VirginiaVirginia PortPort AuthorityAuthority

SustainabilitySustainability TaskTask ForceForce MeetingMeeting JanuaryJanuary 10,10, 20072007 1 Authority Overview History

• Prior to 1971, seaport terminals were managed separately by individual cities of Norfolk, Portsmouth and Newport News • Authority was created by an Act of the General Assembly and unified port operations – Portsmouth Marine Terminal (PMT) – Newport News Marine Terminals (NNMT) – Norfolk International Terminals (NIT) • In 1989, the VPA developed the Virginia Inland Port (VIP) in order to bring Virginia 220 miles closer to certain U.S. markets that were formerly captive to competing North Atlantic Ports – VIP has generated significant economic growth in areas surrounding the facility • In 1981, VPA created Virginia International Terminals (VIT) to operate the Port Facilities

3 Facility Locations

VPA’s facility locations offer natural advantages & strong intermodal connectivity.

• 3 marine terminals located on the of Hampton Roads with 50 foot deep-water channels • No bridge obstructions in the channels leading to the Authority’s terminals • Served by 4 railroads – Norfolk Southern – CSX – Norfolk and Portsmouth Belt Line – Eastern Shore • Close proximity to major Federal Interstates (I-164, I-264, I-464, & I- 664) and State highways 4 Virginia Port Authority – Twenty-Foot Equivalent Units (TEU’s)

2,500,000

2,000,000

1,500,000

1,000,000

500,000

- 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

5 Major U.S. East Coast Ports

General and Container Statistics

5,000 4,500 4,000 3,500 3,000 2,500 2,000 Thousands 1,500 TEUs (Twenty Foot (Twenty TEUs Equivalent Units) in 1,000 500 0

1) sey ( ore (2) r a m leston nnah Je a w ina Ports e Balti Sav Virgini Char k/N or Philadelphia Port of ew Y North Carol N 2001 2002 2003 2004 2005 2006

(1) Does not include other River ports. (2) The table includes data for all facilities that comprise the Port of Virginia, some of which are not owned by the Authority. The Authority believes that the VPA facilities handle in excess of 95% of the general cargo transported through the Port of Virginia.

Source: Terminal Operators’ Statistics, and the American Association of Port Authorities. 2006 data not available for /New 6 Jersey, Philadelphia and . VPA Cargo Destinations

TheThe PortPort ofof VirginiaVirginia –– Cargo Cargo OriginsOrigins andand • Over 47% of cargo DestinationsDestinations originates or is destined for locations within Virginia

• Efficient flow of cargo across the US is critically important to the national economy

CONTAINER VOLUME 1 - 1,000 1,001 - 2,500 2,501 - 7,500 7,501 - 15,000 15,001 - 45,000

7 Financial Condition VIT Historical Financial Performance

VIT revenue has increased over 85% since 1997.

Virginia International Terminals Revenues and Expenses

$250

$200

$150

$100 $ in millions

$50

$0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Fiscal Year

Gross Revenues Total Expenses Income Before Transfers & Contributions

Source: VIT Audited Financial Statements 9 VIT Transfers to VPA

Since 1997, transfers from VIT to VPA have increased 118%. • Terminal revenues are transferred from VIT to VPA after paying: 1) VIT current expenses 2) Required deposits to VIT’s Current Expense Reserve (“CE Reserve”) 3) Required deposits to VIT’s Capital and Extraordinary Maintenance Account (“CEMA”) VIT Transfers to VPA

60

50

40

30

$ in millions 20

10

0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Fiscal Year Improvements Operating 10 2040 Master Plan & Capital Improvement Program Master Plan Overview The 2040 Master Plan provides a guide for the repair, modernization, expansion, development and funding of the Port Facilities to ensure continued successful operations.

• Container traffic in the Port of Virginia is projected to triple by 2030, consistent with industry-wide global forecasts • Absent planned capital investment by VPA, container traffic in the Port of Virginia will exceed VPA’s capacity by 2011 • The Master Plan is a strategic plan addressing key challenges facing the Port – Conservative average growth of 4.1% per year – Need for expansion and modernization of existing terminals – Development of Marine Terminal – Competition from new Terminal – Growth in vessel size – Age of existing facilities and container handling equipment • Capital investment through 2032 of $2.885 billion (inflated) is required to meet strategic challenges addressed by the Master Plan, maintain market share and realize growth opportunities 12 Craney Island Marine Terminal

• Craney Island Marine Terminal is the future of the VPA • $2.2 billion construction cost, including $400 million for dike and levee construction • Feasibility study by the VPA and the US Army Corps of Engineers complete • Record of Decision and Chief’s report expected by October 2006 • Anticipated to be constructed in four separate phases • Phase I includes two years for design, two years to construct levees, two years to fill and four years for terminal construction • Anticipated opening of Phase I is 2017 13 Heartland Corridor The Heartland Corridor will allow the VPA to expand its reach and the Commonwealth to expand its trade. • $266 million multi-state project to increase vertical clearance of 28 tunnels and bridges along high speed, high capacity Norfolk Southern rail line • Stretches from the Port of Virginia to Columbus, , providing fully cleared, direct route from VPA Facilities to • VPA will be the only East Coast port with rail access to the new Norfolk Southern intermodal ramp at the Rickenbacker Logistics Park in Columbus • Will reduce transit time by 230 miles and 1.5 days for Midwest-bound cargo • Project also includes a rail relocation in Chesapeake and Portsmouth and grade separations of US Route 17, providing improved access to Craney Island Marine Terminal and the new privately-owned Maersk facility • Creates significant benefits for VPA’s facilities without additional capital cost to VPA • $200 million of Federal (SAFETEA-LU), state and private funding commitments to date

• Estimated completion in December 2009 14 Heartland Corridor Rail Service to Chicago

Chicago Cleveland

Harrisburg

Columbus 1031 Miles to Chicago 1264 Miles to Chicago

KenovaPrichard

Roanoke The Port 28 Tunnels Require of Virginia Modifications to Provide 20’-3” Clearance

Heartland Corridor Operating Initiatives

• Chassis Pool • Empty container yards • Conversion to straddle carrier operation • Tandem lift cranes (in progress) • Rail yard expansion and modernization • Truck replacements

16 Operating Initiatives – (continued)

• Fleet management program – On road standards – Electric power – Bio diesel fuel – AAPA and Governor awards for excellence • Environmental mitigation – Elizabeth River Trust – Plumb Point – Forrested tree buffers • Water quality masterplan

17 Financing Initiatives

• Primary goals – Pay internally for growth/expansion – Self sufficiency • Master equipment lease program • Variable rate debt policy • Currency and swap policy • IRS letter ruling

18 Sustainability

• GFOA Government Finance Review – October 2006 – Integrating Sustainable Development into Business Decisions at Manitoba Lotteries Corporation: From Principle to Practice • The Manitoba Lotteries Corporation won a GFOA Award for Excellence in 2006 for its practical approach to embedding sustainable development principles using the expertise of existing employees and existing financial planning and control systems. By Cheryl Eason and Donna Dagg. http://www.gfoa.org/services/gfr/archives/2006/10.shtml

19 Sustainability

• CFO Magazine – October 2006 – Virtue Rewarded • Companies are suddenly discovering the profit potential of social responsibility. By Kate O'Sullivan. http://www.cfo.com/article.cfm/7960857/c_7988452?f=magazine_coverstory

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