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Port of Hampton Roads


rusthebuss

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Just thought I'd mention it... Last week Richmond had a charrette for its downtown plan. During a meeting on river use and development, a city official likened Richmond's location in the future to being "upstream from New York City" due to the growth and importance of the ports in Norfolk/HR in general. Thought it was a cool soundbite for the HR locals to chew on :thumbsup:

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Here's a LINK with details about the rail lines being moved to the median of 164 and 664 for the new terminals.

I'm glad to see this coming. I've long hoped that they'd move the rail line to the medians of 164 and 664, carrying it down to the Route 58 corridor where there could be a giant freight village (distribution centers, container exchanges, offices, even lunch counters and hotel/motel facilities for truck drivers) out in the open space around Hampton Roads Airport. This freight line hits some open spots in Suffolk where perhaps this type of thing could come in the future.

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Here's a LINK with details about the rail lines being moved to the median of 164 and 664 for the new terminals.

Has there been any discussion of what will happen to the existing lines once the replacements are in use? I wonder if the right of way will be sold/given to Portsmouth/Suffolk. If so, it would be great to convert those lines into greenways.

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  • 1 month later...

I am continuously amazed at the experience and knowledge of the assembled masses here, so I was pretty confident someone would have the answer to this one, which came to me as I followed a container that was slowly (10 MPH) crawling out of the Midtown tunnel:

How does the commonwealth get tax revenue from the containers that constitute a sizeable portion of the street traffic here, especially in Norfolk and Portsmouth? I see that the chassis are registered in a variety of states, just like trailers are. But if, say a container leaves NIT on a Maine registered chassis, and takes a 40,000 container to a distribution center in Suffolk, where it is unloaded, refilled and sent out again, how does the state realize any revenue for the use of the roads that enables that trip? And are the chassis taxed just on their value as a chassis? Does the container ever get taxed in Virginia?

I also understand that the tractors in that scenario are licensed and taxed in Virginia. But somehow, I am stuck with a suspicion that I pay more for my car in property tax, partially for the use of the roads, than that container and chassis combination ever pays.

Any thoughts?

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I believe they make it up for the taxes on the terminals themselves. I also believe that they tax the boats that come in for using the waterways.

Rus -- are you saying that the terminals are taxed? I thought all of the VPA terminals -- PMT, NIT and NNMT -- are all state bodies, and therefore tax free.

I just wonder how these mobile assets get taxed for the local services they use. The ships that call impact our air quality, yet I bet they pay nothing to VA since they are mostly foreign flagged. I would love to see how the containers pay for the wear and tear on our highways.

Sorry, but I see the entire maritime industry here -- the terminals (less the new APM terminal), the ships themselves, the trucks and trailers -- all as leeches on our economy. The third crossing (including the Craney Connection) will be built almost exclusively for container traffic will, by itself, cost half of the total planned road spending by the HRTA. Yet all of us will be expected to foot the bill. I understand the benefits to the state as a whole (notice how all of VPA's adds stress the benefit to the state) -- I just wish the state would pay the bill, or find a way to get the industry that creates the need to pay the bill.

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Rus -- are you saying that the terminals are taxed? I thought all of the VPA terminals -- PMT, NIT and NNMT -- are all state bodies, and therefore tax free.

I just wonder how these mobile assets get taxed for the local services they use. The ships that call impact our air quality, yet I bet they pay nothing to VA since they are mostly foreign flagged. I would love to see how the containers pay for the wear and tear on our highways.

Sorry, but I see the entire maritime industry here -- the terminals (less the new APM terminal), the ships themselves, the trucks and trailers -- all as leeches on our economy. The third crossing (including the Craney Connection) will be built almost exclusively for container traffic will, by itself, cost half of the total planned road spending by the HRTA. Yet all of us will be expected to foot the bill. I understand the benefits to the state as a whole (notice how all of VPA's adds stress the benefit to the state) -- I just wish the state would pay the bill, or find a way to get the industry that creates the need to pay the bill.

If you visit the vaports.com website you'll find a link on the left frame for Schedule of Rates. It's a 60 page document detailing all charges on port activities including docking, line handling, water use, crane usage, cargo/container handling and demurrage, port entry, chassis and container weighing, etc. Before the new APM terminal opened up, VPA charged cargo handlers for passing through PMT to transport cargo at the old SeaLand terminal. The Virginia Port Authority operates its own terminals instead of renting out operations to private firms. For example, the Port of L.A. rents its land to stevedoring firms who then charge the aforementioned fees to ships other than their own for using the terminal. Since VPA operates the ports it owns, it charges those fees to the shipping lines and other cargo handlers.

Mind you, these are all fees and not taxes. VPA cannot tax the cargo/containers or the ships for using its ports because that is an area of federal authority. Any tax on interstate or foreign shipping by anyone expect the U.S. gov't is illegal. A tax on foreign goods would be a tariff.

California is trying to pass a container fee designed to pay for environmental upgrades at the ports of L.A. and Long Beach. These upgrades would include building railroads, cold ironing hook-ups, electric/LNG trucks, and additional facilities that would be used by the ports and shippers exclusively. The fees cannot be used for anything else. The L.A. mayor wants to add a couple of deteriorating bridges to that list. Shippers are challenging that because the general public uses those bridges. If fees are used on items used by people outside of the ports, that would mean that the fees are in effect tariffs; and therefore, illegal.

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Mind you, these are all fees and not taxes. VPA cannot tax the cargo/containers or the ships for using its ports because that is an area of federal authority. Any tax on interstate or foreign shipping by anyone expect the U.S. gov't is illegal. A tax on foreign goods would be a tariff.

I understand the difference between taxing the container contents (that would be a import tariff) and the container as a physical asset.

Some states (Oregon for one) tax vessels (ocean going, river, even commercial airliners!) based on the percentage of the time they are in the state. Oregon also taxes the harbor equipment in the state on January 1. I just wonder if the commonwealth requires filing of this data, so that cities can tax the shipping companies for the percentage of the time their enormously valuable assets are in the jurisdiction of the representative cities. I certainly think Portsmouth, Norfolk and NN could tax the shipping companies for the value of all of the containers, empty or not (not the contents, the containers) and the chassis that are sitting pierside on January 1.

I just get worn out here paying all of the taxes I do, when I see Lamborghinis with NC license plates (thus avioding car taxes) parked every night in VB neighborhoods, cars with Florida license plates and "USAF Retired" (no longer eligible for out of state registration), and a maritime industry that is going to stick all of us with the bill to build a third crossing for them. I don't mind paying my fair share -- I just don't like feeling that I am a sucker for doing so.

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I certainly think Portsmouth, Norfolk and NN could tax the shipping companies for the value of all of the containers, empty or not (not the contents, the containers) and the chassis that are sitting pierside on January 1.

I just get worn out here paying all of the taxes I do, when I see Lamborghinis with NC license plates (thus avioding car taxes) parked every night in VB neighborhoods, cars with Florida license plates and "USAF Retired" (no longer eligible for out of state registration), and a maritime industry that is going to stick all of us with the bill to build a third crossing for them. I don't mind paying my fair share -- I just don't like feeling that I am a sucker for doing so.

Virginia has one of the lowest overall tax rates of any state. The thing that gets most people is that there is a tax on everything. But that tax is small compared to other states. Some states may not have an income tax, but they have a high sales tax to make up for it, or vice versa. Those people who are driving around with out of state license plates and have been residents for more than 30 days are breaking the law. But everyone does it and they do it in every state. It's not restricted to Virginia. It is more apparent there because of the military in HR and the federal gov't in NoVa.

Taxing cargo containers, even if just the empty ones, is a slippery slope. I don't believe you can tax property of foreign companies. Also, the U.S. has treaties with several nations not to tax containers that are home-ported in the treaty nations since the containers are "just passing through," or in transit. Taxing cargo containers has been attempted before and struck down by the courts as unconstitutional. Shippers plan to use that argument if and when California passes the container fee. That's why California is trying to keep the money in the ports so that shippers are amicable to it.

As for ships, they are in dock for a couple days. How do you plan on taxing an asset that is in the local jurisdiction for a few days and is registered in another country? That too is unconstitutional.

Also, since the ports are a state entity, the localities cannot impose a business tax on the port assets. The irony of this is that the ports were once city-owned or at least city-operated 30 years ago. VIT, Inc., the terminal operators affiliated with VPA, is a Virginia Non-Stock, Non-Profit company. I believe VIT is a public entity and that all profits are given to VPA, or the commonwealth. Therefore, taxing VIT would be like your right hand taxing your left hand.

The only way to get local money is through tolls on highways leading out of HR such as 64, 460, 58, and 13. You could make the tolls much more expensive for a tractor-trailer than for passenger vehicles. You could institute a locals refund or discount like there is on the CBBT. For example, if you use a transponder for tolls and your home address is in HR, then if you exceed a certain amount, you no longer get charged tolls for using those roads. Or if you are a tourist and you provide hotel and meal receipts totaling x amount, then you get a toll refund.

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I don't believe you can tax property of foreign companies.

You can tax the property, and the income derived from US operations. If you were correct, then the new APM Terminal would pay nothing. I've been on the other end of that -- US company with foreign operations, and believe me, the German gov't got every penny they thought they had coming.

Therefore, taxing VIT would be like your right hand taxing your left hand.

Not really -- taxing VIT would deliver tax revenues to the cities that bear the burden of hosting the terminals -- PTown, NN, and Norfolk -- at the expense of the revenue stream to the Commonwealth. And VPA might not be able to pay their CEO $100K more than the CEOs of either the larger ports of NY or LA. Awwwwwwww.

You could institute a locals refund or discount like there is on the CBBT.

We completely agree on this one -- I would just change the criteria for a refund to be that only cars registered in VA could get the transponders, and ergo, the lower "commuter" rate. If the new expanded driver fees only apply to VA residents, then this should be just the same. If you get the chicken ****, then you need to get the chicken salad.

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1) You can tax the property, and the income derived from US operations. If you were correct, then the new APM Terminal would pay nothing. I've been on the other end of that -- US company with foreign operations, and believe me, the German gov't got every penny they thought they had coming.

2) Not really -- taxing VIT would deliver tax revenues to the cities that bear the burden of hosting the terminals -- PTown, NN, and Norfolk -- at the expense of the revenue stream to the Commonwealth.

1) I meant "in transit" property, specifically cargo containers and ships. Property that is based in the U.S. is open for taxation. Also, yes, revenue derived from operations is taxable. Containers and ships are expenses.

2) True. But how do you tax a state company/agency?

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Containers and ships are expenses.

I can hear my MBA accounting professor screaming right now. Containers and ships are assets -- the depreciation on them is the expense. If they are capital assets, they should be taxable. By whom is the unknown. But at some level, they are like pro ball players that get income tax bills from every state that they play in, based on a percentage of their income that a given game in a given state represents. Dallas Cowboy players don't get a free pass from Maryland when they play that one game at FedEx Field, even if Texas doesn't have an income tax. A Liberian flagged vessel shouldn't get a free pass for the number of days they are in the taxing jurisdiction of the commonwealth of Virginia.

The 8000+ TEU ships that call here are worth about $150-175 million each -- new ULCSs will be 1.5 times that -- value of the ship, not the goods in transit. I will bet, on average, there is one pierside at PMT, for example, every hour of the day, on an annualized basis -- therefore, should add $175M taxable property. Why shouldn't the city of Portsmouth be able to realize the property tax revenue those plant assets represent? If they have to chase ten shipping lines for it, it would still be worth it.

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I can hear my MBA accounting professor screaming right now. Containers and ships are assets -- the depreciation on them is the expense. If they are capital assets, they should be taxable. By whom is the unknown. But at some level, they are like pro ball players that get income tax bills from every state that they play in, based on a percentage of their income that a given game in a given state represents. Dallas Cowboy players don't get a free pass from Maryland when they play that one game at FedEx Field, even if Texas doesn't have an income tax. A Liberian flagged vessel shouldn't get a free pass for the number of days they are in the taxing jurisdiction of the commonwealth of Virginia.

The 8000+ TEU ships that call here are worth about $150-175 million each -- new ULCSs will be 1.5 times that -- value of the ship, not the goods in transit. I will bet, on average, there is one pierside at PMT, for example, every hour of the day, on an annualized basis -- therefore, should add $175M taxable property. Why shouldn't the city of Portsmouth be able to realize the property tax revenue those plant assets represent? If they have to chase ten shipping lines for it, it would still be worth it.

Stupid finance. I haven't taken a class in or used econ or engineering finance in 6 years. You know what I meant.

A U.S. based team or company playing or operating in another state is subject to the tax laws of said state because of reciprocity. Without reciprocity, the United States would be 50 autonomous states united in a confederation. That was the U.S. under the Articles of Confederation. If that was still in force, then Virginia could tax foreign vessels in transit in Virginian waters. Article I Section 8 of the Constitution explicitly states that foreign commerce is the purview of the U.S. Congress, and Article III Section 2 states that maritime law is the purview of federal courts. Ergo, foreign commerce is federal jurisdiction and is not subject to state law. Since the Constitution, the U.S. has enacted other maritime laws, specifically the Merchant Marine Act, and ratified treaties such as the Hague Rules further governing foreign commerce and taxation of vessels used in foreign commerce.

Ergo, if Virginia were to tax foreign vessels in transit, the foreign firm will sue and win. It is not property that is based in Virginia. You can tax factories, cranes, docks, etc. owned by foreign companies because those items are based in the U.S. If a ship was registered in Virginia or spent a majority of its time in said state's waters, or in the waters of the U.S. for that matter, it would be subject to Virginian taxes and U.S. laws and regulations such as ADA. (The Jones Act would make that illegal, though, since any ships that are used for domestic commerce have to U.S. flagged.) However, since it is foreign flagged and spends a majority of its time in transit, that vessel is subject to the taxes and regulations of the home port country. However, the ship is subject to international maritime or aviation laws as those are treaties ratified by member countries.

A better comparison is registration of recreational boats. Boats are subject to the state and local taxes in the state it is registered and the locality in which it is home ported. If that boat sails to another state and remains there for limited duration, it is not subject to that state's property tax laws. However, it is subject to docking fees. Again, we are back to reciprocity. Each state observes the laws of all other states. Likewise, the U.S. observes laws of other countries in that we don't tax foreign ships and they don't tax ours. Again, since foreign commerce is the purview of the federal government, any state law or tax that interferes with that authority is unconstitutional. There are countless court cases supporting that.

Here's a good case: U.S. Supreme CourtJAPAN LINE, LTD. v. COUNTY OF LOS ANGELES, 441 U.S. 434 (1979)441 U.S. 434JAPAN LINE, LTD., ET AL. v. COUNTY OF LOS ANGELES ET AL.APPEAL FROM THE SUPREME COURT OF CALIFORNIANo. 77-1378.Argued January 8, 1979Decided April 30, 1979

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Stupid finance. I haven't taken a class in or used econ or engineering finance in 6 years. You know what I meant.

Well, not really. I would pray for the day that my ad valorem tax was based on my expenses instead of my assets.

Fascinating. Knew I would learn something here. I always do. Several observations:

1. If I find myself on the same side of an issue as William Rehnquist, then I know I am on the side of the angels.

2. The idea that the containers are functionally part of the ship is an interesting thought. Structurally, that is pretty accurate.

3. The argument that containers "remain outside Japan only so long as needed to complete their international missions" is pretty specious. I will bet that a significant percentage never set foot in Japan.

4. Based on my past dealings with the California FTB, it comes as no surprise that a California tax body would take an aggressive posture, especially in 1979. That was right after Prop 13 passed and they were scrambling to find every penny of tax they could.

5. The court found merit in many of the thoughts I had -- I just didn't consider the fact (which I agree with) that foreign trade issues trump the legitimate impact on localities that foreign trade creates, and which they probably should be compensated for -- were it not for the higher merit issue.

6. Your thought that there is a danger in US flagged ships being taxed in foreign ports is one I will gladly accept. The miniscule size of our merchant marine effectively limits our exposure on this to zero.

Before this slid off into a discussion of the tax liability of ships and containers, it started with a discussion of how to get container chassis to "pay their way" for their impact on VA roads. I don't see any way that these chassis are covered by this provision, because they never are in foreign trade. Hoobo, you and I had a discussion almost a year ago over the wisdom of the state of VA enacting a user fee for containers departing any port in VA (used to be that this was exclusively VPA -- now would cover APM's PTown terminal). I love the idea of a $40 fee on every container, refundable if it departs by rail, or during off hours. There will be some of the "please sir, may I have another" crowd in HR that thinks dust will blow in the streets if we don't pass every city on the East Coast in TEUs per year (please reserve that kind of boosterism for where it belongs -- HS football -- and if you want to see that done right, check out my two kids' HS alma mater on ESPNU tomorrow night at 7!).

I thought I would never see Norfolk make a serious threat to bar containers from Hampton Blvd during afternoon rush -- but they have (probably just Paul Fraim kissing Larchmont and West Ghent butts). Now to get containers moving on rails in a percentage that even comes close to national averages would help.

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Of course, such taxes on containers would have to be implemented nationally, or else shipping firms would just scoot on down to Charleston or up to Baltimore and on on. I just wish that the State (the Port) would own up to being primary beneficiaries of the current Third Crossing scheme and contribute more to the funding mix for that project.

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Before this slid off into a discussion of the tax liability of ships and containers, it started with a discussion of how to get container chassis to "pay their way" for their impact on VA roads. I don't see any way that these chassis are covered by this provision, because they never are in foreign trade. Hoobo, you and I had a discussion almost a year ago over the wisdom of the state of VA enacting a user fee for containers departing any port in VA (used to be that this was exclusively VPA -- now would cover APM's PTown terminal). I love the idea of a $40 fee on every container, refundable if it departs by rail, or during off hours. There will be some of the "please sir, may I have another" crowd in HR that thinks dust will blow in the streets if we don't pass every city on the East Coast in TEUs per year (please reserve that kind of boosterism for where it belongs -- HS football -- and if you want to see that done right, check out my two kids' HS alma mater on ESPNU tomorrow night at 7!).

I thought I would never see Norfolk make a serious threat to bar containers from Hampton Blvd during afternoon rush -- but they have (probably just Paul Fraim kissing Larchmont and West Ghent butts). Now to get containers moving on rails in a percentage that even comes close to national averages would help.

Google container fees and ports of L.A. and Long Beach and see the new fight that is brewing here. A state legislator from Long Beach has submitted a bill that would impose a $30/TEU fee to address environmental concerns. The bill stipulates that this money would be used for only port related infrastructure such as cold ironing, electric/LNG trucks, dockside rail, and off-site rail. By limiting the spending to infrastructure that is only used by the ports, this is effectively a user fee and not a tax. Of course, all these "environmental improvements" don't actually help the shipper but help the community at large. Still because the money is kept within the ports, the state would probably get away with this fee in the courts. California may have found a loop hole.

However, Mayor Villaraigosa of L.A. wants to expand the provisions of the bill to include replacement of the deteriorating bridges at the ports which are used both by port traffic and citizens at large. The problem is the latter. If this fee is used on facilities used by the general public, then it becomes a tax. Shippers have a big problem with this proposal and have threatened to sue. They'll win too. The ports don't like it because if the fee goes away then they can't pay for the environmental improvements; and therefore, the moratorium on construction, currently in place until environmental impacts are addressed, continues.

If L.A./Long Beach can get the bill through the state house and the governor to sign the legislation, then it will probably have a ripple effect at other U.S. ports. Instead of a $30/TEU fee, they may charge something less in order not to lose business. Then again, 40% of all containerized cargo comes through the L.A./Long Beach superplex and of those good, 50% is consumed in Southern California, so those two ports have some muscle. In any event, if this user fee works, then maybe VPA can look into it as a way to pay for and improve rail movement at and out of the ports. But like Padman said, you don't want it to be so high that other ports even a day steam up to Baltimore look like cheaper alternatives. HR has to have some economic advantage that would allow it to charge higher rates and get away with it.

What I would also propose is to increase ship fuel taxes using the HRTA like lil-bear mentioned earlier. Since this tax is on fuel and not on the ships or containers, it should be constitutional. That money can go to pay for road repairs, fund rail improvements, or begin a self-supporting cold ironing program. Shippers may like the latter because instead of burning fuel in port, they could cold iron and save a portion of what they'd pay for fuel and fuel tax. Shippers break even (compared to what they paid before in fuel), the ports get a self-supporting cold iron program, and HR gets rid of diesel and bunker fuel particulates.

Another potential fee would be on water and sewer services. All HR cities with ports own their water treatment plants. They could raise the rates on this special needs customer to pay for water system improvements, thus freeing funds that would then be used on roads. HRSD and the cities could also raise sewer rates to pay for sewer upgrades reducing the burden on residential customers.

The idea behind having a port is to lure direct and indirect business. Yes, the port generates positive cash flow, but its the perceived side benefits that the state is after. They want the warehouses and jobs that come with having a port. They also want to leverage the presence of a port to lure factories that either produce items for export and consume the imported items. There also is all the fuel tax collected on the diesel used by trucks and trains. But as you pointe out, scm, these economy benefits help the state but since many of those factories are not located in the communities with the ports, those cities only see the burden.

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  • 1 month later...

House overrides Bush Veto of Craney Island expansion, Senate may vote today.

The 361-54 vote is the initial step of what could be the first overturning of a Bush veto. The Senate may vote on the override as early as today. Previously, both chambers of Congress passed the bill by more than the two-thirds majority required to overturn a veto.
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