Tuesday , July 17, 2018

CLT.biz Insights 16.09.23

Featured In This Issue

 

Trans Pacific Partnership
Trans Pacific Partnership

WHAT IS THE TPP?

Why you need to know about the TPP!

In the midst of our Presidential campaign, I thought it might be helpful to put forward some facts about the TPP. Both Donald Trump and Hillary Clinton have expressed their doubts about the TPP. Their comments have certainly created a negative and false impression about the TPP. However, the TPP is a negotiated trade agreement that has been developed under President Obama. He wants this agreement in place as one of his legacy accomplishments. As such, he is doing all he can to pass it before congress before he leaves office. It is expected to be taken up by Congress during the lame duck session before the next President takes office.

 

Before you jump to your own conclusion about the TPP, it might be valuable to gather the facts about the TPP. Read more…

BizProfiles

What is the TPP?

What is it all about?

Why you need to know about the TPP!

In the midst of our Presidential campaign, I thought it might be helpful to put forward some facts about the TPP. Both Donald Trump and Hillary Clinton have expressed their doubts about the TPP.  Their comments have certainly created a negative and false impression about the TPP.  However, the TPP is a negotiated trade agreement that has been developed under President Obama.  He wants this agreement in place as one of his legacy accomplishments.  As such, he is doing all he can to pass it before congress before he leaves office.  It is expected to be taken up by Congress during the lame duck session before the next President takes office.

Before you jump to your own conclusion about the TPP, it might be valuable to gather the facts about the TPP.

First, what is the TPP?

The Trans-Pacific Partnership (TPP) is the largest regional trade accord in history.  It will establish new terms for trade and business investment among the United States and 11 other Pacific Rim nations — an important collection of countries with an annual gross domestic product of nearly $28 trillion that represents roughly 40 percent of global G.D.P. and one-third of world trade. Countries participating in the TPP include:tpp-w-map

  • Australia
  • Canada
  • Japan
  • Malaysia
  • Mexico
  • Peru
  • United States
  • Vietnam
  • Chile
  • Brunei
  • Singapore
  • New Zealand

The TPP is the product of years of negotiations that culminated last year with the endorsement of the 12 nations’ trade chiefs.  This partnership agreement may be a significant accomplishment for President Obama, who has pushed for a foreign policy “pivot” to the Pacific rim. It seeks to bind Pacific nations closer through lower tariffs while also serving as a buttress against China’s growing regional influence.

 Why is it important to be done now?

This agreement is important for the establishment of global leadership and the rules for trade.  .  The rules of the road are up for grabs in Pacific arena.   If this group does not pass this agreement and write those rules, competitors will set weak rules of the road, threatening American jobs and workers while undermining U.S. leadership in Asia.

The pact is seen as an avenue to address a number of troubling issues that have become stumbling blocks as global trade has skyrocketed, including e-commerce, financial services and cross-border internet communications. The United States is eager to establish formal trade agreements with five of the nations involved — Japan, Malaysia, Brunei, New Zealand and Vietnam.  It should be noted that the TPP addressed many of the outstanding issues with NAFTA as the U.S., Canada and Mexico are major participants in this agreement.

The Trans-Pacific Partnership is hailed as an “open architecture” document written to ease adoption by additional Asian nations, and to provide a potential template to other initiatives underway, like the Transatlantic Trade and Investment Partnership, between the U.S. and Europe.

Where are the divisions around the TPP?

According to the New York Times, “Supporters say that it would be a boon for all the nations involved, that it would “unlock opportunities” and “address vital 21st-century issues within the global economy.” Opponents in the United States see the pact as mostly a giveaway to business, encouraging further export of manufacturing jobs to low-wage nations while limiting competition and encouraging higher prices for pharmaceuticals and other high-value products by spreading American standards for patent protections to other countries. A provision allowing multinational corporations to challenge regulations and court rulings before special tribunals is drawing intense opposition.”

Where is China?

China is uncomfortable with the TPP.  It sees this pact as opening the doors to competition as the United States tries to tighten its relationship with neighboring Asian countries.  There was some suggestion that China might want to participate as some point, but that has yet to be accomplished.  At the same time, China seems more focused on their own trade agreements in the region that are part of its Silk Road initiative in Central Asia. There is speculation that the TPP’s “open architecture” will eventually allow for China to join along with other important economic powers like South Korea.

Most recently, President Obama has reached out to Ohio Governor John Kasich in support of the TPP.  That could signal a bipartisan effort to ratify this agreement before the end of 2016.  Stay tuned.

 

BCBSNC Health Care Challenges

Blue Cross Blue Shield of North Carolina is In

Blue Cross and Blue Shield, North Carolina’s largest health insurer, has announced that it will continue offering individual coverage under the Affordable Care Act in all 100 counties of the state in 2017. Until recently, Blue Cross Blue Shield had questioned their participation in the ACA Exchange.  Having lost $405 million in the previous two years, BCBS was unsure about continuing its involvement with the ACA Exchange.download

Their announcement ensures that all North Carolina residents will have ACA access for at least one more year as the federal exchange enters its fourth year of public enrollment. Previously, two major insurers – Aetna and United Healthcare – announced that they would not offer ACA plans in North Carolina and many other states in 2017. Cigna is the only other carrier offering coverage under the ACA Exchange, but it will only offer plans in five counties in the Raleigh Durham region.

The pricing and other details of Blue Cross insurance plans will not be released until October. The company is seeking an 18.8 percent average rate increase for 2017 plans from the N.C. Department of Insurance, after being granted a 32.5 percent average rate increase for this year’s plans.

Open enrollment for 2017 will begin on Nov. 1, and will end Jan. 31. Customers who want health insurance by Jan. 1 will need to be enrolled by Dec. 15

Blue Cross Will Continue Its Participation in ACA Exchange

Brad Wilson, President and CEO of BCBSNC, outlined the insurer’s options in a presentation before the Hood Hargett Breakfast Club on September 9, 2016. He also offered his recommendations for changes to the ACA so that it might continue more successfully.

Here are some of his comments, edited for brevity and clarity as necessary:

Brad Wilson, President and CEO of Blue Cross Blue Shield North Carolina on Health Care Challenges:

It’s already been said that this is an important and timely topic, health care. It has been for a long time and is going to continue to be very much a part of our state and national conversation holding into the future, and I’m not talking about characterizing it in political terms.

Let me ask you to do this first—set aside whatever particular political energy that you may have around health care for just a few minutes. I’m going to share some information with you that’s data, reality about the ACA and also about the transformation that’s taking place in health care, so that as you listen to the conversation through the political whims and in particular at this time of year as we move through the campaign season, hopefully you will be centered and grounded in reality, as we all enjoy lots and lots of acrimony and spend from every corner.

16-09-21-brad-wilson
BCBSNC CEO – Brad Wilson

This is the second time that I’ve had the opportunity to be with you and so thanks for inviting me again. The first was 5 years ago, back in 2011. I had been in this role about a year at that time and we talked about how quickly health care was changing, how we were transforming our system into one that pays for quality rather than for procedures—items, the more you do, the more you get paid.

We talked about what was driving health care costs even higher back in 2011 and we also talked about why consumers, patients, customers, consumers, all of us individually need to be at the center of health care. That is a multi-dimensional responsibility—education of ourselves about reality, full engagement in taking better care of ourselves, and of course being informed and engaged with our wonderful partners. We need help and to be compliant patients when we in fact become a patient. It’s not a question of whether or not we are going to be a patient, it is just a question of when we will be a patient.

Now let me set the term right here at the beginning. As I talk about health care costs I am not talking about your health insurance premium. That is one component part of health care costs, but those terms are not synonymous. When I talk about health care costs, I’m talking about what is being paid for the goods and services that are being delivered when we need them that when you add them up then becomes translates into a health insurance premium. We have to begin to think about it and understand that and so one is related to the other.

There is a cause and effect relationship there that we cannot separate, so as you think about the health insurance part think about health insurance this way. Really your health insurance premium is the average cost of what is being paid for goods and services when you need to access them, plus taxes that we pay, plus administrative costs of running our company. You take those 3 ingredients and then you spread that cost across a group of people, a pool of people, a well-defined group of people, and you come up with a premium.

Now my actuarial friends would say, “Oh, it’s a lot more complicated than that,” and it is, but it works. If you don’t like your health insurance premium, that’s okay, but you have to understand that it does reflect those 3 ingredients.

Let’s explore just a little bit more about 2011 and how far we have come. We talked about something that in 2011 was not yet implemented. It was the law, but it was just sitting there, and that was the Affordable Care Act. The ACA has now been implemented. In 2014, it went wide and the consequences of the ACA, now in 2016, are beginning to be well understood—both the good and the bad—and there’s both ingredients in the story.

You can see that the topics that we talked about with each other back in 2011 are still the same topics that we’re discussing today and that’s why we are going to talk about them again—and we all need to understand that we all have skin in this game. Doctors, hospitals, insurers, employers, government—all working together—that’s what it’s going to take. That is the formula to improve upon and make things better whatever the things are that you care the most about. It is going to require more different and better collaboration.

Let’s start with the ACA, the law to expand coverage. The law did expand coverage to nearly everyone who chooses to or chose to purchase it and it has helped accelerate the reshaping of our system, but the consequences of that have not worked out exactly like we had planned. Indeed, more people are covered. More people have insurance today than they did before the ACA was enacted and that’s a good thing. But conversely costs are much higher.

Costs (remember the definition of costs?) are much higher, and they continue to climb even more, and quite frankly there is no end in sight according to the Congressional Budget Office. If the trend continues, by 2020, 20 percent of the GDP will be spent on health care. That’s $1 of every $5 in your pocket that will be dedicated to health care somehow, someway.

Why should you care about the ACA? I’m confident that in a crowd this size that many of you have your insurance through your employer or through some other mechanism that’s not the ACA and I’m pretty confident that many of you may have your coverage through the ACA or you know someone or you have a family member who now has coverage through the ACA purchasing it through the exchange. Well the reason that we should all care about it is that the employer group market and the ACA market, two different market places, are in inextricably linked. You cannot separate the two.

We are not going to make the progress that we need to make in health care in improving all of health care, every aspect of health care, until we improve the ACA. Getting ACA right and that means making it affordable for consumers and sustainable for insurers and providers is on our minds every day at our company and I know that it is on the minds of all our provider partners around the state and it needs to be on your radar too.

If you don’t know much about what it is we are talking about this morning, here’s a homework assignment. You really need to pay more attention to every aspect of health and health care. Now as I’ve already said, the ACA has had profound impact both positively and negatively on the health care eco-system. First let’s remind ourselves of some of the positives and I’ve already mentioned that more people are insured today than before, but what does that mean for North Carolina? What that means is there is about half a million—500,000 to 600,000 North Carolinians who got coverage today under the ACA that didn’t have it previously. Those folks are not eligible for Medicaid so that’s a separate conversation that we can have at some other point in time, but that’s a good result. Think about all of the money that brings into the medical economy of our state now that those folks are insured and more importantly think about the care that these folks need, want and deserve so they are getting their needs tended to.

Now one of the aspects we lean into at Blue Cross is trying to educate all consumers, but particularly this consumer group about how the ACA works, the options that they have. Many, many, many of these customers for the first time in their lives have insurance and they really don’t understand how it works or how to use it. Our competitors have done and are doing the same and there was much optimism about 100s of 1,000s of people having health care coverage. Unfortunately, the headlines today are different. Let me give you 3 real headlines from around the country. “Enrollment in Affordable Care Act insurance exchanges are half the initial forecast so while we should celebrate 5 to 600,000 the end there is at least another 5 to 600,000 who for whatever particular reason have not signed up.” Another headline, “Obama Care exchanges are in trouble. What can be done?” And the last one, “Aetna to pull out of most of Obama Care exchanges.” A recent event here in North Carolina that I’ll mention in just a second.

It’s clear that something is wrong. Something is not working right or we would have these headlines. The ACA is drawing customers who need a lot of expensive medical services, but it’s not drawing enough younger, healthier, customers to pay into the insurance pool to balance that book out. That’s a simple fact. That is what the data shows. The math is pretty simple. Insurers like us are paying out more than they are taking in. All of you are business people. You don’t have to get an MBA to understand that if you are not taking in enough to pay for what’s going out that that is an unsustainable business model. What happens when that is the reality? Premiums go up. When premiums go up that forces more of the younger, more of the healthier customer to drop coverage. They don’t need it. Not going to use it. Going to live forever. Can’t afford it. All of the things that we’ve heard so they drop out and then guess what happens? Premiums go up even more. The premiums must move higher to make up for the customers dropping because it’s too expensive. That’s what’s called the death spiral and that’s what we staring, we are staring that in the face right now in North Carolina and across the country in terms of the ACA.

Now let me bring it back home here, here in North Carolina. Here’s some details about our experience with the ACA. Over the last 2 years we have lost $405 million on this piece of business. We have 3.9 million customers. I’m going to round up for simplicity. Out of those 3.9 million customers, we have 450,000 ACA customers and those 450,000 have generated $405 million loss. Compare that with Aetna who reported losses of $430 million in 2 years. Aetna is a national company. We only do business in North Carolina. Aetna is 7-1/2 times the size of Blue Cross Blue Shield in North Carolina and they are pulling out. Even though their losses are simply comparable to ours across the country and United has already announced that they will live. That was back in the spring. 2 big names of competitors have already announced they are out here. Now to me that says a lot about how serious this issue is for North Carolina.

With our for-profit competitors leaving the ACA market it leaves just us. Blue Cross Blue Shield of North Carolina and perhaps 1 other carrier (Cigna) who has filed rates to be in 5 counties. Those 5 counties are essentially Wade County and the counties continuous to Wade. Not here. That is my point to this group. If they stay in there will be 2 there and if we stay in, there will be 2 options in the marketplace, Blue Cross in all 100 counties and a competitor in 5. That is not a formula to make this work as good as it could to the people of our state and I’ve already told you the need is great. 600,000 people have coverage here in our state under the ACA. That places us 4th in the country for ACA enrollment and we are not the 4th largest state in the country. We are behind California, Florida and Texas and then there is North Carolina.

These customers for the most part are working North Carolinians who rely on Federal subsidy to get coverage. In fact, across the whole population about 70% of all those folks rely on Federal subsidy in order to be able to purchase the insurance fees and many of them have chronic conditions and acute need for medical services so as we think about it at Blue Cross and I hope you will too. Behind all the numbers, 600,000, 700,000 more than [inaudible 00:15:01] these are real people, individuals, your neighbors. I was telling a group the other day, I was driving to work, first day of school and you are seeing everybody standing out at the curb taking pictures, first day of school and I wondered all the way to work, I wonder if they are covered by the ACA and what are they going to do if we can’t stay in? This is serious business folks. I also remember that a gentleman in Asheville who spoke to the Citizen-Times up there and said this about his situation, his wife’s ACA plan jumped from $511 a month to $853 in just 2 years. What am I going to do because even with the government subsidy that it is making it unaffordable?

Think about this comment. He also closed by saying, “What options are we going to have if Blue Cross pulls out?” The answer is none. The ACA effectively will not exist in our state. Now I’m not saying this to bring how important Blue Cross Blue Shield North Carolina is. I am telling you this because if there is not an ACA program in this state, there will be 600 to 700,000 people who have insurance today who will not have it tomorrow. I think that’s a big deal if you just stop right there, but think about it 1 more step. They’re going to continue to need and demand services that all of our wonderful provider partners across this state and they are not going to be able to pay for it and that means our provider partners will move that from 1 side of their ledger to the other and it will again show up as uncompensated care.

Uncompensated care is paid for somehow, someway. Nothing is free so it will show up in insurance premiums ultimately because they are then forces when they negotiate and have conversations with us about what we are going to pay them. They want us to pay more so that they can pay for that man’s uncompensated care. That’s the way it works. That’s why you should be concerned about whether or not there is an ACA program here in North Carolina.

Now, we have 2 or 3 more weeks before we will make a decision on whether we are going to be in or out. That decision has not been made and we are hard at work trying to figure out how to answer that questions yes, but let me be clear, we have not yet made that decision so stay tuned. We have a strong commitment to North Carolina. We are going to do everything we can to stay in all 100 counties, but we have a responsibility to the 3.85 million people who are not on the ACA to remain a viable, healthy, financially stable and solid company that we are today.

Let me give you a quick word about health care transformation and then I’m going to open it up to you for questions if we have time. I hope somebody’s got their eye on the clock. The ACA has everybody’s attention right now. We’ve spent a good while here talking about it this morning, but let me be clear. There’s lots of transformation because of and outside of the ACA taking place across our nation and in North Carolina. In fact, North Carolina is looked to as one of the leaders in health care transformation. Even if there was no ACA, we need to be shifting away from our outdated system where doctors and hospitals are rewarded for doing more tests and more procedures. In fact, some experts believe that our traditional method for paying or paid by procedure is the single biggest driver of medical costs and so the fundamental model had to change. The fact is skyrocketing health care costs are forcing us to act even if we didn’t have the ACA and we are all working very, very hard to try to search for better ways to provide value in health care and 1 thing that we have to do is put the consumer more at the center of health care.

Let’s ask this question. We won’t completely answer it this morning, but let me give you some examples. Why does health care cost so much? Why does it keep going up? It’s not just 1 or 2 factors. It is complex and it’s multi-dimensional, but here are a couple of suggestions that I want to have you considering when answering that question. Pay by procedure instead of paying for outcomes is inefficient and rewards the wrong thing. A lack of price and quality transparency and information would allow consumer to make better choices. We were talking about yesterday with 2 or 3 conversations on this subject. You can find out more about how to buy your large screen TV than you can about how to get your knee replaced. A little something wrong with that and availability of data, transparency and price and quality is a part of that.

We’re working on this. We’ve developed tools and sources to help consumer help understand the value of the proposition. This is not about looking for the cheapest. It’s about looking for where the most value is on the goods and services that they pay. Unhealthy lifestyles, everybody groans. We’ve heard that before, but it is true. If you look at chronic conditions across the board: heart disease, diabetes, obesity, those 3 things account for about 3 quarters of medical spending. If we all took better care of ourselves, health care would come down and a lot of this is certainly preventable through better lifestyle habits.

The skyrocketing costs of prescription drugs. Now that’s been in the news a lot lately and it’s going to stay in the news. Particularly specialty drugs. These are the drugs that are for rare and chronic conditions or have to be administered in a specific way and frankly they are breaking the bank in health care costs. Let me give you an example that was in the Raleigh News Observer this morning. Humira and Embrel, those 2 drugs alone, you see a lot of television advertisements for them so even if you’re not taking it you probably know a lot about it. That represents 1% of the scrips in America, but those 2 drugs represent 10% of the entire pharmacy cost in America. The price of those 2 drugs have doubled in recent years.

Now, it is a valid question to ask one. I am not criticizing the efficacy of those drugs. I’m simply giving you data points that while we celebrate the wonderful and positive impacts of pharmaceuticals and I like my drugs as much as you like yours. The ones that I have to take, but we have to have a serious conversation about the cost. Why? Because our specialty drug spending at Blue Cross last year alone jumped 34%. Remember your health insurance premium? When the pharmacy costs jump 34% in 1 year, yes it will put pressure on the health insurance premium and the pharmacy cost is more than any other single category of spending in our company and in companies like ours across the country and unfortunately there is no end in sight. You probably heard about the EpiPen which is the most recent poster child for price escalation when consumption has not increased commensurate with that.

Optimistically there is a better way. Measures which value best care where high quality and good patient outcomes and effect management of costs are being rewarded. We are moving in that direction. I was in a conversation with a great provider partner yesterday in this community. That was said and we agreed that we are not moving fast enough. It’s hard work, but the pace of that change needs to pick up, but we continue to see an evolution in the cost and quality equation around our state and we are encouraged that one of these days while we are all continuing to consume and grow older that we can get to the place where the transformation will catch up with they need and last but not least, I’ll go back to where I started. We’ve got to figure out a way to make the ACA sustainable otherwise the cost burden that’s associated with the ACA is on that list of things that are driving up the cost to both individuals, patients, tax payers and to our provider partners.

As I get ready to conclude, let me leave you with 4 points that I always get asked this question so I’ll answer it now before you ask me. If you were king, what would you do to improve the ACA tomorrow? Now what that means is, number 1 you need to be king. We don’t have one of those. Secondly, what could you do that wouldn’t involve Congress because a lot of the fundamental changes will require and needs an act of Congress. This is what I would do. Stronger enforcement of the individual mandates that requires coverage. Mandate has been too weak. Last night I had a question, why doesn’t health insurance work like automobile insurance? Well, you are required by law to have automobile insurance. Even with that mandate 10% of the folks in North Carolina ride around without any kind of automobile insurance. Well, 90% do so the pool is a lot bigger and when that happens, when there are more participants that makes more things possible in terms of price.

I will also say that tighter control of special enrollment periods during the year. Those need to shrink. Right now there’s far too many opportunities for people to jump in and jump out. That destabilizes the whole market and it runs costs up. I would say you have normal enrollment period, October 1 to December 31. Get in or you’re out until the next year with certain limited exceptions like certain life circumstances: you have a baby, you get a divorce, somebody dies. There’s lots of examples in the commercial space about how that works and works well.

Shorter grace period for paying premiums. In the ACA you get 90 days to catch up on your premium if you don’t pay. What that has caused is a behavior where folks pay through the end of September, stop paying October, November, December, continue to consume services and the reward for that is you get sign up again January 1st. There are no consequences to not paying except for the fact that for the first 30 days if there are claims and the premium doesn’t come in, Blue Cross Blue Shield of North Carolina pays for those claims. The remaining 60 days, we don’t pay the claims and our provider partners have to pick up that tab and finally, fully fund the Federal program that stabilize the health insurance market. That’s the 3 R program that I won’t bore you with, but that would certainly be very, very helpful as we stabilize the market.

Let me simply say in concluding that situation can and should and will change. With these and other adjustments the ACA will become sustainable in my opinion and begin to work as intended to give millions of Americans a better option than remain uninsured. In the meantime, what can you do? What can we do together as a business and community and health care leaders here in Charlotte? You need to raise your voice. You need to educate yourself and you need to advocate for making health care more affordable. You can remain committed to offering competitive health benefits to your employees if that’s a business that you are in and I would urge you to consider offering incentives to those employees to change their lifestyle so that they will be healthier and by the way, a healthier employee is a more productive employee. I think if you do these things it will help accelerate the transformation and we look forward to working together with all of you to make these things happen. That’s the only way transformation and change occurs is when people of good will work hard together to solve a common problem. I look forward to your ideas on how to do just that.

Pew Research Center

Reality Check

Contrary to Political Rhetoric, Immigration in Decline

immigration-numbers-declining

 

 

Certainly one of the most championed issues of this year’s Presidential campaign has been illegal immigration, particularly from Mexico. However, like much of the rhetoric during the campaign, the question of illegal immigration has been largely devoid of facts.

 

fewer-mexican-crossing-borderWhile there are no reliable statistics for how many illegal immigrants cross the border with Mexico, experts use the number of apprehensions as a proxy. By that measure, the number of Mexicans apprehended at the border has dropped from more than 1.5 million in 2000 to just about 229,000 in 2014. Meanwhile, the number of non-Mexicans (mostly from Central American countries including El Salvador, Guatemala and Honduras) rose sharply and exceeded the number of Mexicans apprehended in 2014. A big part of this increase in non-Mexican immigration is accounted for by unaccompanied children.

deportations-at-record-highsMeanwhile, under President Obama, the number of deportations has risen sharply, to a record of more than 435,000 in 2013. Between 2009 and 2014, more than 2.4 million illegal residents were deported. Donald Trump will approve of the fact that more than 40 percent of those deported were convicted criminals. Read more…

 

CLT Airport’s New Long-range Plan

First Draft of New Plan Released for Comments

We all know that the Charlotte Douglas International Airport (CLT Airport) is a huge boon to economic development in this region.  This over-sized hub for American Airlines is the second largest in its network and its traffic is a major reason for it being the 6th busiest hub in the United States.  From its gates, you can fly to visit or conduct business in nearly every U.S. market without changing planes.  As such, it makes the Charlotte region a great location for doing business throughout the U.S. domestic economy.

Just two years ago, Norfolk Southern Railroad (NS) built a new NS Intermodal Center at the south end of CLT Airport between two of the runways with an initial capacity to manage over 200,000 shipping containers per year with options on additional land to handle another 400,000 containers each year.

While the two operations do not affect each other, they are important assets that can be enhanced to spur even more substantial investment in the greater Charlotte region.

CLT Airport and the NS Intermodal have been in the plans since 1996 when the first long-range plan was prepared.  Previous CLT Airport Director Jerry Orr and urban planner Michael Gallis laid the groundwork for many of the changes that have been incorporated into the airport over the last 20 years.

Just this year, the State of North Carolina granted a fuel tax exemption for American Airlines and plans for an expanded passenger terminal have been completed and construction is on schedule.  Serving over 40 million passengers each year requires an expansion of the main terminal to accommodate further growth.  All this work was rewarded when American Airlines extended their contract of gates and the maintenance of the airport services for another 10 years.

Aside from expanding the number of gates from 93 to 169 gates over the next 20 years, American Airlines is interested in expanding its service for passengers and for air cargo.  Their activity and the growth of the airport is also bringing a new state-of-the-art airport tower that will be built over the next five years and at least one 12,000-foot runway will be added.

In January of f2016, CLT Airport contracted for a new long-range plan with the approval of the Charlotte City Council.  CLT Airport contracted with MXD Developers out of British Columbia to conduct this long-range planning study for $900,000.  MXD has considerable airport planning experience having worked with the Denver International Airport as well as airports in Memphis, Atlanta, Halifax, Alberta and Edmonton in the U.S. and in Canada. They have also been instrumental to plans in South America, Australia and South Africa.

MXD was charged with developing a long-range plan that included all of the land within the CLT Airport and NS Intermodal operations and the surrounding 6,000 acres owned by the airport.  See map.

MXD, with the guidance of CLT Airport officials met with as many airport stakeholders as they could to gain input about the wisest and best use of that area.  They were anxious to learn all they could and to gain the ideas of that will further enhance the land use and maximize its value to the City of Charlotte and its citizens. Hair_Stuart_CLT_AR_304279837

Following extensive meetings, they have drafted the first version of their report and are disseminating it for additional comments and recommendations.  Stuart Hair, Director of Economic Affairs at CLT Airport, conducted the briefing to the Charlotte City Council on September 12th.  “One of CLT’s principals is strategic growth: How do we grow appropriately?” said Stuart Hair, economic affairs manager at Charlotte Douglas. “This is about protecting our future of our core business (but) the economy can grow and diversify, and there is unique connectivity offered by transportation modes at and around the airport.”clt-airport-economic-clusters1

Hair outlined four primary objectives of the long-range plan:

  • to protect future growth and flexibility of CLT aeronautical operations through compatible-use development;
  • maintain the airport’s competitiveness by growing non-aeronautical revenue;
  • leverage CLT and the Norfolk Southern Intermodal Facility as economic engines to diversify the local economy;
  • and grow and enhance employment opportunities for local and expanding businesses.

The plan identifies five catalyst

areas around CLT that are primed for development, all with different uses and targeted economic clusters.

  1. CLT – Front Door Office Village – A CLT Gateway District would sit at the entrance to the airport, primarily containing office development and on-site meeting and corporate event facilities.
  2. CLT Terminal Hotel – Another development area includes a hotel directly connected to the terminal as well as a retail and events plaza, which Cagle and Hair said would be attractive for passengers and CLT employees.
  3. CLT Retail Village and Events Plaza – Demand for retail and services would also naturally be driven by new office development to the CLT West region and to the Billy Graham corridor.
  4. CLT Fast Cycle Logistics – A fast-cycle logistics and e-commerce fulfillment hub would target specific tenants, particularly ones in advanced manufacturing — “machines and materials that make the machines and materials,” according to Hair.
  5. CLT temperature controlled logistics and distribution center – A second hub proposed for another area would focus on temperature-controlled logistics, a subset of the industrial sector that would be advantageously positioned near transportation modes in the immediate vicinity — the airport, rail and interstates.

Aviation-related tenants are expected to fill a majority of the office component. As CLT grows, so does the need for more employees to staff new divisions, all of which requires more square footage — even the airport’s current offices are running out of room. “We have 20,000 employees — they all need space,” said Brent Cagle, aviation director at Charlotte Douglas. “Some of our tenants are running out of space at the terminal.”

Remaining commercial space in the office development could target users that necessitate direct proximity to the airport. The airport seeks to partner with third-party development and brokerage firms to develop the buildings and lease office space, but the airport — and, by extension, the Federal Aviation Administration — would still own the land, likely striking concession agreements and ground leases with those seeking to develop around the airport.

“We would always retain ownership,” Cagle said. “It would also mean we could control the uses and that it doesn’t one day down the road become an issue for non-compatible uses.” Cagle added that the FAA generally expects individual airports to be “self-sustaining” and that leaders at those hubs should come up with ways to grow revenue and competitiveness in their individual market, one of the stated intentions of CLT’S AASDP.

Cagle and Hair also articulated that they would continue to collaborate with Lincoln Harris and Crescent Communities, who are spearheading a massive mixed-use project called River District in close proximity to the airport. That project will add millions of square feet of office space and thousands of residents when built out. They also intend to work with other brokers and developers on other projects.

This initial draft of the long-range plan will undergo scrutiny by the various stakeholders to ensure their ideas, thoughts and concerns will be considered and captured before the final plan is written and submitted for approval by the City Council sometime in November or December.

CSX Rail – Economic Developments

CCX – Intermodal in Rocky Mount & Queen City Express to Wilmington

CSX Railroad has been busy lately in the State of North Carolina. Joe Horton, Terminal Manager at CSX Intermodal Terminal in Charlotte reported to the Charlotte World Trade Association about its plans for substantial growth that will enhance the opportunities for significant economic development in conjunction with its corporate growth plans for the next 25 years.

In July 2016, the state of North Carolina, the Carolinas Gateway Partnership and CSX proudly announced Rocky Mount, North Carolina, as the home for a new intermodal rail terminal known as the Carolina Connector, or CCX. This $272M+ critical infrastructure project will serve as a major transportation hub in the Southeast, and a catalyst for substantial economic growth throughout the state of North Carolina.

Horton described the partnership between North Carolina and CSX that has developed over its 150+ years of service.  He went on to say that “CSX eager to play an even larger role in N.C. economy in coming years.”csxx-intermodal-toledo

This new $272M investment in N.C.’s critical infrastructure is a transformational opportunity to attract more advanced manufacturing companies to the east side of the state.  Their state-of-the-art facility will improve North Carolina’s economic competitiveness and bring more than 1,500 jobs to the state.

In addition, this new facility will enable companies to convert freight shipments to rail at this new terminal to eliminate more than 16 million truck miles annually from heavily-traveled North Carolina highways, the equivalent of eliminating 270,000 truck trips from the roads each year. This will consequently reduce congestion, improve road safety and preserve roadway conditions. In total, CCX is expected to save the state $16 million in pavement maintenance savings.

At the same time, this Carolina Connector (CCX) will be the most environmentally friendly way to move goods over land.  It is four times more fuel efficient than trucks. In fact, one intermodal train can carry the load of 280 trucks. Converting freight from highway to rail reduces emissions and improves air quality. Intermodal operations at CCX are estimated to reduce CO2 emissions in the state by 655,000 tons – the equivalent of taking 138,000 cars off the road.

The CCX will capture a vibrant Raleigh market and provides hub connectivity in 100+ lanes.  Its initial build will serve 186 lanes, 265,000 loads with 60% expected for local service and 40% for connectivity to other regions. The full build out is expected to provide expansion potential on proposed footprint up to 500,000 loads.

Horton then moved to his special announcement for the Charlotte region.  A new intermodal rail link will begin this month between the North Carolina State Ports Authority’s Port of Wilmington and the CSX intermodal terminal in Charlotte. Horton says “it is being touted as a game-changer.  It is called the Queen City Express!”

North State Ports Authority Executive Director Paul J. Cozza noted that this will be Wilmington’s first intermodal service in 30 years, terming the offering “fantastic.”

Cozza expects that the Queen City Express “is really going to enhance North Carolina’s connections with the rest of the world.”

The new shuttle service is to transport double-stacked containers on existing CSX tracks between the two points, creating a reduced cost for cargo destined for the greater Charlotte region and out into the global marketplace.

CSX is one of three major railroads serving the East Coast region.  Norfolk Southern and the Canadian Pacific Railroad are its competition, although Norfolk Southern is its major competitor in the Southeast USA.  These three are all Class 1 railroads hauling freight throughout the east-west service East of the Mississippi River.  Headquartered in Jacksonville, Florida, CSX owns about 21,000 miles of track.  csx-track-network

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