ALAMEDA CORRIDOR

““A Project of National Significance”A Project of National Significance”

Project Purpose

The Alameda Corridor Project is needed to keep pace with the steady growth of cargo moving through the Ports of Los Angeles and Long Beach

U.S./Pacific Rim trade has doubled during the last decade

The Port’s share of West Coast container cargo increased from 42% in 1976 to 52% in 1999 with increasing market share projected in future years

Cargo volume in 2000 exceeds the forecast by the Independent Cargo Consultant for 2006

Factors affecting future growth 18 million population in six county area Larger container ships Vessel sharing arrangements Increase in discretionary cargo State of the art facilities at Ports Ports are the “Load Center” of West Coast

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Project Schematic

ALAMEDACORRIDOR

Stauson Ave.

Firestone Ave.

Rosencrans Ave.

Vernon Ave.

Florence Ave.

Southern Ave.

Imperial Hwy.

El Segundo Blvd.

Compton Blvd.

Alondra Blvd.

Del Amo Blvd.

Carson St.

Pacific Coast Hwy.

LONG BEACH

LAKEWOODCARSON

PARAMOUNT

BELLFLOWER

VERNON

HUNTINGTONPARK

SOUTH GATE

LYNWOOD

DOWN-TOWNLOS

ANGELES

Sepulveda Blvd.

Anaheim St.

TORRANCE

LOMITA

RANCHOPALOSVERDES

SAN PEDRO

WILMINGTON

Port ofLong Beach

Port of Los Angeles

P A C I F I C O C E A N

Gage Ave.

Tweedy Ave.

DOWNEY

COMPTON

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Project Description

The Alameda Corridor is a 20 mile, multi-track rail transportation corridor, paralleling Alameda Street, connecting the Ports of Los Angeles and Long Beach

with the transcontinental rail network in downtown Los Angeles

Consolidates operations of the Union Pacific/Southern Pacific (UP) and Burlington Northern Santa Fe (BNSF) onto one improved corridor (San Pedro, Wilmington)

Eliminates traffic conflicts at 200 street level crossings with overpasses and 10 mile long trench

Estimated cost—$2.4 billion, including contingencies and financing costs

Estimated completion—Second Quarter 2002

Projected to reduce train emissions (25%) and vehicular emissions (23%)

Projected to reduce locomotive hours (30% per day) and vehicle delays (15,000 hours per day)

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Organizing the Solution

Identifying Participants and Stakeholders

Port of Los Angeles

Port of Long Beach

City of Los Angeles

City of Long Beach

Burlington Northern/Santa Fe Railroad

Southern Pacific Railroad

Leadership/Sponsorship roles—the Ports took the lead

Legal Construct—J.P.A.—two attempts

Legal Tests

Union Pacific Railroad

6 Corridor Cities

LACMTA

Cal Trans

USDOT

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Risk Sharing

Interest Rate/Market Risk

Construction Risk

Revenue Risk

Seismic Risk

Environmental Risk

Ports

Design-BuildConsortium

Bondholders/Bond Issuers

Outside Insurers

Railroads

USDOT

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ACTA—Financial Feasibility Analysis as a Central Planning Tool

First financial model designed in 1992 427 scenarios over 6 1/2 years Focuses overall efforts Centralizes decision-making around feasibility Format of Executive Level reports allow policy makers to understand key aspects of project

and follow along with progress

Construction Parameters

Revenues

Federal Loan

Prepayments

Tax Analysis

Bonds– Senior– Subordinated

Reserves

Structure Retirements & Reimbursements

Debt Service Tables

Coverage Tables

Flow of Funds

Revenue Accumulations

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Other Sourcesof Funds

The Original Funding of the Project

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FederalCongress, TEA-21 and Demonstration Programs $700USDOT–Other Programs 30Air Quality—EPA 8ISTEA 40

State and Regional 100LACMTA–Regional STIP 0

Ports 400Cities 40

Revenues—Recurring Sources—For bonds and/or Loan 600

Ports—Shippers 5% Gross Wharfage SurchargeTruck Tolls $3 tollRailroads—User Fees $30/box Total $1.838

One Time SourcesOriginal Budget

($millions)

BB

Railroad Sensitivities

RR’s do not like to share facilities

RR’s are sensitive to additional Per Unit Cost

May be amenable to Per Unit Cost where:

Leverage of State/Local/Federal sources is maximized

Accelerates asset modernization substantially

High-Density areas dramatically improve times

Strong demand areas

R.R. Capital costs are much higher

Uncertainty/Risk Avoidance

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USDOT and ACTA—Precursor to TIFIA

ACTA approached Congress/USDOT for $700MM grant

USDOT countered with $400MM loan

Underwriters structured terms: Consistent with feasibility Favorable to ACTA Competitive with tax-exempt rates

USDOT agreed to terms: 10 year Treasury rate through 2001—30 year thereafter No interest due through 2001 Negative amortization through 2013—Builds to $880MM 30 year term No cross default No rate covenant

Congress appropriates $59MM Loan Loss Reserve Ratings OMB scoring

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ACTA and USDOT (cont.)

Congressional heavy lift Chair of House Transportation Committee—House authorization California delegation—Unified Ca. Governor Speaker of the House Committee Chair

Administration efforts Central L.A.—Jobs and economy

Signed loan—1/17/97 to great fanfare

Amended loan 10/98 to include package of construction—friendly amendments to allow 35 year termination of Use Fees

Draws scheduled and taken $140—9/97 $140–9/98 $120—9/99

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Uses

Sources and Uses of Actual Funding

Total Project cost, including all expenditures to date,are estimated at $2.463 billion

Sources

Amounts in $ millions. All construction cost dollars are inflated at 3.35% other than the design buildcontract price. Bond proceeds include original issue discount/premium and accrued interest.

CapitalizedInterest

$247

FinancingCosts

$82

ROW,Demo Proj.,Prelim. Eng.

$468

ProjectContingencies

$200

CorridorConstruction

Costs$1,431

SubordinateBond

Proceeds$164

DOT Loan$400

MTA$347

Interest$90

Misc.$27

Ports$394

SeniorBond

Proceeds$1,006

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Other Sources of Funds

The ports advanced $394 million in 1994 to purchase railroad rights-of-way

The U.S. Department of Transportation made a $400 million loan to the project

Congressional appropriation made

Total $400 million already drawn down

Paid ahead of the Senior Lien Bonds but after the Subordinate Lien Bonds

The Los Angeles County Metropolitan Transportation Authority has committed $347 million to the Project

Approximately $300 million already has been received

All but $76 million of Prop. C funds are from State of California/STIP

Sources other than bonds comprise nearly 50% of project funding

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Project Revenues per Operating Agreement with Railroads

Waterborne Containers are those that cross the docks at the Ports and leave Los Angeles area by rail (or vice versa)

Use Fees and Container Charges subject to automatic annual escalation (CPI): Minimum of 1.5% per year Maximum of 3.0% per year

No charges if complete blockage of Rail Corridor for more than five consecutive days—offset by business insurance

Use Fees or Container Charges are to be levied for 35 yearscommencing after Substantial Completion

Railroads pay Use Fees forUsing Rail Corridor

Waterborne containers $15/TEU (loaded)(i.e., entering or leaving ports) $4/TEU (empty)

Non-waterborne containers $4/TEU(loaded or empty)

Other railcars (autos, coal, white $8/railcar (loaded)bulk, iron & steel, liquid bulk, tec.) No charge (empty)

Railroads pay Container Charges onwaterborne containers not using Rail Corridor

Waterborne containers $15/TEU (loaded)No charge (empty)

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Payable in any year in which use fees and container charges are insufficient to pay 100% of debt service on the bonds and the DOT loan

The maximum Shortfall Advance payable by the ports in any year (i.e. “Contingent Port Obligation”) = 40% of debt service on bonds and DOT loan

Actual Shortfall Advance = debt service on bonds and DOT loan less Use Fees and Container Charges collected

Ports’ Shortfall Advances

The Ports are obligated to provide limited “Shortfall Advances”

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Detail of Revenue Bonds

ACTA has issued/will issue approximately $1.165 billionof 1999 Revenue Bonds in four series

Senior LienBonds

Subordinate LienBonds Total

Tax-Exempt$494MMSeries A

(2006–2037)

$21MMSeries B

(2003–2006)$515MM

Taxable$505MMSeries C

(2015–2037)

$145MMSeries D

(2003–2015)$650MM

Total $999MM $166MM $1,165MM

Amounts shown reflect the estimated par amount (not proceeds) of the 1999 Bonds

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Corridor Revenues

ACTA’s repayment obligations will be paid primarily from Use Fees and Container Charges as projected by BST (based on the Mercer/DRI Cargo Forecast)

Source: BST based on Mercer/DRI 1998 Cargo Forecast through 2020 (“Asian Crisis” scenario); 0% cargo growth assumption and 1.5% CPI assumption on revenue from 2021-2037. Assumes termination of revenues occurs July 2037.

*Containers account for 99% of total revenues

50

100

150

200

250

300

350

Federal Fiscal Year

FY

Rev

enu

es (

$ m

illio

ns)

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Use Fees and Container Charges

Available Revenues

Additional Dedicated Revenues are provided by the Contingent Port Obligation

Source: BST based on Mercer/DRI 1998 Cargo Forecast through 2020 (“Asian Crisis” scenario); 0% cargo growth assumption and 1.5% CPI assumption on revenue from 2021-2037. Assumes termination of revenues occurs July 2037. Contingent Port Obligation = 40% of the Annual Amount and DOT Loan payments each year.

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100

150

200

250

300

350

1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037

Federal Fiscal Year

FY

Rev

enu

es (

$ m

illio

ns)

Contingent Port Obligation

Use Fees and Container Charges

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ACTA Obligations

Dedicated Revenues are expected to provide ample coverage of the 1999 Revenue Bonds and DOT Loan

All debt service is assumed to be capitalized through January 1, 2003.Dedicated Revenues = Use Fees and Container Charges, Contingent Port Obligations and certain interest earnings

50

100

150

200

250

300

350

1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037

Federal Fiscal Year

Deb

t S

ervi

ce (

$ m

illio

ns)

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Senior Lien Debt Service

DOT Loan

Subordinated Debt Service

Use Fees and Container Charges

“Dedicated Revenues”

Required Shortfall

Advances

ACTA’s “base case” projections assume Mercer’s mostconservative estimate (“Asian Crisis”) cargo growth scenario

Mercer Scenarios

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HighGrowth

Base Case(12/97)

“AsianCrisis”

Asian rebound apparent by late 1998

Steady gains in trade liberalization

Long-term global GDP growth rate of 3.2%

Asian rebound begins in mid-1999

Trade liberalization proceeds at a moderate pace

Long-term global GDP growth rate of 2.8%

Asian recovery delayed until early 2000

Trade liberalization slows

Long-term global GDP growth rate of 2.4%

2.9

2.9

7.8

7.0

6.32.9

16.7

14.4

12.4

7.6%

6.9%

6.2%

Note: TEU = Twenty-Foot Equivalent UnitCAGR = Compound Annual Growth Rate

ForecastScenarios Characteristics

Total TEUs($millions) Containers (TEUs)

1996–2020CAGR20101996 2020

Conclusion

Successfully secured the cooperation of major stakeholders including intense competitors.

Local, state, and national elected officials fully supportive of project with Federal government designating the Alameda Corridor as a “project of national significance.

Policy maker decision making process facilitated with well developed model and feasibility analysis.

Risk spread among various parties including construction contractor. ACTA among first to use TIFIA program under TEA-21 resulting in $400 million

federal loan with highly flexible provisions. Funding shared equally between private and public partners. ACTA, on time and on budget, has been a public/private partnership success.

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