Published: August 24, 2006 11:02 am            

Why we’re pursuing a port authority

The Clinton Regional Development Corp. and the Clinton Area Chamber of Commerce have been providing information on the concept of a regional port authority and development of a Foreign Trade Zone. Both can add significantly to our arsenal of economic development tools. The more details we can provide on both will reduce the number of questions and misinformation in the future.

The CRDC and the chamber have been entertaining the concept of creating a port authority, due to the number of inquiries from companies considering job creation and private sector capital investment in the greater Clinton region. In light of this and the high probability of continued inquiries, we feel it is appropriate to learn about this economic development tool to better compete in a global economy.

Port authorities have been in existence since the formation of the original colonies. In some areas they were called port councils, but essentially they provided the same operation: collection of tariffs and providing harbor security. Today port authorities provide a much broader base of service, and not only provide service to waterways, but impact air, rail, truck and pipelines as modes of transportation.

Port authorities provide an organized structure to utilize all the transportation modes that are available to a certain region. They also assure transportation, storage and security are available to all of industries in a region on a fair and equitable basis. Formation of a port authority creates a unified service area with one governing body that is impartial and seeks regional harmony for economic development.

A port authority can apply for state and federal government funds as a joint regional application, representing a diverse group of political subdivisions thus creating a higher degree of approval over single, standalone applications. This way we are able to return tax dollars back to the region from Des Moines, Springfield, Ill., and Washington, D.C.

The passage of Iowa House File 868 (see Division XV of the bill) was driven by inquiries from international corporations evaluating areas to expand their manufacturing facilities, which prefer to work with one regional port authority rather than a number of individual, sometimes competing transportation entities.

In Illinois, port authority legislation is created for specific locations in the state on a case by case basis. The Legislature uses the proposal drafted by each economic development region to structure a separate piece of legislation, which is site specific for that region.

The legislative intent of port authorities is that they be fiscally self-sufficient. The issuance of revenue bonds is the main source of operating capital for a port authority. User fees and income produced through operations will retire the bonds.

The positive effect of a port authority is clear: another tool in the box to attract industrial growth and economic development, resulting in an increase of good paying jobs and a broadening of the tax base.

The only drawback we can see is the establishment of a port authority that is not used to its full potential. We recognize there is no sense of having a port authority just to say we have one. We know we must carefully look at all the alternatives, then take appropriate action.

Foreign Trade Zones are a related economic development tool that often times conjures up the image of a vast waterway on the ocean with large ships waiting to enter a port. This is not true in the age of a global economy. We are all connected to the rest of the world.

Corporate America and the manufacturers of the world want all nations in their customer base. Access to materials and customers is critical for a business exploring the greater Clinton region. We must be able to demonstrate to these companies that we can provide fast, inexpensive means to access foreign markets.

It is a well-documented fact that American employers that export their goods abroad pay higher wages than those that do not export their goods.

To simplify the concept, the area designated as an FTZ is no longer part of the United States. It becomes an area controlled and regulated by United States Customs, which has authority over all goods and activity that moves in and out of the zone. Under FTZ procedures, the usual formal customs entry procedures and payments of duties are not required on foreign merchandise unless and until it enters customs territory for domestic consumption, at which point the importer has the choice of paying duties at the rate of either the original foreign materials or the finished product, whichever is less. The use of FTZ defers, and in some cases lessens or removes the duty on foreign goods.

The use of FTZs provides advantages for both large- and small-sized companies. Small- to medium-sized companies can enter the world market place and utilize the tools the same as big corporations. Large local companies have used FTZs for years that are established at their home office, with the local company simply designated as a sub-zone.

The concept and use of FTZs and port authorities is nothing new. What is new is the desire to examine this tool as a way to attract new employers to the greater Clinton region, and to help the firms already here add jobs and capital investment. Our mission is to research tools that will enable us to have the best answers for those who seek to create jobs and to make capital investments.

Steven Ames is president/CEO of the Clinton Regional Development Corp. Ed O’Neill is the director of infrastructure development for the Clinton Area Chamber of Commerce.

        

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