Item No: 9c_attach
Meeting Date: March 12, 2019

PORT OF SEATTLE

2018 FINANCIAL & PERFORMANCE REPORT

AS OF DECEMBER 31, 2018

TABLE OF CONTENTS

Page
I.

Portwide Performance Report

3-6

II.

Aviation Division Report

7-15

III.

Maritime Division Report

16-20

IV.

Economic Development Division Report

21-24

V.

Central Services Division Report

25-30

2

I. PORTWIDE FINANCIAL & PERFORMANCE REPORT 12/31/18
EXECUTIVE SUMMARY
Financial Summary
The Port's operating results for 2018 were very strong - a record year for both the operating revenues and net
operating income. Total operating revenues were $689.4M, which is $18.9M above budget and $57.4M higher
than 2017. Excluding Aeronautical revenues, which are based on cost recovery, other operating revenues were
$398.1M, $28.7M above budget and $30.2M higher than the 2017 actuals primarily due to higher revenues from
Public Parking, Rental Cars, Airport Dining & Retail, Ground Transportation, Fishing Operations and Conference
& Event Centers. Total operating expenses were $397.6M, $25.2M below budget mainly due to staffing vacancies,
outside services and a $15.6M Washington State Department of Retirement Systems (DRS) Pension True-up
credit. Operating income before depreciation was $291.8M, $44.2M above budget and $32.7M higher than the
2017 actuals. The Port-wide capital spending is $617.7M for 2018, 70.6% of the 2018 budget.
Operating Summary
Sea-Tac Airport had a record year with 49.8 million passengers in 2018 and is now the 8th busiest U.S. airport by
passengers count. The total enplanement growth for 2018 was 6.2% compared to 2017. This number is comprised
of enplanement growth rate of 6.3% for domestic passengers and 5.8% for international passengers. The total
landed weight for 2018 was 6.8 % higher than 2017 while total air cargo metric tons were 1.5% higher than 2017.
For the Maritime division, cruise passengers also reached a record of over 1.1 million in 2018, 4.0% higher than
2017. The occupancy rate at Shilshole Bay Marina increased to 96.4% compared to 94.9% in 2017. For the
Economic Development division, Terminal 91 Industrial has remained at a 100% building occupancy for both
2018 and 2017. Building occupancies for Terminal 106, Central Harbor, and Marina Office and Retail have
remained relatively steady in 2018.
Key Business Events
The Port Commission approved funds to address the shortage of local construction workers and to broaden access
to training and jobs for underrepresented populations in the industry in 2018. The Port obtained Congressional
authorization for Seattle Harbor Deepening Project with the U.S. Army Corps of Engineers. The Port hosted an
event to celebrate the 10 year anniversary of the Port's Veteran Fellow Program. The Port is collaborating with
Puget Sound Restoration Fund and the Washington State Department of Natural Resources on a Blue Carbon
program to build habitat and a native oyster bed at the north end of Smith Cove in Seattle's Elliott Bay. The Port
also celebrated 20 years of serving the cruise industry with over one million revenue passengers two years in a
row. Additionally, the Port welcomed three international airlines to the Sea-Tac Airport and launched SEA Visitor
Pass pilot program that would allow visitors past security at the Airport; visitors can now sign up for a pass giving
them the opportunity to attend Airport events and enjoy other Airport amenities without having to buy an airline
ticket. In December, the Port Commission authorized the fourth annual round of funding for the Tourism
Marketing Support Program that provides matching funds to organizations in Washington State to promote
tourism.
Major Capital Projects
The Port celebrated the "Topping Off" ceremony for the International Arrivals Facility (IAF) as the final structural
roof beam was put in place. Additionally, IAF project design was submitted to the U.S. Green Building Council in
the last quarter of 2018. The IAF project is rapidly progressing and is scheduled to open in the fall of 2020.
Taxiway improvements for the Airport's longest runway (16L/34R) were completed nine days ahead of schedule;
this runway was closed in September 2018 and reopened end of November 2018. Several construction projects
were placed on closeouts including Concourse B Gate Improvements; Wi-Fi Enhancement for Concourses A, B, D
and South Satellite; Alternate Utility Facility; ACL and Service Facility (Restroom Renovation Enabling Phase 1);
T18 Storm Water Outfalls; South Satellite Communications Equipment Relocations; Dynamic Display Signs Zone
3, and Delta In-Flight Regulated Materials Support. Permits were received for the Terminal 5 Berth Modernization
project and the Pier 69 solar project, and removal of North Harbor Crane is also in progress.

3

I. PORTWIDE FINANCIAL & PERFORMANCE REPORT 12/31/18
PORTWIDE FINANCIAL SUMMARY

$ in 000's
Aeronautical Revenues
Airport Non-Aero Revenues
Other Port Operating Revenues
Total Operating Revenues

Total Operating Expenses
NOI before Depreciation
Depreciation
NOI after Depreciation

2016
Actual
244,235
221,021
133,211
598,467
325,285
273,182
164,336
108,846

2018
Actual
291,268
257,707
140,415
689,390
397,638
291,752
164,362
127,390

2017
Actual
264,114
236,803
131,114
632,031
372,982
259,049
165,021
94,028

2018
Budget
301,082
244,786
124,612
670,479
422,885
247,594
163,309
84,285

Fav (UnFav)
Incr (Decr)
Budget Variance Change from 2017
$
%
$
%
(9,814)
-3.3% 27,154
10.3%
12,921
5.3% 20,904
8.8%
15,803
12.7% 9,301
7.1%
18,910
2.8% 57,359
9.1%
25,247
6.0% 24,656
6.6%
44,158
17.8% 32,703
12.6%
(1,053)
-0.6%
(659) -0.4%
43,105
51.1% 33,362
35.5%

MAJOR OPERATING REVENUES SUMMARY

$ in 000's
Aeronautical Revenues

2016
Actual
244,235

2017
Actual
264,114

2018
Actual
291,268

Fav (UnFav)
Incr (Decr)
2018
Budget Variance Change from 2017
$
%
$
Budget
%
301,082
(9,814) -3.3% 27,154 10.3%

Public Parking
Rental Cars - Operations
Rental Cars - Operating CFC
Rental Cars - Total
ADR & Terminal Leased Space
Ground Transportation
Employee Parking
Airport Commercial Properties
Airport Utilities
Clubs and Lounges
Cruise
Recreational Boating
Fishing & Operations
Grain
Maritime Portfolio Management
Central Harbor Management
Conference & Event Centers
NWSA Distributable Revenue
Other
Total Operating Revenues (w/o Aero)
TOTAL

69,540
37,082
12,122
49,203
57,253
12,803
9,329
9,992
7,233
3,028
15,422
10,255
9,108
5,382
10,255
6,920
8,022
61,584
8,902
354,232
598,467

75,106
35,051
10,641
45,691
58,980
15,684
9,617
18,042
7,018
5,041
17,596
11,086
9,297
5,427
10,787
8,634
9,133
54,925
5,854
367,917
632,031

80,212
37,306
16,263
53,569
64,323
18,772
10,269
15,434
7,206
6,802
18,880
12,529
9,763
5,167
11,305
9,018
11,703
55,992
7,177
398,122
689,390

78,572
35,294
15,563
50,857
59,087
16,884
9,457
14,706
7,556
5,630
18,150
12,166
8,388
5,163
11,169
8,951
9,537
46,647
6,477
369,398
670,479

4

1,640 2.1%
2,012 5.7%
700 4.5%
2,713 5.3%
5,236 8.9%
1,888 11.2%
813 8.6%
727 4.9%
(350) -4.6%
1,171 20.8%
730 4.0%
362 3.0%
1,375 16.4%
4 0.1%
136 1.2%
66 0.7%
2,166 22.7%
9,345 20.0%
700 10.8%
28,724 7.8%
18,910 2.8%

5,106
6.8%
2,255
6.4%
5,622 52.8%
7,878 17.2%
5,343
9.1%
3,088 19.7%
652
6.8%
(2,608) -14.5%
189
2.7%
1,761 34.9%
1,284
7.3%
1,443 13.0%
465
5.0%
(260) -4.8%
518
4.8%
384
4.4%
2,570 28.1%
1,067
1.9%
1,324 22.6%
30,205
8.2%
57,359
9.1%

I. PORTWIDE FINANCIAL & PERFORMANCE REPORT 12/31/18
MAJOR OPERATING EXPENSES SUMMARY

$ in 000's
Salaries & Benefits
Wages & Benefits
Payroll to Capital Projects
Equipment Expense
Supplies & Stock
Outside Services
Utilities
Travel & Other Employee Expenses
Promotional Expenses
Other Expenses
Charges to Capital Projects
TOTAL

2016
Actual
102,873
99,917
21,744
7,106
8,792
70,116
21,123
4,200
1,178
25,118
(36,880)
325,285

Fav (UnFav)
Incr (Decr)
2018
2018 Budget Variance Change from 2017
2017
Actual Actual Budget
$
%
$
%
112,837 127,575 135,982
8,407
6.2% 14,738
13.1%
108,041 108,381 122,544 14,163 11.6%
340
0.3%
25,708 28,329
28,964
635
2.2%
2,621
10.2%
11,118 10,622
8,212 (2,411) -29.4%
(495)
-4.5%
10,238 10,781
8,800 (1,981) -22.5%
542
5.3%
83,603 99,885 112,292 12,407 11.0% 16,282
19.5%
23,529 25,552
24,219 (1,334) -5.5%
2,024
8.6%
4,767
4,848
6,398
1,550 24.2%
81
1.7%
1,408
1,956
2,341
385 16.4%
548
38.9%
36,483 31,911
28,045 (3,867) -13.8% (4,572)
-12.5%
(44,750) (52,203) (54,910) (2,707)
4.9% (7,453)
16.7%
372,982 397,638 422,885 25,247
6.0% 24,656
6.6%

The 2018 actuals are $24.7M higher than the 2017 actuals primarily due to the following:
• Payroll: $15.0M higher mainly due to the addition of new FTEs and pay for performance increase; partially offset by a
$15.6M DRS pension True-up credit.
• Outside Services: $16.3M higher largely due to more consultant expenses, more capital and expense projects, and some
capital to expense write-offs.
• Other Expenses: $4.6M lower due to environmental liability expenses ($4.0M).

TOTAL OPERATING AND NON-OPERATING REVENUES AND EXPENSES

($ in 000's)
Re ve nue s
1. Operating Revenues
2. Tax Levy
3. PFCs
4. CFCs
5. Fuel Hydrant
6. Non-Capital Grants & Donations
7. Capital Contributions
8. Interest Income
Total
Expe nse s
1. O&M Expense
2. Depreciation
3. Revenue Bond Interest Expense
4. GO Bond Interest Expense
5. PFC Bond Interest Expense
6. Public Expense
7. Non-Op Environmental Expense
8. Other Non-Op Rev/Expense
Total
Special Item
Retro Adjustment to Net Position
Increase In Net Position

2016
Actual

2017
Actual

2018
Actual

2018
Budge t

Fav (UnFav)
Budge t Variance
$
%

598,467
71,678
85,570
24,715
6,992
6,284
18,108
8,448
820,262

632,031
71,702
88,389
25,790
7,000
6,705
30,112
12,174
873,902

689,390
71,771
94,070
21,802
6,942
1,573
43,650
26,287
955,484

670,479
72,000
91,787
22,161
7,023
5,504
41,379
15,713
926,047

18,910
(229)
2,283
(359)
(82)
(3,931)
2,271
10,573
29,438

325,285
164,336
105,567
9,765
5,251
8,560
280
12,087
631,131
147,700
41,431

372,982
165,021
97,748
13,891
4,931
4,588
4,464
10,441
674,066
199,836

397,638
164,362
100,432
13,414
4,368
5,269
10,600
3,217
699,299
34,923
2,736
218,526

422,885
163,309
122,544
13,501
4,437
10,794
2,250
473
740,193
185,854

25,247
6.0%
(1,053)
-0.6%
22,111
18.0%
0.6%
88
69
1.5%
5,525
51.2%
(8,350) -371.1%
(2,744) -580.5%
5.5%
40,893
(34,923)
0.0%
0.0%
(2,736)
32,673
17.6%

5

2.8%
-0.3%
2.5%
-1.6%
-1.2%
-71.4%
5.5%
67.3%
3.2%

I. PORTWIDE FINANCIAL & PERFORMANCE REPORT 12/31/18
Major Budget Variance Explanations:
• Non-Capital Grants & Donations: $3.9M lower than budget mainly due to less DOE grants.
• Interest Income: $10.6M higher than budget as budget did not include interest earnings on new bond proceeds.
• Revenue Bond Interest Expense: $22.1M favorable to budget mainly due to savings from new revenue bond and lower
cost of issuance than budgeted.
• Public Expense: $5.5M less than budget due to Safe & Swift and Heavy Haul did not take place as budgeted.
• Non-Op Environmental Expense: $8.4M higher than budget mainly due to Environmental Remediation Liabilities
increase for T91, Lower Duwamish Superfund, South Park Marina, EWW Superfund, T30 and T5.
• Special Item Expense: $34.9M higher than budget due to T25 NRD restoration project.

KEY PERFORMANCE METRICS

2017
Actual

2018
Actual

Incr (Decr)
Fav (UnFav)
2018 Budget Variance Change from 2017
%
Budget Chg.
Chg.
%

Enplanements (in 000's)

23,416

24,894

24,654

240

1.0%

1,479

6.3%

Landed Weight (lbs. in 000's)

28,431

30,350

29,203

1,147

3.9%

1,919

6.8%

Passenger CPE (in $)

10.52

10.79

11.63

0.84

7.2%

0.27

2.6%

Grain Volume (metric tons in 000's

4,363

4,379

4,146

233

5.6%

16

0.4%

Cruise Passenger (in 000's)

1,072

1,115

1,081

34

3.2%

43

4.0%

Shilshole Bay Marina Occupancy

94.9%

96.4%

95.9%

0.5%

0.6%

1.5%

1.6%

CAPITAL SPENDING RESULTS
$ in 000's
Aviation
Maritime
Economic Development
Central Services & Other (note 1)
TOTAL

2017
Actual
294,497
20,489
3,739
5,798
324,523

2018
2018
Actual Budget
579,135 795,883
25,091
46,449
2,066
6,099
11,456
26,779
617,748 875,210

Budget Variance
$
%
216,748 27.2%
21,358 46.0%
4,033 66.1%
15,323 57.2%
257,462 29.4%

Note:
(1) "Other" includes $1.7M Stormwater Utility capital projects.

PORTWIDE INVESTMENT PORTFOLIO
During the fourth quarter of 2018, the investment portfolio earned 2.13% versus the benchmark's (the Bank of
America Merrill Lynch 1-3 Year US Treasury & Agency Index) 2.53%. Over the last twelve months the portfolio
and the benchmark have earned 1.86% and 2.54%, respectively. Since the Port became its own Treasurer in 2002,
the life-to-date earnings of the Port's portfolio and the benchmark are 2.46% and 1.83%, respectively

6

II. AVIATION DIVISION PERFORMANCE REPORT 12/31/18
FINANCIAL SUMMARY

$ in 000's
Operating Revenues:
Gross Aeronautical Revenues
(1)

Fav (UnFav)
Budget Variance
%
$

2016
Actual

2017
Actual

2018
Actual

2018
Budget

247,811

267,690

291,268

301,082

(9,814)

-3.3%

Incr (Decr)
Change from 2017
$
%

23,578

8.8%

(3,576)

(3,576)

-

-

-

0.0%

3,576

-100.0%

Aeronautical Revenues

244,235

264,114

291,268

301,082

(9,814)

-3.3%

27,154

10.3%

Non-Aeronautical Revenues

221,021

236,803

257,707

244,786

12,921

5.3%

20,904

8.8%

Total Operating Revenues

465,256

500,916

548,975

545,867

3,107

0.6%

48,058

9.6%

SLOA III Incentive Straight Line Adj

Total Operating Expense

261,226

299,114

318,849

334,856

16,007

4.8%

19,735

6.6%

Net Operating Income

204,030

201,802

230,126

211,011

19,114

9.1%

28,324

14.0%

Capital Expenditures

153,887

293,785

579,135

796,200

217,065

27.3%

285,350

97.1%

(1) Annual non-cash amortization of $17.9M lease incentive related to the 5 year SLOA III agreement which ended in 2017.

Division Summary 2018 Actuals vs. 2018 Budget
• Net Operating Income for 2018 is $19.1M higher than budget (9.1% favorable)
o Operating Revenue is ($3.1M) higher than budget (0.6% favorable) -primarily due to higher revenue in
Non-Aeronautical Revenues, driven by strong performance in Airport Dining & Retail despite unit
closures for lease transition, Rental Car, Public Parking, Port-owned Clubs, and Ground Transportation
which has continued strong growth in TNC activity.
o Operating Expenses are $16.0M lower than budget (4.8% favorable) primarily due to a year-end pension
credit adjustment to the Airport $5.5M and savings from other divisions $19.7M which included the
airport's allocated share ($7.2M) of the year-end pension credit adjustment affecting other divisions,
partially offset by higher than anticipated Environmental Remediation Liability cost increase ($2.2M)
associated with remediation required for IAF & NSAT mega projects, and Capital to Expense write offs
($6.9M).
Division Summary 2018 Actuals vs. 2017 Actuals
• Net Operating Income for 2018 is $28.3M higher than prior year (14.0% favorable)
o Operating Revenue is $48.1M higher than prior year (9.6% favorable) - primarily due to higher
Aeronautical revenue of which $23.6M of the increase is driven by higher rate-based costs and lower
revenue sharing. Non-Aero revenue increased by $20.9M due to increased activities in the Landside
business, primarily in Airport Dining & Retail, Ground Transportation, and Clubs and Lounges.
O Operating Expenses are $19.7M higher than prior year (6.6% variance) - due to higher payroll of $10.9M
(net of the 2018 year end pension credit adjustment) due to staffing that increased between 2017 and 2018,
higher outside services expense of $6.6M which was primarily due to non-recurring expenses focused on
addressing strategic initiatives throughout the airport, and higher Capital to Expenses of $4M. These 2018
Total Operating Expenses are partially offset by the one-time amortization for prepaid frontage fees in
2017 of $3.6M.

7

II. AVIATION DIVISION PERFORMANCE REPORT 12/31/18
A. BUSINESS EVENTS
•

•

•
•

•
•

•
•

Safety: Below targets:
o 2018 Airfield Composite Safety Score of 12 vs. goal of 29
o 2018 Occupational injury rate of 5.9 vs. goal of 4.61
o 2018 days away severity rate of 90.84 vs. goal of 65.10
Innovation & Efficiency: Achieved goal of at least 2 in each department. Highlights include:
o SEA Visitor Pass pilot program implemented in Q4
o Installed dynamic ticket counter signage in Zone 1.
o Completed Lean Lift for traffic congestion
Asset Management: Completed asset management gap assessment in Q3.
Social Responsibility: Mixed results:
o Achieved Disadvantaged Business Enterprise (DBE) share of total Airport Improvement Project (AIP)
funded construction contracts of 15.43% vs. goal of 8%
o Achieved ACDBE share of ADR gross sales of 19.9% vs. goal of 22%
Customer Service: Below targets. Airport Service Quality scores below 2017 in all 6 categories.
Environment and Sustainability:
o SAF: Commission approved sustainable aviation fuel strategic plan in Q3
o Sound insulation: 20 homes not insulated, but gained FAA grant to fund work in 2019
o Stormwater: completed regional stormwater assessment in Q4.
Financial Performance: Achieved both goals.
o 2018 Non-aero NOI of $150 million vs. budget of $127 million
o 2018 CPE of $10.79 vs. adjusted budget of $11.63
Capital Project, Planning & SAMP: Achieved most milestones:
o Completed SAMP near term projects scoping for Environmental Review in Q3
o IAF: Completed design, sterile corridor Pod A, structural steel, bridge foundations
o NSAT: on track to achieve opening of phase 1A in January 2019
o Baggage Optimization: Phase 1: completed 74% of construction; Phase 2 completed 90% of design
o SSAT Renovation: on hold
o Concourse D Hardstand Terminal: facility completed, activated and operational
o Restroom Upgrades: Phase 1 enabling work in construction

B. KEY PERFORMANCE METRICS

2016

2017

2018

% Change
from 2017

Total Passengers (000's)
Domestic
International
Total

40,871
4,866
45,737

41,804
5,130
46,935

44,422
5,428
49,850

6.3%
5.8%
6.2%

Operations

412,170

416,124

438,391

5.4%

1,888
25,387
27,276

2,323
26,107
28,431

2,471
27,879
30,350

6.4%
6.8%
6.8%

194,754
114,350
57,326
366,430

242,271
123,934
59,651
425,856

241,397
133,274
57,644
432,315

-0.4%
7.5%
-3.4%
1.5%

Landed Weight (In Millions of lbs.)
Cargo
All other
Total
Cargo - Metric Tons
Domestic freight
International freight
Mail
Total

8

II. AVIATION DIVISION PERFORMANCE REPORT 12/31/18
C. Key Performance Measures

2016
Actual

2017
Actual

2018
Actual

2018
Budget

Fav (UnFav)
Budget Vairance
$
%

Key Performance Metrics
Cost per Enplanement (CPE)
Non-Aeronautical NOI (in 000's)

10.10
128,727

10.52
133,101

10.79
149,959

11.63
126,607

0.84
23,352

7.2%
18.4%

0.26
16,858

2.5%
12.7%

Other Performance Metrics
O&M Cost per Enplanement
Non-Aero Revenue per Enplanement
Debt per Enplanement (in $)
Debt Service Coverage
Days cash on hand (10 months = 304 days)
Aeronautical Revenue Sharing ($ in 000's)

11.46
12.77
9.70
10.11
104
114
1.53
1.57
416
379
(37,395) (42,311)

12.81
10.35
133
1.66
235
(36,863)

13.58
9.93
116
1.51
304
(35,799)

0.77
0.42
(17)
0.15
-69
(1,065)

5.7%
4.3%
-14.8%
9.7%
-22.6%
-3.0%

0.03
0.24
19
0.08
(144)
5,447

0.3%
2.4%
16.3%
5.3%
-37.9%
12.9%

Activity (in 000's)
Enplanements

22,796

24,894

24,654

240

1.0%

1,479

6.3%

23,416

Incr (Decr)
Change from 2017
$
%

Key Performance Metrics - 2018 Actual compared to 2018 Budget:
• Cost per Enplanement (CPE):
o Adjusted CPE Budget is 11.63 (as shown above) based on 40% Revenue Sharing per SLOA IV agreement
bringing the adjusted CPE to $0.84 favorable to budget. The 2018 Actual reflects 40% Revenue Sharing as
negotiated in the SLOA IV agreement, which was not known when the 2018 Budget was approved.
o Note: CPE $0.56 favorable to original budget of $11.35 - 2018 Budget assumed 50% Revenue Sharing.
o CPE increase of $0.26 compared to prior year - due to increase in rate base costs and decrease in revenue
sharing percentage under SLOA IV.
• Non-Aero NOI:
o Non-Aero NOI 2018 Actual is $23.4M favorable to 2018 budget due primarily to increased Ground
Transportation activity, increased transactions in Public Parking, and stronger performance in Airport
Dining and Retail.
o Non-Aero NOI 2018 Actual is $16.9M higher than prior year due primarily to increased Ground
Transportation activity, increased transactions in Public Parking, and stronger performance in Airport
Dining and Retail.

9

II. AVIATION DIVISION PERFORMANCE REPORT 12/31/18
D. OPERATING RESULTS
Division Summary
2016
Actual

2017
Actual

2018
Actual

2018
Budget

Fav (UnFav)
Budget Variance
$
%

Incr (Decr)
Change from 2017
$
%

Gross Aeronautical Revenues (1)
SLOA III Incentive Straight Line Adj (2)
Aeronautical Revenues
Non-Aeronautical Revenues
Total Operating Revenues

247,811
(3,576)
244,235
221,021
465,256

267,690
(3,576)
264,114
236,803
500,916

291,268
291,268
257,707
548,975

301,082
301,082
244,786
545,867

(9,814)
(9,814)
12,921
3,107

-3.3%
0.0%
5.3%
0.6%

23,578
3,576
27,154
20,904
48,058

8.8%
100.0%
10.3%
8.8%
9.6%

Operating Expenses:
Payroll
Outside Services
Utilities
Other Airport Expenses
Total Airport Direct Charges

101,879
37,863
14,690
20,655
175,087

114,463
41,055
16,374
28,292
200,184

125,341
47,638
18,237
25,125
216,341

132,156
52,532
17,320
19,776
221,784

6,815
4,895
(918)
(5,349)
5,443

5.2%
9.3%
-5.3%
-27.0%
2.5%

10,878
6,583
1,864
(3,168)
16,157

9.5%
16.0%
11.4%
-11.2%
8.1%

4,463
129
4,592

8,812
2,856
11,668

6,233
6,891
13,124

4,030
4,030

(2,203) -54.7%
(6,891)
0.0%
(9,094) -225.7%

(2,579)

-29.3%

4,035
1,456

141.3%
12.5%

Total Airport Expenses

179,679

211,852

229,465

225,814

(3,651)

-1.6%

17,613

8.3%

Police Costs
Capital Development
Other Central Services
Maritime/Economic Development
Total Charges from Other Divisions

18,183
9,319
50,099
3,946
81,547

17,652
14,701
51,004
3,904
87,262

19,231
12,607
53,121
4,425
89,384

22,174
23,092
58,265
5,511
109,042

2,944
10,485
5,144
1,086
19,658

13.3%
45.4%
8.8%
19.7%
18.0%

1,579
(2,094)
2,117
520

8.9%

2,122

-14.2%
4.1%
13.3%
2.4%

Total Operating Expense

261,226

299,114

318,849

334,856

16,007

4.8%

19,735

6.6%

Net Operating Income

204,030

201,802

230,126

211,011

19,114

9.1%

28,324

CFC Surplus

(4,899)
2,160
3,576
(133,982)
70,885

(2,750)
3,481
3,576
(131,060)
75,050

(7,724)
3,167
(136,218)
89,351

(7,142)
4,406
(136,075)
72,200

(582)
(1,239)
(143)
17,150

-8.1%
-28.1%
0.0%
0.1%
23.8%

$ in 000's
Operating Revenues:

Environmental Remediation Liability
Capital to Expense
Total Exceptions

Net Non-Operating Items in / out from ADF (3)
SLOA III Incentive Straight Line Adj
Debt Service (4)
Adjusted Net Cash Flow

14.0%
(4,974) -180.9%
-9.0%
(314)
(3,576) -100.0%
-3.9%
(5,159)
19.1%
14,301

(1) Aero revenues are net of revenue sharing.
(2) Annual non-cash amortization of $17.9M lease incentive related to the SLOA III agreement for the 5 year period from 2013-2017.
(3) Per SLOA III definition of Net Revenues.
(4) 2018 Budget debt service amount inadvertently understated by the $2.1M debt service exclusion adjustment which impacts Aero Rate Based Revenues only. Total 2018
Aeronautical debt service obligation is reflected in the 2018 Actual column.

10

II. AVIATION DIVISION PERFORMANCE REPORT 12/31/18
Operating Expenses - 2018 Actuals compared to 2018 Budget:
Total Operating Expenses are lower than the 2018 Budget by $16 million due to the net of the following:
•

Aviation Direct Charges are lower than the 2018 Budget by $5.4 million due to the following:
Positive Variance of $11.7M
Payroll - vacancies & hiring delays
Year Pension Credit Adjustment
Vacancies & hiring delays
Outside Services
Delays in Environmental Assessments
Delays of the On-Call Project Planning and EPM
Delays in Prepaid Parking System, ACDBE Disparity Study
Delays in AV Biofuels Partnership Fund & Carbon Initiatives
All other Outside Services

•

Negative Variance of $6.3M
$6.8M
5.5M
1.3M
$4.9M
1.5M
0.5M
1.1M
0.2M
1.6M

Utilities
IWTP overflow event
Garbage disposal compact failures
Other Aviation Expenses
Equipment Rental & General Expenses
Maintenance Equipment & Supplies
All other Aviation Expense

$5.4M
1.2M
1.4M
2.8M

Aviation Operating Expense Exceptions are higher than budget by $9.1 million due to the following:
Positive Variance - no material variance

Negative Variance of $9.1M
Environmental Remediation Liability
IAF soil contamination increase
NSAT asbestos increase
Obligating events not expected until 2019
Capital to Expense Write-Offs
SSAT Renovation
Renewable CNG Busses
C3 Holdroom
Other

•

$0.9M
0.6M
0.3M

$2.2M
3.8M
1.0M
(2.6M)
$6.9M
3.5M
0.4M
0.9M
2.1M

Operating Expense charges from Central Services and other divisions are lower than budget by $19.7 million
due to the following:
Positive Variance of $19.7M
Central Services savings
Police
Maritime/Economic savings
CDD savings (projects delayed/deffered)
Aviation PMG
PCS
Engineering
Other CDD
Year End Pension Credit Adjustment
Central Services
Police
CDD

Negative Variance - none
$2.3M
($0.2M)
$1.1M
$9.3M
5.8M
2.3M
1.0M
0.2M
$7.2M
2.8M
3.1M
1.3M

11

II. AVIATION DIVISION PERFORMANCE REPORT 12/31/18
Operating Expenses - 2018 Actuals compared to 2017 Actuals:
Total Operating Expenses are higher than 2017 Actuals by $19.7 million due to the net of the following:
•

•

Aviation Direct Charges are higher than 2017 Actuals by $16.2 million due to the following:
Increase of $19.4M

Decrease of $3.2M

Payroll
$10.9M
Increased Staffing
14.0M
Year Pension Credit Adjustment
(3.1M)
Outside Services
$6.6M
Janitorial Contract started in 2017
1.6M
SAMP and Advanced Planning
1.0M
Utility Master Plan, Civil/Structural Standards, EPM
1.1M
SAMP Environrmental Assessment
0.2M
Curbside Assistance/Wheelchair Valet, CONRAC Reimburs. 0.5M
Customer Service Contracts
0.3M
All other Outside Services increases
1.9M
Utilities
$1.9M

Other Aviation Expenses
One-time amortization frontage fees
Litigated & Non-litigated damages
All other Aviation Expenses

Operating Expense Exceptions are higher than 2017 Actuals by $1.5M due to the following:
Increase of $4.0M
Capital to Expense Write-Offs
SSAT Renovation
Renewable CNG Busses
C3 Holdroom
Other

•

$3.2M
3.3M
0.2M
(0.3M)

Decrease of $2.5M
$4.0M
3.5M
0.4M
0.9M
(0.8M)

Environmental Remediation Liability
IAF Soils
IAF Asbestos
NSAT Asbestos
Other

$2.5M
2.7M
(1.3M)
2.1M
(1.0M)

Operating Expense charges from Central Services and other divisions are higher than 2017 Actuals by $2.1
million due to the following:
Increase of $2.1M
Police
Police Service
2018 Year End Pension Credit Adjustment
CDD
CDD Savings
2018 Year End Pension Credit Adjustment
Other Central Services
Other Central Services
2018 Year End Pension Credit Adjustment
Maritime/Economic Development divisions

Decrease - no material amount
$1.6M
4.7M
(3.1M)
($2.1M)
(0.8M)
(1.3M)
$2.1M
4.9M
(2.8M)
$0.5M

12

II. AVIATION DIVISION PERFORMANCE REPORT 12/31/18
Aeronautical Business Unit Summary
Fav (UnFav)
Budget Variance

Incr (Decr)
Change from 2017

2016

2017

2018

2018

$ in 000's

Actual

Actual

Actual

Budget

$

%

$

%

Revenues:
Movement Area
Apron Area
Terminal Rents
Federal Inspection Services (FIS)
Total Rate Base Revenues

94,725
14,028
155,852
11,227
275,832

108,638
16,771
155,431
18,612
299,452

116,703
15,627
169,318
16,226
317,874

125,422
15,979
171,854
13,413
326,668

(8,720)
(352)
(2,536)
2,813
(8,794)

-7.0%
-2.2%
-1.5%
21.0%
-2.7%

8,064
(1,144)
13,888
(2,386)
18,422

7.4%
-6.8%
8.9%
-12.8%
6.2%

Commercial Area
Subtotal before Revenue Sharing

9,379
285,211

10,574
310,026

10,257
328,131

10,212
336,880

45
(8,749)

0.4%
-2.6%

(317)
18,106

-3.0%
5.8%

Revenue Sharing

(37,395)

(42,311)

(36,863)

(35,799)

(1,065)

-3.0%

5,447

12.9%

Other Prior Year Revenues
Total Aeronautical Revenues

(5)
247,811

(26)
267,690

291,268

301,082

(9,814)

0.0%
-3.3%

26
23,578

100.0%

Total Aeronautical Expenses

168,932

195,414

211,101

216,931

5,830

2.7%

15,688

8.0%

Net Operating Income

78,879

72,276

80,167

84,151

(3,984)

-4.7%

7,891

10.9%

Debt Service (1)
Net Cash Flow

(89,130)
(10,251)

(86,564)
(14,288)

(91,673)
(11,506)

(90,323)
(6,173)

(1,350)
(5,333)

-1.5%
-86.4%

(5,109)
2,782

-5.9%

8.8%

19.5%

(1) 2018 Budget debt service amount inadvertently understated by the $2.1M debt service exclusion adjustment which impacts Aero Rate Based Revenues
only. Total 2018 Aeronautical debt service obligation is reflected in the 2018 Actual column.

Airline Rate Base Cost Drivers

$ in 000's
O&M
Debt Service Gross

2016
Actual
165,427
118,641
(32,831)
28,215
(2,638)

2017
Actual
192,188
113,832
(33,057)
29,654
(2,264)

2018
Actual
206,076
115,419
(32,987)
32,371
(2,132)

2018
Budget
210,433
120,555
(33,015)
32,373
(2,650)

Debt Service PFC Offset
Amortization
Space Vacancy
TSA Operating Grant and Other
Rate Base Revenues
Commercial area
Total Aero Revenues

(982)
275,832
9,379
285,211

(901)
299,452
10,574
310,026

(873)
317,874
10,257
328,131

(1,028)
326,668
10,212
336,880

Fav (UnFav)
Budget Variance

Incr (Decr)
Change from 2017

$
%
(4,357) -2.1%
(5,135) -4.3%
28 -0.1%
(2) 0.0%
518 -19.5%

$
13,888
1,588
70
2,717
132

%
7.2%
1.4%
-0.2%
9.2%
-5.8%

155 -15.1%
(8,794) -2.7%
45
0.4%
(8,749) -2.6%

28
18,422
(317)
18,106

-3.1%
6.2%
-3.0%
5.8%

(1) O&M, Debt Service Gross, and Amortization do not include commercial area costs or the international incentive expenses

Aeronautical - 2018 Actuals vs. 2018 Budget
•

Aeronautical net operating income is $4.0M lower than budget (4.7% unfavorable).
o Aeronautical revenues are $9.8M lower than budget (3.3% unfavorable) - primarily due to decreases in
Debt Service flowing through Rates in the Movement and Terminal Rents areas.
o Aeronautical operating expenses is $5.8M lower than budget (2.7% favorable) driven primarily by a yearend pension credit adjustment with a favorable impact of $12.2M (of which $5.5M impacted the Aviation
division and $7.5M impacted other divisions).

Aeronautical - 2018 Actuals vs. 2017 Actuals
• Net Operating Income for 2018 is $7.9M higher than prior year (10.9% favorable)
13

II. AVIATION DIVISION PERFORMANCE REPORT 12/31/18
o

o

Operating Revenue is $23.6M higher than prior year (8.8% favorable) due to higher rate-based costs to
support increased airline activity and lower revenue sharing due to reduction in revenue sharing percentage
(from 50% down to 40%) under new airline agreement.
Operating Expenses are $15.7M higher than prior year (8.0% variance) due to higher airport direct
operating expenses to support increased airline activity and higher charges from other divisions.

Non-Aero Business Unit Summary
Fav (UnFav)
Budget Variance
$
%

Incr (Decr)
Change from 2017
$
%

2016
Actual

2017
Actual

2018
Actual

2018
Budget

35,051
10,641
75,106
15,684
58,980
18,042
7,018
9,617
5,041
1,624
236,803
103,702

37,306
16,263
80,212
18,772
64,323
15,434
7,206
10,269
6,802
1,119
257,707
106,435

35,294
15,563
78,572
16,884
59,087
14,706
7,556
9,457
5,630
2,036
244,786
117,925

2,012
700
1,640
1,888
5,236
727
(350)
813
1,171
(917)
12,921

Total Non-Aero Expenses

37,082
12,122
69,540
12,803
57,253
9,992
7,233
9,329
3,028
2,639
221,021
92,294

11,490

9.7%

2,733

2.6%

Net Operating Income

128,727

133,101

151,271

126,861

(4,899)
123,828
(43,984)
79,844

(2,750)
130,351
(44,495)
85,856

(7,724)
143,548
(44,545)
99,002

(7,142)
119,719
(45,752)
73,967

24,411
(582)
23,829
1,207
25,035

19.2%
-8.1%
19.9%
2.6%
33.8%

18,171
(4,974)
13,197
(50)
13,147

13.7%
-180.9%
10.1%
-0.1%
15.3%

$ in 000's
Non-Aero Revenues
Rental Cars - Operations
Rental Cars - Operating CFC
Public Parking
Ground Transportation
Airport Dining & Retail & Leased Space
Commercial Properties
Utilities
Employee Parking
Clubs and Lounges
Other
Total Non-Aero Revenues

Less: CFC (Surplus) / Deficit
Adjusted Non-Aero NOI
(1)
Debt Service
Net Cash Flow

(1)

5.7%
4.5%
2.1%
11.2%
8.9%
4.9%
-4.6%
8.6%
20.8%
-45.0%
5.3%

2,255
5,622
5,106
3,088
5,343
(2,608)
189
652
1,761
(505)
20,904

6.4%
52.8%
6.8%
19.7%
9.1%
-14.5%
2.7%
6.8%
34.9%
-31.1%
8.8%

(1) CFC excess and Debit service are forecasted/budgeted on an annual basis only. Thus, quarterly data is not available.

Non-Aeronautical - 2018 Actuals vs. 2018 Budget
•

Non-Aeronautical net operating income is $24.4M higher than budget (19.2% favorable).
o Non-Aeronautical revenues is $12.9M higher than budget (5.3% favorable):
 Airport Dining & Retail - favorable $5.2M reflects strong performance in Food and Beverage despite
transitions to new leases, Retail Sales growth driven by increased "grab'n'go" food offering, and
increased revenue from Advertising.
 Commercial Properties - favorable $0.7M due to earlier than anticipated occupancy of DMCBP Phase
II building.
 Utilities - unfavorable ($0.3M) due to reduced tenant billings while garbage program undergoes
process improvement planning.
o Non-Aeronautical operating expenses are $11.5M lower than budget (9.7% favorable) - primarily due to
lower than anticipated charges from other divisions due to AVPMG terminal project delays, and Non-Aero
share of year-end pension credit.
Non-Aeronautical - 2018 Actuals vs. 2017 Actuals
•

Net Operating Income for 2018 is $18.2M higher than prior year (13.7% favorable)
o Operating Revenue is $20.9M higher than prior year (8.8% favorable) primarily due to increased Landside
business activity and strong performance in Airport Dining & Retail and Clubs & Lounges, which more
than offsets the year-over-year decrease ($5.3M) due to the one-time lump sum frontage fee
reimbursement received in Commercial Properties in 2017.
o Operating Expenses are $2.7M higher than prior year (2.6% variance) due to higher payroll costs related to
increase in staffing, higher outside services expense primarily due to non-recurring expenses focused on
addressing strategic initiatives throughout the airport, and higher charges from other divisions, partially
offset by higher pension credit in 2018.
14

II. AVIATION DIVISION PERFORMANCE REPORT 12/31/18
E. CAPITAL RESULTS
Capital Variance

$ in 000's
Description
(1)

International Arrivals Facility
(2)
ASL Conversion at Checkpoints
(3)
NS NSAT Renov NSTS Lobbies
(4)
N. Terminals Utilities Upgrade
(5)
Add'l Baggage Makeup Space IAF
(6)
Additional STS Cars
(7)
2018 Taxiway Improvement Project
SSAT Infrastructure HVAC
Concourse D Hardstand Holdroom
Holdroom Seatings for Conc B& C
Terminal Security Enhancements
All Other
Total Spending
(1)
(2)
(3)

(4)
(5)
(6)
(7)

2018
Actual
223,714
1,593
169,018
417
1,187
3
30,495
819
25,757
1,115
1,888
123,128
579,135

Budget Variance
2018
Budget
$
%
324,221 100,507 31.0%
16,800
15,207 90.5%
140,738
(28,280) -20.1%
8,200
7,783 94.9%
15,998
14,811 92.6%
6,525
6,522 100.0%
36,250
5,755 15.9%
4,910
4,091 83.3%
27,986
2,229 8.0%
6,950
5,835 84.0%
5,925
4,037 68.1%
201,380
78,252 38.9%
795,883 216,748
27.2%

Foundations and structural steel delayed and then proceeded at a slower pace than expected.
$8.7M of capital budget deemed to be public expense as the equipment will be transferred to TSA. 1 of 3 lanes have been installed; remaining lanes
pushed out to Q4 2019.
2018 Budget included a reclass of $8.7M to non-operating public expense for the non-Port owned equipment to be turned over to the TSA. When
Baseline was set in early 2018, Construction was lagging. Construction level of effort is now matching and exceeding initial expectations as schedule
end dates have not slipped.
Early works construction cancelled and combined with main construction phase due to better coordination with adjacent projects.
Foundations and structural steel delayed and then proceeded at a slower pace than expected. Additionally, a major payment (~$9M) scheduled for
Dec-18 was delayed one month by GMP negotiation and settlement and will apply in Jan-19.
Project has been delayed until 2020.
Favorable bids on the project.

15

III. MARITIME DIVISION PERFORMANCE REPORT 12/31/18
FINANCIAL SUMMARY

$ in 000's
Total Revenues

2016
Actual
50,810

2017
Actual
54,183

2018
Actual
57,575

2018
Budget
55,053

Fav (UnFav)
Budget Variance
$
%
2,522
5%

Incr (Decr)
Change from 2017
$
%
3,391
6%

Total Operating Expenses

40,384

42,164

43,252

49,578

6,326

13%

1,088

3%

Net Operating Income

10,426

12,020

14,323

5,475

8,848

162%

2,303

19%

Depreciation

17,351

17,410

18,022

17,868

(154)

-1%

612

4%

Net Income

(6,924)

(5,390)

(3,699)

(12,394)

8,695

70%

1,691

31%

Capital Expenditures

5,746

20,489

25,091

46,449

21,358

46%

4,602

22%

Division Summary 2018 Actuals vs. 2018 Budget
• Operating Revenues $2,522K above budget due to favorable moorage revenue, and more cruise passengers.
• Operating Expenses $6,326K below budget from underspend in Cruise, Recreational Boating, Other Maritime,
and Central Services payroll.
• Net Operating Income $8,848K above budget.
• Capital spending for full year 2018 is $25.1 million or 54% of the approved budget of $46.4 million.
Division Summary 2018 Actuals vs. 2017 Actuals
• Operating Revenues $3,391K above 2017 primarily due to higher tariff rates.
• Operating Expenses $1,088K greater than 2017 due primarily to increased maintenance wage rates, Cruise Port
Valet, and acquisition of Salmon Bay Marina.
• Net Operating Income is $2,303K higher than 2017.
Net Operating Income before Depreciation by Business

$ in 000's

2016

2017

2018

2018

Actual

Actual

Actual

Budget

Fav (UnFav)

Incr (Decr)

Budget Variance

Change from 2017

$

%

$

%

Fishing & Operations

(3,149)

(1,451)

(1,586)

(3,299)

1,714

52%

(135)

-9%

Recreational Boating

1,016

1,305

2,262

505

1,756

347%

957

73%

Cruise

8,326

8,599

9,029

5,332

3,697

69%

430

5%

Bulk

4,215

4,030

3,430

3,324

105

3%

(600)

-15%

Maritime Portfolio

249

167

1,098

278

820

-295%

931

559%

All Other

(232)

(630)

90

(666)

756

114%

720

114%

10,426

12,020

14,323

5,475

8,848

162%

2,303

19%

Total Maritime

A. BUSINESS EVENTS
Cruise - Record setting passenger counts at over 1.1M. Inaugural sailing of the Norwegian Bliss. Successful Port
Valet program with costs coming in well under budget. Continued profitability.
Recreational Boating - Incorporated Salmon Bay Marina. Shilshole Bay Marina occupancy was 2% higher than
2017 due to process improvements reducing turnaround times. Third year in a row with zero injuries.

16

III. MARITIME DIVISION PERFORMANCE REPORT 12/31/18
Fishing and Commercial Operations - Christened the Global Provider, a new 126 foot tanker vessel at
Fishermen's Terminal. Doubled occupancy at Pier 34 dolphins and extended agreements at Pier 46 North with
WSDOT and Washington State Ferries.
Maritime Portfolio Management -Added new marina-wide Wi-Fi and completed Electric Vehicle Charging Pilot
Project at Shilshole Bay Marina.
Stormwater Utility - Rehabilitated 6.4 miles of stormwater infrastructure and assessed 33.3 miles exceeding
target. Received confirmation from DOE on termination of Industrial SW permit, saving $32K annually.

B. KEY PERFORMANCE METRICS
Grain Volume - Metric Tons in 000's

700
600
500
400
300
200
100
0

2017 Actuals
2018 Budget
2018 Actuals

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Cruise Passengers in 000's

300
250
200

2017 Actuals

150

2018 Budget

100

2018 Actuals

50
0
Jan

Feb

Mar

Apr

May

Jun

Jul

17

Aug

Sep

Oct

Nov

Dec

III. MARITIME DIVISION PERFORMANCE REPORT 12/31/18
C. OPERATING RESULTS

$ in 000's
Fishing & Operations
Recreational Boating
Cruise
Bulk
Maritime Portfolio Management
Other
Total Revenue
Expenses
Fishing & Operations
Rec Boating
Cruise
Other Maritime
Maintenance Expenses
Portfolio Management
Other ED Expenses
Total Maritime & EDD expenses
Enviromental & Sustainability
CDD Expenses
Police Expenses
Other Central Services
Aviation Division
Total Central Services & Aviation
Envir Remed Liability
Total Expense
NOI Before Depreciation
Depreciation
NOI After Depreciation

2016
Actual
9,108
10,255
15,422
5,382
10,255
388
50,810

2017
Actual
9,297
11,086
17,596
5,427
10,787
(9)
54,183

2018
Actual
9,763
12,529
18,880
5,167
11,305
(69)
57,575

2018
Budget
8,388
12,166
18,150
5,163
11,169
17
55,053

Fav (UnFav)
Budget Variance
$
%
1,375
16%
362
3%
730
4%
4
0%
136
1%
(86)
-502%
2,522
5%

4,308
3,164
2,600
781
9,900
3,367
420
24,540
1,358
1,010
3,921
9,300
139
15,728
115
40,384
10,426
17,351
(6,924)

4,599
3,813
2,674
462
10,420
3,507
665
26,140
1,125
748
3,756
9,869
138
15,635
389
42,164
12,020
17,410
(5,390)

4,702
3,688
2,677
259
11,416
3,726
621
27,089
1,588
823
4,041
9,564
148
16,163
0
43,252
14,323
18,022
(3,699)

4,641
4,595
4,748
1,399
11,261
3,750
833
31,226
2,168
1,212
4,209
10,641
123
18,352
0
49,578
5,475
17,868
(12,394)

(61)
907
2,071
1,140
(156)
23
212
4,137
580
389
168
1,077
(24)
2,189
0
6,326
8,848
(154)
8,695

-1%
20%
44%
81%
-1%
1%
25%
13%
27%
32%
4%
10%
-20%
12%
NA
13%
162%
-1%
70%

Incr (Decr)
Change from 2017
$
%
465
5%
1,443
13%
1,284
7%
(260)
-5%
518
5%
(60)
-692%
3,391
6%
104
(126)
3
(203)
996
219
(44)
949
463
75
285
(305)
10
528
(389)
1,088
2,303
612
1,691

2%
-3%
0%
-44%
10%
6%
-7%
4%
41%
10%
8%
-3%
7%
3%
-100%
3%
19%
4%
31%

2018 Actuals vs. Budget
• Operating Revenues were $2,522K higher than budget:
o Fishing and Operations $1,375K higher than budget due to better utilization of recreational boating at
Fishermen's Terminal while the fishing boats are at sea.
o Recreational boating $362K favorable to budget from faster turnaround of moorage slips resulting in a 2%
increase in vacancy rates.
o Cruise revenue $730K above budget from higher passenger counts than budgeted.
o All other revenue nets to $55K
•

Operating Expenses were $6,326K favorable than budget:
o Rec Boating $907K below budget due to open positions and general underspend.
o Cruise $2,071K lower than budget due to timing and savings of Port Valet, consulting, and marketing
programs.
o Other Maritime $1,140K lower than budget from Marketing open FTEs and Habitat expenses applied to
non-operations and capital.
o Environment and Sustainability $580K lower than budget due to vacant positions and capital/expense mix.
o Capital Development (CDD) $389K below budget due to fewer contractors than expected.
o Other Central Services $1,071K lower than budget primarily due to lower charges from IT $251K, Public
Affairs $148K, Human Resources $222K, Accounting $192K, Finance $74K, and Exec $143K.
o All other expenses net to $168K lower than budget.

•

Net Operating Income was $8,848 above budget.
18

III. MARITIME DIVISION PERFORMANCE REPORT 12/31/18
2018 Actuals vs. 2017 Actuals
• Operating Revenues were $3,391 higher than 2017 actual due to increased moorage rates, improved occupancy
at Shilshole Bay Marina, increased cruise passenger fees, and longer than anticipated occupancy by fishing
vessels at Terminal 91.
•

Operating Expenses were $1,088K higher than 2017 actual:
o Marine Maintenance $996K greater than 2017 due to increased wages and increased project completion.
o Portfolio Management $219K greater than 2017 due to higher utility expense.
o Environmental and Sustainability $463K higher than 2017 due to migration of costs from habitat business.
o Police expenses increased $285K related to new officers at the airport and associated allocations.
o Other Central Services ($305K) decrease from 2017 related to lower allocation rate.
o Environmental Remediation ($389K) below 2017.
o All other Expenses net to $181K above 2017.

•

Net Operating Income was $2,303K above 2017 actual.

D. CAPITAL RESULTS

$ in 000's
Salmon Bay Marina ACQ
SBM Restrms/Service Bldgs Rep
FT Gateway Building
P91 South End Fender
Maritime Fleet Replacement
Contingency Renewal & Replace.
SBM Paving
Cruise Terminal Tenant Improv
Salmon Bay Marina Uplands
FT Docs 3,4,5 Fixed Pie
Restoration
All Other Projects
Total Maritime

2018
Actual
15,724
221
868
2,056
1,422
0
136
343
46
174
109
3,992
25,091

2018
Budget
15,804
7,162
2,700
2,202
2,158
2,000
1,673
1,531
1,505
1,424
1,140
7,150
46,449

Comments on Key Projects:
In 2018, Maritime spent 54% of the annual approved capital budget.

19

Budget Variance
$
%
80
1%
6,941
97%
1,832
68%
146
7%
736
34%
2,000
100%
1,537
92%
1,188
78%
1,459
97%
1,250
88%
1,031
90%
3,158
44%
21,358
46%

III. MARITIME DIVISION PERFORMANCE REPORT 12/31/18
Projects with significant changes in spending were:
•
•
•
•
•
•
•

SBM Restrooms/Service Buildings Rep - Construction Delay, scope of work change.
FT Gateway Building - Change of scope.
Contingency Renewal and Replace - $850k used for Portwide Radio System Upgrade.
SBM Paving - Construction Delay. Moved to Q2 2019.
Cruise Terminal Tenant Improvements - moved to expense.
FT Docs 3,4,5 Fixed Pie - Design phase extended.
Restoration - Project delayed until 2020.

20

IV. ECONOMIC DEVELOPMENT DIVISION PERFORMANCE REPORT 12/31/18
FINANCIAL SUMMARY

$ in 000's
Total Revenues

2016
Actual
15,902

2017
Actual
17,791

2018
Actual
20,705

2018
Budget
18,522

Fav (UnFav)
Budget Variance
$
%
2,182
12%

Incr (Decr)
Change from 2017
$
%
2,914
16%

Total Operating Expenses

20,983

25,396

27,651

28,751

1,101

4%

2,255

9%

Net Operating Income

(5,080)

(7,605)

(6,946)

(10,229)

3,283

32%

659

9%

Depreciation

3,682

3,863

3,992

4,156

164

4%

129

3%

Net Income

(8,763)

(11,469)

(10,938)

(14,385)

3,447

24%

531

5%

Capital Expenditures

4,757

3,739

2,066

6,099

4,033

66%

(1,673)

-45%

Division Summary 2018 Actuals vs. 2018 Budget
• Operating Revenues $2,182K above budget primarily due to higher than expected Conference and Event
Center activity.
• Operating Expenses $1,101K below budget primarily due to EDD Initiative programs.
• Net Operating Income $3,283K above budget.
• Capital spending $2.01M or 34% of the approved budget of $6.1M.
Division Summary 2018 Actuals vs. 2017 Actuals
• Operating Revenues are expected to be $2,914K above 2017 primarily due to stronger sales at Bell Harbor
Conference Center.
• Operating Expenses $2,255K greater than 2017 primarily due to increased volumes at Conference and Event
Centers, EDD Initiatives, and Maintenance.
• Net Operating Income $659K greater than 2017.
Net Operating Income before Depreciation by Business

$ in 000's
Portfolio Management
Conference & Event Centers

2016

2017

2018

2018

Actual

Actual

Actual

Budget

(3,925)

(5,236)

(3,741)

Fav (UnFav)

Incr (Decr)

Budget Variance

Change from 2017

$

%

$

(4,308)

567

13%

1,494

%
29%

538

762

45

(1,200)

1,245

104%

(716)

94%

Tourism

(1,117)

(1,265)

(1,439)

(1,486)

47

3%

(174)

-14%

Workforce Development

(517)

(1,113)

(973)

(2,275)

1,303

57%

140

13%

EDD Grants

(22)

(753)

(838)

(960)

122

13%

(85)

NA

Env Grants/Remed Liab/ERC
Total Econ Dev

(37)

(1)

0

(0)

0

100%

1

-100%

(5,080)

(7,605)

(6,946)

(10,229)

3,283

32%

659

9%

21

IV. ECONOMIC DEVELOPMENT DIVISION PERFORMANCE REPORT 12/31/18
E. BUSINESS EVENTS
Workforce Development - Participated in Joint RFP for construction worker training and retention services. The
first Port-funded Ironworkers pre-apprenticeship cohort graduated. Partnered with the Regional Public Owners
group to complete a construction workforce supply demand study. Planned and held a highly successful Project
LIFT event to highlight aviation career opportunities. Launched an Airport Career Connected Learning
partnership with King County International Airport to increase awareness of airport-related career pathways in
middle and high schools.
Small Business - Established New Diversity in Contracting program by helping divisions establish 2019 WMBE
utilization goals and finalizing 2019 internal/external outreach plans. Offered six PortGen training sessions with
over 300 disadvantaged businesses and prime contractors attended these events to learn about Port opportunities.
Staged outreach event at Airport Minority Advisory Council (AMAC) Conference where over 200 primes and
WMBE businesses speed dated and discussed partnership opportunities. Established first ever Disadvantaged
Business Enterprise (DBE) race conscious goal airport runway project and achieved 19% DBE utilization.
Tourism - Conducted 34 travel/media FAMS tours which resulted in $550K in-kind contributions and $7.5
million earned media value. Approved 34 applicants and awarded $200K to 26 recipients of the 2018 Tourism
Marketing Support Program which offers marketing organizations partnering to promote their Washington State
destination to out-of-state visitors while promoting the use of Port facilities. Awarded 72 recipients of the
Spotlight Advertising Program which reserves 18 advertising locations at Sea-Tac airport to promote their
destinations to 49 million travelers. Coordinated a China Sales Mission with Holland America Line to promote
Alaska cruising and pre/post experiences to cruise tour operators and media.
Portfolio Management - With one third of leases rolling over in EDD and Maritime portfolios in 2018, we
maintained 94% occupancy with average 11% increase in rates. Successfully concluded the market rate reset
negotiations with City ice/Lineage Logistics total 9% increase in lease revenue. Completed critical Central
Waterfront capital and maintenance projects (elevators and HVAC). Completed 90% design and submitted
permits for Bell Harbor Modernization.
F. KEY PERFORMANCE METRICS
Building Occupancy by Location:
100%
95%
Central Harbor

90%

T-91 Uplands

85%

Marina Office & Retail
T-91 Industrial

80%

T-106 Warehouse

75%
70%

Q4 2017

Q1 2018

Q2 2018

Q3 2018

22

Q4 2018

IV. ECONOMIC DEVELOPMENT DIVISION PERFORMANCE REPORT 12/31/18
G. OPERATING RESULTS

$ in 000's
Revenue
Conf & Event Centers
Total Revenue
Expenses
Portfolio Management
Conf & Event Centers
P69 Facilities Expenses
RE Dev & Planning
EconDev Expenses Other
Maintenance Expenses
Maritime Expenses (Excl Maint)
Total EDD & Maritime Expenses
Small Business
Workforce Development
Tourism
EDD Grants
Total EDD Initiatives
Environmental & Sustainability
CDD Expenses
Police Expenses
Other Central Services
Aviation Division
Total Central Services & Aviation
Envir Remed Liability
Total Expense
NOI Before Depreciation
Depreciation
NOI After Depreciation

2016
Actual
7,880
8,022
15,902

2017
Actual
8,658
9,133
17,791

2018
Actual
9,002
11,703
20,705

2018
Budget
8,985
9,537
18,522

Fav (UnFav)
Budget Variance
$
%
17
0%
2,166
23%
2,182
12%

Incr (Decr)
Change from 2017
$
%
344
4%
2,570
28%
2,914
16%

3,425
6,932
180
595
620
2,783
31
14,566
21
522
1,093
20
1,656
62
212
157
4,222
107
4,761
0
20,983
(5,080)
3,682

3,875
7,639
206
214
776
3,666
52
16,427
64
850
1,234
751
2,900
260
387
51
5,257
113
6,068
0
25,396
(7,605)
3,863

3,571
9,889
235
149
785
3,915
166
18,711
132
702
1,408
838
3,080
281
283
(76)
5,259
113
5,860
0
27,651
(6,946)
3,992

3,778
8,465
289
211
1,227
3,055
344
17,370
140
1,992
1,460
960
4,552
398
329
158
5,816
127
6,829
0
28,751
(10,229)
4,156

207
(1,424)
54
62
442
(860)
178
(1,341)
8
1,290
51
122
1,472
117
46
234
557
14
969
0
1,101
3,283
164

5%
-17%
19%
29%
36%
-28%
52%
-8%
6%
65%
4%
13%
32%
29%
14%
148%
10%
11%
14%
NA
4%
32%
4%

(304)
2,251
30
(65)
9
249
114
2,283
68
(148)
174
87
180
21
(104)
(127)
1
1
(209)
0
2,255
659
129

-8%
29%
14%
-30%
1%
7%
217%
14%
105%
-17%
14%
12%
6%
8%
-27%
-248%
0%
1%
-3%
NA
9%
9%
3%

(8,763)

(11,469)

(10,938)

(14,385)

3,447

24%

531

5%

2018 YTD Actuals vs. Budget
• Operating Revenues were $2,182K higher than budget due to unplanned leases at T91 and higher volumes at
the conference and event center.
•

Operating Expenses were $1,101K lower than budget:
o Conference and Event Center costs $1,424K unfavorable due to higher volumes.
o Workforce Development $1,290K lower than budget due to lower than planned spending for Construction
Trades - Regional Partnership, K-12 Career Connected Learning, Maritime Initiative, and Airport Career
Pathways implementation.
o EconDev Other $442K lower than budget due to unspent Opportunity Fund and delayed hiring.
o EDD Grants $122K favorable to budget due to unclaimed funds and Tourism $51K favorable to budget
due to lower than planned spending related to marketing and advertising
o Maintenance cost unfavorable to budget by $860K due to unbudgeted HVAC repairs at Bell Street
common areas and T91 work that should have been charged to Maritime.
o Other Central Services $557K lower than budget primarily due to lower charges from IT $147K, Public
Affairs $126K, and Human Resources $125K
o All other expenses net to $923K lower than budget.

•

Net Operating Income was $3,283K above budget.

23

IV. ECONOMIC DEVELOPMENT DIVISION PERFORMANCE REPORT 12/31/18
2018 YTD Actuals vs. 2017 YTD Actuals
• Operating Revenues were $2,914K higher than 2017 actual due to stronger sales resulting from the completion
of the Pier 66 Cruise Terminal Expansion Project that increased additional capacity to offer larger events with
customized menus.
•

Operating Expenses were $2,255K higher than 2017 actual:
o Conference and Event Center $2,251K greater than 2017 due to higher sales activity at Bell Harbor
International Conference Center.
o Portfolio Management lower $304K from one-time elevator modernization and T102 tenant expense work
in 2017.
o Maintenance Expenses $249K greater than 2017 due to Maintenance at P66 Common Area.
o EDD Grants $87K higher than 2017 due to increased allocated funds and claims.
o Workforce Development $148K lower than 2017 due to lower than prior year spending for Career
Pathways and Skills Center Feasibility Study.
o All other Expenses net to $120K above 2017.

•

Net Operating Income was $659K above 2017 actual.

H. CAPITAL RESULTS

Comments on Key Projects:
Economic Development spent 34% of the annual approved capital budget.
Projects with significant changes in spending were:
•
•
•
•

T91 Upland Pre-Development - Project delayed due to capital planning.
T-102 Outdoor Lighting - Project cost refinement based on final design.
Central Waterfront Elevator Modernization- Scope reduction and shift of work to 2019/2020.
Bell Harbor International Conference Center Modernization - Shift of work to 2019/2020.

24

V. CENTRAL SERVICES FINANCIAL & PERFORMANCE REPORT 12/31/18
FINANCIAL SUMMARY

Total Operating Revenues

2016
Actual
1,330

2017
Actual
68

2018
2018
Actual
Budget
(500)
182

Fav (UnFav)
Incr (Decr)
Budget Variance Change from 2017
$
%
$
%
(682) -375.4%
(569) -832.8%

Core Central Support Services
Police
Capital Development
Environment & Sustainability
Total Operating Expenses

69,196
23,045
12,218
8,824
113,284

71,071
22,095
17,370
6,975
117,511

73,576
23,908
15,501
8,770
121,755

6,791
3,157
10,788
2,735
23,470

$ in 000's

80,367
27,065
26,289
11,504
145,225

8.4%
11.7%
41.0%
23.8%
16.2%

2,505
1,813
(1,869)
1,795
4,244

3.5%
8.2%
-10.8%
25.7%
3.6%

Division Summary 2018 Actuals vs. 2018 Budget
• Operating Revenues were $-500K, $682K lower than budget due to a $863K special funding LEOFF 2
received from the Washington State Department of Retirement Systems (DRS).
• Operating Expenses were $23.5M favorable to budget mainly due to the latest estimate from the State Actuary
current funding of the DRS Pension Plans exceeded the future liabilities; also due to vacant positions, projects
spending delay and lower Outside Services costs.
• Capital spending was $9.7M, 39.9% of the 2018 budget.
Division Summary 2018 Actuals vs. 2017 Actuals
• Operating Revenues were $569K below 2017 mainly due to a special funding LEOFF 2 received from the
DRS.
• Operating Expenses were $4.2M higher than 2017 mainly due to higher Payroll expenses and Outside Services
costs, partially offset by a $9.5M DRS Pension True-up credit.
A. BUSINESS EVENTS
•
•
•
•
•
•
•
•
•
•
•
•

The Port Commission established policy directives on Diversity in Contracting, Priority Hire, Construction
Labor Practices in 2018.
The Port Commission approved funds to address the shortage of local construction workers and to broaden
access to training and jobs for underrepresented populations in the industry.
Obtained Congressional authorization for Seattle Harbor Deepening Project with the U.S. Army Corps of
Engineers.
Received a regional Food Recovery Challenge Award from the U.S. Environmental Protection Agency for
outstanding accomplishments in preventing and diverting wasted food at the airport.
Broadened awareness with multi-cultural communities through first multi-lingual boat tour with 200 attendees.
Developed the 2019 Safety Engagement Award to recognize employees that take action to ensure every
employee goes home safely.
Developed, administered, received and reviewed full Employee Engagement survey results analysis.
Hosted event to celebrate 10 year anniversary of the Port's Veteran Fellow Program.
Expanded mobile safety performance apps to track all leading indicators including near miss and hazard
reporting, safety plans, permits, inspections and audits.
Completed another successful summer High School internship program. Began to develop year-round High
School internship program.
Received the "Certificate of Achievement for Excellence in Financial Reporting" and the 2018 Distinguished
Budget Presentation Award from the Government Finance Officers Association (GFOA) of the United States
and Canada.
Issued Intermediate Lien Revenue Bonds of $555,564,000 to finance or refinance capital improvements to
aviation facilities.
25

V. CENTRAL SERVICES FINANCIAL & PERFORMANCE REPORT 12/31/18
B. KEY PERFORMANCE METRICS
Key Performance Indicators/Measures

2018

2017/Notes

A. Century Agenda Strategies
1. Small Business Participation - Annual / Small Works (portwide)
2. Small Business Participation - Annual / Major Construction
(port-wide) including Mega projects

42.8%

69.0%

24.6%

25.3%

22.1%

22.7%

36.5%

27.5%

10.5%

7.3%

657
99.5%

519, increased by
138
99.5%

90%
122

83%
99

535

590, decreased by
55
100%
263

3. Small Business Participation - Annual / Goods & Services
(port-wide)
4. Small Business Participation - Service Agreements (port-wide) Annual (including Legal department Service Agreements)
5. Minority/Women-Owned Business Participation in Capital
Development Contracts
B. High Performance Organization - Customer Satisfaction
1. Respond to Public Disclosure Requests
2. Information and Communication Technology System
Availability
3. Customer Survey for Police Service Excellent or Very Good
4. Oversee Implementation and Administration of CBAs
agreements
5. Number of Jobs Openings

6. Percent of annual audit work plan completed each year
94%
7. Request of information and guidelines for integrity & business
311
conduct
C. High Performance Organization - Talent Development & Safety
14 classes, 128
1. MIS and Clarity Training
attendees
1765
2. Employee Development Class Attendees/Structured Learning
3. Required Safety Training
4. Occupational Injury Rate
5. Days Away Severity Rate
D. Financial Performance
1. Corporate costs as a % of Total Operating Expenses
2. Construction Soft Costs - Total Soft Costs (36 months avg.)
3. Clean independent CPA audits involving AFR
4. Timely process disbursement payment requests
5. Keep receivables collections 85% current (within 30 days)
6. Investment Portfolio Yield
7. Litigation and Claim Reserves (in $ thousand)

26

94%
4.87
61.44

21 classes, 151
attendees
7084, decreased
by 5319
95%
4.26
N/A

30.6%
18%
yes
4 days
87%
2.13%
$1,632

31.5%
28%
yes
3 days
96%
1.51%
$928

V. CENTRAL SERVICES FINANCIAL & PERFORMANCE REPORT 12/31/18
C. OPERATING RESULTS
Division Summary

Total Operating Revenues

2016
Actual
1,330

2017
Actual
68

2018
2018
Actual
Budget
(500)
182

Fav (UnFav)
Incr (Decr)
Budget Variance Change from 2017
$
%
$
%
(682) -375.4%
(569) -832.8%

Core Central Support Services
Police
Capital Development
Environment & Sustainability
Total Operating Expenses

69,196
23,045
12,218
8,824
113,284

71,071
22,095
17,370
6,975
117,511

73,576
23,908
15,501
8,770
121,755

6,791
3,157
10,788
2,735
23,470

$ in 000's

80,367
27,065
26,289
11,504
145,225

8.4%
11.7%
41.0%
23.8%
16.2%

2,505
1,813
(1,869)
1,795
4,244

3.5%
8.2%
-10.8%
25.7%
3.6%

2018 Actuals vs. 2018 Budget
• Operating Revenues were $682.2K unfavorable to budget due to lower miscellaneous revenues because of the
special funding LEOFF 2 received from the State of Washington Department of Retirement Systems (DRS).
• Operating Expenses were $23.5M favorable to budget due primarily to recording the annual DRS Pension Plan
True-up Expense based on the actuarial report on pension asset/liability at year-end, vacant positions, hiring
delays, and lower Outside Services Costs.
2018 Actuals vs. 2017 Actuals
• Operating Revenues were $568.8K lower than 2017 level.
• Operating Expenses were $4.2M higher than last year primarily due to higher Payroll and Outside Services
Costs.

27

V. CENTRAL SERVICES FINANCIAL & PERFORMANCE REPORT 12/31/18

$ in 000's

2016
Actual

2017
Actual

2018
Actual

2018
Budget

Fav (UnFav)
Budget Variance
$
%

Total Revenues

1,330

68

(500)

182

(682) -375.4%

(569)

-832.8%

Executive
Commission
Legal
Public Affairs
Human Resources
Labor Relations
Internal Audit
Accounting & Financial Reporting Services
Information & Communication Technology
Finance & Budget
Maritime Finance
Finance & Budget
Aviation Finance & Budget
Business Intelligence
Risk Services
Office of Strategic Initiatives
Central Procurement Office
Security and Preparedness
Contingency
Capital to Expense
Core Central Support Services

2,185
1,569
3,365
6,033
7,001
1,268
1,455
6,550
20,158
4,810
1,212
1,647
1,950
1,004
3,202
1,393
6,963
1,420
369
450
69,196

1,287
1,685
3,741
7,112
8,418
1,678
1,603
6,751
21,633
4,998
1,229
1,871
1,897
1,211
3,077
1,882
3,861
1,754
381
71,071

2,136
1,848
3,948
7,362
8,430
1,079
1,521
6,842
21,961
5,593
1,445
1,843
2,305
1,323
3,095
1,596
4,630
2,027
185
73,576

2,001
1,984
3,617
8,308
9,689
1,371
1,828
8,148
23,308
5,828
1,478
1,955
2,395
1,543
3,322
2,265
4,511
2,394
250
80,367

(135)
136
(331)
946
1,259
293
307
1,306
1,347
235
33
112
90
220
227
669
(119)
366
65
6,791

-6.8%
6.9%
-9.1%
11.4%
13.0%
21.3%
16.8%
16.0%
5.8%
4.0%
2.2%
5.7%
3.8%
14.3%
6.8%
29.5%
-2.6%
15.3%
25.9%
0.0%
8.4%

849
163
207
250
12
(599)
(83)
91
327
595
216
(28)
408
112
18
(286)
770
273
(196)
2,505

66.0%
9.7%
5.5%
3.5%
0.1%
-35.7%
-5.1%
1.3%
1.5%
11.9%
17.6%
-1.5%
21.5%
9.2%
0.6%
-15.2%
19.9%
15.6%
-51.3%
0.0%
3.5%

Police

23,045

22,095

23,908

27,065

3,157

11.7%

1,813

8.2%

Total Before Cap Dev & Environment

92,241

93,166

97,484

107,432

9,948

9.3%

4,318

4.6%

4,493
3,488
2,823
999
416
12,218

5,284
3,709
6,942
1,007
428
17,370

5,477
3,522
4,876
1,052
574
15,501

7,841
5,685
10,977
1,178
607
26,289

2,364
2,164
6,101
127
33
10,789

30.1%
38.1%
55.6%
10.7%
5.5%
41.0%

193
(187)
(2,066)
44
146
(1,869)

3.7%
-5.1%
-29.8%
4.4%
34.2%
-10.8%

5,857
2,098
722
148
8,824

3,779
2,157
670
368
6,975

5,006
2,418
722
624
8,770

6,503
3,046
742
1,214
11,504

1,497
628
20
590
2,735

23.0%
20.6%
2.7%
48.6%
23.8%

1,227
261
52
255
1,795

32.5%
12.1%
7.7%
69.3%
25.7%

113,284

117,511

121,755

145,225

23,470

16.2%

4,243

3.6%

Capital Development
Engineering
Port Construction Services
Aviation PMG
Seaport PMG
Capital Development Admin
Sub-Total
Environment & Sustainability
Aviation Environmental
Maritime Environmental & Planning
Noise Programs
Environment & Sustainability
Sub-Total
Total Expenses

28

Incr (Decr)
Change from 2017
$
%

V. CENTRAL SERVICES FINANCIAL & PERFORMANCE REPORT 12/31/18
2018 Actuals vs. 2018 Budget
• Operating Expenses were $23.5M below budget due primarily to:
o Executive - unfavorable variance is due to Legal Expenses.
o Commission - favorable variance is due to the annual DRS Pension Plan True-up Expense and lower
Travel Expenses.
o Legal - unfavorable variance is due to Legal Expenses.
o Public Affairs - favorable variance is due to the annual DRS Pension Plan True-up Expense, vacant
positions, lower Outside Services, Travel and General Expenses.
o Human Resources - favorable variance is due to the annual DRS Pension Plan True-up Expense, several
vacant positions and savings in Travel Expenses, Outside Services and Property Rentals.
o Labor Relations - favorable variance is due to the annual DRS Pension Plan True-up Expense, ,two
vacant positions which one has been filled and credit received for a litigation reserve.
o Internal Audit - favorable variance is due to the annual DRS Pension Plan True-up Expense, vacant
positions of which one has been filled and savings in Outside Services.
o Accounting and Financial Reporting Services - favorable variance is due to the annual DRS Pension
Plan True-up Expense, 3 vacant positions, credit card rebates, charging more to capital projects than
originally anticipated and Travel Expenses. The savings in Salaries and Benefits have been used to cover
retro-active pay for positions recently converted to Non-Exempt and to backfill a vacant position with a
temporary employee.
o Information & Communication Technology - favorable variance is due to the annual DRS Pension Plan
True-up Expense and savings in Travel and Telecommunications Expenses.
o Finance & Budget - favorable variance is due primarily to the annual DRS Pension Plan True-up
Expense.
o Business Intelligence - favorable variance is due to vacant positions and the annual DRS Pension Plan
True-up Expense.
o Risk Services - favorable variance is due to the property insurance renewal and broker fees being lower
than anticipated and to the annual DRS Pension Plan True-up Expense.
o Office of Strategic Initiative - favorable variance is due to two vacant positions and to the annual DRS
Pension Plan True-up Expense.
o Central Procurement Office - unfavorable variance is due to intra-department allocation expense.
o Security and Preparedness - favorable variance is due to the annual DRS Pension Plan True-up Expense,
a vacant position, savings in Outside Services due to cancellation of a project and Travel Expenses.
o Contingency -used fewer funds than anticipated.
o Police - favorable variance is due primarily to the annual DRS Pension Plan True-up Expense.
o Capital Development - favorable variance is due to hiring fewer contractors than budgeted, delayed
project, change in design and scope of the South Satellite project and due to the annual DRS Pension Plan
True-up Expense.
o Environment & Sustainability - favorable variance is due to vacant positions, the annual DRS Pension
Plan True-up Expense and savings in Outside Services due to delayed in SAMP and the Energy &
Sustainability and Forterra Assessment funds.
2018 Actuals vs. 2017 Actuals
• Operating Expenses were $4.2M higher than prior year primarily due to higher Payroll and Outside Services
Costs.
o Executive - expenses were $849K above 2017:
 Due to charges to Legal Expenses.
o Information & Communication Technology - expenses were $327K above 2017:
 Due to higher payroll costs primarily, the addition of a new position that was transferred from another
department.

29

V. CENTRAL SERVICES FINANCIAL & PERFORMANCE REPORT 12/31/18
o
o
o

o
o

Finance and Budget - expenses were $595K above 2017:
 Due to higher payroll costs primarily, the addition of two new positions.
Central Procurement Services - expenses were $770K above 2017:
 Due to higher payroll costs primarily, the addition of three new positions.
Police - expenses were $1.8M above 2017:
 Added 3 K-9 Handlers in mid-2017 (and the 2018 number reflects the full-year costs).
 Added 12 Police Officers requested by the airlines in 2018.
 More overtime in the first quarter of 2018.
Capital Development - expenses were $1.9M below 2017:
 Due to more Charges to Capital Projects than in the prior year.
Environment & Sustainability - expenses were $1.8M over 2017 due to the following:
 SAMP Environmental Review expenses were $438K for 2018 compared only to $169K in 2017 (the
budget for 2017 was $2.3M). Total budget variance is $1.3M for 2018.
 More spending in ACE fund, Energy & Sustainability fund for 2018 ($337K), while spending very
little last year (less than $40K).
 Added 3 new FTEs in the 2018 Environment & Sustainability budget.
 Added $175K for Aviation Biofuel Partnership Fund Development Project in the 2018 budget.
 Added $140K for terminals/facilities waste audits and reports for Maritime ENV in the 2018 budget.
 Included $110K for emission inventory update and three ports Salish Sea water initiative in the 2018
budget.

D. CAPITAL RESULTS

$ in 000's
Infrastructure - Small Cap
Services Tech - Small Cap
Project Cost Mgmt System
Supplier Database System
Corporate Firewall
PeopleSoft Financials Upgrade
Radio System Upgrade
Police Records Mgmt System
CDD Fleet Replacement
Corporate Fleet Replacement
Other (note 1)
TOTAL

2018
2018
Actual Budget
786
1,500
225
1,150
430
600
349
450
66
922
2,025
3,100
3,866
12,000
0
700
768
1,210
726
1,180
466
1,526
9,707 24,338

Budget Variance
$
%
714
47.6%
925
80.4%
170
28.3%
101
22.4%
856
92.8%
1,075
34.7%
8,134
67.8%
700
100.0%
442
36.5%
454
38.5%
1,060
69.5%
14,631
60.1%

Note:
(1) "Other" includes remaining ICT projects and small capital projects/acquisitions.

30