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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.

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…. 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…..

 

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…….

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….

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.

The Port That Almost Got Away
Courtesy of news.delaware.gov.

It wasn’t that long ago, Markell and Alan Levin said: “With a private investor we were going to get $500 million invested in the port. There would be new upgrades, new docks poking out into the Delaware, new infrastructure”, and the New Castle County construction industry, labor and contractors, saw that $500 million aimed at them….. .

Monday, February 11th, we finally heard the deal….

$5 million towards expansion.

It is being rolled out as a $200.5 million dollar deal. But, that comes spread over 50 years. $200.5 divided by 50 years is $4.1 million a year.

But wait again. We are getting $16 million up front, which disappears into the General Fund this year, and is gone forever. And some of those costs will go to infrastructure. So if we pull the $5 million for expansion, the $24 million for maintenance over 50 years (or $480,000 per year), and the $12.5 million for infrastructural improvements (or $250,000 per year), we have a lease payment coming in of…..$2.85 million a year….

$2,85 million is exactly the tiny bit the state of Delaware spent on funding Pencader Charter School, which is about to go belly up … Despite state investment the school has had difficulty working with its annual budget, leading to it having been at risk of closure in 2011, 2012 and again in 2013.. In October, 2011, the school fired three teachers who had been reported by the state for being paid a state pension at the same time that they were getting teaching salaries. They immediately rehired the fired teachers as independent contractors, a fact which came to light when one of the teachers was recorded calling a student a “bitch”. That teacher, Bob Lewis (husband of school head Ann Lewis) was found to be being paid $6,500 a month for teaching a single class on morals and ethics…..

We are thinking of giving away our port for what it costs to fund a Charter School that teaches “morals and ethics”…

As previously mentioned, if the 420 dock workers have their union dissolved and make $10 less per hour, that bodes a deficit of $5 million every year to the City of Wilmington and County of New Castle economies…..

Delaware’s seaport creates 4,300 family-sustaining regional jobs which produce $365 million in annual business revenue and $31 million in regional annual tax revenue. Port activity generates $34 million in annual Port revenue.

You can’t blame Kinder Morgan. Anyone would jump on getting control of this port for $2.8 million a year….

The blame has to belong solely to whomever it was who decided to sell the 2nd best fruit and banana port in the entire global market, across the entire circumference of the planet, for almost nothing.

We cannot afford to lose the port of Wilmington and only to get a negative return back on it.

Forget absolutely everything else but money. This is just a plain bad deal….

If you were supposed to be getting married and found your future spouse out on a date with someone else,  there is probably a good chance you won’t be getting married.   One could alway hope.  Perhaps it was a business meeting.  Perhaps it was an old friend?  Perhaps a long talk with a former love?

But in all probability, your fiancée is probably going to call the wedding off.

It is in this framework that we hear that Kinder Morgan,  the only approved suitor for the Port of Wilmington, has just bought out Copano for $5 billion.   Let’s see.  The total cost of their Wilmington Port investment up front fee was $16 million or 0.32 of One percent of what they just spent on buying out Copano.

That gives you an idea of how important Wilmington was  to them.

Today they signed an agreement totaling $30 million investment in improvements down in Southern Texas with Calpine, a power generating company.

At the same time they were meeting with the Diamond State Port Authority here just off 13 south of  State Road….

The Wilmington Port nor Diamond State Port have commented at this time….

Looking at the money there is a good chance we just got brushed off……

Todays editorial in the News Journal authored by Mr. Sweeney is clogged with errors…

Mr. Sweeney tries to deflect our focus away from the fact that this port issue is about less income coming into Wilmington.  Less income is our concern. That is the concern for the City of Wilmington; that is the concern for the government of New Castle County…  For you see, both their revenue comes from the level of prosperity bestowed upon its inhabitants.  As discussed below, the Kinder Morgan deal will siphon $5 million out of the economy of our city and send it electronically to Houston Texas, their main office…

To deflect us from the prime argument against the Kinder Morgan takeover of the port,  Mr. Sweeney offers the argument that we should all be concerned about the “cost of shipping.”  In other words what people in Bentonville, Arkansas will pay for their goods, is more important than the economies of Wilmington and New Castle County.

The amount of savings will not amount to $5 million just in the New Castle County area.  The loss of union wages WILL cost that amount, right here.  Each year!

Mr. Sweeney uses debunked data to back his assertions.

First of all, products brought into Norfolk/Portsmouth, will always be cheaper than products brought into Wilmington, whether or not the state or Kinder Morgan takes over.  The port of Wilmington is competitive only on fruit and produce.  Shipping into Wilmington does save money if  one is buying produce.  What Mr. Sweeney fails to realize is that supply and demand have more of a impetus upon the price of a banana, than one micro-cent difference in the cost of shipping.

Produce is perishable.   As it goes bad, its price goes WAY down.  Towards the holiday season, demand causes its price to jump way up….   Wilmington and Port Labor do a great job at giving the East Coast the cheapest imported produce available.

Sweeney’s argument fails when applied to produce simply for the fact that if the price asked is low, you can’t sit on inventory until it goes up again. You sell it or throw it away. The cost of shipping is an irrelevant item.

Secondly.  Mr Sweeney states “that each mile of bad road, each worn out berth in a port adds an extra cost to the shipping of goods…”   Not exactly true.   A truck full of bananas drives out the same driveway whether or not it has potholes.   A ship berths and unloads, whether or not it has new or old padding to protect it.  Which is the reason that they are not replaced..   What Mr. Sweeney should have said and would have been correct, … “was that the improvement or upgrades of roads and ports, .. adds to the shipping costs.”  For it is when we spend, and spread that cost over a time period,  is when we need to pay for those improvements.    Not doing anything, actually keeps prices low.

This shoots Mr. Sweeney’s argument full of holes.  The cost of shipping will go up… THE COST OF SHIPPING WILL GO UP… no matter who invests in the port. Whether it is Kinder Morgan, the State of Delaware, or some white knight who rides in to save the port.  The cost of shipping goes up WHEN improvements are made.  Period.

(It is no different from when you get a loan to improve your house, the total amount of your household going to both loan payments is now more…. If  you didn’t fix up your house, you would still be paying the same single loan payment instead of now paying two….)

Obviously Mr. Sweeney is not informed of recent events.  He is looking off the original prospectus; not the most current one with updates.

If Delaware Bay were as deep as Norfolk,  I would share the enthusiasm.

Delaware must continue being the number one port for the little ships that dock at remote third world banana ports then race up to Wilmington, Delaware to unload their cargo.  Why?  Because our dock hands are the best.  We can get these little ships  in and out faster than any other port up and down the East Coast.  Furthermore,  in less than one mile, freshly loaded trucks are cruising 495 at maximum speed towards their destination….

I don’t mean to beat up on Mr. Sweeney too bad.  His argument would have had more credibility even one month ago.  However, as each new piece of data drips in,  it makes the Kinder Morgan Plan appear to be less and less of a good match between it, and the folks here in New Castle County.

Stop everything. Let’s just focus on finances.

When we first heard of this deal, the Markell administration sold it like this. With this deal was are hopeful that a $500 million investment will be put into extending the port into the Delaware River.

That investment back into the port is currently pegged at $150 million. The deal is for 50 years. The exchange of $16 million up front seals the deal. The state gets a lease payment of just under $2 million a year. And the expansion into the Delaware River is not going forward.

A general rule of thumb is that any corporation doubles the amount they tell a state government when they make their investment. In order to get approval they make the verbal statement but are not legally contracted to spend what they promise. Consequently the force of stockholders and their unending demand for profit, deems these investments to become half of their usual stated amount.

So in-port investment will be close to $75 million if this general rule holds true in this case.

Delaware for their port, will receive over the 50 year lease, (50 yrs. X $2 mil) or $100 million, plus the $75 million that Kinder Morgan will actually spend for two cranes and a conveyor. This grand total of $175 million averaged per year, amounts to $3 1/2 million per year.

With no expansion into the river, the rate of cargo must be the same. There are only 4 berths and usually all are full. We will not grow jobs. Instead those working now at union wages, will decrease to non union wages. With 240 union jobs at stake, just with a $10 an hour deduction under Kinder Morgan, the states economy loses (240 X 40hrs/wk X 52wk/yr X $10/hr), or Delaware would suffer almost a $5 million hit to their local economy.

This alone would amount to a negative impact caused by the privatization of the port.

$3.5 million a year that is positive; $5 million a year that is negative. The good news is that within the confines of the state budget, there is a switch from a cost of minus $1.5 million, to a plus of $3.5 million. The bad news is that cost just got dumped on the laborers currently working at the port, who collectively will lose $5 million. They will still be putting in the same hours; just that the local economy will be making do on $5 million less…. That $5 million goes as profit to Kinder Morgan headquarters.

Furthermore, Wilmington’s port volume increased 25% this past year. Up from 4 million tons to 5 million tons. The dollar losses quoted by Alan Levin do not yet account for this increased activity. There is a chance the port actually did make money over 2012 and actually cost the state nothing.

I can understand why Kinder Morgan is interested in the port; it is obvious considering how cheap Markell and Levin are selling it. I would buy the port for that cheap.

The issue begs to be asked. If we are selling the port so cheap, why? Why are there not lines of people begging to pay more for an investment that becomes $1.5 million profitable with no change other than firing all the unions and rehiring non union labor?

Why do we only have one suitor, who was handpicked by a consulting firm, and don’t have open bidding?

I would venture, perhaps because “open bidding” is done in the “open”?

I can name two other deals done in the dark that did not end well for our state. Fisker and Bloom…. Both negotiated by Markell and Levin. I supported both myself because both made good sense on paper. Reality is different. Our in-expertise got us shunted to the bottom of the creditor pile causing us to not get money back from Fisker even though we specified that it was to be clearly promised to us in the deal. The tricky investment firm instead, is getting that money. Likewise Delawareans have already begun paying for the Bloom boxes that will save them money. Construction is behind and has not been started.

I have watched the Phillies long enough to know that two strikes can occur and on the third one, the ball can still get batted out of the park. But I also know, not to bet on it happening…. I’ll enjoy it when I see it, but I won’t mortgage my house on it…

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…