Commission Meeting Portal

Special Meeting on Oct 08, 2009 1:00PM

Minutes for the Port Of Seattle Commission meeting, held on Oct 08, 2009 1:00PM

        Commissioners                                               Tay Yoshitani 
                                                                                              Chief Executive Officer 
                      Bill Bryant 
                      Chair and President 
                   John Creighton                           P.O. Box 1209 
                     Patricia Davis                           Seattle, Washington 98111 
                   Lloyd Hara                             www. 
                   Gael Tarleton                              206.787.3000 

             An audio of the meeting proceedings and meeting materials are available on the Port of
                                        Seattle web site - 

             (The approximate point in the audio recording for the specific item is identified by
            minutes and seconds; example: 01:30.) 
                     APPROVED MINUTES 
            The Port of Seattle Commission met in a special meeting at 9:00 a.m., Thursday, October
            8, 2009 in the Commission Chambers at Pier 69, 2711 Alaskan Way, Seattle, WA.
            Commissioners Bryant, Creighton, Davis, Hara and Tarleton were present. 
               1.     CALL TO ORDER 
             The regular meeting was called to order at 9:10 a.m. by Bill Bryant, Chair and President. 
               2.     EXECUTIVE SESSION pursuant to RCW 42.30.110 
               3.     APPROVAL OF MINUTES 
               4.    SPECIAL ORDER OF BUSINESS 
               5.    UNANIMOUS CONSENT CALENDAR 

                October 8 SM Min

         THURSDAY, OCTOBER 8, 2009                        P. 2 
               7.   STAFF BRIEFINGS 
               8.   NEW BUSINESS 
               9.   POLICY ROUNDTABLE 
               a.  (00:01:35) Budget Workshop: Briefing on 2010 Corporate and Capital
             Development Division Budgets 
            Presentation documents: Commission agenda memorandum dated September 30, 2009
            and computer slide presentations titled, "Port of Seattle 2010 Preliminary Budget: and
           Capital Development Division 2010 Preliminary Budget" from Dan Thomas, Chief
            Financial Officer; Ralph Graves, Managing Director, Capital Development Division; and
           Michael Tong, Corporate Budget Manager. 
             Presenters: Mr. Thomas, Mr. Tong and Dakota Chamberlain, Director, Seaport Project
          Management Group 
            Mr. Thomas noted that over the past few weeks, Commissioners had been provided
             briefings on the preliminary budgets for individual divisions of the Port, and that today's
            information would provide more of a summary of how the preliminary budget is looking
             from a total Port-wide basis. He stated that one of the issues the Port is facing is a
            significant increase to the Environmental Reserves, which runs through the income
            statement as an environmental reserve expense. He reminded the Commission that this is
             where reserves are set up for future liabilities for future cleanup actions, and noted that it
             is anticipated that there will be some large ones beginning in 2010, particularly in the
            Seaport and Real Estate divisions. He also stated that those costs are funded by the tax
            levy and not out of operating revenues, but under accounting rules, they are booked under
            operating expense against operating revenues.
             Mr. Thomas stated that staff plans to return in early November with a fuller picture of
            what is happening with the 2009 budget and the impacts resulting from the Voluntary
            Separation Program (VSP). 
            Responding to a comment by Commissioner Tarleton, Mr. Thomas clarified that without
            counting environmental expenses, the preliminary 2010 budget has gone down
            substantially from the 2009 budget (4.4%). 
             Mr. Thomas also called to attention an additional booking of reserves, that being Other
            Post Employment Benefits (OPEB), which are non-pension related benefits (typically

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         THURSDAY, OCTOBER 8, 2009                        P. 3 
             health care) that are provided for retirees, noting that the booking of these costs began in
           2007. He noted that the largest portion of those reserves relate to the fact that the Port's
             retirees are able to join the Port's medical plans and pay their own premiums. He stated
             that in the past, those premiums did not reflect the full cost of the benefits being achieved
              by the retirees. As a result, as part of overall cost-cutting measures, the decision was
             made to charge retirees the full cost of their health care benefits beginning in 2010. As a
             result of doing so, staff expects to achieve significant savings by reversing and writing
             off those reserves.
            Mr. Thomas provided a comparison of operating revenues and expenses from 2009 
            budget through the 2010 budget, noting that the numbers provided included the
            environmental expenses for 2010. Commissioner Bryant stated that it would be helpful
            to have an additional column of numbers which reflected the environmental unfunded
            mandate costs. 
            Mr. Thomas then provided a summary of Port FTE's (full-time equivalent employees),
            noting that there has been a reduction across the board, both through the VSP program as
             well as the elimination of some positions. 
            Mr. Tong then addressed items within the 2010 Preliminary Budget for Corporate
            Professional and Technical Services, first providing a brief overview of how the
            preliminary budget target for 2010 was achieved. He reviewed budget cuts and noted
             that cuts were made across the board, and stated that since most of the corporate costs are
             payroll-related, significant cuts had been achieved due to FTE reductions. 
           Mr. Tong commented on additions which had been made to the 2010 budget, which
              Port Centennial Planning 
              Workplace Responsibility Program 
              2 FTE's in Human Resources and Development (HR&D) for Human Capital
              Management (HCM) 
              Payment Card Industry (PCI) Compliance Mandatory Audit 
              Self-Funding Benefits Broker 
              Deferred Compensation Third Party Administrator 
            Commissioner Hara asked about the approximate cost of the Port Centennial. Mr.
             Thomas responded that there is not a sure amount at this point, that there is a significant
            amount of work to be done, and there will be more funding in 2011.
            Commissioner Tarleton stated that there is hope that much of the funding will be
            underwritten by sponsors, and that she would be reluctant to speculate about what the
             impact on the 2011 budget could be on the Port until there is a chance to review a draft
            budget from the team. She also commented that she believes the total will be in the
            $500,000 to $1,000,000 range, but would not be principally funded by us. 

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         THURSDAY, OCTOBER 8, 2009                        P. 4 
            Mr. Tong noted that one of the savings measures was the elimination of the Economic &
           Trade Development Department. Commissioner Tarleton clarified that although the
            department had been eliminated, the functions and responsibilities of that department
            would reside in other Divisions.
            Commissioner Bryant asked to see breakouts, prior to the October 13 meeting, of line
           items for Risk Services; Human Resources and Development (HR&D); Information &
            Communications Technology (ICT); Office of Social Responsibility (OSR); and
            Regional Transportation. 
            Mr. Tong then reviewed a summary of the Corporate FTE count and also elements of risk
            for 2010, which included: 
              Uncertainty of economic conditions 
             SAO Performance Audit 
              Renewal of insurance premiums 
               Unexpected litigation or claims 
               Unanticipated events or Transportation Security Administration (TSA) mandates 
            During the discussion of proposed Capital Projects, Commissioner Tarleton stated that it
            would be helpful to see a breakout between Airport and Seaport Divisions of the ICT
             projects. Peter Garlock, Chief Information Officer, responded to the issue, noting that the
            amount presented in this presentation ($14,645,000) was only for Corporate Capital
            projects and that the total amount of the ICT budget was closer to $25,000,000. Mr.
             Garlock also stated that perhaps it would be helpful for staff to provide a detailed
             breakout of the individual projects that are proposed, as well as who will benefit from
             each project. Commissioner Bryant asked staff to consider where cuts could be made if it
            was necessary to reduce the proposed amount by $5,000,000. 
            Mr. Tong reviewed the remaining schedule for the 2010, noting that the preliminary
            budget document would be available to the Commission on October 20; First Reading of
            the budget would take place on November 10; Second Reading and Final Passage would
            take place on November 24; and the Final Budget would be filed with the county by
           December 1. 
            (01:00:55) As introduction to Mr. Chamberlain's presentation on the Capital
            Development Division's 2010 Preliminary Budget, he reviewed the Division's Mission,
            which is "The Capital Development Division (CDD) delivers projects and provides
             technical and contracting services in support of the business plans and infrastructure
             needs of the Port of Seattle." He also reviewed CDD's priorities for 2010, which include: 
               Continue the full implementation of the changes resulting from recent audits and
                  new Port Policies, anticipating a return visit from the State Audit Office (SAO) in
               Begin operation of the new Enterprise-wide Project Delivery (EPDS) system. 

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         THURSDAY, OCTOBER 8, 2009                        P. 5 
               Prioritize accomplishment of critical Capital Improvement Program (CIP)
              Measure department performance according to the CDD performance metrics. 
               Complete the high priority Capital Development Division Initiatives. 
            Mr. Chamberlain noted that the CDD budget is driven by the workload defined by the
            Seaport, Aviation and Real Estate divisions. He stated that an increase has been seen in
            the amount of expense work being done, partly due to changes to accounting rules. 
             Mr. Chamberlain noted that positions held by consultants in the past are continuing to be
             converted to Port staff positions, thereby reducing the number of consultants and
            reducing some costs. It was also noted that vacancies within Central Procurement would
              be filled. 
            Mr. Chamberlain provided and organizational chart of the CDD, noting that the Division
            is made up of five separate departments and that budgeting is done at the department
            level. Mr. Chamberlain stated that CDD's expense target for 2010 was a 5% savings
            compared to what was approved for the 2009 budget. 
            Staffing FTE's by department were reviewed and he also provided a look at what the
            make-up of the Procurement Office staff prior to the SAO audit as well as how that staff
             has changed since that time and currently exists. 
             Nora Huey, Director, Central Procurement Office, noted that in the restructuring of the
            department, the main focus had been to bring staff into compliance and going forward the
             department will be looking at how to gain better efficiencies. 
            Mr. Chamberlain identified upcoming risks, which included: 
                Financing difficulties disrupt capital programs. 
               Operating income declines interrupt expense-funded programs. 
               Personnel and process transitions disrupt project performance. 
               Renewed audit scrutiny disrupts response and performance. 
               Resource shortages constrain process improvements. 
             Opportunities were also identified, including: 
               Depressed market generates low bids for construction. 
               Slowed design and construction employment provides quality candidates for CDD
               Sustainable asset management can inform project decisions. 
               Building information management can aid project visualization and construction. 

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         THURSDAY, OCTOBER 8, 2009                        P. 6 

        10. ADJOURNMENT 
            There being no further business, the meeting was adjourned at 10:40 a.m. 
             (A digital recording of the meeting is available on the Port's website) 

           Lloyd Hara 

                Oct 8 SM Min