Economic Development Division 2019 Business Plan and Budget Development Preview Overview • Key Budget Timelines • Situational assessment • Alignment with Century Agenda/Long Range Plan • Economic Development Priorities for 2019 • 2019 Operating and Capital Budget Needs Maritime Cluster Positioned for Growth: The global 'Ocean Economy' is valued on a conservative basis by the Organization for Economic Cooperation and Development (OECD) at $1.5 trillion (2010) and growing to $3.0 trillion by 2030 2 2019 EDD 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) 24) (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 • Promote international travel and cruise adventures • Promote women and minority business enterprise (WMBE) and small business growth • Advance equitable workforce training within key Port industries • Develop port properties to support aviation, fishing and maritime industries 4 Industry/Business Context: Real Estate • Industrial sector still very active, rents seeing new peaks • On other hand, construction starts will slow down (especially in commercial and residential sectors) • High occupancy rates at Port's commercial and industrial properties (97+%) • Multi-story warehouses will become the norm in urban industrial areas • Pressure on SODO and other Industrial areas. 5 Industry/Business Context: Workforce Development • Talent attraction/retention a top employer issue • The Seattle region: - increasingly racially and ethnically diverse - Higher housing and transportation costs are especially impactful on low wage workers • Career connected learning initiatives are especially important to tap into and train younger generation • Robotics, AI, Machine Learning and other advancing technologies changing the nature of work Aerospace Class 6 Industry/Business Context: Small Business • Finding and retaining employees is especially challenging for smaller firms • High cost and scarce availability of manufacturing and commercial space • WMBE participation in Port of Seattle opportunities has been disparately low. • Trending: Digital payments, Block chain, Z Gen, Cybersecurity, video Champions of Inclusion 7 Industry/Business Context: Tourism • Travel bans and international friction will dampen United States tourism - Washington state will likely do better and grow slightly • China will continue to drive global travel. • Cruise industry growth will continue worldwide and in the Alaska Market • Washington State tourism promotion efforts will increase substantially with advent of new statewide tourism agency Tourism Spotlight Airport Advertising Partnership 8 Industry/Business Context: Maritime Innovation* • Seattle Maritime Sector = low visibility and innovation performance compared to other local industries • Top business and innovation barriers: 1. 2. 3. Lack of public policy and incentives support Workforce challenges Understanding of the business opportunities • Most impactful new maritime technologies: 1. 2. 3. 4. Electrification Ship and vessel design innovation Marine renewables Autonomous/underwater vessels • Industrial space especially for small and emerging maritime companies is particularly difficult to find in Ballard/Interbay *Results from Maritime innovation center survey Maritime Innovation Center 9 Challenges • Staying nimble and strategic as real estate markets change • Maintaining high occupancy rates at Port properties (and taking care of our assets) • Making workforce investments that "move the needle" for key Port industries • Expanding opportunities for Women Minority Business Enterprises • Maintaining tourism growth despite international reputation 10 Century Agenda/Long Range Plan Drives Economic Development Division 1 Century Agenda/LRP Economic Development Priorities CA1 Objective 5 Fishermen's Terminal & Terminal 91 Development (inc. Maritime Innovation District) (Fishing & Maritime Cluster Growth) 2 CA 2 Objectives 6 and 9 Tourism 3 CA 3, Objectives 10 & 11 Diversity in Contracting/Small Business 4 CA 3, Objective 12 Workforce Training in Key Clusters 5 CA 4, Objective 4 Industrial Land Protection and Development "The Port of Seattle will use its real estate, capital assets and financial capabilities to accomplish the Century Agenda. These are tools to thoughtfully steward, rather than areas well-suited for specific 25-year goals." 11 Highest Priorities for 2019 1. 2. 3. 4. 5. Manage and Develop Port Real Estate Assets Expand contracting opportunities for Women Minority Business Enterprises Advance workforce development initiatives especially those focused on Career Connected Learning Promote tourism opportunities that tie to the use of Airport and Maritime terminals Lead and manage unique economic development initiatives:   Partner with King County Cities on ED Grant program Advance Maritime innovation center and district initiatives 12 Real Estate Management and Development  Ground lease Des Moines Creek West property  Complete design work on Gateway and Seattle Ship Supply buildings and get projects through the entitlement process  Complete design work on Terminal 91 Uplands light industrial buildings and get projects started through entitlement process  Initiate Bell Harbor Conference Center Modernization  Manage real estate portfolio to generate positive NOI after depreciation and corporate allocations by year-end 2024.  Develop a "second 25 years" renewal, replacement, and modernization strategy for the HQ facility. Pier Two 13 Workforce Development  Manage airport employment office in partnership with PortJobs  Advance aviation career pathway training initiative  Invest in regional Career Connect Learning learning initiative  Implement and Strengthen Regional Construction Trades Partnership Pedro Reynaga, Harbor Operations Intern 14 Diversity in Contracting/Small Business Assistance  Implementation of Diversity in Contracting Policy    Provide greater access to Port opportunities through education, events, and assistance Expand supplier diversity Develop tools and conduct assessments to measure and monitor inclusion in contracting  Explore utilizing Port resources to support business incubator facilities 15 Tourism  Promote the cruise industry through outreach to travel influencers (trade and media) both domestically and in priority international markets (UK, Germany, China & Australia).  Increase the value of tourism throughout Washington • Increase reach of Tourism Marketing Support Program • Enhance Airport Spotlight program • Use WeChat airport site to serve as portal for destinations in Washington. Norwegian Bliss Marks Arrival of Larger Cruise Ships 16 Maritime Innovation  Continue dialogue and work with Memorandum of Understanding partners who can help support and sustain Maritime Innovation Center  Develop operating model, business plan and priority services  Work with partners to support "virtual maritime innovation center operations"  Secure public and private funding to support center construction and operations  Make fact finding trips to maritime innovation centers to gain insights into their operations and lessons learned Maritime Innovation District 17 Budget Preview • Operating Revenues/Expenses Driven by Central Harbor Properties • Levy supports Small Business, Workforce, ED and Tourism Grants • Will likely need additional staffing to support Diversity in Contracting program • Will prioritize some existing funding to support long term development of maritime innovation center - Will develop business plan for this initiative that leverages Port operating and capital investments - Partners interested in developing "virtual maritime incubator" until Port develops building(s) over next three years. 18 Preliminary 2019 to 2023 Capital Program Spending Breakdown* New Projects Proposed (> $5M): T91 Uplands Light Industrial Buildings Bell Harbor Conference Center Modernization Potentially Deferred Projects: Projects Underway Small Projects/Fleet Contingency New Projects T91 Uplands Light Industrial Buildings Bell Harbor Conference Center Modernization P66 HVAC Systems Upgrade WTC HVAC System Replacement Deferred Projects *Assumes $200 million funding capacity for Maritime & Economic Development Divisions 2019 to 2023 capital spending 19 Appendix: 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 20