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City of Suffolk Legislative Agenda 2016 General Assembly Session

City of Suffolk, Virginia City Council Members Mayor Linda T. Johnson Vice Mayor Leroy Bennett – Cypress Borough Michael D. Duman – Chuckatuck Borough Roger W. Fawcett – Sleepy Hole Borough Timothy J. Johnson – Holy Neck Borough Curtis R. Milteer, Sr. – Whaleyville Borough Donald Z. Goldberg – Suffolk Borough Lue R. Ward, Jr. – Nansemond Borough

City Manager Patrick G. Roberts


City of Suffolk Legislative Agenda 2016 General Assembly Session

City of Suffolk, Virginia Congressional Delegation

Rep. Randy Forbes – Fourth Congressional District Senator Mark Warner – United States Senate Senator Tim Kaine – United States Senate

General Assembly Delegation Senator John A. Cosgrove – Senate District 14 Delegate Matthew James – House District 80 Delegate S. Chris Jones – House District 76 Senator L. Louise Lucas – Senate District 18 Senator John C. Miller – Senate District 1 Delegate Richard Morris – House District 64 Senator Thomas K. Norment, Jr. – Senate District 3 Delegate Lionell Spruill, Sr. – House District 77


City of Suffolk Legislative Agenda 2016 General Assembly Session

Table of Contents

Legislative Requests  Ground Water Withdrawal Conservation Incentive and    

Regulatory Certainty Program Legislation Education Funding Commonwealth Rail Line Safety Relocation WTRJ Federal Recovery Request for Exemption Historic Preservation Tax Credits

1 2 3 4 5

Policy Positions and Items to Monitor      

Local Government Taxing Authority Business, Professional and Occupational License (BPOL) Tax Apportionment of Liability for Teacher Retirement Plan Chesapeake Bay TMDL Polychlorinated Biphenyls (PCB) TMDL Mandates

6 6 7 8 8 9

State/Federal Funding Requests  Transportation

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Appendix  Groundwater Withdrawal Conservation  Suffolk Historic Preservation Tax Credit Summary

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City of Suffolk Legislative Agenda 2016 General Assembly Session

Legislative Requests ď ś Ground Water Withdrawal Conservation Incentive and Regulatory Certainty Program Legislation The long-term sustainability of the Eastern Virginia Coastal Plain ground water aquifers as a long-term water source for future generations is critically important. Through new enhanced computer modeling coupled with historical data, DEQ has determined the aquifers have been over-permitted and withdrawn at unsustainably high rates. The General Assembly and the Virginia Department of Environmental Quality are pursuing actions to correct this situation. In cooperation with and as a member of the Western Tidewater Water Authority (WTWA) the City of Suffolk would like to propose a voluntary program to encourage the conservation of groundwater resources. Suffolk wants to ensure that safe drinking water is available for its citizens today and tomorrow. The purpose of this legislation is to provide incentives to participating permittees so as to support a substantial reduction in reliance upon ground water, transition to alternative sources, and development of related infrastructure. The incentives include time to make a smooth transition and an ensuing certainty period to support planning and investment. By accepting a voluntary 50% reduction in current groundwater withdraw permits, permittees shall be provided a transition period up to 15 years to plan, finance, and implement the necessary infrastructure to transition to alternative sources of water while retiring current valued ground water assets. This transition period ensures the smart strategic growth of a permittee’s water supply. Upon completion of the transition period and in order for the regions program participants to have the time necessary to plan, finance, and implement a more sustainable future, a regulatory certainty period of 20 years, in which the withdraw amount is not further reduced, will ensure long term conservation goals are achievable. Please see the appendices for more program details. Request: The Western Tidewater Water Authority, City of Suffolk, and Isle of Wight County supports legislation that will reduce current water withdrawal permits to protect the sustainability of the aquifers, so long as each of the major permittees who voluntarily take a sufficient permit reduction, are granted an adequate transition period followed by a reasonable regulatory certainty period.

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City of Suffolk Legislative Agenda 2016 General Assembly Session ď ś Education Funding Funding and improving our public schools is a very high priority for the City of Suffolk. As a strong public school system is essential to economic development and prosperity. The City of Suffolk contributes 50% of its local funds to public education. After adjusting for inflation the current State funding level per pupil is less than levels granted in FY 2005. Increases in educational mandates and the student population coupled with changes in State policy that have decreased funding over the last decade, have strained school systems and localities. The City opposes policies that lower state contributions but do nothing to address the cost of meeting the requirements of the Standards of Accreditation and Standards of Learning.

Request: The City asks that public education remain a top priority of the General Assembly and that State spending on K-12 be significantly increased during the 2016 Session of the General Assembly.

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City of Suffolk Legislative Agenda 2016 General Assembly Session   Commonwealth Rail Line Safety Relocation Commonwealth Railway (CWRY) owns and operates approximately 4.5 miles of rail through the Cities of Portsmouth and Chesapeake and approximately 12 additional miles through the City of Suffolk. The Commonwealth Railway Mainline Safety Relocation project consists of the relocation of Portsmouth and Chesapeake segments of this rail line to the Western Freeway (Route 164/I-664) Median Rail Corridor. The project was funded primarily through state and federal appropriations. This rail corridor is used to serve both the planned Craney Island Marine Terminal and the recently completed APM/Maersk Marine Terminal. The $2.1 billion Craney Island Marine Terminal is in the planning stage. Rail traffic from these two facilities is expected to exceed one million TEUs annually. (Source: Virginia Port Authority). Laid end to end, these cargo containers would stretch more than 3,787 miles. The current rail alignment in the City of Suffolk has a negative impact on existing businesses, impacts emergency response times and traffic patterns, and has a negative impact on the quality of life for the residents who reside near the current rail corridor. No funding has been identified by the state or federal government to address rail impacts in Suffolk related to increased freight on the Commonwealth Mainline. The 2013 State Budget Conference Report contained language directing the Virginia Port Authority to “further analyze the necessary improvements identified in the study undertaken under contract by the Virginia Port Authority in 2010 regarding the Commonwealth Rail Line Safety Relocation Initiative in the City of Suffolk.” Additional partners include the Virginia Department of Transportation, the Department of Rail and Public Transportation, and the affected railroads. Below is an excerpt from the Suffolk Rail Study authored by the Virginia Port Authority. “The Virginia Port Authority shall work with the Virginia Department of Transportation and the Department of Rail and Public Transportation to identify the respective share of project costs that should be borne by each entity, recognizing that the rail project seeks to address adverse highway delays caused by rail traffic emanating from the Virginia Port Authority operated facilities. Such review shall assess the availability of Rail Enhancement Funding, Rail Preservation Funding, Railroad Rehabilitation and Improvement Financing, Transportation Innovation and Finance funding, Highway Safety Improvement Funding, Rail Industrial Access grants and Virginia Port Authority funding available to finance the critical improvements.”

Request: The City of Suffolk appreciates and supports the positive action taken by the Suffolk delegation to move this important initiative forward. Our shared constituents are demanding relief from waiting at grade crossings while more than a mile long trains travel slowly through the City and create frustrating and dangerous delays. We stand ready to work with the delegation to identify and implement a funding solution to this State problem. 3


City of Suffolk Legislative Agenda 2016 General Assembly Session   Western Tidewater Regional Jail Federal Recovery Request for Exemption Western Tidewater Regional Jail (WTRJ) is seeking the City’s support of a legislative request for the 2016 General Assembly Session. The Western Tidewater Regional Jail (WTRJ) seeks an exemption from the provisions of the federal overhead recovery language in the state b udget. The current language requires the Commonwealth to keep $20 per day of the $55 per day the federal government pays WTRJ to house federal prisoners. Deleting this language will allow WTRJ to keep the $55 per day per diem. The WTRJ constructed a 180 bed addition to the facility in 1999 at no cost to the state. The jail officers in the 180 bed expansion are fully funded with local dollars – not state funds. Therefore, there is little, if any, state recoverable cost. Nonetheless, the state had been recovering $1.3 million from WTRJ when there are no state costs associated with holding federal Inmates at this facility. The 2013 Budget Conference Report provided $766,460 in FY14 for the anomaly in the federal overhead recovery policy as it applies to both the Western Tidewater and Piedmont regional jails. While appreciated by WTRJ, this provided only a partial exemption from the recovery policy. The Commonwealth still withholds approximately $500,000 per year. As there are no actual state costs to house these federal prisoners at WTRJ this withholding of State funds is the wrong policy and should be reversed. Request: The WTRJ is requesting a full exemption from the federal overhead recovery policy to allow it to keep the full federal per diem it receives for each federal inmate. The taxpayers in WTRJ’s member localities should not be required to make up the difference in cost for housing federal inmates a s their federal taxes already paid to house these federal prisoners. The City of Suffolk supports this request.

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City of Suffolk Legislative Agenda 2016 General Assembly Session   Historic Preservation Tax Credits The Virginia Historic Preservation Tax Credit program has been a tremendous success for localities across the Commonwealth. The rehabilitation, re-use and preservation of Virginia’s historic residential and commercial buildings are good for the state's economy according to a study conducted by Virginia Commonwealth University in 2013. The benefits of bringing old buildings back to life ripples across the economy and through local communities, adding upwards of an estimated $3.9 billion to the commonwealth’s economic health. Those rehabilitation expenses and their domino effect have also created more than 31,000 full and part-time jobs during a 17-year period and generated an estimated $133 million in state and local tax revenues. Request: The City of Suffolk strongly endorses the program and opposes any effort to end the program. A one page description of some of Suffolk’s successes using historic preservation tax credits is included in the Appendix.

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City of Suffolk Legislative Agenda 2016 General Assembly Session

Policy Positions   Local Government Taxing Authority The City of Suffolk, like many other localities, has a broad and diverse tax base. Overreliance on any one or two taxes jeopardizes financial reliability and a locality’s ability to properly budget long-range. The proportion each local tax represents within the City’s overall local tax sources is provided below, illustrating the total impact of the number of smaller magnitude local tax sources. FY 15 (Adopted Estimate) Local Revenue Sources Revenue Category Real Estate Personal Property Sales Tax Consumer Utility Communications Sales and Use Tax Business, Professional, Occupational License

Percent Dollars 61% 91,339,165.00 11% 16,423,994.00 6% 9,397,170.00 3% 4,509,480.00 2% 3,492,721.00 5% 6,928,327.00

Other General Property (interest earned on all taxes)

1%

1,206,718.00

Vehicle Tags

2%

2,301,259.00

Recordation Tax All Other Local (including Transient Occupancy Tax)

1% 9%

1,456,396.00 13,286,790.00

 Business, Professional and Occupational License (BPOL) Tax The City of Suffolk opposes the repeal or restriction of BPOL, machinery and tools, or excise taxes unless, at a minimum, suitable revenue-neutral replacement sources are provided.

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City of Suffolk Legislative Agenda 2016 General Assembly Session   Apportionment of Liability for Teacher Retirement Plan As a result of standards adopted by the Governmental Accounting Standards Board (GASB), just under $14 billion in unfunded liabilities for the teacher retirement plan will be assigned to Virginia local governments with school divisions. These accounting standards affect how liabilities are calculated and reported. Prior to the change in GASB rules, the liabilities associated with “cost-shared” plans (in which more than one government funds retirement contributions) were not assigned to any governmental body. The GASB rules assign the liability for the cost-shared plans to the government that makes the payment to the retirement system. In Virginia, that is the school division. School division liabilities, however, are shown on the local government financial statement. The effect on the financial statements of localities that operate school divisions a r e substantial, and could lead to the downgrading of local credit ratings. The billions in liability will be apportioned among the school divisions based on each division’s percent of payroll. Suffolk’s unfunded pension liability is approximately $112 Million. Even though the contributions are funded by the state and the school board, under the new GASB rules, the unfunded liability falls solely on the school boards. In Virginia that means that the liability will be shown on the city, county or town financial statement and not on the State’s. Moody’s, for example, is in the process of revising its methodology for assessing credit worthiness by emphasizing liabilities relating to pensions. The City of Suffolk takes great pride in the work that it has done to elevate its financial credits and improve its fund balance over the last few years. Should the rating agencies react negatively to the reporting of teacher retirement liability on the locality books, our progress could deteriorate and our AAA status could be jeopardized. Localities should not have to bear full responsibility for the unfunded liability of the teacher retirement plan because the state sets standards that require a minimum number of teachers and shares in the cost of salaries. Additionally, the General Assembly sets many of the retirement benefits, including requirements that retirement, group life insurance and health insurance credits are offered. The unfunded liability associated with the teacher retirement plan should be a shared responsibility of the state and local government just as salaries and benefits are a shared responsibility. The City of Suffolk supports legislation that would provide for the Virginia Department of Education to pay its share of retirement costs directly to the Virginia Retirement System in order to facilitate the sharing of these liabilities.

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City of Suffolk Legislative Agenda 2016 General Assembly Session  Chesapeake Bay TMDL On June 16, 2014, Virginia was among the States that signed a new Chesapeake Bay Watershed Agreement. This new effort, to go along with the EPA’s Chesapeake Bay Total Maximum Daily Load (TMDL) program is an effort to restore the Bay. The Chesapeake Bay TMDL sets out EPA’s “pollution diet” for the Bay and this plan is in its implementation phase. The health of the Chesapeake Bay i s a concern to everyone and must be addressed. Our primary concern is that everyone’s great ideas on Bay restoration will be paid for by local governments with little or no help from the state and federal government. We ask our federal and state legislators to bear in mind that projected Bay restoration costs run into the billions of dollars and localities are just as cash-strapped as our federal and state partners. Any successful plan to restore the Chesapeake Bay must include funding from those who pass the laws and enact the regulations to accomplish tis worthy goal.

 Polychlorinated Biphenyls (PCB) TMDL The DEQ is currently in the process of performing a TMDL assessment for PCB’s in the James River watershed. The City of Suffolk is very concerned about this TMDL and the effects that it may have on localities that are predominately suburban or agricultural in nature. The primary source of PCB’s in these land uses comes from power transformers, which are legally allowed through federal statute, to contain PCB’s at levels thousands of times higher than the water quality standards established. As a result, the City will be required to fund any reductions, but will be unable to establish any controls necessary to reduce the PCB load. The City of Suffolk requests that our legislators monitor this TMDL process and work closely with state agencies to provide reasonable reductions for industries that are the primary contributors of PCBs, while limiting the responsibilities of municipalities to control a load from sources that are legally permissible.

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City of Suffolk Legislative Agenda 2016 General Assembly Session ď ś Mandates Unfunded and underfunded state mandates and commitments place an extreme burden on local government and their overextended local tax revenue streams. While State revenues such as sales and individual income taxes may be recovering, local revenues, which are largely comprised of real estate taxes, are not. Coupled with the decline in local revenue, municipalities across the Commonwealth have experienced the steady erosion of State funding for mandated services such as education, public safety, human services, and transportation. The City of Suffolk opposes the imposition or shifting of costs for federal and state mandates for service provisions or administrative functions without full federal or state funding. Further the City of Suffolk opposes the shifting of costs to local governments through continued underfunding, reduction or elimination of programs and services. Any legislation having a fiscal impact on local governments should also be accompanied with State appropriations adequate to cover the full cost of such

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City of Suffolk Legislative Agenda 2016 General Assembly Session

State/Federal Funding Requests  Transportation In order to address significant transportation deficiencies and to foster future major economic development initiatives, funding is desperately needed for the following transportation projects:     

Route 58/Holland Road Godwin Bridge Replacement Rail Crossings New Kings Bridge Highway Bennett’s Creek Maintenance Dredging (Federal)

Route 58/Holland Road  Route 58/Holland Road west of the Suffolk Bypass must be widened to accommodate the truck traffic at the CenterPoint Intermodal Center. The design consultants, who have prepared preliminary design plans, have estimated the cost to improve Holland Road from four lanes to six lanes to accommodate existing traffic and traffic from the port at $72.5 Million. The City estimates the project will ultimately cost approximately $84 Million, by the time all funding sources have been secured. Suffolk has $34 Million for the project from various sources. The amount still required to complete the project is $50 Million. Godwin Bridge Capacity Expansion Traffic congestion and design limitations necessitate the construction of a second bridge over the Nansemond River, parallel to the Godwin Bridge. This is critical to ensure public safety and to reduce significant detour times for the traveling public utilizing this corridor should the existing bridge be closed due to accidents or repair. Detour times could exceed more than one hour and as much as two to four hours. More than 30,000 vehicles per day currently use this roadway and could be significantly impacted if a parallel span is not constructed in the near future. The estimated cost for the parallel span is $65 million. Railroad Crossing  As mentioned above, there are serious safety concerns about the numerous railroad grade crossings throughout the City. With the number of cargo containers from the Port of Virginia expected to grow dramatically, this situation will continue to deteriorate unless these grade crossings are separated. The cost of eliminating the most impactful grade crossings can be determined once they are identified. 10


City of Suffolk Legislative Agenda 2016 General Assembly Session

Kings Highway Bridge  Due to safety concerns, the Virginia Department of Transportation closed and demolished the Kings Highway Bridge in 2005. Closure of the bridge eliminated one of only three crossings of the Nansemond River and significantly reduced the ability of residents to easily move through the City and evacuate the area during times of disaster. In addition, the closure created a major detour and severed a direct connection between the villages of Driver and Chuckatuck. The estimated cost for a replacement bridge is $65 Million. Continued Maintenance Dredging of Bennett’s Creek (Federal) The City of Suffolk has an authorized maintenance project with the US Army Corps of Engineers to preserve the navigability and safety of Bennett’s Creek for boaters and commercial businesses that utilize this waterway. It is anticipated that future maintenance dredging will be necessary approximately every three to five years.

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City of Suffolk Legislative Agenda 2016 General Assembly Session

Appendix Ground Water Withdrawal Conservation Incentive and Regulatory Certainty Program Legislation

PROGRAM QUALIFICATION AND INCENTIVES: Incentives will be granted to any permittee that voluntarily agrees by September 30, 2016 to either: A. B.

Accept a 50 percent reduction in its currently authorized withdrawal amount, or Achieve a comparable level of conservation by any combination of authorized withdrawal amount reductions and alternative options approved by DEQ.

The first incentive is a water supply transition period of up to 15 years. Establishment of the length of transition period shall be established on a case-by-case basis during the permit renewal process considering the following criteria: 1. 2. 3. 4.

Feasibility, cost and affordability of securing any alternative source Feasibility, cost and affordability of constructing any necessary infrastructure Existing investments in and outstanding public debt for ground water related infrastructure Other relevant factors

The second incentive is a regulatory certainty period of 20 years during which the resulting withdrawal amount shall not be further reduced, except in limited situations. The certainty period for this guaranteed minimum capacity shall also be available for any permit issued between January 1, 2012 and July 1, 2016 that was reduced by 50 percent or more. The legislation aligns with and supports the on-going Eastern Virginia Groundwater Management Advisory Committee proceedings and efforts.

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City of Suffolk Legislative Agenda 2016 General Assembly Session

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City of Suffolk, VA 2016 Legislative Agenda