From John's Desk: Taking A Mulligan Or Two On The Produce Market

November 11, 2019


From-Johns-Desk-Taking-A-Mulligan-Or-Two-On-The-Produce-Market

This article originally appeared in the June 2019 issue of the Produce Business Magazine

 

I don't play golf but recently attended my first charity tournament and learned about a valuable fundraising tool - selling the golfers a "mulligan." According to Wikipedia, a "mulligan" is a second chance to perform an action, usually after the first chance went wrong. You get to buy the opportunity to correct your mistakes. What a concept. 

 

How would our Philadelphia Wholesale Produce Market look and operate if the architects and Market merchants were given a "mulligan"? This June marks the eighth year in our "new" produce market facility. The honeymoon is definitely over. The merchants and the building are deep in the realities of a long-term relationship. The old market smell is gone, replaced by the aroma of maintenance and repair. In broader terms, the facility has delivered well on our expectations, but what would we have done differently, if we could do it over?

 

We knew we would get just one shot to design the future of a viable Terminal Market in Philadelphia. But looking back, I can see that we could have more closely scrutinized the financials and plans for our new home. There are things we should have done differently, and admittedly, there are things I miss about the old Market. 

 

Can we get a mulligan on the financial structure of the deal? We should have fought harder for a place at the deal-making table. We didn't own our old building and therefore had no equity to contribute to the deal. Our financing plan was hatched in 2008, a perilous fiscal period. It was cobbled together by politicians and bureaucrats at the end of their public lives and a very hungry real estate developer. The deal that finally came together was back-loaded with ruinous balloon payments, and because of the uncertainty of financial markets at the time, we were pushed into closing with the promise that these could be fixed later. We did eliminate the balloons in 2018, but without the guidance of those that crafted our original deal. The money and time spent to revise the payment schedule was a costly blow to our merchants. In addition, we should have more closely reviewed the financial documents submitted by our merchants. We trusted that everything offered was properly prepared and executed. We trusted but didn't verify. One of our original merchants played games with the name of his business entity, and when he abandoned his lease commitment, the market operating budget was badly hurt.

 

Can we get a mulligan on the site plan and the blueprints? One of the more noticeable things about our site is a rectangular bite that was taken adjacent to our exit gate. A small parcel was unobtainable at the time our ground was purchased, and that resulted in an inequitable distribution of automobile parking spaces. "Value engineering" (a fancy term for cutting corners) resulted in the loss of some important features. Structures to prevent pallet and forklift contact with the walls and doorways were insufficient, and we have had the repair bills to prove it. We should have included some logistics amenities for customers. Access to pallet-jack charging stations and staging or storage areas would enhance the way our customers are using the new market. Facilities to improve the quality of life for staff, such as a gym or day care for employees' kids, would have been welcomed. 

 

How about a mulligan on the construction? Once construction begins, an owner's rep protects the interests of the project owner and ensures that the building and its components match the blueprints and the building code. We could only afford one rep, and he was a terrific engineer with solid practical experience. But our facility is more than 700,000 square feet. If our rep had had wings he couldn’t have kept up with the builders. Once the foundations were poured and the steel frames put up, construction went very fast. After the drywall was up and the valves and junction boxes covered, it was too late to inspect pipes, wires, and ducts. We should have hired six reps. 

 

In spite of all the things we may have overlooked, neglected, or were value engineered, what we have works. I don't miss the stench of old product in the street on hot summer days, scraping ice and snow from the loading dock in winter, the cracking floors or crumbling walls of our old building. But, in our new facility, our offices are far from the action. Our old offices looked out over the sales floor. I miss looking out the window next to my desk and spotting a favorite customer or watching pallets of produce rolling out the door towards waiting trucks.

 

We are so much better equipped to serve our customers in this building. I just have to walk a bit farther to catch the action.   


Posted by:
John Vena



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