Item No. . 9a_supp
Meeting Date: July 10, 2018

Maritime Division
2019 Business Plan and
Budget Development
July 10, 2018

Outline
• Strategy to Budget Process
• Strategic Priorities
• Anticipated 2019 Budget needs: Capital Focus
• 2019 Milestones

2

2019 Maritime Division Budget Timeline

2019 Business
Plan and CIP
Development

Budget
Budget
Development
Development
Briefing
Briefing

Budget
Briefing
Budget
Briefing

First
First Reading
Reading &
&
Public Hearing
for 2019 Budget

nd Reading &
22nd Reading
&
Final Passage of
2019 Budget

(May/June)

(July
(July 10)
10)

(Oct 9)

(Mid-November)
(Mid-November)

(Late
(Late November)
November)

Note: Detailed schedule in appendix

3

Strategy To Budget Process

Implementation

Strategic Planning

Century Agenda
Vision

5- 10 Years

Cross Functional
Evaluation
Gap
Strategies and Objectives
(Long Range Plans)

3 - 5 Years

2019 Business Plan
2019 Budget
2019 Performance Plans

Annual

• Century Agenda and LRP
underway: focus on creating
jobs of the Future in the Ocean
Economy.
• Strong Demand of facilities in
all business lines: Vessel size
growing.
• Matrix organization requires
cross-functional work and
close collaboration
• Developing strategies and
actions to position Maritime
Division and Industry for the
future.

4
2019 Budget will reflect resources needed to move towards CA Objectives

Maritime Priorities 2019

5

Maritime Priorities
Maritime Priorities

Century Agenda/LRP

Financial Stability

CA/LRP (S1-Obj 2) Making prudent infrastructure investments.

Customer Service

CA/LRP (S2-Obj 9, PA2) Improving convenience and efficiency for cruise passengers.
LRP/HPO (S1-Obj 1, PA1,2,3) Making the NWSA an attractive West Coast gateway.

Economic Impact

CA/LRP (S1-Obj 5 PA 1,2,4); (S2-Obj 9 PA 1,3,4); (S3-Obj 10 PA1,3); (Obj 12, PA1,2). Fostering family
wage jobs and workforce development.

Safety, Security, Preparedness

LRP/HPO S2-Obj 3 PA1,2,3); (Obj 4, PA1,2,3); (Obj 6, PA2) Continuous improvement in safety,
security, and preparedness.

Sustainability

CA/LRP (S4-Obj 13, PA1,2,3,4); (Obj 14, PA1,2,3); (Obj 15, PA2,3,4); (Obj 16, PA1,2,3); (Obj 17,
PA1,2,3,4) Becoming North America's Greenest, Most Energy Efficient Port.

Innovation, Process
Improvement

CA/LRP (S1-Obj 5, PA3);
LRP/HPO (S1-Obj 2, PA 1,2,3); (Obj 6, PA1) Innovating in the maritime cluster as well in our own
organization.

Equity, Inclusion

LRP/HPO (S4-Obj 7, PA1); (Obj 8, PA1); (Obj 9, PA1) Demonstrate our leadership in equity, equity,
and inclusion.

Asset Management

CA/LRP (S1-Obj 5, PA 1, 2); (Obj 8, PA3)
LRP/HPO (S1-Obj 1, PA2,3); (Obj 2, PA 1) Building a framework for maintaining our maritime assets.
6

Cruise
Industry/Business Context

7

SARS

CONCORIDA

9-11

Passengers ('000)

20,000

CRISIS

US

25,000

ECONOMIC

Worldwide cruise passengers

15,000

10,000

5,000

0

Asia

Europe

North America
8

8

Seattle's Cruise Passenger Growth
1999 - 2018
• Seattle Ranks #1 - West Coast Cruise Ports

1,000,000

900,000
800,000
700,000
600,000
500,000
400,000
300,000
200,000
100,000
0

99

00

01

02

03

04

05

06

07

08

09

10

11

12

13

14

15

16

17

2018: 216 cruise vessel calls scheduled - Est revenue passengers 1,100,600

Seattle Ranks #1 - West Coast Cruise Ports

9

Additional Industry Capacity Planned Through 2026

Year

2018

2019

2020

2021

2022

2023

2024

2025

2026

# of New
Ships

16 23 16 13 14

5

4

2

1

+94 New Ships by 2026
*Source: Cruise Industry News

New Ships On Order To Meet Demand

10

Cruise Ships are Getting Larger

Norwegian Bliss

11

Fishing
Industry/Business Context

12

Ocean Economy critical to the Region's Economy

*Information taken from Maritime Federation
"Economic Impact of the Maritime Industry in
Washington State"

Important family wage jobs: ecosystem of Maritime services

13

Fishing Vessels: moorage shortage for larger vessels

Recapitalization underway

14

Industry/Business Context
• Recreational Boating:
- Strong Demand for moorage: occupancy high!
- Trend expected to continue
- Our marinas provide direct access to the
water for many King County Residents
- We are involved in transacting directly
with the public

Water access for community members

15

Industry/Business Context
• Grain:
- Volumes have increased an average of 7% per year, for last 3 years.
- The YTD 2018 volumes are down by 6%.

• Portfolio Management:
- The local industrial real estate market remains strong with record
lease rates.
- Occupancy rate around 98.3%.
- Higher than average growth projected.

16

Challenges
• Larger Vessels: finding space
• Traffic congestion
• Capital Capacity: continuing to steward
and maintain our assets given capacity
and resource availability
• Construction cost escalation
• Changing land use in Seattle
• Terminal 86 is an export-only facility:
trade wars could impact.
17

Strengths
• Robust Maritime Cluster
and legacy
• Proximity to Alaska
• Strong Team
• Track Record in
Sustainability

18

Financial Goals: 2019 is year 1 of a 5 year plan
2019: Positive Net Operating Income including Allocations and Depreciation
• Cruise
• Grain Terminal
2019: take steps to reach Positive Net Operating Income
• Maritime Portfolio Management
• Recreational Boating
2019 take steps to cover expenses
• Fishing and Operations

Maritime Goal: Positive NOI after Depreciation by 2024

19

Financial Strategic Plans
1.) Find / expand
new revenue sources

2.) Maximize existing
revenue streams

3.) Limit spending
increases

•
•
•
•

• Guest moorage
• Lease renewals
• Increase recreational
moorage during
fishing season @ FT
• Align rates to market
demand

• Push process
improvement
• Use technology to
reduce workload
• Leverage existing
overhead
• Optimize predictive
maintenance
• Cost sharing

4th Cruise berth
Habitat banking
Dry stack moorage
Industrial
development
• Diversified fleet

20

Advance Environmental Sustainability
• Complete stormwater system assessment and develop
framework for repairs and green stormwater infrastructure.
• Restore and maintain habitat sites.
• Develop a Habitat Mitigation Banking Agreement.
• Greenhouse gas reduction plan.
• Track and reduce solid waste generation.

21

Other Priorities: Resiliency, Innovation, Equity
- All employees go home safely
• Implement systematic approach to behavior based safety.

- Be better prepared to respond to emergencies.
• Enhance Incident Command Systems qualifications for staff.

- Lead Maritime Industry in Innovation
• Train leaders in Continuous Process Improvement. Encourage innovation at every
level. Maritime Blue

- Partner with others to bring more diverse workforce to Maritime Industry
• Mentoring youth and increasing support for Internships and pre apprentices

STRATEGY

22

Preliminary 2019 to 2023 Capital Program
Capital Spending Breakdown
EDD and Maritime in $M
Small
Projects/Fleet,
$12.8

Projects
Underway, $8.2

New Projects Proposed (> $5M):
T117 Restoration
FT Docks 3,4,5 Upgrade
T91 Berths 6 and 8

"On the bubble"
Contingency,
$30

New Projects,
$149

Salmon Bay Uplands Development
Harbor Island Marina Dock E Rehab
FT Redevelopment Phase I
Shore power at P66

Not Included:
Additional Cruise Facility

$200 Million Total

Note: Assumes current revenue and levy projections
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Appendix Slide #1
Maritime Division - 2017 Actual
in $000s
Revenue
Direct Operating Exp.
Maintenance Exp.
Central Services
Other External Exp.
Total Operating Exp.
NOI before Depreciation
Depreciation
NOI after Depreciation

Fishing &
Rec.
Portfolio Grain
Other /
Total
Cruise
Ops
Boating Mgmt. Terminal Habitat Maritime
17,596
9,297
11,086
10,787
5,427
(9) 54,184
2,674
4,599
3,813
3,682
14,768
2,048
2,295
2,483
3,290
277
27
10,420
3,645
3,148
3,010
3,052
867
13,722
629
707
474
596
253
594
3,253
8,996
10,749
9,780
10,620
1,397
621
42,163
8,600
5,924
2,676

(1,452)
5,119
(6,571)

1,306
3,122
(1,816)

167
2,681
(2,514)

4,030
558
3,472

(630)
6
(636)

12,021
17,410
(5,389)

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Detail 2019 Budget Schedule
•
•
•
•
•
•
•
•
•
•
•
•
•

07/24 - 2019 EDD Business Plan and Budget Development Preview briefing
09/11 - Commission Budget Priorities Budget Discussion
09/25 - Central Services budget Commission briefing
10/09 - Operating division budgets Commission briefing
10/23 - Tax Levy & Draft Plan of Finance Commission briefing
10/23 - 2019 Preliminary Budget document available to Commission
10/25 - 2019 Preliminary Budget document available to the public
10/30 - NWSA Budget study session by Managing Members
11/13 - NWSA Budget adoption by Managing Members
11/13 - First reading of budget resolution and public hearing
11/27 - Second reading and final passage of 2019 Budget
12/03 - File the 2019 statutory budget with King county
12/14 - Publish the 2019 Final Budget to the public

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