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State releases proposals on port privatization

By Alex Bridges -- abridges@nvdaily.com

An effort to privatize Virginia's ports attracted two major international firms, according to information released by the state Wednesday.

The Office of Transportation Public-Private Partnerships advised the process remains in the early stages and intent by private firms to take over the ports doesn't guarantee state's approval. Likewise any takeover deal struck may not necessarily include The Virginia Inland Port in Warren County.

As made available on the transportation office's website, the agency received proposals from Carlyle Infrastructure Partners LP, a team of Washington D.C.-based The Carlyle Group, and from RREEF America LLC, of New York City. The agency had received in April a conceptual proposal from APM Terminals to take over The Virginia Inland Port, Norfolk International Terminals, Portsmouth Marine Terminal, Newport News Marine Terminal and its own APM Terminals.

The transportation office briefed the Virginia Port Authority board at a special meeting that day on the two alternative conceptual proposals at a special meeting submitted through the Public-Private Transportation Act of 1995. Proposals call for the private firms to assume certain control of the five of the state's ports and repay Virginia some amount of compensation.

"I think they make reference to Portsmouth, the Inland Port and the Port of Virginia as being something they would be open to potentially operating subject to further discussions, so again it's a bit general at this point," said Ryan Pedraza, program manager for the ports project. "The Inland Port is not the central theme in any of them but what I guess is important to keep in mind is all of the proposals at this stage are conceptual in nature, so details about scope of the operation, scope of the concession, are what we'll work to refine over the coming months."

Part of the review process will involve officials looking at the concessions offered as compared to what the state already makes and spends on the ports.

"There are differences between how the various teams view a potential partnership with the commonwealth," Pedraza said. "But probably the most immediate difference I guess to folks reviewing the documents is the value. But generally what they're all putting forth [is] a long-term concession arrangement where they operate a number of port assets, similar to what APM has proposed."

Mere intent by private firms to offer to take over some or all of the state's ports does not guarantee privatization of any of the facilities.

"There's competition between the three but the state's under no obligation to proceed with any of three," Pedraza said. "We're just continuing this process and there will be a point late in the year where a decision will be taken whether to advance to a contract or go down another path."

The alternative proposals remained confidential until the port authority board and the transportation office could meet and discuss the submitted documents. The transportation office has since posted each alternative proposal on the agency's website for public viewing. The agency already posted the unsolicited conceptual proposal submitted in early April by APM Terminals which currently operates a port in Virginia. The agency then advertised for other interested firms to submit proposals.

The proposal evaluation process continues through the public-private partnerships office. The first step after the initial submittal involved advertising for other interested firms to submit alternative proposals, Pedraza explained. The agency then reviewed the proposals against the "minimum submission criteria," according to Pedraza. The agency now plans to move forward and to discuss with the proposing teams the submission of detailed proposals, Pedraza said. Agency officials plan to begin those discussions within the next few days, according to Pedraza. Detailed proposals could be submitted in early October, Pedraza said.

Whether some or all information in the detailed proposals would stay confidential and out of the public view remains unknown.

"Typically the way it works is portions of the proposal depending on the kind of information they contain may qualify for an exemption under [the Freedom of Information Act]," Pedraza said. "If the do the portions would be withheld but the balance of the document would be made public."


Virginia wants to sell its port assets for a one-time lump sum payment and rid itself of a long term revenue income stream? Virginia kills the goose that lays the golden eggs.

Republicans have limited financial visions, always preferring to eat the fluffy feathered bird in hand rather than buying steak with the income from compound interest generating long term investments. Patience is not a strong Republican virtue. But they fear Democrats coming into power which explains their money grubbing grab before they loose power, striking while the iron is hot.

Do we want the Chinese controlling our ports? Take a look at which out-of-country interests owns these Limited Liability Corporations vying to buy, then control, the shipment of goods.

This same issue of selling control of America's ports was bandied about, then defeated, during the Bush years. Today America is experiencing the train wrecks caused by the Bush financial "expertise".

I agree with everything you said, Boo Bird. Reading this article really raised lots of questions for me. Lots of potential security problems, I would think, if the "powers that be" here in Virginia allow for the privatization of our ports not to mention loss of long term revenue. The Republicans are all for privatizing just about everything since they feel "the big, bad government is the problem" and should not run anything. What incredibly foolish and shortsighted visions they have, as you so well put it.

Song98 and Boo Bird - do either of you folks happen to know where one can find the costs and revenue associated with State of Virginia operating these ports? It seems that you may have insight into privatization efforts. If you would not mind sharing this information, that would be great. Thank you.

It should be pointed out Virginia received two unsolicited proposals to take over and operate Virginia's ports, one from Carlyle Infrastructure Partners LP and a second unsolicited proposal came from RREEF America LLC. Both of these limited partnerships are cloaked in secrecy as to who are the principal partners of these companies. What can be said is both are investment capital providers interested in taking over public sector operations and operating them for profit. The end result is always an increase in cost of service provided to citizens.

There has been public backlash against Wall Street buying up Main Street. In Chicago, Mayor Richard Daley was criticized last year after leasing 36,000 parking meters for 75 years to an investor group led by Morgan Stanley. The new operators quadrupled some meter rates and eliminated free parking on Sundays -- moves that outraged drivers and local officials.

An infrastructure fund managed by Washington-based Carlyle Group, the world’s second-biggest private-equity company, (Blackstone is the largest) in November inked a $178 million public-private partnership to manage 23 service areas along Connecticut’s highways for 35 years. These service areas provide gas, diesel, and food services to motorists trapped on the limited access toll roads with no alternative, and hence competitive, sources for the same services. These service areas resemble those you have seen if you have driven the toll-road Pennsylvania or Ohio Turnpikes.

When all is said and done, when a private investment company acquires public infrastructure, the cost to citizen users rises nearly out of control due to lack of competition that results from a monoploy.

The main website for the Virginia Office of Transportation Public-Private Partnerships:

The candidate PPTA Project proposal information for the Port of Virginia is here:

I might point out the obvious parallel here....

private venture capitalists taking over the operation of non-profit public infrastructure and raising the costs to provide the same (or worse) service and guarantee profits.....

and Paul Ryans's plan to have private insurance companies take over the operation of non-profit Medicare's responsibilities, raising premiums to provide the same (or worse) service and guarantee profits.

Under the Medicare privatization scenario, death squads finally have a possibility of being created in the attempt to maximize profits.

Which insurance company will full-coverage insure an 82 year old woman for the dollar amount of Ryans voucher?

i agree with Boobird and song. I see alot of trains coming out of the inland port area, and a descent amount of the boxcars have writing on them, that are not English. We don't need to sell out our port infrastracture.

Selling public assets to private corporations is and has been the operating methodology of the Republicans for quite some time. It always results in more expense for the public and more profit for the corporations and their investors. And it is not just a methodology for Republicans in America, but largely of the moneyed class worldwide. Read Naomi Klein's book The Shock Doctrine if you want to see how this methodology has played out world wide, and it is leading most of us to financial ruin while a few make out as the bandits they are.

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