California Bond Buyer Conference September 15, 2011

Transcription

1 California Bond Buyer Conference September 15, 2011 Sam Joumblat Chief Financial Officer

2 Port of Long Beach Second largest container port in US 3,200 acres of land 6 container terminals 65 deep water berths 70 post-panamax gantry cranes Also liquid bulk, dry bulk, break bulk, lumber and auto terminals Excellent transportation connections MSC/Zim Hanjin Matson OOCL OOCL K Line COSCO 2

3 2010 Volumes Reversed Recent Negative Trend 2007 Peak: 7.2MM TEUs Compounded Annual Growth Rate of 3.15% US GDP CAGR of 1.56% Estimated MM TEUs Historical Container Volumes Historical Net Income Net Income has grown at a compounded annual rate of 3.3% over the past ten years 2

4 POLB s Capital Plan Focuses on Enhancing Capacity and Efficiency Projected capital expenditure of $3.3 billion over the next five years Strong liquidity position of $472 million unrestricted cash at the end of fiscal rd quarter $ in millions Projected Capital Expenditure Projected new debt issuance of $1.5 billion over the next five years Covenant of 1.25x Debt Service Coverage Policy is a minimum of 2.0x Debt Service Coverage and 600 days of unrestricted cash $ in millions Projected New Debt Issuance 3

5 Major Projects Middle Harbor Redevelopment Combine two terminals into one $1.16 billion over 10 years Pier G Modernization Redevelopment of an existing terminal including buildings, roads, rail yards $980 million, 10-year project Gerald Desmond Bridge Improve traffic flow and safety, increase height to allow larger vessels to go under $950 million over 6 years ($836MM in grants) Pier S Container Terminal EIR certification is anticipated at the end of 2011 $650 million, 5-year project

6 Financial Statements/CAFR s Budgets Official Statements/Bond Disclosure Statistical Data

7 Conclusion Port s business rebounded from the economic downturn faster than expected Continuing conservative and prudent fiscal management Port policy calls for a minimum unrestricted cash level of 600 days of operating expense before depreciation Debt service coverage ratios are projected to remain above 2.0 times Port making investments to ensure competitiveness and enhanced efficiencies with a $3.3 billion Capital Plan over five years This year is our 100th anniversary

8 The Port of Los Angeles Karl Pan Chief Financial Officer California Bond Buyers Conference September 15, 2011

9 The Port of Los Angeles is an Economic Powerhouse Page 1 Processes $89.2 billion in California trade value and $223 billion in U.S. trade value Generates $5.1 billion in state tax revenue and $21.5 billion in federal tax revenue For every dollar spent another 97 cents is generated in indirect and induced sales in the region Accounts for approximately 16,360 direct port industry jobs Another 43,398 jobs are directly generated at the maritime terminals Over 88% of direct job holders reside within Los Angeles County Induced Jobs: social services, business services, educational services, government, etc. Local purchases for goods and services by direct job holders support 60,204 jobs in the region. Firms providing direct services and jobs support an additional 18,618 indirect jobs by making$1.9 billion of local and in-state purchases.

10 Page 2 POLA is Large and Healthy Largest container port in the Western Hemisphere in terms of container volume Large, vibrant container market encompassing Southern California 45% to 50% of all TEUs destined for the five county area Superior intermodal connections to and from inland markets Landlord port with key tenants holding long-term lease agreements A leader in the green port revolution, while generating healthy financial returns AA rated with stable outlook

11 POLA Continues To Lead North American Container Ports TEUs (Twenty-foot equivalent units) CY 2010 Source: Port s Website Page 3

12 Page 4 Projected 5-YEAR CIP (at 8/8/11) (In millions) CIP TOTAL COST Audited Unaudited Forecast Bdgt Year Total $305 $233 $229 $342 $386 $291 $250 $1,498

13 Page 5 Additional Information Port of Los Angeles Website TEU statistics: Financial information: Audited statements: Bond disclosures:

14 Presentation to: California Bond Buyer Conference Alameda Corridor Transportation Authority Jim Preusch, CFO September 15, 2011

15 Overview of Alameda Corridor Project Description The Alameda Corridor is a 20-Mile, Multi-Track Rail Cargo Expressway Completed on time and under budget in April 2002 Connects the Ports of Los Angeles and Long Beach with the transcontinental rail network in downtown Los Angeles Runs parallel to Alameda Street Consolidated four branch lines onto a single 40 MPH multi-track corridor 20-mile corridor including 10-mile trench section Reduced conflicts at 200 grade crossings Reduced emissions by more than 20 million pounds to date Reduced train noise Improved safety and emergency response time 1

16 Highlights Overview of Alameda Corridor Highlights & Project Financing $2.4 Billion Public-Private Partnership 4 million cubic yards excavated 50 grade separations and bridges 2,000 utility interfaces Nearly 100 miles of new track with signals Designed to the latest site specific seismic criteria Completed on time and under budget in 2002 Interest $90 Misc. $27 Project Funding Sources* Ports $394 Senior Bond Proceeds $1,006 LACMTA $347 US DOT Loan** $400 Subordinate Bond Proceeds $164 * Amounts in $ millions. ** Subsequently refinanced with Revenue Bonds. Note: Bonds secured by revenues - primarily charges per TEU paid by the railroads. 2

17 Corridor Operations Project Description Cargo Enters the San Pedro Bay Through the Ports of Los Angeles and Long Beach 3

18 Corridor Operations Cargo Distribution Approximately 50% of All Cargo Handled by the San Pedro Bay (SPB) Port Complex Uses Rail to or from Areas Beyond Southern California 2009 Container Distribution (11.82 Million TEUs) Beyond LA Basin Within LA Basin Truck to/from Near Dock Rail National (0.61M) Uses Corridor Truck to DC then to Rail National (1.71M) Truck to/from Off Dock Rail National (0.67M) 5.7% 5.2% 14.5% 23.5% Truck from DC Rail Related Empties (1.71M) 14.5% 36.7% Direct to Rail National (2.78M) Uses Corridor Truck to/from DC Local+Regional+Phoenix & Las Vegas (4.34M) ACTA s cargo related revenues derive from intermodal cargo destined beyond the LA basin ( 36% of Total TEUs) Legend: DC: Distribution Centers (#): Volume in TEUs 4

19 Corridor Operations National Impact of the Alameda Corridor Intermodal (Ship + Rail Transport) Trade Volume San Pedro Bay Ports Note: Line thickness corresponds to intermodal volume Source: Double Stack Container Systems: Implications for U.S. Railroads and Ports (U.S. Department of Transportation, Washington DC, 1990). 5

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21 Considerations Panama Canal Expansion Price Sensitivity & Transit Times Trans Pacific Trade Routes San Pedro Bay ( SPB ) land bridge is 2-5 days faster to east coast than all-water service Large local market draws discretionary cargo Panama Canal Transit Fees add significantly to the cost of each container move Gulf of Mexico weather conditions can impact vessel movements 2-4 months per year Senior Bond Proceeds $1,006

22 Ports Perspectives Presentation to California Public Finance Conference September 15, 2011 Lisa Greer Quateman, Esq. Polsinelli Shughart Managing Partner Los Angeles 1801 Century Park East, Suite 1801 Los Angeles, California

23 Presentation Outline Key Global Business Issues for Ports Legislative Climate in Washington, D.C. What Happened to Discretionary Funding in 2011? Outlook for 2012 Appropriations Process The Port Finance Legal Landscape in 2011

24 Key Global Business Issues Using transportation trust funds for infrastructure development, considering deficit reduction and other competing demands Increasing U.S. exports note President Obama s National Export Initiative to double exports by 2014, Department of Commerce program with AAPA signed July 2011 Enhancing free and fair trade worldwide, free of crime and corruption Expanding sources for seaport development financing and revenues, including for seaport security measures Creating sustainable seaports through a balance of environmental, economic and social responsibility initiatives Providing waterside port access through dredging and dredged material disposal Securing resources for intermodal landside access to seaports Conducting commerce with global terminal operators

25 Legislative Climate in Washington Funding for programs is getting cut in Washington, not increased. The agenda is cut, cut, cut. The legislative process is slower than usual and only the must do is happening. And even that is not happening on time, as we saw recently with expiration of the aviation ticket tax and the layoff of FAA employees. The deal on the debt ceiling increase laid the framework for future political posturing because a Super Committee was created to find $1.2 trillion worth of savings (over nine years). This Super Committee must report its recommendations by November 23, 2011, which must be put to a vote before Christmas.

26 Legislative Climate in Washington (2) This Super Committee will likely drive the legislative agenda. A funding continuing resolution to keep the government open will be required for a good period of time. A few other programs will expire if not continued, including the flood insurance program, the gas tax and the aviation ticket tax. In all probability these extensions will be coupled with further cuts to government programs. It will probably all come to a head again in December, like it did last year. If no bill containing $1.2 trillion in reductions is enacted, then across-the-board spending cuts of about 9% can be expected to occur in January 2013.

27 WHAT HAPPENED TO DISCRETIONARY FUNDING IN 2011? In fiscal year 2011, $18 billion of the $40 billion cut made to discretionary programs came from community-focused programs like programs impacting ports. On average, this funding was cut by 26% from Some examples: DHS STATE AND LOCAL GRANTS are funded in total at $2.23 billion in 2011, a cut of $617 million or 22% from the 2010 level of $2.847 billion. Within this, port security grants are funded at $250 million, a cut of $50 million or 17% from For 2012, the House funds all grants at $1 billion, a further 55% cut, and would leave it totally up to the DHS Secretary what grant programs to fund. So, port security grant funding could be eliminated. CORPS OF ENGINEERS programs are funded in total at $4.867 billion in 2011, a cut of $579 million or 11% from the 2010 level of $5.446 billion. For 2012, the House funds these programs at $4.768 billion, a further cut of $99 million or 2%. HIGHWAY TIGER GRANTS are funded in total at $528 million in 2011, a cut of $72 million or 12% from the 2010 level of $600 million.

28 Outlook for 2012 Appropriations Process Many think that the debt deal decided the funding levels that will be used in the 2012 appropriations process. However, the House is operating under lower funding levels ($1.019 billion) and would need to legislatively raise its allocation to provide funding ($1.043 billion) at the debt deal level. Some think that House conservatives will not allow this vote. If that is the case, it is questionable whether the House will finalize its position on all appropriations bills. The debt deal funding level of $1.043 billion is binding in the Senate, so the Senate should not have the same problem as the House. However, the number of appropriations bills the Senate can actually move this September and October is in question. Some think only one more (the Senate has already passed VAMilCon) can be passed, but that most will get through the Appropriations Committee.

29 Outlook for 2012 Appropriations Process (2) It is likely that there will be a few Continuing Resolutions to get the appropriations process past the Super Committee deadline of November 23rd. Many think that the appropriations process cannot be finalized until the Super Committee process is completed. That means late December at the earliest. If the Super Committee produces nothing that becomes law, then across the board cuts for fiscal year 2013 are expected to occur in January They could be equal to about 9% of whatever the 2013 appropriations are, by account.

30 The Port Finance Legal Landscape in 2011 Impact of troubled municipal sponsors Interplay among various funding sources Increases in private placements and bank loans Issues in agreements relating to investments, swaps and derivatives IRS attention Heightened scrutiny of disclosure practices Funding obligations for pensions and other post-employment benefits Technical port issues, including: Customs and security Dangerous and hazardous materials Environmental health and safety Structure of terminal permits, tariffs and wharfage revenues Continuing disclosure procedures Investor relations websites Rule 15c2-12 amendments

31 Please note: Polsinelli provides this material for informational purposes only. The material provided herein is general and is not intended to be legal advice. Nothing herein should be relied upon or used without consulting a lawyer to consider your specific circumstances, possible changes to applicable laws, rules and regulations and other legal issues. Receipt of this material does not establish an attorney-client relationship. Polsinelli is very proud of the results we obtain for our clients, but you should know that past results do not guarantee future results; that every case is different and must be judged on its own merits; and that the choice of a lawyer is an important decision and should not be based solely upon advertisements.

32 For further information: California Lisa Greer Quateman Timothy J. Reimers - treimers@polsinelli.com Donna Mo dmo@polsinelli.com Washington, D.C. Beverly Aimaro Pheto, Senior Policy Advisor, bpheto@polsinelli.com