Will the wind blow city’s way?

Orsted, port and lo­cal of­fi­cials in talks on New Lon­don’s off­shore en­ergy po­ten­tial

The Day - - FRONT PAGE - By BEN­JAMIN KAIL, GREG SMITH and JULIA BERGMAN

New Lon­don — As north­east­ern states boost their re­liance on re­new­able en­ergy, New Lon­don State Pier has po­ten­tial as a long-term player in the emerg­ing off­shore wind in­dus­try.

How­ever, what that will look like hinges on ne­go­ti­a­tions be­tween the in­ter­na­tional en­ergy com­pany Orsted, the re­cently se­lected pier op­er­a­tor Gate­way New Lon­don LLC, the Con­necti­cut Port Au­thor­ity and city lead­ers.

Orsted is not part of Gate­way’s 20-year con­tract to op­er­ate State Pier, even though over the last few months Orsted of­fi­cials laid out a vision of work­ing with Gate­way to help trans­form State Pier into a world­class off­shore wind hub sup­port­ing up­com­ing projects and po­ten­tially draw­ing sup­pli­ers and man­u­fac­tur­ers to the re­gion.

And while Orsted’s 200-megawatt Rev­o­lu­tion Wind pro­ject picked up steam last month, when reg­u­la­tors ap­proved an ad­di­tional 100 megawatts in the state’s zero-car­bon elec­tric­ity auc­tion, the 800-megawatt Con­sti­tu­tion Wind farm pro­posed by Orsted and Ever­source lost out in the auc­tion, which saw reg­u­la­tors tap Mill­stone Power Sta­tion for the bulk of in­com­ing power.

Mean­while, with State Pier ben­e­fit­ting from al­most $50 mil­lion split be­tween pub­lic and pri­vate in­vest­ment into in­fra­struc­ture up­grades, city of­fi­cials hope to bank on long-term eco­nomic de­vel­op­ment through off­shore wind while push­ing for hard fi­nan­cial com­mit­ments from the Port Au­thor­ity. Un­der its new deal with Gate­way, the Port Au­thor­ity will see an in­flux of non­tax­able cash from both con­ven­tional and

“I want to be­lieve that they still have their eyes on the prize, which is a deal that makes the port of New Lon­don as the hub to build up the off­shore wind in­dus­try for the next 10, 15, 20 years.”

MICHAEL PASSERO, NEW LON­DON MAYOR

emerg­ing busi­nesses.

“I want to be­lieve that they still have their eyes on the prize, which is a deal that makes the port of New Lon­don as the hub to build up the off­shore wind in­dus­try for the next 10, 15, 20 years,” Mayor Michael Passero said in an in­ter­view Thurs­day.

Orsted, Gate­way and Port Au­thor­ity lead­ers say they re­main ex­cited about New Lon­don’s po­ten­tial to play a ma­jor role in the off­shore wind in­dus­try.

“Orsted is plan­ning sub­stan­tial off­shore wind ac­tiv­i­ties in New Lon­don for our Rev­o­lu­tion Wind pro­ject, and that in­cludes mak­ing sig­nif­i­cant in­vest­ments in State Pier,” said Orsted U.S. Off­shore Wind CoCEO Jeff Gry­bowski, ref­er­enc­ing at least $22.5 mil­lion the com­pany has com­mit­ted to in­fra­struc­ture up­grades. “At the same time, we’ll be con­tin­u­ing our dia­logue with the state about how New Lon­don can be best po­si­tioned to be­come a ma­jor hub in the East Coast off­shore wind in­dus­try.”

Port Au­thor­ity of­fi­cials and Matthew Sat­nick, co-CEO and chair­man of En­struc­ture, Gate­way’s fi­nan­cial part­ner, said the par­ties could not com­ment on ne­go­ti­a­tions. But Sat­nick said Gate­way was “work­ing closely with the Con­necti­cut Port Au­thor­ity and the ma­jor off­shore wind com­pa­nies to re­al­ize the off­shore wind op­por­tu­nity for New Lon­don State Pier.”

Port Au­thor­ity Chair­man Scott Bates de­scribed Gate­way as “a world-class op­er­a­tion” with ex­per­tise at cre­at­ing jobs for lo­cal work­ers. He said Gate­way’s pro­posal, which should cre­ate at least four dozen di­rect port op­er­a­tions jobs, “matched our vision of en­hanc­ing the mar­itime econ­omy of the state.”

“Now the real work can be­gin,” he added. “Choos­ing a ter­mi­nal op­er­a­tor had to come first, and we wanted some­one will­ing to pur­sue a mix of tra­di­tional busi­ness and op­por­tu­ni­ties in the emerg­ing power sec­tor of off­shore wind,” he said.

La­mont ‘look­ing for­ward’ to New Lon­don in­vest­ments

Seven states have com­mit­ted to build more than 10 gi­gawatts of off­shore wind ca­pac­ity by 2030, and the Bu­reau of Ocean En­ergy Management is look­ing to lease more swaths of fed­eral wa­ters to de­vel­op­ers.

John Humphries, lead or­ga­nizer of the Con­necti­cut Round­table on Cli­mate and Jobs, em­pha­sized “how im­por­tant it is for the new ad­min­is­tra­tion and leg­is­la­ture to take im­me­di­ate and bold steps to clar­ify the state’s longterm com­mit­ment to off­shore wind pro­cure­ment. We need to act quickly to en­sure that Con­necti­cut gets a sig­nif­i­cant share of the clean en­ergy and lo­cal in­vest­ment as the new in­dus­try rapidly ex­pands in the com­ing years.”

Mari­bel La Luz, di­rec­tor of com­mu­ni­ca­tions for Gov. Ned La­mont, who cam­paigned on con­tin­ued re­duc­tions to green­house gases and ramp­ing up re­new­able en­ergy, said Fri­day that the state should be “proud of the gains for the en­vi­ron­ment and econ­omy from the cur­rent agree­ments.”

“Gov­er­nor La­mont is look­ing for­ward to fur­ther re­spon­si­ble in­vest­ments that will make New Lon­don the re­gional wind-power hub for a gen­er­a­tion to come,” she added.

Bates has said it could cost al­most $100 mil­lion to fully pre­pare State Pier as a longterm hub for off­shore wind. He said that, with at least $25 mil­lion in pier up­grades through the state Bond­ing Com­mis­sion and $22.5 mil­lion from Orsted, “This is the foun­da­tion upon which you can build new in­dus­tries and strengthen the ones that are there.”

Gate­way has pledged about $30 mil­lion for equip­ment and main­te­nance at the pier.

No off­shore wind firm sub­mit­ted an in­de­pen­dent pro­posal to run the pier, the Port Au­thor­ity said. Sat­nick said the state’s zero-car­bon se­lec­tions did not fac­tor into Gate­way and Orsted’s col­lab­o­ra­tion.

Port Au­thor­ity open to new deal with city

Ini­tially planned by Block Is­land Wind Farm de­vel­oper Deep­wa­ter Wind be­fore an ac­qui­si­tion by Den­mark-based Orsted, Rev­o­lu­tion Wind will de­liver power from fed­eral wa­ters south of Martha’s Vine­yard to Rhode Is­land and Con­necti­cut by 2023. Oceano­graphic sur­veys and per­mit­ting work for the pro­ject is un­der­way, with Orsted plan­ning to use New Lon­don to build a sub­sta­tion and per­form sec­ondary steel fab­ri­ca­tion.

Deep­wa­ter Wind pledged an an­nual $750,000 in­vest­ment in the city as part of a host com­mu­nity agree­ment for the length of its stay in New Lon­don. Orsted has said it would main­tain Deep­wa­ter Wind’s com­mit­ments and plans to open of­fice space in the city as well, but city of­fi­cials say it remains un­clear how long Orsted will stay.

A stick­ing point for city of­fi­cials is that the Port of New Lon­don sits on state-owned, tax-ex­empt land that, de­spite ben­e­fit­ting from city ser­vices, does not pay its fair share, Passero said. The state does not pay per­sonal or real es­tate taxes to the city on the State Pier prop­erty. Though the state does make pay­ments in lieu of taxes to the city, it is less than 15 per­cent of what a pri­vate owner would pay.

While the con­tract be­tween the Con­necti­cut Port Au­thor­ity and Gate­way has mil­lions of dol­lars flow­ing to the Port Au­thor­ity, there are no guar­an­tees for New Lon­don.

“At any point in the last 50 years, they could have sold that to a pri­vate en­tity and it would be gen­er­at­ing enough rev­enue to cover its prop­erty taxes and all of its over­head and turn­ing a profit. But the state owns it,” Passero said. “Right now, with this deal, it wouldn’t even cover the prop­erty taxes they would be pay­ing. That tells you there’s some­thing wrong.”

The city gets an es­ti­mated $165,000 for the State Pier prop­erty through the state’s PI­LOT pro­gram. By com­par­i­son, the New Haven port nets the city of New Haven nearly $3 mil­lion a year in taxes alone, avail­able as­sess­ment data shows.

Passero said New Lon­don has pitched the idea of a host com­mu­nity agree­ment with the Port Au­thor­ity but has not yet had those dis­cus­sions.

“How do we share in the rev­enue of this as­set so we can pay for the mu­nic­i­pal sup­port that this port needs like any other busi­ness?” asked Felix Reyes, the di­rec­tor of the city’s Of­fice of De­vel­op­ment and Plan­ning.

‘Trans­for­ma­tive deal’

Bates on Thurs­day said port of­fi­cials “are ab­so­lutely in­ter­ested in talk­ing about a host com­mu­nity agree­ment with the city and look­ing at mod­els that work best in Amer­ica and the re­gion that will keep us com­pet­i­tive so we can out hus­tle Rhode Is­land and Mas­sachusetts for busi­ness.”

Bates added that the Port Au­thor­ity has worked with the city to es­tab­lish and pay for se­cu­rity plans and a har­bor management plan, al­low­ing mil­i­tary and cruise ships to come to New Lon­don.

“We’re very happy to make those kind of in­vest­ments, as they all go to­ward our mis­sion of ad­vanc­ing the mar­itime econ­omy,” Bates said. “Hav­ing Gate­way op­er­ate the pier is only go­ing to strengthen the emerg­ing part­ner­ship with the city.”

Asked about city of­fi­cials’ crit­i­cism, Bates said the Port Au­thor­ity in­her­ited State Pier from the state Depart­ment of Trans­porta­tion be­cause the leg­is­la­ture de­ter­mined the state “was los­ing in the race for mar­itime jobs.”

“All our neigh­bor­ing states have port au­thor­i­ties,” he added. “We be­lieve in the fu­ture of State Pier and New Lon­don and eco­nomic growth for the re­gion and the state. That’s what this deal is all about.”

Passero sent a let­ter to Orsted of­fi­cials in De­cem­ber not­ing that the city was look­ing for more from the next port op­er­a­tor. The Dec. 15 let­ter, ob­tained by The Day, ref­er­ences the se­lec­tion of an op­er­a­tor for State Pier.

“This trans­for­ma­tive deal, while im­por­tant for the re­gion and sig­nif­i­cant for the state of Con­necti­cut, must also con­sider the in­ter­ests of the host city,” Passero wrote. “To date, the city has not been part of the ne­go­ti­a­tions. We are con­cerned that agree­ments will be struc­tured around his­toric in­equities that the state of Con­necti­cut has im­posed on the tax­pay­ers of New Lon­don by con­tin­u­ing to re­quire our small city to solely sub­si­dize the costs of host­ing a sig­nif­i­cant com­mer­cial port op­er­a­tion.”

Fu­ture of Crys­tal Av­enue prop­erty in ques­tion

Mean­while, the city holds own­er­ship of the nearby land hous­ing the for­mer Thames River Apart­ments on Crys­tal Av­enue and had ex­pected it would in some way be tied to the port op­er­a­tions. Two en­ti­ties — the Con­necti­cut Port Au­thor­ity and Con­necti­cut Waste Pro­cess­ing Ma­te­ri­als LLC — have ex­pressed in­ter­est in the land.

Passero said no de­ci­sions have been made about the prop­erty’s fu­ture use. A let­ter from Re­nais­sance City De­vel­op­ment As­so­ci­a­tion Ex­ec­u­tive Di­rec­tor Peter Davis to the Port Au­thor­ity in Oc­to­ber, ob­tained by The Day, sheds light on some of the city’s ex­pec­ta­tions.

The city asks for re­im­burse­ment of the $185,000 pur­chase price of the land, and re­quests a long-term lease and taxes on the fully as­sessed value of the prop­erty. Ad­di­tion­ally, the city calls for a per­cent­age of rev­enues from State Pier op­er­a­tions and for the Port Au­thor­ity to spon­sor leg­is­la­tion that gives the city a seat on the Port Au­thor­ity. It also asks the Port Au­thor­ity to take re­spon­si­bil­ity for the abate­ment of the prop­erty and de­mo­li­tion of the high­rise build­ings.

Bates noted that the Port Au­thor­ity’s re­quest for pro­pos­als for a pier op­er­a­tor did not in­clude the Crys­tal Av­enue prop­erty be­cause it’s out­side of the State Pier fa­cil­ity.

“But if you look at that prop­erty, you can see it could be use­ful in a port dis­trict,” he added.

Asked about the next steps for State Pier, Bates said of­fi­cials are de­ter­min­ing over­all in­fra­struc­ture costs, re­view­ing de­signs and bor­ing be­tween piers “to see what we need to do to make up­grades there. I want to get to work yes­ter­day, but we’ll be talk­ing with our part­ners.”

PHO­TOS BY SEAN D. ELLIOT/THE DAY

Long­shore­men un­load lum­ber last May from the Ba­hamas-flagged cargo ship Quet­zal Ar­row at State Pier in New Lon­don. The Port Au­thor­ity deal with Gate­way to op­er­ate the port did not in­clude Orsted or the city of New Lon­don.

New Lon­don Mayor Michael Passero, cen­ter, shown at the State Pier last Au­gust, said in a let­ter to the Port Au­thor­ity, “This trans­for­ma­tive deal, while im­por­tant for the re­gion and sig­nif­i­cant for the state of Con­necti­cut, must also con­sider the in­ter­ests of the host city.”

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