Saginaw River port development study phase II, report

[From the U.S. Government Printing Office, www.gpo.gov]

MICHIGAN
OCZM GRANT #04-8-M01-334
Subtask2lD@7,1

TRANSPORTATION

AND ECONOMIC RESEARCH ASSOCIATES, INC.
FIE
554 2849 MEADOW VIEW RD., FALLS CHURCH, VA. 22042
S24 (703) 698-7400
S24
.1980
phase 2
CA

SAGINAW RIVER PORT

DEVELOPMENT STUDY

PHASE II REPORT

Submitted to:

Bay County Planning Division
912 N. Adams Street
Bay City, Michigan 48706

September 20, 1980

,7-
Prepared by:

Transportation and Economic Research Associates, Inc.
2849 Meadow View Road
Falls Church, Virginia 22042
(703) 698-7400

and

Johnson, Johnson & Roy/inc.
303 North Main Street
Ann Arbor, Michigan 48104
(313) 662-4457

This report was funded in part through financial assistance
provided by the Office of Coastal Zone Management, National
Oceanic and Atmospheric Administration, United States Depart-
ment of Commerce, through funds provided under the Coastal
Zone Management Act of 1972 (PL 92-583); and administered by
the Michigan Department of Natural Resources Division of Land
Resources Programs.

TRANSPORTATION

AND ECONOMIC RESEARCH ASSOCIATES, INC.
WASHINGTON, D.C. 9 LOS ANGELES 0 OAK RIDG@

September 20, 1980

Mr. Lawrence C. Hall, Head
Bay County Planning Division
912 North Adams Street
Bay City, Michigan 48706

Dear Mr. Hall:

We are pleased to transmit herewith the Phase II
final report of the Saginaw River Port Development Study,
prepared by TERA, Inc. in association with Johnson,
Johnson & Roy/inc.

The purpose of Phase II is to provide an implementa-
tion plan to address port development opportunities and
problems that were identified in Phase I. Accordingly,
this report analyzes institutional arrangements and
specific priority programs and projects for develop-
ment of the Saginaw resource.

The study was designed to produce a balanced de-
velopment plan that recognizes the needs of recreational
and commercial interests. The need to translate that
plan into action is equally important. We believe our
implementation plan is realistic and consistent with the
needs to manage and develop the Saginaw, and action is
indeed justified.
SinLr

Asil Ge4n, Ph.D.
Presideni

AG/cw

Encl.

2849 MEADOW VIEW ROAD 0 FALLS CHURCH, VIRGINIA 22042 0 (703) 698-7400

TABLE OF CONTENTS
Page No.

INTRODUCTION ................................... 1

I. SUMMARY AND CONCLUSIONS ........................ 3

II. PORT DEVELOPMENT MANAGEMENT .................... 7
Management Options ........................... 9
Evaluation of Options ........................ 22
Financial Analysis ....................... : ... 34
Findings ..................................... 36

III. PORT DEVELOPMENT PROGRAMS ...................... 38
Port. Project ................................. 38
Spoil Disposal ................................ . 39
Port Promotion ............................... 44
Findings ........................................ 46

IV. PORT DEVELOPMENT PROJECTS ...................... 47
Facility Sites ............................... 47
Traffic Patterns ............................. 52
Environmental Considerations ................. 52
Conceptual Designs ........................... 53
Financial Analysis ........................... 61
Findings ..................................... 69

APPENDIX A Lorain Port Authority Policies and
Programs

APPENDIX B Corps Notice of Public Workshops

APPENDIX C Consultant Letter to Corps

LIST OF FIGURES/MAPS

Page No.
Figure III-1. Proposed Mid-River Spoil Disposal Site ........ 43
Figure IV-1. Integrated Development Plan - Bay City 48
Area Waterfront Uses .........................

Figure IV-2.; General Location Map - Grain Elevator
and Bulk Terminal ............................ 50
F igure IV-3. General Site Plan - Grain Elevator ........... 55

Figure IV-4. General Site Plan - Bulk Terminal ............ 56
Figure IV-5. Flow Chart - Grain Elevator ................... 58
Figure IV-6. Flow Chart - Bulk Terminal ................... 62

LIST OF TABLES

Table II-1. U.S. Port Administration Systems by State .... 10

Table 11-2. Estimated Economic Benefits Per Ton of
Grain ........................................ 26

Table 11-3. Estimated Income/Expense, Saginaw River
Port Authority ............................... 36
Table IV-1. Cost Estimate Summary - Grain Elevator ....... 64

Table IV-2. Brownsville Public Elevator Operating
Results ...................................... 65

Table Iv-3. Brownsville Public Elevator Estimated
Annual Expenses .............................. 65

Table IV-4- Cost Estimate Summary - Bulk Terminal ........ 68-

INTRODUCTION

e purpose of Phase I of this study was to determine
1h
the long-tern needs for commercial, industrial and recreational
uses of the Saginaw River, and to provide an integrated devel-
opment plan with an appropriate balance of commercial and
recreational uses.

The plan includes a number of recommendations related
to improvement of navigation channels, development of commer-
cial and recreational facilities, and coordination of these
three efforts. The needs identified for priority attention
in Phase II were the channel project, and conmercial develop-
ment. The pertinent Phase I recommendations were as fo'llows:

Channel Project
An acquisition program to provide a site for a new
dredged material disposal area for river maintenance
dredging should be initiated promptly. This should.
be part of a continuing program to identify and pro-
vide spoil disposal areas for future bay and river
maintenance and improvement dredging.

9 Advocacy of Federal Project improvements is needed
in order to assure the benefits of deeper channels.
An immediate request for official study of the
improvements identified in this study should be
forwarded to the Corps of Engineers.

A formal port organization is needed to provide pro-
ject advocacy and initiative, and liaison between
the Federal and local interests. The port organiza-
tion/port project sponsors should be Bay, Saginaw
and Midland counties.

Commercial Development
Any significant new investment in marine terminal
facilities, if needed, should be innade along the

lower reach of the river, Bay City/Grand Trunk Western
Bridge to Bangor/Essexville, because of the transpor-
tation economies from deeper water and better prospects
for continued channel maintenance and improvement
there.

A feasibility study of incremental channel deepening,
is recommended, along with more detailed economic
feasibility studies of the new terminal facilities
this study has identified as needed. Specifically,
an export grain elevator, and a dry bulk materials
terminal or terminals JLor feed exports and/or fertilizer
receipts.

e Pro motional efforts are needed to assure construction
of new marine terminal facilities, and better utiliza-
tion of existing facilities. The port organization
needed for Port Project sponsorship would be equally
valuable in port development. It should be created
promptly.

The Phase II analysis in subsequent chapters addresses
these needs in terms of:

(1) Management - the institutional arrangements consistent
with multi-use management and development of the
river resource.

(2) Programs - the development initiatives that involve
a series of goals and require a continuous ongoing
effort, with specific reference to commercial devel-
opment.

(3) Projects - the development efforts that involve a
specific identifiable goal. In this case ' the pro-
vision of additional port facilities to develop
port commerce.

I. sun.4ARY AND CONCLUSIONS

Approximately half of the following reportis devoted
to the chapter on Port Development Management. This is an
appropriate weighting in view of the importance of managing
the Saginaw resource. An organized approach to the Port
Development Programs and Port Development Projects covered
in subsequent chapters is essential to assure positive
results.

The review of port management systems and options
recognizes the unique role played by Michigan state agen-
cies in providing port administrative and development ser-
vices. The study's conclusion is that this arrangement
reduces the role of local port agencies, but does not
eliminate the need for them. Instead, this should be
viewed as an opportunity to obtain the benefits of local
initiative at minimum cost. The review also noted that
the local perception of the need for a port agency varies
widely, and it is unlikely that any one of the port man-
agement options would meet immediate, universal approval.

Recognizing both needs and realities, this study
has recommended that initially a bi-county Port Commission
be created by Bay and Saginaw counties as a "minimum manage-
ment" minimal cost administrative device to provide coord-
ination in the separate exercise of planning and regulatory
powers of the two directly related governments. The study
also recommended that the Port Commission use the resources
of the existing planning organizations for administrative
services as needed, in order to provide expertise most
economically, and a basis for continuing inter-county coop-
eration and perspective.

For the long run, the study has recommended the
creation of a tri-county Port Authori.ty by Bay, Saginaw
and Midland Counties. As shown', the benefits of the au-
thority organization are numerous, particularly for de-
velopmental programs and projects. The role and budget
of the port authority can be sized to meet the require-
ments of the Saginaw's ports. The study also recommends
a program for use before or after creation of the Port
Commission that include a comprehensive determination of
port economic benefits, and the establishment of formal
liaison with the ports' business community.

The Port Development Programs addressed in this
study are the Port Project, Spoil Disposal and Port Pro-
motion. They are all activities that require coordinated,
continuing local efforts.

As suggested by the Phase I Study, and at the initia-
tive and request of the Bay County Commission, the Corps
of Engineers has included the Saginaw in a current
study of channel improvements for Great Lakes Harbors.
This timely action saved several years of effort typi-
cally required to initiate an independent offical study.
To take advantage of this opportunity, timely action is
needed to determine the priorities of local interests and
present these to the Corps via an update of the relevant
sections of the Saginaw River Port Development Study. The
substance of these recommendations will be quite differ-
ent, depending on whether they represent Bay County in-
terests only, or all river interests.

There is another Corps of Engineers study under way
to determine the location of a dredged material disposal
facili.ty to serve up-river dredging. The consultant team

submitted to the Corps the site identified in Phase I of
this study as the best and most economical long run solu-
tion for spoil disposal up-river. Currently unutilized,
the site is also a candidate for inclusion in the expanded
Crow Island State Game Area. This site may be the last
opportunity to provide economical spoil disposal for the
Saginaw area. Spoil disposal requirements will continue
there, with or without channel deepening, unless dredging
is discontinued. As in the case of channel improvements,
a question of local priorities is involved. The choice
of the consultant team would be to pursue use of'the
property. The study reconmendation is immediate action by
Saginaw County. .

The initial propo.sal of the consultant team for an
arrangement to reactivate the Dow Chemical/Bay City Sea-
way Terminal as a public marine terminal was not attrac-
tive to the owner. There was agreement that it would be
desirable to preserve the public terminal use of this
facility consistent with the owner's needs, to provide
a way to build up the port's miscellaneous or general
cargo traffic. A continued effort will be needed to
locate a suitable operator and/or the requisite cargos
to utilize this facility for trade development.

The Port Development Projects evaluated in the final
chapter were an export grain elevator, and a multi-purpose
bulk terminal. The conceptual desig@is indicated that
these facilities would be physically feasible, compati-
ble with adjacent land uses, and consistent with better
utilization of the waterfront. With an estimated employ-.
ment of 50 new, full-time jobs, the facilities would pro-
vide significant economic benefits and transportation

cost savings. The economic analysis indicated the elevator
might be a marginally viable independent enterprise, and
that except as an integral part of a proprietary distribu-
tion system, the bulk terminal would not be.

This report does not find that these projects are
impossible, just difficult. The facility concepts should
be used as a sales tool to find the combination of public
and private enterprise that will make these facilities
viable. Based on the indicated demand in Phase I and the
fact that elevators and bulk plants are being bLiilt at
other ports, the analyses should not be used to dismiss
the potential of port development on the Saginaw. It is
evidence that port development requires a multi-year sus-
tained effort.

II. PORT DEVELOPMENT MANAGEMENT

Background

The commercial ports of Michigan handle over 90 million
tons of waterborne commerce annually. In terms of tons, the
state ranks first in the Great Lakes area, and sixth in the
nation in the importance of its ports. 1 Although Michigan
enabling legislation has provided for the establishment of
C,
special purpose governmental units to administer and develop
2
its ports since 1925, only a handful have been created.
The state has recognized the importance of waterborne trans-
portation, and is one of the few to dedicate significant
support for that mode via a state DOT. Overall, howevq_@r,.
states with far less waterborne commerce than Michigan, as
well as those ranking above it, have much more elaborate
institutional arrangements to support their ports' develop-

ment.

Some of the reasons for the notable absence of local
port administrations in Michigan are:

9 An abundance of natural harbors that eliminated the
need for extensive channel improvements at most
ports, at least until commerce was well established
unlike Texas ports.

1,-- - 309.1, Louisiana
1977 tonnages in millions: Texas
258.8, New York - 212.7, California - 112.9, Pennsylvania
109.0, Michigan - 91.8. From Corps of Engineers' Waterborne
Commerce of the U.S.
2 Port Districts: Monroe and Detroit;
Port Commissions: Benton Harbor, Ludington, Manistee,
Muskegon.

9 The predominance of large volume shipments of bulk
materials, and the related propensity for private
enterprise to provide needed port facilities - unlike
many tidewater ports.

* -The arrangement unique to Michigan, whereby the
Michigan State Waterways Commission -acts in behalf of
local interests in providing assurances of cooperation
required for Corps of Engineers dredging.

In brief, there is a high degree of homogeneity among
the major users of Michigan ports - a relatively'limited
number of firms who compete with or sell to each other, but
are at least acquainted - and a minimum of problems. As a
result, most port problems have been addressed on a coopera-
tive, ad hoc basis. There hasn't been a need for the number
of formal port organizations that exist elsewhere.

The management of the Saginaw has been typical of
Michigan practice. Historically the initiative for channel
improvements has been provided by the U.S. Corps of Engineers.
The Corps-established pierhead and bulkhead lines, and
the Corps-administered permit system in combination with
state permits, provides some administrative control. As needed,
albeit not always promptly, Bay City and Bay County have
provided the local cooperation assurances required in connec-
tion with Corps dredging either directly or via the Water-
ways Commission.

These local assurances princlDally involved spoil disposal
areas, and the siting of the Saginaw Bay Diked Disposal
Facility involved a classic cooperative effort by port users.
A,more unusual and earlier demonstration of ad hoc coopera-
tion was the voluntary assessment scheme agreed to by port
users,.to pay the cost of reinforcing the New York Central
bridge over the Saginaw to provide for channel improvements.

In the case of the Saginaw Bay Diked Facility, Bay County's
Port Coordinator played a key part in organizing the coopera-
tion. In the case of the bridge rebuilding, the state worked
directly with-port users.

An honest assessment of the management of Michigan ports
in general, and the Saginaw in particular, has to recognize
that the system works reasonably well in resolving problems
and at a minimum cost. Its weakness is that it does not
provide for local initative in addressing either problems or
opportunities. Its dependence on state and federal agencies
precludes its effective use as a local development resource.

Phase I of the study identified the need for local
initiative in addressing several problems and opportunities.
This analysis is to identify the form of port administration
that can do this economically and effectively, and complement
the existing agencies of government.

Management Options

Every U.S. maritime state has provided for some type
of agency to develop, own or operate its ports.. The pre-
dominant form of administration is shown in Table II-1.
Where the state has a secondary system, it is indicated by
an asterisk. Tidewater states are listed geographically
followed by Great Lakes and riverport states in alphabetical
order.

Michigan has just two port districts, Monroe and Detroit,
with the broad powers comparable to the local authorities
that are the predominant port administrative system in most
states. By contrast Washington state has the most local
authorities, 57, with Texas second with 18, In neighboring

TABLE II-1

U.S. PORT ADMINISTRATION SYSTEMS BY STATE

State Port Authorities City/County
State DOT State Local Port Depts.

Maine X
New Hampshire X
Massachusetts X
Rhode Island X
Connecticut
New York X
New Jersey X
Pennsylvania X
Delaware X
Maryland X
Virginia X
North Carolina X
South Carolina X
Georgia X
Florida X
Alabama. X
Mississippi X
Louisiana X
Texas X
California X
Oregon X(2)
Washington X
Alaska (3)
Hawaii X
Illinois X(4)
Indiana X
Michigan (3) X
Minnesota X
Wisconsin X
Arkansas X
Iowa (3)
Kentucky X
Missouri (3) X
Tennessee X
West Virginia X

Notes: (1) State-owned pier at New London. Connecticut
Dept. of Commerce acts as statewide ports
coordinator.
(2) Oregon Dept. of Economic Development acts as
statewide ports coordinator.
(3) State Dept. of Transportation acts as statewide
ports coordinator.
(4) Illinois Dept. of Transportation provides
financial assistance. Dept. of Business and
Economic Development assists port promotion.

Source: TERA, Inc.

I r%

states, Ohio has 13 local authorities and Indiana has a
state authority operating multiple ports.

As indicated by Table II-1, most of the states that
have opted for a centralized system - state authority, DOT,
or in the case of Alabama, state docks department - have
only one dominant port in the state. Where the state has
more than one major port, the centralized system is often.
perceived as favoring one port over the other - as in Vir-
ginia, and to a lesser extent the Carolinas and Georgia.
This could present a problem in Michigan also, if the Dort-
related programs of the Department of Natural Resources and
Department of Transportation were centralized in a single
strong port development agency.

The various institutional arrangements that could be
applied to management of-the Saginaw are:

State Government. Any inventory of management options
has to include the existing state agencies. They are, as
noted earlier, very effective in providing the basic ser-
vices that would otherwise be required of a local port
agency. To that extent, the need for a local port agency
is diminished. The need is not eliminated, because: (1) at
some point these state agencies have to interact with local
interests in providing the services they do provide, and
(2) most planning and development activities require local
initiative. Planning guidelines are passed:down from the
state level, but planning and implementation have been
from the bottom up, by mutual choice.

Were the State of Michigan to -centralize its port-
related programs in a single, strong development-oriented

agency, the need for a local agency would be virtually.nil.
In the case of the Saginaw, this could be advantageous in
treating the whole river as a resource. The philosophy
underlying Michigan's port-related legislation is not in
this direction however, and the inherent problems in ap-
plying centralized control to the Michigan port system
virtually preclude this as a possibility.-

Municipal Government. There is considerable prece-
dent for municipal port management, not only on the Saginaw
but elsewhere in the U.S. The responsibilities of port
management can be assigned to existing units of city govern-
ment, in whole or in part, or port departments, commissions,
or port administrative positions created, under the geiieral
or special powers available to municipalities.

Where the responsibilities have been assigned, the
Department of Public Works or its equivalent, has fre-
quently been the repository for these responsibilities.
In Connecticut, which has the double distinction of not
having county governments nor any provision for either
state or local port agencies, each port has a "Harbormaster,"
typically someone in the public works department. The
assumption of certain port responsibilities by Bay City's
Director of Community Development has considerable logic,
but it is a practice rarely followed elsewhere. The best
examples of specific departments created to handle the
full range of port managmeent responsibilities are at Los
Angeles and Long Beach. Significantly, both these "harbor
departments" have financial independence; they are almost
indistinguishable from "port authorities."

A number of communities on the Saginaw do operate
waterfront facilities now - for recreation purposes. In

the distant past almost every port city provided a public
wharf or wharves. The trend for many years, however, has
been away from city participation in port management;
there is too much competition from other municipal ser-
vices for the available funds and management talent. As
two competing harbor departments on the same waterway,
Los Angeles and Long Beach have been highly successful.
Although two port agencies might be better than none, the
Saginaw does not offer the opportunities to support dupli-
cation of effort, and the need for coordination is rela-
tively greater.

County Government. There is limited precedent for
county governments that participate directly in port man-
agement by way of dedicated personnel or departments.
Partly this is because most ports are also within some
municipal jurisdiction. The Bay County Port Coordinator
position was unusual. There is a growing trend for coun-
ties to be involved in port management indirectly, via
countywide or city/county port authorities or commissions.
Largely this trend is the result of the departure of cities
from active port management.

As with cities, the powers of county governments under
Act 66 permit the assignment of port management responsibil-
ities to existing entities or individuals, or the creation
of departments, commissions or positions for that purpose.
The merits of independent or duplicative county action are
the same as with cities. Inter-county cooperation in manage-
ment of the Saginaw could be facilitated by via certain exist-
ing units of government.

Specifically, in the Saginaw Ports' area the East
Central Michigan Planning and Development Region is a

multi-county agency with multiple port-related functions.
-Originally created as an Economic Development District,
it was reconstituted in 1973 as a Planning and Development
agency under Act 281 of 1945. At present, the Region acts
as the coordinating and project clearing'house agency for a
14-county area. It is a creature of those county govern-
ments, funded by them and created by joint resolution, with
its charter defined by its By-Laws.

Subject to amendment of the Region's By-LaVs, which
requires approval by 75 percent of the sponsoring govern-
ments, this. agency could provide coordinated management of
the Saginaw. As such, it would be a limited version of
port commission where the powers exercised are those de-
3@ived from the parent" g'overnment(s) - but with even more
limited ability to implement development plans. As a
clearing house agency, the Region would have to rely on
local agencies to "deliver" projects or programs. It would
offer expertise in port planning and development as an ex-
tension of its present activities.

An alternative to coordinating port planning and
development activities via the Region would be a more
systematic interchange of information between the county
agencies responsible for these activities. These include
the Metropolitan Planning Organizations for the respective
counties or their supporting staffs, and the respective
recreational and economic development agencies.

In the case of recreation, there is informal coordina
tion now via sporadic meetings of the recreation directors
of Bay and Saginaw counties and other political subdivisions.
In the case of economic development, there is a built-in

bias against mutual action. Accordingly, the most -promis-
ing area for improvement of cooperation is in port-related
planning, specifically by way of liaison between the multi-
modal transportation planning entities.
CI

Si nce the Metropolitan Planning Organizations span
an array of planning functions and act as clearing agen-
cies, the most relevant level for port-related liaison is
at the staff level. Two counterpart organizations that
have been identified as most appropriate for this are, the
Bay City Area Transportation Study and the Saginaw Metro-
politan Area Transportation Study. They have been created
by their respective county commissions with their charters
defined in By-Laws. Since the study groups are not bud-
oeted as 'such but depend on contributed staff of other*
C,
units of county government, they are not candidates for
implementing programs. On the other hand, they could
assist coordination of port management most economically.

Multi-Government. The powers available to cities and
counties under Act 66 of 1952 may be exercised by those polit-
ical subdivisions individually or jointly. Accordingly these
statutes offer one of the few options for a Port Commission
or equivalent entity to provide mutual management of the
Saginaw.

The relevant sections of Act 66, paragraphs 281.541 et.
seq., Co@npiled Laws of Michigan, or 5.2768(11)(12)(13) Michigan
Statutes Annotated, are as follows:

281.541 Definition (Section 1)
The term "political subdivision" used herein is
defined to mean any county, city, village, township
or district of this state and any other governmental
C>
agency or subdivision, public corporation, authoritv

or district in this state, which is or may be autho-_
rized by law to adquire, establish, construct, maintain,
improve and operate harbors, channels and other naviga-
tional facilities. Whenever used in this act the term
political subdivision shall include any combinations
of political subdivisions acting jointly.
281.542 Waterways; harbor guards, ordinances, harbor
masters (Section 2)
.A political subdivision is hereby authorized (a)
to adopt and amend all needful rules, regulations and
ordinances for the management, government and use of
any waterways, harbors, channels or other navigational
facilities under its control, either within or without
its territorial limits; to employ harbor guards, police
or a harbor master with fullpolice powers; to fix
penalties for the violation of said rules, regulations
and ordinances and enforce such penalties, (b) to adopt
and enact rules, regulations and ordinances designed
to safeguard the public upon or beyond the limits or
harbors, channels, connecting waterways or other navi-
gational facilities within such political subdivision
or its political jurisdiction, which rules shall be
consistent with and conform to, as nearly as may be
possible, the laws*of this state, (c) to vest authority
for the maintenance, operation and regulation thereof
in an officer, board or body of such political subdivi-
sion by ordinances or resolutions. which shall prescribe
the duties and powers of such officers, boards or body,
and (d) to employ a regular harbor master for the
harbors, channels, connecting waterways or navigational
facilities under its control, or in cases where a harbor
board or body is established the harbor master may be
employed by such board or body.

281.543 Same; jurisdiction, contents (Section 3)
All powers., right and authority granted to any
political subdivision in this act may be exercised
and enjoyed by 2 or more of them, or by this state
through its appropriate agencies and 1 or more such
political subdivisions acting jointly, either within
or without the territorial limits of either of them,
and contracts may be entered with each other for the
herein provided and authorized joint action.

The port commission, harbor commission or equivalent
entity created under Act 66 is not a corporate body. It
derives its powers as an extension of the governmental unit(s)

that create it. The power to tax, issue bonds and/or own
property resides with the parent government(s), and those
powers in turn are subject to the limitations imposed by
laws other than Act 66; specifically the Waterfront Improve-
3 4 5
ments Act , Municipal Finance Act ,Revenue Bond Act.

The creation of a port organization under Act 66 involves
an authorizing resolution and ordinance creating the organ-
ization and defining its powers, passed by the governing body
of the parent unit or units of government. A vote of the
public is not required. Financially the port commission is
a part of its parent(s). Capital needs or operating expenses
in excess of any revenues are provided by the parent govern-
ment(s).

The port commission is an appropriate form of organiza-
tion for providing an advisory body, particularly if no
professional staff are to be employed and the budget is
nominal. The St. Joseph River Harbor Commission (Benton
Harbor - St. Joseph) is a good example of two-city cooperation
through a port advisory body. The limitations of the com-
mission form of organization are most apparent when there is
a need to retain professional port management, provide fa-
cilities and/or achieve self-supporting status. The Muskegon
Harbor Commission (city-county) is a good example of what
can be achieved and the difficulty in doing so via a port
commission organization.

3Act 66 of 1941; par. 123.601 et seg. Compiled Laws
of-1948 (MSA 5.2768(l)(2)(3)(4).
4Act 202 of 1943; par. 131.1 et. seg. Compiled Laws
of 1948
5Act 94 of 1933; par. 141.101 et. seg. Compiled
Laws of 1948.

Special Government. Michigan law provides for two
forms of semi-autonomous port organizations with the broad
powers that are comparable to local port authorities, the
prevailing administrative system in other maritime states.
Act 234 of 1925 provides for Port Districts. Act 639 of 1978
provides'for Port Authorities. Under either law, the port
.organization is a body corporate that can encompass one or
more counties. Additionally, port authorities can be spon-
sored by combinations of cities and counties. As a practi-
cal matter, the port authority form is the only available
option.

The older port district enabling legislation provided
for a truly independent body with the power to own and oper-
at,e properties, issue debt, and levy taxes for debt service
and operations. These powers are broad and comparable to
those of Texas' Navigation Districts and Washington State's
Port Districts. Act 234 is codified in paragraphs 120.1 -
120.56, Compiled Laws of Michigan, including the amendment
thereto providing for cooperation with and matching grants
from Michigan Department of Commerce under Act 251 of 1966.
The law is lengthy and comprehensive, but events have made
it academic.

Prior amendments to Act 234 allowed the county govern-
ment to exercise budgetary control over the port
district and to provide administrative services. As
a result, the Wayne County-Detroit Port District
became indistinguishable from the rest of county
government. The only other port district, Monroe,
has had a close and continuing relationship with city
of Monroe, and results have been happier.6

6
Max M. McGray, Executive Director. Section 9 or Act
234 requires at least two of the five Port Co-m-mission
Members to be from the county seat of the county in which
the port district is located.

The Port Authority Act (639 of 1978) has a "sunset
provision" covering port districts. Section 30
provides "Act 234 ... is repealed Cbut not until) the
constituent bodies of each port authority created
pursuant to Act No. 234 of the Public Act of 1925
and in existence on the effective date of this act
participate in the creation of an authority pursuant
to this act...". The Wayne County Port District
is in the process of converting to a port authority.
As of September, 1980, the Monroe Port District had
V-0 nia-ns to do so. 7

Act 639, the Hertel-Law-T. Stopczynski Port Authority
Act is codified in Michigan Statutes Annotated paragraphs
5.2190(l) - (30). The principal parallels and differences
between the port district and port authority acts include:

Creation of the port district requires an approving
vote by the voters of the county or counties in
which it is situated. Creation of a port authority
requires a resolution requesting incorporation by the
governing body of the "constituent units" (couTities
and/or cities) and authorization by the governor
after consideration of the recommendations of the
Departments of Commerce and Transportation. (Sec.
4 of Act 639).

Appointees to the five-person governing board of the
port district (called port commission under both
Act 66 and Act 234) are allocated to sponsoring
governments by formula. The five to seven member-
ship of the port authority board includes one guber-
natorial appointee but i-s otherwise determined by
local option. (Sec. 5).

The powers of districts and authorities are equally
broad in permitting acquisition, ownership, operation
and disposal of port facilities. As defined in Sec.
2(e) "Port Facilities" means those facilities owned
by tho port authority such as: seawall jetties;
piers; wharves; docks; boat landings; marinas; ware-
houses; storehouses; elevators; grain bins; cold
storage plants; terminal icing plants; bunkers; oil
tanks; ferries; canals; locks; bridges; tunnels;
se@aways; conveyors; modern appliances for the eco@
nomical, handling, storage, and transportation of .
freightand handling of passenger traffic; transfer
and terminal facilities required for the efficient
operation and development of ports and harbors;
other harbor improvements; or improvements, enlarge-
ments, remodeling, or extensions of any of these
buildings or structures.
7Max M. McCray, op. cit.
19

Port authorities are empowered to regulate and plan
the use of waterways including pierhead lines, safety
and environmental protection similar to Act 66 Port
Commission powers including "Do all acts and things
necessary or convenient to promote and increase
commerce and recreation within its territorial jur-
isdiction". (Sec. 10(d)).

9 Unlike port districts, port authorities can issue
revenue bonds but not general obligation bonds. The
constituent governments can pledge their full
faith and credit for issuance of port-related bonds,
but without any increase in taxing powers or bond
limits. (Sec. 12, 13).

9 Properties held by port districts were required
to pay "payments in lieu of taxes" on income-producing
properties. Port authority properties used for
11private purposes" are taxable as private property,
butwhen used for public purposes are exempt
(Sec. 22).

9 Both port districts and port authorities.are required
to prepare comprehensive port development plans.
In the case of port districts, the plans are required
prior to building port improvements. In the case
of port authorities, the comprehensive plan is
required "within two years" of the authority's crea-
tion. (Sec. 23).

Budgets of port districts were subject to the ap-
Droval of the board of supervisors of the countV
(or a budget committee for multi-county districts).
Authority budgets are subject to the approval of
the governing bodies of the constituent (sponsoring)
local governments and Michigan Departments of Commerce
and Transportation (Sec. 24).

Port districts were eligible for matching state
grants for facility planning and acquisition, sub-
ject to appropriation of funds. Port authorities
are eligible for 50% state funding of operating bud-
gets. Matching funds for an approved port authority
budget are required to be budgeted by the state's
Department of Transportation. That budget in turn
is subject to legislative approval.

The port authority is the organization form of choice
when there is a need to retain professional port management
personnel, provide facilities and/or implement programs,
and a self-supporting entity is desired. It is not
appropriate if programs and budget are to be nominal.
The matching state funds available to an authority also
obligate it to be more than an advisory body. Without
development as well as management functions it is unlikely
that incorporation of the authority would be recommended
by the Departments of Transportation and Commerce.

Unofficial Institutions. Michigan law recognizes,
through the enabling legislation for port districts,
and port authorities,,that port management is complex.'
It cuts across a number of planning and development func-
tions and institutions, and often requires a unique solu-
tion. The sections on municipal and county port adminis-
tration are additional evidence of that. In brief, the
enabling legislation for spec-ial purpose port agencies
was not arrived at lightly, and should not be dismissed
lightly.

In addition to the official entity charged with port
administration responsibilities, whatever its form, most
ports have a counterpart organization in the business com-
munity, composed of interested port occupants or users.
In respons e to the Saginaw dredging crisis in the 1970's,
there was.a temporary example of this port phenomenon. In
many other ports, a similar citizens group has preceded
the formation of an official port'entity. In most ports
with an official port entity,. that entity finds it advan-
tageous to work with an organized group of port users.

Citizen groups unite in response to a perceived need.
Some factors that appear to minimize that perception on
the Saginaw are: (1) the businesses interested in
commercial and recreational uses of the Saginaw do not
view it as a mutual resource, (2) the business interests
do not.have an umbrella organization that bridges the
counties involved to view the Saginaw resource in its
entirety. This study is intended to help in that
respect. It would be desirable to have some type of
unofficial institution to assist in the management of the
Saginaw. Very likely it would be a necessary p3@ecedent
to a more formal administration system.

Evaluation of Options

As shown in the, preceding section, there are several
options to provide more orderly and effective management
of the Saginaw. To evaluate these options, it is necessary
to define the Saginaw's needs, perceived as well as real,
and based thereon, the role of port management. Also,
although Phase II addresses only priority commercial
development programs and projects, it is appropriate to
define management needs in terms of balanced recreational
and commercial development, in line with the plan produced
in Phase I of this study.

Independent of other studies, Phase I of this study
identified numerous opportunities for both recreational
and coLmercial development. In many cases, these oppor-
tunities or related problems were identified in earlier
studies. Phase I went beyond the previous efforts princi.-
pally in its attempt to quantify the needs, benefits and
costs of specific developments, and in relating these to
the entire river resource.

Recreation. The public perception of development
opportunities in this field very nearly approximates the
findings of the study. In fact, very few of the proposed
facilities were original, and the study effort was directed
toward determining the appropriate sizing and location of
the facilities. With the exception of the two large
regional facilities proposed for Middle Ground and the
Saginaw Bay Diked Disposal Facility, the recreation@faci-
lities are within the capacity of local interests to
finance, either with private funds or a combination of
local and other public funds.

Overall, there is general agreement between the study
and the public perception that local initiative is adequate
for recreational development. The study's concern with
aistributing that development over the entire river, to
avoid overbuilding the river mouth and to make recreational
activities upriver more attractive, was not matched with
expressed interest in more formal coordination of local
efforts, either during contacts in the course of the study,
or in the recreation plans of the separate entities.

Commerce. Phase I identified several development
opportunities that included industrial coal, other bulk
cargos including fertilizers, and increased grain exports.
The significant benefits avai "lable to the agricultural
sector from deeper channels was recognized in the earlier
1978 Saginaw River Port Study9 that suggested channel
deepening for a Bay City area grain elevator. Remarkably,

31976 Bay County_Recreation Plan
1980 Saginaw County Parks, Recreation and Open Space
Plan
1976 -@e`gional Perspectives -- Recreation Facilities
9Bay City Area Transportation Study, Saginaw River
Port Study, May 1978, pages 18, 19.

despite the potential benefits, the upriver elevator
operators have shown no apparent initiative in pursuing
channel deepening. Despite the fact that this agriculture-
related shipping is now concentrated in Saginaw County,
the county has not participated in channel maintenance

programs.

This anomaly may be attributable to-the perception
that further commercial development of the Saginaw will
benefit Bay County. The Overall Economic Development
Program for Saginaw County noted "Generally local people
consider the whole Saginaw-Bay City Port underutilized.
However, major new improvements are.perhaps more favorable
for Bay City as the river channel and highway bridges are
less of a problem there."10 The present waterfront
elevator operators understandably view another elevator
as competition.

Since transportation savings flow to shippers and
receivers and particularly in the case of grain, to
producers and the income from cargo handling is widely
dispersed, a parochial view of Saginaw River port develop--
ment is inappropriate. The Region's 1977 Overall Economic
Development Program recognized the river as a regional
transportation resource:

Water transportation appeared to have the
best chance for expansion of all the transpor-
tation modes. The Region has an international
seaport and a foreign trade zone. The committee

Saginaw County Metropolitan Planning Commission,
Overall Economic Development Program for Saginaw County,
June 1976, revised March 1977.

.felt that expansion of these facilities and in-
creased use of all port facilities would reduce
the cost of goods received throughout the Region
and would increase the Region's competitive
position in the sale of goods. In addition,
increased use of water transportation would
provide potential employment opportunities for
people living in at least five counties.11

A better appreciation of the widespread benefits and
regional significance of the Saginaw ports could be pro-
vided by a study comparable to the 1976 Economic Benefits
of the Port of Detroit. 12 That study quantified*the
benefits applicable to the cargos moving through the Port
of Detroit.on a commodity by commodity basis, and also
allocated those benefits to the counties in the port's
hinterland. Although there are numerous other port impact
studies, the Detroit @study was unique in identifying
benefits by geographic area. The Detroit study was part
of the overall effort by the Interagency Task Force for
Detroit/Wayne County Riverfront Development directed toward'
producing a more effective port organization. That effort,
the benefit analysis, and the Task Force's conclusions and
recommendations are summarized in its report, Partners for
Progress -- the Land and the River.13

llEast Central Michigan'Planning and Development Region-,
Overall Economic Development Program, December 1977, page 184.

12
Dr. Asil Gezen, Economic Benefits of the Port of
Detroit, A report prepared for the Interagency Task Force
To-rDetroit/Wayne County Riverfront Development, May 1976.
13 Partners for Progress -- the Land and the River,
the Report of the Interagency Task Force for Detroit/Wayne
County Riverfront Development, published by the Office of
Economic Expansion, Michigan Department of Conmierce, June
1976.

A definitive port economic impact analysis is beyond
the scope of this study. The Economic Benefits of the
Port of Detroit involved some one and one-half man-years
of ef f ort. In lieu of a scientif ic analysis that identif ies
the specific cargo origins and destinations and flow of
expenditures, Table 11-2 provides a rough estimate of
the dispersion of benefits for a hypothetical Bay City
grain elevator on a Seaway-depth channel.

TABLE 11-2

ESTIMATED ECONOMI C BENEFITS PER TON OF GRAIN

Expenditures Transport
Counties Direct Indirect Savings Total

Bay $3.48 $ 1.93 $ .15 $ 5.56
Midland .27 1.09 .09 1.45
Saginaw .92 3.67 .42 5.01
Other 1.33 5.31 3.89 10.53
$6.00(l) $12.00(2) $4.55(3) $22-55

Notes: (1) Direct port area expenditures for grain exports
are low end of range ($5.45 - $15.00) provided by
American Association of Port Authorities from impact
studies of numerous ports. Low-end used to relate
to estimated $2.10 elevator charges, $1.00 fitting
and trimming vessel; and balance for grain inspection,
land transport, vessel expenditures. Allocation
assumes half of $6.00 is local labor, balance is
supplies, services, other charges,allocated to 14-
county region by population.

(2) Indirect benefits estimated at two times direct,
mid-range of EDA 1.5 factor, University of Texas/
Port of Houston 2.81. $12.00 allocated to 14-county
region by population.

(3) Seaway depth savings at $4.55 from Phase I study,
page 140. Allocated to 46-county port hinterland
by production, Phase I, page 80.

It should be noted that Table 11-2 is unscientific,
but it is intended to be representative. It is offered
to illustrate a point; that the public's perception of
the benefits of port development may not be correct. A
comprehensive analysis would include all commodities as
well as their hinterland origins or destinations and the
specific port facilities used.

Industry. Compared to previous studies performed by
or for the local governments, the Phase I report was more
optimistic in regard to development of commerce'on the
Saginaw, less optimistic about specific industrial develop-
ment opportunities. Port improvements that have been
suggested earlierl4--a heavy lift crane for machinery
shipments, the replacement of the D&:M bridge at Bay City
*to allow construction of the largest size lake'carriers
could not be justified on the basis of foreseeable business.
The use of a foreign trade zone would not significantly
improve opportunities to use imported materials or local
labor supply.

A realistic appraisal of industrial development
opportunities recognizes that new installations requiring
large waterfront sites are few and far between. The new
shipyard recently located in Ontonagon is evidence that
they do occur. The port development plan of Phase I was
designed to provide a balance' of recreational, commercial
and industrial waterfront uses, based on the premise that
increased commercial and recreational activities would
produce supporting industrial activities. Partly for that

14 Bay County Economic Adjustment Plan, a report pre-
pared by the Michigan Department of Commerce and Marten
Hoffman and Company, Inc., 1975, pages 46-55.

reason, the report did not recommend concentrating all
commercial facilities at Bay City. To an even greater
degree than commercial development, industrial development
will depend on perception of the whole river as a mutual

resource.

In brief, there is considerable variation in the
perception of Saginaw River development opportunities.
This is paralleled in the perceived need to manage that
development.

e The Bay City Area Transportation Study's 1978
Saginaw River Port Study recommended a full-time
port director and suggested this be via a two-
county port organization.15

9 None of the Saginaw and Midland County studies
and plans reviewed in the course of this study
evidenced interest in a port management organiza-
tion.

The East Central Michigan Planning and Development
Region's 1977 Overall Economic Development Program
recommended the establishment of a tri-county or
multi-county portauthority.16

In view of all of the foregoing, it can be assumed
that none of the port management options, including doing
nothing, will have universal appeal. Since the Phase I
study and other studies of the river -- found a real
need to manage the resource,-the evaluation of options
has three goals:

(1) To identify the minimum management system
consistent with real and perceived needs.

(2) To identify the best system for management
and development of the Saginaw.

.150p cit, pages 18-19.
160p cit, page 184.

(3) To identify a strategy for going from (1) to
(2).

Minimum Management. Literally "doing nothing" is
a local option in Michigan because of the unique services
provided by the Michigan State Waterways Commission acting
as local cooperation guarantor for the federal channel
project, and the Michigan DOT in coordinating the develop-
ment of the state's waterways. It is because of their
effectiveness, not lack of it, that doing nothing would
be unacceptable. These agencies represent a significant
investment of state funds, and are a resource to be used
for Saginaw port development. They can be effective only
when there is at least someone local "to answer the phone".

Similar to the interaction between state agencies and
local interests, there is a need to use all of the local
development resources available within the Saginaw ports
area. As a practical matter, if there is anything less
than multi-county port management system, it is likely to
involve only a Bay City, or more likely to involve only a
Bay County port agency. In that case, the lack of partici-
pation by Saginaw County in port affairs would be a self-
fulfilling prophesy. A Bay County Port Commission would be
hard pressed to explain or justify any efforts to improve
or maintain the navigation channel to Saginaw -- including
spoil disposal areas, particularly when the principal
3-Mpact at Bay City would be more bridge openings.

Perceived or not, Saginaw and 11idland Counties have an
interest in management of the river. A minimum management
system requires the participation of Bay and Saginaw Counties,
and the exercise of the powers available under Act 66 of
1952 to harmonize the regulations and planning of the two

counties relevant to the river. As an administrative
device utilizing existing units of government, the merits
of a bi-county Port Commission are compelling. Creation
requires the initiative of the Bay and Saginaw County
Commissioners.

This report recommends that the initial port organization
be a Bi-County Port Commission with the following features:

(1) Create the.Commission by joint resolution of
Bay and Saginaw Counties. Implementing
ordinances can be adopted by the counties
severally.

(2) Provide staff support as needed by utilizing
the expertise provided by existing planning
organizations, alternately one or both counties
or the East Central Michigan Planning and
Development Region.

(3) It is suggested that two members of the Commission
be elected officials of the two counties, two
members be representatives of river users appointed
by their respective counties, and the fifth member
be alternately, nominated by the appointed members
or determined by any other mutually acceptable
formula.

Maximum Development. The Port Commission as described
in the preceding section would be quite adequate to coordi-
nate the planning and assist the development activities
of the existing agencies within the Saginaw ports area.
The need for an agency to provide development initiative
is a matter of perception. Phase I of this study indicated
there was such a need. This is based on the business prin-
ciple that when there is identified work to be done, the way
to get results is to assign the responsibility to a specific
individual or agency.

To be effective as a development agency, the port
management organization needs a separate corporate identity,
the ability to own property, employ specialized personnel,
and be self-supporting. In brief, this is the port authority
provided for in Act 639 of 1978. Subject to the public's
perception that the Saginaw is a multi-county resource
with broad benefits, the option of choice would be a tri-
county port authority, representing Bay, Saginaw and Mid-
land Counties. In the interim, an educational effort is'
required to clarify the public perception of the role of
a port authority.

Universally,the creation of an additional unit of
government is viewed with suspicion by existing
political entities. The initiative for creation
of a port authority is too much to expect of
County Commissioners.

Within Michigan, the role of a port agency of any
type has been clouded by the acrimonious debate in
Detroit over public versus private participation
in waterfront development. That city literally
11 missed the boat" in utilizing its resource because
a small segment of the community has viewed the
public agency as competition instead of providing
complementary services.

Locally, and probably universally, another new
public entity is viewed as "more taxes".

There may be some element of truth in the last concern-.
Compared to some other ports". the Saginaw has been remarkably
free of local obligations that involve significant cash
expenditures of public funds. Considerable ingenuity will
be required to provide spoil areas for upriver dredging
without payment for fee title or easements. Since the bur-
den of these payments would fall on Saginaw County, it would
be to that county's interest to have a multi.-county port
authority immediately, in order to have a vehicle for
sharing the cost of local cooperation. For that reason,

the immediate creation of a port authority to address
problems of spoil disposal would guarantee an unfair
public perception of the role of the authority.

The classic definition of the role of a port authority
was stated by a former manager of the Port of Toledo:

The reasons for establishing a public port
authority include the desire for orderly develop-
ment of the harbor with planned facilities and
nondiscriminatory access for shipping, as well
as the necessity of providing the data in rate
cases, in national legislation, and in obtaining
adequate harbor and channel appropriations.
Another primary reason for the establishment of
port authorities is that they function in an
area'not attractive to private capital. -For
instance,private industry cannot obtain long-
term financing at the interest rates available
to public bodies,. can-not acquire land by eminent
domain.... Still another reason for establishing
a port authority is the direct benefits bestowed
on industry in that facilities constructed by
public funds are usually leased to private firms
on terms profitable to the operator. Few public
port bodies operate the facilities they own. In
addition, the public port agency in its promo-
tional efforts and in its solicitation of cargo
serves as a sales force for the private operators
in the port.17

This study recognizes that the opportunities of
Toledo are not those of the Saginaw. Fortunately, neither
are the problems of Detroit. The role of a port authority
on the Saginaw need not be as broad as that described by
the Toledo port director. It can be a significant and
useful one nonetheless. The role described by Mr.. Jewell
is a valuable guide.

17 Government Control of Ports, by E.O. Jewell, Western
Reserve University Law Review, December 1959, page 85.

This report recommends the,ultimate incorporation of
a Tri-County Port Authority with the following features:

(1) Contract the performance of planning and regu-
latory powers and duties contained in Section
10 of Act 639 to the existing planning organ-
ization(s), in order to preserve the continuity
of inter-county cooperation established under
the Port Commission, with the Port Authority
Board retaining the oversight exercised by the
Commission.

(2) Exercise the primary (developmental) powers
and duties contained in Section 8 of Act 639
by employing a minimum.professional staff.
Unless otherwise justified by specific port
programs or projects, this staff would be one
executive and one or two supporting staff.

(3) Vest the ultimate ownership of the Saginaw Bay
Diked Facility and any other lands acquired
for similar public purposes in the authority,
for port related development, commercial,
recreational, industrial, regional or otherwise
as consistent with applicable plans.

(4) Operate the authority as a public enterprise,
so that consistent with its development obli-
gations and the philosophy that private enter-
prise should provide facilities and services
when willing and able, the authority's long-
range goal shall be self-support.

Strategy. This report has recommended the creation
of a Port Commission on the initiative of the Bay and .
Saginaw County Commissioners. The following three stages
would be an appropriate route to consideration of con-
version of the Commission to a Port Authority. Absent a
bi-county initiative to create the Port Commission, step
one and possibly step two could be helpful precedents.

(1) A comprehensive economic impact study of all
Saginaw waterfront activities that identifies
the distribution of benefits.

(2) Creation of a Port Committee or equivalent citizens
group with a representative membership of port
occupants or users as described in the preceding
"Unofficial Institutions" section.

(3) An examination of the operations of represen-
tative port authorities by representatives of
the Commission and Committee. This report
suggests the following candidates for visits
and/or exchange of information:

9 Toledo-Lucas County Port Authority (out-
standing rapport with business community)

Seaway Port Authority of Duluth (industrial
development emphasis)

San Diego Unified Port District (multi-
jurisdiction, recreational development
emphasis)

Lorain Port Authority (small but effective)

The Lorain Port Authority's activities approximate
those required for the Saginaw. That authority's policies,
1980 work program and budget are attached to this study
as Appendix A.

Financial Analysis

Substantially the same amount of effort is required
in the establishment of a Port Commission or a Port Authority.
The commitment of financial support after creation or
incorporation will largely be determined by the projects
and programs undertaken by either organization, but there
are significant differences.

The creation of a Port Commission carries no
obligation to spend any money on personnel, pro-
jects or programs. It is possible to exercise
the powers of the Commission through use of
contributed staff with a budget that is nominal.

The incorporation of an Authority does imply an
obligation to have a professional staff and action
programs. As noted in an earlier section, it is
unlikely that incorporation would be recommended
without this. In addition, the Port Authority Act
(639), requires a "Plan of Development" to be
prepared within two years of creation, and this
study does not constitute the comprehensive study
required under the Act. As a partial offset to
these obligations, the state may provide 50 percent
of authority operating expenses.

Under the Minimum Management/Maximum Development op tions
for the Saginaw, the minimum annual financial commitment
could be zero for a Port Commission, in the $15',000 -
$25,000 range for a Port Authority. The cost of the latter
is predicated on a minimum level of development effort
using a part-time professional. A more realistic level of
effort and expense for planning coordination and promotion
by the authority, would be in the area of $50,000 per year.

The financial estimates are based on the actual
experience of the Lorain Port Authority. Until two years
ago, their staff was a part-time but very competent pro-
fessional with secretarial assistance. Similar to the
Saginaw setting, that authority was not endowed with any
revenue-producing assets. The authority has built up an
income by acting as the financing vehicle for port-related
facilities. Initially, income consisted of interest
earnings on escrowed funds. Their current formula is
one-half percent of the face amount of the issue plus one-
half percent annually of the amount outstanding. The
facilities that have been financed include a shipyard
expansion (Amship), tank farm (Ashland), and most recently,
a bulk handling plant (Republic, Steel).

The Lorain authority now has a full-time professional
with-secretarial assistance. The authority's 1980 budget

is shown in Appendix A. Assuming an identical level of
effort and income for a Saginaw River Port Authority
would produce the following results.

TABLE 11-3

ESTIMATED INCOME/EXPENSE
SAGINAW RIVER PORT AUTHORITY

Personnel $ 45,200
Supplies & Services 10,500
Development & Sales 11,540
Miscellaneous 2,100
Total Expenses $ 69,340
income 24,600
Deficit $ 44,740
State Contribution 22,370
Local Subsidy $ 22,370

Findings

As a leading maritime state, Michigan is unique in
the port administrative and developmental services
provided by state agencies.- This arrangement, which is
not likely to change, reduces the role of local port
agencies -- but does not eliminate the need for them.
The services provided by the state should not be viewed
as competing with a local authority's, but complementary
-- an opportunity to obtain the benefits of local initiative
at minimum cost.

Michigan law recognizes the need for local partici-
pation in port administration, and provides several
optional forms of organization to manage and/or develop
port resources. Within the unique setting of Michigan's
port-related infrastructure, this offers an opportunity
and a challenge -- to adopt an organizational form that
is best suited to local circumstances. The local per-
ception of need varies widely, and it is unlikely that
any one of the port management options would meet immedi ate
universal approval.

Recognizing both needs and realities, this study has
recommended the immediate creation of a bi-county Port
Commission, and longer-range, the incorporation of a tri-
county Port Authority. In the interim period, or if
necessary as precedent actions, the study recommends.
determination of the economic benefits of the Saginaw
ports, and establishment of formal liaison with the ports'
business community. Ultimately, the value of any local
port organization will depend on it being perceived and
used as complementing and not competing with existing
political institutions and business enterprises.

III. Port Development Programs

Overview

Phase I of the study identified a number of port
development problems and needs. Some of these are regularly
recurring, and are typical examples of the needs routinely
addressed by established port organizations. The Phase I
report suggested that they be given priority attention,
presumably by a new port organization. The study @dvisory
Committee directed the Consultant team to address these in
the Phase II study. For a brief period, the consultant
team functioned as the port authoritv.

Port Project

The Phase I report analyzed the need for dredging of
the Saginaw. The purpose was twofold: to identify any
need for deepening of the navigation channels, and to test
the logic of terminating dredging of the channel upstream
of Bay City. Both the deepening and the abandonment of"
dredging have been suggested prior to the report.

The report found that the major beneficiaries of
deepening would be agricultural interests. Unfortunately
for them, the export grain elevators are at Saginaw. A
.preliminary cost-benefit analysis indicated deepening at
Bay City would be justified, but not to Saginaw. There
are several alternatives, including a grain elevator at
Bay-City. One necessity is a definitive cost-benefits
analysis and justification for the dredging.

As noted in Phase I, the procedures for implementing
channel improvements and their official study are lengthy.

38 1r

An ongoing study by the Corps of Engineers of the Great Lakes
connecting channels and harbors provides a convenient vehicle
for an official study of Saginaw improvements. The Saginaw
was not included in the original study scope, and the Phase
I report suggested a timely request to this effect.

In September, a request for inclusion of the Saginaw
in the Corps' study was made by the Study Coordinator,
in behalf of the Bay County Commission. Were there a
port organization, the request would be a typical respon-
sibility. In support of that request and for use in sub-
sequent Corps studies and public hearings, a local port
agency typically would produce in-house, a study comparable
with this report's analysis of the needs and benefits of
-channel dredging, but with a stronger advocacy of improvbments.

Dredged Material Disposal

Federal improvement and maintenance of a waterway
customarily involves certain "local obligations" such as
providing rights-of-way and relocation of utilities as may
be needed for dredging, assurance that wharves and similar
structures will be built and the waterway used, and disposal
areas for dredged material. As noted in the Phase I report,
local obligations are subject to negotiation, and may be
more extensive.

In Michiga n, the Michigan State Waterways, Commission
acts as the contracting agency with the Corps of Engineers,
to provide assurances of local cooperation. When necessary,
the Waterways Commission may require a subsidiary contract
with local interes ts, to support the guarantee to the Corps.
This unique arrangement for local cooperation agreements
arose from the circumstances under which the Waterways

Commission was created. Act 320 of 1947 charged the
Commission with the development of the ports and waterways
of the state, with the immediate purpose of securing the
construction of fifteen harbors of refuge. The latter
required the power to provide the local cooperation assurances,
Thereafter, the development of commercial harbors was assigned
to the Michigan Department of Commerce in the 1960's, and
to the Michigan Department of State Highways and Transport-
tation in 1973 by Act 327 of 1972, but the power to contract
for cooperation assurances remained with the Waterways
Commission,

In the case of the Saginaw Bay Diked Disposal Facilities,
the site was state-owned land, but an agreement with Bay
.County was required in order to provide for ultimate owner-
ship after use as a dredged material disposal area. The
dike itself was constructed with 100% federal funding under
P.L.91-611. That law provides that the ownership of a diked
disposal area will not remain with the federal government
when it is no longer used for the purpose for which it was
built.

In the case of the Middle Ground dredged material
facility, Bay City provided a city-owned site and diked it,
because it was advantageous to use the dredged material in
the adjacent city sanitary landfill. Since that landfill
operation must be discontinued in the near future, this
study and all parties concerned with river dredging have
identified the need to provide a new mid-river disposal site.

The Phase I report emphasized the need to acquire a
large enough site to serve for an extended period. This
is reinforced by the Corps' determination that the new mid-
river facility's dikes can be funded under P.L.91-611.

Diking is a significant expense. Should local'interests be
required to pay the cost of future dikes, it would be dis-
advantageous to constrain the size of the P.L.91-611 funded
facility, and advantageous to build it where it could be
expanded economically. The Phase I report recommended an
area on the west side of the Saginaw, southwest of James
Clements Airport and identified on some maps as the "Clements
Seaplane Base." The,report recommended a site of 330 to 700
acres, depending on acceptable dike heights, to accommodate
dredged materials to the year 2020. For comparison: the
Middle Ground facility is 12 acres; the 17-mile Brownsville,
Texas channel has 20,000 dedicated acres; the 25-mile river-
ine section of the Houston Channel has about 2,500 acres
but the dikes are taller than adjacent houses.

Concurrent with the completion of the Phase I Port
Development Study, the Corps of Engineers announced a
"Public Workshop Session" for August 28, 1980, to consider
four spoil disposal facility sites that had been identified
during the Corps' one-year search for candidate sites.
The Corps' sites were:

(1) 45 acres, Northwest portion of Clements.
Airport;
(2) 40 acres, Southeast portion of Clements,
Airport;
(3) 50 acres, North of and adjacent to the
Farm Bureau Elevator at Zilwaukee;
(4) 40 acres, East Bank of the Saginaw
across the road from the Saginaw Veterans
Memorial Park, north of the Bay County-
Saginaw County Line.

The first two sites are owned by Bay City, and the City
preferred site #1. The other two sites are privately owned.
The first three sites were considered in the Phase I report,

and deemed unacceptable for stated reasons. The fourth site
was not considered in that report. It was the generally
preferred site by the attendees at the public workshop.
Figure III-1 following, shows the preferred site at the
public workshops cross-hatched and the sites recommended by
the consultants (Maxwell preferred).

The west side sites were submitted to the Corps for
consideration, by letter dated September 4, 1980,from the
Study Consultants. Copies of the Corps' notice of the
public workshops, and the consultants' Iletters are attached
to this report as Appendices B and C, respectively. As noted
in the letter, Michigan Department of Natural Resources has
denied a request by property owner Maxwell for a permit-to
fill that property, and DNR is now negotiating the purchase
of that property and assembling acreage to create a state
game area now called "Crow Island West."

Preliminary inquiry by the consultants at DNR indicate
the state is not receptive to using all or part of the
Maxwell property for spoil disposal. However, the DNR Wild-
life Division did indicate that use of part of the present
(east shore of the Saginaw) Crow Island State Game Area
could be considered with the provision that local interests
would be required to mitigate the interim loss of the game
area, and restore it after use. "Mitigation" customarily
involves dedication of more-or-less equal acreage for the
same use, but recent efforts of the port industry have
produced some innovative solutions where the trade-offs are
more flexible.

At the present time, the 40 acre site preferred at the
public workshop appears to have several limitations. Since
it is privately-owned, fee title or a long-term easement

Figure III-1
Proposed Mid-River Spoil Disposal Sites

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must be purchased, and an undefined amount of mitigation
committed. To avoid prejudicing the state's negotiations
for the Maxwell property, the consultant refrained from
contacting the property owners. A clear indication of local
support for use of the Maxwell or adjoining properties would
be appropriate before pursuing the matter further with DNR.

Port Promotion

The Phase I report on "Commercial Development" identified
two factors that will have a significant effect in determining
whether the Saginaw achieves its full potential. They were
(1) improvement of the navigation channel, and (2) promotion
of the port. The efforts already initiated in regard to a
review of the federal project and provisions for disposal of
dredged material will be helpful. The Phase I report proposed
reactivation of the Dow Chemical owned Bay City Seaway Terminal
as a public facility under the auspices of a port agency@as
an activity that could initiate a port promotion program
that combined incentives with the possibility of self-support.

The relevant sections of the Phase I report were shared.
with executives of Dow Chemical U.S.A. The substance of the
consultants' discussions with those executives Is:

Dow Chemical is interested in reviving the
operation of their Bangor facility as a
public use terminal consistent with Dow's
shipments through the facility, as a use that
may incidentally benefit Dow, but principally
to demonstrate corporate responsibility in port
development.

4 4

Dow would prefer an arrangement with a private
terminal operator, such as the previous terminal
operation by Oglebay Norton Company.
e The Dow executives are convinced that the
potential general cargo traffic of the port
will not provide enough business for a viable
public terminal operation.
0 Dow is not about to make a commitment at this
time to a public port agency not yet in existence,
and whose form of organization and operation
have not been defined.

In summary, the proposal in the Phase I report was not
rejected outright. Neither did it produce an immediate need
for a public port agency.

As noted in the Phase I report, Mr. Bernard Surath
-acquired the former Oglebay Norton general cargo terminal in
Carrollton. He has now reactivated it, and anticipates scrap
shipments and receipts of pig iron by vessel. His is a
classic example of the entreprenuerial spirit needed to
develop the Saginaw's ports. Because of his proprietary
interest in the Carrollton terminal, he is a remote candidate
to operate the Dow facility.

The alternative to public terminal operation of the Dow
facility to revive the Saginaw's general cargo traffic is to
produce the need for a public facility first, by identifying
and attracting a sufficient volume of neo-bulk or other cargos
compatible with.the facility, i.e., Scrap handling would not
be appropriate.

The Dow executive for further contact in regard to the
terminal is Mr. Donald E. Janish, Site Manager, Bay City
Plants, Michigan Division. (517) 684-1330.

Findings

Appropriately, the federal project study of channel
improvements, the provision of spoil disposal areas and the
initiation of a port promotion effort have been addressed
as ongoing programs. As noted, there has been some initiative
in these areas associated with this study, but real progress
will require continued effort.

Provisions should be made for updating the relevant
sections of the Saginaw River Port Development Study to assist
in making the Corps of Engineers study of channel improvements
productive.

There is an opportunity now to provide a long-term
solution to a new mid-river dredged material disposal site.
General agreement at the local level as to the desirability
of the proposed site is a prerequisite to what will have to be
a concerted local effort to dedicate the site for spoil
disposal -- an effort comparable to that involved in the
Saginaw Bay Diked Disposal Facility.

A continued effort should be made to locate a suitable
operator and/or the requisite cargos needed to reactivate
the.Dow Chemical facility in Bangor as a public terminal.

IV. PORT DEVELOPMENT PROJECTS

Overview

Phase I of the study identified most commercial port
development opportunities to be associated with the agri-
cultural sector--grain and animal feed exports, and
fertilizer receipts by vessel (both domestic origins and
imports). An export grain elevator on Seaway depth channels
was estimated to offer higher returns to the local grain
producers. The cost of a minimum suitable elevator was
estimated to be $7.5 million. Further analysis of a multi-
purpose dry-bulk terminal capable of handling both feed
exports (in pellets) and fertilizers was also recommended,
with no estimate as to cost. The Study Advisory Committee
determined these two facilities were the top priority
projects, and directed the consultants to investigate their
feasibility in Phase II. This chapter presents the conceptual
designs, underlying assumptions and estimated costs for the
two facilities, not including site acquisition costs.

Facility Sites

The Phase I report identified the need to use the
commercial waterfront of the Saginaw more intensively, by
consolidation of uses where feasible as with the oil terminals,
and the desirability of consolidating new significant in-
vestment in marine terminals in the Bay City area, where
the maintenance of channel depths is more economical and
more likely. Figure IV-1 shows the recommended uses of
C)
the waterfront in the Bay City area for commercial purposes,
based on the integrated development plan of Phase I.

FIGURE IV-1
10 3 "A
INTEGRATED DEVELOPMENT PLAN
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Land transportation as well as channel depths was a
major factor in determining the proposed sites for the two
facilities investigated in Phase II. For those locations
with reasonably acceptable rail and road service, the next
priority was to find existing underutilized terminals that
would offer suitable sites. The final major criterion or
factor was to provide for future expansion of the facilities.

This analysis identified the two sites shown on Figure
IV-2. The owners of the two properties were contacted to
determine if there were any objections to the consultants'
use of the sites--at least on paper--for preparation of
conceptual plans. Both parties readily agreed. Mr. Frederick
Fletcher of Fletcher Oil Co., owner of the grain elevator
site, welcomed a project that could make more intensive use
of that site. Mr. Barron Berger, Senior V.P. and General
Manager of Newcor-Bay City, indicated his company's property
was not needed for corporate purposes, and an alternate use
for the property would be welcome.

The consultants were aware that a portion of the Fletcher
property has been designated an archaelogical site because
it had been used by Indians, and there might be resistance
to its development. An effort was made to identify the
specific boundaries of the designated site (apparently none)
and the legal restrictions on its use (likely a delay in
issuance of construction permits regardless of the presence
of artifacts).

The prime portion of the Fletcher property centers on
the "India n Mound", and although this area has been thoroughly
mined for artifacts, the consultants considered it ineligible
as the elevator site. Accordingly, the presently developed
portion of the Fletcher property was used as the proposed

FIGURE IV-2

LOCATION MAP-
Jill
GRAIN ELEVATOR AN dIINAL SITES
D BULK TEr
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site, even though this would impinge upon existing uses,
and is less attractive geologically. That portion of the
property has been filled, indicating that it probably
never was used by the Indians. Michigan State University,
the organization that had nominated the "Mound" site for
the archaelogical register, indicated two days of core
borings could conclusively determine whether this portion
of the property had archaelogical value.

The principal reasons for selecting this site despite
the potential controversy are:

e The Fletcher site provides a unique combination
of rail and highway access in the Bay City area.

As an elevator site there would be demonstrable
benefits from deeper channels. The anticipated
upstream limit for deepening the Saginaw is the
Grand Trunk railroad bridge immediately upstream
of the Fletcher property. The favorable cost-
benefit ratio attributable to the elevator would
apply to all dredging downstream.

The general location of the multi-purpose dry-bulk ter-
minal was chosen because the south bank of the Saginaw between
the Truman (highway) bridge and D&M (railroad) bridge is a
prime marine terminal area and not being used for that pur-
pose. The specific location next to the Bay City Wastewater
plant was chosen because it presented the possibility of
building a wharf structure offshore from the plant, and thus
making multiple use of the water area and providing an activ-
ity suitable for viewing from the proposed riverfront mini-
park. The design was constrained by the size of the Newcor
property, and field surveys will be needed to determine if
the indicated rail access impinges on existing structures.
Alternately, the Bay Chemical property could provide rail
access or a facility site.

Traffic Patterns

As indicated, land transportation access was a key
determinant of prospective facility sites. Similarly, the
impact of trains and truck traffic on the adjacent community
was a key consideration.

The operators of the present waterfront elevators at
Saginaw have both considered Bay City as a location, but
considered the lack of good truck access from Interstate 75
to be a severe disability. If the site is on the south
shore (such as the proposed bulk terminal) and the access
is via the.I-75 business route through downtown Bay City,
their perception is correct.

Analysis of the access via Wilder Road convinced the
consultants that a north shore location for the elevator
would be feasible. In addition, the Fletcher site is
served by Conrail with a direct link to the elevators in
Saginaw. This will provide better service for shuttling
grain between the elevators, and minimize grade crossing
interference with highway traffic.

The prospective tonnage to be handled by the bulk
terminal is smaller than the grain elevator, and peaking
of traffic flows will be far less. In addition,,due to the
new highway bridge over the Saginaw, truck traffic can be
routed via Wilder Road for access to 1-75.

Environmental Considerations

The conceptual design of the two facilities includes'
those features that are current best practice in environmental
protection.

The grain elevator employs an inclined belt for
elevating grain to the top of the silos in lieu of the
-traditional vertical bucket elevators, in order:to min-
imize the creation of dust and dust explosion hazards.
This makes the facility relatively more expensive than
older designs, but is state-of-the-art design.

Both the grain elevator and bulk terminal are designed
to trap surface runoff water, from rain or other sources,
and divert this water to sedimentation basins or treatment
facilities when necessary, before discharge into'the river.

The sp.ecific impacts addressed in the conceptual
design are:

Visual. The grain elevator silos are not obstructive,
and the architectural symmetry should be pleasing,
absent the traditional "headhouse" for elevating
legs, which is usually twice the height of the silos.

Noise. Receiving and delivery capacities at both
T-acilities have been designed so that rail switching
service will not be needed more than 16 hours per
day. Grain elevator truck traffic normally peaks
at the beginning of the business day, and is lowest
during the midnight-6 All period.

9 Dust. Both facilities are designed to meet EPA air
and water quality standards, with the most cost-
effective equipment.

Conceptual Designs

The design objective for the two conceptual Dlans was
to provide, consistent with good safety and environmental
protection features:

An export grain elevator of minimum feasible size
at the lowest possible cost, conservatively estimated.

A multi-purpose dry-bulk terminal with relatively
high tons-per-hour receiving and delivery capacity
and generous storage space and bagging facilities,
with a substantial multi-purpose wharf. In effect,
the facility is over-designed to provide a basis
for terminal expansion in the future.

The general site plans for the grain elevator and
bulk terminal are shown in Figures IV-3 and IV-4, respec-
tively. The design criteria for these two facilities
were as follows:

Grain Elevator. Based on the estimated elevator
needs shown on pages 139 and 140 of the Phase I'study, a
"deepwater" elevator would have potential annual exports
independent of those via the port elevators in the
Saginaw area as follows: (In thousands of bushels)
1980 - 14,763 2000 - 19,843
1990 - 17,302 2020 - 24,923

Based on an annual throughput of ten times storage,
and the length of time it will take to provide Seaway
channel depths at Bay City, the market will support a
minimum-size export elevator of 1.5 million bushels capacity
by the time that deepwater elevator is reality. Long-run,
provision should be made for increasing storage capacity
to 2 million and 2.5 million bushels.

It is assumed that about half the grain received will
be by rail from other elevators including the port elevator
at Saginaw, with the other half by truck -- either from
other elevators or direct from farms. It is assumed that
virtually all shipments will be to vessels, with an
occasional trainload loaded out. The vessels are likely
to be maximum size "salties" loading about 700,000 bushels.
Based on 15,000,000 bushels per year, indicated annual
traffic in about 7,500 trucks, 2,187 rail cars, and 20
vessels.

mm M.m = = m = m = m
FTGITRE IV-3
GENERAL SITE PLAN - GRAIN ELEVATOR

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FIGURE IV-4
GENERAL SITE PLAN BULK TERMINAL

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In order to use the Fletcher site most advantageously,
it is assumed that rail car loading and unloading will be
done at the inshore end of the elevator adjacent to Marquette
Avenue, to utilize a straight-through track alignment that
will facilitate handling unit trains. Loading and un-
loading of trucks can be accomplished at either end of the
elevator. Vessel loading facilities will use an elevated
gallery the length of the berth with gravity spouts to
reach all hatches without vessel shifting, maximum combined
loading rate, 45,000 bushels per hour. The supporting
structure will be the lowest-cost alternative, bulkhead,
caissons, or piling.

The flow of grain through the elevator is shown in
Figure IV-5. The estimated staff of the elevator, based on
information obtained-for a comparable-sized public facility
at Brownsville, Texas is as follows:

I Manager 1 Superintendent
2 Office Clerical 1 Foreman
3 Maintenance 1 Assistant Foreman
15 Permanent Operating Personnel
12 Seasonal Operating Personnel

Operating personnel assignments as follows:
Rece Loadout to
Operation Truck 1 Vessel Truck-7Rail

Samplers 2 1
Runner 1 1
Graders 2 2
Dumper 2 2* - -
Scale(s) 3 1 2 2
Gallery 1 1 1 1
Distributor 1 1 1 1
Headhouse 1 1 1 1
Spouts - - 3 2
Car Pull - 1 - 1
Cleanup 2 2 2 2
Per Shift 15 13 10

*Bottom dump cars. Alternately, 5-man power-shovel teams.

mm M.m m m m m m = m
FIGURE IV-5

FLOW CHART GRAIN ELEVATOR

ISTAGI GALLERY TRANSFER
BELT CONV. BIN
1500 TRUCK YR
6 TRUCK /-DAY (Min) SHUTE FROM
R.R.BIN lN
7 $k
4 Min/TRUCK z \ . f 11.5M Bud
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1000 Bu 1240OW 0\ WEIGH Min.
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00 1,600 T/Hr.

FROM
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SHUTE,@/_7

BIN CONTROL
GATE + SHUTE

TO TRUCK BIN
-:::3 E 8 TRAINS/Yr. or
TUNNEL BELT CONV. 65 CARS/TRAIN
98 TON/ 40 FT.
CAR

The Brownsville operation is based on single-shift
operation, no more than two simultaneous operations. A
-15 million bushel per year volume at Bay City would likely
require two-shift operation several months per year.

In addition to elevator personnel, directly related
employment includes grain inspectors (3 as needed) and
vessel trimming crews (5 per spout as needed). The
combination of permanent, part-time and full-time employ-
ment for the Bay City elevator is estimated to be the
equivalent of 40 full-time jobs.

Bulk Terminal. Estimates of dry bulk fertilizer
receipts and feed exports were shown on page 128 of the
Phase I study. Estimates of available facility capacity
-to handle these two commodities were shown on-pages 137
and 138, respectively. A summary of these estimates and
the indicated facility needs is as follows: (Tons per
year)

1990 2000 2020
Feed Exports 50,000 90,000 90,000
Present Facilities 30,000 30,000 30,000
Expected Facilities 30POOO 30,000 30,000
Needed Facilities - 0 - 30,000 30,000

Fertilizer Received 75,716 213,262 267,818
Present Facilities - - -
Expected Facilities 75,000 150,000 150,000
Needed Facilities - 0 63,262 117,818

Two possibilities were considered in sizing the bulk
terminal: (1) as a prototype for the proprietary facilities
expected to be built, or (2) as the multiple-user additional
facility for which there is an indicated need starting in
2000. Under either scenario, the prospective volume for the
facility would be about 100,000 tons per year initially,
with ultimate expansion to 150,000 to 180,000 tons per year.

Accordingly, it was decided that the.most useful design
would be for a multi-purpose facility that could handle
and store both feeds and fertilizers since the storage
space requirements are similar under different scenarios.
Four of these scenarios are shown below: (Quantities
in tons)
Annual Storage
Scenario #/Commodity Volume Turnover Required

#1 Feeds 30,000 3X 10,000
Fertilizers 75,000 5X 15,000
Total 1990 Expected (Proprietary) Facilities 25,000
#2 Feeds 30,000 3X 10,000
Fertilizers 63,262 5X 12,652_
Total 2000 Needed (Additional) Facilities 22,652
#3 Feeds 60,000 3X 20,000
#4 Fertilizers 150,000 5X 30,000

The optimal facility is one long and narrow clear-span
building parallel to the vessel berth, connected to a solid
fill or free-standing wharf with a wide apron where a moveable
loading tower can reach all holds of the vessel and/or a
moveable or mobile crane can reach all holds. Movement
between storage and wharf is by one reversable or two
conveyors, or alternately by vehicles. A dockside hopper
would receive cargo discharged by self-unloading vessels.
A single reversable conveyor in the peak of the building,
with interior elevating legs fed by mobile equipment --
plus cargo doors -- provides'for movement into and out of
storage.

There have been numerous variations of the small bulk
plant concept in other ports -- purpose-built facilities in
Savannah for fertilizers and clay, in Brownsville for ferti-
lizers and feeds, in Galveston for sugar, and conversions of
general cargo transit sheds in New Orleans for feeds. The

Bay City facility shown in Figure IV-4 reflects certain
site constraints. The flow chart for the facility is
shown in Figure IV-6.

It is assumed that all feed exports will be received
by truck and loaded to general purpose "salties", that
virtually all fertilizers will be received from a combination
of vessels barges, self-unloading lakers, and some
11salties" with about 80% of fertilizers delivered out'
via truck, with the balance rail. Based on 30,000 tons of
feeds, 70,000 tons of fertilizers, indicated annual traffic
would be 5,700 trucks, 250 rail cars, 20 vessels. Based on
the Brownsville bulk plantestimated staff would be:

1 Manager 1 Foreman
2 Clerical 2 Maintenance
5 to 30 operating personnel as needed

Financial Analysis

A definitive determination of the feasibility of the
two proposed port facilities can only be made based on the
specific requirements of a specific prospect related to a
specific site -- and would likely require the sharing of
proprietary data. This study is a pre-feasibility analysis
to define the financial parameters, so that contact with
potential prospects will be realistic and productive. It
is based on generally available information.

Grain Elevators. In the past decade, virtually all
U.S. port elevators have been built with public financing,
for operation by major grain firms. In part, the public
financing reflects the capital intensiveness of elevators',
and the marginal return on investment in the facility per se.
In part,it is due to the fact that when most elevators are

FIGURE IV-6
FLOW CHART7 BULK TERMINAL

FERTILIZER
VE HICLES MOBILE BLDG. CONVEYOR
-.a-
CONVEYOR tz,-777Z7zzzzz@zzz
500 T/HR

280 TRUCK/SHIP 94 TON/ CAR SCALE 50 x 30dx 35' 3 SHIPS
8 HR. SHIFT 65 CAR/TRAIN 100 30,000 DWT
35 TRUCK/HR. 5 TRAIN /SHIP TON 3 DAY UNLOAD

FERTILIZER

PELLET BLDG.

VEHICLES DUMP
500T/HR

QO n rin-
r

V Z z z 140'x 300 x 35'
SCALE

PELLET

publicly financed, the others need to be,to have competitive
costs. The predominantly private operation is due to the
fact that a major company automatically has a volume of
business for a new facility. Also, the blending of grains
within the elevator is its most profitable aspect, and the
advantages are lost in a true public facility. Because of
the public financing of elevators, their construction costs
are public knowledge. Recent construction has cost about
$5 per bushel of storage capacity. The Burns Harbor elevator
under construction by Cargill is expected to cost $18 million
for 3.4 million bushels of capacity. On the satae unit cost
basis the Bay City elevator would cost $7.9 million, versus
the Phase.I estimate of $7.5 million (page 104). Because
of the private operation of most export elevators, virtually
all operating cost information is proprietary. The sole
publicly-owned, publicly-operated export elevator is at
Brownsville, and information for this elevator is shown.

Table IV-1 shows an itemized cost estimate for the Bay
City elevator prepared for this study. The indicated cost
is $14.82 million, or almost $10 per bushel of capacity.
The Brownsville elevator has a present capacity of 3 million
bushels storage, built in increments with an overall cost of
about $2.25 per bushel, and handled an average of 14.5 million
bushels per year in the past five-years. Although somewhat
larger than the proposed Bay City facility, its operating
results are believed relevant. A five year summary is
shown in Table IV-2.

TABLE IV-1

COST ESTIMATE SUMMARY - GRAIN ELEVATOR

(not including site acquisition cost)

SILOS - 10 UNITS W/INTERSTICIAL CELLS $3,550,000
VERTICAL/ HORIZONTAL CONVEYORS 6,500,000
RAILROAD CAR DUMP BIN 81,700

RAILROAD CAR SCALE 90,000
RAILROAD TRACK 127,000

TRUCK DUMP BINS 163,000
TRUCK SCALES 180,000

DEEP FOUNDATIONS 1,630,000
GENERAL EARTHWORK 194,000
PAVING 117,300
UTILITIES 173,600

FENCE 46,300
DOCK 527,000

DREDGING 482,000

ADMINISTRATION BLDG. 510,000
GUARD HOUSE 10,000
MAINTENANCE 440,000
TOTAL = $14,821,900

TABLE IV-2

BROWNSVILLE PUBLIC ELEVATOR OPERATING RESULTS
(1975-1979 Average Volume, Revenues, Expense)

Total Per Bu.
Volume 14,505,492
Gross Revenues $ 1,232,000 8.49@-
Operating Expense 560,000 3.86r,
Operating Margin' 672,000 4.63(@

*Does not include indirect and administrative expense,
depreciation or debt service.

Estimates of the Brownsville expenses are shown in
Table IV-3, based on.recent experience projected to
one year.

TABLE IV-3

BROWNSVILLE PUBLIC ELEVATOR ESTI14ATED ANNUAL EXPENSES

Direct Labor Other Direct Costs
Wages $262,000 Materials $ 44,000
Fringes 88,000 Contract Repair 12,000
$350,000 Fumigation 36,000
Inspections 60,000
Indirect Costs Equip. Use 34,000
Wages $106,000 Electricity 64,000
Fringes 22,000 Bldg. Ins. 38,000
Prop. Ins. 2,000 Content Ins. 50,000
Liab. Ins. 18,000 $338,000
Shrink'Res. 92,000
Misc. 20,000
$260,000 Depreciation $122,000

Total Estimated Expense $1,070,000
Total Expected Revenues 1,660,000
Cash Flow for Debt Service $ 712,000

Similar to elevator expenses, elevator revenues are
built up from a number of charges in addition to the basic
rates for elevation, delivery and storage (respectively 3(,%
per bushel in, 3r,% to 3kr,% per bushel out, and 1/10,c,% per
bushel per day after 10 days free time at Brownsville).
A rough estimate of the Bay City elevator revenues based
on 15 million bushels per year related to Brownsville
revenues is $1.275 million. Since revenues may be even
more sensitive to site specific conditions than expenses',
the assumption has been made that Brownsville's average
net revenue per bushel handled (i.e., cash flow after
direct and indirect expense, but before depreciation) will
provide a 'more realistic indication of the Bay City's
facility to service debt. On the basis of a cash flow of
3.5(,% per bushel handled, and an annual volume of 15 million
'bushels, the Bay City'elevator could produce $525,000 per
year as return on investment.

Currently, 9% interest, 20-year money, is probably
the best available elevator financing via tax-free revenue
bonds. That requires equal annual interest and amortization
payments of 11.746% of the issue. When interest rates were
lower and 30-year money was available 8% would amortize.
Based on the $14,821,900 estimated cost of the conceptual
elevator design, 9% 20-year money would produce annual
charges of $1,740,980. Alternately, a $7.5 million invest-
ment with 9% 30-year money would produce charges of about
$587,498.

Bulk Terminals. The fact that there are numerous
public and privately-owned bulk terminals means there are
more cost figures available. Unfortunately, very few of
those terminals are similar to the proposed Bay City facility.

The Brownsville terminal is comparable. It has a 100,000
square foot warehouse with a 250 ton-per-hour conveyor
system connecting with the wharf. That facility therefore
has more storage, and about half the handling speed of the
design prepared for this study. The Brownsville facility
cost about $1 million fifteen years ago. Escalating for
inflation, that indicates a current reproduction cost of
about $4 million. The itemized cost estimate of the Bay
City facility, shown in Figure IV-4, is $11.9 million.

Since the Brownsville bulk plant was built and is
operated in conjunction with the grain elevator, some
facility components and staff are shared. Despite this,
operating profits have been nominal because of low volume.
The terminal volume averages in the area of 50,000 tons,
or about half the meal and fertilizer shipments in the area
because some meals and most fertilizers are handled via
proprietary or other port facilities. As a result, the
principal revenues from the facility to provide a return
on investment are wharfage and dockage revenues produced
by the cargos handled. These revenues range around $1 per
ton, depending on the type vessel served. Contact with
other ports indicates that the operating characteristics
and financial results are more-or-less representative.

Accordingly, $1 per ton has been assumed as the likely
cash flow of the Bay City facility available to recover
investment. Based on annual throughput of 100,000 tons,
and 9% interest plus amortization, the $100,000 could
.support an investment of only $851,354. Even with a drastic
scale-down of the concept, this facility appears unlikely
to be financially viable as an independent enterprise. As
a proprietary facility that offers additional benefits in

TABLE IV-4

COST ESTIMATE SUMMARY - BULK TERMINAL
(not including site acquisition cost)

RAIL LOADING CONVEYOR $ 120,000

RAILROAD SCALE 90,000

RAILROAD TRACK 67,200

TRUCK DUMP BINS 163,000
TRUCK SCALES 180,000

STORAGE YARD 108,800
PAVING 114,600

CONVEYORS 3,282,000

DEEP FOUNDATIONS 441,000

GENERAL EARTHWORK 120,000

UTILITIES 445,000

FENCE 67,800
DOCK 1,627,600
DREDGING 116,200

SUB TOTAL $ 6,943,200

GUARD HOUSE 10,000

ADMINISTRATION BLDG. 360,000

MAINTENANCE BLDG. 360,000

PELLET BLDG. 1,638,000

FERTILIZER BLDG. 1,822,500

BAGGING BLDG. 720,000
SUB TOTAL $ 4,910,500

TOTAL $11,853,700

corporate marketing and provides storage and processing
space that would otherwise be needed, it is possible that
it could be viable.

Findings

The conceptual designs for an export grain elevator
on the Fletcher Oil property and a multi-purpose bulk
terminal on the Newcor property at Bay City indicate both
facilities would be physically feasible, compatible with
adjacent land uses, and consistent with more intensive use
of the waterfront. The facilities would create'employment
opportunities equivalent to approximately 50 full-time jobs,
and provide transportation cost savings that would be
beneficial to users. The two sites are presently under-
utilized, and construction of either or both facilities
would be desirable to anchor future commercial waterfront
development on the Saginaw.

The economic analysis of the two facilities based on
the conceptual design and preliminary cost estimates
indicates that the grain elevator could be a viable enter-
prise, and that except as an integral part of a proprietary
distribution system, the bulk terminal would not be. The
realities of port facilities are that the transportation
savings and other benefits that they produce do not flow
through commensurate with the cost of the facility, and
this report does not recommend building money-losing
facilities. This report does not find that development of
the Saginaw is impossible, just difficult.

The facility concepts should be used as a sales tool
to find the combination of public and private enterprise
that will make these facilities viable. Based on the

indicated demand in Phase I and the fact that elevators
and bulk plants are being built at other ports, the
analyses should not be used to dismiss the potential of
port development on the Saginaw. It is evidence that
port development requires a multi-year sustained effort.

The Port of Burns Harbor has been the subject of such
a sustained development effort. The port has finally
attracted an elevator, and is expected to announce a bul k
plant soon. The following release by the Indiana Port
Commission is evidence of the rewards.

Grain facility at Port means new commerce, jobs

New construction at the Port of Indiana employment in northwest Indiana. This will
may soon allow farmers within a 100-mile radius provide a favorable impact on the state's farmers
of the Port to shop grain throughout the world. and transportation industry and provide a means
The Port, which opened in 1973, has continually for expanded American exports, while reducing
grown with more than one million tons of ship wasteful energy consumption.
and barge cargo handled in 1978. 10% more Indiana farmers and grain shippers within a
tonnage is predicted for this season which will 100-mile radius would benefit by receiving a
end with the winter freeze on the Great Lakes in higher net price for their products than they
December. receive by present marketing routes. Net income
The Port Commission recently concluded gained for the farming sector is estimated at $2
an agreement with Cargill, Inc. of Minneapolis million to $2.75 million per average year for each
for construction of an export grain terminal, of the first 5 operating years. The 100-mile radius
estimated at a cost of $18 million and includes an area bounded by Lafayeete, Goshen,
construction scheduled to begin this summer. In Kalamazoo, Michigan, and Peru/Salem, Illinois.
order to simultaneously expand necessary Additionally, the port facility would also
public-use facilities such as additional docks, bring good employment news in the Gary/Burns
internal road and railway trackage, the Port Harbor area with an additional workforce of
Commission has applied to the EDA (Economic 40-50 persons engaged in the transportation of
Development Administration) for a $2.55 million grain. Related shipping activities such as
grant over the next two years. banking, insurance, ship chartering and customs
Approval of the EDA grant has been activities which are now concentrated in the
endorsed by Dick Lugar, and other regional Chicago area could also provide an economic
representatives who cited the Port expansion as boost to northwest Indiana.
an excellent opportunity for increased

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I Appendix A. Lorain Port Authority Policies
and Programs
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Tl
@THE LORAIN OORT -AU HOR-ITY

0 RA IN., OHIO

POLICY AND WORK PROGRAM
FOR

1980

APPROVED BY BOARD OF DIRECTORS
SUBJECT TO REVISIONS OF COUNCIL

nprornhpr 11 1 q79

CONTENTS

PAGE

A.- THE PURPOSE

THE POLICIES 3

C. THE PROGRAM 4

THE LORAIN PORT AUTHORITY

A. THE PURPOSE:
The Lorain Port Authority was authorized by Lorain City Council
in 1964 to work as an agent of the State of Ohio and the City of Lorain
By virtue of the creation of the Lorain Port Authority, broad powers
were granted under the Ohio Port Authority Act.

The Port Authority is governed by a nine-member Board fo Directors
who are appointed by the Mayor with the consent of City Council. The
Board of Director's employ two full-time persons to assist them in the
discharge of their duties and powers.

The Board of Directors may act in a variety of ways to promote the
Port of Lorain and facilities in Lorain. They seek to more fully utilize
the water which is a great asset to the residents of Lorain. To accom-
plish that job, State and local law permit the following:

A. The purchase, lease, sale, or construction of lands and/or
facilities such as terminals, docks, wharves, marinas, or
other recreational facilities on or in the water;

B. The improvement of waterways for navigation;

C. Issue bonds to fulfill its purpose, and assist other users
of the waterways of Lorain.

D. Establish, operate, and maintain foreign trade zones;

E. Exercise the power of eminent domain necessary to accomplish
its purpose; and

F. Exercise many other powers similar to the City of Lorain for
the greater benefit and use of the waterways of Lorain.

-2-

The activities of the Lorain Port Authority are guided by an

overall Development Plan; however, it is necessary to periodically

revise the plan. The plan serves only as a broad set of long-term

goals for the City of Lorain and the Board of Directors feels it

must think more specifically about its annual activities. By doing so,

a work program is formulated within the parameters of the law and basic

plan. Certainly there will be unexpected events with witch the Board

of Directors will have to cope; however, with a well-defined set of

policies, it can make sound decisions in the best interests of Lorain.

-3-

B. THE POLICIES:
1- Planning and Administration

The Lorain Port Authority determines to maintain and con-

tribute to economically viable plans, revised from time to time,

to keep pace with the needs of industry and the citizens of Lorain.

Furthermore, it determines to conduct its business in a manner that

will bring credibility, trust, and success to itself, the City

Administration, City Council, and the citizens of Lorain which it

serves.

2. Lands and Properties

The Lorain Port Authority determines to maximize the use and

service of all water-related properties in the best interest of the

economy, industry, commerce, and the overall needs of the citizens

of Lorain, and to safeguard those properties.

3. Facilities

The Lorain Port Authority determines to promote, plan, and

develop water-related facilities that meet the needs of industry,

commerce, and the recreational needs of the citizens of Lorain.

4. Promotion and Competition

The Lorain Port Authority determines to make the Port of Lorain

a significant and competitive port-of-call for the greater benefit

of the economy, industry, commerce, and citizens of the City of Lorain.

-4-

C. THE PROGRAM

I. Planning and Administration

A. Planning and Programming

1. Evaluate, revise, and update the overall Development

Plan.

2. Complete the programming for Year 2 of the Marine Patrol

for the greater security of port users.

3. Prepare and seek funding on any proposals or programs

identified in the update of the revised plan that have

merit to the residents of Lorain, and its industry.

4. Provide any data, perform any survey, and generally con-

tribute to the rapid progress of the Corps of Engineers'

Study for Navigation Improvements.

5. Identify bulk cargo, not presently transshipped, which is

feasible to ship into and from the Port of Lorain, and

develop a proposal to do so. Particular attention will be

given to coal.

6. Secure funding, and construct a floating tire breakwater.

7. Complete study to design and derive costs of Phase I Small

Boat Harbor, and apply for construction funds.

8. Secure funding and begin analysis of coal blending in Port

of Lorain.

9. Continue efforts to rehabilitate West Breakwater and remove

West Pier.

-5-

B. Administration

I. Maintain maximum communication with the Mayor, his adminis-

tration, City Council, local State and Federal elected officials

in the exercise of duties.

2. Perform usual and special duties including maintenance of

minutes of meetings, fiscal records, etc., and other functions

as advised by the Board of Directors.

3. Perform any audits required by appropriate laws, regulations,

or as advised by the Board.

4. Continue the amortization of bonds used in financial assistance

to American Ship Building Company and Ashland Oil, Inc., and

possible new issues.

5. Maintain legal advice and guidance in the conduct of duties.

6. Monitor, provide, and coordinate information regarding scheduling,

cargo, and shipping data.

7. Maintain close cooperation with the Harbormaster, Coast Guard, or

other Great Lakes agencies concerning the well-being of the Port

of Lorain.

8. Continue the administration of a Marine Patrol Program. (i.e.

funding, reporting, operations).

9. Maintain and improve communication with all port users and serve

as their liaison in all necessary matters.

-6-

II. Lands and Properties

A. Maintain an inventory of property information for response to

potential industrial and recreational users.

B. Aggressively, work toward and assist in the sale, lease, or rental

of property which contributes to the economy of Lorain and meets

the recreational needs of the citizens. Such assistance may in-

clude the issuance of bonds to finance a project.

C. Provide assistance and bonding capacity to existing port users

to expand and enhance existing industry and jobs.

D. Cooperate with the Mayor, Council, and Planning Commission to

assure compatible land use development.

E. Identify a potential site for coal blending, analyze facility

requirements, and pursue development.

F. Work closely with steelmakers to determine an overall plan for

taconite transfer.

G. Work to improve recreational boating opportunities and facilities.

-7-

III. Facilities

A. Industrial/Commercial

1. Maintain an inventory of existing commercial facilities,

additional needs and requirements, receipts and shipments

of materials or products, and work to expand facilities

and production.

2. Identify equipment and facilities that could transship

a variety of bulk cargoes, and be available and flexible

enough to handle demands for general cargo transshipment.

Consider the market for such a facility, develop a financing

plan, and consider its operation.

3. Others, as reviewed.

B. Recreational

1. Continue to work with the Mayor and Council toward the

development of a small watercraft basin.

2. Input to the Corps of Engineers' study any and all data for

a better understanding and plan for recreational boating

improvements.

3. Continue to maintain the ramps at Marine Beach for the benefit

of fisherman and recreational boaters.

4. Through a Marine Patrol Program, provide additional security

and safety to the users and their property in Lorain waters.

5. Others, as reviewed.

-8-

IV. Promotion and Competition

A. Determine the best way to cost-effectively promote and

advertise the facilities, lands, and water of the City

of Lorain.

B. Place selected advertisements in trade journals and

directories.

C. Compile a list of potential port users through available

sources, launch a direct mail campaign, and follow-up to

sell the features, services, and capabilities of the Port

of Lorain.

D. Develop and maintain an understanding of the marketplace,

inventory other port facilities and services, and effectively

compete in the capture of trade.

E. Support the development of other modes of transportation

to enhance the Port of Lorain as a major transshipment

center.

F. Work with and through effective organizations for the

betterment of the Port of Lorain, and water-borne commerce.

G. Advocate Federal and State aid for the Port of Lorain and

secure the same for projects and programs.

H. Promote a greater awareness of the economic significance

of the Port of Lorain to the Local and regional economy.

I. Others, as reviewed.

LORAIN PORT AUTHORITY

1980 BUDGET

ACCOUNTS:

101. Salaries . . . . . . . . . . . . . . . . . . . . . . . . $36,000.00

102. Fringes . . . . . . . . . . . . . . . . . . . . . . . . 9,200.00

103. Supplies . . . . . . . . . . . . . . . . . . . . . . . . 1,500.00

104. Utilities. . . . . . . . . . . . . . . . . . . . . . . . 2,000.00

105. Dues and Publications. . . . . . . . . . . . . . . . . . 1,500.00

106. Promotion/Port Development . . . . . . . . . . . . . . . 3,500.00

107. Travel and Education . . . . . . . . . . . . . . . . . . 6,540.00

108. Contract Repairs/Services. . . . . . . . . . . . . . . . 7,000.00

109. Equipment. . . . . . . . . . . . . . . . . . . . . . . . 1,000.00

110. Miscellaneous Contingencies. . . . . . . . . . . . . . . 1,100.00

Total: $69,340.00
Less Anticipated 1980 Income: 24,600.00
$44,740.00

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I Appendix B.. Corps Notice of Public Workshops
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DEPARTMENT OF THE ARMY

DETROIT DISTRICT, CORPS OF ENGINEERS
BOX 1027
DETROIT, MICHIGAN 48231

ANNOUNCEMENT!
of
PUBLIC WORKSHOP SESSION

ALTERNATIVE CONFINED DISPOSAL SITES FOR PLACING
DREDGED MATERIAL FROM MAINTENANCE OF
THE NAVIGATION CHANNEL
SAGINAWRIVLR

WHY?

To encourage an Interchange of information, and solicit the opinions of citizens and
organizations Concerning the site for disposal of material maintenance dredged from the
federal channel in the Saginaw River.

WHO SHOULD ATTEND?

Anyone interested in the site for disposal of material maintenance dredged from the federal
Channels in the Saginaw River.

WHERE AND WHEN?

Council Chambers
City Hall
301 Washington Street
Bay City Michigan
Thursday, 28 August 1980
7:30 p.m.

For additional information contact: A workshop brochure is at-
Neal Gehring (313) 226-6793 tached for your information

"THE CORPS CARES"

WORKSHOP BROCHURE

Alternate Confined Di3posal
Facility Sites fo'r
Upper Saginaw River
Dilted Disposal Project

vl@ W---t moos.
2v

- - - - - - - - - - - - - -NEW=

U.S. Army Engineer District
Detroll"., Michigan

July, 1980

WORKSHOP BROCHURE FOR THE
UPPER SAGINAW RIVER
CONFINED DISPOSAL FACILITY
SITE SELECTION

1. DESCRIPTION OF THE PROJECT AREA

The Saginaw River drains the east-central part of the lower peninsula. It
flows into the southwest corner of Saginaw Bay, the largest indentation along
the west shore of Lake Huron. The Bay has an entrance width of 26 miles
be;-ween Point Aux Barques and Au Sable Point, and a length of 51 miles running
southwest from the entrance to the mouth of the Saginaw River.

The Saginaw River begins at the confluence of four large tributary rivers,
the Cass, Flint, Shiawassee, and Tittabweiassee Rivers, near the southerly city
limits of Saginaw, flowing northerly for about 22 miles into the Bay. Its
normal width varies from 400 to 800 feet through the City of Saginaw, to about
1,000 feet wide between Saginaw and Bay City. Downstream from Bay City, the
river widens in places to 2,000 feet. The river is typically bordered by low
marshy areas throughout its length.

The Saginaw River and tributaries serve urban areas populated by
approximately a million persons. The major industries in the Saginaw-Bay
City area along the Saginaw River dependent on water transportation are the
Consumers Power Company power plants, a shipyard, a cement company, a grey
iron foundry, grain elevators, petroleum refineries and tank farms, chemical
plants, and coal and construction materials docks.

2. STATUS OF PROJECT MAINTENANCE DREDGING

The Saginaw Bay entrance channel is maintained to a depth of 27 feet and a
width of 350 feet from the 27-foot contour in Saginaw Bay to the river mouth.
The river channel varies in width and depth from 26' and 25' at Bay City and
then 22' upstream to Saginaw, to an upstream limit at Green Point, vest of
Saginaw. The Environmental Protection Agency (EPA) has categorized this area
as a "harbor wherein the material to be dredged contains polluted wastes;
however, maintenance of these harbors is essential to the economy of the port
and surrounding region." By 1969, testin 'a by the Environmental Protection
Agency had established that dredged material from the entire river portion of
the project as unsuitable for open water disposal. Subsequently, dredged
material from the river, upstream of the Belinda Street Bridge has been placed
in a confined disposal facility (CDF) a* Middle Ground Island. However,
between 1969, when maintenance dredging was halted, and 1978, when the Saginaw
Bay (CDF) construction was completed, no maintenance dredging was performed
dow,nstream from the Belinda Street Bridge. Since 1978, the entire project has
been maintained regularly. Now, the use of the existing CDF on Middle Ground
Island is being phased out by Bay City to make room for the development of a
lar@@2 recreation complex. A ne CDF is therefore required to replace the
Middle Ground Island CDF which could be constructed under the authority of
,@Liblic Law

3. NEED FOR CONTINUED MAINTENANCE DREDGING AND THE PROPOSED PROJECT

Based on recent surveys conducted in the Saginaw River, the extent of the
annuai shoaling expected would be from I to 4 feet along the channel lines.
The project is important to the national economy and vital to the local
economy. Because of this project's large volume of w-aterborne commerce it
meets the criteria established for maintenance, and is unquestionably
justifted.

The 1978 Waterborne Commerce statistics for Saginaw River report a total
of 3,-173,573 tons of freight. The principal commodities carried were
limestone, coal and lignite, sand and gravel, grain, soybeans, and
mi&@ellaneous items. The project also contributes significantly to the
recreational facilities of the area; however, the proposed maintenance is
justified solely on the benefits to commercial navigation.

4. PUBLIC LAW 91-611

Section 123 of this law authorizes the Corps of Engineers to construct,
operate and maintain disposal facilities to contain dredged materialP
unsuitable for open water disposal with sufficient capacity to contain
material dredged over a 10 year period plus any backlog of material. The
authority contains requirements for coordination and local cooperation which
are discussed in subsequent paragraphs.

A. Characteristics and Quantities of Material to be Dredged EPA
standards and testing of sediments indicate that all the material to be
dredged from the river portion of the project is unsuitable for open water
disposal primarily due to the high levels of phosphorus, nitrogen, volatile
solids, Chemical Oxygen Demand (COD), oil and grease, and PCB's. Physically,
the material consists of soft deposits mostly composed of sand with some silt
and clay. Wood chips and shells are also present. Most of the finer clay and
silt materials are deposited further downstream and when dredged are placed
into the Saainaw Bay CDF.

The total capacity required for the CDF is approximately 1,250,000 cubic
yards (c.y.). This capacity would be sufficient for 10 years of dredgings at
1003, 000 c.y. per year an estimated backlog of 250,000 cubic yards. No
substantial permit volumes are anticipated. A CDF similar, but larger than
that at Middle Ground Island would meet these needs. Annual maintenance
dredging in the Saginaw River channel has been performed economically by
Governmeat-owned-and-operated hopper dredges. This practice is expected to
continue.

B. Coordination. The selection of confined disposal facilities must be
coordinated with the U.S. Environmental Protection Agency, Michigan Department
of Natural Resources, the U.S. Fish and Wildlife Service, and local
governmental agencies. The selected site must be agreed upon by all agencies
and have a local sponsor to provide the required iteris of local cooperation
discussed bel.ow.

C. Requirements of Local Cooperation. Construction of a CDF is subject
to the statutory provision that non-Federal interests enter into an agreement
local cooperation, as defined in Public Law 91-611. In the State of
Michigan,local cooperation for navigation projects such as the Saginaw River
CDF must be provided by the, State. The major items of local cooperation
required by the law to be provided are:

(1) Furnish all land, easements, and rigts-of-way necessary for the
construction,operation, and maintenance of the facility;

(2) Contribute to the United States 25 percent: of the construction costs
(This requirement has been waived by the District Engineer, Detroit District,
Corps of Engineers, for the CDF constructed in the Bay, and is being
considered for the river portion being planned. This means the CDF would be
constructed at 100% Federal costs);

(3) Hold and save the United States free from damages due to
construction, operation, and maintenance of the facility;

(4) Maintain the facility after completion of its use for disposal
purposes in a manner satisfactory to the Secretary of the Army.

D. Interpretation of Public Law 91-611. Initially, legal interpretation
of Section 123 of Public Law 91-611 stated that contained disposal facilities
constructed under this law could not be located on private lands. The
Congress of the United States intended that the land used for the purpose of
spoil disposal be in public ownership, whether that public ownership be In
fee, simple, or other acceptable form of title. Recent interpretations of
PL 91-611, Section 123 now allows disposal on private property if, before
construction, the land on which the CDF is to be constructed is conveyed to
the State. The State, in turn, must be willing to provide the local
cooperation previously discussed. Thus, privately owned sites can at least be
considered during the site selection process.

5. USE OF PRIVATE SITES: AIN ALTERNATIVE TO PUBLIC LAW 91-611.

Provided that adequate assurance that the unsuitable dredged material
would not find its way back into navigable waters of the United States, and
assuming all legal requirements applicable to permits and environmental impact
statements would be satisfied, unsuitable dredged material may be placed upon
private upland or privately owned submerged land. Placement of unsuitable.
materials on privately owned lands would require that the private owner
provide the following:

A. Adequate diking, meeting the specifications of the District Engineer,
to assure containment and retention of the unsuitable material.

b. Adequate docking facilities for pumpout of the material.

An effluent weir or other effluent facility.

d. Uninterrupted right to enter upon the lands affected and the use of
all facilities required, without cost to the United States.

e. Waiver of any and all damages, or claims for damages, as a result of
the use of the facilities, including the land areas.

f. An agro,2ment from the owner to maintain the facility in a manner that
would assure the retention of the unsuitable material in a manner satisfactory
to the Secretary of the Army.

The Federal Government would assume the cost for the pipelines and pumping
systems and nny additional handling costs incurred over the cost of open lake
disposal to transport the material to the site.

6. POSSIBLE SITES AND WORKSHOP PURPOSE

in May 1979, the Detroit District began to search for sites for a new CDF
to replace the existing Middle Ground Island site, which is being phased out.
Letters were mailed in July 1979 to the EPA, Michigan Department of Natural
-1@esources, U.S. Fish and Wildlife Service, local governments, the news media,
'and others indicating our desire to coordinate the selection of a new disposal
site, either under PL 91-611 or as discussed paragraph 5 above. Four sites
have been identified for possible implementation as a CDF-

The four disposal sites considered thus far lie on or immediately adjacent
to the Saginaw River and are located between the Carrollton Bar (a marshland
ridge) to the south, and the Clements Municipal Airport to the north.
Vegetation in this area ranges from marsh, to agricultural crops, to deep
wools, The marsh areas along the river provide a vegetative buffer zone
between the river and agricultural lands. The saturated soils throughout this
region extend inland for approximately one mile and, for the most part,
provide excellent wildlife habitat, particularly for waterfowl. A brief site
specific description of each of the four sites is provided on inclosures 2-5.

The purpose of the workshop is to present the four alternative sites,
obtain reactions to these alternative sites and to determine if other viable
sites exist, prior to selecting any of the sites known at this time. If,you
know of any 20-40 acre sites located near the Saginaw River between Bay City
and Saginaw, and you cannot attend the workshop, please contact the Project
manager, 111r. N. A. Gehring at the address on the letterhead or call at
(313) 226-6793. Otherwise, please bring your ideas to the workshop.

5 TnCl.
1. Map of Area
Discussior and Sketch of Private Site No. I
J. I'.--iscussion an-d Sketch of Private Site No. 2
4. Discussion'and Sketch of S.E. Airport Site
5. D:L@:;ctission and Sketch of N.W. Airpoit Site

CORP OF EW51NEERS

LEGEND

INDEX TO BRIDGES
SHOWN THUS 02 PROJECT DEPTH 20.0 1
NADA

SALkT STE M.
MICHIGAN 1. DETROIT a MACKINAC RY
2. BELINDA ST.
3. PENIN CENTRAL R.R. r
'00
4. TH RD ST.
'A 5. MCKINLEY ST. MEMORIAL
6. LAFAYETTE AVE.
7. HIGHWAY 23 AT CROW ISLAND
8 SIXTH ST.
9. CHESAPEAKE a OHIO RY
10 JOHNSON ST.
11. GENESSEE AVE.
12. PENN CENTRAL R. R.
13. HOLLAND AVE.
M,CHIGAN 14. COURT ST.
Of TOD, 15. HIGHWAY 46
:
6 CENTER ST. F1
7, PROPOSED 1-675

INDIAN 4 0
"ONITY0 "M 6'
SCUE OF W"Ep 0 PROJECT D
0 0 0
SHAMROCK OIL REFINING CO.

SIXTH STRE'
sc
100 a

NOTES
Reference numbers token from the,'The Port of Detroit and ports on The Saginaw River, Michigan', Port Series No.45 Dated 1961
Project depths are referred to International Great Lakes Dotum(1955) for Loke Huron, Elevation 576.8 ft. above Mean Water Level (M.W.L.) of
HoChured areas denote work authorized but not constructed.
(@) Indicates State Routes
M3 Indicates U.S. Routes
Indica es IntefsIate Routes
Aerial Cobles

SIX TH .5 r
TURNING BASIN
7Z/RA//A"S BASIN PROJECT DEPTH 20 FT
PROJECT DEPTH 15 F7'

CITY OF
/Upstream Limit of Federol Improveme.Ent;7 Z I LW A U K E--@E
ODA
PRaccr oEprH
LTO N
16.5 FT. CARROL

J/
L
J,F]r L
v-
JL
L-1 \ - C.
i1N)L-J -1
CA11
JL 1 AF(, C11

vc*,
- I I \
X
7---)L -1 - I I - t, O.If@-T DEP7-W"-,---
0
River
7. CARROLL
K
0 V TURNING

C
PRoIF-cr DEP
Ax,i
vreen
@0 @0

<
Point
THIS SECTION
,,,--@NOT MAINTAINED
SAG
INAW
R Miles show,

U.S. ARMY

A-
r3 7

BANGOR TOWN SHI P

P/?Ol/f"
cr DEPr@H?,-@"
Outer Limit of
25 F.
Federol Improvement

?7 ft Cwgp,
OROJEC7-
DE
PrH 26Fr

PRO IEC7' DEP114
25 Fr
D.S.C.G. STATION

PROJECr 27F.

o0w
AL-
SAGINAW BAY CDFj
CITY (EX I ST ING)
cll
TREAM LIMIT OF
ESSEX V& L E
NG AREA FOR T-uf,'VING BA
)Fj PROJ1FCTD96P Fr EAR RANGE LlGmTS
BAY CD
AND 20 F.
ESSEXVILLE
o
lb
115 o

a. ol

TO
Oj
10

-b.b

[L-
rPTr ESSEXVILLE
TURNING BASIN
SCALE OF FEET
C 100 *0 wo "0 400
c

RIVEIR,
I CH I G A

Iccle of Feet

1000 0 5000 '0.coo

U S. ENGINEER L-ISTRICT, DETROIT
'-'ORT TURINING BASIN
SCA,E C@ FEE. '50 JUNE V377
K INCL No. I

0@
32'30"

7D.VP
if
15 70we.
77. tP

"24
:E
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Scc. 4V
*4 xd8w) 923
4c 4 C; /sf c
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41!rAe eo"@Kje@l 44-le SAGINAW CO,

c>
LLJ M

422
'qc' + ... ............ 11 @oaftidefal
211, P P.,;

"K
Z I L A U
z

11 if

.0
W,
2a
j, j(0 V I.SLAN 'TAW 'AME
D 8 G ARF.A
43'30'
CA 55' 265=- L 83*52'30"
7 J% TO IMICONIArC 7.1
A rl"A W' Wit i IN 40)
lip
IMILE ROAD CLASSIFICATION

Heavy-duty Liehl-duly
Medium-duly Unimproved dirt

Interstate Route -U.S. Route State Route

MICIIIGAN

QUADRANCL E LOCATION BAY CITY, MICH.
H4330-WB352.5/7.5

1967
iq-n

LXJO L u
29
13 28

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r,, SAGINAW,, MICH.
N4322.5-W8352.5/7.5
590

1967
J-
Vc t c, .14- PHUTOREVISED 1973
E.
AMS 4270 IV NW-SERIES V8e2
'1' 11 a0fie Sch
NORMAN,:_
;PRIVATE SITE NQ. I'
INCL No.

Private Site No. I

Site - 50 Ac.
Perimeter Length - 67001
Top of Req'd Dike - 595'
Fill Height - 101
Estimated Cost to Construct - $1,100,000

DISCUSSION:

The site is totally diked and has a makeshift weir. The owner of the
property has a permit to fill the land with dredged material and may be
willing to consider temporary transfer of ownership to get the site filled.

The site is in a location which would provide easy access to the dredging
area. However, this site is environmentally desirable. The area is primarily
wetland with scattered patches of upland. Wetland plants include arrow leaf,
arrow arum, cattails, and sedges. It appears to be excellent habitat for
waterfowl and shore birds.

The ultimate disposition of this property should be determined before
further consideration is given for use as a CDF. If the site would be filled
by the owner, use of this environmentally desirable site may be considered
prudent if available.

32'30"

I-ower.1- 584
..... .. ..... .

41124

LU
Uj

4823

>
@All 10 ce A LU
W
SAGINAW Uj
U.)>
C-1
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4822
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1-Z
48210mm N.

581

29
j
NOW ISL.AND STATF CAMR AREA.. 30'
J' -J 43
@4 55' 9 v 1:
'-I' TO 7!3 83 *52'30"
@@ I.J/ rip7
ROAD CLASSIFICATION
3
L Heavy duty btht-duly
Medium-duty Unifi-poved dirt

intorstate Route U. S. Route State Route

QUADRANGLE I-CCATION BAY CITY, MICH.
(" @0

N4 3 30-W8352.5/ 7.5

1967
PI 10 i (7j:?[ v 1'@ED 13
AMS 4271 ill 15W-SERIES V862
PRIVATE SITE No. 2 INCL No.

Private Site No. 2

Site - 40 Ac.
Perimeter Length 7400'
Top of Req'd Dike 600'
Fill Height - 13'
Estimated Cost to Construct - $1$600.%000

DISCUSSION:

This site is naturally, partially diked. The area contains some fill of
un.%-nown origin. The owner of the property would like to sell the land, but
may be willing to consider a temporary ownership transfer.

Small mounds of dumped fill are scattered throughout the site. The
vegetation is dense, composed primarily of grasses and plants typical of
recently abandoned fields. Clumps of shrubs and trees such as cottonwood, box
elder and willow are scattered throughout the site. The area has several
small (less than 1/4 acre) pockets containing wetland vegetation. This
habitat would be primarily used by songbirds and small mammals.

Dumv
az

"c'1c'wKISS 56q R01j"e" !t
OA
Pe, k
Vi
leg
St I'Aul f;,h

N, Lai

!st J:
6

STONE POAD

INC

':p 0

@amies Clemeq Is
V.,jnicipal,Airport
0 Stony@
land
U IS- rt-
r!s
NBPbRt @ITE.
S. E
2
51'
4
7
.71* @_ @ @ @ @ @. - - i @\;@\ I . A
SCALE 1:24000
0 .:LE

0 1000 200C 3000 4000 5000 clocc Dr'O FFE
F=4 F--T-
1 5 0 1 K!,,OmETER

AlMeLri,@, CONTOUR INTERVAL 5 FEET
794 DATUM IS MEAN SEA LEVEL
DEPTH CURVES AND SOUNDINGS IN FEET-DATUM IS LOW WATER 576.8 FEET T

BAY CITY, MICH.
N4330-W8352.5/7.5

1967
Bay City PHOTOREVISED 1973
AMS 4271 Ill SW-SERIES V862
&Country Club.
J
7,
s Ei. A IR P,Q"R T Sf..r E

0 0 C",
PRO.ICCT Dr`FrH
SH-ILVER C-PAICAL PFZ@IOUCTS Co f,ffr
20 T 176
F. N 0
HURON PORTL AN! :7@ BANGOR
loo

zz
o:O, 24, 7

@7 116

'so

s REVE TMENT
SCALEU OF FEET CARROLLTON
2
0 'Do 00 3no
TURNING BASIN

PROdECT DEPTH
7
CD
-22 Fr-
EXISTING SAGINAW RIVER CDF,
(MIDDLE GROUND ISLAND'
B A Y
Vk

f,:-CT DEP7-H 20.0 Fr.--'
CIT
G cc
1UPSTR6114 L@
STREET TURNING BASIN
DREDGING AREA F:
S,A@ L 0@ Li .0 AIRPORT
AW BAY C
rURMW BA s//v SAGIN QFJ
PROL)FCT DEPTH 22 FT

cl Folher Pwlt, Q-ebec N.W.. AIRPORT SITE
C,

S.E. AIRPORT SITE

ak
SITE No-2-
PRIVATE Q

rR.R.
E
- @,@D3 2 _Nfl-
CH,4N
15
@-PROJECT DfPTH-----
22 FT

PRIVATE SITE No@ I
TUpNING
7',

err
1. L rot@
1,11"G BASIAl
r 21,1PTH 20 F T PROO -C'
,jHURaN PIN'T',"N'

AIRPORT TURNINC
SCALE OF FEET

S.E. Airport Site

site - 40 Ac. - 58001
Perimeter Length
Top of Req'd Dike - 599'
Fill Height - 17'
EstimiAted Cost to Construct - $130900)1000

DISCUSSION:

This site is owned by Bay City. The city may be willing to consider using
this area for fill, but its first choice is the N.W. airport site.

This site is in a good location and would be acceptable operationally.
The area consists mostly of open field with a small (approximately one acre)
wetland at the southeast corner. Some shrubs (dogwood) and trees (green ash)
exist along the east boundary. From an environmental viewpoint, this would be
the best site of the four sites identified to date.

3 2

M,n. v-
QD S
Dump

-,,a r
R,,, oe
ROAC) J5,77

508
S tPaul Sch Y r
137
D711ch

6
N -

aa
ISLANDU -ff-
STONE

Ilk 0-

585.-
ilk.

:Clk"en IS
PA -@t. r or I
r
stony@
Island
IS- T__
.... .......
i 2
fa t
N'; AWPORT
SCALE 1.24000 5
I MILE

200C 30W 4000 5000 6000 7000 FEET
I cloo 0 IOOU
F=r-
c
5 1 KILOMETER
77
A A-1:1 I
CONTOUR INTERVAL 5 FEET
DATUM IS MEAN SEA LEVEL T
DEPTH CURVES AND SOUNDINGS IN FEET-DATUM IS LOW WATER 576.8 FEET

MICH.
BAY CITY
-WS352.5/7-5
N4330
z
1967
X

Bay C,ty PHOT014EVISED 1973
m
ounir AIAS 427! Ill Sw-SERIES V862
c y Clubf
o1z 7

N.W. Airport Site

site - 45 Ac.
Perimeter Length - 6600'
Top of Req'd Dike 594'
F - 15'
eill Height
Estirand Cost to Construct $1,@00,000

DISCUSSION:

This site is owned by Bay City. The city considers this site to be its
first,choice as a CDF site. The city wants this area filled as the beginning
ol the implementation of its master plan for the area,

This site's location and operational value make it desirable for use as a
CDF. The area, however, offers good habitat for waterfowl, songbirds, and
wildlife. The site is a large marsh dominated by grasses, sedges, and
cattails. There are patches of open water. This site is environmentally
desirable.

I
I
I
I
I
I
I
I
I Appendix C. Consultant Letter to Corps
I
I
I
I
I
I
I
I
I
I

TRANSPORTATION AND

ECONOMIC RESEARCH ASSOCIATES, INC.
WfNW,
om4nnawm (703) 698-7400
2849 Meadow View Road, Falls Church, Virginia 22042
September 4, 1980

Mr. Neal A. Gehring, Project Manager
Saginaw Dredged Material Disposal Sites
Detroit District NCEED-T
U.S. Army Corps of Engineers
Post Office Box 1027
Detroit, Michigan 48231

Dear Neal:

The notice of the August 28th Public Workshop Session
on dredged material-disposal sites.forthe Saginaw Project
invited suggestions for additional sites. I am writing
to submit the site- identified on the attached map.
Specifically, it is part of approximately 2,000 acres on
the west bank of the river, southwest of Clements Airport.
Only three property owners are involved, one of which is
the State of Michigan.

TERA, in association with Johnson,-Johnson & Roy
of Ann Arbor, is.in the process of completing a port-
development study for Bay and Saginaw counties and
Bay City. Our study recognized the need for a new and
larger mid-river disposal facility to replace the one
on Middle Ground, wad independent of your efforts, we
had identified the site I have submitted as deserving
investigation. Our investigations now indicate that it
does have merit and deserves consideration.

The site is. shown on various maps and photographs as
alternately farm land Caerials), under water (National
Ocean Survey Chart #14867, and Bay County road map showing
it as the "Clements Seaplane Base"), and marshland
CGeological Survey quadrangle map). Dikes in the area may
account for this alternate inundation and drainage. More
significantly, they indicate the character of this land
has been changed by man and future use is negotiable.

-A

M MCA%
M
Mr. Neal A. Gehring
Page 2
September 4, 1980

Our investigations indicate that private interests
had considered acquiring most of this area as a game preserve.
More recently, the State of Michigan has started a land
acquisition program for the purpose of extending the
Crow Island State Game Area. We have identified the present
ownership in the area, and the preliminary 1981 tax valuations
and the relevant maps and tax/ownership information are
included as a separate enclosure.

The ownership of the three properties we suggest for
consideration are:

Donald Plowdry 629.47 acres
Dirk Maxwell 414.50 acres
State of
Michigan 960.00 acres

Neither Maxwell or Plowdry reside on their properties, and
this is also the case with adjoining properties that could
also be considered: Schulte - 159.5 acres; Case - 24 acres;
and, Consumers Power - 58.6 acres.

My preliminary inquiry at Michigan Department of
Natural Resources, Wildlife Division, confirmed the state's
plans for land acquisition for "Crow Island - West." The
state is currently negotiating the purchase of the Maxwell
acreage after having refused a fill permit requested by
that owner. The properties adjoining Maxwell-Plowdry on
the west and Schulte on the east--apparently have been
diked and drained and would not be subject to distress
sale. It is my understanding that federal funds along with
state funds will be used in the Maxwell acquisition, and it
is my hope that this may be used to justify multiple use of
the property, including spoil disposal.

Our TERA/JJR study estimated the long-term need for a mid-
river spoil disposal area based on economic as well as environ-
mental considerations. This assumed that disposal of upriver
dredged material in Saginaw Bay, contained or otherwise, would
be prohibitively expensive because of the hauling distance;
and that a mid-river disposal area of 330 to 700 acres would
be required to serve for the foreseeable future. The Maxwell

Mr. Neal A. Gehring
Page 3
September 4, 1980

et.al. properties appear to offer the best solution; and, in
behalf of our study's sponsors, I can assure you that we would
like to pursue this opportunity with the Corps.

Sincerely,

Richard'L. Schultz
Principal Associate

RLS/mlf

Attachment

CC: Mr. Lawrence C. Hall, Coordinator
Saginaw River Port Development Study
c/o Bay County Planning Division
912 North Adams Street
Bay City, Michigan 48706
(517) 892-6011

Mr. Jon B. Mersman
Director of Planning
Saginaw County Metropolitan Planning
Commission
111 South Michigan Avenue
Saginaw, Michigan 48602
(517) 790-5284

US Department of Commerce
NOAA Coastal -,',-@rvices center Library
2234 Scuth Robson Avenue
Charleston, SC 29405-2413 A

3 6668 14102 5306