by Joe Shea
Port Manatee News
August 18, 2011
FIGHTING FOR A PLACE IN THE FUTURE
BRADENTON, Fla., Aug. 19, 2011 -- The Port of Manatee is broke - and that's not such a bad thing. And the AAA bonds of Manatee County have been downgraded - and that's not such a bad thing. Just ask the county comptroller or the port's director, who defended the pORT'S $1.5 "paper" deficit Thursday and sees a far brighter future ahead.
What Port Authority Commissioner Joe McClash called "deceptive" accounting methods used to balance the $11 budget, and the depredeations of Standard & Poor's were the actual culprits, the three men said.
The equanimity of seven Manatee County Commissioners must have been tested a little Thursday morning as they learned that the assets of the Port of Manatee, the closest deepwater port to the Panama Canal, have been depleted to less than zero by depreciation accounting and its potential revenues in the 2012-2013 fiscal year don't even add up to the $1.5-million to $2-million hole it's in. Its liabilities exceed assets due to technical accounting methods use to calculate depreciation. That would be treated differently in the budget of a business, McClash said.
"It's just on paper," Port Manatee executive director David McDonald told the Port Manatee News and Manatee County Times after its crowded meeting at the port's three-story Intermodal Center 10 miles from downtown Bradenton. And in truth, he said, the budget represents an "extremely conservative" estimate of potential revenues the nascent port could experience next year, depending on the economy, state and federal funding and other factors. Some of those revenues, treated more generously, would put the budget back in balance, McDonald said.
And as for the bonds? An angry Robert B. "Chips" Shore, who is Clerk of the Court and effectively the county's comptroller, burst into the meeting Thursday waving a long letter and clearly angry - not at the commissioners or the port, as Board of County Commissioners chair Carol Whitmore noted with relief - but at the local Bradenton Herald and Standard & Poor's, the ratings agency which recently downgraded the United States credit from AAA+ to AA+, the same as Slovenia and Belgium.
Shore, who is the Clerk of the Court for Manatee County, was angry at the Herald for not calling him about the story. The paper's reporter, county editor James Jones, wrote that he reached four members of the commission but not Shore, who charged that his home, office and cell phone number were in the paper's computerized resource directory and that he should have been called.
The paper's Thursday headline revealed, as Shore's unpublicized letter told commissioners weeks ago, that a million and a half dollars invested with the Florida state Board of Administration Fund B - a tinty part of a county retirement and excess-funds pool of nearly $700 million invested in super-safe bonds - has led to a downgrade of its own debt. The state fund lost millions owed to state workers and municipalities during the sub-prime crisis, and was downgraded to junk bond status. The taint on that 0.002 percent of Manatee County investments brought its S&P rating down, too.
"Just a million dollars, out of seven hundred!" exclaimed Shore, a longtime and very popular county official. The money is invested in U.S. Treasury notes, which S&P downgraded two weeks ago.
Shore has done what at least a few other entities - towns, counties and other taxing authorities - have done: He fired S&P as the county's ratings agency. For the giant agency, the county's $20,000 payment for its credit rating is probably small potatoes, but if Thursday's news was any indication, it may soon be happening to the agency at bond issuers all over the state, many of whom received the same news over the past month.
The fact that the Securities Exchange Commission and the U.S. Department of Justice are investigating Standard & Poor's failure to warn American investors of the looming sub-prime crisis - a probe that some at the meeting, like surgeon and warehouse operator Stan Riggs called "shooting the messenger - was not mentioned while, outside the port, the stock market crashed again in the continuing aftermath of the S&P downgrade, oil fell to historic recent lows and gold bravely marched through the $1,825 barrier.
There was some good news, too. McDonald, the dapper, polished port director who retires in October after a decade with the county-run agency, hauled out from beneath podium a trove of awards from several marketing and other trade groups, including a platinum and a gold Hermes Award (for its port directory and Web site, respectively), a heavy framed certificate and a futuristic trophy - so much stuff he had to put it all on the floor - and handed out a beautifully illustrated large brochure for the Port Manatee Encouragement Zone, a McClash project that holds great promise for the hoped-for halcyon days to come.
Chairman Larry Bustle saved his comments for last, as is the chair's prerogative. The 75-year-old Bustle, a former USAF fighter pilot and airbase commander in Turkey, is an anchor to the Port Authority who steers its focus back to nuts and bolts when its members' dreams stray far afield. After members' long, rosy discussion of how efforts to forge a cooperative relationship with the nearby Port of Tampa Bay might benefit both, he reminded his colleagues that their purpose was "to make money for the port, its clients and Manatee County."
Joe Mikes of Provident Logistics and his brother Joe, major landowners in the Port Manatee Encouragement Zone whose creation McClash spearheaded, are trying to build basic infrastructure for what all hope will become a $1 billion rail and deepwater hub for national distribution of produce from Florida and South America on CSX's proposed "Green Express," has fought commissioner Joe McClash for two years to proceed.
In Thursday's remarks McClash, a former port chair who has said he has private reservations about the brothers' credibility, had high praise for the Mikes' projects. "This (the Mikes projects and the port) is a tremendous economic driver for our county, for our region," he said. Others questioned his assessment.
"We can't keep them on the hook forever," said Bustle, a plain-spoken former mayor of nearby Palmetto, referring to long delays the brothers have experienced in their dealings with Manatee County.
"It has never been an easy project," Whitmore responded. There's been bumps in the road. ... There's been a lot of scars in between." Whitmore told the Port Manatee News afterwards that McClash was "trying to take the glory" for bringing forward expensive, ambitious and important projects - the CSX rail hub in particular, which could eventually bring thousands of jobs - when in fact he'd fought against them behind the scenes.
"For two years, Joe made it hell for them," Whitmore said, opposing everything they presented. "Joe made it hell," she said.
When the expansion of the Panama Canal is finished in 2014, it is expected to bring a stream of lucrative container traffic steaming across the Caribbean into the Gulf of Mexico to Port Manatee, the nearest deepwater port to the Canal Zone and eight hours of costly fuel closer than the Port of Tampa. That shipping traffic would bring a need for refrigerated warehouses and a host of other businesses to support a busy port and occupy the long, now-empty acres of the Encouragement Zone.
While clients, port officials, county staff, county commission and port authority members (who are the same people) struggled for position Thursday and optimistically awaited the largesse of the world's great shipping companies, the well-maintained port's half-mile of new berths and new deepwater channel sat mostly in silence Thursday, hosting politicians, the county Chamber of Commerce and themselves, all with a collective ear cocked to the future and the distant blast of foghorns on ships arriving from the south.