9b Maritime Preliminary Budget Briefing Presentation
Item No. 9b_supp_1 Meeting Date: October 8, 2019 Maritime Division 2020 Preliminary Budget Briefing October 8th, 2020 2020 Maritime Division Budget Timeline 2020 Business BudgetBudget Budget BriefingBudget First Reading &First Reading & 2nd2nd Reading & Reading & Plan and CIP DevelopmentDevelopment Briefing Public HearingPublic Hearing Final Passage of Final Passage of Development BriefingBriefing for 2019 Budgetfor 2019 Budget 2019 Budget 2019 Budget (May/June) (July 10)(Jun 25) (Oct 9)(Oct 8) (Mid-November)(Nov 12) (Late November) (Nov 19) 2 Strategy To Budget Process Century Agenda Vision 5- 10 Years Strategic Planning Cross Functional Evaluation Gap Strategies and Objectives (Long Range Plans) 3 5 Years Implementation 2020 Business Plan 2020 Budget Annual 2020 Performance Plans 3 Maritime Priorities 2020 Budget supports future focused strategies 4 2020 Budget Objective Financial Goal: Maritime Division achieves positive Net Operating Income including depreciation by 2024. Leverage cruise and grain business to help support the regional fishing fleet, environment, and local maritime small businesses. Manage expense growth. Balance port revenue growth with supporting vital maritime industries. Execute 5 year Capital Plan. 5 Maritime Budget: Bottom Line Up Front Compared to 2019 Budget Revenue up $3.2 M or 5.4% Expenses up $1.5M or 2.9% Budget Drivers: Growth of Cruise Supporting transformational Capital Plan Project Managers and Planners Innovation Sustainability 6 Maritime Revenues Overall up $3.2M or 5.4% Strong growth in Cruise, balancing contraction elsewhere Cruise budget revenues projected $26.1 M up 17% Rate increase and new vessels Grain down $764K K or 18% 2018 2019 2019 2020 Budget Change Budget to Forecast Trade war and tariffs $ in 000's Actual Budget Forecast Budget $ % Grain 5,167 4,254 4,254 3,490 (764) -18% Elliot Bay fishing: down Cruise Operations 18,880 22,406 22,406 26,261 3,856 17% Elliott Bay Fishing & Commercial Ops 6,755 5,927 5,827 5,123 (804) -14% $804K or 14% Ship Canal Fishing & Operations 3,502 4,021 4,021 4,264 243 6% Maritime Portfolio Mgmt 11,305 10,328 10,328 10,428 100 1% Loss of Ocean Phoenix Rec Boating 12,035 12,794 12,794 13,361 567 4% All Other (69) 0 0 11 11 NA Total Maritime 57,575 59,729 59,629 62,938 3,208 5.4% 2020 Revenue Up 7 Maritime Expenses Maritime Expenses up $350K or 2.4% Overall Expenses (all in) up $1.5M or 2.9% Zero Based Budgeting mindset: Almost $1M reduced Strategic Review needs and historic spending: consultants, advertising, travel Adding FTEs to support capital, cruise, innovation: Offsetting by eliminating 3 unfilled positions, reducing consultant costs CPI, Planning Department, Cruise 3 to Project Management team Maintenance cost up 8 2020 Maritime Budget Summary (Excluding T46 Cruise) Inclusive of Direct Charges & Allocations from Corporate, & Other Divisions Incr (Decr) Key 2020 budget changes from 2019 2018 2018 2019 2019 2020 Budget Change $ in 000's Actual Budget Budget Forecast Budget $ % budget Total Revenues 57,575 55,053 59,729 59,629 62,938 3,208 5.4% Expenses Revenue Growth of 5.4% Maritime (Excl. Maint) 11,348 15,383 14,604 13,229 14,953 349 2.4% Economic Development 4,347 4,583 4,996 4,573 5,692 695 13.9% Expense Growth of 2.9% Total Direct 15,695 19,965 19,600 17,802 20,645 1,044 5.3% Direct increase of 5.3% Support Services increase of 8.3% Maintenance Expenses 11,416 11,261 11,980 11,980 13,021 1,041 8.7% Envir Services & Planning 1,588 2,168 2,622 2,436 2,759 137 5.2% Maintenance growth in labor Capital Development Expenses 823 1,212 821 855 918 97 11.8% rates, materials cost, and Total Support Services 13,827 14,640 15,422 15,270 16,698 1,275 8.3% common area allocation IT 2,607 2,858 2,788 2,788 2,903 115 4.1% change. Police Expenses 4,041 4,209 4,473 4,297 3,408 (1,065) -23.8% Central Services decrease 5.2% External Relations 1,379 1,528 1,685 1,585 1,800 115 6.8% Other Central Services 5,483 6,184 6,647 6,432 6,627 (20) -0.3% Recalibration of Police Aviation Division 221 194 206 206 236 30 14.8% deployment hours. Total Central Services / Other 13,730 14,973 15,799 15,308 14,974 (824) -5.2% Operating Expenses 43,252 49,578 50,822 48,381 52,317 1,495 2.9% 24.5% increase in Net income Net Operating Income before Depeciation 14,323 5,475 8,908 11,249 10,621 1,713 19.2% Depreciation 18,022 17,868 17,613 17,613 17,195 (418) -2.4% NOI after Depreciation (3,699) (12,394) (8,705) (6,364) (6,573) 2,132 24.5% 9 2020 Maritime Budget Summary (Including T46 NWSA Payment) Inclusive of Direct Charges & Allocations from Corporate, & Other Divisions Incr (Decr) 2018 2018 2019 2019 2020 Budget Change $ in 000's Actual Budget Budget Forecast Budget $ % Impact of Terminal 46 payment to Total Revenues 57,575 55,053 59,729 59,629 62,938 3,208 5.4% NWSA beginning in 2020 to the Port Expenses $3.82M growing 2% annually for 29 Maritime (Excl. Maint) 11,348 15,383 14,604 13,229 18,779 4,175 28.6% acres at Terminal 46 Economic Development 4,347 4,583 4,996 4,573 5,692 695 13.9% Total Direct 15,695 19,965 19,600 17,802 24,471 4,871 24.9% Payment creates revenue for NWSA (50% returned to Port of Seattle, not Maintenance Expenses 11,416 11,261 11,980 11,980 13,021 1,041 8.7% shown here) Envir Services & Planning 1,588 2,168 2,622 2,436 2,759 137 5.2% Capital Development Expenses 823 1,212 821 855 950 129 15.6% Total Support Services 13,827 14,640 15,422 15,270 16,729 1,307 8.5% IT 2,607 2,858 2,788 2,788 2,903 115 4.1% Police Expenses 4,041 4,209 4,473 4,297 3,408 (1,065) -23.8% External Relations 1,379 1,528 1,685 1,585 1,800 115 6.8% Other Central Services 5,483 6,184 6,647 6,432 6,627 (20) -0.3% Aviation Division 221 194 206 206 236 30 14.8% Total Central Services / Other 13,730 14,973 15,799 15,308 14,974 (824) -5.2% Operating Expenses 43,252 49,578 50,822 48,381 56,175 5,353 10.5% Net Operating Income before Depeciation 14,323 5,475 8,908 11,249 6,763 (2,145) -24.1% Depreciation 18,022 17,868 17,613 17,613 17,195 (418) -2.4% NOI after Depreciation (3,699) (12,394) (8,705) (6,364) (10,432) (1,727) -19.8% 10 Maritime Division Financial Trends In 000s Depreciation 80,000 Terminal 46 Payment Continuing upward Operating and Overhead Expense 70,000 revenue trend. Revenue 60,000 50,000 Expense reductions 40,000 helped mitigate $3.8M gross payment to the 30,000 NWSA. 20,000 10,000 Depreciation is down - 2014 2015 2016 2017 2018 2019 Forecast 2019 Budget 2020 Budget slightly Y/Y. Continuing progress toward profitability 11 Cruise Financial Goal: Profitability while driving regional tourism Revenue up $3.9M/17.2% In $000's *Expenses up $4.5M/37.8% 30,000 Depreciation Operating Expense *Includes $3.8M Northwest Seaport Alliance 25,000 Payment Revenue 20,000 Initiatives: 15,000 Port Valet $1.2M ($720K to Cruise, $480K to Aviation), budget increased 10,000 from 2019 driven by passengers Seatrade Booth $160K 5,000 - 2016 2017 2018 Actual 2019 Forecast 2019 Budget 2020 Budget Continued growth in Cruise Demand 12 Recreational Boating Goal: Journey to Profitability In $000's Depreciation 18,000 Operating Expense 16,000 Revenue Revenue up $567K/4.4% 14,000 Expenses down $108K/-0.9% 12,000 10,000 8,000 Initiatives: 6,000 Destination awareness: market 4,000 guest moorage Complete capital projects 2,000 Attract new boaters - 2016 2017 2018 Actual 2019 Forecast 2019 Budget 2020 Budget 13 Elliott Bay Fishing & Commercial Operations In $000's 14,000 Depreciation Operating Expense Revenue 12,000 Revenue down $804K/-13.6% 10,000 Expenses up $842K/13.6% 8,000 Initiatives: 6,000 Terminal 91 Berth 6&8 Repair 4,000 T46 North Pier Redevelopment 2,000 Mooring Dolphins - 2016 2017 2018 Actual 2019 Forecast 2019 Budget 2020 Budget 14 Ship Canal Fishing & Operations In $000's Depreciation 10,000 Operating Expense 9,000 Revenue 8,000 Revenue up $243K/6% 7,000 6,000 Expenses up $548K/8.7% 5,000 4,000 Initiatives: 3,000 Maritime Innovation Center / 2,000 Fishermen's Terminal 1,000 Redevelopment - 2016 2017 2018 Actual 2019 Forecast 2019 Budget 2020 Budget 15 Maritime Portfolio Management: Positive NOI including Depreciation by 2024 In $000's 18,000 Depreciation Operating Expense Revenue 16,000 Revenue up $100K/1% 14,000 Expenses up $164K/1.4% 12,000 10,000 8,000 Initiatives: 6,000 Fishermen's Terminal Redevelopment 4,000 Maritime Industrial Center A1 building 2,000 improvements - 106 Development 2016 2017 2018 Actual 2019 Forecast 2019 Budget 2020 Budget 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. 16 Grain Terminal Goal: Net Income Maximized Revenue down $764K/-18% In $000's 6,000 Expenses up $59K/3.2% 5,000 4,000 Depreciation 3,000 Operating Expense Revenue 2,000 1,000 - 2016 2017 2018 Actual 2019 Forecast 2019 Budget 2020 Budget Tariff policy driving uncertainty in grain volumes 17 Maritime Division Service Group Summary 2020 Preliminary Budget October 8, 2019 Marine Maintenance Maintenance Breakdown Corp NWSA SWU Maritime Up 8.4% over 2019 Budget Economic Development Assumes 4% increase in labor cost Project Management and Facilities Management Teams fully staffed Increase of 0.5 FTEs and conversion of 24 long-term Emergency Hires Maintenance Overhead Marine Maintenance supports many constituents across the region 19 Environmental Programs Continuing core services and responding to new priorities Assessed and realigned resources to meet current demands 2020 outside services request is $386K below 2019 budget 2 new FTEs to deliver priorities and offsetting outside consultant use New Priorities: Sustainability, Orca Recovery, Cruise Environmental and Duwamish Engagement $420K 20 Staffing Changes Summary 8.5 new positions 3 in Project Management 2 Planners Cruise team member Continuous Process Improvement 3 eliminated positions Net change: 5.5 21 Stormwater Utility Summary 2020 Preliminary Budget September 11, 2019 Stormwater Utility Operating Budget Rate increase to 8.2%, transferred one FTE from Environment & Sustainability to SWU FTE to grow from 2 to 3 to offset with reduced consulting cost. 23 Stormwater Utility Capital Budget Summary 24 Maritime Appendix 2020 Preliminary Budget October 8th, 2020 Reductions from Zero-Based Approach Business What Totals in '000 Description MD Portfolio Management Travel/Training (1) Mainly reduction in Registration MD Portfolio Management Promotional Hosting (5) Removed Promo Hosting for FVO Centennial ($5K) budgeted in 2019 MD Portfolio Management General Expenses (21) Removed Salmon Bay Marina Office/Retail Miscellaneous Exp ($15K) budgeted in 2019 Cruise Professional Services (750) Reduction in design consultant services Cruise Travel/Lodging (6) Reduction in airfare, lodging, and employee food & beverage Cruise Promotional Expenses (5) Consolidated with Maritime Marketing efforts Cruise Advertising (10) Consolidated with Maritime Marketing efforts Maritime Marketing Computer acquistion (1) Reduction in computer expenses based on need in 2020 Maritime Marketing Other contracted services (40) Reductions in large format graphics and printing for Cruise materials Maritime Marketing Advertising (85) Reduction based on need and ability to spend in 2020 Maritime Operations Furnitures (7) Reduction of unneccessary purchasing RecBoating Recycling (14) Reduction of expenses in line with actuals RecBoating Seasonal Hiring (13) Reduction of operating expenses Note: There are additional reductions outside of this list, including service groups 26 Marine Maintenance $ in 000s 2017 Actual 2018 Actual 2019 Budget 2019 Forecast 2020 Budget Budget to Budget Forecast to Budget Operating Exp* 18,873 20,630 19,740 21,485 21,755 2,015 10.2% 270 1.3% Expense Project 1,323 1,250 2,712 1,316 2,577 (136) -5.0% 1,261 95.8% Total 20,196 21,880 22,452 22,801 24,331 1,879 8.4% 1,531 6.7% Maintenance Breakdown Corp NWSA Assumes 4% increase in labor cost SWU Project Management and Facilities Management Teams fully staffed Maritime Increase of 0.5 FTEs and conversion of 24 long-term Emergency Hires Economic Development Maintenance Overhead *Operating Expense net of revenue from reimbursable work 27 Net Increase of 5.5 FTE 2019 Budget (excluding Stormwater Utility) 169.5 2020 Budget 2019 Changes Staff Addition/Subraction: Transfer Capital 1) Transfer from Seaport Project Management 20.0 1) Project Manager 2 - Seaport PM 1.0 2) Transferred from Security 2.0 2) Capital Project Scheduler - Seaport PM 1.0 3) Unfilled purchasing specialist (Maintenance) -1.0 3) Administrative Assistant 1.0 Total Capital 3.0 Adjusted 2019 190.5 Maintenance 1) Conversion of existing craft/labor emergency hires 24.0 1) Convert 0.5 Facilities Maintenance Manager to full FTE 0.5 Adjusted 2020 Baseline 214.5 2) New administrative assistant - Maintenance 1.0 3) Removal of Senior Fleet Manager Position Summary -1.0 Total Maintenance 0.5 Maritime Direct 8.5 new positions 1) Maritime Continuous Process Improvement Specialist 1.0 2) Maritime Facility Planner 1.0 3 eliminated positions 3) Sr. Manager Planning 1.0 4) Cruise Services Specialist 1.0 Net change: 5.5 5) Removal of vacant Customer Service Supervisor -1.0 6) Removal of vacant Harbor Accounting Business Analyst -1.0 Total Maritime Direct 2.0 Conversion of 24 existing Marine Net Change 5.5 Proposed 2020 Budget 220.0 Maintenance emergency hires to FTE 28
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