New London ponders future benefits of State Pier
New London — As northeastern states boost their reliance on renewable energy, New London State Pier has potential as a long-term player in the emerging offshore wind industry.
However, what that will look like hinges on negotiations between the international energy company Orsted, the recently selected pier operator Gateway New London LLC, the Connecticut Port Authority and city leaders.
Orsted is not part of Gateway's 20-year contract to operate State Pier, even though over the last few months Orsted officials laid out a vision of working with Gateway to help transform State Pier into a world-class offshore wind hub supporting upcoming projects and potentially drawing suppliers and manufacturers to the region.
And while Orsted's 200-megawatt Revolution Wind project picked up steam last month, when regulators approved an additional 100 megawatts in the state's zero-carbon electricity auction, the 800-megawatt Constitution Wind farm proposed by Orsted and Eversource lost out in the auction, which saw regulators tap Millstone Power Station for the bulk of incoming power.
Meanwhile, with State Pier benefitting from almost $50 million split between public and private investment into infrastructure upgrades, city officials hope to bank on long-term economic development through offshore wind while pushing for hard financial commitments from the Port Authority. Under its new deal with Gateway, the Port Authority will see an influx of nontaxable cash from both conventional and emerging businesses.
"I want to believe that they still have their eyes on the prize, which is a deal that makes the port of New London as the hub to build up the offshore wind industry for the next 10, 15, 20 years," Mayor Michael Passero said in an interview Thursday.
Orsted, Gateway and Port Authority leaders say they remain excited about New London's potential to play a major role in the offshore wind industry.
"Orsted is planning substantial offshore wind activities in New London for our Revolution Wind project, and that includes making significant investments in State Pier," said Orsted U.S. Offshore Wind Co-CEO Jeff Grybowski, referencing at least $22.5 million the company has committed to infrastructure upgrades. "At the same time, we'll be continuing our dialogue with the state about how New London can be best positioned to become a major hub in the East Coast offshore wind industry."
Port Authority officials and Matthew Satnick, co-CEO and chairman of Enstructure, Gateway's financial partner, said the parties could not comment on negotiations. But Satnick said Gateway was "working closely with the Connecticut Port Authority and the major offshore wind companies to realize the offshore wind opportunity for New London State Pier."
Port Authority Chairman Scott Bates described Gateway as "a world-class operation" with expertise at creating jobs for local workers. He said Gateway's proposal, which should create at least four dozen direct port operations jobs, "matched our vision of enhancing the maritime economy of the state."
"Now the real work can begin," he added. "Choosing a terminal operator had to come first, and we wanted someone willing to pursue a mix of traditional business and opportunities in the emerging power sector of offshore wind," he said.
Lamont 'looking forward' to New London investments
Seven states have committed to build more than 10 gigawatts of offshore wind capacity by 2030, and the Bureau of Ocean Energy Management is looking to lease more swaths of federal waters to developers.
John Humphries, lead organizer of the Connecticut Roundtable on Climate and Jobs, emphasized "how important it is for the new administration and legislature to take immediate and bold steps to clarify the state's long-term commitment to offshore wind procurement. We need to act quickly to ensure that Connecticut gets a significant share of the clean energy and local investment as the new industry rapidly expands in the coming years."
Maribel La Luz, director of communications for Gov. Ned Lamont, who campaigned on continued reductions to greenhouse gases and ramping up renewable energy, said Friday that the state should be "proud of the gains for the environment and economy from the current agreements."
"Governor Lamont is looking forward to further responsible investments that will make New London the regional wind-power hub for a generation to come," she added.
Bates has said it could cost almost $100 million to fully prepare State Pier as a long-term hub for offshore wind. He said that, with at least $25 million in pier upgrades through the state Bonding Commission and $22.5 million from Orsted, "This is the foundation upon which you can build new industries and strengthen the ones that are there."
Gateway has pledged about $30 million for equipment and maintenance at the pier.
No offshore wind firm submitted an independent proposal to run the pier, the Port Authority said. Satnick said the state's zero-carbon selections did not factor into Gateway and Orsted's collaboration.
Port Authority open to new deal with city
Initially planned by Block Island Wind Farm developer Deepwater Wind before an acquisition by Denmark-based Orsted, Revolution Wind will deliver power from federal waters south of Martha's Vineyard to Rhode Island and Connecticut by 2023. Oceanographic surveys and permitting work for the project is underway, with Orsted planning to use New London to build a substation and perform secondary steel fabrication.
Deepwater Wind pledged an annual $750,000 investment in the city as part of a host community agreement for the length of its stay in New London. Orsted has said it would maintain Deepwater Wind's commitments and plans to open office space in the city as well, but city officials say it remains unclear how long Orsted will stay.
A sticking point for city officials is that the Port of New London sits on state-owned, tax-exempt land that, despite benefitting from city services, does not pay its fair share, Passero said. The state does not pay personal or real estate taxes to the city on the State Pier property. Though the state does make payments in lieu of taxes to the city, it is less than 15 percent of what a private owner would pay.
While the contract between the Connecticut Port Authority and Gateway has millions of dollars flowing to the Port Authority, there are no guarantees for New London.
"At any point in the last 50 years, they could have sold that to a private entity and it would be generating enough revenue to cover its property taxes and all of its overhead and turning a profit. But the state owns it," Passero said. "Right now, with this deal, it wouldn't even cover the property taxes they would be paying. That tells you there's something wrong."
The city gets an estimated $165,000 for the State Pier property through the state's PILOT program. By comparison, the New Haven port nets the city of New Haven nearly $3 million a year in taxes alone, available assessment data shows.
Passero said New London has pitched the idea of a host community agreement with the Port Authority but has not yet had those discussions.
"How do we share in the revenue of this asset so we can pay for the municipal support that this port needs like any other business?" asked Felix Reyes, the director of the city's Office of Development and Planning.
Bates on Thursday said port officials "are absolutely interested in talking about a host community agreement with the city and looking at models that work best in America and the region that will keep us competitive so we can out hustle Rhode Island and Massachusetts for business."
Bates added that the Port Authority has worked with the city to establish and pay for security plans and a harbor management plan, allowing military and cruise ships to come to New London.
"We're very happy to make those kind of investments, as they all go toward our mission of advancing the maritime economy," Bates said. "Having Gateway operate the pier is only going to strengthen the emerging partnership with the city."
Asked about city officials' criticism, Bates said the Port Authority inherited State Pier from the state Department of Transportation because the legislature determined the state "was losing in the race for maritime jobs."
"All our neighboring states have port authorities," he added. "We believe in the future of State Pier and New London and economic growth for the region and the state. That's what this deal is all about."
Passero sent a letter to Orsted officials in December noting that the city was looking for more from the next port operator. The Dec. 15 letter, obtained by The Day, references the selection of an operator for State Pier.
"This transformative deal, while important for the region and significant for the state of Connecticut, must also consider the interests of the host city," Passero wrote. "To date, the city has not been part of the negotiations. We are concerned that agreements will be structured around historic inequities that the state of Connecticut has imposed on the taxpayers of New London by continuing to require our small city to solely subsidize the costs of hosting a significant commercial port operation."
Future of Crystal Avenue property in question
Meanwhile, the city holds ownership of the nearby land housing the former Thames River Apartments on Crystal Avenue and had expected it would in some way be tied to the port operations. Two entities — the Connecticut Port Authority and Connecticut Waste Processing Materials LLC — have expressed interest in the land.
Passero said no decisions have been made about the property's future use. A letter from Renaissance City Development Association Executive Director Peter Davis to the Port Authority in October, obtained by The Day, sheds light on some of the city's expectations.
The city asks for reimbursement of the $185,000 purchase price of the land, and requests a long-term lease and taxes on the fully assessed value of the property. Additionally, the city calls for a percentage of revenues from State Pier operations and for the Port Authority to sponsor legislation that gives the city a seat on the Port Authority. It also asks the Port Authority to take responsibility for the abatement of the property and demolition of the high-rise buildings.
Bates noted that the Port Authority's request for proposals for a pier operator did not include the Crystal Avenue property because it's outside of the State Pier facility.
"But if you look at that property, you can see it could be useful in a port district," he added.
Asked about the next steps for State Pier, Bates said officials are determining overall infrastructure costs, reviewing designs and boring between piers "to see what we need to do to make upgrades there. I want to get to work yesterday, but we'll be talking with our partners."
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