Va. Port Authority mulls port privatization

NORFOLK, Va. (AP) -- The company that put the Virginia Port Authority on a path toward deciding whether to privatize its terminal operations defended its efforts on Monday, saying during a public hearing that the status quo is no longer a sustainable option for the East Coast's third-largest port.

The Virginia Port Authority received an unsolicited bid from APM Terminals last spring to privatize most of its port operations, taking over the job that has been done by Virginia International Terminals Inc. for the past 30 years.

APM Terminals would lease the state's coastal ports for 48 years, fund capital improvements at the terminals and transfer ownership of its Portsmouth facility to the state. Local governments also would receive property taxes and other revenue that it can't currently receive from the existing facilities, which are exempt.

"You have an opportunity to choose a better way," said APM Terminals senior vice president John Crowley.

Following APM's unsolicited proposal, two other companies also submitted pitches to run the state's terminals for the next 48 to 50 years with the potential revenue for the state estimated to be more than $3 billion.

One of the companies later dropped its bid, although a group headed by JP Morgan Chase & Co. is still a contender. At issue is the port's growth and profitability. Gov. Bob McDonnell has grown frustrated that Virginia lags behind competitors in New York and Savannah, Ga., and has replaced 10 of the port authority's 11 commissioners in an effort to spur growth.

The proposal to privatize operations has run into opposition by many with port-related jobs who worry that a company would look out for its own interests above that of the people of Virginia and that a private operator would unfairly discriminate against competitors.

In an amphitheater at the Nauticus museum, several hundred people came to listen to the proposals and applauded when VIT's performance was lauded. The port recently had its second best year in terms of container units in the port's history. VIT officials also note that when they took over in 1983, the Port of Virginia was the 30th largest in the country. Today it is the sixth largest in the U.S. and a legislative audit

Before the public was about to speak, sensed that he was about to be outnumbered.

"APMT isn't in the business of parading employees in front of you. Our employees are busy working," Crowley told port authority board members.

The authority is scheduled to select a preferred proposal this spring, although some state lawmakers want to stop the process altogether. Other lawmakers are also calling for an end to the practice of allowing unsolicited privatization proposals and other efforts to reform the port authority's organization and relationship with Virginia International Terminals. VIT representatives also said they support restructuring its relationship with the port authority.

This isn't the first time private companies have taken an interest in operating the state's ports. In 2009, three companies submitted proposals, at least one of which was valued at $3.5 billion. The state declined to accept those offers. The state is under no obligation to accept any submitted proposals this time, either.