9a Maritime Division Business Plan and Budget Presentation
Item No: 9a_supp Meeting Date: June 25, 2019 Maritime Division 2020 Business Plan and Budget Development June 25, 2019 Outline • Strategy to Budget Process • Strategic Priorities • Anticipated 2020 Budget needs: Capital Focus • 2020 Milestones 2 2020 Maritime Division Budget Timeline 2020 Business Plan and CIP Development Budget Budget Development Development Briefing Briefing Budget Briefing Budget Briefing First First Reading Reading & & Public Hearing for 2019 Budget nd Reading & 22nd Reading & Final Passage of 2019 Budget (May/June) (July (Jun 10) 25) (Oct 9) 8) (Mid-November) (Nov 12) (Late(Nov November) 19) Note: Detailed schedule in appendix 3 Strategy To Budget Process Implementation Strategic Planning Century Agenda Vision 5- 10 Years Cross Functional Evaluation Gap Strategies and Objectives (Long Range Plans) 3 – 5 Years 2020 Business Plan 2020 Budget Annual 2020 Performance Plans 4 Maritime Priorities 2020 5 Comparing the Statewide Economic Impact of Major Clusters Total Jobs Total Jobs Per Direct Job 300000 3 250000 2.5 200000 2 150000 1.5 100000 1 50000 0.5 0 0 Maritime Agriculture Aerospace & Food Processing Maritime Agriculture & Food Processing Aerospace Sources: Each study by Community Attributes, Inc.: Washington Aerospace Partnership, “Washington State Aerospace Economic Impacts 2016 Update,” October 2016; Washington Farm Bureau, “Washington State Agriculture & Food Processing Economic/Fiscal Impact Study,” January 2015; Washington Maritime Federation, “Washington State Maritime Sector Economic Impact Study,” April 2017. 6 Ocean Economy Critical to the Region’s Economy Source: Port of Seattle, Port of Tacoma, and the NW Seaport Alliance Economic Impact Analysis, Community Attributes, March 2019 7 SWOT: Industry/Business Context Strengths: • • • • Robust Maritime Cluster. Deep expertise and operational excellence. Track record in Sustainability. Commitment to infrastructure upgrades Weaknesses: • Aging infrastructure in some areas. • Port Facilities not meeting demand for berth space and new vessels. • Legal, financial, regulatory compliance can result in less competitive edge for real estate. • Competing demands for resources 8 SWOT: Industry/Business Context Opportunities: • Investments in new vessels in all key sectors • Technology and Innovation opportunities with infrastructure upgrades • Proximity to Alaska • Focus on sustainability Threats: • Urban pressures and traffic congestion • Trade war affecting Terminal 86 • Construction cost escalation • Effects of climate change: warming ocean 9 Cruise Industry/Business Context 10 11 124 new cruise ships on order 12 Industry changes - Small to Large 13 The future: Hybrid and Electric 14 Terminal 46 Shared Space with the Northwest Seaport Alliance Operations 15 Fishing Industry/Business Context 16 New Vessels in the Fleet Mavrik Marine’s Sternpicker 32 Improvements: • Stability • Capacity • Speed Length | 32 ft Beam | 12 ft Draft | 22 ft Built in Washington State Crew | 4 17 Fleet Modernization Underway • Average vessel is 40 years old in the North Pacific Fishing Fleet • New vessels are safer and more environmentally sound • New technology: • Data Needs 18 Industry/Business Context • Recreational Boating: – Strong Demand for moorage: occupancy high! – Trend expected to continue – Our marinas provide direct access to the water for many King County Residents – We are involved in transacting directly with the public Water access for community members 19 Industry/Business Context • Grain: – Volumes will likely decrease given the ongoing tariff impact on export volumes. – The YTD volumes 2019 (through April 2019) are down by 17.8%. • Portfolio Management: – The local industrial real estate market remains strong and rates are stable. – Current occupancy rate of industrial property is 98%. 20 Financial Goals: 2020 is year two of a five-year plan Maritime Division Financial Goal in $000s Positive NOI after Depreciation by 2024 Goal 0(2,000) (4,000) Actual *2020 Expected NOI Budget Range (6,000) – Smaller Variance. (8,000) (10,000) • 2018 Actual NOI above goal. • Budget guidance including zero-based approach. Budget (12,000) (14,000) 2017 2018 2019 2020 2021 2022 2023 2024 *Note: Does not include Terminal 46 payment or revenue Maritime Goal: Positive NOI after Depreciation by 2024 21 Financial Goals: 2020 is year two of a five-year plan Positive Net Operating Income including Allocations and Depreciation • Cruise • Grain Terminal Take steps to reach Positive Net Operating Income • Recreational Boating Cover all expenses and make inroads on depreciation • Maritime Portfolio Management • Elliott Bay Fishing & Commercial Operations Take steps to cover maintenance and direct expenses • Ship Canal Fishing & Operations Maritime Goal: Building on 2019 achievements 22 Financial Strategic Plans 1.) Find / expand new revenue sources 2.) Maximize existing revenue streams 3.) Limit spending increases • 4th Cruise berth • Habitat banking • Industrial development • Diversified fleet • Moorage Dolphins • Align rates to market demand • Guest moorage • Lease renewals • Increase recreational moorage during fishing season @ FT • Push process improvement • Use technology to reduce workload • Leverage existing overhead • Optimize predictive maintenance • Cost sharing Levers to achieve financial goal 23 Advance Environmental Sustainability • Stormwater: develop framework for repair and build green infrastructure • Habitat: restore and maintain habitat/ develop banking agreement • Greenhouse gas: implement reduction plan • Solid waste: track and reduce • Orca: contribute to recovery actions 24 Additional Priorities: Resiliency, Innovation, Equity • All employees go home safely - Implement systematic approach to behavior based safety • Be better prepared to respond to emergencies - Enhance Incident Command Systems qualifications for staff • Lead Maritime Industry in Innovation - Train leaders in Continuous Process Improvement. Encourage innovation at every level. Maritime Blue • Partner with others to bring more diverse workforce to Maritime Industry - Mentoring youth and increasing support for Internships and pre apprentices 25 Preliminary Maritime 2020 Capital Plan Highlights • Continued pre-construction work toward: – T46 Cruise Terminal – Pier 66 Shore Power – Terminal 91 Berths 6 & 8 – Harbor Mooring Dolphins • Prospective projects (asset preservation, moorage enhancements & public access): – Terminal 46 North Pier – Terminal 91 Northwest Fender Replacement – Jack Block Park Pier Replacement Note: prospective projects subject to funding availability 26 Staffing Resource Needs • Visionary Capital Plan • Growing demand for facility • Staffing needs in the following areas: – Planning – Continuous Process Improvement – Cruise • Offsets: will pursue first 27 Appendix 28 Appendix Slide #1 2018 Maritime Division in $000s Revenue Direct Operating Exp. Maintenance Exp. Central Services / Police Other External Exp. Total Operating Exp. NOI before Depreciation Depreciation NOI after Depreciation Cruise 18,880 2,659 2,407 4,548 237 9,850 9,029 6,517 2,513 Elliott Bay Ship Canal Rec. Portfolio Grain Other / Fishing & Ops Fishing & Ops Boating Mgmt. * Terminal Habitat Total Maritime 6,755 3,502 12,035 11,305 5,167 (69) 57,575 2,575 2,265 3,672 3,904 165 15,239 1,557 1,523 3,350 2,739 428 79 12,082 1,898 1,717 2,447 3,234 994 14,838 100 70 440 331 151 (237) 1,092 6,130 5,575 9,910 10,208 1,737 (159) 43,252 624 3,421 (2,797) (2,073) 1,908 (3,981) 2,125 2,872 (747) 1,098 2,693 (1,596) 3,430 597 2,833 90 14 77 14,323 18,022 (3,699) *Includes uplands of Shilshole Bay Marina, Terminal 91 (Industrial), Fishermen’s Terminal, Maritime Industrial Center, Salmon Bay Marina, T-115, T-108, and T-106. 29 Detail 2020 Budget Schedule 06/25 – 2020 Maritime Business Plan and Budget Development Preview briefing 07/23 – EDD/Maritime CIP and Funding Discussion 09/24 – Central Services budget Commission briefing 10/08 – Operating division budgets Commission briefing 10/22 – Tax Levy & Draft Plan of Finance Commission briefing 10/22 – 2020 Preliminary Budget document available to Commission 10/24 – 2020 Preliminary Budget document available to the public 10/29 – NWSA Budget study session by Managing Members 11/13 – First reading of budget resolution and public hearing 11/14 – NWSA Budget adoption by Managing Members 11/13 – First reading of budget resolution and public hearing 11/19 – Second reading and final passage of 2020 Budget 12/02 – File the 2020 statutory budget with King county 12/13 – Publish the 2020 Final Budget to the public 30
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