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From Richmond to the
Oceanfront
The Creation of a Mega-Region
Thomas R. Frantz
CEO and Chairman
Williams Mullen
From Richmond to the Oceanfront:
The Creation of a Mega-Region
> 77% of the nation’s population and 80% of the nation’s
economic growth is expected to reside within 11emerging
Global Gateway regions (mega-regions) according to the
America 2050 project.
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What is a Mega-Region and how is it created
> According to planners and academics who study a spatial relations,
the concept of the mega-region evolved from the city-region concept
– In the United States the most common and known designation of a
region is a metropolitan statistical area (MSA), the official designation
that the federal government uses to define regions of the country
– MSAs develop from an urban core and the related surrounding areas
> MSA vs. CSA vs. Mega -region
– Combined Statistical Areas (CSA) are identified by the US Office of
Planning and Budget when there is a measureable level of commuting
between two adjoining MSAs
• There are 166 CSAs in the United States as of July, 2012
• Some MSAs and CSAs are parts of mega-regions because of their
willingness to collaborate and work with others in another region
• There is no official process for the designation of a mega-region
• Researchers, academics, urban planners and America 2050 have
all identified mega-regions based on the existence of formal plans
for collaboration and a demonstrated willingness to work together
3
Statistical Areas and use of Designations
> Federal agencies use the OMB’s designation of MSA or CSA for
collecting, tabulating and publishing federal statistics
> These federal statistics are used by:
– Federal, state and local officials who allocate grants and public funding
for infrastructure projects
– Companies making relocation and expansion decisions
– Professional sports teams and entertainment venues that are choosing
a home
– Corporations, public officials and candidates as they decide where to
spend advertising dollars
> While an informal designation, mega-regions are recognized as
being a part of the 11centers of economic growth
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Concepts needed for Mega-Region Success
Adoption of the following concepts have all been
present in the creation of mega -regions :
> Mega-region boundaries have been flexible and fluid to accommodate
diverse participation and projects . As growth occurs and growth patterns
change the boundaries of mega-regions have been adapted.
> Institutions within a mega-region come together to address specific
issues on a regular basis. Issues that bring individuals together include
transportation needs, shared economic development goals and freight
movement logistics.
> Efforts to create a mega-region that have been formalized and include a
communication plan have been successful. Establishing joint priorities,
engaging stakeholders, and implementing specific initiatives all lead to the
successful development of the mega-region.
5
Key Benefits of a Mega-Region Designation
> Stronger ability to secure federal funding for infrastructure
development
– The US Department of Transportation has developed the Multistate
Corridor Operations Management (MCOM) program. The program
awards grants to regions that demonstrate collaboration
> Greater connectivity of workers, visitors and freight and
enhance connectivity to world markets
– Approximately 85% of High Speed Rail investment by the federal
government in 2010 was concentrated in 6 regions that encompass
major mega-regions
> Enhanced ability to attract corporate investment, which
hopefully, would result in job creation
– 99% of institutional investment in commercial real estate was within the
11 mega-regions as indicated in the NCREIF database as of fourth
quarter 2012.
> Larger corporate advertising spend
– The largest spending on advertising is concentrated in Top 25 regions
6
The Alignment of the Regions
> The Richmond MSA and the Hampton Roads MSA
can compete with larger regions throughout the
nation more effectively if the two align with one
another to form a mega-region.
-
Alignment does not mean consolidation or acquisitions.
Existing local governments and existing economic development
authorities and the functions they perform would not change.
> 38 regions nationwide have been identified as parts
of a mega-region and others are close to merging
– Existing mega-regions: Arizona Sun Corridor, Texas Triangle,
Gulf Pipeline Corridor, DMV and Atlantic Piedmont Region
– Regions that will likely formally merge in the next few years :
Austin – San Antonio and Tampa – Orlando
7
Combined Physical Size and Population
> If the Richmond MSA and Hampton Roads MSA decided to
collaborate and became a recognized mega-region, together the
two would have a population larger than the 16th largest MSA,
according to 2012 U.S. census population figures.
– Just a year prior, in 2011, the combined regions would have ranked as
the 18th largest MSA
– The population in the regions is growing. According to the Weldon
Cooper Center, the populations of the Richmond- Hampton Roads
regions will account for 40.19% of Virginia’s population by 2040.
> The land mass of the Richmond MSA and Hampton Roads MSA,
if merged and recognized as a mega-region, would compete in
size with other mega-regions
– The land mass of the combined MSAs would be 8,010 sq. miles
> The two regions are geographically close to one another
– The ends of both regions are separated by less than 50 miles
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A Map of Virginia’s MSAs
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A Healthy Economy Can Help with Business Attraction
> Together the Richmond MSA and Hampton Roads
MSA economic output of gross product represented
36.3% of the Commonwealth’s total economic output
in 2009 according to the Brookings Institute.
> Nine of Virginia’s 20 largest corporations call the
Richmond and Hampton Roads MSAs home.
– Some have a presence in both regions:
• Altria
• Dominion
• Norfolk Southern
• MeadWestvaco
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Complementary Economic Drivers and Largest Employers
Some of the top employers in both regions are in the same or complimentary
industries:
– Companies in the healthcare and banking industry are among the top employers in both
regions
Other large employers are unique to the regions, which will help ensure a
diversification of the mega-region’s economy and prevent a rapid fall of the
mega-region upon the downfall of a particular industry
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The All-Important Technology Sector is Present
> Technology assets include:
–
–
–
–
–
Federal labs
Military centers
High–tech initiatives at the regions’ colleges and universities
Virginia Biotechnology Research Park
Jefferson National Accelerator Facility
> Emphasis on continued development of sectors
– Commonwealth Center for Advanced Manufacturing (CCAM)
– Commonwealth Center for Advanced Logistics Systems (CCALS)
> Organizations in both regions are committed to enhancing
entrepreneurial efforts and connecting the benefactors of the
innovations developed by startups, universities and other
innovators, in both regions
12
Higher Education and Career Preparatory Programs
> The regions are home to 23 universities and colleges
and 11 two-year institutions
> A skilled workforce supports the labor industry in
both the Richmond and Hampton Roads MSAs
> 13,000 trained and disciplined workers leave the
military annually
> One apprentice school for advanced manufacturing
jobs exists in the Hampton Roads MSA and one is
being planned in the Richmond MSA
13
The Movement of Goods is Centered in the Richmond MSA and
Hampton Roads MSA
55% and 60% of the nation’s consumers and
manufacturing establishments within 750 miles of the
Richmond MSA and the Hampton Roads MSA,
respectively.
– Both the Richmond MSA and the Hampton Roads MSA are also
home to several major rail lines operated by CSX
Transportation and Norfolk Southern Railway.
– Several of the most highly traveled highways in the state
transverse the Richmond MSA and Hampton Roads MSA,
including:
– the junctions of Interstate 64 and Interstates 85 and 95
– the proposed junction of Route 460 and Interstates 85 and
95.
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The Port of Virginia – A Linchpin to our Success
> The Port of Virginia is the 5th largest Port of all US Ports and the
third largest container port on the U.S. East Coast. It is a hub
for the world's leading international shipping companies.
– The Port of Richmond is a Port of Virginia partner
– A barge service between the Port of Virginia and the Richmond Port
travels twice weekly
– During calendar year 2013 a total of 7,964 containers were transported
between the marine terminals in Hampton Roads and the Port of
Richmond. The ports have become a maritime solution and alternative
to transporting goods on Interstate 64
> The Panama Canal opening in 2015 will have a modest effect on
volume between the east and west coast.
– After 2015, vessels up to 12,500 TEU’s will be able to transit through
the Panama Canal or Suez Canal to the East Coast.
– The Port of Virginia is prepared to handle the larger ships that are
calling now and will call with the opening of the Panama Canal.
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The Port of Virginia is preparing for Growth
•
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Application for 55’ deep channel
The Port of Virginia has an a distinct Advantage
17
Transportation Infrastructure Improvements are Needed
> Several of the most highly-traveled highways in the
Commonwealth are in the Richmond and Hampton Roads MSAs
– The increase in the volume of goods coming to the east coast will bring
a need for expanded capacity on both the Richmond MSA and Hampton
Roads MSA roads and rail systems.
Over 2.2 million TEU’s came through the Port of Virginia in 2013. Of
those coming in and out of the Port:
4 % were further transported by barge
32 % were transported to their next destination by rail
62 % were transported by truck
> The capacity of our existing rail system has improved but
remains an issue for the Port.
– It takes too many days (up to 5) for rail to be able to handle the volume
of goods coming into the Port.
18
The Port is Ideally Located
The Port of Virginia is
within a day’s drive of
two-thirds of the U.S.
population
19
Political Strength of the Combined regions
> At the state legislative level, members representing the
Richmond and Hampton Roads MSAs constitute 39% of
the House of Delegates and 48% of the Senate.
> The Lieutenant Governor, the Majority Leader of the State
Senate, the Majority Leader of the House of Delegates,
and the Secretaries of Transportation, Commerce and
Trade, Natural Resources and Education are all from the
Hampton Roads MSA and Richmond MSA.
20
Competition
Mega-regions are able to compete in the world market
The mega-region’s economies are the size of those of other countries around the world.
Obtained from Business Insider 3-12-14
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Other regions are Moving forward with consolidation
> More regions are developing strategies to align with other
nearby regions in order to compete.
> Austin – San Antonio and Tampa – Orlando are two examples
Austin – San Antonio, Texas
– 5 cities and 2 counties came together to develop and, fund and
advocate for the development of a commuter rail, the Lone Star Rail,
to connect Austin and San Antonio and localities in between the two
– A second highway, State Highway 130 was built in 2012. Nearly half
of the funding for the project came from a loan and credit from the
Federal Highway Administration’s Transportation Infrastructure
Finance and Innovation Act (TIFIA) program.
– Cities in between San Antonio and Austin are planning development
projects that are helping to create a connection between the two
cities (which are both growing). Examples: the Veramendi
development of 5,000 homes, retail and corporate campuses,
medical offices, a hotel and two schools.
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Other regions are Moving forward with consolidation
Tampa – Orlando
– The two regions are growing toward one another
– Both regions have alternative modes of transportation other than
highways that will help connect people to a future passenger rail
system connecting the two regions.
• Orlando is constructing a commuter rail line connecting the city to its
suburbs.
• Tampa has a streetcar that connects suburbs to the inner city.
– Economic development in both regions is also fueling the
development of related business in both regions
• The development of the USF Polytechnic University is in
development and will help unify the economies of both regions.
• The area between the two regions, Lakeland, is becoming home to
new distribution centers – Amazon and Trader Joes
23
The Regions have the Needed “ingredients”
> There are 5 key “ingredients” needed to successfully create a megaregion. All 5 ingredients have or can be achieved in our MSAs
 Two or more growing metro areas
The individual metro areas have good economies and growing populations
 A rapidly growing in-between zone
Williamsburg- James City Council and New Kent County have both seen
growth and sprawl
 Multiple transportation connections
In addition to highways, there must be alternate modes of transportation to
connect the economies and labor forces. Existing infrastructure could be used
to enhance passenger rail between the regions. The Ports of Richmond and
Virginia connect the economies.
 Complimentary growth patterns
The Richmond MSA and Virginia Beach – Norfolk – Newport News MSAs see
growth towards one another
 A diversified regional economy
The diverse engines and linchpins of the regions’ economies are
complimentary
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Summary
> A merger of the MSAs would strengthen and diversify
the economy of each MSA.
> Overlapping of the transportation infrastructure
coupled with the geographic proximity of the two
MSAs can enhance economic development.
> Political strength of each MSA will be augmented
through an alliance.
> The creation of a mega-region will enable Richmond
and Hampton Roads to compete both at a national
and international level.
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Questions?
25536345
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Virginia’s Global Gateway Region
John Reinhart
CEO and Executive Director
Virginia Port Authority
March 17, 2015
The Port of Virginia Mission
Guided by our company values, The Port of Virginia
will achieve our shared vision of operational
excellence, fiscal responsibility, and sustainable
growth. Above all, we will remain responsible
members of the communities we serve, a valuable
resource to our customers, an excellent place to
work, and an economic engine for the region.
•
•
•
•
Foster and stimulate growth for Virginia’s
economy
Serve as the global gateway for import and
export of freight
Improve navigable waters within the state of
Virginia
Aid in the development of commerce for all
maritime and inland ports, and related facilities
28
Agenda
•
•
•
•
•
Overview of the port
Economic impact
Promoting regionalism
Future forecast
Conclusion/Questions
29
Statewide Footprint
30
Advantages
• Post-Panamax ready at 50 ft. and in
the early stages of permitting to
deepen to 55 ft., as already
authorized by the USACE
• Only 18 miles from open sea
• No overhead obstructions
• Central location on the East Coast
• Served by two Class I
railroads
• Strong terminal infrastructure and
intermodal connections provide for
efficient cargo movement
• Ability to expand
31
2014 Cargo Moved Via:
Per day / 365
4% Barges
156
33% Rail
1,228
63% Trucks
2,378
32
240
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
Jan-15
Feb-15
Thousands
Record-setting volumes in 11 of the last 20 months
Month/month comparison to prior
year
TEUs
205
207
201 204
33
214 221208
203
208 201
191
178
160
80
Stabilizing The Port’s
Finances
•
•
•
Budgeting for the future
Bond financing and refunding
Current bond ratings
– Fitch Ratings = A+
– Moody’s Investor’s Service =
Aa3
– Standard & Poor’s = A+
34
Consolidated Operating Results
$10.0
$6.1
$5.0
$ Millions
$0.0
($5.0)
($10.0)
($11.2)
($15.0)
($15.5)
($18.5)
($20.0)
($20.5)
($16.6)
($20.1)
($25.0)
FY 2009
•
•
FY 2010
FY 2011
FY 2012
FY 2013
FY 2014
Six years of operating losses $(102.4) million
Should be returning $44 million annually on invested capital (at 5%)
35
FY 2015 DEC
YTD
Economic Engine
36
The Port Contributes to Virginia’s
Economy in Three Ways:
• The transportation of export and
import cargo within Virginia and
across it from other states and
countries
• The export of goods made in
Virginia
• The added processing and
distribution of imports retained in
the Commonwealth
37
Positive Economic Impact
• The last economic impact study, also conducted by
William & Mary, assessed the port’s economic impact
during fiscal 2006 (July 1, 2005 – June 20, 2006).
• Fiscal 2006 vs fiscal 2013:
Spending
2006
$41.1B
2013
$60.3B
Change
47%
Employee Compensation
Selected Virginia Taxes
Employment
$13.5B
$1.2B
343,001
$17.5B 30%
$1.4B
17%
374,646 9%
Source: The Fiscal Year 2013 Economic Impacts of The Port of Virginia, Raymond A. Mason School of Business, William & Mary
38
Economic Impacts FY 2013
$
$17.5 billion in wages
374,000 employees
9 . 4 % Va w o r k f o r c e
4.5 million tons
$10.9 billion
18 million tons
$53.2 billion
GSP $30.5 billion
6.9% of GSP
Source: The Fiscal Year 2013 Economic Impacts of The Port of Virginia, Raymond A. Mason School of Business, William & Mary
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Port-Driven Economic Development Achievements
• Announcements: 34
• Square Footage: 4.3+ million
• Investment: $2.6+ billion
• Jobs Created: 5,000+
• As a benchmark, every 1,000 containers impacts about
300 jobs (direct/indirect/induced) at an average wage of
$46,000
* Announced in 2014
40
Industrial Warehouse Capacity
Primary: industrial
warehousing within
50 miles of a port,
or within 100 miles
if in the same state
Secondary:
industrial
warehousing within
300 miles of a port
that is considered
discretionary as to
competitive port
choice
41
Coffee and Tea: Growing a Niche
• The Port of Virginia has been selected by the
Intercontinental Exchange (ICE) to become a delivery
point for the coffee “C” futures contract
• Allows owners of exchange-grade coffee stored in
regional exchange-licensed warehouses to make
delivery against the futures contract using that coffee
• Positive development for the port and coffee roasters in
the area
• Designation will contribute to a burgeoning, regional
coffee and tea, or “caffeine,” trade
42
Alternative Site Framework
43
Selected Distribution Facilities Using The Port of Virginia
44
Logistics Assets
Within 50 Miles of
Richmond
Distribution Sites
Richmond
•
•
•
•
Port of Richmond
CSX Rail
NS Rail
James River barge
service
Interstates 95, 64, 85,
295
Richmond International
Airport
Foreign Trade Zone #20
Forts AP Hill and Pickett
•
•
•
•
45
Commerce Road Area
Redevelopment Plan
•
Partnership with City of
Richmond Economic
Development
Target industries –
advanced
manufacturing, food
production and
distribution sector
Currently working on
an active distribution
project looking to locate
in the Greater
Richmond Region
including two sites in
the Commerce Road
industrial area
•
•
46
Capital Investment in Port of Richmond
FY 2014 VPA Capital Investments: $568,926
• Repairs to the rail track leading to and inside the fence
at the Port of Richmond
Near-term capital investment projections: $250,000
• Warehouse repairs for existing and potential
customers; maintenance repairs for roof/awning and
North wharf paving
Long-term capital projects:
• Mobile Harbor Crane: $4.2 million (CMAQ grant)
• Dredging plan: $315,000 (VPA share)/total cost $2.4
million; project to be prioritized by stakeholders
47
64 Express
Marine Highway
Connector
• 77 nautical miles
from Norfolk to the
Port of Richmond
• Sustainable
transportation mode
with capacity to
expand
• “64 Express”
container barge
service began in
2008
• In 2014 the service is
available 3 days a
week
48
Virginia Inland
Port
• Total Acreage: 161
• Five-day-a-week rail
service between VIP
and The Port of
Virginia marine
terminals
• Within one mile of I66 and five miles of I81
49
The Virginia
Inland Port
Virginia Inland
Port
• Economic engine for
the Commonwealth
• 39 major companies
have located near
the Virginia Inland
Port
• Investment of nearly
$748 Million
• Over 8 Million sq. ft.
of buildings
• Employment of over
8,000 people
50
Future Forecast
51
Ideally Situated – Population Centers and 2040 Cargo Forecasts
Less than 6,600 TEUs
6.601 - 33,000 TEUs
33,001 - 88,000 TEUs
88,001 - 198,000 TEUs
198,001 - 440,000 TEUs
52
Norfolk Southern
53
CSX
54
Market Sizing and Port Positioning
• Market reach is competitive
in size to NY/NJ & Savannah
• All three ports able to serve
a market potential of +50M
•
Without a large, local
population base, our trade
prospects are substantial,
but very competitive
Source: Colliers, population categories defined by R K Johns
Primary: population proximate enough where the port is the preferred or
exclusive gateway (based on inland distances)
Secondary: the discretionary population in areas that overlap in regards to
the opportunity to be served by competing ports
Population figures include 16 states (AL, CT, DC, FL, GA, KY, MD, NC,
NJ, NY, OH, PA, SC, TN, VA, WV)
• We must be savvy in
economic development
efforts, capitalizing on assets
and potential
55
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Capital Investments
• Create a more efficient and
capable solution to container
handling the port’s terminals.
• Equipment replacement will be
aimed at refreshing and improving
the equipment fleet while
increasing efficiency and
throughput capability.
• Phased investment strategy
• End result will be a state of the art
portfolio of facilities poised for
efficient and sustainable growth.
56
55-foot Channel
45 ft.
57
The Future
58
Craney Island Marine Terminal
Phase 1 – June 2025
Cranes: 6
Capacity: 1.5M TEUs
Full Build-out
Cranes: 28
Capacity: 5M TEUs
Total Acreage: 220
Pier Length: 3,000 ft.
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