Item No. 9c_supp . Meeting Date: August 13, 2019 Port of Seattle Q2 2019 Financial Performance Report Portwide Financial Highlights • Q2 YTD Actual: Operating Revenues $7.9M favorable to budget and $37.7M over 2018. The Non-Aviation Revenues $5.4M favorable to budget and $3.6M higher than 2018. Operating Expenses $16.0M below budget and $25.2M over 2018. Net Operating Income before Depreciation $23.9M favorable to budget and $12.5M over 2018. o Total capital spending was $287.5M for Q2 2019. o o o o • Year-End Forecast: o Operating Revenues $14.7M higher than budget. o Operating Expenses $6.8M lower than budget. o NOI before depreciation $21.6M higher than budget. Strong Q2 financial results 2 Aviation Division Financial Highlights Business Highlights Forecast Budget Variance Revenues Aeronautical Non-aeronautical Total 364,646 270,014 634,660 365,604 259,537 625,141 (958) 10,477 9,519 O&M expense 363,640 366,105 2,465 NOI 271,020 259,036 11,984 Figure in $000s Key Measures Non-Aero NOI CPE ($) Capital Spending 149,181 136,534 12,647 13.09 13.39 0.30 659,813 767,732 107,919 • • • Passenger growth 3.4% YTD NSAT Phase I complete (July) Meeting Safety goals: - - • Meeting customer service goals: - • Airfield composite safety score 20.5, above goal of 18 Individuals not going home = 19 vs. 2019 goal ≤ 52 ASQ: Exceeding 5-year average for 2 of 6 key measures (goal is 2/6) Completed sound insulation on 9 single family homes On track to meet financial targets and business goals 3 Maritime Division Financial Highlights Figure in $000s Revenues Fishing, Commercial, & Recreational Marinas Cruise Maritime Portfolio Mgmt. Grain / Other Total Forecast Budget Business Highlights Variance • YTD Q2 NOI $516K greater than 2018. - 22,642 22,406 10,328 4,254 59,629 22,742 22,406 10,328 4,254 59,729 (100) 0 0 0 (100) O&M Expense Maritime & EDD Maintenance Central Services and Other Total 17,802 11,980 18,699 48,481 19,600 11,980 19,242 50,822 (1,798) 0 (543) (2,341) NOI 11,149 8,908 2,241 Capital Spending 15,105 17,638 (2,533) • • • • • Revenue Growth 4%, Expense Growth 3% Completed RFQ process for new cruise terminal with 3 finalists. RFP issued to each in Q3. Successful first arrival of the Norwegian Joy and Royal Caribbean's Ovation of the Seas. Last season of the 680' Ocean Phoenix at T-91. She will travel to Texas to be recycled in July. Completed solar panel installation at Pier 69. Project came in under budget with 66% of costs recovered by the grant. Installed rain garden adjacent to the bike path at T-86 and new drainage system in Cruise passenger area at Pier 91. Exceeding budget and completing environmental projects 4 Economic Development Division Financial Highlights Business Highlights Figure in $000s Forecast Budget Variance Revenues 19,725 19,725 0 O&M Expense EDD & Maritime Maintenance Diversity in Contracting Workforce Development Tourism EDD Grants Central Services and Other Total 14,985 3,571 199 1,600 1,521 900 6,397 29,172 15,593 4,071 199 2,010 1,521 1,160 6,561 31,114 (608) (500) 0 (410) 0 (260) (164) (1,942) NOI (29,172) (31,114) 1,942 Capital Spending 4,980 5,713 (733) • • • • Authorization to start modernization at BHICC. Leased 98K of yard space at T-91. Strong response for T-106 RFP issued Q2. Published first Diversity In Contracting Annual Report. - • • • • 2018 WMBE results (11.8%) and 2019 goals (12.4% excl. construction) Port had 16.1% WMBE utilization after Q1. Ironworker's union program second cohort graduated 14, and 13 are now enrolled apprentices. RFP for Career Advancement Center at airport released. EDD Partnership Program YTD - Approximately $796K awarded to 25 cities in 2019. Maximizing Port's real estate potential and driving jobs & economic activity 5 Central Services Financial Highlights Figure in $000s Revenues Business Highlights Forecast Budget Variance 498 185 313 O&M Expense Core Central Support Services Police Capital Development Environment & Sustainability Total 81,157 29,578 16,227 12,101 139,064 82,710 30,778 18,628 13,224 145,339 1,552 1,200 2,401 1,123 6,276 Capital Spending 14,844 23,368 8,524 • Adopted the Duwamish Valley Community Equity Program and held the Duwamish Alive community restoration event at T117. • Hosted Career Awareness events in Mt. Rainier High School, Foster High School, and Highline High School. Completed Phase 2 of Port Website Redesign project. • • • • Provided Rapid Response trainings to airport/airline employees by the Port Police department. A new Project Delivery system for smaller and major construction projects is being developed to replace two legacy project management solutions and streamline key processes. Released the Comprehensive Annual Financial Report (CAFR) and received a clean independent audit opinion on financial statements. Strong performance results for Central Services 6 Q&A 7 Portwide Net Operating Income Performance Airport Non-Aero Revenues Aeronautical Revenues Non-Airport Revenues Total Operating Expenses NOI • Operating Revenues are $7.9M higher than budget due to higher revenues in: o ADR o Ground Transportation o Rental Cars o Clubs and Lounges o Conference & Event Centers o NWSA Distributable Revenue In 000s 900 800 700 600 500 400 • Total Operating expenses are $16.0M below budget due to: o Staffing vacancies o Project delays 300 200 100 2015 2016 2017 2018 2019 Fcst 2019 Bud Steady revenue growth since 2015 8 Non-Airport Net Operating Income Performance Other Operating Revenues NWSA Distributable Revenues Total Operating Expenses NOI In 000s 160 • Non-Airport Operating Revenue exceeded budget by $5.4M due to: o Higher revenue from Conference & Event Centers. o Higher NWSA Distributable Revenues • Expenses are $4.6M lower than budget due to: o Staffing vacancies o Project delays o Other spending delays. 140 120 100 80 60 40 20 - 2015 2016 2017 2018 2019 Fcst 2019 Bud NOI forecast to exceed budget 9 Aviation Division Q2 2019 Financial Performance Report Aviation Business Events • PASSENGERS: o Passengers up 3.4% through June o International passengers up 3.0% o Tracking below adjusted 2019 growth assumption of 4% (budget assumed 3%) • NEW INTERNATIONAL SERVICES STARTED YTD: o Cathay to Hong Kong o Japan Airlines to Tokyo-Narita o Delta to Osaka • NEW FACILITIES: o Opened Alaska Lounge on NSAT, Phase I complete (July) Growth continues 11 Business Highlights: 2019 Goals SAFETY: • Airfield composite safety score of 20.5 exceeds annual target of 18 • Major ground incidents YTD = 32 vs. annual goal ≤ 67 • Individual not going home: Q2 YTD 19 vs. 2019 goal < 52 (on track) • Developed policy for standardized personal protective equipment required in Bagwell SECURITY: • Phase II Employee Screening authorized in May • Implemented new Credentialing Office processes to reduce wait times to receive badge Airfield composite safety score exceeding goal 12 Business Highlights: 2019 Goals EMPLOYEE ENGAGEMENT: • Goal is to increase employee engagement in the Aviation Division as evidenced by a 3% increase over the 2018 survey results by Q4 2019. • Create department specific survey action plans by end of Q2: in progress INNOVATIONS & EFFICIENCES: • Preparation for second Shark Tank innovations forum (held July 30) • Implement two efficiencies or innovations in each department - in process ASSET MANAGEMENT: • Asset condition assessment inventory - in process On track 13 Business Highlights: 2019 Goals SOCIAL RESPONSIBILITY: • Airport Concessions Disadvantaged Business Enterprise (ACDBE) share of sales = 22.5% vs. goal of 22% • Disadvantaged Business Enterprise (DBE) share of FAA grant contract spending of 13.9% vs. goal of 8% • Women and Minority Business Enterprise share of spending on personal services contracts = 14.2% vs. goal of 12% CUSTOMER SERVICE: • Through Q2 exceeding five-year average for 2 of 6 key measures (goal is 2) • Q2 increase for washroom cleanliness and internet access/wi-fi • 76% of AV Division staff completed WE ARE customer service training On track 14 Business Highlights: 2019 Goals ENVIRONMENT AND SUSTAINABILITY: • Completed A&E/Construction contract for condo sound insulation • Reviewing proposals for purchase of renewable natural gas • Completed sound insulation for 9 single family homes FINANCIAL PERFORMANCE: • Forecasting to achieve both 2019 goals: o Non-aeronautical NOI of $149.2M vs. budget of $136.6M o Airline costs (CPE) of $13.09 vs. budget of $13.39 • Commission authorized Concessions Lease Group 5 in June On Track 15 Business Highlights: 2019 Goals CAPITAL PROJECT, PLANNING & SAMP: • SAMP: o Submitted revised NEPA scope of work and forecast report o Commission authorized $10 million for project planning and preliminary design for SAMP projects (July) • Briefed Commission on main terminal optimization plan (MTOP) in July • Completed phase 1 of North Satellite and opening of Alaska Lounge (July) Progress on major project milestones 16 Airport Activity Year-to-date Q2: Passengers +3.4% Landed weight +3.0% Cargo metric tons +1.2% Total passenger growth anticipated to be 4% for year 17 Airline Cost Management (CPE) 2019 Budget: • Adjusted for SLOA IV 20% revenue sharing 15,682 2019 CPE Forecast: • Higher than 2018 due to higher revenue requirements in 2019. Currently below Budget of 13.39 due to increase in forecasted non-airline revenues 2019 Revenue Sharing down from 2018 based on change from 40% to 20% sharing 18 Non-Aeronautical Performance 10.22 YTD 2019 vs. 2018: • Revenues 4.8% Increase • Expenses 8.3% Increase • NOI 2.0% Increase Revenue growth: • Public parking • ADR • GT • Clubs and Lounges ADR, parking and TNCs driving positive revenue variance in 2019 forecast 19 Total Operating Expense Performance 14.42 363,640 366,105 Q2 YTD: • $11.4M favorable, 6.1% 2019 Forecast vs Budget : • $2.5M favorable, 0.7% 2019 Forecast under-run driven primarily by: • Cost allocations to Aviation from other divisions due to delayed project and program spending Anticipate cost savings due to delayed project and program spending 20 Capital Spending 2019 Forecast: • IAF = $339M • NSAT = $133M • Other = $188M Major 2019 Variances: • IAF = $38M • NSAT= $8M • Service Tunnel Renewal = $4M • SSAT Renov. Project = $3.5M • ARC Flash Mitigation = $3.4M • Fire Station Westside= $3M • Automated Security Lane = $1.9M • Other - $46M 2019 spending variances primarily due to delayed spending, not project savings 21 FTE Staffing Status June YTD: Average Total FTE Vacancy Rate = 8.82% Existing FTE Vacancy Rate = 6.96% New 2019 FTE Vacancy Rate = 44.82% Approved Budget = 1105.78 FTEs New FTEs = 54.37 (included in the Total) Vacancy Rate for existing FTEs, June YTD = 6.96% 22 Maritime Division Q2 2019 Financial Performance Report Business Highlights • Cruise - Successful first arrival of the Norwegian Joy and Royal Caribbean's Ovation of the Seas. Eighty percent of business volume now under contracted commitment. Received feedback on RFQ and selected three entities to participate in the RFP process. • Elliott Bay Fishing & Commercial Operations - The 680' Ocean Phoenix fished her last season of Pollock. She has been a 30+year tenant of the port, employing 225 crew, and bringing 4,200 tons of product annually to Pier 90. The 367' M/V Excellence has been overhauled to help absorb the processing capacity of the Ocean Phoenix. • Recreational Boating -Bids closed for Shilshole Bay Marina's customer service facility buildings. Building on 4th year in a row with zero injuries. • Seaport Environmental - Completed installation of 390 solar panels, each with 300 watts at P69. Project came in under budget with 66% of costs recovered by the grant. • Stormwater Utility - Completed installation of a rain garden adjacent to the bike path at Terminal 86 and new drainage system in Cruise passenger area at Pier 91. Managing growth and environmental stewardship 24 Maritime Financial Highlights Maritime - 2019 NOI is $3,435K favorable to budget and $516K higher than 2018 • YTD 2019 Revenue unfavorable to budget by $550K due to cruise schedule and late berthing agreement. YTD 2019 Revenue $1,110K or 4% higher than 2018 driven by Salmon Bay Marina acquisition, Recreational Boating & Cruise rate increases offset by reduction in Grain volumes and leases from WSDOT. • Expenses $3,985K favorable to budget driven by Cruise consulting and marketing, Maintenance timing, and unfilled positions. Expense are up $594K or 3% Y/Y. • 11% of Capital budget was spent in the 1st half, with annual forecast at 86% of budget. • Stormwater Utility is tracking to budget. $ in 000's Total Revenues 2017 YTD 2018 YTD Actual Actual 24,525 26,257 2019 Year-to-Date Actual Budget 27,368 27,918 Fav (UnFav) Budget Variance $ % (550) -2% Incr (Decr) Change from 2018 $ % 1,110 4% Total Operating Expenses 19,690 21,716 22,310 26,295 3,985 15% 594 3% Net Operating Income 4,835 4,541 5,058 1,623 3,435 212% 516 11% Depreciation 8,442 8,823 8,911 8,804 (107) -1% 88 1% Net Income (3,606) (4,281) (3,853) (7,181) 3,328 46% 429 10% Revenue growth continues to outpace spending growth 25 Maritime Division Financial Trends In 000s 2019 Forecast Drivers: 80,000 70,000 60,000 50,000 Depreciation 40,000 Allocation 30,000 Operating Expense Revenue 20,000 10,000 2014 2015 2016 2017 2018 2019 Forecast 2019 Budget Revenue 1. Grain Terminal uncertainty. 2. Cruise occupancy and unplanned visits. 3. Utilization of Elliott Bay moorage and dockage facilities. Expense 1. Non-capitalizable consulting and outside services related to new cruise terminal/berth. 2. Port Valet service costs. 3. Tenant improvement costs. 4. Central Services allocation. 5. Maintenance spend. Operateing profit forecasted over $2M higher than budget 26 Cruise Financial Trends In 000s 2019 Forecast Drivers: 25,000 20,000 Depreciation 15,000 Revenue 1. Will occupancy continue to exceed 104% with bigger ships in Q3. 2. Unplanned port of call visits. Allocation Operating Expense 10,000 Revenue 5,000 2016 2017 2018 Actual 2019 Forecast • Individual business lines forecast to budget as of Q2 2019. 2019 Budget Expense 1. Non-capitalizable consulting and outside services related to new cruise terminal/berth. 2. Port Valet service costs. 3. Maintenance spend. 4. Change of allocation methodology for shared properties. Agreements and schedule changes driving revenue from Q2 to Q3 27 Recreational Boating Financial Trends In 000s 2019 Forecast Drivers: 16,000 14,000 12,000 10,000 Depreciation 8,000 Allocation 6,000 Operating Expense Revenue 4,000 Revenue 1. Utilization of guest moorage. 2. Occupancy rates. Expense 1. Maintenance costs. 2. Open staffing positions. 2,000 2016 2017 2018 2019 Forecast 2019 Budget • Individual business lines forecast to budget as of Q2 2019. • Includes Shilshole Bay Marina, Bell Harbor Marina, and Harbor Island Marina. Tracking to budget 28 Ship Canal Fishing & Ops Trends In 000s 2019 Forecast Drivers: 10,000 9,000 8,000 7,000 6,000 Depreciation 5,000 Allocation 4,000 Operating Expense Revenue 3,000 2,000 1,000 2016 2017 2018 2019 Forecast 2019 Budget Revenue 1. Backfill with recreational vessels while Fishermen's Terminal fishing vessels at sea. 2. Events such as the Seattle Boat Show. Expense 1. Maintenance, both planned and unplanned. 2. Remediation tied to Fishermen's Terminal redevelopment. 3. Unfilled positions. • Individual business lines forecast to budget as of Q2 2019. • Includes Fishermen's Terminal, Maritime Industrial Center, and Salmon Bay Marina. Integrating Salmon Bay Marina 29 Elliott Bay Fishing & Commercial Ops Trends 2019 Forecast Drivers: In 000s 12,000 10,000 8,000 Depreciation Allocation 6,000 Operating Expense 4,000 Revenue 2,000 Revenue 1. Long term occupancy by large fishing vessels at T91. 2. Event moorage. 3. Utilization of smaller moorage/dockage on the south end and up the Duwamish. Expense 1. Maintenance, both planned and unplanned. 2. Security and allocations. - 2016 2017 2018 2019 Forecast 2019 Budget • Individual business lines forecast to budget as of Q2 2019. • Includes Terminal 91 (waterside non-Cruise), Terminal 46 Docks, Kellogg Island, Terminal 25, Terminal 18 Dolphins, Pier 69 Vessels, Pier 28 Docks, Pier 34 Dolphins, Pier 2 Docks, and Terminal 108 Moorage. Rate increases offset by less utilization than expected 30 Maritime Portfolio Management Trends 2019 Forecast Drivers: In 000s 18,000 16,000 14,000 12,000 Depreciation 10,000 Allocation 8,000 Operating Expense 6,000 Revenue 4,000 2,000 - 2016 2017 2018 2019 Forecast Revenue 1. Ability to backfill leases at T106. 2. Filling the C3 building at the Maritime Industrial Center. Expense 1. Non-capitalizable tenant improvements. 2. Maintenance spend. 3. Change of allocation methodology for shared properties. 2019 Budget • Individual business lines forecast to budget as of Q2 2019. • Includes uplands of Shilshole Bay Marina, Terminal 91 (Industrial), Fishermen's Terminal, Maritime Industrial Center, Salmon Bay Marina, T-115, T-108, and T-106. Leasing closer to market and managing costs 31 Grain Terminal Goal: Net Income Maximized In 000s 6,000 2019 Forecast Drivers: 5,000 4,000 Depreciation Allocation 3,000 Operating Expense 2,000 Revenue Revenue 1. Impact of tariffs. 2. Weather. Expense 1. Maintenance and allocations. 1,000 2016 2017 2018 2019 Forecast 2019 Budget • Individual business lines forecast to budget as of Q2 2019. Navigating volatility of tariffs and soybean exports 32 Northwest Seaport Alliance Summary $ in 000's Revenue Operating expense Operating Income Interest Income Market Value Adjustment Net Interest Income Non Operating Income (Expense) Grant Income Net Income Cargo TEUs Cargo Volume (Metric Tons) 2018 YTD Actual 92,371 41,151 51,220 2019 Year-to-Date Actual Budget 98,997 97,497 51,212 54,620 47,785 42,877 Fav (UnFav) Budget Variance $ % 1,500 2% 3,408 6% 4,908 11% Incr (Decr) Change from 2018 $ % 6,626 7% 10,061 24% (3,435) -7% 567 (179) 388 856 330 1,186 700 0 700 (156) (330) 486 -22% NA 69% 289 509 798 51% -284% 206% 31 50 51,689 (322) 1,246 49,895 (1,026) 1,695 44,246 (704) 449 5,649 69% 26% 13% (353) 1,196 (1,794) -1139% 2392% -3% 135,543 1,165,105 8% 8% 1,779,706 1,915,249 13,963,966 15,129,071 Note: Results may differ slightly from NWSA site due to rounding differences Revenue - Non-container business $3.1M favorable to budget from higher than expected military and auto volumes. Expenses - Growth from 2018 driven by one-time crane removal costs at T18 & T46 along with volume related costs. NWSA TEU Data YTD Volumes up, but Tariffs are the wildcard. As trade shifts from China to SE Asia, there is risk volumes could shift to East Coast ports due to the shorter transit. Exports: • YTD May 2018, China was #1 export partner, YTD May 2019, China is #3 with export TEU volumes down 34%. Biggest declines in hay/forage products, waste paper and whey/milk products. • India exports are also impacted by trade war, and exports there are also down 34%. Their ranking went from #5 to #6. Biggest declines in apples (5,792 TEUs!) and waste paper. Imports • Imports from China are down 0.2% YTD, -718 TEUs. • Imports from other countries are up (Japan +12%, Taiwan +27%, Vietnam +27%, Thailand +55% (growth on smaller volumes) Favorable Net Income to budget, but tariffs impacting Y/Y growth 33 Economic Development Division Q2 2019 Financial Performance Report Economic Development Division Business Highlights 35 Real Estate Development • Issued RFP to redevelop Terminal 106 and received strong response . • Received Commission approval to surplus and sell small property on Harbor Avenue. • Received Commission authorization to start design work on Historic Ship Supply building at Fishermen's Terminal. • Finalized appraisal of WA Dept. of Transportation property adjacent to the Port's Des Moines Creek West property. • This property enhances development potential of our property. Staff is starting negotiations with WSDOT now that we have agreed on site's value. Launching development projects 36 Portfolio Management • Received Commission authorization to start construction/modernization of Bell Harbor Conference Center • Secured a maritime-related tenant to lease the office building at Salmon Bay Marina, resulting in 100% occupancy on the uplands. • Leased an additional 98,400 square feet of yard space at Terminal 91. • Brought in Origin Seafoods to Terminal 102. They will sell seafood online, then portion, fulfill, and ship orders at the terminal. Maintaining strong occupancy 37 Diversity in Contracting • • • • • Published the first Diversity in Contracting Annual Report. It highlighted the Port's 2018 WMBE results (11.8%) and 2019 WMBE utilization goals (12.4%*) Posted first quarterly Diversity in Contracting article and blogs on the Port of Seattle's website and external news/media outlets. Port had 16.1% WMBE utilization after Q1 2019. Staff is now tracking utilization quarterly across all divisions/departments Held a PortGen Maritime event with 70 attendees learning about the upcoming Maritime Projects, the Maritime's 2019 WMBE aspirational goal, and the Port's new Diversity in Contracting Program. Presented the Port's aspirational goals and new affirmative efforts required by those Primes interested in doing business with the Port to the Construction Management Associations of America Implementing the Port's new Diversity in Contracting Program *not including construction 38 Tourism • Thirty organizations received 2019 tourism grants from the Port of Seattle. New recipients include: Goldendale Chamber of Commerce promoting the Goldendale Observatory, the Suquamish Museum targeting travelers in Seattle hotels and Methow Trails will improve their website promoting outdoor winter activities. • Twenty four recipients were awarded Airport Spotlight advertising grants. Current recipients include Lewis County, Suquamish Tribal Museum, Sequim Lavender Farmers, Long Beach Visitors Bureau and Methow Trails. • Selected Core Communications to provide tourism marketing programs on behalf of the Port of Seattle's international tourism efforts. • Participated in Aer Lingus Tour America travel show, ITB Berlin, Visit Seattle's Korea Sales Mission and Active America China travel trade show to educate travel trade, tour operators and travel media about cruising from Seattle to Alaska and promote SeaTac International Airport as the gateway for international arriving visitors. Supporting Tourism Marketing programs and promoting gateway facilities 39 Workforce Development • 14 aspiring ironworkers graduated from the union's second pre-apprenticeship cohort. 13 are now enrolled apprentices. The group has earned $140, 937 ($24+/hour) so far. • ANEW also hosted a graduation event for their second cohort of construction preapprentices. They had 14 people complete their construction program. Starting wages for graduates from this program range from $22-27/hour • Released RFP to operate Career Advancement Center at Seatac International Airport. Bids are due in July and we expect to award contracts and start services in Q4 2019. • Organized and held awareness event focused on recreational boating and maritime careers with youth from Upward Bound. Along with learning about maritime careers, over 50 diverse youth experienced sailing on the Adventuress Continued efforts on Workforce Development Initiatives 40 EDD Partnership Program • YTD - Approximately $795,900 has been awarded to 25 cities in 2019 • King County cities have committed to $584,000 in matching funds and in-kind resources • Hosting 4 economic development partnership meetings with cities on topics like: - Roundtable discussion on small business development resources - Greater Seattle Partners update and discussion about strategic plan - Presentation by Seattle Metro. Chamber on new Business Retention/Expansion program Continued Economic Development Partnership Program 41 Economic Development Financial Highlights 2019 Q2 NOI $3,132K favorable to budget and $668K greater than 2018 • Revenue favorable to budget by $367K and $619K greater than 2018 driven by favorable volumes at the Conference and Event Centers. Annual revenue forecast at budget and 5% below 2018 from anticipated closures related to Conference and Event Center modernization project. • Expenses favorable to budget by $2,716K driven by timing of Economic Development grant matching funds, timing initiative programs, favorable P66 allocation methodology change, and underspend in central services. Expenses are flat on a Y/Y basis. Annual expenses forecasted to 6% under budget and 6% higher than 2018 due to primarily to higher spending in initiative programs. • 25 % of Capital budget was spent in the 1st half, with annual forecast at 87% of budget. $ in 000's Total Revenues 2017 YTD 2018 YTD Actual Actual 7,727 9,765 2019 Year-to-Date Actual Budget 10,384 10,017 Fav (UnFav) Budget Variance $ % 367 4% Total Operating Expenses 12,067 12,880 12,972 15,688 2,716 17% Net Operating Income (4,340) (3,115) (2,588) (5,670) 3,082 Depreciation 1,860 1,999 1,859 1,908 50 Net Income (6,201) (5,114) (4,447) (7,579) 3,132 Incr (Decr) Change from 2018 $ % 619 6% 92 1% 54% 527 17% 3% (141) -7% 41% 668 13% YTD Revenue exceeding plan, expenses below budget 42 Economic Development Division Financial Trends 2019 Forecast Drivers: In 000s 40,000 35,000 30,000 Depreciation 25,000 Allocation 20,000 *Program Expense 15,000 **Operating Expense 10,000 Revenue 5,000 (5,000) Revenue 1. Impact of Conference and Event Center Modernization. 2. Lessee turnover and ability to expand unplanned space rental. 2014 2015 2016 2017 2018 2019 Forecast 2019 Budget Expense 1. Program spend / execution. 2. Tenant Improvements. 3. Maintenance spend. 4. RE development costs. * Includes Small Business, Tourism, Workforce Development, Real Estate Development, and Economic Development Grants. ** Includes Portfolio Management, Division Management, Facilities, and Other. Forecasting $1,147K favorable to budget 43 Portfolio Management Trends 2019 Forecast Drivers: in 000s 35,000 30,000 25,000 Depreciation 20,000 Allocation 15,000 Operating Expense Revenue 10,000 5,000 2016 2017 2018 2019 Forecast 2019 Budget Revenue 1. Impact of Conference and Event Center Modernization. 2. Lessee turnover and ability to expand unplanned space rental. Expense 1. Tenant improvements. 2. Maintenance spend. 3. Costs associated with transitioning the NWSA leasing software. • Individual business lines forecast to budget as of Q2 2019. • Includes non-alliance & upland real-estate at Tsubota, T-91 (General), T-86, P-69, Bell Street Garage, Smith Cove Conference Center, Bell Harbor Conference Center, World Trade Center, Foreign Trade Zone, Pier 2, T-34, and T-102. Increasing margins 44 Central Services Q2 2019 Financial Performance Report Central Services Business Highlights • The Port adopted the Duwamish Valley Community Equity Program and held the Duwamish Alive community restoration event at T117. • The Port of Seattle released the Comprehensive Annual Financial Report (CAFR) and received a clean independent Certified Public Accountant (CPA) audit opinion on financial statements. • Completed Phase 2 of Port Website Redesign project which included adding the Maritime Moorage Application and filtered lists for Commission items. • Replaced the Aviation Stormwater GIS which will allow for upstream or downstream stormwater contamination tracking along a properly constructed pipe network. • A new Project Delivery system for smaller and major construction projects is being developed to replace two legacy project management solutions and streamline key processes. • Port of Seattle Police department instructors provided Rapid Response trainings to airport/airline employees. • Hosted Career Awareness events: ICT with Mt. Rainier High School, Construction & Design with Foster High School, Young Entrepreneurs with Highline High School. Achieved a number of accomplishments in Q2. 46 Central Services Financial Highlights • Q2 YTD Actual: o Operating expenses are $7.0M favorable to budget mainly due to staff vacancies and project delays. o Operating expenses are $3.7M higher than 2018 mainly due to higher Payroll costs and more Outside Services. • Year-End Forecast: o Operating expenses forecast are $6.3M favorable to budget due to savings in Payroll and Outside Services. o Operating expenses forecast are $17.3M higher than 2018 due to higher payroll and more project-related expenses. Forecasting a $6.3M favorable budget variance for the year. 47 Central Services Financial Trends Core Central Support Services In 000s Police Capital Development Environment & Sustainability 160 o 140 120 o 100 80 60 40 20 Operating expenses forecast are $17.3M higher than 2018 due to higher payroll and more project-related expenses. Major changes from 2018 are as follows : o Core Central Support Services: $7.6M o Police: $5.7M o Environment & Sustainability: $3.3M o Capital Development: $726K 2015 2016 2017 2018 2019 Fcst 2019 Bud Expenses are $7.0M favorable to the budget YTD 48 Appendix Q2 2019 Financial Performance Report Portwide Financial Summary $ in 000's Aeronautical Revenues Airport Non-Aero Revenues Non-Airport Revenues Total Operating Revenues Total Operating Expenses NOI before Depreciation Depreciation NOI after Depreciation 2017 YTD 2018 YTD Actual Actual 127,780 147,570 112,761 118,864 61,548 64,054 302,088 330,489 174,104 191,577 127,984 138,912 81,860 81,949 46,124 56,963 2019 Year-to-Date Actual Budget 175,927 177,039 124,604 121,045 67,632 62,229 368,164 360,313 216,758 232,756 151,407 127,557 82,481 81,933 68,926 45,624 Fav (UnFav) Incr (Decr) Budget Variance Change from 2018 $ % $ % (1,112) -0.6% 28,357 19.2% 3,560 2.9% 5,740 4.8% 5,403 8.7% 3,578 5.6% 7,851 2.2% 37,676 11.4% 15,999 6.9% 25,181 13.1% 23,850 18.7% 12,495 9.0% (548) -0.7% 532 0.6% 23,302 51.1% 11,963 21.0% Strong YTD financial performance 50 Non-Airport Financial Summary $ in 000's NWSA Distributable Revenue Maritime Revenues EDD Revenues SWU & Other Total Operating Revenues Total Operating Expenses NOI before Depreciation Depreciation NOI after Depreciation 2017 YTD 2018 YTD Actual Actual 27,283 25,844 24,525 26,257 7,727 9,765 2,012 2,187 61,548 64,054 33,783 38,141 27,765 25,913 20,272 19,988 7,493 5,925 Fav (UnFav) Incr (Decr) 2019 Year-to-Date Budget Variance Change from 2018 Actual Budget $ % $ % 24,941 21,955 2,986 13.6% (903) -3.5% 27,368 27,918 (550) -2.0% 1,110 4.2% 10,384 10,017 367 3.7% 619 6.3% 4,939 2,338 2,601 111.2% 2,752 125.8% 67,632 62,229 5,403 8.7% 3,578 5.6% 40,522 45,171 4,649 10.3% 2,381 6.2% 27,110 17,058 10,051 58.9% 1,197 4.6% 19,623 18,909 (715) -3.8% (365) -1.8% 7,487 (1,850) 9,337 -504.7% 1,562 26.4% Non-Airport NOI outperformed budget by $10.1M in Q2 51 Portwide Operating Revenues Summary $ in 000's Aeronautical Revenues 2017 YTD 2018 YTD Actual Actual 127,780 147,570 - 2019 Year-to-Date Actual Budget 175,927 177,039 - Fav (UnFav) Budget Variance $ % (1,112) -0.6% - Incr (Decr) Change from 2018 $ % 28,357 19.2% Public Parking Rental Cars - Operations Rental Cars - Operating CFC 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) 36,958 14,514 3,284 28,420 7,633 4,674 10,708 3,423 2,173 6,325 5,438 4,440 3,042 5,267 4,161 3,545 27,283 3,021 174,309 39,402 14,922 5,497 30,179 8,885 5,191 7,593 3,438 2,773 6,806 6,125 4,565 3,123 5,628 4,557 5,188 25,844 3,201 182,918 40,401 15,560 4,505 32,689 9,979 5,193 7,072 3,665 4,456 8,473 6,228 5,071 2,567 5,019 4,406 5,963 24,941 6,049 192,237 40,969 15,123 4,657 30,754 9,413 4,876 6,703 3,932 3,626 9,114 6,358 4,972 2,423 5,052 4,399 5,604 21,955 3,346 183,274 (568) 437 (153) 1,936 567 317 369 (267) 830 (641) (131) 99 144 (33) 7 360 2,986 2,703 8,963 -1.4% 2.9% -3.3% 6.3% 6.0% 6.5% 5.5% -6.8% 22.9% -7.0% -2.1% 2.0% 5.9% -0.6% 0.2% 6.4% 13.6% 80.8% 4.9% 999 637 (993) 2,510 1,094 2 (521) 227 1,683 1,668 102 506 (556) (609) (151) 775 (903) 2,848 9,318 2.5% 4.3% -18.1% 8.3% 12.3% 0.0% -6.9% 6.6% 60.7% 24.5% 1.7% 11.1% -17.8% -10.8% -3.3% 14.9% -3.5% 89.0% 5.1% TOTAL 302,088 330,489 368,164 360,313 7,851 2.2% 37,676 11.4% Operating revenues exceeded budget by $7.9M 52 Portwide Operating Expense Summary 2017 YTD 2018 YTD $ in 000's Actual Actual Salaries & Benefits 56,338 62,772 Wages & Benefits 52,948 60,075 Payroll to Capital Projects 12,873 13,602 Equipment Expense 4,311 3,866 Supplies & Stock 4,616 4,633 Outside Services 32,969 38,460 Utilities 11,911 13,453 Travel & Other Employee Expenses 2,338 2,303 Promotional Expenses 460 964 Other Expenses 16,865 15,550 Charges to Capital Projects/Overhead Alloc (21,524) (24,100) TOTAL 174,104 191,577 Fav (UnFav) Incr (Decr) Budget Variance Change from 2018 2019 Year-to-Date Actual Budget $ % $ % 66,334 69,636 3,302 4.7% 3,562 5.7% 64,035 63,866 (169) -0.3% 3,960 6.6% 13,523 16,640 3,117 18.7% (79) -0.6% 4,484 4,136 (347) -8.4% 618 16.0% 5,290 4,452 (838) -18.8% 657 14.2% 43,951 55,365 11,415 20.6% 5,491 14.3% 13,103 14,963 1,860 12.4% (350) -2.6% 2,487 3,909 1,422 36.4% 184 8.0% 890 1,360 470 34.6% (74) -7.7% 27,560 27,939 379 1.4% 12,010 77.2% (24,898) (29,511) (4,613) 15.6% (798) 3.3% 216,758 232,756 15,999 6.9% 25,181 13.1% • Payroll expenses were $3.3M below budget due to staff vacancies. • Outside Services were $11.4M favorable to budget due to timing of spending, project delays, and some actual savings. • Supplies & Stock were $838K over budget mainly due to more De-icing Materials for snow removal. Operating expenses were $16.0M below budget 53 Portwide Financial Summary - YE Forecast $ in 000's Aeronautical Revenues Airport Non-Aero Revenues Non-Airport Revenues Total Operating Revenues Total Operating Expenses NOI before Depreciation Depreciation NOI after Depreciation 2017 Actual 264,114 236,803 131,114 632,031 372,982 259,049 165,021 94,028 2018 Actual 291,268 257,707 140,415 689,390 397,638 291,752 164,362 127,390 2019 Forecast 364,646 270,014 133,328 767,988 448,162 319,826 168,676 151,150 2019 Budget 365,604 259,537 128,115 753,255 454,986 298,269 168,676 129,593 Fav (UnFav) Incr (Decr) Budget Variance Change from 2018 $ % $ % (958) -0.3% 73,378 25.2% 10,477 4.0% 12,307 4.8% 5,213 4.1% (7,087) -5.0% 14,733 2.0% 78,598 11.4% 6,824 1.5% 50,524 12.7% 21,557 7.2% 28,074 9.6% 0.0% 4,314 2.6% 21,557 16.6% 23,760 18.7% Expect strong financial performance results for 2019 54 Capital Spending by Division $ in 000's 2019 YTD Actual 2019 Forecast 2019 Budget Aviation Maritime 280,124 1,879 659,813 15,105 767,732 17,638 Economic Development 1,444 5,040 5,713 673 11.8% Central Services & Other (note 1) 4,007 16,581 25,203 8,622 34.2% 287,454 696,539 816,286 119,747 14.7% TOTAL Budget Variance $ % 107,919 14.1% 2,533 14.4% Note: (1) "Other" includes Street Vacation projects and Storm Water Utility Small Capital projects. Capital spending was $287.5M for Q2 2019 55 Aviation Division Appendix Passengers (Growth Comparison) Passenger updated growth forecast is 4% vs. initial 3% 57 Airport Activity YTD 2017 YTD 2018 YTD 2019 % Change from 2018 Total Passengers (000's) Domestic International Total 19,666 2,484 22,150 20,897 2,611 23,508 21,616 2,689 24,304 3.4% 3.0% 3.4% Operations 199,610 210,722 214,749 1.9% 1,025 12,416 13,441 1,147 13,328 14,476 1,165 13,738 14,903 1.5% 3.1% 3.0% 110,915 57,633 28,882 197,430 114,627 64,749 28,326 207,702 118,401 63,388 28,314 210,103 3.3% -2.1% 0.0% 1.2% Landed Weight (In Millions of lbs.) Cargo All other Total Cargo - Metric Tons Domestic freight International freight Mail Total Passenger Activity Change 2019 Market Airline 2018 v. 2019 Share Alaska 3.6% 48.5% Delta 11.5% 24.2% United -9.0% 5.5% Southwest -8.3% 5.5% American 3.2% 5.1% Q2 2019: Passengers • YTD passenger growth of 3.4% tracking ahead of 2019 budget based on 3.0% growth, but just short of updated forecast based on 4% growth. 2019 YTD total passenger growth of 3.4% 58 Aviation Financial Summary 2018 Actual 2019 Forecast 2019 Budget Fav (UnFav) Budget Variance $ % Incr (Decr) Change from 2018 $ % $ in 000's 2017 Actual Operating Revenues: Aeronautical Revenues 264,114 291,268 364,646 365,604 (957) -0.3% 73,378 25.2% Non-Aeronautical Revenues 236,803 257,707 270,014 259,537 10,477 4.0% 12,307 4.8% Total Operating Revenues 500,916 548,975 634,660 625,140 9,520 1.5% 85,685 15.6% Total Operating Expense 299,114 318,849 363,640 366,105 2,465 0.7% 44,791 14.0% Net Operating Income 201,802 230,126 271,020 259,036 11,985 4.6% 40,894 17.8% Capital Expenditures 293,785 579,135 659,813 767,732 107,919 14.1% 80,678 13.9% (1) Annual non-cash amortization of $17.9M lease incentive related to the 5 year SLOA III agreement which ended in 2017. 2019 Forecasted NOI $12M favorable to budget 59 Key Performance Measures 2017 Actual 2018 Actual 2019 Forecast 2019 Budget Fav (UnFav) Budget Vairance $ % Key Performance Metrics Cost per Enplanement (CPE) Non-Aeronautical NOI (in 000's) 10.52 133,101 10.79 149,959 13.09 149,181 13.39 136,534 0.29 12,648 2.2% 9.3% 2.31 (778) 21.4% -0.5% 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) 12.77 12.81 10.11 10.35 114 133 1.57 1.66 379 235 (42,311) (36,863) 14.05 10.43 121 1.67 298 (17,192) 14.42 10.22 123 1.65 278 (15,682) 0.37 0.21 2 0.03 20 (1,510) 2.6% 2.0% 1.6% 1.6% 7.1% -9.6% 1.24 0.08 (12) 0.02 63 19,672 9.7% 0.7% -8.9% 1.0% 26.6% 53.4% Activity (in 000's) Enplanements 23,416 25,890 25,394 496 2.0% 996 4.0% 24,894 Incr (Decr) Change from 2018 $ % CPE 2019 Forecast vs 2018 Actuals: • CPE increase - Impacted by SLOA IV reduction in Revenue Sharing to 20% in 2019 from 40% in 2018 Non-Aero NOI 2019 Forecast vs 2019 Budget: • Non-Aero NOI growth due to higher forecasted Non-Aero Revenue Other Performance Metrics: • Aero Revenue Sharing - Forecast reflects 20% Revenue Sharing per SLOA IV. Positive: Non-aero NOI above budget. CPE below budget. 60 Aviation Expense YTD Summary Incr (Decr) Change from 2018 $ % 2019 YTD Actuals to YTD 2019 Budget 0.6% 16.9% 13.1% -22.7% 3.5% 5,249 3,441 (300) 4,452 12,842 8.3% 16.4% -3.1% 45.5% 12.4% 1,661 (83) 1,578 11.7% N/A 11.1% 8,060 75 8,135 179.8% 937.6% 181.1% 134,737 5,739 4.3% 20,977 11,117 6,860 27,221 2,039 47,237 12,589 8,265 29,416 2,578 52,848 1,472 1,405 2,195 540 5,612 11.7% 17.0% 7.5% 20.9% 10.6% 458 788 507 69 1,823 13.0% 1.9% 3.5% 4.0% Delayed Spending in Airport Expenses $5.7M Favorable: • Primarily driven by savings from Outside Services due to delayed spending in Aviation Planning, Capital Development and Program Management, and Facilities and Infrastructure, offset by snow related costs early in the year Delayed Spending in Other Divisions $5.6M Favorable: • Cost savings in allocations from other divisions due to planning project and program delays 176,235 187,585 11,350 6.1% 22,799 14.9% 2018 YTD Actual 55,798 17,203 8,389 13,680 95,070 63,139 21,015 9,589 9,788 103,530 68,388 24,456 9,288 14,240 116,372 68,833 29,412 10,683 11,605 120,533 445 4,956 1,395 (2,636) 4,161 Environmental Remediation Liability Capital to Expense Total Exceptions 2,714 24 2,738 4,484 8 4,492 12,543 83 12,627 14,204 14,204 Total Airport Expenses 97,808 108,021 128,998 Police Costs Capital Development Other Central Services Maritime/Economic Development Total Charges from Other Divisions 9,146 6,486 25,000 1,879 42,512 10,659 6,072 26,714 1,970 45,414 Total Operating Expense 140,320 153,436 $ in 000's Operating Expenses: Payroll Outside Services Utilities Other Airport Expenses Total Airport Direct Charges 2019 Year-to-Date Actual Budget Fav (UnFav) Budget Variance $ % 2017 YTD Actual 19.4% 4.3% Expenses - $11.4M Favorable, driven by: YTD Cost Savings due to delayed spending on projects 61 Aviation Expense YE Summary Fav (UnFav) Budget Variance $ % Incr (Decr) Change from 2018 $ % $ in 000's Operating Expenses: Payroll Outside Services Utilities Other Airport Expenses Total Airport Direct Charges 2017 Actual 2018 Actual 2019 Forecast 2019 Budget 114,463 41,055 16,374 28,292 200,184 125,341 47,638 18,237 25,125 216,341 141,341 61,428 18,949 25,710 247,429 141,316 60,950 20,235 22,692 245,192 (25) (479) 1,285 (3,018) (2,237) 0.0% -0.8% 6.4% -13.3% -0.9% 15,999 13,791 712 586 31,088 12.8% 28.9% 3.9% 2.3% 14.4% Environmental Remediation Liability Capital to Expense Total Exceptions 8,812 2,856 11,668 6,233 6,891 13,124 14,865 14,865 14,259 14,259 (605) (605) -4.2% 0.0% -4.2% 8,632 138.5% (6,891) 1,741 -100.0% 13.3% Total Airport Expenses 211,852 229,465 262,294 259,451 (2,842) -1.1% 32,829 14.3% Police Costs Capital Development Other Central Services Maritime/Economic Development Total Charges from Other Divisions 17,652 14,701 51,004 3,904 87,262 19,231 12,607 53,121 4,425 89,384 25,137 13,196 57,869 5,145 101,346 25,137 16,242 60,129 5,145 106,654 3,047 2,260 1 5,307 0.0% 18.8% 3.8% 0.0% 5.0% 5,906 588 4,748 720 11,962 4.7% 8.9% 16.3% 13.4% Total Operating Expense 299,114 318,849 363,640 366,105 2,465 0.7% 44,791 14.0% 30.7% 2019 Forecast to 2019 Budget Expenses - $2.5M Favorable driven primarily by: • $2.5M estimated over-run in Snow Removal related expenses (affecting Payroll, Outside Services, and other Airport Expenses), absorbed largely by forecasted cost savings in allocations from other divisions due to spending delays in Capital Development (AV PMG) Projected cost savings due to delayed project and program spending 62 Aeronautical Business YTD 2017 YTD 2018 YTD 2019 Year-to-Date $ in 000's Actual Actual Actual Budget Revenues: Movement Area Apron Area Terminal Rents Federal Inspection Services (FIS) Total Rate Base Revenues 50,849 7,636 78,051 6,708 143,243 59,656 8,209 83,956 6,641 158,462 61,289 9,883 100,229 7,271 178,672 61,987 9,456 100,032 7,086 178,561 Commercial Area Subtotal before Revenue Sharing 4,959 148,202 5,072 163,534 5,569 184,241 Revenue Sharing Total Aeronautical Revenues (18,635) 129,567 (15,964) 147,570 Total Aeronautical Expenses 91,209 Net Operating Income 38,358 Fav (UnFav) Budget Variance $ Incr (Decr) Change from 2018 % $ % (697) 427 197 185 111 -1.1% 4.5% 0.2% 2.6% 0.1% 1,634 1,674 16,272 630 20,210 2.7% 20.4% 19.4% 9.5% 12.8% 6,319 184,880 (750) (639) -11.9% -0.3% 497 20,707 9.8% 12.7% (8,314) 175,927 (7,841) 177,039 (473) (1,112) -6.0% -0.6% 7,650 28,357 47.9% 19.2% 100,511 118,919 125,356 6,437 5.1% 18,408 18.3% 47,059 57,008 51,683 5,326 10.3% 9,949 21.1% 2019 YTD Actuals to YTD 2019 Budget • Aero Revenue $1.1M lower, and within 1% of Budget • Aero Expenses - $6.4M favorable mostly driven by lower allocations from other divisions due to delays in project work Aeronautical NOI higher due to YTD project delays 63 Aeronautical Business YE Fav (UnFav) Budget Variance 2017 2018 2019 2019 $ in 000's Actual Actual Forecast Budget $ % Revenues: Movement Area Apron Area Terminal Rents Federal Inspection Services (FIS) Total Rate Base Revenues 108,638 16,771 155,431 18,612 299,452 116,703 15,627 169,318 16,226 317,874 128,896 19,513 205,142 15,171 368,722 130,873 19,714 203,319 14,521 368,426 (1,976) (202) 1,824 650 296 Commercial Area Subtotal before Revenue Sharing 10,574 310,026 10,257 328,131 13,116 381,838 12,859 381,286 Revenue Sharing (42,311) (36,863) (17,192) Other Prior Year Revenues Total Aeronautical Revenues (26) 267,690 291,268 Total Aeronautical Expenses 195,414 Net Operating Income Debt Service (1) Net Cash Flow Incr (Decr) Change from 2018 2019 Forecast to Budget $ % Revenue - $1M unfavorable -1.5% -1.0% 0.9% 4.5% 0.1% 12,194 3,886 35,824 (1,055) 50,848 10.4% 24.9% 21.2% -6.5% 16.0% • 256 552 2.0% 0.1% 2,858 53,707 27.9% Rate based revenue $1M lower- driven primary by higher year-end forecasted non-aeronautical revenue which drives revenue sharing to airlines to be higher, resulting in lower aeronautical revenues 16.4% • (15,682) (1,510) -9.6% 19,672 53.4% 364,646 365,604 (957) 0.0% -0.3% 73,378 25.2% Revenue sharing $1.5M - higher due to higher non-aero NOI forecast partially offset by reduction of revenue sharing percentage from 40% to 20%, based on SLOA IV provisions 211,101 242,808 243,102 294 0.1% 31,706 15.0% 72,276 80,167 121,839 122,502 (663) -0.5% 41,672 52.0% (86,564) (14,288) (91,673) (11,506) (111,673) 10,166 (109,343) 13,159 (2,330) (2,993) -2.1% 22.7% (20,000) -21.8% 21,672 188.4% Lower Aeronautical Revenues primarily driven by higher forecasted revenue sharing 64 Aero Cost Drivers 2019 Forecast to 2019 Budget • $ in 000's 2017 Actual 2018 Actual O&M Debt Service Gross Debt Service PFC Offset Amortization Space Vacancy TSA Operating Grant and Other Rate Base Revenues Commercial area Total Aero Revenues 192,188 206,076 113,832 115,419 (33,057) (32,987) 29,654 32,371 (2,264) (2,132) (901) (873) 299,452 317,874 10,574 10,257 310,026 328,131 2019 Forecast 2019 Budget 236,175 137,696 (33,060) 30,583 (1,614) (1,058) 368,722 13,116 381,838 237,387 136,513 (33,045) 30,121 (1,521) (1,028) 368,426 12,859 381,286 Fav (UnFav) Budget Variance $ % (1,212) -0.5% 1,183 0.9% (15) 0.0% 463 1.5% (93) 6.1% (30) 2.9% 296 0.1% 256 2.0% 553 0.1% Incr (Decr) Change from 2018 $ % 30,099 22,277 (73) (1,787) 518 (185) 50,848 2,858 53,707 14.6% 19.3% 0.2% -5.5% -24.3% 21.2% 16.0% 27.9% 16.4% • • O&M - ($1.2M) lower primarily driven by impact of snow events in Q1, offset by larger Corporate and AV Planning/F&I savings Debt Service - $1.2M increase due to increase in Rate Base of NS NSAT Renov Phase 1 inservice ($3.5M), offset by 2015A bond principal paydown ($1.86M), projects delay on Hardstand Equipment Purchase ($300K) & GBAS Upgrade ($145K). Amortization - $463K increase due to Public Expense Projects -Flight Corridor Safety ($102K); IAF FAA Fiber Optic Cable Replacement ($169K) & Vanderlande Screening Lanes ($136K) Aero rate base revenues based on cost recovery formulas 65 Aero Revenue Sharing 2017 2018 2019 2019 $ in 000's Actual Actual Forecast Budget Aero Revenues (incl' commercial) 310,026 328,131 381,838 381,286 Non-Aeronautical Revenues 236,803 257,707 270,014 259,537 Total O&M Expenses (299,114) (318,849) (363,640) (366,119) Net Operating Income 247,714 266,989 288,212 274,703 ADF Interest Income 4,242 3,752 6,352 6,352 Security Checkpoint TSA Grant 1,039 1,001 1,028 1,028 Misc. Non-Operating Expenses (1,799) (1,586) (1,311) (1,311) CFC Excess (2,750) (7,724) (4,683) (3,993) Available for Debt Service [a]248,446 262,433 289,599 276,780 Debt Service Debt Service x 1.25 Fav (UnFav) Budget Variance $ Incr (Decr) Change from 2018 553 10,477 2,479 13,509 (689) 12,819 % 0.1% 4.0% -0.7% 4.9% 0.0% 0.0% 0.0% 17.3% 4.6% $ 53,707 12,307 (44,791) 21,223 2,600 27 275 3,041 27,166 % 16.4% 4.8% 14.0% 7.9% 69.3% 2.7% -17.4% -39.4% 10.4% 131,060 [b]1 63,825 136,218 170,273 162,912 203,640 158,696 198,369 4,217 5,271 2.7% 2.7% 26,694 33,367 19.6% 19.6% Available for revenue sharing [c]=[a]-[b] 84,621 92,159 85,959 78,410 7,549 9.6% (6,201) -6.7% (1) [d]=[c]*0.5 42,310 36,864 17,192 15,682 1,510 9.6% (19,672) -53.4% Revenue Sharing Higher revenue sharing percentage due to higher forecasted non-aero NOI 66 Non-Aeronautical Business YTD $ in 000's Non-Aero Revenues Rental Cars - Operations Rental Cars - Operating CFC Public Parking Ground Transportation Airport Dining & Retail Non-Airline Terminal Leased Space Commercial Properties Utilities Employee Parking Clubs and Lounges Other Total Non-Aero Revenues Total Non-Aero Expenses Net Operating Income Incr (Decr) Change from 2018 $ % 2018 YTD Actual 14,514 3,284 36,958 7,633 26,349 2,071 10,708 3,423 4,674 2,173 973 14,922 5,497 39,402 8,885 27,694 2,485 7,593 3,438 5,191 2,773 983 15,560 4,505 40,401 9,979 29,581 3,108 7,072 3,665 5,193 4,456 1,085 15,123 4,657 40,969 9,413 28,199 2,555 6,703 3,932 4,876 3,626 993 437 (153) (568) 567 1,383 553 369 (267) 317 830 92 2.9% -3.3% -1.4% 6.0% 4.9% 21.6% 5.5% -6.8% 6.5% 22.9% 9.3% 637 (993) 999 1,094 1,887 623 (521) 227 2 1,683 102 4.3% -18.1% 2.5% 12.3% 6.8% 25.1% -6.9% 6.6% 0.0% 60.7% 10.4% 112,761 49,111 63,649 118,864 124,604 57,316 67,288 121,045 62,229 58,816 3,560 2.9% 5,740 4.8% 4,913 8,472 7.9% 14.4% 4,391 1,349 8.3% 2.0% 52,925 65,940 2019 Year-to-Date Actual Budget Fav (UnFav) Budget Variance $ % 2017 YTD Actual 2019 YTD Actuals to YTD Prior Year Non-Aero Revenue • Rental Car - relatively flat to PY, primarily due to change in customer preference most noticeable in decline in 1-day rentals • GT - TNC revenue growth exceeds 27% YOY, partially offset by decline in demand for taxis. • Clubs - demand driven growth • ADR - Reopening of Terminal and NSAT concessions driving strong growth Non-Aero Expenses - YOY growth reflects planned initiatives in the 2019 Budget Revenue growth driven by ADR, Lounges, GT, and Parking 67 Non-Aeronautical Business YE Fav (UnFav) Budget Variance $ % Incr (Decr) Change from 2018 $ % 2018 Actual 2019 Forecast 2019 Budget 35,051 10,641 75,106 15,684 54,611 4,369 18,042 7,018 9,617 5,041 1,624 37,306 16,263 80,212 18,772 59,021 5,302 15,434 7,206 10,269 6,802 1,119 36,913 14,374 86,070 20,706 59,962 5,879 15,471 8,026 10,134 10,329 2,150 36,455 13,624 82,350 19,734 59,484 4,909 14,219 8,058 10,134 8,520 2,049 459 749 3,720 972 478 970 1,251 (32) 1,809 101 1.3% 5.5% 4.5% 4.9% 0.8% 19.8% 8.8% -0.4% 0.0% 21.2% 4.9% (393) (1,889) 5,859 1,934 941 577 37 820 (135) 3,527 1,030 236,803 103,702 133,101 257,707 107,748 149,959 270,014 120,832 149,181 259,537 123,003 136,534 10,477 4.0% 12,307 4.8% Total Non-Aero Expenses Net Operating Income 2,171 12,648 1.8% 9.3% 13,085 (778) 12.1% -0.5% Less: CFC (Surplus) / Deficit (1) Adjusted Non-Aero NOI (2,750) 130,351 (6,157) 143,802 (4,683) 144,499 (3,993) 132,540 (689) 11,958 -17.3% 9.0% 1,474 696 23.9% 0.5% Debt Service (1) Net Cash Flow (44,495) 85,856 (44,545) 99,257 (49,459) 95,040 (49,352) 83,188 (107) 11,852 -0.2% 14.2% (4,914) (4,217) -11.0% -4.2% $ in 000's Non-Aero Revenues Rental Cars - Operations Rental Cars - Operating CFC Public Parking Ground Transportation Airport Dining & Retail Non-Airline Terminal Leased Space Commercial Properties Utilities Employee Parking Clubs and Lounges Other Total Non-Aero Revenues 2017 Actual -1.1% -11.6% 7.3% 10.3% 1.6% 10.9% 0.2% 11.4% -1.3% 51.9% 92.1% 2019 Forecast to 2018 Actuals Revenue - • Rental Car - fewer transactions offset by higher average ticket price results in nearly flat Concession Revenue. Slight decline in Transaction Days and higher debt service in 2019 drive lower CFC Operating Revenue compared to PY. • Parking - demand driven growth • GT - driven by TNC revenue growth, partially offset by decline in demand for taxis • Airport Dining & Retail - strong performance continues during lease transitions, and increased Concession revenue from AlClear memberships • Clubs - demand driven growth by Priority Pass sales and turn-aways from Alaska lounge. • All other Non-Aero revenue showing steady growth Expenses • Planned spending in line with 2019 Budget initiatives NOI favorable to Budget, but lower compared to 2018 68 Public Parking Performance YTD Public Parking - Revenue Detail $ in 000's Parking Garage Revenue to Port Gross Sales - Parking Garage less - WA Sales Tax less - SeaTac Parking Tax General Parking/Terminal Direct Prebooking Revenue to Port - General Parking Other Garage Revenue Fav (UnFav) Budget Variance $ % 2017 YTD 2018 YTD 2019 Year-to-Date Actual Actual Actual Budget Incr (Decr) Change from 2018 $ % 39,974 (3,350) (3,123) 33,502 33,502 42,623 (3,565) (3,411) 35,647 35,647 43,153 (3,620) (3,333) 36,200 36,200 44,442 (3,705) (3,691) 34,196 2,850 37,046 (1,289) 85 358 2,004 (2,850) (846) -2.9% -2.3% -9.7% 5.9% -100.0% -2.3% 530 1.2% (55) 1.6% 79 -2.3% 553 1.6% - N/A 553 1.6% Premier Corporate Parking Passport Parking Program Total Parking Garage Revenue 468 1,459 35,428 593 1,532 37,772 697 1,751 38,648 616 1,645 39,307 80 106 (660) 13.1% 6.4% -1.7% 103 219 875 17.4% 14.3% 2.3% Other Parking Revenue Concession Rent - Doug Fox off-site parking All Other Parking Revenue Total Parking Revenue 1,518 12 36,958 1,613 16 39,402 1,723 31 40,401 1,652 9 40,969 71 21 (568) 4.3% 226.2% -1.4% 109 15 999 6.8% 89.2% 2.5% Parking Transactions by duration in 000's Total Enplanements O&D % O&D Enplanements Revenue per O&D Enplanement Metrics Public Parking Premier Corporate Parking Passport Parking Program Total Garage Revenue per O&D Enplanement Concession Rent - Doug Fox off-site parking All Other Parking Revenue Total Parking per O&D Enplanement Fav / (UnFav) Incr / (Decr) Budget Variance Change from 2018 # % # % 149 1.2% 391 3.3% 0.9% 1.3% 0.0% 0.0% 214 2.5% 279 3.3% 2017 YTD 2018 YTD 2019 Year-to-Date Actual Actual Actual Budget 11,008 11,688 12,079 11,930 70.4% 71.2% 71.2% 70.3% 7,750 8,322 8,600 8,387 $ $ $ $ $ $ $ 4.32 0.06 0.19 4.57 0.20 0.00 4.77 $ $ $ $ $ $ $ 4.28 0.07 0.18 4.54 0.19 0.00 4.73 $ $ $ $ $ $ $ 4.21 0.08 0.20 4.49 0.20 0.00 4.70 $ $ $ $ $ $ $ 4.42 0.07 0.20 4.69 0.20 0.00 4.88 Key message: Parking revenue growth YOY driven by higher enplanements and tariff increase for parking programs (Premier Corporate and Passport Parking) implemented mid-2018, partially offset by lack of a coupon program resulting in less transactions. $ $ $ $ $ $ $ (0.21) 0.01 0.01 (0.19) 0.00 0.00 (0.19) -4.7% $ (0.07) 10.3% $ 0.01 3.8% $ 0.02 -4.1% $ (0.05) 1.7% $ 0.01 218.1% $ 0.00 -3.8% $ (0.04) -1.7% 13.6% 10.6% -1.0% 3.3% 83.1% -0.8% YOY growth in reflects tariff increases and customer demand for close-in parking 69 Public Parking Performance YE Public Parking - Revenue Detail $ in 000's Parking Garage Revenue to Port Gross Sales - Parking Garage less - WA Sales Tax less - SeaTac Parking Tax General Parking/Terminal Direct Prebooking Revenue to Port - Public Parking Other Garage Revenue Programs Premier Corporate Parking Passport Parking Program Revenue to Port - Parking Programs Total Parking Garage Revenue Other Parking Revenue Concession Rent - Doug Fox off-site parking Space Rent and Other Parking Revenue Total Parking Revenue Total Enplanements O&D % O&D Enplanements Revenue per O&D Enplanement Metrics Public Parking Premier Corporate Parking Passport Parking Program Total Garage Revenue per O&D Enplanement Fav / (UnFav) Incr / (Decr) 2017 Actual 2018 Actual 2019 Forecast 2019 Budget Budget Variance Change from 2018 81,404 (6,818) (6,563) 68,981 68,024 86,971 (7,247) (7,251) 72,473 72,473 93,644 (7,801) (7,829) 78,014 78,014 89,838 (7,455) (7,829) 69,054 5,500 74,554 958 2,977 3,934 71,958 1,225 3,219 4,444 76,917 1,324 3,477 4,801 82,815 3,109 25 75,093 23,416 70.4% 16,461 3,238 56 80,212 24,894 71.2% 17,725 3,200 55 86,070 25,890 71.2% 18,434 $ $ $ $ 4.13 0.06 0.18 4.37 $ $ $ $ 4.09 0.07 0.18 4.34 $ $ $ $ 4.23 0.07 0.19 4.49 $ $ $ $ $ % 3,806 4.2% (346) 4.6% 0.0% 8,960 13.0% (5,500) -100.0% 3,460 4.6% 6,673 (554) (578) 5,541 5,541 7.7% 7.6% 8.0% 7.6% 100% 7.6% 1,247 3,330 4,578 79,132 77 147 224 3,684 6.2% 4.4% 4.9% 4.7% 99 258 357 5,898 8.1% 8.0% 8.0% 7.7% 3,200 19 82,350 25,394 70.3% 17,852 0.0% 36 190.1% 3,720 4.5% 496 2.0% 0.9% 1.3% 582 3.3% (38) (1) 5,859 996 0.0% 709 -1.2% -1.8% 7.3% 4.0% 0.0% 4.0% $ 0.06 $ 0.00 $ 0.00 $ 0.06 0.14 0.00 0.01 0.15 3.5% 3.9% 3.9% 3.5% 4.18 0.07 0.19 4.43 $ % 1.3% $ 2.8% $ 1.1% $ 1.4% $ Key message: Parking revenue growth primarily driven by higher enplanements forecast and a price increase to General Parking beginning in July. 2019 Forecast vs. 2018 Actuals • Revenue - Forecasted increase in Public Parking compared to prior year, primarily due to higher enplanements and due to 2nd tariff rate increase for General Parking effective 7/1/2019. • There was also a tariff increase in 2018, which was effective on 7/1/2018 and impacted both General Parking and parking programs within the garage (Premier Corporate and Passport Parking). Strong enplanements growth and tariff rate increases driving parking revenue growth 70 Rental Car Performance YTD Rental Car - Revenue Detail $ in 000's Total Enplanements O&D % O&D Enplanements Gross Sales by Operators Total Transactions Average Ticket Average Length of Stay Transactions/O&D Enplanements CFC Revenue Summary Total Transaction Days CFC Rate per Transaction Day CFC Revenue Earned Other CFC Collections Total CFC Revenue Debt Service Reserve Requirement Residual - CFC Operating Revenue Rental Car - Revenue Summary $ in 000's RCF Concession Revenue to Port Residual - CFC Operating Revenue: Land Rent/Space Rent/Other Total Rental Cars Operating Revenue 2017 YTD 2018 YTD Actual Actual 11,008 11,688 70.4% 71.2% 7,750 8,322 127,258 134,434 648 657 $196.27 $204.48 4.13 4.16 8.37% 7.90% 2,677 $6.00 16,062 372 16,434 (13,150) 3,284 2,734 $6.00 16,406 93 16,499 (11,001) 5,497 2017 YTD 2018 YTD Actual Actual 12,673 13,025 3,284 5,497 1,841 1,898 17,798 20,420 2019 Year-to-Date Actual Budget 12,079 11,930 71.2% 70.3% 8,600 8,387 134,334 132,299 647 652 $207.53 $202.91 4.27 4.19 7.53% 7.77% 2,761 $6.00 16,567 (373) 16,194 (11,689) 4,505 2,733 $6.00 16,398 16,398 (11,741) 4,657 2019 Year-to-Date Actual Budget 13,632 13,229 4,505 4,657 1,927 1,894 20,064 19,780 Fav / (UnFav) Budget Variance $ % 149 1.2% 0.9% 1.3% 214 2.5% 2,035 1.5% (5) -0.7% $4.62 2.3% 0.07 1.8% -0.25% -3.2% Incr / (Decr) Change from 2018 $ % 391 3.3% 0.0% 0.0% 279 3.3% (100) -0.1% (10) -1.5% $3.06 1.5% 0.11 0.03 -0.37% -4.7% 28 1.0% $0.00 0.0% 169 1.0% (373) N/A (204) -1.2% 52 -0.4% (153) -3.3% Fav / (UnFav) Budget Variance $ % 403 3.0% (153) -3.3% 33 1.7% 284 1.4% 27 1.0% $0.00 0.0% 161 1.0% (466) -502.1% (305) -1.8% (688) 6.3% (993) -18.1% Incr / (Decr) Change from 2018 $ % 608 4.7% (993) -18.1% 30 1.6% (355) -1.7% Key message: Rental Car revenue continues to be impacted by availability of other transportation alternatives (light rail, TNCs, car-sharing, etc.). Transactions per O&D enplaned passenger declining faster than overall enplanement growth. Reduced transactions per O&D enplaned passenger 71 Rental Car Performance YE Rental Car - Revenue Detail RCF Concession Revenue to Port 2016 Actual 33,465 2017 Actual 31,352 2018 Actual 33,474 2019 Forecast 33,125 2019 Budget 32,666 Total Enplanements O&D % O&D Enplanements 22,796 69.5% 15,843 23,416 70.4% 16,485 24,894 71.2% 17,725 25,890 71.2% 18,434 Gross Sales by Operators Total Transactions Average Ticket Average Length of Stay Transactions/O&D Enplanements 310,987 1,411 $220.42 4.34 8.91% 313,654 334,355 1,388 1,416 $226.03 $ 236.08 4.37 4.44 8.42% 7.99% CFC Revenue Summary Total Transaction Days 6,129 6,070 6,286 CFC Rate per Transaction Day $6.00 $6.00 $6.00 CFC Revenue Earned 36,771 36,421 37,716 Other CFC Collections 66 (160) 584 Total CFC Revenue Earned 36,837 36,261 38,300 Reserve for debt service and CP interest: (21,715) (22,621) (21,802) Reserve for CP principal payment: (3,000) (3,000) Debt Service Reserve Requirement (24,715) (25,621) (21,802) Residual - CFC Operating Revenue: 12,122 10,641 16,499 # and $ in 000's # and $ in 000's RCF Concession Revenue to Port Residual - CFC Operating Revenue: Land Rent/Space Rent/Other Total Rental Cars Oper Revenue 2017 Actual 31,352 10,641 3,699 45,691 2018 Actual 33,474 16,499 3,597 53,569 Incr / (Decr) Change from 2018 $ 459 % 1.4% $ (348) % -1.0% 25,394 70.3% 17,852 496 0.9% 582 2.0% 1.3% 3.3% 996 0.0% 709 4.0% 0.0% 4.0% 331,254 1,386 $239.00 4.54 7.52% 326,665 1,396 $234.00 4.43 7.82% 4,589 (10) 5.00 0.11 -0.30% 1.4% -0.7% 2.1% 2.5% -3.8% (3,101) (30) $2.92 0.10 -0.47% -0.9% -2.1% 1.2% 2.3% -5.9% 6,292 $6.00 37,752 37,752 (23,482) (23,378) 14,374 6,184 $6.00 37,106 37,106 (23,482) (23,482) 13,624 108 $0.00 646 646 103 749 1.7% 0.0% 1.7% N/A 1.7% 0.0% NA -0.4% 5.5% 6 0.1% $0.00 0.0% 36 0.1% (584) -100.0% (548) -1.4% (1,680) 7.7% NA (1,577) 7.2% (2,125) -12.9% Fav / (UnFav) Incr / (Decr) 2019 Forecast 33,125 14,374 3,788 51,287 2019 Budget 32,666 13,624 3,788 50,079 Budget Variance Change from 2018 $ 459 749 1,208 $ % (348) -1.0% (2,125) -12.9% 191 5.3% (2,282) -4.3% Rental Car - Revenue Summary 2017 Actual 33,465 12,122 3,617 49,203 Fav / (UnFav) Budget Variance % 1.4% 5.5% 0.0% 2.4% Key message: Rental Car revenue continues to be impacted by availability of other transportation alternatives (light rail, TNCs, car-sharing, etc.) 2019 Forecast vs. 2018 Actuals Rental Car Concession revenue - Forecast relatively flat to prior year. Concession Revenue is impacted by (3) key indicators: • Expected continuation of decline in Transactions per O&D Enplanement reflects trend in passenger preference shifting to other transportation options, most notable in short-term (1-day) rentals • Average length of stay is increasing as 1-day rentals have declined significantly, due to shift in customer preference to other transportation alternatives. • Average ticket price is a function of rental car pricing and customer demand, and can vary significantly. The 2019 Budget and the 2019 Forecast assumes an average ticket price higher than 2018 actuals due to the continued erosion of short-term rentals to other transportation modes. This metric will be monitored and adjusted in future forecast updates, as needed CFC Operating Revenue - Forecasted to decline YOY due to combined impact of decline in Transaction Days and increase in debt service compared to prior year Reduced transactions per O&D enplaned passenger 72 Ground Transportation YTD Revenue to Port $ in 000's Ground Transportation Revenues Transportation Network Companies On Demand Taxis On Demand Limos Belled In Taxis (Annual Permit) Pre-Arranged Limos (Annual Permit) Courtesy Cars (cost recovery) All other Operators (cost recovery) Other Misc Revenues Total GT Revenue 2017 YTD Actual 2018 YTD Actual 3,181 2,631 405 43 360 687 203 123 7,633 4,749 2,160 403 33 361 798 172 210 8,885 2017 YTD Actual 2018 YTD Actual 573 375 36 37 165 587 40 1,813 784 363 35 9 168 580 30 1,969 2019 Year-to-Date Actual Budget 5,997 1,856 403 27 350 986 208 153 9,979 5,304 2,088 401 31 343 955 183 107 9,413 Trip Activity in 000's Ground Transportation Trips Transportation Network Companies On Demand Taxis On Demand Limos Belled In Taxis (Annual Permit) Pre-Arranged Limos (Annual Permit) Courtesy Cars (cost recovery) All other Operators (cost recovery) Total GT Trip Activity 2019 Year-to-Date Actual Budget 999 309 34 8 165 594 55 2,165 964 348 34 12 168 579 28 2,133 Fav (UnFav) Incr (Decr) Budget Variance Change from 2018 $ % 693 13.1% (232) -11.1% 2 0.5% (4) -14.0% 6 1.8% 31 3.2% 25 13.6% 46 43.4% 567 6.0% $ % 1,248 (303) 0 (6) (11) 187 36 (57) 1,094 26.3% -14.0% 0.1% -18.7% -3.1% 23.5% 21.0% -27.0% 12.3% Fav / (UnFav) Incr / (Decr) Budget Variance Change from 2018 # % 35 3.7% (39) -11.1% 0 0.6% (4) -35.7% (3) -1.8% 15 2.7% 26 92.9% 32 1.5% # Key message: Significant changes in customer preferred ground transportation alternatives are reflected in both revenue and trip activity between GT operator categories. Growth in TNC activity continues to outpace the offsetting decline in all other GT operator categories combined, which results in an overall increase in trip activity of 10.0% YTD % 216 27.5% (53) -14.7% (1) -2.3% (2) -18.4% (3) -1.8% 14 2.4% 25 84.6% 196 10.0% TNC growth expected to continue to outpace enplanement growth 73 Ground Transportation YE Revenue to Port $ in 000's Ground Transportation Revenues Transportation Network Companies On Demand Taxis On Demand Limos Belled In Taxis (Annual Permit) Pre-Arranged Limos (Annual Permit) Courtesy Cars (cost recovery) All other Operators (cost recovery) Other Misc Revenues Total GT Revenue Fav / (UnFav) Incr / (Decr) 2015 Actual 2016 Actual 2017 Actual 2018 2019 2019 Actual Forecast Budget Budget Variance Change from 2018 4,517 869 132 363 2,195 511 223 12,803 3,222 5,045 869 159 496 2,039 696 278 12,803 6,940 5,199 858 45 626 1,319 394 303 15,684 10,349 4,475 853 35 635 1,660 340 424 18,772 12,864 3,690 842 29 588 2,020 459 214 20,706 11,574 4,176 842 33 588 1,919 388 214 19,734 Trip Activity in 000's Ground Transportation Trips Transportation Network Companies On Demand Taxis On Demand Limos Belled In Taxis (Annual Permit) Pre-Arranged Limos (Annual Permit) Courtesy Cars (cost recovery) All other Operators (cost recovery) Total GT Trip Activity 2015 Actual 2016 Actual 2017 Actual 2018 2019 2019 Actual Forecast Budget 924 82 142 334 1,230 103 2,816 602 827 74 195 369 1,218 95 3,381 1,277 750 72 56 337 1,198 79 3,769 1,715 723 69 18 347 1,209 63 4,145 2,144 615 67 14 344 1,224 76 4,484 1,929 696 67 18 344 1,160 57 4,271 $ $ % 1,290 11.1% (486) -11.6% 0.0% (4) -12.1% 0.0% 101 5.3% 71 18.3% 0.0% 972 4.9% 2,515 (785) (11) (6) (47) 360 119 (210) 1,934 24.3% -17.5% -1.2% -17.1% -7.4% 21.7% 34.9% -49.6% 10.3% Fav / (UnFav) Incr / (Decr) Budget Variance Change from 2018 # % % 215 11.1% (81) -11.6% 0.0% (4) -22.5% 0.0% 64 5.6% 19 33.7% 214 5.0% # % 429 25.0% (108) -15.0% (2) -2.8% (5) -24.9% (3) -1.0% 16 1.3% 13 21.0% 339 8.2% Key message: Significant changes in customer preferred ground transportation alternatives are reflected in both revenue and trip activity between GT operator categories. 2019 Forecast vs. 2018 Actuals GT Revenue forecast compared to prior year: • TNC revenue forecast in 2019 reflects continued shift in customer preference, and is expected to grow ~24% YOY • Taxi revenue forecasted to decline ~18% YOY • Minor differences between YOY revenue growth % and YOY trip volume growth % are due to incidental billing adjustments. GT Trip Activity forecast compared to prior year: • TNC trip volume expected to continue to grow significantly faster than the growth in enplaned passengers. 2019 Forecast expects a 25% YOY increase in TNC trip volume. • Taxi trips activity continues to continue to decline. 2019 Forecast expects a 15% YOY reduction in taxi trip volume • Small growth in other operators driven by enplanements and offset by lower transactions per O&D enplanements. Shared-Ride Van growth driven by better AVI tracking. TNC growth expected to continue to outpace enplanement growth 74 Airport Dining & Retail YTD Airport Dining & Retail Org Basis (in 000's) ADR Revenue 2017 YTD Actual 2018YTD 2019 Year-to-Date Actual Actual Budget Fav / (Unfav) Budget Variance Incr / (Decr) from 2018 $ % $ % Food & Beverage 10,453 10,626 12,266 11,460 806 7.0% 1,640 15.4% Retail 6,213 7,819 7,717 7,125 592 8.3% (102) -1.3% Duty Free 3,518 3,742 3,263 3,472 (210) -6.0% (479) -12.8% Personal Services 1,869 1,830 1,982 1,818 163 9.0% 152 8.3% Advertising 3,412 2,920 3,502 3,290 212 6.4% 582 19.9% Space Rental - Terminal 664 681 660 693 (34) -4.8% (21) -3.1% All other revenue Total ADR Revenue 219 26,349 77 27,694 193 29,581 340 28,199 (147) 1,383 -43.2% 4.9% 116 1,887 151.6% 6.8% Sales per Enplanement SPE - Food & Beverage SPE - Retail Sales SPE - Duty Free SPE - Personal Services SPE - Airport Dining & Retail $7.36 $3.99 $0.92 $0.99 $13.25 $7.17 $4.34 $0.89 $0.95 $13.35 $7.61 $4.04 $0.77 $0.85 $13.27 $7.30 $3.88 $0.90 $0.89 $12.97 $ 0.31 $ 0.16 $ (0.13) $ (0.03) $0.30 4.3% $ 0.44 4.0% $ (0.30) -14.3% $ (0.12) -3.9% $ (0.10) 2.3% ($0.07) 6.2% -6.9% -13.6% -10.2% -0.6% 2019 Forecast vs. 2018 Actuals • Food & Beverage - Strong sales in all new units in Central Terminal and North Satellite. Continuing operations near Central Terminal still beating sales expectations even after reopening of Central Terminal Concourse • Retail Sales-Convenience Retail strong YTD sales with help from hardstands and temporary operations • Personal Services - Machine vending revenues (Sodexo) favorable as more machine vending options having been made available across all terminals • Duty Free- Sales lagging due to increased Chinese enforcement of existing tariffs Strong First half driven by Central Terminal and North Satellite Concessions 75 Airport Dining & Retail YE Airport Dining & Retail Org Basis (in 000's) ADR Revenue 2017 Actual 2018 Actual 2019 2019 Forecast Budget Food & Beverage 21,579 23,132 23,917 Retail 13,989 17,005 Duty Free 6,912 Personal Services Fav / (Unfav) Budget Variance Incr / (Decr) Change from 2018 $ % $ % 23,780 137 0.6% 785 3.4% 17,268 15,445 1,823 11.8% 263 1.5% 7,026 6,290 7,497 (1,207) -16.1% (736) -10.5% 3,728 3,951 3,744 3,785 (41) -1.1% (207) -5.3% Advertising 6,662 6,432 6,896 6,896 - 0.0% 464 7.2% Space Rental - Terminal 1,292 1,351 1,320 1,385 (64) -4.6% (31) -2.3% All other revenue Total Airport Dining & Retail Revenue 449 54,611 125 59,022 432 59,866 697 59,484 (266) 382 -38.1% 0.6% 307 845 246.3% 1.4% Sales per Enplanement SPE - Food & Beverage SPE - Retail Sales SPE - Duty Free SPE - Personal Services SPE - Airport Dining & Retail $7.18 $4.07 $0.91 $0.95 $13.12 $7.34 $4.38 $0.83 $0.94 $13.50 $7.32 $4.01 $0.75 $0.88 $12.97 $7.30 $3.88 $0.90 $0.89 $12.97 $0.03 $0.13 ($0.14) ($0.01) $0.00 0.3% 3.4% -16.1% -0.9% 0.0% ($0.02) ($0.37) ($0.08) ($0.07) ($0.53) -0.2% -8.4% -9.6% -6.9% -3.9% 2019 Forecast vs. 2018 Actuals • Food & Beverage - YOY growth tracking with enplanements and strong performance by new Central Terminal and NSAT concessions, despite upcoming closures and delayed openings for Capitol Hill Food Hall and Village Pub • Retail Sales - YOY growth moderate due to prior year sales peak from supplemental sales in "grab'n'go" food during restaurant closures. Steady growth is expected to continue. • Duty Free - continued decline in DF sales attributed to Chinese enforcement of tariffs and SEA inability to offer premium goods due to existing space and placement limitations. Strong year over year performance despite lagging Duty Free program 76 Commercial Properties YTD Non-Aero Commercial Properties 2017 YTD 2018 YTD Subclass Basis (in 000's) Actual Actual 2019 Year to Date Actuals Budget Fav / (Unfav) 2019 Budget Variance $ % Incr / (Decr) from 2018 Actuals $ % Revenue Source NEW DEVELOPMENT PARCELS DMCBP Land Rents - all (3) phases 314 772 789 787 2 0.3% 17 2.2% DMCBP In Lieu - 7yr repayment schedule (Phase I & III) 147 218 256 256 - 0.0% 38 17.4% DMCBP In Lieu - lump sum payment (Phase II) Subtotal DMCBP: 5,434 - - - - 5,895 990 1,045 1,042 2 0.2% 55 5.5% NERA 2 Land Rent - 47 134 134 0 0.0% 88 187.7% NERA 3 Land Rent - 127 367 367 0 0.0% 240 189.1% Des Moines Creek North Land Rent - - 169 169 0 0.0% 169 100% 5,895 1,164 1,715 1,713 2 0.1% 551 47.4% 3,596 3,933 4,408 4,028 380 9.4% 475 12.1% 162 1,276 - - - 1,055 1,220 949 962 10,708 7,593 7,072 6,703 Subtotal New Development revenue: In-Flight Kitchen Revenue Burien NERA 3 FAA Pilot Program grant All Other Commercial Properties Revenue Non-Aero Commercial Properties Revenue: Key messages: • In-Flight Meal Revenue growth continues to outpace the growth in enplanements. • Non-Aero commercial real estate portfolio now stable, as construction is complete on most new development properties and occupancy is stable on existing properties. • NERA grant program ended in mid-2018 (1,276) -100.0% (13) -1.3% (271) -22.2% 369 (521) -6.9% 5.5% Strong in flight meal revenues driving positive performance 77 Commercial Properties YE Non-Aero Commercial Properties 2017 2018 2019 2019 Fav / (Unfav) 2019 Budget Subclass Basis (in 000's) Revenue Source NEW DEVELOPMENT PARCELS DMCBP Land Rents - all (3) phases DMCBP In Lieu - 7yr repayment schedule (Phase I & III) DMCBP In Lieu - lump sum payment (Phase II) Subtotal DMCBP: NERA 2 Land Rent NERA 3 Land Rent Des Moines Creek North Land Rent Subtotal New Development revenue: Actual Actual Forecast Budget $ 1,079 445 5,434 6,958 15 42 7,015 1,556 482 2,038 248 687 90 3,063 1,573 522 2,095 268 734 593 3,690 1,573 522 2,095 268 734 593 3,690 0 0 0 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 57 2.8% 20 8.3% 47 6.8% 503 560.2% 627 20.5% In-Flight Kitchen Revenue Burien NERA 3 FAA Pilot Program grant All Other Commercial Properties Revenue Non-Aero Commercial Properties Revenue: 7,827 1,402 1,798 18,042 8,705 1,807 1,859 15,433 9,709 2,072 15,471 8,634 1,896 14,219 1,075 177 1,251 12.5% 1,004 11.5% (1,807) -100.0% 213 11.5% 37 0.2% % Incr / (Decr) from 2018 Actuals $ % 17 40 1.1% 8.2% - 9.3% 8.8% Key message: • In-Flight Meal Revenue growth continues to outpace the growth in enplanements. • Occupancy stable in all other Non-Aero Commercial Properties locations. Favorable variance due to one expected mid-year vacancy now delayed until later in the year. • NERA grant program ended mid-2018 In-flight meal revenue growth continues to outpace enplanement growth 78 2019 Capital Expenditures $ in 000's Description 2019 YTD Actual 153,500 2019 Forecast 338,500 2019 Budget 376,548 NS NSAT Renov NSTS Lobbies (2) 64,866 133,086 141,054 7,968 5.6% Service Tunnel Renewal/Replace (3) 5,083 11,083 15,000 3,917 26.1% SSAT Renovation Project (4) (3,426) (3,426) 100 3,526 3525.9% 29 189 3,636 3,448 94.8% Fire Station - Westside (6) 358 958 4,000 3,042 76.0% Highline School Insulation (7) 3 6,043 3,300 (2,743) -83.1% 6 406 2,800 2,394 85.5% International Arrivals Facility (1) Arc Flash Mitigation (5) Electric Utility SCADA (8) Budget Variance $ % 38,048 10.1% 157 1,317 3,590 2,273 63.3% (10) 536 1,536 3,400 1,864 54.8% PLB Renew & Replace Phase 2 (11) 1,606 4,168 5,834 1,666 28.6% Perimeter Intrusion Detect Sys (12) 26 123 1,775 1,652 93.1% RCF Pavement Remediation (13) All Other Total Spending 173 3,573 5,200 1,627 31.3% 57,206 280,124 162,257 659,813 201,494 39,237 767,732 107,919 19.5% 14.1% Parking Garage Elevators Modernization ASL Conversion at Checkpoints (9) (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) The Design Builder construction in place has lagged behind projections, primarily because of steel fabrication delays and overall manpower shortages. One month lag on construction invoicing is contributing to positive variance. Original estimate assumed traffic management change order was to be implemented which has not yet occurred. Estimate did not account for decrease in spending as work in the main garage is completed. Project cancelled. Design delays have deferred construction start to 2020. A change in delivery method from two major works contracts to one contract has resulted in delaying the construction to start in Q1 2020. FAA issued a grant, issuance of grant accelerated projected cash flows for the two schools. Project delayed to address design deficiencies and additional scope. Elevator shafts and vestibules are being delayed until 2020 construction season due to design delays and weather windows. Work delays are due to the lack of electrical contracting and sprinkler damage delays with CP2/CP3. Two bridges are pushed out from 2019 to 2020 due to gate S12 PLB failure. Payments to suppliers are later than forecasted. RFP Took longer than originally anticipated to get off the ground. Original estimate prepared prior to scope revision for fencing that delayed construction two months. YTD spending variances primarily due to delayed Capex spending 79 SAMP Overview Fav (Unfav) YTD Summary $ in 000's SAMP Completion & Transition to Env Review Adv Planning IDIQ - Master Plan Environmental Review - Master Plan SAMP Utilities Master Plan Total SAMP-Related Spending 2017 YTD 2018 YTD 2019 Year-to-Date 2019 Budget Variance Change from 2018 Actual Actual Actual Budget $ % $ % 100 161 99 120 21 17.5% (62) -38.5% 0 1,296 1,895 2,325 430 18.5% 599 46.2% 47 800 672 0 127 84.1% 127 N/A 0 0 540 800 540 260 32.5% N/A 147 1,457 2,661 4,045 1,383 34.2% 1,204 82.7% Year-End Projection Annual Forecast $ in 000's SAMP Completion & Transition to Env Review Adv Planning IDIQ - Master Plan Environmental Review - Master Plan SAMP Utilities Master Plan Total SAMP-Related Spending Inc (Decr) 2017 Actual 1,335 1,141 169 276 2,921 2018 2019 Actual Forecast 462 300 3,905 4,650 521 1,250 459 2,000 5,347 8,200 Fav (Unfav) Inc (Decr) 2019 2019 Budget Variance Change from 2018 Budget $ % $ % 300 0 0.0% (162) -35.1% 4,650 0 0.0% 745 19.1% 350 1,600 21.9% 729 139.9% 2,000 0 0.0% 1,541 335.7% 8,550 350 4.1% 2,853 53.4% YTD timing delay in Environmental Review and Advanced Planning 80 Maritime Division Appendix Maritime 2019 Financial Summary 2017 YTD 2018 YTD $ in 000's Actual Actual Ship Canal Fishing & Operations 1,456 1,610 Elliott Bay Fishing & Commercial Operations 2,984 3,012 Recreational Boating 5,438 6,068 Cruise 6,325 6,806 Bulk 3,042 3,123 Maritime Portfolio Management 5,267 5,628 Other 14 11 Total Revenue 24,525 26,257 2019 Year-to-Date Actual Budget 2,004 2,010 3,067 2,961 6,228 6,358 8,473 9,114 2,567 2,423 5,019 5,052 10 0 27,368 27,918 Fav (UnFav) Budget Variance $ % (6) 0% 105 4% (131) -2% (641) -7% 144 6% (33) -1% 10 NA (550) -2% 1,227 1,202 2,027 998 280 5,521 2,136 232 13,624 1,082 415 1,988 5,055 135 8,675 11 22,310 5,058 8,911 (3,853) 266 205 285 1,309 (11) 706 266 123 3,149 212 5 252 406 (28) 847 (11) 3,985 3,435 (107) 3,328 Incr (Decr) Change from 2018 $ % 394 24% 55 2% 160 3% 1,668 25% (556) -18% (609) -11% (1) -8% 1,110 4% Expenses Ship Canal Fishing & Operations 1,021 Elliott Bay Fishing & Commercial Operations 1,289 Rec Boating 1,857 Cruise 427 Other Maritime 221 Maintenance Expenses 4,658 Portfolio Management 1,770 Other ED Expenses 353 Total Maritime & EDD expenses 11,595 Enviromental & Sustainability 598 CDD Expenses 419 Police Expenses 1,889 Other Central Services 4,725 Aviation Division 93 Total Central Services & Aviation 7,724 Envir Remed Liability 371 Total Expense 19,690 NOI Before Depreciation 4,835 Depreciation 8,442 NOI After Depreciation (3,606) 1,183 1,315 1,952 1,136 365 5,576 2,031 320 13,878 519 437 2,169 4,707 105 7,937 (99) 21,716 4,541 8,823 (4,281) 1,493 1,407 2,312 2,307 270 6,227 2,402 356 16,773 1,294 420 2,240 5,461 107 9,522 0 26,295 1,623 8,804 (7,181) 18% 15% 12% 57% -4% 11% 11% 35% 19% 16% 1% 11% 7% -26% 9% NA 15% 212% -1% 46% 44 (113) 75 (138) (85) (55) 105 (87) (254) 563 (22) (181) 349 30 738 110 594 516 88 429 4% -9% 4% -12% -23% -1% 5% -27% -2% 108% -5% -8% 7% 28% 9% -111% 3% 11% 1% 10% YTD NOI 11% higher than 2018 82 Maritime 2019 Business Line Financials Page 1 YTD Actual 2017 YTD Actual 2018 YTD Actual 2019 YTD Budget 2019 Cruise Revenue Expense NOI Before Depreciation Depreciation Expense NOI After Depreciation 6,325 3,495 2,830 2,627 203 6,806 4,712 2,094 3,201 (1,107) 8,473 5,257 3,216 3,211 5 9,114 6,194 2,920 2,994 (74) (641) 937 296 (217) 79 -7.03% 15.13% 10.14% -7.25% 106.76% 1,667 545 1,122 10 1,112 24.49% 11.57% 53.58% 0.31% 100.45% 22,406 12,017 10,389 5,986 4,403 Rec Boating Revenue Expense NOI Before Depreciation Depreciation Expense NOI After Depreciation 5,438 4,647 791 1,592 (801) 6,068 5,085 983 1,459 (476) 6,228 5,183 1,045 1,378 (333) 6,358 6,095 263 1,363 (1,100) (130) 912 782 (15) 767 -2.04% 14.96% 297.34% -1.10% 69.73% 160 98 62 (81) 143 2.64% 1.93% 6.31% -5.55% 30.04% 12,794 11,750 1,044 2,727 (1,683) Maritime Portfolio Revenue Expense NOI Before Depreciation Depreciation Expense NOI After Depreciation 5,267 5,155 112 1,335 (1,223) 5,628 5,237 391 1,361 (970) 5,019 5,454 (435) 1,279 (1,714) 5,052 6,277 (1,225) 1,249 (2,474) (33) 823 790 (30) 760 -0.65% 13.11% 64.49% -2.40% 30.72% (609) 217 (826) (82) (744) -10.82% 4.14% -211.25% -6.02% -76.70% 10,328 11,982 (1,654) 2,502 (4,156) Ship Canal Fishing & Operations Revenue Expense NOI Before Depreciation Depreciation Expense NOI After Depreciation 1,456 2,614 (1,159) 830 (1,989) 1,610 2,758 (1,148) 821 (1,969) 2,004 2,805 (800) 1,089 (1,889) 2,010 3,225 (1,215) 1,184 (2,399) (6) 420 414 96 510 -0.30% 14.98% 51.74% 8.80% 26.99% 394 46 348 268 80 24.49% 1.68% 30.30% 32.65% 4.06% 4,021 6,319 (2,298) 2,370 (4,668) $ in 000's Fav(UnFav) Bud Var $ % Incr/(Decr) Chg fr Prior Year $ % Total Year Budget 2019 83 Maritime 2019 Business Line Financials Page 2 YTD Actual 2017 YTD Actual 2018 YTD Actual 2019 YTD Budget 2019 Elliott Bay Fishing & Commercial Operations Revenue 2,984 Expense 2,735 NOI Before Depreciation 249 Depreciation Expense 1,775 NOI After Depreciation (1,527) 3,012 2,999 13 1,676 (1,663) 3,067 2,552 515 1,671 (1,157) 2,961 3,244 (282) 1,735 (2,017) 105 691 797 64 860 3.44% 27.09% NA 3.80% 74.37% 55 (447) 501 (5) 506 1.81% -14.90% 3799.04% -0.27% -30.43% 5,927 6,195 (269) 3,471 (3,739) Bulk/Grain Terminal Revenue Expense NOI Before Depreciation Depreciation Expense NOI After Depreciation 3,042 653 2,389 279 2,110 3,123 874 2,249 298 1,951 2,567 830 1,737 275 1,462 2,423 889 1,534 272 1,262 144 59 203 (3) 200 5.94% 6.64% 13.23% -1.10% 15.85% (556) (44) (512) (23) (489) -17.80% -5.03% -22.77% -7.72% -25.06% 4,254 1,810 2,444 543 1,901 Other Revenue Expense NOI Before Depreciation Depreciation Expense NOI After Depreciation 14 391 (377) 3 (380) 11 50 (39) 7 (46) 10 229 (219) 7 (226) 0 372 (372) 7 (379) 10 143 153 0 153 NA 38.44% 41.13% 0.00% 40.37% (1) 179 (180) 0 (180) -9.09% 358.00% -461.54% NA -391.30% 0 748 (748) 14 (762) Total Maritime Revenue Expense NOI Before Depreciation Depreciation Expense NOI After Depreciation 24,525 19,690 4,835 8,442 (3,607) 26,257 21,716 4,541 8,823 (4,282) 27,368 22,310 5,058 8,911 (3,853) 27,918 26,295 1,623 8,804 (7,181) (550) 3,985 3,435 (107) 3,328 -1.97% 15.15% 211.65% -1.22% 46.34% 1,111 594 517 88 429 4.23% 2.74% 11.39% 1.00% 10.02% 59,729 50,822 8,907 17,613 (8,706) $ in 000's Fav(UnFav) Bud Var $ % Incr/(Decr) Chg fr Prior Year $ % Total Year Budget 2018 84 Maritime Capital 2019 $ in 000's Small Projects SBM Restrms/Service Bldgs Rep Contingency Renewal & Replace. MD Fleet 2019 Cruise Terminal Tenant Improv T117 Restoration FT Docs 3,4,5 Fixed Pier New Cruise Terminal SBM Paving Maritime Technology Projects Marina Mgt Sys Replacement All Other Projects Total Maritime 2019 YTD Actual 748 62 0 0 13 99 173 160 27 26 63 508 1,879 2019 Forecast 2,717 2,721 2,000 1,429 1,370 579 637 1,060 725 176 163 1,528 15,105 2019 Budget 3,954 2,920 2,000 1,818 1,370 1,040 600 600 596 450 426 1,864 17,638 Budget Variance $ % 1,237 31% 199 7% 0 0% 389 21% 0 0% 461 44% (37) -6% (460) -77% (129) -22% 274 61% 263 62% 336 18% 2,533 14% Small Projects - Numerous projects within CIP are under feasibility discussions to either cancel or defer spending into 2020. T117 Restoration - Schedule delayed due to delay in Trustee negotiation. New Cruise Terminal - A site for the new cruise terminal became available sooner than expected. Design development proceeding earlier than anticipated. SBM Paving - Construction delayed due to reevaluation of project scope after bids received 33% over Engineer's estimate. Contract award expected in Q3 2019. Marina Management System - Project on hold as Vendor unable to meet security requirements. Schedule delays driving underspend vs. to budget 85 Stormwater Utility $ in 000's Revenue NWSA Tenants Revenue Non-tenants Revenue Total Revenues Expenses SWU Direct Maintenance Expenses EDD Expenses Environmental & Sustainability Capital Development Expenses Other Central Service Expenses Total Expenses NOI Before Depreciation Depreciation NOI After Depreciation 2017 YTD Actual 2018 YTD Actual 1,919 496 56 2,471 2,097 561 49 2,707 2,227 617 53 2,897 263 1,125 10 260 24 39 1,720 751 498 253 394 1,669 4 103 7 76 2,253 241 548 (307) 336 1,525 17 180 14 90 2,161 500 599 (99) Fav (UnFav) Budget Variance $ % Incr (Decr) Change from 2018 $ % 2,282 562 53 2,897 (55) 55 (0) 0 -2% 10% 0% 0% 130 57 4 191 6% 10% 8% 7% 3,995 507 1,293 5,795 510 1,461 25 129 26 72 2,223 357 551 (194) (174) 63 (8) 51 (12) 18 (62) 143 49 94 -34% 4% -34% 40% -47% 26% -3% 40% 9% -49% (58) (144) 13 77 7 14 (92) 259 51 208 -15% -9% 314% 74% 90% 19% -4% 107% 9% -68% 1,052 2,933 50 268 70 4,373 2019 Year-to-Date Actual Budget Total Year Budget 1,108 (1,108) Crews have assessed 80% of the system, rehabilitated 17.4%, completed 19 repairs, and installed 5 tide gates so far in 2019. SWU tracking to budget 86 Economic Development Division Appendix EDD 2019 YTD Financial Detail $ 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 Diversity in Contracting 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 2017 YTD 2018 YTD Actual Actual 4,182 4,577 3,545 5,188 7,727 9,765 2019 Year-to-Date Actual Budget 4,421 4,414 5,963 5,604 10,384 10,017 Fav (UnFav) Budget Variance $ % 7 0% 360 6% 367 4% Incr (Decr) Change from 2018 $ % (156) -3% 775 15% 619 6% 2,050 3,660 96 120 396 1,492 24 7,838 26 228 514 427 1,195 130 200 85 2,551 69 3,034 0 12,067 (4,340) 1,860 1,952 4,306 114 74 473 1,996 77 8,992 37 228 620 28 912 121 139 81 2,555 79 2,976 0 12,880 (3,115) 1,999 1,922 4,833 92 48 352 1,563 72 8,882 99 474 526 (4) 1,095 173 148 101 2,520 54 2,995 0 12,972 (2,588) 1,859 2,156 4,687 115 98 644 2,160 196 10,055 106 959 761 580 2,406 193 120 114 2,719 80 3,226 0 15,688 (5,670) 1,908 234 (146) 23 49 292 597 124 1,174 7 485 235 584 1,311 20 (28) 13 199 27 231 0 2,716 3,082 50 11% -3% 20% 51% 45% 28% 63% 12% 7% 51% 31% 101% 54% 10% -23% 12% 7% 33% 7% NA 17% 54% 3% (30) 526 (22) (26) (121) (433) (5) (111) 62 246 (94) (32) 183 52 9 20 (35) (26) 20 0 92 527 (141) -2% 12% -20% -35% -26% -22% -6% -1% 169% 108% -15% -112% 20% 43% 6% 24% -1% -32% 1% NA 1% 17% -7% (6,201) (5,114) (4,447) (7,579) 3,132 41% 668 13% Flat spending YTD over 2018 88 EDD Capital 2019 $ in 000's Tenant Improvements -Capital RE: Contingency Renew.&Replace Small Projects BHICC Interior Modernization P66 HVAC Systems Upgrade T91 Upland PreDevelopment P69 Commission Chamber Refresh P69 Solar Panel System EDD Technology Projects Fleet Replacement Other Projects Total Economic Development 2019 YTD Actual 2019 Forecast 2019 Budget 0 0 74 523 266 53 258 266 0 0 4 1,023 1,000 499 750 666 203 258 266 170 30 115 1,444 4,980 Budget Variance $ % 1,012 1,000 750 750 690 625 301 300 250 30 5 (11) 0 251 0 24 422 43 34 80 0 (110) 0 -1% 0% 33% 0% 3% 68% 14% 11% 32% 0% -2200% NA 5,713 733 13% Tenant Improvements - Capital - Leases forecasted to expire will be renewed and require additional capital investment. Small Projects - Upland Garage EV Charging Station project was cancelled by project sponsor for 2019. Project feasibility for 2020 under discussion. T-91 Upland Industrial - Spending less in 2019 with more spending to occur in 2020 and 2021. Prioritization and project delays 89 Central Services Appendix Central Services Financial Summary $ in 000's Total Operating Revenues Core Central Support Services Police Capital Development Environment & Sustainability Total Operating Expenses 2017 YTD 2018 YTD Actual Actual 82 81 34,692 11,378 7,763 3,347 57,181 36,661 13,188 7,733 2,954 60,536 2019 Year-to-Date Actual Budget 331 56 37,576 13,997 8,155 4,551 64,279 40,544 15,416 9,489 5,857 71,305 Fav (UnFav) Incr (Decr) Budget Variance Change from 2018 $ % $ % 275 488.2% 250 308.5% 2,968 1,419 1,334 1,306 7,026 7.3% 9.2% 14.1% 22.3% 9.9% 915 809 422 1,597 3,743 2.5% 6.1% 5.5% 54.1% 6.2% Operating expenses were $7.0M favorable to budget in Q2 2019 91 Central Services Expense by Category 2017 YTD 2018 YTD 2019 Year-to-Date $ in 000's Actual Actual Actual Budget Salaries & Benefits 34,654 38,558 40,329 41,669 Wages & Benefits 10,679 12,360 13,323 14,156 Payroll to Capital Projects 11,207 10,897 11,176 13,656 Equipment Expense 1,230 1,193 1,005 1,172 Supplies & Stock 493 589 487 617 Outside Services 13,311 14,340 15,374 20,586 Travel & Other Employee Exps 1,188 1,199 1,203 1,969 Insurance Expense 1,167 1,079 1,117 1,150 Litigated Injuries & Damages 838 (82) Other 1,102 1,036 1,837 1,712 Charge to Capital/Overhead Alloc (18,688) (20,633) (21,572) (25,383) Total 57,181 60,536 64,279 71,305 Fav (UnFav) Incr (Decr) Budget Variance Change from 2018 $ % $ % 1,341 3.2% 1,770 4.6% • 833 5.9% 963 7.8% 2,480 18.2% 279 2.6% • 168 14.3% (188) -15.8% 130 21.1% (102) -17.3% 5,211 25.3% 1,034 7.2% 766 38.9% 4 0.3% • 33 2.9% 38 3.5% 0.0% 82 -100.0% (125) -7.3% 801 77.3% (3,811) 15.0% 939 4.6% 7,026 9.9% 3,743 6.2% Payroll savings due to staff vacancies. Outside Services favorable budget variance are largely due to lower spending and project delays. Charge to Capital was lower than budget due to delay of some capital projects. Most of the budget savings came from payroll and outside services 92 Central Service YE Financial Forecast $ in 000's Total Operating Revenues 2017 Actual 68 2018 2019 Actual Forecast (500) 498 2019 Budget 185 Fav (UnFav) Incr (Decr) Budget Variance Change from 2018 $ % $ % 313 169.2% 998 -199.5% Core Central Support Services Police Capital Development Environment & Sustainability Total Operating Expenses 71,071 22,095 17,370 6,975 117,511 73,576 23,908 15,501 8,770 121,755 82,710 30,778 18,628 13,224 145,339 1,552 1,200 2,401 1,123 6,276 81,157 29,578 16,227 12,101 139,064 1.9% 3.9% 12.9% 8.5% 4.3% 7,581 5,670 726 3,331 17,308 10.3% 23.7% 4.7% 38.0% 14.2% Expect a $6.3M favorable budget variance for 2019 93 Central Services Capital Spending $ in 000's Infrastructure - Small Cap Services Tech - Small Cap PeopleSoft Financials Upgrade Radio System Upgrade Police Records Mgmt System New Budget System Office Wi-Fi Refresh Maximo Upgrade STIA Network Redundancy Fiber Channel Phone System Upgrade Customer Relationship Mgmt CDD Fleet Replacement Corporate Fleet Replacement Other (note 1) TOTAL 2019 YTD 2019 Actual Forecast 433 1,500 176 600 809 1,575 1,511 5,311 0 300 0 500 0 250 0 30 0 750 0 350 0 300 0 400 125 1,149 212 212 462 1,617 3,728 14,844 2019 Budget 1,500 1,000 1,575 9,140 800 600 500 500 900 600 1,400 0 1,439 1,328 2,086 23,368 Budget Variance $ % 0 0.0% 400 40.0% 0 0.0% 3,829 41.9% 500 62.5% 100 16.7% 250 50.0% 470 94.0% 150 16.7% 250 41.7% 1,100 78.6% (400) n/a 290 20.2% 1,116 84.0% 469 22.5% 8,524 36.5% Note: (1) "Other" includes remaining ICT projects and small capital projects/acquisitions. YTD spending variances primarily due to delayed spending 94