Changes in cargo shipping patterns, stricter federal rules for annual maintenance dredging and the closure of Georgetown’s steel mill could force state officials to shut down the coastal city’s seaport, despite residents’ attempts to save the struggling maritime facility.
State legislators who oversee the State Ports Authority last week questioned whether the Georgetown port can remain viable in the face of those challenges, particularly since the fast-silting Georgetown Harbor limits the types of ships that can use the port.
“It is a very challenging proposition by any stretch, and we do the best we can,” Jim Newsome, the SPA’s president and CEO, told the legislative review and oversight commission during a meeting in Mount Pleasant.
Georgetown Harbor has an authorized depth of 27 feet, but its current depth is between 18 feet and 20 feet because no one has the $5 million to $6 million it will take every year to maintain the maximum that’s allowed.
These days, the port — which handles noncontainerized cargo known as breakbulk — mainly is used by barges shipping products for cement companies. The annual tonnage of overall shipments has been steady in recent years — between 450,000 and 600,000 — but well below the 1-million-ton threshold needed to qualify for federal dredging funds.
The Office of Management and Budget is expected to raise that threshold to as much as 5 million tons per year, so the lion’s share of federal dollars will be directed to fewer harbors with more tonnage.
Georgetown County voters last year approved a local-option sales tax that will, among other things, raise $6 million over the next three years to help dredge the harbor back to its 27-foot depth. But that referendum was passed before a new Army Corps of Engineers estimate for the project nearly doubled the cost — to about $60 million.
The state Legislature also set aside $5.25 million to help restore the harbor’s depth. That money has not been spent and Sen. Larry Grooms, R-Charleston, questioned whether it should still be used for that purpose.
“Even if we spend the money to dredge it out, we cannot count on the federal government to maintain it,” Grooms said, adding that the General Assembly should consider taking back the money and using it for other projects.
Sel Hemingway, Georgetown County’s administrator, said the dredging project likely would be canceled if the state took back its share.
Georgetown County Council recently borrowed $28 million against the local-option sales tax revenue so it can more quickly begin a list of road and public works projects. Hemingway said port dredging might be moved to the end of that list while officials wait to see what funding ultimately is available.
If the dredging never occurs, Hemingway said, the sales tax money earmarked for the project might be available for another use.
Hemingway said the closing of the ArcelorMittal steel mill in August forced residents and politicians to rethink how that property and the port might be redeveloped. The mill had been one of the port’s biggest customers, and SPA officials were counting on it to raise the port’s tonnage beyond 1 million per year.
“There are a lot of opinions, but this gives us an opportunity to look at redevelopment,” Hemingway said. “There are efforts underway to ensure we have an objective type of assessment of how that entire property should be developed.”
Newsome said the steel mill’s closure “makes a difficult scenario even more difficult,” adding that the state’s money might be better spent elsewhere.
“We thought that if we could routinely get over 1 million tons it was worthwhile,” Newsome said. “I think the question today is finding a scenario where you could get 1 million tons without the steel mill.”
Grooms said even if that were to happen, there’s no guarantee federal dollars would follow.
“We believe that (maintenance dredging) would be a federal obligation and responsibility, and it’s very likely that they will not do that,” the lawmaker said.
Grooms said the Port of Georgetown might be similar to the SPA’s Port Royal property, a former small cargo terminal in Beaufort County that was closed in 2004 after changes in shipping patterns sent business to larger ports. The SPA has a contract with a Greenville developer that wants to purchase the site, but the $15.4 deal has not yet closed.
“Some of the breakbulk cargo that you would see flowing through the Port of Georgetown is now being transloaded into containers, and Georgetown is not a container port,” Grooms said. “There are still some breakbulk products that could move through there — wood products and cement — but I don’t believe the tonnage would be enough that the federal government would maintain that channel.”
The smaller vessels capable of calling on Georgetown restrict trade opportunities to nearby regions, primarily Canada, Mexico, the Caribbean and northern parts of South America.
“It’s a very similar pattern to what happened down at Port Royal,” Grooms said. “The ability for that to be a viable port changed when shipping patterns and the type of cargo that could be handled changed.”
Reach David Wren at 843-937-5550 or on Twitter at @David_Wren_