A consultant told the Port St. Joe Port Authority board last week that the case for state investment in dredging the Port of Port St. Joe shipping channel was “positive.”
Rod Lewis, working with the Washington Economic Group, said a Return On Investment study commissioned by the Port Authority had resulted in numbers even more positive than he had estimated before undertaking the study.
The ROI study is considered critical for the second path – permitting is the first – the Port Authority is pursuing for dredging, namely the funding.
The ROI, once finalized after input from board members, would be offered in Tallahassee as state lawmakers consider this spring making the estimated $25 million investment in dredging.
“Is there some return on investment? That is what the state is interested in,” Lewis said.
At the bottom line, the study – and Lewis emphasized that it and the numbers contained therein is in draft form – estimates that the modernization and expansion of the Port of Port St. Joe would carry nearly $941 million in economic impacts over a decade, a return of $4.66 for every $1 of state investment.
Lewis noted that the study only factored in the two energy companies, Green Circle and Enova Energy, with signed Letters of Intent (LOI) with the St. Joe Company to ship wood pellets through the port for overseas markets.
“It’s a positive number,” Lewis said of the ROI estimates. “This is actually a very positive number. The state is looking at roughly $5 for every $1 of investment, so this is right there.”
The ROI aimed to quantify the output and revenue from an operational port and to do so, Lewis said, researchers looked at similar scenarios at other ports.
Specifically, it focused on the economic impacts of a $25 million dredging project combined with $5 million in state-funded improvements to the Genesee-Wyoming rail line; the impacts from the cargo loads shipped through the port from Green Circle and Enova; additional indirect impacts of new port operations and rail employment to haul the wood pellets.
The team examined operations and financial impacts at ports such as Panama City, Canaveral, Jacksonville, Olympia, WA, all the ports of Georgia, Everglades, Wilmington, DE as well as averages for all ports in the US.
Researchers quantified the impacts per 1,000 shipping ton; examining direct jobs generated, total jobs, user jobs as well as tax revenue and cargo loads.
Direct jobs, Lewis explained, are those jobs dependent on an operational port and which would relocate if the port was not operational.
User jobs are those created by factory operations tied to shipping through an operational port, such as at Green Circle and Enova.
According to the study, the port dredging would create 319 construction jobs – short-term employment – as soon as 2015, with 707 permanent jobs in place each year of the ensuing decade.
The labor income over that decade would top $216 million with total economic impacts, local, regional and statewide, of over $552 million.
“The impacts in year one are less than the impacts over 10 years,” Lewis said. “That is the meat of where this happens. You get a lot more of your impacts in the out years.”
Combined with the railway investment and factory (user) jobs, the numbers grow exponentially.
The total impacts of rail and port expansion, the increase in factory activity, all of it sustained over 10 years, would equate to 803 jobs, $334 million in wages/payroll, $491 million in gross domestic product and a total economic impact of $940.5 million.
“I did not expect going into this to see the numbers play out so positively,” Lewis said.
Eugene Raffield noted the port’s case is also bolstered by the fact that just 40 percent of the shipping channel will have to be dredged, meaning a project of lesser scope than is typical, and that there has already been over the past decade considerable investment in infrastructure at the port.
“That only makes the story that much stronger,” Lewis agreed. “You should capitalize on investments already made.”
And, Lewis noted, the ROI only quantifies the impacts of just two identified potential clients.
Those two companies, however, are not the only parties showing interest in the port, just the two that have formally signed agreements.
The Holland M. Ware Charitable Foundation has offered a letter of interest to ship aggregate and sand through the port, which would effectively double the volume estimated from Green Circle Energy and Ernova.
In addition, the Port Authority has seen a recent uptick in inquiries, with at least two potential clients to visit in the next few weeks, said board chairman Leonard Costin.
“You have a great case with the worst case,” Lewis said.
The key, Costin said, is making that case successfully to the Florida Legislature and Gov. Rick Scott, who has repeatedly told port officials that state investment hinges in large measure on a return.
Costin said the report showed the return was potentially game-changing.
“I am really encouraged,” he said. “We are moving in the right direction I think. We need to get this (study) to the powers that be. This is a very important step. This is one of the first hoops we have to jump through.”
The dredge permit application work continues apace of the original timetable, Costin said.
The goal is to have the application submitted by March with a permit hopefully in Port Authority hands by early summer. The hope is that state funding will be put in place for the coming fiscal year leading to dredging by the end of 2014 or early 2015.