from Crain’s Cleveland Business July 25, 2011
Port seeks to become steward of river, lake
By JAY MILLER
4:30 am, July 25, 2011
A second regional government is going through a makeover. Just as Cuyahoga County government has been remaking itself under new County Executive Ed FitzGerald after a major corruption scandal, the Cleveland-Cuyahoga County Port Authority is coming clean and rebranding itself under its president of one year, William Friedman. Last week, in unveiling a new strategic plan, the Port Authority officially signaled it was abandoning its ambitions to be a real estate developer on port land. Instead, it wants to be seen as a green agency that’s protecting the Cuyahoga River even as it refocuses on its business role as a dock operator on the Great Lakes. In short, it’s positioning itself to be the steward of the lakefront and the Cuyahoga. The changes come after a plan to move the docks to East 55th Street proved to be financially unachievable — or, as a new policy statement explains in a mea culpa, “overly ambitious.” The agency is refashioning itself a year before it must go back to voters to renew, and possibly increase, the small, 0.13-mill property tax levy that currently covers about 40% of the agency’s annual revenue, which totaled $7.9 million in 2010. “The Port Authority believes preserving the river channel and maritime industries are critical responsibilities,” Mr. Friedman reported to his board of directors last Wednesday, July 20. “We are prepared to lead that effort.” Later that day, in a meeting with the Crain’s editorial board, Mr. Friedman said the needs of the lakefront and the river channel are so great it could take $250 million over the next decade or longer to restore the waterfront infrastructure. That investment is needed to protect what the strategic plan calculates are 17,832 jobs and $1.81 billion in annual economic activity tied to Port of Cleveland docks and to private berths along the river. It’s likely the Port Authority would seek state and federal money to cover as much of the cost of this work as possible, though Mr. Friedman told the Crain’s editorial board the agency also could use its tax receipts.“The port’s tax levy is a pretty logical place to look,” he said. Mr. Friedman said money from the Port Authority’s levy could be used to support a long-term bond issue. But first, the Port Authority must beef up its cargo operations, which now are losing money and are subsidized in part by the tax levy.
The new strategic plan calls for pursuing various avenues for cargo growth. Mr. Friedman said he believes interest is developing among shippers for a new container cargo route that would bring goods chiefly shipped from northern Europe to Cleveland via Montreal. He also said he is pursuing a cargo ferry that would shuttle from a Canadian port on Lake Erie to Cleveland. This ferry would be in addition to a planned passenger ferry service the Port Authority is negotiating with local Ontario officials in Port Stanley. Beyond those measures, the Port Authority master plan sees potential for cargo from the wind energy industry and even an increase in steel and other traditional lake cargo as the port pursues business from shippers. Bradley Hull, associate professor of management and business logistics at John Carroll University, said he believes the cargo business can be built. Dr. Hull worked as a consultant to the Port Authority earlier this decade and surveyed local companies for their interest in shipping containers through the Port of Cleveland. “There were probably about 20 big companies in Cleveland that were interested in it,” he said. “They never said, “Yes I would do this,’ but there weren’t any steamship companies interested in coming to Cleveland at the time.” Dr. Hull said he believes there is more than enough business for a once-a-week container ship shuttle between Cleveland and Montreal. Arnie de la Porte, honorary consul for the Netherlands, likewise believes this new cargo plan makes sense. Netherlands shipping lines call frequently at the Port of Cleveland. “One of the biggest problems we had at the port was uncertainty — they talked about moving, about taking away certain things — and everyone (in the shipping community) became nervous,” Mr. de la Porte said. “This strategic plan makes sense.”
Dibs on the Cuyahoga
The Port Authority also is looking to broaden its domain and its relevance by positioning itself as the keeper of the Cuyahoga. It makes the case that maintaining the river as a navigable channel for shippers who bring bulk cargo up the river — such as the iron ore that is vital to the ArcelorMittal steel mill in the Flats — is a key factor in maintaining the health of the port. “I feel strongly that it is the right thing for the Port Authority as a matter of public policy to address the needs of the river,” Mr. Friedman said. Sections of the bulkhead that prevent the erosion of the riverbank are crumbling. In one section, this erosion has caused the closure of Riverbed Road because its base has shifted downhill. A landslide that breached the bulkhead could close the river to navigation.
Out with the old …
The new strategic plan formalizes a significant shift from the direction the port had been heading last decade. Five years ago the Port Authority was making headlines as a real estate wheeler and dealer, as it embarked on a bold plan to remake the waterfront east from the Cuyahoga River. It even went a step further and offered its development financing know-how to rebuild NASA Glenn Research Center. In part, the port’s real estate bent reflected the temperment of board chairman John Carney, a real estate developer who had seen the transformation of the Spanish port of Bilboa — an Atlantic port city smaller than Cleveland — while on a vacation/fact-gathering trip. He saw a similar opportunity in Cleveland. But the port’s vision collapsed as newly appointed board members balked at the growing expense of a ballooning staff and questioned the Port Authority’s ability to afford new, larger docks, forcing the abrupt resignation in November 2009 of Port Authority president Adam Wasserman.