“Economic reality suggests it is time to cut our losses on the idea of competing for the West Coast container trade and recognize that the railroad cannot be cost-effectively restored as part of a container shipping related enterprise.”

Time to weigh in on the bay’s future

Patrick Higgins/My Word/The Times-Standard
Article Launched: 07/15/2008 10:23:46 AM PDT

 

The Humboldt Bay Harbor, Recreation and Conservation Commission, to which I was elected last year, will soon make critical decisions that will either bind us to a 10 to 50 year commitment to large scale industrial Port of Humboldt Bay development or choose another course. Concerned citizens need to weigh in before the end of August regarding the proposal to develop a container-shipping terminal in Samoa.

The commission will make two decisions soon and public comment is invited for each: 1) consideration of adoption of the Redwood Marine Terminal Business Plan, and 2) whether to sign a contract with Goldman Sachs to be our sales representative to auction port assets. The latter agreement would entail an even closer relationship between the harbor district and the North Coast Railroad Authority, which also would have to agree to a long-term lease of railroad assets.

On June 26, the consulting firm TranSystems presented the Draft Redwood Marine Terminal Business Plan to a packed house at the Wharfinger Building. Their report does not show tangible prospects for profitable operation, yet they recommend that the district take on $32-$38 million in bond debt to build a multi-purpose terminal anyway. Positive cash flow in the report is based such unlikely prospects as dozens of cruise ships a year coming into Humboldt Bay, when only two have come in the last five years. Shipping tariffs and dockage fees associated with large-scale terminal development are similarly fabricated. How bonds would be secured will be discussed during our July 24 meeting.

The business plan also recommends that the district attract capital for container port infrastructure by becoming a port landlord, which is the framework that would allow Goldman Sachs to auction our assets in combination with those of the railroad.

The commission on May 22 authorized district staff and counsel to begin negotiations with Goldman Sachs to act as our sales agent to find port investors. The decision to bind the harbor district to an agreement will likely be considered in August. In order for Goldman Sachs to auction off use of the Redwood Dock and NCRA assets, full environmental review of Humboldt Bay and rail corridor impacts must be completed and developments approved by government agencies. I will likely recommend that we hold off on any formal agreement until the environmental analysis has been completed.

I recently voted against passing the district’s 2008-09 budget because we will incur a loss of nearly $600,000 due to investments in port development that have not brought economic return. The business plan does not provide any substantive evidence that we will generate significant revenue from shipping in the next five years, and I am concerned that the harbor district may become insolvent. Our cash reserves are down to a 10-year low of $3.4 million and we have been in the red annually since deepening the mouth of the Humboldt Bay in 2000. Economic reality suggests it is time to cut our losses on the idea of competing for the West Coast container trade and recognize that the railroad cannot be cost-effectively restored as part of a container shipping related enterprise.

At the June 26 meeting, at least 100 new people came and respectfully addressed our commission regarding reservations about container ships, the railroad and Goldman Sachs. My hope is that hundreds more will attend future meetings so my fellow commissioners understand the depth and breadth of public sentiment on the proposals under consideration and how many of their neighbors perceive their economic viability. Commission meetings are normally held at Woodley Island Marina on the second and fourth Thursdays of the month (July 24, August 14 and 24).

The comment period on the business plan has been extended to August 30 and both the Arcata and Eureka City Councils will have agenda items concerning the plan during the month of August. The business plan can be viewed on-line at http://www.humboldtbay.org and written comments via email can be directed to dhull@portofhumboldtbay.org. You can contact me at phiggins@humboldt1.com.  

Patrick Higgins is a Humboldt Bay Harbor, Recreation and Conservation District commissioner.

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