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Work Not Finished For Port Authority

October 13, 2013
By IAN HICKS Staff Writer , The Intelligencer / Wheeling News-Register

WEIRTON - It's been more than a week since the West Virginia Public Port Authority voted to dissolve the Weirton Area Port Authority, and in that time the state board has failed to communicate with local port officials, Chairman B.J. DeFelice said.

Weirton officials have been at odds with the city's port authority since April, when they requested an audit of the port's operations amid concerns over at least two contractors' claims the Weirton Area Port Authority Inc. - the non-profit arm of the local port operation - did not pay them for hundreds of thousands of dollars' of work done at the port terminal at Half Moon Industrial Park.

The situation came to a head last month when Weirton Mayor George Kondik wrote to the state Public Port Authority - from which the local port authority derives its powers - requesting it take immediate action to dissolve the Weirton Area Port Authority. The state board voted to do that at its annual meeting Oct. 2, but DeFelice said his board is prepared to contest that action - possibly through the courts, if necessary.

He believes the state authority's vote was taken in violation of a 2012 operating agreement that he said requires the state to give notice and provide reasons for such action prior to taking it.

"So far, there's been no notification" from the state, written or otherwise, DeFelice said. "We're still doing what we've been doing."

Weirton Port a Three-Pronged Operation

The Weirton port is a three-pronged operation consisting of the Weirton Area Port Authority political subdivision; the non-profit Weirton Area Port Authority Inc.; and the for-profit Tri-State Port Management LLC. It is the political subdivision that the state has voted to dissolve.

Though some have described the structure as complicated or confusing, DeFelice noted such partnerships are sanctioned by the Internal Revenue Service.

"They're not new - they're new to the area," DeFelice said of public-private partnerships.

The idea, DeFelice said, is to combine the non-profit's ability to seek state and federal grant funding with the for-profit company's ability to generate income through private investment and the services it provides to clients at the port terminal. Combining those entities with the political subdivision's authority to issue tax-exempt revenue bonds, DeFelice believes, is an effective way to boost local infrastructure and put the region in a position to compete on a national - and even international - level.

"Everything's old," DeFelice said of local infrastructure. Weirton Steel "handled a lot of stuff (in the past) and it's just old. ... A big company's going to say, 'I can't go there because I don't have communication, or the roads aren't good."

For example, Tri-State Port Management provides a number of services on a contract basis to World Point Terminals for its 680,000-barrel canopy unloading facility for petroleum products at Half Moon Industrial Park. Those services include electricity, stormwater management, security fencing, a sprinkler system and communication services.

"They want to move oil. That's their core competency," DeFelice said of World Point. "They don't have to worry about something that's not their expertise."

Although the World Point agreement is the port operation's only current contract, DeFelice said there are ongoing negotiations with trucking and barging firms to utilize the services at the Weirton terminal. In the future, the port authority also would like to attract companies seeking to export anything from soybeans to steel, coal or natural gas.

According to DeFelice, activity at the port terminal is financed solely through private investment. When he came on board, he said, Weirton City Council had allocated $5,000 - money which was accounted for through the city manager's office and spent on travel expenses and office functions.

What Is WAPA?

Weirton City Council created the Weirton Area Port Authority by ordinance in 2000. In November 2001, the West Virginia Public Port Authority voted to grant the local authority status as a political subdivision.

But DeFelice said the local port authority languished in inactivity for several years following Weirton Steel Corp.'s 2003 bankruptcy until 2009, when then-Mayor Mark Harris appointed five members to the reconstituted board - DeFelice, then-Councilman Max Fijewski, John Brown, Art Miser Sr. and Rick Antol.

In 2010, the Weirton Area Port Authority approved a set of bylaws that would govern the board from that point forward, DeFelice said. Under the new bylaws, any vacancy on the board would be filled by a majority vote of the remaining members.

Today, DeFelice is the only remaining member of that board appointed by the mayor under the old system. Fijewski chose not to run for re-election to City Council in 2011 and Antol, Miser and Brown each eventually resigned. According to DeFelice, Antol and Miser felt they were too busy to remain on the board, and Brown believed his involvement with other entities could lead to a conflict of interest should they ever do business with the port authority.

Current Weirton Councilman Chuck Wright had replaced Fijewski as council's representative on the port authority board, but resigned in April, shortly before joining his colleagues on council in unanimously passing a resolution asking the state Public Port Authority to take an in-depth look at the port's operations.

The other six members of the board include Wheeling businessman Dolph Santorine; Santo Santoro of United Steelworkers District 1; USW Local 2911 President Mark Glyptis; Tony Paletta, employed as a strategic account manager for Scientech; John Dietz, employed by Astorino Development Co.; and Doug Velegol, director of global manufacturing for Mylan Pharmaceuticals.

DeFelice said board members are unpaid volunteers, save for limited reimbursement of expenses.

The non-profit Weirton Area Port Authority Inc. is under the direction of General Manager James Greco - also an unpaid volunteer, DeFelice said. Greco has served in that role since 2011. He is president of Greco Plumbing and Heating Corp.

The Weirton Area Port Authority's website lists three officers for the for-profit Tri-State Port Management LLC: President Martin Phillips, CEO Mike Tipton and Chairman John R. Vargo. The website lists an office for the company at 200 Stanton Blvd., Suite 240, in Steubenville.

Other West Virginia Ports

As a division of the state Department of Transportation, the West Virginia Public Port Authority's goals are much the same as those of the local port authority - develop West Virginia as a transportation hub capable of competing nationally and internationally to attract jobs. It assists both private and public parties in developing public port and intermodal facilities and facilitates the development of local port districts such as Weirton's.

In addition to the Weirton port, the state authority oversees five other inland port districts: the Buffalo-Putnam Port District, the Cabell-Wayne Port District, the port of Huntington Tri-State, the Jackson County Maritime and Industrial Center and the Kanawha Valley Local Port Authority District.

The WVPPA also provides for the operation of the Point Pleasant Rail Terminal and Warehouse Facility and is working to build a multimodal inland container port facility at Prichard, W.Va., in Wayne County.

An email sent to state Port Authority Director James York was not immediately returned Friday.

Future Options for the Weirton Port

Although DeFelice doesn't believe the controversy over the Weirton Area Port Authority is settled, he believes the future holds tremendous possibility even if that board ultimately disbands.

The non-profit Weirton Area Port Authority Inc. and Tri-State Port Management would continue to exist and could work together to continue development of the port terminal. And although the operation would lack the independent bonding authority of a political subdivision, it could still work with the state or other government entities to obtain tax-exempt financing through industrial revenue bonds.

"This can all be done privately," DeFelice said. "It's a huge business opportunity in general. ... It can't be all public because there's no money on the public side."

 
 

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