If you wonder why the McDonnell administration official are giving serious consideration selling the Virginia Port Authority to private interests, there may be more to their thinking than a fetish for privatization. As Transportation Secretary Sean Connaughton the Virginia House Appropriations Committee yesterday, port operations are “financially unsustainable” under its current setup.
The commonwealth is subsidizing port operations by $60 million to $70 million a year, Connaughton said. Meanwhile, Virginia ports have been losing market share to other East Coast ports since the end of the recession. “If we go the way we are, we will see slow, steady growth” in port traffic, he said, “but we will be eclipsed by the ports to the north and south.”
The administration had been entertaining proposals from four groups to take over operation of the report. However, one of them, the Carlyle Group, has dropped out of the competition. APM Terminals, a global port operator, has proposed a 48-year agreement to operate the state ports in a deal that it says could be worth $3 billion to $4 billion over the life of the agreement. Peter Bacque reports on the committee hearing for the Times-Dispatch here.
Bacon’s bottom line: Many local interests in Hampton Roads oppose port privatization, but here’s how the administration could make the deal palatable. Take that $3 billion to $4 billion and use it to fund the transportation improvements like the U.S. 460 Connector and the Third Crossing, both of which are said to be justified on the basis of projected container traffic from the ports. Committing to the improvements would make the ports more competitive, which, presumably, would help fetch a higher price.