Virginia Ports to Stay Public

New dawn for Virginia ports?

After 18 months of review, the board of commissioners of the Virginia Port Authority has decided to drop all bids for port privatization.

“We are transforming The Port of Virginia to meet a changing and increasingly competitive environment,” said William Fralin, chairman of the VPA board in a prepared statement. “We will move forward as a stronger, leaner organization that is better-positioned to serve the ocean carriers and port customers, attract cargo to Virginia and be more accountable to Virginia taxpayers.

Keeping the ports public will provide better cash flow to the commonwealth than either of the two private sector proposals, the VPA said. Moreover, cargo volumes are picking up after the recession and the port is likely to benefit from changes in shipping patterns resulting from of the Panama Canal expansion.

Instead of privatizing the port, the board decided it was possible to maintain a strong competitive posture under a public ownership structure. The board will convert Virginia International Terminals (VIT) from a non-stock corporation to a single member Virginia limited liability corporation under more direct control by the VPA. “The new structure will eliminate duplications, increase efficiencies and reduce costs,” the VPA states.

Next steps include hiring a permanent executive director and chief commercial officer, and overhauling the strategic plan with an eye to making major capital improvements, reducing debt levels and attracting new distribution centers and manufacturers “to help drive increased cargo and economic development across the Commonwealth of Virginia.”

Bacon’s bottom line: Governor Bob McDonnell initiated the move to explore port privatization and replaced every member of the previous board but one. If a new board consisting of McDonnell’s hand-picked appointees decided that maintaining public ownership represents a better deal for the commonwealth, I am not inclined to disagree.

Update: McDonnell has issued a statement: “In the coming days, the Secretary of Transportation and I intend to review the letter and materials sent to me by VPA Chairman Fralin regarding the board’s action. After that review is completed, I will issue a statement regarding my position on the board’s actions.” Hmmm. This may not be over yet.

– JAB

9 Responses to Virginia Ports to Stay Public

  1. “I’m not inclined to disagree….” WHAT? what happened to your free market, ROI instincts?

    fess up Bacon. Are you REALLY SAYING that you think the govt can do a better job than the private sector?

    BLASPHEMY! is this don’t get you outed as a RINO by the right… heavens knows what it will take! It’s a GOOD THING that you did not get an invite to CPAC, eh?

    that’s a pretty sneaky double negative guy…which from my admittedly very limited appreciation of grammar – it’s a journalistic no-no.

    Given him hell Peter!

    • It is silly to think that privatization and outsourcing always results in efficiencies or other gains for a public body. It often can, but there’s no private-sector fairy dust that automatically makes the private alternative better, especially if the public body is already pretty well run. The key is to always keep the option open — don’t let the public sector guys get complacent.

      I get the sense that this privatization exercise has been very beneficial for the VPA. Fear of privatization has forced port executives to get more creative and think harder about ways to do things better. The whole process has been worthwhile.

      • just curious as to what process you used to make this determination.

        is the same process usable for other private vs public decisions?

        ;-)

        and why in the world would you accept McDonnell’s approach ..isn’t he the same guy you have castigated for not protecting the public from unwarranted tax increases?

        lord, Bacon!

        • Actually, McDonnell has not said he would accept the board’s decision. In a press release issued about an hour ago, he said, “In the coming days, the Secretary of Transportation and I intend to review the letter and materials sent to me by VPA Chairman Fralin regarding the board’s action. After that review is completed, I will issue a statement regarding my position on the board’s actions.”

          Hmmm… Maybe I should add an update.

  2. Sounds like Connaughton was full of it and JLARC had it right. Peter had this figured out back in January.

    http://www.baconsrebellion.com/2013/01/how-bleak-are-virginias-ports-exactly.html

    Now, Peter – if you could turn your prognostications toward public companies with shares I can buy and sell …

  3. DJR,
    I can’t do this tonight but I agree that Fearless Leader Bacon is hallucinating about this. Making PPP3 some kind of yardstick is nuts. I’ll call him and ask about his meds — maybe he’s mixing them up.

  4. With an attentive Board at VPA and a commitment to revise the VIT/VPA arrangement, they may have accomplished all or the major part of what the Governor and the Secretary have been trying to achieve. The biggest single problem with the Port is the VIT/VPA structure. It sounds like VPA has gained control of that snarly situation.

  5. ” The biggest single problem with the Port is the VIT/VPA structure.”

    this seems to be a familiar refrain with more than few of Virginia’s boards.

    I’m wondering if the “Virginia Way” of governing might have some flaws…since we seem to keep having issues with “board decisions” and “structure”.

    or perhaps I am naive in thinking that there is some better way to operate.

    MWAA , UVA BOV, even the CTB seem to struggle at times in dealing with their basic missions.

    OTOH – you have a board that does operate the CBBT and it seems to stay out of trouble… :-)

  6. so to add to this – this morning – Scout said this ” The biggest single problem with the Port is the VIT/VPA structure. It sounds like VPA has gained control of that snarly situation.”

    to me, it sounds like the structure enables personalities to affect the institutional mission and governance and while I’m a realist in understanding
    that virtually any institution can and is affected by personalities associated with it – there usually are various safeguards to protect the institution from being adversely affected/perverted/damaged by one or two strong-minded individuals.

    I think, in general, safeguards to limite/temperate the power of un-elected people and boards for which there is much less accountability to the public they ostensibly serve is prudent and it appears to me that more than a few such boards in Va operate in ways that clearly demonstrate that accountability is not always sufficient enough to keep those in check that should be kept in check.

    This is a pretty serious issue in my view – when we have in the news…on a regular basis – some Va board or commission that has gotten out of whack and needs the attention of the Governor and GA to correct it.

    In the case of the Va Ports – this approach is repeated. The gov replaces people – but then the Gov departs the scene and personalities then take hold again… and can continue, perhaps in ways not deemed in the best interest of the ports or the taxpayers – without direct intervention by the Gov/GA again in the future.

    this seems not a good way to do business to me.

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