Kinder Morgan had their public presentation on Monday accompanied with the requisite PowerPoint deck to highlight main points. I’ve embedded a copy of that presentation below — it is a black and white copy, so some of the graphics are hard to read. I hope you’ll take a look at these slides (some of them you might need to print) and let us know what you think of this deal so far. But here are some of my thoughts on what is here:
1. This isn’t really a proposal — it is more of an Introduction to KM presentation. I wonder why so many seem so gung ho on this when the information is this thin.
2. As noted previously, the business they envision adding is bulk and break-bulk, which is already a key portion of their port business. And as noted, this business doesn’t add much in terms of new jobs.
3. This confirms the “investment” numbers. $200.5M over 50 years, with only $41.5 available (over 20 years) for capital improvements or repairs. This doesn’t match up at all with the $156 (+/-) that the Port ED said needed to be invested in the Port for long term competitiveness. Then compare the capital improvements and repairs to what the State has contributed via the Bond Bill:
- FY 2008 = $3M
- FY 2009 = $4M
- FY 2010 = $2M
- FY 2011 = $10M
- FY 2012 = $0M
4. This confirms that the buildout of new facilities into the Delaware is not on the table for this round. Which means that all of the effort to dangle this in front of the public as a major benefit was something of a con job.
5. Given that KM knows that the current Port tenants and outside of the gate businesses are very wary of this deal, they only addressed current relationships in two lines on a single slide.
6. A commitment to extending current employees and service relationships (ILA and Teamsters) for 3 years. In 3 years, Jack Markell and Alan Levin will be working on their next political acts and a whole lot of Democrats are going to be up for re-election to something here. I seriously hope that these unions are using this timing to their advantage.
So why all of the excitement for this? It certainly doesn’t look like a very good deal — Alan Levin assuredly would have laughed out of the room anyone who valued Happy Harry’s so poorly. And he would have put whoever made this offer on the Happy Harry’s Always Pay Full Price For Prescriptions list. Further, in 2009 DEDO wrote an article in an online development journal (Area Development Journal Online) touting the advantages of the Port of Wilmington. DEDO assessed the health of the port then as follows:
The port receives an average of 400 ships per year, which convey about four million tons of cargo. The businesses generate $31.5 million in annual gross revenue and about 19,000 direct and indirect jobs are sustained at the businesses. These jobs create $307 million in personal income, $409 million in business revenue and more than $29 million in state and local taxes. Since 1996, the state has invested more than $161 million for port development and expansion. In turn, the port has returned more than $250 million in tax revenue.
A return of $250M in tax revenue is pretty decent for a $161M development and expansion investment (and I don’t know if this includes the purchase price of the port, now that I read that). So what am I missing here? (Other than the fact that DEDO can give you this ROI data for the port, but apparently not for any of their other “investments” for business.)
Even though they don’t know what is in this deal, either, the Chamber has decided to weigh in on this issue on the anti-democratic side. Anything that disrupts the path of businesses to the taxpayer trough irks these guys, but if I was a port tenant or one of the businesses on the other side of the fence supporting these businesses, I’d be making sure that I got my Chamber dues back. Because the Delaware Chamber of Commerce certainly won’t be representing YOUR interests here. Senator Bobby Marshall looks like he is trying to represent everybody — making sure that at the end of the day, we still have a Port that is poised to not just retain the businesses and jobs already there, but also to continue expanding and capturing new business.
h/t to multiple anonymous tipsters who have been sending me documents related to this deal. If you have any other data useful for this, please feel free to contact me. More perspective on this deal is forthcoming.
Tags: Port of Wilmington