9d Operating Division Preliminary Budgets Presentation
Item No. 9d_supp Meeting Date: October 9,2018 2019 Operating Division Preliminary Budgets Commission Briefing October 9, 2018 1 2019 Operating Divisions' Budget Timeline 2019 Business Budget Budget First Reading & 2nd Reading & Plan and CIP Development Public Hearing Final Passage of Development Briefing Briefing for 2019 Budget 2019 Budget (May/June) (June) (October 9th) (Mid-November) (Late November) Will cover operating budget and capital budget 2 Aviation Division 2019 Preliminary Budget October 9, 2018 3 Outline for Aviation presentation Overview, drivers, summary Activity forecast: passengers FTEs Operating expenses Non-aeronautical business Aeronautical business, CPE Capital Budget Financial Forecast Appendix Will cover operating budget and capital budget 4 Context: Passenger Growth and Capital Program Total Passengers (000s) Capital Spending ($M) Total Passengers Growth Rate 2015 2016 2017 2018 FCST 2019 BUD 2020 2021 60,000 14% 12.9% $1,000 $935 50,787 49,308 50,000 12% 45,737 46,935 42,341 10% $800 40,000 37,498 34,827 8.0% 7.7% $618 8% $577 $600 30,000 $515 5.1% 6% 20,000 $400 $294 3.0% 4% 2.6% 10,000 $200 $165 $154 2% 0 0% $0 2013 2014 2015 2016 2017 2018 FCST 2019 BUD 2015 2016 2017 2018 FCST 2019 BUD 2020 2021 Passenger Growth: Major projects now under construction: Up 46% since 2013 NSAT, IAF, Baggage Optimization CAGR of 6.5% Customer service challenges Anticipate 50.8 million annual passengers Construction reduces gate capacity (MAP) in 2019 vs. 34.8 MAP in 2013 Need to plan for next phase Catching up from passenger growth; Peak spending on capital program 5 Century Agenda Drives Airport Priorities AV Priorities Century Agenda - High Performance Organization Employees HPO 2: Eliminate workplace injuries HPO 3: Act as one Port Customer Service & HPO 4: Foster employee development and leverage talent Facility Efficiency Goals: Customer Service HPO 1: Increase customer satisfaction Airport roadway entry CA 2 Obj 6: Make Sea-Tac "Gateway of Choice" Facilities/Capacity CA 2 Obj 8: Meet the regions air transportation needs through security check Financial CA 2 Obj 8: Meet the regions air transportation needs point: 45 min. Safety HPO 2: Eliminate workplace injuries Maximum wait time at HPO 3: Public safety and Security security checkpoints: Security HPO 3: Public safety and Security 20 min. Community HPO 1: Customer Service and Public Engagement Diversity CA 3: Promote small business Minimum connect HPO 4: Model for Workplace Equity, Diversity and Inclusion time: 75 min. Sustainability CA 4: Be the greenest and most energy efficient Port Partners HPO 1: Improve customer service and public engagement 2019 budget reflects Century Agenda objectives and Aviation Priorities 6 Key Priorities Drive 2019 Budget CUSTOMER Additional Pathfinders, New Department in 2018 SERVICE seasonal on-call support SAMP Environmental, FACILITIES/CAPACITY Utility Master Plan, Advanced Planning, Asset management Airspace study FINANCIAL Increase non-aero NOI: grow parking revenues EMPLOYEES Implement staffing plan to add necessary resources Employees are the foundation of success 7 2018 Update 2018 Activity 2018 Passenger growth forecasted at 5%, YTD activity currently outpacing forecast Expenses: Completed SAMP, moved to Environmental Review Expenses overall tracking close to budget, many unplanned items are being accommodated in budget through savings/deferrals Non-Aero revenues: Airport Dining & Retail lease transitions continue on schedule, gross sales from majority of new units are outperforming initial lease projections Growth in parking Continuing deterioration in rental car transactions Ground transportation: TNCs continue to grow Expect to exceed NOI target 2019 Budget builds on 2018 Forecast 8 Budget Summary 2016 2017 2018 2018 2019 Budget Change Budget vs Forecast $ in 000's Actual Actual Budget Forecast Budget $ % $ % Operating Revenues: Aeronautical Revenues 244,235 264,114 301,082 305,005 366,862 65,780 21.8% 61,857 20.3% Non-Aeronautical Revenues 221,021 236,803 244,786 250,728 257,461 12,675 5.2% 6,733 2.7% Total Operating Revenues 465,256 500,916 545,867 555,733 624,323 78,455 14.4% 68,590 12.3% Total Operating Expenses 261,226 299,114 334,856 333,374 367,092 32,236 9.6% 33,719 10.1% Net Operating Income 204,030 201,802 211,011 222,359 257,231 46,219 21.9% 34,872 15.7% CPE 10.10 10.52 11.35 11.52 13.43 2.08 18.3% 1.92 16.6% Non-Aero NOI 128,727 133,101 126,861 134,164 134,178 7,317 5.8% 14 0.0% Enplaned passengers (000s) 22,796 23,416 24,654 24,654 25,394 740 3.0% 740 3.0% Expense increase driven by new requests of $28.6 million ($6.5M baseline, $22.1M non-recurring) and $14M for Environmental Remediation Liability expense. Non-aero NOI impacted by significant non-recurring expenses Strong growth in Net Operating Income; CPE growing as expected 9 Airport Activity: Passengers DomesticPassengers Growth rate 60,000 14% 12.9% 50,787 49,308 49,308 12% 50,000 46,935 45,737 42,341 Int'l Int'l Int'l Int'l Int'l 10% 40,000 37,498 Passengers (000s) Int'l Int'l 8.0% 8% 7.7% 30,000 6% Growth Rate % 5.1% 5.1% 20,000 4% 3.0% 2.6% 10,000 2% Domestic Domestic Domestic Domestic Domestic Domestic Domestic 0 0% 2014 2015 2016 2017 2018 BUD 2018 FCST 2019 BUD Growth rate declining, but passenger growth continues 10 Implementing 2017 ICF Staffing Study Recommendations FTE's FTE's ICF ICF FTE Budget Approved Proposed Recomm. Recomm. Total Aviation Division Only 2018 2019 2020 2021 2018-2021 Beginning Balance 983.16 1,048.41 1102.28 1149.16 New Additions: Permanent FTE's 56.00 40.12 46.88 0.00 143.00 Temporary FTE's to Address Specific Areas: Limited Duration Hires 0.00 5.00 0.00 0.00 5.00 Emergency Hires 0.00 8.00 0.00 0.00 8.00 Interns 1.25 0.75 0.00 0.00 2.00 Total New Additions 57.25 53.87 46.88 0.00 158.00 Total Budget FTE's 1,040.41 1,102.28 1,149.16 1,149.16 Mid-Year Adds: Permanent FTE 1.00 Limited Duration Hires 7.00 Total Adjusted Baseline 1,048.41 1,102.28 1,149.16 1,149.16 ICF Recommended Adds: 59.00 42.00 43.00 0.00 144.00 Added Permanent FTE's -57.00 -40.12 -46.88 0.00 -144.00 Under/(Over) ICF Recommendations 2.00 1.88 -3.88 0.00 0.00 Cummulative Under/(Over) 2.00 3.88 0.00 0.00 0.00 2019 Budget reflects fewer permanent FTEs than recommended 11 New FTE Position List 2019 Proposed Budget FTEs FTEs 2019 Proposed Budget FTEs (cont'd) FTEs Limited Duration FTE's 5.00 Facilities & Infrastructure FTE's 2.00 ORAT positions (LTD) 4.00 Senior Engineer, Civil 1.00 Rodent Control Specialist (LTD) 1.00 Signage Graphics Specialist 1.00 Emergency Hire FTE's 8.00 Customer Service FTE's 6.00 Pathfinders (EH) 8.00 Volunteer Coordinator 1.00 Pathfinders 4.00 Landside FTE's 3.00 Customer Communications Specialist 1.00 Landside Supervisor 1.00 Employee Parking Bus Driver 1.00 Maintenance FTE's 13.00 Public Parking Cashier 1.00 AVM Asset Management Analyst 1.00 Bus-Automotive Mechanic 1.00 Commercial Management FTE's 3.12 Field Crew Garage 1.00 Property Manager 1.00 Electronic Technicans 2.00 ADR Business Manager-Small Business Initiative1.00 Wireman for Utility Metering 2.00 Public Parking Yield Management Analyst 1.00 Boiler Room Position 1.00 On-call Mail Messenger 0.12 Boiler Room Capital Position 1.00 Conveyor 1.00 Airport Operations FTE's 1.00 Passenger Loading Bridge Position 2.00 Airport Duty Manager - Airfield 1.00 Custodial Shift Supervisor/QA Technican 1.00 Terminal Operations FTE's 3.00 Fire Department FTE's 9.00 SMS Specialist 1.00 Firefighters 8.00 Airline Scheduling Coordinator 1.00 Admin Assistant 1.00 Terminal Development Project Manager 1.00 New Intern FTE's - College/Graduate 0.75 (continued) 2019 Proposed New FTEs: 53.87 Strategic use of limited duration and seasonal FTEs to supplement ICF staffing recommendations 12 FTE Growth Relative to Enplanement Growth FTEs FTEs per Million Enplanements 1,400 52 Includes AV FTEs for AV Environmental, 49 Noise and AV Finance & Budget 1,200 46 50 45 43 44 42 1,140 1,000 39 1,085 1,017 40 FTEs per 800 858 863 881 889 849 30 FTEs 600 20 400 10 Million Enplanements 200 0 0 2012 2013 2014 2015 2016 2017 2018 FCST 2019 BUD 2019 FTE Growth Rate is slightly higher than Enplanement Growth Rate 13 Aviation Operating Expenses 2018 Aviation O&M Budget $226,088 Remove non- recurring items $15,816 Remove regulated materials (ERL) $4,030 Transfer to Central Services $29 AV Operating Cost reductions/savings $1,289 Cost ($000s) Cost increases $12,566 2019 Baseline before additions $217,490 Proposed baseline additions $6,465 Proposed non- recurring additions $22,115 Proposed exceptions (ERL) $14,259 2019 Proposed Budget $260,329 $0 $50,000 $100,000 $150,000 $200,000 $250,000 Baseline expense increase targets core operations, Non-recurring expenses driven by strategic initiatives 14 Cost Reductions 2019 Baseline Cost Reductions/Savings: $000's Contractual Savings & Formulaic Cost Decreases Higher estimated Charges to Capital (offsets higher payroll) 362 Total Contractual & Formulaic Decreases 362 Non-Payroll Savings (zero based budgeting) ACDBE Disparity Study (non-recurring activity in 2018) 300 Eastside Remote Bag Checking feasibility study 200 AMAC conference - hosted in Seattle in 2018 200 Other non-payroll savings (zero based budgeting) 227 Additional Non-Payroll Savings 927 Total 2019 Baseline Cost Reductions 1,289 Cost reductions identified during thorough review of baseline costs 15 Cost Increases 2019 Baseline Cost Increases: $000's Payroll Increases (before new FTE requests) Non-Represented payroll & benefits increase (3.8% average) 1,518 Represented pay & benefits increase (per labor agreements) 2,181 Annualized new FTE's approved in 2018 Budget 1,613 Annualized new FTE's approved during 2018 715 All other increases to baseline payroll 317 Total Baseline Payroll Increases 6,345 Non-Aero costs related to revenue growth Clubs & Lounges - higher demand/increased volume 1,012 Advertising increase (100% paid by Tenant Mktg fund) 67 Non-Aero B&O tax increase 132 Total Non-Aero Cost Increases 1,211 Total Contractual & Formulaic Cost Increases - detail next page 5,010 Total 2019 Baseline Cost Increases 12,566 Payroll for existing staff is largest component of Baseline increase 16 Continued - Cost Increases 2019 Baseline Cost Increases - continued: $000's Contractual & Formulaic Cost Increases - detail Utility rate & commodity cost increase 2,572 Taxi curbside management contract now paid by Port (SP+) 1,261 Increase in Worker's Compensation expense 583 All other contract increases 413 Aeronautical B&O tax increase 144 Other Non-Payroll Increases (zero based budgeting) 37 Total Contractual & Formulaic Increases 5,010 Total 2019 Baseline Cost Increases 12,566 Utility costs and taxi curbside management are primary drivers for contractual increases 17 Summary of Budget Requests 2019 Budget Requests # of Budget Request Category Non- Requests FTEs Baseline Total Reoccurring Employees 11 2.4 $ 123,624 $ 67,458 $ 191,082 Customer Service 37 18.0 1,227,680 4,007,816 5,235,496 Facilities/Capacity 51 19.0 1,989,615 14,580,629 16,570,244 Financial 8 2.0 842,195 165,000 1,007,195 Safety 10 10.0 1,513,261 732,800 2,246,061 Community 2 - 77,000 - 77,000 Diversity 3 1.0 77,346 202,500 279,846 Sustainability 13 - 110,000 985,000 1,095,000 Partners 12 2.0 503,959 1,373,459 1,877,419 2019 Budget Requests - Total Proposed 147 54.4 $ 6,464,681 $ 22,114,662 $ 28,579,343 2019 Budget Requests - Initial Requests 194 54.4 $ 17,257,937 $ 25,549,151 $ 42,807,088 Century Agenda and Airport Priorities drive 2019 Budget Requests 18 Highlights of Budget Requests 2019 Budget Request Highlights: $000's These requests Advance Planning/On-call Planning support 4,650 account for Seasonal Customer Service Staff 2,500 71% of $28.6 Master Planning - Infrastructure Systems 2,000 million of total Executive Program Management consulting support 1,620 requests SAMP/Environmental Review/Planning 1,600 Additional Firefighter (8) FTEs - staffing 2nd Care Car 1,307 Air Service Development - existing routes and anticipated new service 1,100 Airfield-Airspace study 1,000 Asset Management program 1,000 Integrated Pest Management scope increase 800 ORAT (4) limited duration FTEs & other new department costs 284 All other new staffing - (42.37) FTEs 2,524 Subtotal - 2019 Budget Request Highlights: 20,385 Most budget requests are for non-recurring expenditures 19 Environmental Remediation Liability Expense Environmental Remediation Budget vs. Liability Expense (ERL) 2015 2016 2017 2018 2018 2019 Budget Change Forecast Org Basis (in 000's) Actual Actual Actual Budget Forecast Budget $ % $ % North Satellite Asbestos 419 266 1,341 1,029 5,630 5,630 n/a 4,601 447.1% Contaminated Soils 1,935 2,917 2,917 n/a 2,917 n/a NSAT - ERL Expense 419 266 3,276 - 1,029 8,546 8,546 n/a 7,517 730.6% SSAT - HVAC Infrastructure Upgrade Asbestos 1,290 - 4,323 3,033 235.1% 4,323 n/a SSAT - ERL Expense - - - 1,290 - 4,323 3,033 235.1% 4,323 n/a International Arrivals Facility Asbestos 63 800 452 885 85 10.6% 433 95.8% Contaminated Soils 5,201 1,535 - - n/a (1,535) -100.0% IAF - ERL Expense - - 5,264 800 1,987 885 85 10.6% (1,102) -55.5% Lora Lake (lake parcel) 1,726 - n/a - n/a All other RMM expense 2,077 4,197 271 1,940 1,835 505 (1,435) -74.0% (1,330) -72.5% Total ERL Expense 4,222 4,463 8,812 4,030 4,851 14,259 10,229 253.8% 9,408 193.9% Expense increase driven by NSAT and SSAT projects 20 Total Airport Expense Summary 2016 2017 2018 2018 2019 Budget Change Budget vs Forecast $ in 000's Actual Actual Budget Forecast Budget $ % $ % Operating Expenses: Payroll 101,879 114,463 132,156 130,809 142,926 10,770 8.1% 12,117 9.3% Outside Services 37,863 41,055 52,532 55,002 60,950 8,417 16.0% 5,948 10.8% Utilities 14,690 16,374 17,320 17,927 19,994 2,674 15.4% 2,067 11.5% Other Airport Expenses 20,655 28,292 19,776 21,940 22,482 2,707 13.7% 542 2.5% Total Airport Direct Charges 175,087 200,184 221,784 225,677 246,352 24,568 11.1% 20,674 9.2% Environmental Remediation Liability 4,463 8,812 4,030 4,851 14,259 10,229 253.8% 9,408 193.9% Capital to Expense 129 2,856 - 367 - - NA (367) -100.0% Total Exceptions 4,592 11,668 4,030 5,218 14,259 10,229 253.8% 9,041 173.3% Total Airport Expenses 179,679 211,852 225,814 230,896 260,611 34,797 15.4% 29,716 12.9% Police Costs 18,183 17,652 22,174 22,174 25,137 2,963 13.4% 2,963 13.4% Capital Development 9,319 14,701 23,092 17,936 16,242 (6,850) -29.7% (1,694) -9.4% Other Central Services 50,099 51,004 58,265 57,032 59,956 1,692 2.9% 2,924 5.1% Maritime/Economic Development 3,946 3,904 5,511 5,336 5,145 (366) -6.6% (191) -3.6% Total Charges from Other Divisions 81,547 87,262 109,042 102,478 106,481 (2,561) -2.3% 4,003 3.9% Total Operating Expense 261,226 299,114 334,856 333,374 367,092 32,236 9.6% 33,719 10.1% 2019 costs include significant non-recurring costs 21 Total Operating Expenses Total O&M Expense ($000s) O&M Expense per Enplanement $16 $14.46 $400,000 $13.58 $13.52 $14 $12.74 $367,092 $12.19 $11.28 $11.46 $334,856 $333,374 $12 $299,114 $300,000 O&M Expense (000s) Budget $261,226 Forecast $10 $238,140 $228,172 $8 $200,000 $6 $4 $100,000 YTD YTD O&M Expense per Enplanement $2 $0 $0 2014 2015 2016 2017 2018 BUD 2018 FCST 2019 BUD 2018 savings/deferrals covering unplanned expenditures 22 2016 O&M Per Enplanement vs. Peer Airports $26.08 $25 $24.09 $21.01$20.89 2019 Budget: O&M per $20 $19.32 Enplanement is $14.46 $18.73$18.63 O&M Expense per Enplanement $18.13 $17.10 $16.12$16.08 $15.05$14.90 $15 $14.35$14.02 $13.87$13.82 $12.74$12.68$12.67$12.59 $11.00 $9.89 $9.82 $10 $7.98 $5.61 $5.27 $5 $0 Airport Most recent O&M per enplanement compares favorably to peer airports 23 Non-Aero Business Parking: Anticipate growth consistent with passenger growth Rental Car: Transaction per O&D enplanement continuing to decline CFC operating revenue decreasing due to more debt service Airport Dining & Retail - growth consistent with passenger growth. Anthony's closure scheduled for Q1 2019 Ground Transportation continued growth of TNCs. Added taxi curbside contract costs. Commercial properties base revenues growing but 2018 included one-time grant so year over year decline Airport lounges continue to grow increased volume drives extended hours of operation Non-aero cost growth impacted by share of division wide initiatives, mostly nonrecurring Changing patterns of ground transportation business impacting Landside revenues 24 Non-Aero NOI 2016 2017 2018 2018 2019 Budget Change Budget vs Forecast $ in 000's Actual Actual Budget Forecast Budget $ % $ % Non-Aero Revenues Rental Cars - Operations 37,082 35,051 35,294 35,084 34,779 (515) -1.5% (306) -0.9% Rental Cars - Operating CFC 12,122 10,641 15,563 14,653 12,830 (2,733) -17.6% (1,823) -12.4% Public Parking 69,540 75,106 78,572 80,046 82,350 3,778 4.8% 2,305 2.9% Ground Transportation 12,803 15,684 16,884 18,401 20,584 3,700 21.9% 2,183 11.9% Airport Dining & Retail & Leased Space 58,405 58,980 59,087 61,980 63,909 4,822 8.2% 1,929 3.1% Commercial Properties 9,992 18,042 14,706 15,236 14,219 (487) -3.3% (1,016) -6.7% Utilities 7,233 7,018 7,556 7,317 8,086 530 7.0% 769 10.5% Employee Parking 9,329 9,617 9,457 10,214 10,134 677 7.2% (80) -0.8% Clubs and Lounges 3,028 5,041 5,630 5,830 8,520 2,890 51.3% 2,690 46.1% Other 1,487 1,624 2,036 1,966 2,049 12 0.6% 82 4.2% Total Non-Aero Revenues 221,021 236,803 244,786 250,728 257,461 12,675 5.2% 6,733 2.7% Total Non-Aero Expenses 92,294 103,702 117,925 116,564 123,282 5,357 4.5% 6,719 5.8% Net Operating Income 128,727 133,101 126,861 134,164 134,178 7,317 5.8% 14 0.0% Less: CFC Surplus (4,899) (2,750) (7,142) (6,182) (3,199) (3,943) -55.2% (2,983) -48.2% Adjusted Non-Aero NOI 123,828 130,351 119,719 127,982 130,979 11,260 9.4% 2,997 2.3% Debt Service (43,984) (44,495) (45,752) (45,752) (49,417) 3,665 8.0% 3,665 8.0% Net Cash Flow 79,844 85,856 73,967 82,230 81,562 7,595 10.3% (668) -0.8% Overall 2019 Non-Aero Revenue growth includes significant shifts by revenue type 25 Non-Aeronautical Performance Non-Aero NOI ($000s) Non-Aero Revenue per Enplanement $180,000 $12 $160,000 $10.09 $10.17 $9.93 $10.14 $9.66 $9.70 $9.33 $10 $140,000 $133,101 $134,164 $134,178 $128,727 $126,861 $120,000 $112,618 $8 $100,386 $100,000 NOI (000s) $6 Forecast $80,000 Budget $60,000 $4 Rev Per Enplanement $40,000 YTD YTD $2 $20,000 $0 $0 2014 2015 2016 2017 2018 BUD 2018 FCST 2019 BUD NOI impacted by division costs. Most additions are non-recurring. 26 Adjusted Non-Aero NOI Non-Aero NOI - adjusted for ERL impact 2018 2018 2019 Budget Change Budget vs Forecast $ in 000's Budget Forecast Budget $ % $ % Revenues 244,786 250,728 257,461 12,675 5.2% 6,733 2.8% Expenses 117,925 116,564 123,282 5,357 4.5% 6,719 5.7% Net Operating Income 126,861 134,164 134,178 7,317 5.8% 14 0.0% Less: ERL - Non-Aero Share of Terminal Building (293) (233) (2,923) 2,630 -899% 2,689 -919% Non-Aero NOI w/o Major Non-Recurring 127,153 134,397 137,101 9,948 7.8% 2,704 2.1% Removing Non-Aero share of non-recurring ERL expense shows real growth of NOI 27 Aeronautical Business Revenues defined by cost recovery formulas in Signatory Lease and Operating Agreement (SLOA IV) O&M and capital costs included in airline rate bases Revenues and CPE increasing in 2019 as expected Reduction in revenue sharing (per SLOA IV) increases CPE but also increases Port cash flow Most revenues are based on cost recovery formulas 28 Aeronautical NOI 2016 2017 2018 2018 2019 Budget Change Budget vs Forecast $ in 000's Actual Actual Budget Forecast Budget $ % $ % Revenues: Movement Area 94,725 108,638 125,422 125,275 132,201 6,779 5.4% 6,926 5.5% Apron Area 14,028 16,771 15,979 16,023 19,426 3,447 21.6% 3,403 21.2% Terminal Rents 155,852 155,431 171,854 171,260 203,221 31,367 18.3% 31,961 18.7% Federal Inspection Services (FIS) 11,227 18,612 13,413 14,143 14,583 1,170 8.7% 440 3.1% Total Rate Base Revenues 275,832 299,452 326,668 326,701 369,432 42,764 13.1% 42,731 13.1% Commercial Area 9,379 10,574 10,212 10,212 12,859 2,647 25.9% 2,647 25.9% Subtotal before Revenue Sharing 285,211 310,026 336,880 336,913 382,291 45,411 13.5% 45,378 13.5% Revenue Sharing (37,395) (42,311) (35,799) (31,908) (15,429) (20,369) -56.9% (16,479) -51.6% Other Prior Year Revenues (5) (26) - - - - NA - NA Total Aeronautical Revenues 247,811 267,690 301,082 305,005 366,862 65,780 21.8% 61,857 20.3% Total Aeronautical Expenses 168,932 195,414 216,931 216,810 243,810 26,879 12.4% 27,000 12.5% Net Operating Income 78,879 72,276 84,151 88,195 123,052 38,902 46.2% 34,857 39.5% Debt Service (89,130) (86,564) (90,323) (92,425) (109,259) 18,935 21.0% 16,834 18.2% Net Cash Flow (10,251) (14,288) (6,173) (4,230) 13,794 19,966 323.5% 18,024 426.1% Net cash flow is positive in 2019 due to reduction in revenue sharing 29 Aeronautical Cost Drivers Impact on Aero Impact on Aero Revenues Revenues 2017 2018 2018 2019 Budget Change Budget vs Forecast $ in 000's Actual Budget Forecast Budget $ % $ % O&M (1) 192,188 210,433 210,685 237,960 27,527 13.1% 27,275 12.9% Debt Service Gross 113,832 120,555 120,555 136,477 15,922 13.2% 15,922 13.2% Debt Service PFC Offset (33,057) (33,015) (33,015) (33,045) (30) 0.1% (30) 0.1% Amortization 29,654 32,373 32,373 30,121 (2,252) -7.0% (2,252) -7.0% Space Vacancy (2,264) (2,650) (2,638) (1,304) 1,345 -50.8% 1,334 -50.6% TSA Operating Grant and Other (901) (1,028) (1,259) (776) 253 -24.6% 483 -38.4% Rate Base Revenues 299,452 326,668 326,701 369,432 42,764 13.1% 42,731 13.1% Commercial area 10,574 10,212 10,212 12,859 (2,647) -25.9% (362) -3.5% Total Aero Revenues 310,026 336,880 336,913 382,291 40,117 11.9% 42,369 12.6% (1) O&M, Debt Service Gross, and Amortization do not include commercial area costs or the international incentive expenses O&M costs driven by: Environmental remediation liability expenses tied to NSAT and SSAT Added division initiatives, most of which are non-recurring and primarily allocated to aero businesses Capital costs driven by debt service on new facilities: Phase I NSAT, Concourse D Terminal O&M cost increases, many non-recurring, driving up airline costs 30 Airline Cost Management (CPE) CPE Revenue Sharing ($000s) $14 $13.43 $50,000 2019 Budget: $42,310 Adjusted for $12 $11.48 $11.35 $11.52 SLOA IV 20% $10.52 $40,000 $10.12 $10.10 $35,799 revenue $10 Revenue Sharing (000s) sharing (was $37,413 $31,908 50% in 2017 $30,000 and 40% in $8 2018) $29,453 CPE 2019 CPE: $6 $20,000 Lower than $15,429 2018 budget $4 $17,031 forecast for 2019 ($13.57) $10,000 $2 $0 $0 2014 2015 2016 2017 2018 BUD 2018 FCST 2019 BUD 2018 and 2019 revenue sharing has decreased to 40% and 20% with SLOA IV provision 31 2017 CPE Comparison $26.77 $26.14 $25 SEA 2019 CPE of $13.43 CPE is an imperfect comparison. At some likely still in Middle Third airports, airlines or private entities operate and pay for $20 O&M Expense per Enplanement certain facilities making $19.61 $18.87 $18.84 Targeted Middle Third comparisons difficult $17.00 $16.46 $15 $15.59 $15.02 $13.98 $13.44 $11.59 $11.28 $10 $11.10 $11.03 $10.71 $10.57 $10.52 $9.83 $9.81 $9.79 $9.34 $6.41 $6.13 $5 $5.69 $5.02 $4.89 $4.51 $3.53 $1.23 $0 Airport CPE is competitive: SEA ranks 13 out of 30 Large Hub Airports 32 CAPITAL BUDGET 2019 - 2023 33 Capital Spending $935,454 $815,704 $800,000 $617,544 Capital Spend ($000s) $600,000 Forecast Forecast $400,000 $293,785 $200,000 $155,970 $164,931 $153,887 YTD YTD $0 2014 2015 2016 2017 2018 BUD 2018 FCST 2019 BUD 2019 will be peak year of spending with IAF and NSAT 34 Capital Budget Summary Cash Flows (Figures in $000s) 2018 2019 - 23 FCST 2019 2020 2021 2022 2023 TOTAL Four Major Projects International Arrivals Facility 239,277 410,752 123,104 5,217 - - 539,073 NSAT 131,716 129,034 123,514 105,470 61,520 - 419,538 Baggage Optimization 38,009 50,000 50,000 50,000 55,000 55,000 260,000 Subtotal - Major Projects 409,002 589,786 296,618 160,687 116,520 55,000 1,218,611 Other Existing Projects 206,552 326,895 211,104 173,786 96,447 55,658 863,890 Proposed New Projects - 1,773 19,354 44,087 6,391 210 71,815 SAMP Preliminary Planning / Design - 2,000 9,500 76,500 94,750 68,000 250,750 Allowance CIPs 2,000 15,000 40,000 60,000 80,000 100,000 295,000 Total Proposed CIP 617,554 935,454 576,576 515,060 394,108 278,868 2,700,066 Three major projects account for $1.22 billion Proposing 7 projects totaling $72M spending through 2023 Proposing SAMP preliminary planning/design spending of $251M through 2023 ($300M total) Besides preliminary planning/design funds, budget does not include potential projects to be identified by Sustainable Airport Master Plan (SAMP) Undertaking major program before SAMP projects 35 Major Projects Cash Flows (Figures in $000s) 2018 2019 - 23 Major Projects CIP FCST 2019 2020 2021 2022 2023 TOTAL Authorized International Arrivals Fac-IAF C800583 239,277 410,752 123,104 5,216 - - 539,072 NS NSAT Renov NSTS Lobbies C800556 131,716 129,034 123,514 105,470 61,520 - 419,538 Checked Bag Recap/Optimization C800612 38,009 50,000 50,000 50,000 55,000 55,000 260,000 MT Low Voltage Sys Upgrade C800061 153 4,000 5,000 14,500 18,100 19,200 60,800 SSAT Infrastructure HVAC C800798 1,218 22,800 12,700 7,600 2,954 - 46,054 Restroom Upgrades Conc B, C, D C800697 2,982 12,000 13,500 2,636 794 - 28,930 Safedock Upgrade & Expansion C800779 949 24,825 2,137 - - - 26,962 Other (105) 189,988 207,455 81,967 24,476 9,049 6,000 328,947 Total - Authorized 604,292 860,866 411,922 209,898 147,417 80,200 1,710,303 Pending Authorization Airfield Pvmt Repl 2020-2024 C800930 50 175 11,013 13,997 15,594 12,977 53,756 C1 Building Floor Expansion* C800845 600 1,000 10,000 20,000 10,000 8,400 49,400 Proposed New Projects Multiple - 1,773 19,354 44,087 6,391 210 71,815 SAMP Preliminary Planning / Design Multiple - 2,000 9,500 76,500 94,750 68,000 250,750 Allowance CIPs Multiple 2,000 15,000 40,000 60,000 80,000 100,000 295,000 Other (50) 10,612 54,640 74,787 90,577 39,956 9,081 269,041 Total - Pending Authorization 13,262 74,588 164,654 305,161 246,691 198,668 989,762 Grand Total 617,554 935,454 576,576 515,059 394,108 278,868 2,700,065 * Cash flows and budgets are preliminary and may substantially change Much of 2019-2023 spending for projects already authorized 36 Proposed New Projects # of Cost Cash Flows (Figures in $000s) 2019 - 23 Projects Description Estimate 2019 2020 2021 2022 2023 TOTAL 3 Asset Management 63,600 1,311 18,570 39,963 3,546 210 63,600 2 Capacity / Facility Challenges 4,800 239 388 2,291 1,882 - 4,800 1 Cargo 900 73 206 621 - - 900 1 Grow Non-Aero Revenue 2,515 150 190 1,212 963 - 2,515 7 TOTAL 71,815 1,773 19,354 44,087 6,391 210 71,815 Projects include: Upgrades to STS Train Control: $57.0 million Elevator/Escalator Communication Cards: $6.0M Consolidated Deicing Storage: $3.1M Main Terminal Space Conversion: $2.5M Compactor Capacity: $1.7M BT Properties AOA Connection: $900k Departure Drive Drainage: $600k Asset management is a key driver for new projects 37 Capital Budget - Major Projects in $000s Three major projects account for majority of near term spending 38 FINANCIAL FORECAST 2019 - 2023 39 Key Assumptions/Risks Passenger growth: consistent with SAMP Expense growth: Baseline growth of 4% FTE growth in 2020 per ICF Staffing Study New facilities add incremental costs (IAF, NSAT) Non-airline revenues: Continuing recent changes: Fewer rental car transactions per O&D Growth in TNCs Aiming to grow parking revenues, while supporting mode shift to public transportation ADR revenue growth: consistent with implementation of ADR Master Plan Forecast reflects planned response to closely monitored risks & opportunities 40 Financial Forecast: 2019 - 2023 In $000's 2018 BUD 2019 BUD 2020 2021 2022 2023 Airline Revenue 301,204 366,862 422,642 486,338 516,584 545,373 Non-Airline Revenue 244,786 257,461 262,735 266,917 272,732 278,669 Total Revenue 545,989 624,323 685,377 753,255 789,316 824,042 Operating Expense 334,856 367,092 372,132 392,677 410,587 428,970 Net Operating Income 211,133 257,231 313,245 360,578 378,729 395,071 Net Non-Operating Income/Expense 4,406 6,069 6,329 6,540 6,916 7,245 CFC Excess* (7,142) (3,199) (3,148) (3,157) (3,201) (3,673) Available for Debt Service 208,398 260,101 316,425 363,961 382,445 398,643 Net Debt Service 138,177 158,676 195,540 250,445 269,108 283,347 Net Cash Flow 70,221 101,426 120,885 113,516 113,337 115,296 Key Measures Debt Service Coverage 1.51 1.64 1.62 1.45 1.42 1.41 Revenue Sharing 35,677 15,429 - - - - Passenger Airline CPE 11.36 13.43 15.35 17.51 18.37 19.13 Debt per Enplaned Passenger 115.90 125.78 137.77 147.57 150.97 148.43 * CFC collection in excess of CFC debt service/O&M is restricted and cannot be used for other revenue bond debt service Forecasting increase in CPE and reduction in debt service coverage 41 Future CPE Future CPE SEA future CPE driven by completion of major projects $30.00 $27.42 $25.82 Will likely not be within $25.00 $19.13 middle third of 30 large hub $20.00 $14.69 airports (22nd , see appendix) $15.00 Will be competitive compared $10.00 to west coast international $5.00 gateway hubs (SFO and LAX) $0.00 SFO (FY24) LAX (FY24) SEA (FY23) PDX (FY22) SAMP projects would drive CPE higher Source of future CPEs: WJ Advisors, Ph2 Consulting and AIRMAC LLC Through 2023 forecasting competitive CPE vs. selected west coast airports 42 Maritime Division 2019 Preliminary Budget October 9, 2018 43 Strategy to Budget Process Century Agenda and LRP Century Agenda underway: focus on creating jobs Vision 5- 10 of the Future in the Ocean Cross Functional Years Economy. Evaluation Strong Demand of facilities in all Strategic Planning business lines: Vessel size Gap growing. Strategies and Objectives 3 5 Matrix organization requires (Long Range Plans) Years cross-functional work and close Implementation collaboration 2019 Business Plan Developing strategies and Annual actions to position Maritime 2019 Budget Division and Industry for the 2019 Performance Plans future. 2019 Budget will reflect resources needed to move toward CA Objectives 44 2019 Maritime Priorities Foundation of Success 45 Maritime Priorities Maritime Priorities Century Agenda/LRP Financial Stability CA/LRP (S1-Obj 2) Making prudent infrastructure investments. Customer Service CA/LRP (S2-Obj 9, PA2) Improving convenience and efficiency for cruise passengers. LRP/HPO (S1-Obj 1, PA1,2,3) Making the NWSA an attractive West Coast gateway. Economic Impact CA/LRP (S1-Obj 5 PA 1,2,4); (S2-Obj 9 PA 1,3,4); (S3-Obj 10 PA1,3); (Obj 12, PA1,2). Fostering family wage jobs and workforce development. Safety, Security, Preparedness LRP/HPO S2-Obj 3 PA1,2,3); (Obj 4, PA1,2,3); (Obj 6, PA2) Continuous improvement in safety, security, and preparedness. Sustainability CA/LRP (S4-Obj 13, PA1,2,3,4); (Obj 14, PA1,2,3); (Obj 15, PA2,3,4); (Obj 16, PA1,2,3); (Obj 17, PA1,2,3,4) Becoming North America's Greenest, Most Energy Efficient Port. Innovation, Process CA/LRP (S1-Obj 5, PA3); Improvement LRP/HPO (S1-Obj 2, PA 1,2,3); (Obj 6, PA1) Innovating in the maritime cluster as well in our own organization. Equity, Inclusion LRP/HPO (S4-Obj 7, PA1); (Obj 8, PA1); (Obj 9, PA1) Demonstrate our leadership in equity, equity, and inclusion. Asset Management CA/LRP (S1-Obj 5, PA 1, 2); (Obj 8, PA3) LRP/HPO (S1-Obj 1, PA2,3); (Obj 2, PA 1) Building a framework for maintaining our maritime assets. 46 2019 Budget Objective Financial Goal: Maritime Division positive Net Income including depreciation by 2024. How to get there: Leverage assets in the cruise business and the grain terminal to help support the regional fishing fleet, environment, and local maritime small businesses. Do well to do good 47 Budget Preview 2010-2017 expenses grew faster than revenue Revenue grew 3.6% Expenses grew 4.5% Historically actual expenses significantly under and revenue over budget. This trend continued with 2018 budget process. Scrubbed expenses in 2019 similar to "Zero Based" approach 2019 Budget focus: Increase revenue more than expenses Revenue up 12.7% Expenses up 2.4% Steps to improve financial sustainability 48 Maritime Division Financial Trends Pricing services to market Limiting operating expense growth, scaling overhead with growth Bending the revenue and cost curves in the right direction 49 2010-2017 Line of Business Trends Compound annual growth rates Revenue Cruise 5.8% Recreational Boating 3.4% Grain Terminal (Bulk) (1.5%) Fishing & Operations 5.6% Maritime Portfolio Mgmt 5.2% Total Maritime 3.6% Expenses Cruise 9.4% Recreational Boating 5.1% Grain Terminal (Bulk) 3.7% Fishing & Operations 1.5% Maritime Portfolio Management 16.1% Total Maritime 4.5% From 2010 to 2017 expenses growing 25% faster than revenue 50 2018-2019 Line of Business Budget Overview Budget Growth rates Revenue Cruise 36.1% Recreational Boating 12.4% Grain Terminal (Bulk) (17.6%) Fishing & Operations 8.2% Maritime Portfolio Mgmt (7.5%) Total Maritime 12.7% Expenses Cruise (6.3%) Recreational Boating 7.3% Grain Terminal (Bulk) (1.7%) Fishing & Operations 0.4% Maritime Portfolio Management 9.9% Total Maritime 2.4% From 2018 to 2019 budget: Revenues far outpacing expenses led by Cruise 51 2019 Revenue 2017 2018 2018 2019 Budget Change Budget to Forecast $ in 000's Actual Budget Forecast Budget $ % $ % Grain 5,427 5,163 5,163 4,254 (909) -18% (909) -18% Cruise Operations 17,596 18,150 18,150 24,707 6,558 36% 6,558 36% Fishing & Operations 9,297 8,388 8,748 9,071 684 8% 324 4% Maritime Portfolio Mgmt 10,787 11,169 10,769 10,328 (841) -8% (441) -4% Rec Boating 11,086 12,166 12,446 13,671 1,504 12% 1,224 10% All Other (9) 17 17 0 (17) -100% (17) -100% Total Maritime 54,183 55,053 55,293 62,031 6,978 13% 6,738 12% Variance to 2018 Budget Grain down from "the current political climate and tariffs that have been put in place." Cruise 36% favorable 20% tariff increase, CCCL moving to tariff, bigger ships. Fishing 8% favorable Salmon Bay Marina acquisition, increased tariff. Maritime Portfolio Management 8% unfavorable - WSDOT lease expiration at Terminal 106. Recreational Boating 12% favorable - higher guest moorage and proposed 7% tariff increase. 13% increase in Maritime revenues 52 2019 Maritime Budget Summary Inclusive of Direct Charges & Allocations from Corporate, CDD, & Other Divisions Incr (Decr) Incr (Decr) 2017 2018 2018 2019 Budget Change Budget to Forecast $ in 000's Actual Budget Forecast Budget $ % $ % Total Revenues 54,183 55,053 55,293 62,031 6,978 12.7% 6,738 12.2% Expenses Maritime Expenses (Excl. Maint) 12,051 15,383 15,383 14,610 (773) -5.0% (773) -5.0% Envir Services & Planning 1,125 2,168 1,994 2,659 491 22.7% 665 33.3% Maintenance Expenses 10,502 11,261 11,261 11,982 721 6.4% 721 6.4% Econ Dev Expenses 4,172 4,583 4,383 4,996 414 9.0% 614 14.0% CDD Expenses 748 1,212 1,030 821 (390) -32.2% (209) -20.3% Police Expenses 3,756 4,209 4,209 4,473 264 6.3% 264 6.3% IT 2,711 2,858 2,858 2,788 (70) -2.4% (70) -2.4% Public Affairs 1,346 1,528 1,528 1,646 118 7.7% 118 7.7% Other Corporate Expenses 5,769 6,184 5,971 6,631 447 7.2% 660 11.1% AV 203 194 194 182 (12) -6.4% (12) -6.4% Operating Expenses 42,381 49,578 48,810 50,788 1,210 2.4% 1,978 4.1% Net Operating Income before Depeciation 11,802 5,475 6,483 11,243 5,768 105.4% 4,760 73.4% Depreciation 17,410 17,868 17,868 17,612 (256) -1.4% (256) -1.4% NOI after Depreciation (5,608) (12,394) (11,386) (6,370) 6,024 48.6% 5,016 44.1% Increasing profit while absorbing initiative expenses 53 Cruise Financial Goal: Profitability while driving regional tourism Revenue up $6.6M/36% Expenses down $806K/6.3% Opportunities: Increase in demand for Alaskan cruises Growth in vessel sizes and passenger counts Risks: Shortage of capacity to house large cruise vessels Expensive capital replacement cost Raising tariff and managing cost 54 Cruise Key Strategies and Initiatives LRP Objective: Double the economic value of cruise traffic to Washington State. Initiatives: Port Valet $1M ($600K to Cruise, $400K to Aviation). Budget decreased from 2018. Consulting for future planning $750K Advertising $250K Leveraging cruise demand to support regional tourism 55 Recreational Boating Goal: Positive NOI including Depreciation by 2024 Revenue up $1.5M/12.4% Expenses up $848K/7.3% Opportunities: Guest moorage Lean efforts to increase revenue Risks: Aging Docks Economic Conditions Weather Security Issues Incremental steps to profit goal 56 Recreational Boating Key Strategies and Initiatives Driving Demand Destination Awareness Completing Restroom Project Restaurant Completion Attracting New Boaters Driving youth participation Increasing diversity Superyachts Maintaining high demand for facilities 57 Fishing & Operations Goal: Positive NOI before Depreciation by 2024 Revenue up $684K/8.2% Expenses Flat Opportunities: Tug & barge market Big fishing moorage Risks: Aging docks Environmental constraints First full year of Salmon Bay Marina ownership Incremental steps to profit goal 58 Fishing & Commercial Operations Key Strategies and Initiatives LRP Objective: Double the economic value of Fishing and Maritime Cluster. Initiatives: Terminal 91 Berth 6&8 Repair ($35M Capital) Terminal 5 North Mooring Dolphins ($3.6M Capital) Maritime Innovation Center / Fishermen's Terminal Redevelopment ($34M Capital) T-91 North Fender Pile Repair Berth K,L, & M ($200K Expense) Capital intensive business 59 Maritime Portfolio Management: Positive NOI including Depreciation by 2024 Revenue down $841K/7.5% Expenses up $1,230K/9.9% Opportunities: T106 development FT redevelopment Bigger step increases on tenant renewals Better maintenance management Risks: Long vacancy turnaround times Softening real estate market Aging facilities expensive to maintain Vacancies and Redevelopment: Vacant now -> Upside later 60 Grain Terminal Goal: Net Income Maximized Revenue down $909K/17.6% Expenses down $32K/1.7% Opportunities: Recent trend of outperforming budget Risks: Impact of tariffs and current political climate Port carries upside and downside risk in contract with Louis Dreyfus Net Operating Income supporting other businesses 61 Environmental Initiatives $ in 000's Habitat Initiatives 2019 Budget Smith Cover Blue Carbon Pilot Project 200 PORTfolio Site Maintenance/Enhancements 60 Umbrella Mitigation Bank 68 Customer Service Supervisor 125 On-Call Technical Support for PORTfolio 75 Other Environmental Initiatives Funding for Federal, State, and Local agencies 50 Programmatic Shoreline Permit 20 Waste Management Program Continuation 55 Total 653 Focus on improving water quality, improving habitat 62 Full-Time Equivalents (FTEs) 2018 Budget 168.0 2018 Changes Transfer Transfer in Maritime Security Manager from Corporate 1.0 FTE Transfer from Maintenance to Finance -1.0 Adjusted 2018 168.0 2019 Budget Staff Addition/Subraction: Limited Duration Purchasing Rep 1.0 Marine Maint PMG Project Specialist 1.0 Retired Facility Mgr - Move to outside services -0.5 Admin Intern -0.3 College Intern for Marketing -0.3 Net Change 1.0 Proposed 2018 Budget 169.0 One net new FTE 63 Stormwater Utility 2018 Budget Review Commission Review October 9, 2018 64 Stormwater Utility Operating Budget Incr (Decr) Incr (Decr) 20172017 20182018 20182018 20192019 Budget ChangeBudget Change $ in 000's$ in 000's ActualActual BudgetBudget ForecastForecast BudgetBudget $$ %% RevenueRevenue 4,9854,985 5,3335,333 5,3335,333 5,7955,795 461461 8.6%8.6% Operating ExpensesOperating Expenses Stormwater Utility ExpensesStormwater Utility Expenses 945945 1,1591,159 1,1591,159 1,0521,052 (107)(107) -9.2%-9.2% Maintenance ExpensesMaintenance Expenses 2,3802,380 3,4133,413 3,4133,413 2,9332,933 (480)(480) -14.1%-14.1% Environmental & SustainabilityEnvironmental & Sustainability 375375 237237 237237 268268 3030 12.8%12.8% EDD ExpensesEDD Expenses 2020 1818 1818 5050 3232 177.6%177.6% CDD ExpensesCDD Expenses 4141 5151 5151 7070 1919 36.7%36.7% Corporate ExpensesCorporate Expenses 389389 723723 723723 785785 6262 8.6%8.6% Total Operating ExpensesTotal Operating Expenses 4,1504,150 5,6015,601 5,6015,601 5,1585,158 (443)(443) -7.9%-7.9% Net Operating IncomeNet Operating Income 835835 (268)(268) (268)(268) 636636 904904 NANA Rate increase to 8.2%, additional increase related to Salmon Bay Marina Acquisition. FTE to grow from 1 to 2 offset with reduced consulting cost. Moving into a fully operational utility 65 Stormwater Utility Capital Budget Summary $'s in 000's 2019 2020 2021 2022 2023 Total Commission Authorized/Underway 1,650 1,900 669 500 500 5,219 T18 Stormwater outfalls renew/replace 1,150 1,400 169 - - 2,719 Portwide Stormwater Sys Renewal 500 500 500 500 500 2,500 - Pending Future Authorization - 500 1,500 1,500 1,500 5,000 SWU Contingency - 500 1,500 1,500 1,500 5,000 Portwide Stormwater Sys Renewal - Small Capital Projects 150 150 150 150 150 750 1,800 2,550 2,319 2,150 2,150 10,969 66 Economic Development Division 2019 Preliminary Budget October 9, 2018 67 Division Priorities Driven by Century Agenda Century Agenda Division Priorities Vision 5- 10 Cross Functional Years Promote international travel Strategic Evaluation and cruise adventures Planning Promote women and minority Gap business enterprise (WMBE) Strategies and Objectives 3 5 and small business growth (Long Range Plans) Years Advance equitable workforce training within key Port Implementation 2019 Business Plan industries Annual Develop port properties to 2019 Budget support aviation, fishing and 2019 Performance Plans maritime industries 68 Key Budget Assumptions Maintain zero base budgets for nonrevenue generating departments Commercial Properties target 95% occupancy at year-end 2019. Conference and Event Center revenue up 13% from 2018 budget*. Economic Development Partnership Grants continued. Continued funding of Workforce Development. Tourism initiatives continued. *Based on draft 2019 budget from Columbia Hospitality Inc. Near full occupancy, continued Workforce Development and Grant initiatives 69 EDD P&L Summary Incr (Decr) Incr (Decr) 2017 2018 2018 2019 Budget Variance Budget to Forecast $ in 000's Actual Budget Forecast Budget $ % $ % Revenue 8,658 8,985 9,097 8,930 (55) -1% (167) -2% Conf & Event Centers 9,133 9,537 9,949 10,795 1,258 13% 846 9% Total Revenue 17,791 18,522 19,046 19,725 1,203 6% 679 4% Expenses Portfolio Management 3,875 3,778 3,778 4,128 350 9% 350 9% Conf & Event Centers 7,639 8,465 8,465 9,374 908 11% 908 11% P69 Facilities Expenses 206 289 289 225 (65) -22% (65) -22% RE Dev & Planning 214 211 211 216 5 2% 5 2% EconDev Expenses Other 763 1,227 1,227 1,262 35 3% 35 3% Maintenance Expenses 3,657 3,055 3,055 4,071 1,017 33% 1,017 33% Maritime Expenses (Excl Maint) 52 344 344 389 45 13% 45 13% Total EDD & Maritime Expenses 16,406 17,370 17,370 19,664 2,294 13% 2,294 13% Small Business 64 140 140 199 59 42% 59 42% Workforce Development 850 1,992 1,292 2,010 18 1% 718 56% Tourism 1,234 1,460 1,460 1,463 3 0% 3 0% EDD Grants 751 960 960 960 0 0% 0 NA *Total EDD Initiatives 2,900 4,552 3,852 4,632 80 2% 780 20% *Portion of 2019 EDD initiatives Environmental & Sustainability 260 398 363 395 (2) -1% 33 9% CDD Expenses 387 329 264 235 (94) -29% (29) -11% assigned to tax levy: Police Expenses 51 158 156 228 70 44% 72 46% Other Central Services 5,269 5,816 5,700 5,533 (283) -5% (167) -3% Small Business - $88K Aviation Division 113 127 127 155 28 22% 28 22% Total Central Services & Aviation 6,080 6,829 6,611 6,547 (281) -4% (63) -1% Workforce Dev. - $1,624K Envir Remed Liability 0 0 0 0 0 NA 0 NA Total Expense 25,387 28,751 27,833 30,844 2,093 7% 3,011 11% EDD Grants - $960K NOI Before Depreciation (7,596) (10,229) (8,787) (11,119) (890) 9% (2,332) 27% Depreciation 3,863 4,156 4,156 3,819 (337) -8% (337) -8% NOI After Depreciation (11,459) (14,385) (12,943) (14,937) (553) 4% (1,994) 15% Near full occupancy, continued Workforce Development and Grant initiatives 70 Portfolio Management Financial Trend Revenue up $1.2M/6.5% Expenses up $2.0M/8.3% Opportunities: T91 Development Pier 2 and CEM ground leases Risks/Challenges: Allocation Structure Aging facilities expensive to maintain Takes years to generate higher revenues from existing leases Conference and Events Center growing revenues and associated costs 71 Portfolio Management Key Strategies and Initiatives Grow and promote Conference and Event Center facilities while working to increase gross margin Migrate tenant billing system for NWSA Maximize Parking Revenues Negotiate Step up leases across for both Maritime & Economic Development Divisions Focus on improved security and customer service 72 Diversity in Contracting/Small Business Assistance Implement Diversity in Contracting Policy/Program Provide greater access to Port opportunities through education, events, and assistance Expand supplier diversity Develop tools and conduct assessments to measure and monitor inclusion in contracting Support construction business incubator in partnership with other public and private stakeholders Promoting opportunity for Disadvantaged Businesses 73 Small Business 2019 Initiatives $ in 000's '19-'18 2018 Budget 2019 Budget Change Technical Assistance/Outreach Construction Business Incubator 150 60 (90) Port Gen/Mentoring/Contractor Assistance 75 75 0 Procurement Technical Assistance Center Support 15 15 0 Marketing/ Communication/Design Services 15 5 (10) Champion of Inclusion Recognition Event 20 10 (10) Supplier Diversity and Program Evaluation OMWBE Certification 15 15 0 WMBE Best Practice and Implementation 50 50 0 Total 340 230 (110) Balanced efforts in Small Business 74 Workforce Development Manage airport employment office in partnership with PortJobs Implement and Strengthen Regional Construction Trades Partnership Advance aviation career pathway training initiative Invest in regional Career Connected Learning initiative Pedro Reynaga, Harbor Operations Intern Advancing Workforce Development with an equity lens 75 Workforce Development 2019 Initiatives $ in 000's '19-'18 2018 Budget 2019 Budget Change Contracted Initiatives Airport Employment Center (contracted) 500 500 0 Airport Employment Center and Classroom 350 350 0 Employment Continuity Pool Program 75 60 (15) Construction Trades - Regional Partnership Services, Pre-Ap 710 710 0 Total Contracted Initiatives 1,635 1,620 (15) Developing Initiatives Airport Career Pathways Implementation 250 250 0 Maritime Career Exploration Initiative 250 250 0 K-12 Career Connected Learning 400 400 0 Total Developing Initiatives 900 900 0 Workforce Development Support 25 28 3 Total Workforce Development 2,560 2,548 (13) Continued efforts in Workforce Development 76 Tourism Promote the cruise industry through outreach to travel influencers (trade and media) both domestically and in priority international markets (UK, Germany, China & Australia). Increase the value of tourism throughout Washington Increase reach of Tourism Marketing Support Program Enhance Airport Spotlight program Use WeChat airport site to serve as portal Norwegian Bliss Marks Arrival of Larger Cruise Ships for destinations in Washington. Promoting Cruise, Extended Stays & Use of our Maritime and Aviation Facilities 77 Tourism 2019 Initiatives $ in 000's '19-'18 2018 Budget 2019 Budget Change New Requests Int. Representation & Work (Australia/China) 98 98 Continuing Adv/Marketing (WeChat, FT, Cruise) 142 133 (9) Europe Representation & VS Sponsorship 410 275 (135) Tourism Grants 200 200 0 London Trvl Show / Tourism Development 65 39 (26) Fam Tours / New Service Inaugural Activity 62 83 21 Total 879 828 (51) Focused on Increasing International and US Tourists to Region & State 78 Real Estate Management and Development Ground lease Des Moines Creek West property Initiate Bell Harbor Conference Center Modernization Manage real estate portfolio to generate positive NOI after depreciation and corporate allocations by year-end 2024. Complete design work on Gateway and Seattle Ship Supply buildings and get projects through the entitlement process Complete design work on Terminal 91 Uplands light industrial buildings and get projects started through entitlement process Develop a "second 25 years" renewal, replacement, and modernization strategy for the HQ facility. Pier Two Using our Real Estate & Capital Assets to Advance the Century Agenda 79 Real Estate Development 2019 Initiatives '19-'18 $ in 000's 2018 Budget 2019 Budget Change Ongoing Appraisals 50 50 0 Development Advisory Consulting 250 250 0 Total 300 300 0 Initiatives centered on executing Real Estate Strategic Plan 80 EDD Admin 2019 Initiatives '19-'18 $ in 000's 2018 Budget 2019 Budget Change Ongoing ED Partnership Grants 960 960 0 Membership: Economic Dev Council 100 100 0 Membership: Trade Dev Alliance 0 93 93 Promotional Hosting/Sponsorships 60 60 0 Opportunity Fund 500 500 0 Total 1,620 1,713 93 Continuation of ED Partnership Grants & additional public partnerships 81 Pier 69 Facilities 2019 Initiatives $ in 000's '19-'18 2018 Budget 2019 Budget Change P69 Lobby Refresh expense portion 200 0 (200) P69 Shuttle 0 200 200 Total 200 200 - Managing changes in congestion 82 Full-Time Equivalents (FTEs) 2018 Budget 36.0 2018 Changes Elimination of Business Analyst, Small Business (1.0) Elimination of Manager, Small Business (1.0) Addition of Sr Administrative Assistant, Small Business 1.0 Adjusted 2018 35.0 2019 Budget Staff Additions: WMBE Manager 1.0 Net Change 2019 1.0 Proposed 2019 Budget 36.0 No Change in FTE 83 2019 Operating Divisions' Budget Timeline 2019 Business Budget Budget First Reading & 2nd Reading & Plan and CIP Development Public Hearing Final Passage of Development Briefing Briefing for 2019 Budget 2019 Budget (May/June) (June) (October 9th) (Mid-November) (Late November) Will cover operating budget and capital budget 84 2019 Operating Division Budgets Appendix 85 AVIATION APPENDIX Additional 2019 Budget Materials 86 Table of Contents 2019 FTE reconciliation O&M expense budget request details Details of budget request for planning Revenue budgets for Non-aeronautical business units Future CPE Comparison for 30 large hub airports Details for operating and capital budget requests are in this appendix 87 2019 FTE Reconciliation 2019 Proposed Budget FTEs FTEs % 2018 Approved Budget 1040.41 Lost & Found Staffing (LTD) 6.00 Chart shows total FTEs Senior Art Program Manager (LTD) 1.00 Customer Service Admin Assistant 1.00 2018 Adjusted Baseline 1,048.41 0.8% included in airport staffing Proposed New FTEs: Limited Duration FTE's 5.00 0.5% ORAT positions (LTD) 4.00 study by ICF in 2017, Rodent Control Specialist (LTD) 1.00 Emergency Hire FTE's 8.00 0.8% Pathfinders (EH) 8.00 including Central Services New FTE's for Core Airport functions: 40.12 3.9% Landside FTE's 3.00 Commercial Management FTE's 3.12 departments (Av F&B, AV Airport Operations FTE's 1.00 Terminal Operations FTE's 3.00 Capital Development/Facilities & Infrastructure FTE's 2.00 Environmental Services, Customer Service FTE's 6.00 Maintenance FTE's 13.00 Fire Department FTE's 9.00 and Noise) New Intern FTE's - College/Graduate 0.75 0.1% Proposed Increase in 2019 Budget FTEs 53.87 5.2% 2019 Budget Proposed FTEs 1,102.28 5.9% plus: Central Services FTE's direct charged 100% to airport 37.75 2019 Budget FTE's - in Aviation division budget 1,140.03 88 Summary of Budget Requests 2019 Budget Requests # of Budget Request Category Non- Requests FTEs Baseline Total Reoccurring Employees 11 2.4 $ 123,624 $ 67,458 $ 191,082 Customer Service 37 18.0 1,227,680 4,007,816 5,235,496 Facilities/Capacity 51 19.0 1,989,615 14,580,629 16,570,244 Financial 8 2.0 842,195 165,000 1,007,195 Safety 10 10.0 1,513,261 732,800 2,246,061 Community 2 - 77,000 - 77,000 Diversity 3 1.0 77,346 202,500 279,846 Sustainability 13 - 110,000 985,000 1,095,000 Partners 12 2.0 503,959 1,373,459 1,877,419 2019 Budget Requests - Total Proposed 147 54.4 $ 6,464,681 $ 22,114,662 $ 28,579,343 2019 Budget Requests - Initial Requests 194 54.4 $ 17,257,937 $ 25,549,151 $ 42,807,088 Century Agenda and Airport Priorities drive 2019 Budget Requests 89 Budget Requests: Employees 2019 Budget Requests Non- AV Priority Problem/Need/Opportunity Solution FTEs Baseline Total Reoccurring Employees Absence of admin support for Fire Department - Admin Staff Assistant 1.0 $ 40,320 $ 2,500 $ 42,820 growing department Hire an On-call Mail Messenger 0.1 4,004 - 4,004 Package Tracking System - 10,404 - 10,404 Foster Employee Development Airport Innovation Travel Budget Right-sizing - 4,000 - 4,000 and Leverage Talent AV Finance & Budget Additional Staff Training - - 28,666 28,666 Host the 2019 AAAE Geospatial Conference - - 7,500 7,500 Grow Port Intern Program Art Collection College Intern 0.3 - 14,697 14,697 AV Finance & Budget Graduate Intern 0.5 33,322 2,500 35,822 Civil Engineering College Intern 0.3 15,568 2,500 18,068 Graduate Intern in Museology Studies 0.3 16,006 1,000 17,006 Reduce Occupational Injury Rate Workstation Ergonomics - - 8,095 8,095 (OIR) and Days Away Severity Rate ( DASR) Employees Total 2.4 $ 123,624 $ 67,458 $ 191,082 Budget requests driven by strategic priorities 90 Budget Requests: Customer Service 2019 Budget Requests Non- AV Priority Problem/Need/Opportunity Solution FTEs Baseline Total Reoccurring Customer Service Anticipate, Influence and Hire a Parking Services Representative 1.0 $ 66,451 $ - $ 66,451 Respond to Landside Mobility Shifts Expand and Upgrade Wireless Aira Annual Subscription - 15,000 - 15,000 Network Coverage and Indoor Conduct Wireless Spectrum Analysis - - 25,000 25,000 Facilities Cleanliness and AOB Lobby Furniture - Refurb - - 25,000 25,000 Appearance Art Handler Budget Increase - 9,550 - 9,550 Custodial Services in Transit Areas, Garage, - 85,500 - 85,500 and NE Cruise Lot Escalator Cleaning - 99,000 - 99,000 Hire a Custodial Shift Supervisor/Quality 1.0 63,329 3,500 66,829 Assurance Technician Restroom Ambient Scent System - - 16,426 16,426 Improve Customer Hire four (4) Pathfinders to interact with TSA, 4.0 182,616 13,200 195,816 Understanding at Security Airlines and other tenants Checkpoints Make Sea-Tac "Gateway Of Customer Service Start-Up Contract Year - - 68,000 68,000 Choice" Three Sea-Tac Branding - - 350,000 350,000 Budget requests driven by strategic priorities 91 Budget Requests: Customer Service 2019 Budget Requests Non- AV Priority Problem/Need/Opportunity Solution FTEs Baseline Total Reoccurring Customer Service Provide Real-Time Airport- Acquire New Features and Capabilities in the - - 100,000 100,000 Related Information to Map SDK (Smartphone App) Customers Seven Days Per Aviation Telephone Call Center - 65,000 - 65,000 Week Customer Communications real-time - 50,000 - 50,000 messaging, printed material production and language translations Expand Indoor Navigation Infrastructure - 24,000 56,000 80,000 Phone Tree Enhancements - 30,000 - 30,000 STS Info System Graphic Support - 50,000 - 50,000 Rightsizing to Reflect Current Customer Care Department Right-Sizing - 5,365 - 5,365 Staffing Level Customer Experience & Communication - 12,000 - 12,000 Department Right-Sizing Customer Service Department Right-Sizing - 47,340 - 47,340 Non-Payroll Standard FTE Package for existing - 6,550 - 6,550 vacant position (Cust Comm Splst) Right-size Sr. Art Manager Non-Payroll - - 6,855 6,855 Budget requests driven by strategic priorities 92 Budget Requests: Customer Service 2019 Budget Requests Non- AV Priority Problem/Need/Opportunity Solution FTEs Baseline Total Reoccurring Customer Service Wayfinding/Processing Hire a Landside Supervisor 1.0 52,905 3,300 56,205 Passengers Hire a Signing Graphics Specialist 1.0 55,246 3,000 58,246 Hire eight (8) emergency pathfinders 8.0 - 245,235 245,235 Portable Induction Loop Hearing Aid System - - 15,000 15,000 Rental Car Facility Curbside Assistance - 120,000 - 120,000 Seasonal Customer Service Staff - - 2,500,000 2,500,000 Signage and Wayfinding Master Plan - - 400,000 400,000 Wheelchair Services Right-Sizing - 23,000 - 23,000 Equip Employees with The Skills Airport-wide Mystery Shopper Program - - 100,000 100,000 and Knowledge to Deliver Planning & Benchmark Study Exceptional Customer Service Continue Customer Service contract funding - - 74,000 74,000 to support training and program development Contract training for AV SEA frontline staff - 25,000 - 25,000 Customer Service course (WE ARE) training - 20,000 - 20,000 materials Hire a Customer Communications Specialist 1.0 61,549 3,300 64,849 Hire a Volunteer Coordinator 1.0 58,280 - 58,280 Customer Service Total 18.0 $ 1,227,680 $ 4,007,816 $ 5,235,496 Budget requests driven by strategic priorities 93 Budget Requests: Facilities/Capacity 2019 Budget Requests Non- AV Priority Problem/Need/Opportunity Solution FTEs Baseline Total Reoccurring Facilities/Capacity Meet the Maintenance Needs Add to Grease Interceptor - Sewer Clearing - $ 90,000 $ - $ 90,000 and Standards of the Existing Budget Facilities Under Increasing Alternative Utility Facilities - Cummins Service - 75,000 - 75,000 Demand Agreement Cleaning and Protection of Cellantano - - 60,000 60,000 Painting Compactor Maintenance and Repair - 58,000 - 58,000 Conference Center AV System Maintenance - 19,102 - 19,102 Elevator & Escalator Repairs Expense Budget - 150,000 - 150,000 Increase Hire a AVM Asset Management Analyst 1.0 63,329 3,500 66,829 Hire a Boiler Room (BLRM) 1.0 65,687 3,000 68,687 Hire a Boiler Room Capital (BLRM) 1.0 65,687 3,000 68,687 Hire a Bus-Automotive Mechanic 1.0 76,396 3,000 79,396 Hire a Civil Engineer 1.0 83,055 3,460 86,515 Hire a Conveyor (CONV) 1.0 64,047 3,000 67,047 Hire a Field Crew Garage 1.0 42,626 3,000 45,626 Hire two (2) Electronic Technicians 2.0 126,882 11,000 137,882 Hire two (2) Passenger Loading Bridge FTEs 2.0 130,006 6,000 136,006 Hire two (2) wireman for Utility Metering 2.0 147,979 11,000 158,979 Budget requests driven by strategic priorities 94 Budget Requests: Facilities/Capacity 2019 Budget Requests Non- AV Priority Problem/Need/Opportunity Solution FTEs Baseline Total Reoccurring Facilities/Capacity Meet the Maintenance Needs Maint & Repair Expense Budget Increase - RCF - 68,000 - 68,000 and Standards of the Existing Facilities Under Increasing Maintenance Materials Expense Budget - 80,000 - 80,000 Demand Increase - Baggage Systems Parking Garage Concrete Distress Repairs - - 50,000 50,000 Purchase 2018 ICC Books for the Building - - 11,252 11,252 Department Quality Assurance (Q&A) Inspection Software - - 120,000 120,000 for Operations and ADR Upgrade/Replacement Small Works Expense Budget Increase - 130,000 - 130,000 State Building Code Council Payment - 3,500 - 3,500 Telecommunications Delivery System Upgrade - - 200,000 200,000 Used Cooking Oil Tank Maint and Repair - 13,000 - 13,000 Watermain Labeling & Leak Detection - 50,000 - 50,000 Rightsizing to Reflect Current Fuel Expense Budget Increase - 180,000 - 180,000 Staffing Level Phone Purchases and cell service - Right-sizing - 7,500 - 7,500 budget Budget requests driven by strategic priorities 95 Budget Requests: Facilities/Capacity 2019 Budget Requests Non- AV Priority Problem/Need/Opportunity Solution FTEs Baseline Total Reoccurring Facilities/Capacity Strategic Asset Management Asset Management Gap Assessment - - 1,000,000 1,000,000 Implementation Completion of Asset Management Gap - - 50,000 50,000 Assessment Critical Asset Monitoring - IoT (Internet of - - 90,000 90,000 Things) Pest Control & Waste Hire a Rodent Control Specialist (2 year 1.0 - 97,875 97,875 Management limited duration) Integrated Pest Management - - 800,000 800,000 Ongoing Solid Waste System Improvements - 90,000 - 90,000 Waste Receptacle Replacement - - 175,000 175,000 Planning for Future Facilities Airfield-Airspace Study - - 1,000,000 1,000,000 Needs Executive Program Management - - 1,620,000 1,620,000 Hire a Project Development Manager 1.0 78,820 3,300 82,120 Infrastructure Systems Master Planning - - 2,000,000 2,000,000 Long-Term Aviation Office Facility Plans - - 100,000 100,000 On Call project planning providing project - - 650,000 650,000 planning definition with conceptual design On-Call Planning - - 1,500,000 1,500,000 SR 518 Corridor Study - - 350,000 350,000 Budget requests driven by strategic priorities 96 Budget Requests: Facilities/Capacity 2019 Budget Requests Non- AV Priority Problem/Need/Opportunity Solution FTEs Baseline Total Reoccurring Facilities/Capacity Complete the Sustainable Follow On Planning/Project definition for - - 2,500,000 2,500,000 Airport Master Plan SAMP near-term projects SAMP Environmental - - 300,000 300,000 Sustainable Airport Master Plan (SAMP) - - 1,600,000 1,600,000 Environmental Review and Permitting Implement Operational Hire a limited duration ORAT employee for 1.0 - 64,987 64,987 Readiness and Airport Public Affairs Transition (ORAT) Hire a limited duration ORAT 1.0 - 58,280 58,280 Specialist/Admin Hire two (2) limited duration ORAT specialists 2.0 - 129,974 129,974 ORAT Promotional Hosting - 10,000 - 10,000 Right-sizing Travel Budget for Operational - 21,000 - 21,000 Readiness and Activation Department (New) Facilities/Capacity Total 19.0 1,989,615 14,580,629 16,570,244 Budget requests driven by strategic priorities 97 Budget Requests: Safety 2019 Budget Requests Non- AV Priority Problem/Need/Opportunity Solution FTEs Baseline Total Reoccurring Safety Continuously Improve Safety of Certified Service Provider Program (CSPP) - $ - $ 200,000 $ 200,000 Airport Operations Area implementation Fire Department - Bunker Gear Purchase - - 79,700 79,700 Hire an Airfield ADM 1.0 76,461 2,500 78,961 Hire eight (8) fire fighters 8.0 1,244,313 62,300 1,306,613 Facility Life-Safety Airport Exit Sign Evaluation - - 160,000 160,000 Enhancements Perform Smoke Control Testing - 50,000 - 50,000 Implement Safety Management Hire a Safety Management System (SMS) 1.0 67,487 3,300 70,787 System Specialist SMS E-learning & VR training program - - 150,000 150,000 development Other Arc Flash Ongoing Work - 75,000 - 75,000 Arc Flash Study - - 75,000 75,000 Safety Total 10.0 $ 1,513,261 $ 732,800 $ 2,246,061 Budget requests driven by strategic priorities 98 Budget Requests: Financial, Community, Diversity 2019 Budget Requests Non- AV Priority Problem/Need/Opportunity Solution FTEs Baseline Total Reoccurring Financial Keep Airline Costs Competitive Consultant Duty Free Expansion Planning - $ - $ 100,000 $ 100,000 Through Increasing Non- Hire a Property Manager 1.0 64,282 2,500 66,782 Aeronautical Revenue Hire a Yield Management Analyst 1.0 69,913 2,500 72,413 Parking Pre Booking Expenses - 390,000 60,000 450,000 Parking Ticket Stock - 15,000 - 15,000 Rightsizing to reflect current Additional Garbage Disposal expenses at - 8,000 - 8,000 usage level transit operations center Garage Architectural Maintenance - 200,000 - 200,000 New Recycling Surcharge - 95,000 - 95,000 Financial Total 2.0 $ 842,195 $ 165,000 $ 1,007,195 Community Airport Noise Mitigation and Noise Consulting Services - $ 51,000 $ - $ 51,000 Community Outreach PlaneNoise Complaint Handling System - 26,000 - 26,000 Annual Subscription Community Total - $ 77,000 $ - $ 77,000 Diversity Promote Small Business ACDBE Disparity Study - $ - $ 125,000 $ 125,000 ADR Business Manager-Small Business 1.0 77,346 2,500 79,846 Initiative Consulting Services for FAA ACDBE Tri- - - 75,000 75,000 Annuals Goals and Reporting Diversity Total 1.0 $ 77,346 $ 202,500 $ 279,846 Budget requests driven by strategic priorities 99 Budget Requests: Sustainability 2019 Budget Requests Non- AV Priority Problem/Need/Opportunity Solution FTEs Baseline Total Reoccurring Sustainability Be the Greenest and Most Complete renewable energy source study - $ - $ 30,000 $ 30,000 Energy-Efficient Port in North started 2018 America Digital Lighting Standards - - 200,000 200,000 Energy Conservation Assessment - - 150,000 150,000 Ground Transportation Alternatives Program - - 75,000 75,000 Implantation Implement Sustainable Aviation Fuels (SAF) - - 125,000 125,000 workplan LED Lighting Upgrades - 20,000 - 20,000 Water Conservation Assessment - - 150,000 150,000 Environmental Compliance Complete 2018 BOD Study - - 15,000 15,000 Complete Airport's 5-year NPDES Permit - - 100,000 100,000 Renewal Application Flight Corridor Safety Program Habitat - 60,000 - 60,000 Management Sanitary Sewer BOD Monitoring - 30,000 - 30,000 Implement Clean-Up Projects Contaminated Site Management - PFAS - - 65,000 65,000 Across the Port Meet or Exceed Requirements Technical Support for IWS Deicing - - 75,000 75,000 for Stormwater Leaving Port- Management Study Owned or Operated Facilities Sustainability Total - $ 110,000 $ 985,000 $ 1,095,000 Budget requests driven by strategic priorities 100 Budget Requests: Partners 2019 Budget Requests Non- AV Priority Problem/Need/Opportunity Solution FTEs Baseline Total Reoccurring Partners Air Service Development New Air Service Incentives - $ - $ 1,100,000 $ 1,100,000 Assure Airport Operational Hire an Airline Scheduling Coordinator 1.0 67,487 3,300 70,787 Continuity and Interoperability Via 24/7/365 Situational Awareness Increasing Volume Airline Forum Registration Costs - 13,000 - 13,000 Custodial Waste Collection Pilot - - 100,000 100,000 Employee-wide Sanitation Training; Human - - 100,000 100,000 Factor Trainging, SMS Awareness/Driver Training Hire a temporary Load Dock Coordinator - - 60,159 60,159 Hire an Employee Operations Bus Driver 1.0 44,472 - 44,472 Portable Restooms - 320,000 - 320,000 Partners' Employee Services Cell Charges GPS Employee Parking - 16,000 - 16,000 Cell Charges GPS Rental Cars - 25,000 - 25,000 Complete Circadian Lighting Study Starting - - 10,000 10,000 2018 External airport Learning Management - 18,000 - 18,000 System (AAAE IET Training Platform Enhancement) Partners Total 2.0 $ 503,959 $ 1,373,459 $ 1,877,419 Budget requests driven by strategic priorities 101 2019 Planning Budget Details 2019 Proposed Advanced Planning and On-Call Planning ($000) 2019 Proposed On-call Planning Detail ($000) Advanced Planning Detail 2,500 Aviation Planning 1,500 Project Management Team 337 GTAP Follow-on Support 600 Main Terminal Optimization Plan 385 Express Bus Study 400 T2 - North Gates, bridge & tunnel connections, Landscape Master Plan 100 processor refinements, etc. 577 Airfield 80 Implementation Plan - schedule/phasing, cost estimates 481 Terminal 120 North Airfield & Grading Plan 433 Landside 80 North East GT Lot 288 Off-Airport Properties 120 On-call Planning (detail in next box) 2,150 Capital Program Management 650 Airline Realignment - 2021 Planning 150 Concourse B/C/D HVAC Upgrades, Smoke Control Planning 150 P3 Feasibility Assessment 300 Pop-up On-call 50 Total Advanced Planning and On-call Planning 4,650 Total On-Call Planning 2,150 2019 Budget Request detail for $4.65M Advance Planning 102 Public Parking Public Parking - Revenue Detail 2016 2017 2018 2018 2019 Budget Change Budget vs Forecast $ in 000's Actual Actual Budget Forecast Budget $ % $ % Parking Garage Revenue to Port Gross Sales - Parking Garage 73,707 81,404 87,112 87,015 89,569 2,457 3% 2,554 2.9% less - WA Sales Tax (6,081) (6,818) (7,102) (7,358) (7,455) (353) 5% (97) 1.3% less - SeaTac Parking Tax (4,212) (6,563) (7,196) (7,274) (7,560) (364) 5% (286) 3.9% Revenue to Port - General Parking 63,414 68,024 71,022 72,383 74,554 3,532 5% 2,171 3.0% Other Garage Revenue Programs Corporate Premier Parking Program 594 958 976 1,211 1,247 271 28% 36 3.0% Passport Parking Program 2,749 2,977 3,356 3,233 3,330 (25) -1% 97 3.0% Revenue to Port - Parking Programs 3,344 3,934 4,331 4,444 4,578 246 6% 133 3.0% Total Parking Garage Revenue 66,758 71,958 75,353 76,827 79,132 3,778 5% 2,304 3.0% Other Parking Revenue Concession Rent - Doug Fox off-site parking 2,751 3,109 3,200 3,200 3,200 - 0% - 0.0% Space Rent and Other Parking Revenue 32 25 19 19 19 0 0% 0 0.0% Total Parking Revenue 69,540 75,093 78,572 80,046 82,350 3,778 4.8% 2,304 2.9% Enplanements 2016 2017 2018 2018 2019 Budget Change Budget vs Forecast in 000's Actual Actual Budget Forecast Budget # % # % Total Enplanements 22,796 23,416 24,654 24,654 25,394 740 3.0% 740 3.0% O&D % 69.4% 70.3% 69.2% 70.3% 70.3% 0 1.6% - 0.0% O&D Enplanements 15,821 16,461 17,061 17,332 17,852 791 4.6% 520 3.0% Garage Revenue per O&D Enplanement $ 4.22 $ 4.37 $ 4.42 $ 4.43 $ 4.43 $ 0.02 0.4% $ (0.00) 0.0% Parking growth consistent with enplanement growth 103 Rental Cars Rental Car - Revenue Detail 2014 2015 2016 2017 2018 2018 2019 Budget Change Budget vs Forecast # and $ in 000's Actual Actual Actual Actual Budget Forecast Budget $ % $ % RCF Concession Revenue to Port 28,955 30,662 33,465 31,352 31,508 31,299 30,991 (518) -1.6% (308) -1.0% Total Enplanements 18,717 21,109 22,796 23,416 24,654 24,654 25,394 740 3.0% 740 3.0% O&D % 73.8% 69.8% 69.4% 70.3% 69.2% 70.3% 70.3% 1.1% 1.6% - 0.0% O&D Enplanements 13,813 14,734 15,821 16,461 17,061 17,332 17,852 791 4.6% 520 3.0% Gross Sales by Operators 281,884 302,372 310,987 313,654 315,083 312,987 309,906 (5,178) -1.6% (3,081) -1.0% Total Transactions 1,289 1,390 1,411 1,388 1,437 1,395 1,384 (54) -3.7% (12) -0.8% Average Ticket $218.64 $217.51 $220.42 $226.03 $219.22 $224.33 $224.00 0 2.2% ($0.33) -0.1% Average Length of Stay 4.31 4.34 4.34 4.37 4.37 4.38 4.37 - 0.0% (0.00) -0.1% Transactions/O&D Enplanements 8.15% 9.44% 8.92% 8.43% 8.42% 8.05% 7.75% (0) -8.0% -0.30% -3.7% CFC Revenue Summary Total Transaction Days 5,554 6,039 6,129 6,067 6,287 6,109 6,052 (235) -3.7% (57) -0.9% CFC Rate per Transaction Day $6.00 $6.00 $6.00 $6.00 $6.00 $6.00 $6.00 - 0.0% $0.00 0.0% Total CFC Revenue Earned 33,554 36,206 36,830 36,261 37,723 36,655 36,311 (1,412) -3.7% (344) -0.9% Reserve for debt service and CP interest: (19,946) (20,543) (21,708) (22,621) (22,161) (22,003) (23,481) 1,321 6.0% 1,479 6.7% Reserve for CP principal payment: - (3,000) (3,000) (3,000) - - - - NA - NA Debt Service Reserve Requirement (19,946) (23,543) (24,708) (25,621) (22,161) (22,003) (23,481) 1,321 6.0% 1,479 6.7% Residual - CFC Operating Revenue: 13,608 12,663 12,122 10,641 15,563 14,653 12,830 (2,733) -17.6% (1,823) -12.4% Rental Car - Revenue Summary 2016 2016 2016 2017 2018 2018 2019 Budget Change Budget vs Forecast # and $ in 000's Actual Actual Actual Actual Budget Forecast Budget $ % $ % RCF Concession Revenue to Port 28,955 30,662 33,465 31,352 31,508 31,299 30,991 (518) -1.6% (308) -1.0% Residual - CFC Operating Revenue: 13,608 12,663 12,122 10,641 15,563 14,653 12,830 (2,733) -17.6% (1,823) -12.4% Land Rent/Space Rent/Other 3,541 3,189 3,617 3,699 3,786 3,786 3,788 3 0.1% 3 0.1% Total Rental Cars Operating Revenue 46,104 46,515 49,203 45,691 50,857 49,737 47,609 (3,248) -6.4% (2,128) -4.3% Transactions per O&D enplanement continue to decline, higher debt service puts additional downward pressure on CFC 104 Ground Transportation Revenue to Port 2016 2017 2018 2018 2019 Budget Change Budget vs Forecast $ in 000's Actual Actual Budget Forecast Budget $ % $ % Ground Transportation Revenues Transportation Network Companies 3,222 6,940 8,122 10,080 11,574 3,452 42.5% 1,494 14.8% On Demand Taxis 5,045 5,199 4,591 4,307 4,176 (415) -9.0% (131) -3.0% On Demand Limos 869 858 855 849 842 (13) -1.5% (7) -0.8% Belled In Taxis (Annual Permit) 159 45 108 35 43 (65) -60.2% 8 24.0% Pre-Arranged Limos (Annual Permit) 496 626 603 628 815 212 35.1% 187 29.8% Courtesy Cars (cost recovery) 2,039 1,319 1,909 1,763 2,477 568 29.8% 714 40.5% All other Operators (cost recovery) 669 360 433 361 393 (40) -9.3% 32 8.8% Other Misc Revenues 305 337 264 378 264 (0) 0.0% (114) -30.2% Total GT Revenue 12,803 15,684 16,884 18,401 20,584 3,700 21.9% 2,183 11.9% Trip Activity 2016 2017 2018 2018 2019 Budget Change Budget vs Forecast in 000's Actual Actual Budget Forecast Budget # % # % Ground Transportation Trips Transportation Network Companies 602 1,277 1,354 1,678 1,929 575 42.5% 251 14.9% On Demand Taxis 827 750 765 718 696 (69) -9.0% (22) -3.0% On Demand Limos 74 72 71 69 67 (3) -4.7% (2) -2.9% Belled In Taxis (Annual Permit) 195 56 52 18 18 (34) -65.9% (0) -1.9% Pre-Arranged Limos (Annual Permit) 369 337 325 345 344 19 5.9% (1) -0.2% Courtesy Cars (cost recovery) 1,197 1,175 1,211 1,174 1,160 (51) -4.2% (14) -1.2% All other Operators (cost recovery) 95 79 78 57 57 (22) -27.6% (0) -0.7% Total GT Trip Activity 3,454 3,825 3,934 4,116 4,328 394 10.0% 212 5.1% Strong growth in TNC volume continues into 2019 105 Airport Dining & Retail and Terminal Leased Space Airport Dining & Retail and Terminal Leased Space 2014 2015 2016 2017 2018 2018 2019 Budget Change Budget vs. Forecast Org Basis (in 000's) Actual Actual Actual Actual Budget Forecast Budget $ % $ % ADR Revenue Food & Beverage 1 15,223 17,427 21,314 21,579 21,700 21,700 23,780 2,081 9.6% 2,081 9.6% Retail 1 11,213 12,127 13,496 13,989 14,344 16,044 15,445 1,101 7.7% (599) -3.7% Duty Free 1 6,664 6,769 6,265 6,912 7,251 7,251 7,497 246 3.4% 246 3.4% Personal Services 1 3,201 3,548 3,657 3,728 3,809 3,809 3,785 (24) -0.6% (24) -0.6% Advertising 5,815 6,460 6,725 6,662 6,021 6,680 6,896 874 14.5% 216 3.2% Space Rental - Terminal 3,483 4,629 5,190 5,641 5,664 6,121 6,026 362 6.4% (95) -1.5% All other revenue 476 477 605 469 300 377 481 181 60.4% 104 27.6% Total ADR & Terminal Lease Revenue 46,076 51,437 57,252 58,980 59,087 61,980 63,909 4,822 8.2% 1,929 3.1% Expenses ADR & Terminal Leased Space 1,862 2,569 2,241 1,962 2,163 2,508 2,561 398 18.4% 54 2.1% Income from Operations 44,214 48,868 55,010 57,018 56,924 59,472 61,348 4,423 7.8% 1,876 3.2% Sales per Enplanement SPE - Food & Beverage $6.46 $6.48 $7.23 $7.18 $6.93 $6.93 $7.46 $0.53 7.6% $0.53 7.6% SPE - Retail Sales $4.10 $3.92 $3.86 $4.07 $4.03 $4.16 $3.87 ($0.17) -4.2% ($0.30) -7.2% SPE - Duty Free $1.12 $0.96 $0.89 $0.91 $0.90 $0.90 $0.91 $0.01 0.9% $0.01 0.9% SPE - Personal Services $1.17 $1.08 $1.00 $0.95 $0.90 $0.90 $0.89 ($0.01) -1.4% ($0.01) -1.4% SPE - Airport Dining & Retail $12.84 $12.45 $12.98 $13.12 $12.76 $12.89 $13.12 $0.35 2.8% $0.22 1.7% Concession Revenue 1 per Enplanement $1.94 $1.89 $1.96 $1.97 $1.91 $1.98 $2.03 $0.12 6.3% $0.05 2.6% Strong Revenue Growth continues in 2019 with the opening of 20 new full and quick service dining units 106 Non Aero Commercial Properties Non-Aero Commercial Properties 2016 2017 2018 2018 2019 Budget Change Forecast Change Org Basis (in 000's) Actual Actual Budget Forecast Budget $ % $ % Revenue Source NEW DEVELOPMENT PARCELS DMCBP Land Rents - all (3) phases 471 1,079 1,203 1,542 1,573 370 30.7% 31 2.0% DMCBP In Lieu - 7yr repayment schedule (Phase I & III) 318 445 482 482 522 40 8.3% 40 8.3% DMCBP In Lieu - lump sum payment (Phase II) - 5,434 - - - - n/a - n/a Subtotal DMCBP: 789 6,958 1,685 2,024 2,095 410 24.3% 71 3.5% NERA 2 Land Rent - 15 248 248 268 20 8.3% 20 8.3% NERA 3 Land Rent - 42 678 678 734 56 8.3% 56 8.3% DMC-North Land Rent - - 61 63 593 531 868.7% 530 844.1% DMC-West Land Rent - - - - - - n/a - n/a Owner Liaison Reimbursement - various properties - - 60 85 25 (35) -58.3% (60) -70.6% Subtotal New Development revenue: 789 7,015 2,732 3,098 3,715 982 36.0% 617 19.9% In-Flight Kitchen Revenue 7,025 7,827 8,054 8,554 8,664 610 7.6% 110 1.3% Burien NERA 3 FAA Pilot Program grant 908 1,402 2,070 1,734 - (2,070) -100.0% (1,734) -100.0% All Other Commercial Properties Revenue 1,271 1,798 1,850 1,850 1,841 (10) -0.5% (10) -0.5% TOTAL - ORG 3630 Revenue 9,992 18,042 14,706 15,236 14,219 (487) -3.3% (1,016) -6.7% Operating Expenses DMCBP frontage fee amort - 7yr pymt (Phase I & III) 271 346 346 346 346 0 0.0% 0 0.0% DMCBP frontage fee amort. - lump sum (Phase II) - 3,578 - - - - n/a - n/a Owner Liaison expense - various properties - - 60 85 25 (35) -58.3% (60) -70.6% Subtotal New Development expense: 271 3,924 406 431 371 (35) -8.6% (60) -13.9% - n/a Burien NERA 3 FAA Pilot - grant eligible expenses 987 1,598 2,300 1,927 - (2,300) -100.0% (1,927) -100.0% All Other Commercial Properties expenses 434 406 554 554 308 (247) -44.5% (247) -44.5% TOTAL - ORG 3630 Expense 1,692 5,928 3,260 2,912 679 (2,582) -79.2% (2,233) -76.7% Income from Operations 8,300 12,114 11,446 12,324 13,541 2,095 18.3% 1,217 9.9% NERA FAA grant ended in 2018; New RE development primary driver of revenue growth 107 Clubs and Lounges Clubs & Lounges 2014 2015 2016 2017 2018 2018 2019 Budget Change Forecast Change Org Basis (in 000's) Actual Actual Actual Actual Budget Forecast Budget $ % $ % Revenue Clubs & Lounges Operating Revenue 1,518 2,392 3,028 5,041 5,630 5,830 8,520 2,890 51.3% 2,690 46.1% Total Revenue 1,518 2,392 3,028 5,041 5,630 5,830 8,520 2,890 51.3% 2,690 46.1% Expenses Clubs & Lounges Operating Expense 614 927 1,079 1,598 1,866 1,866 2,780 913 48.9% 913 48.9% Base Management Fee 88 159 182 182 182 182 182 - 0.0% - 0.0% Incentive Management Fee 73 26 83 103 174 174 229 55 31.8% 55 31.8% All other expense 32 30 73 76 84 84 128 43 51.3% 43 51.3% Total Expense 806 1,142 1,418 1,959 2,307 2,307 3,319 1,012 43.9% 1,012 43.9% Income from Operations 711 1,250 1,609 3,081 3,323 3,523 5,201 1,878 56.5% 1,678 47.6% Airport lounges continue to grow increased volume drives extended hours of operation 108 Future CPE Comparison: 30 Large Hub Airports $30.00 $27.47 Projected Increase $27.42 Future CPE Outlook - 30 Large Hub Airports $26.77 Current CPE $26.14$25.93$25.82 Prepared by WJ Advisors, PH2 Consulting $25.00 $23.40 $19.75 $20.00 $19.13 $18.56 $16.63$16.57 $15.04$14.69 $15.00 $14.46 $14.07$13.77 $12.02 $11.10 $10.66 $10.27 $9.85 $10.00 $9.58 $9.53 $9.34 $7.89 $6.99 $6.25 $5.00 $4.51 $2.78 $0.00 ORD SFO EWR JFK LGA LAX MIA IAD SEA PHL BOS DEN MDW PDX SAN DCA DFW HNL IAH LAS MCO DTW SLC FLL BWI PHX MSP TPA ATL CLT (FY25) (FY24) (FY23) (FY24) (FY23) (FY23) (FY23) (FY23) (FY21) (FY25) (FY25) (FY22) (FY23) (FY23) (FY18) (FY22) (FY19) (FY20) (FY23) (FY25) (FY24) (FY27)(FY19) (FY23) (FY22) (FY24) (FY22) Many airports anticipate rising CPEs 109 MARITIME APPENDIX Additional 2019 Budget Materials 110 Marine Maintenance 2017 2018 2018 2019 Budget to Budget Budget to Forecast $ in 000s Actual Budget Forecast Budget $ % $ % Project Expense 1,323 1,924 1,539 3,286 1,362 71% 1,746 113.5% Operating Expense 18,873 18,304 20,454 19,171 867 5% (1,283) -6.3% Total Maintenance 20,196 20,228 21,993 22,457 2,228 11% 464 2.1% Project OpExp 10,000 9,000 Assumes 4% increase in 8,000 7,000 labor cost 6,000 Materials also increasing 5,000 4,000 Goal to improve project 3,000 tracking for more 2,000 1,000 accurate cost allocation 0 17A 18B 19B 17A 18B 19B 17A 18B 19B 17A 18B 19B 17A 18B 19B 17A 18B 19B Corporate EDD Maintenance Maritime NWSA SWU Improvement in identifying project work 111 Marine Maintenance $ in 000's 2019 Budget % New Requests - One-Time or Phased Work EDD Portfolio Management 722 22% Fishing & Operations 655 20% Rec Boating 504 15% P69 Facilities 305 9% Cruise 294 9% MD Portfolio Management 257 8% Maintenance 227 7% MD Admin 130 4% Parks 113 3% NWSA Container 40 1% NWSA Non-Container 38 1% Total 3,286 100% One-Time expense focus 112
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