The 20-year agreement, which takes effect May 1, requires that the port authority be paid an annual fixed fee of $500,000, increasing by $250,000 every five years. The CPA also will receive a variable fee of 7 percent of Gateway’s gross revenues at State Pier, with a minimum annual guarantee of $500,000, which has the potential to increase every five years based on Gateway’s percentage increase in gross revenues.
In addition, Gateway will pay an annual wharfage and dockage fee equal to 50 percent of all wharfage and dockage user fees at State Pier.
“All together, these terms will provide CPA with a substantial increase in revenue versus the current operations,” the port authority said in a statement Monday. CPA has the option to extend the agreement two additional 10-year periods.
According to the agreement, Gateway will invest at least $30 million in capital improvements at State Pier over the next 20 years.
Gateway Terminal is a privately held Connecticut-based company, started in 1985 by its president, Larry Smith. It’s the largest marine terminal operator in Connecticut, currently managing five terminals on 75 acres in and around the state’s Port of New Haven.
CPA has promoted State Pier as a potential hub for staging giant wind turbine components to be used in the construction of New England’s planned offshore wind farms. Gateway is experienced at handling a wide range of breakbulk, dry bulk and liquid bulk products.
CPA’s agreement with Gateway mirrors recent actions taken by other port authorities along the East Coast to find private-sector partners to operate their marine terminals.
In the fall of 2018, the state of Delaware finalized a 50-year agreement with Gulftainer to operate and invest up to $600 million into the marine terminal at the Port of Wilmington.