Monday, March 9, 2009

Centerpiece of $700 million Land for inland port would be given by Jafza

By DAN McCUE, Special to The T&D

Concerned that far more than a soured U.S. economy is eroding the state's position in the global supply chain, the Orangeburg County Development Commission is promoting a $700 million plan to create a "global logistics corridor" extending from the Port of Charleston to Columbia.

The proposal, outlined in a white paper distributed to the state's congressional delegation and the White House Office of Intergovernmental Affairs during a two-day trip to Washington in February, calls for the creation of a new freight rail shuttle service between Charleston and Orangeburg. Containers would then flow in all directions from a planned 61-acre intermodal yard.

Gregg Robinson, the OCDC executive director, said while much of the plan would fall outside the parameters of project deadlines of the $787 billion federal economic stimulus package, the stimulus should "free up some of the normal or traditional sources of funding, such as the federal highway fund, over the next several years."

That said, Robinson made plain that he sees the plan as part of the economic recovery process.

"What we're putting out there is a regional solution to a statewide problem -- a plan that will create hundreds of construction jobs in the near term and thousands of sustainable jobs over the next 20 years," he said.

"My philosophy is, build the infrastructure, add the value businesses need to be successful, and then get out of the way and let the private sector do its thing," Robinson said.

Politicians pushing

U.S. Sen. Lindsey Graham described the proposal as "one of the most transformational projects in South Carolina by creating thousands of new jobs and generating tens of millions of dollars in revenue at the local, state and federal level."

"I have been pleased to work with the Orangeburg County Development Commission in their effort to make the corridor a reality," Graham said, vowing to work with the commission, state leaders and their partners in moving the global logistics corridor forward."

U.S. House Majority Whip James Clyburn, who, like Graham, has been securing funds for infrastructure projects in the area since Jafza International purchased 1,324 acres in South Carolina last year, said he reiterated his support for the Global Logistics Triangle and the corridor now being promoted, during his meeting with Robinson and other Orangeburg County officials in Washington.

Clyburn dedicated $4.6 million in the House-passed omnibus appropriations bill for improvements to the I-95/U.S. 301 interchange adjacent to the site and $10 million for the Lake Marion Regional Water Agency, which will serve it.

He did so, he said, " to contribute to the success of this tremendous economic development initiative, and I will continue to support this project with available federal funds as they are needed."

Clyburn also inserted language into the federal economic stimulus package -- known formally as the American Recovery and Redevelopment Act -- that directs 10 percent of rural development funding in that law to persistent poverty counties.

The law defines "persistent poverty" as a county having a poverty level of 20 percent or more over the last 30 years. Orangeburg County qualifies as one of those counties.

"These funds could be helpful to the county in its efforts to develop the Global Logistics Triangle and help achieve the goal of job creation in the region," Clyburn said.

Joel Sawyer, a spokesman for Gov. Mark Sanford, said the proposal "represents a real opportunity for our state, of which we're still learning the details. We'll be following all of the various moving parts of this project as it goes forward."

The corridor is an extension, rather than a replacement of, the Global Logistics Triangle concept the OCDC has been employing as an economic development strategy for the past eight years.

At its heart will be a logistics and distribution park for the processing and distribution of both import and export cargo.

"The way we see it, the park will be a centralized, regional facility where multiple distribution centers will be located, along with ancillary businesses related to the movement of import and export cargo, such a trucking firms and logistics providers," Robinson said.

The Jafza link

The linchpin of the plan is Jafza South Carolina LLC, which has already invested more than $22 million in the development near the convergence of Interstate 95, Interstate 26 and U.S. 301.

The Dubai-based company has provisionally agreed to donate 61 acres of its site, as well as public access to all roadways leading to and from its property, for the creation of an intermodal hub.

The Jafza project, which will be developed in five phases through 2032, is currently undergoing zoning approval for its entire 1,300-acre parcel. The first phase of the project, expected to get under way later this year, will focus on light manufacturing and assembly-type businesses.

Robinson described the creation of the intermodal hub as a public-private partnership, with some of the players known -- Jafza, Orangeburg County, among them -- and others to be determined.

He said the creation of a shuttle service between the Port of Charleston and the intermodal hub is essential to the commercial viability of the global logistics triangle, but will also help to shift trucks away from the congested Charleston metropolitan area.

"The model we're pointing to in discussing the concept is Front Royal, an inland port created by the Virginia Port Authority in 1989 to compete with the Port of Baltimore in serving the lucrative Ohio Valley market," Robinson said.

Prior to the economic slowdown, the intermodal yard in Virginia was handling 30,000 cargo containers a year, reducing the number of trucks that had been contributing to congestion on nearby interstates, and serving to boost economic development in surrounding counties.

"We see this as adding value not just for one county, but for all of them, because there isn't a county in this state that is not in some way touched by the Port of Charleston," Robinson said.

From Orangeburg, some cargo would remain on rail, while the rest would leave the site by truck. The long-term plan calls for time-sensitive shipments to be directed to Columbia Metropolitan Airport.

"This really is about though-put," Robinson said. "We have an amazingly efficient port. In terms of container moves, it is one of the most efficient in the world.

"The creation of the intermodal facility and shuttle train system will only increase the volume of containers it can handle," he said.

Columbia airport

Michael Flack, executive director of Columbia Metropolitan Airport, said he didn't know anything about the proposal but said the airport would embrace the opportunity to be included in such a corridor.

"Certainly we would be happy to be part of that effort as it ties in to our air cargo operations," Flack said. "Our proximity to Orangeburg and Interstate 26 makes that an easy proposition.

"At the same time, both UPS and FedEx have good operations at this airport, so I would think that their participation would have to be helpful," he said.

Robinson deflected a suggestion that the proposal might be seen as favoring one developer -- Jafza -- over the Rockefeller Group, Hillwood Development and others developing distribution centers along the Interstate 26 corridor near Jedburg.

"I think this proposal will only enhance the success of their projects," he said. "Having more containers coming through the Port of Charleston rather than somewhere else is good for everybody."

Robinson also asserted that the plan would benefit truckers by moving their activities inland, and away from the overburdened roads around Charleston.

"There's an awful lot of backlash and conflict that they wouldn't have further inland, and they'd also be the beneficiaries of higher cargo volumes," he said.

Robinson said based on numerous studies conducted over the past five years, the corridor project would raise personal income in Orangeburg County by $130 million and generate an additional $382 million in additional business activity, while creating 3,765 jobs.

He said the project would also generate $450 million in additional business activity in the rest of the state, amounting to a $164 million increase in personal income in the state's other 45 counties, with the creation of an additional 5,294 jobs.

Robinson said if the strategy is implemented, by 2020, the county would be receiving an additional $12 million in tax revenue from activities directly related to the corridor, with the state receiving another $22.5 million, and the federal government approximately $54 million.

Rail connection

But Robinson readily conceded the plan is not without challenges and that even with state and federal support, some heavy lifting needs to be done -- particularly in regard to the rail connection between the Port of Charleston and the proposed intermodal site.

To begin with, he said, the efficiency of the shuttle service would be dependent on there being "dual, competitive rail access" to the port's terminals, including the new, $600 million facility being built at the former Charleston Navy base,

A memorandum of understanding between the S.C. State Ports Authority and the city of North Charleston currently prohibits cargo-laden trains from leaving the north side of the new facility, where the Norfolk Southern railroad's tracks enter the Navy base. CSX Transportation has rail access from the south side of the property.

The OCDC plan calls for the S.C. Public Railways to run the shuttle train between the port and Orangeburg, after acquiring sections of rail near Creston and Pregnall currently belonging to the respective railroads, and getting permission to operate over existing CSX and Norfolk Southern tracks between Pregnall and the terminals.

"In our view, S.C. Public railways is the entity best positioned to provide fair, equitable, efficient and competitive rail shuttle service under our proposal," Robinson said.

S.C. Public Railways, a division of the State Department of Commerce, is in effect a holding company that owns and operates three railroad companies; two terminal yard-switching operations within Port of Charleston facilities, and a short line railroad in Berkeley County that serves BP Chemicals and Nucor Steel.

S.C. Public Railways President Jeff McWhorter confirmed that "very preliminary" discussions with the two railroads have occurred, but declined to discuss the specifics of those talks.

"There are some real benefits to the rail component of the proposal, a big one being the better management of congestion on Interstate 26," he said. "Another benefit would be cleaner area around Charleston, while also increasing capacity for the ports."

McWhorter, who accompanied Robinson to Washington, said he came away from the series of meetings hopeful that the project could receive funding through the federal stimulus package.

"Something we did learn is that the whole idea of projects having to be shovel ready for the receipt of funding is something that will be continuously evaluated," he said.

Ports Authority

And then, there's the matter of the current state of the Ports Authority itself, the subject of three bills before the Legislature that could result in major changes to its operating structure.

Senate Bill 392 and House Bill 3128 would dissolve the ports authority board of directors and invest power in a new director to be appointed by the governor. Senate Bill 351, on the other hand, would retain the board structure but require members to have extensive business experience relevant to running the port.

The bill would also require the ports authority to draft long-range strategic and financing plans, and would require that whenever the new executive director of the ports authority is hired, their duties be explicitly spelled out.

State Sen. Larry Grooms, R-Berkeley, a sponsor of Senate Bill 351, said while aspects of the global logistics corridor proposal are laudable, "I think we have to determine precisely what kind of port we're going to have before we talk about spending money on infrastructure.

"We have a ports authority without an executive director, and a debate over the kind of ports authority board we have or even if we have one at all; there are still a lot of questions to be answered," he said.

But as he assessed the port, Grooms appeared to be in accord with key elements of the OCDC proposal, namely the rail connection to the north side of the Navy Base terminal.

Grooms described the MOU between the Ports Authority and the city of North Charleston as a "flaw in strategic vision."

"On a day-to-day basis, operationally, no one can touch us," he said. "But it was certainly short-sighted to cut off Norfolk Southern's access to the new terminal simply for the sake of a deal with North Charleston to ease resistance to the new terminal."

Offering his own assessment of the port, Robinson said, "Obviously, right now we are in a down time in terms of global trade, but that's precisely what makes now the time to act: We have time to establish a world-class and efficient infrastructure before the high-volume trade activity we've been seeing in recent years resumes, which everyone agrees it will."

Dan McCue is a journalist based in Charleston.

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