CenterPoint unveils Virginia port proposal
CenterPoint Properties, a warehouse and real estate company, proposed Thursday to acquire operating rights for the Virginia Port Authority terminals for the next 60 years.
Oak Brook, Ill.-based CenterPoint said its “conceptual proposal” was submitted to Virginia's Secretary of Transportation under the state's Public Private Transportation Act.
The state port authority operates three large marine terminals in the Hampton Roads area in Norfolk, Newport News and Portsmouth, as well as inland in Front Royal. The terminals are operated by Virginia International Terminals.
CenterPoint said it was not calling for a sale of the port's assets, but “a true partnership which, if accepted, would be documented in a comprehensive and binding 60-year concession agreement aligning the interests of CenterPoint with those of the commonwealth.”
CenterPoint said it would provide $8.9 billion in total value to the commonwealth over the life of the concession, or $3.5 billion in today's dollars. The proposal includes funds for the development of a new terminal on Craney Island, the port’s dredge spoil disposal site.
“This capital would include funds to modernize the port and provide both up-front and ongoing fixed payments to the state,” the company said. “Profit sharing would allow the commonwealth to benefit in the future from the growth in port business.”
CenterPoint said it would release the annual subsidy provided the port from Virginia’s Commonwealth Transportation Fund.
“The dollars CenterPoint pays the state of Virginia, and the foregone subsidy, could be used for off-port rail and road infrastructure to ease area congestion or for other pressing needs,” the company said. It also proposed to increase payments to the municipalities hosting port facilities.
“Apart from substantial capital, CenterPoint would enhance the appeal of the port to shipping lines by integrating its extensive logistics and distribution real estate experience with the operating expertise of Virginia International Terminals,” said the company in a statement. It said it wanted to “acquire and employ VIT to run the port under the continued oversight of the Virginia Port Authority.
“Importantly, because CenterPoint is not aligned with any steamship line, its participation in the port's management ensures a level playing field among existing and prospective customers,” it added.
'We believe our capital, but more importantly our transportation, logistics, and development experience, complement the port,' said Paul Fisher, CenterPoint's president. 'Packaged with port services, our Virginia and other inland distribution centers can attract new customers to the commonwealth.”
CenterPoint says it is the largest owner, manager and developer of industrial real estate in metropolitan Chicago with 26 branded business parks and together with affiliates, owns and manages more than 27.8 million square feet of space.
CenterPoint is a subsidiary of CalEast Global Logistics LLC, an investor in logistics warehouse and related real estate whose members include the California Public Employees’ Retirement System (CalPERS) and LaSalle Investment Management. While most of the developments it has built are in the Chicago area, last August it said it would invest $325 million to construct a 900-acre integrated logistics center in Suffolk, Va., also in the Hampton Roads area.
Nick Donohue, assistant secretary of transportation for Virginia, said he had not yet seen the proposal, which is being made under the state’s 1995 Public-Private Transportation Act. The act allows private entities to enter into agreements to construct, improve, maintain and operate transportation facilities.
Passed back in 1995 the act has been used to deliver or begin projects worth about $8 billion, he said.
“Especially as our public funding is declining, we look for ways, where appropriate, to leverage additional private funding for our private needs. It has been used on highway projects, including a four- lane expansion of 14 miles along the Capital Beltway that goes around Washington D.C underway, and the Pocahontas Parkway outside of Richmond.
Donohue said that transportation act requires a public benefit that is clearly articulated, for private resources to be “at risk” to address the public need, and for it to create a project that will be less costly or delivered in a more timely manner, and for there to be transparency and accountability.
If the proposal meets those criteria and is initially accepted, the state would solicit competing proposals over a 90-120 day period and all offers would be evaluated by a independent review panel that would hold public meetings. Then the panel would make a recommendation to the state’s secretary of transportation and governor. ' Chris Dupin