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Oct 16, 2005   •   Beaufort, South Carolina 
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Authority must work with private sector
Published Sun, Oct 16, 2005

As South Carolina begins the process of steering its economy into the 21st century, maximizing our state's competitive advantages must become more of a priority to those in government. Too often, "politics as usual" and power struggles within the good old boy network trump the fundamental value of ideas -- preventing our state from moving forward and realizing its full economic development potential. As a result, South Carolina's unemployment rate remains high, our income levels remain low and an increasingly bureaucratic, fragmented and inefficient state government remains part of the problem, not part of the solution.

The global, Web-based economy is advancing at lighting speed, but the South Carolina Ports Authority and the political establishment that controls it is limping along like an old Charles Towne carriage horse with its blinders on.

A perfect example of the ignorance -- and at times arrogance -- of this failed status quo is the S.C. State Ports Authority. Despite huge increases in port traffic over the past decade and an expanding influx of new Asian shipping business to the South Atlantic region, the SPA has spent the past decade fumbling around with various expansion plans in Charleston, all while ignoring nearly $500 million in private-sector funding for the best remaining port site on the Eastern Seaboard -- South Carolina's own Jasper County site on the Savannah River. The result? The lion's share of the new Asian

business is being captured by the Port of Savannah, a coup that recently put it on the front page of The Wall Street Journal.

Recently, the State Ports Authority further disconnected itself from working families and taxpayers by voting to expressly forbid public-private partnerships in the form of landlord-tenant agreements -- effectively cutting off a critical source of private capital investment that's utilized at 45 of the world's 50 largest ports, including 13 of the 15 largest U.S. ports. Essentially, a landlord-tenant model enables private companies to build and operate terminals with private money, usually paying a lease to the government until such time as the facility is turned over to the state.

Yet, while states like Alabama, Florida, Texas and Virginia are using these win-win agreements to boost jobs and their port capacity and to capture new business, the S.C. State Ports Authority is telling private investors to take their money someplace else.

Unfortunately for our state's economy, that's exactly what they're doing.

For example, Maersk Sealand, the world's largest shipping company, recently entered into a $450 million landlord-tenant agreement to build a new terminal in Portsmouth, Va. Unlike the S.C. State Ports Authority, states utilizing landlord-tenant deals understand that taxpayer dollars are limited, the private sector moves faster than government and competition for business is brutal. They know that standing still in this business climate is deadly and that once missed, most opportunities don't come around a second time.

Despite the State Ports Authority's recent promises to the contrary, the fact is that a port in Jasper cannot be built without substantially involving private capital in a way that only landlord-tenant models permit. Without private capital, the Ports Authority and S.C. taxpayers simply can't afford the bill. The Ports Authority can't borrow the $600 million needed to add three new berths in Charleston, let alone the $600 million needed to build the first phase of a port in Jasper.

The Ports Authority's defense of its "our way or the highway" approach has been to raise the specter of unions -- an argument correctly referred to as "nonsense" by University of Chicago economist Sam Peltzman. Apparently forgetting the fact that 1,400 unionized employees already work at the Port of Charleston (compared with just 400 state employees), the Ports Authority board in a 5-3 vote warned ominously that a public-private Jasper port would "pave the way for further unionization in South Carolina."

This is simply a scare tactic to distract you from the real issue of accepting some private control in exchange for private investment. More importantly, it stands in stark contrast to the statesmen-like actions pursued by officials in other states. Listen to Joe Dorto, president of Virginia International Terminals, commenting on the $450 million agreement his state reached with Maersk Sealand: "It's capacity we need. We don't have the money to buy additional property or expand beyond where we are now, but this is all being done with private money."

The bottom line is that the next decade and beyond promises significant growth in the shipping business, and our state is either going to get in the game or sit by and watch other ports willing to engage public-private partnerships generate jobs and prosperity for their citizens. South Carolina needs real jobs for working families right now. Leaders should be looking for ways to expand our competitive advantages.

Sadly, it seems the State Ports Authority is more interested in protecting its turf than agreeing to public-private partnerships that would boost our capacity, create new jobs and stimulate the economy of this state in the process. If you want better jobs and better schools, call your senators and representatives today and ask them to take the lead in bringing a free market port to South Carolina.

Richard H. "Dick" Stewart is a Beaufort businessman, a board member of the Greater Beaufort-Hilton Head Economic Partnership, past chairman of the Greater Beaufort Chamber of Commerce, chair of the United Way of Beaufort County and a member of the Beaufort County Council. His e-mail address is .
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