The Norfolk Naval Shipyard, often called the Norfolk Navy Yard, is a historic and active U.S. Navy facility that is actually located in Portsmouth rather than Norfolk; the name "Norfolk" was adopted to avoid confusion with Portsmouth, New Hampshire, where a naval shipyard already existed when the Virginia facility opened. The shipyard builds, remodels, and repairs the Navy's ships of all types.
Directly opposite Norfolk, the city of Portsmouth also has miles of waterfront land on the Elizabeth River as part of the harbor of Hampton Roads. There is a ferry boat that takes riders back and forth across the water between Downtown Norfolk and Olde Towne Portsmouth.
Portsmouth is located on the western side of the Elizabeth River directly across from the City of Norfolk. In 1620, the future site of Portsmouth was recognized as suitable shipbuilding location by John Wood, a shipbuilder, who petitioned King James I of England for a land grant. The surrounding area was soon settled as a plantation community.
Portsmouth was founded by Colonel William Crawford, a wealthy merchant and ship owner, who dedicated the four corners of High and Court streets for a church, a market, a courthouse, and a jail. It was established as a town in 1752 by an act of the Virginia General Assembly and was named for Portsmouth, England.
In 1767, Andrew Sprowle, a shipbuilder, founded the Gosport Shipyard adjacent to Portsmouth. The Gosport Shipyard at Portsmouth was owned by the Commonwealth of Virginia after the American Revolutionary War and was sold to the new United States federal government. During the American Civil War, in 1861, Virginia joined the Confederate States of America.
Fearing that the Confederacy would take control of the shipyard at Portsmouth, the shipyard commander ordered the burning of the shipyard. The Confederate forces did in fact take over the shipyard, and did so without armed conflict through an elaborate ruse orchestrated by civilian railroad builder William Mahone (soon to become a famous Confederate officer). The Union forces withdrew to Fort Monroe across Hampton Roads, which was the only land in the area which remained under Union control.
In early 1862, the Confederate ironclad warship CSS Virginia was rebuilt using the burned-out hulk of USS Merrimack. Virginia engaged the Union ironclad USS Monitor in the famous Battle of Hampton Roads during the Union blockade of Hampton Roads. The Confederates burned the shipyard again when they left in May 1862.
Following the recapture of Norfolk and Portsmouth by the Union forces, the name of the shipyard was changed to Norfolk Naval Shipyard. The name of the shipyard was derived from its location in Norfolk County. The Norfolk Naval Shipyard today is located entirely within the city limits of Portsmouth, Virginia. The Norfolk Naval Shipyard name has been retained to minimize any confusion with the Portsmouth Naval Shipyard, which itself is actually located in Kittery, Maine, across the Piscataqua River from Portsmouth, New Hampshire.
One of the older cities of Hampton Roads, in the early 21st century, Portsmouth was undergoing moderate urban renewal in the downtown area. However, population had been declining and there was no room for expansion, as it is surrounded by water and other cities of South Hampton Roads.
The city has a radically limited tax base. A large portion of the city is controlled by the U.S. Navy; when Navy facilities are combined with schools, churches, and other tax-exempt entities, over half of Portsmouth's assessed valuation is off the tax rolls. The APM "MAERSK" marine terminal for container ships opened in 2007 in the West Norfolk section. Virginia has funded millions of dollars in railroad and transportation improvements to serve it.