_7a_Supp________
Revised: October 10, 2011
ITEM NO.

DATE OF
MEETING:

Oct 4, 2011

Aviation Division
2012 Preliminary Operating Budget
Commission Briefing
October 4, 2011

Industry Status/Trends
• Domestic airline industry was profitable in 2010,
forecasting near breakeven for 2011
- IATA forecasting global industry profit of $6.9 billion in 2011

• Fuel costs are high (near 2008 levels), yet Industry
has figured out how to survive:
- Focus on profit, not market share
• Unprofitable routes eliminated

- Seasonal capacity changes, very high load factors
- Consolidation
- Ancillary fees

• Industry expert predicts limited domestic growth, but
there will be winners and losers among airports
- Large hubs with limited regional competition and
international connections will likely see growth
2

Implications for Sea-Tac
• Sea-Tac will likely see growth in spite of
economic uncertainty
- SEA is a large hub, has international connections,
and has limited competition

• Very resilient market
- "Only" 3% drop in traffic during Great Recession

• Alaska Airlines is profitable and growing
- Record earnings for 2011 YTD
- Highest enplanement growth among U.S. airlines
for January - June 2011 (10.7%)

• Implications: Need to plan for growth
3

Sea-Tac Status
• Positive enplanement growth each month since
June 2010
• Strong YTD enplanement growth through August
2011: + 4.5%
- International +7.6%

• Forecasting growth of 3.8% for 2011
- Exceeding last year's 2011 growth forecast of 1.0%

• Economic uncertainty and effect on future air
travel remains a concern
- Airport is prepared to adjust budgets as needed if
economic conditions deteriorate
4

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

2011: 3.8%
2012: 1.5%
2013: 2.2%
2014+: 2.2%

5

Financial Goals
• Aeronautical side of business revenues
based on cost-recovery formulas
- Focus is on managing costs, so CPE
is primary measure
• Non-aeronautical side of business is
focused on generating cash flow, so NOI
is primary measure
• Total airport:
- Increase cash flow after debt service
- Maintain debt service coverage >
1.25x
- Maintain unrestricted cash balance >
10 months O&M expenses

2011 Forecast CPE for 2012
Plus increase inTerminal Realignment
Plus increase in RMM
CPE Target

$ 13.13
0.31
0.04
$ 13.48

CPE for 2012 Budget

$ 13.43

Exceeded target

0.05

6

Non-aeronautical Goal
• Goal is long-term growth in NOI. 2012 is a year of
investment for future growth; NOI declining $5.3
million:
- Rental car revenue is down for 2012 due to:
• Space rent in garage replaced with lower land rent for rental
car facility (permanent)
• Lease incentives to complete tenant improvements (one-time)

- Land development costs in anticipation of future
revenues: brokerage fees, etc.
- Planning for new concessions space to come on-line in
2013
- Marketing and promotion to increase parking revenue

• 2012 NOI reduction, positioned for future growth
7

Budget Drivers
• Expenses driven by:
- Payroll and contractual increases
- Opening rental car facility / busing service
• $9.6 million operating costs and 80.6 FTEs
• CFC revenues increase to cover almost all costs

- Terminal realignment
• Multiple capital projects, mostly approved by Commission
• $8.2 million in operating budget, drives increase in 2012 airline costs
(CPE)

- New initiatives tied to Strategic Goals / Century Agenda

• Revenues driven by:
- Airline revenues increasing due to costs for terminal
realignment, maintenance and capital costs
- Non-airline revenues:
• Increase in CFC to pay for operating costs of RCF / busing
• Reduction in rental car revenues due to relocation and incentives
8

Aviation Expense Summary
•

Cost increases:
-
-

•
•

Rental car facility / busing - (see
Appendix A)
Terminal realignment will total
$8.2 million (increase of $5.2M).
-
-

•
•

Compensation +$5.0 million
Contracts: +$1.3 million

Port project oversight of tenant
projects
Tenant reimbursement

Grant funded costs always
excluded from baseline budget
Environmental remediation
expense driven by capital
projects:
-
-
-
-

Vertical conveyance
Common use expansion
South Sat. concessions
GSE Electrical charge stations

2011 Budget

$000s
139,575

%

Cost increases (compensation, contractual)
Rental Car Facility & Busing (CFC funded)
Increase in Terminal Realignment
Decrease of Grant funded operating costs
Increase in RMM
Subtotal

6,348
7,593
5,200
(405)
1,325
20,062

4.5%
5.4%
3.7%
-0.3%
0.9%
14.4%

Budget Requests
Net savings/one-time items
Subtotal

8,811
(5,539)
3,272

2.3%

Total increase

23,334

16.7%

2012 Budget

162,908

Summary:
While budget increase is large, only
$3.3 million (2.3%) is driven by new
requests.
9

Payroll Costs
Baseline Payroll
Salary
Salary Benefits
Wage
Wage Benefits
Subtotal
Rental Car Facility
Total

2011
18,195
6,639
37,931
16,726
79,490
184
79,674

2012
19,364
6,835
40,655
17,645
84,498
5,905
90,403

Change
1,169
196
2,723
919
5,007
5,721
10,729

%
6.4%
3.0%
7.2%
5.5%
6.3%
3116.3%
13.5%

Table above shows payroll costs before 2012 requests. Variances
included the following:
•
•

2012 salaries include $645K additional costs of FTEs added during 2011
Wages:
• 2011 FTEs added with full funding in 2012
$559K
• Retro contractual increase not 2011 budget
$198K
• 2012 contractual increases
$796K
• Firefighters added with SAFER grant
$350K
10

Budget Requests
• Initial budget requests totaled $24 million
• $8.8 million proposed for approval, or 37% of
requests
• Offset by $5.6 million of cuts and savings from
one-time items in 2011 budget (details
covered later)
• Next slides will focus on budget requests
• Requests organized by Strategic Goal

11

Budget Drivers: 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
12

Budget Drivers: 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

13

New Requests Summary
New Requests:
Safe/Secure Airport
Customer needs/capacity
Asset Management:
New Facilities/Assets
Maintenance Resource Alignment
Total

$000s
764
680
1,652
1,717
3,369

Customer service
Airline cost management
Non-Aero revenue development
Costs offset by new revenues
Future revenue development costs
Total

1,567
428

Other
Total

394
8,811

808
802
1,609

14

New Requests
Safe/Secure Airport
Description
Wildlife Specialist
Painters
Safety Mgmt System Impl & Facilitation
Upgrade backup C4 facility
Other
Total

$000s
75
135
108
50
396
764

Capacity and Customer Needs
FTEs

Description

1 Master Plan
2 Terminal development strategy planning

3

Airfield project planning and analysis
Air service development FTE
Other
Total

$000s
230
200
100
75
75
680

FTEs

1
1

• Wildlife Specialist allows for studies to be done in-house to reduce
consulting costs and reduce pest presence to customers/aircraft
• Painters will update striping for safety concerns on the
Airfield/Landside properties
• Safety Management System has been approved by Commission
as a commitment to safety; 75% of which is grant funded
15

New Requests
New Facilities
Description
Common Use System support
Airfield lighting photometrics
Airfield crew 3rd runway
Pre-conditioned air system
Landscaping
Other
Total

Maintenance Resource Alignment
$000s
314
218
258
544
156
162
1,652

FTEs

3
2
4
6

15

Description
Mechanical Systems Support
STS Electronic Tech and materials
Auto mechanics for deferred maintenance
Maintenance Planning Coordinator
Conveyor shop materials
Cargo building mgmt ($500K new revenues)
Outside fence property cleanup
Other
Total

$000s
188
234
177
70
160
585
100
203
1,717

FTEs

2
3
2
1

8

• Pre-conditioned air was estimated at $800K annual O&M costs in 2010.
• Third runway became operational in late 2008, but staffing for airfield
crew was not increased. Additional work load can't be accomplished.
• Electrical technicians support common use system.
• Airfield photo-metrics initiative supports compliance with FAA
regulations.
• STS running more cars and longer hours.
16

New Requests
Non-Airline Revenue Development
Description
Offset by New 2012 Revenues:
Tenant marketing expense increase
Public parking marketing and promotion
Conference center video equip& advertising
Club International
Subtotal

$000s
100
430
64
214
808

Future Revenue Development Costs:
Concession leasing and planning
Land Development: Brokerage Commission
Land Development Planning
Other
Subtotal

300
234
250
18
802

Total

1,609

•

Customer Service
Description
Enhanced elevator/escalator service
Pathfinders support for escalator project
Loading bridge and garage lobby flooring
Window interior and exterior cleaning
Remote cruise screening facility
Baggage Mgr & Electrical Support
Restroom facility support
Carpenter
Sign Writer
Other
Total

$000s
500
251
133
90
84
194
139
79
65
32
1,567

FTEs

4

2
1
1
1
9

Escalator replacement project drives need for enhanced service and more
Pathfinders for customer service.

17

New Requests
Airline Cost Management
Description
Energy Management
Continuous Process Improvement
Other
Total

$000s
257
110
61
428

Other New Initiatives
FTEs

2

2

Description
Maintenance Budget Specialist
Wetland Re-delineation
Part 150
Undergraduate and Graduate Internship
RCF Opening Celebration
Other
Total

$000s
56
125
97
84
15
18
394

FTEs

1

2.25

3.25

• Energy management team will perform ongoing dynamic air and water
balancing for all HVAC system at SeaTac which will reduce future
electrical consumption and save costs. Also key initiatives of
Environmental Strategy.
• 2012 budget requests continuation of consultant support for
Continuous Process Improvement initiative.
• Wetlands re-delineation is required.
18

Cuts / Trade-offs
•

•

•

•

Initial requests of $24 million vs.
proposed requests for approval of
$8.8 million
Cut from budget:
- Temporary back-up power
$2.3M (plus $570K from CDD
for total of $2.8M)
- Environmental remediation
liability $1M
Budget requests that were reduced:
- Elevator/escalator service
$1.1M
- Concessions $200K
Total budget requests denied
$15.2M

Budget Request
Enhanced Elevator/Escalator Service
Additional Janitorial Services
Carpet Replacement in Garage Lobbies
Garbage/Recycling Cans
Winter Chemical Cost Increases
Maintenance Support (2 FTEs)
Emergency Mgmt (2 FTEs)
Lora Lake Study
Runway Studies/Pavement Classification
Airfield planning and analysis
Demo of Gym at Learning Center
Elevator Cab Re-Flooring
South Satellite Fixed Stanchions
All Other Denied Budget Requests
Total Denied Budget Requests

Amount
Denied/
($ in 000s)
1,061
649
354
351
350
218
207
200
200
200
130
106
100
11,073
15,200

19

Expense Summary by Department
$ in 000's

2010
Actual

2011
Budget

2012
Budget

'12-'11 Budget Change
$
%

Airport Operations
Operations
Rental Car Facility
Terminal Realignment
Subtotal

29,039
29,039

31,726
31,726

32,204
660
3,000
35,864

33,489
7,593
8,200
49,282

1,285
6,933
5,200
13,418

4.0%
1050.5%
173.3%
37.4%

Business Development
SeaTac Utilities
Aviation Maintenance
Fire Department
Airport Security
AV Environmental Programs
Aviation Director's Office
AV Facilities & Infrastructure
Aviation Planning
Other (Excluding AV PMG)
Baseline O&M

4,024
14,971
45,791
11,848
6,215
2,940
101
1,612
1,263
2,952
120,755

3,431
13,668
46,636
11,143
5,636
3,244
1,150
1,524
991
4,061
123,210

4,272
15,322
48,678
11,799
6,044
3,705
1,431
1,654
2,373
6,663
137,804

5,464
13,050
56,357
11,749
6,137
3,847
1,804
1,923
1,898
8,302
159,812

1,192
(2,273)
7,679
(50)
92
142
373
270
(474)
1,639
22,009

27.9%
-14.8%
15.8%
-0.4%
1.5%
3.8%
26.1%
16.3%
-20.0%
24.6%
16.0%

1,991
$ 122,747

3,271
$ 126,481

1,771
$ 139,575

3,096
$ 162,909

1,325
23,334

74.8%
16.7%

Environmental Remediation Liability
Total Airport Expenses

•
•

2009
Actual

$

SeaTac utilities 2012 budget decreased due to eliminating emergency generators
Other budget line increased in 2012 due to budgeting worker's comp,
unemployment, and OPEB in one new Org versus individual department.

20

Expense Summary by Accounts
2009
Actual

$ in 000's

Payroll
Outside Services
Utilities
Supplies & Stock
Other
Baseline O&M

$

80,804
21,509
13,209
4,779
455
120,755

Environmental Remediation Liability
Total Airport Expenses

1,991
$ 122,747

Payroll variances include:
-
-
-

2012 baseline increase $5M
Rental car facility $5.9M
2012 budget requests $3M

2010
Actual
$

76,036
22,519
11,381
4,692
11,853
123,210

3,271
$ 126,481

2011
Budget
$

81,673
29,453
12,576
4,100
11,773
137,804

1,771
$ 139,575

$

2012
Budget

'12-'11 Budget Change
$
%

95,732
37,534
12,584
4,425
12,634
159,812

$

3,096
$ 162,909

$

14,059
8,081
8
325
861
22,009

17.2%
27.4%
0.1%
7.9%
7.3%
16.0%

1,325
23,334

74.8%
16.7%

Outside services variances include:
-
-
-
-
-
-

Terminal realignment $5.2M
Enhanced escalator/elevator service
$500K
Master long-term planning $200K
Cargo property management $585K
Non-airline revenue development $808K
Future revenue development costs
$802K

21

Maintenance Department
Description
Baseline budget
Rental Car Facility/Busing
New facilities
Safe/Secure airport
Maintenance resource alignment
Customer service
Other

$000s
2,694
1,073
1,653
186
941
1,077
56
7,679

FTEs
9
15
2
8
4
1
39

• 2009 budget cuts reduced Maintenance FTEs by 7.6%
• Cuts were not sustainable:
- Workload to maintain existing assets has increased
- New assets have been added
22

Asset Growth vs. Maint. FTEs
FTEs
2008 forward included
Temporary FTEs counts (15
FTEs in 2008).
2009 included cuts of 20 vacant
positions and RIF of 7 FTEs.

Asset Descripton
2005
2006
2007
2008
2009
2010
2011
2012 Bud
# of Jet Bridges
46
46
48
48
49
51
51
51
Acres of Wetland Mitigation
158
171
181
181
Stormwater Retention Reservoirs
15
17
18
22
23
23
24
24
Baggage/Conveyor Linear Ft
15,668
15,828
27,018
28,628
49,327
49,327
49,237
49,237
Runway Sqft 3,198,750 3,198,750 3,198,750 6,839,500 6,839,500 6,839,500 6,839,500 6,839,500
23

FTEs
FTE's

%

2011 Budget
Aviation

749.9

Rental Car Facility

12.0

2012
2012 % Change
2011 Added in Budget Proposed 2012 Bud Budget 2011 Requests Budget 2011 Bud

761.9
FTEs added in 2011
2011 Baseline

7.1
769.0

Airport Operations
Aeronautical
Landside

2012 Budget Changes:
Rental Car Facility (RCF) & Busing:
Bus Drivers

50.0

BMF Mechanics

5.0

BMF Utility Workers

4.0

Traffic Support Specialists

7.6

RCF & BMF Subtotal

66.6

Other Aviation Division Initiatives:
New Facilities & Assets

15.0

Safe & Secure Airport

3.0

Customer Needs & Capacity

1.0

Asset Management

8.0

Customer Service

9.0

Airline cost Management

2.0

Employee Development
Other Initiatives Subtotal
2012 Budget Proposed FTEs

109.0
83.3
192.3

(5.0)
3.2
(1.8)

7.3
57.6
64.9

111.3
144.1
255.4

2.11%
72.99%
32.82%

Business Development
Aviation Services
Facilities
Maintenance

20.0
177.3
43.4
329.0

6.9
2.0

1.8
2.3
39.0

21.8
184.1
45.7
370.0

8.75%
3.87%
5.18%
12.46%

Total Aviation Division

761.9

7.1

107.9

876.9

15.1%

2.3
41.3
876.9

15.1%

24

Aviation FTEs: 2006 - 2012
FTEs

Total FTEs

2006
762

2007
775

2008
782

2009
792

2010
746

2011
762

2012 Bud
877

25

Non-Airline Business
$ in 000's

2009
Actual

2010
Actual

2011
Budget

2011
Forecast

2012
Budget

'12-'11 Bud Change
Var $
Var %

Revenues:
Public Parking
Customer Facility Charge (RCF)
Rental Cars
Concessions
Other
Total Non-Airline Revenue

$ 49,689
33,320
33,473
20,865
137,348

$ 49,416
30,309
33,765
21,929
135,418

$ 52,847
1,543
32,290
32,640
25,644
144,965

$ 51,542
500
31,678
34,366
26,818
144,904

$ 53,780
9,104
26,367
34,769
26,228
150,248

$

RCF Operating Expense
All Other Operating Expense

55,916

54,743

1,546
62,850

1,546
61,479

17,011
(16,738)
56,189
$ 81,159

16,935
(14,464)
57,215
$ 78,203

17,940
(18,370)
63,967
$ 80,997

17,467
(18,370)
62,122
$ 82,782

Share of terminal O&M
Less utility internal billing
Net Operating & Maint
Net Operating Income

•
•
•

933
7,560
(5,923)
2,129
584
5,284

1.8%
489.9%
-18.3%
6.5%
2.3%
3.6%

9,337
66,195

7,791
3,344

503.9%
5.3%

19,082
(20,010)
74,604
$ 75,644

1,142
(1,640)
10,637
$ (5,354)

6.4%
8.9%
16.6%
-6.6%

Customer Facility Charge increase to cover operating costs associated with Rental
Car Facility and related busing operations.
Rental cars revenues decreased in 2012 due to $900K reduction of MAG and $2
million credit incentive.
Operating expense increased due to maintenance costs of $1M, B&O taxes
$215K, Club International $314K, and corporate and divisional allocations of $2M.
26

Non-Airline Key Indicators
2009
Actual

2010
Actual

2011
Budget

2011
Forecast

2012
Budget

'12-'11 Bud Change
Var $
Var %

Revenues / Enplanement
Parking
Rental Car (net of CFCs)
Concessions
Other
Total Revenue

3.18
2.13
2.14
1.34
8.80

3.13
1.92
2.14
1.39
8.59

3.34
2.04
2.06
1.62
9.15

3.16
1.94
2.11
1.64
8.88

3.24
1.59
2.09
1.58
9.04

(0.10)
(0.45)
0.03
(0.04)
(0.11)

-3.0%
-22.1%
1.6%
-2.5%
-1.2%

Primary Concessions Sales / Enpl
Gross Profit Margin

9.66
59.1%

9.99
57.7%

10.12
55.9%

10.24
57.1%

10.42
50.3%

0.30
(0.06)

3.0%
-9.9%

• Concessions 2012 budget lower than 2011 forecast
due to one-time revenues in 2011, such as Google
promotions.

27

Aeronautical Business
$ in 000's

2009
Actual

2010
Actual

2011
Budget

2011
Forecast

2012
Budget

'12-'11 Bud Change
Var $
Var %

Revenues requirement:
Capital Costs
Operating Costs net Non-Aero
Total Costs
FIS Offset
Other Offsets
Net Revenue Requirement
Other Aero Revenues
Total Aero Revenues

$ 72,013
118,456
190,469
(5,250)
(16,441)
168,778
13,757
182,534

$ 82,083
122,985
205,067
(7,000)
(15,767)
182,300
16,029
198,329

$ 87,111
137,195
224,305
(7,000)
(14,821)
202,485
14,715
217,200

$ 85,554
135,793
221,348
(7,000)
(14,882)
199,466
14,715
214,181

$ 91,630
152,845
244,475
(8,000)
(13,523)
222,953
15,197
238,149

$

4,519
15,651
20,170
(1,000)
1,298
20,468
482
20,950

5.2%
11.4%
9.0%
14.3%
-8.8%
10.1%
3.3%
9.6%

Non-passenger Airline Costs
Net Pasenger Airline Costs

12,074
$ 170,460

14,885
$ 183,444

15,066
$ 202,133

15,566
$ 198,614

15,051
$ 223,098

(15)
$ 20,965

-0.1%
10.4%

•

•
•

Major increases to aeronautical operating costs include Terminal Realignment project ($5.2
million), maintenance FTEs in support of aeronautical business ($2 million), Planning
studies for terminal development/FIS ($150K), Environmental work ($145K).
Increases to debt service is mainly driven by an increase in principal payment for 2005
bonds ($2.4 million aero), funding source for aero projects such as Runway 16L.
Amortization of new aeronautical assets ($3.3 million) is driven by Runway 16C taxiway
panel ($591K), HVAC air ducts ($222K), and allocation of IT/Roadways assets ($811K).

28

Aeronautical Key Indicators
2009
Actual
CPE:
Capital Costs / Enpl
Operating Costs / Enpl
Offsets
Other Aero Revenues
Non-passenger Airline Costs
Passenger Airline CPE

4.61
7.59
(1.39)
0.88
(0.77)
10.92

2010
Actual
5.20
7.80
(1.44)
1.02
(0.94)
11.63

2011
Budget
5.50
8.66
(1.38)
0.93
(0.95)
12.76

2011
Forecast
5.24
8.32
(1.34)
0.90
(0.95)
12.17

2012
Budget
5.51
9.20
(1.30)
0.91
(0.91)
13.43

12-'11 Bud Change
Var $
Var %
0.02
0.54
0.08
(0.01)
0.05
0.67

0.3%
6.2%
-6.0%
-1.5%
-4.7%
5.2%

• Increased operating costs are primary driver for increased CPE:
- Terminal realignment, incremental CPE impact of $0.31
- Environmental remediation liability increase of $1.1M, or $0.04 CPE
- Maintenance additional FTEs or $0.15 CPE
- Security fund deposit $1.9M, or $0.04 CPE
- Offsets lower due to decreased levels of aeronautical related
reimbursements, no TSA grant
29

Division Summary
2009

2010

2011

2011

2012

$ in 000's

Actual

Actual

Budget

Forecast

Budget

$

Revenues
Total Airline Revenues
Other Non-Airline Revenues

$ 182,534
137,348

$ 198,329
135,418

$ 217,200
144,965

$ 214,181
144,904

$ 238,149
150,248

$ 20,950
5,284

9.6%
3.6%

Fuel Hydrant
Fuel Hydrant reclass as Non-operating ***
Total Revenues

8,359
(7,845)
320,396

8,426
(7,912)
334,262

8,353
(7,839)
362,678

8,353
(7,839)
360,099

514
388,911

(7,839)
7,839
26,233

-93.8%
-100.0%
7.2%

Airport Expenses

122,877

126,481

139,575

137,119

162,909

23,334

16.7%

Corporate Expenses
Police Expenses
CDD/Other Expenses
Corporate and Other Expenses

32,492
14,461
4,823
51,777

33,975
14,317
6,368
54,660

35,529
16,389
9,458
61,376

34,802
16,382
9,611
60,795

37,602
17,102
9,838
64,542

2,073
714
380
3,166

5.8%
4.4%
4.0%
5.2%

Total Aviation Expenses

174,654

181,142

200,950

197,915

227,450

26,500

13.2%

$ 145,742

$ 153,120

$ 161,728

$ 162,184

$ 161,461

(267)

-0.2%

Key Measures
Non-Aeronautical NOI
Net Cash Flow after Debt Service
Passenger Airline CPE
Debt Service Coverage

81,159
48,433
10.92
1.42

78,203
44,585
11.63
1.40

80,997
45,382
12.76
1.40

82,782
49,366
12.20
1.44

75,644
42,662
13.43
1.34

(5,354)
(2,720)
0.67
(0.06)

-6.6%
-6.0%
5.2%
-4.4%

Traffic
Enplanements
Landed Weight

15,610
20,388

15,773
19,786

15,845
20,089

16,325
20,089

16,618
20,290

773
201

4.9%
1.0%

Net Operating Income

'12-'11 Bud Change

$

%

*** Accounting change: non-cash transaction relating to fuel
hydrant bonds.
30

Key Non-operating Revenues
$ in 000's

Customer Facility Charges (Operating)
Customer Facility Charges (Non-Operating)
Total CFC Revenue
Passenger Facility Charges
Grants & Donations Revenues

2009
Actual
21,866
21,866
59,689
74,323

2010
Actual
23,243
23,243
59,744
30,040

2011
Budget

2011
Forecast

2012
Budget

1,543
22,237
23,780
61,320
28,990

500
23,275
23,775
61,933
28,990

9,104
21,333
30,436
63,142
28,982

12-'11 Bud Change
$
%
7,560
(904)
6,657
1,822
(8)

83.0%
-4.2%
28.0%
2.9%
0.0%

• CFCs split between non-operating revenues (pays for debt service)
and operating revenues. Total increasing due to rate increase on
opening day.
• 90% of PFCs used to pay debt service on PFC eligible projects.
• Grants tied to specific projects approved for grant funding by FAA.

31

Financial Forecast
$ in 000's

2011 Bud

2012

2013

2014

2015

2016

Airline Revenue
Non-Airline Revenue
Other Revenue (Excl Fuel Hyd)
Total Revenue

$217,200
144,965
514
362,678

$238,149
150,248
514
388,911

$265,368
161,533
514
427,415

$273,652
167,729
514
441,895

$286,355
174,512
514
461,381

$293,200
182,997
514
476,711

Operating Expense

200,950

227,450

243,305

230,976

234,915

243,726

Net Operating Income (NOI)
Non-Operating Income
CFC Excess*

161,728
4,167
-

161,461
3,771
-

184,110
2,160
(1,866)

210,919
6,002
(1,500)

226,466
6,047
(2,129)

232,985
5,998
(5,258)

Available for Debt Service
Debt Service
Debt Service paid by CFCs
Debt Service paid by PFCs

165,895
(171,474)
20,048
32,257

165,232
(181,555)
21,698
37,103

184,404
(192,510)
22,381
36,094

215,421
(223,131)
24,717
36,402

230,384
(233,515)
26,199
41,035

233,725
(234,279)
25,335
41,965

46,726

42,478

50,369

53,409

64,103

66,746

Total Airport Coverage
Rates and Charges Coverage

1.40
1.00

1.35
1.00

1.38
1.00

1.33
1.00

1.39
1.00

1.40
1.00

Passenger Airline CPE
CPE - Nov. 2005 (SLOA)
Reduction in CPE

12.76
15.47
(2.71)

13.43
16.49
(3.06)

14.70
16.69
(1.99)

14.82
17.65
(2.83)

15.19
17.59
(2.40)

15.22
19.39
(4.17)

Net Cash Flow
Key Measures

* CFC collections in excess of CFC debt service/O&M are restricted
and cannot be used for other revenue bond debt service.
32

Risks & Opportunities
• Risks:
- Economic uncertainty, airline profitability and seat capacity in
Seattle market
- Parking competition
- Environmental costs for Lora Lake
- Opening date for rental car facility affects the timing of costs
and new revenues
- Pending labor settlements vs. baseline budget assumptions
- Weather forecast: wet and cold - snow?

• Opportunities:
- Plan to launch parking promotions
- Terminal concessions have remained strong, growth may
exceed forecast
- New international service
33

Seaport Division
2012 Preliminary Operating Budget

Commission Briefing
October 4, 2011

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

Key Revenue Assumptions
• TEU volume at 2.0 million, an 11% increase from
2011 budget
• Cruise forecast 11% increase in passengers

• Grain volume level to 2011 budget
• CPI increase of 2.5% for applicable tariffs and
lease rates

37

Expense Issues
• Comprehensive Asset Condition Assessments
• Maintenance Dredging
• Pile Cap Pilot Program and Repair Costs
• Stormwater
• NW Ports Clean Air Strategy
• Utility Increases
• Alaskan Way Viaduct monitoring related costs
• Environmental Remediation Liability
38

Org Revenues By Group
Seaport Division Only

2010

2011

Actual

Budget Forecast

Budget

$

%

Lease & Asset Management

80,248

81,474

82,145

81,000

(475)

-0.6%

Cruise & Maritime Ops

15,240

13,263

14,623

15,554

2,290

17.3%

Operating Revenue

95,489

94,738

96,769

96,553

1,816

1.9%

Security Grants

1,791

3,415

697

1,598

(1,817) -53.2%

Total Revenues

97,279

98,153

97,466

98,151

$'s Thousands

2011

2012

'12-'11 Bud Chg

Revenue

(1)

0.0%

39

Org Revenues
Lease & Asset Management
2010

2011

Actual

Budget Forecast

Budget

$

%

Containers

61,036

61,916

62,788

60,435

(1,481)

-2.4%

Grain

6,035

6,087

6,087

6,088

1

0.0%

Industrial Properties

13,177

13,471

13,270

14,476

1,006

7.5%

Operating Revenue

80,248

81,474

82,145

81,000

(475)

-0.6%

$'s Thousands

2011

2012

'12-'11 Bud Chg

Revenue

40

Org Revenues
Cruise & Maritime Operations
2010

2011

Actual

Budget

Cruise

11,666

10,150

11,450

Docks

3,574

3,113

Operating Revenue

15,240

Security Grants
Total Revenues

$'s Thousands

2011

2012

Forecast Budget

'12-'11 Bud Chg
$

%

11,718

1,568

15.4%

3,173

3,836

723

23.2%

13,263

14,623

15,554

2,290

17.3%

1,791

3,415

697

1,598

(1,817) -53.2%

17,031

16,678

15,320

17,152

Revenue

473

2.8%

41

Org Expenses By Group
Seaport Division Only
Incr (Decr)
$'s Thousands

2010

2011

2011

2012

Actual

Budget Forecast

'12-'11 Bud Chg

Budget

$

%

Org Expenses
Lease & Asset Mgmt

5,780

8,326

7,118

8,061

(265)

-3.2%

Cruise & Maritime Ops

3,890

3,366

3,222

3,985

619

18.4%

Commercial Strategy

1,215

1,874

1,626

1,841

(33)

-1.7%

Environmental Services

2,782

3,120

2,575

2,828

(292)

-9.4%

Planning

775

537

393

447

(90)

-16.8%

Seaport Finance

607

896

951

1,012

116

12.9%

Seaport Admin

1,039

921

583

758

(163)

-17.7%

Contingency

0

250

0

0

(250)

-100.0%

Capital to Expense

8

0

0

0

0

NA

Total Operating Expense

16,096

19,291

16,468

18,932

(358)

-1.9%

Security Grants

1,982

3,451

768

1,476

(1,975)

-57.2%

Envir Remediation Liability

1,439

500

250

0

(500)

-100.0%

Total Expenses

19,517

23,242

17,487

20,408

(2,834)

-12.2%

42

Seaport Org Expense Budget
Seaport Division Expenses Only
$'s Thousands

2011

2012

Budget

Budget

12-'11 Change
$

%

Baseline Budget
Salaries

5,014

5,053

39

0.8%

Benefits

1,530

1,598

69

4.5%

0

0

0

NA

Wages & Benefits
OPEB

37

64

27

74.6%

Salaries & Wages to Cap/Non-Op/ERL

1,133

1,113

(19)

-1.7%

Total Payroll Costs

7,713

7,829

116

1.5%

Net Payroll Exp (net of to Cap/Non-Op/ERL)

6,580

6,716

135

2.1%

Utilities

4,811

5,014

202

4.2%

B&O Tax

308

386

77

25.0%

Contract Watchmen

456

597

141

30.9%

Projects Overhead

0

(408)

(408)

NA

Other O&M

3,912

3,857

(55)

-1.4%

Total Baseline Budget

16,068

16,162

94

0.6%

Condition Assessments

1,000

0

Maintenance Dredging

1,050

500

(550)

-52.4%

331

340

9

2.7%

Pile Cap (Pilot & Commence Full)

0

1,200

1,200

NA

RFID Expenses

0

276

276

NA

Relocation Costs

100

0

Planning & Transportation Services

258

263

ISO Certification (4 Terminals)

75

75

Artifact Storage

9

117

108 1200.0%

150

0

(150) -100.0%
(250) -100.0%

Initiatives

Tribal Mitigation

Grain Terminal Appraisal/Assess
Contingency

(1,000) -100.0%

(100) -100.0%
5

1.9%

0

0.0%

250

0

3,223

2,771

(452)

-14.0%

Total Operating Expenses

19,291

18,932

(358)

-1.9%

Security Grant Expenses

3,451

1,476

(1,975)

-57.2%

Envir Remediation Liability

500

0

23,242

20,408

Total Initiatives

Total Expenses

(500) -100.0%
(2,834)

-12.2%

43

Initiatives
$'s in Thousands
Initiatives - Proposed for 2012 Budget
Maintenance Dredging

T-5 maintenance dredging (phase 2)

500

Pile Cap Repair

Pilot Program costs in 2012
Commence pile cap repair

700
500
1,200

RFID Implementation Costs ($100 grant funded)

276

Tribal Mitigation

Contractual Payment

340

Artifact Storage

117

Transportation & Planning Studies
Transportation
Planning Studies

100
163
263

Terminal Efficiency Initiative

ISO Certification (4 Terminals)
Total 2012 Seaport One-Time Expenses

2012 Projects/Work Budgeted in CDD
Condition Assessments
Berth Soundings
AWV/Tunnel Monitoring

75
2,771

1,000
50
380
1,430
44

Northwest Ports Clean Air Initiatives
and Envir Remediation Liability
Classified as Non-Operating Expense
$'s Thousands

Non-Operating Expense

2012
Budget

PSCAA
ABC Fuels

$700

Trucks

250

Cargo Handling Equip

100

Envir Remediation Liability -Sea

5,090
200

Envir Remediation Liability -RE
Total

$6,340

45

Full-Time Equivalents (FTEs)
FTE's
2011 Budget

60.4

2011 Changes
Staff Addition:

Sr. Financial Analyst from .6 to 1.0

0.4

Staff Reductions:

Adj Asst Mgr Industrial Properties
Elim Deputy Director position
Ltd. Duration Real Estate Specialist

-0.1
-1.0
-0.6

Adjusted 2011

59.1

2012 Budget
Add: Ltd Duration Real Estate Specialist

0.8

Subtotal

0.8

Proposed FTE's for 2012

59.9

46

Full-Time Equivalents (FTEs) Summary
Seaport FTE Summary

2008 Bud

2009 Bud 2010 Bud

2011 Bud 2012 Bud

Total Seaport

64.9

61.8

60.4

60.4

59.9

Less: Interns

(2.8)

(2.2)

(2.2)

(2.2)

(2.2)

Adjusted Seaport

62.1

59.6

58.2

58.2

57.7

47

Seaport Budget Summary
Inclusive of Direct Charges & Allocations from Corporate, CDD, & Other Divisions

Incr (Decr)
2010

2011

2011

2012

Actual

Budget

Forecast

Budget

$

Operating Revenues
Security Grants

96,060
1,791

94,972
3,415

97,003
697

96,980
1,598

2,008
(1,817)

-53.2%

Total Revenues

97,850

98,387

97,700

98,578

191

0.2%

Seaport Expenses (excl env srvs)
Environmental Services
Maintenance Expenses
P69 Facilities Expenses
Other RE Expenses
CDD Expenses
Police Expenses
Corporate Expenses
Security Grant Expenses
Envir Remed Liability

12,932

15,729

15,301

15,515

-1.4%

1,982

2,208

1,935

2,009

4,981

4,761

5,051

6,079

527

532

532

531

147

293

293

300

1,995

3,412

3,297

4,477

3,201

3,713

3,713

4,167

10,379

12,487

12,207

12,334

1,982

3,451

733

1,476

1,439

500

250

0

(214)
(199)
1,318
(1)
6
1,065
454
(154)
(1,975)
(500)

-100.0%

Operating Expenses

39,564

47,087

43,313

46,887

(200)

-0.4%

Net Operating Income

58,286

51,300

54,387

51,691

391

0.8%

$'s Thousands

'12-'11 Bud Chg
%

Revenues
2.1%

Expenses
-9.0%
27.7%
-0.2%
2.2%
31.2%
12.2%
-1.2%
-57.2%

48

Containers Budget Summary
Inclusive of Direct Charges & Allocations from Corporate, CDD, & Other Divisions

Containers
Incr (Decr)
2010

2011

2012

Actual

Budget

Budget

$

Container Revenues
Maintenance Reimburseable

61,036
296

61,916
138

60,435
300

(1,481)
162

117.4%

Total Revenues

61,332

62,054

60,735

(1,319)

-2.1%

Seaport Expenses (excl env srvs)
Environmental Services
Maintenance Expenses
P69 Facilities Expenses
Other RE Expenses
CDD Expenses
Police Expenses
Corporate Expenses

5,470

7,745

7,917

2.2%

1,307

1,335

1,029

1,470

1,128

1,697

326

329

336

8

15

20

1,367

2,261

2,989

843

989

1,093

6,031

7,388

7,116

173
(306)
568
7
5
727
103
(272)

Operating Expenses

16,821

21,191

22,196

1,005

4.7%

Net Operating Income

44,511

40,863

38,539

(2,324)

-5.7%

$'s Thousands

'12-'11 Bud Chg
%

Revenues
-2.4%

Expenses
-23.0%
50.4%
2.0%
37.1%
32.2%
10.4%
-3.7%

49

Grain Budget Summary
Inclusive of Direct Charges & Allocations from Corporate, CDD, & Other Divisions

Grain
Incr (Decr)
$'s Thousands

2010

2011

2012

'12-'11 Bud Chg

Actual

Budget

Budget

$

%

Revenues

Grain Revenues
Maintenance Reimburseable

6,035
0

6,087
0

6,088
1

1
1

0.0%

Total Revenues

6,035

6,087

6,089

1

0.0%

306

449

261

-41.8%

10

0

1

29

21

53

30

30

31

1

0

0

41

155

179

187

215

228

478

586

615

(188)
0
32
1
(0)
24
13
29

Operating Expenses

1,081

1,456

1,369

(88)

-6.0%

Net Operating Income

4,955

4,631

4,720

89

1.9%

NA

Expenses

Seaport Expenses (excl env srvs)
Environmental Services
Maintenance Expenses
P69 Facilities Expenses
Other RE Expenses
CDD Expenses
Police Expenses
Corporate Expenses

8.5%
153.7%
4.9%
-100.0%
15.4%
6.2%
5.0%

50

Industrial Properties Budget Summary
Inclusive of Direct Charges & Allocations from Corporate, CDD, & Other Divisions

Industrial Properties
Incr (Decr)
$'s Thousands

2010

2011

2012

'12-'11 Bud Chg

Actual

Budget

Budget

$

%
7.5%

Revenues

Industrial Properties Revenues
Maintenance Reimburseable

13,177
42

13,471
10

14,476
9

1,006
(1)

-6.1%

Total Revenues

13,219

13,481

14,486

1,005

7.5%

Seaport Expenses (excl env srvs)
Environmental Services
Maintenance Expenses
P69 Facilities Expenses
Other RE Expenses
CDD Expenses
Police Expenses
Corporate Expenses

3,348

3,800

3,482

-8.4%

506

702

569

942

1,213

1,386

87

88

83

126

186

191

207

458

596

823

944

1,000

1,592

1,950

1,912

(318)
(133)
173
(6)
5
138
56
(39)

Operating Expenses

7,633

9,342

9,218

(124)

-1.3%

Net Operating Income

5,587

4,139

5,268

1,129

27.3%

Expenses
-19.0%
14.2%
-6.3%
2.5%
30.0%
5.9%
-2.0%

51

Cruise Budget Summary
Inclusive of Direct Charges & Allocations from Corporate, CDD, & Other Divisions

Cruise
Incr (Decr)
2010

2011

2012

Actual

Budget

Budget

$

%

Cruise Revenues
Maintenance Reimburseable

11,666
196

10,150
65

11,718
97

1,568
32

15.4%

Total Revenues

11,862

10,215

11,815

1,599

15.7%

Seaport Expenses (excl env srvs)
Environmental Services
Maintenance Expenses
P69 Facilities Expenses
Other RE Expenses
CDD Expenses
Police Expenses
Corporate Expenses

1,043

1,159

1,198

3.4%

98

138

227

1,390

1,236

1,682

59

59

55

3

43

47

113

388

505

936

1,094

1,345

1,234

1,385

1,423

39
89
446
(4)
3
117
252
39

Operating Expenses

4,875

5,501

6,483

981

17.8%

Net Operating Income

6,987

4,714

5,332

618

13.1%

$'s Thousands

'12-'11 Bud Chg

Revenues
48.5%

Expenses
64.4%
36.1%
-6.5%
7.6%
30.1%
23.0%
2.8%

52

Docks - Budget Summary
Inclusive of Direct Charges & Allocations from Corporate, CDD, & Other Divisions

Docks
Incr (Decr)
2010

2011

2012

Actual

Budget

Budget

Docks Revenues
Maintenance Reimburseable

3,574
37

3,113
22

Total Revenues

3,611

Seaport Expenses (excl env srvs)
Environmental Services
Maintenance Expenses
P69 Facilities Expenses
Other RE Expenses
CDD Expenses
Police Expenses
Corporate Expenses

'12-'11 Bud Chg
$

%

3,836
21

723
(2)

23.2%

3,135

3,856

721

23.0%

2,006

2,013

2,239

11.2%

61

32

184

1,144

1,154

1,253

25

26

26

8

49

42

265

137

193

412

472

501

527

635

675

226
152
99
0
(7)
56
29
41

Operating Expenses

4,448

4,517

5,113

596

13.2%

Net Operating Income

(837)

(1,382)

(1,256)

125

-9.1%

$'s Thousands

Revenues
-6.8%

Expenses
470.1%
8.6%
0.1%
-14.4%
41.2%
6.2%
6.4%

53

Risks
•U.S. and Global economic uncertainties - Potential
impact on Container and Cruise volumes

•Competitive Pressures
•Traffic congestion due to construction
•Unexpected Repairs
•Environmental Remediation Liabilities

54

Real Estate Division
2012 Preliminary Operating Budget
Commission Briefing
October 4, 2011

Key Assumptions
• Marina occupancy rate 94% compared to 93% in
2011 Budget
• Fishing & Commercial occupancy rates FT 84%
and MIC 72% compared to FT 82% and MIC 70%
in 2011 Budget

• Commercial Properties target 87% occupancy.
2011 Budget target was 90%

56

Key Assumptions (continued)
• Bell Harbor International Conference Center



Number of guests consistent with 2011 Budget
Revenue per guest budgeted to increase

• Ownership of Eastside Rail Corridor transferred to
King County by July 1, 2012
• Execution of Deferred Maintenance Plan continues
with $3.5 million of projects budgeted for 2012

57

Org Revenues By Group
Real Estate Division Only

Incr (Decr)
$'s Thousands

2010

2011

2011

2012

12-'11 Bud Chg

Actual

Budget

Forecast

Budget

$

%

Revenue
Harbor Services

11,533

11,448

11,360

11,633

185

1.6%

Portfolio Management

17,150

18,373

18,612

19,820

1,447

7.9%

Commercial

6,133

6,513

6,513

6,906

393

6.0%

Third Party

11,017

11,860

12,099

12,914

1,054

8.9%

Development & Planning

756

724

858

812

88

12.1%

Eastside Rail

114

45

76

22

(23) -50.8%

Facilities & Maintenance

839

352

352

542

189

53.8%

30,391

30,942

31,258

32,828

1,886

6.1%

Total Revenue

58

Org Expenses By Group
Real Estate Division Expenses Only
Incr (Decr)
$'s Thousands

2010

2011

2011

2012

12-'11 Bud Chg

Actual

Budget

Forecast

Budget

$

%

Operating Expenses
Harbor Services

4,436

4,454

4,310

4,614

160

3.6%

Portfolio Management

10,990

11,954

12,157

12,441

487

4.1%

Commercial

3,390

3,610

3,810

3,913

303

8.4%

Third Party

7,600

8,344

8,347

8,528

184

2.2%

Development & Planning

692

759

753

799

40

5.3%

Eastside Rail Corridor

504

484

835

203

Maintenance

12,142

14,279

13,629

17,209

2,930

20.5%

Facilities

1,510

1,453

1,384

1,521

68

4.7%

Division Admin

346

358

403

378

20

5.6%

Other

120

0

0

0

0

NA

0

0

0

0

0

NA

30,739

33,741

33,471

37,166

3,425

10.2%

Contingency
Total Operating Expenses

(281) -58.1%

59

Real Estate Org Expense Budget
Real Estate Division Expenses Only

$'s Thousands

2011

2012

Incr (Decr)

Budget

Budget

Change

%

Baseline Budget
Salaries

5,816

6,089

273

4.7%

Benefits

2,120

2,228

108

5.1%

Wages & Benefits

7,113

7,621

508

7.1%

Salaries & Wages to Cap, Non-op,ERL

1,000

1,400

400

40.0%

Total Payroll Costs

16,049

17,338

1,289

8.0%

Net Payroll Exp (net of to capital,Non-op,ERL)

15,049

15,938

889

5.9%

Utilities

3,243

3,627

384

11.8%

Third Party Mgmt (Hospitality Only)

7,613

7,870

257

3.4%

0

1,250

1,250

NA

Other O&M

5,311

5,221

(90)

-1.7%

Allocated to Capital

(400)

(644)

(244)

61.0%

30,816

33,262

2,446

7.9%

Increase Baseline Maint

Total Baseline Budget
Initiatives
Tenant Improve & Broker Fees

155

207

52

33.3%

1,690

3,046

1,356

80.2%

Deferred Maint Salaried Staff

198

198

(0)

-0.1%

Net Shed related work

260

250

(10)

-3.8%

T91 Development Study (50%)

138

0

(138) -100.0%

Eastside Rail Corridor

484

203

(281) -58.1%

0

0

0

NA

2,925

3,904

979

33.5%

33,741

37,166

3,425

10.2%

Deferred Maint Projects in Budget

Contingency
Total
Total Operating Expenses

60

Baseline Maintenance Work
$'s Thousands
Increase in Baseline Maintenance
2012 Budget
Maint work for Engineering, PCS
Northend Office Overhead (Mgr,Admin, Utilities, Maint)
Increase in reimburseable work
Purchasing and Safety Training
Phased Maintenance of Bell St Cruise Pier & Gangway
SBM ongoing repairs (e.g. potholes, concrete)
Project Mgmt & Craft Technical Training
New Areas Requiring Maintenance
Tsubota
Eastside Rail Corridor
Terminal 10
Total Increase in Baseline Maintenance

347
277
190
117
86
60
32
62
50
29
1,250

61

2012 Deferred Maintenance Projects
$'s Thousands

Deferred Maintenance Projects
2012 Budget

Bell Street Bridge painting
P69 concrete beams rehab
P69 carpet replacement
Centennial Park rip rap repair
T102 electrical coordination study
Pier 66 replace wood fender panels
Replace 800 MHz radio system
Maximo mobility and integration
Marine Maint lighting upgrade
Contingency
Other
Subtotal per schedule
Maint Net Shed related work
Total Deferred Maintenance Projects

400
350
400
250
150
120
270
250
100
300
654
3,244

250
3,494

62

Full-Time Equivalents (FTEs)
2011 Budget

164.8

2011 Changes

Facilities - upgrade non-exempt position

1.0
(1.0)
0.0

Adjusted 2011

164.8

Maintenance - Purchaser
Maintenance - Skilled Crafts

2012 Budget
Staff Additions:
RE Dev & Planning Project Assistant
Net Change
Proposed 2012 Budget

1.0
1.0
165.8

63

Real Estate Budget Summary
Inclusive of Direct Charges & Allocations from Corporate, CDD, & Other Divisions
Incr (Decr)
2010

2011

2011

2012

Actual

Budget

Forecast

Budget

$

%

Operating Revenues

29,820

30,707

31,023

32,401

1,694

5.5%

Total Revenues

29,820

30,707

31,023

32,401

1,694

5.5%

Real Estate Exp (excl Maint,P69,Hosp)

9,814

9,963

10,568

10,123

160

1.6%

Real Estate BHICC & WTC

6,964

7,613

7,623

7,870

257

3.4%

Maintenance Expenses

6,652

8,934

8,485

9,837

902

10.1%

P69 Facilities

226

159

152

198

39

24.5%

Environmental Services

800

912

775

819

(93)

-10.2%

Seaport Expenses (excl env srvs)

395

430

430

589

159

37.0%

CDD Expenses

806

1,266

1,366

1,214

(52)

-4.1%

Police Expenses

1,198

1,350

1,350

1,442

93

6.9%

Corporate Expenses

4,671

5,472

5,337

5,230

(241)

-4.4%

(2)

0

0

0

0

NA

Operating Expenses

31,524

36,099

36,086

37,323

1,224

3.4%

Net Operating Income

(1,704)

(5,392)

(5,063)

(4,922)

471

8.7%

$'s Thousands

'12-'11 Bud Chg

Revenues

Expenses

Envir Remediation Liability

64

Fishing & Commercial Budget Summary
Inclusive of Direct Charges & Allocations from Corporate, CDD, & Other Divisions

Fishing & Commercial
Incr (Decr)
2010

2011

2012

Actual

Budget

Budget

Operating Revenues

2,753

2,653

2,667

14

0.5%

Total Revenues

2,753

2,653

2,667

14

0.5%

1,850

1,744

1,847

103

5.9%

0

0

0

0

NA

1,430

1,530

1,855

325

21.3%

P69 Facilities

23

24

33

9

35.4%

Environmental Services

324

353

266

(87) -24.6%

Seaport Expenses (excl env srvs)

45

60

113

53

CDD Expenses

335

292

215

(77) -26.5%

Police Expenses

430

482

519

37

7.6%

Corporate Expenses

857

928

964

36

3.9%

0

0

0

0

NA

Operating Expenses

5,296

5,413

5,813

399

7.4%

Net Operating Income

(2,543)

(2,760)

(3,146)

(385) -14.0%

$'s Thousands

'12-'11 Bud Chg
$

%

Revenues

Expenses
Real Estate Exp (excl Maint & P69)
Real Estate BHICC & WTC
Maintenance Expenses

Envir Remediation Liability

89.0%

65

Recreational Boating Budget Summary
Inclusive of Direct Charges & Allocations from Corporate, CDD, & Other Divisions

Recreational Boating
Incr (Decr)
2010

2011

2012

Actual

Budget

Budget

Operating Revenues

8,794

8,803

Total Revenues

8,794

$'s Thousands

'12-'11 Bud Chg
$

%

8,974

171

1.9%

8,803

8,974

171

1.9%

2,633

2,741

2,803

61

2.2%

0

0

0

0

NA

1,647

1,934

2,191

257

13.3%

P69 Facilities

61

64

81

17

26.4%

Environmental Services

309

356

274

(82) -23.0%

Seaport Expenses (excl env srvs)

45

60

70

10

16.9%

CDD Expenses

169

385

467

82

21.4%

Police Expenses

337

387

415

29

7.5%

1,715

2,032

1,881

(150)

-7.4%

0

0

0

0

NA

Operating Expenses

6,916

7,958

8,182

224

2.8%

Net Operating Income

1,878

845

792

(54)

-6.3%

Revenues

Expenses
Real Estate Exp (excl Maint & P69)
Real Estate BHICC & WTC
Maintenance Expenses

Corporate Expenses
Envir Remediation Liability

66

Portfolio Management Budget Summary
Inclusive of Direct Charges & Allocations from Corporate, CDD, & Other Divisions

Portfolio Management
Incr (Decr)
2010

2011

2012

Actual

Budget

Budget

$

%

Operating Revenues

17,300

18,479

19,923

1,444

7.8%

Total Revenues

17,300

18,479

19,923

1,444

7.8%

Real Estate Exp (excl Maint & P69)

4,041

4,142

4,348

206

5.0%

Real Estate BHICC & WTC

6,964

7,613

7,870

257

3.4%

Maintenance Expenses

3,339

5,115

5,289

175

3.4%

P69 Facilities

58

61

72

12

19.4%

Environmental Services

62

31

212

182

587.4%

Seaport Expenses (excl env srvs)

218

224

224

0

0.1%

CDD Expenses

253

528

461

(67) -12.6%

Police Expenses

431

481

508

27

5.6%

1,747

2,049

1,978

(71)

-3.5%

0

0

0

0

NA

Operating Expenses

17,113

20,244

20,965

721

3.6%

Net Operating Income

187

(1,765)

(1,042)

723

41.0%

$'s Thousands

'12-'11 Bud Chg

Revenues

Expenses

Corporate Expenses
Envir Remediation Liability

67

Eastside Rail Corridor Budget Summary
Inclusive of Direct Charges & Allocations from Corporate, CDD, & Other Divisions

Eastside Rail Corridor
Incr (Decr)
2010

2011

2012

Actual

Budget

Budget

Operating Revenues

114

45

22

(23) -50.8%

Total Revenues

114

45

22

(23)

660

634

389

(245) -38.7%

Real Estate BHICC & WTC

0

0

0

0

NA

Maintenance Expenses

6

0

64

64

NA

P69 Facilities

0

0

0

0

NA

Environmental Services

0

30

60

30

100.8%

Seaport Expenses (excl env srvs)

0

0

0

0

NA

CDD Expenses

11

0

8

8

NA

Police Expenses

0

0

0

0

NA

Corporate Expenses

74

31

101

70

230.3%

Envir Remediation Liability

0

0

0

0

NA

Operating Expenses

751

694

621

(73)

-10.5%

Net Operating Income

(637)

(649)

(599)

50

7.7%

$'s Thousands

'12-'11 Bud Chg
$

%

Revenues

-50.8%

Expenses
Real Estate Exp (excl Maint & P69)

68

Re Dev & Plan Budget Summary
Inclusive of Direct Charges & Allocations from Corporate, CDD, & Other Divisions

RE Development & Planning
Incr (Decr)
2010

2011

2012

Actual

Budget

Budget

Operating Revenues

756

724

812

88

12.1%

Total Revenues

756

724

812

88

12.1%

628

701

737

36

5.1%

0

0

0

0

NA

204

356

434

78

22.0%

7

7

11

4

58.4%

Environmental Services

105

143

7

Seaport Expenses (excl env srvs)

87

86

181

95

111.3%

CDD Expenses

37

62

63

2

2.5%

Police Expenses

0

0

0

0

NA

279

432

306

0

0

0

0

NA

Operating Expenses

1,347

1,786

1,739

(48)

-2.7%

Net Operating Income

(591)

(1,063)

(927)

136

12.8%

$'s Thousands

'12-'11 Bud Chg
$

%

Revenues

Expenses
Real Estate Exp (excl Maint & P69)
Real Estate BHICC & WTC
Maintenance Expenses
P69 Facilities

Corporate Expenses
Envir Remediation Liability

(136) -95.1%

(126) -29.3%

69

Risks
• Potential higher vacancies in commercial
properties and recreational marinas
• Eastside Rail Corridor
• Deferred maintenance costs
• Outside legal costs
• Tenant improvement allowances

70

Capital Development Division
2012 Operating Budget
Commission Briefing
October 4, 2011

CDD 2011 & 2012 Budgets
2011 Budget

2012 Budget

262.5

255.75

Total Salaries & Benefits

$ 28,451,234

$ 29,510,754

On-site consultants

$

5,529,009

$

2,575,595

Small Works Constr Contracts

$

1,122,664

$

992,000

Total Before Capital Ch & Trans

$ 38,637,105

$ 36,556,692

Sal/Wag to Capital

$ 13,663,576

$ 14,062,613

Capital Projects Overhead

$

6,295,482

$

5,195,829

On-site consultants to Capital

$

4,424,462

$

1,794,896

Total Charges to Capital

$ 24,383,520

$ 21,053,338

Total Operating Expense

$ 14,278,467

$ 15,528,081

FTE

72

CDD 2012 by Department
O9000: Capital
Development

CPO

CDD
Admin

All CDD
Total

ENG

PCS

AVPMG

SPMG

FTE

108.75

47

44

17

37

2

255.75

Payroll to Capital Projects

6,652,371

2,769,447

2,666,168

870,225

1,104,402

Total Salaries & Benefits

12,065,162

5,224,463

5,532,915

2,300,298

4,030,085

On-site Consultants

1,282,500

14,062,613
357,832

1,293,095

29,510,754
2,575,595

Total Costs Before Capital
14,209,092 6,790,865
Charges & Transfers

7,730,978

2,986,588

4,465,202

Total Charges to Capital
Projects

-9,744,225

-3,312,529

-5,229,354

-1,437,192

-1,330,038

TOTAL OPERATING
EXPENSE

4,472,367

3,478,836

2,501,904

1,550,201

3,150,507

373,966

36,556,692

-21,053,338

374,266

15,528,081

73

Priority CDD Initiatives
• Establish Skire Unifier as our Project Delivery System.
• Support the business divisions in implementing
sustainable asset management.
• Streamline the formation and administration of service
agreement contracts.
• Update Port standard specifications for construction
projects.
• Optimize SharePoint in CDD.
• Improve Emergency Response readiness.

74

Corporate
2012 Preliminary Operating Budget

Commission Briefing
October 4, 2011

Budget Overview
• Key Drivers:
- Baseline payroll increases and contractual increases
- New Rental Car Facility
- Century Agenda
- Audit Committee/Internal Audit Initiatives
- Other initiatives including Enterprise Risk
Management, Medical Plan Review/Design, Business
Process Improvement

• Overall increase of 2.2% vs. 2011 budget
• Decline in Corporate Cost as a percent of total
operating revenues and expenses
76

Corporate Expense Summary
(in $ 000's)
2011 Budget
Less: 2011 One time Items
2011 Baseline Budget

Amount Notes
75,008
(1,829) AAPA Conference & other misc.
73,179

Cost Increases
Salaries & Benefits (Baseline)
Wages & Benefits (Baseline)
Contractual/Unavoidable
Subtotal

991 Per budget guidelines
862 Per bargaining agreements
364 ICT Software maintenance and new systems
2,216

New Budget Requests
New Rental Car Facility Costs
2012 One Time Items
Other Requests
Subtotal

185 Details in the next slide
711 Details in the next slide
373 Details in the next slide
1,269

2012 Proposed Budget

76,655

Increase Over 2011 Baseline
Increase Over 2011 Budget

3,485
1,647
77

Approved Budget Requests
(in $ 000's)

Amount Notes

New Rental Car Facility Costs
Police FTE for Traffic Mitigation
Insurance premiums
Subtotal RCF

110
75
185

CFC reimbursable
RCF reimbursable

2012 One Time Items
Century Agenda
IT Risk Assessment and Performance Audit
Internal Audit Independent Peer Review
Medical Benefits Consulting
Tourism Business Consultant
Port Leadership Conference
Accounts Payable Invoice Automation
Subtotal One Time Items

135
250
50
95
50
51
80
711

Complete strategic planning process
Endoresed by Audit Committee
Endorsed by Audit Committee
Evaluate alternative plan designs
Develop business & revenue model
$19K in baseline for $70K total
Set up paperless AP system & workflow

Other Requests
Apprenticeship Program
Police Communications Support FTE
Risk Management FTE
Other
Subtotal Other Requests

100
102
79
91
373

Previously funded through $0.20/hour contractor fees
Support to Police, Fire, Emergency Prep
RCF driver program, strategic initiatives

Total

1,269
78

2012 Corporate Budget
(in $ 000's)

TOTAL REVENUES
EXPENSES
Executive
Commission
Legal
Risk Management
Health & Safety
Public Affairs
Human Resources & Development
Labor Relations
Information & Communications Tech.
Finance & Budget
Accounting & Financial Reporting
Internal Audit
Office of Social Responsibility
Contingency
Police
Total Corporate Costs

2010
Actual

2011
Budget

2011
Forecast

2012
Budget

'12-'11 Bud Change
$
%

610

1,025

1,202

151

-874

-85.2%

1,356
831
3,475
2,618
1,001
5,553
4,107
675
18,765
1,455
5,939
990
1,280
21
19,273
67,391

1,500
931
2,906
2,789
1,129
7,012
5,285
922
19,511
1,493
6,596
1,215
1,567
700
21,452
75,008

1,460
862
3,055
2,722
1,124
6,795
5,063
922
19,511
1,483
6,415
1,204
1,560
350
21,443
73,969

1,539
980
2,901
2,959
1,060
5,815
5,494
961
20,194
1,543
6,853
1,496
1,476
700
22,684
76,655

39
49
-5
170
-69
-1,197
209
39
683
50
257
281
-90
0
1,232
1,647

2.6%
5.3%
-0.2%
6.1%
-6.1%
-17.1%
4.0%
4.3%
3.5%
3.3%
3.9%
23.2%
-5.8%
0.0%
5.7%
2.2%
79

2012 Budget Major Changes

80

2012 Corporate FTE Summary
FTE's
2011 Approved Budget

447.6

Changes in 2011:
Intern for Century Agenda
Public Affairs Program Manager (Full Time)
Added CAD System Administrator in ICT
Added Two Limited Duration Positions in AFR
Eliminated Two Positions
Intern Position in HR&D
2011 Baseline

0.5
0.2
1.0
2.0
-2.0
0.5
449.8

2012 Proposed New FTEs:
Risk Specialist 1
Police Sergeant for new RCF
Communication Support Position
WR Intake/Investigation Specialist Becomes Full Time
Proposed new FTEs for 2012
2012 Budget Proposed FTEs

1.0
1.0
1.0
0.4
3.4
453.2
81

Corporate Cost Analysis
($ in 000's)
2010
Actual

2011
Budget

2011
Forecast

2012
Budget

Corporate Cost

67,391

75,008

73,969

76,655

Total Revenue

462,651

492,798

487,719

520,042

Total Expense

253,464

285,844

278,547

312,666

Corporate Cost as % of Revenues

14.6%

15.2%

15.2%

14.7%

Corporate Cost as % of Expense

26.6%

26.2%

26.6%

24.5%

82

Risks
• Pending labor settlements vs. budget
assumptions
• Insurance premiums on renewal
• Unexpected litigations or claims
• Unanticipated events

83

Port of Seattle
2012 Preliminary Operating Budget
Port-wide Summary

84

Key Payroll Assumptions
• 3% average merit increase for non-represented
staff
- in line with projected 3.1% average in regional salary
planning surveys
- only 3.5% of employers projecting zero increases for
2012, vs. 17.3% in 2010 and 8.1% in 2011
- 2.2% increase in Port-sponsored medical plan due to
lower utilization and minor design changes

85

Key Payroll Assumptions
• 2012 PERS employer rate not yet available
- 2011 actual blended rate of 6.25% is below budgeted
rate of 7%
- Preliminary budget assumes 2012 rate increases to
8.5% in July from current actual rate of 7.25%, for a
full year blended rate of 7.875%

• Represented staff payroll based on bargaining
agreements, includes COLA & STEP increases
for specified groups

86

Key Payroll Assumptions
• In August, Commission asked for a comparison of recent average
pay increases for represented and non-represented staff
• The following table provides base pay increases for 2010 and YTD
June 2011
2010

2011 YTD June

Average Increase*

4.0%

2.4%

Range

0-7%

0-6%

Average Merit Increase

3.78%

2.45%

Range

0-5%

0-3%

Represented Staff

Non-Represented Staff

* COLA/across the board increases only; excludes STEP increases

87

2012 Preliminary Budget
($ in '000s)

Operating Revenues
Aeronautical
Non-Aeronautical
Other (adjusted)
Aviation

2010
2011
2012
$
%
Actual Budget Budget Chang Change
198,329 217,200 238,149 20,950
135,052 144,601 149,828 5,227
880
877
934
57
334,262 362,678 388,911 26,233

Notes

9.6% Cost recovery
3.6% Including $9.1M RAC operating revenue.
6.4% $7.8M Fuel Hydrant rev is reclassified as non-op.
7.2%

Seaport
Real Estate
CDD
Corporate
Other Operating Revenues

97,279 98,153 98,151
-1
0.0% $2.1M reduction in pass-through grant.
30,391 30,942 32,828 1,886
6.1%
36
n/a
610
1,025
151 -874 -85.2% $990K for AAPA Conference in 2011 budget.
128,316 130,119 131,131 1,012
0.8%

Total

462,578 492,798 520,042 27,245

5.5%

Operating Expenses
Aviation
Seaport
Real Estate
CDD
Corp
Total

126,481 139,575 162,909 23,334 16.7%
19,517 23,242 20,408 -2,834 -12.2% $2.1M pass-thro grant and $500K for env. reserve exp.
30,739 33,741 37,166 3,425 10.2%
9,335 14,278 15,528 1,250
8.8%
67,391 75,008 76,655 1,647
2.2%
253,464 285,844 312,666 26,822
9.4%

Net Operating Income

209,114 206,954 207,376

422

0.2%
88

Comprehensive Summary

•
•
•

Total Revenues were $13.8M higher than 2011 budget and $42.1M higher than 2010.
Total Expenses were $1.2M less than 2011 budget and $13.0M higher than 2010.
Change in Net Assets were $15.0M above 2011 budget and $29.1M higher than 2010.
89

Potential Contingency Cuts
Description

2012 Estimated
Budget
Cuts Notes

Vacant Positions

4,253

2,127

Hiring delay for 6 months

Travel/Training Expenses

5,523

1,657

Cut 30% of the budget

New Budget Requests & Outside Services

10,360

Furloughs

7,239

Total

21,382

2012 Preliminary Budget
Estimated Cuts as % of Total Budget

Two-week furloughs

312,666
6.8%

90

Port-wide FTEs Summary
Aviation
2011 Approved FTE's

Seaport Real Estate Capital Dev Corporate

Totals

761.9

60.4

164.8

262.5

447.6

1697.2

Mid Year Approval

7.1

0.4

1.0

2.0

3.7

14.2

Eliminated

0.0

-1.7

-1.0

0.0

-1.5

-4.2

Transfers

0.0

0.0

0.0

0.0

0.0

0.0

Adjusted 2011 FTE's

769.0

59.1

164.8

264.5

449.8

1707.2

Eliminated

0.0

0.0

0.0

-9.8

0.0

-9.8

Transfer

0.0

0.0

0.0

0.0

0.0

0.0

New FTE's

107.9

0.8

1.0

1.0

3.4

114.1

Total 2012 Changes

107.9

0.8

1.0

-8.8

3.4

104.4

Proposed 2012 FTE's

876.9

59.9

165.8

255.8

453.2

1811.6

2012 Budget

91

Port of Seattle
2012 Preliminary Operating Budget

Commission Briefing
October 4, 2011

Appendix A: Summary of RCF/Bussing
$ in 000's

2011 Budget

New Costs

2012 Budget

184
476
660

5,905
1,689
7,593

6,088
2,165
8,253

Corporate
Capital Development
Police
(a)
Subtotal Other

96
790
886

31
56
110
198

127
847
110
1,084

Total RCF Expenses

1,546

7,791

9,337

Expenses:
Payroll
Other
Total Aviation

Expenses not CFC covered:
30% Allocable to Employee Parking
Ops Mgr 25% to Employee Parking
Total ADF funded

-

(145)
(59)
(204)

(145)
(59)
(204)

RCF Reimbursable
Total CFC funded

1,546

(477)
7,110

(477)
8,656

New revenues:
RCF Reimbursable
CFC Op Rev (b)
Total new revenues

1,543
1,543

477
7,083
7,560

477
8,627
9,104

Total Surplus/(Deficit)

(3)

(231)

(234)

CFC
Revenues
Costs
Surplus/(Deficits)

$000s
8,627
8,656
(30)

Reimbursable
Revenues
Costs
Surplus/(Deficits)

477
477
-

Employee Parking (ADF)
Revenues
Expenses

Total Deficit

204
(204)
(234)

All CFC-eligible costs paid by
CFC operating revenues

(a) Includes one Sergeant in the Police's Budget.
(b) Assumes $6.17 opening day CFC in April 2012.
93