ITEM NO:       6a_supp_1
DATE OF MEETING: November 14,2017
Port of Seattle
2018 Budget
First Reading & Public Hearing
Commission Meeting
November 14, 2017

1

Outline
2018 Budget Process Recap
2018 Budget Overview
2018 Operating Budget
2018 Comprehensive Operating & Non-Operating Budget
2018-2022 Capital Plan
2018 Staffing Summary
5 Year Financial Forecast
2018 Sources and Uses of Funds
2018 Proposed Tax Levy
Remaining 2018 Budget Schedule

2

2018 Budget Process
Jun. 13      Commission 2018 Budget Work Session 
Jul. 25      2018 Budget Development Commission 
Jul. 25       Long Range Plan (LRP) Commission Draft Review/Briefing 
Aug. 22     Memo to Commission regarding key budget assumptions for 2018 
Sept. 12     Second LRP Commission Draft Review 
Sept. 26     2018 Central Services Operating and Capital Budgets Briefing and LRP Commission Draft Review 
Oct. 10       2018 Division Operating and Capital Budgets Briefing
Oct. 24      Tax Levy & Draft Plan of Finance Commission Briefing and 
Oct. 24      Preliminary Budget document to the Commission 
Oct. 26      Preliminary Budget document released to the public 
Nov. 14       First Reading & Public Hearing of the Preliminary Budget and LRP Approval Request
Nov. 28       Second Reading & Final Passage of the Preliminary Budget
Dec. 1       File Statutory Budget with King County
Dec. 15     Release the Final Budget and Draft Plan of Finance
Commission engaged in the budget process
3

2018 Budget Highlights
Operating revenues are budgeted at $670.0M, $49.8M or 8.0% higher
than 2017 budget
Operating expenses are budgeted at $422.2M, $37.6M or 9.8%
increase from 2017 budget
Net Operating Income is budgeted at $247.8M, $12.2M or 5.2% above
2017 budget
The 2018 capital budget is $878.2M and the 5-year capital spending
plan is approximately $3.1 billion
The proposed tax levy for 2018 is $72.0M
The 2018 budget reflects the Port's growth and continued investments for the region
4

2018 Business Activity Forecasts
Aviation Division:
Forecast 5.0% growth in enplaned passenger for 2018 (from the 2017 year-end forecast, which is
expected to be 3.0% higher than 2016)
Enplaned passengers up 48.5% since 2012 (6.8% annual compounded rate) 
Major capital projects underway at Sea-Tac will improve the customer experience, reduce
congestion, and add capacity to accommodate future growth
Maritime Division:
3.1% growth in cruise passengers to over 1 million in 2018 
11.6% growth in grain volumes in 2018
Fishing and Commercial Operations occupancy rate average of 86%, above 2017 budget of 84%
Economic Development Division:
Commercial Properties target 95% occupancy rate at the end of 2018
Conference & Event Center revenue up 19% from 2017 budget
2018 budget supports growth in Port businesses
5

2018 Key Initiatives/Budget Drivers 
Support for Business Growth and Customer Service 



Continue to improve        Catch up with strong Sea-    Grow international and        Support the airport
customer service          Tac growth             domestic passenger          capital improvement
Continue to improve        Strengthen the Port's        service                      program
safety & security           own Centers of Expertise    Increase Air Cargo           Address growing airport
office space needs
Growth is a key budget driver
6

2018 Key Initiatives/Budget Drivers 
Implement Commission Priorities & Initiatives 



Energy and Sustainability    Workforce development       Expand tourism             Restore and enhance
Equity Program           opportunities for small &        opportunities                waterside habitat
Priority Hire               disadvantaged businesses      Advance real estate
WMBE                  Continue internship program     development
Expand public outreach
Budget resources support Commission priorities
7

Budget Additions for Commission Priorities
Energy & Sustainability Committee & Green House Gas Reduction:
3 new FTEs focused on sustainability efforts
$921K in consulting services
Equity Program:
1 new FTE for the Equity Program in Human Resources
Priority Hire:
1 new FTE for Priority Hire in Capital Development
Women and Minority Business Enterprise (WMBE):
1 new FTE for WMBE in Economic Development Division
1 new FTE for WMBE in Central Procurement Office

Adding new FTEs and resources to advance Commission priorities
8

Changes Since Preliminary Budget Briefings
Aviation Division
Aeronautical revenues (cost recovery) increased by $2,185K due to revised janitorial
costs and debt service, partially offset by higher revenue sharing
Non-aeronautical revenues increased by $1,275K mainly due to $1M TNC rate & volume
increases and additional $255K from building permits
Operating expenses up by $2,425K due to:
o $236K in new labor contract for bus drivers and revenue specialists
o $66K reduction in Airport Building Dept. due to more payroll charges to capital
o $1,951K increase in janitorial contract (not in the 2018 Preliminary Budget Book)
o $300K for ACDBE consultant and study for ADR (not in the 2018 Preliminary Budget Book)
o $4K increase in B&O taxes due to higher badge revenue (not in the 2018 Preliminary Budget Book)
Additional budget increase due to the new ILA with City of SeaTac (not in the Budget Book):
o $569K increase in operating expense for stormwater fees (to $1.2M of which $700K was included in
baseline)
o $68K increase in operating expense for annual building permit fees
o $1.4M non-op expense for annual Public Safety payment (using tax levy fund)
Additional refinements made to the budget
9

Changes Since Preliminary Budget Briefings
Economic Development Division
Added $130K for a WMBE manager position and related expenses
Central Services
Added $104K for a WMBE Compliance Analyst position and related expenses.
Added $90K for a Priority Hire Coordinator position.
NWSA Distributable Revenue
Added $991K to the Distributable Revenue due to higher Net Income for the NWSA (not
in the 2018 Preliminary Budget Book)
Maritime/EDD CIP
spending has been reduced by $106 million from 2018-2022 to align with
projected funding capacity

Additional refinements made to the budget
10

2018 Operating Budget for Aviation
2016    2017    2017    2018   Budget Change Budget vs Forecast
($ in '000s)                  Actual   Budget  Forecast   Budget       $ %        $ %
Operating Revenues
Aeronautical - Net           244,235   274,799   266,637   301,082   26,282   9.6%    34,445  12.9%
Non-Aeronautical           221,021   226,645   232,456   244,786   18,141   8.0%   12,330   5.3%
TOTAL        465,256  501,444  499,093  545,867  44,423  8.9%  46,774  9.4%
Operating Expenses         261,226  302,711  300,631  334,612  31,901  10.5%   33,981  11.3%
Net Operating Income        204,030  198,733  198,462  211,255  12,522   6.3%   12,793   6.4%

Growth driving expenses and revenues
11

2018 Operating Budget for Non-Aviation
2016    2017    2017    2018   Budget Change Budget vs Forecast
($ in '000s)                  Actual   Budget  Forecast   Budget       $ %        $ %
Operating Revenues
Maritime                50,810   51,830   52,614   54,622   2,792   5.4%    2,008   3.8%
EDD            15,902  16,030  16,547  18,522  2,492 15.5%   1,975 11.9%
NWSA Distributable Revenue   61,584   46,708   51,288   46,647    -61  -0.1%   -4,642  -9.0%
Stormwater Utility - Maritime     3,677    3,845    3,845    4,208     363   9.4%     363   9.4%
Central Services & Others       1,236     388     388     182    -206  -53.2%     -206  -53.2%
Total                   133,210   118,801   124,682   124,181   5,380   4.5%     -501  -0.4%
Operating Expenses
Maritime                40,268   46,502   45,850   49,284   2,781   6.0%    3,434   7.5%
EDD            20,983  29,069  26,792  28,651  -418  -1.4%   1,859  6.9%
Joint Venture/POS           1,590    1,128    1,128    4,442   3,314  293.8%    3,314 293.8%
Stormwater Utility - Maritime      629    2,882    2,882    4,476   1,594  55.3%    1,594  55.3%
Central Services               428    2,367      667     782   -1,585  -67.0%     115  17.2%
Total                   63,898   81,949   77,319   87,634   5,686   6.9%   10,315  13.3%
Net Operating Income         69,312   36,852   47,363   36,546    -306  -0.8%   -10,816 -22.8%
Flat NOI versus 2017 Budget
12

2018 Operating Budget - Port wide
2016    2017    2017    2018   Budget Change Budget vs Forecast
($ in '000s)                  Actual   Budget  Forecast   Budget       $ %        $ %
Operating Revenues         598,466  620,245  623,774  670,048  49,803   8.0%   46,274   7.4%
Operating Expenses         325,124  384,660  376,118  422,246  37,587   9.8%   46,129  12.3%
Net Operating Income        273,342  235,585  247,656  247,802  12,217   5.2%     146   0.1%


A record $670M of operating revenues for 2018 
13

2018 Comprehensive Budget
2016    2017    2017    2018   Budget Change
($ in '000s)                             Actual   Budget  Forecast   Budget       $ %                    Explanations
Revenues
1. Aeronautical Revenue - Net            244,235   274,799   266,637   301,082   26,282    9.6% Cost recovery under SLOA.
2. Portwide Non-Aeronautical Revenue      354,231   345,446   357,138   368,967   23,521    6.8% Mainly due to higher revenues from the Airport, Maritime & EDD.
3. Tax Levy                            71,678    72,000    72,000    72,000 -    0.0% Assume no change from 2017.
4. PFCs                               85,570    89,087    92,087    91,787    2,700    3.0% Higher enplanement forecast for 2018.
5. CFCs                               24,715    26,300    26,300    22,161   (4,139)  -15.7% Paid off CFC-funded commercial paper in 2017.
6. Fuel Hydrant                          6,992     7,024     7,024     7,023       ()    0.0%
7. Non-Capital Grants and Donations           6,284     8,595     5,595     5,504   (3,091)  -36.0% Lower state grant for T117 in 2018.
8. Capital Contributions                    18,108    15,000    10,000    41,379   26,379  175.9% Increase grants reimbursement from FAA and TSA.
9. Interest Income                        8,448    10,822    15,822    15,713    4,891   45.2% Slight increase in rates and higher cash balances.
Total Revenues                    820,261   849,073   852,603   925,616   76,542   9.0%
Expenses
1. O&M Expense                       325,124   384,660   376,118   422,246   37,587    9.8% New budget initiatives and average pay increase.
2. Depreciation                         164,336   166,300   164,300   163,309   (2,991)   -1.8% 2017 YTD actual lower than the budget.
3. Revenue Bond Interest Expense            105,567   122,026   107,026   122,544     518    0.4% Assume $700M new bond issuance in 2018.
4. GO Bond Interest Expense                 9,765    17,714    14,714    13,501   (4,213)  -23.8% Savings from bond refinancing.
5. PFC Bond Interest Expense                5,251     4,985     4,985     4,437     (548)  -11.0% Decreased debt service on PFC bonds through amortization.
6. Non-Op Environmental Expense              280     5,441     4,441     2,250   (3,191)  -58.7% Revise costs estimates for ERL balance and superfund sites.
7. Public Expense                         8,560     2,488     1,488    10,794    8,306  333.8% $6M for Swift & Safe and $2M for Heavy Haul in 2018.
8. Other Non-Op Rev/Expense                7,485     (257)     (257)      473     730 -283.8%
Total Expenses                    626,368   703,357   672,815   739,554   36,197   5.1%
Revenues over Expenses             193,893  145,716  179,788  186,061  40,346  27.7%
9. Special Item                         147,700 - - - -      n/a Second & third payments for Viaduct contribution in 2016.
Change In Net Assets                46,193  145,716  179,788  186,061   40,346  27.7%
A strong financial position for the Port in 2018
14

CIP Prioritization
Staff has prioritized the Maritime/EDD 5-year CIP to align spending
with projected funding capacity; recommendations include:
Fund North Harbor channel deepening
Provide funding for:
Projects under construction or required
Projects under $1 million
Contingency and small capital
Follow asset stewardship program to avoid premature funding of non-
critical renewal projects
Retain a targeted $50 million of unallocated funding capacity reserved for
future considerations
Additional prioritized projects included on following slide
Airport CIP is fully funded with Airport resources
Prioritization efforts focused on Maritime and EDD projects 
15

Additional Maritime/EDD Funded Projects
2018-2022
Division                Project                 $'000   Score Rank  Notes
MT   C800525 FT Strategic Plan            33,995  10  1 Fishing industry support and produces new cash flow
MT   C800995 Restoration              18,848  10  1 Environmental remediation and produces new cash flow
MT   C800675 P91 South End Fender          3,425  10  1 Fishing asset and income preservation
MT   C800129 New Cruise Gangway at T91        4,490  10  1 Increases cruise traffic and cruise revenues
MT   C800531 FT Dock 3,4,5 Fixed Pier Improvement    6,239   9  4 Supports the fishing industry and preserves revenue generating assets
MT   C800356 SBM Restrms/Service Bldgs Rep, paving   8,390   9  4 Critical asset renewal and supports new revenues
EDD   C801006 P66 HVAC Systems Upgrade         3,000   8  6 Supports cruise industry key asset renewal
EDD   C801016 CW Elevator Modernizations        2,750   8  6 Public amenity asset renewal
EDD   C800199 WTC HVAC Replacement          1,600   8  6 Asset renewal and revenue preservation
EDD   C800889 BHICC Interior Modernization        6,681   8  6 Asset renewal and revenue preservation and growth
EDD   C800158 T91 Uplands Development         30,000   7  10 Supports maritime industry and produces cash flow
TOTAL                         119,418 

Projects include new initiatives and asset stewardship
16

Prioritized Projects
Project Prioritization - Staff Recommendation                   Highlighted Projects have updates
FOR DISCUSSION                      Blue color indicates staff recommendation for funding
Pink color indicates projects to compete again for funding in 2018
2018-                                                    2018-
Update 2022 Cost                                       Update 2022 Cost
Project                                    Notes   ($ mil.)                                                Notes   ($ mil.)
Staff Recommended for Inclusion in Funded CIP                                    Staff Recommended for Future Review in 2018
MT   C800525 FT Strategic Plan                   33,995   C  MT   C800993 Property ACQ          #3    32,000
MT   C800995 Restoration                     18,848   D EDD   C800887 P69 Ext & Lobby Improvements   #4     2,500
MT   C800675 P91 South End Fender                 3,425        MT   C800539 BHM Pile Wraps               3,350
A  MT    C800129 New Cruise Gangway at T91           #1      4,490          MT    C800534 FT S Wall Cl Fndr Rp & Cor Prt           13,300
MT   C800531 FT Dock 3,4,5 Fixed Pier Improvmnt            6,239        MT   C800528 FT W Wall N Fender Replacement        3,050
MT   C800356 SBM Restrms/Service Bldgs Rep, paving          8,390        MT   C800529 FT W Wall N Sht Pile Crsn Prtn         2,884
B  EDD   C801006 P66 HVAC Systems Upgrade           #2      3,000          MT    C800533 FT W Wall S Sht Pile Cor Protn            2,210
EDD   C801016 CW Elevator Modernizations                  2,750          MT   C800530 FT S Wall Wt End Improvements          1,674
EDD   C800199 WTC HVAC Replacement                   1,600       E  MT   C800678 HIM ABCDE Dock          #5     12,370
EDD   C800889 BHICC Interior Modernization                 6,681          MT   C800741 Duwamish Mooring Dolphins            2,300
EDD   C800158 T91 Uplands Development                  30,000      MT   C800820 P66 Exterior Modernization            12,480
Sub total                                              119,418     MT     C801020 Maritime Video Camera Project               3,200
Sub total                                      91,318
1 as originally contemplated, an additional fee (surcharge) will recover costs in an estimated 4 years.
2 P66 HVAC capital costs over 2018-2022 reduced by $14.8 million, some higher maintenance costs will be needed.
3 Commission has suggested acquisition may be an addition to be funded.
4 Project will focus on Clipper, assuming lease terms provide positive return on investments, lobby accessible furniture, and possibly security improvements.
5 HIM dock replacement can be deferred except for possibly dock E. If 2018 evaluation indicates an urgent need it can be paid from contingency, estimate is $4 million.
23 projects were reviewed
17

Capital Plan Summary
Capital Plan Summary by Division
$ in 000's               2017 Fcst  2018    2019    2020    2021    2022   2018-2022
Aviation                 340,056  815,704  724,212  507,919  459,023  311,828   2,818,686
Maritime                25,076  38,090  31,821  21,921  20,120  14,845    126,797
Economic Development       4,718   9,178  16,979  22,900   8,580   7,180    64,817
Stormwater Utility             1,407   1,700    1,650   2,592   2,150   2,150     10,242
Central Services and Other      7,328  13,556  12,401  10,071  10,873  11,706     58,607
Total                 378,585  878,228  787,063  565,403  500,746  347,709  3,079,149

Capital projects have been prioritized by staff.
The capital plan does not include $249.9M for our share of the NWSA capital spending between 2018 and 2022.
The Port continues to invest in the region with a 5-year capital plan of over $3 billion
18

10 Year Comparison of FTEs to Revenues
10 Year Comparison of FTEs to Revenues       $ in Millions
2,500                                                                    700
600
2,000
500   R
F
e
T  1,500                                              400
v
E
s   1,000                                                                               300    e
n
200   u
500
100   e
s
-                                                                                            0
2017   2018
2008   2009   2010   2011   2012   2013   2014   2015   2016
Est.    Bud
FTEs   1,778  1,779  1,696  1,712  1,788  1,801  1,830  1,842  1,867  2,062  2,156     FTEs
Revenues  479   442   463   483   522   545   534   553   600   624   670      Revenues

The annual compound growth rate is 1.9% for FTEs compared to 3.4% for operating revenues from 2008 to 2018. 
Operating revenues outgrew FTEs for the past 10 years
19

FTE Summary
Central
Aviation Maritime Econ Dev.  Services    Total
2017 Approved FTE's          962.9   162.3         36.0    870.1  2,031.3
Mid Year Approval           15.3        1.0 -       15.5    31.8 
Eliminated - - -    (1.0) (1.0) 
Net Transfers -   1.0    (1.0) -   - 
Adjusted 2017 FTE's (note 1)       978.2    164.3          35.0     884.6   2,062.1
2018 Budget
Eliminated - - -    (1.6) (1.6) 
Transfer - - - -  - 
New FTE's (note 2)           62.2         3.8         1.0      27.4    94.4 
Total 2018 Changes            62.2        3.8         1.0     25.8    92.8 
Proposed 2018 FTE's        1,040.4        169.0         36.0    910.5  2,155.9
Notes:
(1) Includes 1.0 FTE for Stormwater Utility in Maritime Division.
(2) Includes 2 new FTEs for WMBE and 1 new FTE for Priority Hire added after the Commission budget briefings.
FTEs driven by Commission priorities and growth initiatives
20

5 Year Financial Forecast
($ in 000's)                                                                                       Compound
Budget  Forecast  Budget           Forecast            Growth
OPERATING BUDGET           2017   2017   2018   2019   2020   2021   2022  2018 - 2022
Aeronautical Revenue - Net                274,799  266,637        301,082        358,885   12.7% 404,903        463,050        485,623
Portwide Non-Aeronautical Revenue          298,738  305,849        322,320        321,429    1.6% 326,581        333,986        344,049
NWSA Distributable Revenue              46,708   51,288   46,647   43,122   42,334   45,815   46,498     -0.1%
Total Operating Revenues              620,245  623,775        670,048        723,436   6.9% 773,818        842,852        876,171
Total Operating Expenses              384,660  376,118        422,246        431,797   3.9% 452,041        473,164        491,161

Net Operating Income Before Depreciation     235,585  247,657  247,802  291,641  321,777  369,688  385,009    11.6%

Steady growth in Net Operating Income projected
21

Sources of Funds
Rental Car Customer   Fuel Hydrant Receipts 
Passenger Facility Facility Charges           0.4% 
Charges        1.4% 
Other Receipts 
Tax Levy    5.6%                          0.2% 
4.4% 
Grants and Capital                                                          84% of funding
Operating Revenues 
Contributions                                             41.1%              sources come from
2.9%                                                          bond proceeds and
operating income.
The tax levy makes
up less than 5% of
the funding sources
Proceeds from Bond
Issues                                                       in 2018.
43.0% 


Interest Receipts 
Total Sources: $1,628.5M                                      1.0% 
The Port has diversified funding sources
22

Uses of Funds
Operating Expenses 
24.1% 

Plan to spend more
Capital Expenditures                 Bond Redemptions                  than half of our
50.8%                       10.0%                     funds on capital
projects in 2018.
Interest Payments                      Operating expenses
9.5%                        are less than a
quarter of total
expenditures in
2018.
Other Expenses 
Payment to NWSA for                0.3% 
Capital Expenditures       Public Expense 
4.4%              0.6%             Total Uses: $1,730.5M 
Capital spending comprises more than half of Port expenditures
23

2018 Tax Levy
The maximum allowable levy for 2018 is $101.6 million. 
For 2018 the levy will be $72.0 million.
The estimated millage rate is $0.1358. 
The 2018 levy will be used for:
General Obligation (G.O.) Bonds Debt Service 
Regional Transportation projects 
Environmental Remediation 
Capital projects meeting specified criteria endorsed by the Commission 
Economic development initiatives including workforce development and
economic development partnership programs 
Other environmental initiatives including Airport Community Ecology
funding and energy and sustainability policy directives 
The Port uses tax levy for community investments
24

2009-2018 Tax Levy & Millage Rate
$ Millions 
$80  $75.90 $73.50 $73.50 $73.00 $73.00 $73.00 $73.00 
$72.00 $72.00 $72.00  $0.70
$70                                           $0.60
$60
$0.50
$50
$0.40
$40
$0.22   $0.22   $0.23   $0.23   $0.22                          $0.30
$30  $0.20                      $0.19  $0.17  $0.15  $0.14 
$20                                           $0.20
$10                                           $0.10
$0                                           $0.00
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Tax Levy (Left Scale)           Millage (Right Scale)
The Port has gradually reduced the tax levy amount since 2009
25

Actual vs. Maximum Allowable Levy



The Port has forgone $491M in tax revenue since 1991 
26

Remaining Budget Schedule
Second Budget Reading                   Nov. 28, 2017
File Statutory Budget with King County       Dec. 1, 2017
Release the 2018 Final Budget Document     Dec. 15, 2017

Statutory budget to be filed with the County on December 1
27

Port of Seattle
2018 Budget
First Reading & Public Hearing
Commission Meeting
November 14, 2017

28