The Virginian-Pilot
©
NEWPORT NEWS
A Chicago-area industrial real estate company on Thursday sketched out a proposal to take over the port operations of the Virginia Port Authority, part of a 60-year "strategic partnership" it says would be worth $8.9 billion to the state over the life of the deal.
"We believe our capital, but more importantly our transportation, logistics and development experience, complement the port," Paul Fisher, president of CenterPoint Properties, said in a prepared statement.
The deal, which Fisher said is worth $3.5 billion in today's dollars, involves the company's acquisition of Virginia International Terminals Inc., a nonprofit corporation set up by the Virginia Port Authority in 1981 to operate the state-owned marine terminals.
Today, VIT manages Norfolk International Terminals, Portsmouth Marine Terminal and Newport News Marine Terminal, as well as the Virginia Inland Port in Front Royal.
CenterPoint has no experience running port terminals, Fisher conceded. The proposal announced Thursday would be its first partnership with a port.
"That's why we want VIT to run the port," said Fisher, adding that VIT's current management would remain in place.
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.
Specific details about how the partnership would work and how the state would be paid were not disclosed by CenterPoint.
It would be up to the state, Fisher said, 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," he 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 new s 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.
Virginia Secretary of Transportation Pierce Homer said Thursday that he had been given a copy of CenterPoint's proposal but hadn't "even opened the cover."
The CenterPoint offer will be reviewed by his staff for the next seven to 10 days, Homer said.
If it meets various quality-control criteria, it will be posted on the Internet for 90 to 120 days, during which the state would aggressively seek competing proposals, he said.
At the end of that period, an independent panel would be appointed by the state to study all proposals and decide whether to move forward with any of them, after which more detailed, committed proposals might be requested.
The review process is likely to last at least through the end of 2009, Homer said.
"You're probably looking at a good 12-to-18-month time period," he said.
James V. Koch, a professor of economics at Old Dominion University, said he believes the state ought to give strong consideration to contracting out the operation of its port terminals.
"It sounds pretty interesting," Koch said of the CenterPoint plan. "But God really is in the details in these things. I'll be interested in what their numbers look like. Let's listen. Maybe this makes sense."
CenterPoint Properties, based in Oak Brook, Ill., near Chicago, was established in 1984 and "is nationally focused on the development, ownership and management of industrial real estate and related rail, road and port infrastructure," it said in a new s release.
In January, the Suffolk City Council approved CenterPoint's application to build a 900-plus-acre "intermodal center" in the city. Featuring 13 warehouses with about 5.8 million square feet of space to be built over the next decade, the center will be about 20 miles from the Virginia Port Authority's terminals on U.S. 58, west of downtown.
The Suffolk project is one of an array of similar CenterPoint sites in places such as Savannah, Ga.; Manteca, Calif., near Oakland; Houston; and Joliet, Ill., near Chicago.
CenterPoint was acquired in March 2006 by CalEast Global Logistics LLC, a wholly owned subsidiary of the California Public Employees' Retirement System, or Cal-PERS, the nation's largest pension fund, with more than $260 billion in assets.
"Under the new ownership structure and relationship with CalPERS, CenterPoint's balance sheet and joint venture relationships are supplemented with the financial strength of this institution," CenterPoint's Web site states. "This extraordinary financial capacity ensures our ability to fund large-scale investments and developments without reliance on external capital, and enhances our ability to execute and close deals quickly."
Robert McCabe, (757) 222-5217, robert.mccabe@pilotonline.com
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CenterPoint Properties
It is just like the Mafia to want to add an additional layer of cost
on top of the already expenses of a good port system.
Port Management Deal
Wake up Hampton Roads. All of the major steamship line carriers that were in Norfolk from the early 1900's have left us. Hapag-Lloyd moved offices to Chicago, Maersk moved offices to Charlotte, Hanjin closed their offices last year, APL left, and the list goes on and on. Not to mention that all of these carriers have sent thousands of job overseas to "Customer Service Centers", who do their bills of lading, manifests, etc.... The real reason behind the push is simple. Once Craney Island is finished and up and running. NIT / 7737 Hampton Blvd. in Norfolk and it's thousands of acres on "deep water", will be prime real estate for development and sale. The bonus, it will get all those trucks and containers off the Norfolk City Streets and over to Portsmouth where I-164 can offer an exit on to Cedar Lane's 2 lane road up to the Craney Island Port in Progress facility.
ILA union labor
Concerning not using the subject, please keep in mind that the ILA workers are experienced in handling all types of cargoes. If necessary, the leaders of the dock workers will provide training for "their employees" that will be hired to do the necessary functions to keep the terminals operating. If a private company wants to acquire the expense of training these people, they will just be acquiring "additional debt". In this "present economy", the amount of "outstanding debt" will determine success or failure of an enterprise.
Port volume is down 5% worldwide
The article left out the fact that the Port will not reach its capacity as expected, because no one considered a reduction in shipping last year,this year. and the next few years to come.
This is a scarey buisness move for 8 billion in 60 years.
Another Public/Private enterprise that has the taxpayers footing the bill. It doesn't say how much Virginia will have to spen on railways, highways, and bridges.
I smell
A lot of Union freaks making comments. Why does the port only send millions, not billions to the state? Two reasons: 1) no govt can run a company as efficiently and as profitable as a private entity. 2) Unions suck the blood out of any business they are involved in. Instead of a company having 1 executive structure, they have 2 - one for the business, one for the Union members.
Amusing argument
But opponents argue that a private company would put profits over job creation and other economic development targets, and that the port is too valuable an asset to lose.
I find that argument rather amusing having worked for several government organizations. Switching from commercial to government is a travel back in time to obsolete technology and projects hampered by huge bureaucracy and disinterested employees.
So much misinformation here...
The top 3 execs at VIT salaries do not reach 1 million combined! VIT gives to the state more then 40 mil. each and every year after paying expenses including upkeep and salary for both VIT and ILA and the VPA and paying on the bonds that were raised for port improvements and paying for the rail improvements. Take a look at who has ownership stakes in CenterPoint, the Cailf. State retirment fund and a private Chicago equity firm. Private as in we will take all the profit and pass it along to our investors who by the way are out of state. "Sorry about your roads Va. and Norfolk, we are taxpayers too and have every right to use and abuse them". How do they make more money? Cut labor, cut ILA jobs, quick and easy way to raise the profit margin. They don't care about Va.
Look at Oaklands deal, 700 mil. over 50 years is only 1.4 mil. per year. Remember VIT gives the state of Va. over 40 mil. per year...Do the math, VIT/VPA = more money and it stays here. Or some deal where ALL the profits go to investors and shareholders in Calif. and Chicago.
Is it just me, or is something funny here?
J. Robert "Bobby" Bray retires from being the Executive Director of VPA in 2007. That tells me he knows all the insider business of VPA. If there wasn't a bundle of money in this for him, I doubt he'd be pushing this. Other issues that are strange is that our tax dollars subsidize the ports via our the taxes we pay into the transportation funds that were suppose to go to building and improving roads. Maybe it's time for us (the taxpayers) to start digging up and exposing the corruption taking place here. Seems I recall huge bonuses being given to VAP execs and the rail execs, both of which are subsidized by our tax dollars. Maybe it's time for term limits so that we will have "citizen politicians" the way our founding fathers meant us to have. Instead of a government full of career politicians (60% lawyers, 99% corrupt) let's get back to politicians that are indeed our peers and are aware of the issues of their constituents. Instead of the blueblood life long leaches we have now. TERM LIMITS would resolve a lot of problems we have, such as this bad port proposal.
What about the transportation problems?
The Hampton Roads transportation projects have all been designed around moving more cargo out of the port areas. There's been no progress on this issue so I question bringing in a company who's desire is to try and move more cargo through the area.
Trust Industry over Govt
Don't be fooled by the term "non-profit". VIT makes plenty of money for themselves to cover their costs plus their management fees, they just hand over the remaining earnings from operations to the state after they have been paid. If a private company were to own the ports, those earnings would be reinvested back into the operations in some form, likely capital growth or improvements. If this Illinois company is public, those earnings would partially go back to stockholders, thus attracting more capital from Wall Street. With the state getting those funds, who knows where it goes! I'd trust a pivate company with those profits for local reinvestment far more than a government agency, who wouldn't know an efficient business model if they saw one.