Economic Development Division 2020 Preliminary Budget October 8 Item No. 9b_supp_2 Meeting Date: October 8, 2019 2020 Economic Development Division Budget Timeline 2020 Business Plan and CIP Development Budget Division Development Business Plan 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 10) (Oct 9) 8) (Mid-November) (Nov 12) (Late(Nov November) 19) 2 Strategy to Budget Process Century Agenda Implementation Strategic Planning Vision 5- 10 Years SWOT Strategies and Objectives (Long Range Plans) 3 - 5 Years 2020 Business Plan 2020 Budget Annual 2020 Performance Plans 3 Economic Development Key 2020 Budget Drivers Revenue Down $615K/3.1%: • Modest increases in existing leases. • $809K reduction In Conference Centers. Expense Down $1,385K/4.5% • Better alignment of budgeted initiatives with spending. • Favorable allocations from shared facilities and Central Services. Capital • Construction of Bell Harbor Conference Center. • Completing Design process for T91 light industrial buildings. 4 EDD P&L Summary $ 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 2018 Actual 9,002 11,703 20,705 2018 Budget 8,985 9,537 18,522 2019 Budget 8,930 10,795 19,725 2019 Forecast 8,930 10,795 19,725 2020 Budget 9,124 9,985 19,110 Incr (Decr) Budget Variance $ % 194 2% (810) -7% (615) -3% 3,571 9,889 235 149 785 3,915 179 18,724 132 702 1,408 838 3,080 281 283 (76) 5,203 155 5,846 0 27,651 (6,946) 3,992 3,778 8,465 289 211 1,227 3,055 344 17,370 140 1,992 1,460 960 4,552 398 329 158 5,816 127 6,829 0 28,751 (10,229) 4,156 4,128 9,374 225 216 1,262 4,071 389 19,664 199 2,010 1,521 1,160 4,890 395 235 228 5,547 155 6,561 0 31,114 (11,389) 3,819 3,894 9,374 225 166 1,062 3,571 265 18,556 199 1,600 1,521 900 4,220 338 247 220 5,436 155 6,397 0 29,172 (9,447) 3,819 4,008 8,902 195 208 932 3,789 439 18,472 197 1,900 1,536 1,110 4,743 323 341 0 5,737 113 6,514 0 29,730 (10,620) 3,392 (119) (472) (30) (8) (330) (282) 50 (1,191) (2) (110) 15 (50) (146) (73) 106 (228) 190 (42) (47) 0 (1,385) 769 (427) -3% -5% -13% -4% -26% -7% 13% -6% -1% -5% 1% -4% -3% -18% 45% -100% 3% -27% -1% NA -4.5% 7% -11% (10,938) (14,385) (15,208) (13,266) (14,011) 1,196 8% Budget to Forecast *Portion of 2020 EDD initiatives assigned to tax levy: Workforce Development • Career Advancement Center - $300K • Construction Trades - Pre- Apprentice - $650K • Airport Career Pathways - $100K • Engagement and Strategic Plan - $200K • Transportation / Bus Charters - $2.4K • Maritime Secondary Education - $100K • Youth Maritime Initiative - $150K Other • • • • EDD Partnership Grants - $960K Tourism Marketing Support Program - $200K Port Gen Small Business Training - $50K Maritime Innovation Initiatives $150K Total = $2,762K 5 Economic Development Division Financial Trend In 000s 40,000 35,000 30,000 25,000 Depreciation Program Expense 20,000 Operating and Overhead Expense 15,000 Revenue 10,000 5,000 2014 2015 2016 2017 2018 2019 Forecast 2019 Budget 2020 Budget • Conference & Event Center construction driving 2019/2020 revenue decline (and associated variable expense). Return to trend expected 2021 and beyond. 6 Portfolio Management Financial Trend Revenue down $617K/-3.1% Expenses down $1,042K/-4.0% in 000s Expense Depreciation Revenue 35,000 Opportunities: • T91 Development 30,000 25,000 20,000 15,000 10,000 5,000 2016 2017 2018 Actual 2019 Forecast 2019 Budget 2020 Budget • 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. Risks/Challenges: • Potential downturn in real estate and the economy • Ongoing major projects on the waterfront. • Potential impact from newly built convention centers. 7 Real Estate Strategic Priorities ❑ Complete Bell Harbor Conference Center Modernization ❑ Redevelop Terminal 106 ❑ Redevelop CEM and Des Moines Creek West properties ❑ Continue Terminal 91 Uplands planning/development ❑ Move Maritime Innovation Center forward along with FT Gateway building ❑ Manage and Operate Pier 69 Headquarters ❑ Maintain 95% occupancy for Economic Development and Maritime properties New Light Industrial Facilities at Des Moines Creek North Business Park in SeaTac. Over the past five years, the Port has partnered with private developers to build/lease over 2.2 Million square feet of light industrial space near Sea-Tac international airport. 8 Real Estate Development 2020 Initiatives $ in 000's 2019 Budget 2020 Budget '20-'19 Change Appraisals Central Waterfront wayfinding plan/ideas Real Estate Strategic Plan/other consulting services 50 0 250 50 50 250 0 50 0 Total 300 350 50 9 Pier 69 Facilities 2020 Initiatives $ in 000's P69 Shuttle Total '20-'19 Change 2019 Budget 2020 Budget 200 0 (200) 200 0 (200) 10 Diversity in Contracting Strategic Priorities 1. Increase WMBE contracting utilization results, especially for African American and Hispanic businesses 2. Advance community engagement and partnerships to support WMBE and DBE programs 3. Provide PortGen workshops/trainings to interested WMBE and DBE businesses 4. Implement communication and education programs to build external and internal support for WMBE utilization 5. Work with Public Sector partners to advance WMBE and DBE utilization 2019 Port Annual WMBE Utilization Goal = 12.4% 2019 WMBE Utilization (end of Q2) = 13.8% 11 Diversity in Contracting 2020 Initiatives $ in 000's Construction Incubator Small Business Training Marketing/ Communication/Design Services OMWBE Certification WMBE Best Practice and Implementation Champion of Inclusion Procurement Technical Assistance Mentor Protege Total '20-'19 Change 2019 Budget 2020 Budget 60 75 5 15 50 10 15 0 50 50 10 15 0 10 15 80 (10) (25) 5 0 (50) 0 0 80 230 230 - 12 Tourism Strategic Priorities 1. Utilize Tourism Grant programs to increase the awareness of Washington state's unique visitor opportunities and attractions 2. Expand cruise and stay options within Washington state to enhance the cruise industry's economic impacts to the region 3. Conduct Familiarization tours (FAMS) for the travel media and travel trade to generate interest in King County and Washington state's tourism amenities and attractions 4. Partner with Visit Seattle and the Washington Tourism Association to leverage the Port's tourism investments and grant programs Spotlight Airport Advertising Program Highlights WA Destinations 13 Tourism 2020 Initiatives $ in 000's 2019 Budget Int. Representation & Work (Australia/China) Adv/Marketing (WeChat, FT, Cruise) Europe Representation & VS Sponsorship Tourism Grants London Trvl Show / Tourism Development Fam Tours / New Service Inaugural Activity Total 2020 Budget 98 133 275 200 39 83 98 133 275 200 39 83 828 828 '20-'19 Change 0 0 0 0 0 0 - 14 ED and Maritime Innovation Partnerships - Strategic Priorities 1. Implement 2020 Economic Development Grant Program in partnership with King County Cities 2. Support Greater Seattle Partners' regional economic development initiatives 3. Support Duwamish Community Equity Partners' economic development initiatives 4. Support maritime innovation initiatives to discover, promote and help advance promising maritime ventures and startups ❑ Implement pilot maritime accelerator program to support promising maritime startups ❑ Build partnerships with other maritime innovation centers/programs ❑ Work across the Port to advance maritime innovation ED Grant program touches cities across King County 15 EDD Admin 2020 Initiatives Economic Development Admin $ in 000's ED Partnership Grants Workforce Dev. Pilot Program ( Career Advancement Center ) Membership: Economic Dev Council Membership: Trade Dev Alliance Membership: Greater Seattle Partners Promotional Hosting/Sponsorships Maritime Innovation Initiatives Opportunity Fund Total 2019 Budget 2020 Budget 960 200 100 93 0 60 0 500 1,913 960 0 0 0 150 60 150 350 1,670 '20-'19 Change 0 (200) (100) (93) 150 0 150 (150) (243) 16 Workforce Development Strategic Priorities 1. Support new Port Commission workforce policy 2. Sustain construction industry training for disadvantaged workers 3. Support workers and employers at SeaTac International airport by operating Airport Employment Center and Career Support Center 4. Implement aviation career pathway pilot training initiative 5. Sustain Maritime Youth Collaborative (MYC) & Aviation career connected learning initiatives Ironworker's Preapprenticeship Graduates 17 Workforce Development 2020 Initiatives $ in 000's '20-'19 Change 2019 Budget 2020 Budget 500 350 60 710 250 200 250 2,070 500 419 60 650 150 300 100 2,079 0 69 0 (60) (100) 100 (150) 9 Developing Initiatives Engagement and Strategic Plan Maritime Secondary Education K-12 Career Connected Learning Total Developing Initiatives 0 0 400 400 200 100 0 300 200 100 (400) (100) Workforce Development Support 28 28 0 Total Workforce Development 2,498 2,407 (91) Contracted Initiatives Airport Employment Center Airport Employment Center and Classroom Employment Continuity Pool Program Construction Trades - Regional Partnership Services, Pre-Ap Maritime (Youth Collaborative) Career Advancement Center (Originally WFD Pilot Program) Airport Career Pathways Implementation Total Contracted Initiatives 0 18 Net Increase of 0.6 FTE 2019 Budget 36.0 2019 Changes P69 Front Desk Security (Transferred Departments) 1.0 1.0 (1.0) Adjusted 2019 37.0 Disadvantaged Business Enterprise Specialist Diversity in Contracting Outreach & Training Manager 2020 Budget Staff Additions (Subtractions): Real Estate Analyst 0.6 Net Change 2020 0.6 Proposed 2020 Budget 37.6 19 Economic Development Division Commission Briefing - Appendix 2020 Preliminary Budget October 8, 2019 Reductions from Zero-Based Approach Business Diversity in Contracting Diversity in Contracting Diversity in Contracting Diversity in Contracting Diversity in Contracting Diversity in Contracting Workforce Development Workforce Development Workforce Development Workforce Development Workforce Development Workforce Development Workforce Development ED Portfolio Management ED Portfolio Management ED Portfolio Management ED Portfolio Management ED Portfolio Management ED Portfolio Management EDD Administration Total What Equipment Expense Travel/Training Outside Services Initiatives Initiatives Initiatives Equipment Expense Travel/Training Other O&M Initiatives Initiatives Initiatives Initiatives Equipment General Expenses Initiatives Initiatives Initiatives Initiatives Travel/Training Totals in '000 Description (2) Computer and Telephone expense for AOB office and staff (5) Mainly reduction in Registration (11) Decrease in Outside Temp Clearical/Admin ($10K) and Other Contracted Services Trade Show Banner ($2K) (10) Construction Incubator (25) Small Business Training (50) WMBE Best Practice and Implementation (4) Removed Laptop Replacment ($2K), Equipment Rental and A/V for Events ($2K) (8) Reductions in Registration ($4K), Local Transportation ($2K), and Air Fare ($2K) (4) Burning Glass subscription (250) Airport Career Pathways Implementation (100) Youth Maritime Initiative (60) Construction Trades - Regional Partnership Services, Pre-Ap (400) K-12 Career Connected Learning (25) Decreased in capital reserve (457) BHICC's 3rd Party Management Op Exp and their Management Fee (163) T-102 Tenant Improvements (110) T-102 Broker Fees (51) WTCW Broker Fees (69) WTCW Tenant Improvements (15) Reduction in line with historic actuals (1,819) Note: There are additional reductions outside of this list, including service groups 21