profile - chesapeake bay bridge–tunnelt he parallel thimble shoal tunnel (the “ptst”) project...
TRANSCRIPT
T o provide the traveling public with a safe, cost effective, and unique
driving experience across the scenic Chesapeake Bay. MISSION
F or fifty-four years, the Chesapeake Bay Bridge-Tunnel has captured worldwide attention as a
modern engineering wonder and an important East Coast travel convenience. Crossing over and under open waters where the Chesapeake Bay meets the Atlantic Ocean, the Bridge-Tunnel provides a direct link between Coastal Virginia and the Delmarva Peninsula (Delaware plus the Eastern Shore counties in Maryland and Virginia), and saves 75 miles from the journey between Virginia Beach and points north of Wilmington, Delaware, as compared to the I-64/I-95 corridor. The Chesapeake Bay Bridge and Tunnel Commission is the governing body of the District. The Commission consists of eleven members who are appointed by the Governor of the Commonwealth of Virginia. One member represents the Commonwealth Transportation Board and the remaining ten members represent the
localities within the District. The District is comprised of six cities: Virginia Beach, Norfolk, Portsmouth, Chesapeake, Hampton, Newport News; and the two Eastern Shore counties of Northampton and Accomack. Following its opening on April 15, 1964, the Bridge-Tunnel was selected “One of the Seven Engineering Wonders of the Modern World” in a worldwide competition that included more than one hundred major projects. In addition, in 1965, it was distinguished as “The Outstanding Civil Engineering Achievement” by the American Society of Civil Engineers. In 2000, the Bridge-Tunnel was recognized by Structural Engineer magazine as one of the “Seven Structural Engineering Wonders of America for the 20th Century.” In 2007, the Chesapeake Bay Bridge-Tunnel was selected as one of Virginia’s “Top Seven Manmade Wonders” in an online poll conducted by the Richmond Times-Dispatch.
PROFILE
FREDERICK T. STANT, III Chairman, City of Virginia Beach
THOMAS W. MEEHAN, SR.
Vice Chairman, City of Newport News
JOHN F. MALBON Secretary-Treasurer, Commonwealth
Transportation Board
PAUL E. BIBBINS, JR., PhD Northampton County
JEFFREY K. WALKER
Northampton County
CHRIS SNEAD City of Hampton
JEFFREY A. ROWLAND City of Chesapeake
KAREN S. JAMES
City of Portsmouth
REEVES W. MAHONEY City of Norfolk
GREGORY L. DUNCAN, SR. Accomack County
KEITH COLONNA
Accomack County
JEFFREY B. HOLLAND Executive Director
The members of the Chesapeake Bay Bridge and Tunnel Commission have worked diligently during 2018 in administering the affairs of the District in the best interest of the bondholders and the traveling public. In May, the Commission approved the operating expense budget for the District for fiscal year 2018-2019, in the amount of $15,236,722, which was a 1.3 % increase versus the prior year. The Commission, working through the Commission Alumni Society, continues to prioritize its communication with former Commission members and to update them on the Commission and the District, as the Commission Alumni continue to serve as ambassadors of the Chesapeake Bay Bridge-Tunnel.
COMMISSION
February 20, 2019 The Honorable Ralph S. Northam Governor, Commonwealth of Virginia Office of the Governor Post Office Box 1475 Richmond, Virginia 23218 Dear Governor Northam: We are pleased to submit the Annual Report on the operation of the Chesapeake Bay Bridge and Tunnel District for the year January 1 through December 31, 2018, in accordance with the provisions of Chapter 22, Title 33.2 of the Code of Virginia, formerly Paragraph 16, Chapter 714 of the 1956 Acts of the General Assembly. As you will see, 2018 was an excellent year for the District. The following pages include information on the District’s traffic volumes, revenue bonds, financial status, operations, maintenance, promotional activities and community involvements.
Thank you for all that you do for the Commonwealth. If you have any questions concerning this Report or the operation of the Bridge-Tunnel, please let us know and we would be most happy to discuss them with you. CHESAPEAKE BAY BRIDGE AND TUNNEL COMMISSION Frederick T. Stant, III, Chairman
COMMISSION MEMBERS FREDERICK T. STANT, III CHAIRMAN CITY OF VIRGINIA BEACH THOMAS W. MEEHAN, SR. VICE CHAIRMAN CITY OF NEWPORT NEWS JOHN F. MALBON SECRETARY-TREASURER COMMONWEALTH TRANSPORTATION BOARD PAUL E. BIBBINS, JR. PhD NORTHAMPTON COUNTY JEFFREY K. WALKER NORTHAMPTON COUNTY CHRIS SNEAD CITY OF HAMPTON
COMMISSION MEMBERS
JEFFREY A. ROWLAND CITY OF CHESAPEAKE
KAREN S. JAMES
CITY OF PORTSMOUTH
REEVES W. MAHONEY CITY OF NORFOLK
GREGORY L. DUNCAN, SR.
ACCOMACK COUNTY
KEITH COLONNA ACCOMACK COUNTY
JEFFREY B. HOLLAND EXECUTIVE DIRECTOR
CHESAPEAKE BAY BRIDGE AND TUNNEL DISTRICT
32386 LANKFORD HIGHWAY
CAPE CHARLES, VIRGINIA 23310
757/331-2960 FAX 757/331-4565
WWW.CBBT.COM
1 |
T he Parallel Thimble Shoal Tunnel (the “PTST”) project is being undertaken by the Chesapeake Bay Bridge and Tunnel District (“the
District”) to provide a second tunnel under Thimble Shoal Channel. When complete, the new tunnel will carry two lanes of traffic southbound and the exis ng tunnel will carry two lanes of traffic northbound, thereby improving the safety for the travelling public. The Project development team u lized the design‐build delivery method wherein pre‐qualified teams, ve ed by the CBBT, were selected to submit proposals to design and build the project. The District developed a set of technical requirements, which were supplied to the teams, and then over the course of several mee ngs, the bid package was revised to refine the project scope, minimize risk, and reduce costs. In July 2016, the contract was awarded to the low bidder, Chesapeake Tunnel Joint Venture (“CTJV”), in the amount of $756 million. The new tunnel will be slightly longer than the exis ng tunnel due to alignment, approximately 6,500 feet in length, and will be constructed using a tunnel boring machine, or TBM. A TBM excavates and erects the tunnel as it mines, and the PTST Project is the first transporta on tunnel in the
Mid‐Atlan c region to be constructed using this methodology. The islands at the end of each tunnel require extensive work to allow the TBM to pass, including the expansion of each island via an engineered berm. A TBM is a mobile mining machine, but it must mine through soils. Sand and several different types of rock will be imported to expand the islands and create the berms. Sand placement comes first and then the rock, smaller sizes lowest and largest sizes on top, to protect the expanded island from the elements. A groundbreaking ceremony was held in September 2017 and Project tours were hosted in August 2018 to
provide a unique opportunity for the general public to learn more about the Project, its progress and to see
what’s taking place on the islands. The project is scheduled for comple on in 2023.
Detailed design and permi ng: Detailed project design advanced to approximately 85%. Permits for land‐based work were completed in 2017. Permit for in‐water work from Department of Environmental Quality (DEQ) received before Christmas and the
US Army Corps of Engineers (USACE) permit is expected in early 2019.
Construc on Work: Deep founda on work, which involves the digging of rectangular holes straight down into the body of the
island using specialized excava on equipment, is ongoing. These holes, once excavated, are then filled with a
Parallel Thimble Shoal Channel Tunnel
Work completed in 2018
| 2
concrete and steel structure that will become part of the TBM launching/receiving pits, and eventually be transformed into the open approaches of the new tunnel roadway.
The soils under the island areas over which the TBM will pass must be strengthened to ensure the TBM does not sink in the so soils. The soil strengthening will also serve to inhibit water penetra on into the new tunnel. The strengthening involves injec ng a cemen ous material called grout into the soil and mixing it with the in‐place soils. Preliminary work to develop grout mixes compa ble with the in‐situ soils was completed in fall 2018.
Ongoing work at Li le Creek project office loca on includes armor stone stockpiling and fabrica on work for some of the support structures that will be needed to allow the contractor to expand the islands.
Tunnel Boring Machine (TBM): The TBM has been constructed and Factory
Acceptance Tes ng (FAT) was performed in Germany. The TBM will be stored at the factory un l CTJV
arranges to have it shipped to the site in 2019.
Tunnel Segments: Concrete Systems, Inc. (CSI) has erected a facility in
Chesapeake, VA, to produce the precast concrete tunnel segments, and produc on should begin in early 2019.
A total of 9,900 tunnel segments that make up the 990 tunnel rings will be produced. CSI will be employing local labor for fabrica on of the segments as well as transport of the segments to the project site.
Plant tes ng and segment produc on startup is forecast in the first quarter of 2019 with full produc on in the second quarter of 2019.
DBE Goal: CTJV has completed approximately
20% of the Disadvantaged Business Enterprise (DBE) goal of approximate‐ly $20 million for the project and has a plan in place to meet or exceed the project goal. Various businesses have been retained to provide both design
Parallel Crossing Phase II
and construc on services as well as materials supply.
The District’s responsive website con nues to offer informa on to a variety of project stakeholders, including travelers, students and contractors. It also provides a library of all per nent documents and informa on as it pertains specifically to the Parallel Thimble Shoal Tunnel Project. Addi onally, the Project Connect e‐Newsle er con nues to provide more than 740 interested par es with up‐to‐date informa on and milestone no fica ons related to the Parallel Thimble Shoal Tunnel Project.
Pictured above: Jet grout testing on Portal Island #1. Pictured below: Armor stone stockpiled at Little Creek.
Pictured below is the CSI Plant in Chesapeake, VA.
3 |
A ccording to tunneling tradi on, a TBM cannot begin work un l it is given a name. The name is generally that of a female, as
a sign of good luck for the project ahead. In keeping with tradi on, the CBBT announced the kick‐off of a TBM Naming Contest in January. This contest was open to all 6th grade students within the represented locali es of the District. Students were asked to submit an essay of 200 words or less or a 2‐minute (or less) video that reflected the chosen name for the TBM. Students were encouraged to be wi y and crea ve; however, the names had to be a female name or character, real or fic onal, and had to have some significance to the Commonwealth, the Chesapeake Bay region, nature, transporta on or engineering. More than 120 entries were received and the Top 10 finalists were selected by a Review Commi ee comprised of representa ves from the Project Partners. The Top 10 names were then published in an on‐line poll and opened to the public for vo ng. A er two weeks of on‐line vo ng, the CBBT and its partners on the Parallel Thimble Shoal Tunnel Project were excited to announce the winning name for the Project’s tunnel boring machine…Chessie! The winning entry was submi ed by Grace Bentley of Nandua Middle School, located in Onley, VA.
Pictured above is Chessie, the Tunnel Boring Machine that will be used to construct the Parallel Thimble Shoal Tunnel. Pictured to the left is Grace Bentley (center), with her family and CBBT Commission and staff, as she was presented with a certificate for the winning entry.
Meet CHessie
| 4
TRAFFIC and Revenue
T he Chesapeake Bay Bridge‐Tunnel (the “CBBT”) provides the only direct north/south route across the lower Chesapeake Bay and completes the coastal transporta on corridor stretching from Maine to Florida. Traffic totaled 3,931,637 vehicles in 2018, a decrease of 67,591, or 1.7% under the 3,999,228 vehicles recorded in 2017. Cars and light trucks accounted for 90.4% of the total traffic or 3,552,076 vehicles, a decrease of 2.0% versus 2017. Heavy trucks totaled 366,693 vehicles or 9.3% of total traffic, an increase of 1.5% over 2017. Buses totaled 12,868 vehicles or 0.3% of the total traffic, and registered a decrease of 6.8% from 2017. A comparison by classes on a monthly and yearly basis can be found on page vii of the a ached financial report. A review of traffic changes since incep on of the facility is indicated in the graph below.
Gross toll revenue for calendar year 2018 totaled $57,130,577, a decrease of $773,863 or 1.3% below gross toll revenue received in 2017. The District accepts cash, E‐ZPass, scrip, and credit cards in the toll lanes for customer convenience. E‐ZPass u liza on for 2018 totaled 70.6% of the total revenue for calendar year 2018, as compared to 67.1% in calendar year 2017. In calendar year 2018, the District incurred total E‐ZPass and credit card fees of $1,092,565 for processing electronic payments as compared to $1,056,423 during the previous year. As a result, net toll revenues for 2018 totaled $55,899,454 versus $56,710,311 in the prior year. At its November 13, 2018 mee ng, the Chesapeake Bay Bridge and Tunnel Commission voted to approve a toll rate increase, effec ve January 1, 2019. This toll rate increase is compliant with the resolu on that was adopted by the Commission in August 2013, by which the Commission approved a toll rate increase effec ve January 2014 and approximate 10% increases every five years therea er. These toll rate increases were approved to fund the accelera on of the project procurement, award and contract of the Parallel Thimble Shoal Project from 2021 to 2016. A series of public informa on mee ngs were held in November 2018 to inform the public
about the toll rate schedule revisions as well as to provide a general overview on the Parallel Thimble Shoal Tunnel Project. Li le Creek Property The District purchased property at Li le Creek in 1995 to be used as a staging area for the construc on of the Parallel Crossing Project, and Phase I of the Project was completed in 1999. The property on Li le Creek Harbor is now being leased to the contractor team for the Parallel Thimble Shoal Tunnel Project and con nues to produce excellent income for the District. In 2018, income from leases of the Li le Creek property totaled $996,513.
Virginia Originals Gi Shop Virginia Originals LLC, operated by Chris and Kellson Savvides of Virginia Beach, relocated a small gi shop to the North Toll Plaza Rest Area Building in October 2017 upon the closing of the restaurant and retail space on One Island. Though the new retail space is small, the offerings are huge and Virginia Originals con nues to offer Bridge‐Tunnel memorabilia as well as other unique items from the Commonwealth and beyond. In 2018, the District received a total of $8,419 from the lease of the new rest area gi shop.
BONDS
F inancing for the District’s Parallel Thimble Shoal Tunnel Project closed in November
2016. The Project financing included the issuance of $321,515,000 First Tier General Resolu on Revenue Bonds, Series 2016 (the “Series 2016
Bonds”), a subordinate loan from the United States Department of Transporta on under the TIFIA program (the “TIFIA Loan”) in the amount of up to $338,528,672, plus capitalized interest and a subordinate loan from the Virginia Transporta on
5 |
Customer Service During 2018, the Opera ons Division rendered assistance to 391 customers who experienced some type of difficulty with their vehicles while crossing the facility.
Customer Assistance The CBBT’s Driver Assistance Program con nues to be well received by the traveling public. Opera ons Division employees will drive a customer’s personal vehicle across the facility to pre‐empt an unsafe incident from occurring due to any phobia when driving across the facility. This is a free service for customers who are traveling in a car, van, SUV or pickup truck. In 2018, the Opera ons Division assisted 741 customers with driving over the facility as a result of gephyrophobia, acrophobia, etc.
In‐Service School The Chesapeake Bay Bridge‐Tunnel Police Department conducted two Law Enforcement In‐Service Schools, which were a ended by a total of 15 District Police Officers as well as 22 other Police Officers from local and regional
departments including Accomack and Northampton County Sheriff’s Offices, Cape Charles, Chincoteague, CBN/Regent University, Eastern Shore Community College, Exmore, Parksley, and Tangier.
Personnel Training and Con nuing Educa on The District provides opportuni es throughout the year for its employees to par cipate in specialized trainings or con nuing educa on classes. Throughout 2018, our Opera ons personnel a ended the following: FBINAA (FBI Na onal Academy Associates) First
Line Supervisors School Field Training Officer School “FBI Civil Rights—JTTF‐Bombs” workshop Crisis Interven on training “Dynamics of Officer/Ci zen Encounters”
training “GLOCK Armorer’s” course “Safe Driving Train the Trainer” course “Northeast Counterdrug on Courtroom
Tes mony in Narco c Cases” training “Reasonable Suspicion” training
OPERATIONS
Infrastructure Bank (the “VTIB Loan”) in the amount of $50,000,000, plus capitalized interest.
The Series 2016 Bonds are term bonds maturing from July 1, 2041 through July 1, 2055 with coupon interest rate of 4.0% to 5.0%. The proceeds from the Series 2016 Bonds, along with the proceeds of the TIFIA Loan and VTIB Loan and cash contributed by the District will be u lized to finance the development and construc on of the Parallel Thimble Shoal Tunnel Project.
The TIFIA Loan and the VTIB Loan are highly sought a er funding sources for major transporta on projects as they offer low long‐term interest rates and flexible repayment schedules. The TIFIA Loan and the VTIB Loan are issued on the Subordinate
Lien of the 2016 General Revenue Bond Resolu on and bear interest rates of 2.88% and 2.90%, respec vely. The loans do not incur interest un l drawn, which began in August 2018.
The underlying credit ra ng on the Series 2016 Bonds is Baa2 and BBB by Moody’s Investors Service and S&P Global Ra ngs, respec vely. The TIFIA Loan is also rated Baa2 and BBB by Moody’s Investors Service and S&P Global Ra ngs, respec vely. The VTIB Loan is unrated.
All of the District’s outstanding debt por olio is fixed rate debt.
| 6
“De‐escala on and Minimizing Use of Force” training
“Dangerous Crossroads Ahead” VMLIP Workshop
“Interview and Interroga on” training “VALOR Survive and Thrive” training “Inves ga ng and Prosecu ng DUID Cases”
training FBI 9th Annual Law Enforcement Symposium 2018 Virginia Gang Conference related to gang
ac vi es and inves ga ons Impact of Trauma on Law Enforcement
Officers Conference Virginia Associa on of Chiefs of Police 2018
Midyear Conference Vehicle Interdic on (Passenger) training DUI Refresher/Updates “Hazardous Materials and Cargo Tank
Inspec ons” training Federal Motor Carrier Safety School Customer Service Workshop Fire Truck training
Cer fica on: Virginia Criminal Network (VCIN) Training TASER Instructor training Radar/Lidar Cer fica on Firearms Instructor Pre‐shoot Training Firearms Instructor Firearms Familiariza on and Qualifica ons
training Defensive Tac cs Instructor Cer fica on Instructor Chemical Aerosol Projector training General Instructor Cer fica on Speed Measurement Instructor course Breath Alcohol Operators Cer fied Basic Life Support Instructor CPR Training
Traffic Summonses and Arrests The Police Department issued 3,374 traffic summonses, of which 22 were for driving under the influence. Addi onally, the department handled 17 felony arrests during calendar year 2018. Total traffic summonses increased by 12% when compared to last year. Of important note, the Chesapeake Bay Bridge‐Tunnel does not receive summons proceeds from the Courts. All proceeds are credited to the Commonwealth’s Literary Fund.
Accidents and Safety Benchmarks During 2018, 20 reportable vehicular accidents occurred on the facility, which involved five personal injuries and two fatali es. This represents a 20% decrease when compared with 25 accidents in 2017. As a result of the 20 accidents, es mated vehicle damage totaled $248,200, and damage to District property totaled $277,330. Since comple on of the Parallel Crossing Project in 1999, the injury rate on the CBBT is 10.925 injuries per 100 million miles traveled, or approximately 11% of the na onal average, which is 99 injuries per 100 million miles traveled. The Na onal Highway Traffic Safety Administra on gauges the fatali es per 100 million miles driven na onwide as 1.16 in the latest repor ng year of 2017. The fatality rate on the CBBT per 100 million miles driven is 0.6032, or just above half of the na onal average.
Wind Restric ons Occasionally, the District will have to restrict
certain traffic from crossing the facility as the result of strong winds or storm cells moving across the Bay. In 2018, a total of 228 hours of restric ons were put in place, with winds ranging from 40 mph to greater than 65 mph. The facility was closed to all traffic for a total of 31 hours. To decrease delay mes for some travelers, the
7 |
Annual Inspec on The Annual Inspec on of the Lucius J. Kellam, Jr. Bridge ‐ Tunnel was performed by Jacobs Engineering Group Inc. (Jacobs) during September of 2018. This inspec on is conducted annually as required by Sec on 504 of the District’s Revenue Bond Resolu on Covenant. The inspec on of the facility was performed using inspec on procedures that followed the general recommended guidelines and regula ons of the Na onal Bridge Inspec on Standards (NBIS), as defined in the Code of Federal Regula ons, the Federal Highway Administra on
(FHWA), and the Virginia Department of Trans‐porta on (VDOT). A report on the 2018 Annual Inspec on was submi ed to the District on January 7, 2019. Addi onally, effec ve August 13, 2015, as defined in the Code of Federal Regula ons, the FHWA established the Na onal Tunnel Inspec on Standards (NTIS) for highway tunnels. The NTIS require tunnel owners to establish an inspec on program with the minimum standard to inspect the tunnels, to maintain a tunnel
inventory, to report inspec on findings to the FHWA, and to correct any cri cal findings found during the inspec on. In accordance with this mandate, an inspec on of the Chesapeake Channel Tunnel was performed following the recom‐mended guidelines and regula ons of NTIS, as defined in
District offers complimentary wind vans to assist in transpor ng exterior cargo that would otherwise restrict passenger cars and pickup trucks from crossing during the restricted periods. The District con nues to use Twi er to disseminate any wind restric ons to the traveling public.
Tunnel Lane Closures During 2018, a total of 26 vehicles were disabled in the tunnels, which required traffic control un l District‐provided wrecker service arrived. This resulted in 45 hours of traffic stoppages.
Addi onally, the Opera ons Division/Police Department escorted 432 oversized loads, which required traffic to be stopped at both ends of each tunnel, resul ng in 143 hours of traffic stoppages. Nigh me work details in the tunnels during calendar year 2018 totaled 125, resul ng in 941 hours of traffic stoppages. In summary, during the calendar year 2018, there was a total of 583 lane closures in the tunnels, which resulted in a total of 1130 hours of traffic stoppages.
Engineering, Maintenance AND Management Information Systems
| 8
the Code of Federal Regula ons, by the FHWA, and by VDOT.
Underwater Inspec on During the past year, Jacobs conducted an underwater inspec on of the substructure units of Trestles A’NB, ANB and ASB, following the guidelines of the NBIS. Jacobs retained the diving services of Cro on Diving Corp. for the underwater inspec on por on of this work. Jacobs/Cro on provided an on‐site engineer/inspector, as appropriate. The underwater inspec on of these bridges and trestles con nue the inspec on cycle for the facility’s bridge and trestle structures in accordance with the NBIS mandated requirement that the frequency of underwater inspec on not exceed five years. The annual inspec on cycle was formalized in a report received on January 7, 2019. The summarized findings by Jacobs regarding the inspec on cycle were: No cri cal findings and the overall condi on ra ngs are summarized below:
Maintenance and Management Informa on Systems The Maintenance and Management Informa on Systems Divisions oversee and maintain the following throughout the year: Approach roads totaling eight lane miles 12 low‐lying concrete bridges totaling 50 lane
miles Four high level steel bridges over naviga on
channels Four manmade islands totaling 20 acres 13 buildings totaling just under 100,000 square
feet Just under 100 fleet vehicles, ranging from
police units to heavy construc on equipment, to underdeck bridge inspec on vehicles with ar cula ng work pla orms
Electrical distribu on system complete with its own Transformer Sta on and four sets of double‐ended switchgear to adequately power every aspect of the facility
State‐of‐the‐art fiber op c network u lizing “Next Genera on” hardware, spanning 40 miles and providing high‐speed connec vity for the District’s communica ons, security and control systems
Complex Electronic Toll Collec on System providing 10 lanes for payment using E‐ZPass, all major credit cards, cash or scrip
Drinking and domes c use wells, storm water and sanitary systems
Water and sewer lines from Virginia Beach at South Plaza and Li le Creek
9 |
Cluster Item Ra ng
A. Approach Roads 8
B. Fisherman Island Causeway 8
C. Tunnels 7
D. Portal Islands 7
E. Toll Plaza Infrastructure 8
F. Site‐Wide U li es 8
| 10
A 37‐acre commercial port, with bulkhead and finger pier, accommoda ng a 20 foot dra
Capital Projects The Commission approved its Capital Projects in the District’s Long‐Term Capital Projects Plan, which extends to 2035. The following lists some of the major projects that were completed or were in construc on in 2018: Pavement Marking, Restriping Trestles – This
project was bid on April 24, 2018 and was awarded to Spivey Pavement Markings, Inc. The project was completed on July 19, 2018.
Design, Mill and Repave Trestles‐Replace End Dams – Jacobs was awarded the Design for this project. The project will be adver sed in 2019 with construc on scheduled to begin in 2020.
Fire Life Safety Tunnel Signage – In 2018, the District installed “Distance to Exit” signage in both Chesapeake and Thimble Shoal Tunnels, in accordance with NFPA 502 requirements.
Chesapeake Tunnel Invert Slab Repairs – This project is repairing delaminated concrete. The project was started in 2018 and con nues into 2019 and will repair approximately 10,000 square feet of delaminated concrete. The project was compe vely bid and was awarded to Coastal Gunite Construc on Company. Es mated comple on is December 2019.
Replace Lights in Chesapeake Tunnel – The District con nues to expand on its LED pilot project for tunnel ligh ng. Over the previous year, the District has fine‐tuned the low intensity
light design, working hand‐in‐hand with Kenall Ligh ng. This partnership con nues with the design, refinement, and implementa on of high intensity ligh ng toward the ends of the tunnel. The District’s goal in this process is to reduce maintenance of tunnel ligh ng, resul ng in less lane closures and disrup on to customers, as well as reduced overall energy expenses. Near the end of 2018, the District received all of the CT‐2 and CT‐3 light fixtures and ini ated the wholesale replacement; all of the fixtures will be replaced in 2019.
Upper Lateral Support Hangers ‐ The District developed a lateral bracing hanger repair for the NCB‐NB lateral bracing elements to fix repe ve past design breaks that occurred frequently. To date, District forces have installed these at 114 of 144 loca ons, u lizing a rented 60‐foot boom snooper vehicle to navigate around the deep steel girder spans. The final 30 brackets will be repaired in 2019.
Con nuing Educa on, Training and Conferences Throughout 2018, our Maintenance Division personnel a ended the following: A Virginia Department of Health, Division of
Drinking Water Class was a ended by District Tunnel Mechanics at the Eastern Shore Community College. The class was en tled “Efficient Energy Use in Drinking Water Produc on” and is used toward their CEUs for required held licensure.
General Adver sing The District con nues to promote the Chesapeake Bay Bridge‐Tunnel with adver sing and public rela ons through coopera ve adver sing and promo onal efforts with surrounding locali es, the Virginia Tourism Corpora on, the Coastal Virginia Tourism Alliance, the Eastern Shore Tourism Commission, and the Virginia Restaurant, Lodging and Travel Associa on. As a result of these efforts, response was made to 5,000 individuals reques ng literature and informa on on the Chesapeake Bay Bridge‐Tunnel and surrounding areas. In addi on to requests made by individuals for literature, more than 182,000 pieces of bulk mail (promo onal brochures and toll schedules) were shipped to individual businesses for display in their brochure racks. Website visits topped the charts at 566,559 in 2018, and social media con nues to be a posi ve
extension of the CBBT marke ng. Twi er con nues as a pla orm to inform followers of up‐to‐date traffic and weather condi ons on the facility, with 12,096 direct followers to date. Facebook is used to provide general informa on, photography, and history, as well as an addi onal means to disseminate informa on to the social public. Our “friends” community con nues to grow with a current following of 19,802. Instagram is used as an extension of Facebook with a current following of 1,428. The District develops and publishes informa onal brochures, flyers, and newsle ers for its employees and re rees throughout the year. The “Follow the Gulls” promo onal brochure was revised to include general informa on on the Parallel Thimble Shoal Tunnel Project and an E‐ZPass
Marketing and community relations
CTJV’s Safety Director hosted a Confined Space Training Class that was a ended by two Electrical Mechanical employees.
A Virginia Department of Health, Division of Drinking Water Class was a ended by District Tunnel Mechanics at the Eastern Shore Community College. The class was en tled “Public Health, Consumer Confidence, and Drink‐ing Water” and is used toward their CEUs for required held licensure.
The Director of Maintenance a ended an AASHTO Subcommi ee mee ng on Bridges and Structures (SCOBS) in Burlington, Vermont.
District HVAC Mechanic a ended a four‐day class on AC Refrigera on, Boiler Maintenance and Safety conducted by TPC Trainco.
A Virginia Department of Health, Division of Drinking Water Class was a ended by District Tunnel Mechanics at the Eastern Shore Community College. The class was en tled “Iron and Manganese in Water Samples” and is used toward their CEUs for required held licensure.
The District Custodian a ended a 40‐hour class en tled “Crisis Interven on Team (CIT) Training” at the Eastern Shore Community College District.
The Engineering Technician a ended an AutoCad Class at Tidewater Community College.
The District Safety Manual was updated and distributed to all employees.
Safety mee ngs are held each month for all available Maintenance personnel. Topics for 2018 included:
Safe Driving Tips for Snow and Ice Slips, Trips and Falls Hand Safety—Gloves First Aid Beat the Heat‐Preven ng and Trea ng
Heat Disorders Personal Protec ve Equipment Driving to Distrac on Electric Arc Flash Safety Traffic Control Safety Complacency in the Workplace Snow Plow Safety
11 |
brochure, specific to its use on the CBBT, addresses frequently asked ques ons about the E‐ZPass system, including account replenishment and toll discounts offered by the CBBT. New Toll Schedules were designed and printed in prepara on of the toll rate increase that became effec ve on January 1, 2019. In 2018, the District worked with CGI Communica ons, through an ini a ve with the Eastern Shore Chamber of Commerce, to develop a 2‐minute video highligh ng this engineering marvel. The video is an asset to the District’s website and social media pages, as well as visitors to the Chamber’s website.
Tours Throughout the year, presenta ons and “behind‐the‐scenes” tours of the facility were provided to more than 650 people. Tour par cipants included students from regional high schools and colleges including Broadwater Academy and Olin College of Engineering; Elizabeth City’s Summer Transporta on Ins tute; VDOT; VMRC; tHRive; Virginia Society of Professional Engineers; and other special‐interest groups. These tours con nue to provide par cipants with a vast amount of transparent knowledge regarding the District, its history and mission, general opera ons and maintenance, and the Parallel Thimble Shoal Tunnel Project. The District also con nues to work with local news media and travel writers, as well as Virginia Tourism Corpora on in an effort to publicize and promote the Chesapeake Bay Bridge‐Tunnel and its surrounding regions to various markets.
Partnerships The CBBT’s partnership with the Eastern Shore Tourism Commission remains strong. The Eastern Shore Southern Gateway Welcome Center, located within the North Toll Plaza Rest Area and
operated by the Eastern Shore of Virginia Tourism Commission, con nues to thrive. The travel ambassadors, comprised largely of volunteer staff led by Welcome Center Manager Allan Burns, ac vely engage the visitors when they come into the Center in order to determine their vaca on preferences and to convert them from “travelers” to “visitors,” as they guide them to the many Eastern Shore a rac ons and ameni es. A total of 109,277 visitors were welcomed during the 2018 calendar year, a 4.3% increase over visita on in 2017. Since opening its doors in 2009, this center has welcomed more than 1,005,000 visitors.
One Millionth Visitor Welcomed
O n November 30, 2018, Linda Burne and her husband Don, who were visi ng Coastal Virginia from Independence, MO along with their
daughter and grandson, made a trip across the Chesapeake Bay Bridge‐Tunnel and stopped at the Eastern Shore of Virginia Welcome Center. Li le did she know she would be welcomed as the one millionth visitor! Linda and her family were welcomed by Center Manager Allan Burns and his staff and were presented with a large gi basket complete with gi cards, coupons and an assortment of local goodies, including an 8‐night stay on Virginia’s Eastern Shore. All items were generously donated by many of the Eastern Shore’s local tourism partners. The Burne s were honored and look forward to visi ng Virginia’s Eastern Shore in 2019.
| 12
13 |
E‐ZPass E‐ZPass usage on the Chesapeake Bay Bridge‐Tunnel con nues to grow, with more than 70% of the District’s customers u lizing E‐ZPass in the toll lanes. A full‐service E‐ZPass Customer Service Office con nues to operate at the CBBT’s Administra on Building, providing valuable assistance with account maintenance and updates, payments and sales. In 2018, the District assisted more than 4,500 customers with their Virginia E‐ZPass accounts and sold more than 450 “On‐the‐Go” retail transponders, including E‐ZPass FLEX tags, which work on the nearby 64 Express Lanes.
Employee Rela ons From healthy vending to biometric screenings, vascular arterial screenings, skin cancer screenings and a flu shot clinic, the District con nues to aggressively promote a healthier work environment. In advance of the holidays, a “60 Miles in 60 Days” walking program was introduced to encourage employees to get moving. Designed to be achievable for all, this program helped bring awareness to individual daily habits and will serve as a founda on for future walking programs. A fitness room is available around the clock to all employees, including a treadmill, ellip cal, and Smith machine. A personal trainer provides on‐site assistance with customized workouts twice a week and yoga classes are offered twice a week, teaching techniques to calm the mind and body as well as to improve strength, flexibility and self‐awareness.
Community Rela ons The Commission and District con nue to donate funds to a medical toll fund administered by Eastern Shore Rural Health, which in turn are used
to purchase scrip toll ckets for local residents who need to travel across the Chesapeake Bay for medical reasons. This Medical Tolls Program has benefited many Eastern Shore residents over the past 26 years. A total of $106,600 was donated in Calendar Year 2018.
The Educa onal Toll Program was created in 2010 to provide assistance to students commu ng across the Chesapeake Bay Bridge‐Tunnel for the purpose of furthering their post‐secondary educa on. This successful program is a partnership between the Chesapeake Bay Bridge‐Tunnel and the Eastern Shore Community College, who administers the program. A total of $30,000 was donated in Calendar Year 2018.
For more than 25 years, the Eastern Shore of Virginia Habitat for Humanity has worked in partnership with God and people everywhere to build simple and affordable homes in decent communi es. Through a partnership with the Tunnel Project Team, the local Sheriff’s Department and the “Shop” students at a local high school, the District pledged to provide 1,000 volunteer hours to assist in the construc on of a Habitat home. Construc on began in the spring of 2016 and more than 775 volunteer hours were donated to this project and the dedica on and blessing of our first home took place on May 21, 2017. Thanks to the ongoing support of the Parallel Thimble Shoal Tunnel Project Team, comprised of members from CTJV, HNTB, Jacobs, Mo MacDonald and the CBBT, more than 1,500 hours have been provided to this non‐profit organiza on and assistance has been provided thus far with the construc on and comple on of three homes.
| 14
The District con nues to par cipate in area Job Fairs, as well as Career Days, that are hosted by local schools and Chambers of Commerce on Virginia’s Eastern Shore. Through its partnership with the Coastal Virginia Tourism Alliance and in support of Na onal Tourism Week, the District, as well as the Eastern Shore Tourism Commission, con nues to par cipate in “Thank a Visitor Day” at the Norfolk Interna onal Airport.
Each year, District employees and Commission members par cipate in the Northampton County Department of Social Services’ “Angel Tree” Christmas program. Through our efforts, 25 angels, from newborns to age 11, were provided with needed clothing items and winter coats. Assistance was also provided with the delivery of stockings, food, toys and bikes from the Salva on Army in Virginia Beach to more than 300 children on Virginia’s Eastern Shore.
In February of each year, a “Super Bowl Food Blitz” to benefit the local Foodbank of Southeastern Virginia, including Virginia’s Eastern Shore, is conducted at the CBBT. In 2018, 414 pounds of food and $374 was collected, which will provide more than 1,380 meals.
District employees con nue to support the Eastern Shore of Virginia’s United Way campaign. Employees pledged $15,454 to this year’s campaign, “What We Do Today Can Change the Future,” thus providing valuable support to community organiza ons and non‐profit agencies. The United Way of Virginia’s Eastern Shore recognized the District with a plaque for its employee contribu on in excess of $10,000 to the campaign.
Birdwatching Tours The CBBT’s habitat of concrete, steel, asphalt and rocks located in open water create an invi ng rest stop for birds during spring and fall migra on. The District con nues to offer birding enthusiasts the opportunity to observe the many birds and waterfowl from areas along the facility. During the 2018 calendar year, there were 9 birdwatching tours conducted on #4 Island. Birding tours have been limited to the northernmost island as a result of the ongoing construc on for the Parallel Thimble Shoal Tunnel.
Special Olympics Torch Run Since 1987, the Chesapeake Bay Bridge–Tunnel has par cipated in the Special Olympics Torch Run. Designed to provide Police Officers an opportunity to volunteer with Special Olympics in communi es where they live and work, the Torch Run is their signature event. Each year in June, the Special Olympics’ “Flame of Courage” is carried over more than 2,000 miles of Virginia’s roadways to Richmond to open the largest compe on for athletes with disabili es. On June 6, three District Police Officers represented the CBBT as they par cipated in the final leg of the race down the Eastern Shore of Virginia, running the final mile on the south side of the facility and passing the torch to awai ng officers in Virginia Beach. The overall Eastern Shore par cipa on raised $2,000 for this Special Olympics cause in 2018.
15 |
CHESAPEAKE BAY BRIDGE AND TUNNEL DISTRICT
FINANCIAL STATEMENTS FOR CALENDAR YEAR 2018
| 16
i |
CHESAPEAKE BAY BRIDGE AND TUNNEL DISTRICT Notes to the Financial Statements & Governor’s Report
As of December 31, 2018
Overview of the Financial Statements
The Chesapeake Bay Bridge and Tunnel District’s (the District) financial report for the years ended December 31, 2018 and 2017 provides long-term and short-term information about the District’s overall financial status. This report consists of two parts: management’s discussion and analysis and the basic financial statements, including notes to the basic financial statements. Management’s discussion and analysis introduces the basic financial statements and provides an analytical overview of the District’s financial activities. The basic financial statements are the statements of net position as of December 31, 2018 and 2017 and the related statements of revenues, expenses, and changes in net position. The notes to the basic financial statements consist of information that is essential to a user’s understanding of the basic financial statements.
As it is considered a special-purpose government engaged only in business-type activities, the District follows enterprise fund reporting; accordingly, the basic financial statements are presented using the economic resources measurement focus and the accrual basis of accounting. Under this basis, revenues are recognized in the period in which they are earned, expenses are recognized in the period in which they are incurred, and depreciation of non-bridge-tunnel infrastructure assets is recognized in the statements of revenues, expenses, and changes in net position. All assets and deferred outflows of resources and liabilities and deferred inflows of resources resulting from the operation of the District are included in the statements of net position.
Financial Highlights for Year ended December 31, 2018
Gross toll revenues before deductions for the year ending 2018 were $57,130,577 and were 1.3% less than toll revenues in the previous year. During 2018, 3,931,637 total revenue vehicles crossed the District’s facility. This represents a 1.7% decrease in vehicular traffic over 2017. The slightly disproportional decrease in vehicular traffic compared to toll revenues in 2018 is due to the mix in traffic growth as the growth in commercial vehicle classes outpaced the growth in passenger cars and light trucks. Additionally, buses had a 6.8% decrease from 2017.
Other revenues in 2018 totaled $1,112,779, which is a decrease of 14.3% over other revenues in 2017. The decrease in other revenue is due to a decrease in lease income as a result of tenants terminating their leases at the Little Creek property. The entire property is now leased by CTJV as a staging area for Parallel Thimble Shoal Tunnel (PTST) construction.
Operating expenses in 2018, before District facility expenses, totaled $14,223,961, which is an increase in operating expenses of $456,969 or 3.3% from 2017.
Total net position at December 31, 2018 was $715,037,985, a 6.1% increase over total net position at December 31, 2017.
Contacting the District’s Financial Management
This financial report is designed to provide the bondholders, customers, and other interested parties with a general overview of the District’s finances and to demonstrate the District’s accountability for the money it receives. If you have any questions about this report or need additional financial information, address your request to the Executive Director or the Deputy Executive Director of Finance and Operations, 32386 Lankford Highway, Cape Charles, Virginia 23310.
| ii
iii |
| iv
v |
| vi
vii |
| viii
CHESAPEAKE BAY BRIDGE AND TUNNEL DISTRICT Notes to the Financial Statements & Governor’s Report
As of December 31, 2018
(1) Organization and Summary of Operations
The Chesapeake Bay Bridge and Tunnel District (the District) was created as a political subdivision of the Commonwealth of Virginia by Chapter 693 of the Acts of Virginia of 1954. Chapter 693 was subsequently amended by the following Chapters of the Acts of Virginia: Chapters 462 and 714 of the 1956 Session, Chapter 24 of the 1959 Extra Session, Chapters 228 and 605 of the 1962 Session, Chapter 348 of the 1964 Session, Chapter 203 of the 1990 Session, Chapter 548 of the 1998 Session, Chapters 238 and 705 of the 2000 Session, and Chapters 270 and 297 of the 2005 Session, (collectively, the Acts). All such Acts have been codified into Title 33.2 Code of Virginia, Chapter 22. The District comprises the area, all within the Commonwealth of Virginia, in Accomack and Northampton Counties, the Cities of Virginia Beach, Hampton, Newport News, Chesapeake, Norfolk, and Portsmouth, and the area of the Chesapeake Bay between these subdivisions.
By the Acts, the Chesapeake Bay Bridge and Tunnel Commission (the Commission) was created as the governing body of the District. These Acts authorized the Commission to acquire, establish, construct, maintain, repair, and operate a project comprising public ferry service over and across the waters between any two points within the boundaries of the District, where such public ferry services would form a connecting link in the system of state highways.
Under the Acts, the Commission was also authorized to establish, construct, maintain, repair, and operate a bridge or tunnel or a bridge and tunnel project from any point within the boundaries of the District to a point in the County of Northampton, including such approaches and approach highways as the Commission deemed necessary to facilitate the flow of traffic in the vicinity of such project or to connect such project with the highway system or other facilities in the state.
The Chesapeake Bay Bridge and Tunnel (the Bridge-Tunnel) is a 20-mile, four-lane trestle and bridge and two-lane tunnel crossing at the mouth of the Chesapeake Bay between the City of Virginia Beach and Northampton County on the Eastern Shore of Virginia. The Bridge-Tunnel consists principally of low-level trestles, four bridges, two tunnels, approach highways, and an earth-fill causeway. The Bridge-Tunnel is designated as part of U.S. Route 13, the main north-south highway on Virginia’s Eastern Shore and the only direct link between Virginia’s Eastern Shore and the metropolitan area of south Hampton Roads, Virginia.
The District sold a revenue bond issue of $200,000,000 (1960 Bonds) under a Trust Indenture dated July 1, 1960, and constructed the two-lane bridge and tunnel project. The project was opened to traffic on April 15, 1964. The Commission discontinued ferry service following the opening of the two-lane bridge and tunnel project.
On April 15, 1964, the Bridge-Tunnel opened as a two-lane facility. A three-staged parallel crossing project began in 1995. Stage 1 of this project was completed in April 1999. This stage included construction of parallel trestles, bridges, roadways, and rehabilitation of the original two-lane facility. Stage 2 will consist of construction of an additional two-lane tunnel under Thimble Shoal Channel. Stage 3 will complete the parallel crossing with construction of an additional two-lane tunnel under Chesapeake Channel.
(2) Summary of Significant Accounting Policies
The District is accounted for under the economic resources measurement focus and the accrual basis of accounting as a special-purpose government engaged in business-type activities, which follows enterprise fund reporting. Special-purpose governments engaged in business-type activities are used to account for the ongoing activities that are financed and operated similar to those often found in the private sector. Accordingly, revenues are recognized in the period earned and expenses are recognized when they are incurred. The District distinguishes operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from the District’s ongoing operations. Operating revenues include revenue from toll collection, recognized when travelers cross the bridge and tunnel, and lease income.
ix |
CHESAPEAKE BAY BRIDGE AND TUNNEL DISTRICT Notes to the Financial Statements & Governor’s Report
As of December 31, 2018
Operating expenses include District facility and administrative expenses. All revenues and expenses not meeting these definitions are reported as non-operating revenues and expenses.
The statements of net position reports all assets, deferred outflows of resources, liabilities, deferred inflows of resources, and the residual net position of the District. Deferred outflows of resources are defined as a consumption of net position by the District that is applicable to a future reporting period. Similarly, deferred inflows of resources are defined as an acquisition of net position by the District that is applicable to a future reporting period.
(a) Cash and Investments
Cash includes cash on hand and various checking accounts.
In accordance with GAAP, the District reports its investment securities at fair market value. Fair market value is determined as of the statements of net position date. The fair value is based on either quotations obtained from national security exchanges or on the basis of quotations provided by a pricing service, which uses information with respect to transactions on bonds, quotations from bond dealers, market transactions in comparable securities, and various relationships between securities.
(b) Restricted Assets
In accordance with applicable covenants of certain bond issues, cash, investments, and accrued interest receivables have been appropriately restricted. When both restricted and unrestricted resources are available for use, it is the District’s policy to use restricted resources first, and then unrestricted resources, as they are needed.
(c) Capital Assets
The bridge and tunnel assets are stated at cost and include capitalized interest. No provision for depreciation or obsolescence of the Bridge-Tunnel facilities is provided as the District has adopted the modified approach to account for these assets. Non-bridge and tunnel assets are being depreciated over their estimated useful lives of 3 years up to 50 years.
(d) Restricted Net Position
Restricted net position, as defined by GAAP, is reported when constraints are placed on the use of assets either externally by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments or imposed by law through constitutional provisions or enabling legislations. At December 31, 2018 and 2017, the District had net position restricted for debt service of $54,391,197 and $61,936,728 respectively.
(e) Management’s Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and deferred outflows and liabilities and deferred inflows and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
(f) Revenue Recognition
Toll revenues represent the tolls collected, net of any deductions such as credit card fees, E-ZPass fees and medical and educational toll discounts. Revenues are recognized when earned.
(g) Pensions
The Virginia Retirement System (VRS) Political Subdivision Retirement Plan is a multi-employer, agent plan. For purposes of measuring net pension liability, deferred outflows of resources and deferred inflows of resources, related to pensions, and pension expense, information about the fiduciary net
| x
CHESAPEAKE BAY BRIDGE AND TUNNEL DISTRICT Notes to the Financial Statements & Governor’s Report
As of December 31, 2018
position of the District’s Retirement Plan and the additions to/deductions from the District’s Retirement Plan’s net fiduciary position have been determined on the same basis as they were reported by the Virginia Retirement System (VRS). For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.
(h) New Accounting Pronouncement
In FY2018, the District adopted GASB Statement No. 75 – Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, which replaces the requirements of Statements No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, as amended, and No. 57, OPEB Measurements by Agent Employers and Agent Multiple-Employer Plans, for OPEB. Statement No. 75 addresses accounting and financial reporting for other postemployment benefits (OPEB), like retiree health insurance, that is provided to the employees of state and local governmental employers. This Statement establishes standards for recognizing and measuring liabilities, deferred outflows of resources, deferred inflows of resources, and expense/expenditures. For defined benefit OPEB, this Statement identifies the methods and assumptions that are required to be used to project benefit payments, discount projected benefit payments to their actuarial present value, and attribute that present value to periods of employee service. Note disclosure and required supplementary information requirements about defined benefit OPEB also are addressed.
Due to limitations on the information available for the prior fiscal year, it was determined to be impractical for the District to restate the FY2017 financial statements. As such, the cumulative effect of applying GASB Statement No. 75 is being reported as a prior period adjustment increasing the beginning balance of net position for FY2018 by $338,262 of which $213,142 represents deferred outflows of resources related to benefit payments/OPEB contributions made by the District in FY2017 that will be recognized as a reduction in total OPEB liability in FY2018 under GASB Statement No. 75.
The remaining adjustment of $125,120 is a result of a decrease in the total OPEB liability at June 30, 2017. The FY2017 financial statements presented herein for comparative purposes still reflect the requirements of GASB Statements No. 45 and No. 57.
(3) Cash Deposits and Investments
(a) Deposits
The carrying value of the District’s deposits (unrestricted and restricted) were $1,576,041 and $1,101,233 at December 31, 2018 and 2017, respectively. The bank balance of these deposits was $1,214,789 and $718,529 at December 31, 2018 and 2017, respectively. The entire bank balance was covered for both fiscal years by federal depository insurance or collateralized in accordance with the Virginia Security for Public Deposits Act (VSPD Act). In accordance with the VSPD Act, the District’s depository institution pledged collateral in the form of federal agency obligations with a market value equal to 110% of the District’s deposits with a third-party trustee in the name of the Treasurer of the Commonwealth of Virginia. In the event that the banking institution fails, the Treasurer will take possession of the collateral, liquidate it, and reimburse the District up to the value of its deposits. The State Treasury Board is responsible for monitoring compliance with the collateralization and reporting requirements of the VSPD Act and for notifying local governments of compliance by banks.
(b) Investments
The District is authorized to invest in obligations of the United States or agencies thereof; obligations of any state or territory of the United States and any political subdivision thereof; obligations permitted by the laws of the Commonwealth of Virginia; repurchase agreements with respect to the foregoing obligations; certificates of deposit, time deposits, or interest in money market portfolios issued by any bank, banking association, savings and loan association, or trust company insured by the FDIC or
xi |
CHESAPEAKE BAY BRIDGE AND TUNNEL DISTRICT Notes to the Financial Statements & Governor’s Report
As of December 31, 2018
Federal Savings and Loan Insurance Corporation; commercial paper, shares in one or more open-ended investment funds provided that the funds are registered under the State Securities Act or the Federal Investment Company Act; bankers’ acceptances; and units representing beneficial interests in investment pools created pursuant to the Government Non-Arbitrage Investment Act of the Commonwealth of Virginia.
(c ) Credit Risk
Credit risk is defined as the risk that an issuer or other counterparty to an investment will not fulfill its obligations. As required by state statute, the policy requires that commercial paper have a short-term debt rating of no less than “A-1” (or its equivalent) from at least two of the following: Moody’s Investors Service, Standard & Poor’s, Fitch Investors Service, and Duff and Phelps. Corporate notes, negotiable certificates of deposit, and bank deposit, notes maturing in less than one year must have a short-term debt rating of at least “A-1” by Standard & Poor’s and “P-1” by Moody’s Investors Service. Notes having a maturity of greater than one year must be rated “AA” by Standard & Poor’s and “Aa” by Moody’s Investors Service.
The District’s investment securities using the Standard & Poor’s credit quality ratings scale are presented below:
(d) Concentration of Credit Risk
The District’s investment policy establishes guidelines on portfolio composition by investment type in order to control concentration of credit risk. As of December 31, 2018, the District’s portfolio was invested as follows:
(e) Interest Rate Risk
Interest rate risk is defined as the risk that changes in interest rates will adversely affect the fair value of an investment. The District’s investment policy limits the investment of funds as a means of limiting
| xii
CHESAPEAKE BAY BRIDGE AND TUNNEL DISTRICT Notes to the Financial Statements & Governor’s Report
As of December 31, 2018
exposure to fair value losses. Investments in the General Resolution Debt Service Reserve Fund are limited to investments with maturities less than five years. Investments in the General Resolution General Fund are limited to investments with maturities that are consistent with the schedule of planning, development, and construction of parallel tunnels that would complete the parallel crossing.
Investments are selected based on the current perception of the direction of interest rates with a greater emphasis on yield and a lesser emphasis on liquidity.
Proceeds from the sale of bonds issued by the District are invested in compliance with the specific requirements of the bond covenants without further restriction as to the maximum term of securities purchased.
As of December 31, 2018, the District had the following investments and maturities:
(4) Capital Assets
Capital assets include bridge and tunnel assets, capitalized interest and financing expenses, and other capital assets. The bridges, trestles, approach roads, Fisherman Island Causeway, tunnels, portal islands with all attached improvements, toll plaza infrastructure and the rest area facility, and site-wide utilities are classified as bridge and tunnel assets. Capitalized interest and financing expenses include the amount of money that was funded from the 1960 Bonds issued for debt service and associated costs of the bonds during construction until the opening of the Bridge-Tunnel in 1964. Miscellaneous capital assets include all other assets that the District has capitalized such as land, buildings, fleet vehicles, and equipment.
The District utilizes the modified approach to infrastructure reporting on bridge and tunnel assets and capitalized interest and financing expenses. In lieu of reporting depreciation on bridge and tunnel assets, the costs incurred for maintaining bridge and tunnel assets at the condition level that is specified by Commission policy are reported as preservation expenses on the accompanying statements of revenues, expenses, and changes in net position.
The District has elected to continue to use the traditional approach or depreciation method for buildings, fleet vehicles, and equipment that are depreciable, as stipulated in the District’s Capital Asset Policy.
U.S. generally accepted accounting principles (GAAP) requires that governmental entities that utilize the modified approach for infrastructure reporting must have their governing board set a policy for the condition levels at which modified approach assets will be maintained. GAAP also requires that a third party perform condition level assessments of the modified approach assets annually and that the condition levels for the current and prior two fiscal years be disclosed in the notes to the financial statements.
xiii |
CHESAPEAKE BAY BRIDGE AND TUNNEL DISTRICT Notes to the Financial Statements & Governor’s Report
As of December 31, 2018
The Commission’s preservation policy is to maintain 90% of the bridge and tunnel assets at a maintenance rating program (MRP) condition level of “good” or better.
Jacob’s Engineering, Inc., the District’s consulting engineer, has inspected the District’s bridge and tunnel assets. Jacob’s Engineering, Inc. determines the MRP condition level for the bridge and tunnel assets as a numeric scaled rating. The numeric scaled rating is based on a condition index utilized by the Virginia Department of Transportation whereby 0 is a failed condition level and 9 is an excellent condition level. The table below defines the numeric scaled ratings assigned by Jacob’s Engineering, Inc.:
The following two tables derive percentages in different ways. Trestles and bridges that have an MRP numeric condition level are described as a percentage of lane miles. All other bridge and tunnel assets that have an MRP numeric condition level are described as a percentage of that specific bridge and tunnel asset.
The following tables detail the MRP condition level of bridge and tunnel assets for the last three years:
| xiv
CHESAPEAKE BAY BRIDGE AND TUNNEL DISTRICT Notes to the Financial Statements & Governor’s Report
As of December 31, 2018
(5) General Resolution Revenue Bonds
Bond activity for the year ended December 31, 2018 was as follows:
In July 2016, the Commission awarded a contract to Chesapeake Tunnel Joint Venture to design and build the Parallel Thimble Shoal Tunnel Project (the “Project”). On October 24, 2016, to finance the costs of the Project, the Commission adopted and approved a new General Revenue Bond Resolution (the “2016 Resolution”) along with three Supplemental Resolutions authorizing the issuance of $321,515,000 First Tier General Resolution Revenue Bonds, Series 2016 (the “Series 2016 Bonds”), a loan from the United States Department of Transportation under the TIFIA program (the “TIFIA Loan”) in the amount of up to $338,528,672, plus capitalized interest and a loan from the Virginia Transportation Infrastructure Bank (the “VTIB Loan”) in the amount of up to $50,000,000, plus capitalized interest.
The Series 2016 Bonds are term bonds maturing from July 1, 2041 through July 1, 2055 with coupon interest rate of 4.0% to 5.0%. The proceeds from the Series 2016 Bonds, along with the proceeds of the TIFIA Loan and VTIB Loan and cash contributed by the District will be utilized to finance the development and construction of the Parallel Thimble Shoal Tunnel Project. The remaining portion of the proceeds from the Series 2016 Bonds will be utilized to (i) pay capitalized interest on a portion of the Series 2016 Bonds to and including July 1, 2021, (ii) to obtain a municipal bond debt service reserve insurance policy for the Series 2016 Bonds, and (iii) to pay the related issuance expenses, including bond insurance premiums.
The Series 2016 Bonds are subject to optional redemption prior to maturity by the District on or after July 1, 2026, in whole or in part, at par plus accrued interest. The Series 2016 Bonds are subject to mandatory sinking fund redemption in part prior to maturity on July 1 of each year starting in 2035.
The 2041 Term Bond and the 2055 Term Bond are insured by Assured Guaranty Municipal Corporation. The Series 2016 Bonds Debt Service Reserve Fund Requirement of $24,774,566 is secured by a debt service reserve fund policy also issued by Assured Guaranty Municipal Corporation.
xv |
CHESAPEAKE BAY BRIDGE AND TUNNEL DISTRICT Notes to the Financial Statements & Governor’s Report
As of December 31, 2018
The TIFIA Loan and the VTIB Loan are issued on the Subordinate Lien of the 2016 Resolution and bear interest rates of 2.88% and 2.90%, respectively. The loans do not incur interest until drawn which is in the Fall of 2018. Both loans have first semi-annual interest repayments commencing January 1, 2021 and first annual principal repayments commencing on July 1, 2025. Final repayment on both loans is July 1, 2054.
The underlying credit rating on the Series 2016 Bonds is Baa2 and BBB by Moody’s Investors Service and S&P Global Ratings, respectively. The TIFIA Loan is also rated Baa2 and BBB by Moody’s Investors Service and S&P Global Ratings, respectively. The VTIB Loan is unrated.
The bond premiums for General Resolution Revenue Bonds are being accreted using the straight-line method, which is not materially different from using the effective-interest method, over the period the bonds will be outstanding.
Tolls and other revenues derived from the operation of the Bridge-Tunnel are pledged as security for the General Resolution Revenue Bonds. The General Revenue Bond Resolution includes covenants such as minimum toll rate covenant ratios and minimum debt service reserve requirements.
(6) Fair Value Measurements
The District utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The District determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:
Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at measurement date.
Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantively the full term of the asset or liability.
Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.
The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identified assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements).
The level in the fair value hierarchy within which a fair value measurement, in its entirety falls in, is based on the lowest level input that is significant to the fair value measurement in its entirety.
Portfolio investments are assigned a level based upon the observability of the inputs which are significant to the overall valuation. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
All of the District’s investments in debt securities are in one of the four categories below and therefore the entire portfolio of debt securities is Level 2.
Debt securities classified in Level 2 are valued using the following approaches:
U.S. Treasuries, U.S. Agencies, and Supra-Nationals: quoted prices for similar securities in the market are used to draw appropriate correlations;
| xvi
CHESAPEAKE BAY BRIDGE AND TUNNEL DISTRICT Notes to the Financial Statements & Governor’s Report
As of December 31, 2018
Corporate Notes and Municipal Bonds: relevant trade data, benchmark quotes and surveys of the dealer community are incorporated into the evaluation process;
Certificates of Deposit: matrix pricing based on various market makers and dealers;
Federal Agency Mortgage-Backed: solicited prices from market buy and sell side sources, including primary and secondary dealers, portfolio managers and research analysts are used.
The fair value of investments in money market funds is based on the published net asset values per share of those funds.
The District has the following recurring fair value measurements as of December 31, 2018:
xvii |
| xviii
T he dream of a structure bridging the lower Chesapeake Bay to connect Virginia’s Eastern Shore with the mainland of Virginia became a reality with the opening of the Bridge-Tunnel on April 15, 1964. This accomplishment can be attributed to the foresight, leadership, and untiring efforts of
Lucius J. Kellam, Jr. of Belle Haven, Virginia. He served continuously from 1954 as Chairman of the Chesapeake Bay Bridge and Tunnel Commission and the former Chesapeake Bay Ferry Commission until 1993, when he was named Chairman Emeritus and continued to serve as an active member of the Commission until September 24, 1995. He was lauded as a diplomat, an executive, a public-spirited citizen, a man of the highest integrity, and a Virginia gentleman.
I n recognition of the outstanding contributions made by Lucius J. Kellam, Jr., and his continued dedication to this major transportation facility, the members of the Chesapeake Bay Bridge and Tunnel Commission, by resolution dated August 11, 1987, named this crossing in his honor. Kellam will be
long remembered for his outstanding contributions to the Chesapeake Bay Bridge and Tunnel Commission and the Commonwealth of Virginia.