“The difference between extraterrestrial aliens and nuclear material or hazardous chemical shipments is that ET’s aren’t regularly shipped in and out of ports (that we know of).”


Humboldt Herald

This says it all:

Moneymen weave new port-rail vision – May 27, 2008

Jennifer Savage
Eye Scene Editor

HUMBOLDT BAY – A presentation on behalf of the world’s leading investment bank thrilled rail and port supporters at last week’s Humboldt Bay Harbor, Conservation and Recreation District meeting. 

In what was termed an “unsolicited proposal,” Goldman Sachs Vice President for Public Sector and Infrastructure Banking Jeff Holt explained the new popularity of public infrastructure as an investment opportunity and assured commissioners he could  find private investors to rebuild the rail and install an international port on Humboldt Bay.

Under such a plan, a “goods gateway” similar to Coos Bay and Prince Rupert ports would be created.

Rail and port, together again

Corresponding with private investment would be a handing over of control to the same private interests, although the Bay District would have an opportunity to set operating standards up front, Holt explained. Also key to the deal, would be the port and rail marketed as a single asset. “What captivates attention,” he said, “is the rail and port together.” Holt predicted a “feeding frenzy.”

“It all comes together nicely,” he said.

Long-term thinking

Fifth District Commissioner Pat Higgins referenced a prior study showing container shipping to be a poor fit for Humboldt Bay. “[The proposal] sounds really good,” Higgins said, “but how do you reconcile it?” Holt responded that a shift in thinking has occurred over the past few years. “We’re thinking of these assets in a very long-term way,” he said.

“I’m talking 50, 75, 100 years in order to get the time frame required to amortize an investment. An assumption is made that a certain amount of growth will happen.” 

Humboldt County’s relative lack of population is no longer seen as a hindrance to expansion, he explained, as local use of goods has shown to be completely unnecessary.

At Prince Rupert, Hold said, not a single person uses the shipped goods locally.

Further, because of the overload of containers in larger port cities like Los Angeles –

“They’re dumping 30-to-40 thousand containers on the streets of L.A. and folks don’t like that” using noncongested ports is now opportune for private investors. “We can control the entire chain,” Holt said. “It’s all about dedicated intermodal transit.”

After continued examples of shipping quandaries elsewhere, Holt reiterated the importance of long-term leasing to make the investment opportunities viable.

“So, we maintain the shell of a public entity, but become a private enterprise?” Higgins asked. “It is now,” Holt replied.

Interests aligned, money attracted

Goldman Sachs’ fees would stem from the amount of investment the firm procured for the Bay District. “We align ourselves with your interests,” Holt said, “and take a percentage of the money we are able to attract.” 

Interest and control

“Have you spoken to the NCRA [North Coast Railroad Authority]?” Third District Commissioner Mike Wilson asked. Holt responded that he had talked with the rail’s operator, NWP, Inc., a private company. “You cannot improve the port without the railroad and you cannot improve the railroad without the port,” he said.

“But you haven’t spoken with the board?” Wilson said. 

“My concern is with the lessee,” Holt replied. 

Wilson questioned the difference between the NCRA’s south-end lease and north-end option, and how that could effect investment plans. 

“An option is control,” Holt said.

A half-million units?

Goldman Sachs represents almost every other port on the West Coast, Holt said. “We’re involved in every possible space in this sector.” He predicted the rail restoral and port development could reach the minimum needed for service within three-to-four years from the time investments were made. 

Wilson expressed skepticism. “NCRA said that their environmental review would take five years alone.” 

“Then it wouldn’t even be funded until an environmental review was done,” Holt said, but added that other parts of the equation could be figured out simultaneously.

As far as number of containers shipped, Holt said he didn’t think it “unfeasible” to reach the industry standard of a half-million within several years. “It’s a viable phase,” he said.

Setting the standards

First District Commissioner Ronnie Pellegrini inquired about implementing “a model port of green development.”

Holt assured her that although, “it may sound like you’re giving up control… you have a tremendous amount of time on the front end to determine what you want.” The beauty is, he continued, “is if they don’t keep to [the agreement], you drop them and keep their money.”

‘It is what it is’

When asked about the hundreds of millions of dollars estimated for the  Eel River Canyon rail repair – a stumbling block often quoted by those who question the wisdom of bringing back freight trains to Humboldt County – Holt shrugged. “The amount of money is just a fact. It is what it is.”

Prayers answered

Several longtime rail and port supporters waxed nostalgic and thanked Holt for coming.

“I came here from France in 1952,” NCRA representative and former Fifth District Commissioner and Charles Ollivier said. “Is there something wrong with employing people? I remember when the trains were running.

“You’ve made my day,” Times-Standard columnist and Humboldt Taxpayers’ League President Leo Sears stated.

“Amen!” called out Citizens for Port Rail Development Chairperson Kaye Strickland.

A lack of excitement

Wilson and Higgins exhibited more caution. Wilson called the proposal interesting and well-thought out, but referred to the still-developing business plan being created by TranSystems consultants.

“It’s a little too early… I’d like to see a business plan before we start doing business,” Wilson said. He also noted cases of small entities being manipulated by “big fish” and a lack of excitement about the Bay District being even further entwined with the NCRA.

Wilson also continued to press for compliance with the California Environmental Quality Act (CEQA). “We’ve already skirted [CEQA] and I don’t want to get into more hot water potentially. We haven’t broached CEQA at all.”

Higgins didn’t find Holt’s presentation compelling, he said, but added, “I knew I stepped on an ocean liner when I was elected… I hate to be locked into something inviable, a foregone conclusion that never comes to fruition.”

The district voted 3-2 to enter into negotiations with Goldman Sachs to acquire investors.