Photo Courtesy of Port of Wilmington.com
Delaware is poised to give Kinder Morgan, our port for free. Well not exactly but on a percentage scale to Kinder Morgan, that is what it would come to.
This could easily have been done, if our government handled everything in secret. Pay a few people off, sign the contract; the yellow smoke appears, and Delaware fades into oblivion (Shrek Forever After image).
But, Delaware is a government of the People, for the People, and of the People. We found out.
There is a reason you have presidents of stockholders. Because naturally every one has a certain slant of opinions and one has to listen to a lot of hot air by listening to everyone’ parents complain. Having a chief executive cuts that process out and gives us simplicity required to get things done in a timely fashion. If people differ then they can take it up with the chairman and organize a revolt if necessary…
Hence in Delaware we have reached the point where we have a chief executive making the decisions and a lot of revolt steaming underneath.
So up to now, the unanswered question has been: how much should we charge? Just using the simple criteria of buying a house as an example, we can come up with a minimum figure.
When you sell a house you ask for:
- Down payment: 5 percent
- Interest rate: 3.26 percent
Next step is to figure out exactly what our port is worth to us.
If we just take the cumulative $250 million the state has made off the port in tariffs since taking ownership and providing records since 1996, we have a minimum guideline. In tax revenues alone over 50 years, to maintain the status quo, we need the minimum of a $781 (250/16 X 50) million asking price.
Using the criteria above, we should then require 5% or 39 million down payment, and run the existing remainder through the standard mortgage calculation at 3.26%…
(Remember we are not figuring out the best deal, but the best worst deal for which we can afford to give up our beautiful port)
So financing the remainder $742 million over 50 years at 3.26% we should be asking directly for $$1,505,000.000 (billion) spread over 600 payments on top of that 5% down…. Even this paltry price would bring into the state a monthly income of $2.5 million (that is monthly!)..
As an aside, the equivalent of interest we would be receiving over time, would be $706 million. Not much over 50 years but a lot better than a loss.
As we have heard from many, giving the port up for free (as is being proposed by the secret deal of Alan Levine with Jack Markell’s blessing), hurts very many people…
So being realistic, if we have hurt on one hand, and benefit on the other, we need to make sure the overall benefit we get at least matches the hurt we are about to cause,… in order to simply break even. Since breaking even is not a really the best business decision, we should be looking at doing a little or a lot better than breaking even…
Our lowest minimum price can be $1,544,000,000 (billion) meaning we lose out on anything less.
How much is the Kinder Morgan Deal? $200.5 million. Just 13% of the minimum price we will need to require for purchase… .