Start including New London in port negotiations
A major development for future economic growth of New London and the state came Monday when the Connecticut Port Authority awarded a 20-year contract to operate the state-owned State Pier. The Gateway Corporation, the largest port operator in Connecticut with five terminals in New Haven, won the contract.
Under the agreement, the port authority will receive a $500,000 annual fee from Gateway. That fee increases by $250,000 every five years. The port authority also will receive 7 percent of Gateway's gross annual revenues at State Pier, with a minimum annual guarantee of $500,000. Gateway will pay the port authority a variable percentage of all wharf and dockage fees the company charges arriving cargo ships.
Most significant, Gateway has committed $30 million in capital improvements at State Pier.
The revenues received by the port authority on this one deal more than double the authority’s annual $1 million operating budget, according to Port Authority Chairman Scott Bates. That’s a nice income boost for the port authority.
Nowhere in this otherwise welcome news, however, was mention made of compensation for New London. That is troubling.
This is a big deal. The change of operations management at State Pier is the first play of a long game to transform the pier into a major operational hub for an important new industry. The entire region will benefit significantly from the economic boost if State Pier becomes the home port for offshore wind farm development.
Gateway, which assumes control of State Pier on May 1, said it has started discussions with companies that will use State Pier. That includes Orsted, the European energy company contracted to deliver 300 megawatts of electricity to Connecticut from the Revolution Wind farm. The wind farm will be constructed in federal waters about 65 miles from State Pier. Orsted has identified State Pier as a good location to base its operations.
Bates says State Pier requires a $100 million investment in infrastructure and equipment to become competitive as a first-rate port facility. In addition to Gateway’s $30 million commitment, the port authority received $25 million from the state. Orsted has agreed to at least a $15 million investment if New London is designated as home port.
As things now stand, however, New London’s revenue share will be limited to its current measly compensation of $165,000 from the state for payments in lieu of taxes. New London also may impose personal property taxes on Gateway for the cranes, front loaders and other equipment.
Mayor Michael Passero correctly argues that is far short of what New London should expect as the host community for a reinvigorated State Pier. He contends a large-scale wind farm construction and marine transportation site is a commercial activity. He wants property taxes assessed at the same rates as the Cross Sound Ferry commercial business adjacent to State Pier.
Passero’s anger over New London being excluded from deliberations is justified. He maintains that a host community agreement, specifying fees and taxes paid to the city in exchange for services, should have been part of the Gateway State Pier operator contract.
Bates disagrees, but only on the timing. He sees the Gateway contract as a vital first step. That deal was strategic, he argues, because it was designed to provide pier upgrades and a logistic supply chain, necessary to entice the wind energy companies to choose New London.
With that deal in place, says Bates, work can begin on landing agreements with the wind energy companies for use of the State Pier facility. Bates agrees New London should be at the table when those negotiations begin, with any resulting deals providing increased revenues to the city tied to the upsurge in port activity.
Focus should turn to that common ground, the negotiating of a host community agreement with the State of Connecticut for State Pier, one that provides assurances that the city will get a fair share of the revenues that flow from increased activity. This is urgent. New London can no longer be left out of negotiations wondering what happens next, hoping its needs will not be ignored.
While John S. Johnson, a New London businessman and chairman of OpSail Connecticut sits on the port authority board, his appointment was made by Gov. Dannel P. Malloy without the mayor's input. Gov. Ned Lamont should also appoint to the board a New London representative recommended by Mayor Passero and aligned with his views.
Securing New London as the home port for offshore wind farm development should be a Lamont administration priority. Competition from Rhode Island and Massachusetts ports will be stiff. It is of paramount importance that the state, the port authority and New London collaborate as a team to help assure the best possible outcome.
The Day editorial board meets regularly with political, business and community leaders and convenes weekly to formulate editorial viewpoints. It is composed of President and Publisher Tim Dwyer, Editorial Page Editor Paul Choiniere, Managing Editor Tim Cotter, Staff Writer Julia Bergman and retired deputy managing editor Lisa McGinley. However, only the publisher and editorial page editor are responsible for developing the editorial opinions. The board operates independently from the Day newsroom.
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The best choice for the state and for the viability of the industry is to see the awards divided up between the two ventures focused on development at the New London and Bridgeport ports.