ITEM NO.
_7a_Supp________
Revised:
August 17, 2011
DATE OF
MEETING: August 16, 2011

Aviation Division
2012-16 Business Plan
August 16, 2011

Outline
• State of Economy and Aviation Industry
• State of Seattle Market and Sea-Tac Airport
• Environmental Scan
• Strategic Goals
• Objectives for 2012-2016, Key Initiatives
• Capital Program Overview
• Summary of 2012 Budget Implications

2

Airline Industry
• Industry was profitable in 2010
• Heading towards profitable year in 2011:
- High load factors; ancillary fee structure

• Recent global economic worries, European debt
crisis, and slow down in U.S. economy cast doubt
on strength of recovery
- Increased chance of double dip recession

• Airlines focused on "smart" growth
-
-

Focus on high yield routes
Cuts in many small markets

• Locally, Alaska Air Group reported record second
quarter earnings
3

2011 Airline Activity at Sea-Tac
• 2011 Enplanements:
June
June YTD

Domestic
3.6%
4.7%

Int'l
4.7%
6.3%

Total
3.7%
4.9%

• Growth fueled by increased capacity & high load factors
Q1
Q2
June

Available
Seats
3.5%
2.8%
1.8%

Load Factor
2011
2010
79.4%
78.5%
83.8%
81.9%
86.6%
84.7%

• Alaska Air Group:
- Enplanements YTD: +5.8%
- Market Share YTD: 50.8%
4

State of Sea-Tac Airport
• Strong growth in enplanements first half of 2011, but
likely will decline in 3rd and 4th quarters
- Forecasting 2011 growth of 3.5%

• Seeing "bounce back" a year earlier than forecasted
last year (1% in 2011, 3% in 2012)
• Seeing solid growth in non-airline revenues, but
parking and rental car revenues lower than
budgeted
• Recent global economic worries, and slow down in
U.S. economy cast doubt on strength of recovery
• Enplanement growth of 1.5% forecasted for 2012
5

Enplaned Passengers
• Traffic dropped 3%
in recent recession,
pointing out
resiliency of market
demand
• Faster recovery
than after 2001
• Assumptions:

19,000
18,000
17,000
16,000
15,000
14,000
13,000
12,000
11,000
10,000
2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

-
-
-
-

2011: 3.5%
2012: 1.5%
2013: 2.2%
2014+: 2.2%

6

Financial Trends at Sea-Tac
• Following slides show Sea-Tac's performance
since 2006 for key performance measures
• Overall, Sea-Tac has faired well in a deep
recession, reflecting the resiliency of the
demand for air service in this market, and the
ability of the Port to manage through challenging
economic circumstances

7

Operating Costs
O&M Costs in $ millions

• Significant budget cuts in 2009 &
2010:

250.0

200.0

- Furloughs
- For 2010 budget, eliminated over 10% of
FTEs from 2009 level

150.0

100.0

• For 2011:

50.0

2006

2007

2008

2009

2010

2011 Fcst

2010

2011 Fcst

O&M Costs Per Enplaned Passenger
$13.00

$12.00

-
-
-
-

Restored some unsustainable cuts
Full year of back-up power costs
Terminal realignment costs
Initial expense items relating to rental car
facility and busing operations

$11.00

$10.00

$9.00

$8.00

$7.00

$6.00
2006

2007

2008

2009

8

Non-Aero NOI
Non-Aero NOI in $ Millions
$95.0
92.94

$90.0
87.71
86.47
$85.0
82.78
81.16
$80.0
78.20

$75.0

$70.0
2006

2007

2008

2009

2010

2011 Fcst

Non-Aero Revenue per Enplanement
10.00

9.50

9.44
9.19

9.36

9.00

8.88

8.80
8.61

8.50

8.00

7.50

7.00

• Recovery of revenues and
NOI is evident in 2011
• Economic downturn and
increased competition from
off-airport lots had large
impact on public parking
• Rental car transactions are
growing, but pricing is down,
hurting Port's concession
revenues
• Concessions has remained
stable and is now growing

6.50

6.00
2006

2007

2008

2009

2010

2011 Fcst

9

Net Operating Income
NOI

• NOI is traditional measure

180
175

- Good indicator of cash flow, but
aeronautical cost-recovery
business model can make NOI
misleading

170
165
160
155
150
145
140
2006

2007

2008

2009

2010

2011 Fcst

NOI

NOI after debt service & interest income
60.00

50.00

40.00

30.00

20.00

10.00

2006

2007

2008

2009

2010

2011 Fcst

• Increased debt service generates
higher NOI
• Debt service savings produces
lower NOI

• NOI after debt service and
interest income is better
indicator of net cash flow
available to invest
• Both indicators pointing up in
2011
10

Airline Costs - CPE
Capital Spending in $ Millions
$400

$350

$300

$250

$200

$150

$100

$50

$0
2006

2007

2008

2009

2010

$16.00

2011 Fcst

15.47
14.87

$15.00
14.15
$14.00

13.41

$13.00

12.64
11.95

$12.00

12.20
11.10

$11.00

11.79

11.73

11.89

11.10

11.63
10.92

$10.00

$9.00

• Capital spending is major
driver of CPE
• Use of PFCs to offset
revenue bond debt service
mitigated rise in CPE
• Red line shows CPE
forecast in 2005 when
airline agreement (SLOA)
was signed
• CPE has been lower than
2005 forecast in every year

$8.00
2005

2006

2007

Cost Per Enplanement (CPE)

2008

2009

2010

2011 Fcst

CPE - 2005 Forecast (SLOA)

11

Cash, Debt Service Coverage
600.00

505.29

507.75

482.12

500.00

454.33
411.59
400.00
349.25

300.00

200.00

100.00

2006

2007

2008

Cash balance: Days of O&M

1.55

2009

2010

2011 Fcst

Target: 10 months

1.51

1.50
1.46

1.45

1.45
1.40

1.40

1.41

1.39

1.35
1.30
1.25
1.25

1.25

1.25

1.25

1.25

1.25

2007

2008

2009

2010

2011 Fcst

1.20

• Port policies and management
decisions allowed STIA to
contribute to Port's strong
credit standing.
• Unrestricted cash has been
managed to exceed target of
10 months of O&M costs each
year.
• In spite of deep recession,
STIA has maintained debt
service coverage well above
1.25x target.

1.15
1.10
1.05
1.00
2006

Aviation Debt Serv Coverage

Aviation Min Target

12

Environment: Key Considerations
• Strong finances: O&D airport; cash flow/reserves; low competition;
airline agreement
• Anticipate continued growth in international travel, especially Asia
• Cargo growth an opportunity
• Economic uncertainty: slow recovery, or double dip recessions, or?
• Non-aeronautical NOI increasing, needed for future investments
• Major capital requirements: vertical circulation, terminal reallocation,
FIS upgrade/replacement
• Long-term throughput/efficiency/cost effectiveness of terminal
investments
• Technology utilization deployments
• Long-term planning issues: airport capacity, drives capacity, hotel,
south access, cargo development, off airport property development
• Threats to Port control relating to business strategy and investments
13

Business Plan Framework
• Built around Aviation's seven strategic goals
- Enduring, long-term

• For each goal, five-year objectives
- Measurable
- Incorporates Century Agenda objectives

• For each objective, multiple initiatives
- Capital projects
- Programs, action plans

14

Strategic Goals
1. Operate a world-class international airport by:
- Ensuring safe and secure operations
- Meeting needs of our tenants, passengers and the
region's economy
- Managing our assets to minimize the long-term total
cost of ownership
2. Become one of the top ten customer service airports in
the world by 2015 (measured by the ACI ASQ index)
3. Lead the airport industry in environmental innovation
and minimize the airport's environmental impacts
4. Reduce airline costs (CPE) as far as possible without
compromising operational and capital needs
15

Strategic Goals
5. Maximize non-aeronautical net operating income (NOI)
consistent with current contracts, appropriate use of
airport properties and market demand
6. Continually invest in a culture of employee
development, organizational improvement, and
business agility
7. Develop valued community partnerships based on
mutual understanding and socially responsible
practices

16
16

5 Year Objectives & Key Initiatives
1. a) World class international airport - safe and secure
operations:
- Comply with emerging FAA safety management system
requirements by 2014
• Additional staff, data systems, training

- Reduce runway incursions by 30% by 2015
• Foreign object debris radar: $3.5 million new CIP

- Increase airfield's runway availability during snow event from
33% to 55% by 2013
• Capital equipment costs totaling $8.4 million

17

5 Year Objectives & Key Initiatives
1. b) World class international airport - Capacity
- Complete terminal realignment by 2014
• $23+ million in expense costs through 2014, $8.2 million in 2012
• Capital projects totaling $ 33 million

- Meet all critical path milestones through 2016 to achieve 2020
capacity:
•
•
•
•
•
•
•
•
•
•

Initiate Master Plan in 2012 (expense)
Terminal wide copper/fiber/wifi - $3 million
Renovate NSAT and Concourse C - $10 million +
Modify Checkpoints 2-5 - $15 million
Mid-term FIS improvements by 2013 - $32 million
Aircraft Remain Overnight (RON) parking by 2014 - $44 million
Rebuild runway 16C in 2016 - $90 million
Garage retrofit floors 1 & 2 in 2013 - $7.6 million
Long-term FIS solution ~ 2013 - 2017
NSAT Expansion - 2017+

18
18

5 Year Objectives & Key Initiatives
1. b. World Class international airport - Capacity (cont.)
- Increase total air cargo to 340,000 metric tons and international
cargo to 127,000 metric tons by 2016
•
•
•
•

Cargo VI enhancements by 2013 - $5.5 million
Cargo II expansion of ready yard by 2013 - $1.5 million
Cargo II hardstand expansion by 2014 - $13.3 million
Cargo III infrastructure for expanded Federal Express warehouse by 2014 -
budget TBD

- Develop 3 new international routes by 2016. Develop additional
service in 2 existing markets by 2016.
• Joint marketing funds in accordance with incentive policy

19

5 Year Objectives & Key Initiatives
1. c. World Class international airport - asset management
- Develop asset management system by 2016
• Annual cost for asset inspections

- 80% of maintenance work is proactively planned
- Develop system reliability metrics for baggage systems, STS
and elevators & escalators by 2013

2. Customer Service
- Complete comprehensive signage upgrade by 2014
• New $ 5 million capital project

- Complete elevator & escalator refurbishments by 2014
• $55 million escalator project ongoing
• $30 million in new elevator renovation projects

20

5 Year Objectives & Key Initiatives
2. Customer Service
- Increase self-service passenger check-in and bag-drop to
industry leading level by 2015
• Ten new CUSS units in zone 1 ticketing in 2012 - existing CIP, $550K
• Common use self-bag-drop - $1M new CIP

- Implement integrated cruise service to passengers by 2015
• Pre-paid bag transfer from aircraft to ship by 2013 - $300K expense

- Fully implement TSA automated wait time and communications
systems in 2012
- Create single wheelchair service system in 2012
- Complete deployment of electric appliance charging system at
gates by 2013
• New CIP - $3.0 million

- Identify needed restroom upgrades in 2012 - future CIP $ TBD

21

5 Year Objectives & Key Initiatives
3. Environmental Innovation
- Reduce airport owned and controlled greenhouse gas emissions
by 15% below 2005 levels by
• PC Air project - $43.5 million
• EGSE project - $50 million

- Meet all future electricity load growth through conservation
measures and renewable energy
• [initiatives listed under Reduce Airline Costs]

- Increase solid waste recycling rate to 50% by 2014
• Expand recycling into garage in 2012- $150K
• Expand recycling into underserved areas of terminal in 2012 - $400K

- Reduce potable water consumption rate 5% below 2008 level by
2015
• Evaluate feasibility of rainwater recapture in the garage in 2012 - $30K

22

5 Year Objectives & Key Initiatives
4. Reduce airline costs
- Maintain CPE under $14.00 through 2016
• 2011 business plan forecast for 2016 = $15.12
• Next airline agreement preserves Port's ability to generate and retain NOI to
use towards Port's strategic goals
• Use PFCs to pay debt service as much as possible
• Evaluate General Aviation expansion - revenue offsets airfield costs

- By 2016, achieve $1 million in savings from Continuous Process
Improvements
• FTE and consultant engaged in 2011

- Meet all future electricity load growth through conservation
measures and renewable energy
• Develop utilities management, tracking and reporting system

- Evaluate security exit technology in 2012
• Existing CIP for $1.0 million, future CIPs? or TSA funding?

23

5 Year Objectives & Key Initiatives
5. Maximize Non-Aero NOI
- Concessions: grow sales per enplanement by 3-5% CAGR
through 2016
• Major concessions program transition and leasing
- Commence work with leasing consultant in 2012 - $500K

• Initiate terminal space and infrastructure improvements
- Complete freight elevator replacement - $6.6 million

• New unit direct leasing and small business concessions opportunities
• Marketing innovations to increase sales

- Parking: grow revenues by 5% CAGR through 2016
• Implement Park Smart programs in 2012, $165K expense
- Marketing and branding ; parking reservations system in 2012

• Valet parking in 2013

- Significant Threat: Off-airport parking additions

24

5 Year Objectives & Key Initiatives
5. Maximize Non-Aero NOI
- Real Estate: Grow annual revenues by $1.3 million by 2016
• Des Moines Creek Business Park - prepare and submit entitlement
applications - $300K expense + $700K existing CIP
• Cargo logistics support:
- Northeast Redevelopment Area - infrastructure projects - $1.3 million new CIP
- L-Shape property - prepare property for development in 2012 - $800K new CIP

- Grow other non-aeronautical revenues of $1.2 million by 2016
• Relocate and expand shared lounge on SSAT
• Introduce loyalty program for parking and concessions in 2012

25

5 Year Objectives & Key Initiatives
6. Employee development, organizational improvement,
and business agility
- Increase internal candidate promotion rate (TBD)
• 2012 internal internship program - Aviation division
• 2013 internal internship program - Port-wide

- Reduce average hire time (TBD) for Aviation division positions
- Address all FEMA exercise improvements by 2014
• Training
• Standardized radio and notification systems
• Emergency power at all facilities - develop recommendation

26

5 Year Objectives & Key Initiatives
7. Community Partnerships
- Implement Commission and FAA approved FAR Part 150
recommendations by 2016
• Install new remote noise monitors
• Possible new ground run-up enclosure - potential new CIP $8 - 40 million
• Other new programs?

- Through 2016, Port, local cities and/or businesses will be
successful in implementing solutions to land development and
other issues
- Achieve 2012 small business goal of 10% for goods and
services
- Expand limited-English outreach program

27

Capital Program Overview
Figures in $ millions

2011

2012

2013

2014

2015

2016

Total

Committed Projects:
Authorized
Other Projects
Subtotal

184
1
185

259
11
270

116
5
121

40

4

10

40

4

10

613
17
630

Bus. Plan Prospective:
Specific projects
Allowance CIPs
Subtotal

7
3
10

109
33
142

64
67
131

34
66
100

7
79
86

93
160
253

314
408
722

Total

195

412

252

140

90

263

1,352

•
•
•

-

-

Authorized does not mean entire project budget has been authorized
Table shows CIP before 2012 budget decisions
CPE impact of "Allowance" CIPs built into forecast, indicates available
budget for new projects
28

Future Capital Investments
• Significant likely investments are not included in 2012 -
2016 capital plan:
• Landside
- South access
- Terminal drives

• Non-aeronautical
- Land development infrastructure - invest to support cargo,
generate future revenues
- Hotel infrastructure

• Aeronautical
- Long-term solution to FIS capacity needs
- North Satellite expansion

• Environmental initiatives?
29

Financial Forecast Summary
2011

2012

2013

2014

2015

2016

Non-Airline Revenues

144,904

149,285

156,390

163,009

170,512

180,134

NOI

169,523

170,409

192,487

209,169

220,443

230,083

Debt Service Coverage

1.45

1.35

1.31

1.31

1.35

1.35

CPE

12.20

12.88

13.69

14.33

14.58

14.86

Enplanement Growth

3.5%

1.5%

2.2%

2.2%

2.2%

2.2%

• Preliminary forecast, does not reflect 2012 budget decisions
• Stated objective of keeping CPE below $14.00 through 2016 will be
challenging

30

2012 Budget Implications
• Moderate enplanement growth: 1.5%
• Non-airline revenues - growth in core business,
yet lose $7 million garage rent from rental cars
- Partially offset by new land rent, loss of $4.7M

• Significant new operating costs ($7+ million) to
operate rental car busing (100 new FTEs)
- Paid by Customer Facility Charges, NOI neutral

• Second year of terminal realignment - $8+
million operating costs
- Recovered through airline rents, NOI neutral

31

Airport Cost Comparison
(Prepared by Dallas-Fort Worth Airport)

Seaport Division
2012 Business Plan Overview
Commission Presentation
August 16, 2011

2012 SEAPORT BUSINESSS PLAN

I. Seaport Strategies
A. Commercial Business
1. Container
2. Cruise
3. Grain
4. Industrial Properties
5. Fishing & Other Maritime

B. Asset Stewardship
C. Green Gateway
II. Financials & Financial Outlook
III. Risks
IV. Recap
34

Terminal 91

Pier 86
Pier 66

Terminal 46
T-18 On-Dock Rail
BNSF (SIG - North)

T-5 On-Dock Rail

Terminal
30
Terminal 18

BNSF (SIG - South)
Terminal 25 S

Terminal 5

UPRR (ARGO)

35

2012 SEAPORT KEY STRATEGIES

In 2011, the Seaport's three Strategic Initiative
Teams developed long term Seaport Strategies:
1. Commercial Business
2. Asset Stewardship
3. Green Gateway
For 2012, Seaport will advance these strategies in
alignment with the Commission's Century Agenda,
the CEO's Goals and Key Corporate Initiatives.

36

Seaport Commercial Business
Business Development

Financial Sustainability

Port Advocacy

Growing the Seaport's Business

Maintaining Financial Independence

Building public & community support

Strategic Goal

Strategic Goal

Strategic Goal

Enhance regional economic
development by increasing cargo
freight & passengers moving
through the Port's Terminals

Improve the Seaport's income
from operations

Maintain and support
relationships that cultivate
overall Port goals for freight
movement and economic
development in Washington

Guiding Principles

Guiding Principles

Guiding Principles

•Retain existing customers
•Develop & maintain relationships
with strategic partners
•Capitalize on opportunities to
secure new business
•Maintain freight and passenger
mobility

•Prioritize projects that generate
sustainable rates of return
•Maximize asset utilization to
increase returns on investments
•Maintain market lease rates
•Maximize efficiency of dollars
spent and resources used

•Maintain a business-friendly
environment
•Ensure efficient freight mobility
within the Harbor and on-ward
to inland destinations
•Reinforce the Seaport's
economic and environmental
benefit story

Overarching Objective

Overarching Objective

Increase container volume and
cruise activity to meet Century
Agenda 5 & 25 year objectives

Maintain the Seaport's financial
independence

Overarching Objective
Manage/maintain advocacy for
Port issues with Stakeholders

37

Container Capacity Growth Plan
2M

3M

Work Package #1

4M

3.5M
Work Package #2

Work Package #3

TERMINALS

TERMINALS

TERMINALS

•T-30 Reactivation
•T-25 expansion to 16 acres

•T-5 increase internal CY

•T-5 RTG Ops

RAILYARDS

RAILYARDS

•Wide span gantry cranes at Main
SIG

•On-dock IY at T-18 or 16th Ave

RAILYARDS
•SIG North Expansion
•T-5 IY second shift

MAINLINE
OFF-DOCK
•20 acre third party container
support

•Sound Transit/BNSF new track
agreement Seattle to Tacoma
•Crown Stampede Pass
•Duwamish Corridor Project

•SR-519
•T-5 surface street
intersection
•EMW grade separation
•Continuous day gate hours
•Spokane Street Viaduct
•Viaduct Construction
accommodates freight.

conversion to IY.
•SIG Stacy Yard conversion.
•ARGO domestic relocation
•ARGO re-designed for high density
operations

MAINLINE

TRAFFIC
•1st Ave S. & E. Marginal Way
•Increase use of night gates.

OFF-DOCK

OFF-DOCK
•20 acre 3rd party container support

Work
Package #4

Terminals

•Tukwila-Tacoma track.
•Sumner Connection
•Vancouver bypass
•Ellensburg/Lind cutoff
•Point Defiance bypass

TRAFFIC

5M

•20 acre 3rd party support

•T-5 18 acre expansion
•T-46 additional RTG ops

RAILYARDS
•SIG South expansion
•New remote railyard
shared with POT

MAINLINE
•Could be constrained?

OFF-DOCK
•T25/30 off-site yard
•40-acre 3rd party support

TRAFFIC
•Steady night gates.

TRAFFIC
•SR-509
•More night gates
38

Seaport Asset Stewardship
Condition Assessment

Asset Maintenance

Understand Existing Assets

Maintain Existing Assets

Capacity Growth

Invest in New Assets When Warranted

Strategic Goal

Strategic Goal

Strategic Goal

Assess and document existing
condition of major assets

Reduce total cost of ownership of
seaport assets

Align asset investments to
support long term market
demand

Guiding Principles

Guiding Principles

Guiding Principles

•Maintain complete asset register
•Perform condition assessments

•Manage assets in a financially
sustainable manner
•Align asset maintenance with long
term strategies

•Enhance existing assets to
support long term growth
•Invest in new assets to support
commercial strategy

Overarching Objective

Overarching Objective

Overarching Objective

Prioritize and execute asset
maintenance program that
sustains our assets

Steward assets to retain
existing business and support
future growth

Maintain a condition assessment
program that sustains or extends
the life of our assets

39

Seaport Green Gateway
Compliance Management
Programs we have to do

Commercial Support
Programs that help support
our business advantage

Community Commitment
Initiatives that reflect our commitment

Strategic Goal

Strategic Goal

Strategic Goal

Meet local, state and federal
regulations as effectively as
possible

Collaborate with industry to reduce
impacts while enhancing our
competitive advantage

Engage stakeholders to build
understanding and support for
environmental initiatives

Guiding Principles

Guiding Principles

Guiding Principles

•Meet legal obligations
•Use scientific knowledge and
programmatic approaches to use
resources most efficiently
•Partner with internal/external
stakeholders for effective
environmental management

•Develop environmental initiatives to
enhance the Port's economic
competitiveness
•Maintain collaborative approach to
environmental problem solving

•Communicate that the Port is an
environmental leader and vital
economic engine.
•Inform and collaborate with
community stakeholders to
support economic and
environmental sustainability

Overarching Objective

Overarching Objective

Overarching Objective

Implement programs that reduce
resource use, emissions and the
Port's carbon footprint, while
increasing our competitive advantage

Inform and engage stakeholders
to aid in understanding and
support of the Port's focus on
balancing economic and
environmental sustainability

Minimize the % of environmental
budget spent on compliance to
maximize resources available for
other environmental strategies

40

COMMERCIAL BUSINESS

Seaport Lines of Business

41

CONTAINER
Market Outlook:
• Transpacific volume projected at 3.7% growth
• U.S. Economy and Consumer demand uncertain
Revenue Assumption:
• Seattle Harbor volume forecast of 2.0M TEUs
Major Work:
• Support terminal operators to retain/grow business
• Advance Export and Northern Corridor initiatives
• Joint market FTZ, Green Gateway, air cargo
• Work with stakeholders to facilitate freight mobility
& minimize business impacts during construction
42

CONTAINER
Major Work (cont'd)
• Continue major asset condition assessments

• Repair pile caps (assuming no major DEF problem)
• Monitor performance of Clean Truck Program
• Implement Radio Frequency Identification
(RFID) system for Clean Truck Program
• Develop T25S for revenue generating use
• Evaluate feasibility of intermodal logistics park
• Pursue long term lease of Terminal 46
• Initiate program to deepen fed'l channel to -50'ft
• Assess tenant storm water infrastructure needs
43

CONTAINER
Financial Overview
Containers
$'s in 000's
Revenue
Direct Expenses
Income from Operations
Divisional Allocations
Corp Allocations
Net Operating Income
Depreciation
Net Income

2008
Actual
52,838
7,190
45,648
5,679
6,533
33,436
16,964
16,473

2009
Actual
56,665
7,866
48,799
5,043
6,506
37,250
18,259
18,990

2010
Actual
61,332
5,576
55,756
4,782
6,463
44,511
19,063
25,448

2011
Budget
62,054
7,911
54,144
4,757
8,524
40,863
19,258
21,605

44

CONTAINER
Financial Overview By Facility
$'s in 000's

2008
Actual

2009
Actual

2010
Actual

2011
Budget

Income From Operations
Terminal 18**
Terminal 5
Terminal 46
Terminal 30 (25/28)
Terminal 106 West
Terminal 3
Container Management
Total Income From Operations

14,184
20,692
10,395
2,035
(3)
(28)
(1,628)
45,648

15,322
21,268
11,107
3,088
(2)
(32)
(1,951)
48,799

16,097
22,640
11,840
7,646
0
(32)
(2,434)
55,756

15,999
21,998
12,613
7,900
0
(9)
(4,357)
54,144

Allocations
Divisional Allocations
Corporate Allocations
Total Allocations

(5,679)
(6,533)
(12,212)

(5,043)
(6,506)
(11,549)

(4,782)
(6,463)
(11,245)

(4,757)
(8,524)
(13,281)

Net Operating Income

33,436

37,250

44,511

40,863

Note**: Terminal 18 IFO is net of debt service related to special facility revenue bonds.

Income from Operations (IFO) = Revenue - Direct Expense Charges

45

CRUISE
Market Outlook:
• Global cruise market projection at 7% growth
• Alaska Cruises remain very desirable domestically
Assumptions:
• 204 vessel calls and 878,600 passengers
• Cruise revenue projection at 15% growth
Major Work:
• Pursue long term agreement with add'l cruise line
• Market mid-week and shoulder season itineraries (Cruise+)
• Make recommendations for P66 shore power
• Evaluate cruise management agreement models
• Complete Fender System Improvements at T91
46

CRUISE
Financial Overview
Cruise
$'s in 000's
Revenue
Direct Expenses
Income from Operations
Divisional Allocations
Corp Allocations
Net Operating Income
Depreciation
Net Income

2008
Actual
9,375
2,133
7,243
976
1,558
4,709
3,749
959

2009
Actual
10,744
2,827
7,917
972
1,605
5,340
4,199
1,141

2010
Actual
11,862
1,536
10,326
1,201
2,138
6,987
5,144
1,842

2011
Budget
10,215
1,828
8,387
1,067
2,606
4,714
5,289
(575)

47

GRAIN
Market Outlook:
• Export corn/soybean market forecast is strong
• Outlook could vary depending on mid-west weather
Revenue Assumptions:
• Similar grain volume and revenue as 2011
• New grain facilities will not draw cargo from T-86
Major Work:
• Negotiate a new long term agreement for T-86

48

GRAIN
Financial Overview
Grain
$'s in 000's
Revenue
Direct Expenses
Income from Operations
Divisional Allocations
Corp Allocations
Net Operating Income
Depreciation
Net Income

2008
Actual
7,053
702
6,351
307
986
5,058
508
4,550

2009
Actual
6,049
322
5,727
234
744
4,748
531
4,217

2010
Actual
6,035
242
5,793
183
655
4,955
554
4,401

2011
Budget
6,087
381
5,706
203
872
4,631
621
4,010

49

INDUSTRIAL PROPERTIES
Market Outlook:
• Occupancy to remain constant except for T-106
Revenue Assumptions:
• Revenue forecast to increase by 8%
• T-106 leased to the State commencing Fall 2011
Major Work:
• T-104 site improvements
• T-108 paving overlay
• T-115 rail spur upgrades
50
50

INDUSTRIAL PROPERTIES
Financial Overview
Industrial Properties
$'s in 000's
Revenue
Direct Expenses
Income from Operations
Divisional Allocations
Corp Allocations
Net Operating Income
Depreciation
Net Income

2008
Actual
12,747
2,971
9,776
1,646
2,445
5,685
2,546
3,139

2009
Actual
12,675
5,027
7,648
1,220
2,234
4,194
2,957
1,237

2010
Actual
13,219
3,804
9,415
1,492
2,362
5,561
3,029
2,532

2011
Budget
13,481
4,841
8,639
1,483
3,037
4,119
3,156
963

51

INDUSTRIAL PROPERTIES
$'s in 000's

Financial
Overview
By
Facility

2008
Actual

2009
Actual

2010
Actual

2011
Budget

Income From Operations
Terminal 115
Terminal 91 Seaport Industrial
Terminal 108
Terminal 18 Bulk Terminals
Terminal 106 Container Related
Terminal 104
Terminal 103
Pier 16/17
Terminal 107
Harbor Island Central
Terminal 106 Bulk Terminals
Terminal 46 Industrial
Terminal 25 South
Terminal 117
Terminal 10
Terminal 5 Container Support
Terminal 106 Bldgs. 1 & 2
Other (f ormer T30 property)
Industrial Properties Admin
Total Income From Operations

4,222
1,961
861
901
602
550
511
469
178
166
90
0
18
0
(46)
0
(71)
(137)
(497)
9,776

4,300
1,969
875
874
635
(176)
484
475
147
171
96
62
(1,392)
(30)
(72)
0
(260)
(93)
(417)
7,648

4,150
2,352
755
930
590
(21)
557
474
204
187
83
125
(47)
(25)
(57)
4
(208)
0
(637)
9,415

4,307
2,249
643
919
616
77
503
484
210
208
82
121
(92)
(20)
(59)
(126)
(54)
0
(1,427)
8,639

Allocations
Divisional Allocations
Corporate Allocations
Total Allocations

(1,646)
(2,445)
(4,091)

(1,220)
(2,234)
(3,454)

(1,492)
(2,362)
(3,854)

(1,483)
(3,037)
(4,521)

Net Operating Income

5,685

4,194

5,561

4,119

Income from Operations (IFO) = Revenue - Direct Expense Charges

52

FISHING & OTHER MARITIME
Market Outlook:
• Commercial Fishing in Alaska expected to remain strong
• Factory trawler moorage demand expected to remain strong
• Historical demand is expected for other commercial vessels
Revenue Assumptions:
• Facility use fees at market rates & vessel calls remain flat
Major Work:
• Increase commercial moorage business harbor wide
• Evaluate models for increasing third party business activity
• Complete P90/91 mooring bollards & other planned projects
• Advance maritime operations training and development
53

FISHING & OTHER MARITIME
Financial Overview
Docks
$'s in 000's
Revenue
Direct Expenses
Income from Operations
Divisional Allocations
Corp Allocations
Net Operating Income
Depreciation
Net Income

2008
Actual
3,361
2,244
1,118
695
870
(448)
2,845
(3,293)

2009
Actual
3,663
2,216
1,448
677
826
(56)
3,110
(3,166)

2010
Actual
3,611
2,742
869
778
928
(837)
3,191
(4,028)

2011
Budget
3,135
2,556
580
809
1,152
(1,382)
3,398
(4,780)

54

FISHING & OTHER MARITIME
$'s in 000's

Financial
Overview
By
Facility

2008
Actual

2009
Actual

2010
Actual

2011
Budget

Income From Operations
Terminal 91 Fishing Related
Terminal 91 Vessel Operations
Terminal 91 Operations Overhead
Terminal 25 Vessel Operations
Pier 2 Docks
Pier 34 Docks
Terminal 46 Fishing Related
Pier 69 Vessel Operations
Pier 28 Docks
Terminal 18 North-Mooring Dolphins
Total Income From Operations

1,991
1,032
(2,078)
77
50
22
18
7
0
0
1,118

2,723
464
(1,973)
141
31
(7)
47
(2)
24
0
1,448

2,562
436
(2,425)
295
51
0
(19)
(1)
(29)
0
869

2,196
298
(2,452)
300
46
0
11
(1)
78
103
580

Allocations
Divisional Allocations
Corporate Allocations
Total Allocations

(695)
(870)
(1,566)

(677)
(826)
(1,503)

(778)
(928)
(1,706)

(809)
(1,152)
(1,961)

Net Operating Income

(448)

(56)

(837)

(1,382)

Income from Operations (IFO) = Revenue - Direct Expense Charges

55

SEAPORT SECURITY &
EMERGENCY PREPAREDNESS
Seaport Security:
• Maintain compliance with Federal security regulations
• Conduct security awareness training and exercising
• Perform security risk assessments and improvements
• Seek & pilot emerging security screening technology
Emergency Preparedness (EP):
• Execute FEMA IEMC* action plan items for Seaport
• Develop joint EP Program with Real Estate/Corporate
• Develop and conduct EP training and exercising
• Review and strengthen departmental COOP# plans
*Integrated Emergency Management Course

#Continuity of Operations Plan

56

SEAPORT SECURITY GRANTS
Financial Overview
In $ Thousands

2008
Actual

2009
Actual

2010
Actual

2011
Forecast

2011
Budget

2011 Bud Var
$
%

Security Grants

850

847

1,791

423

3,415

(2,992)

-88%

Total Revenue

850

847

1,791

423

3,415

(2,992)

-88%

Direct Expenses

794

780

798

755

755

0

0%

Security Grant Expense

921

860

1,983

459

3,451

2,992

87%

Corporate Allocations

343

515

486

374

374

0

0%

Total Expense

2,058

2,154

3,267

1,588

4,580

2,992

65%

Net Operating Incom e (NOI)

(1,208)

(1,307)

(1,477)

(1,165)

(1,165)

0

0%

57

SEAPORT ASSET STEWARDSHIP
Major Asset Categories:
1. Dock Systems - including crane
2. Building Systems - including utilities
3. Yard Systems - including paving
4. Dredging - including annual surveys

Major Work:
• Condition assessments
- Inspect Dock Systems/Cranes
- Inventory utilities

• T-18 Pile Cap Repairs*
−

Complete pilot repairs

−

Start major repairs

• Develop a system to manage • Complete DEF assessment
(inventory) asset condition data
*Assuming DEF is not a major problem

58

SEAPORT ASSET STEWARDSHIP

Projects
&
Capital Budget

PROJECT

Terminal
5

CIP STATUS

T-5 Completion
Committed
T-5 New Cranes (4)
BP Prospective
T-5 Dredge Phase 2
EXPENSE
TOTAL Committed/Bplan Prospective:
Note - Excludes Prospective Items

2012 2012-2016 2017-2021
$
$
$
$

813
813

$
903 $
$ 45,000 $
$ 3,500 $
$ 49,403 $

-

TOTAL
$
903
$ 45,000
$ 3,500
$ 49,403

60

PROJECT

Terminal
18

CIP STATUS

T-18 Fender Replacement
Committed
T-18 Rail Crossings
BP Prospective
T-18 Pile Cap Pilot
EXPENSE
T-18 Pile Cap Repair Project
EXPENSE
T-18 Remove IHI Cranes
EXPENSE
TOTAL Committed/Bplan Prospective:
Note - Excludes Prospective Items

2012 2012-2016 2017-2021
$ 1,378 $ 1,378
$
$
$ 700 $
700
$ 500 $ 30,000
$ 1,000 $ 1,000
$ 3,578 $ 33,078

$
$
$
$
$
$

1,000
1,000

TOTAL
$ 1,378
$ 1,000
$
700
$ 30,000
$ 1,000
$ 34,078

61

PROJECT

CIP STATUS

Terminal T-25/30 South Container Yard Committed
P-33-35 Public Access
Committed
25/30
TOTAL Committed/Bplan Prospective:
Note - Excludes Prospective Items

2012 2012-2016 2017-2021
$ 12,200 $ 12,200 $
$ 1,300 $ 5,800 $
$ 13,500 $ 18,000 $

-

TOTAL
$ 12,200
$ 5,800
$ 18,000
62

PROJECT
T-46 North Dock Replacement
T-46 Development

CIP STATUS
BP Prospective

Terminal T-46 Demo Crane 54
EXPENSE
T-46 Pile Cap Repairs
EXPENSE
46
TOTAL Committed/Bplan Prospective:

$
$

2012 2012-2016 2017-2021
$ 20,000 $
$
$ 25,000 $ 15,000 $

TOTAL
20,000
40,000

$
$
$

-

450
60,450

$
$
$

450
45,450

$
$
$

15,000

$
$
$

Note - Excludes Prospective Items
63

Pier 66

PROJECT

CIP STATUS

P-66 Shore Power

BP Prospective

$

-

$

13,700

$

-

$

13,700

P-66 Pile Wraps

Expense

$

115

$

575

$

575

$

1,150

$

115

$

14,275

$

575

$

14,850

TOTAL Committed/Bplan Prospective:

2012

2012-2016

2017-2021

TOTAL

Note - Excludes Prospective Items
64

Terminal
86

PROJECT

CIP STATUS

T-86 Grain Term Modernization

Committed

$

107

$

107

$

-

$

107

T-86 Grain Term Cathodic Protection

BP Prospective

$

900

$

1,000

$

-

$

1,000

P-86 Fishing Pier Replacement

BP Prospective

$

-

$

1,300

$

4,750

$

6,050

$

1,007

$

2,407

$

4,750

$

7,157

TOTAL Committed/Bplan Prospective:

2012

2012-2016

2017-2021

TOTAL

Note - Excludes Prospective Items
65

Terminals 104 and 115

PROJECT

CIP STATUS

T-104 Site Improvements

BP Prospective $ 1,000 $

TOTAL Committed/Bplan Prospective:

2012 2012-2016 2017-2021

$ 1,000 $

T-115 Rail Spur Upgrades
BP Prospective $
TOTAL Committed/Bplan Prospective:
$
Note - Excludes Prospective Items

-

$
$

TOTAL

3,000 $

-

$

3,000

3,000 $

-

$

3,000

1,050 $
1,050 $

-

$ 1,050
$ 1,050

66

PROJECT

Terminal
108

CIP STATUS

T-108 Paving Overlay
BP Prospective $
TOTAL Committed/Bplan Prospective:
$

2012 2012-2016 2017-2021
-

$
$

3,190 $
3,190 $

-

TOTAL
$
$

3,190
3,190

Note - Excludes Prospective Items
67

Terminal
91
68

Terminal 91
PROJECT

CIP STATUS

2012 2012-2016 2017-2021

P-90 C-175 Roof Replacement Committed
$ 2,005
P-90 Dredge East Waterway BP Prospective $ P-90 Berth 6 & 8 Redev Ph 1 BP Prospective $ P-90 Berth 6 & 8 Redev Ph 2 BP Prospective $ T-91 Water Main Replacement Committed
$ 565
P-91 Fender System Upgrade Committed
$ 1,875
P-91 2nd Gangway per Berth BP Prospective $ T-91 Industrial Whse & Office BP Prospective $ T-91 Substation Upgrades
BP Prospective $ T-91 New Whse @ Tank Farm BP Prospective $ T-91 Rail Spur Upgrades
BP Prospective $ TOTAL Committed/Bplan Prospective:
$ 4,445
Note - Excludes Prospective Items

$
$
$
$
$
$
$
$
$
$
$
$

2,005
24,500
13,000
565
1,875
4,500
2,500
21,900
1,110
71,955

TOTAL

$
$ 2,005
$ 6,000 $ 6,000
$
$ 24,500
$ 12,500 $ 25,500
$
$
565
$
$ 1,875
$ 5,000 $ 9,500
$ 23,700 $ 23,700
$
$ 2,500
$
$ 21,900
$ 1,110
$
$ 47,200 $ 119,155
69

Other Seaport Projects

PROJECT
Seaport Small Projects
Cont Supp Yd - 3.5 m TEU #1
Cont Supp Yd - 3.5 m TEU #2
Cont Term Storm Water Pilot
Contingency Renew/Replace
Maint Dredge All Terminals
Condition Assessments

CIP STATUS
Committed
BP Prospective
BP Prospective
BP Prospective
BP Prospective
EXPENSE
EXPENSE

TOTAL Committed/Bplan Prospective:
Note - Excludes Prospective Items

$
$
$
$
$
$
$

2012
575
1,000
1,000

$ 2,575

2012-2016
$
2,975
$ 30,000
$
$
1,300
$ 38,500
$
3,000
$
1,000

2017-2021
$
2,500
$
$ 35,000
$
$ 120,000
$
4,000
$
-

TOTAL
$
5,475
$ 30,000
$ 35,000
$
1,300
$ 158,500
$
7,000
$
1,000

$

$ 161,500

$ 238,275

76,775

70

Seaport Project Plan Summary
Draft as of 08/05/2011
$'s in 000's

2012

2012-2016

2017-2021

Total

Committed

24,606

40,644

18,204

58,848

Bus Plan Prospective

5,188

252,838

222,950

475,788

29,794

293,482

241,154

534,636

Major Expense Projects

3,315

40,225

4,575

44,800

Total Projects

33,109

333,707

245,729

579,436

0

450,355

271,897

722,252

Total Capital Committed & BPP

Other
Prospective Capital Projects

71

SEAPORT FINANCIAL OUTLOOK
• Operating Revenue (excluding grants)
is projected to increase by 2.5%
compared to 2011 Budget
• Primary components of revenue:
- In place leases
- Forecasted future leases
- Volume: cruise, grain, crane rent
- Grants
72

SEAPORT FINANCIAL OUTLOOK
Expense Trends and Risks:
• Comprehensive asset condition assessments
• Maintenance dredging
• Repair costs
• Crane removal
• Storm water infrastructure
• NW Clean Air Strategy
• Environmental Remediation Liability Expense
• Tribal fishing coordination
73

SEAPORT FINANCIAL OUTLOOK

In $ Thousands

2008
Actual

2009
Actual

2010
Actual

2011
Forecast

2011
Budget

2011 Bud Var
$
%

Operating Revenue

85,404

89,844

96,060

95,772

94,972

800

1%

Security Grants

850

847

1,791

423

3,415

(2,992)

-88%

Total Revenue

86,254

90,691

97,850

96,195

98,387

(2,192)

-2%

Direct Expenses

23,031

25,108

20,780

25,293

24,081

(1,212)

-5%

Security Grant Expense

921

860

1,983

459

3,451

2,992

87%

Envir Remediation Liability Exp

866

24

1,439

500

500

0

0%

Divisional Allocations

2,335

2,123

2,354

1,461

2,511

1,050

42%

Corporate Allocations

12,734

12,430

13,033

16,285

16,565

280

2%

Total Expense

39,887

40,545

39,590

43,998

47,108

3,110

7%

Net Operating Income (NOI)

46,367

50,145

58,261

52,198

51,280

918

2%

74

2012 SEAPORT BUSINESS PLAN
RISKS
• Competitive threats (i.e. B.C., Panama Canal, HMT*)
• U.S. economic recovery stalls or contracts
• Loss of business due to construction congestion
• Loss of business due to lower cost competitive ports
• Escalating liability, project and overhead costs
• Increased taxes/fees due to State budgetary
pressures
• Legislation/regulation that impedes port
competitiveness
* HMT - Harbor Maintenance Tax

75

2012 SEAPORT BUSINESS PLAN
KEY HIGHLIGHTS:
• Overall business outlook is uncertain in Seattle; mirroring
uncertain U.S. economy and global outlook
• Revenue streams remain solid & looking for new opportunities
• Seaport building upon "Green Gateway" brand and successes
• Capital Projects closely tied to Business Plans
• Asset Stewardship is a critical area of work
• Develop/advance Northern Transportation Corridor
• Continue business-friendly, collaborative approach
• Advance strategic marketing efforts to retain business
• Business Plan aligns with Century Agenda & CEO goals
76

Real Estate Division
2012 Business Plan
August 16, 2011

Division Objectives
• Provide for NOI consistent with 2011 levels,
notwithstanding recognition of deferred maintenance
costs
• Continue execution of deferred maintenance obligations
• Provide for amended real estate policies as necessary
with regard to:
- Purchase and sale of properties
- Competitive process requirements
- Establishment of asset ranking system
- Respond to recommendations from Century Agenda planning

78

Real Estate 2012 Budget Preview
Operating Revenues expected to be favorable
by approximately 2% relative to 2011 Budget

• Positive trailing indicators:
- Third party revenue forecasted slight increase as the hospitality
market continues to strengthen.
- Market conditions continue to tighten, albeit with aggressive owner
contributions

• Exposures/ risks:
- Potential higher vacancies in commercial properties and
recreational marinas
- Eastside Rail Corridor
- Deferred maintenance costs
- Tenant improvement allowances
- Competition for capital
- Pending debt re-payment challenge looms
79

Real Estate Revenue Bonds
• 1998 Series refunded bonds issued to pay for P-69
• 2007 A bonds issued as "governmental bonds"
funded public uses at Shilshole
• 2007 B bonds issued as "private activity bonds"
funded
- Seaport - primarily T30/T91 project
- Real Estate - Shilshole leased areas
Real Estate net income does not support payment of debt service.
Debt service is paid from Real Estate's General Fund balance.

80

Level debt service in aggregate, but
increase in Real Estate debt service in 2016

81

RE Revenue Bond Debt Service Payments

12,000
661

661

10,000
661
8,000
8,539

6,000

4,000

8,536

908
8,540

1,264

1,264

1,264

1,264

1,264

1,384

1,384

1,384

1,384

1,384

2,197

2,199

2,198

2,201

2,194

2,194

2,200

2011

2012

2013

2014

2015

2016

2017

5,601

2,000
1,381

0

1998 Sub Lien

2007A

2018

2019

2020

2007B

82

RE General Fund Balance (Cash) Available
60,000
50,000
40,000
30,000
20,000
10,000
0
-10,000
-20,000
2010 YE

2011 YE

2012 YE

Min Required Cash

2013 YE

2014 YE

Avail Cash Balance

2015 YE

2016 YE

2017 YE

Total Cash

83

Real Estate Division Financial Overview

In $ Thousands

2008
Actual

2009
Actual

2010
Actual

2011
Forecast

2011
Budget

2011 Bud Var
$
%

Operating Revenue

34,797

30,132

29,820

30,795

30,707

88

0.3%

Total Revenue

34,797

30,132

29,820

30,795

30,707

88

0.3%

Direct Expenses

36,355

27,525

29,502

31,765

33,221

1,456

4%

Divisional Allocations

(3,413)

(3,200)

(3,485)

(2,375)

(3,787)

(1,412)

-37%

Corporate Allocations

5,253

5,244

5,481

6,550

6,645

95

1%

Total Expense

38,195

29,569

31,499

35,940

36,079

139

0.4%

Net Operating Incom e (NOI)

(3,398)

563

(1,678)

(5,145)

(5,372)

227

4%

84

Financial Overview
Harbor Services

Harbor Services
$'s in 000's
Revenue
Direct Expenses
Income from Operations
Divisional Allocations
Corp Allocations
Net Operating Income
Depreciation
Net Income

2008
Actual
10,491
5,694
4,797
1,589
2,904
304
5,187
(4,883)

2009
Actual
11,402
6,077
5,324
1,937
3,089
298
5,423
(5,124)

2010
Actual
11,548
6,627
4,921
2,412
3,174
(664)
5,578
(6,242)

2011
Budget
11,456
7,060
4,396
2,477
3,833
(1,915)
5,855
(7,770)

85

Financial Overview
Portfolio Management

Portfolio Mgmt Group
$'s in 000's
Revenue
Direct Expenses
Income from Operations
Divisional Allocations
Corp Allocations
Net Operating Income
Depreciation
Net Income

2008
Actual
22,720
14,849
7,871
2,478
2,157
3,235
4,323
(1,088)

2009
Actual
17,646
12,826
4,820
2,193
1,966
661
4,299
(3,638)

2010
Actual
17,300
13,234
4,066
1,786
2,068
212
4,216
(4,003)

2011
Budget
18,479
14,951
3,527
2,729
2,543
(1,745)
4,090
(5,835)

86

Financial Overview
RE Development & Planning

Real Estate Dev & Plann
$'s in 000's
Revenue
Direct Expenses
Income from Operations
Divisional Allocations
Corp Allocations
Net Operating Income
Depreciation
Net Income

2008
Actual
1,270
7,902
(6,632)
161
191
(6,985)
523
(7,508)

2009
Actual
807
727
80
207
190
(318)
227
(545)

2010
Actual
756
820
(64)
287
239
(591)
231
(822)

2011
Budget
724
1,201
(478)
317
268
(1,063)
221
(1,284)

87

Financial Overview
Eastside Rail Corridor

Eastside Rail Corridor
$'s in 000's
Revenue
Direct Expenses
Income from Operations
Divisional Allocations
Corp Allocations
Net Operating Income
Depreciation
Net Income

2008
Actual
0
0
0
0
0
0
0
0

2009
Actual
0
79
(79)
0
0
(79)
0
(79)

2010
Actual
114
751
(637)
0
0
(637)
0
(637)

2011
Budget
45
694
(649)
0
0
(649)
0
(649)

88

Draft 2012 Capital Plan

Total Real Estate Division $ 000's
TOTAL REAL ESTATE DIVISION
Committed
Business Plan Prospective
TOTAL

2012

2012-16 Total

11,406
6,050

23,410
42,820

17,456

66,230

89

Draft 2012 Capital Plan By Location
Fishermen's Terminal $ 000's
FISHERMEN'S TERMINAL

2012

2012-16 Total

FT Waterside Projects Capital Projects
Status
Description
Committed
FT Waterside Small Capital Projects
FT Net Shed Solution
BPP
BPP
FT Net Shed 9 Roof Replace
BPP
FT NW Dock Improvements
BPP
FT S Wall W End Pile Repl & Corr Protect
BPP
FT W Wall N Fender Sys Replace
BPP
FT W Wall N Sheet Pile Corr Protect
BPP
FT Docks 3 Fixed Pier Improvements
BPP
FT Docks 4 Fixed Pier Improvements
BPP
FT S Wall Ctrl Fender Repl & Corr Protect
BPP
FT W Wall South Sheet Pile Corr Protect
Total FT Waterside

70
2,500
450
0
0
200
0
0
0
0
0
3,220

220
7,500
450
100
1,250
2,625
2,600
2,800
3,300
0
0
20,845

FT Upland Projects Capital Projects
Status
Description
Committed
FT C15 HVAC Improvements
Committed
FT Uplands Small Capital Projects
BPP
FT Paving/Storm Upgrades
BPP
FT C15 Bldg Roof Replacement
BPP
FT C14 (Downey) Bldg Imp
BPP
FT C-2 Bldg Roof & HVAC Rplmnt
BPP
FT C-15 Bldg East Sewer Line
BPP
FT C-15 Bldg Subsidence Imp
Total FT Landside

3,572
0
0
0
0
0
850
250
4,672

3,602
1,255
1,650
2,400
950
1,150
850
2,750
14,607

TOTAL FISHERMEN'S TERMINAL

7,892

35,452

90

Draft 2012 Capital Plan By Location
Shilshole Bay Marina $ 000's
SHILSHOLE BAY MARINA

2012

2012-16 Total

Shilshole Bay Marina Recreational Boating
Committed
Small Projects
BPP
SBM Fuel Floats Improve
BPP
Central Seawall Replacement
Total SBM Recreational Boating

70
0
0
70

165
1,000
915
2,080

Shilshole Bay Marina Commercial Prop
BPP
SBM: Seaview Bldg A5 Rehab
Total SBM Commercial Prop

0
0

300
300

70

2,380

TOTAL SHILSHOLE BAY MARINA

91

Draft 2012 Capital Plan By Location
Central Waterfront $ 000's
CENTRAL WATERFRONT

2012

2012-16 Total

Central Waterfront- Bell Harbor Marina
BPP
BHM Standpipe Upgrade
Total BHM Recreational Boating

500
500

500
500

Central Waterfront Commercial Bldgs
Committed
Bell Harb Lighting Ctrl Upgrade
Committed
Small Projects
BPP
P66 Chiller Upgrades
Total Central Waterfront Commerical Bldgs

513
150
300
963

513
535
300
1,348

1,463

1,848

TOTAL CENTRAL WATERFRONT

92

Draft 2012 Capital Plan By Location

Other Commercial Properties $ 000's
OTHER COMMERCIAL PROPERTIES

2012

2012-16 Total

Other Commercial Properties
Committed
Tenant Improvements -Capital
Committed
Other Commercial Props Small Capital
BPP
T102 Bldg Roof Replacement
Total Other Commercial Buildings

1,052
0
0
1,052

3,434
475
2,430
6,339

TOTAL OTHER COMMERCIAL PROPERTIES

1,052

6,339

93

Draft 2012 Capital Plan By Location

Pier 69 and Other Projects $ 000's
PIER 69 AND OTHER PROJECTS

2012

2012-16 Total

Other
Committed
P69 N Apron Piling Cathodic Protection
Committed
P69 Built Up Roof Replace
Committed
Pier 69 Small Projects
Committed
RE Div: Green Port Initiative
Committed
RE Fleet Replacement
Committed
RE Preliminary Planning
Committed
RE Technology Projects
Committed
Unspecified Small Projects
BPP
RE: Contingency Renew.&Replace
Total Other

3,923
300
525
225
506
250
250
0
1,000
6,979

3,923
1,992
525
1,653
2,403
1,250
1,250
215
7,000
20,211

TOTAL P69 AND OTHER PROJECTS

6,979

20,211

94

Real Estate Development and
Planning
• Master planning and land development:
- North Bay
• Complete development options study
• Initiate the environmental review process
• Engage the City and other stakeholders in the planning
process

- Des Moines Creek
• Complete new development agreement with City
• Finalize possible retail option agreement with City
• Finalize possible industrial development agreement with
Puget Sound Energy

95

Real Estate Development and
Planning
• Other Projects:
• Respond as appropriate to the GSA/FAA office requirement for
SeaTac and Des Moines sites
• Continue collaboration City of Burien on the Northeast
Redevelopment Area
• Continue collaboration City of SeaTac on the 28th Avenue S.
area
• Complete second land swap with WSDOT

96

Portfolio Management and Leasing
• Property management
- Achieve net operating income and occupancy targets
- Fishermen's Terminal
• Complete asset condition examination and adopt 20 year asset plan
• Complete FVO lease renewal and seawall replacement
• Conduct due diligence and prepare to receive title to Downey building

- Examine alternatives for energy conservation measures utilizing
utility company incentive plans
- Publish RFQ/RFP for Bell Harbor International Conference
Center

97

Harbor Services
• Financial performance:
- Achieve net operating income target
• Fishermen's Terminal:
- Complete asset condition examination and adopt 20 year asset
plan
- Implement net locker solution
- Complete NW Dock East Fender Pile Replacement

• Shilshole Bay Marina:
- Revise long term master plan
- Examine implications of revised Shoreline regulations

98

P69 Facilities Management
• Achieve flat utility consumption over 2011
• Perform space planning forecast for 2013
• Continue improvement of emergency operations &
business continuity program
• Conduct three communication drills and one tabletop
exercise

99

Marine Maintenance
• Manage expense budgets within 2%
• Continue Green & Sustainability Initiatives
- Zero increase in landfill waste
- Stormwater compliance
- Energy Conservation

• Parks and public access-24 sites, 63 acres
• Deferred maintenance
- Multiple projects underway

100

Port of Seattle
2012 Budget Planning Assumptions
August 16, 2011

Agenda
• Background
• Overall Budget Assumptions
• Key Payroll Assumptions
• Corporate Costs
• Key Dates for 2012 budget
• Q & A's

102

Background
• 2009 - Took early and proactive steps to reduce
costs; O&M expense $28M below budget.
• 2010 Budget - Reduced $11 million of additional
costs relative to 2009 budget through Zero Based
Budgeting and implemented a voluntary
separation program; eliminated 110 positions
(6.2% of the workforce).
• 2011 Budget - Matched expenses to revenues to
maintain NOI.
103

Historical Port Financial Performance

104

Overall Budget Assumptions
• Economic outlook uncertain
• Process will incorporate Commission guidance
on budget.
• Continued focus on managing overall O&M costs
and Corporate costs.
- Reduce Corporate expense as a % of total Port
operating revenues.

• Revenue assumptions yet to be finalized.
• Tax levy discussion as part of Plan of Finance
105

Preliminary Payroll Assumptions*
• Average merit pay of 3.0% based on preliminary
market survey data (may be revised based on
final data and overall budget considerations).
• Port-sponsored medical cost increase of 2%
with minor plan design changes (compared to
8% national trend).
• Total Rewards philosophy development
continues-minimal 2012 budget impact
expected
* For non-represented employees
106

Preliminary Payroll Assumptions
• 2012 Employer PERS contribution rate not yet
finalized
• 2011 rate was less than projected:
- Budgeted rate: 7% (blended rate of 5.3% and 8.7%)
- Actual rate: 6.25% (blended rate of 5.3%, 7.07%,
7.25%)

• 2012 Preliminary budget based on 7.25%; will
be reviewed as new information becomes
available
107

Corporate Costs
• 2009 Budget: Cut 2% ($1.5M) out of $75M
• 2010: Adopted Zero-Based Budgeting.
• 2011: Non-payroll costs held flat.
• 2012: Focus on sustainable costs measured as a
percent of total Port revenue/expenses.

108

Corporate Cost Trends
$ in 000's

2005
Actual

2006
Actual

2007
Actual

2008
Actual

2009
Actual

2010
Actual

2011 2005-11 6-Year
Fcst Change CAGR

Total Corporate Expenses

58,828

60,294

65,072

69,329

65,340

67,338

73,969

15,140

3.9%

Total Port Revenues

416,525 448,449 457,888 478,523 449,435 470,490 495,630

79,105

2.9%

Total Port Expenses

226,195 223,564 236,897 274,619 245,767 253,464 278,547

52,352

3.5%

% of Total Revenue
% of Total O&M

14.1%
26.0%

13.4%
27.0%

14.2%
27.5%

14.5%
25.2%

14.5%
26.6%

14.3%
26.6%

14.9%
26.6%

*Costs adjusted to reflect certain ICT cost transfers from operating divisions
During this period Internal Audit and OSR departments were expanded; Corporate received
transfer of Airport Jobs, PLA and ORCA program from the Airport; ICT took on several service
support functions from the operating divisions. Excluding the one-time Port Centennial and AAPA
Convention expense in 2011, Corporate Costs as a percentage of Total Revenues and Total
Expenses are 14.6% and 26.0%, respectively.
109

2012 Budget Calendar
August
• Budget user/refresher training
• 2012 Budget Guidelines released
• Commission meeting on division business and
capital plans
• Commission meeting on budget assumptions

110

2012 Budget Calendar
September
• Prepare preliminary operating & capital budgets
• Internal budget reviews by each dept & division
• Executive preliminary budget reviews (9/19 - 9/22)
• Commission capital budgets meeting on 9/27

111

2012 Budget Calendar
October
• Operating budget Commission meeting on 10/4
• Preliminary budget document available to the
Commission on 10/18
• Draft Plan of Finance Commission meeting on
10/25
• Release 2012 Preliminary Budget and Draft Plan
of Finance Document to the public on 10/27
112

2012 Budget Calendar
November
• First reading of budget resolution on 11/8
• Second reading of budget resolution on 11/22
December
• File statutory budget on 12/1
• Release 2012 Final Budget and Draft Plan of
Finance Document to the public by 12/15
113

Port of Seattle
2012 Budget Planning Assumptions
August 16, 2011