City Council Hearing on the Port of Wilmington

Yesterday evening there was a Wilmington City Council joint committee hearing — the Economic Development Committee and the Public Works Committee — to gather viewpoints and input on the proposed privatization of the Port of Wilmington to be run by Kinder Morgan. While invited, no one from the Governor’s office spoke on this project, but there were a number of businesses from outside of the Port fence who did speak on the potential conflicts and downside that this deal presents for them. I think that this may have been the first public forum that provided these businessmen (as well as the ILA) a chance to make their concerns heard. Senator Bobby Marshall was also in the audience, but did not speak.

John Vitale, the President of ICS, made a point about the informal public-private partnership that already exists at the Port. According to him, the Port has been pretty clear for some time that the fruit, cars and containers business that makes up the bulk of the Port’s business didn’t mix well with the bulk import and export business. So the informal agreement was that the bulk business would operate outside of the Port fence — meaning that bulk shipments could come in to the Port, be offloaded and moved directly through the main gate to the businesses like his that manage and provide value-added services to these materials. What this has done has been to allow the Port of Wilmington to expand its business and business opportunities with minimal additional investment by taxpayers. In the military, they call this a force multiplier, and you can tell how well this works given the $330 (+/-) of business generated by the businesses outside of the gate vs. the $34M (FY2012) in revenue generated by the Port itself. So that for every million dollars that this Port generates itself, another ten million is generated just outside of the fence. This is fantastic, since the vast majority of the additional business needs little in the way of additional public investment to get there.

Almost all of the businesspeople who spoke noted that handing KM control over the Port with little oversight by the State means that KM has the ability to undermine these businesses in order to privilege its own. One long time owner noted that they had approached the Port to use some of the unused land there to store some bulk products before moving them to their own warehouses. The Port told them no — that the bulk products presented a risk to the fruit, cars and containers that are their mainstay. This makes sense (and I suppose that I should remind you that bulk cargo products include chemicals, minerals and so on), especially if you are protecting the customers that are your bread and butter. But if you go back and look at the KM presentation, KM is proposing to use these same No Go areas for storage of *their* bulk products, meaning that the Port people should answer why storing bulk products so close to more sensitive (and key) cargo is OK now.  They also made the point that KM would be operating their bulk business without the overhead that the folks outside of the fence live with — and certainly could increase the costs and overhead of the firms outside of the fence pretty much at will (at least when contracts expire).

Councilman Bud Freel had the most interesting questions that the City should get answered about this deal:

1. The City of Wilmington is still owed money on the sale of the Port to the State years back.  If KM takes over the Port, how will that debt be settled?
2. Wilmington charges most parcels a Stormwater Utility Fee that is meant to help finance the costs of the stormwater and combined sewer overflow management.  The Port of Wilmington — while in the city limits — currently does not pay this fee (and it would be substantial at that facility).  Would KM be liable to pay this fee now?
3. DNREC requires a surface water management plan for this kind of industrial or commercial facility.  Currently, the Port does  not have one — would KM be required to develop and implement one?
4. Currently, the Port is still covered by the City’s NPDES and Municipal Separate Storm Sewer Systems permits.  The City probably would not want the liability of covering Kinder Morgan under its own permits, so they’d want the process to get this addressed detailed.

None of these things is necessarily a deal killer, but this does remind us that this is a complex undertaking with a great many stakeholders — stakeholders that have been quite deliberately kept in the dark.