“The cost to public health, restrictions on other bay activity, heightened terrorism interest and attendant security costs are nowhere to be found in the plan. Nor are there any restrictions on military, weapon, nuclear material, or hazardous chemical shipments.”

The Privatization of Humboldt Bay

Opinion by Dave Spreen, June 20, 2008

The action by three Humboldt Bay Harbor, Recreation, and Conservation District (HBHRCD) Commissioners authorizing negotiation of an agreement with Goldman Sachs to move forward before the Redwood Marine Terminal (RMT) business plan was even finished was not only a waste of staff and legal time, but a disservice to over half of the residents of Humboldt County who have clearly expressed through the last 3 general elections that they do not want scarce resources wasted pursuing another boondoggle project, but rather those that are of an appropriate scale.

The privatization of public assets of the HBHRCD was not a focus of the feasibility study. Now it seems the NCRA (North Coast Railroad Authority) and NWP (Northwestern Pacific Railroad) will have to be rolled into the deal in some sort of Public-Private Partnership (PPP). The package will then be marketed to large hedge, retirement, multinational and foreign investment funds by auction. Goldman Sachs takes its money off the top. Those who went this way on LNG (Liquid Natural Gas) plants now find they sit empty because the market changed making domestic supplies more competitive than foreign.

Obviously, the idea is to transfer the risk to the private sector, but it doesn’t always work out that way. The Port Authority in NYC stands to lose $160 million of future lease payments from Goldman Sachs due to construction delays there.

Meanwhile the NCRA is claiming they are exempt from California environmental laws because they are involved in interstate commerce and therefore regulated by the feds only. Ironic isn’t it – an agency created by the California legislature now claims its authority exceeds that of the state! Incidentally, the NCRA has already sold-out those hoping for passenger service or a tourist train because their 99-year lease deal with the NWP operator made no provision for such services. Despite violating its own bylaws in doing so, the HBHRCD Executive Director continues to defend loans to the NCRA as a “good investment”.

There have been 2 major assumptions carried through in the feasibility and business plan that are outdated and misleading: the projected increase in containerized shipping and the thousands of jobs to be created by the project.

The first assumption was based on projections during the building boom from 2000-2005. Already, those projections are woefully inaccurate, but still pushed as justification for the huge risk by proponents of the port/rail project. They ignore the fact the Port of Oakland is now reducing operating expenses, cutting 60 to 70 jobs this year, and trimming over 30 percent of its capital improvements planned for the next 5 years.

The 1999 World Bank report Measuring Port Performance states, “The recent study shows a relatively constant productivity of about 1000 TEUs per staff per year, for a large array of yearly throughput, from 150,000 up to 600,000 TEUs. This includes all staff: operational, administrative and management.”

The RMT business plan calls for about 200,000 TEUs (20 ft. shipping containers) annually for the first few years reaching about 300,000 TEUs maximum. That translates to about 200 to 300 jobs total. If the public share of the project cost runs about $300 million, that’s about $1 million per job, without even considering a few alternative projects.

The cost to public health, restrictions on other bay activity, heightened terrorism interest and attendant security costs are nowhere to be found in the plan. Nor are there any restrictions on military, weapon, nuclear material, or hazardous chemical shipments.

The HBHRCD’s annual budget runs about $3 million – about the same size budget as a small K-6 school district (200 students approx). To think that by a 3-2 vote, this extremely risky and divisive project could move forward is absurd. While the County has taken 8 years and spent millions to update the General Plan, this project could potentially undermine the entire direction of development and forever change the complexion of Humboldt County.

Goldman Sachs will finish the agreement for the HBHRCD sometime in August. The district’s past, present and projected budget deficits will not put them in a good bargaining position. If approved by the Commissioners, as a major interstate commerce project guided by the California PPP enabling legislation, it goes straight to Sacramento for final approval and local control ceases.

While it has become politically correct for many political and business leaders to stay clear of the fray, something has to give. While the county moves forward permitting the residential Samoa Town Development, the heavy industrial container port is planned to be built literally across the tracks.

The question is, will our elected representatives stand up for diverse community interests through the continuation of local control or hand over the future development of Humboldt Bay and thereby the county to the highest bidder?

About the author: Dave Spreen has been a resident of Humboldt County since 1972.