7a supp
ITEM NO: 7a_Supp_1___ DATE OF MEETING: October 10, 2016 Aviation Division 2017 Budget Review Commission Briefing October 10, 2016 1 Growth Drives 2017 Budget Enplaned Passengers (000s) Capital Spending ($ millions) 30,000 $700 $663 4.0% 9.0% $590 25,000 12.8% $600 $498 7.7% 20,000 $500 4.7% $400 15,000 $300 23,009 23,929 10,000 21,109 18,717 $200 $156 $165 $173 16,597 17,376 5,000 $100 $0 - 2012 2013 2014 2015 2016 Fcst 2017 Bud 2014 2015 2016 Fcst 2017 2018 2019 Enplaned passengers: Entering phase of major increase in capital 44.2% growth since 2012 spending CAGR of 7.6% Will continue for many years Anticipate 48 million annual passengers Organization must prepare to succeed (MAP) in 2017 vs. 33 MAP in 2012 Growth drives budget 2 2017 Budget Drivers Achieve Century Agenda objectives: Airport capacity/accommodate growth: Operational challenges: Gates full at peak times, necessitating hardstand operations Ground transportation growing trips and complexity of operations Airport capacity: Long-term facility planning/development: Finalize master plan, including environmental review Advance planning for master plan projects Cost effective expansion: Grow non-aero revenues: ADR program Property development Parking Gateway of Choice: Improve customer service: Facility cleanliness and appearance Wayfinding and passenger processing Enhance security - Full employee screening Improve safety Flight corridor safety program IATA Level of Service Century Agenda drives budget 3 Aviation Division Expense Summary: Baseline & Non-recurring Costs in 000's Approved Proposed Change vs. 2016 Budget 2017 Budget Restated Baseline Baseline Budget 161,389 170,111 $ % Baseline transferred to Corporate (2,346) Adjusted Baseline Budget 161,389 167,765 Baseline Cost Reductions/Savings (2,205) (4,486) Baseline Cost Increases 6,606 6,770 Baseline Budget before proposed additions 165,789 170,049 2,284 1.4% Proposed additions to Baseline 4,322 6,607 3.9% Add 100% Employee Screening 7,905 4.7% Revised Baseline Budget 170,111 184,560 16,795 10.0% Change vs. 2016 Bud Non-recurring Expenses 10,158 14,507 4,349 Budget before Exceptions 180,269 199,067 18,799 10.4% Exceptions: Regulated Materials 3,246 3,775 529 16.3% Aviation O&M Budget $ 183,515 $ 202,842 $ 19,328 10.5% Majority of budget requests: non-recurring ($14.5M) and 100% employee screening ($7.9M) 4 FTE Summary FTEs % Driver - 2017 Additions 2016 Approved budet 892.81 Safety 3.0 Transfers & Changes in 2016 (12.15) Security 3.0 2016 adjusted baseline 880.66 Growth - Operational Challengs 16.0 2017 budget cuts (5.00) -0.6% Capital Program Delivery 7.0 2017 Additions 33.50 3.8% Century Agenda/Business Needs 4.5 Net change 28.50 3.2% Total 33.5 Employee screening function 85.00 9.7% Total increase 113.50 12.9% BI, Community Relations and Emergency Preparedness transferred to Corporate in 2016 (11.9 FTE's) 2017 Proposed budget 994.16 Phase II re-org Corporate FTE's 100% assigned to Aviation are included in 2017 Proposed Budget count (39.25 FTE's) FTEs driven by budget priorities 5 Budget Addition Requests 2017 Budget Request $000 Problem/Need/Opportunity Solution FTEs Baseline One-time Safety Prepare for emergency/disaster 2017 Tri-Annual Disaster Exercise 100 Need to implement systematic airfield safety Airport Ops Manager - Safety Management 1.0 110 2 management program - Required Increased airfield operations requires additonal staff to Airport Operations Specialist 2.0 194 2 provide adequate oversight Code requires annual inspection Annual Smoke Control Consultant 50 Electrical danger for staff Arc Flash study - next phase 150 Unsafe lighting conditions at BMF BMF Lighting Design and Improvement 50 FAA requires live fire training for Fire Dept. Training at DFW (North Bend closed) 100 Protect staff and contractors Fall Protection Inspection 25 Improve safety conditions for passengers RCF Bus Camera (software) upgrade 100 Safety - 2017 Budget Requests 3.0 479 404 2017 Budget Request $000 Problem/Need/Opportunity Solution FTEs Baseline One-time Security Opportunity to enhance security Hire staff to do full employee screening 85.0 7,905 Increased compliance and audit requirements Audit and Compliance Manager 1.0 99 2 Increased compliance and audit requirements Security Compliance Coordinator 1.0 89 2 Develop and manage videao analytics Security Systems Process Manager 1.0 105 2 Security - 2017 Budget Requests 88.0 8,198 5 Safety & Security Enhancement Opportunities 6 Budget Addition Requests 2017 Budget Request $000 Problem/Need/Opportunity Solution FTEs Baseline One-time Passenger Growth: Operational Challenges Ground Transportation Trip Activity Growth & Complexity Effective mgmt oversight & compliance monitoring Landside Supervisors 2.0 190 limited by resource capacity Ground Transportation Controllers 6.0 397 Contract management support 1.0 137 Hardstand Operations Complex hardstand scheduling/ coordination driven by Airline Scheduling Systems Specialist 1.0 95 3 volume growth Additional buses and increased trip activity driven by Automotive Bus Mechanic 1.0 87 volume growth Field Crew Laborer - Bus Washer/Cleaner 1.0 54 New hardstand equipment Automotive/equipment Mechanic 1.0 87 Maintain Facilities Passenger volumes increase wear on facilties Carpenter 1.0 85 Laborer - Parking Garage 1.0 55 Volume Driven Resource Needs Scheduling delays for mandatory training (badging Additional AAAE IET Training Stations (AV 15 process) due to testing stations at full capacity Training Ctr) Increase in Badge volume growth Background Compliance Specialist 1.0 73 2 Passenger Growth: Operational Challenges - 2017 Budget Requests 16.0 1,259 20 Passenger Growth: Operational Challenges 7 Budget Addition Requests 2017 Budget Request $000 Problem/Need/Opportunity Solution FTEs Baseline One-time Passenger Growth: Long-term Facility Needs Complete SAMP and Related Planning Identify facility needs SAMP & Transition to Environmental Review 500 Identify specific projects Post-SAMP Advanced Planning 3,500 Validate Plan SAMP Environmental Review 2,300 SAMP Utilities Evaluation 500 IWS/Storm Water Evaluation 150 Other Facility Planning Architectural Standards Update Consultant 200 Ground Transportation Operators Relocation Design 100 Terminal Space Masterplan 80 Build Capacity for Capital Program Delivery Capital Program Development (project definition, sequencing, coordination) 500 Capital Development Program FTE 1.0 137 2 Sr. Engineer, Conveyance 1.0 113 3 Sr. Engineer, Mechanical Systems 1.0 113 3 Program Management Coordinator 1.0 82 2 Ltd. Duration - Admin Assistant for F&I/Utilities 1.0 75 Permit Management Tracking System 60 Building Inspector/Plans Examiner 1.0 96 3 Permit Technician - Building Department 1.0 59 2 Passenger Growth: Long-term Facility Needs - 2017 Budget Requests 7.0 600 7,980 Passenger Growth: Long-term Facility Needs 8 Budget Addition Requests 2017 Budget Request $000 Problem/Need/Opportunity Solution FTEs Baseline One-time Customer Service Facility Cleanliness / Appearance / ASQ metrics Janitorial contract scope increase 1,000 Parking garage improvements (one floor refresh) 375 Terminal to Ground Transportation transition - pilot project 75 Music Initiative Programming & Development (airport share) 175 Stanchions and sign holders for common use gates 35 Curbside Refresh - Arrivals level 30 Wayfinding / Processing Passengers Airport Signage Master Plan 950 CISS contract scope increase 879 Annual fees for additional Automated Passport Control kiosks 96 IER Mobile Phone Scanners - for passport control 24 Equipment Upgrades 10 Train Staff on Customer Service Airport-wide Customer Service Training 260 Customer Service Recognition program 55 Other North Employee Parking Lot Attendant contract 196 Salesforce Licensing - employee portals & data processing 40 Customer Service - 2017 Budget Requests 2,526 1,674 Customer Service 9 Budget Addition Requests 2017 Budget Request $000 Problem/Need/Opportunity Solution FTEs Baseline One-time Air Service Development New Air Service Incentive- Xiamen Air 250 New Air Service Incentive- Volaris 150 New Air Service Incentive- Condor 50 New Air Service Incentive- Alaska- 25 New Air Service Incentive- Alaska -San Luis 25 New Air Service Incentive- Alaska -Wichita 25 New Air Service Incentive- Unnamed Airline 200 Air Service Development - 2017 Budget Requests 725 2017 Budget Request $000 Problem/Need/Opportunity Solution FTEs Baseline One-time Grow Non-Aeronautical Revenues Develop land to generate revenues NERA FAA Pilot Program - grant 1,800 Owner's Liaison - new property development 150 Support Services (surveys, appraisals, title 50 Reserved parking can generate new revenue Parking Pre-booking System Consultant 200 ADR releasing program ADR Leasing Consultant 500 Monitor quality of ADR program to improve ADR Quality Assurance Consulting 53 customer satisfaction and grow revenue Grow Non-Aeronautical Revenues - 2017 Budget Requests 2,753 Air Service Development & Grow Non-Aero Revenue 10 Budget Addition Requests 2017 Budget Request $000 Problem/Need/Opportunit Solution FTEs Baseline One-time Asset Managementy Strategic Asset Management Asset Condition Assessment Support 100 Facility Master Record Drawing Consultant 150 Asset Management Estimating Consultant 50 UHF/VHF Radio Antenna mapping and 50 Maintaining Existing Assets Fire Dept Apparatus Maintenance Contract 300 Maintenance Materials Increase (Elec. & 200 Terminal Test and Balance Consultant 100 Water Reservoir Cleaning 100 Airport Office Bldg - Increase 10 Storage Tank(s) 10-Year Inspection 20 Asset Management - 2017 Budget Requests 710 370 2017 Budget Request $000 Problem/Need/Opportunit Solution FTEs Baseline One-time Environmentaly Centralized Management of Deicing 50 Water Conservation Plan 50 Environmental - 2017 Budget Requests 100 Asset Management & Environmental 11 Budget Addition Requests 2017 Budget Request $000 Problem/Need/Opportunity Solution FTEs Baseline One-time Other Business Needs Determine optimal staffing levels Staffing Plan Consultant 150 Increase grant utilization, to further MWBE goals Senior Financial Analyst - Grants and PFC mgmt 1.0 131 2 Cargo facility development Cargo Facilities Manager 1.0 104 2 Cargo Business Development & Marketing Mgr 1.0 104 2 Cargo Consulting Services 140 Critical high value lease Financial consulting - primarily for airline agreement 100 Enhance utility billing customer service Utility Business Analyst 1.0 108 3 Enhance systems utilization & training Ground Transportation Software System Upgrade 30 Maximo system upgrade training 12 Post-Maximo upgrade implementation 25 Grow internship opportunities Airport Training dept - College Intern 0.25 16 Airport Dining & Retail dept - Graduate Intern 0.25 14 Tomorrow at Sea-Tac coalition Seattle Chamber Membership Dues 100 Airport legislative alliance ACI/AAAE Membership Dues 48 Reduced for 2016, need to augment Additional Travel/Training 25 Professional development & software acquisition 69 Employee Recognition 10 General supplies/PPE 11 Backup system for emergency responders Generator & Infrastructure for Fort Lawton site 10 Other - 2017 Budget Requests 4.5 739 476 Other 2017 Budget Requests 12 Expense Summary 2015 2016 2016 2017 Budget Change Budget vs Forecast $ in 000's Actual Budget Forecast Budget $ % $ % Operating Expenses Payroll 99,327 107,800 102,733 120,430 12,629 11.7% 17,697 17.2% Outside Services 31,801 40,138 40,769 45,392 5,253 13.1% 4,622 11.3% Utilities 13,682 14,686 14,858 15,187 501 3.4% 329 2.2% Other Airport Expenses 21,737 20,251 28,943 21,834 1,583 7.8% (7,109) -24.6% Total Aviation Expenses 166,548 182,876 187,304 202,842 19,967 10.9% 15,539 8.3% Corporate 44,065 50,961 51,209 54,428 3,468 6.8% 3,220 6.3% Police Costs 15,815 18,728 18,712 19,173 446 2.4% 461 2.5% Capital Development 7,828 11,746 8,029 22,378 10,633 90.5% 14,350 178.7% Maritime/Economic Development 3,885 3,907 3,488 3,393 (514) -13.2% (96) -2.7% Costs from other Divisions 71,592 85,341 81,438 99,372 14,032 16.4% 17,934 22.0% Total Operating Expense 238,140 268,216 268,742 302,215 33,999 12.7% 33,473 12.5% Payroll costs include new FTEs, including employee screening function($7.9 million) Outside services include SAMP completion and advance planning costs Capital development cost include: flight corridor safety program ($3.3 million), terminal security enhancements ($4.3 million) and tenant support for ADR buildout ($4.0 million) Expenses here include costs from other divisions 13 5 Year Comparison of FTE to Enplanement Growth Enplaned passengers: 44.2% growth since 2012 CAGR of 7.6% Aviation Division FTE's: 15.7% growth since 2012 CAGR of 3.0% Enplanement growth rate much higher than FTE growth rate 14 Non-Aeronautical NOI 2015 2016 2016 2017 Budget Change Budget vs Forecast $ in 000's Actual Budget Forecast Budget $ % $ % Non-Aero Revenues Rental Cars 46,515 48,166 50,013 50,746 2,580 5.4% 733 1.5% Public Parking 63,059 66,847 69,767 73,568 6,721 10.1% 3,801 5.4% Ground Transportation 8,809 8,327 12,618 14,443 6,116 73.5% 1,825 14.5% Airport Dining & Retail/Terminal leases 52,391 55,554 55,799 56,738 1,184 2.1% 938 1.7% Commercial Properties 8,007 10,251 15,708 12,141 1,891 18.4% (3,567) -22.7% Other 18,064 19,177 19,708 18,968 (209) -1.1% (740) -3.8% Total Non-Aero Revenues 196,844 208,321 223,613 226,604 18,283 8.8% 2,991 1.3% Total Non-Aero Expenses 84,226 97,657 96,180 107,391 9,734 10.0% 11,211 11.7% Net Operating Income 112,618 110,664 127,433 119,213 8,550 7.7% (8,219) -6.4% Less: CFC Surplus (5,159) (5,146) (6,219) (5,223) 77 -1.5% 996 -16.0% Adjusted Non-Aero NOI 107,459 105,518 121,214 113,991 8,473 8.0% (7,223) -6.0% Debt Service (42,812) (43,494) (44,372) (45,136) 1,642 -3.6% (764) 1.7% Net Cash Flow 64,647 62,024 76,842 68,855 6,831 11.0% (7,987) -10.4% Passenger growth: 9% growth driving 2016 forecast increase, compared to 4% growth for 2017 Budget Ground Transportation: 2017 Budget reflects full year of new taxi contract and TNC operations Commercial Properties: 2016 Revenues included one-time $5 million for DMCBP advance payment Expenses: 2017 Budget reflects $4 million for project support for ADR tenant buildouts 2017 NOI impacted by one-time costs 15 Aeronautical NOI 2015 2016 2016 2017 Budget Change Budget vs Forecast $ in 000's Actual Budget Forecast Budget $ % $ % Revenues: Movement Area 78,326 95,220 100,462 110,281 15,061 15.8% 9,819 9.8% Apron Area 10,840 14,144 14,291 15,921 1,778 12.6% 1,630 11.4% Terminal Rents 150,449 159,569 155,101 163,425 3,856 2.4% 8,323 5.4% Federal Inspection Services (FIS) 9,979 10,836 10,839 12,418 1,583 14.6% 1,579 14.6% Total Rate Base Revenues 249,594 279,768 280,694 302,046 8.0% 22,277 21,351 7.6% Commercial Area 9,519 9,306 9,197 9,665 359 3.9% 468 5.1% Subtotal before Revenue Sharing 259,113 289,074 289,891 311,711 7.8% 22,637 21,820 7.5% Revenue Sharing (29,453) (28,055) (35,676) (33,612) (5,557) 19.8% 2,065 -5.8% Other Prior Year Revenues (35) - - - - 0.0% - 0.0% Total Aeronautical Revenues 229,624 261,019 254,215 278,099 6.5% 17,080 23,884 9.4% Total Aeronautical Expenses 153,914 170,559 172,562 194,824 24,265 12.9% 14.2% 22,262 Net Operating Income 75,710 90,460 81,653 83,275 (7,185) -7.9% 1,622 - 2.0% Debt Service (82,341) (91,723) (91,351) (88,740) 2,983 -3.3% 2,610 -2.9% Net Cash Flow (6,631) (1,263) (9,697) (5,465) (4,202) 332.7% 4,232 -43.6% Rate Based Revenue growth driven by increased rate base costs 16 Operating Budget Summary 2015 2016 2016 2017 Budget Change Budget vs Forecast $ in 000's Actual Budget Forecast Budget $ % $ % Operating Revenues: Aeronautical Revenues 229,624 261,019 254,215 278,099 17,080 6.5% 23,884 9.4% SLOA III Incentive Straight Line Adj (3,576) (3,576) (3,576) (3,576) - 0.0% - 0.0% Non-Aeronautical Revenues 196,844 208,321 223,613 226,604 18,283 8.8% 2,991 1.3% Total Operating Revenues 422,892 465,764 474,252 501,127 35,363 7.6% 26,876 5.7% Operating Expenses: Aviation Budget before Exceptions 162,265 179,630 180,920 199,067 19,438 10.8% 18,147 10.0% Exceptions 4,283 3,246 6,383 3,775 529 16.3% (2,608) -40.9% Aviation O&M Budget 166,548 182,876 187,304 202,842 19,967 10.9% 15,539 8.3% Costs from Other Divisions 71,592 85,341 81,438 99,372 14,032 16.4% 17,934 22.0% Total Operating Expense 238,140 268,216 268,742 302,215 33,999 12.7% 33,473 12.5% Net Operating Income 184,752 197,548 205,510 198,913 1,365 0.7% (6,597) -3.2% CFC Surplus (5,159) (5,146) (6,219) (5,223) (77) 1.5% 996 -16.0% Net Non-Operating items paid from ADF 2,690 1,099 2,462 3,691 2,592 236.0% 1,229 49.9% SLOA III Incentive Straight Line Adj 3,576 3,576 3,576 3,576 - 0.0% Debt Service (125,153) (135,217) (135,723) (133,876) 1,341 -1.0% 1,846 -1.4% Adjusted Net Cash Flow 60,706 61,859 69,607 67,081 5,221 8.4% (2,526) -3.6% Key Measures CPE 10.12 11.00 10.31 10.87 (0.13) -1.2% 0.55 5.4% O&M per Enplanement 11.28 12.07 11.68 12.63 0.56 4.6% 0.95 8.1% Debt Service Coverage 1.49 1.46 1.50 1.50 0.04 3.0% (0.00) -0.2% Increased bottom line and debt service coverage 17 Capital Budget Summary Cash Flows (Figures in $000s) 2017-21 2016 2017 2018 2019 2020 2021 Total Four Major Projects NorthSTAR 29,128 73,799 112,316 117,001 499,882 113,988 82,778 International Arrivals Facility 41,527 197,366 227,339 - 143,128 595,430 27,597 Baggage Optimization 5,421 45,000 45,600 64,500 47,000 57,000 259,100 South Satellite Renovation 30 970 9,000 20,000 30,000 50,000 109,970 Subtotal 76,106 317,135 394,255 344,629 218,585 189,778 1,464,382 Other existing projects 103,381 209,135 50,018 162,595 19,519 508,705 67,438 Proposed New Projects 1,386 59,666 91,501 56,249 41,175 24,896 273,487 Allowance CIPs - 4,562 15,000 30,000 45,000 60,000 154,562 Total Proposed CIP 180,873 590,498 663,351 498,316 354,778 294,193 2,401,136 Four major projects account for $1.46 billion Proposing 33 projects totaling $273M spending through 2021 Budget includes place-holder spending for as yet undefined future projects (called "Allowance CIPs"): $154M Budget does not include potential projects to be identified by Sustainable Airport Master Plan (SAMP) Undertaking major program before SAMP projects 18 Proposed New Projects Next # of Cost Cash Flows (Figures in $000s) 2017-21 Slide Projects Description Estimate 2017 2018 2019 2020 2021 Total I 8 Safety and Security 41,777 5,152 19,697 6,0448,500 2,296 41,689 II 10 Asset Management 54,072 12,644 21,4714,736 - 15,220 54,071 III 6 Response to Growth: Capacity 115,039 25,614 22,34022,400 21,055 22,600 114,009 IV 3 Response to Growth: Customer Service 17,000 1,947 10,878 2,170- - 14,995 V 6 Other 48,836 14,309 17,1157,995 - 9,304 48,723 33 TOTAL 276,724 59,666 91,50141,175 56,249 24,896 273,487 Proposing 33 projects for approval to meet critical business needs The largest projects include: C1 Building Floor Expansion Garage Plaza and Elevators Update The proposed projects do not include projects that will come out of SAMP Responding to growth is primary driver for new projects 19 Proposed New Projects Safety & Security Cost Cash Flows (Figures in $000s) 2017-21 I CIP Description Estimate 2017 2018 2019 2020 2021 Total 1 C800650 Surface Area Management System 5,000 700 4,300 - - - 5,000 2 C800779 Safedock - A5, D10, D11 & GOS 3,872 770 3,102 - - - 3,872 3 C800834 GBAS Upgrade 3,158 220 2,938 - - - 3,158 4 C800876 Fire Station - Westside 2,400 2,020 380 - - - 2,400 5 C800842 AOS Perimeter Fence Line 3,993 346 1944 1703 - - 3,993 6 C800844 Perimeter Intrusion Detect Sys 10,000 285 378 997 6,044 2,296 10,000 7 C800862 Terminal Security Enhancements 9,854 300 4,285 5,269 - - 9,854 8 C800880 Employee Security Screening 3,500 511 2370 531 - - 3,412 - TOTAL 41,777 5,152 19,697 6,0448,500 2,296 41,689 1. Detect and display the location of aircraft and vehicles throughout the ramp areas using multiple cameras, sensors, and existing data feeds. 2. InstallSafedock units at gates A5, D10 and D11, and connect all 22 existing Safedock units to communications. Install the Safedock Gate Operating System (GOS) and connect it to Inform. 3. Upgrade Ground Based Augmentation System (GBAS), from a beta system to a fully functioningnavigational aid. 4. Provide 2 connected modular facilities and an additional ARFF vehicle structure to properly house the Fire Department personnel and equipment. Providing safety and security 20 Proposed New Projects Asset Management Cost Cash Flows (Figures in $000s) 2017-21 II CIP Description Estimate 2017 2018 2019 2020 2021 Total 1 C800789 Garage Plaza & Elevators Update 23,276 3,672 6,182 8,686 4,736 - 23,276 2 C800801 Replace Variable Freq. Drive 5,000 2,450 2,550 - - - 5,000 3 C800865 Trenchless Pipe Replace Ph 2 5,623 390 1,293 3,940 - - 5,623 4 C800878 ARFF Vehicle Replacements 2,200 2,200 - - - - 2,200 5 C800900 Garage Ancillary Renew/Replace 1,936 483 1,130 322 - - 1,935 6 C800901 Parking Garage - Elec. Panels 3,267 815 1,907 545 - - 3,267 7 C800902 Conc B - Electrical Panels 2,675 645 2,030 - - - 2,675 8 C800903 Conc B - Mechanical Equipment 1,328 330 998 - - - 1,328 9 C800904 Conc B - Water/Sewer Lines 2,636 636 2,000 - - - 2,636 10 C800905 Conc C - Electrical Panels 6,131 1,023 3,381 1,727 - - 6,131 TOTAL 54,072 12,644 21,4714,736 - 15,220 54,071 1. Modernize Parking Garage elevator banks PGB and PGC (10 elevators total). 2. Replace VFDs that have outlived their useful lives 3. Replace the oldest water main at STIA, a main artery for the water distribution that supply water to the main terminals. Both satellite terminals has reported several water supply incidents. 4. Purchase (2) 3,000 gallon ARFF Units. As part of our purchasing plan we are in need of replacing (1) aging ARFF Vehicles and acquiring another ARFF Unit so that we can move a 2006 ARFF Unit into reserve status. Maintain assets 21 Response to Growth Capacity Cost Cash Flows (Figures in $000s) 2017-21 III CIP Description Estimate 2017 2018 2019 2020 2021 Total 1 C800845 C1 Building Floor Expansion 50,000 1,100 2,000 2,500 21,800 22,600 50,000 2 C800850 C61 Upgrades and Add'l Makeup 16,300 7,889 8,381 - - - 16,270 3 C800866 Widen Arrivals Approach 15,600 200 1,000 14,400 - - 15,600 4 C800873 Concourse B Gate Reconfigure 10,400 9,400 - - - - 9,400 5 C800875 Additional STS Cars 17,450 6,525 8,175 2,150 600 - 17,450 6 C800883 Central Term Mezzanine Offices 5,289 500 2,784 2,005 - - 5,289 TOTAL 115,039 25,614 22,34022,400 21,055 22,600 114,009 1. C1 Building expansion will add needed office space, lounge space and additional ADR space 2. C61 will add needed interim baggage system capacity 3. The Widening of the arrivals approach drive will add roadway capacity and relieve congestion 4. Concourse B Gate Reconfiguration will add narrow body aircraft parking positions Accommodate growth at the airport 22 Response to Growth Customer Service Cost Cash Flows (Figures in $000s) 2017-21 IV CIP Description Estimate 2017 2018 2019 2020 2021 Total 1 C800833 Holdroom Seatings for Conc B&C 6,000 367 5,628 - - - 5,995 2 C800886 Central Terminal Enhancements 3,000 750 250 - - - 1,000 3 C800898 Airport Signage Phase 1 8,000 830 5,000 2,170 - - 8,000 TOTAL 17,000 1,947 10,878 2,170- - 14,995 1. Purchase holdroom seating to furnish all holdrooms on Concourses B and C. These seats will replace a mixture of Port and airline-owned seats currently in the holdrooms on these concourses. Defining a new holdroom seating standard is currently underway. 2. By spring 2018, we will have new and shining restaurants on the South Side of the Central Terminal and by 2019 on the North Side as well. Improve customer service 23 Other Cost Cash Flows (Figures in $000s) 2017-21 V CIP Description Estimate 2017 2018 2019 2020 2021 Total Regulatory & Community 1 C200095 Condo Sound Insulation 24,681 700 7,993 7,993 7,995 - 24,681 Grow Non-Aero Revenue 2 C800870 Parking Revenue Infrastructure 14,611 8,550 6,061 - - - 14,611 Small Business 3 C800846 Kiosk Program Expansion 3,139 1,012 2,014 - - - 3,026 Business Need 4 C800762 Telecommunication Meet Me Room 905 47 47 811 - - 905 5 C800841 Tenant Network Demarc Upgrade 2,500 1,000 1,000 500 - - 2,500 6 C800864 Water System Alternate Source 3,000 3,000 - - - - 3,000 TOTAL 48,836 14,309 17,1157,995 - 9,304 48,723 1. Sound insulation for condominiums was an outcome of the 2014 Part 150 study. 2. Support the design, installation, and maintenance of revenue-enhancing infrastructure for the Sea-Tac Airport parking garage. 3. Increase small, local and/or disadvantaged business opportunities in the Airport Dining and Retail (ADR) Program. 4. Repurpose vacant space on the fourth floor of the parking garage, collocated with the "Backup ACC", creating a production environment, where telecommunications equipment can be expected to run on 24/7 basis with minimal risk of interruption. 5. Standardize our tenant network "demarc packages" for many existing legacy installations and important vacant properties. 6. Provide a reliable alternate source to the current high cost source thus saving taxpayer and rate payer expenses. Other primary drivers for new projects 24 Financial Forecast In $000's 2016 Bud 2017 Bud 2018 2019 2020 2021 Airline Revenue 261,019 278,099 297,979 344,552 365,435 406,706 Non-Airline Revenue 208,321 226,604 235,466 238,013 251,150 257,000 Total Revenue 469,340 504,703 533,444 582,566 616,585 663,706 Operating Expense 268,216 302,215 313,221 324,705 337,579 352,134 Net Operating Income 201,124 202,489 220,223 257,861 279,006 311,572 Net Non-Operating Income/Expense 1,099 3,691 4,170 4,307 4,451 4,612 CFC Excess* (5,146) (5,223) (7,438) (6,003) (13,768) (13,966) Available for Debt Service 197,077 200,957 216,955 256,165 269,688 302,218 Net Debt Service 135,217 133,876 149,346 188,517 201,072 234,011 Net Cash Flow 61,859 67,081 67,609 67,648 68,616 68,207 Key Measures Debt Service Coverage 1.46 1.50 1.45 1.36 1.34 1.29 Revenue Sharing 28,055 33,612 30,272 20,519 18,348 9,704 Passenger Airline CPE 11.00 10.86 11.54 13.28 13.95 15.41 Debt per Enplaned Passenger 111.3 110.3 126.6 137.4 142.9 146.4 * CFC collection in excess of CFC debt service/O&M is restricted and cannot be used for other revenue bond debt service CPE will rise as major projects are completed and costs hit rate base 25 2017 Budget Open Items, Risks Open Items: Employee screening refine plan? Potential need for additional fire fighters (12) to staff second station under review Improvements to Weyerhaeuser building for Fire Dept. could replace proposed capital project Central Terminal Enhancements proposed capital project has significant elements that would be expense Enplanement forecast for 2017 will continue to review and refine Not in 2017 Budget: Employee screening phase 2 Security checkpoint queue management (TSA to provide) Bus drivers for hardstand operations (airlines to staff) Capital projects to support/implement master plan (SAMP) Need to resolve open items 26 Maritime Division 2017 Budget Review Commission Briefing October 10, 2016 27 Business Lines Included Org Orgs moved in Phase II Re-org Subclass Fishing & Operations Maritime Environmental Fishing & Operations Cruise Maritime Finance Cruise Recreational Boating Maritime Security Recreational Boating Grain Maritime Portfolio Mgmt Grain Habitat and Parks Habitat and Parks Maritime Marketing Maritime Portfolio Mgmt Maritime Division Mgmt Maritime Security Marine Maintenance Maritime Environmental Note: Stormwater Utility in separate deck Maritime Division evolving into a matrixed organization 28 Key Assumptions Cruise forecasts 1,043,530 passengers a 8.8% increase from 2016 Budget due to 14 additional calls. Grain volume at 3.72 million metric tons per forecast from tenant, a decrease of 7% from 2016 forecast and budget. Recreational Marina occupancy rate average of 95% consistent with 2016 Budget and year end forecast. Fishing & Commercial occupancy rates average of 83%, above 2016 Budget of 82%. Commercial Building Properties target 95% occupancy at year-end 2017 consistent with current results. Growth in Cruise passengers, lower grain volumes 29 Org Revenues By Group Maritime Division Only 2015 2016 2016 2017 Budget Change Budget to Forecast $ in 000's Actual Budget Forecast Budget $ % $ % Bulk 4,678 5,000 4,866 4,506 (494) -10% (360) -8% Cruise and Maritime Operations 14,324 15,333 15,500 16,507 1,174 8% 1,007 6% Fishing & Operations 8,333 8,477 9,100 9,068 591 7% (32) 0% Maint 1,150 384 805 383 (1) 0% (422) -110% Rec Boating 9,734 10,439 10,193 11,077 638 6% 884 8% Total Maritime 38,218 39,633 40,464 41,541 1,909 5% 1,078 3% Bulk (Grain Terminal) 2017 budget based on preliminary guidance from Louis Dreyfus. Cruise Operations increase due to 14 additional calls and estimated 8.8% passenger increase. Fishing and Operations increase driven by better utilization of Maritime Operations assets. Maintenance revenue generated from direct reimbursement of existing tenants. Recreational boating includes a 6% preliminary tariff increase. Steady Growth in Maritime tariff based revenues, risk added to Bulk 30 Org Expenses by Group Baseline 2016 2016 2017 Budget Change Budget to Forecast $ in 000's Budget Forecast Budget $ % $ % Bulk 72 74 64 (9) -12% (11) -14% Cruise Operations 1,118 998 1,428 310 28% 430 43% Fishing & Operations 4,117 4,341 4,557 440 11% 216 5% Mantenance 16,798 15,833 17,586 788 5% 1,753 11% Rec Boating 2,833 2,860 3,065 232 8% 205 7% Maritime Admin 513 463 469 (44) -9% 6 1% Maritime Marketing 495 336 332 (163) -33% (4) -1% Parks, Env. Remediation, Other 343 205 180 (163) -47% (25) -12% Maritime Baseline 26,289 25,109 27,680 1,391 5% 2,571 10% Initiatives and One -Time Items Cruise Operations 2,066 2,066 2,231 165 165 Fishing & Operations 14 14 119 105 105 Maintenance 2,912 2,745 3,802 890 1,057 Rec Boating 37 37 281 243 243 Maritime Admin 50 50 65 15 15 Maritime Marketing 0 0 152 152 152 Maritime Initiatives 5,079 4,912 6,650 1,570 1,738 Total 2015 2016 2016 2017 Budget Change Budget to Forecast $ in 000's Actual Budget Forecast Budget $ % $ % Bulk 60 72 74 64 (9) -12% (11) -14% Cruise Operations 2,305 3,184 3,064 3,659 475 15% 595 19% Fishing & Operations 4,026 4,131 4,355 4,676 545 13% 321 7% Mantenance 17,124 19,710 18,577 21,388 1,678 9% 2,811 15% Rec Boating 2,832 2,870 2,897 3,346 475 17% 448 15% Maritime Admin 440 563 513 534 (29) -5% 21 4% Maritime Marketing 498 495 336 484 (11) -2% 148 44% Parks, Env. Remediation, Other 114 343 205 180 (163) -47% (25) -12% Total Maritime 27,398 31,368 30,021 34,330 2,962 9% 4,309 14% Expense growth primarily in initiatives and one-time items 31 Cruise 2017 Initiatives & One-Time Expenses Cruise $ in 000's '17-'16 2016 Budget 2017 Budget Change New Requests Best in Class Initiative 0 300 300 Destination Awareness Initiative 0 157 157 Marketing Study - Feasibility of new Cruise Berth 0 100 100 Cruise facility concept/feasibiligy design 0 300 300 1.0 FTE - Pier 66 Facility Manager beg 2/1 0 114 114 .5 FTE - Seasonal Facility Maintenance Manager beg 2/1 0 69 69 *T91 Resurfacing Lobby and Baggage Hall Floors 0 405 405 P66 Cruise Terminal Expansion One-Time Expenses CTA Allowance 160 180 20 CHI Guaranteed Income 231 378 147 CHI Relocation Costs 25 0 (25) Mitigation Funds for CEC 250 125 (125) Leaseback of P66 from NCLH 0 104 104 CTA Lease Buyout 1,000 0 (1,000) Not Funded in 2017 T91 Maintenance dredging 400 0 (400) Total 2,066 2,231 165 *Planned in prior years, but prioritized in 2017 Focus on Pier 66 expansion and Century Agenda 32 Recreational Boating 2017 Initiatives & One- Time Expenses Recreational Boating $ in 000's '17-'16 2016 Budget 2017 Budget Change New Requests Replace dock carts and needed equipment on dock 0 27 27 Benchmarking Study 0 2 2 2 new Harbor Specialists 0 116 116 Provide more amenities to enhance customer experience at Shilshole 0 19 19 Work process and Workstation improvement 0 22 22 Purchase of tools required to implement guest paid parking 0 5 5 Additional overnight sercurity contract service 0 65 65 Safety & team training for staff 0 6 6 Develop a Shilshole information booklet 0 5 5 National Marina Day event 0 5 5 Market the Clean Captain's Club 0 3 3 Staff uniforms 0 7 7 Not Funded in 2017 Replacement Equipment / Furniture 37 0 (37) Total 37 281 243 Focus on improved security and customer service 33 Marine Maintenance 2017 One-Time Maintenance Expenses $ in 000's 2017 Budget % New Requests - One-Time or Phased Work Stormwater Utility Assessments and Needed Repairs 338 9% RE Development and Planning 54 1% Facilities P69 245 6% Portfolio Management 699 18% Cruise Operations 195 5% Fishing and Operations 219 6% Maintenance 291 8% Maritime Portfolio Management 725 19% Parks 78 2% Recreational Boating 804 21% NH Lease and Asset Management 145 4% Aviation 9 0% Total 3,802 Efforts geared toward Stormwater and aging port infrastructure 34 Other 2017 Initiatives & One-Time Expenses Other Maritime $ in 000's 2017 Budget New Requests Fishing and Operations Leadership Development Program 9 Maritime Ops Uniforms 2 Be the Change Workshop 1 Maritime Ops Additional FTE 73 T91 Kitchen 15 College Intern 14 Maritime Marketing College Intern 10 FT Strategic Plan Advertising 75 Rec Boating Branding & Promotion 30 Marina special event branding 25 Video Production 12 Maritime Admin College Intern 10 Total 275 Other Maritime Division items 35 Maritime Org Expense Budget Maritime Division Expenses Only 2015 2016 2016 2017 Budget Change Budget to Forecast $ in 000's Actual Budget Forecast Budget $ % $ % Explanation Salaries 5,950 6,094 5,827 6,484 390 6% 657 11% 5.3 (3%) new FTE's + merit Benefits 2,437 2,502 2,361 2,732 230 9% 370 16% *Wages & Benefits 9,804 12,151 10,886 13,289 1,138 9% 2,402 22% Increase in Maintenance OPEB 46 28 40 44 16 56% 4 10% Salaries & Wages to Cap, Non-op,ERL (475) (479) (381) (407) 71 -15% (26) 7% Total Payroll Costs 17,763 20,296 18,734 22,141 1,845 9% 3,407 18% Net Payroll Exp (net of to capital,Non-op ) 18,238 20,775 19,115 22,548 1,773 9% 3,433 18% Utilities 2,803 3,103 3,400 3,527 423 14% 126 4% Electricity, Water, and Stormwater Equipment Expense 1,017 825 1,158 1,320 494 60% 162 14% Furniture at P66 Maint Materials and Vehicle Parts 1,521 1,693 1,693 1,594 (99) -6% (99) -6% Outside Services 2,235 2,519 3,155 3,613 1,094 43% 458 15% Support for Cruise and Marketing initiativess Travel & Other Employee Exp 286 395 277 353 (42) -11% 76 28% Reduction in Admin Travel Promotional Expenses 68 117 113 336 219 188% 223 198% Cruise - Best in Class and Destination Awareness Initiatives Workers Comp 319 271 243 269 (3) -1% 26 11% *Other O&M 1,385 2,112 866 1,203 (910) -43% 336 39% CTA Payment in 2016 Budget Total Budget 27,398 31,368 30,021 34,330 2,962 9% 4,309 14% *Note: Wages & Benefits and Other O&M (Supplies) forecast is below budget due to project delays and challenges procuring craft labor at the Marine Maintenance shop. We anticipate the labor pool to improve in 2017. Increased expense for cruise, utilities, and maintenance work for 2017 36 Full-Time Equivalents (FTEs) 2016 Budget 184.3 2016 Changes Staff Transfers from Reorg and COE to Corportate: Maritime / EDD Finance Transfers to Corporate -6.0 Environmenal Finance and Cost Recovery -4.0 Environmental & Planning Transfer to Corporate -17.3 Staff Transfers from Reorg and COE to Economic Development: Industrial Property Manager to EDD -1.0 Sr. Real Estate Property Manager to EDD -1.0 Real Estate Property Manager to EDD -1.0 Adjusted 2016 154.0 2017 Budget Staff Addition: Pier 66 Cruise Facility Manager 1.0 Seasonal Cruise Facility Maintenance Manager 0.5 Billing & Admin - Fishing & Operations (formerly .5 FTE) 1.0 Intern Fishing and Operations 0.3 Intern Maritime Marketing 0.3 Intern Maritime Administration 0.3 Harbor Facilities Specialist - SBM 1.0 Harbor Facilities Specialist 1.0 Net Change 5.3 Proposed 2017 Budget 159.3 Net increase of 5.3 FTE 37 Maritime Budget Summary Inclusive of Direct Charges & Allocations from Corporate, CDD, & Other Divisions Incr (Decr) Incr (Decr) 2015 2016 2016 2017 Budget Change Budget to Forecast $ in 000's Actual Budget Forecast Budget $ % $ % Revenues Operating Revenues 47,268 49,314 49,801 51,877 2,564 5.2% 2,077 4.2% Total Revenues 47,268 49,314 49,801 51,877 2,564 5.2% 2,077 4.2% Expenses Maritime Expenses (excl env srvs) 9,561 11,584 11,121 12,790 1,205 10.4% 1,669 15.0% Envir Services & Planning 1,278 1,430 1,540 1,701 270 18.9% 160 10.4% Maintenance Expenses 9,031 10,576 10,153 11,439 864 8.2% 1,287 12.7% Econ Dev Expenses 3,343 4,113 3,692 4,617 504 12.3% 925 25.0% CDD Expenses 1,544 1,029 1,029 1,177 147 14.3% 147 14.3% Police Expenses 2,611 4,023 3,983 3,867 (157) -3.9% (116) -2.9% IT 2,046 2,466 2,466 2,894 428 17.3% 428 17.3% Public Affairs 316 1,194 1,175 1,449 256 21.4% 275 23.4% Other Corporate Expenses 3,594 6,053 5,893 6,608 555 9.2% 716 12.1% NWSA 120 0 0 0 0 NA 0 NA Operating Expenses 33,443 42,469 41,052 46,541 4,072 9.6% 5,490 13.4% Net Operating Income 13,825 6,845 8,749 5,336 (1,509) -22.0% (3,413) -39.0% Maritime absorbing more corporate allocations in lieu of NWSA 38 Maritime Division Capital Budget 2017-2021 39 Maritime 2017 Capital Budget Capital Budget Summary By Status $'s in 000's 2017 2018 2019 2020 2021 2017-2021 Commission Authorized/Underway 23,895 4,609 243 - - 28,747 Pending 2016/2017 Authorization 4,206 19,152 22,705 1,380 8,700 56,143 Pending Future Authorization 3,589 17,386 22,750 10,580 11,150 65,455 Small Capital and Other 3,330 3,193 3,077 2,902 1,788 14,290 Total 35,020 44,340 48,775 14,862 21,638 164,635 Overall 2017-2021 dollar amount of projects at ~$164M, funding capacity for future projects not yet determined 40 Maritime 2017 Capital Budget Commission Authorized/Underway $'s in 000's 2017 2018 2019 2020 2021 2017-2021 FT C15 HVAC Improvements 8 - - - - 8 T91 Substation Upgrades 17 - - - - 17 Cruise Terminal Tenant Improvements 12,800 200 - - - 13,000 Cruise Cap Allow - CTA Lease 100 200 200 - - 500 Cruise per Passenger Allowance 60 60 43 - - 163 P91 South End Fender 2,278 - - - - 2,278 Marina Mgt Sys Replacement 100 - - - - 100 FT Net Shed 3,4,5 &6 Roof Replacement 3,928 179 - - - 4,107 T91 Building C-173 Roof Overlay 1,397 54 - - - 1,451 SBM Restrms/Service Bldgs Replacement 3,207 3,916 - - - 7,123 23,895 4,609 243 - - 28,747 Note: Includes projects where some portion of the budget is authorized by Commission Approved projects focused on P66 Cruise Terminal, FT, and SBM buildings 41 Maritime 2017 Capital Budget Pending 2016/2017 Authorization $'s in 000's 2017 2018 2019 2020 2021 2017-2021 Bell Street Cruise Terminal Implementation Staff Oversight 121 - - - - 121 T91 Cruise Terminal Improvements 540 635 - - - 1,175 T91 P91W Slope Stabilization 650 600 - - - 1,250 P66 Exterior Modernization 700 5,370 6,850 30 - 12,950 FT Paving/Storm Upgrades 90 800 55 - - 945 C15 Building Tunnel Improvement 400 300 - - - 700 SBM Paving 55 1,047 - - - 1,102 HIM E Dock 200 3,550 150 - - 3,900 Shilshole Bay Marina Pad Site Developement 250 250 - - - 500 FT Strategic Plan 1,200 6,600 15,650 1,350 8,700 33,500 4,206 19,152 22,705 1,380 8,700 56,143 Pending projects tied to existing facility improvements 42 Maritime 2017 Capital Budget Pending Future Authorization $'s in 000's 2017 2018 2019 2020 2021 2017-2021 Second Gangway per Berth @ T91 475 7,500 25 - - 8,000 HIM A, B, & D Dock 200 2,525 1,675 200 - 4,600 Maintenance North Office Site Improvement 200 300 - - - 500 HIM C Dock 200 100 4,000 600 - 4,900 FT South Wall West End Improvements 169 970 530 - - 1,669 FT Dock 4 Fixed Pier Corr Protection 150 1,540 1,800 - - 3,490 FT Dock 3 Fixed Pier Improvement 150 840 2,000 - - 2,990 P66 Cruise Termerminal Roof Fall Protection 25 251 - - - 276 FT West Wall North Fender Replacement 10 190 2,750 - - 2,950 FT West Wall North Sht Pile Crsn Protection 10 190 2,575 - - 2,775 T91 Camel Replacements - 930 - - - 930 P66 Cruise Terminal StandOffs - 50 550 - - 600 SBM Lower A Dock Improvement - - 825 - - 825 FT West Wall South Sht Pile Cor Protection - - 10 190 1,000 1,200 FT South Wall Central Fender Replacement & Cor Protection - - 10 190 4,150 4,350 BHM Pile Wraps - - - 3,400 - 3,400 Contingency Renewal & Replace 2,000 2,000 6,000 6,000 6,000 22,000 3,589 17,386 22,750 10,580 11,150 65,455 Capital pending future authorization 43 Maritime 2017 Capital Budget Small Projects $'s in 000's 2017 2018 2019 2020 2021 2017-2021 Maritime Technology Projects 250 250 250 250 250 1,250 Maritime Fleet Replacement 1,203 1,213 1,177 1,187 1,038 5,818 Small Projects 1,877 1,730 1,650 1,465 500 7,222 3,330 3,193 3,077 2,902 1,788 14,290 Includes projects under $300K 44 Stormwater Utility 2017 Budget Review Commission Briefing October 10, 2016 45 Stormwater Utility Org Budget Summary Incr (Decr) Incr (Decr) 2015 2016 2016 2017 Budget Change Budget to Forecast $ in 000's Actual Budget Forecast Budget $ % $ % Revenue 4,403 4,317 4,742 4,955 638 15% 213 4% Expenses Administrative Expenses (1 FTE) 0 142 50 142 (0) -0.1% 92 64.9% City Utility and B&O Taxes 42 540 616 644 104 19.3% 28 4.3% Consultant Services 0 0 0 269 269 NA 269 100.0% One-Time Payment to City of Seattle 3,993 0 0 0 0 NA 0 NA Total Operating Expenses 4,035 682 666 1,056 373 54.7% 389 36.9% Income From Operation 368 3,635 4,076 3,900 265 7.3% (176) -4.5% 2017 Revenue Budget includes: $3M from Tenant areas of NWSA, Maritime, Economic Development Divisions $2M from Non-Tenant areas of NWSA, Maritime, Economic Development Divisions Y/Y rate increase of 4% 46 Stormwater Utility Budget Summary Inclusive of Direct Charges & Allocations from Corporate, Maritime and EDD Divisions Incr (Decr) Incr (Decr) 2015 2016 2016 2017 Budget Change Budget to Forecast $ in 000's Actual Budget Forecast Budget $ % $ % Revenue 4,403 4,317 4,742 4,955 638 15% 213 4% Operating Expenses Stormwater Utility Expenses 4,035 682 666 1,056 373 54.7% 390 36.9% Maintenance Expenses 0 1,518 1,080 2,260 742 48.9% 1,180 52.2% Environmental & Sustainability 0 293 293 168 (125) -42.6% (125) -74.3% EDD Expenses 0 0 0 32 32 NA 32 100.0% CDD Expenses 0 2 20 59 57 2839.2% 39 66.0% Corporate Expenses 0 0 0 430 430 NA 430 100.0% Total Operating Expenses 4,035 2,495 2,059 4,005 1,509 60.5% 1,946 48.6% Net Operating Income 368 1,822 2,683 951 (871) -47.8% (1,732) -182.2% Overall 2017 operating expense budget is higher than 2016 budget mainly due to administrative support / allocation costs matching hours spent Robust improvements planned for 2017 47 Stormwater Utility 2017 Capital Budget Capital Budget Summary By Status $'s in 000's 2017 2018 2019 2020 2021 2017-2021 Commission Authorized/Underway - - - - - - Pending 2016/2017 Authorization 1,500 1,500 1,500 1,500 500 6,500 T18 Stormwater outfalls renew/replace 1,000 1,000 1,000 1,000 - 4,000 Portwide Stormwater Sys Renewal 500 500 500 500 500 2,500 Pending Future Authorization 490 - - 500 1,500 2,490 Vactor Truck 490 - - - - 490 Stormwater Utility Contingency - - - 500 1,500 2,000 Small Capital Projects 150 150 150 150 150 750 2,140 1,650 1,650 2,150 2,150 9,740 Overall 2017 2021 dollar amount of projects at ~$9.7M 48 Economic Development Division 2017 Budget Review Commission Briefing October 10, 2016 49 Business Lines Included Business Lines Business Lines in Org / Included in Org and Not Subclass Division Maritime Portfolio Portfolio Management Management Tourism Business Lines Managed, Workforce but showing in Airport Development Airport Dining and Retail Small Business Airport Business RE Development Development Economic Development Division engaged across the entire organization 50 Key Assumptions Commercial Properties target 95% occupancy at year- end 2017. 2016 Budget target was 95% Bell Harbor International Conference Center revenue up 26% from 2016 Budget ED Partnership Grants continued Tourism Grants increased to $150K Continued funding of Workforce Development Strong metrics and increased initiatives 51 Org Revenues By Group Non-Aviation Economic Development Division 2015 2016 2016 2017 Budget Change Budget to Forecast $ in 000's Actual Budget Forecast Budget $ % $ % Revenue Portfolio & Asset Management* 27,683 23,583 25,439 26,536 2,953 12.5% 1,097 4.3% Central Harbor Mgmt Group 7,687 7,377 7,691 8,015 638 8.7% 324 4.2% Conference & Event Centers 10,091 6,263 7,735 7,917 1,654 26.4% 182 2.3% Foreign Trade Zone Program 0 25 17 30 5 20.0% 13 73.1% Maritime Portfolio Management** 9,906 9,918 9,995 10,574 656 6.6% 579 5.8% Eastside Rail 7 1 1 0 (1) -100% (1) -100% Total Revenue 27,690 23,584 25,440 26,536 2,952 12.5% 1,096 4.3% * Increase fron 2016 budget due to greater activity and less disruptions than expected for 2016 ** Subclass under Maritime Division Continued focus on maximizing revenue for Port properties 52 Org Expenses By Group Non-Aviation Economic Development Division Incr (Decr) Incr (Decr) 2015 2016 2016 2017 Budget Change Budget to Forecast $ in 000's Actual Budget Forecast Budget $ % $ % Operating Expenses Portfolio Management 15,235 14,037 14,475 15,859 1,822 13.0% 1,384 9.6% Central Harbor Mgmt Group 3,230 3,314 3,457 3,666 352 10.6% 208 6.0% Portfolio Management Conference & Event Centers 8,550 6,439 7,234 7,935 1,496 23.2% 702 9.7% expense increase result of Foreign Trade Zone Program - 8 8 9 1 13.4% 1 12.3% Portfolio Mgmt Admin 1,009 976 938 996 20 2.0% 58 6.2% higher Conference & Event Maritime Portfolio Management* 2,446 3,299 2,838 3,253 (47) -1.4% 415 14.6% Center activity and costs. Development & Planning 345 1,853 1,189 1,277 (576) -31.1% 88 7.4% Increases in Division Admin Eastside Rail Corridor (1,263) 144 8 - (144) -100.0% (8) -100.0% due to 2 new FTE's and Small Business 2,145 471 443 708 236 50.1% 264 59.7% new/expanded initiatives. Workforce Development - 2,644 2,604 2,862 218 8.3% 258 9.9% Details are provided on Tourism 920 1,174 1,116 1,285 111 9.5% 169 15.1% upcoming slide. Facilities 1,394 1,538 1,568 1,775 237 15.4% 207 13.2% Division Admin 533 405 1,445 2,534 2,129 525.4% 1,089 75.4% Envir Remed Exp/Other 0 - 56 - 0 NA (56) -100.0% Total Operating Expenses 19,308 22,267 22,904 26,300 4,034 18.1% 3,396 14.8% * Subclass under Maritime Division Expense growth focused on expediting Century Agenda 53 Economic Dev Division Org Expense Budget Non Aviation Economic Development Division Expenses 2016 2017 Incr (Decr) $ in 000's Budget Budget Change % Explanation Baseline Budget Salaries 3,056 3,547 491 16.1% Add: RE Specialist(LTD) Benefits 1,208 1,408 200 16.5% Director Business Development OPEB 22 21 (1) -4.6% Administrative Assistant Salaries & Wages to Cap, Non-op,ERL 0 0 0 NA Transfer: 5 High School Interns Total Payroll Costs 4,286 4,976 690 16.1% Net Payroll Exp (Nnet of to Capital,Non-op,ERL) 4,286 4,976 690 16.1% Conf & Event Activity Op Expense 6,022 6,957 935 15.5% Related to higher Revenue Conf & Event Activity Management Fee 219 320 101 46.1% Related to higher Revenue Conf & Event Activity - Furn & Equip Acq 36 157 121 336.1% Expensed "capital" reserve Travel & Other Employee Expense 153 179 26 17.2% Other O&M 6,711 6,711 (1) 0.0% Total Baseline Budget 17,427 19,299 1,873 10.7% Initiatives Tenant Improve, Broker Fees,Space Plan 588 625 37 6.3% WTC Seattle Interior Refresh 0 400 400 NA P69 Lobby Refresh 0 200 200 NA Small Business Generator Program 100 175 75 75.0% Port Gen Training Workforce Development 2,287 2,520 233 10.2% Detail on following slide Tourism 590 721 131 22.2% Detail on following slide RE Development & Planning 525 600 75 14.3% Detail on following slide EDD Division Admin 750 1,760 1,010 134.7% Detail on following slide Total 4,840 7,001 2,161 44.6% Total Operating Expenses 22,267 26,300 4,034 18.1% Envir Remediation Liability 0 0 0 NA Total Expenses 22,267 26,300 4,034 18.1% Conference and Event Center driving baseline expense growth 54 Workforce Development 2017 Initiatives $ in 000's '17-'16 2016 Budget 2017 Budget Change New Requests High School Career Exploration and Intern Program Development 0 150 150 Burning Glass cost share-Seattle Office ED 0 10 10 Continuity Pool contract 0 150 150 Continuing Airport Career Pathways 175 250 75 Maritime Industrial Workforce Development 150 250 100 Core Plus 200 200 0 Workforce Development - Trades - Regional Partnership/Pre-Apprenticeship 710 710 0 Airport Sector Workforce Development (Port Jobs) 450 450 0 Airport Employment Center Rent (Port Jobs) 302 350 48 Not Funded in 2017 Manufacturing Industry / Truck Driving 150 0 (150) Workforce Development Program evaluation 100 0 (100) Port Jobs Contract Extension (6 mo) 50 0 (50) Total 2,287 2,520 233 Increased efforts in Workforce Development 55 Tourism 2017 Initiatives $ in 000's '17-'16 2016 Budget 2017 Budget Change New Requests Inaugural Virgin Atl. & Holiday 0 15 15 Prog Marketing Cruise & Stay 0 35 35 Continuing Advertising 45 22 (23) UK Marketing Core Communication 250 245 (5) Other International/Visit Seattle 157 165 8 Tourism Grant 50 150 100 CP Communications 38 39 1 World Trade Market & Familiarization Trips 50 50 0 Total 590 721 132 Expansion of tourism grant program 56 Real Estate Development 2017 Initiatives $ in 000's 2016 Budget 2017 Budget New Requests Consulting - Property Acquisitions 0 100 Consulting - Finance 0 150 Consulting - Infrastructure 0 150 Consulting - Property Development 0 100 Ongoing/Reductions Appraisals 25 100 Consulting - RE Strategic Plan - Airport Properties 75 0 Consulting - RE Strategic Plan - Downtown Properties 225 0 Consulting - RE Strategic Plan - New Planning Projects 200 0 Total 525 600 Initiatives centered on executing RE Strategic Plan 57 EDD Admin 2017 Initiatives '17-'16 $ in 000's 2016 Budget 2017 Budget Change New Requests ED Partnership Grants 0 960 960 Ongoing Membership: Economic Dev Council 100 100 0 RE Plan Outreach 0 50 50 Business Development: 150 0 Consulting Services 0 100 Trade Shows & Sponsorships 0 28 Travel 0 22 Opportunity Fund 500 500 0 Total 750 1,760 1,010 Continuation of ED Partnership Grants & additional public outreach 58 Full-Time Equivalents (FTEs) 2016 Budget 33.8 2016 Changes OSR Trf to Corporate (2.3) Maritime Portfolio Mgmt Trf from Maritime 3.0 Add FTE: Director Small Business 1.0 Delete FTE: RE Dev Admin (1.0) Adjusted 2016 34.5 2017 Budget Staff Additions: RE Dev: RE Specialist (LTD) 1.0 Division Admin Changes Director Business Development 1.0 Administrative Assistant 1.0 High School Interns Trf to HRD (1.5) Net Change 1.5 Proposed 2017 Budget 36.0 Net increase of 1.5 FTE 59 Economic Development Budget Summary Inclusive of Direct Charges & Allocations from Corporate, CDD, & Other Divisions Incr (Decr) Incr (Decr) 2015 2016 2016 2017 Budget Change Budget to Forecast $ in 000's Actual Budget Forecast Budget $ % $ % Revenues Operating Revenues 7,767 7,449 7,710 8,114 664 9% 404 5% Conf & Event Ctr Revenue 10,396 6,296 7,735 7,917 1,621 26% 182 2% Total Revenues 18,164 13,745 15,445 16,030 2,285 17% 585 4% Expenses Econ Dev Exp (excl P69,Conf, SB, WFD, Tour) 2,757 5,690 6,035 6,534 843 15% 499 8% Conf & Event Ctr Expense 8,549 6,439 7,234 7,935 1,496 23% 702 10% Small Business 330 120 113 161 41 34% 48 42% Workforce Development 0 1,558 1,518 2,862 1,304 84% 1,344 89% Tourism 919 1,174 1,116 1,285 111 9% 169 15% Maintenance Expenses 3,332 3,153 2,901 3,592 439 14% 691 24% P69 Facilities 40 177 180 234 57 32% 54 30% Maritime Expenses 11 28 28 64 36 127% 36 127% Enviromental & Sustainability 243 126 126 451 325 258% 325 258% CDD Expenses 374 248 248 439 192 77% 191 77% Police Expenses 413 169 167 173 5 3% 6 4% Corporate Expenses 2,238 4,565 4,496 5,890 1,325 29% 1,394 31% Envir Remediation Liability 0 0 0 0 0 NA 0 NA Operating Expenses 19,206 23,447 24,162 29,621 6,174 26% 5,458 23% Net Operating Income (1,043) (9,702) (8,718) (13,591) (3,889) -40% (4,873) 56% Increase in corporate standard allocation (4.8% to 5.5%) 60 Economic Development Division Capital Budget 2017 - 2021 61 Economic Development 2017 Capital Budget Capital Budget Summary By Status $'s in 000's 2017 2018 2019 2020 2021 2017-2021 Commission Authorized/Underway 6,124 463 - - - 6,587 Pending 2016/2017 Authorization 6,851 20,760 30,620 10 - 58,241 Pending Future Authorization 1,625 1,489 1,000 3,000 3,000 10,114 Small Capital and Other 1,350 1,240 1,845 1,110 1,130 6,675 15,950 23,952 33,465 4,120 4,130 81,617 Overall 2017 2021 dollar amount of projects at ~$82M 62 Economic Development 2017 Capital Budget Commission Authorized/Underway $'s in 000's 2017 2018 2019 2020 2021 2017-2021 P69 Roof Beam Rehabilitation 877 - - - - 877 BHICC Fit & Finish Improvement 400 - - - - 400 T102 Bldg Roof HVAC Replacemt 3,963 - - - - 3,963 P66 Elevator 2,3,4 Upgrades 884 463 - - - 1,347 6,124 463 - - - 6,587 Projects approved by commission and in progress 63 Economic Development 2017 Capital Budget Pending 2016/2017 Authorization $'s in 000's 2017 2018 2019 2020 2021 2017-2021 Bell St Garage AI Elevator Upgrade 291 - - - - 291 P69 Lobby Improvements 1,000 - - - - 1,000 BHICC Interior Modernization 560 5,760 620 10 - 6,950 T91 Uplands Pre-Development 5,000 15,000 30,000 - - 50,000 6,851 20,760 30,620 10 - 58,241 Focus on Bell Harbor and T-91 development 64 Economic Development 2017 Capital Budget Pending Future Authorization $'s in 000's 2017 2018 2019 2020 2021 2017-2021 P69 Solar Panels 1,100 100 - - - 1,200 ED BHICC Roof Fall Protection 25 389 - - - 414 ED: Contingency Renew.&Replace 500 1,000 1,000 3,000 3,000 8,500 1,625 1,489 1,000 3,000 3,000 10,114 Held to cover future unknown capital needs 65 Economic Development 2017 Capital Budget Small Projects $'s in 000's 2017 2018 2019 2020 2021 2017-2021 Small Capital Projects 770 690 1,235 500 500 3,695 ED Technology Projects 250 250 250 250 250 1,250 ED Fleet Replacement 30 - 60 60 80 230 Tenant Improvements -Capital 300 300 300 300 300 1,500 1,350 1,240 1,845 1,110 1,130 6,675 EDD small capital projects centered on tenant improvements and building upkeep 66 Portwide 2017 Budget Review Commission Briefing October 10, 2016 67 2017 Operating Budget 2015 2016 2016 2017 Budget Change Budget vs Forecast ($ in '000s) Actual Budget Forecast Budget $ % $ % Operating Revenues Aeronautical 229,624 261,019 254,215 278,099 17,080 6.5% 23,884 9.4% SLOA III Incentive Adj. -3,576 -3,576 -3,576 -3,576 - 0.0% - 0.0% Non-Aeronautical 196,844 208,321 223,613 226,604 18,283 8.8% 2,991 1.3% Aviation 422,892 465,764 474,252 501,127 35,363 7.6% 26,875 5.7% Maritime 47,268 49,314 49,714 51,877 2,564 5.2% 2,163 4.4% Economic Development 18,164 13,745 14,991 16,030 2,285 16.6% 1,039 6.9% Licensed NWSA Assets 61,401 51,829 55,136 46,906 -4,923 -9.5% -8,230 -14.9% Stormwater Utility 2,808 3,581 4,002 3,845 264 7.4% -157 -3.9% Other 491 345 345 367 22 6.5% 22 6.5% Total 553,023 584,578 598,440 620,153 35,576 6.1% 21,713 3.6% Operating Expenses Aviation 238,140 268,216 268,742 302,215 33,999 12.7% 33,473 12.5% Maritime 33,443 42,261 42,361 46,541 4,280 10.1% 4,180 9.9% Economic Development 19,206 23,309 23,319 29,621 6,312 27.1% 6,302 27.0% Licensed NWSA Assets 18,077 121 121 1,100 980 810.9% 980 810.9% Stormwater Utility 2,440 1,759 1,323 3,022 1,264 71.8% 1,700 128.5% Corporate 543 345 345 367 22 6.5% 22 6.5% Total 311,850 336,010 336,210 382,867 46,857 13.9% 46,657 13.9% Net Operating Income 241,173 248,568 262,230 237,286 -11,281 -4.5% -24,944 -9.5% A record $620M of operating revenues for 2017 68 Comprehensive Budget 2015 2016 2016 2017 Budget Change Budget vs Forecast ($ in '000s) Actual Budget Forecast Budget $ % $ % Revenues 1. Aeronautical Revenues 229,624 261,019 254,215 278,099 17,080 6.5% 23,884 9.4% 2. SLOA III Incentive (3,576) (3,576) (3,576) (3,576) - 0.0% - 0.0% 3. Other Operating Revenues 326,975 327,135 347,801 345,630 18,495 5.7% (2,171) -0.6% 4. Tax Levy 72,819 72,000 72,000 72,000 - 0.0% - 0.0% 5. PFCs 79,209 84,650 85,586 89,087 4,437 5.2% 3,501 4.1% 6. CFCs 23,540 24,963 24,963 26,300 1,337 5.4% 1,337 5.4% 7. Fuel Hydrant 6,957 7,098 7,098 7,024 (74) -1.0% (74) -1.0% 8. Non-Capital Grants and Donations 5,358 3,566 3,566 12,816 9,250 259.4% 9,250 259.4% 9. Capital Contributions 22,804 23,406 18,531 15,000 (8,406) -35.9% (3,531) -19.1% 10. Interest Income 9,091 8,537 12,535 10,822 2,285 26.8% (1,712) -13.7% Total Revenues 772,801 808,799 822,719 853,203 44,404 5.5% 30,484 3.7% Expenses 1. O&M Expense 311,850 335,943 336,210 382,867 46,924 14.0% 46,657 13.9% 2. Depreciation 163,338 162,451 164,451 166,300 3,849 2.4% 1,849 1.1% 3. Revenue Bond Interest Expense 110,128 121,423 116,476 122,026 603 0.5% 5,550 4.8% 4. GO Bond Interest Expense 10,490 14,726 9,808 17,714 2,988 20.3% 7,906 80.6% 5. PFC Bond Interest Expense 5,584 5,302 5,302 4,985 (317) -6.0% (317) -6.0% 6. Non-Op Environmental Expense 2,888 5,000 5,000 5,441 441 8.8% 441 8.8% 7. Public Expense 5,023 8,898 8,898 2,488 (6,410) -72.0% (6,410) -72.0% 8. Other Non-Op Rev/Expense 23,498 3,319 10,335 (257) (3,577) -107.7% (10,592) -102.5% Sub-Total 632,800 657,064 656,480 701,565 44,501 6.8% 45,084 6.9% Revenues over Expenses 140,001 151,736 166,239 151,638 (97) -0.1% (14,601) -8.8% 9. Special Item 120,000 147,700 147,700 - (147,700) -100.0% (147,700) -100.0% 10. Retro Adj to Net Position 77,342 - - - - n/a - n/a Total Expenses 830,142 804,764 804,180 701,565 (103,199) -12.8% (102,616) -12.8% Change In Net Assets (57,341) 4,036 18,539 151,638 147,603 3657.5% 133,099 717.9% A strong financial position for the Port in 2017 69 Portwide FTEs Summary Aviation Maritime Econ Dev Corporate Total 2016 Approved FTE's 892.8 184.3 33.8 745.4 1,856.3 Mid Year Approval - - 1.0 9.0 10.0 Eliminated - - (1.0) (2.0) (3.0) Net Transfers (note 1) (50.2) (30.3) 0.7 79.8 - Adjusted 2016 FTE's 842.6 154.0 34.5 832.2 1,863.3 2017 Budget Eliminated (5.5) - - (1.3) (6.8) Transfer - - (1.5) - (1.5) New FTE's (note 2) 118.5 5.3 3.0 21.5 148.3 Total 2017 Changes 113.0 5.3 1.5 20.2 140.0 Proposed 2017 FTE's 955.6 159.3 36.0 852.4 2,003.3 Notes: 1) Net transfers include all the FTE transfers resulted from Phase II re-org. 2) Includes 85 new FTEs for the Screening Function in Aviation; but does not include 82 new High School Interns positions in HR. FTEs driven by budget priorities and strong growth 70 Capital Budget $'s in 000's 2017 2018 2019 2020 2021 2017-2021 Aviation 590,498 663,351 498,316 354,778 294,193 2,401,136 Maritime 35,020 44,340 48,775 14,862 21,638 164,635 Economic Development 15,950 23,952 33,465 4,120 4,130 81,617 Stormwater Utility 2,140 1,650 1,650 2,150 2,150 9,740 Corporate and Other 7,969 9,152 9,002 9,511 9,692 45,326 Total 651,577 742,445 591,208 385,421 331,803 2,702,454 The Port continues to invest in the region 71 APPENDIX Additional 2017 Budget Materials 72 Appendix Table of Contents Page 73 IATA Level of Service Page 74 Enplanement growth assumptions Page 75-79 Cost Trends and Peer airport comparisons Page 80-82 Baseline budget changes Page 83-84 Non-recurring cost changes Page 85-86 FTE details Page 87-89 Aero and Non-aero drivers and indicators Page 90 Major capital projects 73 IATA Level of Service Level of Service Space Time Area / Pax. ADRM 9th Ed. ADRM 10th Ed. ADRM 10th Ed. ADRM 10th Ed. ADRM 9th Ed. A 1.4 m/pax Overdesign Excessive or empty space. Overprovision of resources. B 1.2 m/pax Sufficient space to Acceptable processing and C Optimum accommodate the necessary 1.0 m/pax waiting times functions in a comfortable D 0.8 m/pax Unacceptable processing and Suboptimum Crowded and uncomfortable waiting times E 0.6 m/pax F Failure 0.4 m/pax Century Agenda goal of being the gateway of choice will require achievement of at least "optimum" level of service. Desired level of service drives facility planning 74 Enplanement Growth Assumptions Inputs: SAMP long-term activity forecast OAG advance airline schedules Conversations with Alaska and Delta Economic forecast data Issues: Recent growth has been predominately connecting traffic At gate capacity at peak in 2016, will lose gates in 2017 due to construction. Need for increased hardstand operations may limit growth. Will continue to review and refine forecast 75 Cost Trends and Peer Airport Comparisons CPE Rising in 2016 but remains near 12 year low for SEA For 2015, SEA CPE ranks 12th lowest of 30 large hub airports O&M per enplanement Rising in 2016, but remains below SEA 2013 level Very competitive compared to peer airports 9th lowest out of 30 large hubs Costs are rising but SEA costs remain competitive 76 Cost Per Enplanement - Trend CPE trending down due to cost management and increased enplanements 77 Current CPE Comparison Current CPE Ranks 12 out of 30 Large Hub Airports 78 O&M Per Enplanement - Trend Increasing, but lower than 2013 79 O&M Per Enplanement vs. Peer Airports - 2015 O&M costs per enplanement compares favorably to peer airports 80 Baseline Cost Reductions 2017 Baseline Cost Reductions/Savings: $000's Payroll Savings from eliminated FTE's 355 Eliminate (1) FTE - Apprentice, Operating Maint Engineer 130 Eliminate (1) FTE - Lead RCF Bus Driver 80 Eliminate (1) FTE - RCF Relief Bus Driver 65 Eliminate (0.5) FTE - Bus Driver in Employee Parking 41 Eliminate (0.5) FTE - Cashier in Public Parking 40 Other Payroll Savings (before new FTE requests) Lower Worker's Comp & OPEB 381 Other payroll savings (zero based budgeting) 81 Total Payroll Decrease (before new FTE's) 816 Non-Payroll Savings (zero based budgeting) Eliminate Aviation Contingencies 1,600 RCF Curbside/Wheelchair contract (RCF operator to perform) 420 Amortization - prepaid frontage fees (DMCBP Phase II paid in full) 414 Cargo building maintenance (AVM will perform) 264 AVM elevator/escalator contracts adjusted to trend 150 Other non-payroll savings (zero based budgeting) 822 Total Non-Payroll Savings 3,670 Total 2017 Baseline Cost Reductions 4,486 Savings due to eliminated FTEs, review of baseline 81 Baseline Cost Increases 2017 Baseline Cost Increases: $000's Payroll Increases (before new FTE requests) Average payroll increase (3.5%) & benefits adj 3,303 Contractual & Formulaic Cost Increases Lower estimated Charges to Capital 814 Utility commodity cost increase 626 Aeronautical B&O tax increase 246 Janitorial contract increase 196 Other Non-Payroll Increases (zero based budgeting) 673 Total Contractual Increases 2,556 Non-Aero costs related to revenue growth Amortization - prepaid frontage fees (DMCBP Phase III) 167 Owner's liaison costs DMCBP Phase II & III (100% reimb) 200 Clubs & Lounges - increased operating costs 80 Advertising increase (100% paid by Tenant Mktg fund) 120 B&O tax increase 127 Increase in credit card fees 217 Total Non-Aero Cost Increases 912 Total 2017 Baseline Cost Increases 6,770 Payroll for existing staff is primary driver of increase 82 Proposed Additions to Baseline 2017 Baseline Budget Requests: $000's New FTE's for 100% employee screening 7,905 Other Baseline Requests All other New FTE's 2,913 Annual fees for additional automated Janitorial contract scope increase 1,000 passport control kiosks ($96K) CISS contract scope increase 879 Annual Smoke Control consultant ($50K) Fire Dept apparatus maintenance contract 300 Fall Protection systems inspection ($25K) Fire Dept FAA required Live Fire training 100 Increase Airport Office building renewal & Airport-wide Customer Service training 260 replacement budget ($10K) Maintenance materials increase - higher usage 200 Other training, licensing, employee development & recognition ($278K) NEPL parking lot attendant contract 196 Asset Condition Assessment support 100 Terminal Test & Balance consultant 100 Seattle Chamber dues/membership 100 All other Baseline budget requests 459 Total 2017 Baseline Budget Requests 14,511 Details for proposed additions to baseline budget 83 2017 Non-Recurring Expenses 2017 Non-recurring Budget Requests: $000's Sustainable Master Plan Complete SAMP and transition to next phase 500 Adv Planning IDIQ for Master Plan projects 3,500 SAMP Environmental Review (NEPA/SEPA) 2,300 SAMP Utilities Evaluation 500 Non-Airline Revenue Development Burien NERA 3 - FAA pilot program (90% reimb) 1,800 ADR leasing consultant 500 Parking pre-booking consultant 200 Music Initiative Program (airport share) 175 Airport Signage Master Plan 950 Capital Program Development Project definition, sequencing, coordination 500 Architectural Standards Update 200 Parking garage improvements (one floor refresh) 450 Cargo Consulting Services 140 Air Incentive Program - new int'l service 725 All other Non-recurring budget requests (next slide) 2,067 Total 2017 Non-recurring Budget Requests 14,507 Details for proposed non-recurring items 84 Continued - 2017 Non-Recurring Expenses $000's $000's Non-Airline Revenue Development Other Aeronautical Business Owner's Liaison - new property develop 150 Stanchions & sign holders -common use gates 35 Support svcs (surveys, appraisals, title reports) 50 IER Mobile Phone Scanners -passport control 24 Other Non-Aero Business Maintenance GT Operators Relocation Design 100 Arc Flash Consultant - ADR/Terminal/Baggage 150 RCF Bus Camera (software) upgrade 100 Water Reservoir Cleaning 100 ADR quality assurance consulting 53 Centralized Mgmt Deicing Equip Consulting 50 GT Software System Upgrade 30 Curbside Refresh - Arrivals level 30 Facilities Management Post-Maximo upgrade implementation 25 IWS/Storm Water Evaluation 150 Storage Tanks 10-Year Inspection 20 Facility Master Record Drawing Consultant 150 Maximo system upgrade training 12 BMF Lighting Design and Improvement 50 Equipment Upgrades 10 Asset Management Estimating Consultant 50 Generator & Infrastructure for Fort Lawton Site 10 Terminal Space Masterplan 80 Other non-recurring Ltd. Duration - Admin Asst for F&I/Utilities 73 Staffing Plan consultant 150 Permit Management Tracking System 60 Financial consulting for airline agreement 100 Water Conservation Plan 50 Tri-Annual Disaster costs - 2017 Exercise 100 UHF/VHF Radio Antenna mapping and doc 50 Non-recurring new FTE costs (equipment) 40 Addt'l AAAE IET Training Stations (AV training ctr) 15 All Other 2017 Non-recurring Budget Requests 2,067 Details for other proposed non-recurring items 85 FTE Changes 2017 Proposed Budget FTEs FTEs % 2017 Proposed Budget FTEs FTEs % 2016 Approved Budget 892.81 2017 Budget FTEs BEFORE Proposed New FTEs 875.66 -0.6% Business Intelligence Analyst positions added 2.00 Business Intelligence staff transferred to Corp (7.25) Proposed New FTEs: Community Relations staff transferred to Corp (4.32) FTE' for New function: 100% Employee Screening 85.00 9.7% Emergency Mgmt staff transferred to Corp (2.33) High School Intern positions added (28 @ 0.25) 7.00 New FTE's for Existing functions: 33.50 3.8% Transfer all High School Intern positions to HR (30 @ 0.25) (7.50) Strong passenger growth, compliance requirements, and capital program College Intern - Fire department 0.25 Airport Security FTE's 4.25 2016 Adjusted Baseline 880.66 Cargo FTEs 2.00 Landside FTE's 8.00 2017 FTE Reductions & Transfers: Building Dept. FTE's 2.00 Positions Eliminated in 2017 Budget (4.00) Business Development FTE's 1.25 Apprentice, Operating Maint Engineer (1.00) Airport Operations FTE's 4.00 Lead RCF Bus Driver (1.00) Capital Development/Facilities & Infrastructure FTE's 6.00 RCF Relief Bus Driver (1.00) Finance & Budget - Grants and PFC Management 1.00 Bus Driver in Employee Parking (0.50) Maintenance FTE's 5.00 Cashier in Public Parking (0.50) Proposed New 2017 Budget FTEs 118.50 13.3% Graduate Fellowship (limited duration) (1.00) Net 2017 FTE Reductions & Transfers: (5.00) -0.6% 2017 Budget Proposed FTEs 994.16 11.4% 2017 Budget FTEs BEFORE Proposed New FTEs 875.66 -0.6% Excluding new screening function, FTE growth much lower than passenger growth 86 New FTE Position List 2017 Proposed Budget FTEs FTEs 2017 Proposed Budget FTEs FTEs New FTE's for 100% Employee Screening 85.00 Airport Operations FTE's 6.00 Airport Security FTE's 4.25 Airport Operations Mgr - Safety Mgmt 1.00 Audit and Compliance Manager 1.00 Airport Operations Specialist 2.00 Security Compliance Coordinator 1.00 Airline Scheduling Systems Specialist 1.00 Security Systems Process Manager 1.00 Cargo Facilities/Bus. Development 2.00 Background Compliance Specialist 1.00 Capital Development/Facilities & Infrastructure FTE's 6.00 College Intern in Airport Training 0.25 Utility Business Analyst 1.00 Landside FTE's 8.00 Program Management Coordinator 1.00 Landside Supervisors 2.00 Capital Development Program 1.00 Ground Transportation Controllers 6.00 Sr. Engineer, Mechanical Systems 1.00 Building Dept. FTE's 2.00 Sr. Engineer, Conveyance 1.00 Permit Technician 1.00 Sr. Admin Staff Assistant (limited duration) 1.00 Building Inspector/Plans Examiner 1.00 Finance & Budget - Grants and PFC Management 1.00 Business Development FTE's 1.25 Senior Financial Analyst 1.00 Aviation Property Manager 2 1.00 Maintenance FTE's 5.00 Graduate Intern in ADR 0.25 Carpenter 1.00 Laborer - Parking Garage 1.00 Automotive Bus Mechanic 1.00 Automotive Mechanic 1.00 Field Crew Laborer - Bus Washer/Cleaner 1.00 2017 Proposed New FTEs: 118.50 New FTEs driven by budget priorities 87 Aeronautical Cost Drivers Impact on Aero Impact on Aero 2015 2016 2016 2017 Revenues Revenues Budget Change Budget vs Forecast $ in 000's Actual Budget Forecast Budget $ % $ % O&M (1) 150,286 166,776 168,648 190,886 24,110 14.5% 22,238 13.2% Debt Service Gross 111,477 120,668 120,311 117,336 (3,332) -2.8% (2,975) -2.5% Debt Service PFC Offset (32,454) (32,583) (32,859) (33,099) (516) 1.6% (240) 0.7% Amortization 24,853 28,338 28,217 29,637 1,298 4.6% 1,420 5.0% Space Vacancy (3,469) (2,431) (2,785) (1,485) 946 -38.9% 1,300 -46.7% TSA Operating Grant and Other (1,099) (1,000) (838) (1,230) (230) 23.0% (392) 46.7% Rate Base Revenues 249,594 279,768 280,694 302,046 22,277 8.0% 21,351 7.6% Commercial area 9,519 9,306 9,197 9,665 359 3.9% 468 5.1% Total Aero Revenues 259,113 289,074 289,891 311,711 22,637 7.8% 21,820 7.5% O&M, Debt Service Gross, and Amortization do not include commercial area costs or the international incentive expenses O&M costs driven by: Full employee screening Flight corridor safety program Terminal safety enhancements O&M cost increases, many non-recurring, driving up airline costs 88 Non-Aero Key Indicators 2015 2016 2016 2017 Budget Change Budget vs Forecast Actual Budget Forecast Budget $ % $ % Non Aero Revenues per Enplanement Parking 2.99 3.01 3.03 3.07 0.07 2.2% 0.04 1.4% Rental Cars (includes Operating CFC) 2.20 2.17 2.17 2.12 (0.05) -2.2% (0.05) -2.4% Ground Transportation 0.42 0.37 0.55 0.60 0.23 61.0% 0.06 10.1% Airport Dining and Retail 2.44 2.45 2.37 2.19 (0.26) -10.5% (0.18) -7.6% Commercial Properties 0.38 0.46 0.68 0.51 0.05 10.0% (0.18) -25.7% Non-Airline Terminal Leased Space 0.04 0.05 0.05 0.18 0.13 253.8% 0.13 243.3% Utilities 0.33 0.34 0.32 0.30 (0.04) -12.9% (0.02) -6.4% Employee Parking 0.37 0.37 0.39 0.35 (0.02) -5.7% (0.04) -9.7% Clubs and Lounges 0.11 0.12 0.11 0.11 (0.00) -1.7% 0.00 1.8% Other 0.04 0.03 0.04 0.03 (0.00) -9.5% (0.01) -21.3% Total Revenue per Enplanement 9.33 9.38 9.72 9.47 0.09 1.0% (0.25) -2.6% Primary Concessions Sales / Enpl 11.40 11.85 11.55 11.61 (0.25) -2.1% 0.05 0.5% Revenue growth not keeping pace with enplaned passenger growth 89 2017 Budget: Aero & Non-Aero $ in 000's Aero Non-Aero Other Total Operating Revenues 278,099 226,604 - 504,703 SLOA III Incentive (3,576) - - (3,576) Total Revenues 274,523 226,604 - 501,127 Operating Expenses 194,824 107,391 - 302,215 Net Operating Income 79,699 119,213 - 198,913 CFC Surplus - (5,223) - (5,223) Net non-op paid with ADF - - 3,691 3,691 SLOA III Incentive 3,576 - - 3,576 Available for Debt Service 83,275 113,991 3,691 200,957 Debt Service - net of PFCs (88,740) (45,136) - (133,876) Adjusted Net Cash Flow (5,465) 68,855 3,691 67,081 Non-aero businesses generate cash flow 90 Major Projects Cash Flows (Figures in $000s) 2017 - 2021 Major Projects CIP 2016 2017 2018 2019 2020 2021 Total NorthSTAR program 5 CIPs 29,128 73,799 112,316 117,001 499,882 113,988 82,778 International Arrivals Facility C800583 41,527 197,366 227,339 - 143,128 595,430 27,597 Baggage Recapitalization/Optimization C800612 5,421 45,000 45,600 64,500 47,000 57,000 259,100 South Satellite Renovation C800743 30 970 9,000 20,000 30,000 50,000 109,970 Concourse D Hardstand Terminal C800769 278 15,000 22,722 - - - 37,722 Alternate Utility Facility C800538 601 10,000 20,000 5,596 - - 35,596 Airfield Pavement Program C800483 38 6,500 6,500 6,500 6,500 6,394 32,394 Restroom Upgrades Conc B, C, D C800697 86 3,000 5,000 7,500 7,500 5,000 28,000 Highline School Insulation C200007 - 7,251 - - 15,675 - 22,926 N. Terminals Utilities Upgrade C800717 898 8,000 8,000 3,328 - - 19,328 MT Low Voltage Sys Upgrade C800061 1,170 5,000 5,000 5,000 3,039 - 18,039 Add'l Baggage Makeup Space IAF C800836 167 400 15,584 2,349 - - 18,333 Concessions Infrastructure C800638 1,694 5,000 5,000 5,000 3,581 - 18,581 SSAT Make-Up Feed Line C800780 176 - - 8,000 5,823 - 13,823 Video System Improvements Proj C800642 1,035 5,000 4,000 2,696 - - 11,696 GSE Electrical Chrg Stations C800335 4,199 5,000 5,066 - - - 10,066 New Projects Multiple 1,386 59,666 91,501 56,249 41,175 24,896 273,487 Allowance CIPs - 4,562 15,000 30,000 45,000 60,000 154,562 Other (123) 93,039 138,984 21,46965,723 7,900 8,125 242,201 Total 180,873 590,498 663,351 498,316 354,778 294,193 2,401,136 Much of 2017- 2021 spending for projects already authorized 91
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