GERS, WICO still at odds over Havensight Mall management


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ST. THOMAS - The Government Employees Retirement System again is feeling pushback from the West Indian Co. over negotiations about the management of Havensight Mall.

WICO, which may back out of signing a new contract with GERS, threatened to discontinue negotiations by the end of the month if GERS cannot accept a settlement proposed in an April 30 letter written by WICO board Chairwoman Beverly Nicholson-Doty.

WICO will forfeit its management role, which it has had since 1993, on May 31 if WICO's proposal is not accepted, Nicholson-Doty wrote.

"Nonsense. Nonsense," GERS Administrator Austin Nibbs said Thursday after reading the letter to the GERS Board of Trustees at its general meeting.

The WICO board rehashed issues that GERS thought had been resolved, according to Nibbs.

WICO owned Havensight Mall until 1993, when it was sold to GERS. WICO has managed the property ever since under a management contract that typically is renewed every five years.

In 2009, GERS put the management contract out to bid, causing strife between the two agencies.

Since then, no long-term deal has been reached, and WICO has continued to manage the property on a month-to-month contract.

In WICO's most recent letter, the company said that it could afford to compromise, or agree upon, certain issues but could not compromise on others. The issues addressed in the letter included:

- WICO decided that it could compromise on the issue of depreciation. WICO decided that the depreciation value of the mall's management could be reduced by $655,000, instead of $1.2 million.

- WICO proposed that it could reduce the value of claims that WICO believes GERS owes the company. WICO agreed to reduce the $2.5 million amount to $1.58 million.

- WICO asserted that it "can no longer allow the GERS to have a veto over rentals or development of WICO-owned land," which was part of a non-competition clause previously in the management agreement. The clause has been stunting development of WICO properties, the letter said. The clause is non-reciprocal, allowing GERS to develop properties as it pleases without considering how they might adversely affect Havensight business, according to the letter.

- WICO insisted that it would produce all documentation requested by GERS for its own audit, despite GERS claims that WICO had not been complying with requests for information.

"We are happy to assure you that all the requested information will be produced - or produced again - promptly," Nicholson-Doty said in the letter.

If the proposed conditions are not accepted, WICO officials said that they would withdraw the company's management role at Havensight in the company's best interest, according to the letter.

"Over the last three or four years, we have come to this point before. We have a contingency plan," Nibbs said in response to the letter on Thursday evening.

GERS Board of Trustees Chairman Vincent Liger will be responding to WICO in the near future, Nibbs said, though he would not say when that would be.

If WICO chooses to halt negotiations for a new management contract, Nibbs said that GERS has a 30-day transition period before it will need to find new management.

Lawsuit

In a separate matter, the GERS Board of Trustees voted Thursday to become the lead plaintiff in a class action lawsuit after a request from one of its four security litigators, Motley Rice LLC.

The lawsuit is against stock exchanges and brokerages that participated in what could be the nation's largest security fraud case to date, according to GERS general counsel Cathy Smith.

Smith said she did not yet know the names of the defendants in the lawsuit, but they include 40 of some of the largest stock exchanges and brokerages in the United States.

The government retirement system does not know how much money it could have lost in the grand scheme, but it will know more as the case progresses, Smith said.

GERS may be replaced as the lead plaintiff if a plaintiff with greater losses than GERS is identified, but it will maintain its role managing the litigation until that point.

While Smith could not quantify how much GERS may have lost, the exchanges and brokerages may have swindled billions of dollars by breaching traders' security and trust, she said.

Expenses

Also at Thursday's meeting, the GERS Board of Trustees agreed that it needs to update its business and education travel expense policy. GERS board members currently are reimbursed for their GERS-related travel, though the details are murky, according to GERS Chief Financial Officer Grasilda Dobbins.

Questions often are raised during audits because many of the trips logged and reimbursed are not described exactly in the current policy, even though they may be standard trips, Dobbins said.

The board requested that Dobbins make a list of exceptions that she frequently runs into.

- Contact Jenny Kane at 714-9102 or email jkane@dailynews.vi.

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