After a long selection process, the Connecticut Port Authority unanimously approved an initial 20-year agreement Monday with Gateway Terminal New London LLC to operate the State Pier in New London, beginning May 1.
“This is a historic investment from a private sector partner in State Pier,” Scott Bates, chairman of the port authority, said Monday after the port authority's vote in Hartford. “This is key is for job creation and business growth. It allows businesses in Eastern Connecticut and across the state to have more efficient supply chain solutions and gives them even better access to global markets.”
In its search for an operator, Bates said the port authority contacted 65 firms worldwide and 14 signed non-disclosure agreements to receive additional information. By the Aug. 10 deadline, the port authority had received six proposals and chose three firms for the final evaluation phase: Gateway; Worldwide Terminals LLC ; and Logistec, the current State Pier operator.
Bates said the authority sought an operator with a strong record of success that would invest in State Pier and generate more business.
Gateway, a privately owned company founded in 1985, is the largest terminal operator in Connecticut with five terminals on about 75 acres in and around the Port of New Haven. Its annual revenues are more than $1 billion.
Under the contract, Gateway will pay the port authority $500,000 annually, with the payment increasing by $250,000 every five years. The port authority will also receive 7 percent of Gateway’s gross revenues at State Pier, with a minimum annual guarantee of $500,000 that can increase every five years based on Gateway’s percentage increase in gross revenues. Gateway will also pay an annual wharfage and dockage fee equaling 50 percent of all State Pier wharfage and dockage user fees. Under the agreement, Gateway also has an option at the end of the 20-year term to extend for two 10-year periods.
Bates said the terms of the agreement will provide the port authority with a substantial increase in revenue.
“Our main asset is State Pier and we wanted to get the best deal possible. As it stands under this deal, our revenue will be close to double in the near term and grow exponentially over the course of the agreement,” he said. “But, most important of all, is having a partner that we can think strategically with to bring business to State Pier and to Eastern Connecticut.”
Gateway is planning a minimum of $30 million in capital improvements at State Pier during the duration of the agreement.
“A meaningful percentage of the $30 million will be in the form of equipment,” said Matt Satnick, co-CEO of Enstructure in Wellesley, Mass., Gateway’s financial partner. The other components will be in maintenance, which is an investment directly into the pier and improving the pier, and growth opportunities.”
Satnick said the companies consider New London as a potential hub for offshore wind energy projects. The state has said it will spend $15 million on improvements that would allow developers to use the pier to deploy equipment for the construction of wind turbines off the coasts of Rhode Island, Massachusetts, New York and New Jersey.
State Pier currently receives shipments of mostly steel, lumber, and salt.
The new contract will create construction job opportunities as well as providing economic opportunities to businesses by providing more efficient supply chain solutions and access to markets, Bates said.
“Our challenge in our section the state, speaking as a Southeastern Connecticut native, is we’ve been in a 'cul-de-sac.' We’ve been cut off from efficient, effective transportation and access to markets and this helps leap us into the network that can move people and goods more effectively,” he said.