Port review recommends changes

Published 10:53 pm Friday, October 18, 2013

A review of the Virginia Port Authority’s competitiveness, funding and governance has concluded the state’s ports have performed well against others, according to a draft report.

Still, the Joint Legislative Audit and Review Commission also identified several areas that could be improved.

Despite a reputation for high prices, the port competes successfully against other ports for business in Virginia, the Mid-Atlantic region and major Midwest markets, the report says.

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Among the more contentious findings, however, the report says port customers took a negative view of Gov. Bob McDonnell’s 2011 authority board cleanout, which replaced 10 of 11 members and “contributed to a period of uncertain and unstable leadership.”

In response, the report recommends state lawmakers change the configuration of the authority’s board to “maximize the stability and value of the board’s guidance.”

Changes would establish qualifications for board service “to make sure that diverse and highly relevant areas of expertise are represented,” and restrict a governor’s authority to alter the board makeup to “cases of malfeasance, misfeasance, or gross neglect of duty.”

The review also calls upon the authority’s incoming executive director to review steps taken by the respective boards of the authority and Virginia International Terminals (VIT) to unify governance and administrative structure.

Earlier this year, the authority selected VIT, a nonprofit, non-stock company it created for the purpose, over two competing private bids to continue operating the commonwealth’s marine terminals on its behalf.

Efficiencies, savings and increased coordination should result from the boards’ changes, but the authority’s executive director should review the situation and look to improve it further, as well as provide more clarity on roles and responsibilities.

The authority’s board should also move to clarify that the executive director carries out “the director administration of Virginia’s port operations,” and develop policies, goals and objectives that “guide and hold accountable” the executive director as well as authority and VIT staff.

The report also recommends the authority’s board do more to decrease operating expenses and says the Commonwealth Port Fund should be used only to service existing bond debt and fund construction of the new Craney Island terminal as well as “projects that improve port access.”

Authority staff are instructed to “review and reconsider” price structures when negotiating with ocean carriers to avoid pricing the port out of regional and inland markets.

The report says the authority’s strategies to grow the port are “likely to be effective but expensive,” and that state funding of the port is “modest and declining” relative to the revenue being generated.

However, while other ports also receive state support, Georgia and South Carolina’s have been operated and developed “without state assistance for at least the past decade.”