BAR HARBOR — Town Council debates over possible future formation of a Bar Harbor Port Authority this winter have left some residents wondering what a port authority is.
Seaports in the United States use a wide range of governance structures, according to the American Association of Port Authorities (AAPA). Different entities might own, operate and be responsible for overall coordination, oversight, safety and infrastructure of a marine terminal.
“We like to say in our industry that if you’ve seen one port, you’ve seen one port,” said Jean Godwin, AAPA executive vice president and general counsel. “Our members are everything from state agencies to bi-state agencies to city or county agencies.”
Still other port operations are owned and operated by private companies (such as Searsport) or controlled directly by a state or municipal government, sometimes with an advisory board or commission (such as Ketchikan, Alaska).
According to a report on port governance by Rex Sherman of AAPA, the Port Authority “movement” began as a response to control of commercial port areas by private companies, mostly railroads, in the nineteenth century.
“Many of the early port authorities were in fact established as a public response to problems arising from railroad control of commercial port areas,” Sherman wrote. “Faced with the loss of port services because of the inability or unwillingness of the railroads to maintain their marine terminals, certain states … resorted to the creation of port authorities to ensure the continuation and development of harbor facilities in the public interest.”
Governing boards of port authorities also vary widely. Sixty-one percent are appointed, 19 percent are elected, and others are indirectly elected or have no governing bodies or only appointed advisory councils. Many have requirements that appointees must meet geographic or professional criteria. Some appointments must be confirmed by municipal officers or a state legislature.
In Maine, the Eastport Port Authority board includes four appointed members and three members elected to four-year terms. Godwin said it would be difficult for another entity to “stack” a port authority board because most boards stagger member terms.
The Maine Port Authority exists primarily to provide bonding authority for port facility financing, according to Sherman. Its seven-member board is appointed by the governor, to include “private businesspersons with backgrounds in areas of business such as banking, finance, engineering, construction, manufacturing, service industries, etc.,” according to policy documents.
In order for the Internal Revenue Service to approve a port authority’s ability to issue tax-exempt bonds, the port authority must qualify as a “political subdivision.” That designation requires the entity to have “a substantial sovereign power,” according to IRS guidelines. “It need not have all three sovereign powers (the power to tax, the power of eminent domain, police power), but possessing only an insubstantial amount of any or all of the sovereign powers is insufficient.”
Because the IRS determined the Eastport Port Authority did not meet the requirements for “political subdivision” status, the port authority’s enabling legislation was revised by an emergency bill in 2011. The amendment removed a requirement that the Eastport City Council approve property acquisitions by the port authority.