St. Paul Port Authority Builds Legacy On River, In Community
The 89-year-old St. Paul Port Authority (SPPA) stands as the uppermost port complex on the Mississippi River. The authority oversees four terminals in the St. Paul, Minn., region, connecting farmlands and industry to the Mississippi River and, more than 1,800 miles downstream, to the Gulf of Mexico and the world market.
Besides its strategic location, the St. Paul Port Authority could also easily claim another superlative as one of the most diverse on the inland waterways, with its influence extending beyond terminal oversight to include energy financing and property redevelopment.
The Minnesota Legislature voted to form the SPPA in 1929. Over the next 30-plus years, the authority added its four river terminals: Barge Terminal One, Barge Terminal Two, Red Rock and Southport. Those four terminals remain the core of SPPA’s waterway presence.
“Grain going out and fertilizer coming in are definitely king up here with the Minnesota farming community,” said Kathryn Sarnecki, vice president of redevelopment and harbor management for the St. Paul Port Authority. “We also bring in a lot of road salt by barge, and cement and aggregates also come in by barge as well.”
According to the port authority and data from the state of Minnesota, close to 4.3 million tons of cargoes came into the port in 2016, with cement, road salt, fertilizer and aggregate serving as the top commodities. Agricultural products, including soybeans, corn, grain and wheat, were the top exported commodities in 2016, with close to 3.9 million tons of cargo leaving the St. Paul area.
Port Tenants
Sarnecki said SPPA’s four terminals are busy with both longterm and newer tenants who all represent the strengths of the region. Barge Terminal One, which dates to the 1930s, features scrap metal recycling and aggregates, along with salt, feed additives and petroleum coke. Tenants include Northern Metals, Morton Salt, Hawkins Inc., Aggregate Industries, BThree, Contanta Terminals, Flint Hills Resources, Westway Feed and Cemstone.
Barge Terminal Two is home to Upper River Services, the Port Authority’s harbor operator. At Barge Terminal Two, Upper River Services houses its dispatch center and offers fleeting, drydocking and barge maintenance and cleaning.
The Port Authority’s Southport Terminal is located just downriver from the city, adjacent to the St. Paul Downtown Airport.
“That area was developed in the 70s, but it’s also the area where we have the most new business,” Sarnecki said.
Tenants include Ingredient Transport, Alter Trading, Hawkins Inc., JF Brennan, LS Marine, Gerdau and Origination.
Just downriver from the Southport Terminal and on the east bank is the Red Rock Terminal, which features the Gavilon Red Rock Elevator, along with other feed, grain, cement, asphalt and aggregates services from Barton/Tiller Corporation and Continental Cement. Sarnecki added that a strength of Red Rock is that it’s outside the river’s flood plain.
Port Optimization
And while all four terminals have roots that go back decades, the St. Paul Port Authority continues to refine and develop those facilities to bolster and expand the flow of commerce. SPPA has been working with a consultant to conduct port optimization modeling.
“They’ve been looking at what is coming into and out of St. Paul, our port, and also the region as a whole,” Sarnecki said. “They’re also looking at opportunities for products that are not on barge or rail to move to barge and rail, and trying to figure out what some of the pinch points are for our users and tenants.”
One pinch point is located at the Port Authority’s Red Rock Terminal, where a rail spur crosses the access road to the terminal. With more unit trains serving the terminal, road access to and from the terminal is often blocked.
“Because of where the line runs, we can get very heavily impacted where we’re essentially trapped inside and can’t get to the road to get out—or in,” said Lee Nelson, president of Upper River Services. “Too many times, our folks either can’t get to work or can’t get from work. Or in the middle of the day, can’t get deliveries. That’s something we hope is being worked on and will have some resolution in the not-too-distant future.”
The port authority has proposed realigning that spur around the north end of the terminal. A public meeting was held just last month to seek input from affected businesses and the community.
“We’re going through the process now to acquire the property we would need for that,” Sarnecki said.
In addition, SPPA has identified the potential for increased throughput at the Southport Terminal. To achieve that, the port authority, about two years ago, installed a heavy-lift pad with a capacity of a 250-ton lift from barge to shore.
“The next phase of that project is extending the rail spur so we can go directly from barge to rail,” Sarnecki said. “The rail extension part of that should be coming in the next year.”
Early this year, the St. Paul Port Authority was awarded a $1.8 million grant from the Minnesota Department of Transportation’s Port Development Assistance Program to fund that rail spur extension project, with the total project estimated to cost about $2.5 million.
Sarnecki attributed that grant to the close partnership among port authorities in the region through the Minnesota Ports Association (MPA). The Minnesota Department of Transportation has awarded about $5.2 million in the past year to MPA member ports. The port authority’s heavy-lift pad project, along with dock wall refacing and refurbishments over the years, have all been funded in part through the state’s Port Development Assistance Program. Sarnecki said that consistent funding from the state legislature through the port development program is exciting, with funding going to both the St. Paul region and other members of the Minnesota Ports Association.
Trade Matters
Besides those successes at the state level, the St. Paul Port Authority has also been part of a national and international debate over waterway management and trade.
On the international front, St. Paul, with its strong grain export presence, is integrally connected to the ongoing trade dispute between the United States and China, particularly retaliatory tariffs China has placed on U.S. agricultural products. Paul Freeman, a past president of the Minnesota Soybean Growers Association and chair of the Upper Mississippi Waterway Association, said the Chinese tariff on U.S. soybeans has had a devastating impact on farmers.
“For myself, with just the trade talk and tariffs going with soybeans, the price action took away 100 percent of my profit margin on soybeans,” Freeman said.
Freeman said he expects farmers will store more of their product and take a wait-and-see approach to the market. He recognized the principle at the heart of tariffs—intellectual property and inequity in China’s trade policies—but he questioned the collateral damage.
“We have a good crop coming,” Freeman said. “We just don’t know who we’re going to send it to.”
Freeman pointed to American waterways as the competitive advantage for farmers.
“With our waterway system, we can get our product to the world quite economically, with a good value to our customers,” Freeman said. “With interruptions, you know darn well there will be accelerated investment in infrastructure in other countries.”
Freeman acknowledged that government assistance to impacted farmers might carry them temporarily, but he called that an “ugly bandaid for the situation” and a “very short term” solution.
“Long term, we need to work out a trade deal,” Freeman said. “For soybeans, over half of what we grow goes to the export market.”
Lock Study
On a national level, the Port Authority will also be impacted by a U.S. Army Corps of Engineers disposition study involving the three locks and dams just upstream of St. Paul—Upper St. Anthony Falls, Lower St. Anthony Falls and Lock and Dam 1. The Corps closed the Upper St. Anthony Falls Lock to navigation June 10, 2015, to combat the upriver spread of Asian carp, even though no reproducing populations of the invasive species have been observed on the Mississippi River as far north as the Quad Cities in southeastern Iowa Iowa.
The Upper St. Anthony Falls Lock closure drastically impacted commercial use of the Lower St. Anthony Falls Lock and Lock 1, forcing operators upstream in Minneapolis to either completely shift operations to St. Paul or rely more on trucking. Still, the Corps continues to spend around $1.5 million a year just to maintain the three locks. The disposition study is assessing whether the Corps should continue maintaining the locks or if the agency should divest itself of the locks, potentially selling them to another government agency or private party. Removing the locks and dams is not part of the Corps’ current disposition study.
Nelson said that since the closure of the Upper St. Anthony Falls Lock essentially brought commercial navigation on all three locks to a halt, he supports the Corps divesting itself of the locks.
“We believe they should let those assets go, whether it’s to another unit of government, a municipality or private party—that’s up to them,” Nelson said. “But we prefer to see those dollars go to [operation and maintenance] on the main stem, which supports commercial navigation, rather than to that which no longer supports commercial navigation.”
According to Nanette Bischoff, project manager for the St. Paul Engineer District, the agency continues to gather economic, social and environmental impacts to determine the best recommendation for each lock. That effort should wrap up by December, with a draft report released next spring and a final report complete by December 2019.
Influence Beyond The Riverfront
Away from the waterfront, the St. Paul Port Authority distinguishes itself from many other port authorities by serving as an economic developer for the region. The Minnesota Legislature authorized the port authority to play an economic development role inland. Since then, the port has been acquiring polluted or blighted properties in the St. Paul region and redeveloped the land for light industrial and commercial use. So far, SPPA has developed 21 business centers that are home to some 500 or more businesses. That business development activity supports 25,000 jobs and generates around $28 million in taxes each year.
The port authority has a nonprofit arm called Capital City Properties, through which it conducted its property redevelopment projects. The most recent property SPPA has put back into commerce is a former Macy’s building in the heart of downtown St. Paul. The building was shuttered years ago, and the city approached the authority, requesting that it take the lead on redeveloping the property.
“To put it into perspective, the building had no windows and was just a big brick fortress with five floors,” said Andrea Novak, SPPA senior vice president of marketing. “There were several of the floors that had not been merchandised for up to 20-plus years. The people at the port authority really had to do a lot of due diligence to determine what could be done with the building.”
SPPA approached the Minnesota Wild hockey team and gauged the team’s interest in having a practice facility in the former Macy’s building, now called the Treasure Island Center. The team jumped at the opportunity.
“They saw the vision, and that’s what really spearheaded a lot of the things that are happening there,” Novak said. “Once the Minnesota Wild came on board, a lot of the other tenants followed, like a domino effect.”
The port authority built an enclosed hockey rink onto the top of the Treasure Island Center and installed windows throughout the building, totally changing the aesthetics in the process. Additional tenants at the Treasure Island Center now include Walgreens, Tim Hortons, Stacked Deck Brewing, the Minnesota Housing Finance Agency and TRIA Orthopedic.
The ice rink will also carry a community focus, Novak said, with a percentage of the ice time set aside for organizations that serve children living in poverty. Capital City Properties has established an organization called Equity On Ice to oversee those efforts.
In addition to those property development efforts, the St. Paul Port Authority also manages two programs—MinnPACE and Trillion BTU—which help businesses improve energy efficiencies through innovative financing. Typically, the cost of the energy investments is offset by lowered utility costs, Novak said.
Both waterside and in the community, the St. Paul Port Authority has played an integral role in the Twin Cities region for close to nine decades. And with the innovative programs in the community and smart investments in its terminals, the port authority is set to continue its legacy of leadership far into the future.
