Tuesday, August 9, 2022

Whatever happened to . . . NC Ports $4.5 billion, 600-acre ‘megaport’ project in Brunswick County?

In 2006, the North Carolina State Port Authority borrowed $30 million to buy 600-acres of land in Brunswick County for a 'megaport.' But as the price tag doubled -- and then quadrupled -- the project fell out of favor. But is the project done for good?

The 600-acre location purchased by the North Carolina State Port Authority in 2006. (Port City Daily photo | Courtesy Save the Cape)
The 600-acre location purchased by the North Carolina State Port Authority in 2006. (Port City Daily photo | Courtesy Save the Cape)

BRUNSWICK COUNTY — In 2006, the North Carolina State Port Authority took out a $30 million loan to buy over 600 acres of land just north of Southport. So, what happened to it?

Between 2006 and 2012, the North Carolina International Terminal (NCIT) project took shape, stalled, and died as projected costs doubled — then quadrupled — and interest and support waned.

After purchasing the land, the North Carolina State Port Authority (NCSPA) spent another $10 million in consulting and design fees, and several additional million to maintain the land. Since halting the project, the NCSPA has largely cut (and written off) its losses – while the ports are still paying back debt on the land, according to Brunswick County records they are tax exempt.

While the land has increased in value – from about $4.9 million to about $12.2 million – it’s still a fraction of the NCSPA’s investment. Many have asked if there could be better uses for the land, which includes wetlands and riverfront property, than sitting idle.

Costs double, then quadruple

In 2005, the Pfizer corporation put its in Brunswick County for sale. Two years before the financial collapse, the housing boom was in full effect and property values ran ahead of tax evaluation – which is how NCSPA ended up paying six times the appraised value. Still, with a growing global economy, NCSPA felt it was important to improve dramatically on the Port of Wilmington’s capacity.

NCSPA hired Colorado-based CH2M Hill to manage the project in 2006. Few details were initially available, but the initial price tag was put at approximately $1 billion dollars. CH2M Hill did not initially put an estimated price-tag on its management services.

Two years later, CH2M delivered preliminary designs for the megaport.

The semi-automated port would have 5 times the capacity of the Port of Wilmington, offering 3 million TEU (a twenty-foot shipping container) annual capacity, compared to 600,000. At the time, that would have put it on par or ahead of the Port of Savannah, in Georgia, in terms of capacity.

 

The business plan for the proposed North Carolina International Terminal, produced by CH2M Hill in 2008, showed projected costs had more than doubled since the project was announced in 2006. (Port City Daily photo | Courtesy NCSPA)
The business plan for the proposed North Carolina International Terminal, produced by CH2M Hill in 2008, showed projected costs had more than doubled since the project was announced in 2006. (Port City Daily photo | Courtesy NCSPA)

But the increased capacity would come at a cost: $681 million for dredging, $72 million for rail infrastructure, $60 million for environmental studies and permits.

Delivered at the height of the financial crisis, CH2M’s business plan put total costs at $2.4 billion – costs which did not account for inflation, escalation (increases in workforce and other costs over time), and the increased interest rates being charged by a banking system that had become dramatically more risk-averse.

The North Carolina put a block on any funds for the project for the 2011 fiscal year, at which point it became clear that state and federal funds could not cover the project, and NCSPA started looking at privatization options.

In 2010, the P.F. Richardson Associates consulting firm delivered a cost-reduction study to NCSPA, in an attempt to make the project as lean as possible in an attempt to attract private investment. P.F. Richardson delivered a plan that cut tens of millions in cost in a number of areas – but ultimately, it didn’t impact the bottom line much.

By 2010, costs had doubled again -- now approximately 4.5 times the megaport's initial $1 billion price tag. (Port City Daily photo | Courtesy NCSPA)
By 2010, costs had doubled again — now approximately 4.5 times the megaport’s initial $1 billion price tag. (Port City Daily photo | Courtesy NCSPA)

In fact, by 2010, P.F. Richardson, now factoring in escalation, put the projected cost of the NCIT at $4.4 billion.

The Megaport flounders

A month after P.F. Richardson delivered its report, NCPSA put the project on hold.

Then-congressman Mike McIntyre released a statement calling the move a “positive step forward,” and praised NCSPA for “deciding to focus on immediate ways we can make the Wilmington Port the crown jewel of the East Coast.”

Whatever McIntyre intended “crown jewel” to mean, it didn’t translate to capacity — Port officials at the time stated they would not — in part because they could not — attempt to compete with much larger facilities in Georgia and Virginia.

In 2012, Governor Beverly Purdue’s Logistics Task Force, charged with outlining priorities for the state’s transportation infrastructure, focused on Morehead City and Wilmington ports. According to the task force, there was no funding at the state or federal level for the NCIT. The report remained noncommittal on the idea.

“However, the issue has not gone away. The issue of a deepwater port is something that will probably be looked at by this Logistics Task Force. The Task Force has not taken an official position on this issue,” according to the report.

The report did seem to express concern over the consulting advice NCSPA had received over the project’s six-year lifespan, specifically excluding NCSPA’s previously contracted firms from future consideration.

“Due issues which arose due to the North Carolina State Port Authority’s proposed North Carolina International Terminal project in Brunswick County, leadership believed that this study needed to be conducted by firms with significant experience in the maritime industry, as well as those who had not previously completed work for the North Carolina State Ports Authority,” according to the study.

Could the public use the land?

Next to nothing has been heard about the megaport since 2012, when the last of the officials supporting the plan left NCSPA, including CEO Tom Eagar – who was either fired or left — and Board Chairman Carl Stewart, who resigned ahead of the end of his term in 2016.

Until recently, one group advocated consistently for the creative re-purposing of the 600-acre site.

Save the Cape, founded in 2010 in Southport by Toby Bronstein and Michael Rice, was initially organized to protest the megaport but – as support quickly dissolved for the project – shifted focus to turning the port site into a public park.

The proposed Cape Fear State Park would, in theory, be created by transferring the 600-acre NCSPA site between state departments, reducing costs and shifting the land use from stagnant to generating revenue. (Port City Daily photo | Courtesy Save the Cape)
The proposed Cape Fear State Park would, in theory, be created by transferring the 600-acre NCSPA site between state departments, reducing costs and shifting the land use from stagnant to generating revenue. (Port City Daily photo | Courtesy Save the Cape)

Bronstein suggested that the land, in its stagnant state, was doing nothing to help the NCSPA manage its debt – including some that still remained from the land purchase. In a detailed proposal, first put forward in 2012 and then updated in 2014, Save the Cape laid out a plan to transfer the land from one state agency to another, creating a state park.

The plan, which contrasts the difficulties of getting a private commercial or industrial buyer for the land – given the proximity to both the Brunswick nuclear plant and MOSTU – with the relative ease of creating a public area.

Bronstein, in short, suggests creating a park that could generate at least some revenue, while also preserving the natural wetlands.

Asked if there were any plans by to pursue a plan like the one outlined by Save the Cape, North Carolina Ports Spokesperson Bethany Welch said the Port had no plans to divest itself of any of its land at the current time.

The port is dead, long live the port?

After several years of focusing on improving existing ports, the idea of a new port resurfaced.

In 2015, the NCSPA released its strategic plan for for the next five years. While the immediate goals were comparatively modest — doubling the state’s capacity to handle shipping — the long-range goals were clearly more ambitious.

“Finally, an independent long-range study needs to be initiated to examine a new
strategic North Carolina seaport. The study will need to examine the benefits and advantages of Authority-owned properties at Radio Island/Morehead City, in coastal Brunswick County, as well as other possible locations,” the plan stated.

Since NCSPA intends to consider — or reconsider — the Brunswick County property as a location, and has been clear there are no current plans to sell the land, it is natural that speculation would continue about the plans for a megaport there.

The timing, location, and author - former NCSPA Board Chairman and current State Senator Michael Lee - forced questions about whether or not the plan was related to the dormant, but not extinct, megaport project. This speculative map demonstrates why those questions were asked. (Port City Daily photo | Courtesy Save the Cape)
The timing, location, and author – former NCSPA Board Chairman and current State Senator Michael Lee – forced questions about whether or not the plan was related to the dormant, but not extinct, megaport project. This speculative map demonstrates why those questions were asked. (Port City Daily photo | Courtesy Save the Cape)

Those speculations flared up in 2015 when the North Carolina State Senator Michael Lee included language in the budget bill, authorizing a study of removing the New Inlet Dam, also known as “Zeke’s rocks” at the southern end of Fort Fisher.

Since Lee was the former chairman of the NCSPA Boar, and the so-called “New New Inlet” would open a passage to the Cape Fear river through the barrier islands and shallow estuary areas almost directly parallel to NCSPA’s Brunswick land, many residents, including Save the Cape members, asked if it was related.

Several local municipalities approved resolutions opposing the move, including Holden Beach, who hired engineer Erik Olsen to examine the potential impact of removing Zeke’s Rocks. Olsen’s white paper predicted the move would have serious consequences for marine life, since salt water would be more directly introduced to the Cape Fear further from the ocean. Olsen’s calculations also indicated that any benefit from opening a channel at New Inlet would require future projects to counteract shoaling.

For his part, Lee denied that the New Inlet plan was in any way related to the NCIT project.

To date, there has been no action on either the megaport or the Zeke’s Rocks removal. The North Carolina State Ports Authority is expected to begin considering it’s next five-year plan in 2020; whether the megaport – which will have been dormant for a decade at that point – will be resurrected, remains unknown.

Bronstein said Save the Cape hadn’t taken its eye off of the project.

The (NCSPA) continues to engage in magical thinking, while dreaming of gargantuan ships, ignoring the reality of Charleston, Savannah, Norfolk, New York, and New Jersey,” Bronstein said.

“While we don’t believe that Duke Energy or the Department of Defense (MOTSU) would ever sign off on a massive international container port on land that abuts their properties, we will be there to resume the fight should the 2020 Strategic Plan explore this losing proposition once again,” Bronstein said.


Send comments and tips to Benjamin Schachtman at ben@localvoicemedia.com, @pcdben on Twitter, and (910) 538-2001.

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