Privatize the Ports?

The Virginia Port Authority has a new executive director, and judging by a recent editorial in the Virginian Pilot, he thinks outside the box. When Jerry Bridges surveys the port’s strategic options, he says that privatization should be considered.

The ports have built enormous economic value in the three decades since the Commonwealth of Virginia consolidated them, rescuing them from the mismanagement of separate municipal authorities. Under the leadership of Bobby Bray, the VPA has risen into the ranks of the largest and fastest-growing ports in the United States. VPA officials guesstimate that private bidders might pay as much as $5 billion for the facilities. As the Pilot points out: “New bidders, like investment banks and pension funds, have been pouring billions into an industry where most investment used to come from large companies already involved in the industry, a much smaller, more stingy pool.”

The Pilot raises some good questions. If the state were to privatize the ports, should it try to maximize the price? Or should it consider other goals, such as environmental protection or good labor relations? What would be done with the money — and who would decide?

Although the ports are a “state” entity, I believe that the proceeds from privatization should be used for the benefit of Hampton Roads. The ports are, after all, one of the region’s most important assets. The proceeds of privatization should be set aside in a mega-community foundation, similar to foundations in Martinsville, Danville and Petersburg endowed by the sale of their community hospitals. Revenues from a Hampton Roads foundation — potentially some $200 million a year — could be applied to regional priorities.

One such priority is building a “third crossing” across the James River, deemed critical to accommodate surging truck traffic from the booming port terminals and also for evacuating the population in the event of a major hurricane. It would be poetic justice if a foundation endowed through the privatization of the ports used a portion of its income to support bonds that paid for building the third crossing.

The state doesn’t have the money to pay for the project, and the funds raised through a cluster of regional taxes enabled by the General Assembly won’t pay for it either. Tolls would cover only a fraction of the cost. Privatizing the ports may be a way to cut the Gordion knot and get the project funded.

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2 responses to “Privatize the Ports?”

  1. E M Risse Avatar
    E M Risse

    Right On Again…

    Except Bigger is not better in transport.

    As EU has discovered, science documents that energy consumption and carbon emmissions from shipping (along air passengers and air freight) has been getting a free ride.

    Effeciency is good, bigger and more consumptive is not.


  2. Darrell -- Chesapeake Avatar
    Darrell — Chesapeake

    It’s nice to dream about what one could accomplish if they won the lottery. Next thing you know, the money’s gone. That’s what I see with this sale of the ports.

    Look at the scenario as it exists. Norfolk Southern has rumors that it may be taken private. Buffet and his cohorts have been making major investments. Should NS go private, and with the latest trend of private purchasing of ports, I can see where Buffet could end up the owner of the port as well.

    The state would end up with a low end of 5 Billion to a high end of around 25 for the sale. Since the GA has already taken care of the roads problem by shifting responsibility to a regional authority, they would not be obligated to give a dime to Tidewater.

    The proceeds would never go into a ‘trust fund’ to pay out interest for projects either. That’s dreaming. Nope, one year and it’s gone.

    The cities at least ‘might’ have the property back on the tax rolls, depending on what the fine print in the closing papers say.

    A cynic? You bet! No one does a deal down here without a catch phrase to gig the taxpayers.

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