Mayors' reactions to port privatization proposal mixed

The mayors of Norfolk and Portsmouth are opposed to a Chicago-area development company's proposal to take over the port operations of the Virginia Port Authority, saying the deal does not provide enough revenue to their cities.

Norfolk Mayor Paul Fraim, whose city is home to the largest of the state's port facilities, called the proposal "completely unacceptable."

Fraim stressed that the proposal probably will change as state officials negotiate with CenterPoint and that he eventually may support it.

"But we need a seat at the table," Fraim said. "Our concerns need to be heard."

CenterPoint has proposed that it acquire Virginia International Terminals Inc., a nonprofit corporation set up by the Virginia Port Authority in 1981 to operate the state-owned marine terminals. VIT would continue to operate the port.

Officials at CenterPoint, who did not return calls, have said the deal would be worth $8.9 billion to the state over 60 years.

Fraim said CenterPoint officials briefed him nearly two weeks ago and told him if the deal goes through, they would provide about $3 million per year to Norfolk. About $2 million would be split between Portsmouth and Newport News, which host smaller port facilities, he said.

Both he and Portsmouth Mayor James Holley said that's not enough to compensate their cities for the loss of real estate tax revenue and for the wear and tear on city streets caused by trucks from the port.

As state property, VPA facilities and the 1,200 acres the authority owns are exempt from taxation.

"I would like to be able to tax them," Holley said. "We've never been fully compensated" for hosting port facilities.

"That's been an issue here for decades."

Newport News Mayor Joe Frank agreed with Fraim's and Holley's concerns but said he didn't yet oppose the CenterPoint proposal.

The port cities have lobbied for years to receive compensation from the state. In 2000, the General Assembly passed a bill to provide compensation to the three cities, plus Front Royal, which is home to an inland port facility.

If fully funded, it would pay at least $6.6 million annually to the cities, but the full amount has never been put in the budget.

Instead, the state provides Portsmouth about $250,000, according to Dana Woodson, a city spokesperson. Norfolk receives about $1.1 million per year, Assistant City Manager Marcus Jones said.

Fraim said neither that figure nor the $3 million proposed by CenterPoint "makes us whole."

"There are 836 deepwater acres, some of the most valuable property in the city, that are not on our tax rolls," he said.

The city supports the port but wants to be treated fairly, he said.

Deborah Bunn, Norfolk's real estate assessor, said if Norfolk International Terminals were private property, real estate taxes alone would generate more than $3.4 million per year and probably more if a reassessment of the buildings and equipment was done. The port probably would also pay the machine-tools tax on some facilities, which are taxed at a higher rate than property taxes.

Fraim said the three cities all bear a burden by hosting the ports.

"There is a physical pounding that our streets and bridges take because of the amount of traffic from trucks hauling containers," he said.

"We provide police and fire protection to the port, not to mention the additional police we need to handle traffic. We're stuck in traffic more often; our air quality suffers."

Yet, he said, many of the benefits of the port go elsewhere.

Most warehouses and other taxable facilities that exist because of the port have been built in other cities. CenterPoint received approval from the Suffolk City Council in January to build a 900-acre "intermodal center" in that city. It would have 13 warehouses with about 5.8 million square feet of space.

D espite Norfolk and Portsmouth's concerns, a final decision on whether to accept the CenterPoint proposal - or one from another company - is up to the state.

State officials are studying the proposal, and if it is deemed acceptable, they will then seek competing proposals. A final decision won't come for at least a year.

Fraim said he has discussed the issue with Pierce Homer, Virginia's Secretary of Transportation, and said he plans to talk with Gov. Timothy M. Kaine.

Harry Minium, (757) 446-2371, harry.minium@pilotonline.com