Port Faces $70M Shortfall on Projectby Libby Tucker
The Columbian, January 13, 2010
Two years into construction on its $137 million rail project, the Port of Vancouver faces a $70 million shortfall on the project, due for completion in 2017, port officials say.
So the port has hired a consulting firm to study its finances and devise "creative funding" options to complete the West Vancouver Freight Access project.
The three-member port commission on Tuesday voted to approve a $299,340 contract with Moffatt & Nichol, a maritime engineering consulting firm based in Long Beach, Calif.
"Before they launch into the next piece, it's really prudent of the port to do this analysis," said Tom McCollough, branch manager with Moffatt & Nichol in Seattle.
The port so far has largely relied on its reserves and bond capacity to pay for the first two phases of the project. Work on the $56 million first phase was completed in 2008 and construction started in November on the $18 million second phase, the Terminal 5 rail loop set to wrap up in May.
Finding funding to this point hasn't been a problem, said Maggie Smith, the port's director of finance and accounting. But the port will need to tap other sources, including private investors, state and federal grants and property sales, to fill the funding gap, she said. The impending shortfall is not a surprise, and the good news is it has seven years to find the money.
"We're being proactive," Smith said.
The consultants will report on four aspects of the project, including cost validation of the existing engineering and modeling; a commercial analysis based on current and future cargo volumes; a financial analysis; and a long-term financing model for capital projects.
The study, due in March, will help the port determine the viability of the project based on its current and future financial outlook.
"Whenever you're seeking capital at this level, it's essential to have a report like this," said Rick Cline, the port's procurement manager.
Now is the right time to undertake the study, says Cline, because much of the engineering work is complete and the firm's analysis won't rely on assumptions. The economic benefit analysis will also help the port obtain more financing, he said.
Port staff interviewed four firms last fall before settling on Moffatt & Nichol because of its substantial experience working with ports, including the Ports of Seattle, Tacoma and Los Angeles, said Todd Coleman, deputy executive director at the port.
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