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$200M Port at Paulsboro: Building a hub for South Jersey commerce

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Construction of the port is continuing as the facility searches for a tenant. Its builder is 'looking at some other opportunities.'
Construction of the port is continuing as the facility searches for a tenant. Its builder is 'looking at some other opportunities.' - (courtesy south jersey port corp.)

Inside Kevin Castagnola's office, atop a metal filing cabinet, sits a toy 18-wheeler bearing the Dole Food Co. logo.

The truck is a memento from a time when Dole was seriously considering signing on as the first tenant for the $200 million-plus Port at Paulsboro project the South Jersey Port Corp. is developing along the Delaware River.

But last month, Dole decided it would keep its port operations in Wilmington, Del., leaving the port with no tenants as the project moves toward completion, said Castagnola, executive director and CEO of South Jersey Port Corp.

With the breakup just a few days old, the toy truck was something like a photo of an ex Castagnola hadn't gotten around to shredding.

"We're moving on from them and looking at some other opportunities," Castagnola said.

"We've got to get the first tenant, the first piece of business. To be operational and have no business doesn't make a difference."

With construction well underway and running close to schedule, finding tenants for the new port at Paulsboro is now the major project for South Jersey Port Corp. It's not every day a new port is built, Castagnola said, and there are a lot of perks that will come with signing on to a new facility.

But there are expenses, too, and long-term leasing commitments to consider. So the port corporation's job is to convince companies that Paulsboro is worth the investment.

For decades, the site served as a petroleum distribution center. Fueling tanks were built there during World War I to support the war effort. BP bought the property in 1969 before shutting it down in the 1990s; it has since languished.

The idea to convert the site into a state-of-the-art port came about when local officials examined how the property could be repurposed to reinvigorate the surrounding borough of Paulsboro. The borough and the South Jersey Port Corp. committed to the port concept in 2006. BP leased all but six acres of the site to Paulsboro for $1 a year for the next 90 years and continued working with the state Department of Environmental Protection to remediate the site — work that continues now.

In 2009, the project officially broke ground; when completed, the site could employ 2,500. For now, the first phase is nearly done. An access road and bridge — a $23 million project that will connect the port directly to I-295 — is 85 percent built, and should be complete by the end of this year, said Marlin Peterson, director of port development.

Roughly 600,000 yards of fill material are being trucked in to raise the ground level at the site to 3 feet above the 100-year flood mark, Peterson said. That should be done by the first quarter of 2014.

And test pilings are being driven into the seabed along the shoreline, to figure out specifics for the construction of the wharf. The contract to build that wharf — the final stage of the first phase — has yet to be awarded, Peterson said, but the goal is to have the wharf built in time for the port to open by the end of 2015.

Phase one, which is estimated to cost some $200 million, will leave the port a blank slate on which tenants can customize their operations to suit their individual needs. And port executives and local officials are counting on that customization to reel tenants in.

"This is the first new port built on this river in 40, 50 years," said Senate President Stephen Sweeney (D-West Deptford), who has been intimately involved with the project. "Dole found it very attractive, because they were going to be able to build in a lot of efficiencies."

Sweeney said Dole's decision to stick with Wilmington was "a big disappointment," but the port corporation has been in talks with several potential tenants, though he wouldn't elaborate. He said he expects lease agreements to start rolling in once the wharf contract has been awarded.

"You can't get someone to sign on the dotted line and then the wharf isn't there when the ships come," Sweeney said. "We're very confident that we're not going to have a problem filling it up."

But the missing wharf may not be the only thing keeping potential tenants away. That much-lauded customization will come at a cost, Castagnola said.

Tenants will have the option to invest their own money in building the necessary infrastructure, or the port corporation can do the work, leaving tenants to pay for the construction over the life of their leases, Castagnola said. But regardless of which option they choose, that kind of capital investment will require a long-term lease agreement, something like 15 to 20 years, to make the port a viable option.

"Obviously, there's got to be a lot of due diligence for people when they make those type of commitments," Castagnola said. "And that's what we want — we want people that want to make commitments to come into the port for a long period and be partners with us."

So it becomes a chicken-and-egg problem. In order to attract tenants, the port needs a functioning wharf. But what good is the wharf without tenants to make use of it?

Anne Strauss-Wieder, a transportation consultant, said she believes the situation will balance out in time, and that the ability to customize operations will prove an undeniable draw for companies looking to ship to the area.

She likened it to buying a house: Wouldn't it be nice to have a home built specifically to suit your family and its needs? It might cost a bit more, but if you can afford it, it's worth the investment, she said.

"A lot of the other facilities, if you look along the Delaware River, are older, so they're really building something that is designed for efficient use," Strauss-Wieder said.

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