Port of Wilmington, 1 Hausel Road, Wilmington, DE 19801

Diamond State Port Corporation

MINUTES OF BOARD MEETING

Public Session

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Friday, February 5, 2016 at 10:00 a.m.

Port of Wilmington, 1 Hausel Road, Wilmington, DE 19801

Board of Directors

Chair: Jeffrey W. Bullock

Vice Chair: Thomas J. Cook

Members: Michael A. Begatto

Karen C. Bifferato

Douglas B. Catts

Jennifer L. Cohan

Joseph G. DiPinto

Gerard L. Esposito

Quinton S. Johnson, IV

Michael L. Morton

James N. Mosley

Fred C. Sears II

David P. Sokola

Peaches M. Whalen

Bernice Whaley

H. Hickman Rowland, Jr., Emeritus

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Present: Jeffrey W. Bullock Gene Bailey, Executive Director

Thomas J. Cook John Haroldson, Acting Director of Marketing

Michael A. Begatto Randall Horne, Director, Engineering & Maint.

Jennifer L. Cohan Parul Shukla, Director, Finance & Administration

Gerard L. Esposito Frank Vignuli, Director, Operations

James N. Mosley Inigo Thomas, Director, Technology Solutions

Fred C. Sears II Sylvia Kennard, Director, Human Resources

David P. Sokola Debra Thompson, Executive Assistant

Bernice Whaley

Peaches M. Whalen

The following members of the public were also present:

John Coulahan – President, Murphy Marine Services; Member, Port Advisory Board

Timothy Gunner – Project Manager, AECOM

ILA Local #1694 – William Ashe, Jr., President, Patrick Cook, Member

ILA Local #1694-1 – Julius Cephas, President; Paul Cutler, Vice President and Sally Chapman, Recording Secretary

The meeting was called to order at 10:04 a.m. with Jeffrey W. Bullock, Chairman of the Board, presiding.

The DSPC Board Chairman opened the meeting by thanking everyone for attending. He welcomed new board member Secretary of Homeland Security and Public Safety, James N. Mosley to the Board, and announced the appointment of Karen Bifferato to Chair the Human Resources and Compensation sub-committee of the Board. He then announced that in an effort to conduct more of the Port of Wilmington’s business in Public, the Board meeting format had been changed.

The Board Chairman then called for a motion to approve the minutes from the meeting of Friday, November 20, 2015. On a motion duly made and seconded, the minutes from the meeting of Friday, November 20, 2015 were unanimously approved.

The Port’s Executive Director, Gene Bailey requested that ILA #1694-1 be permitted to address the Board. Sally Chapman, Recording Secretary for ILA #1694-1 read two tributes – one from the State of Delaware House of Representatives and one from the Delaware State Senate each commending Julius Cephas, ILA #1694-1 president for his service and dedication to his union membership and the State of Delaware.

The Board Chairman congratulated Mr. Cephas and called for further Public comments. Hearing none, the meeting moved to the Board reports.

Randall Horne, the Director of Engineering and Maintenance briefed the Board on the severe deterioration of the surface of the concrete floor in Warehouse “G”. The deterioration is manifested by extensive cracking of the concrete surface over nearly the entire area of the floor; extensive spalling of the concrete surface over large areas of the floor; and exposed and corroded reinforcing steel over large areas of the floor. Temporary patching efforts have been made over the course of the past several years however, ultimately the patching has failed due to further deterioration and failure of the underlying concrete. Exacerbating the problem, the DSPC is receiving damage cargo claims for damage to rolls of Kraft Liner Board caused by the uneven concrete surface and loose debris resulting from the deterioration.

In 2013, with the approval of the Board, DSPC retained Pennoni Associates to perform an engineering review and structural evaluation of the floor and the mat foundation slab. They have recommended that remediation work be completed. Further design work is required, he continued, in order to prepare for the rehabilitation/repair of the concrete mat foundation/floor slab. It has become critical that the DSPC proceed with the final design and planning of this work.

The Director of Engineering and Maintenance briefed the Board on the recent piping failures in the sprinkler system in Warehouse “G.” On September 17, 2015 during the performance of a routine Sprinkler System Trip Test, a seam weld on a header pipe ruptured discharging a significant amount of water and damaging approximately seventy one rolls of Dole’s Kraft Liner Board stored in the warehouse. The claim for the damage totaled approximately $85,000.00

Additionally, on numerous occasions, small leaks have occurred at the threaded pipe joints in the sprinkler system branch lines. Upon removal of the failed piping sections, severely deteriorated threaded end sections have been observed.

Based on these conditions, the DSPC concludes that the most appropriate and expeditious course of action is to replace all of the sprinkler system piping in Warehouse “G.” Preliminary cost estimates for replacement of the sprinkler piping indicate a probable cost of $500,000. This estimated cost does not address any modifications or upgrades that may be required by the City of Wilmington Fire Marshall’s office. The Director of Engineering’s recommendation is to begin this work in late March/April when the need for Warehouse “G” for paper and steel storage diminishes.

The Executive Director referred the Board to a Briefing Note entitled “Status of the Strategic Master Plan.” The Board Chairman invited AECOM’s Project Manager, Tim Gunner to provide additional updates. Mr. Gunner reported that the Port’s Strategic Master Plan was 50% accomplished. A market demand/forecast and capacity analysis had been concluded and will be married together to build out opportunities for the Port’s future. A January 19, 2016 “Open House” was very well attended and attracted a wide range of interested parties. The Plan is on track to be completed and ready for presentation to the Board by April 30th, 2016. Secretary Bullock suggested that an additional “Open House” may be in order for the purpose of a public vetting of the pieces being put together as well as for transparency.

Discussion ensued about the following:

1. The Port may have to change the location of its inbound traffic to accommodate the new ILA Local #1694-1 Hiring Hall when it has been constructed;

2. An additional mobile harbor crane is needed to accommodate the Port’s bulk business;

3. Old Warehouse “B” needs a new roof;

4. $15.8m Bond Bill request; and,

5. The Moroccan clementine business for this season has been discontinued due to both live and dead Mediterranean fruit fly larvae discovered in cargo discharged in Philadelphia at Holt Terminal. The USDA stopped the importation of clementines to the States. The Port will continue to receive the expediting revenue portion of this business only.

The Board Chairman stated that the potential ICL business is healthy for the Port’s bottom line. He said that it is a good investment, not only in terms of the health of the Port, but as a business entity it is a way to balance the Port’s business. DSPC and Murphy Marine Services are coordinating efforts to acquire this business including the construction, by Murphy Marine Services of a built-to-suit 300k sq ft warehouse off-terminal. The Board Chairman continued by remarking that if we don’t get this contract it won’t be because we haven’t tried our very best.

Executive Session - For the purpose of discussing matters of a confidential nature, on a motion duly made and seconded, the Board went into Executive Session at 10:30 a.m. On a motion duly made and seconded, the Board returned to Public Session at 11:26 a.m.

Resolution #16-20 – Approval of First Amendment to the Lease Agreement with Dole Fresh Fruit Company - The Director of Finance and Administration briefed the Board on the request to amend the Lease agreement with Dole Fresh Fruit Company. Changes in Dole’s operations have necessitated an amendment to the Lease and negotiations are underway between DSPC and Dole for finalizing the terms. This resolution seeks authorization for the Chairman and the Executive Director to execute appropriate lease documents, as reviewed by DSPC’s legal counsel. After further discussion by the Board, on a motion duly made and seconded, Resolution #16-20 was unanimously approved.

Resolution #16-21 – Approval of Increase in Port of Wilmington Tariff - The Director of Finance and Administration briefed the Board on a request for authorization to increase the Port of Wilmington tariff. DSPC tariffs cover line handling, dockage, wharfage, equipment rental, and security revenue. Based on increases in costs of operations and overheads, it is proposed that an additional tariff increase is warranted. An increase to the general tariff of 3% effective March 7, 2016 is proposed. After further discussion by the Board, on a motion duly made and seconded, Resolution #16-21 was unanimously approved.

Resolution #16-22 – Approval of the Transfer of Operating Funds to the Capital Account for Funding of the Strategic Master Plan - The Director of Finance and Administration briefed the Board on a funding request for the Strategic Master Plan. The Strategic Master Plan, he said, is considered an important capital project by the Bond Bill Committee. As a result, the State of Delaware has appropriated $200k for Fiscal Year 2016. The cost for the Plan is projected at $500k. In addition, $25k has been spent on purchasing regional traffic data from Datamyne, Inc. Thus, the total cost is estimated at $525k. DSPC will augment the State appropriation with funds from its operations. The Board had previously approved using $100k from funds from operations; this submission seeks a specific approval to spend an additional $325k in Fiscal Year 2016 for the Strategic Master Plan. After further discussion by the Board, on a motion duly made and seconded, Resolution #16-22 was unanimously approved.

Resolution #16-23 – Approval of Wharfage Incentive Agreement with Port Contractors, Inc. (PCI) – The Director of Finance and Administration briefed the Board on a request for approval to enter into a wharfage incentive agreement with PCI. PCI handled over 1.6 million tons of dry bulk commodities in FY 2015. The DSPC has been providing Wharfage volume incentives to PCI since 1997. The agreement provides for a reduced Wharfage based on certain volume as well as a first year reduced Wharfage rate in order to attract and sustain customers importing and exporting dry bulk commodities through the Port of Wilmington. A new agreement is being negotiated with PCI which will provide for another four years of incentives to PCI. This submission seeks authorization for the Executive Director to execute an appropriate Wharfage volume incentive agreement with PCI for another four years ending June 30, 2019. After further discussion by the Board, on a motion duly made and seconded, Resolution #16-23 was unanimously approved.

The Executive Director referred the Board to the 2016 Board Meeting Schedule and reminded them of the upcoming 18th Port of Wilmington Maritime Society Spring luncheon. Secretary Bullock provided details about an upcoming Trade Mission to Canada.

The Board Chairman recommended that the Departmental Reports be accepted as written. He then called for new business and/or final comments. Hearing none, and there being no further business, he thanked everyone for their attendance and participation.

On a motion duly made and seconded, the meeting was adjourned at 11:36 a.m.

Respectfully submitted,

Debra Thompson

Executive Assistant