Pensacola, Florida
Thursday October 23rd 2014

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Rainmaker or Money Pit?

THE DEBATE OVER THE FUTURE OF THE PORT
by RICK OUTZEN

In recent weeks, the City of Pensacola has received two reports regarding the economic potential of the Port of Pensacola. Since 2005, the facility has lost nearly $6 million. Throughout that period, the Pensacola City Council has debated whether or not the port should move towards more mixed-uses and away from its traditional industrial base.

Industrial port supporters like Tom McCulley, president of the Great Circle Shipping Corporation, argue that the facility has tremendous potential but is handicapped because city officials won’t
market it properly. Port critics say the facility is too small to ever compete with larger ports along the Gulf Coast.

Mayor Ashton Hayward appointed in April the Port Advisory Group comprised of local business and policy leaders to advise him on future opportunities for the port and its property.

“Pensacola is fortunate to have a well-managed deepwater Port, but we need to increase our marketing efforts and utilize port space in the most effective way for the taxpayers and businesses that support it,” said Hayward at the time. “This advisory group will work with me to identify the best way to make our community’s waterfront and waterways a more profitable part of our city.”

The advisory group, which is chaired by John Myslak, will be issuing its recommendations to the mayor soon.

Meanwhile, behind-the-scenes battle lines are being drawn, and the winner of the debate could hinge on which of the two reports from economic and port experts recently circulating in city hall the mayor, city council and the public believe.

FLORIDA CHAMBER STUDY
On June 21, the Pensacola City Council sat through a Florida Chamber of Commerce presentation on ports, logistics and trade. The speakers, State Rep. Lake Ray (R-Jacksonville), Joshua Calandros of CSX Railroad and Frank Ryll and Carrie Blanchard of the Florida Chamber of Commerce, talked about the Florida Logistics Study, which was published in December 2010 by the Florida Chamber Foundation.

They were in Pensacola for the monthly meeting of the Pensacola Propeller Club. Industrial port supporters saw their visit as an opportunity to “go on the record” with the city council in their favor.
The Florida Chamber has long advocated investing more funds into the state’s 14 ports. Its study recommended that an increased focus in that area could lead to an additional 143,000 jobs in the state due to the state’s geographic position and the expansion of the Panama Canal within the next three years.

Florida Logistics Study identified seven action items:
• Support the leadership of the governor as Florida’s economic development officer and trade ambassador to market Florida as a trade and logistics hub.
• Expedite plans to create at least one seaport with 50 feet of channel depth and with an on-dock or near-dock rail connection by 2014, the scheduled completion of the Panama Canal expansion. The Port of Miami appears to be that port.
• Identify global trade and logistics as a statewide targeted industry and a focus area for Enterprise Florida, Workforce Florida, the Florida Department of Transportation and other state agencies.
• Continue efforts to double the value of Florida-origin exports over the next five years by pursuing opportunities to place Florida goods in the many containers and other vehicles which currently enter Florida full and leave empty.
• Identify investments needed to maintain and expand Miami International Airport’s role as a global hub, as well as the potential benefits of creating a second-tier air cargo hub elsewhere in Florida.
• Advance planning for an integrated statewide network of trade gateways, logistics centers and transportation corridors.
• Provide sufficient and reliable funding for future state investments in Florida’s trade, transportation and economic development systems.

While the report didn’t specifically discuss the Port of Pensacola, the speakers didn’t want to see the city diminish the facility. They argued that the port and logistics jobs are well-paying jobs, with the typical wage 29 percent higher at around $53,000 per year.

Rep. Ray, who Ryll introduced as the legislature’s expert on ports, talked about how the state’s funding for its ports has increased from $8 million to $117 million in the current budget. He said Florida hasn’t been stable because its economy has been too dependent on agriculture, tourism and real estate development.

Ray said that it had become obvious to him the ports and international trade were significant in stabilizing Florida’s economy. He asked the city officials to be put together a vision for the Port of Pensacola that could be part of the state’s master strategic plan.

Blanchard, who worked on the study, said the ports of Pensacola and Jacksonville could play big roles in shipping goods received from international businesses to domestic markets. She said that state incentives are available to help the port attract new business.

State Rep. Doug Broxson, (R-Milton), spoke in favor of the port. “We have a new sheriff in town. Gov. Scott is traveling and telling the whole world that we are a business-friendly state…We may have more business than we’ve ever had to consider.”

He called Pensacola the “belly button of what could be the central part of this country.”

OTHER EXPERTS WEIGH IN
Dr. Rick Harper of the University of West Florida Haas Center for Business Research and Economic Development sent the Port Advisory Group a report that challenged the Florida Chamber’s assessment of the prospects of the port.

At the request of the advisory committee chairman, Dr. Harper spoke in early June 2011 with several economists and economic developers around the state about the economic development prospects of the Port of Pensacola. Those experts included:

• Dr. Bob Cruz, Chief Economist with Miami-Dade County, expert in economic impact;
• Dr. Tony Villamil, Principal at WEG (Coral Gables) and former head of OTTED and the US BEA;
• Dr. Dale Brill, President of Florida Chamber Foundation (that funded the Florida Logistics Study); and
• Dr. Hank Fishkind, Principal at Fishkind Associates, Orlando.

These experts, except for Brill, didn’t see the potential to turn the Port into a moneymaking enterprise for the City.

“Apart from the issues of positive cash flow to the Port enterprise account, they do not see near- to medium-term potential for job creation associated with the current use of the property,” wrote Harper. “This is because most of the economic activity associated with the Port occurs away from the Port (i.e., where the chickens are produced, where the road builders spend their income), and locals that do use the Port for shipping have other alternatives that are unlikely to damage their business profitability.”

Fishkind’s instant response was for the city to focus on non-industrial marine development. Villamil didn’t think that growth in international trade and widening of the Panama Canal would benefit Port of Pensacola because much of the value will come from taking inbound or outbound containers of products, repackaging and handling them, which the port isn’t equipped to do. Price was the only way that Cruz believed the port could compete with its competitors.

Dale Brill was the most favorably inclined of the group to see economic potential in traditional seaport usage of the Port of Pensacola in coming decades. He termed a move to residential or mixed-use development of some or all of the Port property as “a wrong step towards the Old Florida,” and suggested that non-shipping uses would “lock Pensacola into an old economy model.”

WHAT’S NEXT
As this paper was going to print, the Port Advisory Group was meeting at city hall. It will complete its final report within the next few weeks. Earlier this year a political action committee, Relocate the Port, was formed with Earl Simmons as its chairman and $150 in the bank. There is a rumor that the Pensacola Port Users Association may be forming one also.

Mayor Hayward says that he hasn’t made a decision about the future of the Port, and it’s too early to tell where all the council members will fall on the issue. There is a possibility that a non-binding referendum might be placed before the voters in 2012.

Or Pensacola will simply continue to debate it.

rick@inweekly.net