news story / By Heidi Walters

Port o’ Gold

Major Wall Street players still angling for a piece of Humboldt Bay

(July 24, 2008)  It’s been a month since more than a hundred people crammed into the Wharfinger Building to first hear a plan to turn Humboldt Bay into a major industrial, international shipping port connected to the railroad, with a big cruise-ship enterprise on the side — and to let one of the world’s top investment banking firms, Goldman Sachs, auction off the whole shebang to private investors. In another month, a decision will likely be made on both of these.

The proposed deal has launched yet another battle in the ongoing Humboldt war of the angsts, pitching the we-need-jobs set against the beware-corporate-rule set, the let’s-revive-the-railroad-and-port set against the let’s-​conserve-​and-​market-​our-​environmental-​assets set.

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But it could be a definitive fight: If the Humboldt Bay Harbor, Recreation and Conservation District’s Board of Commissioners votes to approve consultant TranSystems’ business plan for developing the Redwood Marine Terminal, on Samoa, and if it votes to allow the district to contract with Goldman Sachs to swing the finances to make it all happen, the Port of Humboldt’s new path will be chosen.

Some say it would be a path to riches. Others, to ruin.

The Redwood Marine Terminal is an 80-acre elongation of post-industrial wasteland, left over from the timber heyday, bordering Humboldt Bay harbor on the Samoa Peninsula. The district obtained the property in two pieces, in 2004 and 2006, to further its objective to make the Port of Humboldt competitive in the Pacific Rim shipping trade. A harbor deepening project was completed in 2000 as part of that plan. Last year, with $200,000 from the Headwaters Fund, the district hired TranSystems to develop a business plan for the Redwood Marine Terminal.

The draft plan that TranSystems presented to a full house on June 26 recommends that the district first build and market a multipurpose berth for handling cargo ships, barges and cruise ships, as well as aquaculture and warehousing. That could take five years. Then, the district would pursue long-term development of the terminal, in conjunction with rehabilitation of the railroad, to entice a steady stream of container ships into port. That could take 10 years. The district would be the landlord port authority, and could turn over the “lease, design, construction and operation” of the long-term expansion to a private sector concessionaire. For the long-term expansion, the district would need to form a joint-concession with the North Coast Railroad Authority (which already has a long-term agreement with operator John Williams of NWP).

The plan suggests the district take on about $35 million in revenue bond debt to construct the multipurpose berth. According to one of TranSystems’ models, the debt could be paid back over five years through various pilotage, wharfage, passenger, storage and other fees, but would start seeing positive cash flow in the sixth year of its operation. Over 20 years of operation, the model says the district could generate a 14.3 percent internal rate of return. But it depends on how well the shipping and cruise businesses actually do — in a worst-case scenario, the debt would be hard to pay back.

The business plan suggests that the district court private investors to finance the major port infrastructure development. Enter Goldman Sachs — purportedly unsolicited – who, in May, offered to become the district’s chief financial advisor on the project. The firm would find a concessionaire, auction the port assets and help negotiate other transactions.

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