ITEM NO. 6a Supp____________ DATE OF MEETING: Nov 8, 2011 Port of Seattle 2012 Preliminary Budget First Reading/Public Hearing November 08, 2011 1 Agenda • Background • Operating Budget • Comprehensive Op & Non-Op Budget • Capital Budget • Tax Levy • Remaining Schedule • Public Hearing 2 2012 Budget Process Jun. 7 Aug. 16 Aug. 16 Budget Process Briefing Budget Assumptions Briefing Business Plan and Capital Plan Briefing Sept. 27 Capital Budget Briefing Oct. 4 Preliminary Operating Budget Briefing Oct. 25 Nov. 8 Nov. 22 Dec. 1 Dec. 14 Draft Plan of Finance, Tax Levy, and Operating Budget Follow-up Briefings First Reading & Public Hearing, Preliminary Budget Final Reading & Public Hearing, Preliminary Budget Statutory Budget Filed with King County Release Final Budget and Draft Plan of Finance 3 Proposed Budget Changes 1. Reduce public parking revenues by $1.3 million - Initial budget figure based on forecast in early August. Anticipated growth for August, September & October has not been realized. - Q3 2011 forecast is $2.7 million below 2011 budget, but still $730K above 2010 - Proposed budget = $52.48 million, which is $2.3 million (4.7%) above the Q3 2011 forecast 2. Add FTE for emergency preparedness training for $118,000 - Mid-year approval in 2011. Omitted from 2012 budget by mistake. - Total cost includes salary, benefits, computer, & training 3. Add Public Expense (Non-op) for increased obligation to WSDOT for improvements to SR 518 totaling $2,068,055 - Commission authorized up to $10 million in May, 2007 (Res. 3578) - Port previously paid $7,931,945. - WSDOT will invoice Port for remaining obligation in early 2012. - Funding source is Airport Development Fund 4 Key Budget Drivers Operating Revenues Aeronautical Other Operating Revenues Total Operating Revenues 2011 Bud 2012 Bud Change $ Change % 217,200 235,669 18,469 8.5% 275,598 281,176 5,578 2.0% 492,798 516,845 24,047 4.9% Operating Expenses 2011 Bud 2012 Bud Change $ Change % Rental Car Facility & Busing (funded by CFC) Increase in Terminal Realignment (cost recovery) Increase in Environmental Remediation Deferred Maintanence Increase O&M due to Less Charge to Capital Unavoidable Contractual Increase Other Baseline Increase Total Operating Expenses 285,844 309,843 6,609 5,200 1,325 596 2,006 1,664 6,599 23,999 2.3% 1.8% 0.5% 0.2% 0.7% 0.6% 2.3% 8.4% 5 Operating Budget Summary ($ in '000s) Operating Revenues Aeronautical Non-Aeronautical Other (adjusted) Aviation 2010 2011 2011 2012 $ % Actual Budget Forecast Budget Change Change 198,329 217,200 214,181 235,669 18,469 135,052 144,601 144,541 148,811 4,210 880 877 877 1,234 357 334,262 362,678 359,599 385,714 23,035 Seaport Real Estate CDD Corporate Other Operating Revenues 97,279 98,153 95,961 98,151 30,391 30,942 31,030 32,828 36 610 1,025 1,202 151 128,316 130,119 128,192 131,131 Total 462,578 492,798 487,792 516,845 24,047 Notes 8.5% Cost recovery 2.9% Including $9.1M RAC operating revenue. 40.6% $7.8M Fuel Hydrant rev is reclassified as non-op. 6.4% -1 1,886 0.0% $2.1M reduction in pass-through grant. 6.1% n/a -874 -85.2% $990K for AAPA Conference in 2011 budget. 1,012 0.8% 4.9% Operating Expenses Aviation Seaport Real Estate CDD Corp * Total 126,481 139,575 137,120 160,969 21,394 15.3% 19,517 23,242 19,200 20,408 -2,834 -12.2% $2.1M pass-thro grant and $500K for env. reserve exp. 30,739 33,741 33,741 36,416 2,675 7.9% 9,335 14,278 14,278 15,516 1,237 8.7% 67,391 75,008 73,969 76,535 1,527 2.0% 253,464 285,844 278,308 309,843 23,999 8.4% Net Operating Income 209,114 206,954 209,484 207,002 48 0.0% * Include the $1.5M budget for Internal Audit endorsed by the Audit Committee. 6 Comprehensive Budget Summary ($ in 000s) 2010 Actual 2011 Budget 2012 Budget Change $ Change % Revenues 1. Aeronautical Revenues 2. Operating Revenues 3. Tax Levy 4. PFCs 5. CFCs 6. Fuel Hydrant 7. Non-Capital Grants and Donations 8. Capital Contributions 9. Interest Income Total 198,329 264,250 73,125 59,744 23,243 7,912 12,473 30,518 13,096 682,690 217,200 275,598 73,500 60,379 22,237 7,839 8,493 32,106 13,654 711,006 235,669 281,176 73,500 63,448 21,333 7,839 1,779 31,448 5,748 721,939 18,469 5,578 3,069 (904) Expenses 1. O&M Expense 2. Depreciation 3. Revenue Bond Interest Expense 4. GO Bond Interest Expense 5. PFC Bond Interest Expense 6. Non-Op Environmental Expense 7. Public Expense 8. Other Non-Op Rev/Expense Total 253,464 160,775 133,239 17,463 10,187 22,730 25,085 7,276 630,220 285,844 160,491 148,206 13,780 10,191 6,200 17,205 2,521 644,438 Change In Net Assets 52,470 66,568 • • • Explanations Cost recovery Seaport , R.E. Non-Aero & Corp (6,714) (658) (7,906) 10,934 8.5% 2.0% 0.0% 5.1% -4.1% 0.0% -79.1% -2.0% -57.9% 1.5% 309,843 158,479 135,806 14,926 6,826 5,290 7,722 3,576 642,468 23,999 (2,012) (12,400) 1,146 (3,365) (910) (9,483) 1,055 (1,970) 8.4% -1.3% -8.4% 8.3% -33.0% -14.7% -55.1% 41.9% -0.3% Partially due to new RCF/BMF 79,471 12,904 19.4% Increase in enplanement Classify portion as ops revenue Reclassified from ops revenue EMW winding down FAA & DHS grants Lower interest rate 1% vs. 1.86 % Lower interest rates & CP balance New issue and increase interest Savings from bond refunding Due to superfund sites Reduction of FAST I and II projects Total Revenues are $10.9M higher than 2011 budget and $39.2M higher than 2010. Total Expenses are $2.0M less than 2011 budget and $12.2M higher than 2010. Change in Net Assets are $12.9M above 2011 budget and $27.0M higher than 2010. 7 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 10.1 0.4 1.0 2.0 3.7 17.2 Eliminated 0.0 -1.7 -1.0 0.0 -0.5 -3.2 Transfers 1.0 0.0 0.0 0.0 -1.0 0.0 Adjusted 2011 FTE's 773.0 59.1 164.8 264.5 449.8 1711.2 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 87.0 0.8 1.0 1.0 2.4 92.2 Total 2012 Changes 87.0 0.8 1.0 -8.8 2.4 82.5 Proposed 2012 FTE's 860.0 59.9 165.8 255.8 452.2 1793.7 2012 Budget 8 Capital Budget Summary $'s in 000's 2012 2013 2014 2015 2016 2012-16 Commission Authorized/Underway 275,735 114,480 36,173 3,240 9,500 439,128 Pending 2012 Authorization 104,871 167,556 101,447 17,388 5,927 397,189 Pending Future Authorization 11,205 66,920 113,590 129,917 300,831 622,463 Small Projects 14,568 16,043 7,445 6,041 5,742 49,839 Total * 406,379 364,999 258,655 156,586 322,000 1,508,619 * There are some small changes to the 5-year capital plan from the last capital budget follow-up on 10/4/11 due to adjustments made for some Aviation CIPs. 9 2002 - 2012 CIP Spending 10 Tax Levy Overview • Tax Levy Amount - $73.5 million - Levy amount established by the Commission each year as part of the budget process - Statutory limitations on annual collection; Port is below maximum • Tax Levy Uses - Payment of General Obligation bonds debt service • Port policy - debt service is no more than 75% of levy - General purpose use established by Commission policy • Seaport and Real Estate non-operating environmental remediation • Regional freight mobility projects • Real Estate division support • Highline Schools noise mitigation program • Non-Aviation portion of Port Jobs program • SR 99 Tunnel contribution in 2016 11 Tax Levy Sources and Uses $'000 LEVY SOURCES Beginning Tax Levy Fund Balance Eastside Rail Corridor Partners Reimbursements Annual levy Total Sources: 2012 5 Years 2012-2016 41,618 5,000 73,500 120,118 41,618 31,000 367,500 440,118 40,353 211,437 G.O.Bonds DS - new (SR99 Tunnel) Subtotal G.O. Bonds DS 40,353 17,944 229,381 Other uses Roads and Transportation Projects Aviation School, and Highline & other Schools NOISE Insulation 3,954 650 9,189 11,283 Environmental Remediation Liabilities, Seaport & Real Estate - prelim. (2) Funding of Transportation & Infrastructure Fund PortJobs Port Jobs Apprenticeship Program Subtotal Other 15,889 23,000 72 54 43,619 67,597 42,250 486 342 131,147 Subtotal RE Support 14,524 4,922 19,446 54,031 22,355 76,386 Total Uses: 103,417 436,914 Projected Ending Tax Levy Fund Balance 16,700 3,203 LEVY USES General Obligation (G.O.) Bonds Debt Service (DS) G.O. Bonds DS - existing debt (1) • 2012 proposed tax levy is $73.5 million • 2012 maximum levy is estimated to be $90 million • Additional $13 million balance in the Transportation & Infrastructure Fund Real Estate Support (3) RE Capital Total RE Operating Subsidy Notes: (1) Assumes bond issue of $226 million for 25 yrs at 6%. (2) Includes project cash flows for environmental projects already or expected to be expensed and liabilities booked (3) Includes Committed and BP Prospective projects 12 Change to Seaport Funding Plan • Updated information on Seaport fund balance provides more funding capacity • Required project deferrals from 2012-2016 5-yr planning period is reduced from $25 million to $14 million • Still need to defer $68 million in 2013-2014 (compared to $73 million previously) 13 Change to Seaport Funding Plan 2012-2016 ($mil.) 2012-2016 ($mil.) Oct. 25, 2011 Nov. 8, 2011 Seaport Funding Sources Net income Operating funds Grants Existing revenue bond proceeds Future revenue bond proceeds TOTAL 40 22 2 5 201 271 41 31 2 5 202 282 Seaport CIP Committed Business Plan Prospective TOTAL 42 254 296 42 254 296 Funding Shortfall (25) (14) 14 Remaining Schedule • Second Budget Reading Nov. 22, 2011 • Statutory Budget Filed with King County Dec. 01, 2011 • Release Final Budget Document Dec. 14, 2011 15 Port of Seattle 2012 Preliminary Budget First Reading/Public Hearing November 08, 2011 16