Board of Public Works approves port terminal lease
Ports of America to lease Baltimore's Seagirt Marine Terminal for 50 years
ANNAPOLIS The state Board of Public Works approved an agreement to lease the Seagirt Marine Terminal in Baltimore to Ports America Chesapeake for the next 50 years today, even as the company's president said it plans to sell its stake in the operations in the next seven years.
The board, which comprises the governor, comptroller and treasurer, unanimously approved the deal. It is expected to create 5,700 jobs and could yield $1.3 billion to $1.8 billion in total investment and revenue over its life, including $15.7 million annually in state tax revenue.
Under the agreement, Ports America will spend $105.5 million to build a 50-foot berth to allow larger ships to dock at the terminal by the time the Panama Canal expansion is completed in 2014. The agreement also adds four state-of-the-art container cranes.
"Making the investment now will allow the port not only to be competitive with other ports as the canal is widened but also to create jobs," Gov. Martin O'Malley (D) said.
The berth project is expected to begin "immediately," said state transportation Secretary Beverly K. Swaim-Staley, and will create about 2,000 of the 3,000 construction jobs related to the deal. An additional 2,700 jobs are expected to be permanent and come from increased container business.
Ports America is one of the largest port operators in the nation, operating 84 other terminals. It has operated the 200-acre Seagirt terminal since it opened in 1990 and the Dundalk Marine Terminal since 1996.
The company intends to sell its operations at the Seagirt terminal in five to seven years, either through a public offering, to another infrastructure fund or to a strategic port operator, said Christopher Lee, president of Ports America Chesapeake.
The state has right of first refusal of any sale.
"So [a sale] is really not a concern," said James J. White, executive director of the Maryland Port Administration.
Over its lifetime, Seagirt has averaged $1.8 million in annual profits, making $2.8 million in its best year and losing $4.6 million in its worst, White said.
The new deal guarantees the state $3.2 million annually and incremental profit sharing once the volume of business exceeds 500,000 containers, he said.
"There is no loser in this deal. It is a true joint venture and I think we're going to complement each other and bring the port to a higher level," White said.
The Port of Baltimore employs about 16,500 workers and is ranked first nationally for rolling cargo, trucks and imported forest products, gypsum, sugar and iron ore. It is ranked 14th nationally in total foreign cargo tonnage and 12th in cargo value.
The agreement with the Maryland Port Administration calls for Ports America to shift container operations from Dundalk to Seagirt and to give back to the state 65 acres at the Dundalk terminal that will allow the expansion of automobile and rolling cargo operations there.