New London's State Pier gets new operatorJan 7, 2019 01:02 PM
Gateway New London LLC signs a 20-year deal with the Connecticut Port Authority
The following is text of a news release from the Connecticut Port Authority (CPA):
(NEW LONDON) — The Connecticut Port Authority (CPA) has reached an agreement with Gateway New London LLC for the long-term operation of State Pier in New London. The decision comes after a rigorous competitive selection process designed to determine the highest and best use of State Pier and to find a partner with the capability to deliver expanded economic opportunity to the state.
“Gateway shares the CPA’s vision for strengthening Connecticut’s maritime economy and creating new jobs through expanded operations at State Pier,” said Scott Bates, chairman of the CPA.
Under terms of the 20-year agreement, Gateway assumes operation of State Pier on May 1, with an option at the end of the term for the CPA to extend for two additional 10-year periods. The new contract requires that an annual fixed fee of $500,000 be paid to the CPA, increasing by $250,000 every five years. The CPA will also receive a variable fee of 7 percent of Gateway’s gross revenues at State Pier, with a minimum annual guarantee of $500,000 that has the potential to increase every five years based on Gateway’s percentage increase in gross revenues. Finally, Gateway will pay an annual wharfage and dockage fee equal to 50 percent of all wharfage and dockage user fees at State Pier. All together, these terms will provide CPA with a substantial increase in revenue versus the current operations.
“We look forward to working with our new partners to increase the movement of conventional cargo through our ports, while simultaneously capturing the opportunities presented by emerging markets,” Bates said. “This is a welcome balance as we look to better leverage Connecticut’s unique maritime assets. We are confident this selection presents the best future for State Pier and the taxpayers of Connecticut.”
This agreement presents an opportunity to expand the port’s role as an economic driver by increasing the overall traffic flowing through this key point of entry. Businesses and workers around the state will benefit from greater access to valuable markets.
“After months of effort on behalf of the CPA staff and board, we are pleased to partner with Gateway on the continued development and expansion of State Pier,” said Evan Matthews, executive director of the CPA. “The CPA and Gateway have undertaken an extensive process to maximize outcomes and potential, and we see this partnership as the next step towards fulfilling a key objective of our 2018 Maritime Strategy.”
Maximizing the potential of State Pier is the top priority of the 2018 Connecticut Maritime Strategy, released by CPA earlier this year. In support of that strategy, the CPA will work closely with Gateway to invest the funds provided through the recent purchase power agreement and zero carbon initiative to make the pier even more attractive to the offshore wind industry and other emerging opportunities in the region.
“We are excited to partner with the Connecticut Port Authority to operate and expand State Pier,” said Larry Smith, founder of Gateway Terminal. “Our partnership not only positions New London as a potential offshore wind hub for the northeastern United States, but also supports the local harbor community and existing uses, which we believe will expand when we begin our operations.”
• The new contract will guarantee a minimum of $1 million in revenue for the CPA in 2019, increasing by $250,000 every five years.
• The annual fixed fee revenue generated by this deal will increase by 2.5 times from its current level in the first year, and grow to a level approximately six times the current level over the course of the 20-year agreement.
• Gateway is committing a minimum of $30 million in capital improvements at State Pier during the duration of the agreement.
• In 2018, Connecticut has either invested or secured $48 million for improvements to State Pier, the largest investment in the pier in Connecticut’s history. The State Bond Commission allocated $25.5 million for improvements to State Pier, and an additional $22.5 million has been committed by the private sector through the recent purchase power agreement and zero carbon initiative undertaken by the state.
• This agreement has the potential to produce enough revenue to finance a large portion of the CPA’s statewide operations, allowing for an eventual reduction in reliance on state funds.Edit Module