Inside Opinion

What's on the minds of Tacoma News Tribune editorial writers

NOTICE: Inside Opinion has moved.

With the launch of our new website, we've moved Inside Opinion.
Visit the new section.

Don’t just blame the recession for the port’s NYK bust

Post by Patrick O'Callahan on Oct. 20, 2009 at 8:08 pm |
December 22, 2009 2:09 pm

This editorial will appear in tomorrow’s print edition.

Leaders of the Port of Tacoma, including Executive Director Tim Farrell, have blamed the global recession for the failure of the massive NYK terminal project. The story turns out to be far more complicated – and far less flattering for the port.

Kelly Kearsley’s postmortem in Sunday’s News Tribune details major miscalculations that threatened a fiasco even in the absence of the abrupt decline in maritime shipping.

The project – which included building a terminal for NYK Line and overhauling much of the east side of the Blair Waterway – was estimated at $800 million when announced in 2007. The estimates grew by 50 percent, to $1.2 billion, before the whole thing was called off.

The port wound up sinking $190 million into the deal. Most of that money wasn’t wasted: $146 million was spent on real estate that will probably come in handy at some point.

Much of the rest, including $38 million for design, planning and staff time, may have to be written off.

The miscalculations included highly optimistic assumptions about environmental cleanup and utility costs. Eventually, as cost projections rose and shipping fell, the port pushed ahead with a doomed project to avoid abrogating its contract with NYK. As port Commissioner Connie Bacon told Kearsley, “It was waiting to see who would blink first.”

Don Johnson, who ran the Simpson Tacoma Kraft Co. and joined the Port Commission after the NYK deal was made, told Kearsley the project wasn’t viable after its price escalated: “It destroyed returns on investment for the port.”

The port’s leadership can’t be blamed for not having a crystal ball to predict the economic bust. It can be blamed for gross overconfidence, if not hubris.

In retrospect, Farrell and the commission tried to tackle a grizzly bear and eat it in a single sitting. The project was much larger and tougher than anything the port had attempted before, and it was to be done in a hurry, by 2012.

Some of the planning was wildly optimistic. This included an assumption that the port could swiftly deal with Superfund-level toxic contamination on the Blair that the U.S. Environmental Protection Agency and state Department of Ecology had been struggling with for many years.

The Port Commission has decided to part company with Farrell in the wake of these mistakes and his failed, costly attempt to create a rail yard in Thurston County. We presume its members are taking a hard look at their own stewardship as well.

If Johnson’s assessment is right, it’s fortunate that the recession delivered the coup de grace to this project before the port dug itself in any deeper. But that’s another way of saying it took a global bust to rescue the Port of Tacoma from itself.

The News Tribune now uses Facebook commenting on selected blogs. See editor's column for more details. Commenters are expected to abide by terms of service for Facebook as well as commenting rules for Report violators to