Lawmakers are attempting to stop a multi-billion dollar deal that would privatize the port operations in Hampton Roads. Sen. Louise Lucas, Democrat-Portsmouth and Delegate Chris Jones, Republican-Suffolk are introducing legislation that would prevent Republican Governor Bob McDonnell's administration from turning port operations over to a private company. These two lawmakers think that the administration is moving to fast with little input from General Assembly, to give up state control of the port asset, which plays a critical role in Virginia's economy.
Personally, I think it really boils down to an accounting equation. <http://www.investopedia.com/terms/p/presentvalue.asp#axzz2IXHfNZ9z>. What is the value of the money received today, as opposed to the value of the money received in the future? The administration is attempting to privatize the port under the Public-Private Transportation Act of 1995. This allows for private entities to enter into agreements that would construct, improve, maintain and operate state transportation facilities. Quotes from Lucas, “I want to put the brakes on this deal”; “It would take one of the most valuable assets the commonwealth has out of our control. That makes no sense to me.” Also, how much does it cost for the State to run the port, would it save the Commonwealth of Virginia money not to run the port, and has the State ever heard of Change Management?
Jones wants to slow the process and examine it before any deal is made. Jones says, “This is a capstone of our economy,” and that it might make sense in the end, but there are questions that need to be answered first. This effort began with an unsolicited proposal from APM Terminals Inc. and was put on a fast track for completion.
A.P. Moller – Maersk Group is based in Copenhagen, Denmark and has subsidiaries and offices in more than 135 countries worldwide. They employ around 108,000 people and are ranked 147 on the Fortune Global 500 list for 2010, down from 106 in 2009. One of the problems with the deal is that there was no competitive bidding and other companies want the same opportunity. Two other private groups have also offered the state billions of dollars to run the Virginia Port Authority's terminals for decades. Jones has submitted (HB1691), which would stop the state from accepting unsolicited proposals under the law for port operations and (HB1689) which would require legislative approval for the sale or long term lease of port facilities, also authorizing a one year study of the port by the Joint Legislative Audit Review Commission (HJ621). Jones also wants to propose a bill that will reorganize the port's governing structure. Delegate Bob Purkey, Republican, Virginia re-introduced a bill that was proposed before (HB1334) that would prohibit any change in ownership of the port without approval by the governor and the General Assembly. This bill would not affect the pending privatization deal because the state would keep ownership of the port facilities.
Virginia International Terminals Inc., which is the Port Authority's private operations affiliate that has run the port's facilities for three decades has filed a plan to continue in its role. McDonnell's office wants to let the current evaluation process play out, which makes sense. The authority's board is planning on making a decision in March, and is considering three options. There is an annual multi-million dollar tax payer subsidy given to the state's terminal operations. The governor and Transportation Secretary must sign off on any final agreement.
A. P. Moeller filed an unsolicited proposal to take over the Virginia Port operations for the next 48 years, last spring. The estimated value of the offer in today's dollars is $3.8 billion, which includes an upfront payment of $395 million. In addition, they have offered to give the state their $540 million, state of the art container terminal in Portsmouth, Virginia, which the Port Authority is now leasing for $50 million a year.
Other private offers that are now pending are from Virginia Port Partners, LLC, which is comprised of JP Morgan IIF Acquisitions LLC and Maher Terminals, a New Jersey based terminal operator. The value of its proposal is at $3.1 billion, with an upfront fee of $400 million.