Big Impasse in Talks with State
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20120326-NEWS--0001-NAT-CCI-CD_-- 3/23/2012 7:19 PM Page 1 ® www.crainsdetroit.com Vol. 28, No. 13 MARCH 26 – APRIL 1, 2012 $2 a copy; $59 a year ©Entire contents copyright 2012 by Crain Communications Inc. All rights reserved Page 3 Sports Hall of Fame is game to drop debt Lawmakers quick with fix CPAs wanted: M&A, better Courts put real estate investors on the hook; bill frees them economy drive job growth BY DANIEL DUGGAN the state’s most prominent real es- The bill, which is awaiting sig- “The implications were huge,” CRAIN’S DETROIT BUSINESS tate investors and developers — in- nature from Gov. Rick Snyder, said Janet Langlois, executive di- cluding the brother of Robert voids a provision in many signed rector of the Building Owners and Inside It took two court decisions to Schostak, chairman of the Michi- loan agreements that allows Managers Association, the trade highlight a way for lenders to pur- gan Republican Party — worked lenders to sue for the personal as- group representing developers and sue the personal bank accounts of with industry groups and legisla- sets of real estate investors in the investors, leading the efforts. Opera Theatre en route some real estate investors whose tors to counteract the rulings. event of foreclosure. “There was risk to investors for to paying down debt, Page 4 buildings went into foreclosure. Their goal was to retroactively However, investors contend that future development, but also risk And then it took just three indemnify real estate investors they paid higher interest rates on for everything they have.” weeks for a bill to pass both the against personal liability in non- bonds sold to support projects The case that started it all in- Michigan House and Senate to pro- recourse loan agreements, and to based on the understanding that volved the Cherryland Center at M&A Awards tect those investors’ assets. specifically stipulate that only their personal assets were not at In a quiet, coordinated effort, buildings can be used as collateral. risk. See Contracts, Page 29 V for vision: Lifetime Achievement winner led the way on Big impasse in talks investment strategy, Page 11 with state: Finances Crain’s List Question is who can solve it Largest accounting firms, BY NANCY KAFFER Page 18 CRAIN’S DETROIT BUSINESS Arguably, people If the Michigan Court of Appeals “ lifts an injunction today barring should be able to sit This Just In the state and the city of Detroit from entering into a consent down and figure this Chrysler Group continues agreement, it’s possible that the out, but they haven’t JOHN SOBCZAK Auburn Hills expansion two sides could reach a deal by Bill Hellebuyck works with son and sales manager Dave at Hellebuycks day’s end. so far. Power Equipment Center in Warren, where seasonal sales have sprouted Chrysler Group LLC has con- If the city and the state reach a ” earlier than usual this year. tinued its expansion in consent agreement, it’s possible Patrick O’Keefe, Auburn Hills with the lease Detroit could avoid the appoint- O’Keefe & Associates of a 147,000-square-foot office ment of an emergency manager. building at 2301 Featherstone And if the state is sufficiently Road. satisfied with without the expanded powers a Temp work It follows a Chrysler lease BING’S MAN the consent consent agreement would grant in May of 210,000 square feet agreement that him or the restrictions of report- of office space at 1075 En- State signals no it allows De- ing to a state-controlled advisory Businesses warm up to early spring trance Drive and the lease of love for COO Chris troit to sell board. Terry Stanton, communica- Brown, Page 28 about $137 mil- tions director for the Michigan De- 400,000 square feet of indus- BY MEGHANA KESHAVAN He said that in typical years, lion in bonds, partment of Treasury, didn’t re- trial space in Redford SPECIAL TO CRAIN’S DETROIT BUSINESS the company gets about two or it’s possible that the city won’t run spond to an email asking whether Township in December. three service repair requests per out of money in May. the state accepts Bing’s assertion The Featherstone building Local businesses that thrive day in March — but in light of That’s a lot of ifs. that he can get the job done. is owned by a joint venture of on the great outdoors are report- the warmer weather, they’ve The city’s financial situation is But turnaround and municipal Farmington Hills-based Pre- ing a surge in business linked to been averaging about 50 per day so precarious that any snag in the experts are skeptical. mier Equities and Southfield- this month’s unseasonably warm this month. works would likely mean that Gov. “It hasn’t been done yet,” said based General Development Co. temperatures. “Honestly, in 37 years of busi- Rick Snyder would appoint an Patrick O’Keefe, founding princi- The two investors were Real estate, recreation and ness I’ve never been in this situa- emergency manager, one of two pal at O’Keefe & Associates, a able to purchase the building landscaping companies have ex- tion,” he said. options — along with the consent Bloomfield Hills-based turn- for $900,000 when Chrysler perienced increased sales or cus- As of Friday, there were nine agreement — identified by a state- around firm. “Arguably, people was forced to sell its assets as tomer demand thanks to the days in March with tempera- appointed review team examining should be able to sit down and fig- part of its bankruptcy re- warm weather. Farmers and tures above 70, although the fore- Detroit’s finances. ure this out, but they haven’t so structuring, Crain’s reported agriculture businesses, however, cast this week calls for temps in At the same time, Detroit Mayor far. So you have to wonder if in March 2010. are concerned about how the the 40s and 50s. Dave Bing continued to argue last they’re capable of doing this.” — Daniel Duggan temperature spikes will impact Increases in retail and com- week he can fix the city’s problems “The city has had a general fund their crops later in the growing mercial fuel purchases are up, deficit every year since 2002 and season. which will help to balance out an every year since 2002 there has “It’s gotten pretty crazy,” said underperforming winter, said been a deficit elimination plan, Bill Hellebuyck, president and Keith Albertie, executive vice and none of those plans has ever CEO of Hellebuycks Power Equip- president of RKA Petroleum Cos. been fully implemented,” said Bet- ment Center Inc., a lawn care re- Inc. in Romulus. tie Buss, a senior research analyst tailer with locations in Warren “The warm weather has actu- at the nonpartisan Citizens Re- and Shelby Township. “We did ally helped us,” he said. “We did- search Council. more business last Friday than n’t sell as much heating oil this “If you ask technically is it pos- NEWSPAPER we did in the entire month of See Finances, Page 28 February.” See Spring, Page 25 20120326-NEWS--0002-NAT-CCI-CD_-- 3/23/2012 5:39 PM Page 1 Page 2 CRAIN’S DETROIT BUSINESS March 26, 2012 MICHIGAN BRIEFS MEDC wants ‘economic Solo in a thoughtful, analytical manner to ensure lasting success.” gardening’ program to take root Kettering’s tuition plan: Do fixed rates fix the cost? Michigan needs to do less hunt- MICH-CELLANEOUS ing and more gardening when it Kettering University is switching to a fixed-rate tu- tors. “I’d describe it largely as a marketing ploy comes to economic development. ition model meant to take the guesswork out of bud- aimed at quelling people’s fears about increases in Ⅲ Organizers of Gilda’s LaughFest That was a key message delivered geting for a college education. The program locks in higher education costs,” said Christopher Mor- in Grand Rapids (Michigan Briefs, last week at an event in Grand a tuition rate for 10 semesters. The Flint-based col- phew, chairman of educational policy and leader- March 19) say attendance at the Rapids spotlighting a Michigan Eco- lege also will eliminate academic fees and aims to be ship at the University of Iowa and author of a paper ti- second annual event totaled 56,294 nomic Development Corp. pilot pro- a national leader in containing higher education tled Fixed Tuition Pricing: A Solution That May Be over 10 days, beginning March 8. gram aimed at helping second-stage costs, it says in a press release. Worse Than the Problem. In last year’s debut, the comedy companies. Those are businesses Kettering’s freshman 2012 tuition is about $17,000 “You charge people more than they would have festival attracted 55,376 attendees. with 10 to 99 employees and $1 mil- per semester — or $136,000 over eight semesters, ex- paid their first two years and less than the last two Ⅲ The Kent County Board of Public lion to $50 million in annual sales. cluding room and board. The university said that if, years — it equals out,” he said. “The only thing is that Works has extended by 90 days — to In November, the MEDC alternatively, it used a standard plan and tuition in- it’s nice for families and students to know what their June 15 — the public comment pe- launched a pilot of Pure Michigan creased 5 percent each year, an eight-semester edu- costs are going to be over the next four or five years.” riod for input on an amendment to Business Connect, which pairs sec- cation would cost about $140,000.