3 ports proposals now public
Published 10:01 pm Tuesday, August 11, 2009
The state now has three proposals to consider for the Virginia ports.
The competing two proposals to a plan submitted by CenterPoint Properties in March were posted on the Virginia Port Authority’s Web site Monday night. They include a 60-year proposal from The Carlyle Group and a 30-year partnership proposal from the Carrix, Inc. and Goldman Sachs & Co. duo.
The Carlyle Group is interested in an agreement of 60 years or more, which would involve Virginia International Terminals, the entity that operates the ports in Norfolk, Portsmouth, Newport News and Front Royal, becoming a subsidiary of Carlyle.
Email newsletter signup
This move, according to the proposal, would make it easier for Carlyle to provide incentives for the VIT management team for efficiency and increased business, and “introduce other best practices to augment VIT’s existing operating expertise.”
The Carlyle proposal offers an up-front cash payment of between $500 million and $700 million, and offers a profit-sharing plan with the port authority.
The proposal also suggested that VIT could be used as the “operating face of Carlyle” in other port locations in North America, noting that it would be a “Carlyle-owned operating company,” according to the proposal.
Under the Carlyle proposal, the port authority would continue to exist as a public sector entity with the primary role of monitoring, providing security and promoting general economic development in the ports. It would be a key liaison between Carlyle and the state, the proposal adds.
The Carlyle proposal also asks the state and federal governments to provide the money required to prepare the Craney Island site to become a new port facility.
The Carrix/Goldman Sachs proposal offers a shorter time span, a “strategic partnership” rather than a privatization and flexibility in negotiations.
“We propose a range of options that do not contemplate a privatization of the VPA but do involve financial restructuring to achieve near-term proceeds and a strategic partnership with Carrix, a world-renowned port operator, to facilitate increased efficiency and profitability,” the Carrix/Goldman proposal says.
“We do not believe that this is necessarily the optimal time for the Commonwealth to privatize the Port.”
Stressing flexibility and leeway throughout the proposal, Carrix offers a $250 million up-front payment not restricted to any one purpose. Under a cash-flow sharing mechanism, the ports would retain the first $25 million before Carrix receives any compensation. It also argues the Carrix/Goldman proposal is worth more than the $3.6 billion present value over the life of the agreement that CenterPoint offers.
CenterPoint Properties, the same company that is developing 900 acres on U.S. Route 58 in Suffolk, started the proposal process in March, when it delivered a proposal to partner with the port authority for 60 years and acquire VIT as a subsidiary.
Virginia International Terminals then would be employed, through an incentive-based contract, to operate the facility. The CenterPoint proposal includes money for the development of Craney Island, a profit-sharing agreement with the state, annual payments to host communities and funding to modernize the ports.
CenterPoint first became interested in the ports during the process of acquiring land for the Suffolk distribution center.
The next step for the proposals is an independent review board appointed by Virginia Secretary of Transportation Pierce Homer.