Connecticut Port Authority celebrates clean audit
New London ― Leaders of the Connecticut Port Authority say it has turned a corner, as evidenced by a “clean audit” that projects a revamped State Pier will help the quasi-public agency turn a profit next year.
Revenues from State Pier, which is being reconstructed as a staging area for offshore wind farm projects, are projected to exceed $1 million by the end of the next fiscal year, according to Hartford-based CohnReznick LLP, which performed the audit for the CPA for fiscal year 2023.
David Kooris, the CPA’s board chairman, said that aside from the commendable financial position, the new audit should be a sign to taxpayers and state leaders alike that the CPA’s house is in order. The audit also determined there were no significant findings or recommendations.
“For the first time, we do not have a speculative projection for what the finances of the port authority will be. Now we actually know what the revenue is coming in,” Kooris said.
With the cost of the State Pier project soaring to $309 million from early estimates of $93 million, the CPA has faced criticism and state oversight because of financial mismanagement under past leadership. Controversy started even before former tenants operating at State Pier received notices in 2020 to vacate and make way for construction.
The new audit comes on the heels of a state audit released earlier this year from the State Auditors of Public Accounts for fiscal years 2020 and 2021 that was critical of the port authority for allowing its construction management company Kiewit Corp. to recommend itself for some of the subcontracts at State Pier. Legislators reacted by passing a bill that prohibits the practice.
The massive construction project at State Pier is now nearing completion and already a working port, hosting shipments from Ørsted and Eversource’s South Fork Wind project. Ørsted and Eversource, who have jointly contributed $100 million toward construction costs, has also started making lease payments that will total $2 million a year for the next 10 years. New Haven-based Gateway Terminal, the company hired to run State Pier, is also paying the CPA a percentage of its wharfage and onloading/offloading revenue, totaling $380,000 in the last quarter, Kooris said.
The city of New London has started receiving payments as part of a separate host community agreement, $750,000 a year from Ørsted and Eversource for at least seven years. The city will also receive additional $125,000 a year that is a mix of a percentage of the CPA’s port revenues and compensation for municipal services.
Despite the projected surplus of $1.1 million, the audit determined the port authority had an operating loss of $2.3 million, due to $1.7 million in depreciation of the facility according to the audit. Kooris said depreciation is calculated as an operating expense and a simple fact of a new facility whose value will depreciate over time.
The port authority’s board, at its last meeting, voted to continue a memorandum of understanding with the state Office of Policy and Management. While OPM’s involvement in the day-to-day operations is minimal at this point, Kooris said. “having them available as a resource… keeping the relationship going has no downside.”
Interim Port Authority Executive Director Ulysses Hammond, in a statement following release of the audit, said “now we’re seeing all the pieces of this unique project -- a first in the nation -- coming together even better than envisioned.”
“State Pier is not just back in operation, it has been remarkably transformed from an underused and deteriorating state asset into a modern marine terminal…,” Hammond said in the statement.
Port Authority board member John Johnson credited port authority leadership, Hammond and Kooris, for correcting the course of an agency he referred to as a “startup” when it formed with “some opportunities to screw up.”
“It’s been a learning process,” Johnson said. “I think having this report be so clean indicates we know what we’re doing.”
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