Delayed And Out Of Money, Cairo Port Development Has Stalled
A public port project in Cairo, Ill., is facing delays and an uncertain future after contracts have expired, and no funding for it has been received in more than seven months.
Minutes from the Alexander-Cairo Port District’s monthly meetings, received as part of an Illinois Freedom of Information Act request by The Waterways Journal, show that contracts with consultant Todd Ely of Ely Consulting Group in Springfield, Ill., with HDR, an engineering consultant with an office in nearby Paducah, Ky., and with all other contractors expired June 30. Additionally, they showed the district had not received any additional money for the port project since that time, and no additional actions were taken toward beginning construction.
Project Background
Gov. J.B. Pritzker visited Cairo in August 2020 to announce that the state was allocating $40 million for the planned port, to be built on 350 acres west of Cairo at Mississippi River Mile 5.7 on the left descending bank, an area commonly known as Eliza Point. Additionally, he said, the state would immediately release $3.9 million to fund final engineering, permitting and site preparation.
A month later, Pritzker’s office announced that the Alexander-Cairo Port District and Plaquemines Port at Mile 50 to 55 on the Lower Mississippi River in Louisiana had signed memorandums of understanding to provide intermodal container-handling services for American Patriot Transport’s planned next-generation container shipping vessels.
In October 2021, port developers held a webinar and said construction was due to begin in 2022, with operation beginning as soon as 2024, and that a development team had between 40 and 60 people working full-time on the Port of Cairo project each week. Vickerman & Associates, a port and intermodal planning and design firm based in Williamsburg, Va., had put together a master strategic and conceptual plan. Aileron Communications was providing public relations.
Construction never began. The last time a state official visited Cairo to talk about the project was June 24, 2022, six days before records show the contracts expired. On that day, Illinois Comptroller Susana A. Mendoza met with Cairo residents and officials regarding progress and said a lot was happening “behind the scenes.” She urged patience.
Port board chairman Larry Klein and Ely, the former consultant and lead contractor who continued to work pro bono through December 31, confirmed this week that there had been no additional funding allocated to the project and no real progress made on it since June 30. “I am concerned about the whole project,” Klein said. “I’m very frustrated.”
Klein said that although he was hesitant to speak about the project, he did so because he wanted to be transparent to the people of Cairo and Alexander County. He also wants to do anything possible to get the port project moving forward again, he said.
Wetlands Mitigation
Concerns about mitigating wetlands in the project area have brought about some of the delays and fears that inflated construction cost estimates could potentially derail the project.
About 150 acres of the 350-acre project area are considered to be wetlands, according to the meeting minutes. Both Corps of Engineers and state regulations require that for every acre of wetlands destroyed as part of a construction project, additional wetland acreage must be purchased and set aside.
Under the Illinois Interagency Wetland Policy Act of 1989, 5.5 acres of wetlands must be set aside per every acre destroyed through construction. Federal requirements are less stringent, typically requiring about half that acreage to be set aside.
“That’s a $20 million hit to the project,” Ely said.
Illinois lawmakers sought to remedy the problem at first via Senate Bill 1770, filed in February 2021.
The bill language amended the acreage requirement, excluding all properties within 6.5 miles of the confluence of the Ohio and Mississippi River, and was passed in both houses by the end of May 2021.
“There was not a single no vote in either chamber,” Ely said. “It was unanimous.”
In August 2021, Pritzker vetoed it.
Port board minutes note that Ely informed the board that although it had been vetoed, it was with the promise that the state of Illinois would purchase 3,000 acres of wetlands in Alexander and Union County from the Corps of Engineers that would be available for the port district to use as wetland credits.
“After further research, it appears that no land was ever purchased by the state of Illinois for this purpose,” according to the meeting minutes.
Board member Zachary Gowin said he had spoken with the county engineer, Jeff Denny, regarding the land buyout in Olive Branch in Alexander County and found out that approximately 100-110 pieces of land tracts had been purchased, but that they amounted to less than 150 acres all together, according to the minutes.
Ely referred to an August 2022 letter that potential investor Decennial Group sent to the governor’s office concerning the importance of wetlands mitigation. The Waterways Journal also requested that letter via the Illinois Freedom of Information Act.
The letter, signed by David Pavlik, managing partner, says that 825 acres of qualified wetlands must be secured no later than the third quarter of 2023 to allow for environmental permit review by state and federal agencies.
“We are not aware of whether the state’s wetland plans align with this timeline,” Pavlik wrote. “Failure to secure qualified wetland acreage could result in a complete halt in necessary project permits.”
Back in 2020, Ely said the port would need a total capital investment of $125 million to $150 million made possible by public-private partnerships. In the letter, Decennial Group quantifies its investment as roughly $200 million. While Decennial is the lead investor, two other major firms had also been lined up to invest, Ely said. Materials received in the FOIA request did not name the other potential investors, and Ely did not name them.
No Phase II Funding Received
Plans called for the first phase of port funding to design the landside portion of the port project to the 35 percent level. The scope of work and all deliverables were completed before the June 30 contract expiration deadline and under budget, with $1.1 million returned to the state, Ely said and Klein confirmed.
According to the port board minutes, “The Corps would like to see 65-70 percent of the project design completed before they begin to approve any of the more than 20 permits that will be required.”
Originally, Klein noted, the board had planned for the 35 percent design level because they believed it would allow investors more opportunities to alter the plan to meet their specific needs.
Ely said that at the behest of the investment group he asked for $7.5 million from the Illinois Department of Transportation (IDOT), the grant administrator, for the second phase of the plan. Of that, $3.4 million is necessary for information needed to draft the permits. The remaining balance was to be used to cover development of the business plan, the financial pro forma, a micro-market analysis and customer acquisition, which he described as meetings with people with non-disclosure agreements who had already expressed interest in the port and other companies from whom the group wants to get firm letters of intent or pre-lease agreements.
The minutes detail several months of requests to both IDOT and the governor’s office seeking that funding.
Sen. Dale Fowler said he has been told the $3.4 million can come from the $40 million allocated for port construction through the Rebuild Illinois plan, but that the balance could not be. As a result, he filed a bill during the last legislative session for $5 million in additional appropriations. When that bill was not considered by the end of the 2022 veto session, Fowler again filed legislation requesting it. It is styled Senate Bill 124 and was filed January 24.
The bill reads, “The sum of $5 million, or so much thereof as may be necessary, is appropriated from the General Revenue Fund to the Illinois Department of Transportation for a grant to the Alexander-Cairo Port District for all costs associated with nonbondable development expenses of the Cairo Port.”
Fowler said “literally everywhere I go, everyone wants to know” about the status of the Cairo port project.
“I’m doing exactly what the governor’s office has requested that we do” in filing the legislation asking for the appropriations, he said. He added, “We can’t give it enough attention.”
Fowler said he appreciates that the governor has spoken about the importance of the project and that his office came up with the appropriations plan, although he, too, is concerned that the port district has gone months without receiving funding and that contracts with those who provided first-phase services have now been expired for months.
“I’m concerned, and I’m afraid of losing our competitive edge because other states are more proactively pursuing the construction of ports on the Mississippi River,” Fowler said.
Decennial Group echoed their concerns in the letter to the governor’s office.
“While we are encouraged by the long-term prospects for the project and remain interested in potentially investing more than $200 million of private sector funds directly into the project and region to complete the effort, we are deeply concerned that development work has stopped due to the unexpected delay in state funding,” Pavlik wrote. “This stoppage has come at a sensitive stage in the development process and is especially concerning given the rapidly accelerating pace of competing port developments. The stoppage and the uncertainty of the state’s plan for critical elements places us all at a critical juncture regarding the overall feasibility of the Cairo Port.”
Decennial asked for a meeting with the governor, immediate funding of the full $18.5 million budgeted for both the second and third phases of the project, a solution to the wetlands mitigation issue and a dedicated governor’s office liaison.
“Governor, we want to reiterate our deep appreciation for your personal passion and your incredible leadership regarding the Cairo International Terminal,” Pavlik continued. “Working together, we are confident this project will revive the economy of southern Illinois, creating thousands of good-paying jobs.”
Fowler said he was trying to stay optimistic that funds could be forthcoming.
“I continue to be appreciative that Gov. Pritzker continues to tout this project and that it’s the largest development project southern Illinois has seen in 100 years,” he said.
Communication Issues
Klein said better communication between local and state officials and private investors would be helpful in moving forward with the port project. At times, he said, that has been inconsistent.
It has been hampered, in part, he said, by changes in the makeup of the port board. Since Pritzker’s 2020 announcement, the other six members of the seven-member port board have been replaced. Klein is the only remaining original board member, which has existed on paper since 2010 and has had a full complement of officers since 2014.
Most recently, Klein said, board members met with representatives from the governor’s staff in December and learned the state had passed legislation (House Bill 1563) making two more appointments to the port board, increasing the board to nine members and giving the governor the right to appoint six of them. Board decisions must be approved by a majority vote of at least five members.
This was done without the knowledge or the request of the board. Klein said board members were told the appointees will have knowledge of wetlands mitigation and economic development.
Moving Forward
Looking to the future, Ely said if the entire $7.5 million for the second phase of funding were received immediately, even if the previous contractors are free to resume the work and honor the previously agreed-upon contract prices, he would not expect work to be able to begin again in earnest until April as it would take time to ramp it back up and for all contracts to be reviewed and signed.
That would still not address wetlands mitigation needs.
Despite the challenges and the delays, Klein stressed that the port project is critical for Cairo, which since the 1960s has fought major population decline and poverty, despite its storied past as a river town.
In announcing the state funding for the port in 2020, politicians were quick to note that 80 percent of the barge traffic in the country floats by Cairo due to its position at the confluence of the Mississippi and Ohio rivers. Navigational traffic in the area was so important that the governor’s office even included former American Commercial Barge Line CEO Mark Knoy among those who gave comments to the media that day.
Klein also still believes it is a good fit for the region, despite his concerns about whether the delays, wetlands issues and lack of funding over the past months will be overcome, allowing construction to begin.
“That’s the only salvation you have left for the city of Cairo,” he said of the port project. “You’ve got to get some income off of the river traffic, but you’ve got to give them a reason to stop.”
Caption for photo: In an August 4, 2020 ceremony, llinois Gov. J.B. Pritzker announces $40 million in funding to the Alexander-Cairo Port District to build a riverport near the confluence of the Mississippi and Ohio rivers, just west of Cairo, Ill. (WJ file photo by Shelley Byrne)
