NEW YORK (Reuters) – Privately-held Ports America plans to make a $150 million investment to update a section of Oakland, California’s port as part of a 50-year deal to operate there.
Ports America, owned by infrastructure private equity fund Highstar Capital, said on Tuesday the Port of Oakland had voted to approve the deal. Under the agreement, Ports America will update and operate five shipping berths at the port.
The investment comes at a time when U.S. ports are struggling with sagging cargo traffic due to the economic downturn.
“There is no question there has been a significant slowdown in imports as part of the overall recession or depression we are all living through,” said Christopher Lee, managing partner of Highstar.
Lee said the firm was making a long-term investment in the port, and was not concerned about its short-term problems.
“Ports are going to be one of the first lines of the economy to turn” when the environment improves, he said. “We want to be ahead of the competition.”
The Port of Oakland will receive a $60 million payment upfront out of the $150 million, Lee said. The rest of the money will go to improve berths 20 through 24 in Oakland’s outer harbor.
These improvements will include new cranes for the berths and environmental improvements, Lee said. He expects the project to create 6,000 jobs, mostly at the port and in construction.
Ports America also will have to pay a yearly lease payment to the Port, which will start at $19.5 million and escalate over the period of the agreement, which is set to start in January 2010.
A second, larger phase of the port agreement also could be put into play, Lee said, which would involve a $350 million investment. That could include plans to link the port with more rail lines.
The seaport ranks among the top four in the U.S in terms of annual container traffic, according to the port’s website
Investment in U.S. infrastructure has become closely watched after President Obama made it a key part of his economic stimulus plan.
Highstar will not receive any government funds for its port project, but Lee is hopeful the stimulus plan will kick off a wider boom in infrastructure investment.
“I am optimistic that one of the things that will come out of this recession is a renewed emphasis on rebuilding our infrastructure,” he said.
(Reporting by Michael Erman; editing by Carol Bishopric)