What to Watch: What will make headlines in 2020?

The economy. Millennials. Marijuana businesses. These are just three hot topics we’ll be reading and hearing about this year. The TCBN has once again compiled a list of the people, places and products that we predict will be making headlines in 2020.

Below are five items from the What to Watch list. See the January print edition for the entire list, which includes a look at the continued growth at Hagerty, a potential sports complex, the hotel scene shake-up, canned wine and much more! 

 

Opportunity Zones

by Amy Lane

In 2018, the U.S. Department of the Treasury and the IRS designated Opportunity Zones in 18 states to spur investment in distressed communities.

Now, an area of Grand Traverse County could start to see investment as federal regulations and guidance shake out and awareness builds.

The lone tract qualifying within Grand Traverse County includes areas of the city along Garfield Avenue and Barlow Street and portions of Garfield Township around South Airport Road and south Cass Street.

The zone could be used for business locations and growth, housing and other development – all tied to capital gains tax relief for investors in the area.

Traverse City-based merchant bank Cochran, Cowell & Gruman (CCG) is eyeing possibilities in the Grand Traverse zone and is involved in development in Otsego County, another zone. In that zone, CCG and Westwind Construction have partnered to develop a 228-unit garden-style multifamily development similar to Westwind’s Ridge45 development in Garfield Township off of LaFranier Road.

The idea of the zones is that investors can put what would otherwise be taxable capital gains to work toward business and real estate opportunities in designated areas.

To realize tax benefits, proceeds from the sale of capital assets such as stocks, bonds and other investments must be put into what’s called a Qualified Opportunity Fund. Such funds are set up to hold investments in the zone, such as equipment, real estate or businesses. Benefits can include deferral or partial elimination of tax on the prior capital gains. For fund investments held at least 10 years, there would be no tax on the gain when the investment is sold.

“I think it’s a great program and one that could ultimately help spur economic growth in areas that need it,” said Matt Grigsby, principal in the tax department of financial services and advisory firm Rehmann in Traverse City. Rehmann hosted a seminar in April on Opportunity Zones, a concept enacted in the late-2017 federal Tax Cuts and Jobs Act and playing out in areas of Michigan and the country.

Grigsby said the concept is still fairly new but “seems to be gaining traction over time” and he sees “positive momentum going forward into 2020.” “I do think it’s something we’re going to hear more about,” he said.

Among those advocating for a local zone was venture capital firm Boomerang Catapult LLC. Boomerang Principal Lowell Gruman, also a co-founder of CCG, said he sees “a great opportunity” for Traverse City to realize some investments and said he thinks “interest will continue to grow as people become aware of the zone” and implementation rules solidify.

In Otsego County, Westwind and CCG have formed a Qualified Opportunity Fund to invest in the Pines45 project, which should have its first units available by the end of 2020, said CCG President and Co-founder Turner Booth.

He said CCG “is currently evaluating multiple investments” in the Grand Traverse County zone.

“What’s really exciting about the Opportunity Zone program is that it’s not limited to real estate investments,” Booth said. “In certain circumstances the tax advantages offered by the program can be achieved by investing in operating businesses located in Opportunity Zones.”

 

Changing of the Guard

By Ross Boissoneau

Top: Call, Hadley; middle: Eckert, Merwin, Nissley; bottom: Wille

Last year, we reported on a bevy of local leadership positions waiting to be filled. Now, many are. Among the new faces: Dr. Nick Nissley takes over at Northwestern Michigan College for longtime NMC President Tim Nelson, who retired after 19 years leading the college. Nissley previously was executive director for the School for Creative and Performing Arts, a K-12 performing and creative arts school in Cincinnati, and served as the dean of the business technologies division for Cincinnati State Technical and Community College, as well as other educational leadership roles.

Also at NMC, Gene Jenneman retired after serving as the executive director since the Dennos Museum opened in 1991. He was succeeded by Craig Hadley, who left his post as director and curator of exhibitions and university collections at the Richard E. Peeler Art Center at DePauw University in Greencastle, Indiana. Meanwhile, Leslie Eckert – who has taught and managed programs at three campuses of the International Culinary Schools, in Fort Lauderdale, Tampa, and most recently Raleigh-Durham, North Carolina – succeeded Fred Laughlin as director of the Great Lakes Culinary Institute.

Elsewhere in education, Traverse City Area Public Schools had hired Ann Cardon as its new superintendent, but she and the school board mutually agreed to separate after just two months. Former Superintendent Jim Pavelka is serving as interim superintendent while the district determines how to move forward.

Others: Warren Call – once a vice president and private bank regional manager for Huntington Bank and chair of the Grand Traverse County Economic Development Corp. – took over for Doug Luciani as CEO at Traverse Connect, parent company of the Traverse City Area Chamber of Commerce. Dr. Kedrik Merwin – conductor of Interlochen Arts Academy’s Brass Ensemble and House Band for the last decade – was named executive director of the Traverse Symphony Orchestra in September, succeeding interim Gary Gatzke; previously the post was held by Krista Cooper, who resigned in 2018. Matt Wille, the former was the vice president of operations at Allina United Hospital, joined Munson Medical Center as president and CEO, replacing Al Pilong, who took a leadership position at a Virginia health system. Brad Kluczynski took over as manager of the Grand Traverse County Road Commission after stints in Ann Arbor and Elk Rapids. He replaced Jim Cook, who retired at the end of December.

 

Weed in Northern Michigan

by Craig Manning

More than three years have passed since it became legal for medical cannabis dispensaries to operate in Michigan. Fourteen months have elapsed since Michigan residents voted to legalize recreational marijuana use throughout the state.

Yet, despite these legalizations marijuana retail options have remained absent from Traverse City until recently. It wasn’t until May 2019 that the city held a lottery to distribute 13 licenses to allow medical cannabis dispensaries within the city limits. And as of press time, recreational dispensaries are likely five or six months away from setting up shop in the city proper.

Still, marijuana is on its way. The first of Traverse City’s 13 licensed medical marijuana dispensaries – The Cured Leaf, located at 707 South Garfield Ave. – officially opened its doors in November. For now, it is one of just a few medical marijuana establishments in northern Michigan, a list that includes Grayling’s Riverside Provisioning and Frederic’s HumbleBee Provisioning Center. City Clerk Benjamin Marentette expects Traverse City’s other 12 dispensaries will be open shortly. Those 12 were each granted extensions of up to six months mostly due to construction delays. Also opening in the new year is Redbud Roots Provisioning Center, a dispensary in Acme Township.

As for recreational pot sales, Michigan law officially allowed those stores to open starting on December 1 – though very few businesses actually hit that date. According to the Michigan Department of Licensing and Regulatory Affairs, only 10 businesses currently hold licenses to operate recreational marijuana retail establishments in the state; five of those are in Ann Arbor and none are in northern Michigan.

The reason for the delay is legislative. Traverse City commissioners voted at the beginning of December to extend the city’s moratorium on recreational pot sales for up to six more months, giving them time to finish writing rules and regulations for the businesses. An ad hoc committee of commissioners will determine details such as how many recreational retail licenses there should be in the city, where dispensaries can be located, whether retailers can sell recreational and medical marijuana at the same location and more.

 

Northern Michigan’s Economy

By Craig Manning

The economy – both in northern Michigan and throughout the United States – has been booming as of late. But how long will low unemployment rates and ample business growth last?

Many economists have predicted an economic slowdown just around the corner. According to a September third-quarter economic indicator survey conducted by Bankrate, 90% of experts believe that factors such as geopolitical trade wars, slowing business investment and downward trends in U.S. manufacturing will lead to a less robust economy in 2020.

So far, those trends aren’t having an effect on the economy or job market in northern Michigan. According to Michelle Socha, a business liaison with Northwest Michigan Works!, there are currently more than 2,200 job openings across the 10-county region that the program serves. Northwest Michigan Works! collaborates with local employers to recruit and hire talent. While Socha notes that some of those jobs are likely seasonal, she says there are still plenty of full-time job opportunities in the area – enough to keep local unemployment rates low for the foreseeable future.

“The hot industries are still there, and they are still hiring for full-time, year-round employment,” Socha told the Business News. “So, healthcare, IT, certain parts of manufacturing, you name it.”

Networks Northwest CEO Matt McCauley agrees with Socha that the northwest Michigan economy is in good shape heading into a new decade. Networks Northwest is the parent organization under which the Northwest Michigan Works! program exists. It manages numerous programs to offer services such as workforce development, business and economic development, and community development to the 10-county northwest Michigan region.

“There is nothing in the data that suggests a near term slowdown,” McCauley said. “Experience has taught us that this region does best when its mix of industries is more diverse and less auto-centered than the state as a whole. And, while we are still very much seen as a tourist destination, the reality is that our business mix mirrors the nation more so than it mirrors the state or other high tourism areas – a good thing moving forward.”

However, McCauley does see four steps that the area could take to ensure a strong long-term economic outlook – and to insulate itself from any potential downturn: 1) Seek business development opportunities that support wages that can sustain households; 2) seek a diversity of workforce housing options; 3) increase the number of individuals in the region with post-secondary degrees and/or skilled trade credentials; and 4) ensure that we have a future workforce by supporting and encouraging working families with school-aged children.

 

Growing Millennial Business Scene

by Amy Lane

Sam Brickman hopes to open a new bagel shop this winter in the Campus Plaza on East Front. His bagel food truck Bubbie’s Bagels first launched at the Sara Hardy Downtown Farmers Market this summer.

When 28-year-old Sam Brickman opens Bubbie’s Bagels later this month, it will be an homage to his grandmother. That … and the Jewish food and sense of community he grew up with in suburban Detroit.

“I want it to be very much like you walked into my Bubbie’s … house. Let people experience food like I remember it,” Brickman said.

With the space in the Campus Plaza on East Front Street, he will also be one of the latest millennials to enter a Traverse City small business scene increasingly populated by young entrepreneurs.

Laura Galbraith, executive director of Venture North Funding & Development, said Venture North does several loan closings every year with millennials – a group generally born between 1981 and 1996. Some clients have said they start businesses as an outlet for creativity and more flexible schedule, in an area offering good family life and support for young entrepreneurs.

Galbraith says one client told her they had seen first-hand how “the people of Traverse City embrace new business.”

Indeed, Brickman, who started selling bagels – and selling out – at the Sara Hardy Downtown Farmers Market last summer, said he had multiple restaurant owners offer him use of their kitchens. Until he owned his own space, he has made his bagels at Raduno and served them up every Friday at Rose and Fern Café, a year-old business started by another millennial, 31-year-old Becky Tranchell.

There’s a good vibe for young entrepreneurs, Brickman said. “The more people you kind of meet, the more connections you make, (it) becomes this exponential thing,” he said. “There’s this great sense of community, and there’s this great sense of support too.”

Also making tracks with a new business are millennials Leah and Scott Stuhr. The couple, ages 32 and 33, moved to Traverse City in 2018 for something they had talked years about doing: starting their own brewery.

Opening Silver Spruce Brewing on East Eighth Street that November, they seized an opportunity to incorporate their experience in the industry – including at North Carolina’s Asheville Brewing Co., where they met – into what was then the newest microbrewery on the Traverse City beer scene.

Last year’s Eighth Street construction posed a challenge, but Scott Stuhr said the business stayed profitable through the road’s shutdown and gained a local customer base. He said the city has a good sense of community and other brewery owners have become friends. “We’ve had nothing but open arms towards us,” he said.

Plans for 2020 include moderately increasing production and expanding the array of beers. “One thousand barrels a year is our capacity; we are about a third of that now,” Stuhr said. “There’s room for growth still, but we’re busy enough. I think it’s worked out just about perfectly.”

 

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