9b EDD Perliminary Budget Briefing Presentation
Item No. 9b_supp_2 Economic Development Division Meeting Date: October 8, 2019 2020 Preliminary Budget October 8 2020 Economic Development Division Budget Timeline 2020 Business Budget Budget Briefing Division Budget First Reading &First Reading & 2nd2nd Reading & Reading & Plan and CIP Business PlanDevelopment Briefing Public HearingPublic Hearing Final Passage of Final Passage of Development for 2019 Budget 2019 Budget BriefingBriefing for 2019 Budget 2019 Budget (May/June) (July 10) (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 SWOT Strategies and Objectives (Long Range Plans) 3 5 Years Implementation 2020 Business Plan 2020 Budget Annual 2020 Performance Plans 3 Economic Development Key 2020 Budget Drivers Revenue Down $615K/3.1%: Modest increases in existing leases. $809K reduction In Conference Centers. Expense Down $1,385K/4.5% Better alignment of budgeted initiatives with spending. Favorable allocations from shared facilities and Central Services. Capital Construction of Bell Harbor Conference Center. Completing Design process for T91 light industrial buildings. 4 EDD P&L Summary Incr (Decr) 2018 2018 2019 2019 2020 Budget Variance Budget to Forecast $ in 000's Actual Budget Budget Forecast Budget $ % *Portion of 2020 EDD initiatives assigned to tax levy: Revenue 9,002 8,985 8,930 8,930 9,124 194 2% Conf & Event Centers 11,703 9,537 10,795 10,795 9,985 (810) -7% Total Revenue 20,705 18,522 19,725 19,725 19,110 (615) -3% Workforce Development Expenses Career Advancement Center - $300K Portfolio Management 3,571 3,778 4,128 3,894 4,008 (119) -3% Conf & Event Centers 9,889 8,465 9,374 9,374 8,902 (472) -5% Construction Trades - Pre - Apprentice - $650K P69 Facilities Expenses 235 289 225 225 195 (30) -13% Airport Career Pathways - $100K RE Dev & Planning 149 211 216 166 208 (8) -4% EconDev Expenses Other 785 1,227 1,262 1,062 932 (330) -26% Engagement and Strategic Plan - $200K Maintenance Expenses 3,915 3,055 4,071 3,571 3,789 (282) -7% Transportation / Bus Charters - $2.4K Maritime Expenses (Excl Maint) 179 344 389 265 439 50 13% Total EDD & Maritime Expenses 18,724 17,370 19,664 18,556 18,472 (1,191) -6% Maritime Secondary Education - $100K Diversity in Contracting 132 140 199 199 197 (2) -1% Youth Maritime Initiative - $150K Workforce Development 702 1,992 2,010 1,600 1,900 (110) -5% Tourism 1,408 1,460 1,521 1,521 1,536 15 1% EDD Grants 838 960 1,160 900 1,110 (50) -4% Other *Total EDD Initiatives 3,080 4,552 4,890 4,220 4,743 (146) -3% Environmental & Sustainability 281 398 395 338 323 (73) -18% EDD Partnership Grants - $960K CDD Expenses 283 329 235 247 341 106 45% Tourism Marketing Support Program - $200K Police Expenses (76) 158 228 220 0 (228) -100% Other Central Services 5,203 5,816 5,547 5,436 5,737 190 3% Port Gen Small Business Training - $50K Aviation Division 155 127 155 155 113 (42) -27% Maritime Innovation Initiatives $150K Total Central Services & Aviation 5,846 6,829 6,561 6,397 6,514 (47) -1% Envir Remed Liability 0 0 0 0 0 0 NA Total Expense 27,651 28,751 31,114 29,172 29,730 (1,385) -4.5% Total = $2,762K NOI Before Depreciation (6,946) (10,229) (11,389) (9,447) (10,620) 769 7% Depreciation 3,992 4,156 3,819 3,819 3,392 (427) -11% NOI After Depreciation (10,938) (14,385) (15,208) (13,266) (14,011) 1,196 8% 5 Economic Development Division Financial Trend In 000s 40,000 35,000 30,000 25,000 Depreciation 20,000 Program Expense Operating and Overhead Expense 15,000 Revenue 10,000 5,000 - 2014 2015 2016 2017 2018 2019 Forecast 2019 Budget 2020 Budget Conference & Event Center construction driving 2019/2020 revenue decline (and associated variable expense). Return to trend expected 2021 and beyond. 6 Portfolio Management Financial Trend in 000s Revenue down $617K/-3.1% Expense Depreciation Revenue Expenses down $1,042K/-4.0% 35,000 30,000 Opportunities: 25,000 T91 Development 20,000 15,000 Risks/Challenges: 10,000 Potential downturn in real 5,000 estate and the economy - Ongoing major projects on the 2016 2017 2018 Actual 2019 Forecast 2019 Budget 2020 Budget waterfront. Potential impact from newly built convention centers. Includes non-alliance & upland real-estate at Tsubota, T-91 (General), T-86, P-69, Bell Street Garage, Smith Cove Conference Center, Bell Harbor Conference Center, World Trade Center, Foreign Trade Zone, Pier 2, T-34, and T-102. 7 Real Estate Strategic Priorities Complete Bell Harbor Conference Center Modernization Redevelop Terminal 106 Redevelop CEM and Des Moines Creek West properties Continue Terminal 91 Uplands planning/development Move Maritime Innovation Center forward along with FT Gateway building Manage and Operate Pier 69 Headquarters Maintain 95% occupancy for Economic New Light Industrial Facilities at Des Moines Creek North Business Park in SeaTac. Over the past five years, the Port has partnered with private Development and Maritime properties developers to build/lease over 2.2 Million square feet of light industrial space near Sea-Tac international airport. 8 Real Estate Development 2020 Initiatives '20-'19 $ in 000's 2019 Budget 2020 Budget Change Appraisals 50 50 0 Central Waterfront wayfinding plan/ideas 0 50 50 Real Estate Strategic Plan/other consulting services 250 250 0 Total 300 350 50 9 Pier 69 Facilities 2020 Initiatives $ in 000's '20-'19 2019 Budget 2020 Budget Change P69 Shuttle 200 0 (200) Total 200 0 (200) 10 Diversity in Contracting Strategic Priorities 1. Increase WMBE contracting utilization results, especially for African American and Hispanic businesses 2. Advance community engagement and partnerships to support WMBE and DBE programs 3. Provide PortGen workshops/trainings to interested WMBE and DBE businesses 4. Implement communication and education programs to build external and internal support for WMBE utilization 5. Work with Public Sector partners to advance 2019 Port Annual WMBE Utilization Goal = 12.4% WMBE and DBE utilization 2019 WMBE Utilization (end of Q2) = 13.8% 11 Diversity in Contracting 2020 Initiatives $ in 000's '20-'19 2019 Budget 2020 Budget Change Construction Incubator 60 50 (10) Small Business Training 75 50 (25) Marketing/ Communication/Design Services 5 10 5 OMWBE Certification 15 15 0 WMBE Best Practice and Implementation 50 0 (50) Champion of Inclusion 10 10 0 Procurement Technical Assistance 15 15 0 Mentor Protege 0 80 80 Total 230 230 - 12 Tourism Strategic Priorities 1. Utilize Tourism Grant programs to increase the awareness of Washington state's unique visitor opportunities and attractions 2. Expand cruise and stay options within Washington state to enhance the cruise industry's economic impacts to the region 3. Conduct Familiarization tours (FAMS) for the travel media and travel trade to generate interest in King County and Washington state's tourism amenities and attractions 4. Partner with Visit Seattle and the Washington Tourism Association to leverage the Port's Spotlight Airport Advertising Program Highlights WA Destinations tourism investments and grant programs 13 Tourism 2020 Initiatives $ in 000's '20-'19 2019 Budget 2020 Budget Change Int. Representation & Work (Australia/China) 98 98 0 Adv/Marketing (WeChat, FT, Cruise) 133 133 0 Europe Representation & VS Sponsorship 275 275 0 Tourism Grants 200 200 0 London Trvl Show / Tourism Development 39 39 0 Fam Tours / New Service Inaugural Activity 83 83 0 Total 828 828 - 14 ED and Maritime Innovation Partnerships Strategic Priorities 1. Implement 2020 Economic Development Grant Program in partnership with King County Cities 2. Support Greater Seattle Partners' regional economic development initiatives 3. Support Duwamish Community Equity Partners' economic development initiatives 4. Support maritime innovation initiatives to discover, promote and help advance promising maritime ventures and startups Implement pilot maritime accelerator program to support promising maritime startups Build partnerships with other maritime innovation centers/programs Work across the Port to advance maritime ED Grant program touches cities across King County innovation 15 EDD Admin 2020 Initiatives Economic Development Admin '20-'19 $ in 000's 2019 Budget 2020 Budget Change ED Partnership Grants 960 960 0 Workforce Dev. Pilot Program (Career Advancement Center) 200 0 (200) Membership: Economic Dev Council 100 0 (100) Membership: Trade Dev Alliance 93 0 (93) Membership: Greater Seattle Partners 0 150 150 Promotional Hosting/Sponsorships 60 60 0 Maritime Innovation Initiatives 0 150 150 Opportunity Fund 500 350 (150) Total 1,913 1,670 (243) 16 Workforce Development Strategic Priorities 1. Support new Port Commission workforce policy 2. Sustain construction industry training for disadvantaged workers 3. Support workers and employers at SeaTac International airport by operating Airport Employment Center and Career Support Center 4. Implement aviation career pathway pilot training initiative 5. Sustain Maritime Youth Collaborative (MYC) & Aviation career connected learning initiatives Ironworker's Preapprenticeship Graduates 17 Workforce Development 2020 Initiatives $ in 000's '20-'19 2019 Budget 2020 Budget Change Contracted Initiatives Airport Employment Center 500 500 0 Airport Employment Center and Classroom 350 419 69 Employment Continuity Pool Program 60 60 0 Construction Trades - Regional Partnership Services, Pre-Ap 710 650 (60) Maritime (Youth Collaborative) 250 150 (100) Career Advancement Center (Originally WFD Pilot Program) 200 300 100 Airport Career Pathways Implementation 250 100 (150) Total Contracted Initiatives 2,070 2,079 9 Developing Initiatives Engagement and Strategic Plan 0 200 200 Maritime Secondary Education 0 100 100 K-12 Career Connected Learning 400 0 (400) Total Developing Initiatives 400 0 300 (100) Workforce Development Support 28 28 0 Total Workforce Development 2,498 2,407 (91) 18 Net Increase of 0.6 FTE 2019 Budget 36.0 2019 Changes Disadvantaged Business Enterprise Specialist 1.0 Diversity in Contracting Outreach & Training Manager 1.0 P69 Front Desk Security (Transferred Departments) (1.0) Adjusted 2019 37.0 2020 Budget Staff Additions (Subtractions): Real Estate Analyst 0.6 Net Change 2020 0.6 Proposed 2020 Budget 37.6 19 Economic Development Division Commission Briefing - Appendix 2020 Preliminary Budget October 8, 2019 Reductions from Zero-Based Approach Business What Totals in '000 Description Diversity in Contracting Equipment Expense (2) Computer and Telephone expense for AOB office and staff Diversity in Contracting Travel/Training (5) Mainly reduction in Registration Diversity in Contracting Outside Services (11) Decrease in Outside Temp Clearical/Admin ($10K) and Other Contracted Services Trade Show Banner ($2K) Diversity in Contracting Initiatives (10) Construction Incubator Diversity in Contracting Initiatives (25) Small Business Training Diversity in Contracting Initiatives (50) WMBE Best Practice and Implementation Workforce Development Equipment Expense (4) Removed Laptop Replacment ($2K), Equipment Rental and A/V for Events ($2K) Workforce Development Travel/Training (8) Reductions in Registration ($4K), Local Transportation ($2K), and Air Fare ($2K) Workforce Development Other O&M (4) Burning Glass subscription Workforce Development Initiatives (250) Airport Career Pathways Implementation Workforce Development Initiatives (100) Youth Maritime Initiative Workforce Development Initiatives (60) Construction Trades - Regional Partnership Services, Pre-Ap Workforce Development Initiatives (400) K-12 Career Connected Learning ED Portfolio Management Equipment (25) Decreased in capital reserve ED Portfolio Management General Expenses (457) BHICC's 3rd Party Management Op Exp and their Management Fee ED Portfolio Management Initiatives (163) T-102 Tenant Improvements ED Portfolio Management Initiatives (110) T-102 Broker Fees ED Portfolio Management Initiatives (51) WTCW Broker Fees ED Portfolio Management Initiatives (69) WTCW Tenant Improvements EDD Administration Travel/Training (15) Reduction in line with historic actuals Total (1,819) Note: There are additional reductions outside of this list, including service groups 21
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