NEW LONDON — The Connecticut Port Authority and Northeast Offshore LLC, a joint venture of Ørsted and Eversource Energy, paid Gateway New London LLC $800,000 as part of the “wind-down costs” for existing businesses at State Pier.
David Kooris, acting chair of the port authority, explained the agreement in an email to CT Examiner on Tuesday.
The payment reimbursed Gateway for the purchase earlier this year of 20,000 tons of salt from DRVN Enterprises, Inc., a road salt distributor located at State Pier.
The sale was authorized in a Memo of Understanding between the companies, requiring Gateway to purchase as much as 20,000 tons of salt before a March 31 deadline for DRVN to vacate the pier. That deadline has been extended to July 31.
At a special meeting on Tuesday, the port authority unanimously approved a sales agency agreement with Gateway and Northeast Offshore that will allow Gateway to sell the salt.
“Gateway will act as our agent … to hold and sell it. When it’s sold, the revenue (minus Gateway’s management costs) will go back to the escrow funding the project,” Kooris explained in an email after the meeting.
The 20,000 tons of salt were never unloaded at State Pier, but were brought by ship to Gateway Terminal in New Haven for storage.
According to the sales agency agreement, Gateway will store the salt at its New Haven affiliate facility “as an accommodation” to the port authority and Northeast Offshore. Gateway is the exclusive sales agent for the salt and may sell the salt “from time to time to third party purchasers.”
As part of the agreement, Gateway cannot to sell the salt for less than $40 per ton without prior consent and must purchase any salt left unsold by June 30, 2022 for $40 per ton, less management and maintenance fees of up to $2.50 per ton.
In a phone call Tuesday afternoon, Steve Farrelly, owner of DRVN, said the purchase option was included in the earlier agreement to help his company if there was salt remaining when he vacated State Pier.
“Gateway New London, under the original MOU that we signed on September 12, 2019, had agreed to the purchase, which would help me zero out if I had salt left over … and they honored that,” he said.
According to Farrelly, Gateway made the decision to ship rather than truck the salt to New Haven as a cost-saving measure.
DRVN still has about 90,000 tons of salt stored at State Pier, Farrelly said, but after due-diligence nowhere for the business to go before the July 31 deadline.
At the meeting on Tuesday, Kooris explained that DRVN did not have the capacity at the time to take delivery of 20,000 tons of salt.
“We were able to divert the salt to New Haven because there was nowhere for it at DRVN’s area at State Pier. That salt is being held in New Haven, just as Gateway has two other clients in New Haven that have salt at their facility there,” Kooris said.
“Salt is not designed to be flooded into the market. It is not designed to be sold at a loss. It will be sold incrementally over time,” said Kooris. “Frankly, we didn’t intend to own salt. we didn’t intend to be in this … I think it’s the right thing to do to support DRVN, frankly, and provide them the revenue to enable the salt to be diverted because they couldn’t accommodate it in their area and they elected to exercise the clause in their agreement that triggered this purchase.”
Asked about his plans for the future, Farrelly said, “I don’t know yet. I’m uncertain. You know, and I know, that with COVID the whole world has come to a screeching halt, and that’s a monumental task and it’s become more than monumental.”