Deadline arrives for Va. port privatization offers
Monday is the day that competing proposals are due to the state of Virginia to privatize all or part of the Virginia Port Authority's three marine terminals in Hampton Roads.
The process is the result of an unsolicited bid in March by Chicago-based industrial real estate developer CenterPoint Properties to take over the public terminals and an inland intermodal terminal in Front Royal, Va., for 60 years, plus the right to develop the Craney Island terminal.
It said it would make a $500 million upfront cash payment and total payments with present value of $3.5 billion, and total value of $8.9 billion over the 60-year life of the concession.
State officials opted to canvass industry to see if any superior deals could be obtained. They are considering private investors to raise capitol for needed improvements, especially Craney Island, beyond what the state or federal government would provide for port development. Interested parties do not have to match CenterPoint's proposal, but can also offer to operate fewer terminals or alter the lease timeframe.
CenterPoint officials are confident that the thoroughness of their proposal and its coordination with freight stakeholders in the area will appeal to the VPA and state officials.
'We think our odds are good,' said Daniel J. Hemmer, the company's general counsel and secretary, early last month at a freight infrastructure investment conference in Washington.
'We think our proposal will stand out even better' if there's a competing bid, he said.
Even without another offer, the developer believes it has a good shot at the concession. The VPA is under no obligation to accept an unsolicited proposal.
'We think we're paying full value' and that our experience will scare off some other bidders, Hemmer added.
The Virginia Port Authority has a unique hybrid management structure. Instead of operating terminals itself or leasing them to private companies, it created a non-profit state-owned company called Virginia International Terminals to operate the cargo terminals and plow profits back into the port.
CenterPoint, which is 97-percent-owned by the California Public Employee Retirement System, has developed or is the process of developing eight or nine inland intermodal ports, in addition to extensive warehouse holdings. Its flagship logistics park is in Joliet, Ill., which is served by the BNSF Railway at a 770-acre intermodal site and has customers such as Wal-Mart, DSC Logistics, Georgia Pacific and other logistics providers. A second giant logistics park two miles away will double or triple the size of the logistics park and be served by Union Pacific railroad. Combined the two parks will create the largest inland port in the nation with more than 6,000 acres, more than 30 million square feet of industrial facilities, multiple Class I railroad truck-transfer sites, and several hundred acres for container or truck yards. Total projected investment is $3 billion.
The real estate developer says it plans to employ Virginia International Terminals to run the Norfolk International, Portsmouth Marine, Newport News Marine terminals and the intermodal ramp.
CenterPoint is interested in controlling the flow of freight through the port to support a new $325 million logistics park it plans to build nearby in Suffolk, Va., and potentially take advantage of the Norfolk Southern's Heartland Corridor and CSX's Capital Gateway rail projects for double-stack container trains to efficiently feed its warehouses in the Chicago area with goods delivered to the East Coast.
Virginia Transportation Department officials have said it could take them another year or more to make a final decision on privatization. The state will evaluate the conceptual bids and then seek more detailed proposals in coming months from parties it prefers. ' Eric Kulisch