Item No. 9b_supp_1
Meeting Date: October 8, 2019

Maritime Division
2020 Preliminary Budget Briefing
October 8th, 2020

2020 Maritime Division Budget Timeline

2020 Business
Plan and CIP
Development

Budget
Budget
Development
Development
Briefing
Briefing

Budget
Briefing
Budget
Briefing

First
First Reading
Reading &
&
Public Hearing
for 2019 Budget

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

(May/June)

(July
(Jun 10)
25)

(Oct 9)
8)

(Mid-November)
(Nov 12)

(Late(Nov
November)
19)

2

Strategy To Budget Process

Implementation

Strategic Planning

Century Agenda
Vision

5- 10 Years

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

3 - 5 Years

2020 Business Plan
2020 Budget

Annual

2020 Performance Plans

3

Maritime Priorities 2020
Budget supports
future focused
strategies

4

2020 Budget Objective
Financial Goal: Maritime Division achieves positive Net
Operating Income including depreciation by 2024.
- Leverage cruise and grain business to help support the regional
fishing fleet, environment, and local maritime small businesses.
- Manage expense growth.
- Balance port revenue growth with supporting vital maritime
industries.
- Execute 5 year Capital Plan.

5

Maritime Budget: Bottom Line Up Front
• Compared to 2019 Budget
- Revenue up $3.2 M or 5.4%
- Expenses up $1.5M or 2.9%

• Budget Drivers:
- Growth of Cruise
- Supporting transformational Capital Plan
• Project Managers and Planners

- Innovation
- Sustainability

6

Maritime Revenues

• Overall up $3.2M or 5.4%
• Strong growth in Cruise, balancing contraction elsewhere
• Cruise budget revenues projected $26.1 M up 17%
- Rate increase and new vessels

• Grain down $764K K or
18%
- Trade war and tariffs

• Elliot Bay fishing: down
$804K or 14%
- Loss of Ocean Phoenix

$ in 000's
Grain
Cruise Operations
Elliott Bay Fishing & Commercial Ops
Ship Canal Fishing & Operations
Maritime Portfolio Mgmt
Rec Boating
All Other
Total Maritime

2020 Revenue Up

2018
Actual
5,167
18,880
6,755
3,502
11,305
12,035
(69)
57,575

2019
Budget
4,254
22,406
5,927
4,021
10,328
12,794
0
59,729

2019
Forecast
4,254
22,406
5,827
4,021
10,328
12,794
0
59,629

2020
Budget
3,490
26,261
5,123
4,264
10,428
13,361
11
62,938

Budget Change
$
%
(764)
-18%
3,856
17%
(804)
-14%
243
6%
100
1%
567
4%
11
NA
3,208
5.4%

7

Budge

Maritime Expenses
• Maritime Expenses up $350K or 2.4%
• Overall Expenses (all in) up $1.5M or 2.9%
• Zero Based Budgeting mindset: Almost $1M reduced
- Strategic Review needs and historic spending: consultants, advertising, travel

• Adding FTEs to support capital, cruise, innovation:
- Offsetting by eliminating 3 unfilled positions, reducing consultant costs
- CPI, Planning Department, Cruise
- 3 to Project Management team

• Maintenance cost up

8

2020 Maritime Budget Summary (Excluding T46 Cruise)
Inclusive of Direct Charges & Allocations from Corporate, & Other Divisions
Incr (Decr)

$ in 000's
Total Revenues

2018
Actual
57,575

2018
Budget
55,053

2019
2019
Budget Forecast
59,729
59,629

2020
Budget
62,938

Budget Change
$
%
3,208
5.4%

Expenses
Maritime (Excl. Maint)
Economic Development
Total Direct

11,348
4,347
15,695

15,383
4,583
19,965

14,604
4,996
19,600

13,229
4,573
17,802

14,953
5,692
20,645

349
695
1,044

2.4%
13.9%
5.3%

Maintenance Expenses
Envir Services & Planning
Capital Development Expenses
Total Support Services

11,416
1,588
823
13,827

11,261
2,168
1,212
14,640

11,980
2,622
821
15,422

11,980
2,436
855
15,270

13,021
2,759
918
16,698

1,041
137
97
1,275

8.7%
5.2%
11.8%
8.3%

IT
Police Expenses
External Relations
Other Central Services
Aviation Division
Total Central Services / Other

2,607
4,041
1,379
5,483
221
13,730

2,858
4,209
1,528
6,184
194
14,973

2,788
4,473
1,685
6,647
206
15,799

2,788
4,297
1,585
6,432
206
15,308

2,903
3,408
1,800
6,627
236
14,974

115
(1,065)
115
(20)
30
(824)

4.1%
-23.8%
6.8%
-0.3%
14.8%
-5.2%

Operating Expenses

43,252

49,578

50,822

48,381

52,317

1,495

2.9%

Net Operating Income before Depeciation
Depreciation
NOI after Depreciation

14,323
18,022
(3,699)

5,475
17,868
(12,394)

8,908
17,613
(8,705)

11,249
17,613
(6,364)

10,621
17,195
(6,573)

1,713
(418)
2,132

19.2%
-2.4%
24.5%

Key 2020 budget changes from 2019
budget
• Revenue Growth of 5.4%
• Expense Growth of 2.9%
•
•

•

Direct increase of 5.3%
Support Services increase of 8.3%
• Maintenance growth in labor
rates, materials cost, and
common area allocation
change.
Central Services decrease 5.2%
• Recalibration of Police
deployment hours.

24.5% increase in Net income

9

2020 Maritime Budget Summary (Including T46 NWSA Payment)
Inclusive of Direct Charges & Allocations from Corporate, & Other Divisions
Incr (Decr)

$ in 000's
Total Revenues

2018
Actual
57,575

2018
Budget
55,053

2019
2019
Budget Forecast
59,729
59,629

2020
Budget
62,938

Budget Change
$
%
3,208
5.4%

Impact of Terminal 46 payment to
NWSA beginning in 2020 to the Port
•

Expenses
Maritime (Excl. Maint)
Economic Development
Total Direct

11,348
4,347
15,695

15,383
4,583
19,965

14,604
4,996
19,600

13,229
4,573
17,802

18,779
5,692
24,471

4,175
695
4,871

28.6%
13.9%
24.9%

Maintenance Expenses
Envir Services & Planning
Capital Development Expenses
Total Support Services

11,416
1,588
823
13,827

11,261
2,168
1,212
14,640

11,980
2,622
821
15,422

11,980
2,436
855
15,270

13,021
2,759
950
16,729

1,041
137
129
1,307

8.7%
5.2%
15.6%
8.5%

IT
Police Expenses
External Relations
Other Central Services
Aviation Division
Total Central Services / Other

2,607
4,041
1,379
5,483
221
13,730

2,858
4,209
1,528
6,184
194
14,973

2,788
4,473
1,685
6,647
206
15,799

2,788
4,297
1,585
6,432
206
15,308

2,903
3,408
1,800
6,627
236
14,974

115
(1,065)
115
(20)
30
(824)

4.1%
-23.8%
6.8%
-0.3%
14.8%
-5.2%

Operating Expenses

43,252

49,578

50,822

48,381

56,175

5,353

10.5%

Net Operating Income before Depeciation
Depreciation
NOI after Depreciation

14,323
18,022
(3,699)

5,475
17,868
(12,394)

8,908
17,613
(8,705)

11,249
17,613
(6,364)

6,763
17,195
(10,432)

(2,145)
(418)
(1,727)

-24.1%
-2.4%
-19.8%

•

$3.82M growing 2% annually for 29
acres at Terminal 46
Payment creates revenue for NWSA
(50% returned to Port of Seattle, not
shown here)

10

Maritime Division Financial Trends
In 000s

Depreciation

• Continuing upward
revenue trend.

Terminal 46 Payment

80,000

Operating and Overhead Expense

70,000

Revenue

60,000

• Expense reductions
helped mitigate $3.8M
gross payment to the
NWSA.

50,000
40,000
30,000
20,000

10,000
2014

2015

2016

2017

2018

2019 Forecast

2019 Budget

2020 Budget

Continuing progress toward profitability

• Depreciation is down
slightly Y/Y.

11

Cruise Financial Goal:
Profitability while driving regional tourism
Revenue up $3.9M/17.2%
*Expenses up $4.5M/37.8%

In $000's
30,000

Depreciation

*Includes $3.8M Northwest Seaport Alliance

Operating Expense
25,000

Payment

Revenue

Initiatives:

20,000

•

15,000

10,000

•

5,000

Port Valet $1.2M ($720K to Cruise,
$480K to Aviation), budget increased
from 2019 driven by passengers
Seatrade Booth $160K

2016

2017

2018 Actual

2019 Forecast

2019 Budget

2020 Budget

Continued growth in Cruise Demand

12

Recreational Boating Goal: Journey to Profitability
In $000's

Depreciation

18,000

Operating Expense

16,000

Revenue

Revenue up $567K/4.4%
Expenses down $108K/-0.9%

14,000
12,000
10,000

Initiatives:

8,000

• Destination awareness: market
guest moorage
• Complete capital projects
• Attract new boaters

6,000
4,000
2,000
2016

2017

2018 Actual

2019 Forecast

2019 Budget

2020 Budget

13

Elliott Bay Fishing & Commercial Operations
In $000's
14,000
Depreciation

12,000

Operating Expense

Revenue

Revenue down $804K/-13.6%
Expenses up $842K/13.6%

10,000

8,000

Initiatives:

6,000

• Terminal 91 Berth 6&8 Repair
• T46 North Pier Redevelopment
• Mooring Dolphins

4,000

2,000

2016

2017

2018 Actual

2019 Forecast

2019 Budget

2020 Budget

14

Ship Canal Fishing & Operations
In $000's
Depreciation
10,000
Operating Expense
9,000
Revenue

8,000

Revenue up $243K/6%
Expenses up $548K/8.7%

7,000
6,000

5,000

Initiatives:

4,000

• Maritime Innovation Center /
Fishermen's Terminal
Redevelopment

3,000
2,000
1,000
2016

2017

2018 Actual

2019 Forecast

2019 Budget

2020 Budget

15

Maritime Portfolio Management:
Positive NOI including Depreciation by 2024
In $000's
18,000

Depreciation

Operating Expense

Revenue

Revenue up $100K/1%
Expenses up $164K/1.4%

16,000
14,000
12,000
10,000

Initiatives:

8,000
6,000
4,000
2,000
2016

2017

2018 Actual

2019 Forecast

2019 Budget

2020 Budget

• Fishermen's Terminal Redevelopment
• Maritime Industrial Center - A1 building
improvements
• 106 Development

• 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.

16

Grain Terminal Goal: Net Income Maximized
Revenue down $764K/-18%
Expenses up $59K/3.2%

In $000's
6,000

5,000

4,000
Depreciation

3,000

Operating Expense

Revenue
2,000

1,000

2016

2017

2018 Actual

2019 Forecast

2019 Budget

2020 Budget

Tariff policy driving uncertainty in grain volumes

17

Maritime Division
Service Group Summary
2020 Preliminary Budget
October 8, 2019

Marine Maintenance
Maintenance Breakdown
Corp
NWSA

SWU

Maritime

•
•
•

Economic Development

Up 8.4% over 2019 Budget
Assumes 4% increase in labor cost
Project Management and Facilities
Management Teams fully staffed
- Increase of 0.5 FTEs and conversion of 24
long-term Emergency Hires

Maintenance Overhead

Marine Maintenance supports many constituents across the region

19

Environmental Programs
• Continuing core services and responding to new priorities
• Assessed and realigned resources to meet current
demands
• 2020 outside services request is $386K below 2019
budget
• 2 new FTEs to deliver priorities and offsetting outside
consultant use
•

New Priorities: Sustainability, Orca Recovery, Cruise Environmental and
Duwamish Engagement $420K

20

Staffing Changes
Summary
• 8.5 new positions
- 3 in Project Management
- 2 Planners
- Cruise team member
- Continuous Process Improvement

• 3 eliminated positions
• Net change: 5.5

21

Stormwater Utility Summary
2020 Preliminary Budget
September 11, 2019

Stormwater Utility Operating Budget

• Rate increase to 8.2%, transferred one FTE from Environment & Sustainability to SWU
• FTE to grow from 2 to 3 to offset with reduced consulting cost.

23

Stormwater Utility Capital Budget Summary

24

Maritime Appendix
2020 Preliminary Budget
October 8th, 2020

Reductions from Zero-Based Approach
Business
MD Portfolio Management
MD Portfolio Management
MD Portfolio Management
Cruise
Cruise
Cruise
Cruise
Maritime Marketing
Maritime Marketing
Maritime Marketing
Maritime Operations
RecBoating
RecBoating

What
Travel/Training
Promotional Hosting
General Expenses
Professional Services
Travel/Lodging
Promotional Expenses
Advertising
Computer acquistion
Other contracted services
Advertising
Furnitures
Recycling
Seasonal Hiring

Totals in '000 Description
(1) Mainly reduction in Registration
(5) Removed Promo Hosting for FVO Centennial ($5K) budgeted in 2019
(21) Removed Salmon Bay Marina Office/Retail Miscellaneous Exp ($15K) budgeted in 2019
(750) Reduction in design consultant services
(6) Reduction in airfare, lodging, and employee food & beverage
(5) Consolidated with Maritime Marketing efforts
(10) Consolidated with Maritime Marketing efforts
(1) Reduction in computer expenses based on need in 2020
(40) Reductions in large format graphics and printing for Cruise materials
(85) Reduction based on need and ability to spend in 2020
(7) Reduction of unneccessary purchasing
(14) Reduction of expenses in line with actuals
(13) Reduction of operating expenses

Note: There are additional reductions outside of this list, including service groups

26

Marine Maintenance
$ in 000s

2017 Actual

2018 Actual

2019 Budget 2019 Forecast 2020 Budget

Operating Exp*

18,873

20,630

19,740

21,485

21,755

Expense Project

1,323

1,250

2,712

1,316

2,577

Total

20,196

21,880

22,452

22,801

24,331

Budget to Budget

2,015
(136)
1,879

10.2%
-5.0%
8.4%

Forecast to Budget

270
1,261
1,531

1.3%
95.8%
6.7%

Maintenance Breakdown
NWSA

Corp

•
•

SWU
Maritime

Assumes 4% increase in labor cost
Project Management and Facilities
Management Teams fully staffed
-

Increase of 0.5 FTEs and conversion of
24 long-term Emergency Hires

Economic
Development

Maintenance
Overhead

*Operating Expense net of revenue from reimbursable work
27

Net Increase of 5.5 FTE
2019 Budget (excluding Stormwater Utility)
2019 Changes
Transfer
1) Tra ns fer from Sea port Project Ma na gement
2) Tra ns ferred from Securi ty
3) Unfi l l ed purcha s i ng s peci a l i s t (Ma i ntena nce)
Adjusted 2019

169.5

2020 Budget
Staff Addition/Subraction:
Capital

20.0
2.0
-1.0

1) Project Ma na ger 2 - Sea port PM

1.0

2) Ca pi tal Project Schedul er - Sea port PM

1.0

3) Admi ni s tra tive As s i s tant

1.0
3.0

Total Capital

190.5
Maintenance

1) Convers i on of exi s ti ng cra ft/l a bor emergency hi res
Adjusted 2020 Baseline

Summary
• 8.5 new positions
• 3 eliminated positions
• Net change: 5.5

24.0

1) Convert 0.5 Fa ci l i ties Ma i ntena nce Ma na ger to ful l FTE

0.5

214.5

2) New a dmi ni s tra tive a s s i s tant - Ma i ntena nce

1.0

3) Remova l of Seni or Fl eet Ma na ger Pos i tion

-1.0
Total Maintenance

0.5

Maritime Direct
1) Ma ri time Continuous Proces s Improvement Speci a l i s t

1.0

2) Ma ri time Fa ci l i ty Pl a nner

1.0

3) Sr. Ma na ger Pl a nni ng

1.0

4) Crui s e Servi ces Speci a l i s t

1.0

5) Remova l of va ca nt Cus tomer Servi ce Supervi s or

-1.0

6) Remova l of va ca nt Ha rbor Accounting Bus i nes s Ana l ys t

-1.0
Total Maritime Direct

• Conversion of 24 existing Marine
Maintenance emergency hires to FTE

2.0

Net Change

5.5

Proposed 2020 Budget

220.0

28