A primary question addressed in this study has been whether it is it possible for private companies on the North American West Coast to exclusively operate container terminal facilities (berths, yards, building, and equipment) that have been built and are owned by public port authorities in a long term lease; and if so, what concepts and conditions are taken into consideration?118 In Japan, similar facilities that are owned by port management bodies (the local government) are constructed using subsidies from the national government and funds procured by the local government. Currently, it is prerequisite that the facilities constructed by port management bodies are to be used by the public. In other words, port management bodies cannot construct berths and yards that are for exclusive use. Such facilities need to be constructed by private companies themselves with the approval by port management bodies. Port management bodies impose charges indicated in a bylaw on private companies for their use of the facilities. The Port and Harbor Law prohibits activities by port management bodies that may prevent the general public from using the public facilities. There are, however, some exceptions in which exclusive use by private companies is approved. Such conditions are limited to the case where the enhancement in facility functions is can be done without hampering its original purposes. The lease arrangement cannot be made under the local government law unless specifically provided.119 Private companies, in general, can use the facilities by acquiring permission from the government.120
In addressing the above question, in the context given, it is important to think of what “public good” means. When a shift is made from public to the private control, it is often the case that the public good is ignored. In the U.S. the national constitution expresses a free market system and many of its states have established laws to help the system work. The State of Washington, for example, designed a port authority system in the early part of this century based on the understanding that ports are a public good and therefore promote public interest. Ports are believed to serve as an economic engine for growth for their region. The port management laws are deemed necessary in improving the trade and commerce of the region. In this kind of legal framework, most U.S. ports have the ability to function as a landlord to private sector organizations. Some of the U.S. port authorities are able to collect taxes and some are not. It is specified in Washington State law that ports can receive tax support. Taxes that are used by Washington ports come from real estate taxes (property taxes) collected by the local county government in which they reside. But these taxes only account for a small percentage of the entire costs in developing and managing ports. Taxes are used for land purchases but not for construction of the facilities.
In Washington State, as in others, it is prohibited to use public taxes for purposes of private enterprise. However, port authorities can lease the land that has been developed using tax money, to private companies by having the lessees pay appropriate fees. The advantage for lessees in a landlord lease is that property taxes shall not be imposed on them. Port Authorities negotiate with stevedoring companies or shipping companies for the above lease arrangement. Port Authorities usually begin their negotiations as follows: “We have suitable land for you. We will construct berths, moorings, gantry cranes, and yards. We will retain ownership but will lease it to you for a long period of time under conditions that will favor both of us.” Upon completion of negotiations both parties may enter into a long-term lease contract as long as thirty years. The lessees may share some of the facility construction costs. Port authorities will recover the construction costs from the lease revenues. In order to reduce a burden of lease payment on private companies, a revenue-share method is often applied. This type of lessor/lessee relationship is more like a partnership and many negotiations take place between the parties before an agreement is reached.
