The Study Session meeting scheduled for 2019-10-08 at Pier 69

Transcript

The Study Session meeting scheduled for 2019-10-08 at Pier 69

Let's go ahead and get started
Good morning
This is Commission President Stephanie Bowman calling to order the special meeting of October 8th
Twenty nineteen the time is 9:20 with me
We are meeting the commission chambers at Pier 69 present
With me today are commissioners Caulkins, Gregoire, Fellowmen and Steinbruck
This meeting is being digitally recorded and may be viewed or heard at any time on the port's Web site and may be rebroadcast by King County Television
Please join me in standing for the Pledge of Allegiance
To the republic for which it stands a nation under God, indivisible, with liberty and justice for all
All right, thank you, I'm in turnover's Steve
We'll do a focus on our budgets this morning
Morning, commissioners
Today we continue a series of presentations on a proposed 2020 budget
At the last meeting, we presented the proposed Central Services Budget
And this morning we'll be presenting the aviation division operating and capital budgets, along with the Maritime and Economic Development Division's capital investment plan as well
After this presentation, during this afternoon's regular session, we will present the Maritime and Economic Development Division's operating budgets
As I mentioned during the last meeting, the proposed 2020 budget is aligned with the port's strategies, is fiscally responsible, and it is responsive to the region's needs
The OP operating but division budgets that you'll be reviewing today are driven by a focus on sustainability
Innovation
Customer service
Safety and security
Organizational effectiveness and equity
The capital investment plan with some which amounts to more than 3 billion dollars over the next five years, continues our commitment to investing in regional infrastructure, to grow our transportation gateways, create jobs and stimulate economic development
Finally, you'll see in this morning's CFP presentations implementation of our new financial policy on sea IP reserves, using a common terminology and elimination of the strategic reserve that has been in place for the past several years
And this is at the commission's request for asking us to review this
So you'll see the results of that in practice as we present the budget this morning
We will also be providing a briefing on our updated financial policies during this afternoon's regular session as well
And with that, I don't want to delay
I'm going to turn it over to the managing director of the airport, Lance Little, in Borgen Anderson
Thank you, Steve
Good morning, commissioners commissioners' this morning we'll be presenting the 2020 preliminary budget
I see said we'll go both over the operation as well
As well as the capital budget this morning, we can go into a lot of details or we can keep it at high levels as you would like
One of the things you to except one things I've always said is that for us, the budget is a means to an end
It is not the end state
And so it's very important that we understand the context in which the budget has been done
You guys, I've seen this side before
Just spend one minute just going back through it
We have everything again emanates from the center agenda
We have gone through a vision in session
We we have depicted exactly what we want the airport to look like five, 10, 15 years down the road
We have established specific metrics, smart goals, long term goals
We also understand that we do not operate within a vacuum right there
There are forces out there that can prevent us from achieving our goals
And so that's why we go through a SWOT analysis
We look at our internal strengths and weaknesses
We look at our external operate opportunities and threats that exist
The goals that we have set are are really ambitious
So we do a gap analysis
We look at where we are now versus where we're trying to get to
What we come up with are the strategies that we need to eliminate those gaps
So those are the strategies that we that we have established
That is a strategic part of the process for us
Then we have the implementation part
That's where the rubber meets the road
That's where we actually do our budget
Sorry, our business plan
So the business plan is all the activities that we're going to get done in a aparticular year in order to realize our objectives, realize or goals, business plan activities have costs associated with it, has equipment that's required to to get the activities done
And we need people
Right
So those three components actually are what we use to develop our budget
So that's all we get to the budget process and we take it all the way down to our performance reviews
So the activities in our business plan are actually on our performance plans for all of four team members
And so that's all we get alignment where everybody in the organization, their performance plan is actually aligned with the business plan and the budget and aligned with the strategy and the mission and the vision of the organization
So that, in a nutshell, is the exhaustive budgeting process that we go through next night bargain
So these are some of the top priorities that we have in the organization
They're in no specific order
Of course, security is extremely important to us
The bad guys only need to get it right once we have to get it right all the time
And so zero discrepancy, zero breaches is extremely important to a safety is also important
We want to make sure 100 percent to our employees
And when we say our employees, we're not just talking about port employees, everybody who works at the airport
Hundred percent of our employees go home safely everyday
Innovation is the answer
Can I just interview you first? I'm just here
I know a few of us have hard copies of this to the other commissioners that don't have them need them
The screen is not displaying the full o levels
Ok
Just want to make sure that we're all focused on this
OK, great
OK
Terrific
Thank you
Sorry
Continue innovation
Innovation is extremely important to us
Commission is, I think with the goals that we have, with the continued growth, with a limitation and the restriction that we have, we have to basically innovate our way onto the infinite that we're trying to get to
And I see Dave Wilson here who leads our Innovations program, working very closely with the rest of the port
We have we've really come up with some great ideas to achieve, to achieve our goals and our customer service
What you'll see during in the presentation, we're going to probably hit the 4 percent growth target this year and next year we're going to see a 3 percent growth
So the airport continues to grow
And again, even with the with the the limited footprint that we have and on the restriction then challenges that we have, we are still trying to maintain a level of service, what we call optimal
And so the budget actually that bargain is going to be present in is geared towards keeping that level of service at the optimum level
Community engagement is extremely important to us
You will see
Excuse me
Yes
I mean, I understand optimal is sort of within the constraints of where we are
Right
So I think when you say maintain optimal, what you showed previously was that our goal was to get to something above where we are
So the term optimal is really relative to where we are in the situation
Yeah
Where we're well, optimize what was previously called level of service
See there? That level of service
ABC, D-N.D and CS, where we're trying to get to the level of service you see are optimal is where we're trying to get to the the there's some facilities in the airport that are actually functioning at that level
If you go to the north satellite as an example, that would be an example
The new section of the north satellite, that would be an example of a facility that that level of service
See if you go to most other places in the airport, we're not there yet
Term concourse A during maybe the non-peak period, it would be at level of services
So the overall objective is to get to a level of service see throughout the entire airport
So when the naht when they internation on arrival facility is completed, that will be at a level of service
And that's measured from like airport drive
Right
There are several metrics that's there at a space that you have between individual, the time that it takes to get through the security checkpoint, the time that it will take to get through the international arrivals process
There are various different metrics that you use to to determine what level of he is
But doesn't it start at airport drive? Yeah
So that the time that it takes to get up to the driver and get through the occur to check what would be a part of that metric as well
But it's not just on the line side is in the terminal and it's on the other side
I just want the public to understand that this is obviously where they feel the and it's gonna take us a while to get there
And as I said, we will have some facilities that are our right level of service see before others
Again, the Nahed satellite was probably at a E-R somewhere
A law? No, it's
Once we have done the construction is we consider that a level of services' or FISA is definitely nowhere near our level of service right now
But once we are completed that next year, then it will be at that level of service
You know, we should take this up on a level I know as it's my eighth or seventh, I don't know, budget cycle
One thing I think is missing when we do a presentation like this
I go back your slide and you talk about doing, as I'll call it, the strengths, weaknesses, opportunities, threats, the SWOT analysis every five to 10 years, given the growth that's going on at the airport
The reality is we're doing a SWOT analysis continuously
I do think having that as a conversation starter when we talk about the budget is the best way to frame not just for commissioners, but for the public
What we're talking about
I look at your strategic priorities and I like this sounds very positive
I'm looking at MR phelan's question, which is what's the problem we're trying to solve? What's the pressing threat in terms of whether it's congestion or throughput? I think we have to be honest when we think about the budget, that it's not just our vision board, which sounds very happy
It is how we're doing, a constant SWOT analysis
Given the way that we are fiscally responsible with the limited resources to manage a booming airport
So I looked at these materials
I admit that I think they were career to my house last night, looked at these materials in the middle of the night, but I said to myself, we got to be honest, as we have this budget conversation, I don't want to be unhappy talk
Economically, that's where we are as a region
But that's not where we are in terms of operating a booming airport
And so I want to make sure we would be candidates
We talked with schematics
Yeah
So just this one one correction, commissioner, we don't do the SWOT analysis every 5 to 10 years
The vision is for five to 10 years
We actually review or a SWOT analysis every year
In fact, when we presented the last time on the budget, we actually went through the strengths, weaknesses, opportunities and threats
If you'll recall, we went through all of them
So we actually review the SWOT every year
It was the June presentation
Yeah
So, yeah, if the arrow actually points to the vision goals, the five to 10 years, that's what five to ten year references is the vision
Yeah, well it's we are it's part of it's part of the whole strategic planning process
So we do a extensive SWOT analysis, but we've reviewed every year
Yeah
And I think that's a great view when we talk about
But then you continuously doing that's part of operations and continually doing a SWOT analysis based on information that comes in in situations that develop
So it's nonstop
And as Morgan said, we've presented on it in June, we can present it again
So you can see the specifics there
Yeah
You have very good point
Very good point
So I guess in terms of the prioritization, I mean, I know we're trying to lift the whole boat, so to speak, but it seems a prioritization for budget like there are known choke points that will significantly improve like that component to customer service
And I just wondering, I understand our obligation as to the overall airport, but if you could help us identify those things, that would be significant alleviation for congestion with priority that would help in terms of understanding your broad perspective on the airport's challenges for the public
Yeah
And if I guess it's probably you'll see in the appendix or we can go through it in detail when we go through the budget
They are what we call you call them choke points
We call them hotspots throughout the airport, for example, that if I was during peak is a major hotspot
The curb during certain times of the day, that's a major hotspot
The security checkpoint always is a major hotspot where the chances are right there
The Oberoi left wings during certain time hotspot gone transition
So I've identified all of those hotspots
That's one of the reason last year on year before last, we asked for and got commission approval to have on call contractors that could actually help us to manage those hotspots
There are some longer term projects such as the roadway realignment exit exit
That will resolve some of those issues
But in the meantime, we have to use operational means and we have to use people to actually alleviate some of those probleMS So that's in the budget and you'll see some other requests
I just ask that you highlight those
Okay
And I'll do that as we go through it
Yeah, we'll do that
Thank you, sir
Lindesay, just one thing and then I know we need to move on because we have a lot of slides to get through
But I'd appreciate
I didn't see in the presentation or even in the appendix where we are with getting to these goals
And so, for example, where are we with a askew score? The part 1 50, those sorts of things kind of a scorecard
And I appreciate the goal
But where are we year to year in trying to reach those measurements? That would be really helpful information
Yeah
And we actually have that
We do our quarterly review at the airport so we can provide that information are we can do a special presentation
This was really focused on the 2020 developing the 2020 budget
But we can provide that as we're allocating resources to what? And does that keep us closer to the goals that you've established? Okay
We can do that
These are the things we're trying
I guess I'm going to
Steve, we can't separate these
I'm sorry if you think we've got the airport scorecard somewhere tucked into this brain
I don't have it to look at and compare it to the budgets or the SWOT analysis
We've got to think about it when we're doing the budgets with those strategic elements in mind
Yeah, good idea is that there in the budget cycle we process for our presentation, we actually do our presentation and update on where we are with the goals
That would be a good touch and we can do that
All right, slide five just before slide five is a dead horse, I guess
Yes, I'm sorry
Sorry
Just a few things I wanted to highlight that you're going to see in the presentation that bargain you're going to see that we have a significant increase in our operating revenues, which is very important
But also even more important, you're just going to see a moderate increase in our operating expenses, which is very good
The team read it at a great job in trying to keep this budget as lean as possible with that little fluff as possible
You're going to see request for FTD
The number may seem significant, but you'll see that it's in line with what we requested
What we say we would request over the last three years as well
You're going to see some innovation and some risk taken as part of this budget with vacants
In fact, Rick Santorum
Bachmann is going to talk about that
And on the capital budget side, the CHP, currently there are some major projects that's under review, that's in preliminary phases
That's not in the CHP as well
And these are going to be some significant project where they're not in the CHP currently
So with that, how they handle it
I think one of the large areas of savings seems to be in the environmental remediation liability expense at the minus 81 percent situation
And I just see in the list here that the work we do on habitat and storm water are not listed amongst those things
So I'm just wondering
That's a great savings
I'm just looking at what expense we're going to want to touch on that
Sure
OK
Why don't I turn to the overall summary and I'll address that question as I move down through the slide
I'll just say that, as Lance indicated, I'm very pleased to present this 2020 budget
And I would say that we are really planning for some favorable results and I'll try to articulate them here on the first slide and then subsequent slides will go into the details
So starting with revenues, we are planning for revenues to be up almost 10 percent next year and costs growing at only 3.3 percent
The revenue side just to show more detail on this, but normally we try not to grow the aeronautical revenue
That means our line costs are going up 9.9 percent
Is there any of that? Only 4.7 percent is actually rate base revenues
The other half is the reduction in revenue sharing and also the increase in the commercial area, which is a separate cost center
So the the airline revenue is forgive me
Let's just pretend for a second that we don't all know what revenue sharing is because that helps explain
All right
Revenue sharing is something in our airline lease agreement whereby we would credit the airlines with 50 percent excuse me, 50 percent in twenty nineteen or twenty nineteen
It was 20 percent of the debt service coverage above one hundred and twenty five percent
So that in this agreement it was 40 percent in twenty eighteen
Twenty percent in nineteen
And it's zero percent in 2020 and 21 in 2022
That was being phased out in this agreement
We'll see the implications of that
Is it would you call it like a rebate
Because I mean their their businesses are generating the revenues, of course, at least part of them
They're not on the aviation side and we're giving some of it back
I've always had a heart
It includes ADR parking
Oh, yeah
Most of their revenue is all the non aeronautical side
It's based on all of the revenue
It's all revenue
But most of what just generated is an honor
Could you just for the benefit of the public that may be watching, why we why we have this revenue sharing when we have billions of dollars of potential added costs of construction, capital, etc.
I'll say in the previous agreement, which ran from 2013 to 2017, the revenue share was 50 percent and it was that every year and that was just a negotiated agreement
The at the time it seemed like the prudent thing to do because we were attempting to manage down the cost per employment and that was one of the tools we had at our disposal to do that, as at least some of you will remember when we got into the more recent lease agreement negotiations
One of the things we wanted to do was position ourselves to be able to afford the capital program that we knew was coming
And so that's why in this agreement it was being phased out for the very reasons you cite
We want to retain that cash to help us fund the future capital program
And we'll we'll see how big that capital program is getting here in this subsequent slides
And if I want to, though
So it's that's entirely understandable
But why did we have it in the first place as what I don't understand
I think you have to do the calculation as CPE to
Yeah, it's
Yeah
I mean, if I wasn't here at the time, but at other airports, because of the recession and the downturn and the struggles that the airlines were going through, there were several airports that actually negotiated revenue sharing agreements with the airlines
The airlines are booming now
So we don't think we need a matric
That's the reason why
But I know there that's what happened at other airports and maybe they did
My liberal arts version, if that's for one second, is, you know, the cost per employment is the right way to think about the cost it takes to a traveler to travel
Right
I mean, there is a correlation, if not causation
I'm going to go with that
But that's the control that we have
So if you wanna make sure you have service during an economic recession at an airport so that our community can go visit family or travel for business, you need to think that was one of the levers
But then also the cost per employment
Without that, the cost to fly might be prohibitive for those middle class or lower economic scale
So those are both the levers
But I think it was appropriate and really sound
And the team gets your credit to say, OK, in an economic boom, let's be thinking about where that where those dollars are and that we're thinking about the overall cost of of operating the airport
But I think that's the tradeoff
If that's that we need to be thinking about it
As you manage that at this point, we're at the right policy in terms of zero percent revenue sharing
I just think if future slides, you could show that it's a dynamic thing depending on where the airport is in its growth and relative to other airports
Right
It's when the revenues needs change over time
And so I think your future slides help explain the dynamic, why during those cycles it changes
I think MR Caulkins is trying to jump in here
Did you know? Ok, onto the second line item non aired, non aeronautical revenues up 9.1 percent
I'll talk about this a little more, but this is really important because this is the cash that's going to pay for much of our improvements going forward on the operating cost side
We look at the airport direct cost, the environmental remediation liability expense and charges from other divisions
On a net basis, we're growing at 3.3 percent
And as you pointed out, the environmental remediation liability expense is going down
Let me so let me tell you what that is
That is primarily the costs associated with asbestos and dirty dirt that we have at the north satellite in the south satellite projects
And 20 19 was a peak peak year for the encumbrance of those costs
And so as we go into 2020 and every year we look at what projects are out there, what costs are likely to be triggered that we have to recognize
And so it is really something we end up having to do because of the projects we're doing
And so this is really a reflection of the fact that we're getting back to a a down year
You can look at that line item
Since 2017, it was eight point eight
It was four
It was six spiked up and now it's dropping back down
It all has to do with the nature of the projects we're doing at a given point in time
North satellite and s satellite, both very old facilities
You get into them, you have asbestos
It's very expensive to remediate
And that's where we have to recognize that liability
I'm just concerned with the with the if we finally get to the fire station that there were areas in there where we are practicing foam throwing, I believe that there may be some maybe less than unexpected challenges about that
There may be
Keep going
All right, so dropping down with revenues are growing almost 10 percent in costs at 3.3 percent
The net result is a 19 percent growth in net operating income
When we look at some of the key measures down below cost print placement growing to $13 dollars, 93 cents up from our forecast for this year of 13 07
You know, this is pretty much in line with our expectations
When we did the bond issue, we said we'd have S.P
of thirteen ninety four for 2020
So we're very much in line with the forecast
And and when we look at non aeronautical net operating income, this is a subset of our overall net operating income
But again, it shows that where we're growing revenues faster than the expenses on the non aeronautical side, passenger growth or what's listed here is in plain passenger growth, which is of course half of our total passengers
It shows 5 percent
This is a budget to budget comparison
We're actually planning to grow 3 percent next year over our forecast this year, which is slightly higher than the budget from a capital budget standpoint
We're proposing to spend five hundred and seventy million
This is down a little bit from this year, but still represents a very robust level of spending and reflects the fact that we will be completing the international arrivals facility moving full into Phase 2 of the north north satellite and a number of other projects which we'll see
So overall, yeah
Yeah
On the capital side, that that five hundred and seventy million reflects mostly projects that are already underway or so they include new projects yet to be built
It includes some new projects that have not yet been authorized
Most of the new projects won't cede much in the way of spending in 2020, but we will highlight those in a later slide
So my my question regarding the not yet authorized capital projects, if you are including a place holder for a commission proposed restoration of the percent for art to 1 percent
In your future capital projects, I would say each project that comes forward will have that included in its budget
New each new project, correct
OK, that's all I have
Thank you
Quick question for you about that yet, but that's obviously in the works and they're under review
So
Right
I think the difference between a half a percent and a 1 percent when we're looking at this rough level of early cost estimates, that's that's doable if you choose to approve that
So a couple of weeks ago, we had the news that Thomas Cook was closing precipitously, which includes their seasonal flights, and here at Sea-Tac, we're also seeing reports now that there's a couple of other airlines that are on the cusp and that in the event of a recession, which I think is becoming increasingly likely, those airlines are probably going to tip into bankruptcy or closure
Have we anticipate in our aeronautical revenues any
Concerns around certain rounds going away and then secondarily in conversation before this meeting, we talked about the non-canonical revenue side and why you're so bullish
We're coming out of a year in which we're at about 3 percent growth, we're forecasting 9 percent growth
If you could explain a bit why we're bullish on that number
Well, let me start and then work on this
I've spoken to Cosway from our air service development team on it
We're still doing the analysis
The preliminary feedback that we have right now is that with Thomas Cook, it's not him
There were seasonal condor is still here
They're gonna still continue service
The other airlines that you mentioned that are in jeopardy, they're all in Europe
We don't see any of the mainline airlines here in the in the USA being threatened right now
So right now, we don't see a significant impact
Now, if there is a recession, you know, we don't know everything is at play
But for now, with Thomas Cook out, we don't see it as a as a major impact on our revenues, primarily, again, because there were seasonal
And the fact that Condor got a bailout from the German government, they're still going to be flying as well
I'm sure, you know, I'll give a quick summary then of the non aeronautical revenues and we'll we'll see we'll see some of the details later
But primarily our largest revenue source is public parking and we implemented a parking rate increase in July of this year
So we're going to see the full effect of that next year
And our experience has been that that does result in a significant increase of revenue
There may be some fall off in demand, but we expect a lot of that to drop to the bottom line
The other thing that's going on is we are we're starting to see the very solid results from the new airport dining and retail outlets that have an opening before we are kind of looking at forecasts in their original performance
Now we're starting to see some of the results
And we we still we will
We do anticipate seeing some some strong revenue growth there
And the third area is we continue to see growth in the transportation network companies offsetting some reductions in taxi revenue
So that's that's been a growth area for us as well
The port lounges has been very strong up into this point
We see that flattening out a little bit next year
But, you know, overall, it's we expect to see some some good solid growth next year
And so we're not forecasting a recession next year
If if something like that happens, I would expect to see a reduction in summer in certain areas and we would probably reduce all of our expenditures as well
And we try to manage to that bottom line
All right
Are the AVR revenues, assuming that we're going to be doing this opportunity to dine at the airport, even though you're not flying? Getting through security? I guess I'm just I've always wondered about this proposed idea
Given the challenges we have of getting flyers through security
And so I'm just wanting whether this new source of revenue is baked into this, the numbers
And so we did the pilot and then the pilot
We allowed 50 people per day to go through, I think after that way to increase it to
I think a hundred
The plan is to to relook at starting that
I think in November
We're not sure exactly how many people we're going to allow, but the numbers are really small at this point
The purpose was of doing this was not driven by revenues
It was more driven by getting the community actually involved in the airport and trying to get back to pre 9/11 mode of operation where people could actually come to the airport with their loved one, go through and say hi and buy our greet them at the gate
That's what drives it
If we make revenues from it, that's kind of gravy
But it wasn't a revenue driven initiative
It was more a community getting the community to be a part of the airport initiative
Ok
This slide is what we call the the waterfall, if you will
It really is a visual representation of the of the process we go through in developing the budget
And it really reflects how we've attempted to implement Steve's guidance to really have a zero base budget mentality as we go through our budget process
So this this page here focuses on just the the airport costs are our total costs obviously include costs that come in from other divisions
But this reflects what we were looking at as we went through our budget process
So the top half really represents how we look at our existing budget and our existing expenditures and how we manage that
And so the first item we read we do is we remove everything that is a non-recurring recurring item from the twenty nineteen budget and that totaled $22 million
Then the environmental remediation liability costs
They get pulled out because that would get starting from ground zero
The following year we had a transfer mid-year
The aviation project management crew has joined the airport from a division roll up
So that's now included
And then we had $9.3 million of cost reductions and savings
And I'll show in a subsequent slide how we've actually eliminated some FTE this year and that that produce savings of 1.8 million
Then, as Lance had indicated, and as Dan Thomas it indicated a couple weeks ago, we have also implemented a payroll vacancy factor and that is 3 percent and that amounts to 4.3 million dollars for the aviation budget
So those are some of the major cost reductions and savings
Plus, we've gone through every department budget
Look for areas where we haven't been spending the money and we pulled that out
Then we have some charges to capital and then we have some cost increases in most of this, 20 million in cost increases in payroll cost increases, the total over $12 million bringing in the project management group and their and their costs was another $3 million or so
So, you know, before we even started to make decisions on new items, that's where we were at the middle there, 235 million at, which is down significantly from the twenty nineteen budget of 259
So then we go into our budget again
Do you mind just helping me intellectually rationalize? I think a lot of these reflect the change in capital management
That makes sense that I was on your previous slide
I was looking at total charges from other divisions growing by 9.3 percent, which I would have expected to go down given the change in structure around capital
Maybe I'm sort of like apples and oranges
Good point
Slide five
We have restated his aviation project management group was in the airport historically
This slide shows it as a sort of a process where it gets added
And so that's why the numbers don't quite match up
Exactly
That's helpful to you
Yep
Yep
Yep
OK
All right
So then when we get into our budget process
I'm sorry
Can you just tell me what the acronym or the abbreviation M-80 Pastor vls is that materials? Sorry
Where are we? Regulated mediation liability? No
E r l environmental environmental remediation liability
So that's that's regulated materials primarily
Yeah
Just
If there are acronyms and if I can't understand them, I imagine the public can't, so that's what I was assuming
But OK
Sorry, it's just an abbreviation
Ok, so down below reflects the decision making process
Towards the end of the budget process, we were evaluating new iteMS And we've we've segregated those again between the non-recurring and the recurring
And as I'll show on a subsequent slide, we've got proposed additions to baseline of seven point nine million and proposed non-recurring editions of 23 million
It's really breaking things out that way
You know, my my approach to managing the long term growth in costs is to really focus on the baseline costs of the non-recurring items or things we put in the budget
One year we do them, we pull them out
So that's that's how we've gone through this process
And now show you that the summary of MR Samak's get a question or answer
And this is this is related to your summary
So you're okay
I don't expect an immediate answer, but
I think everybody's aware of the kind of exponential growth at the airport, and it doesn't necessarily reassure travelers that, you know, that this growth, even though it has all of its benefits for the economy and jobs and people continue to frequently express their frustrations anecdotally with their travel experience at Sea-Tac
And so from that standpoint, it would be good to know more precisely what we are doing both operationally and with capital projects in the near term
Not the same projects in the future, but in this five year CE IP and currently, how much are we actually out spending in projects and operational improvements that improve level of service, traveler comfort and safety? And that could be anything from the baggage optimization to improvements in the central terminal to new furniture, to wayfinding accessibility improvements, those kinds of things
I think it would be really good to have some clarity around that so that where we can tell the story a little better as to how we're responding, acknowledging the challenges of airport facility was built for almost half of what we currently are are managing in terms of passenger throughput
And I would just say I know that many of those items are covered in the appendix is where you and I
This is the first time that I saw it broken out that way where that said, there's still several policy issues that I hope as we continue on that we can address
One thing is obviously that I think Commissioner Steinbruck might be your friend as well as hard standing and the issue that we're having around that
And so as we go through the budget, we get a little bit deeper
Love to understand some really specific challenges and how this budget would address those
I know you've have quite a bit in the appendix and it's it's not always entirely clear or self-evident what what projects and operational improvements actually are serving those goals to to somebody who might be interested or and for us to be able to communicate more effectively
So what I'm looking for is a list and maybe you can say everything we're doing is working toward those goals, obviously in total, but specific projects that we can refer to and particularly the central terminal, because there's I think, a misperception out there that we're not doing anything to improve our existing facilities, and that's just flat out wrong
You're right
There's a whole lot we're doing and we can we can hover
Commission wants to do it
We can actually provide that information
Well, that's part of the budget
Our special session
And we we can do that
But that was my point up front about chokepoints
I want actually more than just the laundry list, but the prioritization that you see as being the most important for the investment to overcome, what you see are the primary spots to make those in the context of all the other things that you're doing
Ok
Well, when we get to the capital budget slides, we'll try to come back to that and see if we don't address at least part of your question
OK
So where are we here? So this slide really represents our overall budget requests
You can see at the very bottom we started last summer with one hundred and nineteen budget requests totaling almost $48 million
Where we at what we're included in that would have been a one hundred and nineteen FTD
What we're actually proposing now is one hundred and sixty four iteMS Fifty six point five FTD and a total of $31 million
So one way of looking at that is we're proposing to approve sixty five percent of what was originally approved and 40 percent 47 percent of the FTE that were originally approved
Just a quick question, Varga, and thank you again
We're called upon to defend these increases in F-D and how they're contributing to improvements in service and experience
I
It's my understanding from what you said that we've gone through a fairly stringent scrubbing and lean process in identifying efficiencies in our our labor at the airport
Could you elaborate on that a little bit as to how you have how this number has been determined in terms of the increase in FTE? I said what I'd like to do is pick that up on the next slide when we talk about FTD, if I could
I'll just I'll try to be really brief here
But what I wanted to do with this slide is just show all of our budget requests were organized by the strategic priorities that Lance laid out at the outset
And you can see both in the number of the requests, the number of FTD associated with those and whether they've broken up between baseline and non-recurring
You see the dollar
So the big items where we're focusing a lot of efforts are in the facility planning and and asset management in capital projects
That's the biggest area
Secondary would be customer service and then third would be environment and sustainability
So those are the areas where we're putting the most resources or most new resources for for 2020
You know, one of the things that we have done on purpose this year is that we have forced ourselves to be very transparent about the we've achieved some savings and now we want to add something back in
Well, in prior years, some of this reallocation sort of happened and you wouldn't necessarily see it
We purposely brought those out
So you can see all the decisions we're making where we stop spending money over here and now we're proposing to spend it here
So that's why there's a lot more budget requests this year
And again, that reflects our efforts to to deliver on what Steve Metric had guided us to do
All right, so now we're going to take a look at FTD
And I'd like to start on the box on the right side, which is the changes in FTD in twenty nineteen
And again, we took the same kind of zero based budget approach to FTD as well and end in 2019 before we added any new FTD
We eliminated a number of positions and the the primary areas where we cut some of them were just sort of business decisions running their course like we had the lost and found
We had some FTD associated with that
We set up a new service that is being handled elsewhere
So it was after use were reduced
Last year we we cut the budget, but retained the headcount for 16 FTE years in the employee screening area
That would've been the Phase 2 screening
And then this year we identified an additional six after years and the phase one employee screening that were just not needed
So there's a total of 22 that were reduced for from security
We also had some FTE emergency higher positions and maintenance that we identified that were not needed
And we had eight emergency hire Pathfinder's that we're now replacing with with full time FTD
So in total, we reduced our FTE count by almost 43 then during the year
We had some additions that just reflected some some business decisions that were already happening
For example, we have an increase of 10 in the construction support specialists
And this reflected the fact that in our in our budget these were 0.5f to use, but we're actually working almost 40 hours a week
So this reflects sort of right sizing them to for the amount of hours they're actually working
We had some senior access controllers that we needed to add to the man, the exit exit lanes at the security checkpoints
This is something that the actually the construction support specialists had been doing and it was a function that we had to find a proper permanent home for
So we did that
There was a reorganization that Lance announced a few weeks ago that added some 550 E's
We added a couple EF2 used to help us manage the taxi contract
And then we added at enviromental position for the transportation management position
So these are things that were added during twenty nineteen
But as you can see in the box on the right, the minuses and the pluses still resulted in a net reduction of fifteen point five before we got into the new budget request for 2015 to 2020
Corey, I think Graham, a couple of questions here
I'm going to start and this is more for Lance
So Lance, could you help me understand on the first one, a new FTE to increase the capacity, implement the part 1/50 noise, insulation programs? What would be the outcome of that? What would the public see for that one employee being added for the Poland? So, one, they they part 150 implementation has not moved as fast as we would like
This has been going on for multiple years
So what I think that we want to do is actually accelerate that program
So we wanted acceleration look like how many projects would we get done? Well, I'm not sure about the number of project, but I would actually like to get, for example, more houses insulated in a faster, faster not number of colleges that would be insulated per year than we have done in the past
Are the number of condos insulated than we have done in the past? So this is I think we're both Commissioner Greg Warren in Steinbruck and I are all kind of going
Is that
Help us understand what the outcome is
We can describe it to the public
So not just we're going to insulate some more houses
How many houses? Because that gives us the opportunity
If you say this will result in 10 more houses and we want to do 50 more houses than let's figure out how we allocate budget resources to accomplish that outcome
So without having these real outcomes
Excuse me just one more second
It's difficult to see what we're what the public is getting for this is that
If you'll forgive me, I'm making sure that commission staff is doing kind of a Q&A that I think would be, yeah
There we are
We're making sure that we can think about this from a policy level feedback loop as we go through the budget
I do think policy assistance there is critical to our budget team to do that
So to answer your question specifically, this noise position would be primarily to implement the to handle increased workload on staff for our current sound insulation prograMS So a specific outcome of that in terms of numbers would be that we are planning to do that actual installation of the first condo complex next year and start on the second condo complex
So having the two going on at the same time requires additional work
We also have that increased involvement in the start work with ground noise study that we are just starting this fall
That's going to be a substantial effort for next year and this person would help with that
In addition, the number of noise complaints has increased quite dramatically and our staff does a really good job at talking to people directly on the phone about that
But that does take a lot of time and effort to do so
This person would help with that
So does that
And just to add to that, we are intending to come back to commission with a proposal to accelerate the sound insulation program
And that deserves a full public discussion and is a pretty big request
That's not part of what we're talking about here
Right
And we've been waiting for that
So I appreciate you calling that out
But I mean, I think even just a highlight, we we'd have to do it today, but a highlight of what that increase would look like so that we can consider whether we want to do it in the 2020 budget and not then wait another year
You know, I think we all understand there's enormous concerns
As you as you just mentioned, the public is calling daily about noise at the airport
So I think there's big interest amongst the commission to accelerate this program
But give us the opportunity to know what that looks like
So I appreciate thank you for a little more
Explanation is one position
It sounds like that person would be doing quite a bit
And I guess that's a little bit of my concern as well
And Borgen, very much appreciate you started it
I can't hear what the number was
One was at 111 and you're down to 56 FTE
But if we again, we're driving towards specific outcomes, I'd rather see us get things done as opposed to just trying to cut costs
Just to cut costs
So
Status to you guys
OK
Commissioner, if I can
Yes, just to add to that, just add to the conversation here
But I appreciate that
But it's always a balance of both, right
To try to find that that's what we're doing is balancing the unconstrained versus the constraint
We have a we both
And that's what we do in the process to look at that
And one thing, too, is
On a specific FTE, I am fully on board with having a measurable outcomes to do that within prograMS But I think it is very difficult on specific FTE to say if we added one more FTE here, this could produce
So I know we're not going to talk about the insulation once, but a specific outcome related to a measureable outcome
I would prefer to look at the measurement or the program with a strategic goal versus the
Yeah
So the measurement there, I just don't want us to say that we could be that that specific to say if we add this we're gonna get this much of a measurable outcome from one more position
So I think you know, I appreciate that
But, but this actually says increased capacity to implement part 150 and that would mean we're behind as Lance
Yeah
Called out
So maybe Africa figure and maybe if it could go back to the question that Commissioner Sandbrook attacks on the first and the slide previous to this and to add to what CBO said in terms of the the the process that we actually go through when we're when we're developing and trying to prove the FTD as an example, working with Stewart Group, for example, we actually start with the outcome
We say here is the outcome that we're trying to accomplish
Then we look at how many man hours do we actually need to accomplish this particular output
Then we translate that Manoa into FTE
It might be ten point five fifteen
Then we're factoring technology, we factor in process improvement, exit extra to actually come up with a final FTE
So we've got a very extensive process now
It's easier to do it that way with X Duritz group like with Jefferies Group
Not as easy because you're talking about planning and design and it's not as easy to do that way
So you have to use, you know, to to make some guesses
Right
It's more art and science in that word
With Sirat Group, it can be a lot of science more than anything
But we go through an extensive process to actually come up with the FTT numbers
And we actually start with the outcome
Then the man hours, then the number of 50s
And then we factor in technology and efficiency and everything else to get to the numbers
Well, as the only commissioner that's co-chair the highlight forum for the past four years, we certainly have heard extensively about this need for the part 150 installation and I weave
I was under the impression throughout that time that it was a matter of the FAA being slow to implement that which they've already approved
But what I now understand is that it takes the port to actually apply for this money and that something like an 80/20 match
And that's a we had to allocate
So in addition to the FTC, we have to have like the 20 percent part of the budget allocated to actually accomplish that, which the additional FTE has to accomplish that
That's correct
And and I don't want to get too much into the weeds here, but I think in our presentation we in December, we will be talking about the additional risk that we might be asking the commission to take on by accelerating the program, because we would be advancing projects ahead of approval of funding by FAA
And so that money would be spent at risk
Well, that was my point, is that my understanding that we have a backlog of approved projects that we haven't sought to accomplish
So I'm not sure how we get a front of a curve that we haven't fulfilled
Well, as Eileen said, we're looking at several options, including maybe the salt can come
We're going to do a all right
Yeah
Whole session on that
There's gonna be some of our December
So let's keep going on the budget, though
Ok
Ok
So some of these are fairly straightforward
I'm just going to touch on a few of them
So the first line item in the facility planning and capital projects is to increase capacity to plan, manage and implement capital projects
There's a lot bundled in here
This would include one FTE for planning, one for capital management development or capital program development, one architecture FTE, one fire department after each review plans, three to use and PMG and also one in maintenance
So putting together the resources to plan and manage our capital program involves resources throughout the organization
When you when you mentioned the reduction in security, I thought it was like employee clearance, security, employee screening
A screening
Yeah
So I met with a constituent who works like the graveyard shift on the inside the secure area
And she was saying that it's difficult at the wee hours to get through security, I think, when having to bring halal foods through that were not available on the inside
And I don't know whether this, you know, during the very dark hours of the night, whether whether this reduction will make that any more difficult
Now, I don't think it will end as as I think I'd pointed out, the the bringing the food through the security
They the employees are actually supposed to go through the employee screening process and they will be allowed to take the food through
If they continue to try to go through the TSA checkpoints, then they might have an issue, but they're actually supposed be going to the employee screening process downstairs
And but this doesn't reduce that capability
No, it should not
There is
You have
We we reduce the number of checkpoints that we have, that access points that we open at certain points in the night
It doesn't make sense
I mean, to when there's hardly anybody going through
But we it but it doesn't prevent anyone from going through the checkpoint and it doesn't prevent them from taking their lunch through as well
Ok, so moving down the enhanced baggage system, oversight and maintenance
This is F.T
used to address some specific concerns of airlines to just help that process move better
The next line item? Maintain new facilities and equipment
One of the areas where where we have acquired new facilities is in the commercial area of the airfield, the cargo buildings
I think there's at least five new build or five old buildings that we have effectively acquired through lease terminations and they revert to us
So the good news is we get to fully lease out these buildings
The bad news, if you will, is that we have to maintain them
And so we have to invest some money upfront and then on an ongoing basis to keep them in good working order
And that requires resources
The other thing is that we are opening up the international rivals facility and that will just additional square footage
We've got to maintain those facilities
So there that that's certainly a driver
The next big item, adequately maintain civil infrastructure, utilities, stormwater system and solid waste utilities
I mean, this is our our field crew and they they they get called on to do many, many things
But I think we've recognized that there are key areas where we haven't been doing enough
This is aimed at addressing that as we go down the list
There's a number of individual items here
I think the what I would next want to call out is the implementation of random employee screening for six FTD
And again, this is something that will be new and will allow us to more fully address some of the security issues as employees go through different doors
They can have random screening at those doors
And it's part of our part of our plan for for full employee screening
So what I'd like to do now is move on to the highlights of the other budget request, the non FTE iteMS And again, there are many, many more items that are back in the appendix
But I've just called out some of the highlights and the big dollar iteMS The first item is the new item for art conservation
We've added three hundred and five thousand dollars for ongoing conservation of the art at the airport
The next item is for window cleaning for the all the terminal buildings
This is something we've done on an ad hoc basis in the past, but this would do it on an annual basis
Lance indicated earlier the need for customer service at the international arrivals area, and that's what this next line item is
It's bringing the budget up to the level of spending we are currently at right now
And then the next item, this passenger wait time queuing queue management
This is a two and a half million dollars for outside services to help with queue management and potentially other hot spots as well
This reflects actually the same level of budgeting as we have this year
We've treated as a non-recurring item because we want to look at it each year and try to decide is this the right amount to spend? But this represents the same amount that we had in the budget for 2019
The next item I'd like to call out is the incremental costs associated question here
Short film
So with regards to queue management
While I understand that clear provide additional staff to do their clearance, it is in the most central location for folks
So even with TSA pre you have to go down the road apiece to get through that clearance
So you go down to gates to go back if you want to go I.F.
And so it just strikes me that the that the ability to benefit from pre-clear pre-check is reduced at the primary central terminal gate rate
And I'm not sure if anything the question we have pre-check, a checkpoint 1 and Checkpoint 4
So there's pre-check at the north and the south end of the airport
When you come straight into the terminal, that's one checkpoint where pre-check at Checkpoint 1 and we have pre-check, a checkpoint for
So depending on where you're going in within the airport, you either go to Checkpoint 1, our checkpoint for a pre-check as a pre-clear pre-check comps our passenger
My not trying to suggest was that when you go through the central terminal, the most central checkpoint, which I'm fortunate I don't know the number, Checkpoint 3, checkpoint 3 this way
3 is the one that the first one you come to
Right
And you don't have pre-check clear has the access
And so you have to go
So the people with TSA pre are put at a disadvantage
Over the folks that clear now, it seems to me that check out line four is right beside Checkpoint 3
Like right there, it's like like 15 seconds
You're a checkpoint for which the pre-check line
Right
I guess the that wasn't my experience
Just just recently
But the perception perhaps is the
Because I'm getting that feedback as well, that the primary spot is not for the basic passenger
But let me say that maybe that's something that these folks, these managers can help guide people
Ok, well, checkpoint four is right beside Checkpoint 3 and Checkpoint 4 as the preaches a pre-check checkpoint
I mean, literally lining right there
Yeah, right
OK
MR Caulkins
OK
Keep going
All right
I did want to highlight the renewable natural gas item here
This will allow us to pay for 100 percent of the natural gas for the buses and 70 percent in the terminal is the assumption in this budget line item here
Other items that are in here said also being utilized for the A-check system or systems renewable
70 percent is for the terminal heating collection system
And the other part portion is buses
Yes
Yeah
OK
Thanks
And other items on here are are listed as new requests, in many cases they're actually recurring iteMS But we treat them as non-recurring and that would be the sustainable airport master plan
We've got some work on here for both the planning and from the environmental work
There is also ongoing planning work for both existing facilities and anticipating new
We've got work for the utilities master plan, which is really sort of the same kind of thing
But for the utility systems that are necessary to support the growth of the airport and then we've got the completion of the Asset Management Program, which will help us really understand our future asset renewal and replacement plans
Another item would be the new janitorial costs for the international arrivals facility
Big new space
Got to got to maintain it and clean it
And and I guess there's the other items are probably pretty straightforward
So what we've done on the last page in this page is to highlight basically 74 percent of the total budget requests
All the other details of 164 items are in the appendix
MR Samak's get just on the last item there under financial performance, attract and retain new air service incentive payments
I'd like a little more detail on what that refers to
Sure
We we have an incentive program for four new entrants
New new service
New service
So, for example, the new services that have started up this year, there are contractual payments that are made to to support the joint marketing programs and things that are part of each new service
So what this reflects is, are our existing commitments and our sort of no new commitments that will be coming on next year
Bad you service, it could be a new role that that wasn't being done in the beginning
And if you do away of a run, for example, the landing fees, etc., I'm over one or a two year period to kind of get the the new rought are the new air service provider off the ground to reduce the risk of startup their startup rates
Who do we target? Service is not already provided amongst existing carriers
It concerns me that we're actually incentivizing new service in a broad way when we're struggling with our capacity issues and we're spending money or in-kind incentives
I would hope that that those incentives would be directed, particularly in areas where we feel that we are our region would benefit from additional service
It seems like we hardly need to promote the general growth at the air
You're exactly right
So we use we typically target underserved market
Okay
That's what I'm hoping to we're looked at
Look at, you know, dependent on the demographics, population
Here we are
Where do we have a lot of people going to indirectly? And we usually maybe focus on those unserved markets
All right
Thank you
So is it possible, then, is it not possible to incentivize folks to change their hours of flight? That hasn't been all that we can't do this
That that's that's actually been a discussion at multiple airports
I'm not sure if anyone has successfully done that
The airlines usually fly at the time where they are most profitable and at the time where people actually want to fly
That's something we can look at
But I'm much I've not seen an airport that has successfully done it so far and I'm seeing a lot of heads saying they haven't seen it
I mean, obviously, air cargo is where, you know, evening flights or where are the most antagonistic for the number of planes and that we through your efforts, are trying to incentivize through a rating system to to disband or to ship those hours
And so seems to me when you get your dirty dozen
Would that not be an opportunity to then suggest that we could? There's a limitation in terms of what we can do, in terms of how we incentivize different airlines
Also, both cargo and passenger
There's a network in there flying from one airport to another airport
There are banks on the other side of wherever they're going that it makes sense if they can't catch with banks for that flight or that road
I would say that I would like to know that we're offering it
I think to know that that that's an opportunity
If we can if we can promote, we should be able to discourage that in terms of the legality
And I'd like to know that those offers are actually on the table
And with regards to jumping subjects, the oranges project
Well, I'm very excited about this opportunity
I'll accept that
My understanding is that we do not have the final result of the contract and that there is this
So this has not received commission final approval in the quiet period still over and that this is a budget item to reflect the point
The point is, is that there is options before the commission to go beyond 70 percent of the airport natural gas demand and we could do 100 percent of each at a different time at a different price point, which has not been decided
Ok
I guess
Yes
We are still in the quiet period, so I can't say anything specifically
My anticipation is that when we come to commission, there will be a full explanation of the proposal that we're making and options that were considered along the way
I don't know at this point whether the proposal itself will include options
So I can't really speak to that and I probably shouldn't even if I did know
So
Well, that was the understand we had in briefing that options would be presented to us
And this is exactly the kind of thing that the Energy and Sustainability Committee was hoping for no return on the dollar
We may choose to spend more based on the assessment at the end of the year
How close are we to meeting our greenhouse gas goal? Sure
So just for purposes of the budget, we had to give a number based on our best assessment of what it might be
Obviously the commission decision is independent of that
And so whatever the commission decides would be reflected in the in the final budget
I just point out that because we're in the quiet period, to see a number on the table seems to be directly contrary to being told we're in a quiet period
Sure
Okay
They're not they're not related
Yeah
You're not related
We have to make up budgeting
Yeah
Okay
Okay
I just wanted to be a lock
So with that, I've covered Bishop Hawkins as a question
And I just want to point out, we're an hour and a half into a two hour session
And I want to allow the presenters a chance to get through the material that they deem critically important
Okay
I would agree
But I think it's budget
So this is what we do for us artists
And I think they're they're accustomed to it
It is a limited time period
We all need to exercise restraint so that we can get through the really important topics
If it is not budget related, if its operations, please hold your questions or email them to staff at an appropriate time
Keep going, folks
All right
So the next few slides, I'm just going to show the the impact of our budget decisions on honor roll up at the airport
So we're kind of through the nitty gritty details
So I think these next few slides will actually go fairly quickly
This first slide is a summary of our non aeronautical net operating income and you can see the primary revenue sources listed on the left
So public parking, airport dining and read retail rental car, ground transportation, et cetera
The strongest growth areas, as I indicated earlier, public parking in airport dining and retail and bottom line, net operating income up twelve point nine percent
On the aeronautical side, again, primarily cost recovery up above this rate, base revenue using the sea airfield movement area
This is where we recover landing fees
The airfield, Aprin area
There's a separate paren fee for that and terminal Rentz includes a lot of different things
It's the gates, it's the baggage system, it's the ticket counters, it's the space, the people that the airlines lease and then the separate collection and or for you go off
Can you just give a quick explanation for the 2018 budget versus actual on the air? Airfield movement
One twenty five, an actualise 116 and then we're budgeting in 18
Ok
Sure
It's cost recovery
So when we when we go back to 2018, what that reflects is that our costs came in less than anticipated
And, you know, one of the things when whenever we look at 2018 actuals, we have to remember that there was a roughly 14 million dollar pension credit at the end of the year that reduced our costs down
And you know it
We don't actually remember that
OK
All right
Right
Well, I'm remembering
OK
And about ago, I asked the question, I think over 12 million of that was allocated to the airport and then it gets spread across cost centers
So that would be one of many areas where we came in under budget
That happened to be one of the biggest drivers thing
And so that brings the costs down, which brings the revenue down in a cost recovery rate base
What I really wanted to highlight here is the biggest growth for 2020
And that's what the federal inspection services area
This is for the international rivals
And it reflects the opening of the international rivals facility
We will have increased costs associated with that new facility
So we expect to see our f.b.i.'s rate going up and the costs we recover going up
This also reflects the elimination of revenue sharing, as we discussed earlier
So that line item is also highlighted in yellow
And the net result on the very bottom line shows the effect of the reduction and then elimination of revenue sharing back in 2017
We were effectively running a deficit where we were subsidizing the aeronautical side of the business through revenue sharing
And now with the elimination of it, we are generating revenue
And so that's what's going to help us pay for the capital program going forward
I now have a number of slides that just show our trends and this is our passenger level and the the growth rates in the the blue bar
You can see while it's dropping 2 to 3 percent, we're still seeing almost anticipating to see about a million and a half new passengers coming through the airport next year
Total operating costs
You can see how our costs have been growing over the last few years
And just as a take you back a little bit in 2017
We implemented the full employee screening
So there's a big jump in costs that year, 2018, again, was slightly lower than expected due to that pension credit
Twenty nineteen had the big increase in the environmental remediation liability costs, so that bumped that up
And so overall, 2020 is a fairly modest growth compared to to 2019
And that's really the point here
There is some comparisons of our own M costs per in plane passenger compared to peer airports on slide 55 and it'll show we actually compare very favorably
All right, our FTE growth over the last few years and we've added a a box on the top for the perception of this graphic, which is the on twelve, it's somewhat misleading
The the rate of growth is the line
But the actual if you were to fit a line to the absolute growth instead of the rate of growth, as you pointed out, it's a 1.5 million increase
While the number is you know, while it's flattening out, it's still pointing down
Right
So, yeah, the rate of growth is going down
The number of passengers
I know
So in terms of what the traveling public experiences, what they're receiving, public experiences is not Raiders
Yeah, no question
Ok
So looking at slide my here, slide 14 FTE growth here, we've added in the project management group into our totals
And you can see over the last four years, this is really the point that our FTE growth has been consistent with our passenger growth
And you can see that the F-D per million in payments is been relatively flat since twenty seventeen
And if we went back before 2015, we'd see we're actually lower than where we were back in 2013 and 14
Non aeronautical performance here with the big bar showed non aeronautical net operating income and the blue line shows they non-zero revenue per and plainchant
And so that's where we're starting to really see some of the benefits of our ADR program
And as I indicated earlier, the increase in the parking revenue and the primary drivers there
Looking at CPE, we had been relatively flat for it for a number of years and beginning in twenty nineteen we saw a big jump and that really reflects the new facilities that were coming online
We had the Concourse D and X terminal
We had North satellite phase one
We also had the same environmental remediation liability costs that were hitting the rate base and the reduced revenue sharing
And so that's those have been the big drivers in the number we've seen already
Slide 78, we'll show our our CPE compared to all pure airports as of 2018
And we actually you are right in the middle
Finally, some of the key risks or issues attached with our operating budget, as I indicated earlier, we have really taken some measures to try to try and try to generate a more accurate budget
And that includes implementing the payroll vacancy of 3 percent
All of the new FTE that we are proposing assume a July 1 start date for budget purposes, even though many of them will likely be hired earlier than that
And then a number of areas we just reduced the spending from what was originally request and whether it was planning or whether it was the utility master plan or sometimes in the aviation project management group some of the expense projects
We just reduced the requests down to a level that we thought was more likely
It's very difficult to know exactly what what project or what planning study is going to get delayed, but something tends to get delayed
And so we have taken some risks in those areas
I think MR Sempra, second question
We owe it to get through the bullet
OK
Ok
You know, airline realignment is something that we know is out there
This budget, both the operating in the capital budget does not assume anything for it for 2020
If it were to happen, that would be an unbudgeted item
It's magnitude Borgen
That was going to be my question
So rough airline realignment, it it all depends
I mean, it could cost as much as one hundred million dollars
This is the cost of building out new lounges and moving carriers
It's it can be extremely expensive
And that's why we're spending a lot of time to try to get it right and fully understand the airline needs
And I think J.J
in the background probably screaming that there
But it all depends on which option we actually end up going forward
We have looked at option that we thought were the way to go
We have found fatal flaws and we're kind of starting over again, looking at different options
So it could go to that range at Bargain said
But it really depends on which option we ended we end up with
You anticipate coming before the commission with a range of
Just so that we have an idea in terms of the budget of when we might expect
Absolutely
So I would say we as Lind's indicated, we've kind of rebooted
We found a fatal flaw with the alternative that we were primarily focused on a little more than a month ago
So we've re-engaged the airlines
We've identified several alternatives to continue to meet the objectives
Right now we're focused on one alternative and we're in the process of evaluating to see if there's fatal flaws in that scenario
Plan to go to the directors on the 17th of October
So I'm hoping before the end of this month, we're actually going to settle in on an alternative when we get a commission
I think at that point we'll need to make sure that we have good schedule and good cost information
So I would hope before the end of the year we'll be in front of commission
Great
Is that an internal workgroup or do we involve airlines in that? The airlines are very much actively involved
Absolutely
We're soliciting feedback
We're meeting with them biweekly
And as you can imagine, airlines have differing perspectives
So the likelihood of us to be able to meet everybody's interests is very low
So we're making the tough decisions
But making sure that every airline has adequate opportunity for feedback
Thank you
Ok
So I think the other area that we've had some conversation with the airlines on is for the airline consortium to take over certain functions, and they have expressed an interest in taking over the busing of the non-court employee busing function
And we're still having those conversation
This budget does not assume any change is fully in our budget at this point in time
They've also indicated an interest in expanding the scope of the airline technical representative function
They actually want us to put that in their budget
We're pushing back a little bit
Our current budget is just a continuation of our existing situation
We think that will probably change for 2020
One, what's the role and scope of the technical representative? It's a it's a consultant that the port hires
The the individual effectively works for the airlines, helping them to understand and coordinating their response on a lot of our capital projects
So we actually benefit from it
In this sense, it's not technical in the form of app facial recognition, data sharing
We are at new capital and no project
Thank you
Ok
And the last item, there's been some discussion internally about the need for a port accessibility coordinator
I think there is 100 percent agreement that the port needed this function
There was not 100 percent agreement as to where it should reside
That has now been determined
And we will be proposing one additional FTE at the airport that will serve in that capacity
That individual will also provide services to other divisions as well
So it will be a port wide function housed at the airport and we'll bring that forward in our budget at first reading
It strikes me, though, that when you say not yet budget, and so it's assumed to start at the beginning of the year
Yes
Well, it basically didn't make it into our budget for this round for this presentation
We are proposing it and we will be in the budget that we bring forward to you at first reading
Is this part of that wheelchair accessible issue that really one of the questions was, ah, you know, with the signage
And the other questions about is, is the level of service currently reflective of
Opportunities provided or awareness of opportunities, and I don't know what the accessibility coordinators role is, but part of the part of the situation like where you get your access to your wheelchairs, those sort of things are
I don't know whether that's part of the job application or what
Because the pilot project is to evaluate, you know, the scaling and the service levels, the quality of service
That sort of thing
Yes
Jeffrey Brown, director of couple of programs and facilities at the airport
So to answer your question, yes, it is to accelerate the some of the recommendations from the ODIO report, but also to address and the title to complaints and to add some more specificity to Barling audio report
Audio is Open Doors organization does report that was presented to you and they had some recommendations
So it's extra some of those prograMS Yes, it includes wayfinding includes accessible to rooms on the upper and lower levels
And as well as tackling two issues, complaints we may receive through the federal civil rights office, but also as to what Morgan said
We may also look the other prominent address to six issues as well
So that's the undefined portion of the scope for that position
Ok
Now I'd like to turn to the capital budget
What I'm presenting here is a budget that shows that we anticipate spending approximately two point nine billion dollars over the next five years
The top half of the slide shows the spending on our three big projects, the IMF, the North satellite and baggage optimization
And then we have other projects have called out the line item for preliminary planning and design for samp related work
And after that, we have proposed new projects
There are a total of 34 projects that total 233 million in spending in this five year period
Two two items that are
I'd like to also call out that the last line item in the middle box is IP reserves
This is consistent with the policy that Dan Thomas is communicated to you about
This reflects our anticipation of future spending that has not yet defined it is we kind of use it as a as a revolving fund in the sense that if we approve a new project, we we deduct from the reserve
If we achieve some savings, we add it back
It's basically back end loaded because we feel like most of the uncertainty in our capital program is probably going to be in the second half of this five year period
The second item that is very new this year is the last line item there see IPI Cash Flow Adjustment Reserve
And this was another attempt at making our budget a little more realistic
In other words, with over 100 projects, we have a very difficult time of identifying exactly which project is going to get delayed
But we know there's going to be something that's going to come up
So rather than having one hundred plus project managers individually go in and adjust their cash flows, we've taken approach religious look at the division wide and let's assume that we're not going to spend everything that we say we are
And so we developed a formula that says that for those projects under construction, we'll assume about 90 percent of the spending in 2020
For those that are in to have had design authorization but not destruction authorization, we're assuming 75 percent of the spending would occur
And then for those that are have not yet been authorized, we assume 60 percent
So that's how we've developed this adjustment and then we've just spread it out over the following two years
So it's really just a it's a a zero sum game
We're just spreading spreading the dollars out, trying to make our 2020 budget a little more realistic
Thank you, MR Caulkins
His question is that exercise principally a budget exercise or will it actually result in us borrowing less during this time period and therefore saving on some debt service? Potentially, it's it's probably more of a budget exercise
In other words, when it comes time to do a bond issue, we are really focused on the projects that are authorized that are moving forward where we're pretty certain about the spending needs
So this is really aimed at the fact that we've got a lot of projects that are in that earlier phase or they're in design
Something could come back with a big bust and then we can delay the project or the scope has to change and we have to think about it for a few months
Those are situations that do come up that that that delay our spending and it happens every year
We just don't know which project is going to get delayed
MR Steinbruck? Yeah
I want to ask about airline realignment and why that would be why there would not be a placeholder there within the five year
I would think within five years time we're going to work out some of the issues and challenges amongst worst case
So as all of indicated in a subsequent slide, that's one of the items that an effect would be competing for those reserves
We haven't put in a budget item because we just we don't have a basis for that right now
Is James Jennings discussed? There are a number of alternatives that are being looked at
And each of those has very different costs
So for us to pick a number at this point, it was just a little premature
Well, to be fair, we've done that in other projects
But be that as it may take
Yeah
Be that as it may
Could you briefly describe the 16, the money for the samp preliminary planning design, which went to the money? There is the there was $300 million that was approved as a part of the most recent lease agreement that said, okay, we could spend up to with airline approval, we could spend up to three hundred million dollars on sampa related planning and early early design
What has come before you as a request for $10 million dollars to start that process? And you know, any future spending is gonna come back to you for authorization before we go forward
But that's what that line item is sort of based on
If we start moving through the the environmental review process, get it completed and can actually get going on on additional planning and design work
Ok
That's
I'll leave it at that
But just plugging a number based on
Ok
And then we as I indicated, we have 34 new projects here is sort of a summary view of them with the biggest items listed down below the baggage claim device renewal and replacement over multi multi-year program totaling 71 million, addressing some security issues on the mezzanine level, industrial waste treatment plant improvements and creating new lease wall space in the terminal
And the next phase of restroom renewal and replacement
And that would be for the main terminal mezzanine and bag claim areas
So those are some of the new projects
The details are in the appendix
Obviously, before we spend money on those or anything other than early, early money, they would come to you for authorization
And this is a way of summarizing our sea IP in a high level, showing what is under construction in the first section up above
Then what is has design authorization and then what is pending authorization
So helping you see the big, big buckets, if you will, of our capital program, recognizing that there are many projects in them
And then you can see that I guess what I would say is the reserve amount that I showed in the previous slide, that would be all the way down at the bottom
And the other pending capital projects, that totals 1.2 billion
That would have that 680 million of reserves in there as well
So this is just a view of it, and it shows you some of the big projects that will be coming forward next year, the main terminal fire, sprinkler and smoke control system would obviously be seeking authorization, as would these upgrades to a satellite transit system
Train controls
If I can just point out on your on your on your chart, Borgen, is that those statuses you'll see those reflected in the non non aviation as well
And I talked about those before
You get more certainty as you move up into the construction phase, obviously, and you can see that up at the top, the five six and then you have other design for than
The pre-authorization is a 1 through 3 there
So we'll see that that's recurring and certainly increasing on Scott on schedule in costs as you move upward
All right
So here are the items that aren't in the capital budget that are looming out there
And, you know, we recognize that there will be a need to address seismic issues at the south satellite
We know that after the IAF opens to me, the international arrivals facility opens
We'll have significant vacant space in the basement of the south satellite that we want to be able to repurpose and or renovate
That is not yet in the budget
The C1 building is an area where we anticipate being able to expand airport dining and retail office space and create space for more lounges
We have a place holder in our budget now that is grossly insufficient
So we know there's going to be an increase coming indicated airline realignment
Completion of the part 150 noise remediation plan
We have elements that are in our budget right now, the pilot prograMS But obviously there will be follow on projects to those
And then when we complete the asset management program, we expect to have a clearer picture of some of the future retail on replacement needs
We will have
And obviously there could be more sand projects in this five year period
So are our challenge, as you can see from this list, is to make sure that we are addressing sufficient resources on solving problems in our existing terminal
And if I were to go back to this slide and try to address your earlier question, you know, I would say that just about not every project, but almost every project impacts the travelers
I mean, we are making improvements, whether it's building out a new north satellite or whether it's even the ultimately the baggage system will it will it will help the traveling public
So almost all these projects are things that will will impact our our customers
I think the experience really is getting into the
Getting into the airport initially, I think the security checkpoints are perhaps the place where people are feeling the most constraint
And I know we've gone back to D.C
and we've asked for more TSA and the use of dogs and things like this
And I guess once you're on your way to your gate and things like that, I think I think that's maybe some relief
But, um, is is there specifically what what's being done to the way I get through the gates? Probably the checkpoint
One relocation is really I think we've talked about this a few months ago, the plan being to relocate checkpoint one, which is at the south and down to the bag claim level
It will create additional space to expand that checkpoint and provide overall capacity for four checkpoints
There'll be some refinements to the the capacity, I think, at checkpoints 3 as well and 4
But that would be the probably the biggest thing that would change our capacity
Can I can I suggest we actually there is national security implications about how we're talking about screening
We've talked about this previously appropriately in executive session
We are owed an update based on a spring conversation that were supposed to happen in August
As a follow up with Wendy Writer about the some of the changes here
I'd like to move that to executive session because I have questions here, but I know there are national secured applications about it
In general, you're talking about having to go below downstairs to check in
So whatever the implications are, that would take some additional signage
Right
Yes
Yes, I do
To answer your question, in the next five years, you'll see project coming forward to address security where there's checkpoint one that Brogan spoke about, checkpoint to propose improvements there and checkpoint three
In terms of wayfinding, we're 80 percent complete
I don't know where we're finding massive plan
We're going through the review right now
So by next year, we'll see the completed
We're finding massive planting through the terminal on the roadways and then you will, and then projects followed of that
Additionally, we are working and other stuff to do, like landscaping, massive planning stuff
So we're working on projects that would improve the customers experience in the existing facility within next five years
If we talk about a sales that we're going to be doing at Checkpoint 3 as well
So In-to was a part of the security checkpoint
Checkpoint one does go and don't stay in the bag claim the different
They have the new SSL automated screening lanes that improve the throughput for the passengers
It's a fourth checkpoint through as well
We'll see ourselves there
So when we move forward with security, checkpoint movements will be used in the technology that we are that we're accustomed to
Can I just say that on the capital budget? I really appreciate this slide
And what I'd I think we'd all appreciate is is much more detail about these things
And I appreciate that you called it a risk, but they're not really risk
These are all things that are going to need to happen at some point within the next five years
Correct
I mean, General
Yes
Yes
Right
These are recognized AIDS, the amount
And I think that's a better way to put it is a recognized need
It's not really a risk
It's a recognized need
And it feels like we're at at the edge of a cliff and we're going to have an incredible amount of spending coming forward
And yet it's not and we don't need to do it today, but we do need to understand at least some sort of scope of magnitude of what we're looking at
Okay
All right
And just briefly, looking at our five year forecast
Again, we're continuing with good solid results down below some of the key measures
You see the CPE is growing up to seventeen forty by 2024
This is actually a little lower than our five year forecast of last year
And it very much in line with the expectations of delivering on this capital program
We expect the CPE to go up
We're maintaining good solid debt service coverage levels
And I think for me, the key thing here is that we're demonstrating that we have the financial capacity to take on additional investments over and above what we have currently in our capital program
So I think we're in good shape
This is where we want to be
And I think we will be able to address these future concerns that are recognized needs in our capital program over and above what we otherwise have captured as part of the sea IP reserves because there could be more
And that there's there's one final slide and I'll be relatively quickly on or I'll be quick on this
This has to do with the allocation of PEF seas to manage rates
And this comes from a commission motion back in May of 2015 where you guided us to establish the funding plan for the international arrivals facility
And we use the same framework and in determining the funding plan for the north satellite improvements
And basically what this slide shows is the funding plan for the IAF up in the upper right and it shows that we did use cash of 200 million and 100 million of PFC pay goes to sort of reduce the overall costs that would go into the rate base
And then the chart on the lower right shows the impact of using PFC is on an ongoing basis to pay eligible debt service
And so one way of looking at this is the that the total height of the bar shows the FISA rate as it would be if we did not use PFC is to pay debt service
The blue bar shows kind of what we're initially targeting as the FISA rate
We fully expect the FISA rate to go up
We've been targeting basically being in the market for pure airports
And we had a study updated earlier this year that looked at Los Angeles, San Francisco, Dallas, Vancouver and Seattle is sort of key, key comparative airports
L.A
is going to be the highest and they will be approximately $12 in 2023
So we kind of think that is a level at which is probably reasonable
We feel with a brand new facility to be at the high end of the market is not unreasonable
We just don't want to be two or three times the market rate
And so I think this plan reflects the guidance you gave us a few years ago
And I just wanted to report back on it
And there's more details in the appendix that showed more and more more specifics on the funding plan for the North satellite and the IAF and the overall allocation of PEF, CS and Morgan
Thank you for calling that out
That was actually going to be my question
I appreciate that because I think commercial Gregoire and I were the only two that were here in 2015 that said the cost of the IMF back in 2015 was substantially lower than what the ultimate cost was when we passed that policy
That's correct
Can distinctly remember that the original cost estimate for the I.F
was $363 million
So, you know, it just sticks in my mind
It was
So, you know, I just wanted while we did provide that policy guidance in 2015
Things have changed in between
So but I do understand the the concern about not having an F I ask that is astronomically higher than other airports
OK
All right
That concludes our presentation
We had there's quite a bit in the appendix
I think we ought to have some other questions about that or just rough questions
I'm sure, Gregoire
Probably should you chair Bowman? I'm trying to make sure this is very helpful
I know we're level setting as we do this budget
We've we've done in previous briefings in June
We've had some conversation about commissioner priorities in this space
I do think there's a good goal if it makes sense, from maybe leaving open a week where we work with commission staff to go some Q&A, because I'd like to dig a little bit deeper here in customer service
What do we mean by what is the user usage of our app? What do we mean by signage, etc.? I do think I'm trying to think of the most effective way, which is you've presented the budget clearly and transparently at a level that I think is digestible
I give full credit
There are questions come from OK, but are we actually reducing the carbon footprint of the airport? Here's my specific question
Where is that in this budget? And I want to build that in earlier learning last year's kind of exercise of that makes sense that at the end of the day, what we're approving a budget we're not having a conversation about
But my priority is how are the mom of i-Pods being used? Just decide ethical and figure out the right way to do that
And so my attitude is that's that's not here
I have some of those questions, but I'd like to to work with the commission office to document them and go back into policy Q&A process
And I realize that that's going to be a burden on state, an opportunity for staff
And so I wanted to just talk about how much time that might be as an investment
Does that make sense? I think
No, that's totally fair mean
And I'll call out just one
I know that we're gonna have a conversation
Lance, this afternoon
And I think we'll have questions about hard standing and what the impact has been on passengers and what we can do to alleviate what they're going through
And I don't see that reflected in here
So I think those are the sorts of questions that we're gonna be having
And then in the appendix, there's several things that where you really call out specifically staffing, hire an airport employee experience consultant
I don't need to go into the details now, but I think those are the sorts of questions that we're gonna have
And Commissioner Gregor or some of the stuff that you're asking for, we actually go through that when we're developing the budget to have a lot of information
In fact, we asked people, okay, you're asking us for F.T
What is this person going to do from 8:00 in the morning until 5:00 in the evening? Tell us why we should approve it
So we go through a lot of detail
So there's a lot of stuff that we have, but I don't think we could present all of that in a way for a value I have
But yeah
But if you tell us the areas that you want, we can provide a lot of detail
Lance, thank you for highlighting that because that is definitely what I meant, which is I know how vigorous of a a process that you've been developing
Let's be perfectly frank
Basically kick start from the first of the year and then we live it all year
And I know how deeply you push for it
Let me see the justification for why this is a full time FTE
Where's the volunteer opportunity? What's a half FTE? Where do I share this? I think we need to have a as opposed to boiling the ocean in this conversation, kind of a written Q&A response that enables us to say, you know, and I'll volunteer the probably Kappas
I probably should provide you 150 written Q&A
But somewhere in a reasonable like we know that our policy answers and we can talk about it in a digestible format because you can't you can't do that today
I will say that our budget review package, which was always a p_d_f_, not a printed document, was over a thousand pages
And this is what we reviewed as a part of this budget development process
And I also wanted to share that
We shared that with the airlines and we've met with the airlines on two separate occasions already and had the triple A C meeting
The feedback we got was actually very positive
They feel we've been very transparent
We've been listening to some of their concerns
And at least the feedback that they shared with me publicly was was actually fairly positive compared to last year when it wasn't so positive
So I just wanted to share that with you
And if it's commission staff, we would be happy to share the 4000 page notebook with you all and let you go through
I'm going to jump in there
I know the commissioners would love to review that
But I think having the the specific questions or those areas that we can then provide the material, I think that worked well last year on some budget items to to go back
And I think that would be a great format for us to pass that back to all the commissioners then
And on answering those questions that we have gone through a lot of the details that you reference
Just tell us which ones you want and we can provide that information
Absolutely
Commissioner Fellman, So following up on the illusion that Commissioner Gregoire used about boiling the ocean to new one for me, what would be that as it may? I'm one of the things that one of the things in follow up with that, the accounting
I we know we have these greenhouse gas reduction goals, as we note, but the sort of an annual report of where we're at
And so what these expenses are towards achieving those goals seems to be important and special and making a large financial decisions regarding like R&D and things like that will be kind of good to at this point to know
If we're falling behind or should we be making more investments and otherwise and then just to see them in the environmental remediation liability
DR Flug, this Thabet on in the appendix on page 32
We're basically zeroing it out
And so that's just like almost assuming there will be none
And I mean, when you dig into the ground in an airport, you're almost invariably going to run into something unanticipated
And I'm just wondering, should there not be a reserve? I mean, we accomplished these other things, so we got those off the table
But it seems to me there should be something expected to go wrong
Well, I did that
The budget for that is based on the specific projects and we will use the best information we have at the time when we put together our budget
And I you know, I don't know how to address your question any other way other than to say it's going to be different every year, some years it's can be higher
Some years it's going to be lower
It just depends on
But don't we need some reserve? But yeah, what if I could add to that boring and some of the areas that we have projects in our era that we've already found dirt to dirt and we have cleaned it up and mitigated it to the expectation is that hopefully the more we have mitigated these areas already
So we're still digging
Yeah, right
So I mean I just seems to be rather than being surprised
I mean, I bring up the fire gives fire station, but there's other places where we're likely to run into expenses or things like that
I'm glad that we knocked down the big stuff, but it just seems to be prudent to reserve something
I agree
Again, one other thing
As I said in the beginning, one of the things we tried to do is to meet the budget as lean as possible with not a lot of fluff in there
So maybe that's one of the era we can relook at
But we thought that the contingencies that we had in the budget was sufficient
But we can take a look back at that
We didn't want to bring a big old budget with a lot of fluff in there that asking for a bunch of money that we really didn't need
We would vitiate that lands, but I don't think we're not viewing environmental remediation as fluff
And so I think we're just anticipating, as we did even with the I.F.
Right
You know, as we got deeper into the projects, unanticipated, even though we know that it was a you know, the problems with that site
Right
So, Morgens, that it was based on the specific projects on the areas that the projects are actually in our areas that we had looked at
And I don't know if you want to add to that, but those are areas that we had already looked at
Maybe Arnie can add a little bit to it
Just real quickly, I think there are specific rules that guide on what goes in that u._r._l account
And so we'll look into that and get you an explanation as to why the number is what it is
They'll be helpful
Thanks
Yeah
Commissioner Steinberg, I have a question, sort of a broader one regarding both the operating capital budgets and revenue forecasts for the next year, five years
I don't see under the risk category
And we can we can have different terminology there, but I see that as financial risk basically is what the intent of that is, whereas the financial risk reflected in terms of potential for a for 4 recession within the next couple of years, maybe even next year for all we know
How are you considering that? And what how what is the sustainability of these budgets in that with regard to the potential downturn in travel and revenues? The way I would look at that is sort of looking back and, you know, certainly we had a big recession in 2008 9
You know, the Great Recession
And then obviously if you went back further, you'd see 2001 and the 9 of the events of 9/11
In both cases, we saw a downturn
We saw almost of a very quick bounce back
And so that, you know, one way that we look at that, I look at a five year forecast is, is it reasonable, sort of taken as a whole
I don't expect to get every year
Right
But I think over that five year period, it's probably reflects a reasonable outcome
There could be a downturn in there and it could be a recovery
And so you we we've got, I think, some relatively modest growth rates built into that forecast
We're not, you know, shooting for the moon or anything like that
But we do see tremendous demand for travel in this region
And the travelers that are coming through here tend to be willing and desirous of spending more money
And whether that's on food and beverage or whether that's parking or other services, you know that this budget really reflects what we anticipate happening now
Although I will I will say that we are not specifically anticipating a downturn, nor are we expecting a tremendous upturn
It's reflects sort of a five year forecast that we think is reasonable
And if I could just add to add to that as well, we raise the question, what if there was a recession at some point in time, whether it's next year or the year after? It's really a matter of when
And that's one of the reasons we really wanted to meet the budget, really mean we didn't want to have a lot of FTD I've seen in the past where you have a downturn and you start laying people off, et cetera
So we really didn't want to go through that also
We looked at the projects, for example, that would be under construction, meaning there's things coming out of the ground
Those projects are not going to stop even if you have a recession, predicts that in planning aren't designed, that airlines might push back and say, hey, hey, hey, let's stop these because of the recession
But the ones coming out of the ground, you really don't want to under other side of that is you might actually want to move forward with projects during a recession because you can get much better cost on those projects
You can get those predict deliver deliberate at a much lower cost than it is during the boom period
And that might actually help the local economy or the regional economy as well
So we factored in a whole bunch of stuff
Also, what we have seen in the past is that during a recession, there's pushback
Hey, let's stop, stop, stop
And then you start recovering
And then rather than trim because we've been trying to play catch up and rather than catch up, we fall even further back
So we really want to push on, because if you look at the recession, it's a cycle
You go through the recession and then you start going back to the boom phases as well
So we kind of took all of that into consideration during the during the forecast
Otherwise known as a sine curve
Just a quick question on the PFC
It would be great to give us some background on what or not even background information about what a small increase in PFC is would do to provide more revenue for us
We can have talked about this for many, many, many years
Every airport's in the same situation
Every airline as opposed to it seems to be opposed to an increase in the PFC
But we would I think let's revisit that
I know that there was an effort a few years ago to build a coalition of other airports to push for a PFC increase
But I'm just understanding what a small increase would do to provide more revenue would be fantastic
Okay
So in looking further into the appendix, I see that there is a environmental and sustainability budget request which includes a two hundred fifty five thousand dollars for what I think are, you know
PFA esses, which I think is the air
Yeah
Which are the
The foam, I believe
Yes
And so there is an allotment for the for that clean up
It's
It's for investigation
We've tried to take a proactive approach to pe phos knowing how much concern it might be
And so it's to continue investigation that we have already started
Very good
And then I also see under the community and social responsibility side
We have
I don't know whether this would be here, whether the Selkin County Fund
I don't know where where that is going to be allocated or how much of the fund is being budgeted for this coming year
It's and it's not in the airport budget
So it's a public relations
So it's incorporate sort of corporate like on the corporate side
Right
Any other questions? No
OK, well, thank you, I know that we're gonna follow up with a lot of more just written questions and again, really appreciate all the work that's been put into this
We're trying to get a little bit ahead of it this year so that we have several weeks before we actually adopt the budget
Before we wrap up, I really just want to say thanks to bargain and his team and the directors, they have thousand pages
They've done recommend us amount of work to get us to where we are
So I know
Thank you
Thank you
Borgen in team very much
Appreciate it
I hope it doesn't go
I mean, I hope you're hearing this was a tremendously clear presentation at appropriate for the level for the commission, for a very complicated project
And so I wanted to make sure that we had the opportunity to dig into some of that thousand page document
But you've taken that and turned that into a very clear presentation
So, again, thanks
Great job
Thank you
All right
We're going to take up the maritime capital budget, along with operating budget this afternoon so that they're going to marry up together
So we're still going to get our 45 minute break
So with that, we are adjourned at eleven twelve.

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