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Port of Tacome Pier 4 Construction

Paying for US port infrastructure today and tomorrow

No group knows more about U.S. ports than the Washington, D.C.-based American Association of Port Authorities (AAPA). Perhaps the thorniest problem facing U.S. port authorities is how to pay for both the maintenance of existing infrastructure and the improvements to facilities both on the water and landside in the future. The following questions proffered by the AJOT were answered by the AAPA staff.

AJOT: In mid-May, the U.S. House of Representatives released the Energy & Water Development Appropriations bill for fiscal 2020. The bill would provide $7.355 billion in annual funding for the U.S. Army Corps of Engineers – slightly up on the $7 billion in appropriations in the FY 2019. Assuming the appropriation bill as it stands is approved (and how big a question is “approval” given the significant difference between the House bill and the Administration’s budget proposal), on what projects can the funds be spent? Are there any limitations on the use of funds for Corp “work”?

AAPA: Congress begins with the project-specific funding in the President’s budget request. They then provide additional programmatic funds that the Administration (Corps) distributes to specific projects as part of its ‘FY 2020 Work Plan’. This approach complies with the ‘earmarks ban’ which prevents Congress from providing funds to a specific navigation project. For example, the House bill has $600 million ‘Deep Draft Navigation’, which would be distributed by the Corps. (see USACE FY 2019 Work Plan)

The table lists the original amount from the President’s budget and the additional funds distributed from the Congressional programmatic funds. As for funding use limitations, the Appropriations bill normally states these funds cannot be used for a new program, project or activity.

AJOT: How does the funding of The Harbor Maintenance Trust Fund (HMT) get applied to projects? What percent of the HMT funding is generally used for projects? Could you explain which projects fit under the HMT funding mandate?

AAPA: The President’s budget request identifies the amount of HMT eligible work is proposed. The FY 2020 President’s budget requested $956 million for HMT work. The Corps issues a ‘Press Book’ with the HMT summary and project specific details. When Congress provides ‘programmatic funds’, they are distributed to specific projects and a new total for HMT work is determined.

Congress currently appropriates funds independent of HMT collections. In FY 2013 the appropriations were slightly over 50% of HMT revenues. The Water Resources Reform and Development Act, WRRDA 2014 established funding targets that would be used to achieve use of the full prior years HMT revenues by 2025. The FY 2020 House bill is estimated to fund 95% of the FY 2019 HMT revenues.

HMT-eligible work was defined in the Water Resources and Development Act of 1986. It is for operation and maintenance of coastal navigation projects. New construction, such as a channel deepening, is not an authorized use of HMT funds. Coastal includes Great Lakes and a few inland navigation projects that are not part of the defined Inland Waterways Trust Fund, IWTF.

AJOT: The AAPA has highlighted that $66 billion in Federal funding will be needed for port related infrastructure over the next decade, with $33.8 billion of that total on the waterside. Could you elaborate on how the figure was derived and what types of projects would fall within the framework of the landside/waterside funding estimates?

AAPA: The $33.8 billion was developed in 2016 and is the sum of 4 components. (1) Full HMT revenues over the next 10 years, $18.6 billion; (2) The unspent (2016) balance of HMT funds, $9 billion; (3) the Federal share of the Congressionally-authorized channel deepening projects authorized in WRRDA 2014 and WRDA 2016, $3.1 billion; and (4) anticipated cost to construct navigation channel improvements currently under study for Congressional authorization, $3.1 billion.

AJOT: Besides Federal appropriations, port project funding via Private-Public Partnerships and through State and local agencies (sometimes matching Federal grants) has been deployed on many recent port projects. Do you see more (possibly different) funding vehicles being deployed over the next decade to keep up with the needs of seaports?

AAPA: AAPA is supportive of the Federal government’s efforts in this area. The Government is exploring new approaches to funding its obligations for things like Federal navigation channels. It also looks for creative ways to fund maritime infrastructure investments, such as road and rail connectors that will grow the economy, increase jobs and improve the competitiveness of U.S. products in the global marketplace. AAPA supports increasing the federal gas tax to provide solvency for the highway trust fund (HTF). However, along with raising the gas tax, AAPA strongly supports raising the multimodal caps within the highway trust fund so that multimodal port projects will have resources to build connector projects. AAPA also supports some form of a way-bill fee on the domestic movement of cargo. (To see more about AAPA’s policy recommendations in this area, go to AAPA Freight and Land Infrastructure, AAPA Infrastructure Report and AAPA Water Resources)

AJOT: A recent report by the University of Rhode Island indicated that a two – meter sea level rise could require a $57 million - $78 million infrastructure investment by U.S. Ports.

What’s the AAPA’s take on the demands on U.S. port infrastructure that sea level rise will have in the future?

AAPA: Sea level rise certainly has the potential to impact the cost of coastal infrastructure projects, primarily because of the increased frequency and intensity of extreme weather events. While sea level rise itself may not demand dramatic changes to port infrastructure, even modest levels of sea level rise, coupled with dramatic storm surges and an increased likelihood of the weather events causing them, has the capacity to render current port infrastructure inadequate for resiliency purposes. The costs of hardening port infrastructure against such scenarios will vary from port to port. One challenge in trying to calculate costs for the entire port industry is that federal agencies are each independently creating their own predictions and planning scenarios about sea level rise and timelines. The federal government could assist ports in planning by agreeing to a consistent set of assumptions from agency to agency, which would allow for a more reliable cost estimate for the impacts of sea level rise on ports.

AJOT: Recently, the Port of Oakland stakeholders and the Oakland As baseball team have clashed on the proposed location of a new stadium and condo development adjacent to the box terminal. While this is one of the dramatic instances of urbanization colliding with port interests, it isn’t uncommon. How does a port remain competitive as working waterfront against the pressures of urbanization?

AAPA: The scenario you described above has played out in port cities many times over the years, with recent examples on the West Coast in Seattle, Redwood City and San Diego. In most instances, the impacted port has gone out to its community with a strategic communications campaign designed to help its residents better understand the purpose of the port and its various activities, as well as the tremendous economic and societal benefits the port provides in the way of jobs, business development, access to world markets (both in terms of cargo and passenger ships), and business taxes generated through its cargo, passenger and real estate activities. The importance of communication between a port and its region’s residents cannot be overemphasized, and that’s one reason that AAPA’s Public Relations Committee is among the largest, most active of the association’s 12 technical committees, providing port communications professionals opportunities to learn from and interact with their peers at several functions annually, as well as through a number of online formats.

AJOT: In this era of increasingly powerful ocean carrier alliances do you see more alliances between ports similar to the recent Tacoma/Seattle port alliance?

AAPA: While it’s very difficult to predict which, if any, ports may develop a governance structure similar to that of the Northwest Seaport Alliance, what we have seen in recent years are various forms of strategic partnerships between ports. Such partnerships can be mutually beneficial in that the partnering ports can leverage the customers, contacts and relationships of the other. Even though they may be competitors, neighboring ports may develop equipment sharing, land sharing and/or cooperative marketing programs to ensure that growing cargo volumes that one port may not be able to accommodate can be relocated to the partner port so their customers (and the related cargo) don’t end up moving to another port region hundreds of miles away. Another area where competing ports may have common interests and want to share resources is when they lie along the same waterway that needs to be dredged.

George Lauriat
George Lauriat

American Journal of Transportation

Editor in Chief

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