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Home My WebLink AboutJUNE 14, 2016 WORKSHOP MINUTES -1- o 7 to s odd 11 Or OVR 0 VIRGINIA BEACH CITY COUNCIL Virginia Beach, Virginia June 14, 2016 Mayor William D. Sessoms, Jr., called to order the CITY COUNCIL'S WORKSHOP in the City Council Conference Room, Tuesday, June 14, 2016, at 3:30 P.M. Council Members Present: M. Benjamin Davenport, Robert M. Dyer, Barbara M. Henl?y, Vice Mayor Louis R. Jones, Shannon DS Kane, Amelia N. Ross-HGmmond, Mayor William D. Sessoms, Jr., John E. Uhrin, Rosemary Wilson and James L. Wood Council Members Absent: John D. Moss Juae 14, 2016 -2- ADD ON MOMENT OF SILENCE—REFLECT ON THE TRAGIC SHOOTING IN ORLANDO June 14, 2016 -3- CITY COUNCIL'S BRIEFINGS DEFENSE SPENDING- Trends 3:31 P.M. Mayor Sessoms welcomed John Simmons, The Roosevelt Group. Mr. Simmons expressed his appreciation to City Council for their continued support of this Project and distributed a copy of today's briefing which is attached and made part of this record. Mayor Sessoms thanked Mr. Simmons for the informative presentation. Jure 14, 2016 GROUP HRMFFA LEGISLATIVE UPDATE June 14, 2016 2016 - Congressional Dates of Interest January 5: House of representatives returns January 11 : Senate returns January 12: State of the Union Cehry-9-: FY17 Budget Submission and NH Primary �ebraary 17-19: AFCEA West 20-16, San Diego, CA March 15- 17: Global Force Symposium, Huntsville, AL May 16- 19: N-DAA, M+4Con A-ppropriations Pass House June 6- 10: N-DAA on- Senate Floor June 20-22: ADC National Summit, DC July 15: Congressional Recess Begins July 18-21 : Republican Convention, Cleveland, OH July 25-28: Democratic Convention, Philadelphia, PA November 8: Presidential and Congressional Election December: Lame Duck Session of Congress $4. 1 TRILLION FISCAL 2017 REQUEST COMES AMID ESTIMATES OF GROWING DEFICITS Basic elements of the federal budget Spending: $4. 1 trillion in outlays — grants, contracts, federal salaries, etc. Revenue: $3.6 trillion from taxes, fees, etc. Deficit: $503 billion because spending exceeds revenue; no surplus in sight Annual deficits and surpluses net to total debt: $14.8 trillion in fiscal 2017 OMB/administration policy versus CBO baseline (assumes no changes in law) — both forecast increasing deficits, in amount and as percent of GDP Deficits as percent of GDP by fiscal year OMB estimate/historical CBO estimate 0.0% a# -2.0% -4.0% -6.0% -8.0% -10.0% -12.0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Note CBO s baseline estimates assumes no changes to current taw and policy Sources Jan 19.2016, Summary Table 1 OMB St.mmary Tab e S-1 from budget requests 2010.2017 DoD Funding from 9/11 Through FY 2017 Request (Discretionary Budget Authority) $800 S700 666 666 691 687 645 $600 601 ! 163 !63 115 578 581 560 580 583 534 58 59 169 82 8S 63 S500 468 479 124 437 S400 73 91 345 316 S300 - 2! S200 ?87 365 400 479 528 528 530 495 496 497 MO - SO FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 Numbers may not add due to rounding DoD Topline, FY 2001 - FY 2017 (Current Dollars in Billions) Base Budget OCO/Other Budget How Have Budget. Deals to date moved MI) DoD up from Sequester-Level Caps ? $700 $650 Qe 2412 $600 First.S50 Billion pg�311aSG Si trillion i Defense Cuts $550 $500 FY 13-17 Deals _.-�" � Gs Ong $450 $400 FY10 FY11 FY12 FY13 FY14 FY16 FY16 FY17 FY18 FY19 FY20 FY21 i-ENNFY 10-11-12 Actuals �o...FY 2012 PB ■RB131DSG 41M Original RCA Caps FY 13-17 Deals FY 2017 Defense Landscape • President Obama 's last defense budget. • House Republicans respect top line of FY16 BBA but use OCO funding to restore top line accounts. • Essentially spends down OCO by $ 18 Billion into Spring 2017 and puts onus on a new President to ask for a Supplemental in early 2017. • HAC-D generally following suit - $ 16 Billion from OCO. • Senate Authorizers and Appropriators are using PBR and are setting up conference battle with House. • BRAC is PROHIBITED in both the House and Senate Authorization and Appropriations bills. • Acquisition and Goldwater Nichols reforms move forward. Cuts to hit the lower FY 2017 Topline • We will procure fewer weapons systems than planned: — 9 AH-64 Apache helicopters (Army) — 24 UH-60 Blackhawk helicopters (Army) — 5 F-35 A Joint Strike Fighters — 2 V-22 aircraft (Navy) — 3 C-130J aircraft (Air Force) — 4 LCAC Service Life Extension Programs (Navy) — 77 Joint Light Tactical Vehicles (Marine Corps) • Aircraft procurement accounts reduced $4.4 billion • Shipbuilding reduced $1 .75 billion • Other procurement accounts reduced $2.6 billion • Reduce plans for new military construction projects by $1 . 1 billion Comparison to FY 2016 PB Plan for FY 2017 Source: 9 Feb 2016 OSD(C) FY2017 Budget Rollout Brief 8 DEPARTMENT OF DEFENSE: AIR FORCE IS BIG WINNER AMONG SERVICES, WITH $5 BILLION BOOST Reduced funding sought for Navy Navy/USMC: $165 billion, two each of Virginia Class subs, Aegis Destroyers and Littoral Combat Ships Air Force: $167 billion, 15 tankers, 24 Reapers Army: $148 billion, reducing active force to 450,000 by fiscal 2018 Defensewide programs: $103 billion Fiscal 2017 DOD discretionary budget request, by military service, with percentage changes from fiscal 2016 enacted levels Current discretionary budget authority in billions Navy $164.9 -2.3% Air Force $166.9 3.1% Army $148.0 ems �^ 0.8°/0 Defensewide $102.9 0.1 Notes Includes Overseas Contingency Operations IOCO)finding which isn t subyect to budget caps Sources Office of Management and Budget Department of Defense NavyFY17 FSRM Budget Facility Sustainment is cut $279 Million Restoration and Modernization is cut by $303 Million Demolition is cut $47 Million Result - Aggravated Risk of Accelerated Shore Infrastructure Degradation 2,500 58 2 2,000 656 c 0 11 Q1,500 418 353 Demo c R&M 0 1000 Sustain ti 500 0 FY15 FY16 FY17 President's Request - BRAC 2019 • Requested for the fifth time - this time DoD asked for a single round in Calendar Year 2019. • Threatens to use existing authorities to close bases if a BRAC round is not authorized - Section 2687 in FY18. • Mixed reaction on Capitol Hill. • BRAC legislation authored by Rep. Adam Smith on HASC. Other Members on House and Senate defense committees were not inclined to go forward . • Kathleen Ferguson was asked to review and comment. • Must monitor - possible to influence - BRAC can be authorized late in the NDAA process. Defense Infrastructure Capacity Report • Required by FY16 National Defense Authorization Act. • Department accomplished a broad parametric capacity analysis comparing different types of infrastructure to defined force structure. • Not designed to determine level of excess of single base. • Same methodology DoD used in 2004 before BRAC 2005. • Compared base loading from 1989 to base loading in 2019 using 32 metrics. • Result: 22% excess compared to 24% excess in 2004. • Cannot be used to predict the size of next BRAC round or which bases may be recommended for closure. Defense Infrastructure Capacity Report • BRAC historically closes 5% of excess infrastructure. • DoD still feels they need another round of BRAC to stop wasting money on excess bases and infrastructure. • Department feels BRAC is best way to address the excess and has stated next BRAC will focus on efficiencies. • Recent testimony states DoD would save $2Billion/year. • HASC Chairman Mac Thornberry (R-TX) : "The capacity report. . .doesn 't tell us what we need to know. " "No one believes that the current military force structure is adequate to meet the threats we face. " "Assessing our capacity based on an inadequate force structure makes no sense. " "The legal requirement to submit a capacity report based on 2012 force levels remains unfulfilled. " Restoring HASC Marines trying to cannibalize parts from a museum aircraft in order to get current aircraft ready for an ;� '. overseas mission. • • •T ` `14►. Getting aircraft from the boneyard in Arizona back and ready to fly missions; r- Pilots flying well below the minimum number of hours - • , .0 required for minimal proficiency and flying fewer - _ training hours than the adversaries they are being sent to meet; Not having enough senior enlisted people to train and supervise younger ones and those who remain 4 ` working very long hours day after day; ;' r • Service members buying basic supplies, like pens \_-_. and cleaning supplies and paper towels out of their ' own pocket, because otherwise it would take three to four months to get them if they could get them at all. General Dunford's Response to HASC FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 56.2 55.4 54.9 51 .9 55.6 54.0 54.9 56.8 USMC aviation units cannot meet training and mission requirements. Less than one-third of Army BCTs at acceptable levels of readiness. Less than half of the Air Force combat coded forces are ready for a high-end fight. Smallest, oldest, and least ready [force] in our history. Chairman Dunford told Thornberry he was right that readiness is a problem, but he also said the 2017 budget adequately addresses each services' needs. The Army, Navy, and Marine Corps will not repair, train and modernize at a fast enough rate until around Fiscal Year 2020. The Air Force won 't have high enough readiness levels to cope with a high end war until Fiscal Year 2028. Strategic Landscape s- e Gra\\erg\ gyp rage SeG�c��yt�N°�s •rl\`ao`�`t�es OoO 8u�GP °\esGen o�b�\\s Nell G°��C�ta�eGp°\Ogy se�Oes��a'.0 GbsaP`�21. n/0 c\ss�\e t Seo`kN tPc 01- 0. How Have Budget Deals to date moved ,s, DoD up from Sequester-Level Caps? - 41 ( - 1 . MCa .` . --- iiii • .5, . , - •-, -- , ,,,,:l ... ,. . ...i. 4 .. 4 it i , M�' Do. <1 tt . II re sync \ ,.?:•..„/ .7.::..-,,• •41 to Sic nr a+u � 1 OM •,1, W'4 OM •,4 .rq IYtu .•t• oral {Y•7 .,p. .•!, ---r•It.11.0*duds —rr Mt 111 �+11•1:016 — bp,.WA C . --r 13."3.r. 1 ssenx jrip.,.r IN* , I id*h 41ki 41116 IMMO , ../. : seCA k S\ '..ions, aced Jes<me�\s -C\mI 0•o Ja,o� gRN des a p\��e - aSg ompe�\�g E°C G �r\ se eZe e.\\G es O\vX sane `eso0 pp Strategic A roach Approach ► Goals ► End State (Lines of Effort) Protect Mission Grow Mission 0//fRelevant, Modern Missions High Military 1 Value Consolidate Mission Modern Equipment and Facilities Shared Services /Gifts Efficient Operations High Level Leadership Know the Leaders Proven /Reliable Defense Community Support Advocates Support our Delegation Tell Our Story BRACAgnostic Virginia Strategic Plan Recommendations create to a Center of Excellence (COE) at the College of William and Mary 1 devoted to a "Whole of Government' approach to national security (l$Jllenge_s. IOMDevelop a strategy to close Navy identified strategic development gaps. 3 . Support expanding the ROT&,E mission at NSWC Dahlgren. Accelerate efforts to pursue a cyber security mission for the Virginia Air dct - National Guard. UMBrost the persistent training environment for USCYBERCOM In Suffolk. Develop partnerships with industry and academia to strengthen and 4 expand the Navy's current cyber portfolio with an acardemicfjoinr/ interagency Center of Excellence. Increase Commonwealth involvement in autonomous systems • development. Support expanding the Aviation Applied Technology Directorate's (AA.TD) 8 mission at Fort tustis and increase support for joint research with the NASA Langley Research Center and the OOE Jefferson Lab. 49 Compete for a National Network for Manufacturing innovation (NNMI) - institute. Develop a proposal to leverage the capabilities at the Virginia iVtocleling. 1 • Analysis and Simulation Center(VA4ASC) to help DOD improve war gaming and virtual and constructive training. Virginia Strategic Plan Recommendations 11 . Investigate opportunity to conduct logistics optimization RDT&E at Fort Lee and Fort BcMvoir. Implement Military Infrastructure Bonding Authority. 13 Fully utilize the suite of authorities under the National Defense Authorization Act (NDAA) enabling increased use of shared services. 14 . Support expanding the Rivanna Station Integrated Intelligence Campus. 15 Continue efforts to bring the F-SS Joint Strike Fighter to Virginia. 16 , Promote Langley AFB as the location for additional aircraft. 17. Support expanding Joint Service and Special Operations Command training opportunities at Fort AP Hill and Fort Pickett. 18 , Facilitate additional mission growth at Fort Belvoir. Support establishing Underwater, Surface and Airborne Unmanned and 1,g. Autonomous Testing Range at the Third Port and Felker Field at Fort Eustis. 2 0. Support development of additional overhaul and repair opportunities for submarines. • ITC gWI UI 'Art /ft n• • ii "a • KALE 1.2,014,1140 f 40' of somm••••••V-77-7--••••••• • • • • IS aga . 111 . 1.4 • II k Rre n7”! lame 424 1 . -t -Nit V y 1.44. 't 11.9 41%, • Ar-rt , I _ ..a. A t 4 • •. Z I 411121low s in& st s II I 1 • . ''" A 7 ' I, 00,10•i400140.7. .. ..4 to.b,• .4.11`er ,,,g,1.#....,,,,•••.*4 A' %Nip* Irili*Ai Regional Opportunities . . c,-4—, Itite -",2 4-1, ii.. P.,..*e I,...,... for OHO * ,... .6 X .,. 4...I p .1 l't• ',I 4 Exercises and Training ,....,.el•••••• WEST VIRGINIA w0111117 ^ 111111/4„......... a _•.'.v. _ _ rir '.- - wags 1 DO, . ' VIRGINIA . . yews oote•ft hi -I{I.: WWII) roam • •-. Viking 4, ,,,,,. 1A-I 61 ...tit. Langley Eustis APR „,,,,;_ 10, KENTUCKY . . 7r P,• 1, • ".'14.4''..trt.1.4 rftr• lint trig writict arritsCa WeRItI a7211.1 YaNINNAR 'ettisi a ,,,,,,,' row WTHIAI .1113111.0 0 4 VISO II611. " wiyall/. .mr_ gillill ' ... .. w mis,,,,,,, aruortaish:wrzihk, • wrsoc$ 1011011" *nate rinsti .4, —.•,- i waste) wr , IST2Oisi • . • KWH"3 , 147 AlS11/11 wapiti 4 or „`i gr Hutu, mertora weasel want)! ,*„1...,..mr.r.'''''' :.us Yapfie;.pewrivarrao:....amixoale: 'MUM Tt-•96•MEE NONNI CAMOLSIA ' yrr eur Johnson AFB "IP. 11111. wttzst , . =4 i Imo ,Ituosr• '' •,..,,ori.,0110e-* MA - .-- •• .0, yr Iti 1 I I Inn I.'V ,..r. # DIIMMe TIA WG44 winai 1,404. 4 JtA r WIWI *111!C ..sirs 1 ' yalt:d Ni.:Wit.'so,441T,aot -T . W122111) w•rm I, VOl33t4; . AP Ow,.ii.rsc)va PIFIBIL PA* 4.110/14V illia:CK "411111"11 Irtn‘lig4 WPM IV•nos • ChitiiiCOC14.. OR .1 .8, . ROUTH CAROLINA •11101 / W172,171 . ., W11•11.: W1141 at 4. N. !FRC LI., I. 0.44•1 4 ki rrtgtot o& -" onntisg 77 klE t r samosa rillecA"m„ vn NA I'f•N OM• I me..tor S NM WI MIS/ NM',... f MUNCOCP C.11. ; Vegan I IMITTA011 witre\ annals • h.V k N/ WI,a4 41' * 1/119 0101tElA ,.. g/t1q1, 111/4'2,42) SCALE 12.11•11.10 r.:A. a It 10 IIII •• ••• .:. "". L,cl- %viva,.., win* %nom lo••• MUSA •411.4416 MOS JIM N4.1.•i... -- I.,00*ten 0,cvt, WI41 * Wr.htl WWI • til as is Is vs • twits; Dr ma 1V131.trims, FY17 NDAA - TrainingRange Regional Air Ranges and Exercise The committee notes that each military service relies on major national air ranges and military operating areas to provide realistic combined-arms pilot training against a variety of targets and simulated threats. The committee believes these ranges provide critical and efficient opportunities for small and large units to train together as a joint force on a variety of air-to-air and air-to- ground scenarios in increasing levels of complexity. The committee also believes that the integration of fourth and fifth generation g ge e anon combat capabilities on regional ranges during frequent local exercises is critical to maintain the q readiness and proficiency of aircrews to meet combatant commanders ' requirements across the entire spectrum of potential operations. The committee notes that diminished training resources require a prioritization of investments in training infrastructure. The committee believes that regional, jointly managed air ranges, and frequent, locally planned exercises would result in training opportunities for each service that are realistic, efficient, and effective. Looking ahead, the committee believes that the services must address common concerns about limited airspace to meet training requirements for fifth generation aircraft and standoff precision-guided munitions by collaborating on the establishment and management of joint regional ranges consisting of connected, existing service-specific ranges. The committee also believes that regional ranges must be equipped with mobile joint threat emitters designed as a multi-threat, high-fidelity simulator Regional Air Ranges and Exercise with realistic, effective radiated power levels to help train aircrews to identify and counter enemy missile or artillery threats, as well as integrated air defense systems in a war-like training environment. Therefore, the committee directs the Secretary of Defense to establish an investment strategy for the preservation and enhancement of regional ranges and exercises needed to provide adequate live training for aircrews across the full spectrum of operations. The committee notes that the Department's annual sustainable ranges report should inform this report and may facilitate development of an investment strategy. The strategy shall include: (1) An assessment of the importance of regional ranges and exercises; (2) A review of existing threats to continued operation or limits of regional ranges; (3) A review of measures taken to date to preserve the capabilities of each regional range; (4) A prioritized list of specific actions needed to promote compatible development in areas around each regional range; (5) A prioritized list of proposed investments, including installation of joint threat emitter systems; and (6) Specific actions proposed to enhance the training opportunities by combining existing regional ranges, enlarging operating areas, and establishing joint range management entities. The committee further directs the Secretary to submit a report to the House Committee on Armed Services, not later than December 11, 2016, that includes the investment strategy and descriptions of other initiatives to improve regional opportunities for realistic, joint trainingmilitary of aircrews. i i ; ,• -,•..' '5` -- P ,,.-4k ' .i. 11114111111* 4 ,.. Til 'op .. immil -"imelii 46' f 1 , .., 1 ''410116 al :.,r4 0 / , II v. (1111/ me 47jr N' ',41A1r, .v....-r- , l' ,,,,,, 444444,40-, . ... ° 4,1 k so, ''4% 111111 all< ...,t,-,..., 41 , . .. 1111) A ''• it -.,..-• i 1.) , ; A 0 1, ... , . . ., .t.1... „- k j- _ '0, • t , . ,• -4- CITY COUNCIL'S BRIEFINGS PORT OF VIRGINIA - Update 4:10 P.M. Mayor Sessoms welcomed Sarah McCoy, Manager— Government and Community Affairs at the Port of Virginia. Ms. McCoy expressed her appreciation to City Council for their continued support of this Project and distributed a copy of today's briefing which is attached and made part of this record. Mayor Sessoms thanked Ms. McCoy for the informative presentation. June 14, 2016 1 Ir...4..i• .. ill lc il 'ilik .•wi R..J ` "' :' -tea ` a+!* i 414.1g i.. Ar ..----:":0114:11/. i., ill .. .. -111P,. • IMi • -AS• E � �•• �t ;4 1 • IFJ�M1 k • �� : , . THE P � � •/ ti A Catalyst for Co om .4.4 ,. - , . . .. , . ,. } t $ . 4 \ . ,, Jo .0111 June14, 2016 III . . _• THE PORT OF I VIRGNIAStewards of Tomorrow 1 1 A COLLABORATION MATRIX •VPA INTERNAL •VIT •HRCP ni... •STAKEHOLDERS ■....■ VIRGINIA •GOVERNMENT APII •REGIONAL BEYOND •FEDERAL rTHE PORT OF I 1 VIRGINIA Stewards of Tomorrow 2 1 OURTERMINALS TIIV MARvLAND VIRGINIA W'nchnIM� INLAND PORT q •larsbwg Nino/on'. "Me.andna WEST VIRGINIA E MatrRonbur0 °Culpeper rrerwnawny Staunloe, .CharlottesvIlle KENIUCKY lu IIEEK c ®RICHMOND NEwPORT NEWS Lynchburg° EWMARINE TERMINAL Rluksbu •Roanoke Ilamsburg VIRGINIA NORFOLK INTERNATIONAL INTERNATIONAL GATEWAY Nam' 4 Nampt• TERMINALS Ma lhmville ,M,��ko Den vJk SuMoik THE PORTI �� VIRGINIA GINIA Stewards of Tomorrow 3 A DIFFERENT VIEW NNMT = •:r CIMT NIT VIG .ra71•NL3 ,OY'14.+}+ aKr♦ t t :R'. i •p Y4Yi • 4411 •JJ , as ,d \ grit- VIRGINIA I THE PORT OF Stewards of Tomorrow 4 2 HOW WE MOVED THE CARGO: FY 2015 2.5 million 20-Foot Equivalent Units (TEUs) MP IMP a +4.2% + 12% + 10.9% 9% growth over FY 2014 tTHE PORTOF I Stewards of Tomorrow 5 VIRGINIA 5 OPERATING REVENUE: FY 2009 - FYTD 2016 $520 $458.00 $430 $396.67 $420 $352.33 $350 $336.70 $310.64 $320 $287.73 $250 $208.62 $209.26 $200 $150 $100 $50 $0 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 F"2015 FYTD 2016 FY 2009 and FY 2010 do not include APM statistics. Operating Revenue Compound Annual Growth Rate 2011—2014=11.3% 1H[PORT OF �f! VIRGINIA I Stewards of Tomorrow 6 6 3 OPERATING RESULTS: FY 2009 - FYTD 2016 $20.00 $15.00 $13.60 $10.00 $5.00 $0.00 . -$5.00 $4.3 -$10.00 -$15.00 $11.20 522.00 $18.51 515.51 $16.56 -$20.49 -$20.05 -$2 5.00 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FYTD 2016 Alp THE PORT OF I i % VIRGINIA Stewards of Tomorrow 7 WE WORK ASATEAM .„WWITH PARTNERS, t. CUSTOMERS AND . , ..,� A KEHOLDERS. AlI _,..�. ,� t -e AFI THE PORT OF I Z VIRGINIA Stewards of Tomorrow 8 4 1110 s v.co" 0 Many Players — One Goal: A safe, sustainable and successful Port Community Commonwealth economy. III • ill THE POR10F IVIRGINIAStewards of Tomorrow 9 t ` I ... ,,„._ r - r . . . , r r - Nab \\ 'l `�� '9. YZr " ,, ),, Adak , L e, .l-, . ., iiii"....iii ;4?„,,ip,_.- s. THE PORTOF IVIRGINIAStewards of Tomorrow 10 5 FY 2013 ECONOMIC IMPACTS OF VIRGINIA'S MARITIME INDUSTRY 79,000,000 530,800 TONS OF CARGO MOVED JOBS IN VIRGINIA $88.4 BILLION 10. 1 % IN SPENDING OFVA GSP i H E PORT 0 F I Source: Economic Impacts of Virginia's Maritime Industry,2013,Raymond A.Mason Schaal of Business,William&Mary VIRGINIaStewards of Tomorrow 11 11 E7 CY 2016 ECONOMIC DEVELOPMENT TOTALS TO DATE "`� 18 Business , Annoucements ,� Invested more than$434 million ' i iiii •••••:;>•••••0". „,,,. Developed 410 , „,(404,04 2.3 million sq ft of space :\ Created 1,968 jobs gi .nU _A THE PORT Of I VIRGINIAStewards of Tomorrow 12 6 VIRGINIA BEACH PORT USERS Company Import/Export Top ten Virginia Beach port users STIHL Both HAYNES FURNITURE Import KETTLER Import • Over $440 Million worth of cargo SER GROUPAYS Both flowingfrom Virginia Beach through LAUFER GROUP INT. Both g� g HERMESABRASIVES Both the port EAGLE PAPER INT. Export FINNACLE INTERNATIONAL Both FREIGHT _ KOESTERAMERICAN Import ` 90,000 tons of cargo flowing from CAMERON CHEMICALS Both Virginia Beach through the port r-o, THE PORT OF I = VIRGINIA Stewards of Tomorrow I i 13 11111r WE ARE PAR pi OF A RAPIDLY 4ry CHANGING • INDUSTRY. • } !\ THE PORI0f I VIRGINIAStewards of Tomorrow 14 7 INDUSTRY HOT TOPICS/ISSUES • A lack of investment • Increasing ship sizes • The ability to serve discretionary markets To remain competitive, ports •- `` have to be able to attract and _ 0.4,1,, = . - ---1; tt. move cargo swiftly, safely, and sustainably. ` -,'r -,: ,'_ // • _ _ THE PORT OF IVIRGINIAStewards of Tomorrow 15 WE ARE BEGINNING THE PORT OF VIRGINIA' NEXT CHAP tER. k 7". ... a Y ' THE PORT OF I ' - VIRGINIA Stewards of Tomorrow 16 16 8 PHASE I NIT SOUTH CONVERSION • $350 million investment • Increase capacity by 400,000 i containers I I tituuuuunuuuuunre.:_ • 20 17:first stacks complete a ; ( ;nrtnnnnnnnrrnnnren' ' '' • 2019: all 30 stacks complete THE PORT OF et VIRGINIA1 Stewards of Tomorrow 17 VIRGINIA INTERNATIONAL GATEWAY • 650,000 Container Capacity • Served by NS and CSX 55' depth .- • 8 STS Cranes `•- r';r arm Phase 11 Increases designed capacity to 1.2 million/ containers • '' Expanded Rail Operation • Extended Berth ' ` •A ,. • 4 new STS Cranes THE PORT OF I Stewardso/Tomorrow �g '- VIRGINIA 18 9 "VIG II" CONCEPT $320 million ;___- • Increase designed capacity to 1 .2 million • f containers • ' Expanded rail operation �- '� •°i I - New equipment • Extended berth lip TNEPORTOF I . ! VIRGINIA Stewards of Tomorrow 19 VIRGINIA INTERNATIONAL GATEWAY r •.___ +` . .1y _ s ---.. _mr-7 .f+�- - •• • .� �-_.: @,irk -,t,, . „"� . -�tki ,fib, -, p1 i_r L �y , ._ # `�-.p,tt - .4.sYL i Y V• It A+•F ��.._.-`.. .. .. , a` «`7�` .- • ram, 4 ![ !" - .^Fri r�•�c ,✓R�..444, -.y;,,. I. i•_ • ' THE PORTOF I �- VIRGINIA Stewards of Tomorrow 20 20 10 • DEEPER,WIDER, SAFER. • Jun 2015: Cost-Sharing Agreement Signed �s�noc rh"Ibles v, � ho o • Dec 20I5:Alt Milestone met No�Gra-�e 8iohannei 55' • an 2017: Selected Plan and Econ J^ 55' cieE ` Dev Plans identified • Aug 2017:Agency Decision T 45' • June 2018: Chiefs Report Issued : `' illh T VH FIRG P O INIA R T(F I Stewards of Tomorrow 21 21 isi. It ., WE HAVE A CLEAR PATH FORWARD. /flip , ,_ 1HE PORIOr VIRGINI . NitTHL PORT OF Stewards of Tomorrow r VIRGINIA 22 11 5 YEARS • NIT Phase I,VIG II -" -- , ,:--1� '`: projects complete ,- "/- �_ _ _ • Total POV capacity: .,,, " i4f pl. i i ' .r J ;/ iJ � s 2.95 million containers w,y�, . .�: _ - .k . • Capacity to handle 36% ' of volume moved by rail ,�, iiiiiiistim. AtTNEPORTOF I Stewards of Tomorrow VIRGINIA 23 I 0 YEARS • NIT II,VIG II complete - ` - :- . . - . �� .. • Craney Island cells being = < built ✓ - - - _ "'` r f Y..ram^, `'...'t ... - ! , • Total POV capacity: - :.�"- f ' " .` 3.5 million containers n - y r 7a r• 1 y • Capacity to handle 42% . �,. or)tf• 9 ?04,_�,�4�3 { of volume moved by rail • --�1 .{ '# THE PORT OF I4T! VIRGINIAStewards of Tomorrow 24 12 20YEARS - AND BEYOND • Craney Island Phase I & II • Total POV capacity: 5.5 million containers - •„ .�. • Capacity to handle 45% of ipraiLipP' .. volume moved by rail : %LIS • Craney Island capacity when complete: , 2.87 million containers THE PORT OF I- YIRGINIAStewards of Tomorrow 25 25 THE PIECES ARE IN PLACE • The foundation is set. • We will stay aligned and guided by our values. • We will continue to work closely with our partners and stakeholders. • We will continue to build capacity and momentum. • We will continue to be a catalyst for commerce. • We will continue to collaborate with stakeholders and with local, state, and federal governments. iffer THE PORT OF IVIRGINIAStewards of Tomorrow 26 26 13 . L`s' sow i f" $4 .�:.Cx .. WE ARE � • .__. ._ �e w RROW. . t1Hf PfIR!n1 VIRGINIA , THE POH10F I VIRGINIAStewards of Tomorrow 27 27 i :.. � I NATION FORTITUDE !E bio, 0 FULN ESS HELPFULNES S .'' - ABILITY ..•..i • ••. • ,. ... . .. • .. y, yam,ram§a..-....... _ TH[PORTOF I 28 28 14 -5- CITY COUNCIL'S BRIEFINGS 2016 GASB 45 ACTUARIAL VALUATION 4:25 P.M. Mayor Sessoms welcomed Lyndon Remias, City Auditor. Mr. Remias expressed his appreciclion to City Council for their continued support of the Department. Mr. Remias introduced Chris Fdrd, CPA — Deputy City Auditor, to give today's presentation. Mr. Ford distributed a copy of today's bmfrng which is attached and made part of this record. Mayor Sessoms thanked the City Auditor's stafffor all their hard work. Jure 14, 2016 2016 GASB 45 Actuarial Valuation Presentation to City Council June 14, 2016 Lyndon S. Remias,CPA,CIA Chris Ford,CPA City Auditor Deputy City Auditor 1 What is GASB 45? • Government Accounting Standards Board (GASB) 45 deals with the manner in which Governmental entities should account for and financially report the long term liabilities that are associated with Other Postemployment Benefits (OPEB), excluding pensions, offered to retirees (i.e., Healthcare). 2 2 1 "' City Council Resolution • Per City Council Resolution dated — May 12, 2015 • Item 3 states: — "The City Auditor is directed to provide for an actuarial valuation of retiree health insurance costs biennially to meet the Government Accounting Standards Board (GASB) 45 pronouncement concerning fully costing out Other Post Employment Benefits." 3 3 Purpose of AUP • To determine if the valuation of the City/Schools' Governmental Accounting Standards Board Statement 45 (GASB 45) liability and the underlying assumptions are reasonable. • The valuation is still a draft until Milliman completes its internal review. We will issue our formal results soon after that. 4 4 2 Background • GASB 45 requires accrual basis accounting for Other Postemployment Benefits (OPEB) liability recognition (i.e., retiree healthcare). • Contribute annually. — Perform the valuation every two years as allowed by GASB • Our last valuation was in 2014. 5 5 ' Background • Actuarial, not accounting, calculation. • The Annual Required Contribution (ARC) is the 1 . amortization of the unfunded actuarial liability. 2. normal cost of the benefits currently earned this year by active employees. 6 6 3 de, • Background • Since 2008, the City/Schools' have made incremental contributions to fully fund the ARC amounting to approximately $41 million. • Virginia Pooled OPEB Trust — Includes approximately $16 million in unrealized gains for a total value of $57 million through March 2016. 7 011 2016 GASB 45 Valuation Milliman Valuation 1/1/16 Explanation Actuarial Accrued Liability(AAL) $128,445,000 Actuarial value of OPEB benefits already earned by past service Less: Actuarial Value of Assets ($60,768,300) Value of City/School contributions (AVA) &earnings held in trust Unfunded AAL $67,676,700 Unfunded portion of liability Amortized Over 30 years $5,330,500 Amortized portion of liability Normal Cost $3,976,000 Cost of OPEB being earned by employees for current year Interest to End of Year(Fiscal) $342,700 Interest Annual Required Contribution $9,649,200 Amount Required to fully fund (ARC) current year liability Less: PAYGO-Expected Current ($11,746,200) Estimated retiree claims&costs Year Retiree Claims& Cost paid for 2016 Amount Current Year Payment of ($2,097,000) $1,285,200 Schools Retiree Claims Exceeds ARC $ 811,800 City 8 4 Incremental Amount to Fully Fund 10,000,000.00 8,000,000.00 6,000,000.00 I' 4,000,000.00 -11116 2,000,000.00 +' 11 0.00 2008 2009 2010 2011 2012 2013 2014 2015 211. -2,000,000.00 -4,000,000.00 9 404 Funding the ARC • We fund the ARC by paying the current claims and benefits of retirees for the year; and, by contributing, if necessary, an amount to the Trust for future claims. • Our review has been beneficial during these tough budget times. 10 i0 5 Why has the Amount Decreased? • OPEB assets have continued to grow ($57M). • Subsidized retiree healthcare ended for employees hired after July 1 , 2014. • Active and retired members pay an increased amount for healthcare. • Line of Duty (LOD) retirees removed from our GASB 45 valuation — accounted for through VRS GASB 45. 11 11 OPEB Trust Activit Source: VACONML OPEB Trust Statements Summary 3/31/12-3/31/16 OPEB Trust Activity Cost Market Balance,3/31/12 $33,188,349.48 $39,737,403.88 Agrees with prior WPS& 3/31/12 Statement Contributions $7,065,200.00 $7,065,200.00 2012&2013 Contributions Earnings $18,461.69 $6,845,768.40 Market earnings are unrealized gains Fees ($89,063.68) ($89,063.68) Fees Balance, 1/31/14 $40,182,947.49 $53,559,308.90 Agrees with 1/31/14 Trust Statement Contributions $705,600.00 $705,600.00 2014&2015 Contributions Earnings $307,958.69 $3,004,788.04 Fees ($115,338.37) (-115,338.37) Agrees with 3/31/16 Balance, 3/31/16 $41,081,167.81 $57,154,358.57 TrustStatgrjlent 12 6 opo • • The Future • Keep long term rate of return as long as we pay the ARC. • In 2017, GASB 75 replaces GASB 45. • GASB 75 requires: 1 . Recognition of the net OPEB liability in the statement of net position (balance sheet). 2. Requires use of the entry age normal cost method. 13 13 `"b How We Stand Milliman's Projections for 2017 ARC $ 9,786,900 Benefits ($11 ,712,700) Amount of the Retiree Benefit Payments ($ 1 ,925,800) Exceeding the ARC 14 14 7 411" Allak e Conclusion • Draft valuation • Final report and valuation is forthcoming 15 15 4 I Questions? 16 8 -6- CITY MANAGER'S BRIEFINGS CITY VIEW 4:40 P.M. Mayor Sessoms welcomed Douglas Smith, Deputy City Manager and Patti Phillips, Director— Finance. Mr. Smith and Ms. Phillips expressed their appreciation to City Council for their continued support and distributed a copy of today's briefing which is attached and made part of this record. Mayor Sessoms thanked Mr. Smith, Ms. Phillips, and all staff involved on this project for their work. June 14, 2016 Proposed Cityview Two Development Virginia Beach City Council Douglas L. Smith, Deputy City Manager Patricia A. Phillips, Director of Finance June 14, 2016 Presentation Overview • Summary of Developer Proposal • Review of Proposed Term Sheet • Financial Analysis • City Council Discussion and Direction 2 2 1 Location Map . ..,._. .,;. .„,.::.„,,.....„...;..4, • • ,._._ .., ....., - - • - i-,fr ,00., i Al, . • V , 'gk' ' • '-:41101' 't. ir '1 4.., . . ...r:. 4'._.:f,'..Ir'/:, .. ' 44.7: . ..•-' .., I t.0, , i •:*E. ...,,_.--",,_.:1.... ,, ...,-..,-- sp...,,' ,,,, '7./ ''''Cif ted I '• -''''' '` ''. ,...), ....4..--•,. .... • Ifi.....SP . •.1.1.. ' : i'• 44 '.( tti -, •-, • 4'1 V.,NWN. . • '' ,-. -- '600' • ' ''-' ''. IL- -.414 iii 1 k.::e--• .1. • .-.2 ,;' .1'7',if, '- f.,:. i ,--.-- ........... - •• . ' ,..-... '. ''• , : ,-: -.'"?,:?',.: ril4 Ali+ ... 11. ....:- . ....... . , r . ..... 3 3 roposed-Proje. ct Layout of Proposed _7- --- we PAYA ... we...•as.. P^..... ......... •••••••.,.. ......... ••••••-.... . . • '• ' - -' ' ...........:MI.'''.....4: 111•••• .............i 1 rift; PO ..., .... ..- Ik " ..i;-' ,•,' •-- ,, . \I ' A .--:-. --, ' "7 ' . ‘; . , '' I • C..W CI -- i . ,, .• "=/.--- ,14 ,,„,, ' t • hi , I i j/ ...Mina• 41 kIP- IL CITY VIEW TWO MASTER PLAN Sdarr I Of i'AMNIA 11.“01 VIT...V. 4 4 2 Summary of Developer Proposal • Three Phase Mixed-Use Development • $62.oMM anticipated private investment • Request City to dedicate incremental real estate tax revenues from this specific Project. • $io.2MM maximum City dedication • Payable from incremental real estate taxes over 25 years • Developer to: • Make parking available to public • Sell City needed easements over Developer property for Thalia Greenway($300,000) • Six years to complete • Property included within CBD-TIF since TIF inception • Not part of the SSD 5 5 Term Sheet Summary • Three Phase Development- • Phase • 6 Level Mixed Use Tower:13,5oo s.f.office/64 apartments • 8 Level Apartment Tower-138 Units • 7 Level Parking Structure-481 Spaces • Phase 2 • 3 Level Commercial Tower:24,000 s.f. • Phase 3 • TBD Level Mixed Use Hotel Tower uo-iao Key Limited Service Hotel 4,000-5,00o s.f.of Commercial(office or retail) • Construction to commence within 36 months of the agreement approval 6 6 3 Term Sheet Summary- Continued Anticipated Developer Investment • Phase i • Mixed Use Tower: $4.oMM • Apartment Tower: $22.1MM • Parking Garage: $ 8.3MM Total Phase i $44.4MM Phase a Office Tower: $ 5.oMM °I". • Phase 3 • Mixed Use Hotel Tower: $12.6MM • Total Anticipated Investment: $62.o MM 7 ---Term Sheet Summary-Continued City Participation • Beginning with completion of Phase i • City(via VBDA)to make semi-annual payments equal to incremental real estate taxes paid by Project. • Baseline is real estate taxes owed as of June 5,2016 • A Certificate of Occupancy has been issued • Real estate taxes have been paid • Maximum total payment$io.2MM • Maximum term 25 years • VBDA has right to terminate further payments if: • Construction of hotel phase has not commenced within 36 months • All elements of Project not complete 72 months after first payment 8 8 4 Term Sheet Summary- Continued Parking Garage Operations • Developer to own Parking Garage • Parking open to public • Developer entitled to enact rules and regulations to ensure adequate access to parking by its patrons • Developer responsible for all maintenance, operation, and other costs associated with Parking Garage • Failure to maintain public parking terminates incentive payments 9 9 Term Sheet Summary- Continue % � Thalia Creek Easement Acquisition ►1....2 U..d..Desin ►I...1 Compl.l.d Pt... Pnaaa U Ma.*26 i 1 i Y k fitt +.r el ,- ct-')re-i ' ''Zi*: 'I:* re ' ' '' '''''L ti f ( B C iyown.d Thalia Creek Greenway 10 5 Financial Analyic Parking Structure Estimated Debt Service -Garage construction cost(excludes amenity) $8.1 million -Garage debt service -Term ao years -Interest rate 4.75% -Annual payment $633,000 -Total Estimated P&I $t2.7 million -City of Virginia Beach -i00%real estate tax dedication(NTE) $fo.x million -Dedication to debt service ratio 8o% -Baseline date determination June 5,2o16 -Approximate baseline value $2.6 million -Term not to exceed 25 years Source:Strategic Growth Areas Office u 11 Marginal Tax_Contribut. (non real estate net revenues) In Millions z..5 YR BPOL Tax $1.2 Personal Property .4 Sales Tax 2.6 Utility Tax .4 Meals 4.3 Hotel 7.5 Residential 15.1 Indirect Total Additional Revenues $32.4 Municipal Costs/Real Estate $24.7 displacement* Marginal Revenues Source:Department of Budget and Management Services *includes a 5o%displacement on sales based revenues 12 12 6 Central Business District—South Tax Increment Financing District Clod dnliM,A,mrr-Somi Ten-Znenwnr lww.nnt Puna a a � a Al a a" s o • ram,.. 1 - �.. '_ ILl cA I`, oITL �'ea n ❑ .n • • 13 Town Center TIF Annual Revenue Actual and Projected through FY-38 Aa,;a Pro;ectec $16 $1 $12 1 $10 t f $e t- $6 $4 $i $0 ".94�1�,. Jtbs J(� Jp,� Jp Jp�3 JpJJ JpJ�JpJD JpJJ JpJ.r`Jp'�S'Jp' Jp�Jpa! Jp'.i Jp3S —Revenue from Base —Total Revenue ra 14 7 City-Benefits -The City of Virginia Beach incurs no debt or maintenance obligation -Additional general fund revenues are generated -Additional shared parking and new development supports Pembroke SGA and the CBD -Project should generate 165 employment opportunities during construction and sustain 38 ongoing jobs annually plus additional hotel inventory in CBD -Thalia Creek Greenway Project able to proceed The project is compliant with Comprehensive and SGA Plans -Advances opportunities for CBD TlF District to grow around the core area -Ripley Heatwole consolidates operations and brings HQ to the SGA supporting Economic Development's strategy(headquarter industries) '5 15 Questions! Discussion .6 16 8 -7- CITY MANAGER'S BRIEFINGS OYSTER HERITAGE PLAN 5:18P.M. Mayor Sessoms welcomed Barry Frankenfield, Director — Planning. Mr. Frankenfield expressed his appreciation to City Council for their continued support and distributed a copy of today's briefing which is attached and made part of this record. Mayor Sessoms expressed his appreciation to Mr. Frankenfield the entire Department for a job well done. June 14, 2016 Oyster Heritage Fund i_ ul uia l„„. t. re a .,�. , 7 ... .9:f+ -v1 fi . -t • K .;i, r, f r c ,, �� a ,, ' -- r .t r,- `'f L ;fi ; 3r I �� 1Y�� y :� �• ` J`r�� Yt v. i v eo., f tt x"t. .. - „ ,. . ,,,. - - ,, r , J��! 40 y� f Oyster Heritage Fund—City Council Presentation June 14,2016 1 Background • Oyster Heritage Fund established 2002 • 14 Council Actions • 2009 Presidential Coastal America Award "An exemplary successful national habitat restoration project model" "Second largest oyster restoration effort in the world" • Leveraged development of 63 acres of sanctuary reefs • Partners U.S.Army Corp of Engineers Lynnhaven River NOW Virginia Marine Resources Commission Page 2-Oyster Heritage Fund City Council Presentation June 14,2016 2 1 Internal Auditor Report • Extensive FOIA requests regarding Oyster Fund and Lynnhaven River NOW (over 30 requests) • Requested City Auditor review the Oyster Heritage Fund • Auditor Recommendations Reconcile accounts monthly Formalize Oyster Heritage Plan Adhere to procurement process for future services • Auditor Questions How will shells be utilized? When will oyster shells be used? Who is responsible for inventory and management of oyster shells? Page 3-Oyster Heritage Fund City Council Presentation June 14,2016 3 Money Facts • Fund established in 2002 • Revenues of$699,936 • Expenditures for several different purposes, all related to preservation and/or construction of oyster reefs • Lynnhaven River NOW-$8,000 in 2003 for education materials $259,450 from 2008-2015 for reimbursement of costs associated with oyster shell recycling—total of$267,450 • Virginia Marine Resources Commission -$89,839 in 2003 and 2004 for oyster reef construction and $200,000 as matching funds for construction (in partnership with U.S.Army Corps of Engineers) of 50 acre sanctuary oyster reef in Lynnhaven Bay, Broad Bay, Long Creek and Linkhorn Bay • Balance of expenditures for City/temporary staff that performed site evaluations and design to support future construction • Current fund balance$56,650 Page 4-Oyster Heritage Fund City Council Presentation June 14.2016 4 2 Shell Facts ■ Lynnhaven River NOW recycled 18,404 bushels • Wanchese Packing Plant donated 700 bushels ■ Shells used Sanctuary reef with U.S.Army Corps of Engineers and Lynnhaven River NOW -5,000 bushels Virginia Aquarium—60 bushels ■ Approximately 14,100 bushels on site at the Virginia Beach Landfill & Resource Recovery Center Page 5-Oyster Heritage Fund City Council Presentation June 14,2016 5 Oyster Heritage Plan Actions Summary ■ Recycle shells (RFP for Non-Profit) ■ Establish sanctuary reefs ■ Annual surveys ■ Report and communicate results ■ Education and awareness • Ongoing research &analysis • Annual report to City Council ■ Changes to plan to Council for approval Page 6-Oyster Heritage Fund City Council Presentation lane 14,2016 6 3 Recycling with Lynnhaven River NOW • Lynnhaven River NOW provided recycling services from 2008 to present • Outstanding invoices of$39,072.71 for services June—December 2015 and recycling services provided in 2016 • Grant ordinance June 21 to comply with services completed • RFQ for services to be advertised for future contract Page 7-Oyster Heritage Fund City Council Presentation June 14.2016 7 Additional Funds • Maritime Forest Restoration Program • Living Shorelines Restoration Program Fund Page 8-Oyster Heritage Fund City Council Presentation June 14,2016 8 4 Questions? Page 9-Oyster Heritage Fund City Council Presentation June 14,2016 9 5 -8- ADJOURNMENT Mayor William D. Sessoms, Jr., DECLARED the City Council Meeting ADJOURNED at 5:44 P.M. 0/171/ Amanda Fin ey-Barn , MC Chief Deputy City Clerk Ruth Hodges Fraser, MMC City Clerk June 14, 2016