The News Journal published an opinion piece on the Port of Wilmington. In it were several errors.
“taxpayers..(do not) have the money to pay for the hundreds of millions of dollars of improvements that are needed. Today, no state or city has that kind of money…”
Although this is true, this is also misleading since no state or city ever pays out cash sums for public large public projects, In fact whether it is owned by Delaware River Bay Authority or Kinder-Morgan, the port will get their capital from the same source: a Goldman Sachs type investment house. Whoever will be doing it, will borrow the money and pay it back over the long term of the loan. Our state always uses bonds to fund large projects like the Indian River Bridge ($150 million), like the interchange at 202 and 95 (26 million), and like the interchange at Route 1 and 95($86 million)…. Goldman Sach’s put money into our account, we pay them back a little over many years. For as little as $5 million a year, the Port of Wilmington can upgrade… Quite a few Delawareans spend that little amount like it is pocket change.
We know the News Journal knows this. They cover the Bond Committee every legislative session. Whether this was a deliberate attempt to mislead, or was just thoughts escaping off the top of their head, I don’t know. But to imply the state would have to pay hundreds of millions immediately up front, presents a perception that is not true….
The DRBA could upgrade the port without going private, if that is what we really wanted to do.
Secondly, there was another misrepresentation in that piece.
The Delaware River will be deeper. It will be able to handle these larger ships. Will Wilmington? No.
Perhaps I am more familiar with this topic but when I heard that, it didn’t ring true. A quick search verified that.
Ships crossing through the Panama canal will be displacing 50 feet. That means they will need 55 feet of water.
The Delaware River is being dredged to a depth of 45 feet.
This was brought out in the original GAO report that said back in 2002 that dredging the river from 40 to 45 was pointless because of the scarcity of ships that were deeper than 40 ft. The original Panama Canal depth which has set the standards for ship sizes since 1914, is 39.5 feet.
Bottom line: these new ships coming through the Panama Canal…. won’t be coming to Wilmington… unless we re-dredge the Delaware River one more time from the mouth of the Christiana River all the way down to Broadkill Beach, and this time instead of taking 5 feet off the bottom, we will be dredging up 10 feet off the bottom…. (Well, we do need beach sand after Hurricane Sandy…)
And to do so, we will have to pay a lot more of the cost than last time. One of the reasons the Delaware dredging project didn’t originally go for 50 feet, was because at that depth, the Feds through the Corp of Engineers, only pay 40 percent of the cost. The State pays the other 60%. But at 45 feet and under, the Feds pay 65% and we slip by with just 35%…. That was the reason we dredged too little too late…
But the News Journal piece does make one valid point. The canal opens in a year and a half. That kinda hit me and I appreciate that part being in the article. Right now on the East Coast, there is only one port where ships of 50 feet can reach: one port: Norfolk/Hampton Roads. New York/New Jersey should have their dredging done by the time the canal opens, but whether they can raise the Bayonne Bridge 64 feet by then, is a different story. Savannah is trying to arrange for dredging. Charleston SC is trying to arrange for an impact study upon their dredging. Miami should be getting their money for dredging next year…..
Philadelphia and Delaware have an advantage over other ports. No low bridges. However that does little good if the big ships hit bottom just past Lewes…
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February 6, 2013 at 3:57 pm
Nancy Willing
good points. plus, the rationale from Markell and his DSPC was the need for a 500 million investment and guess what, that isn’t forthcoming from KM. They are going for the $150m.
and they aren’t going for the DE River expansion any time soon.
so that leaves no reason to hand them the port.
Mascitti is saying that his math shows a serious fiduciary breach if we allow a meager 3m annual contribution to the state for the 50 year lease. It could reap exponentially more.
February 6, 2013 at 5:17 pm
kavips
The 50 year contract is almost unheard of. LaHarve in France is the only port with a concession that length. the rest around the world according to the World Bank range below 30 years. Most go between 12 and 15 years before renegotiating.
I can only remember two lease contracts of that length. Hong Kong and the Panama Canal. Both of those were one way negotiations, btw, where the terms were dictated to the receiving party…. which was in a position of where they could not refuse…
As you probably know by now through your experience the usual rule of thumb is that in private-public investment is usually half of what was promised. We’d be giving the house away for $70 million in improvements over a 50 year span, averaging out to $1.4 million a year, plus the almost $2 million in rent.
“It’s beginning to look a lot like Fisker”….
If we could only get someone to sing that like Johnny Mathis. I’m sure Rick Jensen could come up with it.
$16 million up front
$1.4 million in investment spread over the contract.
$2 million a year in rent payments.
No liability for environmental spills and disasters.
For that, Kinder Morgan starts out with all the revenues from the handling of 5 million tons off 400 separate vessels. Whoa! I just saw that tonnage increased 25%!!! over 2010 to 2011! Why are we selling it so cheaply?
Seriously. With a deal like that, Kinder Morgan is crazy if they don’t buy. So with a deal that low, the next question is… why only one bidder…. hmmmmm…..
Whoa!! Just announced. The tariff by Diamond State Port jumps up 2% starting this February 17th. Does that anticipate the deal will be signed by then, and the new owners will be raking in 2% more now that it is private? And had the state done the same? Wouldn’t that cover the $1 million shortfall which underpins the whole basis of of giving the port away so we no longer have to pay union wages, union pensions, and can now hire at minimum wages?
Btw. Just saw the remake of the canceled board meeting is now 10 am Feb.11 at same spot….
February 10, 2013 at 7:24 pm
Mr. Sweeney Loses His Pants « kavips
[…] Chinese ships coming through the new Panama Canal will not fit past Lewes. They need 50 feet. We are dredging 45. So unless we dredge the entire bay … again, these ships are not part of the bargain. […]