Board of Public Works OKs Seagirt deal 

Posted: 7:24 pm Wed, December 16, 2009
By Nicholas Sohr
Daily Record Business Writer

ANNAPOLIS — The 50-year lease of Seagirt Marine Terminal is expected to close in mid-January after the Board of Public Works granted the deal its last required state approval on Wednesday.

The public-private partnership, valued by the state at up to $1.8 billion, gives control of the main on- and off-loading point for shipping containers in the Port of Baltimore to Ports America Chesapeake. The company is a subsidiary of Ports America Group, which has operated Seagirt since it opened.

“We did run the risk of this being not a gem, but an albatross, around the neck of the state,” Treasurer Nancy Kopp said of the terminal.  “This is a very good deal.”

Kopp sits on the board with Gov. Martin O’Malley and Comptroller Peter Franchot. All three voted to approve the deal.

Franchot questioned the sense in putting such an important piece of state infrastructure in the hands of a private company that could be sold at the whim of its New York-based corporate parent, Highstar Capital, an infrastructure investment fund.

The deal includes a buyout clause, port officials said, that allows them right of first refusal in the event of a sale.

Christopher H. Lee, managing partner and founder of Highstar, estimated such a sale is five to seven years away.

“At some point, we’ll sell the business,” Lee said. “If we sell the business to somebody they don’t like, the state can take the port back.”

The buyout clause was inspired by the public outcry over a proposed acquisition of a company that held a state contract at Seagirt by Dubai Ports World, a state-owned company in the United Arab Emirates.

“That’s what really created our interest in getting a right of first refusal,” said James White, executive director of the Maryland Port Administration.

State transportation officials have championed the lease as the best way to ensure Seagirt’s infrastructure is upgraded to keep up with the wider, deeper, taller ships already in operation.

The agreement requires Ports America to invest more than $600 million in port-related infrastructure improvements over the 50-year life of the lease, pay yearly rent and make an upfront payment of more than $100 million to fund other Maryland Transportation Authority projects.

Most importantly, transportation officials say, is the 50-foot berth Ports America will construct at Seagirt to accommodate larger ships from Asia that are expected to call on East Cost ports when an expansion of the Panama Canal is completed in 2014.

In place at Seagirt are three berths with depths of 45 feet, and seven container cranes. Ports America will add four cranes to the new berth capable of handling container stacks that are higher and wider than those now calling at the port.

The deal also includes the return of a lease on 53 acres of Dundalk land that will allow for the construction of two terminals to handle roll-on/roll-off cargo.