Privatization Is Profitable
Unlike South Carolina, Virginia has a history of using public-private partnerships to expand its port facilities, grow its economy and generate state revenue.
Now, an offer is on the table to make it even more profitable.
According to the the Virginian-Pilot, CenterPoint properties – a Chicago-based industrial real estate firm – has offered the state a deal worth $8.9 billion to lease its port facilities for the next 60 years.
From the story:
Such a rich public-private partnership could prove attractive to the state, especially as it copes with declining tax revenues in the midst of a recession …
It would be up to the state … to decide whether to keep in the Port Authority the money his firm invests or use it more broadly in the state budget.
“That’s for the commonwealth to decide,” (a company rep) said.
The proposal, however, would include funds for the development of the Port Authority’s proposed terminal at Portsmouth’s Craney Island, “which would dramatically expand the port’s capacity,” according to a CenterPoint news release.
The Port Authority wants to build a $2.4 billion fourth marine cargo terminal at Craney Island to accommodate the growth in cargo volumes it expects in coming decades. Its current terminals are expected to reach capacity in the next five to 10 years.
We hate justifying any argument based on the fact that it would make money for government (which government will then turn around and waste), but c’mon – how in the world do you say no to something like this?
Oh, other than Sen. Glenn McConnell’s whole “private sector = bad” argument.
In addition to the financial consideration, there will also be a 12-18 month review process for the deal, with information about the its specifics posted on the Internet for four months while the state seeks competing proposals.
Which means the entire process will be transparent to Virginia taxpayers.
So, is this the sort of thing we can pull off in South Carolina?
Possibly, but according to former New Orleans ports CEO Ron Brinson that might require us getting a whole new set of political leaders.
Or at least getting our current ones to remove their headquarters from their hindquarters.
From Brinson’s op-ed in this past weekend’s Post & Courier:
While Virginia’s government prepares to entertain a bold new approach to port operations, the discourse in South Carolina drifts past the port system’s real needs. It’s become a gnarly intramural political fight about gubernatorial versus legislative controls. The debate is hammering South Carolina’s marketplace image as a no-nonsense, no-politics port system.
Exactly.
While every other port in America is moving forward, our State Ports Authority continues to make South Carolina the laughing stock of the nation.
WEB EXTRAS:
Port Management Deal Would Pay $8.9 Billion Over 60 Years (The Virginian-Pilot)
Port Must Look To Marketplace, Public To Flourish (Charleston Post & Courier)
Comments
By Silent DoRight on March 16th, 2009 at 12:23 pm
I think it’s short sighted to sell the ports. Why would they want to lease the ports for $8.9 billion if there wasn’t more money to be made.
By StupidShouldHurtMore (SSHM) on March 16th, 2009 at 2:13 pm
Wow … another piece on the Ports Authority (*shock*).
Just so we know where FITS comes from on this issue, let’s read this gem over here:
How To Get Love From $ic Willie
http://www.palmettoscoop.com/2009/03/10/how-to-get-love-from-sic-willie/
Just so everyone has a clue, the “fix” for the Ports isn’t in selling the port. It is in providing more RAIL ACCESS to the port. Let take $ic’s piece on Maersk leaving the Port of Charleston, as an example. If we recall, where was Maersk heading? Oh yes, if you said Norfolk, you are correct. Here – let’s take a look at Norfolk:
http://maps.google.com/maps?q=Norfolk,+VA&oe=UTF-8&client=firefox-a&ie=UTF8&ei=cJW-SYjvN8G0twfyseX2Cw&cd=1&ll=36.875965,-76.316056&spn=0.014796,0.026007&t=h&z=16
Folks – that’s a Norfolk Southern rail terminal. A terminal that handles containers … containers from large ships … such as Maersk. Now $ic, if you really want to help the Port of Charleston, you do the following:
1.) Intensify rail access in and out of the Port of Charleston
2.) Work with SCDOT to make sure all bridges in SC are high enough or the rail grade is low enough to permit “double-stacks” out of Charleston (e.g., stack TWO containers high, thus doubling the amount of cargo that can be processed on a unit train – heading in or out of Charleston).
See … that’s too logical of an approach. It’s so much easier to take the libertarian approach and $ell the port, right?
- SSHM
By fitsnews on March 16th, 2009 at 2:35 pm
SSHM-
Wow. You got him.
What the “Scoop” revealed is that six years ago a lawyer performed a routine transaction for Sic Willie.
Bra-effin-vo, dude.
-FITS
By Brian on March 16th, 2009 at 7:23 pm
Sic
I know the VA ports very well and my contacts there are very suspect of CenterPoint. They have not one day of experience running a port. The money is enticing I agree but this should not be your test case because VA will likely not do this. The comment about rail is 100 percent true. This is the real reason VA and Savannah are kicking Charleston’s ass.
By Mike on March 16th, 2009 at 9:03 pm
If rail is in fact the issue (I ask out of genuine ignorance of that aspect of the ports debate), then why have all of the arguments against privatization sounded like, at best, irrational fear of the private sector or, at worst, naked attempts to cling to 19th Century-era legislative power? I haven’t heard “rail” fall from McConnell’s lips other than in passing remarks of lists of things to examine, unless I just missed it.
By SPA cheerleader on March 17th, 2009 at 8:24 am
First of all, Virginia is not selling their port terminals, they are leasing them for 60 years.
In theory, the state will receive more money for leasing them than they would actually running themselves.
If you want port capacity to entice industry, to help with the cash flow needs of the state, and to maintain port related jobs, then leasing them out in this manner is the way to go.
Personally, I much prefer the under the table deal making with quasi-state agencies much better. Too much transparency often confuses the public- they can’t handle all the details of this complicated business.
By Elmo on March 17th, 2009 at 8:38 am
SSHM- This is a lease proposal -not an outright sale of the port. Charleston has no way to load unit trains of containers – They do not have enough track space at any of their 3 existing terminals nor do they have it planned for their 4th one at the navy base. Plus they have no rail access to the CSX railroad. Two major class 1 carriers in the Eastern U.S. and Charleston chooses to only hook up to one of them.
The container game rewards the player who can get it to the heartland of the U.S. the cheapest- which is double stacked unit trains- which is not Charleston.
The SPA mgmt. and the board are incapable of grasping this concept. They want to handle containers from ships and put them on trucks.
Sic Willie is not impressed with how the SPA management and the board and the legislature and the Governor have run our port terminals and neither am I.
This lease option is a very viable alternative for state owned and operated terminals.
By StupidShouldHurtMore (SSHM) on March 17th, 2009 at 10:23 am
@ Elmo,
… and that is exactly what I am getting at.
It shouldn’t be who runs it, but it should be who has access to it. Yes, it is sad that SC has two major Class 1 Railroads (NS/CSX) and only one goes to Charleston. This sadness is compounded by the stupidity of the General Assembly (did I repeat myself, might have … I digress) when we fail to take a holistic look at the logistical movement of goods and materials through the state of SC. If SC were smart, she would do the following:
1.) Get those bridges raised or grades lowered to handle the double-stack unit trains here in SC. There is NO REASON why bridges across the state can not be adjusted to handle the passage of a double-stack unit train below them.
2.) Work with a regional transit authority (think NC/GA) to make sure said double-stack isn’t whacking some bridge while traveling into NC or GA.
So do we sell or lease the port because the current management doesn’t understand what makes a choo-choo train go? No. The solution lies in getting people into SPA that understand rail and the importance of it. Getting those people into key leadership and decision-making positions will ensure that Charleston beats the rest of the market.
That is … if we still want the Port of Charleston to be that … a port.
- SSHM
PS – If you want to dream big, you’ll figure out a way to get a third Class 1 Railroad to South Carolina. You want to talk about rock-bottom shipping costs … oh my.