Port plan offers millions upfront, billions down road

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