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Statement of Governor McDonnell on Port PPTA Decision and Restructuring


Location: Richmond, VA

Governor Bob McDonnell today issued the following statement regarding his review of the Virginia Port Authority Board of Commissioner's decision to terminate the evaluation of the Public-Private Transportation Act (PPTA) proposals submitted by APM Terminals, Inc. and Virginia Port Partners.

"Over the past week, I have reviewed the letter and information sent to me by Virginia Port Authority Board of Commissioners Chairman William Fralin following the board's decision to terminate further evaluation of PPTA proposals for port operations. At the beginning of this process, I was clear that the initial decision-making authority for whether or not to recommend a private concession was vested in the Board of Commissioners. After conducting my review, I accept the board's decision, and I believe it is in the best interests of the Port of Virginia and the Commonwealth at the current time. I have sent a detailed letter today to Chairman Fralin today outlining my analysis of the board's actions.

"As container vessels continue to grow and larger ships pass through the Suez Canal and soon-to-be completed Panama Canal expansion, the Port of Virginia is one of the only East Coast ports where these larger vessels can call. The projected growth in East Coast container volumes presents a tremendous opportunity for the Port of Virginia to grow and create economic development opportunities and jobs.

"For Virginia to realize this opportunity, however, we must address both the short- and long-term challenges facing the port. In the short-term, we must promptly restructure the current operational arrangement between the VPA and Virginia International Terminals, Inc. to reduce costs, eliminate duplication of effort and grow cargo volumes. In the long-term, we must address challenges like developing Craney Island, attracting manufacturing and distribution centers that use our port, improving infrastructure outside of the port, better coordinating economic development efforts, bringing dual-access rail service to all of our container terminals, and improving the port's financial picture to reduce dependence on state funding.

"Given these challenges, my acceptance of the board's decision is conditioned upon the implementation of certain recommendations made by the board. First, the board must immediately commence a global search for a permanent management team. Second, the VPA must promptly follow through on plans to implement the corporate restructuring of the VPA/VIT relationship. Third, as part of this restructuring, the board's outside auditors must conduct a comprehensive review of VIT prior to the VPA assuming all liability for port operations. Finally, the board must provide a detailed plan for meeting the cargo volume, revenue and cost-reduction targets that served as the foundation for its decision. If these actions are not taken, it will be difficult for the Port of Virginia to remain competitive, create jobs and attract economic development opportunities over the long-term. We owe it to not only the citizens of Virginia, but also to our customers, to ensure that the Port of Virginia is the most cost competitive and operationally efficient port on the East Coast.

"I thank APM Terminals and Virginia Port Partners, a consortium lead by JPMorgan and Maher Terminals, for their strong interest in Virginia. Their interest is indicative of the long-term opportunities presented by the Port of Virginia. The companies spent vast amounts of time and money preparing attractive and thoughtful proposals to operate our port. We appreciate their immense effort, which is a testament to the strength of the ports, and also our time-tested successful public-private partnership laws in Virginia.

"I would also like to thank Chairman Fralin, the Board of Commissioners, and the VPA management and staff for their ongoing efforts to reform the Port of Virginia so that we can ensure it is the leading cargo facility on the East Coast.

"As your letter correctly notes: 'The reforms made over the past two years have had a tremendous impact. The administration's focus on the port and the ongoing efforts of the VPA management and staff has helped to accelerate the port's recovery. We also believe that the competitive tension created by the PPTA process has had an undeniable impact on increasing cargo volumes.'"

"Working together we have made much progress, but we have much work left to do. I look forward to continuing to work with the board throughout the remainder of my administration as we work toward our mutual goals for the Port of Virginia."

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