SC may borrow half a billion dollars to expand rail access at Charleston port

Joseph Bustos
Updated

South Carolina lawmakers are looking at a request from the S.C. Ports Authority to spend more than half a billion dollars to improve railroad and barge capabilities at the Port of Charleston.

The $550 million, which would come from the state issuing debt and be paid back from the state’s taxpayer-funded general fund, would be used to create near-dock railroad infrastructure and expand terminals to move cargo within the port while keeping most of the cargo off of local roads.

The Port of Charleston is the only port on the east coast without rail lines close to the docks. The goal is to take traffic from 500,000 containers off of the local roads when containers arrive or leave the port, which would benefit Lowcountry traffic, said S.C. Ports President and CEO Jim Newsome.

“With this effort, we could buy time on the critical road infrastructure in the Lowcountry,” Newsome told a group of state senators recently.

The Ports Authority owns and operates the Port of Charleston, Port of Georgetown, Inland Port Greer and Inland Port Dillon and it is self-supported and funded by user fees collected from ships going in and out of the port.

However, the state has supported The Ports Authority, an economic driver in the state whose board is appointed by the governor and confirmed by the Senate.

The bond proposal comes as the state has many other infrastructure needs, including road needs and a backlog of deferred maintenance at the state’s colleges and universities.

“Clearly there are those of us who believe those needs exist and want to see that done and have been pushing to be done,” said state Sen. Nikki Setzler, D-Lexington said of road and state building needs around the state.

In recent years, proposals to borrow money for roads and state-owned building improvements have been controversial.

Senate Majority Leader Shane Massey said previous proposed bond bills have not been transparent, including how projects are proposed, but added the process laid out for the port project “lends itself for success.”

“If those things are fully vetted in a subcommittee process, and then the committee process, to allow people to understand what’s going on and to ask questions, and then make the case for why you need it, ... I think you’ve got a much better shot of getting support for it,” Massey said.

Setzler himself has pushed legislation to widen interstates in the state to help vehicular traffic move, such as on I-26 between Charleston and Columbia.

“There are people in the General Assembly who believe we ought to issue bonds again to help construct schools in rural areas,” Setzler said. “Certainly there are numerous ideas through the General Assembly. It’s just a matter of who introduces them and when, and in what form.”

One reason for lawmakers’ hesitation for the state to take on debt is the state has had good budget years with significant surpluses.

“We’re generally conservative and we don’t like borrowing money,” Massey said.

However, lawmakers may be more open to borrowing more than half a billion dollars given how interest rates are being kept low to help the economy recover during the pandemic.

“Right now, money is cheap. If we bond, we’re going to get it for almost nothing,” said Massey who added he is still learning about the proposed project. ”If you’re getting it at lower rate, that means you’re not going to have to pay as much back over a longer period of time. You’re saving taxpayers dollars.”

Money to pay back the debt would come from the state’s general fund, fueled by taxpayer dollars, appropriations over the course of 10 to 15 years

The state has a line item in its budget to pay back debt, and previous debts have been retired.

“From a budgeting standpoint, it’s not going to require any new money,” Massey said. “It was money we already had allocated.”

Spending the money on the port proposal represents a 50-year investment to keep the port competitive and to help the state’s economic development, proponents said.

Bonding the money and repaying the debt over time also frees up current dollars for immediate needs in the state, such as deferred maintenance around the state and even COVID-19 related response efforts, proponents say.

The Port of Charleston has proposed spending $400 million to build an intermodal facility at the former Navy base in Charleston to provide near-dock railway access for shipping containers.

In addition, $150 million is needed to expand terminals in order to facilitate cargo movement within inner harbors. Barges would ferry cargo between the Wando Welch Terminal and the new Hugh K. Leatherman Terminal.

“These infrastructure projects are crucial for the continued competitiveness of the Port of Charleston, which supports the ongoing economic development success and job creation for South Carolinians,” Newsome said.

The project follows a 12-year, $600 million harbor deepening project expected to be finished next year. The state and federal government split the cost of the project, with the state Legislature contributing $300 million toward the deepening.

The proposed $550 million in borrowing would be the largest bond issue the state has made since it borrowed to help improve school buildings in 1999, Setzler said.

In 1999 the state Legislature authorized issuing $750 million in bonds, plus spending $250 million of available cash, for school facilities.

Setzler, who was part of a group of senators who heard the port proposal on Thursday, said a lot of vetting will take place before its approved.

“This is the very beginning of the process for this legislation for the subcommittee, then full committee, then (the full) Senate and the same process in the House, before it goes to the governor for signature,” Setzler said. “This is the way it has been introduced. How it comes out at the end of the process, no one knows at this point in time.”

Originally published

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