Little Rock port OKs try for debt of $5.5M

Improvement bid will need city nod

The Little Rock Port Authority took the first step Wednesday to issue up to $5.5 million in debt that the agency's top official says will help make the Arkansas River port more competitive on the global stage.

The bond issue that likely will take place this fall will provide the $4.5 million that is the required local matching money for a $6.5 million grant the U.S. Department of Transportation awarded the port, said Bryan Day, the port's executive director.

"We are going to issue debt to make capital improvement," he said. "We haven't done that in a long, long time. I can show the board and the community that we are good stewards of our money and we can afford it and manage this debt and come back in a couple of years and issue more debt."

The money will be used to pay for improvements to the port's slack-water harbor -- a man-made channel that allows barge operations regardless of river conditions -- that will permit shipments to be transferred directly from barges to rail cars or from rail cars to barges. Now trucks have to be used to transfer the material.

"That's important because it will open up new markets for us," Day said.

Rail movement within the port is the port's primary revenue generator, accounting for about more than $2 million in the 2017 budget. The port expects to move about 7,000 loaded rail cars in 2017 and receive, on average, $300 per loaded rail car.

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The grant and bond issue also will pay for the construction of a mile of additional storage track at the port, which will be enough to allow the port to store a unit train, which is a 60-car train carrying all the same material. The money will also pay for a new road to the slack-water harbor, which will make it safer for oversize trucks to access the harbor.

And if all the work comes within budget, it could leave $1 million available for other capital improvements within the port, such as another rail extension or land purchase, but Day said he hasn't settled on what they might be yet.

The Port Authority's board of directors voted Wednesday to issue the debt on the same day it convened an afternoon planning retreat focusing on economic development. The bond issue still needs the approval of the Little Rock Board of Directors.

"It's an exciting time for the port," Day said. "By issuing this debt, it's going to allow us to make improvements; it's going to allow us to be more competitive on the global stage and attract new markets. What we're talking about today is economic development, and that's exactly what this is all about."

The bond issue is a trial balloon for acquiring future debt. If all goes well with the debt, Day said, he would like to return to the board in a few years to issue a more ambitious debt load to pay for land improvements in an effort to help make the port more attractive to companies wanting to expand their operations.

"Everything has to be reasonable, strategically planned and well thought out," he said. "Maybe in a few years, we issue more debt of $10 [million] to $15 million and we build 15 miles of road and rail to our site so when that 500-acre, 800-job prospect comes to town, instead of standing out in a bean field, saying, 'Close your eyes and imagine,' I can drive right to it, and the roads are ready, it's clean, and I can say, 'This is yours for the taking.'"

"We no longer are just competing with Texas, Missouri and Mississippi; we're competing with the world, and Arkansas has very few pad-ready sites for manufacturers. I want this port to set the benchmark for that."

Day is pursuing the bond issue even though, he said, the port has millions of dollars in the bank.

"I have in excess of $6 million unrestricted money in the bank," said. "I don't want to tap that. Part of it is I want to show the community that we can manage debt. But also if you get a great opportunity with a prospect, you need a rail spur or wetlands mitigation, it's nice to have that money in the bank."

Mayor Mark Stodola, who is the city Board of Directors' liaison to the Port Authority board, backs Day's strategy.

"It's excellent," Stodola said. "I am very proud of our port for going after the TIGER [Transportation Investment Generating Economic Recovery] grant. This bond issue is necessary to help match that to get the project completed, and they have the revenue to pay for it."

Business on 08/17/2017

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