Inside Opinion

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Tag: NYK


Creso: Port’s losses on NYK deal are higher than advertised

Charles Creso, a candidate for the Tacoma Port Commission, is known for his attention to detail.

He emailed me today about the recently announced implosion of the port’s NYK terminal project. Raised some good questions:

In response to your article titled: Don’t just blame the recession for the port’s NYK bust, I offer the following observations for your consideration regarding the $146 million spent acquiring real estate for this project.

First, after speaking with a representative of the assessor’s office this morning, I ascertain that the negative impact to local taxing authorities (Tacoma‘s General Fund, Parks, emergency services, etc.) that results from moving these properties from private ownership to government ownership is roughly $1.3 million dollars per year.

By at least one forecast in the Tribune, postulating that this project may remain halted for some time and therefore not be complete until 2020, the loss of tax revenue from the time of purchase to project completion is roughly $17 million dollars. Not a small loss for local taxing authorities.

Second, there is a strong argument that in the haste to compile (acquire) targeted port properties and avoid, if possible, condemnation proceedings, Port Commissioners approved purchase prices far in excess of true, defendable market value.

The overage paid, by some arguments, may be as high, on average, as 20%. This may not seem like much, but 20% too much based on purchase prices totaling $146 million is approximately $24 million in overage (146 divided by 1.2, then calculating the difference). These mistakes add up fast.
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Don’t just blame the recession for the port’s NYK bust

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.
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Hold the celebration over Tacoma’s loss of the NYK terminal

This editorial will appear in tomorrow’s print edition.

Tim Farrell, executive director of the Port of Tacoma, was at the center of the Port of Tacoma’s attempt to create a massive terminal for NYK Line on the Blair Waterway. He naturally wants to put the collapse of that project in the best possible light.

But Farrell stretched things a bit Thursday when he talked of the “many wins that go with this decision.”

He does make one excellent point: Tacoma is far better off for securing NYK’s shipping business. Otherwise, the wins here consist mostly of things that could have turned out worse, but didn’t.

The port won’t be stuck spending $1.2 billion on a huge job that just a couple years ago was projected to cost $800 million. It won’t remain bound to its ambitious, overrun-ridden plan to overhaul the east side of the Blair Waterway, build new roads and railways, and create a 168-acre terminal for NYK that – by itself – was supposed to cost $300 million.

NYK – one of the world’s largest shipping lines – will follow through on its plans to move cargo through Tacoma, though its volume will be far less as a result of the recession.

Another could-have-been-worse win: NYK’s arrival will still generate cargo-handling jobs, though not nearly as many as originally expected.
But . . . please forgive us. If this turn of events is supposed to feel good, it’s the kind of good you feel after the pistol-whipping stops, the robbers are gone, and you realize you are still alive – however poorer.

The NYK setback carries some distinct non-wins. One is the disappearance of the 3,000 construction jobs the project was supposed to create. It’s a paper loss, in the sense that the jobs hadn’t materialized yet, but it’s still a big disappointment.
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