Long Beach Port Go­ing Back for New TIFIA Loan

The Bond Buyer - - Front Page - By Richard Wil­liamson

DAL­LAS — The Port of Long Beach, Cal­i­for­nia, is seek­ing a sec­ond Trans­porta­tion In­fra­struc­ture Fi­nance and In­no­va­tion Act loan to com­plete the $1.5 bil­lion Ger­ald Des­mond Bridge re­place­ment.

“We be­gan the process in March,” Sam Joum­blat, the port’s man­ag­ing di­rec­tor, said Fri­day at The Bond Buyer’s Trans­porta­tion/P3 Con­fer­ence. “We hope to have it by the end of next year, but I’m in no big rush.”

A $325 mil­lion TIFIA loan awarded in May 2014 was a key fi­nanc­ing tool for the project. In­ter­est and prin­ci­pal pay­ments be­gan this year, with fi­nal loan

ma­tu­rity in 2051. The port wants to bor­row $175 mil­lion more through TIFIA.

The bridge re­place­ment is a key el­e­ment to ex­pand­ing ca­pac­ity at the port and boost­ing its eco­nomic im­pact in South­ern Cal­i­for­nia, Joum­blat said.

The Bridge is a ma­jor ac­cess point to the port from down­town Long Beach and sur­round­ing com­mu­ni­ties, car­ry­ing In­ter­state 710 over the port’s In­ner Har­bor to Ter­mi­nal Is­land.

The re­place­ment bridge will be a sixlane, ca­ble-stayed de­sign. Its 205-foot clear­ance — 50 feet higher — will al­low the new­est gen­er­a­tion of larger cargo ships to en­ter the port.

The new bridge, un­der con­struc­tion since 2014, is be­ing built along­side the cur­rent span to main­tain traf­fic flow. The re­place­ment bridge is sched­uled to open in late 2019. While the cost was pro­jected at $1.26 bil­lion in 2014, Joum­blat es­ti­mated the cost this year at $1.5 bil­lion.

Long Beach was the first port to use a TIFIA loan, ac­cord­ing to Eric Golyn­sky, ex­ec­u­tive di­rec­tor of UBS Fi­nan­cial Ser­vices Inc., who mod­er­ated a panel on ports at the con­fer­ence.

“TIFIA of­fers a lot of ad­van­tages,” Joum­blat said. “You can struc­ture it so it’s back-loaded and you don’t have to make any pay­ments in the early years. There’s no pre-pay­ment penalty.

“It’s not an easy process,” Joum­blat added. “It’s a very lengthy process, but we be­lieve the ben­e­fits out­weigh the cost.”

The Des­mond bridge re­place­ment is a joint ef­fort of the Cal­i­for­nia Depart­ment of Trans­porta­tion, the Port of Long Beach, the U.S. Depart­ment of Trans­porta­tion and the Los An­ge­les County Met­ro­pol­i­tan Trans­porta­tion Author­ity.

As the ninth-busiest port in the world, Long Beach just com­pleted a record fis­cal year 2018, Joum­blat said.

With the Trump Ad­min­is­tra­tion’s tar­iffs on Chi­nese prod­ucts go­ing into ef­fect, Joum­blat ex­pects vol­ume to soften next year.

“So far, the trade war has not had an im­pact on our vol­umes,” Joum­blat said. “What we have seen is a build­ing of in­ven­tory, and that may ex­plain why our vol­umes have gone up.”

In ad­di­tion to the bridge re­place­ment, the port is re­de­vel­op­ing its Mid­dle Har­bor Ter­mi­nal at a cost of $1.5 bil­lion. The project is de­signed to com­bine two ter­mi­nals into one, Joum­blat said.

“We plan to is­sue $600 mil­lion-plus of debt over the next three years,” he said.

On the East Coast, the Port of Mi­ami is also in a growth mode, with em­pha­sis on cruise pas­sen­gers, said Andy Hecker, as­sis­tant port di­rec­tor.

“The cruise side is a lot more dra­matic for us,” Hecker said. “We are de­vel­op­ing five new cruise ter­mi­nals in P3-type deals un­der a $1.1 bil­lion in­vest­ment plan.”

Both ports boast a com­pet­i­tive ad­van­tage with chan­nels dredged to a depth of 52 feet, which al­lows them to han­dle the largest cargo and pas­sen­ger ships. Some ports are still wait­ing for fed­eral funds to dredge deeper than their cur­rent 40-foot depths.

De­spite the ex­pan­sion of the Panama Canal, the Port of Long Beach still en­joys an ad­van­tage over the ports on the Gulf of Mex­ico and the At­lantic, Joum­blat said. Ship­ments from Shang­hai, China, to Chicago take 21 days through Long Beach com­pared to 32 days for ports ac­cessed through the canal, he said. ◽

Port of Long Beach

The new Ger­ald Des­mond Bridge is be­ing built along­side the ex­ist­ing span at the Port of Long Beach, Cal­i­for­nia.

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