Bill would let Mayor Karl Dean appoint housing agency director

A bill introduced in the General Assembly would allow Mayor Karl Dean to appoint the executive director of the Metro agency that drew heat last year for its planning work on Nashville's convention center project.
The legislation would let Dean decide who runs the Metro Development and Housing Agency, an agency chartered by the state, starting Sept. 1. MDHA's board, which is appointed by the mayor, has the power to hire and fire the executive director.

Dean's administration said it had nothing to do with the bill.

"The Mayor's Office was not involved in initiating the legislation," spokeswoman Janel Lacy said. "All of the state-created authorities in Metro are governed by boards — MDHA, Hospital Authority, Airport Authority, Sports Authority and Convention Center Authority — and that governance structure serves the city well."

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State Rep. Mike Turner, a Democrat from Old Hickory who is sponsoring the bill, said a group of business people, and some members of the Metro Council, approached him about introducing the legislation.

"They thought the mayor treating (MDHA Executive Director Phil Ryan) like any other department head would be better for the citizens of Nashville," Turner said.

MDHA runs Nashville's public housing and urban redevelopment efforts and has played a key role in major downtown construction projects, like LP Field and Sommet Center.

The agency led the planning for the $585 million convention center, which was recently approved by the Metro Council, for most of the past two years. An audit last fall found problems with some of the contracts it administered, including changes in payment amounts that weren't approved by the board and a "commitment" for $104,720 that the board didn't get a chance to review.

PR bill gained attention

Ryan and the agency first came under intense scrutiny last summer after records surfaced showing a prominent Nashville public relations firm had billed nearly $500,000 on a contract with an initial $75,000 cap. The episode raised questions about MDHA's accountability.

Ryan said some of the audit findings were matters of interpretation or speculation by the auditors. In any case, the agency's role in the convention center project will end soon, with some key employees moving over to the staff of the Metro Convention Center Authority.

Chase Cole, chairman of MDHA's board since 1999, criticized the legislation. He said the board, made up of volunteers, represents "a broad constituency" and is accessible to the mayor.

"Certainly, if the mayor had an issue with the executive director, he would have the ability to call any one of us," Cole said. "Fortunately, that hasn't happened."

Cole also said the board's hiring and firing authority "depoliticizes" the executive director's job, making it easier to hire a competent professional and keep that person in place from one administration to the next.

Contact Michael Cass at 615-259-8838 or mcass@tennessean.com.

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Nashville Business People

Kathryn Colegrove is managing director for Nashville Children's Theatre. Colegrove had been associate director, finance and administration for Ferst Center for the Arts on Georgia Tech's campus in Atlanta.
Dr. James M. Stafford joined Radiology Alliance P.C. in Nashville. Stafford had been in private practice with VISTA Radiology in Knoxville.

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Biofuels, coal are part of Obama's clean-energy plan

WASHINGTON — The Obama administration on Wednesday announced plans to boost the use of biofuels — including more ethanol from corn — and speed up work on a plan to capture carbon dioxide from coal, now the biggest source of global warming pollution.
The White House declared that the moves were part of a plan to decrease dependence on foreign oil and create a clean-energy economy that will support many new jobs.

Administration officials said the new moves were based on sound scientific research that now gives a green light for coal-based electricity and corn-based fuel.

President Barack Obama told a bipartisan group of governors that he was following a "non-ideological approach" to energy that included clean energy and efficiency but also offshore drilling for oil and gas, new nuclear power plants and new technology that would allow for continued use of coal without emissions of heat-trapping gases.

Emphasis on all of those forms of energy seemed aimed at pulling in support for a broader measure to limit greenhouse gas emissions and gradually raise prices on fossil fuels.

2 popular goals

Obama also told the governors that his "clean energy agenda" would advance two hugely popular goals — reduced dependence on foreign oil and more jobs.

"I happen to believe that climate change is one of the reasons why we've got to pursue a clean energy agenda, but it's not the only reason," Obama said.

He made the remarks in a meeting with 11 governors: Republicans Jim Douglas of Vermont, Bob Riley of Alabama and Mike Rounds of South Dakota; and Democrats Joe Manchin of West Virginia, Steve Beshear of Kentucky, Dave Freudenthal of Wyoming, Brian Schweitzer of Montana, John Baldacci of Maine, Phil Bredesen of Tennessee, Christine Gregoire of Washington and Ted Strickland of Ohio.

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AIG bonuses are legal, pay czar says

NEW YORK — Bonus payments totaling $100 million to AIG employees from the same unit that prompted a massive taxpayer bailout are "outrageous" but allowed under the law, the Obama administration's pay czar said Wednesday.
Kenneth Feinberg said the retention bonuses were contractual obligations agreed upon years ago, before American International Group Inc. received a $180 billion federal rescue at the height of the financial crisis in late 2008.

"These are the old grandfathered payments," Feinberg told ABC's Good Morning America, adding: "I do not for a minute ignore the outrage out there, which I share. But the fact of the matter is we've got to abide by the law."

Feinberg said he's working to get back as much of the bonus money as possible. He said AIG employees have agreed to repay $39 million out of $45 million in previous bonuses to the U.S. Treasury.

AIG is set to pay the bonuses to employees of its financial products division, the unit whose risky bets helped sink the company and trigger the largest corporate bailout in U.S. history.

AIG still owes the government $120.7 billion of its bailout.

Feinberg said the company should make its last retention bonus payments next month.

"Another month or so, these old, guaranteed bonuses will be a thing of the past," he said.

In a statement, AIG said current and former employees had agreed to reduce their owed retention payments by $20 million.

"We believe this allows us to largely put this matter behind us," the company said.

But the Obama administration took a harder line.

Treasury Secretary Timothy Geithner said Wednesday that Congress can recoup the AIG bonuses through a new bank fee in President Barack Obama's proposed budget. Geithner called the bonuses an "outrageous failure of policy."

Appearing before the House Ways and Means Committee, he asked legislators to support the new fee as a way of getting the money back. The fee, which would be assessed on certain liabilities of the largest firms in the financial sector, would raise about $90 billion over the next decade.

New York-based AIG faced intense public and congressional criticism last March when it paid out hundreds of millions of dollars in retention bonuses to employees months after receiving the government bailout.

When the credit crisis hit in the fall of 2008, the U.S. government rescued AIG from the brink of collapse in exchange for an 80 percent stake in the insurer. AIG's near collapse was not caused by its traditional insurance operations, but instead risky derivatives contracts written by the financial products division.

AIG is winding down that division and has said it needs to fairly compensate its employees to sell off assets and repay taxpayers in full.

iPad's compatibility issues may confuse, upset readers

NEW YORK — Even as Apple's iPad will probably energize electronic reading, the new device is undermining a painstakingly constructed effort by the publishing industry to make it possible to move e-books among different electronic readers.
The slim, 1.5-pound "tablet" computer unveiled last week will be linked to Apple Inc.'s first e-book store when it goes on sale in a few months. The books, however, will not be compatible with Amazon.com Inc.'s Kindle or with the major alternative e-book system.

Apple's creation of a third choice is likely to further frustrate and confuse consumers if they accumulate e-books for one device, then try to go back to read them later on a different one. The effect could be akin to having to buy a new set of CDs every time you get a new stereo system. It could also keep people from buying new e-readers as better models come out if they aren't compatible with the books they already have.

This could cool consumers' enthusiasm for e-books, the way sales of digital music downloads were hampered by a variety of copy-protection schemes.

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"There are going to be some potentially painful lessons" for consumers when they try to move e-books they already own to new devices, said Nick Bogaty, senior manager of digital publishing business development at Adobe Systems Inc., which provides the major alternative e-book system.

Not 'the collaborator'

Before the iPad's debut, there had been two main camps in the e-book industry.

The e-books that Amazon sells work only on the Kindle and on Amazon's software, which can be loaded for free on PCs and some smart phones. Everyone else, including Sony Corp., Barnes & Noble Inc. and public libraries, have gathered around Adobe's system.

Adobe doesn't sell books itself, but it provides software to booksellers and libraries so they can sell and lend books that can be opened on multiple devices. Like the Kindle store, the Adobe system uses a copy-protection system that prevents buyers from reselling the books or distributing them online.

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First Horizon closes down equity research

The Memphis-based parent company of First Tennessee Bank is shutting down its equity research division, FTN Equity Capital Markets Corp., after a deal to sell the division to a New Jersey investment firm fell apart, the banking company said.
Fewer than 100 employees are affected, about 10 of them in Nashville.

A spokesman for the parent company, Anthony Hicks of First Horizon National Corp., said he could not disclose why the sale to Point Capital Partners didn’t happen. The sale was expected to close in the fourth quarter of last year.

One managing partner at Point Capital referred questions to a different managing partner, who could not be reached this morning.

Hicks said First Horizon did look for another buyer but had determined that “the business was not a strategic fit.” He said the closure was effective immediately.

The stock research business is extremely competitive with lots of firms vying for dwindling margins. One analyst estimated FTN Equity Capital made less than $80 million per year in revenues for a firm with $26 billion in assets.

The bank will take a $10 million charge to earnings related to the shutdown. The stock was down 8 cents to $12.87 cents per share this morning on the New York Stock Exchange.

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Land in The Gulch sold to avoid foreclosure

The site of a proposed 10-story mixed-use apartment complex in The Gulch in downtown Nashville that was set for foreclosure, Griffin Plaza, has been sold instead to a group of local investors who got a discounted price.

Mark Bloom said today that his company, Corner Partnership, which includes local investors Ronnie Scott and Larry Papel, purchased the 54,000-square-foot property on Friday for $1.75 million all cash, or $32.40 per square foot, roughly half of what the previous owner had paid.
The previous owner, an entity controlled by Charlotte-based developer Crosland Inc, which also built the Terrazzo condo buildings in The Gulch, was in default on its loan, according to its lender, Carolina First Bank.

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The land on 12th Avenue at the corner with Laurel Street was due for a foreclosure sale last November that was delayed pending the negotiations. The property has two empty houses on it and a warehouse and was set for 140 apartments before the real estate market slowed drastically more than a year ago, condos had trouble selling, and the project was put on hold.

Terrazzo held an auction last year at which is sold one-fourth of its nearby condo building for roughly one third off the asking prices.

Bloom said it could take four or five years before he and the other investors put something on the site, perhaps a hotel or another condo building. Corner Partnership also owns the Hilton Downtown Nashville hotel and the Union Station hotel and developed The Adelicia condos.

“We think it will be a good 48 months before the condos (in The Gulch) are filled up and at that point we will have one of the most attractive sites,’’ he said.

There was no deed filed as of this morning at the Davidson County Register of Deeds and Crosland’s local president, Bill Barkley, could not be immediately reached.

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