7.9 To the Honorable Council December 22, 2020 City of Norfolk, Virginia From: Robert Carteris Subject: Commonwealth Railway Director of Utilities Marshalling Yard Agreement Reviewed: Ward/Superward: N/A Wynter C. Benda, Chief Deputy City Manager Approved: Item Number: Dr. Larry H. Filer II, City Manager I. Recommendation: Adopt Ordinance II. Applicant: City of Norfolk Department of Utilities III. Description: This agenda item is an ordinance authorizing the City of Norfolk to enter into a sub- agreement with the Virginia Port Authority for relocation of municipal water lines in Suffolk, Virginia out of railroad property. IV. Analysis: The Virginia Port Authority received a grant from the Virginia Department of Rail and Public Transportation to expand rail service to the Virginia International Gateway Terminal in Portsmouth, Virginia. The area designated for the track expansion is encumbered by two water lines belonging to Norfolk and Portsmouth. This sub- agreement with the Virginia Port Authority allows them to use grant funding to reimburse Norfolk for 70% of the cost of the water main relocation. V. Financial Impact: The Department of Utilities will use existing authorizations to pay for the design and construction; 30% of the total project costs or approximately $5.8M will be funded by Norfolk. Packet Pg. 462 7.9 VI. Environmental: There may impacts to wetlands during construction; applicable permits and mitigations will be determined during the design process. VII. Community Outreach/Notification: Public notification for this agenda item was conducted through the City’s agenda notification process. VIII. Board/Commission Action: N/A IX. Coordination/Outreach: This letter and ordinance have been coordinated with the City Attorney’s Office. Supporting Material: • Exhibit A to Ordinance (PDF) Packet Pg. 463 7.9 Form and Correctness Approved: BAP Contents Approved: By: By: Office of the City Attorney DEPT. Utilities NORFOLK, VIRGINIA Ordinance No. AN ORDINANCE AUTHORIZING THE CITY OF NORFOLK TO ENTER INTO A SUB-AGREEMENT FOR RELOCATION OF MUNICIPAL WATER LINES AT THE COMMONWEALTH RAILWAY MARSHALLING YARD WITH THE VIRGINIA PORT AUTHORITY; AND AUTHORIZING THE EXPENDITURE OF THE TOTAL SUM OF $19,512,119.00 PREVIOUSLY APPROPRIATED FOR THIS PROJECT, SUBJECT TO AND IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THE AFORESAID AGREEMENTS. - - - WHEREAS, Virginia International Gateway (“VIG”) is a privately owned marine container terminal located along the Elizabeth River in Portsmouth, Virginia, being commissioned in July 2007, and is the largest privately-owned container terminal in the United States; and WHEREAS, in July 2010, the Virginia Port Authority (“VPA”) and VIG entered into a multi-year lease agreement under which the VPA operates VIG; and WHEREAS, presently, rail service to VIG is provided by Commonwealth Railway, Incorporated (“CWRY”), a Class III railroad that owns and operates a rail corridor between the terminal and the main lines of two Class I railroads; and Packet Pg. 464 7.9 WHEREAS, in order to ensure the VPA can fully utilize VIG rail capacity, CWRY’s marshalling yard in the City of Suffolk, Virginia (“Marshalling Yard”) must be expanded; and WHEREAS, on January 6, 2016, CWRY applied for a Rail Enhancement Fund (“REF”) grant pursuant to § 33.2-1601 of the Code of Virginia (1950), as amended, to fund an expansion of the Marshalling Yard; and WHEREAS, in its application, CWRY proposed to design and construct two (2) storage tracks approximately eight thousand (8,000) feet long north of the Marshalling Yard’s existing main line and storage tracks (“Trackwork Project”), and to relocate utilities to accommodate construction of the storage tracks, namely two municipal water lines owned by the City of Norfolk (“Norfolk”) and the City of Portsmouth (“Portsmouth”), respectively; and WHEREAS, the Commonwealth of Virginia’s (“Commonwealth”) Department of Rail and Public Transportation (“Department”) evaluated CWRY’s REF application and determined that the REF Project would benefit the Commonwealth by increasing the amount of freight on the Commonwealth’s rail system, thereby reducing congestion on, and maintenance of, the Commonwealth’s highways, promoting fuel efficiency, and establishing a viable statewide integrated transportation system, which will contribute to the Commonwealth’s continued economic growth, vitality, and competitiveness in national and Packet Pg. 465 7.9 world markets; and WHEREAS, on June 14, 2016, the Commonwealth Transportation Board (“CTB”) determined that CWRY’s REF application satisfied the requirements of § 33.2-1601 and approved funding for the REF Project, including paying for part of the relocation of the utilities, as part of the Department’s Fiscal Years 2017-2022 Six Year Improvement Program; and WHEREAS, the Department added Norfolk as an applicant to the CWRY REF grant in the Department’s Fiscal Years 2018-2023 Six Year Improvement Program and, on September 17, 2018, with consent from CWRY, Norfolk, and the VPA, the Department notified the CTB that the VPA would replace CWRY and Norfolk as grantee for the REF grant; and WHEREAS, on February 6, 2019, the VPA received a revised Preliminary Cost Estimate from Norfolk which showed an increase in cost for the utility relocation and, as a result, the VPA requested additional REF funding for the REF Project from the Department; in response thereto, the Department requested additional REF funding from the CTB, and, on June 19, 2019, the CTB approved the Department’s request as part of the Fiscal Years 2020-2025 Six Year Improvement Program; and WHEREAS, the VPA and the Department have entered into Rail Enhancement Fund Multiple Year Grant Agreement No. 76517-14 for the design and construction of the REF Project and, with the Department’s consent, the VPA is entering into separate sub- Packet Pg. 466 7.9 agreements with CWRY and Norfolk for execution of the work required for the REF Project; and WHEREAS, under the sub-agreement between the VPA and CWRY, CWRY is responsible for the design and construction of the Trackwork Project; Norfolk is responsible for the utility relocation necessary for the construction of the Trackwork Project (“Utility Relocation Project”), which includes the removal and relocation of the waterlines of both Norfolk and Portsmouth, as well as the acquisition of fee title ownership of new lands, or appropriate utility easements over new lands, within which the waterlines may be relocated at an estimated cost of Nineteen Million Five Hundred Twelve Thousand One Hundred Nineteen Dollars ($19,512,119.00), with Norfolk’s anticipated total contribution, after reimbursement from the VPA, being Five Million Eight Hundred Fifty-Three Thousand Six Hundred Thirty-Six Dollars ($5,853,636.00); and WHEREAS, the VPA and Norfolk desire to set forth the requirements of the Utility Relocation Project, the responsibilities of each of entity, the manner of performing the necessary work, the method and time of payment, and additional conditions associated with the Utility Relocation Project, all as is memorialized in the sub-agreement, a copy of which is attached hereto as Exhibit A, with any appropriate appendices (“Agreement”); now, therefore, BE IT ORDAINED by the Council of the City of Norfolk: Packet Pg. 467 7.9 Section 1:- That the terms and conditions of the Agreement between VPA and Norfolk, a copy of which is attached as Exhibit A, are hereby approved. Section 2:- That the sum of $19,512,119.00, being previously appropriated, is hereby authorized to be expended for the Project, subject to and in accordance with the terms and conditions of the Agreement. Section 3:- That the City Manager and other proper officers of the City are authorized to execute the Agreement and to do all things necessary and proper to carry out the terms of the Agreement. Section 4:- That the City Manager, with the advice and counsel of the City Attorney, is further authorized to correct, amend or revise the Agreement as may be necessary to carry out the intent of the Council as expressed herein. Section 5:- That this ordinance shall be in effect from and after the date of its adoption. Attachments: Exhibit A – Agreement (33 pages) Packet Pg. 468 7.9.a EXHIBIT A TO ORDINANCE SUB-AGREEMENT FOR RELOCATION OF MUNICIPAL WATER LINES AT COMMONWEALTH RAILWAY MARSHALLING YARD Attachment: Exhibit A to Ordinance (Commonwealth Railway Marshalling Yard Agreement) Packet Pg. 469 7.9.a SUB-AGREEMENT FOR RELOCATION OF MUNICIPAL WATER LINES AT COMMONWEALTH RAILWAY MARSHALLING YARD This Sub-Agreement for Relocation of Municipal Water Lines at Commonwealth Railway Marshalling Yard (“Sub-Agreement”), is between the Virginia Port Authority (“VPA”) and the City of Norfolk, Virginia (“Norfolk”) (the VPA and Norfolk individually are a “Party” and collectively are the “Parties”). RECITALS 1. Virginia International Gateway (“VIG”) is a privately owned marine container terminal located along the Elizabeth River in Portsmouth, Virginia. The facility was commissioned in July 2007, and is the largest privately-owned container terminal in the United States. In July 2010, the VPA and VIG entered into a multi-year lease agreement under which the VPA operates VIG. 2. Rail service to VIG is provided by Commonwealth Railway, Incorporated (“CWRY”), a Class III railroad that owns and operates a rail corridor between the terminal and the main lines of two Class I railroads. CWRY is a subsidiary of Genesee & Wyoming Inc. To ensure the VPA can fully utilize VIG rail capacity, CWRY’s marshalling yard in Suffolk, Virginia (the “Marshalling Yard”) must be expanded. 3. On January 6, 2016, CWRY applied for a Rail Enhancement Fund (“REF”) grant pursuant to § 33.2-1601 of the Code of Virginia (1950), as amended, to fund an expansion of the Marshalling Yard. In its application, CWRY proposed to design and construct two ~8,000 foot storage tracks north of the Marshalling Yard’s existing main line and storage tracks, and related utility relocation necessary for the construction of the storage tracks (the “REF Project,” as further defined in § 1.28).