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Republican legislators call for federal aid in State Pier project

Source: 
The Day

May 14—Two ranking state Republican senators have called on the eastern Connecticut congressional delegation for federal support to help defray the state portion of the costs associated with the $235 million State Pier redevelopment project in New London.

State Senate Republican Leader Kevin C. Kelly of Stratford and Senate Republic Leader Pro Tempore Paul Formica of East Lyme are requesting the project be included in the next federal bill that is expected to address a wide range of infrastructure projects.

"Today's communication is to update you and ask for your support for a pivotal state project that is on the precipice of success or disaster," Kelly and Formica wrote in the May 12 letter to U.S. Rep. Joe Courtney, D-2nd District, and U.S. Sens. Richard Blumenthal and Chris Murphy.

The letter reiterates Formica's concern about the rising cost of the project, once estimated by the Connecticut Port Authority at $93 million but which now has ballooned to $235.5 million.

Federal aid could help fix what Kelly and Formica call "the financial boondoggle that the CPA has created."

State Pier is being modernized to accommodate the offshore wind industry — a public-private partnership between the state and partners Danish wind giant Ørsted and energy company Eversource. The companies are jointly contributing a $70 million capital investment toward the project.

State Pier is expected to serve as an offshore wind turbine assembly and staging hub for the partners' planned offshore wind projects.

The state is shouldering the remaining costs of the construction project, the most recent contribution to which came with the State Bond Commission approval of $55 million last month.

"The circumstances that we now find ourselves in are forcing the state government and ultimately the taxpayers to foot the difference in costs for this project. We strongly believe that if this were the same scenario involving state assets and private sector mismanagement, you would intervene for the protection of the constituents you represent," the letter reads.

Blumenthal issued a statement in response.

"The State Pier holds the key to significant economic development for New London and eastern Connecticut. The proposed improvements to the pier are exactly what President (Joe) Biden had in mind when he proposed his American Jobs Plan — projects that can lead to significant job growth," Blumenthal said. "Details of what the infrastructure bill will cover are being negotiated and it is likely to defer to state and local authorities on the specific projects that will be funded. I will continue to advocate for federal investment in the New London area."

Formica said this week he backs investment in renewable energy and development that would benefit New London but remains frustrated by escalating costs of the State Pier project and what he deems mismanagement and lack of accountability by the CPA.

The CPA, which has worked closely with the state Department of Administrative Services on the design of the project, has said the newest cost estimates come at the completion of the project design.

Of the $235.5 million estimated cost, $193 million is earmarked for construction costs and $11 million for contingencies. There is an additional $31 million for project soft costs that include construction administration fees, design permitting, environmental mitigation and 12 years of lease payments to New England Railroad Inc., a subsidiary of Connecticut-based Genesee & Wyoming Inc., for use of a 5-acre parcel of railroad property adjacent to State Pier that will expand the port's footprint in New London. The lease is for $525,000 a year, rising 4% annually.

The CPA awaits legislative authorization of another $50 million in bond funding that will be needed to cover the state's final contribution to the project. Major portions of the project await permitting from the state Department of Energy and Environmental Protection and U.S. Army Corps of Engineers.

The work at State Pier includes dredging, installation of a bulkhead and filling a 7-acre area between two existing piers to create one larger structure. Ørsted and Eversource have said State Pier could be used for some of the multiple offshore wind projects they have in the pipeline, including Sunrise Wind, South Fork Wind and Revolution Wind. The 100-turbine Revolution Wind Project, 15 miles off the coast of Rhode Island, is expected to produce 704 megawatts of power — 304 MW to Connecticut and 400 MW to Rhode Island.

David Kooris, chairman of the board of the CPA, said the port authority is negotiating for the upfront payment of $5 million from Ørsted and Eversource, part of an award for completing the project on time: August 2022.

"Now that we have a construction manager on board with the expertise, we are all confident we can deliver the project in that timeframe. We are negotiating their early contribution rather than waiting," Kooris said.

The current capital contribution of $70 million by Ørsted/Eversource toward the project does not include the annual rent payments to the CPA that amount to an additional $20 million over 10 years. It also does not include the annual revenue share payments from terminal operator Gateway New London LLC to the CPA associated with activity at the pier, Kooris said.

Gateway Terminal, the company hired to run State Pier as part of an initial 20-year concession agreement, has agreed to pay $30 million for necessary equipment to handle cargo at the pier.

g.smith@theday.com

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(c)2021 The Day (New London, Conn.)

Visit The Day (New London, Conn.) at www.theday.com

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