Officials remain hopeful for intermodal port, but former river operator says $1.6 million ‘wasted’ on effort

Fort Smith area government officials remain supportive of an effort to build an intermodal facility in the region, with Fort Smith City Administrator Carl Geffken saying it is a project worth taking a chance on. But a veteran river operator says the effort is a waste of time, and the money paid to a state legislator working on the project is “excessive.”

The Western Arkansas Intermodal Authority (WAIA, formerly RITA) was formed in 2009 by a joint agreement of the cities of Fort Smith and Van Buren, and Crawford and Sebastian counties.

The authority received just north of $1.6 million in the last eight years with a substantial portion of the organization’s operating expenditures (43.5%) going to Rep. Mat Pitsch, R-Fort Smith, who received the largest portion after September 2011 when WAIA began financial operations and was recognized as a legal entity eligible to receive regular funding. WAIA pays the Western Arkansas Planning and Development District (WAPDD) $11,000 per month to handle administration. From that total, WAPDD pays Pitsch around $7,400 per month with reduced fees during legislative sessions.

Since 2009, Pitsch has received $696,617.06 broken down as follows: annual compensation (2009-2011, $145,101.80 cumulative), consultant fees (September 2011-August 2017, $515,125 cumulative), and expense reimbursement (2009-2017, $36,390.26 cumulative).

By year, the payments are as follows.
Annual earnings:
2009 – $40,000
2010 – $60,900
2011 – $73,801.80
2012 – $88,800
2013 – $88,800
2014 – $88,800
2015 – $81,300
2016 – $86,025
2017 – $51,800 (YTD through Aug. 31)

Annual expense reimbursements:
2009 – $2,024.20
2010 – $4,746.54
2011 – $9,330.11
2012 – $6,451.24
2013 – $7,892.28
2014 – $3,332.31
2015 – $756.56
2016 – $1,517.62
2017 – $339.40 (YTD through Aug. 31)

Regarding cumulative compensation, Pitsch told Talk Business & Politics to “Please keep in mind that total represents work throughout eight years and also includes expenses.”

“In addition, as a contractor, I’ve been responsible for my own taxes and my family’s benefits package. I’ve worked closely with both the RITA/WAIA staff and board to make sure we’ve been good stewards of RITA/WAIA’s revenue.”

Pitsch also has a $40,188 annual salary as a legislator, and in 2016 received $29,975 in per diem and other expenses from the Arkansas House of Representatives. He also received $8,103 in support of travel, meals and other items for legislative related events outside the state. His first term was 2015.

WHAT IF?
Sebastian County Judge David Hudson acknowledged that from the outset there was an understanding a significant portion of RITA/WAIA funds would go toward staffing.

“I understand that Mat is a legislator and that that raises some concerns about two roles, and there has been a reduction in compensation whenever he serves on the legislature, so that has been done. I think we’re all aware of that. But what do you get from his being in that role also? I understand the debate.”

Geffken said a successful outcome will quash any criticisms.

“The point is, the slackwater port could be, may not be, another car plant, another FedEx, another something that brings hundreds of thousands of jobs to this area. When you look back and say, ‘Wow, it is a success,’ are we going to quibble over how come it took so long to happen or that somebody earned a salary to implement all this? It’s perspective.”

And even if a port operation or intermodal facility does not result from the effort, Geffken said it was responsible to try. He pointed to alleged failed efforts in Fort Smith’s history to go after big projects.

“Hindsight is always 20/20. What’s worse? We have an airport. FedEx wanted to come here. What would have happened if the city had taken a chance on having FedEx? General Motors wanted to build a car or truck plant here in the seventies. What happens if we had actually said, ‘Let’s take a chance on that,’ and not worry about the impact from the other business leaders on the wages they would have to pay? What would have happened if we had taken that chance and said, ‘Yes, let’s do it’? What would have happened if the people who owned the property or the city back in the late nineteenth century had said, ‘Yes, Board of Trustees, we will give you the land for the University of Arkansas?'” Had the city said yes to those things, Geffken said, “We would have been the size of Little Rock. We could have been the largest city in this state. And that went nowhere because, ‘Oh no, we can’t do that, we don’t want to have people’s salaries go up, we don’t want to have that.'”

SEARCH FOR A DEVELOPER
WAIA is undergoing a $200,050 study with renowned Vickerman & Associates led by consultant John Vickerman, who has worked on 67 of the 90 North American deep water ports, including two of the largest in New Orleans and Chicago. At the study’s end, Vickerman hopes to find a developer, who would then theoretically bear the cost of building any resulting infrastructure.

If they fail to attract a viable developer, the city of Fort Smith would “reconsider its support,” Geffken said at a Feb. 7 Board of Directors meeting. The developer search process will run for an additional nine months after the study is complete, giving WAIA until around August 2018 to produce a plan.

This is not the first time a study attempted to prove the area’s viability to support an intermodal facility. In 2012, the then four governing bodies voted to sign a cost-sharing agreement with the United States Army Corps of Engineers to move forward with the feasibility phase of the Northwest Arkansas Regional Port (formerly known as Lavaca Slackwater Harbor). That report was completed in December 2013. That same year, the Fort Chaffee Redevelopment Authority (FCRA) entered into funding alongside the four governments.

Despite support on the public side, the private sector has yet to show tangible interest. For instance, large companies likely to benefit from such a facility — J.B. Hunt and Walmart — are located just up the road from Fort Smith, but haven’t formally expressed interest.

While supportive of the effort, Hudson said the time has come for results.

“I’m hoping that we’re going to see something happen out of it because I think it’s time to see something happen,” he told Talk Business & Politics. “That’s why I’ve really been encouraging this whole project, to bring it to a head. … My point of emphasis has been, ‘Let’s get something done. Let’s bring it to a head about what is feasible to be done here.’ … I’ve grown a little impatient because I wanted to see things move quicker. It’s a challenging thing to try to herd all the interests and go in a common direction.”

Geffken said he believes the city’s Board of Directors made it clear it was time for something to happen with RITA/WAIA, and the Vickerman study will determine how to move forward. To Pitsch’s credit, Geffken said: “Mat has pushed that and pushed that and pushed that. The number of people he has taken on the Mat Pitsch tour of this area of Sebastian and Crawford counties to show this slackwater port is a jewel … now it’s coming to fruition. … The point is, action has been taken, and now, once we get the results of the RFEI, we will measure, what’s the ongoing benefit of RITA? Is there another project we need to do? We still need (Interstate) 49.”

INTERMODAL FACILITY WAS NEVER VIABLE
Eric Lind said he and others with port and river experience tried to tell city and county officials that a push for an intermodal port was a fool’s errand.

Lind worked for 18 years in the dredging and marine construction business as a manager, dredge captain and licensed river pilot. His work included construction and maintenance of several inland waterways and ports in 17 states including 12 ports on the Arkansas River system in addition to the ports of Houston, Fourchon, New Orleans, Pascagoula, Mobile, Manatee, and Charlotte (Florida). He is a former member and vice president of Arkansas Oklahoma Port Operators Association, former chairman of the National Dredging and Marine Contractors Committee, member of the Corps of Engineers Committee, and member of the Naval Facilities Engineering Command Committee.

“The concept of a major intermodal river port located in the Fort Smith/Van Buren/Lavaca area is not viable,” Lind noted in a three-page analysis he prepared for Talk Business & Politics. “Common sense suggests it has lacked viability since inception. And, it is unfortunate that roughly $1.6 million of public funds have been effectively wasted in that effort. That one person has received 44% of that $1.6 million certainly seems excessive.”

Lind presented a timeline he says is proof there is no market for an intermodal facility in the Fort Smith area.

“It is difficult to imagine any potential value for any shipper or transportation company serving this market area in sufficient volume to warrant investment in a dedicated intermodal river port. In fact, there is no reason to suggest that containers can be moved efficiently by barge on the inland river system. Container ships from China sailing through the Panama Canal to U.S. ports on the Gulf of Mexico require an additional 5-8 days transit over those sailing directly to west coast U.S. ports. Allowing for a minimum of 1-2 days for unloading/reloading containers from ship to barge and tow assembly, followed by 6-8 day towing time from the Gulf coast to Fort Smith (900+ river miles) means freight is at minimum 10-12 day disadvantage to freight containers arriving on the West coast and unloaded direct to train or truck. Container shipments by barge to this area are simply not cost effective.”

Lind also said the four slackwater harbors now on the Arkansas River have a combined occupancy of 15%.

“Little Rock’s slackwater harbor, completed in 1988 and with substantially greater existing industry and surrounding infrastructure, handles no waterborne intermodal freight,” Lind said.

MONEY BETTER SPENT ON EXISTING INFRASTRUCTURE
Lind also suggests the $1.6 million would have been better spent on the Port of Fort Smith and the two private port operations in Van Buren. He said both are “underutilized with growth potential.”

“The private terminals in Van Buren are ideally located within the market area. Substantially fewer infrastructure improvements would be needed for these facilities to handle the intermodal waterborne needs of this area well into the future. In that vein, either of the Van Buren facilities could have used the $1.6 million spent to date on the proposed port much more effectively,” Lind asserted in his analysis.

Marty Shell, president of Five Rivers Distribution which operates the port of Fort Smith and one of the two private ports in Van Buren, was asked by Talk Business & Politics how his company would have used $1.6 million.

“The Public Port of Fort Smith could have built a 60,000-square foot bulk storage warehouse with $1.6 million dollars,” Shell wrote in an email. “That would have been able to increase tonnage across the ports docks by 50,000 NT to 75,000 NT per year. We probably would have hired 2 to 3 new employees directly, but the indirect hiring would probably be around 6 to 7 with additional truck drivers to haul the additional tons and supply a cheaper mode of freight cost to the end user customer that could hire additional employees as well.”

Shell continued: “We would love to have just half that amount. The Fort Smith Port Authority has been working for the past 5 years to build a 30,000-square foot warehouse for a customer that has immediate needs for (one).”

Lind said government officials should cut their losses and end the search for an intermodal facility developer.

“The proposed NWA Regional Intermodal River Port project is a ‘field of dreams’ and should be abandoned immediately. Sadly, this should have been recognized shortly after conception, prior to wasting $1.6 million in taxpayer’s dollars. It is unfortunate that advice was not sought from the many experienced operators on the MKARNS Arkansas River System. It is more unfortunate that the comments and advice offered were disregarded or overlooked.”

Talk Business & Politics Executive Editor Michael Tilley contributed to this report.