Offshore wind deal pushing forward at New London State Pier
New London — Key players in the $93 million public-private investment to establish an offshore wind hub here say the deal has not been delayed by recent shakeups in Connecticut Port Authority leadership.
Additionally, the authority is working to satisfy a lengthy set of requirements of its joint application to the Army Corps of Engineers and state Department of Energy and Environmental Protection for a permit allowing the project.
Three months after Gov. Ned Lamont's May 2 announcement of the deal, state and local officials, State Pier operator Gateway and Danish offshore wind giant Orsted and its partner Eversource say negotiations are on schedule, with attorneys likely to finalize details and sign a contract within a few months. Several officials compared the process to the closing of a real estate deal made more complex by the scope of the project, the length of Orsted-Eversource's State Pier lease — 10 years — and the multilayered state, quasi-state and business entities at the table.
"There's nothing holding it up, nothing of contention creating challenges," said David Kooris, acting chairman of the authority and the deputy commissioner of the state Department of Economic and Community Development. "We're running through with our partners all the different scenarios we can think of that may play out over a relatively long-term agreement."
Kooris is serving as acting chair following Bonnie Reemsnyder's resignation after reports that the authority had paid $3,000 for her daughter's artwork for its Old Saybrook office. Executive Director Evan Matthews is on paid leave for undisclosed reasons. The Day has a pending Freedom of Information Act request for details.
Meanwhile, the Connecticut Auditors of Public Accounts is set to begin its biennial audit of the authority amid a whistleblower complaint alleging misuse of funds. Lawmakers have called for a hearing on the authority. And Lamont recently announced an "assessment" of the authority and other quasi-state agencies.
"I need the port authority functioning optimally, at 110 percent," Lamont said in a recent interview, noting his office is "actively involved" in the offshore wind negotiations. "I can't afford to have this linger. There's too many important decisions to be made."
Reiterating a statement he's made before about the likelihood of Waterford's Millstone Power Station not being around in another decade, he said, "We need a locally controlled renewable power source ready to step in."
The authority's partners remain confident that an upgraded State Pier will serve a growing offshore wind industry, bringing renewable energy and hundreds of direct and indirect jobs to the region. Connecticut already is set to receive 300 megawatts of electricity from Orsted-Eversource's Revolution Wind farm south of Martha's Vineyard by 2023, and the state is banking on up to 2,000 megawatts from offshore wind by 2030.
"There's no slow down," said Matthew Morrissey, Orsted's Head of New England Markets. "The principle terms were the heaviest lift in the negotiation."
Matthew Satnick, co-CEO of Enstructure, Gateway's financial partner in State Pier, said going from a "blueprint term sheet to definitive documentation always takes months. When you overlay that with a tri-party arrangement, combined with a public-private investment — these things just take time."
"This is very customary in terms of length of time," Eversource Vice President of Business Development Mike Ausere said. "We've made very good progress and we're on pace to get it done. We still have the same vision we announced back in May, and see this as a tremendous opportunity for New London."
The core components of the State Pier deal, executed in a memorandum of understanding among the parties, include commitments of almost $60 million from Orsted-Eversource and $35 million from the state, with State Pier upgrades tentatively scheduled to begin early next year and be completed by March 2022.
The memorandum of understanding cannot be released, Kooris said, because it is "a component of ongoing negotiations."
"Understanding that one of the main criticisms in the recent past is around transparency and the way we communicate, we are very much committed to making the components of the deal public prior to any board action and providing an opportunity for public discourse," he said.
Ausere and Morrissey said they had the utmost confidence in Kooris, the Lamont administration, the local legislative delegation, the business community and New London Mayor Michael Passero in supporting offshore wind's advancement as Connecticut and several states along the East Coast look to boost renewables and the economy.
"When you step back and look at the region, offshore wind is evolving really rapidly. Connecticut has positioned itself as a leader," Ausere said.
Passero said he remains frustrated by a lack of transparency at the port authority and what he described as a less-than-lucrative deal for New London. But he was confident that the agreement announced by the governor in May will get done.
He also expressed faith in the authority's new leadership, retired Navy Captain Paul Whitescarver, and Kooris. "I couldn't have more confidence the situation will be cleaned up quickly," he said.
Concerns about 'exclusive use'
U.S. Rep. Joe Courtney, D-2nd District, is among those concerned about exclusive use of the pier by the offshore wind industry. Courtney helped secure an $8.3 million grant from the U.S. Department of Transportation to upgrade the state's portion of the New England Central Rail corridor. The rail line connects to State Pier, and the upgrades will allow for heavier loads of cargo to be carried by rail from the port north, as far as the border between Vermont and Canada.
Courtney said in a meeting of The Day's editorial board Thursday that the grant was seen by "stakeholders up and down eastern Connecticut" as an opportunity to transport multiple types of cargo that could come through State Pier. He said he raised that point with the port authority during the wind deal negotiations.
"I have to confess, they say they are going to accommodate other users but every time I look at the plans, it doesn't look like there's going to be any space for them to do that," he said.
The "massive investment" by Orsted shows the State Pier is "a very attractive asset," he said, "but we don't want it to become a single use, exclusive pier."
Passero expressed similar concerns, saying he long suspected the deal would give Orsted-Eversource exclusive use of State Pier and arguing the port authority "was not up front about that. We're all in agreement to see through this wind industry, but we have to work through issues that come with that."
Orsted, Eversource and Gateway officials say while the goal is to maximize the pier for offshore wind support during the lease term, the pier will be marketed to other wind developers and other uses outside of construction seasons.
"To the extent that there are opportunities over the 10-year lease to switch gears, we have the people, the equipment and the wherewithal to do that and move very quickly," Satnick said. He added that offshore wind offers an unprecedented economic development opportunity for the state and New London and "that's getting lost in the distractions at the moment."
State Pier handles more than one rail car per week on average, and Gateway will explore maximizing rail line usage while remaining committed to offshore wind development, said Gateway spokesman Justin May of Gaffney Bennett Public Relations.
Satnick said with the anticipated redevelopment, the company is in a holding period and being cautious about how it markets New London's port. "The last thing we want to do is market and then have a situation where we have to turn vessels away," he said.
Since Gateway took over on May 1, four ships, carrying more than 17,500 metric tons of cargo, have come into State Pier, three of them carrying lumber while the other was transporting copper.
"There's certainly a high possibility that the existing businesses at the port will be displaced, certainly during construction if not longer term," Kooris said. "We look at the grand scheme of maritime industry in the Thames River basin and across Connecticut and are confident that wind represents a unique opportunity to ramp up maritime activities without jeopardizing the ability of other industries to prosper in the Thames River or across the state."
Morrissey said Orsted takes "very seriously, any impact, perceived or real, that any stakeholder in the community might feel is coming," whether environmental, commercial fishing, tribal, or the existing businesses. But he added that the state's goal is to "maximize the use of public infrastructure for economic impact," and that DEEP weighed "the massive amount of private investment in public infrastructure and resulting job opportunities ... against the impact of existing uses of the facility."
Asked why the state would make such a large investment in the project, Kooris noted that the state has long had plans to redevelop State Pier. The Orsted-Eversource investment allows upgrades at a level and speed that the state couldn't accomplish on its own, he argued.
The planned upgrades are "completely consistent with where we wanted to head regardless over the long term," Kooris said, based on previous studies called for "filling in between the two piers, reinforcing the bulkhead, creating heavier lift opportunity. The state didn't have the money to do it and very little aspects of it other than some small maintenance proceeded."
Ongoing permit application
The final agreement is contingent upon all federal and state permits required to support pier redevelopment.
The DEEP permit is needed to "remove existing in-water structures, conduct dredging, install a bulkhead between two existing pier structures and place fill material landward of the bulkhead."
The initial application, received May 7, 2019, was deemed insufficient, according to a letter DEEP sent to Matthews on June 3. Such a letter is standard practice during reviews and DEEP continues to work with the authority to gather additional input to meet requirements, said Jeff Caiola, DEEP's assistant director of the division of land and water resources.
The letter, written by DEEP's senior environmental analyst, Michael Grzywinski, outlines missing requirements including a map showing existing shellfish beds and an explanation on how the authority intends to dredge material from an area where it does not yet have authorization to do so.
Grzywinski goes on to ask the authority how the proposed improvements square with a 2011 "State Pier Needs and Deficiency Planning Study" that determined the pier had a niche among East Coast ports and should take advantage of its rail connection to accommodate a variety of cargoes.
"Please indicate if the current water-dependent users of the facility will be displaced during the proposed activities and if they will be allowed to remain at the site once the proposed work has been completed," Grzywinski writes.
DEEP also wants to ensure the project doesn't result in degradation of the views of the Thames River or impacts Cross Sound Ferry.
Additionally, DEEP wants a letter from the State Historic and Preservation Office "regarding the significance of the (Central Vermont Railroad Pier) and discuss the measures by SHPO to preserve the historic component of the existing pier." That pier is on the National Register of Historic Places.
Kooris said the initial permit was sent "prior to design advancing" and "it's pretty typical to have back and forth with DEEP."
He said he could not yet speak to specific aspects of the application that DEEP deemed insufficient, but noted it was only "a lack of information upon which they can make a determination, rather than a dissatisfaction with approach."
The authority plans to provide DEEP with more information within the next couple of weeks, Kooris said. He added that the permitting process thus far has gone as anticipated and has not held up negotiations.
Lamont last week directed his chief of staff and chief operating officer to conduct an in-depth review of the state's quasi-public agencies, including the port authority. "They need to give taxpayers confidence that they are spending money properly," he said.
The governor said he acted quickly in asking former authority board chair Reemsnyder, who is also first selectwoman in Old Lyme, to resign, and "brought in" Kooris as acting chair — a role he'd like him to retain. The board will vote on a new chair at its next meeting Wednesday, Aug. 7, in New London.
Lamont said he will review the entire authority board and is looking for members who have "strong executive ability" and a background in ports and the maritime industry. Under the port authority's bylaws, the governor appoints four members of the board.
When the port authority's agreement with Gateway was announced, Passero said "almost everything they promised us was not there," including a provision to provide property tax compensation. He said it stung to find out that the authority had neglected to demand or require payment of taxes.
"Ever since then there's almost been a Cold War between New London and the port authority," Passero said.
He said that it will cost the city an estimated $41 million in tax revenue from the 32 acres of state-owned land associated with State Pier over the course of 20 years.
Under the agreement between the port authority and Gateway, New London is guaranteed at least $50,000 a year from port operations and another $75,000 to help defray the cost of services, such as police and fire protection.
Passero said the only thing that made the deal palatable was a promise to include New London, as host city, a permanent seat on the authority board. That has yet to happen and will take an act of the legislature.
Morrissey said negotiations should wrap up in the next few weeks on a host community agreement between Orsted-Eversource and New London. That should include at least $1.5 million to the city over the first two years of the lease, and potentially $250,000 to $750,000 annually for the remaining years, based in part on the amount of offshore wind power procured by the state.
As for giving the mayor of New London a seat on the board, Lamont said he'd "take a look" but that "there are other harbors and ports, too."
If the deal were to fall through, Orsted-Eversource could work with another port, such as Bridgeport or Providence, and still meet the requirements of their approved offshore wind bid to the state. But officials emphasized they were committed to New London because of its geographical and financial advantages and the backing of state and local leaders.
Orsted officials recently confirmed that they signed a lease with Susan Devlin and Barry Neistat, co-owners of Muddy Waters, and plan to eventually open offices upstairs after extensive renovations.
Editor's note: This version clarifies that Mayor Michael Passero referenced an agreement between the port authority and Gateway in his statement.