New Haven port operator chosen to run State Pier
Hartford — After months of negotiations, the Connecticut Port Authority has reached an agreement with Gateway New London LLC to run State Pier in New London for at least the next 20 years, despite Mayor Michael Passero's reservations about the deal.
After the port authority's board voted unanimously to approve the 20-year agreement during a brief meeting in Hartford Monday morning, Chairman Scott Bates said the deal represents the largest investment in State Pier in the facility's history.
"We have a better deal for the taxpayers, which means we're getting more revenue in that we can put to work on projects across the state," Bates said.
Gateway, a privately held company based in Connecticut, is the largest port terminal operator in the state, operating five terminals on about 75 acres in and around the port of New Haven, one of the state's three deepwater ports.
New Haven's port, the highest-volume commercial shipping port on Long Island Sound, handles petroleum products, cargo, scrap metal, metallic products, cement, sand, stone and salt. State Pier receives shipments of mostly steel, lumber, and salt but is being envisioned also as a staging area for offshore wind projects.
Passero said in a statement that he is looking forward to "forming a strong relationship" with Gateway but that he is disappointed that Monday's announcement "provides no assurance that New London will be the hub of the emerging offshore wind industry in the Northeast."
Missing from the agreement is any recognition by the state, the port authority or Gateway "of their obligation to support the operating budget of its host municipality through a fair and equitable payment of property taxes," he said.
Passero said by phone Monday afternoon that the city is negotiating with the port authority to get more payments in lieu of taxes, or PILOT funds, and that he's pushing the state "to recognize that the port authority should pay property taxes like any other commercial organization."
The assessed value of state land in New London totals $53.9 million, which would generate $2.35 million in annual taxes under private ownership. The state, under the PILOT, or payment in lieu of taxes program, paid the city $295,665, or 12.6 percent, of what tax revenue would be, said Finance Director Don Gray.
The parcels that make up State Pier represent $29.97 million of the assessed value. It means the state paid about $164,750 in PILOT funds last year on State Pier.
'Potential offshore wind hub'
Gateway will take over operations at State Pier on May 1. At the end of the 20-year contract, the port authority has the option to extend the agreement for two additional 10-year periods.
Under the agreement, the port authority will receive $500,000 annually from Gateway with an increase of $250,000 every five years. The port authority will also receive 7 percent of Gateway's gross annual revenues at State Pier, with a minimal annual guarantee of $500,000. Gateway will also pay an unspecified annual wharfage and dockage fee.
The deal will ultimately enable the port authority to become financially independent, and no longer receive on annual appropriations from the state, which have been about $400,000 in recent years, Bates said, "but not immediately."
Matthew Satnick, co-CEO and chairman of Enstructure, Gateway's financial partner, said in an interview after the announcement that the company sees New London's deepwater port as a "potential offshore wind hub," and that Gateway is in touch with "the major players in the offshore wind (industry) and are collaborating on opportunities for New London."
What the company built over the past several decades in New Haven is "a good analog for opportunities in New London," Satnick said. "We think we bring both customer-specific relationships and market experience to the table and look forward to expanding the business in New London."
Deepwater Wind, which in October was acquired by Orsted after developing a five-turbine wind farm off Block Island, is under contract to deliver 300 megawatts of electricity to Connecticut from a wind farm off Martha's Vineyard.
Orsted in October said it had collaborated with Gateway on a proposal to operate State Pier, but Orsted spokeswoman Lauren Burm said Monday that Gateway was chosen on its own and Orsted "will have no role for operating the terminal."
"However, we're still very much excited about using the port for the Revolution Wind project, and very excited about New London and will be opening an office there," Burm said.
Port needs improvements
More than 64 companies from across the globe were contacted by the port authority to run the state-owned facility; 12 signed non-disclosure agreements allowing them to receive proprietary information about the facility. Six companies responded to the request for proposal for a pier operator, and three submitted complete bids, including Logistec, which has run pier operations for the last two decades.
Bates said the port authority, in evaluating the proposals, was looking for a partner to "maximize the potential of State Pier."
"We wanted a partner that would have the resources, that would have the commitment to generate new business to bring into the port of New London, and that we knew had a proven track record of excellence," Bates said. "It's interesting that we looked all over the world and we landed on a Connecticut-based firm. That's no mistake because of how the Port of New Haven has been transformed over the last few decades."
Satnick said Gateway has committed $30 million in capital improvements such as equipment and maintenance at State Pier. The port authority also received $25 million from the state for improvements to the facility.
Bates has said it would take about a $100 million investment to make the New London port "a first-rate port facility," an investment he said would likely come from a public-private partnership. Orsted has committed to keeping Deepwater Wind's pledge to invest at least $15 million in the pier.
Day Staff Writers Ben Kail and Greg Smith contributed to this report.