Why The “Delaware Way” Must Go

Not Nancy’s blog; its awesome. But I am talking about the royalty that runs this state regardless of who gets elected,  If a candidate of the people gets in, they are quickly shoved out of viability inside the workings of government and the royalty continues to run things as it wishes.

Our locally elected officials for the most part, actually do try to represent us. And they actually do  well representing us on all issues that don’t affect those who think they run things… But go against those, and you get shoved into areas you can do no damage….

Money, influence, status are all the regular clients  The “Delaware Way” used to be held up as a good thing… I once believed it was a good thing, as probably did Nancy since it was how she named her blog.   The idea was that Democrats and Republicans all got along and got things done for the good of the state, and  compared to the breakdown we see daily in Washington DC, that alone does seem to be a benefit….

However, that now seems to have changed.   By taking a snapshot of today, their image show “The Delaware Way” is now a group that wants to put in a GIGANTIC power plant 200 yards from Newark’s back yards and doesn’t give a damn how many Newark children die in the process.  “The Delaware Way” is now a group that wants to get rid of the Coastal Zone Act, so new polluting industries which can’t get a foothold in any other civilized portion of the planet, can come here and pollute like they could in a third world nation… “The Delaware Way” is now a group that couldn’t care less about segregation, about teaching our children to read or right, about helping in-poverty children learn reading and math,  as long as they can get rich off of all their charter schools.  “The Delaware Way” wants unions busted; zoning laws gone,  conservative dogma taught, and no minimum wage increase until infinity.  Today’s “Delaware Way” wants to keep our prisons full, as long as the are privatized and someone gets paid for each incarceration. Today’s “Delaware Way” wants to keep the death penalty, and levy new death penalties on regular citizens by doing nothing to curb the buying or selling of contraband illegal guns. They want to actually make selling stolen guns completely legal… They want to benefit Highmark over Christina Care. They want to charge tolls on all our highways.  They don’t want taxes on the rich increased, but lowered.  They think today’s middle class earns far too much; they want them poorer…

Their names are familiar.  On the national scale they are Tom Carper, John Carney, and Chris Coons. On the state scale they are Gov. Markell, Dave Sokola, Brian Short, Dan Short, Pete Schwartzkoph, Valerie Longhurst… Add names below if you wish….

Instead of change, these people grind down the changes of other well meaning people into dust.  A simple rule requiring all schools to put their public board meetings on line, was, since it certainly if publicly voted would have passed, shoved into a drawer to never be seen again…  Charter school legislation that will bankrupt every single public school in the state, was drawn up in secret though deemed illegal by the Attorney General’s office of the state, was railroaded through both chambers and signed by the orchestrators above, before anyone knew it was happening…  Public schools are stripped of funding, and it was never brought up to the public for debate.

What brought all this up was Connie Merlet’s letter.. published in Nancy’s blog… appropriately titled:  The Delaware Way.  And it is one tiny piece I wish to draw out…  a little statement.  a few words strung together that says, so, so much….

“I believe changes were well-intended when the Stars program was envisioned, but it has morphed into a system that has enabled already high-quality day cares to enjoy most of the financial benefits… In conversations with our representatives at both levels, I have realized that they really have no understanding of how that money is actually being used. “

There appears to be a government within our government… One thing is promised and passed and then turned over to be executed.  At that point those in the Delaware Way take over, enabling  those of privilege get more money, and those in need to become shafted…  The legislators, those to whom you throw your vote, for the most part mean well;  it is when it gets into the actual bureaucracy that the Delaware Way comes into play. They are the “deciders” as one cowboy once called them.

So no matter what gets passed…. it certainly doesn’t come out the way it was intended… We have a government within our government that does not bode well for the Delaware people.  Look at New Castle County under Paul Clark where without brakes of any sort, the Delaware Way had its way…. The elite do what the elite want, despite the fact they only have one vote like everyone else.

John Carney has gotten completely loopy lately.  So has Chris Coons.  Carper has been pro-elite for a long time now.  But their statements in public from these three decrying it is better that they try to get along with our equivalent of Hannibal Lecter, don’t bode well for all of us who are to be his future victims. It appears that their statements still supportive of the Delaware Way, are only meant to have on single purpose….keeping the lambs quiet before their slaughter. ….

 

Recently Leaked: Markell to Attempt To Sneak Through Legislative Changes To Coastal Zone Protection Act

The mess in WV brings this home…   Anytime you allow industry near water, at some point in the future there will be an accident…. Prevention as opposed to monitoring, is the only way to insure no such event occurs

The proposed legislation will be incremental.  It will be minor in scope.  It’s design is to pit the same groups that combined to apply political muscle to push forward both Newark’s contaminating power plant, and the Millsboro chicken processing plant, towards next applying political pressure to diminish and eventually abolish the Coastal Act.  It will be pushed along as good for jobs, taxes, and energy benefits.  However, none of those will receive benefit.  Instead it is designed in a way to open the coastal area to development. The benefits will all go to developers, Surprised?  Developers as we know are very reputable human beings and would never break a law, would never allow any facility to be built which might pollute, in order to make hundreds of millions of extra dollars.

The Coastal Act is Delaware.  If it goes, Delaware again becomes the cess-pool is was before environmental laws were ever dreamed.

As went Army Creek, so goes the entire Delaware coastline….

Time to get busy now… Stir the pot so nothing sticks to the bottom later.

The June 30th Coup

A bill was placed on the docket to change Delaware Law.  It was supposed to slip through the last minute when no one was watching.    That is Blevins SB 151 regarding the Treasury…   Since it was a surprise, a lot of hoopla as been thrown  in the fire by pundits reacting to the impact of first impressions.   In their defense that was all they had to go on…

Due to time constraints this investigation will take a series of small steps, probably spread across Delaware’s official blog circuit, with help from Starkey of the News Journal…

But to back up the word coup in my title,  I first want to show you how the original language was written then show you how it looked with the changes after SB 151.  Of course this was stated as necessary to keep the state treasure in line, a ploy that El Som and Cassandra seem to have swallowed hook, line and sinker.

First the original bill:

For those who follow along (you all are great) here is the passage number  Title 29; 2716(a)(2)

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(1) Require as a condition to any deposit of such funds in any state or national bank or savings and loan institution that such deposits be continuously and fully secured by direct general obligations of or obligations the payment of the principal and interest on which are unconditionally guaranteed by the United States of America or other suitable obligations as determined by the Board;

(2) Require that the selection of financial institutions to provide banking and investment services pursuant to this section be conducted on an open and competitive basis; and

(3) Require that temporary clearing accounts as well as major disbursement accounts be established in a bank or banks whose principal office is located within the State.

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That was the original piece of legislation.  Patty’s bill seeks to amend the section 2 of that piece, the embolden area.  From SB 151…

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(2) Require that the selection of financial institutions to provide banking and investment services pursuant to this section be conducted on an open and competitive basis as defined by the Board.; It shall be the responsibility of the Board to approve the selection of each of the said financial institutions by a majority vote of the members of the Board. The Board, by a majority vote of its members, shall be responsible for setting the policy as to the allocation between short and long term investments and the allocation of funds to the respective financial institutions selected through the open and competitive process; and

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Notice a “lot” of new language. In the synopsis this was sold as a clarification of the responsibilities of the board and the trimming of the responsibilities of the Treasurer. Instead, in what is now typical Markell modus of operandi, this if more of a surreptitious law-change than a clarification.

Previously the directive was this should be done in on an open and competitive basis. The previous directive specifically states this further down: 2716 (e)(1)

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The investment of money belonging to the State shall be made by the State Treasurer in accordance with policies established by the Board and subject to the terms, conditions and other matters, including the designation of permissible investments relating to the investment of the money belonging to the State,

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It is obvious to all that the existing law separates the Treasurer specifically out from all other board members when it comes to the investment of the state’s finances.

And that was really all existing code says in regards to the investment portfolio of the state’s money.

But, the new law, the one proposed by Blevins titled SB 151, makes HUGE changes. Now the board must make that decision. The board which according to Title 29; 2716(c)(4):

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The Board shall meet as often as shall be necessary to properly discharge its duties; provided, however, that the Board shall meet at least 2 times annually; and provided further, that the State Treasurer or the Chairperson of the Board shall be authorized to call special meetings of the Board.

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and 2716 (c)(2)

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a quorum of 5 members shall be necessary to hold a meeting of the Board.

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and 2716 (d)(5)

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The use of teleconferencing or videoconferencing is authorized for use in conducting meetings of the Cash Management Policy Board.

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Even now under existing policy only 3 people out of nine, if they time their conference-call correctly, can decide the future investment strategy of this state. Patty Blevin’s law would now give those three people (whomever they might be) unprecedented power and remove the current oversight of the only elected official responsible to the public.

“Coup” is the proper term for it.

Last Word On Port Deal

So it appears the Markell administration was so confident they would sell off their port, they put no money into the budget to cover it….

The answer is rather simple. If you need $20 million a year, write a new tax that begins at levels over $1 million dollars and get the $20 million from them….

How hard is that?

or you could increase port fees a few cents per ton…

Then, ask Siemans who they would recommend as a consultant if you were interested in finding a European buyer for our port…..

Solved.

“Go Ahead, Do Your Driveby, Little Girl…..”

…. said Rick Jensen as Liz Allen finished and hung up the phone before Rick could answer….

I usually drive in silence but I laughed out loud when I heard that. Seriously glad I was not drinking coffee that very second…

To set the background, Rick was trying to pin the blame on unions like would a normal corporate shill and Liz called in and was objecting…

Basically her argument was that there were a lot of things wrong with this Kinder Morgan Deal.  Most of you know, I’ve outlined many.  Al Mascitti has outlined some. Nancy Willing outlined some. Norinda outlined some.  Bobby Marshall has outlined some.  John Kowalko has outlined some. The News Journal writers  and editorialists  have outlined some.  Even Alan Levin truthfully  outlined some…. And of course, Liz Allen was Delaware’s voice.  She outlined many…. And don’t even  mention that the entire House of the General Assembly, both Democrats and Republicans unanimously voted for General Assembly oversight on this strange thing happening, despite the Governor and Alan Lavin saying…”shouldn’t do that!!!”

THE  ENTIRE  HOUSE  OF  THE  GENERAL  ASSEMBLY  VOTED  FOR  SENATE  BILL  3  YET  KINDER  MORGAN  IS  SINGLING  OUT  A  LABOR LEADER,  JULIUS  CEPHAS? ? ?

All of these people are more to blame for swaying public opinion than Julius Cephas.  However, truth be told, without Julius, none of these people would be swaying public opinion….  He didn’t harangue, he didn’t bash, he’d didn’t twist arms…

All Julius did to persuade this wave against Kinder Morgan, was speak the “truth”.  The letter paints Julius as a feisty uncooperative fiery personality…  Anyone who’s sat on a panel with Julius finds that hard to believe.  That is not how Julius handles adversity.  He digs down and works.

Of course as we all age we come to realize that anything is possible.  But if we are going to allow ourselves to consider even the most outrageous items,  what I find far more possible, and far more probable, was that Kinder Morgan was seriously planning on cutting jobs.  Furthermore, it probably had it’s eye on the DRBA portion of the state pension fund… Speaking strictly as a vulture capitalist here… who wouldn’t?

Apparently Julius Cephas was in the way…  We all owe him a thank you.

I know Texas gas firms.  This deal is not off.  What we have here is a lighter being held up  to Delaware’s foot.  To scare us a little, try to get us to move things up, to get us to concede… They sharply deduced that to have a successful operation here, they need to do away with the union.  Hence, instead of excoriating Bob Marshall’s leadership, which they would have done if they truly were to pick up and go, …knowing they might need him later instead they chose to focus on Julius Cephas…

Can they turn the state into an out-roar against Julius and the Longshoreman’s union, so much so that we offer them a counter-offer with “the union”  completely eclipsed out of it?

In their minds they think they can.   They’re Texans…  Look at Governor Perry.  (Hope you weren’t drinking hot coffee right there… )

What they don’t realize is that to convince Delaware to come aboard, they have to accomplish all these four things…

A.  Convince us first  on the concept of privatization; Trust us, our state is completely against it.

B.  Give us $5 billion for 50 years.

C.  Promise us the Longshoreman’s Union will be around forever .

D.  Expand business so the outside businesses will grow….. 

I think this is more money than they want to bear right now….  But if they are willing to agree to these propositions,   send us an offer….

Us Delawareans are a little stronger negotiators, with a little more backbone,  than is Alan Levin….  I’m sorry from a honesty point of view, if his actions sort of misled you.

There are two ways to do business.  One is do what is best for the business by being selfish..  The second is to do what is best for the customer and community, which in our view, turns out to be what is best for the business.

Delawareans (minus Rich Heffron)  subscribe to the latter…..

 

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Man Of The Year

Although the year is barely out, we do have our first nomination for the spot to be announced in December 2013.  With the Kinder Morgan Deal now on hold semi-permanently, even they are pointing to our hero of the year as the man most responsible for allowing the port to remain state owned….

I can say it was Julius Cephas who was behind almost every move to combat the loss of good jobs at our port.  He is being pointed out as the villain by the capitalists at Kinder Morgan.  In Delaware’s eyes, that elevates his hero’s stature even more…

In truth, he is no villain and knowing him, he will probably shun the acclimations being made by us common folk as being our hero.  In his eyes, he was just doing what needed to be done because no one else was there at that very moment to do it, and as that task swelled, it took a lot out of him….

Capitalists always need a villian.  But it was the “truth” which actually is what killed this deal.  Kinder Morgan WAS going to cut back on jobs, and their change of heart and blaming Julius instead of others, points exactly to the core of their problem with our port… …

People in Texas, do not understand unions.  They simply can’t fathom or understand how there can be an actual law that lets people strike and shut you down, whenever you try to pay them less..  In their eyes, you work for what they want to give you and if it is too little, ..humph.  go elsewhere….

The second culprit (after the “truth”),  was our office of economic development.  We gave Kinder Morgan too many “eager” signals that set us up as being seen as an easy pick.  They truly thought they could waltz in, pick up a top notch East Coast Port for a song, and we would eagerly give it up…  Again, that was because everything was done in secret.  Had a meeting been forthcoming in the very beginning,  Kinder Morgan might have moved on earlier when it became readily apparent, that southern Texas practices do not bode well in the Northeast…

Of course, being a corporation, they will blame the whistle blower.  (Ironic since the whistle blower of Enron works for them)..   Of course.  It is not like they find anything immoral in taking a state asset for a song, in firing those skilled dock workers, and replace them with some Spanish speaking Texans who never even heard of a union….

And Julius did blow that whistle. .  Like Rose on the Titanic, he took the whistle off of Jack (pun intended), and blew softly at first, then harder, and harder.   Gradually the sound registered on others ears….

Without Julius, Bob Marshall would not have pushed through Senate Bill 3.  Without Julius, most of the links showing up in everyone’s blog, would have not been found.  Without Julius, the case for protecting workers would not have even made the rounds of the Norman Oliver show….

There were many helpers. Bob Marshall, Nancy Willing, Norman Oliver, Norinda, Helene Keeley, Al Mascitti, Liz Allen, John Kowalko, and (an other blogger too shy to be mentioned here). When one looks back through all of them one sees from everywhere, there in the center of the universe,  stands a normal human being just like us, known to most … as Julius.

There will come a time when a better deal will arrive.  Could even be this year. There will come a time when a suitor who does care about Delaware, who does care about unions, about human beings, about those businesses on the outside, and who will want to upgrade the port for everyone’s interest, not just their own… And that suitor in this day and age, could even come from abroad.  Germany is very committed to union labor, to the environment, to being a good neighbor…. There are a great many possibilities out there that are immeasurable…. We definitely dodged a Texas bullet with this one….

When that suitor arrives… Julius’s stature will be set in cement….  For he did nothing really Herculean, except argue the truth…  He didn’t lie.  He didn’t connive,  He didn’t threaten….

That was done by our office of economic development.  Instead and unlike them, Julius told the truth.  He told the truth to anyone who would listen.  He told the truth enough, so many “did” listen….

And that is why, he  deserves this nomination as Delaware’s Man of the Year.  I know it is early into 2013, but great things just do not wait!!….

You will hear smears that Julius tubed the deal… I saw the letter and it is already out on WDEL and the Delawareonline’s News Journal… But as an impartial blogger, I can tell you exactly what killed this deal.

It was “the truth”.  The truth of what this deal would cost us Delawareans….. is what turned the tide and caused the outcry that rose up against it….

If Kinder Morgan really wanted this deal, they could have easily said… “we are expanding and putting 5 new berths out into the river.  We are buying the port for the bargain price of $5 billion.   We need those businesses outside the fence because the jobs we get, will soon be too big, we can’t do it ourselves.  We will keep the union just as it is;  Wilmington needs good jobs and we are going to do our part….  We are also going to contribute into an emergency fund to be used for any spill or environmental accident that takes place under our tenure….

Kinder Morgan could have done any of those things, … and didn’t…. The blame doesn’t lie with Julius after all…. Especially when you consider the following…

This Economic Council erred on Fisker Automotive.  Then it erred on Bloom Energy.  Then it tried to Kinder Morgan us out of our port…..   Someone rushed in  with a save to make sure that last one didn’t happen.

That person is now hereby nominated for Delaware’s Person of the Year…….

Why Lease Out Wilmington’s Port Up Until 2064?

Courtesy of Wikipedia

There are no universal rules about how long the life of a concession should be. Economic theory on regulation indicates that the longer the life-span, the more incentives the private concessionaire has to make adequate investments to enhance the assets, since profitability will be dependent on the state of the facilities.

However, the longer the period between two concessions, the less information the regulator may have on cost and demand conditions. Therefore, there is a trade-off between incentives and information for regulating a concessionaire optimally…..

50 years is a long time.   Most people over 50, won’t see the end of the lease.  Only 6% of those now between 40 and 50 years old, will be around go see it revert back to the state.   An egg, fertilized tonight, will be moving around as a 50 year old when this port lease expires…..

Can a lot change in 50 years?   Let’s look back… 50 years ago was 1963… Let that sink in….  If our ancestors had leased the port in 1963, while John F. Kennedy was president, while Lyndon Baines Johnson was Vice President, while Robert Kennedy was Attorney General, it would still be in the lessor’s control….  What would it be?   Would it have grown as it did as as public entity?   Kinder Morgan is an energy company…  How many of these are still around?   Amoco, Getty, Esso, Sinclair, Atlantic, Texaco, Gulf, Pure, Phillips 66, ….

A quick reminder of our local refinery may drive home the point.   Originally Delaware City refinery was started in 1956 and as of 1963 was owned by Getty… In these 50 years past, it has gone through a progression of Texaco, Star Enterprises, Motiva, Premcor, Valero, and after a brief shut down, it is now run by PBF Enterprises…  I wonder how many of the original promises that Getty made to get approval and the refinery built, are still edified in the practices of the current owner?

Kinder Morgan says it has no plans for Liquid Natural Gas…  but, what about its third owner, its fourth, its fifth?   The only thing constant is change….  When people tell me Kinder Morgan is going to be around a long time,  I tell them that early last year, El Paso Gas was saying exactly the same thing….

Bottom line, none of us would lease our house out for 50 years locked at today’s low rent prices, yet that is what we are doing with Kinder Morgan.  We are giving them a cut throat bottom rate for 50 years with no  renegotiations….. And speaking strictly for myself, if I were Kinder Morgan, … those last 15 years I would put as few pennies as I could into my investment, knowing full well, I’d soon just be turning it over to the state in 2064…

Which means, that after the end of 50 years the State receives an beat down, unmarketable entity, and not the same shining port we are giving up today:  the number two largest fruit port of the entire world…..

So, what do other ports lease for?

http://info.worldbank.org/etools/docs/library/64583/2181seaport.pdf

As one can see, only one port is leased out for 50 years:  La Harve in  France. The average lease on the chart above, is 23.3 years. Furthermore, in such agreements it is very common to have penalties and fines to guarantee adequate compliance with the terms of a concession agreement… Concession contracts have long lives, and therefore it is important that port authorities are able to establish strong positions from the start of the concession, and be allowed to perform regular inspections to verify assets are being kept in top condition. The potential threat of fines must be written into the contract to ensure compliance.

It is because concession contracts have long lives that it is important the port authorities are able to establish strong positions from the start of the concession. Re-negotiation of a concession contract is probably the rule and not the exception, and should not be perceived as a failure. Since concession contracts are typically long-life documents, it is impossible that at the moment of drafting the contract the parties can foresee all possible future contingencies….

Bottom line, the excessive length of this contract for this small port is odd, and is definitely laid out in the favor of the renter, who in this case will be Kinder Morgan.  At this point, without balance embedded deep within the contract, we are really doing nothing more than selling our first born daughter to the very first man who comes along….

Levin and Marshall Head to Head On Port Of Wilmington

Most of you missed this, but Alan Levin and Senator Bob Marshall stopped by coincidentally at the same time to visit Rick Jensen of WDEL, and smooth as he was, Rick convinced both to sit down for an hour and go head to head over the topic of  privatizing the Port of Wilmington….

First Alan Levin;  Delaware Economic Development Office….

a.  Delaware river will be dredged to 45 feet.

b.  Panama canal will open to new big ships from the Pacific, which will be coming up the Delaware River.

c.. Ships if not coming here, may go to ports north to Philly, Paulsboro, Newark NJ, Norfolk.

d.  If we don’t accommodate these larger ships, jobs will go elsewhere taking 3000 jobs. By 2016 we should start seeing them.

e. Was not a sweetheart deal. Competing bids were proffered.  Local  ILA (International Longshoreman) even asked the state to search out new private/public partnership bids back in Sept 09

f. Turns out that the  Bank of Montreal was advisor for port transactions, the division was located in San Francisco. It’s job is to  just finance ports.  Sent out 70 inquiries  17 expressed inquiries for further information,   4 actually made bids.  2 were called non responsive.  leaving 2 good. Kinder Morgan and one private equity group financed by local individuals.

g. Of the two bids received, the Kinder Morgan bid secured workforce. The other group said they would rob workforce pension and union bust to squeeze their profit out of efficiencies.

h. Kinder Morgan bid grants a three year guaranteed security, to the  ILA, to the  teamsters, to the businesses outside..  What other business gives you a three year guarantee?

i.  Kinder Morgan would grow profits by increasing tonnage.  They want to add 3 additional warehouses  200,000 square feet each, and 28 additional jobs.  The other bidder, made up of local cutthroats, would cut the workforce to squeeze out its profit.

j. Kinder has the ability to bring in additional volume, to negotiate and bring other companies in.  The other bid doesn’t.  Improvement costs are substantial.  $12 million per crane. It costs between $60-70 million to replace berth 5 and 6, just the repair of which will cost $8-10 million. We need the long term lease. Companies want return over time.  they won’t do it for 5, they won’t do it for 10. That’s why it is a 50 year lease.  The people of Delaware want commitment as well.  They don’t want someone saying “we’re outta here” after 5 years.

k. BDO did an independent audit.  As does the State Senate  they also show a $ 3 million yearly loss.  Reports are posted in their auditor’s office.  BDO is independent and won’t jeopardize  their reputation by lying about the port of Wilmington.  It is bottom line business.  Net profit in the end, is minus $3 million dollars.  The General Assembly is putting in $10 million a year for improvements.  That $10 million doesn’t get us past where we are. It doesn’t get us out to the large ships.  We need to get out into the Delaware  and that will cost $100’s of millions of dollars.  Kinder Morgan has considered expanding the Delaware River auto berth, built 20 years ago to accommodate Volkswagon.  The berth goes southward. Kinder would go northbound, and put two berths, with two cranes which will service the 3 warehouses being built.l.

l. LNG is off the table,  that has been committed to in the General Assembly and will also be in the lease. Can Wilmington accommodate LNG tankers?  No!  The port of Wilmington is not big enough to do LNG.  And two, they will not increase coal over today’s level; our same level of 100,000 tons of coal is stipulated for the next 50 years.

m. Protests against the port are  having negative effect. Both Mr. Kinder and Mr. Foster came with the understanding we were the ones seeking and they were not expecting negativity. They understand the ebb and flow, but were not prepared for this huge outcry. it was us. We invited them to the party. Had they come to us as a hostle takeover, the outcry could be right and proper… So far we’ve done  what we thought was right.  We got to find a way to stop the annual spending of the $10 million because the $10 million won’t get us out to the river. Kinder proposed and promised and has done it elsewhere.

n. Kinder Morgan if they have a customer who needs to get to the river, they then will build to go to the river; they can make the extension at that time.  But Kinder (like any successful business) does not promise or commit to anything except what it is prepared to do today.

o. If deal falters, the future of port will be tenuous.  It will continue to have great management, and a great workforce, but won’t have the proper resources to go to river.

p.  If deal collapses, no,  the port won’t go bankrupt.  but collapsing the deal  is not responsible.  Being responsible is doing something to stop the $10 million  bleeding.

Now… state senator Bobbie Marshall…author of Senate Bill 3 signed by Jack Markell, overseeing the lease of port….

a. Big problem is… we do not have details of Kinder Morgan.  No written proposal,

b.Expansion is something we all favor. but deal  receded into one of ” no expansion”, but we will now have to turn over the entire port. including the 300 acres owned by Delaware citizens, managed by Diamond State Port Authority to someone we don’t know.

c. Port is actually  a profit making entity if you remove the depreciation yearly. Actual operation is profitable.

d. Port could grow jobs within the  interior 250 acres if port grows and expands, and with new money, more employment opportunity exists if expansion occurs…

e. Point out that Julius Cephus (ILA) has rallied people, businesses, and elected officials, and has pointed out that this may not be beneficial in long term.

f. Preliminary proposal at this time, the due diligence will be present by end of month which will allow presentation to bond bill and bond bill will hold hearings on the proposal… Senate Bill 3 requires review by bond committee.

g. Members of legislature representing the state of Delaware, passed bill in 1994 to allow Diamond State to operate the day to day operations, but never was it place  in the code, to give either Diamond State or the governor sale and total control of 300 acres of port property.  General Assembly and its citizens are the tenant. Diamond State Port is the renter.

h. Port of Wilmington Directors are responsible to exercise “all function” of port….including the leasing of lands to companies…. That is different from” selling” the land of the taxpayers out from under them.  The state taxpayer keeps ownership but leases to Kinder Morgan.

i.  All  interested parties, need to read Miami Herald and how expansion of Panama Canal will affect the ports of the east coast. We need to invest the Delaware river side of the port and that is not happening with Kinder Morgan.

j.  This is a lease, this is not a sale to Kinder Morgan. The Diamond State board can do leases….  Alan’s understanding is if the bond bill committee approves Kinder Morgan deal, it goes to the House and Senate for up or down vote with no debate.  But Marshall say debate will be impossible to quench.

k. Any one can appear before the bond bill committee… Alan will appear. Senators can appear. Kinder Morgan will be given total control of port. Diamond State Board will still be in place, will still have oversight, but not its running on a day to day basis.  They make sure agreement is in force, and if not, they will take appropriate action.

l. Worried about control  People getting laid off?  Kinder Morgan will automate and cut employees down to one.  Low skilled people will get shut out,  Has happened all over the country.  Failed private ports run by Kinder Morgan, cut people.  (Which ones ask Jensen.)

m. Kinder Morgan is interested in the fruit business, Kinder Morgan is paying premium for fruit; they want to build three warehouses. Already they are seeking  long term contracts with Dole, Chiquita, and the Chilean Pacific Seaways in order to get their fruit.  They have to have to be given the chance.

n.  (Jensen) Depreciation needs to be on the form to comply with IRS. Depreciation is where the loss of the port is coming from. Without it, the port is profitable according to Marshall.

o. Kinder Morgan is a bulk and liquid bulk company. (John Vitale):  Concerned this deal will cost him money; his business is on the outside of the port.  Container experience is limited to one 10 acre container port in Florida. Taht is all the experience they have.  Products generating most jobs in ports are containers, breakable containers as in fruit, and automobiles. Handling bulk products are the least job creators.   The outside area around the port has grown because the conscious decision not to handle bulk, because they didn’t mix with fruit and automobiles… .

p.   Ok, (John Vitale) With Kinder Morgan switching to bulk, we could end up out on the river, but we still would have 20 percent of today’s  jobs.

q.  Flat out,(John Vitale)  bulk products are far more profitable and will drive out costlier containers which are labor intensive, forcing the outside businesses to go out of business. High number of jobs at the port are there because of fruit, these will be lost by not sticking to containers…. A for-profit company will not be in the best interest of the  existing port.

r.  Ferrous alloys, fertilizer, liquids are not competitive with the outside businesses. (Alan).  We can promise this:  employees will last three years, we will get an income stream to the people of Delaware, and that capital improvements will happen.  Check out Vancouver where Kinder Morgan has spent in last two years, $140 million spent on improvements for cargo bulk containers, something they didn’t anticipate when they leased it two years ago. …They are  willing to pay a premium for our expertise. They think fruit is good business.

s. Concern that we are putting too much faith in hope. Kinder Morgan is a Wall Street for-profit stockholder company.  Delaware’s General Assembly’s support is contingent on growing business to the river. Legislators are very worried about the external  businesses existing outside the port.  i

t.  Bonds $7 million owed to the city (Roger Roy) ..  In 1994, we made two deals with Wilmington: one to pay them over time, and the other was to take over  the bonds they owed,  which is to pay off their bonds which they currently have.  State still owes city close to$7 million..

u. (Kowalko).  We will debate the bill on the floor. … Alan is saying the Bond Bill Committee will debate the pre proposal proposal… not the proposal because at this time, there is  no proposal.  Issue is not about Kinder. …  The bond bill was to discuss t he ethics of privatization of the port, not the deal itself.  Therefore when it goes on the floors, that will be the only time to debate the actual Kinder Morgan proposal.

v. (Liz Allen)  Vancouver contract shows Kinder Morgan is not liable or loss for any cargo, not liable for any delay, strikes, fires explosions, or acts of god, and Kinder Morgan is indemnified from all losses…. Both (Alan and Rick) spoke up that sounded like a standard hold-harmless contract, one required for all business.  So who is responsible if there is an explosion (Liz)?   Responsibility goes to Kinder Morgan, they have the liability(Alan), their insurance covers that, and we are not absolving them of liability.  All obligations go to the person leasing the deal, not the lessor…

w. (Rick)  Emotion doesn’t make sense. Why so much negative  emotion?. (Bob Marshall)  Those interested and raising concerns are those who work in the port, work in businesses  around the port.  Kinder Morgan is a profit making company, former operator working as Enron officials, that raised a red flag. Rick asks:  is everyone at Enron a criminal?   No.

x. (Alan) Trepidation is about change to what we know.  We have tried to mitigate  that concern on everyones issue.  Bottom line is people of Delaware can no longer afford putting $10 million a year to upgrade the port.

y. (Alan)we take money away from everyone else in the state to bolster the port. We have an obligation to the port of Wilmington, but we can’t take anything away from Seaford, and Laural, and education and public safety….

$5 Billion Is A Start

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… .

Kinder Morgan/ Delaware: It’s All About Respect

There are thousands of reasons why this union is a bad idea. Some are classified under categories of labor, some under categories of environment, and some under categories of finance. But as much as the Governor’s office is infatuated with this union, when it comes down to it, we are really nothing more than a cocktail waitress who happens to catch George Clooney’s eye at one of many events,and become infatuated with the prospects.

Bottom line, Kinder Morgan bought El Pass Oil for $36 billion. If the Delaware Port deal goes through, they will pay $18 million up front and then a little under $3 million a year after that….

The first purchase was a private company. The second is our public entity. We are being propositioned to give up one of our most prized possessions, for something amounting to only five hundredths of one percent, of what our proposer, just gave another suitor….

All of us would silently scream “NOOOOOOOOO” if cinematically forced to watch a young girl willingly give up her virginity to a famous actor she happens to meet at his own bachelor party….

We can’t sit silently and let Delaware do the same.