Posted on April 5, 2018
By Steve Taylor, Rio Grande Guardian
The Port of Brownsville plans to get private industry to pay for the deepening of the ship channel, in hopes that the federal government will later reimburse those companies.
For over a decade, the Brownsville Navigation District has worked on a project to have the ship channel deepened from the current 42 feet to 52 feet. The deeper the channel, the bigger the ships the port can service. The bigger the ships, the more cargo. The more cargo, the more jobs and economic activity for the region.
In a presentation at their State of the Port Address held on Thursday, BND board members said the U.S. Corps of Engineers estimates the cost of deepening the channel by an additional ten feet would cost $200 million. An additional $60 million would be needed to improve port infrastructure.
Congress has authorized the ship channel be deepened to 52 feet but has yet to appropriate the funding. Port Commissioner Ralph Cowen told the Rio Grande Guardian that BND does not want to wait decades for the federal government to fund the project. He also said BND has no intention of raising the $260 million through a bond issue. The way to do it, he said, is via the private sector, with the government reimbursing the companies that fund the project.
“This commission has no intention of going out to our constituents in the district and asking them to tax themselves to deepen the channel. It would be very unfair to ask the poorest people in the United States to pay for the deepening of the channel for some of the richest companies,” Cowen said.
“So, we partnering with some of the richest companies to do this. There is a provision Congress has made in WRDA (the Water Resources Development Act) that allows us to advance funds and then get reimbursed by the federal government.”
Asked to elaborate, Cowen said: “The MOU (memorandum of understanding), conceptually, would be that they (private companies that use the port) would advance the money to do it and then get a series of concessions on fees for doing that and that they would get reimbursed by Congress.”
Cohen explained: “If we wait for Congress, Congress normally does it in increments, so it might be 2045 before Congress fully funds it. Instead of doing that, this is a way to do it much more quickly. Other ports have done this. The Port of Houston has done this. The Port of Corpus Christi is working on doing this. It is the only way it is going to happen right now. When Congress is flush they can pay them (the private investors) back. If Congress does not pay them back, we are under no obligation to pay.”
Asked when the project might get underway, Cowen said: “The sooner the better. We hope to be under construction in the next two to three years. That is our goal. The feasibility study only took ten to 13 years. But, we finally got that done. It was deemed to be in the best interest of the nation to deepen the channel to 52 feet. Everything is now falling into place. We have over 50 percent of the design and the engineering done. Once we have the permit, which comes for the Corps of Engineers, we will be shovel ready.”
Cowen added that deepening the ship channel is a key economic development project for the region. “The whole concept is to lift us (the Rio Grande Valley) out of poverty to prosperity. A rising tide lifts all ships.”
Port of Brownsville board secretary Sergio Tito Lopez spoke about the deepening of the ship channel from the podium at Thursday’s State of the Port Address.
“Our efforts to deepen the port began almost 12 years ago. The deeper the channel the bigger the ships. The bigger the ships the more cargo they carry. The more cargo, the more jobs created,” Lopez said.
Lopez cited a National Oceanic and Atmospheric Administration study, released last year, which showed that deepening a ship channel by a single inch can allow a vessel to carry an extra 179 tons of cargo. “
A ship carrying John Deere tractors could move 36 more tractors, valued at $2.4 million, with just one more inch of draught. But the Port of Brownsville plans to deepen the channel from 42 feet to 52 feet. That is ten feet deeper. With that much additional draught there are cost savings for shipping goods. The biggest winners are the workers,” Lopez said.
In his power point presentation, Lopez pointed out that deepening the ship channel by an additional ten feet would cost $200 million, while modernizing the port to accommodate a deeper channel would cost $60 million. He joked that he would be passing a bucket around the room for donations.
“We are seeking third party partnerships,” Lopez said, explaining how the ship channel project could be paid for. He said the plan is to begin the project as soon as possible. “How soon? It is difficult to predict. Sooner than previously planned. The next five years or so. With the momentum that we have and the team we have in place, this is possible. We will keep you posted,” Lopez said.
Strong and getting stronger
In his remarks at the State of the Port Address, board vice chairman John Reed said the Port of Brownsville “is strong and getting stronger.” He said the port plans to “lead the Valley in regional prosperity.” Asked afterwards to elaborate on this, Reed told the Rio Grande Guardian:
“If we get a steel mill and LNG (liquefied natural gas) terminals, it would be north of $6 billion in capital investment. Our whole goal is to grow this area and make it more prosperous for everybody. We want good employment here so people do not have to leave the area to look for a good-paying job.”
Asked about the ship channel project, Reed said: “We have lobbyists working very hard on it. It took us almost ten years to get the authorization. We are not going to stop now. We need the money. We are going to make it happen somehow, someway. So, one of our ideas is to have private capital pay for it, to get the users of the port to pay for it, and then get them reimbursed through the WRDA mechanism.”
Reed added: “We need about $250 million to deepen the ship channel. If some of these projects (a steel mill and LNG export terminals) come through, then we will have the ability to deepen it. Those are very big projects. It is going to take those projects to be approved by the federal regulators and come to fruition by the private sector.”
Carlos R. Masso is retiring as a Brownsville Navigation District Commissioner after 12 years of service. He told the Rio Grande Guardian that he was proud of the BND’s achievements over the past decade.
“Our revenues have basically doubled since 2008. We have almost $24 million in revenues and, at the same time, we have continued to lower taxes for our community. We are an economic engine for the region,” Masso said.
“I think of the Port as a hidden gem. Many people do not know we are here. But we have a lot of big ships coming in. We are the No. 2 Foreign Trade Zone for exports. There is a lot of products that come through the Port. That means local jobs and money for the state.”
Asked about big projects on the horizon, Masso said an LNG export terminal would be worth $1 billion to $2 billion. “That means a lot of jobs. Valley Crossing Pipeline, which is taking natural gas to Mexico, has created 1,500 jobs. We are very excited about the projects coming through.”
Asked about plans to deepen the ship channel, Masso said: “There is a section in the federal law that allows a private company to come in and fund the project and get reimbursed at a later date. We are looking at this option. It is complicated but it is allowed. To bring private industry in to help us and then get reimbursed at a later date by the federal government.”
Source: Rio Grande Guardian
