Properly compensate New London in State Pier deal
New Londoners and the elected leaders who represent them should stand strong and make sure the final deal for modernizing State Pier — making it a hub supporting offshore wind development — properly compensates the host city.
That seems the last major barrier to seeing all necessary support fall into place to make this transformative, public-private project a reality. Carrying out the planned infrastructure changes would create about 460 direct construction jobs and almost as many indirect jobs. And once wind-power component parts are being assembled at the New London port, where they will be loaded onto specially designed ships for their deep-water destination, an estimated 400-plus good-paying jobs would be in place.
Tapping into wind power will provide necessary diversity for Connecticut’s power supply, now overly dependent on natural gas, which is constrained by utility choke points, and on nuclear power, which is unlikely to be a long-term source of electricity. And this is renewable power, free of greenhouse gas emissions.
But for all the benefits of this project, New London cannot afford to get rolled again. It is a city filled with nonprofit institutions that serve the broader region but escape local taxation, with state revenues falling far short of making up for those losses. That means higher taxes for the locals. Now arrives this proposed massive industrial development, with well-heeled corporate partners — the Danish wind-power giant Ørsted and the Eversource energy company — redeveloping the pier and leasing its use. That arrangement should not be used as a dodge to avoid compensating the city for the support and services it is obligated to provide.
Current plans for compensation were outlined at Tuesday’s informational meeting held in the city. It would amount to about $1.1 million, roughly the current tax value of the property, coming from a combination of revenues shared by the Connecticut Port Authority, state payments in lieu of property taxes and $750,000 from the Ørsted-Eversource partnership.
The problem with that arrangement is the Ørsted-Eversource commitment is short-lived, only two years. And once renovated and developed, the State Pier value will likely as much as triple, as would the tax burden if not for the fact this is happening on state property.
New London Mayor Michael Passero tells us he is asking that Ørsted-Eversource commit to compensating the city as if this were a traditional private project, using the Enterprise Zone provisions that would be available. Under Enterprise Zone provisions, no additional taxes are assessed on property improvements in the first couple of years, but then are gradually ramped up to full value as a project gets on its feet and revenues flow in.
This seems like a good approach and a reasonable request of Ørsted-Eversource if they want to be good corporate neighbors. As now outlined, the state would lease the State Pier for $3 million a year to the wind-power partners once renovations at the pier are completed and work commencing. Perhaps that payment would have to be adjusted downward to provide the financial balance necessary to direct a fair amount of funding to New London under a host agreement.
Most every state senator and representative from the region appeared and spoke at Tuesday’s meeting unveiling the State Pier plans. To varying degrees, they voiced their support for efforts to make sure New London is fairly treated. They need to put their collective shoulders behind the mayor’s efforts to do just that.
The broad terms of the deal appear reasonable. A $93 million project would upgrade the State Pier in such a fashion that not only could it handle the heavy components tied to offshore-wind turbine installations, but leave it as a modern and more able port when that work ends in 10 or 20 years. The private developers would invest $57 million, and potentially more, making a project possible that Connecticut could not afford alone.
Stan Mickus, representing Cross Sound Ferry, said optimistically that concerns about potential interference with ferry service are being addressed. New London Seafood owner Gary Yerman talked about the potential for relocating displaced commercial fishermen to the nearby Fort Trumbull piers. A representative of the Norwich-New London Building Trades Council announced an agreement had been reached to assure union labor will be used in the reconstruction of the port facilities.
Unfortunately, but understandably, there will be disruptions to traditional cargo at the pier, now about two ships a month, meaning interruptions in work for longshoremen. They should be given priority for job opportunities tied to the evolving project.
Find a path to justly compensate New London, then cut the ribbon on this game-changing project.
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.
Editor's Note: This version was amended to clarify Enterprise Zone tax provisions.
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