It’s laudable that South Carolina lawmakers are scrutinizing the State Ports Authority’s request to borrow up to $550 million to make upgrades to the Hugh K. Leatherman Terminal taking shape along North Charleston’s waterfront. As one of the state’s largest public investments in recent years, it merits close examination.
We believe that lawmakers and Gov. Henry McMaster ultimately should conclude that it’s a good deal for the state, assuming the port works out its pending union-labor dispute. Not only because the borrowing would help the Leatherman Terminal fulfill its potential to handle cargo but also because it would help minimize the impact on our region’s air quality and highways, particularly Interstate 526 between North Charleston and Mount Pleasant.
Most of the money, $400 million, would complete a rail yard covering 120 acres on the former Navy base, just north of the terminal. The Ports Authority would operate the yard, which would be owned by Palmetto Railways. CSX Corp. and Norfolk Southern trains would haul cargo to and from the new nearby terminal.
Another $150 million would pay for a barge program to move shipping containers by water between the SPA’s Wando Welch Terminal in Mount Pleasant and the Leatherman Terminal. The containers could then be taken to and from the rail yard via private road. This piece also includes a 700-foot extension of the wharf at Wando Welch and a second wharf at the Leatherman site.
Jim Newsome, president and CEO of the State Ports Authority, calls the projects crucial for the Port of Charleston’s continued competitiveness, which in turn helps the state’s economy succeed. “We are the last major port on the East Coast to have near-dock rail,” he said.
Mr. Newsome’s business acumen is highly regarded, but we’re pleased to see lawmakers not simply take his word for all this. The Senate’s scrutiny of the deal already has led to one important change: the unraveling of the awkward shotgun marriage between South Carolina’s and Georgia’s ports authorities on developing a new container terminal in Jasper County, across from the Port of Savannah. Jasper officials now are free to work directly with the Georgia Ports Authority on that, which may or may not bear fruit.
The Senate passed S.491 Thursday authorizing the borrowing, and House members will take it up soon. Meanwhile, Gov. McMaster touted the “world-class Intermodal Container Transfer facility” in his State of the State speech. Although he has not specified whether he supports borrowing to support it, he noted that, “Once completed, cargo business will skyrocket with new and expanded rail access, traffic congestion will be eased in the Lowcountry and new jobs and investment will flow across the state.”
The success of South Carolina’s ports during the past century stems in part from the state’s willingness to make significant investments in modernizing the waterfront infrastructure. And the Ports Authority’s continued success likely will require more of the same. It’s worth noting that the state already has a lot of skin in this game. The $550 million would come on top of $1.7 billion in Leatherman Terminal construction and Wando upgrades, both financed largely by the port; a $558 million harbor deepening project; and a recently completed $220 million highway spur directly linking the Leatherman Terminal with Interstate 26. And that doesn’t include the millions of dollars already spent to secure space for the rail yard and get a green light from the Federal Railroad Administration and the Army Corps of Engineers.
The state has a healthy bond rating, the capacity to borrow more and a history of issuing similar bonds to provide incentives for major economic development projects, including Boeing Co. and Volvo Cars.
Perhaps the greatest question should involve the timing of the borrowing. Lawmakers may consider giving their approval to the borrowing on the condition that final approval, from the Joint Bond Review Committee, would not take place until the Ports Authority resolves its labor question over whether unionized workers or state workers will operate Leatherman’s ship-to-shore cranes and other lift machines.
We hope the Ports Authority gets the green light soon from the National Labor Relations Board to use its “hybrid model” — union members moving cargo alongside nonunion crane operators — at the Leatherman Terminal. Until it does, however, the competitiveness of that new terminal will be in doubt. As will the wisdom of investing $550 million more there.