HJR 72: Joint Subcommittee Studying Public-Private
Partnerships Regarding Seaports in Virginia
December 1, 2008
The joint subcommittee
held its fourth meeting at Old Dominion University in Norfolk. Legislative
members of the joint subcommittee in attendance were Delegates Purkey
(chairman), Joannou, Massie, and Melvin and Senators Lucas and John Miller.
Nonlegislative members of the joint subcommittee in attendance were Messrs.
Coffer, Godfrey, Martinez, Moye, Padgett, and Sisco. A designee represented
Mr. Whyte, also a nonlegislative member. Delegate Purkey called the fourth
meeting of the joint subcommittee to order and delivered opening remarks.
APM Terminals Americas
Eric Sisco delivered a presentation to the joint subcommittee after first
answering questions posed by Dr. Wayne K. Talley, Executive Director of
the International maritime Ports and Logistics Management Institute at
Old Dominion University. Mr. Sisco began his presentation by discussing
the history, portfolio, and commitments of APM Terminals Americas. Next,
Mr. Sisco showed to the joint subcommittee a video that highlighted the
operations of APM Terminals Americas. He then described, quantitatively,
APM Terminals Americas' impact on the Hampton Roads community, specifically
noting the $6 million it pays to the City of Portsmouth in property taxes.
Mr. Sisco stated that APM Terminals Americas' supports the surrounding
community through its provision of "technologically-advanced jobs
and workforce training" to residents of the community. He also described
those industry structures relating to the ownership and operation of ports;
Mr. Sisco provided a chart illustrating such description.
While noting the benefits of private investment and operation in or of
Virginia seaports, Mr. Sisco discussed how strategic operators contribute
most to the seaports' value in the long-term and how financial investors
with "high-levered investments are being challenged in the current
economic environment." Moreover, Mr. Sisco opined that economic development
and a "more efficient approach toward capacity development"
could be maximized through permissible coordination between APM Terminals
Americas and the Virginia Port Authority and Virginia International Terminals.
Mr. Sisco concluded his presentation by suggesting future examinations,
explorations, and reviews the joint subcommittee could make.
R.K. Johns & Associates
Bill Ralph delivered a presentation to the joint subcommittee regarding
port-related, public-private partnerships. He discussed the attractiveness
of public-private partnerships to governing bodies of port authorities,
citing the resulting redeployment of government spending and asset monetization.
Likewise, Mr. Ralph discussed what attracts private investors to the seaport
industry, and noted such attraction results from "visible and predictable
earnings, "long-term leases [and] low risk assets," and "inflation
linked revenues." Next, Mr. Ralph discussed the two types of private
buyers of ports: "strategic buyers (carriers and global terminal
operators)" and financial buyers, which include both aggressive investors
who seek to "maximize the purchased asset value through debt leverage"
and passive investors who "focus on the asset providing a stable,
longer term yield for the owners." Furthermore, Mr. Ralph discussed
changes in 2008 regarding the new availability and cost of debt (e.g.,
higher rate; more stringent leverage requirements), the availability of
capital as infrastructure funds, the reemergence of strategic buyers in
"build-to-suit" concessions and open bidding, and the pursuit
of public-private partnerships and sale opportunities by ports and terminal
operators. Lastly, Mr. Ralph listed several key considerations he suggested
that the joint subcommittee and other public bodies take into account
when reviewing public-private partnerships relating to ports.
is responsible for capital investment in infrastructure and equipment
leases land to private operator, typically for
to private sector for infrastructure development
typically runs yard, gate, and vessel operations
invests in major infrastructure development and quay wall
invest in connecting infrastructure (roads, rail, channel)
may subcontract operations or other to stevedoring company in shorter-term
typically invests in equipment, buildings, and paving to ready the
land for operational use
invests in major port infrastructure, taking increased risk in return
for a long-term concession
Houston, and Kingston
New York, New Jersey, Tacoma, Jacksonville, Miami, and Oakland
Information provided by Eric Sisco, President and CEO, APM Terminals
Each joint subcommittee
member commented on the past and future workings of the subcommittee.
Additionally, Jerry A. Bridges, Executive Director of the Virginia Port
Authority and Joseph A. Dorto, President and CEO of Virginia International
Terminals, Inc., both offered statements in response to the presentations
made and the discussions that took place.
The joint subcommittee
plans to meet four times, as authorized under HJR 72 in 2009. Additional
information on the presentations may be found on the study website.
The Hon. Harry
Kevin Stokes and
Caroline Stalker, DLS Staff
of Legislative Services > Legislative
Record > 2008
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