NORFOLK
A Chicago-area developer’s bid to take over the operation of the Virginia Port Authority’s terminals includes some juicy financial carrots for the cash-strapped state .
There’s a $500 million upfront cash payment. Then there’s the $4 billion the proposal would free up for other state transportation projects over the next 60 years. And finally it could include $1.3 billion to pay for a proposed new cargo terminal at Craney Island in Portsmouth.
These and other details about the bid by CenterPoint Properties Trust, based in Oak Brook, Ill., were released Friday by state officials after they completed a technical review to assure that the bid met the requirements of the state’s public-private partnership law. The bid had been a closely held secret since CenterPoint delivered it to Secretary of Transportation Pierce Homer on March 12.
CenterPoint values the proposal at $3.5 billion in today’s dollars, but $8.9 billion over the 60-year life of the deal. That value includes:
-The $500 million payment;
-The $4 billion from returning the state’s annual subsidy of port capital projects, which totaled $36 million in 2008 and is funded by a share of the Commonwealth Transportation Trust Fund;
-$987 million in annual payments to the Port Authority, starting at $7 million a year, to cover its expenses and fund the Port Authority Police and other security measures;
-$440 million in potential profit sharing from port operations after CenterPoint’s expenses are paid and it receives a minimum return;
-$615 million in payments to host communities, starting at $5 million a year (the mayors of Norfolk and Portsmouth have already called the amount offered their cities inadequate);
-$1.02 billion for future capital improvements to the port’s existing facilities;
-The right to develop a fourth state marine cargo terminal at Craney Island, and CenterPoint would invest $1.3 billion there.
The state released the bid late Friday by posting it on the Virginia Port Authority’s Web site. The release starts the clock for other potential port operating firms to submit competing bids.
The authority said in a statement Friday that it “will accept for simultaneous consideration any competing and compliant proposals it receives in its Norfolk office” by 10 a.m. July 27.
State transportation officials referred questions about CenterPoint’s proposal to the Port Authority, but John G. Milliken, chairman of the authority’s Board of Commissioners, said there was little he could say.
“I don’t intend to comment on the substance of the proposal,” he said. “Now that a competitive process is started, it is not appropriate to have any comment on the merit or substance of any of the proposals.”
Asked whether he knew of any other proposals , Milliken said he didn’t but added, “I wouldn’t comment if I had.”
CenterPoint’s bid involves its acquisition of Virginia International Terminals Inc., or VIT, 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.
Under the proposal, CenterPoint would control those four facilities as well as the planned Craney Island terminal.
The plan would call for VIT and the Port Authority to “continue in their traditional management and oversight roles, keeping maritime relationships in place,” according to a CenterPoint prepared statement.
“We’ve put a lot of work into our proposal and believe that we bring a lot to the table that others can’t,” said Paul Fisher, CenterPoint’s president, during a teleconference Friday. “So we’re optimistic that the commonwealth and the public will find our proposed partnership the best way forward for the port and the commonwealth to maximize the benefit of your wonderful port facilities.”
Established in 1984, CenterPoint develops, owns and manages industrial real estate and related rail, road and port infrastructure, primarily in the Midwest.
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 port 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.
For the next four months, the state will seek competing proposals to the one filed by CenterPoint, in accordance with Virginia’s Public-Private Transportation Act.
An independent review panel will be appointed to study all of the proposals submitted. The panel would recommend to the authority’s board which, if any, of the proposals to move forward with and then more detailed, committed proposals would be requested.
“It is a long, important public process in which all affected interests have a chance to have their say,” Milliken said Tuesday at a meeting of the port authority’s Board of Commissioners. “These things are, by their nature, complex and difficult, and it’s not going to be over quickly.”
Robert McCabe, (757) 446-2327, robert.mccabe@pilotonline.com
Delicious
Digg
Reddit
Facebook
Google
Yahoo
Mike Barrett
Did you really mean "quote" or 'quite'?
Pure and simple
Dr. Tabor just does not get it at all. SPSA actually does work; it is the method of cost allocation that is broken. Fact is, the average tip fee is quote reasonable; problem is, no one pays the average fee. But as a measure of the efficiency and effectiveness of the organization in disposing of the region's solid waste, it measures up quite well. In fact, a recent study by SCS sponsored by the area's Chief Administrative Officers, concluded that the least expensive method of disposing of the region's municipal waste was to continue with a modified regional system. So all this howling from Chesapeake citizens who don't like the contract their city council signed when SPSA was created has one simple and obvious objective; to get others to pay for their commitments. Pure and so simple that even Dr. Tabor should be able to understand.
Pure and simple
Dr. Tabor just does not get it at all. SPSA actually does work; it is the method of cost allocation that is broken. Fact is, the average tip fee is quote reasonable; problem is, no one pays the average fee. But as a measure of the efficiency and effectiveness of the organization in disposing of the region's solid waste, it measures up quite well. In fact, a recent study by SCS sponsored by the area's Chief Administrative Officers, concluded that the least expensive method of disposing of the region's municipal waste was to continue with a modified regional system. So all this howling from Chesapeake citizens who don't like the contract their city council signed when SPSA was created has one simple and obvious objective; to get others to pay for their commitments. Pure and so simple that even Dr. Tabor should be able to understand.
Pure and simple
Dr. Tabor just does not get it at all. SPSA actually does work; it is the method of cost allocation that is broken. Fact is, the average tip fee is quote reasonable; problem is, no one pays the average fee. But as a measure of the efficiency and effectiveness of the organization in disposing of the region's solid waste, it measures up quite well. In fact, a recent study by SCS sponsored by the area's Chief Administrative Officers, concluded that the least expensive method of disposing of the region's municipal waste was to continue with a modified regional system. So all this howling from Chesapeake citizens who don't like the contract their city council signed when SPSA was created has one simple and obvious objective; to get others to pay for their commitments. Pure and so simple that even Dr. Tabor should be able to understand.
Sounds like a good idea
Basically the government should absolutely never do anything that can be done privately. The reason is there is no motivation to do it better, because they can simply increase our taxes and throw us in jail if we don't pay up.
Ports
If it sounds too good to be true....it probably is!
Waddayagonnado 'bout...
Too many trucks on Hampton Blvd.?
Pending Port Disaster
CenterPoint has no experience running a port facility. None. If Port Operations were easy - everyone would be doing it. Follow the Money! (To Richmond.)
This deal stinks
But it doesn't matter what any of us say, our input means nothing. So I imput nothing. Too bad our own cities and state can not do this instead of the state retirement system of CA.
My say.
If I could say three words to the state on this matter, they woud be, "Don't do it!" It seems that almost every time that a company throws dollar bill figures around, the money appears to be a smokescreen that is attempting to cover up something more hideous than whatever good deeds that those dollars could buy. For some reason (I'll reserve judgement at this time), politicians are quick to sell out when dollars bills are used as enticements. Also, port shipments can be expected to drop with the waning economy, and state control at this time would probably better serve the community than that of a private enterprise whose primary motive is profit. And let's not forget about security and regulatory control which can be better implemented if the port operations are under government control rather than just government oversight.
What is the basis for value?
The state does not even have enough information about port operations to make fair value determination.
http://hamptonroads.com/2008/10/port-study-slips-pork-debate#comment-668057
"But Virginia International Terminals closely guards the details of its finances, and members of the commission don't have enough information to assess how it compares with other operators in terms of cost or efficiency."
Mike, you of all people should know better
How long is it going to take for it to sink in that government run enterprises always lead to disaster?
Give it enough time, and the Port will wind up a bottomless money pit like SPSA. The disciplines of the private sector drive out the inefficiencies and corruption that invariably drag down government sheltered monopolies.
Having had a front row seat for the SPSA debacle, I would expect you to be the first to demand government get out of non-government services.
Experience is supposed to be a good teacher.
Here's hoping
Hope this company is solvent & won't need "bailed out" in short order. Selling HRT & such to private sector usually means a huge increase in cost of services. Can they add in the contract a profit ceiling for the company & CEO's?????
Kickback
Hope Lucas and Holly can hold on till this is settled??? Has anyone given indication as to how all those containers are going to get from Craney Island to Suffolk??? How much is it going to cost PTown??? Is there a transportation corridor in the secret file??? Maybe a bridge from Craney to
464??? So much for water front property values. Look at Port Norfolk!! Nice View!!
Don't Sell Out
The authority’s three marine terminals, plus APM Terminals’ former facility in Portsmouth, led to $41.1 billion in business revenue in the state in 2006, along with $13.5 billion in compensation paid to 343,000 Virginia employees and $1.2 billion in state and local taxes. A state subsidy of $38 million is a small amount to help produce those kinds of figures. Selling out for quick money to a Chicago group backed with money from a bankrupt state is tantamount to opening pandora's box. Dont fix something that is not broken.
Drop in the bucket
Four billion over the next sixty years. Wow, such a deal. However, over a decade ago the deficit in spending on necessary road projects was estimated to be $2,000,000,000/year. So the four billion is only a proverbial drop in the bucket, but provides to the republican majority in the House, and to Libertarians, just another excuse for not paying for the financing of necessary transportation improvements.
This stinks from the head down!
Why would this company want to buy the port operations?
Either the port is not being run efficiently now and they see the opportunity for some BIG money or they have something up their sleeve and are doing nothing but dangling a carrot in front of Virginia, hoping that the current financial picture can be exploited to its advantage. We'll see what they say next! To me there is something very wrong here.
Sell!!
The State has no business trying to run a subsidized monopoly when a private investor is willing to replace it.
Every benefit the Port can bring to the region will enhanced by the efficiency if the private sector and the fuel taxes the Port siphons off from our road funds can be put to its proper use.
Next, sell HRT to some fool and get back that subsidy money as well and our road problems will become easily solved.
MPO/business lobby plan sticks locals with $6B for Port roads!
Do you notice that the Hampton Roads Partnership/Future Hampton Roads and their shills like Art Collins of the HRPDC and the new Ray Taylor MPO keep pushing a "package" of "regional priorities" for our highways that THEY target us locals to pay with tolls, fees, and taxes to the tune of more than $6B (in today dollars) to pay for their "3rd Crossing" and a "new" RT 460 to move thosands of PORT TRUCKS that will flood our highway due to the planned PORT EXPANSION? Yet, the state is looking to SELL THE PORT for less than the cost of the infrastructure the Port needs to move its cargo? Folks - we locals are getting screwed by the Port - and the state - and the local business lobby - and the people they "fund" to install in local elected offices.
Seems like a good idea
I can't say if the money they are offering is exactly great, but the idea is pretty good. This company has a track record of running transportation and a vested interest in making our port more efficient. They also are freeing up money to go toward other transportation projects. We really really really need that!!! And finally, they want to build a warehouse district and another terminal. MORE JOBS good high paying jobs! that should be music to everyones ears.