Friday, October 17, 2008

Development-oriented transit encouraged

There are three megatrends that are compelling planners to take a closer look at transit today: the public consciousness has been awakened regarding emissions and pollution; the era of cheap and abundant oil is over; and a lot of Americans simply want to live the urban lifestyle, according to Charles Hales, commissioner of Planning and Transportation for the City of Portland.

Hales has an extensive background in integrating regional transit with the urban environment. He’s known as the godfather of Portland’s highly successful streetcar system, which has spurred millions in new development in the city’s downtown. He spoke with business leaders and transit advocates Thursday afternoon at the University of Michigan & Urban Lank Institute Real Estate Forum.

Public transit serves poor people who need it to get around and it serves some middle class people who use it to avoid the hassle of everyday commuting, Hales said. It’s also the choice of many of the young people who are flocking to the urban living environments, he added. But statistics from the American Association of Retired People show that 71 percent of older Americans, too, want to live within walking distance of a transit system, he pointed out.

“People are seeking better designed communities served by and organized around transit,” Hales said. “We’re seeing an American Renaissance in transit.”

Some cities are building light rail systems. Others are investing in bus rapid transit, which Hales describes as a “great tool” for connecting a community. A bus rapid transit system will open in Grand Rapids in the summer of 2012. The BRT line will run along Division from 60th Street north to Wealthy Street, through downtown to Michigan Street and then to Central Station. The corridor runs through Grand Rapids, Wyoming and Kentwood. All in all, the route will be just under 10 miles, with 19 station stops and 10-minute service frequency during peak hours. The route will have a dedicated traffic lane and will use hybrid electric busses that have “secondary signal preemption,” which means traffic lights will automatically adjust to longer green lights and shorter red lights.

Many business leaders believe the route will be a catalyst for new jobs and investment in the corridor and that the 19 station stops will be sweet spots for development. Rapid Central Station will serve as one of the station locations and another station location has been recommended — on Jefferson Avenue on Saint Mary’s Health Care property.

Through the auspices of Grand Valley Metro Council, The Rapids will hold a series of charrettes with the three cities to talk about some of the other potential station locations, noted Peter Varga, CEO of The Rapid transit system. Varga said Thursday he expects the BRT will provide about a 400 percent return on investment at station sites.

The total cost of the BRT line is estimated at slightly more than $40 million, of which the state would need to provide a total capital match of 20 percent, or $8.02 million over a four-year period. Varga said legislators juggled items in the budget around a bit and have now assured a match by the state.

Other cities, like Portland, have built or are building downtown streetcar systems — what Hales refers to as “pedestrian accelerators” and “moving sidewalks.” Grand Rapids is one of the cities considering a streetcar system downtown.

A streetcar system is a local “concentrator,” in terms of bringing people together, it’s a tourist amenity, it’s a transit connector and, perhaps most importantly, it’s a huge catalyst for development, Hales said. Portland, for instance, opened an initial 2.4-mile streetcar line in 2001 for a cost of $56.9 million. Three extensions have since added 1.6 miles to the system. By 2005 more than $2.39 billion in private investment had occurred within a two-block radius of the streetcar route, with construction of 7,248 new housing units and 4.6 million square feet of office, institutional, retail and hotel space. Portland’s return on investment was 1,900 percent, which computes to a 40-to-1 return on investment.

According to Hales a streetcar system breeds greater intensity in an area, sharply increases property values and expands the customer base and customer access to businesses along the route.

“Streetcar creates the kind of environment people want,” Hales commented, adding that a streetcar system makes a city more competitive in its ability to attract knowledge workers and makes it more livable by reducing the city’s carbon footprint.

What does it take to make a streetcar system a reality? Hales said it takes the participation of public partners, including the city, universities and hospitals in the area, as well as the participation of private partners who are willing to invest in it.

The local Public Transportation Tomorrow Taskforce has already selected a 1.6-mile streetcar alignment along Monroe and Market avenues from the Sixth Street Bridge on Newberry Street to Rapid Central Station. The estimated cost for the first segment of a streetcar system, in 2008 dollars, is anywhere from $64 million to $80 million, which includes tracks, purchase of streetcars and any utility issues that might be involved.

Construction of the first segment would be funded under a public/private process. Varga, said he’s not seeking federal funds for the streetcar project because under the federal New Starts program The Rapid cannot compete effectively against city’s that are vying for those funds to build streetcar systems that go long distances. The task force is looking into funding options, he said.

The route selected would provide multiple options for future extensions, Varga said, and the task force is already envisioning the next possible alignment. Future extensions, however, would not include Michigan Street hill because the grade on that stretch of Michigan is too steep, he noted.

Varga said he’d like to see the opening of a streetcar system coincide with the opening of the BRT four years from now.

—Anne Bond Emrich

Thursday, October 16, 2008

Inter-governmental cooperation necessary for survival

With Michigan's state and local governments strapped for cash and costs increasing dramatically, that old bugaboo of inter-government cooperation and consolidation of some services surfaced at the afternoon panel presentation today at the University of Michigan & Urban Land Institute Real Estate Forum.

The topic was “Regionalism – The Future of Michigan.” The panel was a mix of mayors and professional administrators: Daryl Delabbio, Kent County administrator and controller; Kurt Kimball, city manager of Grand Rapids; Al McGeehan, mayor of Holland; and Steve Warmington, mayor of Muskegon; with moderator Don Stypula of the Grand Valley Metropolitan Council.

A mix of public and private funding is the answer in some situations, they said (Van Andel Arena, DeVos Place, Millenium Park, the renovation of downtown Muskegon), but they also had plenty of thoughts to share about cooperation between the counties, cities, townships and school districts.

“We have evolved” although there is still some parochialism in Kent County, said Delabbio.

With Michigan being a strong home rule state, that is “probably our biggest obstacle.”

Kimball mentioned the possibility of a merger of sorts between Grand Rapids and Kent County. Though he wasn't sure how or if it would work, he said, “we need to build on our record of collaboration and take it to the next level,” said Kimball.

“Michigan is too cautious,” said Kimball, and isn't doing enough to follow up on the challenge from Gov. Jennifer Granholm in her State of the State address a year and a half ago. She said the state had revenue to share with communities that would cooperate with each other and share services to keep costs down.

Delabbio agreed there is a track record of good communication in West Michigan, that encourages cooperation. Even though there are some key issues he and Kimball do not agree on, that does not prevent them from talking to each other, he said.

But it should be the professional government administrators sitting down together to draft the agreements — not the politicians, said Delabbio.

Delabbio also took a poke at the news media, which he said would rather focus on failed collaboration attempts than the “hundreds” of inter-government collaborations in this region that work.

McGeehan agreed, saying the media is more interested in “border wars.”
If Michigan is going to succeed and prosper, “it will occur in our cities and the communities around them,” said McGeehan.

There are still grass roots challenges to cooperation. Between the school systems, a stalemate often boils down to the issue of the high school football teams.

The panel agred that public and private joint ventures are a great strength of West Michigan.

Warmington pointed out that joint public/private ventures have pumped $175 million into downtown Muskegon, which has undergone a radical change in appearance since the failure of the downtown mall in 2002 to the new construction under way there today.

—Pete Daly

Award winners identify emerging trends

The University of Michigan Land Use Institute Real Estate Forum Excellent Award winners were asked to identify what they thought would be emerging trends in their field. Here are highlights of those responses.

Robert Pliska of Sperry Van Ness: Having good relationships with mortgage bankers. “It’s always been that way, but more so now with the way the economy is,” he said.

Aaron Young of The Wisinski Group: Property owners have to be very sensitive to their tenants, as they will be asking for more concessions. Right now, owners aren’t looking three steps ahead and they should be because their loan-to-value ration could drop. “Equity leases were big a few years ago, and these might come back,” he said. Young also said there is additional pressure on brokerage companies because leases are stronger than sales.

Marcel Burgler of Prime Development: Urban universities will be a catalyst for development. “If you look at the sectors that are growing it’s health care, education and, unfortunately, government,” he said.

Colin Kraay of Grubb & Ellis/Paramount Commerce: Doing a thorough due diligence. “We had to use incredibly in-depth market knowledge to get (the deal done. Due Diligence is going to become more important for brokers as we move forward. From a broker’s standpoint, it’s a return to due diligence and market research,” he said.

Jon Rooks of Parkland Properties: Cooperation with state and local governments will become more important. “There are a lot of tools in the tool box. The state of Michigan is excellent with incentives. Our city government is also excellent,” he said. He also said there would be less new construction, but more renovations of existing buildings. He felt the conversion of apartments into condos was over, but downtowns will thrive because people want to live in those districts and they are willing to downsize their lifestyles to do that.

Randall Allman of CB Richard Ellis: More seller financing and more leasing activities. “We have to be creative and put the two opportunities together to get to the end,” he said.

Duke Suwyn of Grubb & Ellis/Paramount Commerce: Low-skilled, high-paying jobs are gone and so are the large manufacturing plants. Public-private partnerships are vital. Brokers have to be cooperative and do what is best for a community. “We have to get things down to size to meet the market,” he said of large industrial plants.

—David Czurak

Developing a successful city

Grand Action Committee co-chairman David Frey listed six elements that he felt are necessary to develop a successful city at the University of Michigan & Urban Land Institute Real Estate Forum, and here are the six in the order he gave:
  1. A cultural package: Frey said Grand Rapids was strong in this area with DeVos Performance Hall, the new Grand Rapids Art Museum, the Urban Institute for Contemporary Arts, the Gerald R. Ford Presidential Museum and the Van Andel Public Museum Center. He also noted that the city’s arts organizations are nationally known.
  2. Great health care: Here, again, he said the city is doing well with Spectrum Health, Metro Health, Saint Mary’s Health Care, the Van Andel Research and Education Institute and the Michigan State University College of Human Medicine. While Frey noted that having aspiring medical students in the city was a very good thing, he thought VAI provided the best opportunity for the city’s medical future. “The real untold story is the commercialization of the research being done at the Van Andel Institute,” he said.
  3. Good education: Frey said the city was doing very well in this area with five universities and colleges located downtown.
  4. Good entertainment: Also good. Frey said the city offers baseball, arena football, hockey, Millennium Park, an expanding John Ball Zoo and the Meijer Gardens and Sculpture Park, which he said , by the way, was paid for with only private dollars, a $155 million worth. “It is the second-largest tourist attraction in the state of Michigan,” he said of the Frederick Meijer family development.
  5. Good places to gather: Frey said people need places to socialize, other than in establishments that serve alcohol, but the city is lacking in this area. “We are in the process of creating those, all in the private sector,” he said.
  6. Urban dwelling units: Frey said downtown needs to become easier to walk in order to draw more people to live in the district. “We are sort of pedestrian friendly, but we’re more car friendly,” he said.
“We are, perhaps, in the process of creating a new economic paradigm in this city. In some sense, I think this city and the region represents the future of this state,” Frey said as he closed his presentation. “We need venture capital. We are determined to define our future and we will not be determined by the state.”

—David Czurak

Lenders seek developer’s ‘commitment’ to project

The loan spigot is still open at several financial institutions, but other financial outlets simply don’t have the ability to lend right now, according to Holly Jacoby, a client manager of commercial real estate banking at Bank of America. Even where loans are available, lenders are being more cautious these days.

Jacoby said she doesn’t know of any banks that are providing loans for any type of residential development projects or that are acquiring existing residential projects, including condominiums, single-family homes and second homes.

As for commercial real estate projects, banks are looking ever more carefully at a developer’s commitment to a project, Jacoby said.

“In addition to your cash, banks are looking at your commitment as developers to the project. We look at that in a couple of different ways. One way is the guarantee, which I think you’ll find is increasingly unlimited rather than pro rata or some of the other loosened up guarantees that we saw in 2005 through 2007.”

Secondly lenders should be prepared to ask a developer whether he was around during the last recession and if he was, how did he handle it? Did he ever get property back? Did he ever default on a property? How did he work his way out of his problem?

“We’re looking more carefully at the history of behavior in case it might repeat in the next three years,” Jacoby said. “I think you’ll find that lenders are more careful than ever about that sponsorship question. Is the developer prepared to be personally committed to the project?”

Furthermore, for the next few years developers will probably see more three-year term loan deals than the five-year deals, Jacoby said.

Michigan developers need to understand, too, that many believe Michigan is in a one-state recession: Many lenders — even if they would lend in 49 states — would not lend in Michigan, she said.

“We have been written off the map. It’s like they sawed off the mitten and it’s gone,” Jacoby remarked. “Even when the economy returns, lending will not look like it did in the past 36 months.”

—Anne Bond Emrich

Salvation Army project proceeds

The Salvation Army is $700,000 away from breaking ground for the Ray & Joan Kroc Corps Community Center near South Division Avenue and Alger Street SE in Grand Rapids, attendees at the University of Michigan-Urban Land Institute Real Estate Forum learned today.

The nonprofit organization’s Major Roger. R. Ross, Kroc Center administrator, provided an update on the project during the roundtable portion of the conference, being held in Grand Rapids for the first time ever. Efforts are underway to establish a ULI satellite in West Michigan. The real estate organization sponsors the conference annually along with U-M Taubman School of Architecture and Urban Planning. Next year’s conference will be in Ann Arbor.

Ross said the Salvation Army hopes to break ground on the $20 million center on Oct. 29. It has raised $11.8 million of its $15 million from 100 donors in a quiet campaign, but needs $12.5 million before construction can begin. “We have a little bit more to raise before we can put a shovel in the ground,” Ross said.

After the center was rebuffed from Garfield Park, the Salvation Army, the city of Grand Rapids and Grand Rapids Public Schools worked together to cobble together the 20-acre site near New Branches School, a charter school, and GRPS’ Brookside Elementary. The deal included the purchase of five private lots from four owners, Ross said.

Planned is a 94,000-square-foot building at 2500 S. Division Ave., plus an outdoor recreational area.

Among the features: indoor and outdoor performing arts and worship areas; a conference center available for meetings, receptions and other functions; a gymnasium; and indoor water park featuring a 28-foot slide, a lap pool, a lazy river, a 22-person hot tub and zero-entry pool; an outdoor splash pad; child care; an area for painting, ceramics and art programs; a fitness center; a softball diamond; two soccer fields; sand volleyball court; playgrounds; an outdoor basketball court that will be flooded in the winter for ice skating; a sledding hill that will be covered with rubber and turned into a giant “slip n side” in the summer; a community garden; and ropes course.

Ross said the center is expected to open in 2010. “We’re providing this to a neighborhood that has absolutely nothing,” he added, noting that 11,000 children ages 18 and under live within one mile.

He said memberships would be sold, and $250,000 per year will cover scholarships. Ross said no price has been set for memberships.

The late Joan Kroc, widow of the founder of McDonald’s, bequeathed $1.5 billion to the Salvation Army to build centers across the country, after overseeing the first one in San Diego. The funding comes with some strings attached, such as the need to raise local matching funds, putting half the money into an endowment to fund programs and the requirement that no child be turned away, but everyone must pay at least something to use the facility, Ross said.

The Grand Rapids Kroc Center has $21.5 million from the Kroc estate. Of the $15 million fund-raising goal, $11.5 million is planned to support the endowment and the remainder for construction. The total endowment will be $31.5 million, Ross said.

He said the center, with 70 staff member expected, plans to work with Grand Rapids Public Schools and other nearby school to provide physical education programs during the school day as well as after-school programs.

Ross said Erhardt Construction is construction manager on the building, which is being planned for silver level certification under the Leadership in Energy and Environmental Design program. Architect is IBMA; landscape architect is Jim Morgan; and Bob Israels is handling interior design.

—Elizabeth Slowik

Ballpark idea floated for downtown

The Grand Rapids Business Journal is reporting Rockford Companies CEO John Wheeler has revealed a proposal to build a ballpark downtown which could house the West Michigan Whitecaps. Wheeler discussed the proposal at a morning session of the University of Michigan Urban Land Institute Real Estate Forum being held at the Amway Grand Plaza Hotel. For more on this story, go to

Wednesday, October 15, 2008

‘NuMu’ waterfront going green

NuMu is a nickname Dan Henrickson of True North came up with for the new Muskegon, which is rising from the industrial ashes of the past to much more of a lifestyle community on the water. He sees the Muskegon waterfront changing color from rustbelt brown to green, as in sustainability — and money.

So far it's mostly public money that has transformed the Muskegon Lake waterfront, which is just a hop over Business U.S. 31 from downtown Muskegon. But he told his Wednesday audience at the University of Michigan & Urban Land Institute Real Estate Forum there is a lot of opportunity for private investment in an area that is more than twice the size of the prime development area in downtown Grand Rapids.

"Some smart people from Grand Rapids are starting to look at Muskegon," he said.

At the northern end of the waterfront is Harbor 31, a True North development that already has some completed condo units on the water called Vida Nova, with more to come. Other parcels already sold are occupied by MAREC, the GVSU Michigan Alternative and Renewable Energy Center; and the Parmenter O'Toole law firm headquarters.

The entire area was covered with factories and rail sidings for several generations, starting with it's boom town status in the lumber era to another boom in heavy industry during World War II. Muskegon Lake is one of the few deep water industrial ports on Lake Michigan. With all that industry perched there on the shore, downtown Muskegon lost its connection with Muskegon Lake, but that's changed now, and the potential for lakeside living with plenty of boat slips and access to the Big Lake are obvious. The waterfront's industrial heritage make it largely a brownfield area today, which means help with the financing — and Muskegon Lake has already been cleaned up over the last 30 years.

Henrickson, an architect, has worked on a lot of projects in Grand Rapids and other parts of West Michigan. He said Grand Rapids was once lacking in energy and vitality; now it is acclaimed for having the most LEED-certified construction in America. It's happening in Muskegon, too — MAREC is LEED-certified and Vida Nova roofs are literally alive with green roofs for storm water control and natural insulation.

It's all about water in the “NuMu” — and the color green. 

—Pete Daly

‘What’s Next for The Hill?’

The development of health care and life sciences along Grand Rapids’ Michigan Street hill holds economic promise for West Michigan, said speakers at a discussion called “What’s Next for The Hill” at the University of Michigan/Urban Land Institute’s Real Estate Forum in Grand Rapids Wednesday.

“We, I think, have an opportunity here to do something that you can’t do in Boston, you can’t do in Philadelphia; it’s not going to happen in L.A.,” Spectrum Health Hospitals President Matt VanVranken. “It’s really about creating a draw for this community that is palpable.”

Marsha Rappley, dean of Michigan State University’s College of Human Medicine, said the establishment of the medical school’s headquarters, four-year program and research and development arm in Grand Rapids is an example of the public-private partnership that is the only way forward in a time of economic distress in Michigan. 

She said a telling moment occurred while she was touring Ferris State University’s Kendall College of Art & Design, incognito, with her college-shopping son: “This young, passionate artist was recruiting this group of students to Kendall, and he was telling us how the nightlife is so great in Grand Rapids…so he talks about the apartments, he talks about the bars and the restaurants, and then he turned to me and said, ‘And we’re going to have our own medical school, right here.’ 

“It was a turning point, really, in how I cam to understand, what is the value that we bring to this community. It goes well beyond the training of physicians. It goes well beyond the presence of a Big Ten university in downtown Grand Rapids. It means something to this young artist and his ability to recruit to his facility.”

Grand Valley State University President Thomas Haas said in the economic theory that jobs follow talent, “my job is to create human capital, to create talent.” He noted that 98 percent of GVSU graduates are either employed or in graduate school, and of those with jobs, 88 percent stayed in Michigan. 

“In the next 10 years, clearly Grand Valley State University will focus and invest further to be the premier educational provider in the health sciences,” Haas said. “I think there will be new programmatic initiatives as well.”

“Grand Valley was really built not even 50 years on public-private partnerships,” he added. “That will continue to be the fuel as Grand Valley positions itself to a distinctive future especially in the life sciences.”

He predicted a need to expand the West Michigan Science and Technology Initiative’s wet lab space in the Cook-DeVos Institute “beyond the Medical Mile.”

“We’ll be working with both Grand Valley and Michigan State to jointly recruit people to this community,” VanVranken said. “In the last five years, we recruited 2,000 new employees to our system.  You know what the spin-off means in terms of homeownership, the economic (effect). I would see the future having a similar impact as we bring in people, all three of us, into this community the economic impact is significant.”

He said Spectrum Health spent $206 million on local vendors in its 2008 fiscal year.

—Elizabeth Slowik

Brownfield use spurs values

David Levitt, a partner with Brad Rosely in Third Coast Development Partners, shared some brownfield advice Wednesday afternoon at the University of Michigan Urban Land Use Institute Real Estate Forum. Third Coast initiated MidTowne Village, a six-acre, medical mixed-use development just north of Michigan Street at the end east of the Medical Mile. Levitt said the brownfield tax credit was vital for the project to be able to go forward, like it is for many developments. But why it went forward was extremely distinctive.

Levitt said MidTowne was either the first or second project in the state to be approved for brownfield tax credits because Third Coast “took on blight.” These business tax credits are awarded to projects for one of three reasons; the site is polluted, the building is obsolete, or a property is blighted. “How do you prove blight? You can see it, but how do you prove it,” Levitt asked the audience before he explained how Third Coast did it.

Levitt said the firm gathered a lot of quantitative data about the low-income residential neighborhood that consisted of 50 older homes Third Coast wanted to build on and then compared those findings against averages in the city. Things like the rate of tax delinquency there versus the city-wide average and the number of code violations there were compared to the entire city, among other key statistics like mortgage foreclosures.

The resulting data proved blight existed, but there was another problem. Defining a neighborhood as blighted is a public process and Levitt said doing that can trigger liability issues for a city. So in the MidTowne case, the brownfield authority labeled the 50 properties as blighted and not the city commission. Between the business tax credits that come from the brownfield and the project’s tax-increment financing, Levitt said MidTowne is collecting $5.3 million in tax incentives over 12 years.

“We know blight when we see it, but you should get hard data to prove it,” he said. “Don’t do it alone. Get an expert. The whole point of this is to demonstrate need.”

The Women’s Health Center, Park Row Condominiums and 545 Michigan Street are the three buildings that currently make up the MidTowne Village. Third Coast sold the parcels to the developers. But Levitt said a fourth building is planned. They want that to be a hotel and Third Coast is thinking about being a partner in it. That project, however, has been put on hold until the financial markets get better.

“I can’t emphasize enough that brownfield is a very valuable tool in any economy,” said Levitt, “but especially in this economy.”

—David Czurak

Van Andel Institute built upon a vision

The late Jay Van Andel had a new vision for Michigan Street hill, and with the help of what was then Butterworth Hospital, he was able to fulfill that vision.

Jay Van Andel’s vision was to build a medical research institute that would not be encumbered by the normal bureaucracy that was seen in university centers, Steve Heacock, chief administrative officer and general counsel for the institute, told an audience today at the University of Michigan & Urban Land Institute Real Estate Forum.  Jay Van Andel’s vision was for a scientific community that would encourage collaborative and novel approaches to medical research within its own labs and with other organizations in West Michigan and institutes throughout the world. His goal was to build an institution that would be a catalyst for the development of a life sciences environment, Heacock explained. 

“The Van Andel Institute as an entity probably more comfortably belongs in San Diego, or Seattle or Boston,” Heacock said. But that wasn’t what Jay wanted. He wanted to make it happen here and help create and be part of a high density life sciences cluster.”

Today on the Medical Mile there is much to compliment Van Andel’s original vision, Heacock noted: the Lemmon-Holton Cancer Center, the Fred and Lena Meijer Heart Center, Grand Rapids Community College’s Science Center, Grand Valley State University’s Cook-DeVos Center for Health Sciences, the recently dedicated Hauenstein Center, and the Helen DeVos Children’s Hospital, the Michigan State University College of Human Medicine and the Michigan Street Development that are all under way. 

“These really are exciting and dynamic times in West Michigan,” Heacock said.

Ground was broken on Phase I of the VAI in 1998 and the facility’s grand opening was held in 2000. The building is set into a steep hill, and its three-segmented convex glass roofs cascade down the east side of the building, evoking the rapids of the nearby Grand River.

The VAI broke ground in April 2007 on a $170 million Phase II expansion that will triple its laboratory space and allow for a broadened research focus that includes neurological disorders and other chronic illnesses. The eight-story, 240,000-square-foot addition is being built on to the institute’s existing facility on Bostwick Avenue. When that project is completed in late 2009, the institute will have 402,000 square feet of space.
The expansion will open the doors to 550 new positions. When the facility is fully built, staffed and operating at capacity, it will employ 800 researchers and administrative staff whose work will be supported by a $125 million annual budget. The institute is funded by a combination of its endowment, research grants and private philanthropy.

With more labs and with a larger research team, the VAI will advance new initiatives in basic and translational research, Heacock said. The institute will be able to move more aggressively into research related to Alzheimer’s and Parkinson disease, for instance, in addition to some other areas of cancer research.

Cancer killed about 560,000 men, women and children last year, so there’s more work to do, Heacock said.

“I think what were doing here in Grand Rapids will make a difference in people’s lives.”

—Anne Bond Emrich

ULI may branch out

Local Michigan members of the Urban Land Institute’s Detroit District Council were planning to meet Wednesday night to lay the groundwork for establishing a branch in West Michigan.

The Detroit ULI and the University of Michigan’s Taubman College of Architecture and Urban Planning brought their annual real estate forum to the Amway Grand Plaza today and Thursday.

“The idea to start what our national office refers to as a satellite district council in Grand Rapids came up about a year ago,” said Shannon Sclafani, administrator of ULI’s 400-member Detroit District Council, which was founded in 1999. 

ULI provides networking, education and sharing of best practices at 26 programs per year for its members, Scalfani said. Members include commercial real estate professionals, developers, real estate lawyers, public officials, city planners and others involved in the industry, she said.

Sclafani said the Detroit council has 16 members from West Michigan. The national ULI organization prefers satellite councils to have 50 to 75 members, so some local recruiting can be expected after tonight’s meeting, she added.

“One major advantage is that when ULI Detroit started out, there was no staff or support with this getting off the ground. Although I’m three hours away, they still have access to me for handling administrative duties,” Slafani said.

The U-M architecture school started the conference about 22 years ago, she added. It’s the first time it’s been held outside of Southeast Michigan and drew 250 participants.

—Elizabeth Slowik

Stan’s disappearing act

Just when Stan Wisinski, chairman of The Wisinski Group was all set to receive the much coveted Real Estate Excellence Award at the UM-ULI Conference held at the Amway Grand Plaza Hotel today, he disappeared. No one in the audience knew why he left, or where he had gone. Later we found out the reason for the “disappearance” was a major deal he was in the middle of closing. I would say that sort sums up Stan, and is a fitting tribute to a guy who has closed thousands of deals in his years in the commercial real estate business.
Meanwhile, of course, Stan had covered his bases by asking Aaron Young, president of The Wisinski Group, to sub for him. This is vintage Stan, covering his bases, and clearly explains his “disappearance.” Aaron made light of the “disappearance” and did a credible job of replacing Stan.
In addition, a group of business leaders from Detroit showed up in time for the awards session. They were part of our most recent “One Michigan — Bridging 96” collaborative effort between the Grand Rapids Business Journal and Crain’s Detroit Business. This group came from Detroit on a bus tour to see and hear some of the major Grand Rapids area developments and business leaders. And Tuesday, we took a group of Grand Rapids business leaders on a bus tour to Detroit to do the same in Detroit. 
The “Bridging 96” project is all part of our shared belief, and long-term goal, that both sides of the state — east and west — can learn from each other about the types of ideas and projects that work and why. And also, that business success, jobs and the future of Michigan’s economy can no longer depend on government for solutions, as it has been unable to successfully overcome the partisanship divide and entrenched bureaucracies. Business leaders can and must step forward and take leadership roles. 
The UM-ULI Conference provides another opportunity for some of the best development minds in the state to hear about best practices and ideas. 

There is also a wonderful opportunity to network and establish friendships on both sides of the state. The governor and the entire Legislature should have put these two days on their calendars and attended.The conference continues this afternoon, evening, and all day Thursday at the Amway Grand Plaza Hotel. 
—John Zwarensteyn, Publisher

Award winners ponder challenges

After receiving their well-earned honors Wednesday, the winners of the University of Michigan Urban Land Institute Real Estate Forum's Excellence Awards were asked to consider the biggest challenges they will be facing in the future. Here are some of the responses.

Jon Rooks of Parkland Properties: The Michigan Business Tax and retaining young talent between the ages of 25 to 35.

Robert Pliska of Sperry Van Ness & Randall Allman of CB Richard Ellis: Securing financing

Marcel Burgler of Prime Development: The MBT, and municipalities are being too aggressive when it comes to property taxes. "If increasing this works, why don't we make it 100 percent," he said.

Duke Suwyn of Grubb & Ellis/Paramount Commerce: Brokers need to help clients understand whether it is better for them to buy or lease, otherwise opportunities will be missed. "Look around, things haven't changed that much. There are a lot of opportunities," he said.

Colin Kraay of Grubb & Ellis/Paramount Commerce: "What we need to do is find the opportunities in this state. Let's put on our smiley faces for a while, let's be courageous, and let's make some deals," he said.

—David Czurak

Formula for growth shared

Grand Action co-chairman John Canepa revealed the secrets to his group's success in getting Van Andel Arena and DeVos Place built this morning at the University of Michigan Urban Land Institute Real Estate Forum being held in Grand Rapids for the very first time in the event's 22-year history. And Canepa, a retired banking executive, disclosed those secrets in a very nice and neat order, which makes it relatively easy for other organizations to follow. "We do our homework on the front end of a project," he said.

Homework includes:
  1. Paying visits to similar facilities. Checking out those that make money and those that don't.
  2. Bring in a consultant(s) to conduct a feasibility study and an economic model.
  3. Create a fund-raising team.
  4. Move ahead and secure a lead gift. Canepa said this was a very important step to take as "a lead gift allows us to fund those activities," meaning the biggest giver tends to convince other to also donate.
  5. Establish a building committee.
  6. Start the fund-raising campaign with one-on-one visits to key individuals. "Eighty percent of the philanthropy comes from 20 percent of the donors," he said.
  7. Meet with public officials at the state, county and city levels.
  8. Hire an architect.
  9. Select an operations group. For the arena and convention center that turned out to be the Convention and Arena Authority, which was chartered by the state.
  10. Speak with related groups. For the arena, it was potential tenants like the sports teams and concert promoters. For the convention center, it would be the Convention and Visitors Bureau, hotel owners, show producers.
  11. Have the architect hold public workshops to showcase and explain the project. Canepa said getting community consensus for a project was vital because you can take that public support to local governments when you ask for public dollars. When Grand Action was trying to gets funds from the state for the convention center, Canepa said they asked then-Gov. John Engler for $80 million. Engler offered $45 million. Canepa said he and his co-chairmen, Dick DeVos and David Frey, got up to leave the governor's office and said,” Looks like we won't have a convention center. He then gave us $65 million. We were persistent in that case."
Canepa said the arena, convention center, the Civic Theater and the Michigan State University College of Human medicine, four downtown projects that Grand Action has been involved with, are worth $393 million in combined investment. Using the multiplier effect, Canepa said those projects have help catapult $2.7 billion in new investments downtown over the past dozen years.

—David Czurak

Real estate forum kicks off

The 22nd annual University of Michigan & Urban Land Institute Real Estate Forum opened in Grand Rapids this morning. Forum attendees from across the state received a welcome from Grand Rapids Mayor George Heartwell.

An introduction focusing on the renaissance of Grand Rapids’ downtown was presented by Grand Action co-chairs Dick DeVos, John Canepa and David Frey.

Few people in the audience knew that later today DeVos will be hosting President George Bush for tea at his Ada residence, a remarkable coincidence to what is occurring on the global stage even as developers gather to look at best practices in commercial and industrial real estate.

The Grand Rapids Business Journal will be reporting on the conference at this blog site today and Thursday.

—Carole Valade

Friday, September 19, 2008

Link to real-time voting

Results of the West Michigan Regional Policy Conference real-time voting session can be seen here: 

This information will be reviewed and prioritized by the Grand Rapids Area Chamber of Commerce in collaboration with the West Michigan Chamber Coalition leadership. This is the first step toward setting a core list of final policy recommendations, which will be made public in the next 45 to 60 days.

Delegates challenged to act

The West Michigan Policy Conference is now history. The delegates voted to select their five top policy positions (from a list of many possible positions). A Conference report will be presented by the Chamber at an upcoming Economic Club event.

By far, the top two priorities selected by the delegates to move Michigan’s economy forward were:

1) Repeal and/or major revisions to the newly enacted Michigan Business Tax

2) Making Michigan a “Right to Work” state.

Neither was a surprise as the tone was set by opening speaker Robert Genetski, who used facts he had gleaned from hundreds of factual studies. And evidently, the delegates agreed with his assessment and call for action.

As the West Michigan Policy Conference wound down, after all the votes were tabulated, delegates were challenged by co-chair Doug DeVos to “take the process personally and act to keep the agenda alive. We will need your help.”

He added, “We will compile the scorecard, and keep you informed. This is just the beginning, but we know what your top priority is, and we will need your help to make it happen.”

The Business Journal staff did a great job of keeping readers informed on the conference progress.

We enjoyed the process and look forward to any feedback on our coverage.

Next Conference will be in September of 2010.

John Zwarensteyn, publisher

Downtown transit system comments

At Thursday's West Michigan Regional Public Policy Conference, Carol Coletta, pesident of a national network of urban leaders known as CEO's for Cities, talked about how cities can attract the next generation workforce - those in the 24 to 34 age group.

Coletta spoke about the characteristics of cities that that age group finds alluring. A member of the audience asked whether it was important for the core city to have dedicated transit system serving just the downtown area.

"Absolutely not," she replied.

Upon hearing that remark, a few people in the audience glanced toward Peter Varga, CEO of The Rapid transit system, and Jennifer Kalczuk, spokeswoman for The Rapid, who were both in attendance.

Varga said the Colletta's comment didn't concern him much because he didn't think people really understood what she was saying.

"What she was saying was that urban areas don't really need a small downtown transit system: What they need more is a robust regional transit system. I don't think she understands our context here, but if she did understand I think she would say that we have the transit system we need."

Anne Bond Emrich, reporter

Regional Policy Conference overview

During voting audience members were given the opportunity to tally their opinions on the following three themes and seven subject areas. They voted on intensity of each subject and ranked which were most important. Here are the final results by subject areas:


  • Economic Growth
  • Attraction and Retention of Businesses
  • Improve Government Functions

Seven Subject Areas:

  • Governance
  • Workforce of the Future
  • Michigan’s Education System
  • Investing in Higher Education
  • Health Care and Life Sciences
  • Attraction and Retention of Talent
  • Manufacturing and Design for the Future


  • Government Collaboration
  • Reform State Spending and Revenue Streams
  • Reform the structure of Michigan’s legislature

Governance topic rankings in descending order of intensity:

  • Reform State Spending and Revenue Streams
  • Government Collaboration
  • Reform the structure of Michigan’s legislature

Ways to reform state spending and revenue streams:

  • Eliminate the MBT with corresponding spending cuts: 75 percent of the vote
  • The state employee health care and retirement costs to an incentive plan based on the economic performance of the state: 21 percent
  • Reduce state spending across all budgets by 10 percent: 4 percent

Workforce of the Future:

  • Incentivize retraining of workers
  • Eliminate artificial wage setting
  • Remove mandatory union membership requirements

Topic rankings:

  • Remove mandatory union membership requirements
  • Eliminate artificial wage setting
  • Incentivize retraining of workers

Ways to remove mandatory union membership requirements:

  • Implement a right-to-work status for Michigan: 77 percent of votes
  • Oppose union efforts to remove secret ballot votes: 14 percent of votes
  • Prohibit striking by public employees: 9 percent of votes

Michigan’s Education System:

  • Incentivize school consolidation
  • Align Michigan’s curriculum with the needs of emerging industries
  • Institute public school spending reductions

Topic Rankings:

  • Align Michigan’s curriculum with the needs of emerging industries
  • Incentivize school consolidation
  • Institute public school spending reductions

Ways to align Michigan’s curriculum with the needs of emerging industries:

  • Align Michigan’s graduation requirement for a foreign language with emerging global markets: 30 percent of votes.
  • Provide financial incentives to school districts which offer industry specific academies: 40 percent
  • Expand required teacher continuing education credits to include in-site training with employers: 30 percent.

Investing in Higher Education:

  • Increase student diversity
  • Improve coordination among higher education institutions and secondary education systems
  • Create philanthropic and partnership incentives

Topic Rankings:

  • Improve coordination among higher education institutions and secondary education systems
  • Create philanthropic and partnership incentives
  • Increase student diversity

Ways to improving coordination among higher education institutions and secondary education systems:

  • Consolidate Michigan’s public universities: 16 percent of votes.
  • Allow college credit for high school student technical certifications: 32 percent
  • Create additional incentives for high school students entering dual enrollment programs: 52 percent.

Health Care and Life Sciences:

  • Align medical payment rates with provider performance and costs
  • Decrease the rising cost of care
  • Incentivize new research and product development technologies

Topic Rankings:

  • Align medical payment rates with provider performance and costs
  • Decrease the rising cost of care
  • Incentivize new research and product development technologies

Ways to align medical payment rates with provider performance and costs:

  • Increase Medicaid payments to physicians to improve access: 9 percent of votes.
  • Standardize cost recovery payments to all hospitals who provide uncompensated care: 19 percent.
  • Increase funding for providers with effective prevention practices: 72 percent.

Attraction and Retention of Talent:

  • Re-prioritize local governments development plans
  • Enhance investment in state transportation infrastructure
  • Coordinated campaigns to attract professionals to the region

Topic rankings:

  • Enhance investment in state transportation infrastructure
  • Coordinated campaigns to attract professionals to the region
  • Re-prioritize local governments development plans

Ways to enhance investment in state transportation infrastructure:

  • Support the creation of regional transit systems: 32 percent of votes.
  • Increase connectivity through stronger regional airports: 28 percent.
  • Update funding mechanisms for transportation infrastructure: 40 percent.

Manufacturing and Design For Future:

  • Create a tax structure to reward capital investments
  • Incentives for energy innovation
  • Streamline the state regulatory environment

Topic Rankings:

  • Streamline the state regulatory environment
  • Create a tax structure to reward capital investments
  • Incentives for energy innovation

Ways to streamlining the state regulatory environment:

  • Streamline the permitting process within state government: 45 percent of votes.
  • Remove visa barriers to attract and retain foreign skilled workers: 42 percent.
  • Effective “business ombudsman” from the private sector for state departments: 13 percent.

Action needed Now: Results of the voting

Here are the directives coming out of the Regional Policy Conference, in the order of importance:

1.The state government must eliminate the Michigan Business Tax and implement corresponding spending cuts.

2. Implement Right-to-Work in Michigan.

3. In health care, increase funding for providers who offer effective prevention practices.

4. To improve manufacturing/design for the future, streamline the state government permits processes.

5.To attract and retain talented employees to Michigan, “update funding mechanisms for transportation infrastructure.”

It's the MBT

Number one priority coming out of the West Michigan Policy Conference: Fix it, get rid of it -- just do something.

"It's hurting a lot of people and needs to be addressed," said Doug DeVos.

Pete Daly, reporter

Top five issues selected

Attendees at the Regional Policy Conference voted early this afternoon, identifying the top five issues to come out of the conference:

1. Eliminating or revising the MBT
2. Making Michigan a Right To Work state
3. Increasing certain types of funding in the Health Care sector
4. Streamlining the permit process
5. Attracting and retaining a young and talented workforce

Van Andel comments on health care

While the Van Andel Institute directly impacts health care, what researchers do at the institute is still a mystery to many people, David Van Andel said during a panel discussion at the regional policy conference this morning.

The work of VAI researchers will ultimately affect the cost of health care because the VAI is beginning to push medicine down to the personalized level, he said. That will translate into lower health care costs, he said, because treatments for individual patients will be highly targeted -- and money won't have to be wasted on trying a number of drugs before hitting on the right one or the right combination.

Van Andel said there are issues at both the state and federal levels that impact the VAI and its work At the federal level, there's the Food and Drug Administration and the long, arduous process of going through all the FDA channels to get approval for a new drug.

"If I make a discovery it can take 20 years and $850 million before I can bring that discovery to the market place," he said.

Van Andel noted that with the security measures put in place after the terrorist attacks of Sept. 11, 2001, restrictions tightened on green cards and that has made it more difficult to recruit scientists from other countries. This country is decades away from growing its own scientists, he said, so the institute has to recruit from other countries.

At the state level, he said, there's the Small Business Tax, which presents a barrier to start up companies -- companies that might want to spin off new discoveries made here -- and sends the message that Michigan is not really open for business.

Anne Emrich, reporter

Invest in higher education

Michigan is unwilling to invest in higher education, despite the indicators that an educated, creative, innovative and diverse workforce is crucial to the state's economic future: That's the message Grand Valley State University President Thomas J. Haas, who is leading the Presidents' Council of the State Universities of Michigan, brought to the West Michigan Regional Policy Conference this morning.

"I believe there is a culture of disinvestment in higher education in the state of Michigan," Haas told the West Michigan Regional Policy Conference this morning. "Is a degree a public good or just a commodity? We need to look at a degree as a public good."

Haas was joined on the "Investing in Higher Education for Michigan" panel by Ferris State University President David L. Eisler, Northwestern Michigan College President Timothy J. Nelson and Kalamazoo College President Eileen B. Wilson-Oyelaran. They spoke to business and political leaders who will be voting this afternoon on policy initiatives they would like chambers of commerce in West Michigan to pursue in Lansing.

"I think we need to look at the outcomes, the results that we desire. In a way, maybe it's time for a similar Marshall Plan for higher education, where we look at all the different parts of the system and look at what we can do together with our state leaders and others in the business community," Haas said. "In order to have an effective policy, I do think we do need to have a rational, predictable and sustainable investment policy with the state, and I think maybe those tax incentives can go along with it. All of us in higher education must be held accountable in our fiscal responsibilities. Financial aid needs to be a part of it."

Among other comments during the session:

  • Private colleges in West Michigan enroll 26,500 students, or 19 percent of all local college students, Wilson-Oyelaran said. "We are intimately involved in the preparation of talent in this area," she said.
  • Ferris State University's career-oriented curriculum brings the college in close contact with business through industry councils, Eisler said. "We help connect students with great careers," he said.
  • Because of the lack of diversity in northern Michigan, Northwestern Michigan College, a community college in Traverse City, must search out ways to connect its homogenous student body with a diverse world to make sure students are prepared to compete in the global economy, Nelson said. "We believe the economy in this state will develop on a regional basis. The northern Michigan economy will develop differently than the West Side of the state," Nelson added.
  • "When you think about internships, think more broadly than just a student who comes to work in your business or industry," Eisler said. "Think about support and advice where you become a member of one of our advisory councils, you become an extension of our university in terms of helping that student be successful in the career, and we form these partnerships that help drive our economy forward."
  • "It's not just the state legislature.... All of us together in business and higher education need to come together to attract and retain our talent here," Eisler added.

After the session, Michigan State University President Lou Anna Simon and Haas announced a new program to provide a "pathway" to allow up to five GVSU pre-med students to move seamlessly into MSU's College of Human Medicine. Haas said the arrangement is similar to one he forged while working in New York.

Elizabeth Slowik, reporter

Why health care industry is sick

From underfunded Medicaid to a payment system called "perverse" by Metro Health Hospital CEO Mike Faas, health care leaders today told Regional Policy Conference attendees what is making their industry sick.

In a session moderated by Michigan State University President Lou Anna Simon, Faas was joined by Spectrum Health President & CEO Rick Breon, Mercy Health Partners President & CEO Roger Spoelman and Van Andel Institute CEO David Van Andel.

Among the topics the hospital executives identified for those voting this afternoon on policy issues: Low payments from Medicaid that cost West Michigan hospitals hundreds of millions of dollars annually; term limits that boot legislators out of office just as they are beginning to understand health care issues; workforce development, such as recruitment and training; the shortages of nurses; and a system of payment that pays providers "to do something to people, not for them," as Faas put it.

The men -- including Breon, whose organization owns Priority Health, which is one of two dominant insurers in West Michigan -- said they recognize that business owners and their employees are nearing a breaking point of affordability for health insurance. Breon said he expects that many more people in the future will be sent out into the individual insurance market. He called for a thorough "vetting" of issues on any legislative reform in the insurance market. Priority Health vigorously opposed legislation proposed last year by Blue Cross Blue Shield of Michigan to reform the individual insurance market.

"There is no plan for changing health care, and that has to change," Breon added.

Opening the session was BCBSM President & CEO Daniel J. Loepp, whose nonprofit company was a major sponsor of West Michigan's first-ever policy conference.

Additional comments from this morning's session on The Business of Health Care and Life Sciences:

"This is a taxation you've not voted for which you are paying for," Breon said of the gap between Medicaid payments and the health care costs, which are passed on to employers via premium increases.

"One of the reasons we haven't had comprehensive reform in this state is term limits," Breon added.

"We need to do more coordination of all services so we can recruit and train the medical professionals this region needs," said Spoelman. Recruitment, particularly of specialists, was a major issue in the April merger of Hackley Hospital and Mercy General Health Partners that created Mercy Health Partners, owned by Trinity Health. "We do a good job of recruitment and training, but don't do a good job of retaining."

"Without moving to universal coverage, I'm not convinced health care is going to be able to reduce costs," Faas said.

Breon defended Spectrum Health's construction binge, and said the system may spend another $700 million over the next decade. "If you look at the actual amount of premium cost associated with all the building, it's 3 percent," he said. Faas, who presided over last year's move of Metro Health Hospital from Grand Rapids to a new $160 million facility in Wyoming, agreed that health care costs are far more connected to the personnel than the bricks and mortar.

"One of the things we haven't done is raid each other's nurses in a bidding war," said Faas. They noted that the biggest bottleneck in educating more nurses is providing enough qualified instructors.

"We can make changes in Medicaid and you don't have to add one dollar to the system," Breon said. "Just look at who is the most efficient, who makes it work and copy those things."

Elizabeth Slowik, reporter

MSU, GVSU announce partnership

Michigan State University President Lou Anna Simon and Grand Valley State University President Thomas Haas Friday announced a new partnership that will funnel GVSU pre-med students into MSU' s medical school.

"We're thrilled to bring an announcement of a significant agreement that provides a pathway for GVSU students in the pre-med program directly to the medical college at MSU," Haas said. "We want to keep our talent here."

Simon said the details are not yet clear, but Haas said five slots will be reserved at the MSU medical school for GVSU students who have completed requirements of the program.

"It's a great relationship ensuring some of the best and brightest students in West Michigan are ensured access from Grand Valley to MSU." Haas said.

Higher education requires a commitment to invest in the workforce in Michigan, Haas earlier said at Friday morning's session at the Regional Policy Conference, sponsored by the Grand Rapids Area Chamber of Commerce and other West Michigan chambers.

On the panel, Ferris State University President David Eisler, Northwestern Michigan College President Timothy J. Nelson and Kalamazoo College President Eileen B. Wilson-Oyelaran joined Haas, who leads the group representing presidents of the state's 15 public universities. "I believe that emphasized the importance of private and public colleges in moving Michigan's economy forward.

"I believe there is a culture of divestment in higher education in the state of Michigan," Haas told the political and business leaders gathered at the breakfast event. "We need to look at a college degree as a public good."

"I do believe this is just a positive note of collaboration between our two institutions," he added. "We are looking at ways to advance our institutions and ways to advance this region and our state."

Elizabeth Slowik, reporter

George Will blends humor and anger

Using his knowledge and love of baseball, lifelong Chicago Cub fan George Will wowed the Chamber’s Regional Policy Conference dinner audience Thursday with his irreverent views on the political situation in Washington, the economy, baseball and the Presidential race. He managed to add some harsh words for both President Bush and John McCain.

He had fun with his baseball anecdotes, especially with the success of the “Chicago Cubs’ 100 year rebuilding effort finally paying off,” and “You know that every team can have a bad century.”

McCain was cited by Will for the “honorable” positions he frequently takes when discussing his views and positions, which make it difficult for anyone to have serious policy disagreements with anything he says without seeming dishonorable. Will suggested this characteristic display of righteous indignation by McCain will contribute to more polarization in Washington, not less as promised, should the McCain-Palin ticket win in November.

He called George Bush "the most liberal President in the history of the US," due to the growth of the federal government under his watch, especially taking on the debt of huge corporations. Will admitted, in spite of his lifelong conservative credentials, he was angry with the Bush administration for all these recent huge bailouts and other federal power grabs. He expressed concern that this will only lead to more efforts by corporations to get similar bailouts. So the policy implications of all this are “profits are viewed as private, but losses are public.” That is not a good policy for this country.

The danger, of course, from all this mountain of debt is the only way (or, the usual way) the federal government reduces debt is to encourage inflation. This is not a good prescription for our country.

More on the conference in Monday's GRBJ.

John Zwarensteyn, publisher

DeVos cites leadership qualities

People sometimes ask Amway co-founder Rich DeVos how he and his longtime friend and co-founder, the late Jay Van Andel, built their business. His response:"We went to work every day."

Their work ethic and their ability to lead and motivate people were key to their success.
DeVos shared with participants in the regional policy conference this afternoon the characteristics he believes makes for great leaders:
  • A leader sets the tone, attitude and atmosphere in his community, business and home.
  • A leader has the ability to communicate well
  • A leader motivates people
  • A leader is a giver
  • A leader is a builder
Businesses aren't coming to Michigan because the atmosphere in this state is not good, DeVos said, and he said that's due to a lack of leadership on the part of Gov. Jennifer Granholm. The atmosphere in West Michigan, however, is favorable because people in this region work together to get things done: We have a more welcoming, nourishing atmosphere here, he said.
DeVos said future growth in West Michigan will be generated by the people who live here, as it has been in the past.

"The main thing to do is stop thinking that somebody is going to come in and build a big factory here and create a lot of jobs," he said. "We're going to do it. Growth is going to come from us and our children."

David Van Andel comments on health care

While the Van Andel Institute directly impacts health care, what researchers do at the institute is still a mystery to many people, Chairman and CEO David Van Andel said during a panel discussion at the regional policy conference this morning.

The work of VAI researchers will ultimately affect the cost of health care because the VAI is beginning to push medicine down to the personalized level, he said. That will translate into lower health care costs, he added, because treatments for individual patients will be highly targeted -- and money won't have to be wasted on trying a number of drugs before hitting on the right one or the right combination.

Van Andel said there are issues at both the state and federal levels that impact the VAI and its work At the federal level, there's the long, arduous process of going through all the Food and Drug Administration channels to get approval for a new drug.

"If I make a discovery, it can take 20 years and $850 million before I can bring that discovery to the market place," he said.

The security measures put in place after the 9/11 terrorist attacks led to tightened restrictions on green cards, and that has made it more difficult to recruit scientists from other countries. This country is decades away from growing its own scientists, he said, so the institute has to recruit from other countries.

At the state level, he said that the Small Business Tax presents a barrier to start up companies that might want to spin off new discoveries made here -- and the tax sends the message that Michigan is not really open for business.

Anne Bond Emrich, GRBJ Reporter

Discussions, DeVos and decisions

Grand Rapids Area Chamber of Commerce Regional Policy Conference, entering its second and final day after lengthy sessions on Thursday, planned to present divergent points of view and provide multiple discussion points on a number of issues facing the state and regional economy.

Attendees will vote this afternoon to determine which of those issues should become part of a long initiative marshaling resources from throughout West Michigan for resolution. Sessions today will include investment in higher education, and the business of health care and life sciences.

Amway co-founder Rich DeVos is the keynote speaker during the luncheon. He is expected to focus on leadership and partnership topics. And the votes from more than 600 participants are expected immediately after.

Grand Rapids Business Journal reporters will continue to provide updates today as the conference continues.

Carole Valade, editor

Thursday, September 18, 2008

Session Chooses Five Changes For Government

Perhaps the biggest omission at the Thursday session on government at the Regional Policy Conference was that the panel didn't include a current public official.

No mayor, city manager, township supervisor, state lawmaker or county administrator was at the table to tell the audience about the difficulty of running a unit, the feasibility of consolidating services, or the probability of merging with another unit of government  -- which were key points of discussion during the two hour session that was moderated by former Senate Majority Leader Ken Sikkema. Although plenty of local public officials attended the session. But what Phil Power of The Center for Michigan, Michael Shea of Government Strategies LLC, and Louis Schimmel of Municipal Financial Consultants, the panelists, did say led the audience into choosing the following five changes that need to be made for the state and the region to get back on track.
  1. Remove the barriers and create rewards for local governments to consolidate services. The key state barriers to doing so are three laws that require the highest established pay scale to be enacted when services are consolidated, and eliminate Public Act 312 of 1969 that calls for binding arbitration when a unit reaches a labor impasse with public safety employees, such as police and fire.
  2. Repeal and/or modify the state term-limits statute
  3. Elect only honest, courageous and visionary leaders to state and local government posts.
  4. Set a benchmark for public pay and benefits packages.
  5. Eliminate the Michigan Business Tax and cut state spending.

"If we keep doing what we've done, we will keep getting what we got," said Power, who paraphrased former General Motors CEO Roger Smith.

David Czurak, reporter

Education panelists offer divergent solutions

For National Heritage Academies chairman and business J.C. Huizenga, competition will cause all education boats to rise and improve the quality of graduates.

Frank Fuller of Florida State University is a proponent of close cooperation with industry to produce graduates with skills of value in the global marketplace.

Reeths Puffer Public Schools Superintendent Steve Cousins wants to see more ways to reach students of all abilities, including the 17.74 percent in his district with disabilities.

The three panelists presented three divergent solutions to the malaise they see besetting public education in Michigan and across the U.S. at the first-ever West Michigan Regional Policy Conference being sponsored by the Grand Rapids Area Chamber of Commerce today and Friday at DeVos Place.

The conference is drawing 400-plus attendees that include a Who's Who of West Michigan business and political leaders.

Education session moderator, former Republican Lt. Governor Dick Posthumus, said he'd like to see the idea of aligning high school curriculums with marektable industry certifications brought before chamber members for a vote Friday afternoon.

Posthumus noted that while Michigan test scores lag in math and English, the state is ninth in science, and he wondered whether the factors producing that brighter showing could translate to the other subjects.

Cousins described Reeth Puffer's Transitions Academy, which targets middle students for additional reinforcement in math instruction.

"We believe we've found the secret sauce," Huizenga said. "Only through privatization comes competition. Competition works in business. It drives us to our personal best. Anything the government can do, the private sector can do just as well or better at half the cost."

Fuller led an effort to revamp the high school curriculum to meet globally recognized certifications and test results, such as certifications in technology and manufacturing as well as Advanced Placement and International Baccalaueate. "Your solutions have to be done regionally and cannot be done through incumbent state agencies. You're just going to have to find a pathway to lead these incumbent state agencies to your outcome, not theirs."

Elizabeth Slowik, reporter

Future Workers

Three people got together to debate the best way to move forward with Michigan's workers and Right to Work. Those three workers were Birgit Klohs, president and CEO of The Right Place Inc.; Stan Greer, project director, National Institute for Labor Relations Research; Bill Black, legislative and community affairs director, Michigan Teamsters...and it only got a little scary.

The group discussion continually came back to three main points of education, unions, and retraining members of the workforce who have lost their jobs and have no other skill sets.

Klohs pointed out that when people make decisions about where they live, a major determining factor is the workforce. She also pointed out that manufacturing is still alive in West Michigan, but the way it is executed is changing. Baby boomers are retiring soon and when that is combined with a low educated workforce, the outlook can be scary.

When it comes to Right to Work, the debate heated up. The major issues around unions came from job classifications. The arguments against Right to Work include: bad for manufacturing workers; bad for women; creates lower wages, poor health care and unsafe job sites. In defense of Right to Work, job growth was consistent and rapid.

Jake Himmelspach, reporter

Questions raised at Regional Policy Conference

As I entered the Regional Policy Conference room in DeVos Place, a lot of questions were raised by people at my table.

Doug DeVos opened the conference by presenting the main objectives. He introduced Robert Genetski, who presented a dire case for Michigan's future unless it changes course. "Michigan's economic environment is not conducive to serving either manufacturing or service sectors," he said. "The Michigan Business Tax represents a poor process of governance. We need to align Michigan's policies with Michigan's performance."

He said classic economic principles are important to Michigan's future: 1) low taxes 2) free markets 3) protect individual property rights 4) stable currency.

To emphasize his point, he said, "As far back as the Old Testament, God only asked for 10 percent of our income. So if God can only ask for 10 percent, how can our government ask for more?" This got a lot of applause.

He added, "The State of Michigan and its governing officials should be rewarded on the basis of good performance. Some services government performs should not be performed by government at all. Good performing states put limits on taxes and spending."

His other comments:

  • Tinkering with the Michigan Business Tax is not a solution. Michigan needs
    to eliminate the new MBT.
  • Michigan spends significantly more than other high performing states in two
    major areas: education and health care.
  • If you have big problems you need to make big changes.

Basically, Genetski suggested Michigan's problems are too severe to make modest changes. "We need to scrap our current system," he said, "and develop an entirely new system of governance in order to compete."

Lunch speaker Carol Coletta said the No. 1 objective for Grand Rapids is the need to attract talent. She said "place" drives the decision of where people want to live and work. "Creating distinctiveness is important."

John Zwarensteyn, publisher

Taxes, Talent, Energy and Sustainability

In southeast Michigan, the Big Three have long had a lot of clout in Lansing and are (or were) always heard. But there's a Big Three on the other side of Michigan, too. Steelcase, Herman Miller and Haworth account for a large chunk of all the office furniture made in the world, at 40 to 50 percent of all U.S. production, so their economic clout in Michigan cannot be ignored.
So what ideas do the leaders of these key companies have for fixing the economic woes of the ailing Automotive State?
  • Taxes and talent are a good place to start, said Brian Walker of Herman Miller. The MBT is flawed and favors some industries over others. It needs to be less complex and it needs to encourage investment in business into Michigan, not drive it away. The "root problem" behind business tax decisions in Michigan has been the government's "persistent budget shortfalls."
  • Talent is what Michigan needs to grow a strong economy. Highly educated employees are "critical to success" at Herman Miller, said Walker. The problem is our federal government is too restrictive on work visas it offers each year. In two unrelated cases, foreign nationals who worked at Herman Miller after receiving higher educations in the U.S. weren't allowed to stay and work here -- so Herman Miller assigned both employees to the company's operations in the UK, which isn't so restrictive in immigration.
  • The state's energy policy is a problem, said Dick Haworth. The Michigan Legislature is about to re-regulate the energy supply, to chose our suppliers for us, rather than leave it open to competition.
  • "We need to make this a Right to Work state," said Haworth.
  • Education in Michigan is "a failure," added Haworth. "We need to increase the level of education results "at a reasonable cost."
  • Michigan needs to look in a mirror to see where it's not fit, said Jim Hackett of Steelcase. Our education system would be "love handles," he said, noting that in India the daily newspapers have a regular section on education to celebrate the kids' academic accomplishments in school -- and some of those schools are located in very poor areas. The Indians highly value education, to their benefit.
  • All three of the West Michigan Big Three see a great opportunity in sustainability in manufacturing and business. Hackett said the office furniture industry "got ahead of the rest of the world" in practicing sustainability early on. Haworth noted that in the last 30 years, the big driver in business and the economy was information technology. "Sustainability is going to be the biggest driver of change in the next ten to twenty years," said Haworth.
  • "If we lead in sustainability, that gives (Michigan) a competitive advantage," said Walker.

Pete Daly, reporter