Wednesday, June 20, 2012

VIRGINIA PORTS -- EFFORTS TO LEASE/SALE


 
VIRGINIA PORTS -- SUSPEND THE PROPOSAL TO LEASE 

Virginia's ports are crown jewel assets not only for Virginia but for America. They are premier among ports of the world, not only for commerce but for extensive Naval Operations. They are critical to national security. They are invaluable and irreplaceable assets, hence all factors must be considered in decisions as to how such critical assets are managed. Without knowing all details of the proposed “public-private partnership,” to fund widening of I-64 seems a long stretch. It's unjustifiable, in fact, versus other methods of financing transportation needs.
The total cost-to-benefit must be thoroughly considered. What do we win, what do we lose? We understand the need for revenue for transportation funding. However, we have concerns about the current proposal as we had for the previous initiative to sell the ports. We had similar concerns about the initiative to spin off the ABC operations to raise transportation funds, while grossly undervaluing the ABC business assets. Fortunately, both efforts were stopped.

With the proposal to sell the ports, we had justifiable concerns about losing the irreplaceable asset. Of special concern was the probability the ports would end up with foreign ownership as the investors sold them to achieve their targeted ROI. Fortunately, our concerns and, undoubtedly those of others, were heard and acted on. We urge you to do the same with leasing proposals for the ports.

We have similar concerns with the current initiative. Do we lose a unique asset? Loss of control is of critical concern. It is imperative that entire business and operating plans be revealed in detail. As reported, the proposal does not seem acceptable – ill-conceived and force-fit into transportation funding, in fact.
As aforementioned, Virginia ports are vital to national security. What happens to our vast Naval operations now and in the future. This is a critical issue! The ports are important not only to the commerce of the Commonwealth of Virginia but also to the national GDP. At a time when Virginia needs economic development and America's economy has serious structural problems, limiting capability to grow GDP, is this initiative constructive? It's reasonable to think not.

What are the alternatives? We have asked previously for resolution of the “Transportation Trust Fund” and the “Funding Formula.” We believe these basic elements of funding must be dealt with before new initiatives are undertaken. We see the ports issue similarly. What options are available, including bonds?
What is the real financial return? Let us see the entire financial analysis. We are compelled to compare this to the attempts to sell the ABC operations to finance a small fraction of transportation funding needs. In that case, the financial return was inadequate and even negative to the general fund. The advisers' valuation of the business was a fraction of it's true valuation when done with acceptable methodology. Here again, we are thankful our concerns, and that of others, were heard and acted on. We ask for the same consideration of this ports proposal. It's a critical issue!

We urge you to reconsider the proposal for encumbering the ports in long term leases with the same concerns that we expressed for earlier proposals to sell the ports and the ABC operations. Other means of funding highways must be found, starting with issuing bonds. 

We want what is best for Virginia, which is also what is best for America. Losing control of our ports does not meet that criterion. 

Respectfully,
Joe A. Mann, CEO The Mann Group, 148 The Green, Williamsburg, Va 23185, 757-229-4633
Philip Richardson, CEO Richardson Companies, 300 Windsor Hall Dr., A-314, 757-258-3200
James City

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