Editorial: Seagirt deal brings hope, risk

Posted: 5:44 pm Thu, December 3, 2009
By Daily Record Staff

The state has decided that a public-private partnership is the best way to provide the infusion of capital necessary to enable the Seagirt Marine Terminal to modernize and expand its facilities so it can remain a major contributor to the Maryland economy. But it had to sign a 50-year lease to close the deal.

There is a compelling case to be made supporting this direction. More and more governments, strapped for cash in the short run and reluctant to raise taxes in a tough economy, are turning to such arrangements, known as P3s, to attract private capital and expertise into government projects.

In this case, the Maryland Port Authority is facing a critical deadline in 2014, when an expanded Panama Canal will allow longer, taller and wider ships to pass from the Pacific Ocean to East Coast ports.

The Seagirt terminal is the main on- and off-loading point for shipping containers at the Port of Baltimore. If the terminal is not overhauled in the next five years to accommodate those larger ships, the future viability of the port could be threatened and its competitive position weakened.

But that will be a very costly undertaking, which is where the P3 comes into play.

The agreement requires Ports America Chesapeake — a subsidiary of Ports America Group, which has operated Seagirt since it opened — to invest more than $600 million in port-related infrastructure improvements during the 50-year lease and pay yearly rents. Also, the company will make an upfront payment of more than $100 million to help the transportation authority pay for other badly needed projects.

Supporters of the deal believe that expanded East Coast ports such as Seagirt will be more attractive to shippers than unloading cargo at West Coast ports and shipping it across the country. Others say the picture isn’t that clear because of changing conditions such as congestion of certain ports and the cost of inland transportation.

Which brings us back to that 50-year lease. That’s an eternity-and-a-half in the business world, but the public-private partnership does mean that Ports America is sharing the risk with the state.

We agree that the Port of Baltimore is a good bet for Maryland’s economic future. We just hope that the odds for success in this deal work in our favor.