makes shuttle buses, delivery vans, box trucks and similar light-duty vehicles good candidates for electrification, experts say. In addition to the fuel saving benefits of on-vehicle technology, hybrid and electric vehicles are outfitted with advanced telematics, which can provide valuable information for fleet managers. Novi-based The Shyft Group Inc., a manufacturer formerly known as Spartan Motors that maintains a large presence in Charlotte, saw opportunity in the electric vehicle space, specifically for Class 3 light-duty vehicles such as mini-buses, RVs, walk-in vans and city delivery vehicles. The specialty vehicle manufacturer announced earlier this month that it will bring to market an Visit www.mibiz.com

all-electric, purpose-built Class 3 chassis platform designed to serve a wide array of medium-duty truck markets, from last-mile parcel delivery fleets to work trucks, passenger buses and recreational vehicles. Shyft Group President and CEO Daryl Adams told MiBiz that two of the company’s larger clients lobbied it to fill a void of quality products in the Class 3 space. The Shyft Group’s executive team saw opportunity. The Shyft Group is currently searching for a location to produce the chassis and is poised for largescale production in late 2023, Adams said. As a company that has built more than 2,500 alternative propulsion vehicles in its history, Shyft executives foresee an era when electrified Class 3 vehicles will be crucial for operations, Adams said. “We’re seeing it in Europe, where a lot of the cities are saying you must be green to deliver inside the city limits,” Adams said. “These would be perfect to do some of the delivery in a city that is mandating something like that.” The Shyft Group is a leader in the North American market in purpose-built delivery vehicle solutions, a $3.2 billion industry dominated by parcel delivery. This segment of The Shyft Group generated $491 million in sales for the company in 2020. A third-party study commissioned by The Shyft Group showed that the country’s fleet of walk-in and cargo vans totaled some 150,000 vehicles in 2015 and is expected to grow to 450,000 by 2025, partly fueled by a booming e-commerce industry that was accelerated two or three years by the COVID-19 pandemic. “From a delivery standpoint, or anyone that leaves a location and comes back to that exact same location on a daily basis, I think electric vehicles

“We know that consumer electrification is hot with the OEMs now, but fleet management and conversion is a logical place to start.” — GLENN STEVENS Executive Director, MICHauto

will be for them as the adoption rate continues to increase over the years,” Adams said. Boston-based XL Fleet Corp. is another company looking to capitalize on the growing demand for electrified fleet vehicles. XL Fleet recently opened a 24,655-square-foot facility in Wixom — its fourth facility nationwide — for product research and development programs. The site has technology capabilities for prototyping, controls development and electrical and systems engineering. XL Fleet has developed kits to retrofit existing vehicles with plug-in hybrid technology. This allows fleet managers to reap similar benefits without going fully electric. “The industry wants to push toward an allelectric landscape, but there are a number of

Boston-based XL Fleet Corp. is among companies looking to capitalize on the growing demand for electrified fleet vehicles. COURTESY PHOTO

significant challenges that still exist today and they existed 10 years ago when we founded the company,” said Eric Foellmer, director of marketing for XL Fleet. Foellmer pointed to the lack of widespread infrastructure, the scarcity of electric vehicles and the fact that fully electric vehicles may never be ideal for certain fleet applications. However, when clean energy mandates come from states, municipalities or within a company

itself, many clients are leaning on XL Fleet’s hybrid solution as more of a necessity than a cost-saving luxury, Foellmer said. “We hear from customers much more frequently now that say, ‘I have a sustainable mandate. What do you have that can help me meet that right away?’” compared to asking about system costs and a return on investment, he said. “It’s a much different conversation now than it used to be.”

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FOCUS: TRANSPORTATION

Commuter transit route between GR and Holland to be revisited post-pandemic By KATE CARLSON | MiBiz kcarlson@mibiz.com

he COVID-19 pandemic and subsequent widespread shift to remote working has stalled plans for a commuter transit system that would connect Grand Rapids and Holland. T he West M ich iga n E x press i n it iat ive launched in 2017 to provide transportation for commuters a long t he C h ic ago D r ive c or r idor. Before the pandemic, plans were in motion to pilot a bus route starting in the fall of 2020 that would make stops in Grand Rapids, Grandville, Hudsonville, Zeeland and Holland. Municipalities along the Kirk proposed route were in talks to partner with the Interurban Transit Partnership, commonly known as The Rapid, to extend a bus route and link the communities. The initiative called for eventually evolving into a rail system. “Conversations are definitely still happening, but Waterman we want to reaffirm all of our assumptions for ridership in a post-COVID-19 environment,” Hudsonville City Manager Patrick Waterman told MiBiz. “We do assume with the manufacturing and health care industries we have that there probably won’t be too much in the way of changes, and those were planned to be our primary riders.” The Rapid is updating its transit master plan in 2022 and plans to incorporate the West Michigan Express concept into the process. However, the commuter transit plan is on hold until that master planning process is completed, Waterman said.

“It’s a shame because there was some good momentum around the project. But because everything could be so different after the pandemic, it’s good too to take another look at it. It’s a project we remain interested in.” — BILL KIRK Business Affairs Specialist, The Rapid

“We still feel very good about expectations, but we want The Rapid to do the study before we proceed,” Waterman said. The Rapid’s master plan will look at potential regional routes, including along the Chicago Drive corridor, said Bill Kirk, The Rapid’s business affairs specialist. The proposed West Michigan Express route has a “head start” because of prior public feedback and studies that can be updated and incorporated into the master planning process, Kirk said. “It’s a shame because there was some good momentum around the project. But because everything could be so different after the pandemic, it’s good too to take another look at it,” Kirk said. “It’s a project we remain interested in.”

Changing commuter habits Even as workers return to physical offices, Kirk and other planners are keeping an open mind about

The proposed route of the West Michigan Express commuter transit line, which has been put on hold during the COVID-19 pandemic. COURTESY ILLUSTRATION potential shifts in long-term commuting habits because of the pandemic. “When we do study this and try to understand how demand has changed, we’ll look at all of that stuff and if there is still a good level of demand and that a service like this could work, then we will be pursuing it,” Kirk said. “As we try to understand the ‘new normal,’ we want to make sure we give people another option on the transportation side.” Aligning with national trends, The Rapid’s ridership on existing routes has dropped significantly, Kirk said. Ridership at the beginning of the pandemic decreased 90 percent compared to previous years, and today is about 60-percent lower than typical years, he said. The initial steep decline was also related to buses running at lower capacity under COVID-19 safety precautions. “It’s slowly coming back, and we’ll see if things start to pick up more as restrictions lift,” Kirk said.

Despite the ridership trends caused by the pandemic, The Rapid remains in a “pretty financially sound position” with revenues continuing to flow from local property tax millages in the six cities it services and federal relief funding from the American Rescue Plan Act, Kirk said. The transit master planning process will likely start in the second half of 2022 and could take around a year to complete. Even if the project is still feasible, it remains unclear how the operating structure might work. “That remains to be determined, because one of the things we were looking at before the pandemic was The Rapid being the operator and providing vehicles and labor,” Kirk said. “But another option was to contract that out to another operator.”

Remaining optimistic Tim Mroz, senior vice president of strategic initiatives at The Right Place Inc., is optimistic about workers returning to office spaces more broadly after the July 4 holiday. “The parking structures downtown are starting to fill up again, and I think people are missing that in-person interaction,” Mroz said. “We are getting there.” Meanwhile, local officials have long touted the potential commuter project as a talent retention and attraction measure, particularly for areas between Holland and Grand Rapids that aren’t currently served by transit agencies. A 2018 survey by Hope College researchers found 38 percent of workers along the Chicago Drive corridor would use a service like the West Michigan Express on a daily basis if it existed. A separate pre-pandemic study showed that roughly 27,000 people use the corridor to commute daily. Mroz noted that every municipality along the corridor publicly supported the project before the pandemic hit, and that additional federal funding could be available with a federal infrastructure package being debated by lawmakers and the Biden administration. “Depending on what this infrastructure bill ultimately looks like, we could have a once in a generation opportunity to make this happen,” Mroz said.

JUNE 21, 2021 / MiBiz

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FOCUS: TRANSPORTATION

Muskegon transit agency replaces some fixed routes with Uber-like program By ANDY BALASKOVITZ | MiBiz abalaskovitz@mibiz.com MUSKEGON — Facing ongoing budget constraints, the Muskegon Area Transit System (MATS) is launching a new program this week that aims to cut costs while providing the same level of service through an on-demand platform similar to Uber and Lyft. The new Go2 “microtransit” service goes live

on June 23. MATS users can download an app to hail rides within the city of Muskegon, Muskegon Heights, Norton Shores and Roosevelt Park. Fares are $4 per one-way trip, and reduced rates are available for elderly passengers or people with disabilities. MATS contracted with River North Transit LLC, a subsidiary of New York City-based Via Transportation Inc., which has deployed similar on-demand services around the world. The roughly $2.7 million contract lasts for three

years, and River North will provide the technology, equipment and drivers for the turnkey program. Four Go2 minivans are scheduled to operate from 5 a.m. to midnight Monday through Friday, and 8 a.m. to 5 p.m. on Saturday. “It allows us to replace some of our services that we discontinued in our route program, but it also expands service to some additional locations and to earlier mornings and later evenings,” said MATS Manager Jim Koens.

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Koens expects the service to be particularly valuable for employees getting to and from jobs or for people getting to appointments. “There’s a lot of different use cases where people could benefit,” Koens said. “The development of the ridership base will come from a lot of different angles.” Several program details are still undetermined, including potential partnerships with more municipalities and additional offerings such as advanced bookings. A microtransit option was among several recommendations in a 2019 study as MATS sought to reduce costs after over-expanding services about 10 years ago “when the economy was really struggling,” Koens explained. “As the economy improved, we had fewer riders on board,” Koens said. “We determined we needed to do something with our programs to reduce its expense.” MATS reportedly operated at a $400,000 budget deficit in 2019, drawing criticism from county officials who had threatened to defund the agency. Meanwhile, the West Michigan Shoreline Regional Development Commission (WMSRDC) is in the beginning stages of a study that’s exploring a potential merger with Harbor Transit, which operates in Grand Haven, Spring Lake and Ferrysburg. Harbor Transit Transportation Director Scott Borg said he is familiar with the MATS Go2 program but that the tri-cities agency isn’t yet exploring a similar option. “We’re certainly keeping our options open and looking at different ways to grow Harbor Transit,” Borg said.

Disability advocates’ concerns While two of the four Go2 vehicles will be wheelchair accessible, disability advocates remain concerned about the new MATS platform, which eliminated some previous routes in favor of ondemand ride hailing. “The concerns remain high around t he changes to MATS and their new microtransit services,” Diane Fleser, CEO of Disability Network West Michigan, said in an email to MiBiz. “We’re aware of people who are anxiously awaiting to give it a try, including our team, as over 50 percent of our staff are people with disabilities, some of whom use MATS services.” Other concerns involve whether the app will meet Americans with Disabilities Act requirements and rides “only being available as a cornerto-corner service,” which won’t reach specific destinations, Fleser said. “This causes great concern, especially for people who use mobility devices or are visually impaired,” Fleser said. Koens said MATS will continue to provide service for those with disabilities, as is required by federal law. “We do expect we’ll continue to make all of those services available to that group of custom ers,” he said. “And we’re eager to do so.” Visit www.mibiz.com

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MiBiz / JUNE 21, 2021

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The Green Panel Inc. has opened a showroom of various renewable energy products in Byron Center. COURTESY PHOTO

SE Mich. solar installer opens Byron Center showroom amid hot market By ANDY BALASKOVITZ | MiBiz abalaskovitz@mibiz.com

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WEST MICHIGAN TRIBAL ECONOMY JULY 19, 2021 Despite setbacks caused by the pandemic, several tribes are continuing to roll out ambitious economic development projects throughout the state of Michigan. In this focus section, MiBiz will provide a comprehensive report on the emerging tribal economy in Michigan, including M&A activity, real estate developments and new Indigenous businesses throughout the state. Plus, we’ll host a roundtable of tribal executives and advisers. Don’t wait to be in this issue! Contact us by Wednesday, July 7 to advertise. Contact Us Today! sales@mibiz.com editor@mibiz.com 616-608-6170

JUNE 21, 2021 / MiBiz

BYRON CENTER — After selling off his telecommunications firm in the mid-2000s, Adam Harris ventured into another emerging technology field poised for rapid growth: renewable energy. “When I opened my business, I looked like the town idiot,” said Harris, managing director for Brighton-based The Green Panel Inc. “This was 2006 to 2007. It was not a very vogue time to open a business and it was a climate where solar was nonexistent.” Since then, The Green Panel has taken its EF&I (engineer, furnish and install) approach to dozens of corporate, municipal, higher education and residential customers looking to install solar either for environmental or cost-saving purposes. On July 10, the company will hold a grand opening for a Byron Center showroom that features the products it sells, including three leading solar panel brands, Tesla Powerwall home battery storage units and electric vehicle charging ports. Harris says the show room — a roughly 1,300-square-foot space at 325 84th St. — sets The Green Panel apart from other installers by allowing customers to examine products in buffet-like fashion. The COVID-19 pandemic accelerated plans for a showroom that had been in the works for years, and Harris thinks the retail model is more customer-friendly and less intrusive than installers coming to properties. “When COVID came, you didn’t want anyone in your house,” he said. “The showroom is set up and designed with several different t ypes of system offerings that illustrate and show the customer the basic electric elements in their home.” The showroom includes products from Tesla, Panasonic and SunPower. Harris compared the experience to picking out a car at a dealership. “The customer gets to pick and choose what they want with their system,” he said. “Then we’re able to design a system that meets their needs down the road.” The Green Panel’s customer base is 60 percent residential and 40 percent commercial. Past clients include Dow Chemical Co., Hemlock Semiconductor Corp., Michigan State University and Western Michigan University.

Harris said The Green Panel, which has about 50 employees, is “hiring more people every week,” and business continues to grow after avoiding supply chain challenges during the pandemic. Since Harris launched The Green Panel 15 years ago, the U.S. solar market has ebbed and f lowed with favorable tax policies and early government support that never materialized into widespread development. In recent years, though, the cost of producing solar power has come down significantly. U.S. solar installations grew 46 percent in the first quarter this year, and year-over-year growth is expected to reach nearly 24 percent compared to last year, according to a recent report by Wood Mackenzie. Corporate purchasers are helping to drive utility-scale projects while the return on investment for onsite installations is growing shorter for commercial and residential customers. Harris said the improving economics are coupled with growing uncertainty among utility customers about the future of electricity rates which, in Michigan, have steadily climbed in recent years. “As people get older, they’re living on a fixed income,” Harris said. “Electricity becomes an unknown variable for them, they’re at the mercy of the utility company. Solar allows this flatlined variable for them.” The Grand Rapids-area showroom also opens after shifts in Michigan’s solar regulatory environment that changes the way utilities compensate rooftop solar owners for the excess power they send back to the grid. The state’s new distributed generation program credits customers at a lower rate than the previous net metering program. While solar advocates have battled utilities for years over a fair compensation rate, Harris believes the emerging battery storage sector will be equally beneficial for customers. “People say, ‘I won’t send any power back, then I won’t have to worry about what you charge for sending it to the grid,’” Harris said. “Those systems in the future are going to be an island. You won’t even have to go to the utility because you’ll feed nothing back to the grid. The net metering elimination opened the door for storage in a huge way.” Visit www.mibiz.com

REAL ESTATE & DEVELOPMENT

Communities early to opt in see economic development benefits of recreational cannabis By KATE CARLSON | MiBiz kcarlson@mibiz.com

ities that were early to opt in to recreational cannabis are now seeing the benefits from entrepreneurs redeveloping old properties into sleek, modern retail businesses. Muskegon, for example, initially created a medical marijuana overlay district to steer development within an underutilized industrial section of the city. The city’s first dispensary, Park Place Provisionary at 1922 Park St. that has been rebranded as New Standard Park Place, started selling recreational cannabis on Jan. 17, 2020. Muskegon now has six dispensaries just east of Seaway Drive. Last fall, city commissioners in a divided vote amended its zoning ordinance to expand the marijuana district and add six individual properties. Muskegon Planning Director Mike Franzak called the city’s overlay district approach a success story. “We took areas that were heavily disinvested in and very blighted along major corridors that are easy to find,” Franzak said. “We’ve been able to take that area and just see an amazing transformation. It looks like a completely different corridor than it was before, and that was with our initial overlay district.” The city’s zoning ordinance was recently amended again to allow microbusinesses — which can grow up to 150 plants, process and sell products to adults but not other adult-use establishments

— to operate at additional locations in the city, including near downtown. “We decided there were some other key properties throughout the city we had not been able to get reinvestment on, some older buildings that could use the cannabis industry to jumpstart other projects in the area,” Franzak said. Massive, aging industrial buildings around the city are also being reviewed for redevelopment into non-retail cannabis establishments, Franzak said. “The investment doesn’t seem to be stopping,” he said. “It’s just been really good for our economy, we’re seeing a lot of job hiring out of it, and it strengthens our tax base.” The city of Kalamazoo has experienced similar success since adopting its medical marijuana ordinance in 2018, said Assistant City Planner Pete Eldridge. The city now has 12 recreational cannabis retail stores operating across the city, according to state data. “There has been rehabilitation of warehouses in the manufacturing areas, older buildings on some of our community corridors like Portage Street, and it’s definitely made an impact on some of our decaying building stock in a very positive way,” Eldridge said.

Prime real estate Julie Moorehead, co-owner of Timber Cannabis Co. at 313 W. Laketon Ave. in Muskegon, initially saw potential in the property that included a rundown former banquet hall.

Timber Cannabis Co. at 313 W. Laketon Ave. in one of Muskegon’s designated zones for cannabis businesses. COURTESY PHOTO “It’s right on Laketon Avenue, so I’m sure the city is enjoying the refresh that cannabis companies are doing in the city,” Moorehead said. “Once land is zoned into a ‘green area,’ the prices go sky high.” While cities that have opted in to recreational cannabis have taken varied approaches to zoning the industry, skyrocketing real estate prices have tended to follow. “Right now, that’s the impediment to the growth of the industry: The lack of available properties, no question,” said Ben Wrigley, a partner at Cannalex Law in Cascade Township. “The properties are in such demand because there are only so many of them.”

Timber Cannabis installed a new roof, resurfaced the parking lot, and added new flooring and landscaping. “I was really surprised and excited at our final product. It looks like a classy establishment now with a comfortable atmosphere,” Moorehead said. Muskegon’s overlay district approach was an alternative to capping the number of cannabis businesses that could operate there. As a result, new retail stores are competing for customers, often doing so with freshly upgraded facilities. “A lot of our employees live nearby and appreciate the nice aesthetic that’s been going on,” Moorehead said.

FROM VISION TO REALITY: GRAND RAPIDS INNOVATION PARK Grand Rapids is teeming with innovative people and companies. Young professionals recognize the city as the ideal jumping off point for their careers. Entrepreneurs see the tremendous value in leveraging the ample resources available to bring their ideas to life. And along the Medical Mile, which encompasses an expansive stretch of Michigan Street east of the Grand River and just south of Interstate 196, groundbreaking research is transforming the healthcare industry. It’s no surprise that Michigan State University (MSU) chose the Medical Mile as home base for their College of Human Medicine at the Secchia Center. That decision kickstarted the real estate development efforts that have led to the genesis of the Grand Rapids Innovation Park (GRIP). GRIP is a healthcare innovation hub that encompasses the Grand Rapids Research Center, Doug Meijer Medical Innovation Building (DMMIB) and 430 Monroe Avenue, which will become home to Perrigo Company plc’s new North American Corporate Headquarters after construction is completed in 2022. The vision for GRIP is grand: Generate an environment in which a variety of industries – education, healthcare, hospital systems and private industry – can collaborate to license, manufacture, distribute and commercialize health innovation with speed to market. Achieving such a bold vision requires the perfect partner along with a bit of ingenuity. From the onset, Mike Mraz, president of real estate development at Rockford Construction,

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knew his team could provide the level of expertise and service needed to make GRIP a reality. “In terms of the delivery model and our comprehensive platform, which includes real estate development, financing, construction and property management services, we were completely confident in our ability to bring this to life,” Mraz said. Recognizing the complexity of the work, Rockford helped form Health Innovation Partners (HIP), a real estate development joint venture (JV) between Rockford Construction/Rockford Development, Walsh Construction/Walsh Investors, Murphy Real Estate Services, Harrison Street and MSU. Collectively, the group selected a public-private partnership (P3) approach to develop the project. P3s allow public institutions, like universities, to team up with private industry partners who are well equipped to handle the significant capital outlay and allocation of risk associated with large-scale projects like GRIP. They also allow work to be completed with enhanced speed and efficiency. Without the P3, MSU may have had to engage in other efforts to finance the work, such as a longterm fundraiser. But through the expertise of HIP and Rockford, the development kicked off successfully and has been moving forward ever since. “P3s require plenty of innovation and creativity,” said Melissa Collar, Rockford’s chief counsel and vice president of strategic partnerships. “But being a thought leader is something that Rockford

has done throughout its history – give us a difficult problem and we’ll find a solution.”

will provide more than $300 million in economic impact to Kent County each year.

Beyond engaging the partners in a P3 approach to delivery, Rockford and the collective team also brought significant technical knowledge and experience to the development portion of the work. The development group successfully navigated the complex design needed to situate all three buildings within GRIP to maximize visibility. Additionally, the team was able to balance complementary architecture; appropriate floor plans; site infrastructure; mechanical, electrical and plumbing systems; and more to establish a plan for the associated buildings and facilities that won’t just attract world-class tenants, but also

Looking forward, Rockford envisions an opportunity to complete similar projects at additional sites, leveraging the power of P3s to bring advanced healthcare systems to the public quickly and with the highest level of care and quality.

rockfordconstruction.com MiBiz / JUNE 21, 2021

FINANCE

GR Venture Capital scours market for small biz investments, acquisitions By MARK SANCHEZ | MiBiz msanchez@mibiz.com

s an investor and acquirer of small businesses, Steve Barnes is scouting a market that appears to hold plenty of opportunity. Barnes, an entrepreneur who previously co-founded three wireless companies, formed GR Venture Capital LLC a year ago to capitalize on ongoing generational shifts and invest in small businesses that he can grow. He recently closed on the acquisition of Grand Rapids-based Professional Courier Services, a same-day, small package delivery and errand service whose owner, Cathy Smith, wanted to retire. GR Venture Capital typically targets small businesses that have between $200,000 and $2 million in EBITDA (earnings before interest, taxes, depreciation and amortization), where Barnes can support a new generation of business owners through majority investments or minority deals to help owners transition their companies to new ownership. In a minority investment scenario, he’s looking for situations in which a seller will remain with the business in an operating role. “One major goal is to help younger entrepreneurs like myself 10 years ago,” said Barnes, 32, who

believes a “generational wave” is occurring in entrepreneurship. “There’s going to be more entrepreneurs than ever, more businesses than ever, and (I want to) help them get a channel to find or grow their investment in their business.” GR Venture Capital aims to Barnes complete two or three investments annually and focus on technology and distribution companies in West Michigan, although the quality of a deal matters more than quantity, he said. Barnes formed GR Venture Capital as a way to invest the proceeds from the 2018 sale of Genius Phone Repair, a company he co-founded in 2011 with two partners. They grew the business to 18 retail locations in Michigan and Indiana. “I was looking for a new business to jump into,” said Barnes, who looked at about 150 businesses before buying Professional Courier Services. “Right now, it’s the stage of my career where I had the opportunity to find something new and this is Grand Rapids-based, where I live. It’s the right size and it gives me the opportunity to have flexibility and to grow it, and I believe it’s in a great market and that this style of transportation is only going to grow.”

Barnes continues to co-own two wireless businesses, Mobile Defenders and Tech Defenders, which his partners and co-founders operate. He also has invested in a close friend’s olive oil business in Italy to help him sell products in the U.S. GR Venture Capital operates more as a family office or private equity, as opposed to traditional venture capital as the name implies. However, Barnes and his partners are considering whether to form a venture capital fund. “We’re toying around with creating a fund in the Grand Rapids area over the next year or two, whether it’s under the GRVC name or something else,” he said. “It’s something we want to do in the future.” Ba r nes ta rgets add it iona l sma l l businesses deals amid what Matt Baas, a partner at Grand Rapids-based Small Business Deal Advisors LLC, considers to be a strong market, as many companies are now coming to market after going through the harsh economic downturn last year during the COVID-19 pandemic. Some business owners who delayed their exits are now seeking to sell, while others are accelerating existing exit plans, said Baas, who represented Smith at Professional Courier Services in the sale to Barnes. “It’s been really strong. We continue to find sellers that are ready to move forward. A lot of them have managed through the past year, but are still at the point that they need to retire,” Baas said. “At this point … it’s just time to get out, whether to retire or do something else. We have run into a few that are in that position.” He thinks record available capital and low interest rates have created a strong market with high

valuations that may lead some business owners to act now rather than wait any longer. “They may have been looking recently — maybe over the past few years — but weren’t ready to pull the trigger,” Baas said. “Seeing these other opportunities and incentives maybe pushed them further along in that trajectory.” At the same time, “a ton” of prospective buyers are also scouring the market for deals, according to Baas. The pandemic and economic fallout have generated a rise in entrepreneurship among people who lost their jobs or who decided to buy a small business to run, Baas said. In his estimation, more people are deciding “I want to own my own business, I want to be in control of myself, and they’re venturing out and doing something on their own,” similar to what occurred in the wake of the 2008 financial crisis. A first quarter report by online small business marketplace BizBuySell.com found heightened demand among buyers “is likely here to stay,” as small business ownership “has become a haven for individuals seeking security in times of uncertainty.” In a quarterly BizBuySell.com survey, one of five respondents buying a business said they were newly unemployed and 37 percent said they were unhappy with their job and wanted control over their future. “The pandemic has presented a wakeup call for American workers who have faced job loss or stayat-home downtime to assess their future,” according to the quarterly BizBuySell.com report.

INTRODUCING THE 11TH ANNUAL MICHIGAN CONTRACTOR OF THE YEAR (MCOY) NOMINEES On August 26, 2021, the American Subcontractors Association of Michigan (ASAM) will celebrate the 11th Annual MCOY Award Celebration at the home of the Whitecaps, Lake Michigan Credit Union Ballpark. MCOY recognizes Michigan’s general contractors and construction managers with a track record of best practices, professionalism, and collaboration within the trade contracting community.

THANK YOU TO OUR TOP SPONSORS

ASAM IS PLEASED TO ANNOUNCE THIS YEAR’S MCOY AWARD NOMINEES: • • • •

The Christman Company Dan Vos Construction Company EV Construction First Companies

• Owen-Ames-Kimball Co. • Pioneer Construction • Rockford Construction

ASAM members will vote to determine which of these nominees will take home the coveted award. Nominees will be scored on the following criteria: bid ethics & practices, safety, jobsite supervision, communication, schedule coordination, project relations, administrative procedures, payment terms, and quality workmanship. For more information about ASAM and MCOY, please visit ASAMichigan.net •11

ANNUAL•

MCOY AWARDS O c t o it b e r -x xtogether , 2017 BAck at F R E D E R I K M E I J E R G A R D E N S & S C U L P T U R E PA R K

JUNE 21, 2021 / MiBiz

MEET THE BAND:

MID-LIFE CRISIS Mid-Life Crisis is a popular, award-winning Grand Rapids band has that been rocking West Michigan since 2001. This versatile group of six friends and experienced musicians draws musical inspiration from every decade and knows how to get a crowd to their feet with their fun, high-energy performances. Come out and enjoy the fun!

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POLICY TAX BILL PACKAGE

Continued from page 1

Jumpstart Plan that was proposed this month and would use billions of dollars in federal funding for a variety of initiatives. For example, the Michigan Mainstreet Initiative would allocate $300 million for small businesses in the form of restart grants, microenterprise grants and SmartZone funding. Owens said that while grant programs are wellmeaning, they also include administrative costs that siphon off some of the funding. “If we can focus most of our effort on these broad-based programs that are going to have a widespread (effect) and touch many of these businesses, we think that’s a smarter approach,” he said.

Staying competitive Senate Bill 392 — introduced in late April by Sen. Jon Bumstead, R-Newaygo — would reduce Michigan’s corporate income tax rate over two years from 6 percent to 4.9 percent. If approved, the state’s corporate tax rate would decline retroactively to 5.5 percent for 2021 and to 4.9 percent in 2022. The Senate Finance Committee approved the bill along party lines on June 2, sending it to the full Senate for consideration. “The pandemic has been an economically challenging time for our local businesses,” Bumstead said during a May hearing on the legislation. “Providing tax relief now is the most direct way that we can help our financially struggling businesses keep their doors open now and in the future.” Bumstead argues that a lower corporate income tax rate would also make Michigan more competitive with other states. He cited Indiana’s 5.25 percent corporate income tax rate that will decrease to 4.9 percent this summer, and Kentucky’s present 5 percent rate. “Providing this tax relief is important so our state can be competitive with not just these neighboring states but with all states across the nation,” Bumstead said. “Reducing our business tax to a competitive rate like other states near us is important to incentivize companies to come and stay in Michigan.” T he Gra nd R apids A rea Cha mber of Commerce also supports the bill as a way to keep Michigan competitive with other states. “This is all about signaling to our business community and businesses about making it a little more business-friendly state, and especially taking that into account as we get ourselves out of COVID mode and back into whatever this new normal looks like,” said Alexa Kramer, director of government affairs for the Grand Rapids Chamber. “This is something we can do to help out businesses so we can get our businesses back, get our communities back, and put Michigan in a really good position to be competitive with other states.” Michigan ranks 14t h nat ionally among states for overall business tax climate and 20th for corporate income tax rates, according to an annual report by the Washington, D.C.-based Tax Foundation. The only Great Lakes state that ranked higher was Indiana, which was ninth overall for tax climate and 12th for its corporate income tax, according to the Tax Foundation’s report on state business climates. The Tax Foundation’s Visit www.mibiz.com

“Providing tax relief now is the most direct way that we can help our financially struggling businesses keep their doors open now and in the future.” — SEN. JON BUMSTEAD

Tax rankings Great Lakes states’ ranking on overall business climate and the corporate income tax rate (from lowest to highest), according to the Tax Foundation’s 2021 State Business Tax Climate Index:

State

Overall ranking

Corporate income tax rank

Illinois

36th

Indiana

9th

12th

Michigan

14th

20th

Minnesota

46th

45th

New York

48th

15th

Ohio

39th

42nd

Pennsylvania

27th

43rd

Wisconsin

25th

30th

R-Newaygo

overall business climate rankings are based on corporate, individual income, sales, property, and unemployment insurance taxes. Michigan’s corporate income tax rate is currently lower than rates in Wisconsin (7.9 percent), Illinois (9.5 percent), and Pennsylvania (9.99 percent). Ohio, which ranks 39th in overall business tax climate, instead levies a gross receipts tax of 0.26 percent that equates to a ranking of 42nd nationally among corporate income taxes, according to the Tax Foundation. The bill to reduce the state’s corporate income tax has support from the Michigan Manufacturers Association, Small Business Association of Michigan and the Michigan Chamber of Commerce. The state Treasur y Department and the Michigan League for Public Policy indicated t heir opposition at last mont h’s legislative hearing. “Simply put, now is not the time for broad tax cuts for big businesses, as we need investments in our people, like child care, roads and water systems, education, state safety net services and more,” Michigan League for Public Policy President and CEO Gilda Jacobs said in a statement to MiBiz. “We understand that the pandemic has hit our people, our businesses and our economy hard, but as we look to pull out of this health crisis, we believe that strategic investments in what Michigan workers and their families need to thrive will benefit our businesses and state budget as well.”

Refundable tax credit Meanwhile, Senate Bill 393 would create a twoyear refundable tax credit for businesses that were forced to close during the pandemic for at least six weeks and lost at least 25 percent of sales. Those businesses could claim an income tax credit for 2020 and 2021 up to their total property taxes on the affected business. The legislation “creates another source of relief” for businesses affected by last year’s shutdowns, said bill sponsor Sen. Kevin Daley, R-Lum. The state Senate passed Lum’s bill on a 19-16 vote on June 9. The bill, which is also backed by

NOTE: The Tax Foundation’s overall ranking for business climate is based on corporate, individual income, sales, property, and unemployment insurance taxes.

several state and local business groups, now sits before the House Tax Policy Committee. Lawmakers in 2020 passed property tax relief twice for businesses affected by the pa ndem ic , t houg h Bumstead Daley Kramer Owens Whitmer vetoed both efforts. A similar measure included in a supplemental appropriations that need the most relief. Once that goal is bill earlier this year was line-term vetoed. achieved, we want to make sure that we are able The Treasury Department took a neutral to administer the program and ensure that it’s position on S.B. 393, although it has “a num- successful.” ber of concerns,” said Aaron Keel, the Treasury Daley and bill supporters estimate that the bill Department’s director of legislative affairs. Those would result in $75 million in lost revenue in fiscal concerns include “incredibly difficult” admin- year 2022. While it’s unclear how many businesses istration of the tax credits, their retroactive might potentially seek a retroactive tax credit, the nature, and verifying revenue losses of affected Senate Fiscal Agency reported that the bill would businesses. reduce state General Fund and School Aid Fund Still, the Whitmer administration is open to revenue by an “unknown and potentially signifiworking with lawmakers on potential tax cred- cant amount that would depend on the number of its as part of broader budget negotiations for the eligible taxpayers affected.” state’s 2022 fiscal year that starts Oct. 1, Keel said. Owens said the Treasury Department’s willHe noted that the proposed tax credits could ingness to at least discuss the legislation gives result in $150 million to $400 million in potential him hope for some form of tax relief next fiscal lost revenue to the state. year for businesses hit hard by the pandemic. “We do believe that that’s a big price tag that Whitmer and top GOP lawmakers also recently belongs in a larger conversation about how best agreed to negotiate over a 2022 budget, and to provide for and target relief for businesses Owens expects both sides to get part of what that are struggling the most with the resources they want. that we have,” Keel said. “We want to be a part“I think that there’s a possibility that some of ner in identifying and assisting the businesses these things will be signed into law,” he said. MiBiz / JUNE 21, 2021

INFORMED IMPACT To overcome racial, social and economic inequities we must respond with intention and care. Grand Rapids Community Foundation uses the tools of philanthropy to answer community needs. Our partners inspire, motivate and guide our work.

The Community Foundation connects people, passion and resources to meet our region’s toughest challenges. Learn more at grfoundation.org. Grand Rapids Community Foundation is a proud sponsor of MiBiz’s nonprofit news section.

JUNE 21, 2021 / MiBiz

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NONPROFIT ORGANIZATIONS

National giving trends in 2020 create unique opportunities, challenges for local nonprofits By JOSH SPANNINGA | MiBiz jspanninga@mibiz.com

he COVID-19 pandemic caused major shifts in philanthropic giving last year as human services organizations benefited and small-level donors increased, according to a recent report from global nonprofit Giving Tuesday. The Giving Tuesday Data Commons report released last month collected data from more than 100 contributing partners to identify 2020 U.S. giving trends that were reshaped by the pandemic. Unsurprisingly, the 2020 data reflect a tumultuous year for nonprofits.

million in rental assistance, and we are giving about $400,000 to $500,000 a week in assistance. The needs are great, and it will just continue.”

Small donations increased

As more donors contributed to emergency causes last year, the number of small donations increased. The number of donations between $101 and $500 increased by 11 percent last year, which was a large contributing factor to the 1.3-percent top-line gain in donors overall. In contrast, midsize and major donations — from $501 to $50,000 — decreased in 2020. Michael Layton, W.K. Kellogg Community Philanthropy Chair at Grand Valley State University’s Dorothy A. Johnson Center for Philanthropy, said this reversed a five-year trend of small donations decreasing. “The long-term trend had been for fewer families to donate a greater and greater percentage of all the dollars that constitute charitable giving in the U.S,” Layton said. “And there was a lot of concern about what that meant. Just as the distribution of wealth in Layton Van Dyke Zack our economy is becoming more and more While overall fundraising dollars increased unequal, so too was the philanthropic universe 5.4 percent year over year from 2019, much of being increasingly dominated by bigger and bigger those gains went to human services organizadonors. The fact that there was an uptick (in small tions, which saw a 1.9-percent dollar growth. donations) this past year I think represents a really All other causes experienced a drop in year over exciting opportunity.” year donation dollars. Arts and culture nonprofWhile donations of more than $50,000 saw its fared the worst with a 16.3-percent decline in the most year-over-year growth, this was mostly donation dollars. because of initial responses to the pandemic as The large growth in human services fundlarge donations declined year over year, according ing was a result of the public responding to the to the report. pandemic and racial justice issues. Heart of West As giving trends return to pre-pandemic levMichigan United Way was a large benefactor of els and small donations are expected to decrease, this trend. Layton still sees an opportunity for nonprofits to “I think it’s important to recognize the response focus more on attracting this specific demographic. of this community and to donors during the pan“The challenge for nonprofits now is we’ve demic. It was remarkable,” Michelle Van Dyke, preshad this big surge and connected with a lot of ident and CEO of Heart of West Michigan United new donors, engaged especially with smaller Way, told MiBiz. “The $3.3 million that we raised donors,” Layton said. “How do we maintain that for coronavirus response came not only from founmomentum?” dations and corporations, but from individuals all throughout this community. People stepped up in Donor retention will be critical really big ways.” Experts say the Giving Tuesday report underThe Giving Tuesday report showed a sharp scores t he importance of donor retention. increase in donations in April 2020 during the early Despite a spike in April 2020, donor retention stages of the pandemic. Fundraising then had a dropped overall last year. downward trend until October, when end-of-year Meanwhile, new donors accounted for 59 perdonation dollars increased. cent of donor growth in 2020. The other 41 percent of Authors of the report expect giving trends to donor growth came from recaptured return to pre-pandemic levels by donors who had previously given to the end of the year, and will most a cause, lapsed, and then returned likely result in year-over-year NONPROFITS in 2020. This indicates a trend that declines for human services nonNEWS donors are more likely to be mobile in profits. Van Dyke believes many — Sponsored by: the future, switching between causes human ser vices organizations GRAND RAPIDS they support. will continue to feel some strain as COMMUNITY Giving Tuesday report authors some of the long-lasting financial FOUNDATION urge nonprofits to emphasize donor effects of the pandemic, such as an retention in 2021 through ongoing increased need in rental assistance, engagement to leverage the rise in the number of become apparent. donors in 2020. “We administered [Kent] county’s CARES Marilyn Zack, vice president of development for Act dollars, and now we are administering the the Grand Rapids Community Foundation, said federal COVID emergency rental assistance donor retention is a “big issue for us, and we spend program. It’s a testament to the need that’s still a lot of time connecting with our donor partners and out there,” Van Dyke said. “We have about $40 Visit www.mibiz.com

making sure they understand how much we appreciate their support.” “We operate under the assumption that it’s a lot more effective and efficient to maintain donor relationships once they’ve been established rather than to be constantly involved in that churn of attracting new donors,” Zack added. Giving Tuesday researchers expect donor retention to drop significantly in 2021, specifically for human services. Heart of West Michigan United Way plans to combat the expected drop through regular contact with donors and offering opportunities for donors to get involved with volunteer work. “For the most part they really want to have an impact in the community, so for us it’s about communicating that impact,” Van Dyke said. “It’s allowing our donors to get engaged in volunteer opportunities so that they really get the hands-on connection to the work that we’re doing. All of that helps to retain donors by making sure they understand the impact and making sure that they can engage with the mission.”

Layton said. “Instead, if they identify nonprofits working in an area they’re concerned about, they should trust those nonprofits, and kind of strip down and simplify the procedures for applying for grants and reporting requirements afterwards in an effort to allow those nonprofits to focus on the work, and not so much the red tape and bureaucracy.” In 2020, Heart of West Michigan United Way raised $3.3 million in unrestricted funds that it could then flexibly allocate to nonprofits. Van Dyke said this flexibility allowed the organization to quickly respond to community and nonprofit needs. “Many of them were very small nonprofits that wouldn’t have been able to do any kind of fundraising for their efforts,” Van Dyke said. “That was really important, and United Way has the procedures and the systems in place to be able to do this work and very quickly get the funds into the hands of the nonprofits who needed it to meet the emergency needs of their clients.”

Optimism for arts and culture

Unrestricted funds needed Nonprofits rely on both restricted and unrestricted funding from donors that determine whether contributions must be used for specific causes or uses within the organizations. Though the Giving Tuesday report doesn’t differentiate between the two types of funding when analyzing 2020 donations, it shows that much of the giving last year was to meet emergent needs in communities. That includes pandemic response and addressing racial injustice. Layton said responding to emergent community needs aligns with the concept of “trust-based philanthropy.” “In trust-based philanthropy the idea is that grantmakers and foundations should not be so heavy handed in how they make grants with lots of strings attached in terms of what it takes to apply or what you’re expected to report on afterwards,”

As fundraising returns to pre-pandemic levels, experts say arts and culture organizations that saw a sharp drop in donations last year will likely benefit. These organizations and their venues were largely closed during the pandemic in 2020, which caused steep declines in ticket sales and gift shop sales that many organizations rely on for revenue. Layton agrees that the forecast looks much more positive for arts and culture organizations moving forward. “I think it would be pretty shocking if, as people went back to theaters and started enjoying performances and art and museums again, that people wouldn’t be opening their wallets and checkbooks and credit cards and supporting those organizations again,” Layton said. “I think those are very safe bets, but the question is how quickly and how strongly the arts and culture organizations rebound.”

2020 Donor Shifts During the pandemic last year, dollar amounts from small-scale and “supersized” donors increased while mid- and major-level donations decreased. Donor size name

Donor size range

% 2020 dollars

% YOY growth

% of total dollar growth

Micro

up to $100

3.5%

4.1%

Small

$101 - $500

7.3%

5.8%

10%

$501 - $5,000

18.1%

-4.5%

-20%

Major

$5,001 - $50,000

27.9%

-1.6%

-10%

Supersize

$50,001 +

43.2%

11.0%

118%

Mid-size

Source: Giving Tuesday “Giving In Unprecedented Times” report

MiBiz / JUNE 21, 2021

WMed lands historic financial gift as medical students face financial challenges A Q&A with Dr. Paula Termuhlen, dean of the Western Michigan University Homer Stryker M.D. School of Medicine Dr. Paula Termuhlen took the helm of the Western Michigan University Homer Stryker M.D. School of Medicine (WMed) on May 1, succeeding founding Dean Dr. Hal Jenson, who retired after 10 years at the post. Just one month into Termuhlen’s tenure, Western Michigan University announced a historic, anonymous $550 million gift to the university over the course of 10 years. WMed will receive $300 million of the donation, the largest gift ever bestowed upon a public university. MiBiz spoke with Termuhlen on how she plans to use the funds and where WMed is heading after reaching its 10-year milestone. What were your thoughts as WMed received such transformational funding a month after you started as dean? The exciting part is realizing that one of the biggest challenges we face in medicine today is really creating health equity for all and that every medical school plays a role in that. Now, we really get to create an identity and what we can be known for. To have this gift arrive and recognize the work that we needed to do, we can create an inspirational and aspirational vision around health equity. I’m so excited. This now gives us the opportunity to take a young school and really do something transformational with our space. The challenge now is: This is hard work and we’re going to expect to be held accountable by not just our benefactors, but also our community to do this work and do it at a high level and be responsible for the stewardship around a gift like this. Are any other medical schools taking this focused approach to diversity, equity and inclusion, or is WMed seeking to create the blueprint? People are doing a lot of really good work, and I would be remiss if I didn’t acknowledge that the historically black colleges and universities and their medical schools are a part of this system — they have owned this work forever. It’s part of their DNA, it’s why they exist. Having said that, having a school like ours that is a smaller and private school in the Midwest — no one else is doing this work and we have the opportunity to do it. You mentioned that you hope to use the donation for financial assistance for WMed students. Is financial need the biggest barrier in accessing a medical school education? It’s one of the most pressing needs, but it’s not the only pressing need. Here’s a reality: I’m a first-generation college student and I just paid off my student loans the same month I became the dean of a medical school. This happens in families that don’t have resources where their students finally get into medical school and maybe they’re first-generation college students. This is commonly seen in underrepresented and minority populations. And not just students of color, but other diversity measures. It’s about creating wealth for families over time. (Financial aid) allows them to take their resources and spend it on their children so, generationally, you can continue to create economic capacity within families. And paying tuition is just part of the financial dilemma of attending medical school? Particularly with students that come in and are of a lower socioeconomic status. Let’s say they get the tuition money and they get some financial aid for living expenses. Often that doesn’t cover everything. There are several schools around the country now that are starting to understand what it means to have food insecurity within their student population. We actually have medical schools that will create food shelves and so forth. I can’t speak explicitly for WMed except that I know it exists. I don’t have our data about that yet, but it is real and now we’re having national conversations about what we are doing with our medical students as they’re trying to become young physicians and also worrying if they will have enough to eat. What’s next now that WMed has reached the 10-year milestone? We have to do a good job of figuring out how to create a physician workforce that reflects and understands the people we serve. That really does focus on the diversity, equity, inclusion and justice component. We need to do some work to really hardwire how we get that work done and then we can actually think about, ‘Ok, let’s grow some more, let’s expand our classes and do some more.’ At the moment, the bottleneck is our ability to identify clinical sites within our two hospital partners and within some of the communities in Southwest Michigan where we have relationships. As time goes on, we’re looking for opportunities and partners to expand. We’ll be on the lookout while we do this work on the front. Does WMed track where its graduates eventually go to work? If so, has the school been successful in keeping graduates in Michigan? We are so young. After you graduate medical school, you still have to do additional medical training in your specialty. We only have one class that has barely made it out of the door and not even a full class because some of them are still in training. However, this is absolutely critical to our work. This is something that most schools track in some ways, but for me personally, my dream is that we’re not only just tracking where people are practicing and serving communities but I also want to know how they’re doing that. We’re going to be tracking all of this very, very carefully as time goes on. Interview conducted and condensed by Jayson Bussa. Courtesy photo.

JUNE 21, 2021 / MiBiz

IN THE NEWS M&A

n Grand Rapids-based Lake Michigan Credit Union will gain a larger presence along Florida’s Gulf Coast with the proposed acquisition of Pilot Bancshares Inc., the parent company of Pilot Bank and National Aircraft Finance Co. (NAFCO), which specializes in financing aircraft. Under the deal, Lake Michigan Credit Union would add six more offices in the Tampa Bay area, and more than $656 million in assets and $511.2 million in deposits. The deal should close in the fourth quarter, pending approvals from regulators and Pilot Bancshares shareholders. Investment banking firm Donnelly Penman & Partners Inc. advised Lake Michigan Credit Union on the transaction, and the law firm Honigman LLP served as legal counsel. n Grand Rapids-based Continuum Ventures LLC, the family investment company of Doug and Maria DeVos, invested in Harbor Springs-based Walstrom Marine Inc. along with St. Clair Shoresbased Colony Marine Sales and Service Inc. Walstrom Marine, a yacht sales and service company and marina operator, has locations in Harbor Springs, Traverse City, Bay Harbor, Charlevoix and Cheboygan and employs more than 70 people. The company sells yachts made by Tiara Yachts, Pursuit Boats, Chris Craft, Sea Ray, Lund, Crest, and NauticStar. Under the deal, Continuum Ventures took a majority position in the 75-year-old Walstrom Marine while Colony Marine Sales assumed a minority ownership position. Terms of the deal were undisclosed. n Jackson-based CMS Energy Corp. plans to sell EnerBank USA, a Salt Lake City-based bank that specializes in home improvement lending nationwide, to Regions Bank, a subsidiary of Regions Financial Corp. in Birmingham, Ala. The companies expect the $960 million deal to close in the fourth quarter, pending regulatory approval. The divestiture of the “non-core asset” will allow the parent company of Consumers Energy to invest in its core energy business, including clean energy, according to CMS President and CEO Garrick Rochow. Goldman Sachs & Co. LLC served as financial adviser to CMS Energy, which was advised by the law firm of Skadden, Arps, Slate, Meagher & Flom LLP. n Escanaba-based TEAM Wireless has signed an agreement to acquire Canton-based Cellular & More, an independent Verizon authorized retailer with stores throughout southern Michigan. The deal, expected to close July 1, includes 15 locations, including stores in Hastings, Kalamazoo, Charlotte, Lansing and Jackson, according to a statement. The acquisition is the fifth for TEAM Wireless in the last 11 years. With the addition of the Cellular & More locations, TEAM Wireless will own and operate 63 retail locations and employ more than 400 people. n Kamps Inc., a Walker-based pallet recycler, signed a definitive purchase agreement to acquire Buckeye Diamond Logistics Inc., a South Charleston, Ohio-based packaging solutions provider. Buckeye maintains 20 onsite locations and employs 1,100 full-time people. Terms of the deal, which is expected to close at the end of the month, were not disclosed. Kamps has now made three strategic acquisitions in 2021, and six after selling a majority stake to Los Angeles-based private equity firm Freeman Spogli & Co. at the beginning of 2020. n Caledonia-based producer of disposable surgical products Aspen Surgical Products Inc. acquired Stork, a division of Briggs Healthcare, a Des Moines, Iowa-based maker of branded sterile disposable obstetric products. The acquisition “strengthens Aspen’s broad portfolio of medical and surgical disposables sold into the acute care market,” the company said in announcing the deal. Terms of the transaction, the fifth for Aspen in 18 months, were undisclosed.

EXPANSION

n Houston, Texas-based WhiteWater Express Inc., an operator of more than 40 express car

washes, has opened its first facility in Michigan with a new location at 5401 Beckley Road in Battle Creek, according to a statement. WhiteWater Express, which is backed by San Francisco-based private equity firm SkyKnight Capital, plans to develop four additional express car washes in Michigan by the end of 2021. n Midwest Fastener Corp. plans to create up to 90 jobs as part of a $10.8 million investment to expand its headquarters and distribution center in Portage and operations in Decatur. The manufacturer and distributor of nuts, bolts, anchors, deck and drywall screws and specialty fasteners received a $500,000 Michigan Business Development Program performance-based grant from the Michigan Economic Development Corp. to support the expansion. An acquisition last year created a need for additional office and distribution space. The new jobs will involve positions at the company’s headquarters as well as skilled and unskilled laborers at its warehouse and distribution center. n Adhesives, sealants and coatings manufacturer Seal Bond Inc. is planning to relocate its operations and headquarters from Spring Lake Township to a new 200,000-square-foot facility planned for vacant property at 1251 E. Mt. Garfield Road along US-31 in Norton Shores. The site is owned by Kentwood-based Grooters Land Development LLC.

HEALTH CARE

n Grand Rapids-based Spectrum Health has joined several health systems around the country that committed to increasing purchases from local minority- and women-owned businesses. The dozen U.S. health systems that signed on to Washington, D.C.-based Healthcare Anchor Network’s “Impact Purchasing Commitment” will increase spending by at least $1 billion over five years with minority- and women-owned businesses, and enterprises that are owned by employees, cooperatives and nonprofits. The health systems also agree to adopt sustainable procurement goals for goods and services that “minimize damage to health and the environment.” n Hope Network will close a long-term housing center in Coldwater for people with severe disabilities as a new fee schedule is set to take effect under recent automotive no-fault insurance reforms. The 2019 no-fault reform law imposes a 45-percent reduction in reimbursement payments from auto insurance carriers to facilities that care for people who were traumatically injured in crashes and require ongoing care. The change is set to take effect on July 1. The Grand Rapids-based Hope Network said that 10 of the 12 residents at the Coldwater care home are crash survivors. The pending reimbursement cut makes operating the center financially unsustainable, according to Hope Network officials.

BANKING

n United Bank of Michigan plans to expand to the lakeshore market with the opening of a branch office next year in Holland. The branch will go into the $28 million, five-story Towers on River mixeduse development on South River Avenue that’s now under construction. The office will become the Grand Rapids Township-based United Bank’s 13th office in West Michigan and first on the lakeshore. Plans for the location come after United Bank previously opened a loan office in Holland in October 2019 that built a customer base. The new Holland location will open in the summer of 2022 as United Bank’s regional headquarters. n Consumers Credit Union has started construction on a new office in Muskegon that will expand its presence along the lakeshore. The office on East Sherman Boulevard should open in early 2022. Holland-based GDK Construction Co. is the contractor and Kalamazoo-based Bosch Architecture Inc. designed the office. The Kalamazoobased Consumers Credit Union presently has two offices in the lakeshore market in Holland and a branch in South Haven. A Grand Haven office now under construction opens this summer. Visit www.mibiz.com

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