The Virginia Port Authority has a new executive director, and judging by a recent editorial in the Virginian Pilot, he thinks outside the box. When Jerry Bridges surveys the port’s strategic options, he says that privatization should be considered.
The ports have built enormous economic value in the three decades since the Commonwealth of Virginia consolidated them, rescuing them from the mismanagement of separate municipal authorities. Under the leadership of Bobby Bray, the VPA has risen into the ranks of the largest and fastest-growing ports in the United States. VPA officials guesstimate that private bidders might pay as much as $5 billion for the facilities. As the Pilot points out: “New bidders, like investment banks and pension funds, have been pouring billions into an industry where most investment used to come from large companies already involved in the industry, a much smaller, more stingy pool.”
The Pilot raises some good questions. If the state were to privatize the ports, should it try to maximize the price? Or should it consider other goals, such as environmental protection or good labor relations? What would be done with the money — and who would decide?
Although the ports are a “state” entity, I believe that the proceeds from privatization should be used for the benefit of Hampton Roads. The ports are, after all, one of the region’s most important assets. The proceeds of privatization should be set aside in a mega-community foundation, similar to foundations in Martinsville, Danville and Petersburg endowed by the sale of their community hospitals. Revenues from a Hampton Roads foundation — potentially some $200 million a year — could be applied to regional priorities.
One such priority is building a “third crossing” across the James River, deemed critical to accommodate surging truck traffic from the booming port terminals and also for evacuating the population in the event of a major hurricane. It would be poetic justice if a foundation endowed through the privatization of the ports used a portion of its income to support bonds that paid for building the third crossing.
The state doesn’t have the money to pay for the project, and the funds raised through a cluster of regional taxes enabled by the General Assembly won’t pay for it either. Tolls would cover only a fraction of the cost. Privatizing the ports may be a way to cut the Gordion knot and get the project funded.