Cautious assembly panel holds last hearing on port proposals

VIRGINIA BEACH

After eight meetings over a little more than a year, members of a General Assembly panel studying the possible privatization of the state's port terminals ended their last session on Thursday with reflections that fell along a continuum of caution.

About 10 members of the panel listened to more than 90 minutes of presentations by executives who came from Seattle, Chicago and Washington to try to persuade them about the merits of their plans to share in the operation - and profits - of the state's port terminals for decades to come.

At the end of the day, however, the panel had no power to approve or reject any of the proposals, which will move forward under a process begun in accordance with the state's Public-Private Transportation Act.

The panel, however, will present a final report to the governor, containing its recommendations.

Del. Harry R. "Bob" Purkey said one outcome of the panel's work will be a bill filed in the General Assembly, which he will sponsor in the House of Delegates, ensuring that the port's terminals will never be sold without legislative approval.

However, none of the groups that made presentations to the subcommittee - a partnership of Seattle-based Carrix Inc. and New York investment bank Goldman Sachs, CenterPoint Properties Trust of Oak Brook, Ill., and a Washington-based private equity firm, The Carlyle Group - have expressed any interest in buying the assets of the port.

Rather, the groups have each proposed "partnerships" with the Virginia Port Authority, which would continue to own the port, while the private groups offer hundreds of millions of dollars in upfront cash payments and various management enhancements they argue will make the port more competitive in the future. All of the plans include ongoing profit-sharing mechanisms between the state and the private firms.

"As I sit here today, I'm still very concerned and somewhat cautious about turning the asset and the potential of our port into the hands of a private operator at this point in time," said panel member Arthur W. Moye Jr., executive vice president of the Virginia Maritime Association, a trade group representing port stakeholders.

"I have never been in favor of privatizing the port," said state Sen. Louise Lucas, also on the study panel, adding that she was "guarded, cautious about proceeding at this point."

Robert E. Martinez, a Norfolk Southern executive and former state transportation secretary serving on the panel, said he was particularly concerned about moving forward with a deal at a time when the global market is at such a low point.

Del. James P. Massie III said the person who ultimately will decide how the privatization option plays out is Gov.-elect Bob McDonnell.

But he said he believes that, if the process works properly and the right partner is found, a privatization plan could reap dividends.

"Is it a core essential service of state government to be loading and unloading ships every day?" Massie asked after the meeting. "I don't think so; that's a private-sector activity and the private sector will probably do it more efficiently assuming we find the right partner and make the right deal."

After the session, executives of the three groups that made presentations said they were encouraged by what they heard.

"I know this is a complicated process and, you know, given the size of this asset, I can't imagine anybody responsible wouldn't want to proceed with caution," said Paul Fisher, president of CenterPoint Properties Trust. "Rome wasn't built in a day."

As part of the state's Public-Private Transportation Act process, the three proposals are to be examined by an "independent review panel," to be appointed by Secretary of Transportation Pierce Homer.

Robert McCabe, (757) 446-2327, robert.mccabe@pilotonline.com