Cruise Line Foes Unrealistic in Demands

April 18, 2011

Investigative Reports

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The NerveBy Warwick Jones
Citizen Reporter

 

Some on the Charleston Peninsula have a visceral hatred of cruise ships and their passengers, though this hatred has taken some time to foment.

Except for the Coastal Conservation League and some of its supporters, the opposition to cruise ship visits was largely latent at the time when Charleston City Council unanimously passed a resolution endorsing the Union Pier Plan and encouraging cruise ships to use the city as an embarkation point.

That resolution committed the State Ports Authority (SPA) to limit ship visits to an average of two a week and vessel size to a capacity of about 3,500 passengers.

Initially, the opposition to cruise ships centered on the agreement between the city and the SPA. The Charlestowne Neighborhood Association and the Historic Ansonborough Neighborhood Association supported the Union Pier Plan – to build a new terminal to serve cruise ships, provide parking for passengers’ cars, and to develop the remainder.

The associations argued that the agreement was not legally binding in relation to the frequency of visits and the size of cruise ship; they wanted something that was. The city said it believed that the resolution was binding but besides, state law did not allow the city any control over cruise ship visits and their size.

Recently the two Peninsula associations have hardened and extended their opposition. They continue to seek what they consider a legally binding agreement but want to relocate the cruise ship terminal, and want the SPA to sell the whole of Union Pier to a private developer.

Their demands can be seen in the petition drawn up by Charlestowne members Randy Pelzer and Steven Gates, and endorsed by their association and the Historic Ansonborough Neighborhood Association.

The petitioners suggest the cruise ship terminal be located at the northern end of the Columbus Street. The SPA tells us that the site is unsuitable for a number of reasons, including that it’s too far from the historic district and that there are too many difficulties with transport issues relating to cruise ship passengers and rail freight passing in front of the terminal from docks to the south.

But more importantly, breakbulk cargo operations are growing and the State Ports Authority needs the entire site to service customers – the most important of which is BMW.

The wording of the petition indicates that it does not matter to its authors if the Columbus Street terminal is unsuitable, just move it somewhere, anywhere!

Sure, says the SPA, if we were to move it to Columbus Street, then there will be no Union Pier development. We will need the pier for cargo operations.

It is presumed that the neighborhood associations think that the State Ports Authority is bluffing. But if one recalls when the SPA began discussing the development of the North Charleston Container Terminal in 2007 it ran into opposition from neighborhoods over truck access.

It referred to a study undertaken by the Army Corps of Engineers, the conclusion of which was that there were no other undeveloped sites in Charleston Harbor and its reaches that were suitable for a terminal.

So assuming the Corps is correct in its assessment, the refusal of the State Ports Authority to relocate the Cruise terminal somewhere else and the refusal to sell Union Pier in its entirety have merit.

The SPA does not have any opportunity to expand beyond its present and planned terminals.

To give up all of Union Pier to development and carve off part of the Columbus Street terminal for cruise ships would likely cut into its ability to provide port services in the longer term.

The authors of the petition stated at the HANA meeting that the State Ports Authority had plenty of spare capacity, particularly with the fall off in volume in recent years.

It did not need Union Pier, they claim. Indeed, the North Charleston Container Terminal would be ready by 2018 and alleviate any congestion. However, that appears to be a simplistic assumption.

It would appear the petition’s authors have underestimated the importance of Charleston. They are right, though – volumes through the port have fallen in recent years.

The fall in recent years reflects a number of factors, not least of all the recession. But as the State Ports Authority pointed out in its official statement regarding a $170 million bond issue late last year, it also was focusing on European trade, which failed to grow.

Consequently it lost out to Savannah and some other Eastern ports. See a  comparis on here.

Another reason for Charleston’s poor performance has been the fact that the Panama Canal cannot yet accommodate the large Panamax vessels. Consequently, a lot of cargo from Asia destined for the East coast is landed at West Coast ports and railed or trucked across the nation.

When the widening of the Panama Canal is completed in 2014, these ships will be able to travel east and Charleston’s traffic should be boosted.

By how much will depend on when Charleston’s Harbor is deepened to 50 feet from 45 feet to fully accommodate the larger vessels. So the future is promising, perhaps very promising.

It is important to note that the Charleston Harbor has an advantage over all of the Southeastern ports. It is the easiest to deepen to accommodate the larger ships.

Savannah’s harbor can be deepened but at a considerably greater cost, and apparently with some environmental damage. Considering its potential greater importance, the SPA would be remiss to give up any significant part of its port area in Charleston.

This brings us to the petitioners’ request with which many have the greatest issue; they ask that the whole of the 71-acre Union Pier property be sold to a private developer and the proceeds used by the state to balance its budget.

Although the figure is not mentioned in the petition, the authors at the HANA meeting and elsewhere have speculated a worth of $300 million or more.

About half of the 12 acre Ansonborough Field site was sold to a development group in 2008 for $16 million – roughly $2.7 million an acre. That was when things were booming and we concede the price may have been even higher if a commitment to some affordable housing were unnecessary.

The original project is now dead, though some development is still slated to occur. Would a private developer pay today $300 million, or more than $4 million an acre for the Union Pier site, admittedly with some water frontage? Arguable.

And would the developer pay $300 million if half the land were to be set aside for parks and buffers? The State Ports Authority has not committed to any development plan as yet. But it is committed to the creation of parks and green space.

There is no reason to believe that a private developer would be more sympathetic to the ambience of downtown Charleston than the SPA.

Indeed, the State Ports Authority is working with the city and the Historic Charleston Foundation, which have formed a citizens’ Task Force to study the problems and issues of the Union Pier and other developments.

And whatever the amount raised by the sale or lease of property now comprising Union Pier, little or nothing is likely to find its way into state coffers. The property and funds belong to the SPA, and the State Ports Authority needs the money.

Indeed, to take away the proceeds from the sale of any part of Union Pier could invite legal action from a bond holder. After all, the property is part of the assets pledged as collateral.

The SPA’s profits and cash flow have been low in recent years, as these figures demonstrate. And it needs to find about $1.3 billion over the next 10 years to finance its capital programs. Profits and cash flow will have to improve dramatically in future to fund its plans.