The Flint Water Crisis

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Chef Zack Sklar plans down-home chicken joint in Midtown, JANUARY 25-31, 2016 PAGE 3

SPECIAL REPORT The Flint water crisis: What’s next? Moving beyond blame game to look at solutions – and the city’s future health, economy Last week was the week the Flint water crisis became impossible to ignore. Gov. Rick Snyder’s State INSIDE of the State address Editorial: Not enough tough brought a storm of questions, Page 8. national media scrutiny After raising first red flags, that made Flint and health care community Michigan symbols of buckles in for the long haul, Page 23. government dysfunction. Range of technologies could Much of that scrutiny help ease water system consisted of assigning problems, Page 24. blame. In long term, money for fixes Less prominent was could boost Flint economy, attention to what’s next, Page 24. what is being done, and what could to be done to fix the problems with the city’s lead-contaminated water. In this week’s edition, we look at those questions in three broad themes: Work to hook Flint’s water supply to the Ⅲ What needs to be done to fix Flint’s water system Karegnondi system from Lake Huron Ⅲ The health needs of the city’s residents is ongoing. Ⅲ The impact on Flint’s beleaguered economy SEAN PROCTOR, THE ASSOCIATED PRESS Turn to Pages 23-25 for coverage. Packard Plant’s owner says project moving forward despite loss of $80M in financing

By Kirk Pinho provide $80 million in financing for ing for a bowl of soup along with the [email protected] the Packard project. project manager, Kari Smith, at the Fernando Palazuelo has had to But Palazuelo says he’s still fol- Seva vegetarian restaurant on Forest make a course correction on the fi- lowing his original business plan, Avenue in Midtown. He even said nancing of his Packard Plant rede- with no need to scale back on the another large Detroit industrial velopment project after a collapse 3.5 million-square-foot Packard, the property project is in the works (see in a key financing agreement. redevelopment of which is expected related story, Page 22). MICHAEL LEWIS II Palazuelo, who owns the sprawl- to take hundreds of millions of dol- “It’s business as usual,” Smith Packard plant developer Fernando Palazuelo says fears of a global financial slowdown ing plant at I-94 and East Grand lars over the next seven to 15 years. said in agreement, a salad on the prompted an investor to pull out of its funding deal. Boulevard and plans a hodgepodge Invariably, Palazuelo and his way. of uses there, says a large but undis- team are undeterred. Palazuelo said the private equity © Entire contents copyright 2016 closed Peruvian private equity firm “It’s not going to affect the firm’s concerns over the broader by Crain Communications Inc. All rights reserved. has backed out of an agreement to Packard,” Palazuelo said while wait- SEE PACKARD, PAGE 22 crainsdetroit.com Vol. 32 No 4 $2 a copy. $59 a year.

Merging of the Minds We make M&A manageable NEWSPAPER 20160125-NEWS--0002-NAT-CCI-CD_-- 1/22/2016 3:49 PM Page 1

2 CRAIN’S DETROIT BUSINESS // JANUARY 25, 2016

Valley, where competition for work- Commission said it’s investigating es- MICHIGAN ers can be intense. Netflix Inc., for in- timated billing practices by Jack- INSIDE stance, said last year that some of its son-based Consumers Energy Co. that THIS ISSUE employees will be able to take up to have prompted customer com- BANKRUPTCIES ...... 6 CALENDAR ...... 19 a year of paid leave following the plaints, The Associated Press re- CLASSIFIED ADS ...... 21 birth or adoption of a child. Overall, ported. The agency said “problems DEALS & DETAILS ...... 19 paid maternity and paternity leave have persisted for several years de- OPINION ...... 8 BRIEFS in the U.S. lags behind standards spite repeated meetings” with the OTHER VOICES ...... 8 elsewhere; many European coun- utility. A Consumers spokesman PEOPLE ...... 20 Traverse City tech scene ideas online and over the phone, tries mandate several months of said the utility is working with the RUMBLINGS ...... 26 finds a home of sorts but when you get together in the paid leave after a birth or adoption. commission. Consumers must file WEEK ON THE WEB ...... 26 same room … there’s some magic a report by Feb. 18; the commis- Traverse City geologist and entre- that happens,” Schindler said. MICH-CELLANEOUS sion plans recommendations by preneur Russell Schindler became More information about TC May 18. COMPANY INDEX: sick and tired of driving nearly four New Tech can be found at Ⅲ Wyoming, Mich.-based Gordon Ⅲ And now for some good news SEE PAGE 25 hours to Ann Arbor for tech mee- tcnewtech.org. Food Service has opened a new $58 about Flint: The Sloan Museum there tups, so he began a new group to million distribution center in North has received a major donation from made in 2000, amid concern that provide a strong central point for Dow Chemical expands paid Carolina, The Grand Rapids Press Lawrence Gustin, noted automotive Sun Belt states or even foreign pow- his area’s tech industry. leave for birth parents reported. The 300,000-square-foot and city historian, including many ers might use interstate commerce Schindler started TC New Tech last facility is in Kannapolis, 27 miles personal papers of General Motors law or trade pacts to justify piping summer, and the response so far Dow Chemical Co. is fattening the northeast of Charlotte. The distri- founder William Durant. Gustin, a water from the Great Lakes, espe- has been tremendous, he recently paid leave it gives employees after bution center, which will begin longtime Flint Journal writer and cially if pressure intensifies as cli- told Michigan Radio. the birth of a child as it becomes the shipping in April, is the company’s editor and later assistant public re- mate change worsens problems “I just happened upon a big latest major U.S. employer to re- first facility in the Southern state; its lations director of Buick, authored such as droughts and algae pollu- need, and people are lined up to think how it treats parents, The As- current force of 75 employees is ex- three books on Durant, Buick and tion. present and to come to the meet- sociated Press reported. pected to grow to 300 within five Flint. His donated collection in- Ⅲ Michigan’s annual average un- ing,” he said of the group’s monthly The Midland-based company years. cludes copies of Durant’s autobio- employment rate fell in 2015, the gatherings, which usually include said last week that mothers will re- Ⅲ The boom in Grand Rapids is graphical notes, audiotapes of state Department of Technology, Man- between 50 and 70 people from all ceive a minimum of 12 weeks of expected to continue, if Forbes.com Gustin’s interviews with auto-relat- agement & Budget said, marking the over the tech spectrum. paid leave, while non-birthing par- is to be believed. The West Michigan ed and Flint figures, and videos of sixth consecutive yearly decline, The Schindler said he’s been talking ents can get two weeks. That’s up locale was ranked No. 18 by Forbes auto pioneers and city events. Associated Press reported. The with investors about creating a tech from six to eight weeks and one among U.S. cities most likely to Ⅲ The U.S. and Canada have agency said the preliminary annual incubator that would help new and week, respectively. The leave can be prosper in the next decade. Forbes done well at preventing Great Lakes average unemployment rate was 5.4 startup companies get off the taken in the 12 months after a looked at the 53 largest metropoli- water from being overused or raid- percent last year, down from the ground in Traverse City. He said child’s birth. As before, adoptive tan statistical areas and ranked ed by outsiders but should take ad- 2014 rate of 7.3 percent. The 2015 having that physical location where parents get four weeks of paid time them on social, educational and ditional steps to strengthen their measure was slightly above the 5.3 people can come together is a huge off and reimbursement for some ex- economic factors including birth legal protection against future percent national annual rate. The step toward fostering a successful penses. date, migration and job growth. De- grabs, an advisory organization state said its annual unemployment and productive tech scene. More U.S. companies have start- troit ranked No. 31. Topping the list said via The Associated Press. The rate has fallen each year since hitting “People can share ideas, and they ed expanding the leave they give to was Austin, Texas. report by the International Joint Com- a recent annual high of 13.7 percent can share concepts (and) business new parents, especially in Silicon Ⅲ The Michigan Public Service mission updated an assessment in 2009. Ⅲ

Thank you for promoting the health of children in Michigan!

Children’s Hospital of Michigan Foundation would like to thank Barton Malow and Brinker Construction for sponsoring Big Shots, Little Stars afterglow reception the evening of the 2016 NAIAS Charity Preview.

Your support is helping children have more days to play, nights to dream, and time — to just be kids. 20160125-NEWS--0003-NAT-CCI-CD_-- 1/22/2016 5:45 PM Page 1

CRAIN’S DETROIT BUSINESS // JANUARY 25, 2016 3

JACOB LEWKOW Local Chef Zack Sklar on the Midtown site of a planned Gus’s World Famous Fried Chicken, a 60-year-old Memphis classic. A craving for comfort food Sklar targets Midtown for Memphis chicken chain By Sherri Welch ments, Sklar and the minority part- [email protected] ners in the venture, Joshua The owners of some of the Humphrey and Jim Bellinson, last trendiest restaurants in Birming- year opened three more restau- ham and Bloomfield Hills are going rants: Bernie’s Lunch & Supper in the from eclectic dishes to plastic foam River North area of Chicago in Au- plates with the opening of a 60- gust and Au Cochon and Arthur Av- year-old Memphis classic, Gus’s enue in Birmingham later in the World Famous Fried Chicken, in De- year. troit’s Midtown this summer. Peas and Carrots is also taking re- Led by local chef Zack Sklar, a fined comfort food to Grand Rapids member of the 2015 Crain’s 20 in with a second Social Kitchen set to their 20s class, Peas and Carrots open in the spring in the Downtown Hospitality is noted for some of the Market, near Detroit-based Slows region’s most popular restaurants Bar BQ’s west-side restaurant, said — Social Kitchen & Bar in Birming- Sklar, 30. ham and Beau’s Grillery and Mex in So what whetted their appetites Bloomfield Hills. for spicy fried chicken served on As part of $5 million in invest- SEE GUS, PAGE 21 365 Retail grows with fresh angle on the self-service biz

By Marti Benedetti ple shelves and refrigerators with a [email protected] self-checkout kiosk, or the compa- Joe Hessling thinks dusty vend- ny’s new Verii unit, which has a few ing machines tucked away in dark shelves and a small refrigerator that corners of corporate offices are allows customers to choose mer- doomed. chandise and cash out using a mo- The founder and CEO of 365 Re- bile phone app. Users draw over tail Markets and Verii, Troy-based mi- time from the cash they load the cromarket technology companies, app with. cites the speedy growth of the mini- Hessling, who calls himself a markets and self-checkout kiosks product manager and entrepre- his company manufactures and neur, has had seven previous com- sells, which let customers touch the panies in the Detroit area. All were MUST READS OF THE WEEK products and can feature more related to the food industry — from fresh food. a wholesale restaurant supply com- “We are quickly turning into a pany to prepared food and catering The state of Michigan GM’s RenCen self-service society,” said Hessling. operations. None are still in busi- venture capital 365 Retail Markets has a 40 per- ness. With 365, he is experiencing facelift cent share of the U.S. micromarket explosive growth. Millendo Therapeutics’ big deal New facade, interior industry. It provides corporate of- The growth of 365 Retail Markets helped set the pace for a record- improvements highlight fices, hotels and large retailers with has been rampant since it was breaking year. Finance section, big renovation. two kinds of customized micromar- founded in 2009. The company had Page 11. Rumblings, Page 26. kets: a sort of ministore with multi- SEE 365, PAGE 23 20160125-NEWS--0004-NAT-CCI-CD_-- 1/22/2016 3:50 PM Page 1

4 CRAIN’S DETROIT BUSINESS // JANUARY 25, 2016

Career Opportunity Verlander’s veterans charity Business Coach Successful Marketing Strategist looking to form a plans pitches to big donors partnership with a small business coach/consultant I’ve developed a process where I can find more than $10,000 By Bill Shea aging celebrity experiences that “It will resonate [email protected] for ANY small business owner… and do so in less than 45 minutes. team members want to engage.” with folks in a I've been offering this service to small business owners and it's Justin Verlander plans to lever- In the meantime, the founda- age his celebrity and that of other tion is organizing itself, preparing resulting in more business than I can possibly handle. position to write star athletes elsewhere to raise its marketing effort, and getting larger checks.” If you’re an experienced business coach, money for veterans of the wars in ready to approach local businesses or you’re interested in becoming one and Iraq and Afghanistan. and individuals that may be inter- Sandy Hudson, executive director and you have a solid business background, I The six-time All-Star Detroit ested in buying into the effort. CEO, Wins forWarriors Foundation would like to speak with you. Tigers pitcher, known beyond base- The model is to assemble a ball for dating team of high-net-worth donors by troit Business advertising executive Willing to train the “Right Candidate” if supermodel leveraging the desire to access Ver- who joined the foundation this you have what it takes. Kate Upton, is lander’s celebrity and the desire to month as development director. reorganizing his aid veterans. Verlander and his team are For more information nonprofit chari- Donation levels are being mar- aware of the media scrutiny ath- ty, Wins for War- keted under baseball position/job lete philanthropy occasionally email [email protected] riors, to target names. The least expensive dona- comes under, and want to avoid or call 248-231-5205 wealthy donors tion is $25,000 to be an “outfield- negative publicity. — and he’s er,” while the top level, the For example, an investigation of Justin Verlander: going to offer “CEO/general manager” level is 115 athlete charities published in Charity would offer his fundraising $500,000. March 2013 by ESPN’s “Outside the access to All-Star. model to popu- There are five levels of donation Lines” program showed that 74 lar pro athletes and about 25 spots. The larger the percent of the nonprofits fell short in other sports and markets. donation, the more exclusive the of one or more acceptable non- To attract big donors, Wins for access to Verlander. The $500,000 profit operating standards, the Intellectual Property | Litigation | Technology Warriors will offer varying levels of level is for a single individual or network said. access to Verlander, such as dinner company. Verlander’s nonprofit granted 74 or golf outings, in return for annu- Ken Tyrrell, senior vice presi- percent, or $267,000, of its first- al donations that begin at $25,000 dent of wealth management with year revenue, its director said. The and top out at $500,000. UBS Financial Services in suburban revenue comes from his $1 million Transactional “It will resonate with folks in a Washington, D.C., handles all of donation, and some small-scale position to write larger checks,” Verlander’s non-baseball activities fundraising. experience on par said Sandy Hudson, executive di- and investments. Wins for Warriors is awaiting In- with the major Silicon rector and CEO of the Wins for War- He stressed that the philanthro- ternal Revenue Service approval to riors Foundation. py model under construction is a transition from the donor-advised Valley law firms. Previously, the charity was way to leverage fame in a way to fund to a nonprofit foundation. – BRAD KANCIGOR,KANCIGOR, ASSOCIATEASSOCIATE GC funded by $1 million from Verlan- create more dollars for veterans “Wins for Warriors has filed for Synopsys,Synopsys, IncInc der, and it sought donations via organizations by creating some- 501(c)(3), status and we are await- crowdfunding and other grass- thing that allows collaboration ing the determination letter, which roots-level fundraising, which net- and idea-sharing by participants. we are told by our legal counsel ted about $100,000, Hudson said. Specifically, those who donate should be in hand by end of the YOUNG BASILE. Under the new model, Wins for for a spot on Verlander’s “team” get first quarter,” Hudson said. Strategic advisors to the world’s Warriors could raise as much as not only access to him, but the op- Because the foundation still is most innovative companies. $2.7 million annually, Hudson portunity to talk to other investors being organized and awaiting ap- said. interested in doing things for vet- provals, and because the donor- Verlander, 32, launched Wins for erans, such as one-off events or advised fund wasn’t required to ANN ARBOR TROY SILICON VALLEY CHICAGO Warriors as a donor-advised fund, projects. file financial disclosure paper- www.youngbasile.com rather than a public charity or “The goal isn’t to sell access to work, no IRS forms are yet avail- foundation, in 2013. It’s now being Justin for a price,” Tyrrell said. able to independently scrutinize reorganized into a public charity “What we’re trying to do is say the organization. (which is different than a founda- there are a lot of successful people Verlander also continues to tion legally, but can call itself a who care about the veteran com- do charity work for veterans out- foundation), and the remaining munity, who understand there is side of the money for the cash will be transferred to the new value in partnering with this organizations. endeavor. brand. This gives Justin the oppor- For example, he and his team ONE FIRM Foundations can be used for so- tunity to share time and experi- created a benefit race last spring, BETTER TOGETHER liciting donations, while donor- ences with people he’s going to funded a Christmas dinner for advised funds are a tool for donors want to meet and do other things 1,000 ex-service members and to have their giving managed by with.” their families, and will send three third-party professionals. Hudson said about 60 percent veteran families to Disney World this GHD CPAs & Advisors is Once established locally, Verlan- of the money would go to veterans spring. joining Cohen & Company der’s foundation team will pitch organizations in the first year, and “We think those kind of initia- the model to celebrity athletes in the amount would increase in sub- tives are equally important,” Hud- Achieving success requires a team other markets and sports who sequent years as the organization son said. that stands out. By joining Cohen want to aid veterans organiza- matures. Verlander had made Iraq and & Company, we are able to provide tions. Wins for Warriors would Philanthropy industry stan- Afghanistan military veterans our clients with greater depth and handle their fundraising efforts on dards are that 65 to 75 cents of mental health his specific cause of experience — without sacriﬁcing their behalf, and tailor them to every dollar raised should go to the choice during his career. their preferred veterans causes, cause, and the rest to administra- The $1 million also funded a Rand personal service. Hudson said. tive or other costs. Corp. study to identify gaps and bar- Wins for Warriors is starting to “We’re looking at the right per- riers in services for veterans. GH•D identify high-profile athletes who centage,” Hudson said. “We’re very Wins for Warriors recently gave CPAS & ADVISORS aid such causes, and by June will sensitive to expenses for the foun- the study to the Michigan Veterans begin talks with them, Hudson dation. We’re in the formative Affairs Agency and will have talks in said. stage, and expenses might be a bit coming months to see where new “It has to be an athlete that has high in first year.” fundraising can be best applied for celebrity status and can draw The only salaries for the organi- future donation decisions. Ⅲ ghdcpa.com | cohencpa.com | 586.772.8100 high-net-worth individuals,” he zation are for Hudson and Chris- Bill Shea: (313) 446-1626 said. “The model is built in lever- tine Galasso, a former Crain’s De- Twitter: @Bill_Shea19 DBpageAD_DBpageAD.qxd 12/29/2015 11:05 AM Page 1 20160125-NEWS--0006-NAT-CCI-CD_-- 1/22/2016 4:45 PM Page 1

6 CRAIN’S DETROIT BUSINESS // JANUARY 25, 2016 Microsoft’s Fikany to join Quicken Loans as VP By Kirk Pinho [email protected] John Fikany will join Quicken Loans Inc. next month after about a dozen years as a sales chief for the local office of Microsoft Corp. Fikany, 53, will become Quicken’s vice president of strategy development. He was previously vice president of the Enterprise Sales and Part- ner Group for the Redmond, Wash.-based YOUR HOME software maker. Jay Farner, president and AWAY FROM HOME chief marketing officer of Quicken Loans, said he and Fikany had casual conversa- Corporate Eagle’s southeast Michigan-based jets are equipped with John Fikany: To tions the last sev- join Quicken Loans eral months Gogo WiFi, Iridium World Wide Satellite Phone systems with text as VP of strategy. about building and talk, and the latest interiors and entertainment systems so company culture and business, and eventually those that you’ll always feel at home, EVEN 47,000 FEET IN THE AIR. conversations became more serious corporateeagle.com 248-461-9001 as they discussed “how he might be helpful in a lot of the ideas and focuses that we have at Quicken and our Michigan’s largest and longest serving provider of fractional business aviation family of companies.” Fikany will focus on business development strategies for Quicken and other affiliated companies, Farner said. Fikany, a Central Michigan University graduate, said he hadn’t planned on Schechter Investment Advisors harvests losses leaving Microsoft but saw a profes- Markets sional opportunity he couldn’t pass every 31 days. Come learn how our focus on tax up and that he’ll be working on “some have dropped. efficiency, world class managers and technology very cool things” soon after starting. If your advisor waits to harvest can help maximize your portfolio. “Everything they (the Quicken Loans leadership team) stand for losses will they still be there? aligns very well with what I want to be a part of, how they take care of their people and the company culture over there,” he said. DOW JONES INDUSTRIAL AVERAGE “They have a sense of humility but STRIAL A also a confidence and grit that’s almost startup-like,” he said.

JANUARY 2015 For Microsoft, Fikany was responsible for leading sales in 18 states and generated $3.6 billion in software and

JANUARY 2016 service sales revenue, according to his NOVEMBER 2015 LinkedIn profile. He oversaw a team of about 1,000 employees. Before that,

AUGUST 25TH he was vice president of North Ameri- can sales strategy for Oracle. He is also active with the Detroit Economic Club, the Detroit Regional Chamber, the Boys & Girls Club of South- eastern Michigan and Focus: Hope. Ⅲ Kirk Pinho: (313) 446-0412 Twitter: @kirkpinhoCDB As of January 19, 2016: Dow Jones: -7.96%, Nasdaq: -10.59%, S&P 500: -8.09% BANKRUPTCIES The following business filed for 248.731.9500 | WWW.SCHECHTERWEALTH.COM protection in U.S. Bankruptcy Court in Detroit Jan. 15-21. Under Chapter 11, a INVESTMENT ADVISORY AND ADVANCED LIFE INSURANCE DESIGN company files for reorganization. Ⅲ D Dagenais Properties LLC, 5676 Securities offered through NFP Advisor Services, LLC (NFPAS), Member FINRA / SIPC. Investment Advisory Services may be offered through NFPAS or Schechter Investment Advisors, LLC (SIA). NFPAS Springbrook Drive, Troy, voluntary is not affiliated with Schechter Wealth or Schechter Investment Advisors. NFPAS does not provide legal or tax advice, and is not a Certified Public Accounting firm. SIA is an SEC registered investment adviser; please consult the Firm’s Form ADV disclosure documents, available on the SEC’s Investment Adviser Public Disclosure website. Chapter 11. Assets and liabilities not available. Michael Lewis II DBpageAD_DBpageAD.qxd 1/21/2016 10:58 AM Page 1 20160125-NEWS--0008-NAT-CCI-CD_-- 1/22/2016 6:14 PM Page 1

8 CRAIN’S DETROIT BUSINESS // JANUARY 25, 2016 CRAIN’S DETROIT BUSINESS OPINION Flint crisis: Need to ask tough questions

he Flint water debacle is a lesson in healthy skepti- cism. None of the principal players who signed off on T the city’s water treatment plan or handled questions that arose over the past 18 months about the quality of Flint’s water would have passed Journalism 101. They didn’t ask tough questions. Neither, in fact, did news media — initially. The blame is especially onerous within the state Depart- ment of Environmental Quality, which signed off on Flint’s river water treatment plan in There will be the first place then stubbornly plenty of time held to its contention that the testing numbers didn’t suggest to point fingers a problem. And that’s despite a Detroit must keep an eye on building design and assign federal Environmental Protec- NESCO recently designated swaths of land thinking about glob- tion Agency study to the con- U Detroit as the first American al cities and what makes those rise blame. The trary. The bureaucrats were “City of Design.” Home to buildings above others? Will the current de- built by the 20th century’s most in- velopments in planning and design issue now is to woefully too bureaucratic. fluential architects — Albert Kahn, spur sustainable attraction? Re- fix the There will be plenty of time to Mies van der Rohe, Minoru Ya- claimed wood and industrial reuse point fingers and assign blame. masaki, Frank Lloyd Wright, and design can take things only so far, problem. The issue now is to fix the prob- others — it is one of the most im- and it’s the kind of design trend that lem. Our package of stories sug- portant design cities in America. OTHER VOICES the latest corporate rollout is imple- The chances it once took are now John Patrick menting nationwide. gests ways on how that might be done, from innovations in the foundation on which it will To further America’s city of de- pipe linings to continued vigilance on lead levels in children grow. Or will it? John Patrick is founder of “Above the sign in the 21st century, Detroit and other vulnerable groups, and follow-up care and moni- This is a question that occupies Fold,” a talent agency with a focus on needs contemporary, emerging ar- toring for those who test high. my mind as I witness the banal, the built environment. chitects and designers to create des- Meanwhile, national media in particular are contributing stark redevelopment of a city that tinations for gays, singles, young to a blame-game focus while ignoring significant issues. deserves so much more. comeback is said and done, though, creatives, Bohemians, artists and Architecture and design’s func- will the developers, city agencies tech geeks, fueling the diversity that Fact: Not every building in the city of Flint has poisonous tional role in society is clear: It is to and small-business owners have is vital for communities to thrive so- water flowing from the tap. Some neighborhoods and insti- shelter and protect us. Its role in the made the right design choices to in- cially, financially, politically and cul- tutions — such as Kettering University — have undergone city serves a different purpose. It is spire even more waves of growth in turally. Berlin is a prime example for testing of water at the tap and found no issue with lead. to evoke feelings of surprise, awe five, 10, 20 years and beyond? Detroit. Fact: Adding phosphate to the water and installing new and inspiration. For centuries, cities Learning from history, author Taking the opportunity to com- have thrived on having diverse Joel Kotkins writes in The City: A mission innovators for a wide range liners and/or new pipes in portions of the city’s water system buildings in both aesthetics and Global History, “in the world of an- of building projects — from coffee will rectify the water quality problems. (See our story on Page function. As hubs of culture and tiquity, a metropolis designed for shops and retail outlets to large- 24 for a briefing on the options.) commerce, and increasingly nature, business was no match ultimately scale developments — has the po- Fact: At this point, the extent of lead affecting children is the centers of our universe require a for a city built for conquest. An ide- tential to propel Detroit forward in unknown. Testing will reveal the extent of the health issues — dynamic mix to drive innovation, ology based on profit and narrow unexpected ways. and smart, caring people are on the case. advancement and, ultimately, eco- self-interest could not stand up to More important, the subsequent nomic growth. the imperial vision that would dom- diversity and urban life will ensure Fact: No matter how this is resolved, the Flint water mess Detroit is at an interesting tip- inate urban history until the dawn a sustained wave of interest from will be a blot on the legacy of Gov. Rick Snyder, but that lega- ping point; its comeback is con- of the modern era.” insiders and outsiders and give cy also includes taking on Detroit’s insolvency and giving De- stantly in the news, with everyone In contemporary Detroit, are them more reasons to visit again, troit a chance at becoming a sustainable and even thriving from entrepreneurs to artists mov- those in charge of redeveloping the open a business or tell their friends city again. ing here to be a part of it. When the buildings, streetscapes and large about it.

TALK ON THE WEB Re: Obama pledges $80 million zens to become ill from this water. not want to work in bland suburban I have been saying metro Detroit to help Michigan water systems Willie White Reader responses to stories and office parks. Unfortunately, however, needs mass transit and a walkable blogs that appeared on Crain’s that is where the vast majority of urban core for over a decade now. I Now that money is committed to Patterson: Wrong to say ‘Flint’s website. Comments may be edited metro Detroit jobs are located. This am heartened to see so many peo- for length and clarity. Submit letters fixing Flint’s water crisis, when will been poisoned’ trend will not reverse until business ple support urban living today. we see shovels in the ground chang- to the editor to [email protected]. leaders understand that the best BrewPubNate ing those corroded water pipes and L Brooks Patterson’s calling the way to attract young talent is to re- making the other much-needed Flint disaster “a negative story,” is Re: Young talent continues locate to vibrant urban settings, like Re: Kuzzo’s at 1 year: changes? Or will they still be talking like calling the Civil War “the pres- to flee Michigan what is being built downtown De- about the problem two years from ent unpleasantness,” as some peo- troit. We need to double down on You’ll all see big things happening now? Each day that passes is anoth- ple did at one time. Part of this problem can be Detroit. in Detroit soon. er opportunity for more of the citi- 303425 linked to the fact that millennials do Tom Kelly Scott Mitchell 20160125-NEWS--0009-NAT-CCI-CD_-- 1/22/2016 12:03 PM Page 1

CRAIN’S DETROIT BUSINESS // JANUARY 25, 2016 9 Flint’s politicians deserve blame for water problems

Here’s my admittedly biased take reaucracy in Lansing of the poor, City Council and Mayor Dayne ity for making sure all Michigan res- on the Flint water crisis and who’s black, Democratic citizenry of Walling regarding replacing Detroit idents have safe water. mostly responsible. Flint. And that it was Emergency water. But what seems to have gotten It’s not the state. It’s not Rick Sny- Manager Ed Kurtz’s decision, They let the council and mayor overlooked in the recent frenzy is der, who has become everybody’s alone, to replace Detroit water with do as they wished. Had they over- that Flint has a water department, whipping boy. And it’s not Flint’s Flint River water. ruled them, the same angry voice with employees who are supposed emergency managers. Hogwash. accusing them now of having a to make sure water is fit to drink, Yes, the state should have re- TOM HENDERSON Kurtz didn’t make every decision heavy hand in Flint affairs would and who are supposed to respond sponded sooner about lead in the Tom Henderson covers venture capital, at every level of governance or man- have been in an uproar then, too, to complaints. Who should have drinking water and residents’ com- banking, private equity and tech startups agement in the city of Flint. The move accusing them of having a heavy known to treat the river water’s cor- plaints, but if you really want to point for Crain’s Detroit Business. to replace Detroit water had been un- hand in not letting the elected rep- rosiveness. the finger, point it at politicians in derway for years before he got the resentatives of the city make impor- And it’s not Snyder’s fault they Flint and Genesee County. radio, with an angry guest attack- job. tant decisions. failed miserably at their jobs. Snyder’s involvement and the ing the state and Snyder, that this is What Kurtz — and his replace- Certainly, the state, including the For an expanded version of this state’s involvement came very, very all a result of top-down management, Darnell Earley — did was sign Department of Environmental column, see Tom Henderson’s blog at late in a push that began decades ment by a white, Republican bu- off on various requests by the Flint Quality, bears ultimate responsibil- CrainsDetroit.com. earlier to stop paying the city of De- troit for water. If Detroit could have a water system, well, why shouldn’t Flint and Genesee and Lapeer? Why should they have to send money to Detroit — Detroit, of all places — if they didn’t have to? It was 1963 when Flint first took steps to build a water pipeline from Lake Huron, but a profiteering scan- dal hit the headlines and killed the project. In 2006, the Genesee County Drain Commission ordered a fea- sibility study of a pipeline from Flint to Lake Huron, which con- cluded it would be cheaper than continuing to buy water from De- troit. Another study recommended using Flint River water until the pipeline, now under construction, was finished. In 2006, Rick Snyder was still a venture capitalist, mulling over whether to raise a second fund for his Ann Arbor-based Ardesta LLC. By way of full disclosure, I must admit my fondness and respect for Snyder. From 2000 to 2002, I was an employee of Ardesta, writing profiles of tech companies for one of his portfolio companies, Small Times Media, which had a website, smalltimes.com, and a print magazine, Small Times Magazine. Snyder was always the smartest You do business where we do business. guy in the room, and usually the nicest, too. As smart as he was, he delegated authority as a matter of We should meet. course. Maybe he expected folks to be almost as smart and as competent as he was. But when he hired people, he expected them to do their jobs, At Huntington we believe that a stronger business community makes the whole community stronger. and there wasn’t much interference That’s why we work so hard to truly understand your business goals, and to deliver the insights that or second-guessing. Snyder had hired Jon Pepper, the can get you there. We’re proud of the place we call home, and together we can make it even better. former Detroit News columnist, to run Small Times Media, and Pepper aggressively marketed the brand. Too aggressively, in hindsight. He organized trade shows that flopped. He took the staff on expensive brand- building trips. My opinion? Snyder would have been well-served to slow down Pep- per, and it ultimately cost him a fair amount of money, but he was willing to let Jon have his lead. What seems a strength of a top leader — allowing managers to manage freely — would later seem a weakness of leadership as those below Snyder on the flow chart clearly didn’t do their jobs when it Member FDIC. A ® and Huntington® are federally registered service marks of Huntington Bancshares Incorporated. came to Flint. Huntington® Welcome.TM is a service mark of Huntington Bancshares Incorporated. © 2015 Huntington Bancshares Incorporated. On my way to a lunchtime walk at Belle Isle, I heard a rant on the Project3 12/11/2015 5:20 PM Page 1

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CRAIN’S DETROIT BUSINESS // JANUARY 25, 2016 11 SPECIAL REPORT:

TOM HENDERSON Senior reporter [email protected] Twitter: @TomHenderson2 Broe Group manager FINANCE likes Ann Arbor flow he Broe Group of Denver has more than 1,000 employees in T North America in real estate management, logistics and transportation. It also funds Three Leaf Ven- tures, a venture capital firm focused on tech-based health care companies. In June, it opened an office in Ann Arbor. Crain’s reporter Tom Hen- derson talked to Sean Kearney, who runs the local of- Kearney fice.

What’s your background? I got my undergrad in finance from Miami of Ohio and traded on the hedge desk in Cleveland for four years for Aleris International, hedging all their commodity and currency positions. Then I got my MBA in finance from Ohio State and joined The Broe Group in 2013.

How is it going here? We’re in the same building on Detroit Street as Arboretum Ventures, the Mer- cury Fund, Arsenal Ventures and Huron River Ventures. For deal flow, this is so convenient. I’ve had great deal flow. Some of it is just the new guy in town SETTING catching up to what’s going around. But the community is so welcoming. It didn’t take long to be part of other funds’ pipelines. They very quickly started sending deals my way. Most of my investing has been in Silicon THE PACE Valley, and it’s a very different environment there. 2015 VC deals set record; 2016 takes the baton

Why did you choose Ann Arbor? By Tom Henderson lendo Therapeutics Inc. announced it I looked at communities outside [email protected] had raised a venture capital round Denver and outside Silicon Valley. I’d t was a record-breaking year for of $62 million, the largest VC round been in touch with Jim Adox of Ven- venture capital in Michigan in for a drug development company in ture Investors (who runs the Wisconsin I 2015, with 2016 starting up Michigan history. It is testing a drug firm’s Ann Arbor office), and this where last year left off. to fight adrenal cancer. seemed to be a great place to set up Industry veterans point to robust Interestingly, the previous record shop. We’ve got a great pipeline to the deal flow, record-breaking funding for the largest VC round in the state University of Michigan. rounds and notable product licens- was held by another cancer drug ing deals for locally owned innova- company, the $59.5 million raised What are your investment parameters? tion as positive signs of the times. by Plymouth Township-based We’ll go up to $250,000 for a seed “As we look back, 2015 was the ProNAi Therapeutics Inc. in April round, and up to $5 million for Series best year ever for venture capital in 2014. A and beyond. Most commonly we’ll Michigan. It’s what we’ve all been ProNAi, whose drug has shown put in $1 million or $2 million. We’re waiting for,” said Chris Rizik, CEO remarkable results in human trials geographically agnostic. We’ve invest- and fund manager at Ann Arbor- at fighting non-Hodgkin’s lym- ed in California, Colorado, Arizona, based Renaissance Venture Capital phoma, made a very nice return for New York and now Michigan. Fund, which is affiliated with Busi- its VC investors this past July when it ness Leaders for Michigan. You announced this month you made On Jan. 5, Ann Arbor-based Mil- SEE DEALS, PAGE 12 SOURCE: THOMSON REUTERS your first local investment, joining a $1 million seed round for Genomenon Inc. Genomenon’s technology stands out Inside: as a superior solution for genetic data interpretation. We saw (founder and Angel Fund flies high Booking progress Incubating ideas Not so fast CEO) Mark Kiel as a rare talent. These Ann Arbor-based fund Content seller turns a New MSU program VC patience pays off for are precisely the opportunities we are has busy final quarter, page in funding, taking applications, Web-based company, excited to see coming out of UM, Ann Arbor and Southeast Michigan. Page 13 Page 14 Page 14 Page 15 20160125-NEWS--0012-NAT-CCI-CD_-- 1/22/2016 10:46 AM Page 1

12 CRAIN’S DETROIT BUSINESS // JANUARY 25, 2016 SPECIAL REPORT: FINANCE

ROBERT CHASE Millendo Therapeutics co-founder Gary Hammer and CEO Julia Owens with co-founder Raili Kerppola (inset, top right), who lived with adrenal cancer before her death in 2013. Millendo’s record-breaking deal led the way for VC activity in Southeast Michigan last year.

company. them, too. DEALS Also in September, Ann Arbor- “We’ve shown we have the kind FROM PAGE 11 based Arboretum Ventures LLC fin- of CEOs who can run growing com- ished raising the largest venture panies,” he said. “For a long time, raised $158.4 million in its initial capital fund in state history, closing we had an executive problem. Not public offering. Arboretum Ventures IV LP at any more. And it’s not just the CEOs The investment in Millendo $220 million, above the target of we’ve developed, but the executives shows just how far the state has $215 million the firm had listed in they’re now training. … It’s a spider come in shedding its reputation as a filings with the U.S. Securities and Ex- effect.” fly-over state. The deal included exchange Commission. Bellwether deals clusive licensing agreement with The previous largest fund in state London-based pharmaceutical history was the $180 million Michi- It isn’t just the record-breakers giant AstraZeneca plc to continue gan Growth Capital Partners II, that made for a strong 2015. There human trials and commercializa- raised in 2013 by Farmington Hills- were a handful of other large invest- tion of a drug it had developed to based Beringea LLC. ment rounds or licensing deals for fight polycystic ovary syndrome, the Charlie Rothstein, Beringea’s sen- state companies, too. most common endocrine disease in ior managing director, credited suc- In March, James Dyson, the women. cessful exits in recent years for British inventor who built the vacu- Then there was the broad nation- showing Michigan was a place in- um that bears his name, invested al base to Millendo’s funding. The fi- vestors could make money — in- $15 million in Sakti3 Inc., part of a nancing was led by Chevy Chase, cluding the sale of Sakti3; of Ann $20 million round that was joined Md.-based New Enterprise Associates Arbor-based Foresee Results Inc. in by a heavyweight roster of previous and joined by investors in San Fran- 2013 for more than $200 million; of investors, including Detroit-based cisco, Chicago, Seattle, Boston and Ann Arbor-based HandyLab Inc. in General Motors Ventures, Beringea Bala Cynwyd, Pa. 2009 for $275 million; of Ann Arbor- and the iconic Silicon Valley VC firm Its sole Michigan investor was based HealthMedia Inc. in 2008 for Khosla Ventures. Renaissance Venture Capital Fund, $200 million; and of Ann Arbor- In October, Dyson’s company, a fund-of-funds that normally only based Accuri Cytometers Inc. for UK-based Dyson Ltd., bought Sakti3, invests in other VC firms but made $205 million in 2011. a maker of lithium-ion batteries, for an exception this time to invest in “We’re kicking out returns that $90 million. an individual company. draw national attention,” said Roth- In April, Ann Arbor-based Duo “That capital is coming here from stein, who was one of just a handful Security Inc., a provider of cloud- all around the country shows that of venture capitalists in the state based network security, announced this is a good place to invest,” said when he began investing in 1988. it had raised a funding round of Rizik. Rizik said that as those compa- $30 million from a handful of Sili- The record-breaking deal for Mil- nies were sold, their CEOs and other con Valley investors, including lendo, a spinoff from the University C-suite executives for the most part Google Ventures. of Michigan in 2012 when it was remained in the state, joining other In April, it was announced that named Atterocor Inc., followed on a small companies and growing Xenith LLC, a maker of concussion- string of record-breaking deals for fighting football helmets, was mov- Michigan companies: “We’ve shown we ing its headquarters from Lowell, In September, Ann Arbor- Mass., to Detroit, with front office based Llamasoft Inc., a maker of sup- have the kind of staff taking space in the former Kres- ply-chain software, announced it CEOs who can ge building downtown and produc- had received an investment of tion and warehouse operations $50 million from affiliates of New run growing moving into a building on West Fort York-based Goldman, Sachs & Co. It companies. For Street in Detroit. The announce- was the largest single investment ments followed what was reported ever in a Michigan IT company. a long time, we to be an investment of more than In September, Plymouth had an executive $20 million by Dan Gilbert. Township-based Delphinus Medical In June, Ann Arbor-based Lyc- Technologies Inc., which uses ultra- problem. Not era Corp., a UM spinoff that is devel- sound to make 3-D images for im- any more.” oping drugs to fight immune-relat- proved detection of breast cancer, ed diseases, announced that raised a VC round of $39.5 million, a Chris Rizik, state record for a medical device Renaissance Venture Capital Fund CONTINUED ON NEXT PAGE 20160125-NEWS--0013-NAT-CCI-CD_-- 1/22/2016 10:46 AM Page 1

CRAIN’S DETROIT BUSINESS // JANUARY 25, 2016 13 Angel Fund ends SPECIAL REPORT: FINANCE FROM PAGE 12 for Venture Capital and Private Equity at the Ross School of Business at 2015 flying high Celgene Corp., a company based in UM. It was a busy final quarter in 2015 for Summit, N.J., was paying it Said Maureen Miller Brosnan, the Ann Arbor-based Michigan $82.5 million for an exclusive option executive director of the Ann Arbor- Angel Fund, which was launched in to license a compound in phase- based Michigan Venture Capital Asso- 2011 by Ann Arbor Spark and the one testing against inflammatory ciation: “We are on an upward tra- Michigan Economic bowel disease. jectory, one of sustained growth. It’s Development Corp. Another bubble? not a spike.” Michigan’s role The for-profit organization has two While local venture capitalists funds. The fund kicked off in 2011, and the string of record funding In 1979, Brophy founded the an- Michigan Angel Fund I, eventually rounds say 2015 was the best VC nual Michigan Growth Capital Sym- raised $2.1 million from 72 accredited year ever in state history, by one posium, which aimed to bring in- investors. In 2014, the Michigan Angel metric it was a runner-up year. vestors to Michigan to look at Fund II raised $2.05 million from 62 According to the MoneyTree Re- possible deals with early-stage com- accredited investors, including port issued Jan. 15, a report jointly CARTER SHERLINE panies. The symposium was seen $500,000 from the MEDC. issued by PricewaterhouseCoopers Arboretum Ventures Managing Directors Paul McCreadie (from left), Jan Garfinkle and then by many of his colleagues as According to Skip Simms, a senior vice LLP and the Washington, D.C.-based Tim Petersen can celebrate the record raising of the Ann Arbor venture capital firm's tilting at windmills. president at Spark and managing National Venture Capital Association, fourth fund. Why would anyone want to fly in member of the MAF, the funds based on data provided by Thomson from Boston or Silicon Valley to in- invested a total of $2.91 million last Reuters, 2015 was just the second- group enthusiasm whose bubble some perspective is called for. vest here? year in 14 deals, including $1.6 million best year in Michigan for the total exploded that April. Last year, California’s deal flow “We’re seeing the realization that in six deals in the fourth quarter alone. amount of venture capital invested. Venture capitalists gamely con- was more than 100 times greater there is real value being created The local companies that received There was $328.4 million invest- tinued to live up to their funding than Michigan’s, with a total of here, by universities in particular,” investments range from consumer ed in 54 deals in the state, up from agreements for the next few quar- $33.7 billion invested in 1,773 deals. Brophy said. “We’ve got a good service-focused software and apps to the $223.9 million invested in 51 ters before retrenching. New York was runner-up, with $6.2 combination now of good science makers of drones and fuel injectors. deals last year, and up from the National figures also reflect that billion invested in 462 deals. and good entrepreneurs. Look at In the quarter, the MAF invested: $111 million invested in 74 deals in mania for all things Web-related. The record for the VC industry Llamasoft. I’ve known the founder, 2013. Last year, there was a total of was set in 2000, a whopping Don Hicks, as man and boy for 20 The all-time record since the $58.8 billion in venture capital in- $105 billion, which fell off the next years. Suddenly, he’s an overnight $240,000 ... NVCA began keeping records in vesting nationwide, the second- two years to $40.9 billion and $22.2 success. to lead an investment of $750,000 in 1995 was the $355.4 million invest- highest total ever, and up from billion, respectively. “Thirty years ago, we were ask- Detroit-based BoostUp, a social- ed in 55 deals in 2000. $50.8 million last year, $30.3 billion But what’s different this time is ing: How can we find another way media platform that helps people But that year was an anomaly, say in 2013 and $27.7 billion in 2012. that values are more correctly based to make a living to dampen the raise down payments for such things local VCs, investment volumes driv- Michigan ranked No. 18 nation- on business viability and less on cyclical effects of the auto industry. as cars and home purchases and to en by the frothiness — some would ally in 2015 for VC investing, up that dangerous unbridled investor Now we’ve built a really good entre- help pay for other large expenses like say a full frenzy — that preceded the from 20th in 2014. enthusiasm. preneurial community here.” Ⅲ weddings. In 2013, the company dot.com bust. Valuations proved While things are going very well, “The values now are real,” said Tom Henderson: (313) 446-0337 raised a round of $1 million, led by not to be based on reality but on a especially given historical context, David Brophy, director of the Center Twitter: @TomHenderson2 Detroit Venture Partners. $50,000 ... in a $500,000 round for Romulus- based Eco-Fueling LLC, which makes retrofitted fuel injectors to improve fuel efficiency in large High-impact services trucks. $300,000 ... for high-growth companies to lead a $940,000 round in Ann Arbor-based Genomenon Inc.,a genomics startup incubated at the University of Michigan. With nearly 5,000 combinations of services available, $317,000 ... we have the experience today’s growing businesses need to achieve their growth goals … and so much to lead a $1.5 million round in Troy- based Levanto Financial Inc., more. Contact me today to learn more about: which bills itself as a cloud-based • Outsourced accounting CFO for households with incomes of $150,000 a year. It was one of 10 • Business consulting finalists at the 2014 Accelerate • Business valuation Michigan Innovation event. • Tax planning and consulting $345,000 ... • Strategic planning We’ve been helping Michigan businesses for 75 years in a $3 million investment led by Wis.-based Venture Investors LLC and look forward to helping yours! in Ann Arbor-based SkySpec Inc., which provides drones for the inspection of wind turbines, bridges and other infrastructure projects. In CHRIS SING, CPA, CGMA, MBA 2014, it won the grand prize of Principal $500,000 at Accelerate Michigan. [email protected] | 734.302.4130 $290,000 ... In a $750,000 round for Detroit- based FoodJunky.com, which claims to improve the way businesses and groups order food online. The round rehmann.com was led by the Midland-based Blue rehmann.com | 866.799.9580 Water Angels. 20160125-NEWS--0014-NAT-CCI-CD_-- 1/22/2016 10:47 AM Page 1

14 CRAIN’S DETROIT BUSINESS // JANUARY 25, 2016

SPECIAL REPORT: FINANCE Welcome to the MIKE ILITCH SCHOOL OF BUSINESS Book content seller turns a page DETROIT’S BUSINESS SCHOOL in funding,ramps up marketing

By Tom Henderson nia-based Pet Supplies Plus; Story and we’d give them garbage. [email protected] Patches, a website based in Brook- “We weren’t a source of real infor- Ann Arbor-based ContentOro LLC, lyn for quilting enthusiasts; and mation.” a company that specializes in sell- Yoga Shelter, a West Bloomfield “The need is great,” said Skip ing content from books to websites Township-based chain of yoga Simms, a senior vice president at that need content, has started rais- studios. Spark and managing member of ing a funding round of between Chunn’s first investor was Chuck the Michigan Angel Fund, which in- $500,000 and $750,000 as it ramps Newman, who founded ReCellular vested $350,000 in ContentOro. up sales and marketing. Inc., an Ann Arbor-based company “Content for all websites makes The startup was founded in 2014 that recycles cell phones. Newman the difference between being rele- by a former vice president at now- invested $100,000. vant or not, on the first page of a defunct Borders Group Inc. who had Chunn’s last search or not. It’s expensive and the quaint idea there was still job at Borders time consuming to produce,” said money to be made in the book in- was managing Simms. “ContentOro solves both dustry. ContentOro finished raising the digital divi- pain points. It’s scalable with good a seed round of $550,000 last sion, overseeing margins and has a mature team. August. the Ann Arbor What’s not to like?” “We’ve made a lot of progress,” company’s web- Joining the seed round were said CEO and founder Bob Chunn, site, eBooks, Detroit-based Invest Michigan, who said this round, termed a readers, online Farmington Hills-based Lis Ven- “bridge round,” will fund growth Bob Chunn: marketing and tures LLC and several high-net- until the company starts raising a Ex-Borders VP says social media. worth individuals. Series A venture capital round of $2 startup is making Before that, he In December, ContentOro was million next September. progress. headed up the named the Startup of the Year by Learn more about our new name The company had been housed division that student judges of the Venture Capi- in downtown Ann Arbor in an incu- bought books that were no longer tal Investment Competition at the and future home in the District Detroit at bator run by Ann Arbor Spark, but being marketed by publishers to sell Ross School of Business at the Uni- ilitchbusiness.wayne.edu. moved into its own headquarters in at deep discounts, often on racks in versity of Michigan. the Packard Office Center on Packard the entryway into the stores. Six teams of students, playing the Road near US-23 in August. Chunn said he got the idea for role of venture capitalists, did due The company has hired its first ContentOro after he left Borders in diligence on three area startups, two employees: two interns — a 2011 to join Houston-based Retail with the idea to create a term sheet Web developer and a sales person Concepts as its chief marketing offering an investment to the com- Your — from last summer whose pay had officer. pany they thought had the most Fleet Graphics been funded by Eastern Michigan Uni- As Chunn told Crain’s for a profile promise. Partner versity and Spark. last March: “We were paying a lot of All six teams chose ContentOro. Ⅲ More important, ContentOro has money for content for our website, Tom Henderson: (313) 446-0337 landed its first customers — Livo- but people would land on our site Twitter: @TomHenderson2 MSU launches new incubator program

Michigan State University has an- and business leaders, and other re- nounced a new incubator program Applications and more sources. The funding and resource aimed at turning students’ ideas information can be found at access is in exchange for a 5 percent into companies ready for angel and www.conqueraccelerator.com. equity stake in the business. venture capital funding and “The Conquer Accelerator acts as commercialization. an intensive, 10-week program that a final launching platform for start- The program is also open to ex- starts in May. ups from MSU and beyond, prepar- isting — but struggling — early- Five teams of students or compa- ing companies to hit the ground stage businesses. No affiliation to nies will be accepted. They will each running,” said Paul Jacques, the ac- MSU is required. get $20,000 in funding, work space, celerator’s director, in a news The Conquer Accelerator pro- mentorship and access to advice release. Tom Henderson Commercial Fleets, Marketing Programs gram is accepting applications for from 40 seasoned entrepreneurs and Specialty Vehicle Wraps We do more than provide graphic branding solutions that attract and inspire. Our mission is to evoke a unique emotional experience and leave Plymouth Venture leads Wellspring investment round a lasting impression on our partners and their clients. As a national leader in large format graphics, we set the benchmark for quality. From Ann Arbor-based Plymouth Ven- tomers on five continents for its var- ence and additional capital enable our passionate team of creative designers, expert printers, and ture Partners has led a Series B in- ious software and Web-based us to scale Wellspring to the next professional installers to our world-class facility and state-of-the-art vestment round of $6 million in products. level,” said Wellspring CEO Robert technologies—we make you look remarkably good. Wellspring Worldwide, a Chicago- The round was joined by a previ- Lowe in a press release. based company that helps compa- ous investor, Northbrook, Ill.-based “Every day we see the challenges nies, hospitals and universities find, MK Capital. Wellspring raised its first companies of all sizes face in sourc- manage or invest in intellectual round of venture capital funding of ing and investing in innovation,” property. $5 million in 2014. said Plymouth partner Evan Ufer. Wellspring was founded in 2003 Wellspring will use the funds to “Wellspring has clearly demonstrat- as a spin-out of Carnegie Mellon Uni- ramp up marketing and sales. ed its software enables companies versity in Pittsburgh to help univer- Plymouth’s share of the round and universities to find each other sities and hospitals manage their came from its $61 million PVP and manage the complexity of li- iMBranded.com / (866) 717-4467 technology transfer operations. Fund III. censing and investing.” The company claims 500 cus- “Plymouth’s operational experi- Tom Henderson 20160125-NEWS--0015-NAT-CCI-CD_-- 1/22/2016 10:48 AM Page 1

CRAIN’S DETROIT BUSINESS // JANUARY 25, 2016 15 SPECIAL REPORT: FINANCE Ann Arbor’s Companion LLC a case for not grabbing VC too soon

By Tom Henderson app asks if you are OK. If you don’t [email protected] answer in 15 seconds, it sends out Adam Wyden, who runs a private an alert to the network and to 911, equity fund in New York, had words and it triggers a loud alarm on the of advice for Companion LLC, a Web- phone. based company in Ann Arbor that Jeffrey McDole, the IT planning had venture capitalists flying in manager at UM, spoke during from California last September and Companion’s pitch at Demo Day, offering to write checks: The best announcing then that the school deal is often the one you don’t make, was serving as the first institutional especially prematurely. beta tester for Companion. This Companion had been the star of testing phase continues. the Demo Day for startup compa- The company is still working on nies Sept. 11 in Ann Arbor. Com- its revenue model. Since the app is panion is an app that offers safety free, how will it generate revenue? via notification properties with a Ernst said that could be through tap to smartphone users on college selling the service to public safety campuses; the product has already agencies and universities, through resonated with business editors aggregating and selling user data or around the country. a combination of both. Online stories appeared quickly “We’ve kicked that can down the in media outlets as diverse as USA road,” she said. Today, CNN Money, Tech Times, In- Ernst and Pilcowitz say the Com- ternational Business Times and For- panion app, having added more tune, and TV segments on the com- and better features and with one pany were broadcast on the “Today TOM HENDERSON million users, is now ready for Show” and on local shows in, Companion LLC is still working on the revenue model for its free app. Company co-founders, pictured in their incubator space in Ann fundraising, but they will still keep among other places, Minneapolis, Arbor, are (back row, left to right) Jake Wayne,Nathan Pilcowitz and (front, left to right) Katie Reiner and Lexie Ernst. institutional investors at bay for the Boston and Asheville, N.C. time being. “It was a whirlwind,” said Com- in Ann Arbor, and others that same launching tech startups. guys have is something revolution- They hope soon to start raising a panion co-founder Lexie Ernst, still a week for emerging tech companies “I know what it’s like to bootstrap ary. The last thing you need is blow seed round of undisclosed size from senior at the University of Michigan, in Detroit at the Madison Building a company. I started my company it out before it’s ready. Take your friends, family and angel investors. where the company was launched in and The Fillmore, is to introduce at 25, and I’m familiar with the time. Make the product better.’ Until now, Companion was fund- 2014 as a project by five students. The entrepreneurs to investors, Com- growing pains of a new company,” “Now, they’re in a much better ed by $25,000 it won last February other founders were Danny Freed, panion had hit the jackpot, right? Wyden told Crain’s. position,” he said. “They weren’t as best company at the 32nd annual Nathan Pilcowitz, Jake Wayne and Wrong. Wyden, the founder and Wyden, a family friend of Pil- ready to strike. Now they are. They Michigan Business Challenge at Kathy Reiner. portfolio manager at New York City- cowitz, warned the Companion have a really good mousetrap and a UM’s Ross School of Business, and The Companion app got 500,000 based ADW Capital Management LLC, founders that taking on venture very good team.” the $25,000 it got last summer for downloads in a week; Ernst said the which manages a $40 million fund, capital at that early stage of their Companion’s app is available for being chosen as one of the first co- founders would have been happy told Companion’s five co-founders company’s development would free download for iPhones and An- hort of startups at the Desai Accelera- with a few thousand. The buzz and to chill out, that their smartphone likely lead to them losing control of droids. Users set up a network of tor. Desai is a new business incuba- subsequent user interest kept app wasn’t ready yet for prime time. it and having to move it to the West friends and family who can track tor in downtown Ann Arbor that is a crashing its servers. Among the big points Wyden Coast, and that big VC funds were them, if they want, in real time, joint venture between the business Several venture capitalists flew in made: trying to force their hands in the using GPS and Google maps, as they school and the university’s College of from Silicon Valley. Several others in They didn’t need to dilute their middle of all the hype and atten- walk across campus or about town. Engineering. Silicon Valley set up meetings via equity by taking a lot of money tion. If the user sees something suspi- “We don’t need millions. We don’t Skype. There were emails and when their immediate needs didn’t “If they had something that was cious or thinks he or she is being need to be tied to investors in Cali- phone calls. require much funding. just marginally better than the com- followed, a tap on the screen on the fornia or New York and have to “We had people saying, ‘We’ll They’d ultimately be able to petition, sure, take the money and “I feel nervous” button sends out an move. We have low operating costs. write you a check for $500,000,’ ” make a better deal for themselves if try to get it out there as fast as you alert to the network. We don’t need to throw money at a said Ernst. “Or, ‘We’ll send you a they just showed a little patience, a can,” he said. “But they had light- In the event of a fall, or the drop- problem,” said Pilcowitz. blank check, just fill it in.’ ” quality that is something of a rare ning in a bottle. There’s no real com- ping of the phone, or the phone’s Tom Henderson: (313) 446-0337 Since the point of the Demo Day commodity in the frenetic world of petition. I told them: ‘What you holder suddenly starting to run, the Twitter: @TomHenderson2

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CRAIN’S DETROIT BUSINESS // JANUARY 25, 2016 17 CRAIN'S LIST: MICHIGAN'S LARGEST VENTURE CAPITAL FIRMS Ranked by money under management Money under Michigan Company management investment Address ($000,000) Funds professionals Rank Phone; website Top local executives(s) 2015 Managed Recent exits 2015 Description Baird Capital Dave Gregorka, venture partner $3,100.0 6 Justrite Manufacturing, 1 Preferred initial investment amount: $2 million to $7 million. 1 425 N. Main St., Ann Arbor, 48104 Backyard Discovery, Focus on early- and expansion-stage tech and health care (888) 792-0477; www.bairdcapital.com Synarbor companies. Headquartered in Chicago, Ill. Flagship Ventures Michael Johnson, associate $1,400.0 5 Celexion, Seahorse 1 Preferred initial investment amount: $2 million to $5 million 2 122 S. Main St., Suite 230, Ann Arbor, 48104 Bioscience, Seres in three sectors — health technologies, therapeurtics and NA; www.flagshipventures.com Therapeutics sustainability. Headquartered in Cambridge, Mass. Beringea Charles Rothstein, founder, senior $600.0 7 Sakti3, Relume 5 Preferred initial investment amount: $3 million. British unit 3 32330 W. 12 Mile Road, Farmington Hills, 48332 managing director and Michael Technologies operates as Beringea LLC. Company invests between $2M (248) 489-9000; www.beringea.com Gross, managing director and $15M in equity and/or subordinated debt. Arboretum Ventures Jan Garfinkle; Tim Petersen and Paul $450.0 4 CardioMEMS, Esperion 7 Preferred initial investment: $6M. Focus on medical device, 4 303 Detroit St., Suite 301, Ann Arbor, 48104 McCreadie, managing directors Therapeutics diagnostic, health care IT and health care service firms. Set (734) 998-3688; www.arboretumvc.com state record for largest VC fund with its fourth fund of $220M. MK Capital Josh Beebe, director $265.0 2 DramaFever (New 1 Preferred initial investment amount: $4M. Invests in cloud 5 535 W. William, Suite 303, Ann Arbor, 48103 York) infrastructure, digital media, software and education (734) 663-6500; www.mkcapital.com technology. HQ in Northbrook, Ill. Arsenal Venture Partners Ryan Waddington, partner $230.0 4 NA 2 Multistage investor aims at intersection of government, large 6 303 Detroit St., Suite 100, Ann Arbor, 48104 companies and emerging technology. Headquartered in (734) 436-1496; www.arsenalvp.com Winter Park, Fla. Venture Investors Jim Adox, managing director $201.0 6 Celleration, Akebia 1 Seed and early-stage investor, preferred initial amount of 7 201 S. Main St., Suite 900, Ann Arbor, 48104 Therapeutics $2M, in health care and tech firms, with a focus on spinoffs (734) 274-2904; www.ventureinvestors.com from UM and University of Wisconsin. HQ in Madison, Wis. Draper Triangle Ventures Jonathan Murray, managing director $200.0 3 CardioInsight 1 Preferred initial investment amount: $2 million. Early-stage 8 303 Detroit St., Suite 100, Ann Arbor, 48104 Technologies investor focuses on Midwest tech companies. Headquarters (734) 215-7577; www.drapertriangle.com in Pittsburgh, Pa. Mercury Fund Adrian Fortino, partner $200.0 3 Donde, Macheen 1 Seed and early-stage investor, preferred first investment of 8 303 Detroit St., Suite 100, Ann Arbor, 48104 $250,000 to $2 million, with a focus on tech innovation in the NA; www.mercuryfund.com Mid-continent. Headquartered in Houston, Texas. EDF Ventures LLC Mary Campbell and Michael Devries, $178.0 6 Cerenis Therapeutics 3 Oldest VC firm in the state, founded in 1987. It has stopped 10 425 N. Main St., Ann Arbor, 48104 managing directors making investments in new companies as it finds exits for (734) 663-3213; www.edfvc.com current portfolio companies Cultivian Sandbox Ventures Matthew Bell, principal $149.0 2 None 1 Preferred first investment of $3 million to $5 million in 11 303 Detroit St., Suite 101, Ann Arbor, 48104 disruptive agriculture and food-technology companies. NA; www.cultiviansbx.com Headquartered in Chicago, Ill. BioStar Ventures Louis Cannon, founder, senior $133.0 4 NA 4 Focus is on medical devices for cardiovascular and 12 560 W. Mitchell St., Suite 500, Petoskey, 49770 managing director orthopedic medicine. (231) 487-9186; www.biostarventures.com Fletcher Spaght Ventures John Fletcher; Pearson Spaght and $130.9 2 SurgiQuest, HTG 1 Preferred initial investment: $4M. Focus on health care 13 460 Hillspur Road, Ann Arbor, 48105 Linda Tufts, general partners Molecular Diagnostics companies in IT, software, telecommunications, medical NA; www.fletcherspaght.com devices, biotech and health care services. HQ in Boston.

Renaissance Venture Capital Fund Christopher Rizik, CEO and founder $123.3 2 None 2 Renaissance, which is affiliated with Business Leaders for 14 201 S. Main St., 10th Floor, Ann Arbor, 48104 and Jeff Rinvelt, principal Michigan, is a fund of fund mainly investing in Michigan VC (734) 997-8661; www.renvcf.com firms or out-of-state firms willing to invest here. Plymouth Ventures Mark Horne, CEO and managing $104.0 3 Image Integration 6 Focus is on growth-stage companies in the Great Lakes 15 555 Briarwood Circle, Suite 210, Ann Arbor, partner Systems, PODS region, with investments ranging from $2 million to $6 48108 (734) 747-9401; www.plymouthvc.com Westrock million. North Coast Technology Investors Lindsay Aspegren and Hugo Braun, $100.0 3 Arbortext 3 Focus is on early-stage technology companies in the 16 206 S 5th Ave., Suite 550, Ann Arbor, 48104 co-founders Midwest, with preferred initial investment of $750,000. (734) 662-7667; www.northcoastvc.com RPM Ventures Tony Grover, Marc Weiser, and Adam $100.0 2 Xtime, Luvocracy, 5 Preferred initial investment 2015: $1.5M to $2M. Firm targets 16 320 N. Main St., Suite 400, Ann Arbor, 48104 Boyden, managing directors Arbor Photonics online marketplaces, B2B companies, cloud and social- (734) 332-1700; www.rpmvc.com media infrastructure, auto IT. Open Prairie Ventures Jim Schultz, managing partner and $95.0 3 NA 2 Preferred initial investment: $2M. Focuses on agriculture, life 18 241 E. Michigan Ave., Kalamazoo, 49007 Pat Morand, president sciences, medical devices, IT, energy, manufacturing and real (269) 377-0597; www.openprairie.com estate. HQ in Effingham, Ill. Hopen Life Science Ventures Mark Olesnavage, managing director $68.0 2 ProNAi Therapeutics 5 Preferred initial investment amount: $500,000 to $2.5 million. 19 171 Monroe Ave. NW, Suite 400, Grand Rapids, and Mike Jandernoa, managing Focus on early to midstage life science companies in the 49503 (616) 325-2110; www.hopenls.com general partner Midwest. Detroit Venture Partners Brian Hermelin, managing partner; $55.0 1 Opsmatic, Velos, 6 Seed and early-stage investor in technology companies with 20 1555 Broadway St., Third Floor, Detroit, 48226 partners Gabe Karp, Jake Cohen; Dan Chalkfly DVP mission to rebuild Detroit through support of (313) 373-7751; detroitventurepartners.com Gilbert, founding partner entrepreneurship. Preferred first investment of $500,000. TGap Ventures Jack Ahrens and Pete Farner, general $50.0 2 NA 2 Invests in software, life sciences, Internet infrastructure, 21 7171 Stadium Drive, Kalamazoo, 49009 partners specialty manufacturing and plastics, with first investment of (269) 217-1999; www.tgapventures.com $500,000 to $1 million. Arbor Partners Donald Walker, managing director $37.6 2 NA 2 One of state's oldest VC firms, founded in 1996, it focuses on 22 535 W. Williams St., Suite 303, Ann Arbor, 48103 and Joshua Beebe, partner enterprise software, semiconductors and advanced (734) 668-9000; www.arborpartners.com materials. Courtside Ventures George Pyne, nonexec chairman; $35.0 NA NA NA Ramping up Detroit HQ. Funded Dan Gilbert, marketing 23 1555 Broadway, Detroit, 48226 partners Brian Hermelin, Vasu company WPP and George Pyne, former president of IMG, to NA; www.courtsidevc.com Kulkarni, Deepen Perlkh invest in firms in technology and sports. Amherst Fund LLC Matt Turner, president and CEO and $30.0 2 ProNAi Therapeutics 4 Will invest as little as $50,000 in early-stage companies, 24 401 E. Stadium Blvd., Ann Arbor, 48104 David Lin, VP of operations $500,000 in later-stage companies. Investments can include (734) 662-2102 ; www.amherstfund.com equity, subordinated debt and senior debt. Michigan eLab Doug Neal and Paul Brown, partners $22.6 1 None 2 Preferred initial investment: $1M. Silicon Valley veterans 25 505 E. Liberty St., LL500, Ann Arbor, 48104 returned to Michigan in 2012 to invest in early-stage digital (734) 926-5221; www.michiganelab.com health, Internet of things, enterprise and networking. Start Garden Rick Devos, founder and CEO $18.0 2 None 6 Prefers first investment of $200,000 in startups that take 26 40 Pearl St. NW, Suite 200, Grand Rapids, 49503 advantage of Midwest expertise in manufacturing and global NA; www.startgarden.com enterprise. Also runs an incubator for startups. Huron River Ventures Tim Streit, partner; Ryan $16.0 2 Sidecar, Zipments, 3 Likes first investment of $300,000 in agriculture, energy and 27 303 Detroit St., Suite 100, Ann Arbor, 48104 Waddington, partner and Sam Hogg, RideScout transportation technology companies in Michigan and NA; www.huronrivervc.com venture partner Midwest Ludlow Ventures Brett Demarrais, partner and $15.5 2 NA 2 Has a national focus, partnering with larger firms nationally 28 1555 Broadway, Detroit, 48226 Jonathan Triest, founding and in early-stage tech companies. Will invest as little as $25,000, NA; www.ludlowventures.com managing partner as much as $500,000.

This list ranks venture capital firms with a presence in Michigan. Information is provided by the Michigan Venture Capital Association, the companies, company websites and the Michigan Economic Development Corporation. It is not a complete listing but the most comprehensive available. Companies are listed with the address and top executive of their main metro Detroit office. Companies headquartered outside their local location are noted in the description. NA = not available.

LIST RESEARCHED BY SONYA D. HILL 20160125-NEWS--0018-NAT-CCI-CD_-- 1/22/2016 10:48 AM Page 1

18 CRAIN’S DETROIT BUSINESS // JANUARY 25, 2016 Group Associates refocuses after split,acquisition

By Jay Greene A growing conflict between brokerage ler, noting that the acquisition of [email protected] Group Associates was important to For nearly 30 years, David Zick and providing administrative services that vision. ran Bingham Farms-based Group through IT led David Zick and Kent Maestro’s four primary product Associates Inc. as an insurance bro- lines are private health insurance kerage, technology services and Grathwohl to decide they needed a exchange, benefit administration, benefit consulting firm with his new business model. human resources management and business partner Kent Grathwohl. consumer accounts, which include But a growing conflict of interest David Zick Kent Grathwohl health savings accounts and self- between brokerage and providing Group Associates because “(out- health and benefits administration showed him our capabilities at the funded insurance programs. administrative services through side) brokers were not willing to manager. office, and the next day he gave me Last November, Maestro signed a information technology led Zick put business with him,” Grathwohl Maestro now offers integrated a letter of intent. It was an awesome contract to become the exclusive and Grathwohl to conclude they said. benefit administration that in- synergistic relationship.” private exchange provider with Blue needed to change their business Zick said Group Associates was cludes a private exchange, enroll- On July 1, Group Associates Cross Blue Shield of Arizona. model and focus on one or the one of the first benefit companies to ment services, self-funded insur- joined Maestro as a wholly owned “This is technology meets servic- other. So, in an amicable split in take advantage of online informa- ance, health savings accounts and subsidiary. es, a nice connection to offer em- September 2014, Grathwohl took tion technology in the late 1980s. consolidated billing. Zick said Maestro brought Group ployers,” Butler said. his clients and left Group Associ- “We worked with a lot of carriers, “I was not planning to sell the Associates what it needed: a nation- Zick said Maestro has enabled ates and became area vice presi- and over the years our services in- company,” said Zick. “I just did not al sales force with connections to Group Associates to invest in more dent with Gallagher Benefit Services creased and added capability of en- want to have the conflict between major brokers that includes the technology, hire staff and expand its Inc. in Bingham Farms. rolling employees online,” he said. consulting and brokerage. We Willis Group and Gallagher. information technology services. “It wasn’t easy because Kent and I “As time went on, technology be- couldn’t do both anymore.” “We are doing what we do best, Group Associates has about 60 em- worked together for 25 years,” said came more sophisticated, and we To get advice, Zick went to Chica- helping employers with benefit ployees in Michigan and expects to Zick, president of the company. “It realized we could do far more.” go-based Gruppo Marcucci, a con- technology solutions,” Zick said. hire more this year. was a painful decision. Kent and I But Zick said the conflict devel- sulting firm specializing in human Grathwohl said Gallagher and “Since July, we have written 150 have a lot of respect for each other. oped between brokerage services resources and benefits administra- Maestro do about half a million dol- accounts with Affordable Care Act It was almost like a divorce on very and administrative services be- tion technology. Maestro earlier had lars in business together. “This has (employee health benefit) report- friendly terms. We continue to share cause other insurance brokers did- employed Gruppo to search for a worked out fine for me,” he said. ing,” which includes 1095C form fil- accounts and work together.” n’t want to do business with Group benefit administrator to acquire. Butler said he formed Maestro ings for all covered employees that Grathwohl said his brokerage Associates because they feared “we Sometime afterward, Gruppo two years ago to take advantage of proves coverage through the em- work selling life and health policies could replace them as broker” to Marcucci executives suggested that opportunities presented by the Af- ployer and the cost-sharing at Gallagher is similar to his former their clients. Rob Butler, CEO of Maestro, talk fordable Care Act to expand health amounts, said Zick, noting his com- job at Group Associates. Last July, Zick sold Group Associ- with Zick. benefit options for employers. pany was one of the first to be certi- “We weren’t able to deliver ates to Maestro HealthCare Technolo- “Rob called me (in March 2015), “We offer a one-stop shop that al- fied by the IRS. Ⅲ enough lives to (fuel) the adminis- gy and is the technology solutions and we talked a few times and came lows employers, brokers and carri- Jay Greene: (313) 446-0325 trative (technology) engine” at subsidiary to the Chicago-based (to Detroit) for dinner,” Zick said. “I ers to offer one solution,” said But- Twitter: @jaybgreene HEAR WILBUR ROSS TALK ABOUT M&A

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CRAIN’S DETROIT BUSINESS // JANUARY 25, 2016 19

business economist, Federal Bank of Management Education Center, DEALS & Chicago Detroit Branch; and Tony Troy. $32 members, $36 CALENDAR Vernaci, vice president, global nonmembers. Website: business development, Michigan leadershipoakland.com. DETAILS WEDNESDAY members, $25 students. Contact: Economic Development Corp. The JAN.27 Rua Francis Oshana, (248) 826-0281; Townsend Hotel, Birmingham. $50 Why Salespeople Fail … and What You ACQUISITIONS & Global Economic and Industry Outlook email: [email protected]. admission, $40 members, $290 Can Do About It. 11 a.m.-1 p.m. Feb. 3. MERGERS for 2016 and Beyond. 8-10:30 a.m. Au- corporate table of eight; tickets Ann Arbor Spark. Attendees can Visteon Corp., Van Buren Township, tomation Alley. A discussion on the FRIDAY include plated breakfast. Contact: learn how to close more sales by an automotive cockpit electronics shifting dynamics of the global JAN. 29 (244) 644-1700. following a systematic approach. supplier, has signed an agreement to economy and how companies can Market Research Workshop. 10 a.m.- Ann Arbor Spark, Ann Arbor. acquire AllGo Embedded Systems Pvt. best position themselves to do busi- noon. Washtenaw Community Professional Leadership — The Jack Free. Registration ends 24 hours Ltd., Bangalore, India, developer of ness overseas. Keynote speaker: Jim College Bailey Library. Learn to use Aronson Story. 7:30-9 a.m. Feb. 3. before the event at embedded multimedia systems to Glassman, managing director, J.P. print and electronic library Leadership Oakland. Featuring Jack annarborusa.org. Contact: vehicle manufacturers. The agree- Morgan Chase and Co. Automation resources to do market research, Aronson, founder, Garden Fresh. MSU [email protected]. ment is expected to close during the Alley, Troy. $20 members, $40 non- including potential customers and first quarter of 2016. Terms were not members; walk-ins: $30 members, competitors, as well as business-to- disclosed. Websites: visteon.com, $50 nonmembers. Contact: Lisa business marketing. Washtenaw allgosystems.com. Lasser, (248) 457-3200; email: Community College Bailey Library, [email protected]. Ann Arbor. Free; maximum capacity Industrial Commercial Properties LLC, is 30 attendees. Registration: Cleveland, and Industrial Realty Group Creating the Cash Flow Factory. 9-10 wccnet.edu/resources/library/ LLC, Los Angeles, acquired Metro a.m. Michigan CFO Associates. market_research_workshop. Commerce Center, 32500 Van Born Workshop is designed to address Road, Wayne, a 490,000-square-foot, heightened uncertainty over credit UPCOMING EVENTS multi-tenant industrial building on availability and help organizations Birmingham Bloomfield Chamber 34.5 acres. Websites: icpllc.com, generate more cash. Automation Economic Forecast Breakfast. 8-9:30 industrialrealtygroup.com. Alley, Troy. Free. Contact: Kellee War- a.m. Feb. 2. Birmingham Bloomfield ren, (586) 580-3285, Ext. 202; email: Chamber of Commerce. Local and CONTRACTS [email protected]. regional update by Paul Traub, Foley & Lardner LLP, Detroit, has entered into an agreement with Michi- THURSDAY Calendar guidelines. Visit gan Legislative Consultants Inc., Lans- JAN.28 crainsdetroit.com and click “Events” ing, a lobbying firm, to expand Essentials of Building Loyalty via the near the top of the home page. Foley’s public policy presence to Customer Experience. 6-8:30 a.m. Then, click “Submit Your Events” offer government relations repre- American Marketing Association, from the drop-down menu that will sentation and legal advice in Michi- Detroit. Featuring Scott Monty, an appear. Fill out the submission form, gan-related matters. Websites: internationally recognized leader in then click “Submit event” at the foley.com, mlcmi.com. digital communications, social bottom of the page. media and marketing. VisTaTech The University of Michigan’s Artificial Center at Schoolcraft College, More Calendar items can be Intelligence Lab has entered into an Livonia. $45 admission, $35 found at crainsdetroit.com/events. agreement with IBM Corp., Armonk, N.Y., , to launch Project Sapphire, a $4.5 million collaboration to develop an advanced conversational computing system. Faculty, graduate students and postdoctoral researchers will work with IBM scien- M&A Experience tists to develop the system, which they expect to be running within the next couple years. ® Websites: umich.edu, ibm.com. In Your Corner.

Arotech Corp., Ann Arbor, a provider of defense and security products Ŷ Experienced in M&A, negotiated transactions, for the military, law enforcement securities, joint ventures, strategic alliances, and homeland security markets, corporate fi nance, corporate structure and announced that its training and simulation division has received governance. Strong concentration in business $7.4 million in new awards and taxation. contract modifications, including a $1.7 million modification to in- Ŷ Works with domestic and foreign companies in crease the capabilities of the U.S. the automotive, manufacturing, pharmaceutical, Army’s virtual clearance training fi nance, health care and high tech industries. suites and more than $1 million in orders for its transit and public safe- Ŷ Proudly served in the U.S. Marine Corps. ty driving simulators. Website: arotech.com. EXPANSIONS Re/Max of Southeastern Michigan, Troy, opened Re/Max Dynamic, 7495 N. Telegraph Road, Monroe. The office is owned and managed by broker/owner Craig Bollerud. Tele- phone: (734) 265-1502. Website: dynamic.remaxdetroit.com.

Deals & Details guidelines. Email [email protected]. Use any Deals & Details item as a First Tier Ranking model for your release, and look for in Corporate Law and the appropriate category. Without Commercial Litigation complete information, your item will not run. Photos are welcome, but we Ŷ Detroit Ŷ Novi Ŷ Grand Rapids Ŷ Kalamazoo Ŷ Grand Haven Ŷ Lansing Ŷ Ann Arbor Ŷ Hastings Contact Kevin DiDio at [email protected] cannot guarantee they will be used. 20160125-NEWS--0020-NAT-CCI-CD_-- 1/22/2016 11:42 AM Page 1

20 CRAIN’S DETROIT BUSINESS // JANUARY 25, 2016 PEOPLE: ADVERTISING SECTION SPOTLIGHT DEGC names Rafferty VP of small-biz development The Detroit Economic Growth Corp. has named Michael Rafferty vice president of small-business development. Rafferty, Tyanne Miskov and Thomas Tilton 40, had been Account Managers, director of ADVERTISING & the metro Ulliance, Inc. Detroit office MARKETING of the Michi- Miskovis responsible for the delivery of services to client companies including gan Nonprofit Lori Jo Vest, management consultations, critical/traumatic incident debriefings and employee Association, assistance program activities, as well as orientation programs. Miskov held prior where since Associate Director of Michael Rafferty Digital Marketing, positions at Hope Network, St. John Providence Eastwood Clinic and Easter Seals. She October 2013 has her Bachelor of Arts in social science from University of Michigan and Master of he led strate- Moncur Arts in counseling psychology from Western Michigan University gic direction and overall opera- Provide guidance, direction tions in Southeast Michigan. and strategy for a team of Tilton is responsible for the delivery of services to client companies including Prior to joining the MNA, he was copywriters and social media specialists management consultations, critical/traumatic incident debriefings and employee a development officer with the creating digital marketing content for major assistance program activities, as well as orientation programs. Tilton has seven years of Wayne County Economic Develop- brands in both B2B & B2C categories as well as experience working in nonprofit, K-12 and higher education, and as a civilian employee ment Growth Engine. contribute to corporate culture & employee with the US Army. He received his Bachelor of Arts in religious studies from St. engagement efforts. Lori previously was a Edward's University and Master of Science in counseling from Texas A&M University. Givens to lead Eastside Senior Contributor/Social Media at Organic, Inc. in Troy, MI. Community Network Eastside Community Network Victoria Webb, named longtime metro Detroit Director of Client Service, ENGINEERING HEALTH CARE nonprofit Donna Moncur leader Givens to suc- Accountable for high-level Patrick T. Bell, Suzanne Ciaglia, ceed found- relations with all clients, Environmental Project ing CEO Mag- including overall client Vice President of Manager, Clinical Operations, gie DeSantis in satisfaction and management of expectations March. G2 Consulting Group Custom Home Health while ensuring that the work is on strategy, on Givens, 52, time and within budget. Victoria was formerly Patrick T. Bell P.G., an As Vice President of Clinical has been the Principal of 7 Spot Group in Livonia, MI. experienced professional in Operations, Suzanne Donna Givens president of environmental consulting and land development Ciaglia, PT, COS-C, is responsible for all the Youth De- services, has joined G2 Consulting Group as an clinical decisions within Custom Home Health velopment Commission in Detroit ACCOUNTING environmental project manager. Prior to joining including, but not limited to, hiring leadership, for three years. Before that, she G2, Mr. Bell spent his professional career in overseeing the clinical team, and quality was executive director of Bright- positions of increasing responsibility at Atwell- assurance. Suzanne Ciaglia is a Physical moor Community Center. Among William D. Gilbert, Hicks, AKT Peerless and Tim Hortons, providing Therapist with over 20 years of experience in her previous jobs was deputy di- environmental, construction, and development home care. Her most recent experience was at CPA, rector of programs for Eastside, entitlement services. Custom Home Health as the Director of then the Warren/Connor Devel- Vice President and Clinical Services. Ms. Ciaglia is a Wayne State opment Coalition, in 1993-97. Corporate Controller, University Alumna. DeSantis, who has led the or- REDICO TECHNOLOGY ganization for 30 years, an- Gilbert oversees the Andrew Scarfone, nounced a year ago her inten- accounting and finance functions for REDICO’s Vice President of tions to step down. national portfolio of properties. He is Norman Lewis, Business Development, responsible for maintaining the financial President, Custom Home Health Detroit Bikes taps DTE services provided to property owners and UltraLevel As Vice President of manager Kiesling as COO partners to sustain year-over year growth. Business Development, As president, Norman Lewis Detroit Bikes LLC Chris Gilbert had previously served as director of Andrew Scarfone's natural leadership abilities hired will work with the internal Kiesling accounting for REDICO. play an integral role in Custom Home Health's as COO to help strength- team and be a valuable success in regards to hiring and training the en its manufacturing operations resource for clients in assessing strategy and Blake R. Kolo, marketing team while assessing and and meet growing consumer de- advising on the best way to move forward with Managing Director, implementing business strategies. With over 4 mand. new initiatives. His main focus will be the years with Custom Home Health, Andrew He had worked for 11 years at The Siegfried Group continued growth of UltraLevel. Lewis held DTE Energy Co. previously served as the Director of Sales and Detroit-based , multiple information technology director Blake Kolo, CPA, CVA, CFE, Marketing. Andrew earned his J.D. in Law from where he most recently was a positions during his 30-year tenure with Ford CFF has been promoted to University of Detroit Mercy School of Law and plant manager in Pittsburgh. Motor Company. Since retiring from Ford, he Managing Director of The his BA in Law and Economics from Michigan has worked and consulted for a variety of large Siegfried Group’s Detroit Market. He continues State University. Federal-Mogul Holdings to serve as a trusted business advisor to companies, including IBM and Compuware. names Rouquet as CFO financial executives, helping clients become successful leaders in their organization. Blake Southfield-based auto suppli- Kolo, CPA, CVA, CFE, CFF started his career at Use a qualified er Federal-Mogul Holdings Corp. Ernst and Young in their Fraud Investigation and SEARCH SMARTER candidate’s skills and named Jerome Rouquet as CFO, Dispute Service practice followed by three years interests to make the replacing the retiring Raj Shah. at Conway MacKenzie providing litigation best fit for Rouquet will continue to support, transaction, and restructuring services. employers serve as senior vice president of Data Driven Matching finance of the company’s motor- parts division. He previously was Crain’s has moved its complete list chief accounting officer and of appointments and promotions to CFO of Federal-Mogul Vehicle www.crainsdetroit.com/peopleonth Component Solutions Inc. He joined Federal-Mogul in 1996 emove. Guaranteed placement in and has served in various finan- print and online can be purchased cial management roles. Ⅲ at this website. CrainsDetroit.com/JobConnect 20160125-NEWS--0021-NAT-CCI-CD_-- 1/22/2016 4:45 PM Page 1

CRAIN’S DETROIT BUSINESS // JANUARY 25, 2016 21

Peas and Carrots and Schmaltz and wine, Sklar said. GUS “Gus’s is a place for everyone because Hospitality, Sklar said he and his The Third Street corridor in Mid- FROM PAGE 3 it’s so reasonable and the food is so partners expect to do just under $30 town has been an area of focus for million in revenue this year and to community development organiza- plastic foam plates at Gus’s? approachable.” employ more than 500 employees tion Midtown Detroit, Executive Di- It started with a call from Sklar’s Zack Sklar,a local franchise owner of Gus’s World Famous Fried Chicken by this summer. rector Sue Mosey said. best friend early last year urging With its $9.50 per-person average Midtown Detroit has been fund- him to check out a chicken place in mon — great food,” he said. Midtown Detroit Inc. to purchase the check, the Gus’s concept is one for ing a lot of development along the Memphis, Tenn. At first, Sklar To open Gus’s locations, Sklar vacant property on Third Street at the locals as well as visitors to De- Third Street corridor in Midtown balked at the idea of jumping on a and his partners launched Schmaltz West Alexandrine Street. The site is troit, Sklar said. after about a decade of no real de- plane just to eat at a chicken joint. Hospitality LLC. on the fringes of Midtown near the A lot of restaurants have been velopment there. That, combined But eventually he capitulated. The company is one of only historic Rainer Court Apartments, opening up right in the middle of with other investment, has resulted There was a line around the block about 10 franchisees for the chain in which opened last fall, and not far everything downtown, he said. But in the openings of properties, in- when he got there, and it really was the country, he said. And the name from the new Detroit Red Wings “no one is building anything for the cluding the Rainer Court Apart- “the best chicken in the world,” was fitting, given that “schmaltz” is arena and the surrounding District community that lives in Detroit.” ments, Negative and Print and the Sklar said. Yiddish for chicken fat. Detroit. People living in the city “aren’t Nordin Brothers’ new Detroit Design The slightly spicy chicken, which The plan is to open five to seven Schmaltz plans to invest about $1 going to all these ritzy places,” Sklar Studio. is served with white bread, is “a locations per state in their territory, million to secure the land and build said. “It’s white-collar, suburban Gus’s, the first new construction timeless concept” that has a huge which includes Michigan, Illinois, a 3,000-square-foot restaurant for people flocking down to those project along the corridor in recent following around the country, he Wisconsin, Minnesota, Ohio, Col- the casual dining concept, Sklar restaurants, which is a great thing.” years, will bring new jobs and a vi- said. orado and parts of Florida, Sklar said. A February groundbreaking But “Gus’s is a place for everyone brancy to the neighborhood, Mosey “I have some higher-end restau- said. and late May opening are planned. because it’s so reasonable and the said. rants, and (now) I have this fried Schmaltz opened its first Gus’s in He projects that the Midtown lo- food is so approachable,” he said. “We think this new project will chicken, which is the world’s best, Chicago in October, and the loca- cation, which will create 35-40 jobs, “That’s what’s so exciting to me.” draw a lot of new customers to that served on (plastic foam) plates,” tion did $70,000 in business the first will bring in $2.5 million to $3 mil- When it opens, the Detroit Gus’s area to explore it further,” she said. Ⅲ Sklar said. week it was open, he said. lion in revenue its first year. will serve chicken, sides and a few Sherri Welch: (313) 446-1694 The two “have one thing in com- Now it has an agreement with Between Birmingham-based desserts, along with cocktails, beer Twitter: @SherriWelch

markets in place. Its main competi- novation. 365 tor, Tukwila, Wash.-based Avanti Mar- “They manufacture their own FROM PAGE 3 kets Inc., has 4,700, according to hardware with U.S. parts, while their MARKET PLACE revenue that year of $42,000. In its Avanti Markets spokesperson competitors outsource it,” he said. second year, the company reported Heather Quandt. Micromarkets enable Five Star to BUSINESS OPPORTUNITIES $463,000. In 2011, it released its first Avanti and 365 are the “big two” of offer customers up to 300 items ver- INVESTMENT OPPORTUNITIES kiosk product. By 2014, sales hit $16 the emerging sector, both claiming sus 75 items in a vending machine. FOR SALE~ AEROSPACE INVESTMENT OPPORTUNITY million. about 40 percent of the market. Other 365 customers include Cost- MACHINING COMPANY Hessling said revenue last year Avanti has 30 corporate employ- co, Bank of America, pharmaceutical Current partners seeking an owner/ Privately held Aerospace Machining company operator to buy into and run an upscale was more than $23 million, and he ees, some of whom are software de- company Sanofi, and Goldman Sachs, located in Metro Detroit with long term coffee shop in S.W. Oakland Co. Great agreements in place is for sale or merger. staff in place now with positive cash flow. predicts $30 million in sales this year. velopers. The hardware for its micro- which offers employees micromar- Owners retiring. AS-9100 and ISO-9001 Serious inquiries only: 365 Retail Markets has 104 em- markets is handled by suppliers. kets at its New York City offices. registered. Very profitable niche product line with proprietary processes. Send confidential reply to: Email Inquiries to: ployees. Its industrial building in Troy 365’s largest customer is Wood “People will buy 30 percent more [email protected] PO Box 7416, Bloomfield Hills, Mi. 48302 handles sales and marketing, assem- Dale, Ill.-based Canteen Vending, food and drinks when micromarkets Reference box #2001 in subject line bly of the machines with parts that which has purchased 2,200 point-of- are available,” Hessling said, adding come from a variety of U.S. suppliers, sale kiosks from 365 and is tasked that each transaction averages 1.6 MISCELLANEOUS technology and software production with keeping all those micromarkets items. “People like the ability to pick JOB and customer service. It turns out 10 stocked with food and beverages. things off the shelf and look at them NEED WAREHOUSING? to 12 point-of-sale kiosks daily, and “365’s reputation is very good. before buying.” Plymouth & Livonia Area FRONT sells roughly 200 a month, shipping They excel in client support and are Goods that go into the micromar- • Cross-Dock Services • Trucking Services them in the U.S., Canada and the recognized for innovation in the mi- kets tend to be healthier than what is • Diverse Supplier • Reasonable Rates FINANCE United Kingdom. Hessling said the cromarket space,” said Michael Cof- found in traditional vending ma- Call 810-701-0833 company is setting up delivery to fey, Canteen Vending senior vice chines that typically brim with pop, customers in Germany and Italy. president of strategic initiatives. candy and salt-laden snacks. In the Machines that are destined for Eu- Chattanooga, Tenn.-based Five Star U.K., bananas and apples are popu- rope differ from those in the U.S. They Food Service, another 365 customer that lar, along with coffee, tea and food REAL Vice President of Finance allow customers to pay with a credit stocks micromarkets and vending for people with dietary restrictions. Directs the organization’s financial planning and or debit card, a thumbprint or by machines, relies on 365 for its kiosks. What hasn’t changed is the No. 1 ESTATE accounting practices as well as its relationship with leading institutions and the financial scanning a bar code. To accommo- “We are putting in our 500th mi- micromarket seller – Mountain Dew. community. Preparation of current financial reports as well as summaries and forecasts for date the U.S. market that still likes to cromarket (with a kiosk) this Out of 25 million micromarket trans- OFFICE SPACE future business growth and general economic outlook. Responsible for the development and use cash, kiosks often come with an month,” said Gregory McCall, Five actions in November, Hessling said, administration of risk management and loss additional tower that takes cash. Star Food Service senior vice presi- Mountain Dew led the pack. BRIGHTON - GRAND RIVER FRONTAGE prevention program in order to maintain NEW OFFICE SPACE - FOR LEASE maximum protection of the organization’s assets Both kinds of machines are dent, sales and marketing. “365 has Another trend: Fresh food sales in at the most economical rates. May investigate equipped with subtle theft-deterrent the most stable platform with strong vending machines are 5 percent to 8 2,000 - 32,000 S.F. Suites and report on accident involving company Chestnut Development, LLC products, with resulting coordinating between cameras that snap photos of cus- software and technology, customer percent, versus 30 percent in micro- 6253 Grand River, Brighton MI insurance companies and attorneys. Reviews tomers as they check out. service people who resolve issues markets. “Overall, micromarket eat- STEVE GRONOW ~ 810-599-5147 and analyzes data, and devises risk minimization www.chestnutrealestate.com/chestnut-landing programs. Qualified candidates will have a The company has 5,000 micro- immediately and a reputation for in- ing is healthier,” he added. Master’s degree with CPA or CMA designation AirVend preferred, ten years of experience in a financial 365 Retail Markets owns , a WATERFRONT PROPERTY accounting role with eight years in a public Provo, Utah, company that makes accounting firm and/or non-profit organization. At least five years at the supervisory/managerial point-of-sale devices for vending Great Traverse City level with direct experience in Financial and Risk machines. It also licensed the tech- Development Opportunity Management. nology of ReadyFlex in Silicon Valley. Send Resumes to: [email protected] ReadyFlex makes a point-of-sale machine that can be operated either by self checkout or an employee. MISCELLANEOUS Hessling said the company’s challenges include keeping up with ram- SURVEY pant growth that requires 365 to con- tinually add employees and to deal Prime Beach, Prime Location with ANALYZE with outgrowing its space. Approved Plans for 25 Luxury Finding software talent to work Waterfront Condominiums. MATCH in the food industry also requires 1st Phase Sold Out. creativity. “A lot of these profession- See Details at: als are going (to social media com- www.cbgreatlakes.com/1803321 panies),” he said. “We need to make Price $699,900 365 RETAIL MARKETS sure we are providing the right com- Call Rick Korndorfer 231-590-9006 365 Retail Markets has 5,000 micromarkets in place, as well as this one at the compa- pensation and benefits to attract Coldwell Banker Schmidt Realtors ny's corporate office in Troy. the right employees.” Ⅲ 402 E. Front St., Traverse City, MI CrainsDetroit.com/JobConnect | 20160125-NEWS--0022-NAT-CCI-CD_-- 1/22/2016 4:47 PM Page 1

22 CRAIN’S DETROIT BUSINESS // JANUARY 25, 2016 PACKARD FROM PAGE 1 global economy were the main fac- tor in its decision to renege on the agreement to provide $80 million in financing, or nearly one-fifth of the estimated project cost. “This investment fund has been affected by the slowdown of the global economy and is afraid about real estate, and our capital core has been completely canceled,” he said. So Palazuelo has opened his own wallet to pay for things like removal of asbestos-contaminated items that has been ongoing at the former administration building on the 40- acre site that he purchased in late 2013 for $405,000 at a Wayne Coun- ty tax foreclosure auction. “The Packard Plant project will be financed with equity from the mother companies in Peru (everything is on track and following the original business model with no need to scale back),” he said in an email. “Our business in Peru is growing, PHOTOS BY MICHAEL LEWIS II and therefore we are better pre- The sprawling Packard Plant complex became a symbol of Detroit’s decay as it was targeted by vandals, scrappers, arsonists and others. The orange figure on top of the Packard pared today than one year ago for Plant bridge is one of John Sauve's sculptures as part of his "Man in the City" project. the development of the Packard Plant conversion project.” grant a 12-year property tax abate- done by the early part of next Still, many local real estate ex- ment on the building. That is ex- year, Palazuelo said. perts have reservations about the Palazuelo targets more property pected to be approved in the first With perhaps a dozen separate project to convert the Packard quarter. projects envisioned as part of the Plant, which became a symbol of The owner of the Packard Plant says he has another 1.5 million square That building, always envi- overall redevelopment, a second Detroit’s decay and was long the feet of industrial space in the city under contract with plans for a large sioned as the first step in a long building on the site is expected to target of vandals, arsonists, graffiti scale mixed-use conversion. and grueling road toward be converted for recreation uses taggers and scrappers. They have a Fernando Palazuelo declined to identify the property he plans to Packard’s redevelopment, is slat- while a third will be for residential. difficult time imagining an eco- close on by May 1, but said it is in the city and will be turned into light ed to become primarily corporate And so on and so forth, Palazuelo nomically viable redevelopment of industrial and office space, and low-income apartments. offices — as well as an office for said, until the overall project — that scale, at that site, at this time, He also expects some of the redevelopment cost to be financed Palazuelo, a native of Spain who which he expects to cost about $120 with the uses envisioned. through a crowdfunding campaign that will kick off later this year. started developing in Lima after per square foot, or about $420 mil- Those include retail, light indus- This isn’t the first time Palazuelo has eyed Detroit properties other liquidating his assets during a lion — is completed. trial space, multifamily and senior than the Packard Plant, located at I-94 and East Grand Boulevard and personal bankruptcy triggered by He said that beyond the housing, office space, recreation planned for a redevelopment costing more than $400 million over the the global economic meltdown. $405,000 purchase price for the and art all coexisting in a largely for- next seven to 15 years (see related story). If nothing else, Palazuelo has property, $2 million has been gotten part of the city, one previous- Last year, he told Crain’s that he was planning to purchase several attracted attention from unique spent on things like attorneys, ly all but ignored by the redevelop- storied office buildings in the greater downtown area, including the possible users, ranging from getting clear title, securing the ment boom concentrated on Book Tower and Book Building, the Fisher Building and Albert Kahn Building Thomas “The Hitman” Hearns, property, insurance, and some Detroit’s central core. in the New Center area and the Penobscot Building. the boxing legend and Detroit na- cleaning and asbestos removal at “It’s kind of in nowhere land, in a The first four buildings have since sold to other buyers, and the tive who has publicly discussed the administrative building. lot of ways,” said Richard Barr, a owner of the Penobscot has maintained the building is being marketed opening a new boxing gym at the And a difference is already being partner with Detroit-based Honig- for lease only. site, to German developer and felt in the surrounding community, man Miller Schwartz and Cohn LLP and Kirk Pinho nightclub owner Dimitri Hege- which for years was subjected to all leader of the law firm’s Economic mann, who has been in talks with the trappings of living and working Development Incentives Practice Palazuelo about the site. in the shadow of an industrial Group. “Is that really where some- believe in it.” the contagion could be that if you Other uses, including drone graveyard, he said. one wants to live? Not really.” But Hosey, who said he would lay off 100,000 people in the oil in- companies and music and cultural “The Packard was more or less a The Packard is too far away from peg the redevelopment cost at clos- dustry, these might be people who space, have been the subject of ten- big risk a year and a half, two years the buzzing downtown, Midtown er to $700 million, keeps an open buy cars in Detroit,” he said. “The ancy discussions. ago,” he said. “Now, something has and New Center areas to generate mind about it. reality of it is that there is a spillover, The administration building changed in the area, and I don’t enough interest in the multifamily “He needs long-term equity to because we are a global economy.” remediation is expected to take think it’s just because of us.” Ⅲ and office space to justify serious fi- prove it can be done,” he said. “If he If people buy fewer cars from the about 3½ months, and renovation Kirk Pinho: (313) 446-0412 nancing from traditional financiers, can produce that, then he has a Big 3, that could lead to reductions of the building is expected to be Twitter: @kirkpinhoCDB they say. project that will be very nice within in the auto industry workforce, in New industrial space, however, is 20 years. But it’s got to be his turn leading to depleted capability a sound fit for the area, experts have money.” to rent industrial space in a renovat- said, citing high demand for such Global fears, ed Packard Plant or a multifamily space given a lack of it in the city, local impact unit in one of its buildings. particularly with the site’s access to In short: It’s all related. rail services and freeways. The private equity firm — But, Mazzeo said, don’t rule out “Even if you can get the equity, Palazuelo said its assets are valued the possibility that the private equi- with a traditional deal banks want at more than $500 million — likely ty firm simply used the global econ- 20 to 25 percent equity or so, but has reason to be concerned global- omy as a convenient excuse to pull you still have to have a deal solid ly, said Michael Mazzeo, dean of the from the project. enough to get 75 percent debt,” School of Business Administration “And I’m not sure I can discern Barr said. “That’s not a deal that’s at Oakland University. the difference” in this case, he said. a 75 percent deal. There’s still a lot The plunge in crude oil prices — Waiting on tax breaks of risk.” flirting with $27 per barrel last week Richard Hosey III, a former sen- before a Friday spike — caused by Before the first part of the plant’s ior vice president for Bank of America increased production and weak- renovation can begin, Palazuelo is NA who now owns Detroit-based ness in economies like China and seeking approval of an Obsolete Hosey Development LLC, said tradi- other emerging markets has intro- Property Rehabilitation Act district tional bank financing is likely off the duced “contagions” in other eco- from the Detroit City Council for the table because of the project’s size nomic sectors, he said. 150,000-square-foot former admin- Plans to redevelop the abandoned Packard Plant site have been impacted by its distance and “how much vision you need to “OK, I like lower gas prices, but istration building. Approval would from revitalized areas of Detroit. 20160125-NEWS--0023-NAT-CCI-CD_-- 1/22/2016 4:47 PM Page 1

CRAIN’S DETROIT BUSINESS // JANUARY 25, 2016 23

FLINT WATER: WHAT’S NEXT BEFORE ALTERING YOUR COVERAGE, RETHINK. Health care community sounded alarm,now helps lead response

By Jay Greene Pediatric Public Health Plan Initiative. said tests have shown rising lead lev- [email protected] Wells, also a clinical associate els in children in the Flint area. Physicians in Flint sounded the professor of epidemiology at the Genord said HealthPlus has 8,000 alarms early last fall about possible University of Michigan’s School of Pub- commercial members in the affect- lead poisoning. lic Health, said state epidemiologists ed ZIP codes in Flint. Now, local health care providers were already trying to replicate “We have care coordination and insurers are helping the city re- Hanna-Attisha’s study, which they teams who have reached out there spond to the crisis. did Oct. 1. and provided them with informa- When the city switched to the The next day, Gov. Rick Snyder tion and clean water,” he said. Flint River in April 2014, residents ordered the distribution of filters McLaren Health Plan’s CEO, Kathy immediately complained about the along with water testing and blood Kendall, said the HMO has been in- water’s smell, taste and color, said testing for children. volved in the lead crisis since last Kirk Smith, CEO of the Flint Area But it wasn’t until Oct. 16 that the fall, focusing on the 5,000 members Health Coalition, which is coordinat- city switched back to the Detroit in Genesee ages 6 and under. ing the local health effort. water system. And it wasn’t until “We have provided education Despite complaints, Flint resi- Dec. 15, when newly elected Flint and doubled down on lead testing dents were told Mayor Karen Weaver declared a in the most impacted ZIP codes. We for more than 18 state of emergency, followed by have done mass screenings in the months by state Genesee County on Jan. 5 and schools,” Kendall said. “We work and city officials Michigan on Jan. 6. closely with our primary care physi- that tests indi- “Those two months felt like a cians to do developmental screens cated the water year,” Hanna-Attisha said. “I wish and encourage change in diets.” was fine and not they could have gone back to April While “there is no magic pill for to worry. 2014” and never made the decision lead” poisoning, Wells said, it will be But in late to use the Flint River. up to responsible officials to ensure September, Mona Hanna- But Hanna-Attisha said even children get all the medical and be- Mona Hanna- Attisha: Detected though the Detroit-supplied water havioral support they require. Attisha, a pedia- high lead levels. is less acidic, Flint’s water pipe infra- Because lead screening only RETHINK trician at Hurley structure has been damaged and shows exposure within 20 to 30 Medical Center, a city-owned hospi- there is still ongoing lead exposure. days, Hanna-Attisha said longer- tal in Flint, announced tests she “Everybody is really trying to help term tests are needed on children conducted showed up to 9,000 chil- now,” she said. “We had a meeting for the foreseeable future. To ensure there are no holes in your commercial coverage, dren in Flint were being exposed to (last week) with all the Medicaid “Testing now underestimates have the Sterling Insurance Group “RETHINK” your risk double and even triple the average plans in the county. We need to all lead exposure,” she said. “The CDC blood lead levels from the water. work together as providers, health will do longer-term tests to collect exposure and effectively lower your insurance costs. Hanna-Attisha’s study, which has plans, to address the needs of our (children’s) teeth. It is good way to been published in the American children for the long term.” measure lead exposure.” 888.525.7575 | 586.323.5700 | sterlingagency.com Journal of Public Health, showed the Long-term vigilance Other symptoms from lead poi- Commercial Insurance • Employee Beneﬁts • Personal Insurance percentage of children 6 years old soning include irreversible brain

and younger with more than 5 mi- Officials for HealthPlus of Michigan, damage, lower IQ, developmental 2015 crograms per deciliter of lead in their Molina Healthcare of Michigan, McLaren delays, speech problems, a boosted blood increased from 2.1 percent Health Plan and Meridian Health Plan risk for behavioral issues and other when Flint purchased Lake Huron of Michigan said they are stepping up serious chronic conditions. water from Detroit to 4 percent after state-mandated lead screening tests To address longer-term prob- the switch to the Flint River. for children 6 or younger. They have lems, Smith said the Flint health SINCERELY INVESTED IN YOU “Once I got the data, I shared it with donated money and also are work- coalition has formed the Flint Child other pediatricians (that included Dr. ing closely with the Genesee County and Health Development Fund, with a At our ﬁrm, we value our team and clients like family. Lawrence Reynolds, CEO of Mott Chil- Health Department and Flint schools fundraising goal of $100 million. Our investment advice is tailored for each institution dren’s Health Center ),” said Hanna-At- to provide staff for screening exams. The fund will provide child devel- tisha, director of the Hurley pediatric Area hospitals also have stepped opment, nutrition, education, so- and individual. residency program. “I am new and up their efforts through the Flint cial services, medical and behav- needed an army behind me.” health coalition and clinics they op- ioral support, he said. But her warnings at a Sept. 24 erate in the city, said officials with The coalition also is administering press conference were criticized by Genesys, McLaren and Hurley. the Genesee County Children’s Health- the establishment in Lansing for “We have been talking about pre- care Access Program, or CHAP, one of more than a week. vention to make sure our members go nine agencies in Michigan. The pro- “Even when the state was fighting to their primary care physicians,” said gram helps physicians with social back, saying I was playing political Christine Surdock, COO of Molina, support services for families. football, causing hysteria, slicing which began operations in Genesee “Our service volume has been in- and dicing the data and that we on Sept. 1 when it acquired Health- creasing every month,” said Smith, were wrong, I had the full support of Plus’ 70,000 Medicaid members. adding that last week CHAP got 20 Invested alongside the physician community and my “We have met with all the large referrals in one day. you since 1976. hospital,” she said. providers in the area, including the But during the last year, Bobby Fellow physicians at the Genesee health department,” Surdock said. Mukkamala, M.D., an otolaryngolo- County Medical Society, at local hospitals “We have identified children with- gist in Flint who is vice chairman of Member FINRA/SIPC that included Hurley, Genesys Health out lead test screening, and when the Michigan State Medical Society, and McLaren Flint, and the health coali- we get the blood test done, we have said physicians in Flint were frus- tion echoed her concerns, Smith said. expanded our case management trated the state did not act sooner. Investment Advisors s (866) 644-2701 s www.GJSCO.com A doctor-to-doctor conversation program for that population.” “We were discussing it at the with Eden Wells, M.D., the chief med- Surdock said Molina and other medical staff level for months, long ical executive with the Michigan De- plans don’t yet know the long-term before the state of emergency,” with custom partment of Health and Human Services, implications for children. “All the Mukkamala said. “It wasn’t taken se- MAKE THE MOST was the game changer that turned medical directors are having con- riously until somebody started OF YOUR EDITORIAL Reprints, around the state’s attitude, said versations at this point,” she said. screaming about it.” Ⅲ COVERAGE IN CRAIN’S Hanna-Attisha, who now is lead with At HealthPlus, CEO Mike Genord, Jay Greene: (313) 446-0325 E-prints and more! the Michigan State University/Hurley M.D., and executive Nancy Jenkins Twitter: @jaybgreene [email protected] 20160125-NEWS--0024,0025-NAT-CCI-CD_-- 1/22/2016 6:03 PM Page 1

24 CRAIN’S DETROIT BUSINESS // JANUARY 25, 2016 Pipeline to the Flint FLINT WATER: W water crisis March 2013: The Flint City Council approves joining the Karegnondi Water Authority after an exploration period of several years. The idea is to Big costs,technical fixes in the o pipe water in from Lake Huron to mid-Michigan instead of relying on By Chad Halcom from the Flint River in April 2014, Detroit city water. Flint Emergency [email protected] experts said. At best the new Manager Ed Kurtz supports the plan. Lindsay VanHulle sources can bring water with less Crain’s Detroit Business/Bridge Magazine April 2014: In an effort to save money, corrosive agents, and keep things Flint begins drawing its water from the It could take much more than the from getting worse. Flint River instead of relying on water $80 million in new federal aid that Actually removing lead from the from Detroit. The move is considered President Obama has promised water will involve either dosing the temporary while the city waits to Michigan by this week to remove water supply regularly with phos- connect to the new Karegnondi water lead contamination from Flint’s phates, as Flint began to do last system. Residents immediately public water system, officials and month, or installing new liners in- complain about the smell, taste and local experts said. side corroded pipes to separate the appearance of the water. They also What will ultimately be needed flow from the corrosion itself. raise health concerns. to fix the system isn’t fully known The city expects the phosphates yet. But a chemical treatment regi- will coat the inner pipe walls and Summer 2014: Three boil-water men is expected to begin the seams where corrosion has occurred, advisories are issued in 22 days after process, and engineers highlighted and take two to six months to begin positive tests for coliform bacteria. a number of technical fixes, such as lowering lead levels in city water. October 2014: A General Motors liners and coatings, in interviews Snyder has said publicly he is ex- engine plant stops using Flint water, with Crain’s. ASSOCIATED PRESS/PAUL SANCYA pecting phosphate coatings to help saying it rusts parts. The state Senate is expected this Water from the Flint River proved too corrosive for the city’s municipal water system, address the immediate problem, week to take up a state budget supple- leaching lead into the water. and a portion of the budget supple- Feb. 3: State officials pledge $2 ment for the current fiscal year, which ment going to the Senate further million for the water system. began Oct. 1, allocating $28 million to “We do know the replacement of city, not the mains or connectors that funds anti-corrosion measures. But March 27: Flint officials say water various immediate public health the entire system would be very run for miles and might also hold lead the bill is intended only to address quality has improved and that testing measures and some infrastructure. costly and take time,” Weiss said. elsewhere within the water system. immediate concerns in Flint, said finds it meets all safety standards. The House was quick to pass the new Officials from the Michigan De- State leaders budgeted $500,000 Snyder’s spokesman, Dave Murray. Sept.24: A group of doctors led by Dr. supplemental budget last week. partment of Environmental Quality just to study the city’s water infra- Experts said coating is an ongo- Mona Hanna-Attisha of Hurley Medical But that funding largely address- were not made available to Crain’s structure. ing commitment, and in many Center urges Flint to stop using the es needs like bottled water for nurs- to discuss the lead problem, the Another $2 million is proposed for places only all-new pipes will com- Flint River for water after finding high es, filters and funding to hire more city’s water infrastructure or the “additional water system needs in- pletely solve the problem. Liners lead levels in the blood of children. school nurses, with only a fraction anti-corrosion methods being used. cluding new system infrastructure,” can help, and in some cases are State regulators insist the water is safe. earmarked for infrastructure. None A preliminary estimate in a Sep- which Weiss said could pay for about half the cost of new pipes, but of the funding is expected to solve tember daily briefing to Gov. Rick hookup costs and final piping work they have limitations. Sept. 29: Gov. Rick Snyder pledges the bigger problem of how to get Snyder released along with some of to get the city connected with the “Six inches and up (pipe width) is to take action in response to the lead lead out of the city’s sprawling net- his emails last week pegged the cost Karegnondi Water Authority system the common application range for levels. It’s the first acknowledgment work of pipes. to replace lead service lines in the under construction. City leaders and installing pipe liners. There’s some 4- by the state that lead is a problem. Obama last week told a gathering city at $60 million or more, but some the state DEQ have been discussing inch technology that’s come to the Oct. 2: Snyder says the state will of mayors at the White House that a Flint city leaders, including Mayor how to spend the funds, he said. fore, but when you’re talking that size, spend $1 million to buy water filters bipartisan budget agreement last Karen Weaver, have estimated the But neither the interim recon- there’s still a cost issue and (water and test water in Flint public schools. month helps cities rebuild their bill could be as high as $1.5 billion. nection to metro Detroit’s own Great flow) capacity issue,” said Fred Oct. 8: Snyder calls for Flint to go water infrastructure and earmarks That’s probably excessive. Local ex- Lakes Water Authority about two Tingberg Jr., business development back to using Detroit water. $80 million for Michigan. perts told Crain’s the lead problem months ago, nor the Karegnondi manager of Lanzo Lining Services, one Kurt Weiss, a spokesman for the doesn’t seem to affect the entire city connection later this year, can re- of the Roseville-based Lanzo Cos. Oct. 15: The Michigan Legislature state Department of Technology, Man- equally — but the briefing estimate verse the corrosion that’s already “And what about the pipe running and Snyder approve nearly $9.4 agement and Budget, said “no long- seems to address only the cost of re- happened in water lines since the up into the house? There’s no liner million in aid to Flint, including $6 term infrastructure costs have been placing service lines that directly con- city separated itself from the Detroit on the market that’s going to make million to help switch its drinking identified,” as of last week. nect to homes and businesses in the system and began drawing water its way up the street and into a home water back to Detroit. The legislation also includes money for water filters, inspections and lab testing. Oct. 18: Dan Wyant, director of Federal,state money infusion for water system repairs could aid F Michigan’s Department of Environmental Quality, says the state By Robert Snell environmental experts weighed in disasters.For example, Enbridge En- cost of removing lead service lines used the wrong standard governing [email protected] on challenges and opportunities ergy Partners LP has spent an esti- on private property,” AWWA CEO lead in testing for drinking water. Flint’s long-term economic de- facing Flint, which is trying to pro- mated $1.2 billion cleaning up an David LaFrance said in a statement. Dec. 29: Snyder accepts the cline isn’t being helped by the vide safe tap water while pursuing oil spill that polluted the Kalama- Flint resident Mary Dye is frus- Wyant’s resignation and apologizes water crisis. long-term funding. The money zoo River in 2010. trated with her private property, a for what occurred in Flint. But when state and federal aid could help fix the water problem “No question there are business two-bedroom, fire-damaged home starts flowing to fix an aging net- and stem damage to Flint’s econo- opportunities, despite how heartless three miles east of downtown. Jan. 5, 2016: Snyder declares a work of lead water pipes, the econ- my, property values and the city’s or cold that might seem,” said Flint The house is for sale. Dye is asking state of emergency in Flint, the same omy could see a boost, experts said. beleaguered image, officials said. native Jimmy Greene, president and $10,000, though she and a friend paid day federal officials confirm that Work on the solution could be a “The ability to sustain the short- CEO of the Midland-based Greater $55,000 nine years ago. But since list- they are investigating. boon for businesses and contractors term focus and solve the underlying Michigan chapter of Associated ing the home in November, there’s Jan. 12: Snyder activates the tasked with replacing more than infrastructure problem, that’s always Builders and Contractors Inc. “It’s been no open house, no offers. Michigan National Guard to help 15,000 lead water pipes, based on the the challenge and will be the chal- disingenuous to pretend that this Now, there’s no chance of selling distribute bottled water and filters in experience of other cities that have lenge here,” said Stephen Barnes, di- won’t be a contractor boon.” amid the water crisis, she said. Flint and asks for federal help. suffered environmental disasters. rector of the Louisiana State University The recovery effort likely will “I’d take $2,000,” said Dye, 56, who The fixes won’t be cheap, and the Economics & Policy Research Group. provide work for excavators, un- cleans homes outside Flint for a living Jan. 14: Snyder asks President $80 million President Barack Snyder has appealed Obama’s derwater welders, gravel and ce- and fills up bottles of water at each Barack Obama for major disaster Obama promised for Flint last week denial of a disaster declaration, ment companies, and firms that home for cooking and for her dogs. declaration and more federal aid. won’t cover the bill. It could take 15 which would provide more finan- specialize in heating, ventilation Flint property values were plum- Jan. 16: Obama signs an emergency years and $60 million or more to re- cial help. and air conditioning, Greene said. meting before the water crisis, falling declaration and orders federal aid for place pipes that contaminated A briefing released along with Sny- Nationwide, the country’s 20 percent from 2012 to 2015, ac- Flint, but denies the request for a Flint’s tap water, according to Gov. der’s emails last week indicate there buried drinking water infrastruc- cording to Genesee County records. disaster declaration. Rick Snyder’s emails released last are more than 15,000 lead water ture needs more than $1 trillion The impact of a prolonged water Jan. 19: Snyder devotes most of his week, but Mayor Karen Weaver and pipes in Flint that need to be replaced worth of upgrades over the next 21 crisis on property values is unclear in annual State of the State speech to other city officials have said replac- at an average cost of $4,000 per pipe. years, according to the Colorado- a city and region trying to diversify the emergency, saying he failed Flint ing the entire system could cost $1.5 The estimate, totaling $60 mil- based nonprofit group The Ameri- following a loss of auto industry jobs, residents. billion. lion, falls short of other recovery can Water Works Association. particularly at General Motors Co. Source: The Associated Press, Crain’s research Business leaders, residents and projects following environmental “This figure does not include the GM remains the county’s largest 20160125-NEWS--0024,0025-NAT-CCI-CD_-- 1/22/2016 6:03 PM Page 2

CRAIN’S DETROIT BUSINESS // JANUARY 25, 2016 25 R: WHAT’S NEXT CRAIN’S DETROIT BUSINESS www.crainsdetroit.com Editor-in-Chief Keith E. Crain Group Publisher Mary Kramer, (313) 446-0399 or [email protected] e offing as Flint weighs next steps Associate Publisher Marla Wise, (313) 446-6032 or [email protected] Editor Jennette Smith, (313) 446-1622 or through that 3-quarter-inch line.” Act prohibits all but “lead free” Blaze Contracting Inc. all have held lin- $2 million for the replacement [email protected] The Sept. 28 briefing memo to pipes, solder and flux in public ing contracts with DWSD in the past, of plumbing fixtures, such as Director, Digital Strategy, Audience Development Nancy Hanus, Snyder estimates that Flint has about water systems or private plumbing often in collaboration with St. Louis- faucets and drinking fountains, in (313) 446-1621 or [email protected] 32,900 service connections to its lines that supply water for human based Insituform Technologies LLC. city schools, day care centers, adult Managing Editor Michael Lee, (313) 446-1630 or [email protected] public water systems, of which consumption. The rule requires But the traditional “bag liners” foster care centers and nursing Managing Editor/Custom and Special Projects 15,000 might be “considered lead public water systems to have 0.2 that generally get installed inside a homes, hospitals and surgical cen- Daniel Duggan, (313) 446-0414 or [email protected] service lines.” At $4,000 per home, percent lead solder and flux or less, pipe cannot effectively seal up joints, ters — although that applies only to Assistant Managing Editor Kristin Bull, they would cost $60 million to re- and contractors who spot lead or splits and intersections of pipes — above-ground fixtures. (313) 446-1608 or [email protected] News Editor Beth Reeber Valone, (313) 446-5875 place, although some home replace- joints or solder during pipe mainte- and the tools that unfurl them have $1.5 million for lead abatement or [email protected] ment costs can run as high as $8,000. nance are also supposed to report difficulty passing through pipes less at an extra 100 homes, with an esti- Senior Editor Gary Piatek, (313) 446-0357 But the contamination might not and replace them. But this rule is than 6 inches in diameter. mated cost of $15,000 per home. or [email protected] Research and Data EditorSonya Hill,(313) 446-0402 be citywide, particularly since unevenly enforced and doesn’t ad- A more recent polymer spray-on Work could include removing lead or [email protected] methods of laying and connecting dress repairs where no digging oc- liner can handle splits and joints or from plumbing components, such Editorial Support (313) 446-0419; YahNica Craw- ford, (313) 446-0329 pipes have changed dramatically curs and no packing is seen. bends in water lines, and Baglier said as faucets, aerators or fixtures, short Newsroom (313) 446-0329, FAX (313) 446-1687 , over the past century in older cities However, lead solder is usually ex- his company has installed liners in 5- of replacing the entire home TIP LINE (313) 446-6766 like Detroit and Flint. ternal and coatings in the pipe interi- inch lines before. But the cost can plumbing system, Weiss said. REPORTERS or and some naturally occurring min- vary drastically depending on how $90,000 for other residential Jay Greene, senior reporter Covers health care, in- Kettering testing surance, energy, utilities and the environment. eral deposits within the lines keep the many connections a length of pipe lead investigations, particularly in (313) 446-0325 or [email protected] President Robert McMahan of Ket- water out of contact with it — so long has, where in the city is being in- homes of children with high levels Chad Halcom Covers litigation, the defense indus- tering University try and education. (313) 446-6796 or in Flint said in a letter as the water itself isn’t too corrosive. stalled or even the place were it’s of lead in their blood. [email protected] to university parents and alumni last Aggressive anti-corrosion treat- used. Baglier’s company finished in- Flint is certainly not the only Tom Henderson Covers banking, finance, technology and biotechnology. (313) 446-0337 or week that the university has tested ments at the Detroit Water and Sew- stalling liners at a site in Saginaw and Michigan city to rely on lead pipes to [email protected] water from six input lines to the cam- erage Department usually kept Flint another in Cleveland last year, but carry drinking water. But the city’s Kirk Pinho Covers real estate, Oakland and Ma- comb counties. (313) 446-0412 or pus 15 times in the last several and other communities with old in- Baglier said his service is still more crisis laid bare the challenges of re- [email protected] months, and 12 of the tests detected frastructure out of danger, until the widely used in Canada than the U.S. placing underground infrastructure Bill Shea, enterprise editor Covers media, advertising and marketing, the business of no lead. Three samples that did city separated from DWSD and “In Flint, there are probably that is aging or failing, both in terms sports, and transportation. found levels ranging from 1 part to 7 began drawing water from the Flint many points of opportunity, where of cost and complexity. (313) 446-1626 or [email protected] Robert Snell, reporter Covers city of Detroit parts per billion — the U.S. Environ- River in 2014. this kind of lining technology could During his State of the State ad- and regional politics. (313) 446-1654 or mental Protection Agency usually al- Local experts said that water help. But in many cases, when the dress last week, Snyder said he will [email protected] Lindsay VanHulle, Lansing reporter. (517) 657- lows up to 15 parts per billion before source had more corrosive agents lines start going down to a certain create a commission to study 2204 or [email protected] seeking corrective action on lead. and wasn’t being treated as aggres- size they (cities) would just opt to Michigan’s infrastructure — water Dustin Walsh, senior reporter Covers the business of law, auto suppliers, manufacturing and “These were single point in time sively at first, until corrosion inside replace them. It becomes a dollars- and sewer lines, roads and bridges steel. (313) 446-6042 or [email protected] detections; later repeat testing of the pipes brought lead into the flow and-cents issue,” Baglier said. “And and broadband Internet, among Sherri Welch, senior reporter Covers nonprofits, services, retail and hospitality. (313) the same distribution points detect- of water. Once that happened, vir- there’s probably more lead in the them. The commission will be ex- 446-1694 or [email protected]

ed no lead,” McMahan states in the tually any pipes downstream from a houses and the service lines enter- pected to report recommended up- ADVERTISING letter. “(And) no lead has ever been leaching contamination point ing them than some of these mains dates — and ways to pay for them Sales Inquiries (313) 446-6032; FAX (313) 393-0997 detected in any water source used would be affected even if the other in the systems out there.” — by September. Sales Manager Tammy Rokowski for food preparation.” pipes contained no lead. Snyder called the state’s old un- Senior Account Executive Matthew J. Langan Funding options Advertising Sales Christine Galasso, Catherine At issue in Flint is lead within The damage could be contained derground pipes “a hidden prob- Grace, Joe Miller, Sarah Stachowicz water pipes and particularly lead and reversed by installing new liners The state budget supplement lem” out of sight until the next Classified Sales Manager Angela Schutte, (313) 446-6051 packing or “solder and flux” in the inside some pipes, said Tingberg and could reach the Senate by Tuesday. power failure, flood or water issue. Classified Sales Lynn Calcaterra, (313) 446-6086 joints or seams connecting pipe Jim Baglier, owner of Macomb Town- The measure also calls for spending: Yet as in Flint, lead underscored Events Manager Kacey Anderson lines, which cities used in pipe in- ship-based Superior Lining Services LLC, $36,500 on a year’s worth of the point. Creative Services Director Pierrette Templeton Senior Art Director Sylvia Kolaski stallation since at least the early because the water would no longer be anti-corrosion control, which in- “We need to invest more in Marketing Coordinator Ariel Black 20th century. in contact with the corroded surfaces. cludes adding phosphates to the smarter infrastructure so we avoid Special Projects Coordinator Keenan Covington A 1986 amendment by Congress Local contractors like Lanzo, In- water system to prevent lead from crises like this in the future,” Snyder Sales Support Suzanne Janik, YahNica Crawford to the federal Safe Drinking Water land Waters Pollution Control Inc. and leaching from pipes. said during his annual address. Editorial Assistant Nancy Powers Production Manager Wendy Kobylarz Production Supervisor Andrew Spanos

CUSTOMER SERVICE Deloitte responds to Flint’s need Main Number: Call (877) 824-9374 d Flint’s economy,experts say or [email protected] Subscriptions $59 one year, $98 two years. Out of Among business the citizens of Flint, De- state, $79 one year, $138 for two years. Outside employer with 7,500 employees, but lowing the crisis,” researchers wrote. leaders helping with the loitte has begun to work U.S.A., add $48 per year to out-of-state rate for surface mail. Call (313) 446-0450 or (877) 824-9374. that’s down from more than 80,000 Flint & Genesee Chamber of response to Flint’s water with Mayor Weaver and Single Copies (877) 824-9374 in the late 1970s, according to a 2011 Commerce leaders are awaiting re- crisis is Mark Davidoff, her team to assess the Reprints (212) 210-0750; or Krista Bora at [email protected] study by Michigan State University. sults of a survey sent to 1,200 mem- Michigan managing situation, with sole To find a date a story was published (313) 446- Other top employers include bers that could help pinpoint the partner for Deloitte, who focus on the path for- 0406 or e-mail [email protected] Crain’s Detroit Business is published by Genesys Medical Center, McLaren Re- economic impact of the water crisis. is coordinating response ward for the city of Crain Communications Inc. gional Medical Center, Hurley Medical “Then we can zero in on their from the accounting Flint,” Davidoff said in a Chairman Keith E. Crain Center and Wal-Mart Stores Inc., ac- needs,” chamber CEO Tim Herman and consulting firm. written statement. President Rance Crain Treasurer Mary Kay Crain cording to the Flint & Genesee Cham- said. “There’s going to have to be a “As Mayor (Karen) Mark Davidoff Messages seeking Executive Vice President/Operations ber of Commerce. lot of resources pumped into Flint Weaver continues her comment from the city William A. Morrow Executive Vice President/Director of Strategic A study following the 1979 nuclear by the state and federal government efforts to respond to the needs of were not returned. Operations Chris Crain meltdown on Three Mile Island in to get the infrastructure right.” Executive Vice President/Director of Corporate Operations KC Crain Pennsylvania shows a gap between The crisis complicates his attempts Vice President/Production & Manufacturing perceptions about the economic im- to lure businesses and residents to Dave Kamis Chief Financial Officer Thomas Stevens pact of a crisis and reality. Flint and capitalize on momentum INDEX TO COMPANIES Chief Information Officer Anthony DiPonio In July 1979, 32 percent of people that includes about $400 million in- These companies have significant mention in this week’s Crain’s Detroit Business: G.D. Crain Jr. Founder (1885-1973) polled believed that their property val- vested in downtown since 2000. Mrs. G.D. Crain Jr. Chairman (1911-1996) 365 Retail Markets ...... 3 Mich. Dept. of Tech.,Management, Budget...... 24 Editorial & Business Offices ues had fallen and 9 percent said they That figure includes money spent Beringea...... 12 Michigan State University ...... 14 1155 Gratiot Ave., Detroit MI 48207-2732; knew people who had sold a home on University of Michigan-Flint resi- The Broe Group...... 11 Millendo Therapeutics...... 11 (313) 446-6000 Cable address: TWX 248-221-5122 AUTNEW DET Companion ...... 15 Molina Healthcare of Michigan ...... 23 and received less money due to the dence halls, a proton beam treatment CRAIN’S DETROITBUSINESS ISSN # 0882-1992 is pub- meltdown, according to the 1988 center and renovating a mass transit ContentOro ...... 14 Plymouth Venture Partners...... 14 lished weekly,except fora special issue the third weekof Flint & Genesee Chamber of Commerce...... 24 Quicken Loans...... 6 November,and no issue the third weekofDecemberby study The Three Mile Island Crisis Psy- terminal. Crain Communications Inc.at 1155 Gratiot Ave.,Detroit Flint Area Health Coalition...... 23 ReCellular ...... 14 MI 48207-2732.Periodicals postage paid at Detroit,MI chological, Social, and Economic Im- “You take a couple steps forward Gallagher Benefit Services ...... 18 Renaissance Venture Capital Fund...... 11 and additional mailing offices.POSTMASTER: Send ad- pacts on the Surrounding Population” and three steps back,” Herman said. Group Associates...... 18 Schmaltz Hospitality ...... 3 dress changes to CRAIN’S DETROITBUSINESS,Circula- tion Department,P.O.Box07925,Detroit,MI 48207-9732. “However, subsequent studies of “We’re fighting a lot of negativity. HealthPlus of Michigan ...... 23 Superior Lining Services...... 24 GST# 136760444.Printed in U.S.A. real estate sold near (Three Mile Island) The people here are strong and re- Hurley Medical Center ...... 23 Three Leaf Ventures...... 11 Entire contents copyright 2015 byCrain Communica- Lanzo Lining Services...... 25 Verii ...... 3 tions Inc.All rights reserved.Reproduction oruse ofedi- showed no significant change in either silient, and I’m confident we will torial content in anymannerwithout permission is volume or value of sales in the year fol- overcome this.” Michigan Angel Fund...... 13 Wins for Warriors...... 4 strictly prohibited. 20160125-NEWS--0026-NAT-CCI-CD_-- 1/22/2016 5:45 PM Page 1

26 CRAIN’S DETROIT BUSINESS // JANUARY 25, 2016 ON THE WEB RUMBLINGS WEEK JAN. 16-22 ment Authority, Troy-based non- UM-MSU rivalry game gets Pistons up to Detroit Digits profit Community Housing Network A numbers-focused look at last will develop 72 new affordable $850M in value, week’s headlines: housing units in Oak Park and new Detroit-based trophy Pontiac, with occupancy by the end of 2017. he winner of the Feb. 5 to Jefferson Avenue, Tim Mahoney, Forbes says 38,911 Ⅲ Armed with nearly 3.1 acres hockey game between the chief marketing officer and leader, he Detroit Pistons were es- The net loss of residents Michigan of property ready for a new inter- T University of Michigan and global Chevrolet, and global mar- timated by Forbes to be suffered between July 2014 and modal transit center along the M-1 Michigan State University at Joe Louis keting operations for GM, said dur- T worth $850 million, a $40 July 2015, according to the U.S. Rail line, the Michigan Department Arena will receive the new “Iron D” ing a media briefing last week. He million increase over 2015 and a Census. Young, educated people of Transportation is expected to trophy. declined to discuss the cost of the $400 million improvement over are leaving the state in great issue a request for proposals or The Detroit Red Wings, who oper- project or projected investment. 2014. The value ranks No. 22 in numbers, with a net migration loss qualifications this quarter that ate Joe Louis and play there, com- Developed with GM’s design the 30-team National Basketball As- of 0.7 percent of those ages 22-34 could lead the way for a new missioned brothers Erik and Israel team, Neumann Smith Architecture sociation. Also, during an appear- with a bachelor’s degree or higher. mixed-use development in the Nordin of the Detroit Design Center to and EWI Worldwide, the project is set ance in Detroit, NBA Commis- New Center area. sculpt the trophy. to be finished before the end of 2018. sioner Adam Silver was 15,000 Ⅲ Detroit’s popular WRIF 101.1 Most of the trophy is stainless noncommittal about the possibil- The square feet in One Campus FM “Dave & Chuck the Freak” steel, but the “D” is hand-forged Local health care CEO to ity of the Pistons moving down- Martius, formerly known as the morning show was renewed for carbon steel, Erik Nordin said. participate on Clinton panel town from Auburn Hills but said Compuware Building, that Plante an additional four years, through Other elements of the trophy will he was “keeping a close eye” on Moran PLLC is adding. The 2020, by station owner Greater be a cup and a base that will list the Reginald Eadie, CEO of Detroit discussions. Southfield-based accounting firm Boston Radio Inc. Financial terms winners of the game from each sea- Medical Center’s Detroit Receiving, is doubling its current leased were not disclosed. The show, son. Details on the trophy will rep- Harper University and Hutzel Women’s COMPANY NEWS space with a goal of adding 70 which began in 2001 on Windsor’s resent the game of hockey, both hospitals, will join a panel at Bill more employees to its Detroit CIMX 88.7 FM, has been on WRIF universities, the city of Detroit and Clinton’s fifth annual Health Matters Ⅲ American Blue Ribbon Holdings office. since 2013. the new Red Wings arena now Activation Summit on Monday in LLC, the Denver-based parent Ⅲ Most of Detroit’s public under construction downtown. Coachella Valley, Calif. company of the Max & Erma’s schools closed for the day Jan. 20 The commission price was not Eadie, an emergency physician restaurant chain, suddenly closed 92 due to teacher absences, as edu- disclosed. who was a Crain’s Health Care Hero The age of Howard Tanner, former eight of its 11 metro Detroit loca- cators stepped up efforts to UM hockey coach Red Berenson in 2013, is the only hospital execu- director of the state Department tions. A company statement cited protest Gov. Rick Snyder’s plans for and MSU coach Tom Anastos visited tive to sit on the panel, which in- of Natural Resources. Tanner is “streamlining operations and un- the district’s ramshackle finances the Nordins’ studio earlier this cludes two other health care execu- working with a Michigan State derperforming locations” in clos- and dilapidated buildings. Orga- month to help forge the trophy cen- tives. Representing DMC and its University-led effort called Project ing sites in Ann Arbor, Auburn nizers said the sick-out was timed terpiece, a 1½-inch-thick iron letter owner, Dallas-based Tenet Health, he F.I.S.H. to educate youth on the Hills, Canton Township, Livonia, to coincide with a visit to the city “D.” The trophy will be awarded an- will discuss the nation’s health care importance of the Great Lakes. Novi, Plymouth Township and by President Barack Obama for the nually to the winner of the rivalry challenges and rising death rates. Rochester Hills. North American International Auto game at Joe Louis. This year’s Clinton health sum- Ⅲ A subsidiary of Dan Gilbert’s hurdles it faced before it could Show, AP reported. Majority Re- mit will focus on innovations in Bedrock Real Estate Services pur- commercialize its lead drug in publicans in Michigan’s Legisla- health, living longer and technolo- chased the three-building Lofts @ fighting metabolic diseases. ture proposed legislation to make gy. Other panel members come Woodward Center from a Farbman Ⅲ Portland, Ore.-based Pendle- it easier to deem such work stop- from a variety of industries, includ- Group entity for an undisclosed ton Woolen Mills is closing its three pages illegal strikes. ing technology, business, educa- price. Bedrock’s 1448 Webward Av- Michigan stores, including loca- Ⅲ The U.S. Supreme Court re- tion, sports and government. enue LLC bought the buildings, tions in Rochester Hills and fused to give businesses a new Clinton will moderate the panel, plus a small surface parking lot, Northville, by March. tool for stopping class-action with members first sharing their from Farbman’s Woodward Center Ⅲ The Kroger Co. of Michigan lawsuits, saying a defendant can’t perspective and expertise in front of LLC. The lofts, which consist of 61 plans to offer its Clicklist service end a case simply by offering full an expected gathering of several residential units and 15,000 providing online shopping and payment to the lead plaintiff, hundred health care leaders. square feet of retail storefronts, store pickup starting Feb. 3 at the Bloomberg reported. The 6-3 rul- are on the M-1 Rail line, to begin new Kroger in Roseville. The serving was a setback for Detroit- Custom suit maker 1701 service in 2017. ice debuted in the state last based marketing agency COURTESY DETROIT DESIGN CENTER Bespoke opens in Midtown Ⅲ Hogan’s, a fixture in Bloom- month at a Northville location. Campbell Ewald, which was sued The “Iron D” trophy will go to the winner field Hills for 40 years, is set to Ⅲ General Motors Co. is consoli- for allegedly sending unwanted of the annual Michigan-Michigan State Custom men’s clothier 1701 Be- close at month’s end, said a post- dating and expanding its car- text messages as part of a con- hockey game at Joe Louis Arena. spoke opened its flagship store last ing on the website of the golf- sharing programs under a new tract to help the U.S. Navy with re- week at Woodward Avenue and themed restaurant. According to brand, Maven, in its latest push to cruiting. Willis Street in Midtown Detroit. the Detroit News, owner Richard adapt to new business models, Ⅲ Detroit-based Quicken Loans GM plans facelift for The opening marked the end of a Bochenek said the building at Automotive News reported. Inc.’s latest sports marketing ini- Renaissance Center long search for the shop, which 6450 Telegraph Road will be torn Ⅲ The Detroit Tigers signed free tiative is a basketball ticket closed its temporary pop-up space down. agent outfielder Justin Upton to a sweepstakes at 26 colleges, in- General Motors Co. plans this in the Chrysler House in the city in Ⅲ In an effort to expand its cov- six-year, $132.75 million contract. cluding the University of Michigan summer to launch a large-scale late 2014. It opened a satellite fitting erage of the city of Detroit, Detroit Upton, 28, batted .251 with 26 and Michigan State University. Par- renovation of its Detroit headquar- room in Birmingham in April 2015. Public Television entered a two- home runs in 150 games last sea- ticipants will have a chance to ters, the Renaissance Center. Build-out of the new 2,700- year agreement with the Detroit son with the San Diego Padres. win tickets for the 2016-17 sea- The 120,000-square-foot renova- square-foot fitting and showroom Historical Society to work from the Meanwhile, Southfield-based Fox son. tion will include an addition to ex- at 4160 Woodward Ave. cost more Detroit Historical Museum. DPTV’s Sports Detroit said it will air six Ⅲ Former Detroit Mayor tend the section of the complex than $70,000, founder Max Schmidt WTVS-Channel 56 will gain the use Tigers spring training games in Kwame Kilpatrick is asking the U.S. housing the People Mover station said. Ⅲ of more than 1,100 square feet of March. Supreme Court to overturn his cor- editorial space at the museum. Ⅲ The Detroit Lions selected ruption conviction and 28-year Ⅲ Rosemont, Ill.-based private Chicago-based Levy Retail Group as prison sentence, AP reported. The equity firm Wynnchurch Capital LLC the new retail merchandise con- request was recently made after a announced the establishment of a cessionaire at Ford Field, accord- federal appeals court said in Oc- Bloomfield Hills-based industrial ing to a report from Sports Busi- tober it had no interest in taking a investing arm, Wynnchurch Indus- ness Daily, which did not report second look at the case. tries LLC, to invest in industrial the deal’s financial terms or materials companies. length. OBITUARIES Ⅲ A federal class-action lawsuit Ⅲ filed against Ann Arbor-based Es- OTHER NEWS Glenn Frey, the Detroit-born, perion Therapeutics Inc. alleged the Royal-Oak raised guitarist and co- drug-development company Ⅲ After securing $19 million in founder of the famed rock band COURTESY GENERAL MOTORS CO., NEUMANN/SMITH ARCHITECTURE, EWI WORLDWIDE made false and misleading state- tax credit reservations from the the Eagles, died Jan. 18 in New General Motors says its planned updates to the exterior of the Renaissance Center will act ments last year about regulatory Michigan State Housing Develop- York City. He was 67. Ⅲ as a beacon to draw people to the building on Jefferson Avenue in downtown Detroit. DBpageAD_DBpageAD.qxd 1/11/2016 10:18 AM Page 1 DBpageAD_DBpageAD.qxd 1/14/2016 4:11 PM Page 1

12-21-15 | 2:17 PM | GMRENCEN, HART PLAZA

BOB AND MARLOWE ARE reflecting A NEW DETROIT. STORYTELLERS. HISTORIANS. REFLECTIVE DETROITERS.

BOB AND MARLOWE TELL US WHY DETROIT’S HISTORY MATTERS. That everyone has a story – some epic, some small, but all meaningful. Bob Bury, Detroit Historical Society CEO, preserves Detroit’s remarkable stories and explains why they matter. Marlowe Stoudamire leads the Society’s Detroit ‘67 project, promoting an understanding of Detroit’s last 100 years – and showing how what we’ve learned can make us stronger going forward. Our shared history unites and inspires us, and makes us unique. Let’s keep making history, Detroit! GMRENCEN is celebrating the spirit and vision of the SHRSOHRI'HWURLW/HDUQPRUHDWUHŴHFWLQJGHWURLWFRP

#REFLECTINGDETROIT