New London – It was nearly a year ago that New London Mayor Michael Passero had expressed cautious optimism that the city was in line to reap some of the benefits of the planned overhaul of its port.
After months of negotiations, The Connecticut Port Authority had agreed to a $157 million harbor redevelopment plan that would remake State Pier, thanks in large part to a partnership between the state and the joint venture of Danish wind company Ørsted and energy company Eversource.
The deal would transform the port into a modern facility with increased capabilities and see it come alive with activity from the offshore wind industry for at least 10 years. The state, meanwhile, would come closer to meeting its renewable energy goals.
Passero was at the time hoping for an average of $1.3 million a year for city coffers while the wind industry was operating at the new facility.
Plans are moving forward for the redevelopment of the pier but Passero’s optimism has dwindled as negotiations for the host community agreement have stalled. His voice of disapproval has grown louder, as evidenced by his address to the CPA at its annual meeting in December:
“The CPA has turned over an amazing asset in the city of New London to two huge for-profit corporations and given them a free pass from their property tax obligation to the city,” he said. “You are in fact acting like a colonial power, stealing the assets of the City of New London to build your own revenues and to fill the corporate pockets of two huge corporations, one which pays its CEO an obscene $20 million a year.”
He repeats and expounds on those comments in a Sunday op-ed in The Day.
The city is now gearing up to oppose the redevelopment plan on several fronts, perhaps most importantly by planning roadblocks to the CPA’s permit application with the state Department of Energy and Environmental Protection. Permits from the U.S. Army Corps of Engineers and DEEP are crucial to making the State Pier transformation a reality. DEEP is expected to announce a date for a public hearing in the coming weeks.
Negotiations for a host community agreement with Ørsted and Eversource have been stalled since March, Passero said. The transfer of State Pier property to the Connecticut Port Authority has left the city without a means to collect the $125,000 a year it was getting through a Payment in Lieu of Taxes, or PILOT, program when it was owned by the state Department of Transportation.
Passero has loudly voiced his disapproval of the Connecticut Port Authority, plagued with internal issues over the past two years, for its lack of transparency and what he has called a string of broken promises, which include a seat on the port authority’s board. Local legislators have vowed to support securing that seat.
With the redevelopment, Passero said he sees an opportunity for what he has called “just compensation” after years of neglect to his distressed municipality.
“The city’s hope and expectation was that the port authority would begin to remedy the historic inequality of grossly inadequate compensation to the city for lost property tax revenue. This has not happened,” Passero said at the CPA’s annual meeting last month.
State Pier is operated by Gateway, the state’s largest port terminal operator. The agreement with the state, Gateway, the CPA and Ørsted/Eversource is for a sublease of State Pier for a minimum of 10 years for use of the facility for pre-assembly of wind turbine generators in support of offshore wind projects. Ørsted and Eversource have promised $77.5 million toward the redevelopment and $20 million in rent over the 10-year period.
Ørsted has not commented on the stalled negotiations for a host community agreement with New London. Passero previously has said the two sides had agreed in principle to yearly minimum payments to the city – $750,000 per year for the first two years of the agreement to cover a prior commitment and $500,000 per year in subsequent years.
What Ørsted/Eversource has not agreed to is compensating the city for lost PILOT funds, currently at $125,000 annually. Passero argues that figure should increase as the value of State Pier increases.
As part of the CPA agreement, the city will additionally see $125,000 per year – a minimum of $50,000 per year from port revenues and another $75,000 to cover impact fees for the city.
Passero, in a recent interview, referred to the funds as “crumbs off the table.”
The CPA has said the property is not subject to PILOT funding, though David Kooris, chairman of the CPA board, said it was unclear to him whether the state would immediately stop its payments to the city.
“On the one hand it’s technically true the property is no longer subject to PILOT funds. That being said, I don’t see the legislature targeting New London and reducing the set PILOT amount because of the transfer of property” to the CPA, Kooris said.
A spokesman with the state Office of Policy and Management was not immediately available to comment on the status of PILOT funding.
Kooris said the CPA has supported Passero’s bid to have a seat on the CPA board and also has been involved in ongoing discussions with various state agencies to support New London’s position.
Max Reiss, a director of communication for Gov. Ned Lamont, said “the Office of the Governor, Office of Policy and Management, and the Department of Economic and Community Development have remained actively engaged in negotiations to ensure the City of New London is compensated for (its) vital role in ensuring this historic, once in a generation economic development opportunity for the region, is successful.”
“This project will bring a significant number of direct and indirect jobs to the region, which will benefit New London and the surrounding communities, and the Lamont Administration agrees, that the City of New London is entitled to adequate support from the state, and beyond,” Reiss said.
Kooris said the city’s recent opposition to the redevelopment of the pier is disappointing, given that the partnership will benefit the region for generations.
“New London is in a position to capitalize on the impacts,” he said. “I don’t understand what the alternative is. If we don’t invest in the facility there continues to be a meager amount of cargo coming through and, without the heavier load bearing capacity, there are only certain things that can move through that facility.”
Displacement of current State Pier tenants – longshoremen, a road salt distributor and commercial fishermen, among others – is another issue that continues to be debated. There remains opposition to giving exclusive use of the pier to the wind industry and excluding regular cargo.
Tenants at State Pier have to be moved to accommodate the massive construction project, which includes filling in between the two existing piers. But the CPA has argued that the end result is a facility better able to accommodate more activity in the future.
“We have been able to attract a marquee entity to be a customer at the facility,” Kooris said. “More jobs will flow through the port. I would love to see everyone spend their time and energy trying to figure out what aspect of the supply chain we can be attracting to New London. I’d like to think that what we’re doing for the port is making it one step in making things better for the city.”
Passero said the city remains in a difficult situation. “We’ve heard nothing from (Ørsted/Eversource) since March 13. The state seems to have empowered them to just not have to meet their obligations. Which means they don’t feel like they owe any obligations to the city. The project’s going forward to their benefit and with no consideration to the city.”
“Every dollar they are exempt is a dollar we’ve subsidized their profits,” he said of the lack of property tax obligations. “As far as I’m concerned the state is doing the bidding of these two private corporations. They’re supposed to be sticking up for the city of New London.”
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