The US General Assembly has signed off on an unprecedented $350m state-backed bond deal giving the Port of Virginia the money it needs to expand capacity at Norfolk International Terminals, according to local reports.
Online-news publication, the Virginian-Pilot reports that the package still needs the final blessing of Governor Terry McAuliffe, but points out that he was its prime mover.
“This is huge for the commonwealth of Virginia and the port,” said Aubrey Layne, state transportation secretary. “It says we’re open for business.”
The lawmakers’ vote to back the financial-aid package came a year after congestion stretched port operations to breaking point, driven by container volume increases that broke records three times by the autumn.
It also followed a dramatic financial turnaround highlighted in July, when McAuliffe announced that the Virginia Port Authority was able to report a profit for the first time in seven years.
“We are encouraged by the vision and support of the General Assembly in including the $350 million investment in the Port of Virginia in its bond package,” said John Milliken, chairman of the authority’s board. “Not only is this an investment in the future of this port, but in the Commonwealth’s economy as well.”
The General Assembly approval came nearly seven years to the day that the first privatisation bid to run the port was announced, one of a series of bids that unfolded over several years, putting the future direction of the port in limbo, along with decisions about investing in its infrastructure.
From fiscal year 1970 to fiscal year 2012, the commonwealth gave the authority more than $1 billion in funding, according to a 2013 report by the state’s Joint Legislative Audit and Review Commission, the General Assembly’s watchdog arm.
In the autumn, when port officials announced that they would make the request, they said the money generated by the bond deal would enable Norfolk International Terminals to handle another 696,000 standard 20-foot containers a year by 2019. The terminal’s current capacity is about 1.4m a year.
The build-up at NIT will be vertical for the most part, with containers stacked closer together and higher, emulating procedures used at the port’s other big container terminal - Virginia International Gateway in Portsmouth, Virginia.
Parallel to the push to grow NIT is the hope to seal another deal soon - a 50-year extension of the port’s lease of VIG that could culminate in the acquisition of the facility. When the original, 20-year lease was signed in 2010, it was projected to cost more than $1 billion in rent payments by the time it expired in 2030. Assuming the lease extension unfolds as planned, the rent will increase significantly to help cover the cost of a roughly $320 million expansion of the facility, doubling its capacity.
The General Assembly also approved potential relief on that front. Lawmakers enacted a provision in the budget that would let the authority use up to $10 million a year in Commonwealth Port Fund money to offset the higher rent payments, at least for the next two fiscal years.
The arrangement could be renewed over the length of the extended lease, officials said.
