Large cranes and heavy machinery cover the area on and around the State Pier in New London. Construction on the massive project began in June of last year with the demolition of a warehouse and maintenance shops at the site. Since then, crews have demolished additional structures, including portions of the east and west decks, and begun building out new platforms. But it will be another 11 months before the brand-new pier reaches “substantial completion” and can begin its new life as a staging ground for the assembly of wind turbines.
When all is said and done, the project is expected to come in at just under $250 million, assuming there are no more surprises in store. That is nearly $100 million more than when the state entered into a Harbor Development Agreement with Northeast Offshore (a partnership of Eversource and Ørsted, a Danish company) and Gateway, the terminal operator in February of 2020. It’s a number that has ruffled feathers and led to no small number of questions from local residents and the media, as the project continues in the midst of scandals, resignations, and questions from a state watchdog group.
“I think that the escalating costs going from $93 million to $250 million, are a clear indication that there’s a serious problem,” said local resident Kevin Blacker during an April press conference with residents and business owners who oppose the project. “It’s a very clear indication of bad judgment.”
But leaders at the Connecticut Port Authority say there is a perfectly reasonable explanation for the cost increases. The initial increase from $93 million to the agreed-upon $157 million came largely from a dramatic change in the scope of the project, which, according to CPA Board Chair David Kooris, added more than $30 million. The rest? Kooris says it’s a combination of a “variety of factors” that are difficult to pin down to specifics. “Some were soft costs that hadn’t been included in the original 157,” he explained at a recent board meeting. “The bulk of it was just estimates meeting reality. We had estimates from 2019/2020. We then brought them to market through a competitive bid process, which resulted in real pricing.”
Outgoing Port Authority Executive Director John Henshaw couldn’t be more specific about those cost increases when we spoke over the phone at the beginning of April, saying that the amount was just the sum total of the around 40 work packages out for bid. We won’t know the final price tag for the project until it is completed in March of 2023, but Henshaw says he doesn’t foresee any additional major expenses.
Meanwhile, the project has been repeatedly undercut by a series of scandals during its three-year span. Most notable is the ongoing investigation into former Office of Policy Management Deputy Secretary Kosta Diamantis, who left the Lamont administration in 2021 following questions into his daughter’s hiring at the State’s Attorney’s office. Shortly after his departure, it was revealed that the FBI was looking into questionable practices by Diamantis as head of the state’s school construction program. During the investigation, a Federal Grand Jury subpoena requested documents concerning those construction projects as well as the State Pier. Diamantis had been tapped to oversee the project for OPM in early 2020. So far, there is no indication that the federal investigation has affected the pier project whatsoever.
Diamantis’ involvement in the State Pier was itself the result of problems at the Connecticut Port Authority which led to the resignation of both the Executive Director and Board Chair in 2019. Following a report from the state auditor, which cited a lack of proper documentation of finances and receipts, Gov. Lamont instructed OPM to oversee the Port Authority’s financial matters.
Most recently, the State Contracting Board released a report calling into question the Port Authority’s legal ability to enter into the Harbor Development Agreement in the first place. In the report, they claim that a statute allowing the CPA to enter into a public-private partnership (like the HDA) had expired in 2019, months before the agreement was signed.
The Port Authority, meanwhile, disputes that claim. In the report, the Port Authority, along with OPM, says that the term “public-private” was being used in a more general way and not in accordance with the specific statute the Contracting Board is citing. Either way, Port Authority leaders say they aren’t worried that this dispute could derail the project and so far, they’re right.
It hasn’t just been state agencies and state employee scandals throwing wrenches into progress at the pier. Local business owners, unions, and even New London’s mayor have taken issue with certain decisions along the way and not everyone has walked away satisfied.
One who has, though, is Mayor Michael Passero. After early concerns that the redevelopment of the pier would force New London residents to subsidize a commercial enterprise with their tax dollars, the city has now entered into lucrative agreements of its own. At issue was the fact that the pier would be operated at tax-exempt status, essentially robbing the city of potential property taxes. The city was also set to lose out on state PILOT funds to offset that lost tax revenue when the pier was transferred to the Port Authority.
Now, agreements between the city, Northeast Offshore, Gateway, and the Port Authority put New London in a position to collect substantially more than it would have previously. An agreement with Northeast Offshore alone provides $750,000 per year for 10 years but allows for up to $1 million per year depending on how much energy the state commits to buying from the wind farm. According to Mayor Passero, the funds they’ve secured in these agreements have replaced the city’s lost revenue “tenfold.”
Not everyone is quite as enamored with these agreements as Mayor Passero. Some local critics, as well as local journalists, have voiced concerns over a specific clause in the Northeast Offshore agreement which seems to restrict the mayor’s ability to speak negatively about the project.
“When requested by the project, the host community shall acting through its Mayor or his designate issue or advance, or join with the Project in issuing or advancing press statements, other communications, and initiatives in support of the Project, including (a) all federal state and local permitting initiatives; (b) proposals by NEO and affiliates from time to time including solicitations for the procurement of offshore wind energy; and (c) any other positive pressed statements, communications, or initiatives reasonably related to the foregoing. Without limiting the foregoing, the parties mutually covenant and agree not make statements or take actions which may interfere with or harm the interests of the other in connection with the Project.”From the Host Community Agreement between NEO and the City of New London
Mayor Passero, though, disagrees. “I’ve never been negative about the project. And I don’t feel that there is anything in that agreement that restricts me from speaking my mind on any issue related to the project.”
He says he is, in fact, excited about what the redeveloped pier means for the city, not just in new revenue but in jobs. He’s expecting 100-200 full-time jobs to come directly out of the pier, plus additional opportunities along the supply chain. “This will now bring a whole other industry to the city along with its supply chain,” he says. “We’re expecting that this will be a real game-changer here.”
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But not everyone has come out the other side satisfied. A local salt company, DRVN Enterprises, was previously based out of the pier before the project began. The company’s lease ended, according to the Port Authority, and they were forced to vacate that location. DRVN’s owner, Steve Farrelly, says his company took a major financial hit as a result and hasn’t been able to recover fully.
“We’re not able to get conventional banking, and we go to work every day, but we still don’t have the resolve,“ says Farrelly, who adds that he hopes to apply for some type of state aid.
The pier was also home to the longshoremen who worked the docks when ships came in with cargo. That port is, of course, non-operational during construction which has left those dockworkers out of a job. “We’re losing members because there’s no work there,” says Peter Olsen, a trustee with the International Longshoremen’s Association Local 1411. “But my vision is that we will grow back stronger.”
Olsen says the union has been told that once the pier is operational next year, there will be 70 jobs available for his men, but he says they feel a little in the dark. “We ask, continually ask what kind of training we need, what kind of training we can get either from the state or the Port Authority or Gateway, and we cannot get anything specific.”
Henshaw says the Port Authority and Gateway have been in contact with the ILA’s international leadership and they’re optimistic about the future with the union. “They’ve taken an active interest in the offshore wind industry, which is not surprising,” says Henshaw. “And so I think they’re looking to find their appropriate role in that industry.”
Olsen echoes this, saying that the ILA is interested in establishing a pay and benefits package for the emerging wind industry, and the New London pier presents the first opportunity to do so. In the meantime, Olsen is worried that Local 1411 won’t have enough workers when the pier finally does open up to ships again and he’s actively looking for more.
The redeveloped pier could mean more work for everyone if it lives up to expectations. “For over a hundred years, it’s never been able to really gain the success as a cargo port that you would think it might have – or might have achieved – just never found the right formula,” says Mayor Passero. “Now we’re guaranteed for at least the next 10 years to perhaps 20, during the period of time it takes to build out this offshore energy-generating wind operation offshore, it will guarantee that the harbor will be bustling and busy with constant activity.”
“We’re going to see a five-fold increase of vessel calls at the port over the next 10 years, over the previous 10 years before that,” agrees Henshaw. “So, there’s going to be a significant increase in investment calls and activity as a result of his redevelopment of the facility.”
But that reality is still a way off. Henshaw says the pier is about 40% completed as of early April but that he believes they will remain on track for a March completion. The next hurdle is also the next cost increase, an estimated $6.8 million to ensure the completion time with the construction company, Kiewit.
From there, they will be filling in the space between the two piers to create a large platform for the new facility. Until then, we’ll be keeping an eye on the project as it continues to progress.