Background Research Material for Freight Facility Location Selection: A Guide for Public Officials (NCFRP Report 13) (2011)

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68 8.5 Rickenbacker Intermodal Rail Facility – Columbus, Ohio Introduction Figure 8-2 Rickenbacker International Airport Facility Type: Intermodal Facility Rickenbacker Intermodal Rail Facility is an intermodal terminal operated by Norfolk Southern Railroad (NS). The Terminal opened in March 2008 and is located adjacent to the Rickenbacker International Airport, approximately 15 miles south of Columbus, Ohio. Norfolk Southern, a Class 1 Railroad, previously operated the Discovery Park intermodal facility nearby, but the facility had exceeded its capacity and a new site was necessary to accommodate expected growth. Due to operating above capacity NS had to turn away domestic rail business, which at the time accounted for 20% of all traffic at the facility. This lack of capacity was detrimental to both NS and the Columbus region. Thus, a search for a new, larger location took place and Norfolk Southern selected the Rickenbacker site with operations initiated in 2006. The Need for the New Facility As noted above, increased demand for intermodal services Norfolk Southern was forced to operate beyond capacity at the Discovery Park site – with approximately 200,000 annual containers through a facility designed for 125,000. The search for a new location quickened as business demand exceeded capacity. The announcement of the site selection was made in September 2004, but initial construction of the new replacement terminal was delayed by a year until September 2006 due to setbacks in funding and permitting. The railroad established the following key requirements for the new site:  A site allowing for quick development and commissioning of the first phase of development;  Location on the same rail line that the previous facility was serving; and  Ability to handle existing capacity as well as expansion and growth. NS had experienced approximately 15 percent growth in intermodal demand each year for several years and expects that trend to continue. The site is expected to also handle increased freight traffic originating from the Port of Norfolk due to the expansion of the Panama Canal, expected to be completed in 2012. Consideration was also given to finding a

69 site which would allow for expansion by the railroad itself as well as for attracting other companies to co- locate at the site. Such development would allow for these shipping and warehousing companies to operate more closely (and efficiently) with the railroad’s intermodal operations. One key factor in the location of the new facility was the location along the “Heartland Corridor” Route. The Heartland Corridor is a project undertaken by Norfolk Southern and the Federal Highway Administration to improve double-stack capacity to carry intermodal rail cars more efficiently along a more direct route between the east coast ports and inland demand centers. The project will reduce rail shipping distance by up to 200 miles and travel time by up to one day for commodities moving from the Norfolk region to Chicago. By eliminating the longer routes through Rutherford, PA and south through Kentucky, freight can move from Norfolk to Rickenbacker in one day and from Norfolk to Chicago in two days. The new intermodal terminal in Columbus was necessary due to the increased volume anticipated along the improved Heartland Corridor in addition to the current facility being over capacity as previously stated. Double-stacking of containers allows for more efficient use of the rail line, removes trucks from the road, and makes the transition between modes such as rail to highway more efficient. Rickenbacker can handle both Trailer on Flat Cars (TOFC) and Container on Flat Cars (COFC). Given the existing facility in the Columbus region and established customers, Norfolk Southern began the site selection process by establishing that the new facility needed to be in the Columbus area, relatively close to the existing facility and served by the same rail line. This was required to ensure that the facility could continue serving existing domestic and international customers, handle additional capacity upon completion of the Heartland Corridor improvements, have access to sufficient road infrastructure for truck movement, and handle additional industrial and population growth in the region. Once initial sites were identified, each was reviewed with regards to:  Environmental mitigation obstacles  Time required to build facility  Expansion capabilities The Rickenbacker Airport site was not the only option identified in this process. Another site option was a former military landfill location that had more environmental and permitting challenges than the chosen site. The land on the Rickenbacker site was a mix of privately held land and airport land. NS eventually selected and purchased the privately owned land and is leasing the airport owned land at Rickenbacker. The railroad plans to eventually purchase this additional airport land. Site Selection Factors and Facility Characteristics Physical Characteristics of the Site The initial phase of the facility includes 175 acres and has the capacity to handle in excess of 250,000 containers and trailers annually. The proximity to the airport allows for expansion opportunities for customers that may wish to use air, rail, and truck for their transportation needs. There is significant capacity for future expansion ― up to 125 additional acres and a total of 500,000 containers and trailers per year. The Rickenbacker facility is currently the third largest intermodal terminal in the nation, averaging more than 400 trucks daily and serving key markets in Ohio and the Midwest, including

70 the central rail hub of Chicago, which is important for rail movements of international shipments from the West Coast of the United States. Environmental and acquisition considerations for development of the facility included the habitat of the Indiana bat and ensuring that this species would not be negatively impacted. The location of the intermodal facility within an existing freight and industrial park at Rickenbacker ensured that the land was already zoned industrial and had relatively good infrastructure connections. Transportation Access The Rickenbacker Intermodal Facility is located within the Rickenbacker Global Logistics Park, which is a collaborative effort between the Columbus Regional Airport Authority and Duke Realty. The Global Logistics Park can accommodate up to 29 million square feet of development. Rickenbacker Intermodal Facility is strategically located in the Columbus metropolitan area, and is within a one day drive of more than fifty percent of the population of North America, and over 60% of US manufacturing production. The current rail operations at the facility include service by NS and CSX (another Class 1 Railroad). Current NS service includes four daily trains between Chicago and the facility and two daily trains to Norfolk, VA. While there is no close access to a seaport, the rail connections to several ports, via the connection with NS, make the Rickenbacker Intermodal Facility a competitive inland distribution point for international freight that needs to cross the country from either the east or west coast to its final destination. The Port of Norfolk has direct overnight rail access to the Rickenbacker facility. It is also the deepest east coast port and – through Rickenbacker and the Heartland Corridor - provides opportunities for increased container traffic to the central US area. The site provides access to air, rail, and highways as well as a Foreign Trade Zone for ease of international trade. The Rickenbacker Airport, which is also located within the Global Logistics Park, provides air freight services for the Rickenbacker Intermodal Facility users. Rickenbacker International Airport is a cargo airport, owned and operated by Columbus Regional Airport Authority and is a primary port of entry for textiles in the United States. It is a former Army Air Base that has been repurposed for use primarily as a freight facility with limited passenger activity. Because of the potential synergies between a cargo airport, existing freight customers, and an intermodal facility, the Columbus Regional Airport Authority played a critical role in siting the Rickenbacker Intermodal Facility. The facility is also located in close proximity to several major highway routes in the Columbus area – Interstates 270, 71 and 70 as well as highways 23 and 33. Commodities and Shipping Patterns The types of freight handled at the facility are primarily intermodal containers and trailers coming from seaports, with 95 percent of the freight at Rickenbacker international containers. The majority of the freight that comes through the facility currently arrives from west coast ports such as Los Angeles/Long Beach and Seattle for distribution in the Midwest. Additionally, the intermodal facility handles containers from the port of Norfolk, Virginia and – as noted above – this activity is expected to grow to become a primary focus for the facility in the future.

71 The intermodal containers are generally filled with a broad variety of consumer goods and move from ocean to rail to truck within the same container, improving the overall efficiency and transport costs. The improvements to the Heartland Corridor will also allow for more double-stacked trains to pass through the Rickenbacker facility. Since Rickenbacker operates as an intermodal facility, most of the freight is either moving into or through the facility. However, it is anticipated that more freight will originate in the facility as manufacturing and assembly business operations are expanded as the Global Logistics Park continues to develop. While the terminal is served primarily by NS and CSX, some of the freight moving through Rickenbacker may have been transferred by other railroads, with this interchange primarily occurring in Chicago. Freight Facility Development Conditions The Columbus Regional Airport Authority (CRAA) management was the driving agency behind the re- location of the NS intermodal facility, helping to facilitate the location of the Intermodal Terminal and generate interest in the public-private partnership to assist in generation of funding in an attempt to accelerate development of an integrated logistics center. CRAA executives believed that it was important to get the public engaged in the development of this project. Therefore, they took legislators and potential stakeholders on a site visit to the AllianceTexas Global Logistics Hub to increase public awareness of the importance and benefits of freight logistics (see below for the case study on Alliance in Texas). CRAA executives recognized that this awareness and support would be instrumental in the process of obtaining public transportation funding. This intermodal terminal was made possible by a public-private partnership between NS, the CRAA, the city of Columbus, and the state of Ohio. A total of slightly more than $112 million in funding was assembled from several sources for construction of the rail facility and access roads, including $33 million from NS, $28.9 million in Federal funding, $14.3 million from the CRAA, and funds from State General Revenue, the City of Columbus, the Mid-Ohio Regional Planning Commission (MORPC), and Earnhart-Hill Water & Sewer District for the completion of the facility and its access roads. There was also state and local interest, support and financial contributions including $0.8 million from the Ohio Rail Development Commission Grant for assistance with the Heartland Corridor Project. Highway congestion and bottleneck concerns are prevalent in the area due to initial construction of roads as generally two-lane, low speed rural highways. The public-private partnership has worked together to secure both state and federal funding for infrastructure improvements to remedy this and allow for improved movement of the increased volume of trucks. Funding was successfully secured in 2008 from the Alum Creek Drive/Groveport Road intersection and for the I-270 interchange. Most recently, the state of Ohio applied $14 million in ARRA funds to allow for the widening of Rickenbacker Parkway in support of safer and quicker movement of trucks in and around the airport and intermodal terminal. Summary of Location Factors In summary, the primary location factors (as described/defined in Chapter 5) that were most important to the siting and development of the Rickenbacker facility were as follows:  Interaction with Transportation Network: As described above, one of Norfolk Southern’s key requirements for the new site was that the facility be located on the same rail line that the previous

72 facility was served on (including the Heartland Corridor). Similarly, the proximity to the airport allows for intermodal expansion opportunities and was another important factor in site selection.  Ability to Access Key Markets or Customers:  The fact that the Rickenbacker facility is located within a one day drive of more that 50% of the population of North America was a primary location factor for this intermodal facility. Public Sector Assistance and Incentives: Economic Development and Transportation Impacts Over $28 million in Federal funding and additional funding from the state of Ohio, the City of Columbus and other public agencies were significant factors in the decision-making for site selection. Economic Activity of the Freight Facility Direct employment at the Rickenbacker intermodal rail facility is estimated to be approximately 150 jobs. Additional freight facilities attracted to the area by the Rickenbacker facility are expected to generate approximately 20,000 jobs over the next 30 years, including multiplier effects.12 In addition to the job generation, the region expects an additional 34 million square feet of industrial development surrounding the intermodal facility. The regions estimates economic activity generated at Rickenbacker to include $1.2 billion in building construction, and expects a total economic impact of $15.1 billion over the next 30 years. Tax revenues are expected to be nearly $2 billion. While these impacts are primarily indirect, nearly $800 million of direct local, state, and school district revenue is included in this sum. A major driver of the development and future potential is the Heartland Corridor project. Additionally, the facility will increase the use of rail for goods movement and thus reduce pollutants due as goods travelling more frequently by rail rather than truck. The Global Logistics Park, of which the Intermodal Facility is a part, is already home to several businesses, including Whirlpool, which has built a direct rail spur to their building. The Global Logistics Park is also home to several freight-forwarders, including: Kuehne + Nagel, DB Schenker, Hellmann Worldwide Logistics, and Freight Expediters, Inc. Many of these companies have located at the facility due to its central location to freight activity in the United States as well as the proximity and access to a wide variety of transportation modes. Transportation Impacts Annual transportation impacts after ten years of intermodal operation are expected to include $660 million in shipper transportation cost savings of rail shipping (compared to truck), 49 million fewer truck miles in Ohio, $2 million in reduced pavement damage, $2.45 million in reduced accidents.13 The incremental environmental and neighborhood impacts are not expected to be significant as this facility was located within an existing freight and industrial park, A Level 4 Categorical Exclusion was completed by the Ohio Department of Transportation meaning that the new facility will not have a significant effect on the Because the relocation is relatively recent, no data related to annual tonnage are available. As a result, it was not possible to calculate VMT and the associated transportation impacts directly. 12 Based on studies by the CRAA on economic and transportation impacts. 13 Shipper cost savings and truck VMT reductions caculated by the CRAA; benefits from reduced pavement damage and accidents estimated by HDR Decision Economics based on reduced truck VMT.

73 human environment and therefore the project does not require an environmental assessment (EA) or environmental impact statement (EIS).14 8.6 Savage Safe Handling Case Study Introduction Facility Type: Bulk Transload Facility Savage Safe Handling, Inc. is a full-service, bulk product transportation and chemical transloading/processing company. The company operates the largest rail-to-truck transloading facilities in New England and Western Pennsylvania. Savage Safe Handling offers toll processing, which is bulk chemical mixing, dispersing, slurrying, dissolving, blending and diluting for chemical producers. Savage Safe Handling has two locations: Auburn, Maine, and New Stanton, Pennsylvania. At the end of 2009, Savage Services Corporation acquired the assets, terminals and services business of Savage Safe Handling, Inc. Savage owns 150 of its own facilities and the two Safe Handling companies. Currently, Savage Safe Handling is considering the expansion of sites in Wisconsin, Georgia and Oregon. Figure 8-3: Savage Safe Handling Bulk Transload Facility Auburn, ME The Need for the New Facility Maine’s history with the paper industry was a major factor in Safe Handling’s decision to locate a transload intermodal facility in the state. At the time, Safe Handling perceived a need in Maine for the transportation of hazardous and quality sensitive bulk materials for the paper industry and other businesses. No terminal in the region had specialized in this transportation service. Prior to Safe Handling’s facility being developed, paper plants were receiving their chemical shipments from the southern United States. In an effort to minimize shipping costs, Safe Handling was interested in accessing Canada for the inputs required by the paper plants. The St. Lawrence & Atlantic (SLA) Railroad was operating in Maine and was able to offer this access to Canadian industries and markets. Once Safe Handling decided to locate a facility in Maine, Auburn became a logical choice. First, it is centrally located within a cluster of paper plants in Maine. Second, Safe Handling felt comfortable that there would be limited environmental risk associated with locating on this industrially zoned site in Auburn. Finally, SLA was accessible in Auburn, provided Canadian access through its connection with Canadian National Railway (CN), and the highway infrastructure connections were strong. 14 See FHWA’s web site on categorical exclusions: http://environment.fhwa.dot.gov/projdev/docuce.asp.

74 To finance development, Safe Handling secured a low-interest loan from the Auburn Business Development Corporation (ABDC) for land acquisition, equipment, and working capital. One of Safe Handling’s first contracts was with LePage Bakeries to handle several rail cars of flour a month. Lumber, bricks, chemicals, and other products followed. Site Selection Factors and Facility Characteristics Physical Characteristics of the Site This case study is based on the Savage Safe Handling bulk transload operation located in Auburn, Maine. It consists of two separate facilities that are connected by rail and are approximately 1.5 miles apart. The main facility houses the administration building, a large plastics manufacturing building, and a large rail yard that provides bulk and transload services. The second location for facilities is at the “Port of Auburn” which consists of five tracks, one of which is partially dedicated to ethanol transload operations. Overall, the Savage Safe Handling facility encompasses 200 acres. Figure 8-4: Main Yard, Auburn, ME Some of the services Savage Safe Handling’s Auburn warehouse provides are storage, chemical manufacturing, and truck washing. When considering new sites, Savage Safe Handling seeks properties where they can build a warehouse or redevelop an existing space that provides a minimum of 25,000 square feet of warehousing. The ability to potentially expand this warehousing capability is an important and related consideration. The Auburn warehouse building is 90,000 square feet in size and offers a variety of services, as shown in Table 1. The manufacturing facilities at the site offer 74,000 square feet of space. Six rail-to-truck transloading gantries are also available. Table 8-5: Savage Safe Handling Auburn Property and Facilities Size Detail Auburn Savage Safe Handling Property 210 acres Rail – 5 tracks, access to Class 1 Railroad Truck – 3 miles from Maine Turnpike; 30 miles from Port of Portland, Portland International Jetport, City of Portland. Auburn Savage Safe Handling Facilities Warehouse 90,000 sf Temperature-controlled; 24-foot clear stackable height; 8 truck dock doors; 4 indoor rail car spots for box car or tanker cars; fire suppression for flammables storage and internal spill collection & containment storage

75 Central Manufacturing Facility 65,000 sf Used for Chemical Manufacturing Standalone Manufacturing Facility 9,000 sf Used for Chemical Manufacturing Rail-to-truck Transloading Gantries Six gantries available Source: Savage Safe Handling Website The Auburn site is large enough to store several hundred rail cars. This capability was expanded after the site was originally established. The ability to store at least 50 rail cars, as well as the potential for rail storage expansion is a key site selection criterion for Savage Safe Handling. Currently, Auburn’s main facility stores 130 rail cars and the adjacent Port of Auburn location stores another 90 rail cars. In addition, Safe Handling anticipated transport of hazardous materials at the site. The Auburn site was flat, well-drained, and had a clay layer located close to the ground surface. These factors made the surface impervious and well-suited for hazardous material handling. The location of the site in the center of Maine’s industrial activity was also an advantage. Savage Safe Handling also prefers sites that offer an element that may provide a competitive advantage. One example is a site that contained a grandfathered wastewater treatment plant associated with an old industrial site. Similarly, designation as a Foreign Trade Zone (FTZ) is a unique characteristic that the company considers valuable. The Auburn, Maine facility is designated as an FTZ. An FTZ is an area within or adjacent to U.S. Customs and Border Patrol Ports of Entry where commercial merchandise is treated as though it was located outside of the U.S. Freight that travels to and from an FTZ is not subject to Customs duties or taxes. FTZs are supervised by U.S. Customs officials. The Auburn facility is one of only three locations in Maine designated as an FTZ. Because of this status, importers from Asia and Europe (primarily chemical importers) can delay import duties. For example, if the material is stored at the FTZ and then moves to Canada, import duties are completely eliminated. The importance of utilities was not highlighted as a key criterion for site consideration, although electric, water, sewer, gas and telephone utilities are available at the Auburn facility. In addition, terrain considerations were not mentioned. As described later in the case study, “uniqueness” of potential sites is important to Savage. For example, a brownfield site would be of interest to the company because it offers a unique site development opportunity.

76 Transportation Access The main facility, which houses the administration building, a large plastics manufacturing building, and a large rail yard where many products are transloaded/handled, is connected via rail to the Port of Auburn. The Port of Auburn consists of five tracks and is owned by Savage Safe Handling and is switched/serviced seven days per week by the St. Lawrence & Atlantic Railway (SLA), a shortline railroad. The Auburn site also has access to the SLA, which has a shortline haulage agreement with Canadian National Railway (CN), which is a Class 1 railroad. This arrangement makes it possible for Savage Safe Handling to ship and receive freight by rail from both U.S. and Canadian locations. Figure 8-5: Liquid Fuel Transloading at Auburn, ME Facility Access to a Class 1 railroad is considered the most important consideration in Savage Safe Handling’s site selection. In part, this relates to the company’s preference for fuel-efficient transportation and its interest in keeping transportation costs down. Greater detail related to the environmental impact of the facility is described later in the case study. Highway access is another important consideration in the company’s site selection, and the company owns its own trucking fleet. The Auburn facility is located three miles off the Maine Turnpike, which is the 109-mile toll highway running from Kittery in the south to Augusta in the north. Interstate 95 follows the Maine Turnpike between exits 3 and 109. The facility is also 30 miles from the City of Portland. Although the Auburn facility is located relatively close to both the Port of Portland and the Portland International Jetport, access to these facilities is not critical to the operations of the Auburn facility nor is access to an airport/seaport a significant priority in the evaluation of a prospective site. Commodities and Shipping Patterns The Savage Safe Handling facility operates on a hub and spoke distribution model. In general, rail brings the freight inbound and trucks take it outbound. Trucks generally travel within 300 miles of the site, and rail typically handles the longer haul shipments. Freight handling includes bulk, container, truckloads, rail cars and warehousing. Eighty percent of the freight that is moved through the facility is domestic and 20 percent is international. Savage Safe Handling primarily transports raw materials to Maine’s industrial plants and is willing to handle any bulk raw materials that are not explosive. Primary commodities include: baking flour, plastic pellets, fuels, and liquid chemicals. Freight Facility Development Conditions Savage Safe Handling views railroads and the public sector as their partners. Gaining local support for proposed sites is important to the company and financial incentives (e.g., matching grants) have been provided for previous sites. Detail on the specific financing arrangements of particular sites was not provided.

77 Information gaps regarding site selection criteria of the Savage Safe Handling facility includes specific financing arrangements for Savage Safe Handling’s sites. Summary of Location Factors In summary, the primary location factors (as described/defined in Chapter 5) that were most important to the siting and development of the Savage Safe Handling facility were as follows:  Ability to Access Key Markets or Customers:  A primary site selection factor was the significant number of paper plants in the area that would be ideal customers for the transloading capabilities at the Safe Handling facility. Permitting and Regulation:  Another primary factor in site selection was the fact that Safe Handling was comfortable that there would be limited environmental risk with the location chosen because of the local regulatory environment. Interaction with Transportation Network: Economic Development and Transportation Impacts Rail and highway access were critical factors in site selection for Safe Handling. The ability of the SLA to efficiently access the Canadian rail network has provided a competitive advantage for Safe Handling to access the Canadian market for products to support the paper industry and other related industries. Economic Activity of the Freight Facility When Safe Handling was first established in Auburn, they estimated 17 new jobs would be generated. With the assistance of Auburn Business Development Corporation (ABDC) loans, 34 total new jobs were ultimately associated with the new facility. The Auburn Savage Safe Handling combined facilities employ 100 people currently, and the average wage is $15 to $25 per hour for many of the employees. Drivers for Savage Safe Handling are paid a minimum of $60,000 annually. It is estimated that $250,000 is paid in annual property taxes by the facility. Safe Handling’s end users are typically within 200 miles of the Auburn facility, but additional information about these customers was not available due to confidentiality concerns. The extent of the indirect impact in terms of jobs, wages and property taxes has not been estimated, although Savage Safe Handling does help to sustain the paper mills in the area. At this time, it is estimated that 200-300 jobs are associated with paper mills in this region of Maine. In addition, the St. Lawrence and Atlantic executive offices moved to Auburn five years after Safe Handling established the facility. Finally, Superior Carriers trucking relocated from Portland to Auburn after Safe Handling was established in Auburn. Costs of Facility The current facility was vacant at the time of development and over a period of 20 years, $15 million has been invested in the site. Safe Handling received some federal and state grants for rail and transportation improvements. Specifically, they received gap financing of approximately $300,000 in loans through ABDC to cover 25 percent of the total costs of the initial investment. In addition, the State of Maine provided Industrial Rail Access Program (IRAP) funds to Safe Handling to cover the costs of building side rails for car storage. The total amount was not available, but Safe Handling obtained IRAP funding on multiple occasions.

78 Transportation Impacts Every year, Savage Safe Handling handles 500,000 tons of freight coming in by rail and leaving by truck.15 Table 8-6: Railroad and Truck Freight Transportation The facility transloads/handles 5,000 rail cars per year, with one rail car generally moved into four truckloads upon arrival at the facility. Railcar/Trucks per Year Average Length of Haul Annual Tonnage Railroad 5,000 n/a 500,000 tons Truck 20,000 150 miles 500,000 tons Source: Interview with Savage Safe Handling and website Savage Safe Handling indicated that they make a concerted effort to choose transportation options that are more “green” than others. Because rail is more fuel efficient than truck, Savage Safe Handling uses rail when possible to reduce its overall transportation impact. By using rail, rather than truck, for its inbound shipments, $619,500 in accident reduction and approximately $506,000 in pavement expenditures are saved each year. Choosing rail over truck saves an additional $463,499 in emissions costs. Other efforts to reduce their transportation impact include shipping chemicals in dry form and then reconstituting them into a liquid slurry closer to point-of-use, rather than shipping liquid chemicals long distances by truck. Information gaps on the Transportation and Economic Impacts of the Savage Safe Handling Facility include the indirect impact in terms of jobs, wages, and property taxes. Cost information was not available for the Auburn site and the amount of the public investments in the facility was not made available. Additionally, information regarding customers of the facility was not available due to confidentiality concerns. 8.7 Family Dollar Distribution Center – Marianna, Florida Introduction Facility Type: Distribution Center Family Dollar is a consumer goods retailer with 5,908 stores in 44 states. This discount retailer offers convenience products and a wide range of consumer goods in addition to some basic food items, including a refrigerated section. The company operates ten (10) distribution centers around the United States. The Marianna, Florida facility opened in January 2005 and was the 8th distribution center (DC) facility developed by the company. The closest facilities are in Charlotte, NC and Memphis, TN. The Need for the New Facility Family Dollar has needed to increase the number and coverage of distribution center facilities as they have expanded its number of stores throughout the country. Their retail DC business model has evolved to focus on the ability to reach a large number of stores within a roundtrip truck trip. In other words, the company designs its network to gain supply chain efficiencies by locating DC facilities so that trucks can make deliveries and return back to the DC within the same day. DC operations are relatively straight-forward as goods and supplies to their retail stores are shipped by truck to the DC and then consolidated and re- packaged into Family Dollar trucks for customized truck deliveries to retail stores. 15 Savage Safe Handling website.

79 Due to the configuration of the store network, the siting and need for this new facility was concentrated on serving markets in Florida, the southern half of Georgia and Alabama as well as southeastern Mississippi. Figure 8-6: Family Dollar Marianna Distribution Area As Family Dollar began their site selection process, there were 118 potential communities in the target region for the new facility. This long list was narrowed through the company’s site selection process that focused on highway access, market reach, cost of land, public support for infrastructure improvements to the site, and workforce availability. The process narrowed potential locations to 6 communities, then 3 and then a final competition of two possible locations: Cordele, Georgia and Marianna, Florida. The key selection factors that weighed in favor of the Marianna site included:  Direct on-ramp access to Interstate 10 with public funding to help expand the north-south Route 276 from two to four lanes;  Ability to serve all of Florida’s markets as well as key markets in Georgia, Alabama, and Mississippi;  Development of a new distribution center park in Marianna as public officials created a new distribution park with multiple sites and a commitment to help develop the supporting infrastructure;  Strong public support from the Governor’s office to the state and local economic development officials, including significant incentives, workforce training, and tax abatements; and  A strong available workforce which can be a constraint or concern in rural markets. Site Selection Factors and Facility Characteristics Physical Characteristics of the Site The Family Dollar distribution center is the centerpiece of a larger distribution park with direct access to the east-west I-10 and a three lane internal roadway. The Family Dollar building was sited so that it is half in the city of Marianna and half in Jackson County and thus able to receive public funding from both communities.

80 The Family Dollar distribution center is a 75-acre site within the larger 351-acre distribution park. The DC building has 26 acres of space under the roof with 1.1 million in square feet, has 32 foot high ceilings and 250,000 of the square feet are in mezzanine. Key elements of the site preparation work included:  Leveling the land – a considerable portion of the upfront development cost borne by Family Dollar was used to adjust the land for the building, parking, and roadway facilities.  Adding all the utilities to the site – water, sewer, electricity, and natural gas.  Creating new truck lanes and turning lanes in the park with access to I-10 and Route 276.  Removing water as the initial evaluation did not reveal the full extent of the water table level.  Adding a water tank and stormwater retention pond for better management of water.  Adding a new electric power unit and a second fire station facility. There were no other significant environmental concerns at the site. Very few residential properties are located near the distribution park, minimizing “not in my backyard” concerns or conflicts between passenger and freight trips. Transportation Access The Family Dollar distribution center is serviced entirely by trucks for both inbound and outbound goods and Interstate highway access was a critical aspect of siting this facility as a result. The facility provides a direct three lane access road to an existing interchange on Interstate 10. Route 276 is contiguous to the site, providing a north-south connection. Based on local traffic experiences with other DC facilities, such as Charlotte, Family Dollar learned that a direct ramp to the Interstate can be a large benefit by eliminating local traffic concerns. The facility is approximately 5 miles from Marianna Municipal Airport and 14 miles from Lawrence Airport in Grand Ridge, Florida. The nearest cargo airport is Dothan Regional airport, located 40 miles away in Dothan, Alabama. Jackson County has also developed an intermodal rail facility and has relatively good connections to ports in Panama City and Pensacola. These multi-modal connections, while strong, are not currently relevant to Family Dollar’s operations. Commodities and Shipping Patterns As described above, product suppliers deliver goods to Family Dollar DCs and those goods are then re- packaged into Family Dollar trucks for customized deliveries to their retail stores. Many Family Dollar products are manufactured in China and shipped to major United States seaports such as Los Angeles/Long Beach and Savannah, Georgia. These goods are then sent by rail and/or truck to the suppliers, such as Proctor and Gamble. The suppliers then deliver their products to the Family Dollar distribution facilities. The company strategy plans for consumer products to ship from the Family Dollar distribution center by truck to the store locations and have the trucks return to the DC facility within the same day. This is a relatively common practice for retail distribution centers. The Marianna facility serves the major metropolitan areas of Tallahassee, Jacksonville, Orlando, Tampa, and Miami in Florida as well as Montgomery and Mobile, Alabama and Atlanta and Savannah, Georgia.

81 Freight Facility Development Conditions As noted above, one of the key elements of the Marianna site selection was the strong local, regional and state-level support for this rural development projects. In particular, the public commitment to develop a distribution park facility with multiple large-site parcels helped ensure that this effort would produce a development impact beyond the Family Dollar facility. The project was called “Project Raven” (the codename assigned by the company and site selection team) within Florida and the key partners included all relevant jurisdictions:  Governor Jeb Bush and the Office of Trade, Tourism and Economic Development;  US and state legislative support;  Enterprise Florida – the state’s economic development agency;  Jackson County Development Council;  City of Marianna;  Jackson County Board of County Commissions;  Other state agencies such as Workforce Florida, Florida Department of Transportation, Florida Department of Community Affairs, and Florida Department of Revenue;  U.S. Economic Development Administration (EDA); and  Regional agencies such as Florida’s Great Northwest, Opportunity Florida, and the Chipola Regional Workforce Development Board. Strong local support was a driving factor in the company’s decision to site the facility in Marianna over Cordele, Georgia. Family Dollar was impressed by the support of all parties involved and the region’s commitment to economic development and growth according to Family Dollar President and COO David Alexander. Multiple development incentives were provided to Family Dollar at the local, state, and federal levels amounting to a total of $24.2 million. Key elements of this development incentive package included:  75 acres donated by the City and County as well as a 90 acre “public buffer”;  10 year ad valorem tax exemption worth approximately $4.7 million in lower taxes;  State Economic Development Transportation Fund Grant of $2 million;  Florida’s Qualified Target Industry Tax Refund Program valued at about $2.5 million when including state and local matching funds;  Workforce training grants such as the state’s Quick Response Training grant of $850,000 and support from the Chipola Regional Workforce Development;  State Rural Enterprise Zone Incentives including $5.3 million in jobs tax credit for two years and a $1.3 million business equipment sales tax refund;  $2 million U.S. EDA grant; and  County and City Community Development Block Grants (CDBG) totaling over $1.4 million. Workforce availability and capabilities were very important to the siting decision. 6,000 residents applied for the 515 jobs at the distribution center. Family Dollar has been very happy with the performance of the workforce, and provides training for unskilled workers to meet specific needs (such as forklift operations).

82 Local support for new development opportunities and jobs was very positive as there were very few homes near the site, so there were no “NIMBY” (not in my backyard) issues. Local officials even assert that the new facility and related economic development may have actually raised the land value for nearby residential areas. Summary of Location Factors In summary, the primary location factors (as described/defined in Chapter 5) that were most important to the siting and development of the Family Dollar facility were as follows:  Interaction with Transportation Network:  One of the primary factors in regards to locating the site in Marianna, Florida was that this location allowed Family Dollar to gain supply chain efficiencies with its other DC facilities, allowing trucks to make deliveries and return back to the DC within the same day. The site also presented a direct exit ramp to/from Interstate 10 to avoid local traffic problems. Labor and Workforce:  Family Dollar chose the Marianna facility over the location in Georgia largely because of the existing capable and cost-effective workforce as well as support from the Governor’s office to provide workforce training. Public Sector Assistance and Incentives: Economic Development and Transportation Impacts As described above, there was significant local, regional and state-level support for this development; this public sector assistance was a key factor in site location. Economic Activity of the Freight Facility Direct economic activity at the Family Dollar DC includes 515 net new jobs with an average wage of approximately $13 per hour. The Family Dollar distribution center has also acted as a catalyst for development by attracting other businesses to the Distribution Park. As an example, Arizona Chemical built a 120,000 square foot distribution center and employs 45 people as a result of the elevated profile of the area. Another business that has been drawn to the distribution park is Old Castle, a pre-cast concrete pipe company that has located a manufacturing and distribution facility with 110 employees on an additional 110 acres of land and an adjacent construction services park. The distribution park has additional parcels available for development. The Family Dollar facility generates $300,000 a year in property tax revenue, but has a ten-year tax exemption on ad valorem revenues from the City and County. The value of the ad valorem tax exemptions is estimated to be $3.7 million by the County and $0.9 million by the City. There are five years of tax abatement remaining as the facility was opened in 2005. Costs of Facility Family Dollar invested $55 million to the construction and improvement of the facility, coupled with $6 million in publicly-funded infrastructure investments. Most of the public cost went to the development of the distribution park. This had public support as it allows for multiple future development projects (as contrasted to site improvements for a single business). Transportation Impacts Family Dollar handles approximately 90 trucks per day in and out of the facility. Because the facility has direct ramp access to I-10, there are virtually no local traffic concerns. While figures were not available for annual

83 truck trips or truck vehicles miles of travel (VMT), the following estimates provide an approximation of total truck trips and VMT on the Florida and national highway system:  Assuming 300 working days per year, and counting both inbound and outbound trips, that equates to 54,000 annual truck trips related to the Family Dollar distribution facility; and  Assuming an average of 300 miles for inbound and outbound shipments, truck VMT is approximately 16.2 million miles per year. 8.8 Murphy Warehouses Case Study Introduction Facility Type: Distribution Center - Warehousing Murphy Warehouses owns and operates a network of warehouses in the Minneapolis-Saint Paul (MSP), region in Minnesota with facilities that process, consolidate, and store freight for customers. Murphy Warehouses provides warehousing and trucking services focused on the Twin Cities and the Midwestern U.S. markets, including Michigan and Wisconsin. Their trucking services ship products nationwide. The map below shows the locations of Murphy Warehouses’ nine major facilities within the MSP area. The Need for the New Facility When Murphy Warehouses requires another facility either due to new customers or an increase in warehouse and distribution demand, the following are key requirements for purchasing another existing facility: Figure 8-7: Map of Murphy Warehouses Facilities within MSP Region  Facility must have access to Interstate or major highway interchanges (within 3 miles)  Facility must have on-site access to rail  Facility must be between 150,000 to 200,000 square feet  Real estate taxes in community must be reasonable  Preference towards energy-efficient facilities  Facility must be in good structural condition including: docks, steel joists, roof, and floors  Stormwater handled onsite, or readily capable pending regulatory controls The new site should have access to the markets served and located within the metropolitan area. Land prices and development costs that would go into refurbishing the existing facility would also factor into location decisions. Any facilities considered would have to be sound real estate investments and considered sellable in the future.

84 Site Selection Factors and Facility Characteristics Physical Characteristics of the Site Murphy Warehouses owns and operates nine facilities within the MSP region, and six of these are either on or adjacent to rail sidings. In total, these nine facilities consist of approximately 2.4 million square feet of warehousing space. The average size of the rail-served facilities is 250,000 square feet and the average size of the non-rail warehouse facilities is 300,000 square feet. In terms of overall land footprint, one facility sits on a 22-acre plot. Warehouse locations are typically in industrially zoned areas with access to major utilities. One facility has been located on a former Brownfields site. Table 7-7 shows the detailed physical characteristics of existing Murphy Warehouse’s facilities, including details on rail warehouse capacity and services offered. Table 8-7: Murphy Warehouse Characteristics Size Detail Murphy Warehouses Facilities 6 Facilities with Rail Access 25 Truck Fleet All Warehouses 2.4 million Sq Feet Temperature-controlled; 32-foot clear stackable height Warehouses with Rail 1.5 million Sq Feet 24 indoor and 4 outdoor rail docks Services Cross-dock, U.S. Customs Examination Station (CES), Free Trade Zone (FTZ), and Container freight station Murphy Warehouse facilities are located close to the market and customer, typically requiring 150,000 to 200,000 square feet for mixed use. However, the facility size requirements fluctuate based upon the characteristics and needs of the customer; for example, a planned use facility for a single client could be as small as 50,000 square feet in the MSP region. Alternatively, market size can influence facility size as warehouse operators in larger markets may have minimum facility requirements of 500,000 square feet or more. Transportation Access Each of Murphy Warehouses’ warehousing and logistics facilities is within 3 miles to major highway interchanges or beltways in the Twin Cities including: I-94, I-35, I-494, and I-694 and as well as State Routes, such as 10, 100, and 169. Additionally, most warehouse facilities are within 15 miles of Minneapolis-St. Paul International Airport. Proximity to customers and infrastructure has become more important due to Just-In- Time (JIT) distribution. JIT distribution is a large component of regional business for Murphy Warehouses in MSP, and therefore warehouse facilities are required to be easily accessible to customers and markets served. Each of the six rail-served facilities is served by Class 1 railroads including: Burlington Northern Santa Fe (BNSF) Railways, Canadian National (CN) Railways, Union Pacific (UP) Railroad, and Canadian Pacific (CP) Railways. Rail facilities can accommodate up to 18 rail cars indoors at a single facility. Smaller facilities can house 12, 6, or 4 rail cars indoors, with the remaining two rail facilities operating outdoors. A corporate decision was made in the 1980s to obtain and preserve facilities with rail connections, which has become a competitive advantage for Murphy Warehouses. Consequently, this has become a locating requirement for facilities.

85 Commodities and Shipping Patterns Murphy Warehouses handles over 10,000 rail carloads a year at their six rail-served facilities, and over 76,000 truckloads. Smaller facilities can accept up to 15 carloads a week, while larger facilities can receive over 80 carloads a week. Across all nine facilities, Murphy Warehouses handles 3.4 billion pounds of product. The major commodities Murphy Warehouses distributes are: food and beverages, paper, plastics, recyclables, medical equipment, transportation equipment, as well as forest products such as pulp, building materials, roll and flat stock, folded product packaging, raw fibers in sheets, and panel board. Since a large portion of Murphy’s facilities are temperature controlled, food and beverage commodities account for a significant portion of commodities shipped including: salts, beer, canned goods, sugar, and other Consumer Packed Goods (CPG). While most of Murphy Warehouses’ customers are relatively local (MSP), 60 percent of their warehousing and distribution activity is nationwide with the remaining 40 percent serving Minnesota and the Midwestern U.S. Murphy Warehouses operates a Foreign Trade Zone (FTZ) at one of its facilities offering special customs procedures for international customers. Within MSP, only Minneapolis Saint Paul Airport and the Murphy Warehouses facilities have this FTZ designation. While Murphy does have capacity and the ability to serve international customers, international freight service accounts for less than 10 percent of all warehouse services. A specific breakdown of inbound and outbound freight volumes was unavailable due to confidentiality. Overall, costs are the primary driver for location decisions of warehouses and distribution centers. Facilities located closer to customers reduce wait times for trucks and reduce costs associated with travel time and congestion. Since many of Murphy Warehouses customers are located in the urban core, the facilities are located throughout the MSP region. University research has aided warehouse and distribution center location decisions through modifying criteria based upon results from distribution and location freight models, which evaluate the effectiveness and costs of operating facilities. Such models take into account multiple freight modes, network congestion, and operating costs. Facility Development Conditions Murphy Warehouses does not typically have issues with local acceptance of their facilities due to the fact that most of their operations occur indoors. Additionally, Murphy Warehouses often site their facilities within freight-oriented industrial parks, which are usually located in industrial areas that are buffered from residential areas. It is rare for warehouse and distribution facilities to be eligible for state or local incentive programs in Minnesota, as these incentive programs typically require an employee per square foot ratio much greater than the industry standard for warehousing and distribution. Warehouse and distribution centers are more capital- intensive than labor-intensive resulting in relatively low employees per square foot. Unless a warehouse or distribution center is paired with a manufacturing facility, the threshold employee per square foot will typically not be met to qualify for most state or local incentives. Due to this, incentives typically do not play a significant role in Murphy Warehouses’ location selection process. Murphy Warehouses has received Tax Increment Financing (TIF) Funds in one instance to develop a warehouse facility on a contaminated Brownfields site. TIF funds are an economic development mechanism created by states to improve infrastructure and preserve existing structures within specified redevelopment

86 zones with funding based on the incremental increase in property value. The development turned a contaminated site into taxable real estate with growth in property value. Summary of Location Factors In summary, the primary location factors (as described/defined in Chapter 5) that were most important to the siting and development of the Murphy Warehouse facilities were as follows:  Interaction with Transportation Network:  One of the primary location factors for Murphy Warehouses is access within 3 miles of major highways as well as a new requirement for on-site rail access to each warehouse facility. Tax Environment:  Murphy Warehouses indicated that reasonable real estate taxes are an important factor in choosing one location over another. Availability and Cost of Suitable Facilities: Economic Development and Transportation Impacts Many of the locations where Murphy Warehouses develops its facilities have existing structures/facilities. Murphy Warehouses identified the need for these facilities to be in good structural condition as a key selection criteria. Economic Activity of Distribution Centers In the distribution/warehousing industry, employees per square foot can range from one employee per 2,000 to over 5,000 square feet. Across all nine of their facilities, Murphy Warehouses employs 184 people with an average of 20 employees per facility. The current ratio of management to hourly employees is a ratio of 20 to 1. Wages were indicated as above industry average, but actual amounts were not disclosed. According to the Bureau of Labor Statistics (BLS), average weekly wages for transportation and warehousing within the MSP region are $1,178. Costs of Distribution Centers Many of Murphy Warehouses existing facilities were built over 30 years ago and thus capital cost data on the investment needed to construct and operationalize these facilities is generally not available. Recent capital investments into facilities have been focused on energy saving retrofits and operational improvements. Operationally, some facilities ceilings were raised from 18 to 34 feet at one facility to accommodate larger rail cars. Energy saving retrofits included upgrading two existing facilities to Leadership in Energy and Environmental Design (LEED) gold certified status.16 Transportation Impacts . Another investment in 2008 was a stormwater retention system to capture and filter stormwater from a 22 acre site. The system is estimated to generate a return on investment in less than 10 years by eliminating a $68,000 annual stormwater assessment from the city, reducing overall operating costs. The precise operations and maintenance cost per facility were unavailable due to confidentiality. Murphy Warehouses handles over 10,000 carloads a year throughout this network of facilities. Additionally Murphy Warehouses owns a small vehicle fleet of 25 trucks, and receives over 76,000 truckloads annually, or just fewer than 300 trucks daily. Applying the average trip length by mode from the 2007 Commodity Flow Survey to the freight activity at Murphy Warehouses produces the following estimated transportation impacts. 16 LEED certification is an internationally recognized green building classification system verified by a third party, confirming that the building was designed (or improved) using strategies to reduce CO2 emissions, energy usage, and water use. See the U.S. Green Building Council (USGBC) for more information on LEED: www.usgbc.org/leed/.

87  By transporting freight via rail rather than truck, they reduce truck mileage by approximately 852 miles per truckload.17  If freight were to switch from rail to truck mode, the 10,000 rail cars would equate to roughly 27,400 trucks. 18  Freight traveling by rail reduces truck VMT annually by approximately: 1.3 million VMT. 19  Freight traveling by rail reduces greenhouse gasses by 6,730 tons annually. 8.9 AllianceTexas Global Logistics Hub – Fort Worth, Texas Introduction Facility Type: Integrated Logistics Center AllianceTexas is a 17,000-acre master-planned community in north Fort Worth, Texas, with three separate development components ― a global logistics hub, corporate center, and residential community. The centerpiece is the 11,600 acre integrated logistics center (ILC) known as Alliance Global Logistics, and the community also includes the Circle T Ranch corporate center and Heritage residential community. Within the ILC are an airport, an intermodal terminal, access to two Class I railroads, highway access, a foreign trade zone, and logistics and industrial companies. The ILC began with the opening of Fort Worth Alliance Airport in December 1989 as the first purely industrial airport in the world. Development continued in the 1990s with the construction of the Burlington Northern Santa Fe (BNSF) Alliance Intermodal facility and a new highway – Texas Highway 170. The Need for the New Facility H. Ross Perot, Jr. made a determination in the early 1980’s, that the northwest corner of the Fort Worth Metroplex area was underdeveloped and offered significant potential for real estate development, and thus began purchasing sizable amounts of real estate in the area. The primary reason for the lack of development was that the area was prone to unpleasant odors because of the prevailing winds from the famed Fort Worth stockyards livestock market. The stockyards had been closed since the 1960’s and the odors were long gone, though the stigma remained. At the same time that Mr. Perot was considering the best use for the undeveloped land, the Federal Aviation Administration (FAA) conducted an analysis of the Dallas-Fort Worth Airport operations to determine the future aviation needs of the region. This study and another one conducted by the North Central Texas Council of Governments determined that the growing amount of air traffic from the Dallas-Fort Worth airport would result in over-congestion in the near future if nothing was done. In order to curtail this and future congestion, the FAA made the decision to locate a reliever airport for general aviation in each of the four corners of the Metroplex. One of the pieces of land that Mr. Perot had purchased was a long, narrow parcel that would be ideal for an airport. Knowing that general aviation is generally not profitable, Mr. Perot agreed to donate the land only if the FAA would designate the airport as a cargo/industrial airport. The airport thus had potential to generate 17 2007 “Commodity Flow Survey” Bureau of Transportation Statistics. 18 Ratio of rail carloads to truckloads was developed using FHWA’s Freight Analysis Framework (FAF2). 19 Calculation differentiates between truck and private truck, based on 2007 “Commodity Flow Survey” Bureau of Transportation Statistics.

88 significant revenue through the movement of cargo and manufactured goods. The FAA agreed, and thus begun the public-private partnership between the FAA, Fort Worth, and Hillwood ― Mr. Perot’s company. As part of the public-private partnership, the city of Fort Worth was required to put up 10 percent equity to the FAA, so Hillwood donated the land to Fort Worth to be used as the 10 percent equity, and Fort Worth provided the water, sewer and infrastructure to support the airport. The airport was the first step in the generation of the ILC with other modal infrastructure and private sector location decisions following. When the airport opened in December 1989, Hillwood already had arrangements for the BNSF intermodal offloading facility and the American Airlines Maintenance and Engineering facility. The presence of these two major facilities set the stage for further industrial growth in the area. Another public-private partnership between Hillwood and the State of Texas to build a new state highway ― State Highway 170 ― with access to Dallas-Fort Worth International Airport further improved the viability of the facility. Other major anchors of the initial facility included the American Airlines Maintenance and Engineering facility, and within three years of this opening, FedEx announced that they would move their Southern Sorting Facility to AllianceTexas. The American Airlines Maintenance Facility opened in January 1992, and is the primary maintenance facility for the B767 and B777 aircraft as well as the Rolls Royce engines operated by American. American’s parent company is also headquartered in the Fort Worth area. The Alliance Air Trade Center is a 99,000 square foot facility located within the Global Logistics Hub, with capabilities of handling all air cargo needs. It has direct access to the Fort Worth Alliance Airport runway, the ability to directly serve Asia, and an on-site Customs facility. This facility provides strategic advantages for air cargo customers. Site Selection Factors and Facility Characteristics Physical Characteristics of the Site The location for the ILC and broader community complex was primarily chosen due to the availability of these large tracts of undeveloped land proximate to the Fort Worth Metroplex. Much of the rest of the Metroplex area was overdeveloped, and the site which eventually became the AllianceTexas facility provided an opportunity for new development on large parcels of low cost land. Additionally, the location in the south- central part of the United States provided proximity to the large markets in the Dallas-Fort Worth area as well as access to most major US and Mexican cities within one day air travel time. Alliance Global Logistics Hub is subdivided into different sections catering to different market segments. The five divisions (described below) are: Alliance Gateway, Westport at Alliance, Alliance Center, Commerce Center, and Alliance Crossing. Alliance Gateway is the large-scale distribution, manufacturing and industrial segment, and covers approximately 2,400 acres. This area is in the eastern section of the Alliance property, with direct access to Texas Highway 170 and is two miles from Texas 114, less than 4 miles from US 377, and less than five miles from Interstate 35W. This area also has access to Union Pacific Rail and contains several directly rail-served facilities. Westport at Alliance is located on the western edge of the development and has space for approximately 3,500 acres of industrial and distribution facilities. Located between the intermodal rail facility and the airport with good highway access, it is targeted to companies with multi-modal requirements. This section of Alliance

89 is directly accessible to the BNSF Alliance Intermodal facility, the BNSF rail line, Fort Worth Alliance Airport, and I-35W. It is also less than two miles from Texas Highways 170 and 114. Planned future developments include transload facilities and a container yard to allow for future growth and help maintain the competitive position as a top inland port. Alliance Center is a 2,600 acre business park located in the area directly surrounding Fort Worth Alliance Airport. Many of the building sites have direct taxiway access, allowing planes to travel directly from the building to the runway. This area is served by the Alliance Air Trade Center, and is also home to the Heritage Commons office park. Additionally, this area is served by BNSF Railway and has direct access to I-35W. Commerce center is a 300 acre business park located in the northern section of Alliance. Over time, this park is may accommodate up to 1.7 million square feet of distribution, light manufacturing, high-tech and aviation support activity. This area has direct access to I-35W and is at the north edge of the property, within one-half mile of the Airport as well. Alliance Crossing is the retail and small office section of the community, designed by Hillwood to serve the corporate residents of the broader development. It is located at the entrance to Fort Worth Alliance Airport, with direct access to/from I-35W. This area contains more than 75,000 square feet of retail, restaurant and office space. As former agriculture land, all new infrastructure had to be developed for the property. Hillwood developers worked with the City of Fort Worth to annex the land and install all of the gas, electric, water, and sewer infrastructure. There were no environmental concerns beyond the initial fear of odor. Transportation Access There are two airports within 15 miles of the Alliance ILC. The closest is Fort Worth Alliance, located within the ILC. This airport, opened in late 1989, is the first 100 percent cargo airport in the world. Fort Worth Alliance has two runways with 24-hour per day operations and is capable of handling any cargo aircraft. Additionally, Dallas-Fort Worth International Airport ― one of the largest airports in the U.S. and a hub for American Airlines ― is located fifteen miles southeast of the facility. The Alliance ILC is directly served by two Class I Railroads ― Union Pacific (UP) and Burlington Northern Santa Fe (BNSF). UP provides direct rail access to (but not within) the facility. BNSF not only provides direct rail access to many locations within the park but also has their largest intermodal yard at AllianceTexas, servicing 12 daily trains. The facility handles a large variety of commodities, including electronic parts, automobiles, and intermodal containers. The major access to seaports from the facility is via rail, with most maritime containers coming from the Ports of Los Angeles and Long Beach. The facility provides access to the major east-west and north-south highway corridors in the region, with quick access to I-35W and State Highways 114 and 170. Distance from the highway varies from less than one to nearly five miles depending on the building location within the park. Other facilities and capabilities of the ILC include on-site U.S. Customs and Centralized Examination Station, Triple Freeport Inventory Tax Exemption, and Foreign Trade Zone (FTZ) #196. These capabilities can be a positive factor in the attraction of private sector freight-related businesses to the ILC. Additionally, AllianceTexas is home of the FedEx Southwest Region Sort Hub and FedEx Service Center.

90 Commodities and Shipping Patterns A large variety of freight moves through the AllianceTexas facilities. The largest commodities by value are consumer electronics, including phones, televisions and DVDs. These goods primarily enter the facility by truck from Mexico or in intermodal containers via rail from Asia, and leave the facility by air as they tend to be low-weight/high-value. Bulk intermodal cargo also makes up a key portion of the facility’s cargo. The intermodal terminal currently handles 600,000 lifts, and has the capacity to handle 2 million. Lift volume is already projected to increase to 1 million annual lifts in the next few years. This freight is primarily hauled in by rail, often processed or re- loaded at the ILC and then transported by truck or rail to its final destination. AllianceTexas primarily serves the Dallas-Fort Worth Metroplex area, followed in turn by areas within 500 miles, the United States as a whole, and finally international markets. Inbound freight to the facility is originates internationally in approximately 80 percent of cases, and freight moving outbound from the facility is approximately 80 to 90 percent domestic. Inbound freight primarily comes from Asian markets, often via container ship then rail from the Ports of Los Angeles and Long Beach, as well as via truck from Monterey and Guadalajara, Mexico. Outbound shipments are mostly shipped within a 500 miles radius by truck. Transload goods movement activity is increasing dramatically at the facility, and is expected to continue growing in the near future. More freight moves out of the facility than into it, due to on-site manufacturing production. In regards to the general size of shipments, most inbound freight consists of bulk commodities such as electronic parts for assembly of manufactured goods and most of the outbound freight is smaller packages of finished goods for delivery to retail markets. As regards mode, inbound freight arrives primarily via intermodal container, followed by air and truck. Outbound shipments are mostly by truck, followed by rail and then air. Outbound rail volumes are increasing as containers are starting to be used to ship cotton outbound from the area to regions outside of the MetroPlex. Freight Facility Development Conditions The citizens of Fort Worth were initially hesitant to accept the proposal for the new facility, as the city would be financing some of the infrastructure improvements with public funds, with significant uncertainty on the return on this public investment. However, there has been a vast improvement in the level of public support in the region as the planned community has gained success over time and generated significant economic activity, jobs and property tax revenue. There was a significant period of negotiations to develop the site and infrastructure improvements between the state, Fort Worth, and the property manager, Hillwood. The facility has a tax exemption from the Texas inventory tax, called the Triple Freeport Tax Exemption. Hillwood (the developers of the facility) also applied for and received Foreign Trade Zone status from the federal government. This has been a significant amenity for the facility and it allows companies at the facility to hire U.S. workers to assemble the foreign products that are distributed domestically from facilities located at the ILC. For example, if the FTZ was not present, Motorola, which employs 2,500 people at an average wage rate of $15-20 per hour, would most likely move their operations offshore to reduce labor costs.

91 The FTZ exempts resident companies from inverted tariffs, and manufacturers also avoid paying duty on products imported for manufacturing. This significantly reduces the costs of production. Summary of Location Factors In summary, the primary location factors (as described/defined in Chapter 5) that were most important to the siting and development of the AllianceTexas facility were as follows:  Interaction with Transportation Network:  One of the primary location factors for the AllianceTexas facility was the proximity to the Fort Worth Alliance Airport, access to the rail systems of BNSF and UP as well as access to a major highway system. Ability to Access Key Markets or Customers:  Another major location factor was the ability to both efficiently receive freight and distribute the freight to customers. Most inbound freight at AllianceTexas is received via rail from the Ports of Los Angeles and Long Beach and is then transported via truck within a 500 mile radius to several of the largest population centers in the US. Public Sector Assistance and Incentives: Economic Development and Transportation Impacts Key to the project location decision was significant public support and funding for the AllianceTexas facility, as described in detail above. Economic Activity of the Freight Facility The facility is currently home to more than 230 corporate businesses, 14 of them international, with 60 companies listed in the Fortune 500, Global 500, or Forbes’ List of Top Private Companies. There is a large diversity of industries including telecommunications, pharmaceutical/life sciences, financial services, aerospace, aviation, automotive and logistics, all located within the ILC. There are also several major 3PL/Freight Forwarders located within the facility. In total, corporate and freight distribution activity at the ILC directly employed 28,000 people as of 2008. The AllianceTexas ILC is 40 percent developed after twenty years in operation, with a forty (40) year planned build-out. To date, the facility has generated a $36.4 billion economic impact on North Texas measured in business sales, with a $2.53 billion annual economic impact in 2008. In all, 31.2 million square feet of space have been developed with 25 million square feet in industrial building space with 13.6 million square feet constructed by the Hillwood Company. The ILC and property development generated $105 million in tax revenue in 2008. In addition to the growth within the facility, there have also been other businesses attracted to the region beyond the ILC facilities, though it is difficult to quantify these impacts. Costs of Facility Total investment in the AllianceTexas Global Logistics Hub was $7.2 billion from 1990 to 2008. Nearly all of the investment has been private, with 94.6 percent ($6.8 billion) put forth by Hillwood and its partners and $387.5 million, or just over 5 percent, coming from public resources for roads, infrastructure and schools. Hillwood charges a Common Area Maintenance (CAM) fee to each building of approximately $1 or 2 per square foot for overall maintenance costs. Transportation Impacts The intermodal terminal handles 600,000 lifts annually, approximately 60 percent of which have destinations within a 500 mile radius. –However, as each company conducts its own business - it is difficult to measure the total volume of freight in and out of the community. Similarly, because Alliance is a conglomeration of

92 smaller businesses, none of which are required to submit activity data to the owner, aggregate tonnage figures were not available. This precluded independently estimating VMT and no figures were available directly from the facility. As far as environmental impacts are concerned, Hillwood has yet to do any mitigation, but they do pride themselves on being excellent stewards of the land and have recently opened a facility called Independent Water in 2009 to re-use water. The goal is to save potable water for drinking uses, and to capture rainwater and purchase waste water and recycle water to use for drilling gas wells. In the past, drilling has been a very large user of potable water, but the recycling of waste and rain water allows the potable water to be preserved for other uses. 8.10 Old Dominion Freight Line, Inc. – Morristown, Tennessee Introduction Facility Type: Regional Hub Old Dominion Freight Line, Inc. is a nationally-recognized LTL national carrier. Founded in 1934 in Richmond, Virginia, the company provides complete nationwide coverage of the United States. Through its marketing and carrier relationships, Old Dominion offers door-to-door international freight services between North America, Central America, South America and the Far East. The company serves more than 48,000 direct points with its 5,513 tractors, 15,694 pup trailers, and 5,655 vans.20 Operations are conducted through 210 service center locations, of which 125 are company-owned and 85 leased. There are eight (8) inter-regional and 12 regional hub service centers in the company’s network. Of these, nine (9) are breakbulk facilities located at the company’s major inter-regional hubs and the Salt Lake City, Utah, regional hub. Old Dominion employs 10,737 people company-wide and is non-union. Each of the company’s service centers picks up and delivers freight within its service area, loading outbound freight by destination the day it is picked up. All inbound freight received by the service center in the evening or during the night is scheduled for local delivery the next business day, unless a different delivery schedule is requested by the customer.21 20 Old Dominion Freight Line, Inc., website - www.odfl.com 21 Reuters Company Profile of Old Dominion Freight Line, Inc.

93 Inter-Regional Hub Service Centers Morristown, TN Atlanta, GA Dallas, TX Greensboro, NC Harrisburg, PA Indianapolis, IN Memphis, TN Rialto, CA Regional Hub Service Centers Albany, NY Fort Wayne, IN Birmingham, AL Jackson, MS Chicago, IL Jersey City, NJ Columbus, OH Kansas City, KS Denver, CO Parsons, KS Des Moines, IA Salt Lake City, UT Old Dominion has 12 regional hubs located across the United States as far east as Jersey City, New Jersey, and as far west as Salt Lake City, Utah. In addition, the company has eight inter-regional hubs, which are located in the larger metropolitan areas of Atlanta; Dallas; Greensboro, North Carolina; Harrisburg, Pennsylvania; Indianapolis; Memphis; and Rialto, California. The company also has a hub in Morristown, Tennessee - unique in Old Dominion’s system by not being located in a large metropolitan area. The current case study focuses on this Morristown inter-regional hub, which was built in 2000. Because it is a relatively new facility, information related to the site selection process was readily available. It is also considered a successful hub by Old Dominion, and the company is likely to expand the facility in the next few years. The Need for the New Facility The company’s inter-regional and regional hubs serve two purposes within the Old Dominion network. First, they consolidate shipments from various locations and redistribute to the end-of-the-line terminals within the network. Second, they pick up and deliver to local customers. Because of increased demand for Old Dominion’s trucking services, the company knew that it needed to build a new regional hub. The company was particularly interested in establishing a regional hub located along Old Dominion’s major east/west corridor. Two cities in Tennessee met this criterion, Nashville and Morristown. Morristown offered another advantage; it is located on Interstate-81, which is a major north/south corridor served by Old Dominion. Several locations in the Nashville area were considered, but only the current Morristown location was evaluated during the site selection process. The following were the key requirements considered by Old Dominion in assessing the suitability of these sites:  Population  Geography  Location of site in the middle of their major regional network

94 Although both Tennessee cities generally met the three key requirements, the Morristown site was ultimately chosen based on a strong available workforce and Old Dominion was able to find adequate property at a reasonable price. Regarding the available workforce, the Morristown area of Tennessee has a strong furniture manufacturing history, and at the time that Old Dominion was considering developing a regional hub, furniture manufacturing was decreasing in the area and moving overseas. This left a large pool of former manufacturing employees who were available and trainable for employment at the new distribution center. This available workforce was one of the reasons that Old Dominion chose the Morristown site for its new hub. In addition, the company already had success in operating a smaller facility located about a mile from the proposed site, and the Morristown community was very supportive of the possibility of the company’s expansion. Site Selection Factors and Facility Characteristics Physical Characteristics of the Site The Morristown area of Tennessee is in the Appalachian region with hilly terrain, and Old Dominion invested a significant amount in site work to flatten and level the 65 acre property to make it suitable for their operations. Not all 65+ acres are being utilized by the company, although capacity at this hub is steadily being reached and the company has plans to further expand its operation. The Morristown property did not have any access to basic utilities prior to selection by Old Dominion. Everything needed to be brought in, and Old Dominion worked closely with the utilities and municipalities in this effort. There were no zoning or environmental issues associated with the proposed site and the fact that Old Dominion had a smaller facility a mile away (with which the community was already well acquainted), helped make the development of this site run very smoothly. General commodities are shipped by truck into and out of the Morristown hub. Although highway access is important to Old Dominion’s operations, proximity to airports, seaports, or railroads were not important considerations in the selection of the Morristown site. Transportation Access The Morristown, Tennessee inter-regional hub is in eastern Tennessee, less than 40 miles from Knoxville, approximately 200 miles from Nashville, and about 400 miles from Memphis. The Morristown hub is a 100% trucking facility. Consequently, highway access is very important and the facility is situated on a property which directly borders Interstate 81 (I-81). This highway is a major corridor into the eastern part of the United States, which is one of the largest markets served by Old Dominion. The company’s trucks travel from Dallas, throughout the southeast (Georgia, Tennessee, Mississippi, Louisiana, Texas, Arkansas) and into Morristown. The company consolidates shipments at the site and redistributes these to trucks, which then travel to major destinations in the northeast (Baltimore, Metro Jersey City, Providence, Boston) or to local destinations. Commodities and Shipping Patterns According to Old Dominion, nearly every type of commodity is handled at the Morristown facility. Walmart has several distribution centers in the area, and as a result anything this retailer might sell could potentially be handled at the Old Dominion facility. One large customer in the area ships cash register paper, and therefore paper represents another significant commodity for the hub. Other commodities include clothing, tires,

95 chemicals, and groceries. Shipping generally originates as far south as Dallas, heads to Morristown and then goes into the larger metropolitan areas of the northeast. Nearly all of the freight handled in Morristown is domestic. Only 2-3% of the freight at this inter-regional hub is international. More freight is generally shipped to the north than to the south, primarily due to higher population densities and consumption patterns in the north. The average haul length for the company is 950 miles, but haul length information is not collected by the company at the hub level. Freight Facility Development Conditions The Morristown community made Old Dominion exceedingly “welcome” throughout the site selection process. Details were not available on the incentives offered to Old Dominion to encourage site development, but some tax advantages were provided to the company. Summary of Location Factors In summary, the primary location factors (as described/defined in Chapter 5) that were most important to the siting and development of the Old Dominion facilities were as follows:  Interaction with Transportation Network:  One of the primary location factors for Old Dominion is the need to interface with its existing inter-regional and regional hubs. Direct access to I-81 helps to facilitate all truck flows for this regional hub. Labor and Workforce: Economic Development and Transportation Impacts A key location selection criterion of the Morristown site was the strong available and cost-effective workforce. Economic Activity of the Freight Facility The Morristown inter-regional hub employs approximately 750 employees. Fifty of these positions are city drivers and more than 300 are road drivers, most of whom are trained by Old Dominion. City drivers typically make roundtrip deliveries in one day or less, while road drivers operate in a variety of ways:  Team Drivers:  These drivers typically run to and from the west coast, each driving 11 hours while the other sleeps. Bag Drivers:  These drivers travel from Morristown to their destination and then take time off before going to another facility for their next job. Bag drivers operate in this way for a week or more before returning to Morristown. Schedule Drivers:  These drivers run 10 or 11 hours for a delivery, sleep overnight and then return to Morristown. Drivers Operating on “Turns”: The remaining employees are generally platform workers who transfer product from an inbound trucking unit to an outbound one. City drivers make $22 per hour at the Morristown hub. Road drivers are paid differently than city drivers and receive $.50 per mile traveled. The hourly rate for platform workers is $16 to $19. Drivers travel five hours in one direction from Morristown, pick up a load, and then return to Morristown.

96 It is not clear if Old Dominion’s presence in the area has attracted additional businesses to the Morristown area. There is a Walmart Distribution Center located in the area; one in Shelbyville is approximately 20 miles away from Old Dominion’s hub. The Walmart facility was mentioned during the case study interview. Because it was uncertain whether businesses had made their site decisions based on the presence of Old Dominion’s hub, no information related to indirect economic impacts was available. Additionally, information related to property and other taxes was not available. Costs of Facility The Morristown facility was built in 2000 entirely using private funds. Using public funds, a water tank was built for the entire exit located near the facility, but it was not offered specifically as a site location incentive to Old Dominion. It was intended to improve the entire intersection. The total cost of the facility is estimated to be $10 million. No information was available for operating or maintenance costs. Transportation Impacts This regional hub handles 1,250 to 1,500 tons of freight per day, all by truck. The company-wide average haul length is 950 miles, and it is estimated that between 75 and 90 trucks per day travel in and out of the Morristown facility. This means that this facility contributes to between 71,970 and 86,364 vehicle miles traveled (VMT) daily. Table 8-8: Truck Freight Transportation Average Length of Haul Daily Tons Handled Truck 950 miles 1,250-1,500 tons Source: Interview with Old Dominion 8.11 Summary of Case Study Findings Table 8-9 below summarizes the site characteristics and transportation access parameters for each of the facilities evaluated in the case studies. Table 8-9: Case Study Site Characteristics and Transportation Access Facility Type Case Study Size Transportation Access Freight Handled Inland Port Virginia Inland Port (Front Royal, VA) 161 acres One Class 1 Railroad (NS), within 5 miles of I-66 and I-81 Intermodal containers Intermodal Terminal Rickenbacker Intermodal Terminal (Columbus, OH) 175 acres Two Class 1 Railroads (NS & CSX), within 5 miles of I- 270 and Highways 23 and 33, Airport within 1 mile Primarily intermodal containers Bulk or Transload Terminal Savage Safe Handling (Auburn, ME) 210 acres One Shortline Railroad (SLA), within 3 miles of I-95 Chemicals, plastic pellets, liquid fuels

97 Distribution Center Family Dollar 75 acres, 1.2 million sq ft for buildings Direct ramp to I-10 Highway Consumer retail goods Warehouse Murphy Warehouses Average 250,000 to 300,000 sq ft for buildings Rail, Interstate highways Food, beverages, paper, plastics Integrated Logistics Center AllianceTexas (Fort Worth, TX) 11,600 acres Two Class 1 Railroads (BNSF & UP), I-35W, Rtes 170 & 114 within 1 mile, Cargo Airport on-site Primarily intermodal containers Hub Terminal Old Dominion (Morristown, TN) 65 acres Adjacent to I-81 Consumer retail goods Each case study also examines the transportation and economic impacts for each project, but a summary of the impacts is shown below. The number of direct jobs ranged from under 20 for Virginia Inland Port and Murphy Warehouses to over 28,000 direct jobs at AllianceTexas. While the direct employment at Virginia Inland Port is relatively low, there are approximately 8,000 indirect jobs related to this facility as the Inland Port has attracted a large number of freight and distribution businesses. Similarly, the Rickenbacker Intermodal Facility employs about 150 people directly but the industrial park that surrounds the Intermodal Facility is projected to employ over 20,000 in the next 10 years. These facilities also generate significant transportation impacts. Several of these facilities ship and receive freight via rail over long-distance hauls thus reducing freight travel by truck resulting in significant truck vehicle miles travel (VMT) reductions. The truck VMT reductions from the Case Studies range from 1 million to almost 50 million annually. Table 8-10 below provides a summary of both the transportation and economic impacts for the Case Studies.

98 Table 8-10: Economic and Transportation Impacts of Freight Facility Case Studies Facility Type Case Study Direct & Indirect Jobs Freight Volume Transportation Impacts Inland Port Virginia Inland Port (Front Royal, VA) 17 direct jobs, catalyst to another 8,000 jobs22 33,600 containers (2008) 5.4 million VMT reduction, $105,000 greenhouse gas emission savings Intermodal Terminal Rickenbacker Intermodal Terminal (Columbus, OH) Approximately 150 direct jobs at Intermodal facility, projection of 20,000 jobs at freight industrial park23 250,000 annual “lifts” 49 million fewer truck miles in Ohio in 10 years - $2 M in pavement maintenance savings, $2,45 M in accident reductions Bulk or Transload Terminal Savage Safe Handling (Auburn, ME) 100 direct jobs24 500,000 tons per year – 5,000 railcars per year with other businesses attracted nearby $619,500 accident reduction, $506,000 pavement maintenance from using rail over truck Distribution Center Family Dollar (Marianna, FL) 515 direct jobs; catalyst to another 155 jobs25 90 trucks/day – 32,000 trucks per year 16.2 million in truck VMT per year Warehouse Murphy Warehouses 20 direct jobs per warehouse facility (9 facilities in region)26 10,000+ carloads per year 1.3 million VMT reduced annually. 6,730 fewer greenhouse gas tons emitted Integrated Logistics Center AllianceTexas (Fort Worth, TX) 28,000 direct jobs ; catalyst to another 63,388 jobs27 600,000 intermodal rail lifts per year N/A Hub Terminal Old Dominion (Morristown, TN) 750 direct jobs28 75 to 90 trucks per day 21.5 million to 25.9 million truck VMT per year Planning and Strategy Companies most often locate new facilities to expand, contract or change their market position, as discussed elsewhere in this report. Of the case studies evaluated, most companies were establishing the facilities in order to expand their capabilities in an existing market or expand into new markets. Virginia Inland Port 22 Edwards, Greg “The Virginia Inland Port: Commonwealth Transportation Board” [Presentation] Norfolk, VA: Virginia Port Authority, November 7, 2007. 23 Information provided by facility representative based on an independent study conducted by the Rickenbacker facility. 24 Information obtained from Savage Safe Handling current and former facility representatives. 25 Information obtained from a Family Dollar representative and presentation. 26 Murphy Warehouse “Company Profile“ [website]. Minneapolis, MN. http://www.murphywarehouse.com/ (Accessed May 2010). 27 Hillwood Development Co., LLC, and http://www.alliancetexas.com/Research/AllianceTexasFacts/EconomicImpact/tabid/202/Default.aspx. 28 Information obtained from Old Dominion facility representative.

99 (VIP) and Rickenbacker were both developed to address capacity concerns in existing facilities. In the case of VIP it was the ports of Norfolk, Newport and Portsmouth that were in the need of additional intermodal capacity. The Discovery Park intermodal facility had reached its capacity creating the need for the Rickenbacker facility. Savage Safe Handling, on the other hand, identified an opportunity to enter an existing market and compete based on the ability to provide materials more efficiently. Key Site Selection Criteria Chapter 6 provides an overview of the key criteria and data requirements to be considered when companies make site selection decisions. In developing the case studies, many of these criteria were cited as factors that drove the companies to site their facilities in the locations that were selected. It is worth emphasizing that proximity and/or access to markets, especially as it related to business supply chain networks, was almost universally the strategic, high-level driving factor to determine the local or regional area to site a freight facility. Most of the other site selection factors were then used to refine the site selection process to specific, sometime competing sites. Proximity or Access to Key Markets The ability to access key markets was the most important element in most of the companies’ decision making for site selection. Savage Safe Handling located in Auburn, Maine primarily due to the close proximity to the paper plants that would purchase their chemicals and other related products. Companies such as the LTL operation of Old Dominion or the truck-based distribution of Family Dollar based their site selections on serving specific markets within their company’s established supply chain logistics model. Large facilities such as Alliance or Rickenbacker - which have a wide range of modal options and service offerings - are able to partially drive the market to utilize their services and provide a range of distribution, consolidation, and assembly services to handle major national freight flows. Interaction with Transportation Network The ability of the company to access specific transportation network capabilities also critically impacted location decisions. Proximity to highway ramps was a primary criterion for some companies, such as Old Dominion and Family Dollar. Class 1 rail access was critical for site selection of rail-dependent facilities such as Rickenbacker and Alliance. In other cases, the access needs have been more dynamic. Rail access was not originally a requirement for Murphy Warehouses, but in recent years, they have made sites with rail access (e.g., a rail siding) a priority allow for multi-modal shipping options. Some companies, such as Family Dollar and Old Dominion, site facilities based on their own internal transportation network. In the case of Old Dominion, their Morristown, Tennessee facility was developed primarily because of Old Dominion’s existing east/west corridor of similar facilities in this region. Other facilities, such as the Rickenbacker Intermodal Facility, were located largely due to their position along the Heartland Corridor, providing greatly improved double-stack rail service for Norfolk Southern between the east coast and Chicago. Even though the Alliance facility handles more freight volume in tonnage by rail and truck, the original development of the ILC began with the air cargo facilities at Alliance. Access to the nearby cargo airports provides Alliance and Rickenbacker with another mode of transport for freight, specifically high value, low weight freight. The presence of an airport allows these facilities to provide full-service freight movement opportunities to shippers.

100 Public Sector Assistance and Incentives As noted elsewhere in this report, public incentives do not drive location decisions at the strategic level. However, incentives become a potentially differentiating factor as companies narrow their list of potential sites. This was evident with the Family Dollar Case Study after the company had narrowed their site candidates to Cordele, Georgia and Marianna, Florida. The local, county and State support for the Marianna location, which included donation of land, tax exemptions, matching infrastructure funding and several State grants, played a major role in Family Dollar’s selection of this site. The Alliance facility provides another example of proactive public assistance, wherein a public-private partnership was developed between the FAA, the city of Fort Worth and the private development company (Hillwood). The public contribution included land donations as well as construction of utilities, such as water and sewer, and highway infrastructure. Foreign Trade Zones - another form of public incentive programs – played a part in some decision making. Savage Safe Handling, Virginia Inland Port, Rickenbacker, Alliance and Murphy Warehouses all have Foreign Trade Zone designation as part of their sites. Labor and Workforce Labor and workforce availability was not a primary driver for strategic site selection. However, as with public assistance and incentives, this factor often played a role in selecting one site over another within a selected region. An example of this includes Family Dollar, which partially selected their site based on the availability of the workforce in and around Marianna, Florida. Family Dollar received over 6,000 applications for the 515 available jobs at the retail distribution center. Similarly, in the case of Old Dominion, the Morristown, Tennessee site was chosen over the Nashville site primarily because of the greater availability of the workforce in Morristown. Total Cost Environment Not all projects provided cost information. However, for those who did, total costs ranged from $10 million to develop the Old Dominion hub terminal in Morristown, TN to over $7 billion to develop the Alliance Texas ILC in Fort Worth, TX. There was a wide range of funding scenarios, with Old Dominion providing all of the funding privately, while funding for Rickenbacker and Family Dollar was accomplished through public-private partnerships. The $112 million development costs of the Rickenbacker facility included $33 million from Norfolk Southern Railway, $28.9 million of Federal funding, $14.3 million from State and regional planning commissions. Family Dollar contributed $55 million for the construction of their Marianna distribution center and the public commitment has been over $24 million, in the form of land donations, grants and tax credits. The $7.2 billion total investment in the AllianceTexas ILC has been funded primarily with private funds. Just over 5% has come from public sources for roads and other infrastructure. As discussed in the AllianceTexas Case Study, Hillwood has various revenue streams in order to pay back its investment, including a Common Area Maintenance Fee to each building on a per square foot basis. Limited information regarding payback expectations or results is available as most of the companies are private corporations. This information is however available for the Virginia Inland Port, given that it is owned by a quasi-public entity. VIP was constructed in 1987 and began turning a profit seven years later, in 1994.

101 In addition to the capital costs of developing these facilities, the total cost environment criteria also considers operating costs, such as labor costs, tax exposure or fuel costs. Companies that rely primarily on truck transportation place particular emphasis on fuel and operating costs. This was shown clearly with the Family Dollar case study, whereby one of their primary site selection criteria was the ability for their trucks that move consumer goods to their store locations to be able to go out, deliver and return in the same day. Similar to fuel costs, labor costs were identified as a critical site selection criterion for Old Dominion. As mentioned in the case study, the eastern part of Tennessee had lost many manufacturing jobs because of the relocation of furniture production facilities, so therefore there was a large available workforce. Availability and Cost of Suitable Facilities The availability of suitable facilities was particularly important for the companies whose business model involves purchasing existing warehousing facilities. This was the case for both Murphy Warehouses and Savage Safe Handling. Because of their experience owning and operating many facilities, Murphy Warehouses has specific criteria for potential facilities to acquire; including a minimum size requirement of 150,000 square feet of warehousing. In addition to facilities, the availability of low cost land and large parcels impacted location decisions, particularly for large intermodal facilities such as Rickenbacker and Alliance. In the case of Alliance, much of the area surrounding Fort Worth had been developed and the tract of land purchased by Hillwood was relatively inexpensive and not yet developed because the area was prone to unpleasant odors because of prevailing winds from a long-defunct nearby livestock market. While the stockyards had long been gone, the stigma remained. This allowed for large parcels of inexpensive land to be purchased and utilized for industrial development. The case of VIP provides a lesson in ensuring that sites are selected with proper consideration for expansion potential. VIP’s development was sporadic with minimal zoning, and therefore there are not as many opportunities for contiguous growth. As mentioned in the case study, the location of the golf course adjacent to VIP is a prime example of this as it hinders further growth. Utilities Most of the studied facilities needed to add utilities or capacity to their site as part of the development. The ability to “tie-in” at a close proximity to the site was an important, but not essential criterion for most facilities. Some or all of the costs of the utility services were typically provided by the public as part of the public participation and incentive programs. This was the case with AllianceTexas, as the city of Fort Worth provided the water, sewer and other utilities to support the airport (the airport being the first step in the generation of the ILC). Permitting and Regulation Because Savage Safe Handling transloads various chemical and other potentially hazardous materials, it was critical in their location selection that a site was zoned Industrial and that the host city would be amenable to the proposed use of the facility. The developers of the Savage Safe Handling facility in Maine had previous experience with the City of Auburn and were comfortable that City regulators understood the planned operation of Savage Safe Handling. To ease the Family Dollar siting and permitting, Marianna, Florida developed an industrially-zoned distribution park with multiple parcels permitted for freight logistics uses.

102 Tax Environment The tax environment was not often cited as a primary site selection criterion. If mentioned as part of the site location decision, it was related to tax incentives. This was the case with Family Dollar with the significant package of tax abatements for developing the facility:  Ad valorem tax exemptions by the city and county for ten years  Florida Qualified Target Industry Tax Refund Program  Florida Rural Jobs Tax Credit of $1000 per job  State Rural Enterprise Zone incentives in the form of 2 years worth of Jobs Tax Credits,  Building Materials Tax Refunds  Business Equipment Sales Tax Refunds