06/16/13 It seems somewhat odd that one outcome of Kevyn Orr's deficit reduction plan for Detroit is a $1.25 billion investment in blight reduction and improved public safety. But the truth of the matter is this: Living within a budget is important, but cost-cutting doesn't drive success. Eventually you have to invest. That's true for business, and it's true for cities as well. And Orr has repeatedly made the point that a city whose citizens don't feel safe will find it hard to prosper. Put in business terms, you can't drive revenue growth through taxes paid without people and businesses to pay them, the more the better.
06/10/13 The sorry tale of the money-sucking Wayne County Consolidated Jail will play out in the months -- perhaps years -- to come. Was it pure incompetence or something else that led to costly overruns? But there could be a silver lining: A 60-day construction moratorium imposed last week presents a chance to hit the reset button. The county must revisit the entire project, including the jail location. On the table is an intriguing proposition: Move the jail -- and even the county circuit and district courts -- from downtown to the 39-acre site of a shuttered state prison, not quite 20 years old. The state has offered the county a lease of the prison site for $1 a year.
06/03/13 Wayne State University soon will name a successor to President Allan Gilmour, and that person will take the reins of an institution struggling to fulfill its mission as an educator of students and a full partner in the University Research Corridor. As Chad Halcom and Tom Henderson report beginning on Page M13, the university's six-year graduation rate is below 30 percent, the Michigan Economic Development Corp. is unhappy with the school's ability to commercialize technology, and ongoing bad blood between the administration and a prominent professor in the engineering school is perhaps Exhibit A in ongoing management difficulties. For the new president, we have a couple of wishes:
05/26/13 The proposed merger between the Henry Ford and Beaumont health systems came to an abrupt end last week. Although it had the air of a surprise, many in the health care industry seemed to hold the view that it was a bigger surprise that it was contemplated at all. As Jay Greene reports on Page 1, the issues were many, but the main ones seemed to boil down to whether Royal Oak or Detroit would dominate post-merger and the discomfort of many Beaumont physicians with Henry Ford's staff doctor, top-down model. With the clarity of hindsight, those issues look like ones that should have been identified as deal killers in advance of serious talks. However, both systems had attributes that were potentially valuable to the other.
05/19/13 Can the city of Detroit avoid bankruptcy? We may have an answer sooner than we think. Emergency Manager Kevyn Orr, in an interview with Crain's last week, said that he expects to be able to determine that question as soon as the next month or two, based on the progress he is able to make in restructuring city finances. Orr released his report detailing the extent of Detroit's financial problems plan on May 12, and although the news was of the kind that everyone expected, its magnitude was greater.
05/13/13 Gov. Rick Snyder is having trouble getting support from his own party on two major initiatives -- road infrastructure and expanding health coverage to the poor. Last week, GOP House Leader Jase Bolger presented a plan that extends health coverage but creates a lifetime cap of four years. The move is viewed as an assault on low-income residents and will likely touch off another round of partisan feuding. Snyder originally proposed taking advantage of large federal contributions for expanding Medicaid and banking savings from related areas to help pay for future cost increases. He and a handful of other Republican governors have proposed taking the federal money, but like Snyder, they are battling their own party members.
05/07/13 Mary Sue Coleman plans to retire in 2014 as president of the University of Michigan. Her legacy at UM has many accomplishments, but one of the most significant is the decision to purchase the former Pfizer complex for $108 million. The facility, now known as the North Campus Research Complex, is a 28-building, 2.1-million-square-foot complex that houses more than 2,000 employees. And there's more to come.
04/30/13 Business needs certainty. Detroit needs business. But business attraction and retention are taking a big hit because the Detroit Water and Sewerage Department has badly bungled efforts to recoup fees it neglected to charge property owners for years for treating "water runoff." As Kirk Pinho reported last week, 1,200 commercial and industrial property owners were stunned to receive huge bills -- as high as $54,000 for a year -- for water treatment services.
04/22/13 Around the country, regions pull together to promote themselves as good places to do business, whether they're the Research Triangle in North Carolina, the Allegheny Conference in greater Pittsburgh, the Greater Houston Partnership or the Metro Atlanta Chamber. The story Southeast Michigan can tout is getting better and better, but the key players need to be on the same page. That's why Oakland County's decision to drop out of the Detroit Regional Chamber's fundraising toward an aggressive regional marketing program is so disappointing. (See story, Page 1.)
04/14/13 Detroit's top attorney told the City Council last week that there is no conflict of interest in giving what is surely a multimillion-dollar contract to the Jones Day law firm. We beg to disagree. Until last month, Detroit's new emergency manager, Kevyn Orr, was a Jones Day partner. Yes, technically, he resigned and surrendered his partnership to take the Detroit job. But awarding the contract will absolutely reinforce a pervasive suspicion in Detroit that rules exist for "other people" -- not the well-intentioned power brokers trying to put Detroit back together. This is not the message you want to send as the city emerges from the taint of fraud and insider deals during the era of Kwame Kilpatrick Inc.
04/08/13 At last, Michigan will have a system of business courts that focus solely on business cases. A law enacted in 2012 took hold last week with appointments of judges to this specialized bench. (See Week on the Web.) This has been a quest for nearly 10 years by some lawmakers as well as judges and the State Bar of Michigan. In theory, judges with a focus and specialization to handle those cases will move business dockets more quickly. Wayne, Washtenaw, Macomb and Monroe counties each now has a specific judge assigned to the business docket. In Oakland's case, two judges -- James Alexander and Wendy Potts -- were assigned.
03/24/13 Ask any business owner whether he or she can predict business conditions eight years out. Few in 2000 could have predicted the economic meltdown in 2008, from which we are still recovering. That alone is one reason to be critical of the eight-year pact the board at Wayne State University approved with its faculty union. WSU leaders are now trying to defend the indefensible -- the longest pact in the school's history, one that also preserves the union's ability to collect mandatory dues. Timing is everything; this pact was signed just ahead of the state's new right-to-work law, which would give faculty a chance to opt out of paying dues. True, employees will contribute more for health care, but the intent was clear: Help the union secure its dues stream. This would never have happened in the private sector.
03/18/13 Kevyn Orr, Detroit's new emergency manager, was very clear. He wants to get in and get out in 18 months -- if key stakeholders would come to the table to hammer out the city's restructuring. Orr's appointment is a turning point -- for Detroit and the region. He brought the right tone to the press conference that followed his introduction by Gov. Rick Snyder -- expressing a desire for collaboration but carrying the Teddy Roosevelt-worthy big stick of a Chapter 9 bankruptcy filing. It's a tough balancing act. A number of hard decisions will need to be made over the coming months, but if Detroiters don't believe that those decisions have been made with their best interests in mind, longer-term success becomes harder.
03/12/13 The opening of "Oz the Great and Powerful" last week has made many in Michigan nostalgic for the Granholm-era film credits that led to numerous movie star sightings around the area. But let's take a look behind the curtain. The movie was filmed in Pontiac at what is now Michigan Motion Picture Studios, run by Linden Nelson and backed by Al Taubman and John Rakolta, among others. The project was vastly ambitious -- and vast. The cavernous building was designed to be able to accommodate all facets of filmmaking, and director Sam Raimi described it as "the best I've ever seen."
03/03/13 An emergency manager? Or no emergency manager. That is the question -- and we are tired of it. The drawn-out drama over Detroit's finances continues, with Gov. Rick Snyder confirming the city's financial crisis last Friday while allowing the 10-day appeal process to unfold before naming a financial manager. Meanwhile, the anti-manager rhetoric was escalating, with two mayoral candidates accusing the state of fudging numbers and a third, Mike Duggan, announcing that EMs have not worked in Pontiac. Au contraire. As Kirk Pinho reports on Page 1, Pontiac's no-nonsense, straight-talking emergency manager, Louis Schimmel, has reduced costs and improved basic services -- all while creating a foundation for new business investment in the city. Democratic Oakland County Treasurer Andy Meisner even applauds Schimmel's work.
02/27/13 Advocates for maintaining unlimited medical care for those injured in Michigan traffic accidents got a powerful ally last week: Oakland County Executive L. Brooks Patterson denounced proposed changes to the state's no-fault auto insurance law that would cap medical expenses now paid by the Michigan Catastrophic Claims Association. Still recovering from his own traumatic auto collision last year, Patterson knows his driver and friend remains paralyzed and benefits from uncapped care. Patterson also maintains that changing the insurance terms would cost jobs in his county and around the state.
02/18/13 Mayor Dave Bing walked a fine line in his State of the City address last week, acknowledging Detroit's deep financial problems while outlining ways in which the city's future is improving. The address was the last State of the City of Bing's first term and possibly his last as mayor, since he has not yet said whether he intends to seek re-election. The effect was bittersweet. The specter of an emergency financial manager loomed, and the mayor's insistence on assigning the primary blame for the city's financial problems to cutbacks in state revenue sharing is getting old.
02/10/13 Gov. Rick Snyder broke ranks with the majority of Republican governors last week when he called for an expansion of Medicaid eligibility in his 2014 budget address. The expansion has been controversial among Republicans, in part for ideological reasons because of its ties to federal health care reform, but also because of concerns about long-term costs. The plan would expand Medicaid eligibility up to 133 percent of the federal poverty limit. In exchange, the federal government has promised to fully cover the additional cost through 2016 and limit the state's liability to 10 percent after that.
02/04/13 Public sector unions working under contract extensions are now trying to lock in long-term contracts that would skirt the terms of Michigan's new right-to-work law. As Chad Halcom reports on Page 3, unions are launching legal challenges. And faculty unions at Wayne State and Western Michigan universities are seeking new long-term contracts -- as long as 10 years -- before March 28, when the right-to-work law takes effect. Other universities and K-12 school districts are seeking similar pacts or separate agreements that preserve mandatory collection of union dues from employees covered by the contracts. The new law allows workers to opt out. How will all these strategies work?
01/28/13 Will Detroit get a new downtown hockey arena? And who will finance -- and own it? Bill Shea reports on Page 1 that the Ilitch family, which owns the Detroit Red Wings, has floated state ownership and financing through the Michigan Strategic Fund, a little-known but powerful entity with bonding authority. People close to the November meeting that explored such a deal aren't talking. Public ownership and even financing aren't uncommon. Both Comerica Park and Ford Field are owned by a public Detroit-Wayne County stadium authority, which leases both to Wayne County. The county, in turn, has contracts with the teams to manage the facilities.
01/21/13 Michigan needs to invest more dollars into its roads. How to pay for the extra $1.2 billion that Gov. Snyder proposed in his State of the State message last week is the problem. Despite the projected 12,000 jobs that the investment would lead to, Democrats are wary of helping any Snyder plan that would raise taxes on working- and middle-class voters. And both Republican and Democratic lawmakers may be wary of enacting taxes that would invite primary challenges in 2014.
01/17/13 Detroit has seen lots of studies, lots of plans. But the framework for the city's future unveiled last week could be the beginning for historic transformation. At the same time, Detroit's elected leadership -- or state-appointed managers -- must fix the underlying financial and managerial issues crippling municipal operations. Detroit Future City doesn't "shrink" the city or call for wholesale movement of residents from one neighborhood to another. But it does look strategically at core employment areas, reuse of land for parks and even ponds, better basic services such as lighting and getting people to job centers more quickly through transportation.
01/07/13 Yes, the city of Detroit faces major financial hurdles in 2013, the homicide rate is up and the Pistons and Lions continue to disappoint. But not all the news is bad, and so to begin 2013, we'd like to highlight five bits of good news: • The automotive industry continues to thrive. A strong December is expected to push U.S. vehicle sales to about 14.5 million, the best annual total since 2007. According to Crain's sister publication Automotive News, the 2011 sales rate was 13.6 million. The U.S. averaged 16.8 million light-vehicle deliveries annually from 2000 to 2007 before dropping to a 27-year low in 2009 at 10.4 million.
12/18/12 Should a Chinese company be approved to purchase lithium-ion battery maker A123 Systems Inc. out of bankruptcy? A federal panel may have the final say. If the deal fails, it should fail because U.S. interests could be hurt by the deal -- and not because of a knee-jerk, anti-Chinese action. A123 has automotive operations -- and about 700 workers -- locally, supplying electric-car batteries to automakers. A Delaware bankruptcy judge last week approved the sale to the U.S. arm of Chinese auto parts conglomerate Wanxiang Group Co. The Chinese bid of $257 million was twice as big as that submitted by Johnson Controls Inc. Wanxiang tried to buy the company before it filed for bankruptcy. That sale was rejected by the Committee on Foreign Investment in the U.S., which must approve this deal, too.
12/09/12 Detroit is getting a lesson on business ethics in the corruption trial against former Mayor Kwame Kilpatrick. Though it's Kilpatrick; his father, Bernard; and former city contractor Bobby Ferguson on trial, the reputations of specific business owners -- and business in general -- are on trial, too. Testimony from four entrepreneurs -- from former Cobo Center contractor Karl Kado to well-known businessman Anthony Soave -- so far suggest that doing business with the city under Kilpatrick had a Third World quality to it. In many undeveloped countries, bribery is chalked up as a cost of doing business.