CGTA EGM

held at 07.20 on 12th August 2014

in the Fruit & Vegetable Conference Room

New Covent Garden Market, London SW8

 

Note during CGMA attendance

 

In attendance:

Pam Alexander, CGMA Chair            (PA)                 Jan Lloyd, CGMA CEO (JL)

Bill Edgerley, CGMA Board member (BE)    Nigel Jenney, CGMA Board member (NJ)

Bob Marlow, CGMA (BM)                              Helen Evans, CGMA (HE)

Jamie Lewis, CGMA

CGTA representatives – see attached list

 

 

  Action
1 Introductions

 

 
1.1 GM introduced CGMA representatives.  
     
2 Declaration of Interests

 

 
2.1 Gary Marshall (GM) stated that NJ, as CEO of Fresh Produce Consortium, could have a potential conflict of interest as NCGM tenants were members. PA noted that CGMA were also members of the FPC.

 

 

 
3 Introductions  
3.1 GM noted that CGMA had a statutory responsibility to do the best for its tenants and that tenants were their customers. He told the meeting ‘CGMA works for you and we pay them’. He commented that the CEO and other staff were paid high salaries and bonuses as shown in the annual Report. Tony Gaeton (TG) commented that the purpose of the meeting was to hear what was going to happen to the market.

 

 
3.2 GM added that a long standing tenant, Fenn & Hexton was closing and despite being told that JL would visit them she hadn’t done so.

 

 
3.3 PA said that the only reason for the redevelopment was to secure the long term future of NCGM. It was a long process. Changes had been made to the design to take into account CGTA’s comments and CGMA would continue to work on the decant to avoid any businesses being isolated.

 

 
4 Discussion and questions

 

 
4.1 F&V Decant

Alfie Johnson (AJ) commented that he could not understand how CGMA were prepared to proceed with the decant despite tenant opposition.

 

 
4.12 GM added that CGMA had implied wrongly that the CGTA had agreed to the decant. A split of the Buyers Walk was not acceptable. There was not enough space – the   market was being fitted into a residential development, not the other way round.   The CGTA had said they would ‘suffer’ a split if the commercial terms were right. Paul Bishop had said how much that would be for him.

 

 
4.13 PA replied that the move for Fruit & Veg wholesalers was 5 years off and there was time to continue work to address the problems.

 

 
4.14 Grenville Snowden (GS) replied that CGMA did not understand the problems so more time would not help.

 

 
4.15 TG added that tenants wanted an easy working environment.   They knew change was needed and wanted it to work. CGMA should listen. Tenants wanted it to stay as it was now.

 

 
4.16 PA replied that CGMA were trying to make the changes easy for tenant.

 

 
     
4.2 Refurbishment

PA continued by saying that since the buildings are over 40 years old redevelopment was essential.

 

 
4.21 GM replied that the CGTA had paid £9,000 for a structural survey that said the buildings were ok for another 140 years. It was not the buildings that needed changing but investment into infrastructure like the drains.

 

 
4.22 PA replied that the site needed investment.   Refurbishment was not an option.   The figures on refurbishment versus redevelopment were in the OBC which the CGTA had seen.

 

 
4.23 Rob Hurren (RH) said that refurbishment would be cheaper.

 

 
4.24 GM note that this was the last chance for tenants to stop the redevelopment. CGMA were present to answer questions. The CGTA had only seen the OBC after they had asked for it through a Freedom of Information Request.

 

 
4.25 JL replied that CGMA had given CGTA the figures for refurbishment versus redevelopment.

 

 
4.26 PA stated that if this plan did not go ahead refurbishment would not happen. The Government would not support a change to the project and there was a real danger that there would be no market at Nine Elms. The current market would not be sustainable in the future as costs of operation would only increase.

 

 
4.3 Occupancy costs

PA repeated CGMA’s commitment that occupancy costs would be in line with current costs taking rent and service charge together and allowing for inflation.

 

 
4.31 GM replied that many traders would face 30% increase in costs as they would have to pay to internalise the aprons.

 

 
4.32 PA responded that tenants had been aware that was the case from the beginning.

 

 
4.33 GM commented that Brenda Dean and JL had stated that there would be no money for the Government in the deal. But when the CGTA had met with the then minister, Jim Paice, and had presented CGTA’s plan with money for the Government, he had said that the Government were getting more money in from the CGMA deal. The overage would go to Government. It was important to clear up whether CGMA were honest.

 

 

 
4.4 Empty property rates

GM said that the CGTA had written to the CGMA Finance Director asking whether business rates on empty units were charged to the GSC and had had no reply.

 

 
4.41 JL said that CGMA had had a letter from David Norris and had answered the questions and included an independent auditor’s report.   They had had no response to that letter.

 

 
4.42 BE commented that CGMA paid the business rates on the empty units.

 

 
4.43 JL added that CGTA had had the information in a letter from Clive Morton and that business rates on empty units were met by CGMA.

 

 
4.5 Facilities and fit out

TG asked why CGMA would not listen to tenants and understand what they wanted. There would only be three cafes. The site was being sold for millions, businesses were being sacrificed and he would only get a plug. Why could CGMA not offer like for like. Tenants had paid for their fit out once and should not have to buy them again.

 

 
4.51 RH asked why are tenants getting like for like in the Sainsbury’s deal?  

 

4.52 PA replied that the detail of the units had yet to be finalised but the deal agreed with Government had set a cap on costs at £130m.   The land was a public asset and any excess profit over that would go to Treasury, who would not allow any more to be spent on the market.

 

 
4.53 TG asked why the deal couldn’t be changed.

 

 
4.54 PA replied that the Government had taken its decision in 2008 and agreed to £130m as the total cost of the redevelopment. She said that no one she had talked to in government saw any possibility of it being increased.

 

 
4.55 Elizabeth Inigo Jones asked how did the Government arrive at that figure. She said it wasn’t enough.

 

 
4.56 JL responded that CGMA had given the Government the figures for the build cost. CGMA had discussed with the CGTA whether to go for as large a market as possible or for a small but higher specification market. The view had been to go for as large a market as possible. That view underpinned the whole project. The decision has been taken and the task now was to work to get as much into the specification as possible for the money.   But it was never intended that it should provide ‘like for like’.

 

 
4.6 Flower Market size and loading bays

Graeme Diplock stated that the Flower Market would be smaller, not bigger.

 

 
4.61 AJ added that 20 acres would be lost.

 

 
4.62 GM stated that the Flower Market tenants had a number of questions. CGTA’s view was there should be like for like. In the OBC the recommendation was for a Flower Market of 86,000sq ft.   The CGTA had needed an FOI to see the OBC. GM commented that CGMA staff were getting large amounts of money for getting the market a bad deal. In the FBC the Flower Market had reduced to 50,000sq ft.   The CEO and Board had said this decision was based on trends and had promised to give CGTA the analysis but this was outstanding. [This has been sent to CGTA & to Barry Porter] While the bidder the CGTA worked with had also designed a Flower Market of 50,000sq ft, CGTA had never seen the detail of the bid. They had been locked in a lawyer’s office and weren’t aware of the size. It was CGMA that had determined the output specification with a 50,000sq ft size and that was what the bidders based their plans on.

 

 
4.63 Barry Porter (BP) said that CGMA had said that 50,000sq ft was large enough for every tenant to fit. But CGMA had excluded the contract florists. CGTA were not aware of this until last February. Tenants believed CGMA when it said there was enough room for everyone. Tenants had made a mistake.

 

 
4.64 GD added that it wouldn’t work. There weren’t enough loading bays.

 

 
4.65 PA replied that space had now been made for the contract florists on the same level as their parking. If declining trends were reversed then mezzanine space could be provided for storage so that wholesalers could expand. CGMA had listened and understood tenants’ concerns about the loading bays and was addressing the issue. Trials would take place and substitutions to the plan could be made if necessary.

 

 
4.66 GM noted that CGMA was changing working practices and putting customers upstairs.

 

 
4.67 PA replied that every improvement CGMA made was being rejected without consideration.

 

 
4.68 AJ commented that VSM held all the aces.

 

 
4.69 BP referred to a copy of a letter he had received from PA to the Minister. He asked where the space for extra loading bays would come from?

 

 
4.610 JL replied that CGMA based its decision for 3 loading bays on surveys and understood what was needed. It had undertaken to carry out trials over the peak periods, Christmas, Valentine’s Day and Mother’s Day. There was time to make amendments if they were needed. Space could be found by making it deliveries at night and customer space during the morning.

 

 
4.611 BP responded by saying these were just assumptions. It was the tenants who would suffer. The CGMA’s survey had been carried out only on deliveries handled by the Carrying In Gang not other vehicles. CGMA’s data was not complete. Why do tenants have to fight to get the data? He said the plans were ludicrous – a 1.4 gradient, aisles that were too narrow, when trollies don’t have brakes. The letter he had received stated that any extra loading bays would take up parking or trading area.

 

 
4.612 TG asked BP what would make him happy?

 

 
4.613 BP answered, 6 docks.

 

 
4.614 JL repeated that CGMA were addressing the issue.

 

 
4.615 TG commented that JL was not saying no.

 

 
4.616 GM asked about the promised trial of road widths that had still not taken place.

 

 
4.617 JL replied that with changes in the design the roads would be no narrower than now so there was no need for a trial. It had been an issue during earlier discussion of the decant but this had been deferred while the decant strategy was discussed as a change might have made the trial superfluous. She noted that CGMA would not be running a trial on the loading docks yet but first carrying out further surveys. In September CGMA would put forward a proposal for the trial to cover peak periods, as it was important to ensure that any trial did not damage tenant business.

 

 
4.7 Market specification

GM noted that land values had increased. NCGM was the best wholesale market in the UK but that was based on tenant investment. Tenants employed CGMA. CGMA’s responsibility was to its tenants. He asked when the deal would go unconditional

 
  JL replied that tenants wanted answers. Now the design was fixed and the decant determined, CGMA could put VSM under pressure to get as much out of the base specification as it could for the £130m. But tenants would not get like for like.

 

 
  Damian Fowler (DF) said tenants should get like for like, or if not CGMA should walk away from the deal.

 

 
  RH commented that the Arches had got like for like from Sainsburys and surely that set a precedent? CGMA had done a great deal with TfL and would get lovely offices out of it.

 

 
  JL replied that there had been different circumstances with the arches in question as Sainsburys had needed tenants to be moved while they still had valid leases. CGMA would be moving into portacabins not plush offices. By autumn CGMA would have answers on the detailed specification.   The deal would go unconditional later, in 2015.

 

 
  GS noted that the money was there and tenants should have it.

 

 
  He said some arches had already had like for like plus.

 

 
  JL replied that CGMA had needed to move those tenants because of the impact of Barratts’ work in an area where the roads were narrow.

 

 
4.8 Cafes

GM asked why there would only be three cafes not six. The Market café owner, Mem Memhet (MM), had had no response from CGMA to his questions.

 

 
  JL replied that CGMA decided that on a consolidated site only 3 cafes would be viable. She asked the café owner if he had had a letter from CGMA inviting him in to talk and he acknowledged that he had but he had not taken up that offer. She invited him to come in to meet her.

 

 
  MM noted that CGMA had said there would be no casualties.   Cafes seating 80 people would not work on the market. 70% of his business was deliveries.

 

 
  JL replied that the reported closure of Fenn & Hexton was their decision. The number of cafes was not relevant to the planning decision and could be reviewed by CGMA but they needed to be viable.

 

 
4.9 Construction period

RH noted that tenants would be accessing their units through a period of disruption.

 

 
  PA commented that CGMA hoped the deal would go unconditional next year in order to be on site by April 2015. Tenants would only have to commit to their new lease a year before they moved. Since the design and decant had been fixed work could now continue on the other issues.

 

 
  Bruce White (BW) noted that the design and decant had not been agreed by CGTA.

 

 
  PA replied that the design had been changed in the light of CGTA comments.

 

 
  BW replied that he did not remember a discussion about size versus fitout. He did know that CGTA had spent £100,000 on a new market design and everyone loved it.   Tenants had been told refurbishment wasn’t an option. Why did CGMA decide to sell the land when values were going up. Tenants hadn’t agreed.

 

 
  DF added that it was a bad deal and CGMA should walk away from it.

 

 
  PA responded. CGMA had agreed to change the design from 4 buildings to 3. Like for like was never an option. Work would now be taking place on the specification and detail of the decant.

 

 
  GM repeated that the CGTA had said they would ‘suffer’ the split of the Buyers Walk. The redevelopment was giving too much to the residential. CGTA would object. There was not enough room for the market. He asked when the drop dead date for the deal to go unconditional was.

 

 
  JL replied she could not give a precise date because it was complicated and related to other elements of the deal but it was some way off, several years away.

 

 
  GM asked for confirmation in writing on the business rates, the drop dead date and when tenants would be given their new leases.   He noted that catering distributors would be asked to make a decision before wholesalers so would not know what their suppliers would be doing. Tenants were being “done over”.

 

 
  JL, in response to a question, replied that the detail on the specification would be available in the autumn.

 

 
  TG commented that £130m for a market was not the best deal for tenants. 40 years ago they hadn’t needed fridges or BRC accreditation. Tenants had invested and CGMA would be moving them into empty shells.

 

 
  JL repeated that tenants would know what the specification of the units would be in the autumn. It was expected to include white walls, insulated roof and doors which could be chilled to 4° C.   CGMA were trying to get food grade floors, basic lighting and electrics. CGMA were working to ensure BRC continuity and a reassurance letter for tenant customers.

 

 
  Paul Bishop posed a question to Board members: do you think tenants are getting a good deal? His business had 53 staff, everything he had was in his business. If it fails he would lose everything. Tenants had been told the market would come 1st, 2nd and 3rd. The priority should be the market and the development should be fitted round it.   Tenants were not getting like for like. The Flower Market would be smaller. To provide service tenants need space and CGMA is not giving that to them. The final market might work, but how were tenants to get there? The decant is a compromise that wholesalers are not confident they can get through.   The example of the Pavilion shows separation hurts trade. Tenants are going out of business and that is on the head of the Board. Tenants don’t stand a chance.

 

 
  GM asked how distributors would be able to tell their customers that the product would be safe from dust with the example of the Sainsburys site?

 

 
  PA replied that CGMA had a contractor in VINCI with an international reputation to protect who would employ effective dust suppression.

 

 
  GM asked if they had experience of other wholesale markets.

 

 
  JL replied that dust could not tell whether it was a hospital or a wholesale market. VINCI would use constant misting and had consideravble experience ofsensitive sites. CMGA had seen this in operation and she invited the CGTA members to see it too.

 

 
  In response to a question about asbestos, JL replied that its removal was tightly controlled and regulated by law.

 

 
  PA said the asbestos removal would be managed very professionally and effectively and was no threat to the market. The reference to asbestos dust on the CGTA website was both wrong and highly irresponsible.   It was wrong and damaging to the market to scare tenants and customers.

 

 
  GM said he was not aware that there was a reference to asbestos on the site. He added that customers had a choice and would not come. PA asked him to ensure that it was removed immediately.

 

 
  PB repeated his question, is this a good deal?

 

 
  JL replied yes. CGMA were planning for success. Without redevelopment tenants’ costs would increase to a level that would not be viable. The only option was a new market, which would secure tenant futures.

 

 
  GM commented that not one person who had been consulted on the redevelopment agreed with it. He called for a vote of no confidence in CGMA.

 

 
  A majority of tenants voted in favour of the motion. It was not unanimous but no count was taken.