Negotiations to sell Howland Hook terminal break down
Negotiations broke down between the Port Authority of New York and New Jersey and Orient Overseas (International) Ltd. over the terms of the sale of New York Container Terminal at Howland Hook on Staten Island.
Jim Devine, chief executive officer of NYCT, said the port authority is asking for an unreasonable amount of money from OOIL, which wants to sell the terminal to Ontario Teachers Pension Plan Board.
The port authority is seeking $37 million before it will approve transfer of the lease, and is also seeking a commitment to invest $17 million in the terminal.
Devine said that OOIL has offered to pay a $5 million fee and make the $17 million commitment for future improvements, but that offer has been rejected by the port authority.
“They don’t want to negotiate, they want to dictate,” he complained.
'We are willing to go back to the negotiation table at any time, and we're hopeful that we will be able to do that and bring some resolution to this,' said Steve Coleman, port authority spokesman.
Sales of three other terminals to the teachers' pension — the Global Terminal in Jersey City, N.J., and two terminals in Vancouver, British Columbia — have been completed.
In contrast to the situation in New York, he said Vancouver officials have embraced the sale of their terminals. The Global Terminal in New York was privately owned and did not require port authority approval.
Devine noted that the port authority had sharply reduced from $82 million to $10 million the amount of money it requested from Dubai Ports World before it approved the sale of its Port Newark Container Terminal to the insurance company AIG, and that the amount of money that the port authority is seeking from OOIL is unreasonable.
'We are willing to negotiate if you look at what we did with the sale to AIG,' Coleman said.
The port authority was under intense pressure to approve that sale by local politicians such as Sens. Robert Menendez and Chuck Schumer, because of concerns that ownership of the terminal by DP World, a company owned by Arab interests, represented a security threat.
In a letter to the CEO of OOIL earlier this year, Richard Larrabee, the director of authority’s Port Department, noted that the agency has invested more than $111 million in extending the berth and rehabilitating the terminal, enhancing its value.
“Once OOIL decided to move away from operating the terminal and use the Howland Hook lease as a financial instrument, it became our responsibility, as a prudent public landlord, to ensure that the terminal would continue to have adequate stewardship and capital investment under the next tenant,” Larrabee wrote.
Larrabee said the authority is asking for about one-third of what it spent on rehabilitation of the terminal, which is “absolutely consistent with the terms and conditions” required when it allowed DP World sold PNCT.
“Applying the same math here, we arrive at our $37 million figure,” he said.
“I’m not sure where we go from here,” Devine said.