Crains New York - May 6, 2013 - (Page 4)

With tensions high, talks over 30-year deal for Hunts Point break down nancial consequences. City, state and federal governments have authorized more than $160 million in cash and tax breaks—about half the amount needed to renovate the facility. Those commitments are not open-ended. The city’s portion— the lion’s share of the government BY LISA FICKENSCHER money, at about $87 million—remains in place at the discretion of Two years of negotiations between the current administration. Federal the city and the Hunts Point Termi- grants totaling $35 million will stay nal Produce Market over a new 30- on the table through 2015. It is unyear lease and a revamped facility clear for how long the state’s $50 have led to a dead end and a lawsuit. million is committed. The co-op is The two sides agree on only one expected to fund the other half of point: They are at an impasse. the estimated $320 million project. The last time any meaningful With tensions high, the market discussion took place between the could rekindle talks with New Jermarket and the city, which sey, which had been wooowns the land at the 113ing the vendors with tax acre site, was in January. breaks and other incenThat’s when the market, AMOUNT of cash tives—though, according operated by 41 merchants and tax breaks to Mr. D’Arrigo, the co-op authorized by city, who are part of a coopera- state and federal has not talked to Garden tive, rejected the city’s of- governments for State officials in two years. fer to extend its lease by 10 the market Complicating the negoyears while it continued to tiations is the fact that last work on a deal to renovate the 46- month the produce vendors sued the year-old facility,home to the world’s city, naming as a defendant the largest wholesale produce market. Business Integrity Commission, a “I’m not sure either party thinks law-enforcement agency that reguthere is any progress that can be lates public food markets and made with further talks; the deal fell haulers and carters, among other inapart,” said Matthew D’Arrigo, co- dustries. Known as BIC, the agency president of the cooperative, who is has long been a source of contention pinning his hopes on a new City for the produce executives, who Hall administration. claim it oversteps its authority. The deadlock could trigger fiThe lawsuit accuses BIC of de- $160M frauding the produce market and of being duplicitous because although the agency’s role is to root out corruption and remove employees who have ties to organized crime, it awarded a consulting contract several years ago to an obscure security firm whose principals had extensive criminal records. BIC required the market to pay the firm, Global Consulting,$100,000 to prepare a report on security procedures at Hunts Point. Flicking BIC Among the other charges are that BIC awarded the contract to Global Consulting without vetting other companies in a noncompetitive process. A BIC official told Crain’s that the agency invited 23 firms to submit information about their companies, of which 10 were asked to submit proposals. Seven firms responded, and Global Consulting won.“We believe the process was fair and appropriate,” said the city official. Last week, market officials filed a request under the Freedom of Information Act to obtain a copy of the list of companies BIC vetted. “I don’t think they sent a request for proposals to even five companies,” said Charles Slepian, counsel to the co-op. The produce executives, he added, “hope the litigation helps to clarify BIC’s role at the market in the future.” Ⅲ by Aaron Elstein MAJORITY RULE: Retired Verizon exec Bill Jones leads a push by activist shareholders to nominate their own directors to the telecom’s board. buck ennis City, produce market hit dead end on lease agreement IN THE MARKETS ‘Hey, Verizon: Can you hear us now?’ E lections for corporate board seats can be the ultimate in Kremlinesque voting. If investors don’t like the candidates offered up by management, they can’t elect others. In the unlikely event they rise up and vote against a company-backed nominee or sitting member, the board member isn’t necessarily forced to leave the post. The Securities and Exchange Commission tried to change this discour- aging situation a few years ago when it adopted a rule saying that investors could band together and nominate board candidates if they held a combined 5% of a company’s stock. But the U.S. Chamber of Commerce and Business Roundtable sued, arguing the SEC failed to consider the cost of implementing the rule, and the commission backed down. But just because the SEC gave up on a worthwhile idea doesn’t mean that investors should. Exhibit A is a group of former Verizon Communications Inc. employees who led a resolution saying that an investor or group of investors who own 3% of the telecommunications giant’s stock for at least three years can nominate their own board members. The resolution won 53% of votes cast at Verizon’s annual meeting last week in Tulsa, Okla. “I’m very pleased,” said Bill Jones, the 74-year-old president of the Association of BellTel Retirees. “If Verizon adopts this, it will lead to better corporate governance. That will make for a better, healthier company. As retirees who rely on Verizon for our pension, a better, healthier company is exactly what we want.” The BellTel retirees have been a thorn in Verizon’s side for quite some time. Six years ago, they pushed management to adopt sayon-pay votes, and a decade ago, led the call to limit golden parachutes awarded to departing executives. Mr. Jones marshaled the support of his association’s 128,000 members to get the 3% resolution passed. His group reached out to all large Verizon shareholders, including pension plans that own the stock, and to proxy-advisory firms like Institutional Shareholder Services. “We have a good system that we’ve perfected over the years,” said Mr. Jones, who has been running the retiree association since 1996. He spent 30 years at Verizon predecessors New York Telephone and Nynex before retiring in 1990 as a managing director for corporate planning. Because the resolution was nonbinding, it isn’t clear if Verizon will change its elections, even though a majority of shareholders have said that’s what they want. All the company would officially mumble after last week’s vote is that “it will consider the outcome of the vote in its ongoing review of the company’s corporate governance practices.” If Verizon won’t budge, Mr. Jones said, his group may come forward next year with a binding resolution. When these retirees talk, Verizon might want to listen. Ⅲ 156K THE NUMBER OF PEOPLE who followed investor Warren Buffett’s verified Twitter feed four hours after it opened last week. Twitter has been eager to hear from the Oracle of Omaha for a while—one unverified Buffett feed has 132,000 followers. 4 | Crain’s New York Business | May 6, 2013

Table of Contents for the Digital Edition of Crains New York - May 6, 2013

THE INSIDER
IN THE BOROUGHS
IN THE MARKETS
BUSINESS PEOPLE
REAL ESTATE DEALS
SMALL BUSINESS
OPINION
GREG DAVID
REPORT: DIVERSITY
THE LIST
CLASSIFIEDS
NEW YORK, NEW YORK
SOURCE LUNCH
OUT AND ABOUT
SNAPS

Crains New York - May 6, 2013