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SEAPORT DIVISION 2015 BUSINESS PLAN June 17, 2014 MISSION: The Port of Seattle Seaport Division promotes regional economic vitality by: Growing the volumes of cargo freight and passengers moving through the Port's terminals; Championing the region's fishing industry; Creating/facilitating a healthy business environment for maritime trade; Generating sufficient net operating income to be financially self-sustaining; and, Being a model of environmental sustainability for our industry and the region. VISION: A vibrant working waterfront creating economic vitality for the region MAJOR AND NEW INITATIVES: Container Operations Big Ship Ready Terminal 5 Modernization Program Advance the East and West Waterways project Terminal 46 Development Program Steward Regional Freight Mobility Grow Seaport revenue Prepare Port of Seattle for larger cruise ships Environmental Meet or exceed agency requirements for stormwater Continue to implement Northwest Ports Clean Air Strategy Environmental Remediation projects STRATEGIES - SUMMARY: Implement Century Agenda Strategies Position the Puget Sound Region as a premier international logistics hub o Grow Seaport annual container volume to more than 3.5M TEU's (Big Ship Ready) o Structure our relationships with Washington ports to optimize infrastructure investments and financial returns o Triple the value of our outbound cargo to over $50 billion o Double the economic value of the fishing and maritime cluster Implement Century Agenda Strategies Advance this region as a leading tourism destination and business gateway o Double the economic value of cruise traffic to Washington State Implement Century Agenda Strategies Use our influence as an institution to promote small business growth and workforce development o Increase the proportion of funds spent by the port with qualified small business firms on construction goods and services to 40% of eligible dollars spent o Increase work force training, job and business opportunities for local communities in maritime, trade, travel, and logistics Page 1 Implement Century Agenda Strategies Be the greenest, and most energy efficient port in North America o Meet all increased energy needs through conservation and renewable sources o Meet or exceed agency requirements for stormwater leaving facilities owned or operated by the Port o Reduce air pollutants and carbon emissions o Anchor the Puget Sound urban industrial land use to prevent sprawl in less developed areas o Restore, create and enhance 40 additional acres of habitat in the Green/Duwamish watershed and Elliot Bay o Meet local, state, and federal environmental regulations as effectively and efficiently as possible Manage our finances responsibly "Optimize" Seaport Financial Performance o Meet 2015 financial targets o Grow Seaport revenue o Reduce Port's environmental liability through cost recovery o Maintain existing assets and invest in new developments to sustain and enhance Seaport vitality o Provide timely, accurate and insightful financial information and analyses for the Commission, Executive and other Leadership teams for decision making o Ensure compliance with Accounting policies and procedures, and standards Consistently Live By Our Values through our actions and priorities o Align leadership, people and systems with strategic priorities and plans o Strengthen a high integrity, continuous improvement culture o Increase organizational and individual ownership for safe and secure work practices and healthy living DIVISION DESCRIPTION: The Seaport includes two major business groups: Lease & Asset Management and Cruise & Maritime Operations. There are also service groups within the Seaport Division including Commercial Strategy, Environmental Services & Planning, and Finance. These businesses and service groups oversee the marketing, strategic development, and management of cargo and cruise terminals, moorage facilities, and other industrial properties connected to these businesses. Seaport facilities encompass approximately 1,200 acres of moorage and cargo-related facilities. Over 500 acres are dedicated to container operations at four terminals with over12,300 feet of container berth space and 30 cargo cranesincluding thirteen Super Post-Panamax cranes. The Seaport also owns a fully automated grain terminal and general purpose maritime facilities. It is home to the North Pacific factory trawler fishing fleet. The Seaport also operates two cruise vessel terminals with a total of three berths. In addition, the Seaport leases industrial property connected with these cruise, cargo, and factory trawler fishing businesses. PARTNERSHIPS We would not be able to fulfill our mission without positive relationships with our partners. We are focused on: Meeting the needs of our customers by: o Maintaining regular contact with our key customers to stay in touch with their needs and identify opportunities to increase business through port facilities; o Working with stakeholders to constantly improve freight mobility within the seaport; o Facilitating customer relationships with federal inspection agencies; o Developing new business opportunities for our customers; and o Providing market information to support our tenants' interest in expansion. Page 2 Approaching our relationship with labor honestly and with integrity, communicating effectively, and working together under a fair labor agreement. Respecting tribal sovereignty, and tribal religious and cultural values in all consultations with our tribal neighbors. INDUSTRY ASSESSMENTS: Containers The container business is going through unprecedented changes with consolidation into three new "mega" alliances, deployment of large ships, terminal automation, and increased competition from Canadian and east coast ports. Shipping lines are focused on cost reduction. Terminals are being rationalized and the future will favor larger, more cost effective operations, with high productivity rates to handle large ships and large volumes. The dominant railroad in the Pacific Northwest (PNW), BNSF is currently undergoing capacity challenges and infrastructure upgrades in the Northern Corridor, deteriorating container service to the Midwest. Grain Global exports for soybeans are projected to be up 1.5 percent from 2013/14 due to an increase in protein meal consumption in China, which accounts for 30 percent of global protein consumption gains. Exports for corn are projected lower than 2013/14 as larger expected foreign supplies and lower import demand will limit U.S. shipments. Industrial Properties The region's industrial market has been consistent and steady. This trend is expected to continue in 2015. Employment growth in the region is also expected to be positive. With positive growth in both areas continuing to inch upward, absorption of industrial space has outpaced the delivery of new space which further supports the high occupancy and low vacancy numbers that we have seen in the industrial properties market. Rental rates will continue to be somewhat flat with the close in large industrial markets experiencing some modest increases. Cruise Global industry growth is expected to continue in 2015. According to recent Cruise Lines International Association (CLIA) reports, in the U.S. alone the cruise industry contributes $44 billion in positive economic benefits, including 363,000 jobs with direct and indirect employment paying more than $18 billion in wages. Market growth is supported with global fleet expansion and larger ships with new product innovations to meet the high demands of consumers. The Alaskan cruising market remains strong. The cruise lines are presenting some of their best products here in the Northwest. The 2015 vessel schedule for Seattle adds one additional homeport vessel sailing on Mondays and 3 larger newer ships to serve this market. Maritime Operations Heightened regulatory and environmental standards are driving industry change. Requirements for cleaner fuel for ocean going vessels operating within the North American Emissions Control Area (ECA) go into effect in 2015. The supply of suitable and affordable marine terminals is growing increasingly scarce in the Northwest. The ongoing consolidation of the commercial fishing fleets will require changes in facilities and services to meet demand of larger homeport operations. Page 3 BUSINESS ASSESSMENTS: Containers The Port of Seattle is positioned close to North Asia and is a viable gateway to support a "4 corners" distribution strategy. The Port is served by two Class 1 railroads, with both on-dock and near-dock intermodal capacity, and easy access to the Interstate Highway system. The Port has made investments in harbor infrastructure to create fully grade-separated access to all of the container terminals. The PNW has a large, diverse export market, including large volumes of high value refrigerated cargo, but diminished import volumes and first ports of call on the inbound leg reduce capacity and equipment availability for exports. Terminal 5 is a well laid out terminal with on-dock rail; investment in modernization will position Seattle to handle larger ships. The U.S. Army Corps of Engineers (USACE) has received funding to complete a reconnaissance study to evaluate the need to deepen our navigation channels to accommodate the largest container ships and it is expected that USACE will follow up with a feasibility study to explore alternatives for deepening. Grain The Pier 86 Grain Terminal handles corn and soy beans from the upper Midwest states. Despite its age, the terminal is still competitive for handling these commodities. The competition for this market includes the Tacoma facility and several of the facilities on the Columbia River. Capacity is increasing at these alternatives, but the overall market projection is very strong and our terminal should remain competitive and productive for a long time. Grain volumes have been consistent in 2014, with soybeans and corn export activity close to the volumes prior to the 2012/2013 U.S. drought. This trend is expected to continue well into the 2015 harvest year, particularly for soybean exports. For 2015, the U.S. share of global trade is likely to remain at the 2014 level even with higher competition from South America. (US Department of Agriculture, Grains and Oilseeds Outlook, Feb 2014). Industrial Properties Consistent with the regional figures discussed under the Industry Assessment, the forecast for the Seattle Close-In industrial market is for lease rates to hold steady, with slight upticks in rents possible. We expect demand for Seaport industrial properties to continue to be consistent. The Seaport Lease and Industrial properties staff will continue to manage the industrial portfolio for the purpose of maximizing revenue by balancing rental rates (demand) with fluctuating supply to match the performance of local Seattle Close-In market. Cruise Moderate growth is expected for Seattle in 2015. There will be an increased number of vessel calls, including an additional Holland America Line ship sailing on Mondays. Revenue passenger counts are expected to increase to just less than 900,000. Based on recent surveys, the level of satisfaction for Seattle cruise passengers exceeds industry standards. The passengers surveyed express a strong desire to return to Seattle again in the future. The number of pre and post cruise passenger visits is steadily increasing in the region. Maritime Operations Fishing fleet homeport demand is expected to remain stable in 2015. Fishing, tug and barge companies are making significant investments in vessel improvements and system upgrades. Other marine industrial moorage is expected to remain stable with moderate growth over time. The energy sector is driving change in maritime facilities as forward effort continues in oil exploration in north Alaska and as liquefied natural gas (LNG) for marine vessels becomes more prevalent in our region. Page 4 CHALLENGES AND OPPORTUNITIES: Containers Challenges Erosion of regional competitiveness Reduced import first ports of call Reduced capacity for exports Aging utilities on container terminals Containers Opportunities Terminal modernization will position Seattle well for future business Port cooperation will allow Seattle to focus on broader competitiveness Potential to partner with Port of Tacoma on a regional radio frequency identification (RFID) system Heavy Haul Network implementation Grain Challenge Grain volumes are at risk in the event of another drought in the mid-west Grain Opportunity New opportunities for grain is a 10% increase in rates with the pending new lease and with the grain operator increasing activity driven by the grain discount incentive for higher volumes Cruise Challenges Deteriorating berth fender systems Controlling the cost of building, maintaining and operating marine terminals Limited capital capacity for investment in cruise terminal modernization to support larger ships Cruise Opportunity Increased demand for shorter cruise itineraries Maritime Operations Challenges Liquefied natural gas as vessel fuel infrastructure needed for terminal storage and harbor bunkering Maritime Opportunity Ability to set up short term Transportation Worker Identification Credential (TWIC) berths Opportunities for homeport bases supporting seafood and tug fleets Environmental Services and Planning Challenges and Opportunities Washington State has increasingly stringent regulations, particularly in the area of stormwater, construction and sediment clean up, these can add substantial costs and impediments to business operations Funding is increasingly difficult to obtain for grant funded projects and funds available from business revenues are also increasingly constrained. However, proposed changes to MTCA grant rules may open up funding opportunities Clean up project and permitting schedules are controlled by regulatory agencies and may move slowly City policies for densification can make maintaining industrial uses challenging Increasing control on Green House Gases could be both a challenge and an opportunity Page 5 STRATEGIES AND OBJECTIVES STRATEGY: IMPLEMENT CENTURY AGENDA STRATEGIES POSITION THE PUGET SOUND REGION AS A PREMIER INTERNATIONAL LOGISTICS HUB Objective: Grow Seaport annual container volume to more than 3.5M TEU's (Big Ship Ready) Performance Measures Performance Target Actions T5 Modernization Complete design, permitting Continue oversight of design and permitting Program (Dock, Berth, and tenant selection process phase of program Power) in 2016 Commence tenant selection process Advance the East and Complete the Recon study Monthly dredge team meetings West Waterways in Q3 2014 Meet data needs for study deepening project with the U.S. Army Corps of Engineers (USACE) Increase business through Continue outreach to Manage account base of shipping lines Port of Seattle through shipping lines, beneficial Manage account base of local and national level strategic customer cargo owners, railroads import and export accounts outreach Targets set and activities Collaborate with Port of Seattle marine terminal tracked operators to facilitate customer issues and increase container business National and local meetings with railroads to advance regional competitiveness Advance initiatives to Expand economic value of Foreign Trade Zone anchor and increase cargo (FTZ) throughput by developing target accounts volume and value Targets Collaborate with regional Economic set and activities tracked Development Corporations (EDC) on FTZ promotion Promote transload and warehouse activities to anchor business to Puget Sound. Match opportunities for business; collaborate with Public Affairs on policy agenda Implement Export Program Advance Port of Seattle Influence reform of Puget Attend pilotage meetings competitiveness though Sound Pilotage tariff and Provide information needs to support reform to strategic stakeholder policies Activities tracked improve Port competitiveness outreach Work with railroads to National and local meetings with railroads to increase focus on PNW match up business opportunities for domestic intermodal and collaborate and international intermodal services on strategy for terminal modernization Page 6 Steward regional freight Seaport freight mobility Review project designs and special event plans mobility needs are integrated into for impacts to freight mobility project designs, Communicate construction and special event construction traffic related traffic impacts to Seaport stakeholders management, special event Collaborate with local and regional and other planning efforts transportation groups to encourage customer and with the City and State. stakeholder involvement in freight mobility issues Heavy Haul corridor Promote expansion of Heavy Haul corridor with implemented. stakeholders. Director, Seaport Commercial Strategy is Port representative to Seattle Freight Advisory Board Terminal 46 development Meet Terminal 46 lease Complete storm water improvements program obligations Continue work on dock upgrade for big ship ready Continue work on other lease elements Objective: Structure our relationships with Washington ports to optimize infrastructure investments and financial returns Performance Measures Performance Target Actions Support Washington Provide support as Provide seaport expertise ports partnership requested Provide financial information and financial initiative analyses Objective: Triple the value of our outbound cargo to over $50 billion Performance Measures Performance Target Actions Refine and implement a Activities tracked Complete research project to identify high value containerized export commodities and potential for increased volume strategy & program through POS. Collaborate with Government Affairs to advance policy initiatives that facilitate growth of PNW market & infrastructure Leverage FTZ #5 to attract high value manufacturing and export opportunities Work with shipping lines and exporters to increase shipments of refrigerated commodities through POS Promote Alaska and Hawaii trade in calls with importers & exporters Objective: Double the economic value of the fishing and maritime cluster Performance Measures Performance Target Actions Grow existing and attract Increase/expand existing Support existing customer base efforts to grow new seafood value seafood customers. Page 7 Attract new seafood Recruit new seafood companies to the Port customers. Construct additional dry Meet fishing and maritime Complete an analysis to develop a new portable storage facilities at customer on site dry storage dry storage facility at Terminal 91 by year-end Terminal 91 needs in support of their 2014 size and placement location to be operations at Terminal 91 determined Complete rehabilitation Rebuild berths 6 and 8 with Complete an analysis to make a decision of Pier 90 structure adjacent uplands regarding prioritization/funding plan for the design and permitting by year-end 2014 STRATEGY: IMPLEMENT CENTURY AGENDA STRATEGIES ADVANCE THIS REGION AS A LEADING TOURISM DESTINATION AND BUSINESS GATEWAY Objective: Double the economic value of cruise traffic to Washington State Performance Measures Performance Target Actions Grow our market share in Commitment from Provide POS representation in the Cruise Lines homeport cruise industry customers for shorter International Association (CLIA) Executive itineraries for 2016 and Partner Program at annual CLIA events beyond including the Leadership Forum, Congressional Commitment from new Caucus and Cruise3Sixty tourism/ travel trade customer for homeport show. CLIA provides forum to influence vessel for 2016 and beyond positive outcomes through engaged participation of stakeholders , aligning messaging on critical issues to speak through one voice Support Cruise Shipping Miami- Seatrade Miami, West Coast Collaborative, Cruise the West (CTW). Work with other ports in CTW to promote West Coast/ Alaska and Hawaii cruise markets at annual industry conference and trade show. Cost of booth shared with other Ports Work with other Pacific Northwest ports on joint marketing efforts to promote shorter cruise itineraries. Prepare Port of Seattle for Identify operational Work with the airport staff to improve the changes occurring in improvements to increase passenger/bag efficiencies and logistics between the cruise Industry passenger terminal P66, SCCT and STIA Larger ships will efficiencies Work with Customs Border Patrol (CBP) to eventually be on the West Complete feasibility study, improve passenger processing efficiencies (i.e. Coast conceptual design explore onboard clearance) at P66, SCCT and development, estimate cost, STIA schedule and permitting Work with SPM, AV and consultants to requirements for potential increase/optimize P66 passenger processing cruise terminal expansion capacity and utilization Seek long-term berthing commitment from cruise line for future large ship Page 8 Increase pre and post Increase the awareness of Partner with Visit Seattle, Washington Tourism cruise passenger stays in the travel industry and top Alliance and local business on familiarization Seattle and the region selling cruise travel agents events and cruise line visits on Seattle and the region STRATEGY: IMPLEMENT CENTURY AGENDA STRATEGIES USE OUR INFLUENCE AS AN INSTITUTION TO PROMOTE SMALL BUSINESS GROWTH AND WORKFORCE DEVELOPMENT Objective: Increase the proportion of funds spent by the port with qualified small business firms on construction goods and services to 40% of eligible dollars spent Performance Measures Performance Target Actions Maintain high level of Continue record of more Execute contracts contract and consultant than 40% of funds spent by work performed by small the Seaport Division on businesses contracting going to small businesses Objective: Increase work force training, job and business opportunities for local communities in maritime, trade, travel and logistics Performance Measures Performance Target Actions Support workforce Support workforce Interface with Manufacturing Industrial Council development in maritime development in maritime of Seatttle cluster cluster STRATEGY: IMPLEMENT CENTURY AGENDA STRATEGIES BE THE GREENEST AND MOST ENERGY EFFICIENT PORT IN NORTH AMERICA Objective: Meet all increased energy needs through conservation and renewable sources Performance Measures Performance Target Actions Reduce electrical energy Implement 2014 adopted Establish baseline use needs through energy performance plan conservation Conduct 1 to 3 energy Install SBM outdoor lighting upgrades studies at port or tenantowned facilities Page 9 Objective: Meet or exceed agency requirements for storm water leaving facilities owned or operated by the port Performance Measures Performance Target Actions Complete lower Complete by Q3 2015 Finish terminal clean outs Duwamish line and catch Receive 100% Submit documentation for 100% Interagency basin clean out reimbursement Agreement reimbursement Meet conditions of Port Manage stormwater Implement programs to accomplish Phase I municipal program within budget necessary tasks within budget NPDES permit Q4 Optimize review process Achieve 100% review of construction for new construction projects by Q4 projects No non-compliance Prepare Annual report to Ecology to conditions demonstrate 2014 compliance. Track 2015 compliance for 2016 report Facilitate Industrial Continue to work Participate in WPPA led process Permit Compliance collaboratively with tenants, Engage with tenants as appropriate WPPA, and Ecology to develop reasonable approaches to permit compliance Objective: Reduce air pollutants and carbon emissions Performance Measures Performance Target Actions Continue to implement Trucks 220 trucks Continue implementing ScRAPS 2 project Northwest Ports Clean scrapped and replaced by Encourage truck companies to develop fuel- Air Strategy Q4; 30% of trucks and 30% efficiency plans of trips meet 2015 target (have model year 2007 or newer engine) Port Administration fuel Complete fuel efficiency (including anti-idling efficiency plan (including and other operational measures) plan for Port anti-idling and other fleet operational measures) in place for Port vehicle fleet by Q4 Clean construction practices Work with Capital Development Division on for Port-led constuction procedure to include clean construction practices in place by Q4 elements into project design and construction using AAPA sustainability checklist Page 10 Reduce carbon emissions Conduct 2014 The Climate Complete TCR inventory and submit to TCR from port operations Registry (TCR) inventory by Q3 2015 Downward trend in total Analyze results and trends in GHG emissions Green House Gases (GHG) Update energy performance plan to ensure emissions reported to The continued downward trend in GHG emissions Climate Registry Objective: Anchor the Puget Sound urban-industrial land use to prevent sprawl in less developed areas Performance Measures Performance Target Actions Strengthen industrial land City's Comprehensive Plan Engage in in City public process associated with use regulations in City's update process retains land use studies and processes by Comprehensive Plan and/or improves the advocating with City staff, update and in City land preservation of industrial use code land use policies and writing comment letters as opportunities protects freight corridors arise, providing public testimony at City Council City's arena triggered land meetings, and; use studies result in no residential or lodging uses collaborating with a wide range of in the stadium overlay stakeholders aligned with industrial district and that these preservation and coordinate mutual actions studies result in enhanced as appropriate industrial friendly land use regulations in the Duwamish manufacturing/ industrial center Objective: Restore, create and enhance 40 additional acres of habitat in the Green/Duwamish watershed and Elliot Bay Performance Measures Performance Target Actions Create 13 acres of habitat Construction underway by Bid and award Q1 at T117 by 2016 Q3 Start construction Q3 Objective: Meet local, state and federal environmental regulations as effectively and efficiently as possible Performance Measures Performance Target Actions Implement 1. Complete Lower 1. Complete fisher study by Q4, Activated Comprehensive Duwamish Agreed Order Carbon study design by Q2 and award Environmental Response, work by end of 2017 construction contract by Q4 Compensation, and Liability Act (CERCLA) 2. T91 cleanup develop 2. Program approved by Q2 and and Model Toxics and implement long term implementation begun by Q3 Control Act (MTCA) compliance monitoring projects as efficiently and and maintenance program Page 11 effectively as possible 3. East Waterway 3. Draft final report to EPA by end of Q1. Feasibility Study Finalized by Q2 finalized by Q2 2014 4. T115N Remedial 4. Complete Remedial Investigation field work Investigation and by Q3. Submit draft report by Q4 Feasibility Study. Submittal of draft Remedial Investigation by Q4 5. Design and implement 5. Complete design by Q4 the remedial action at T30 cleanup site by Q4 2016 STRATEGY: MANAGE OUR FINANCES RESPONSIBLY - OPTIMIZE SEAPORT FINANCIAL PERFORMANCE Objective: Meet 2015 financial targets Performance Measures Performance Target Actions Seaport Division 2015 Net Operating Income of Continually monitor potential risks to Net Net Operating Income $TBD Million at Operating Income 12/31/2015 Develop plans to mitigate or offset potential losses resulting from these risks Maintain and enhance Year-end occupancy rates Renew existing leases and/or attract new tenants Seaport Industrial meet targets: to occupy available properties Property Occupancy Industrial Rates and Budgeted Revenue Bldgs/Warehouses 93% Land, Improved Submerged 87% Renew expiring leases: Renew existing leases and/or attract new tenants Savanah Logistics LLC to occupy available properties Total Reclaim Incorporated Kinder Morgan Liquids Terminals LLC Seattle Tunnel Partners Olympic Tug and Barge Implement berth surveys Reduce survey costs Scale back terminal lead line surveys from yearly to every three years. Page 12 Objective: Grow Seaport revenue Performance Measures Performance Target Actions Pursue new Industrial Increase utilization of Market properties Properties tenants for available properties (asset Enter into agreements to enhance utilization of available properties (asset impaired properties) such restricted use properties for purposes of impaired properties) as: increasing Seaport revenues Terminal 5 CFS Identify new business prospects through Terminal 10 dedicated resource of Seaport Client Manager Terminal 25 South focused on seeking new revenue opportunities for Seaport non-container facilities Proposal plan to position Implement Plan during 2nd Develop Marketing Plan and or Request for Terminal 106-1 as a quarter of 2015 proposals Warehouse facility to continue and enhance Seaport revenues Commercial moorage Commercial moorage Facilitate construction of new moorage float for revenue revenue increase Seattle Fire Department lease at Pier 90 Complete construction of Pier 34 Mooring Dolphins. Open for barge moorage Q2 2015 Complete Street Vacation Complete all T18 Reach agreement with City on Street Vacations obligations to the City of requirements by the end of conditions Seattle for Terminal 18 2015 Objective: Reduce the Port's environmental liability through cost recovery Performance Measures Performance Target Actions Partner reimbursements Port partners are invoiced Timely preparation of partner billings invoiced and partners pay within 30 days after month- Monitor timeliness of partner payment with in a timely manner end follow-up on any deliquencies Department of Ecology Submissions are completed Proper set up of processes to to efficiently and Grants are processed and reviewed within 30 effectively comply with grant requirements quarterly days after quarter-end Timely preparation and review of grant submissions Insurance submittals are Submissions are completed Proper set up of processes to efficiently and completed monthly and reviewed within 45 effectively meet insurance requirements days after month-end. Timely preparation and review of insurance submissions Page 13 Objective: Maintain existing assets and invest in new developments to sustain and enhance Seaport vitality Performance Measures Performance Target Actions Continue Dock Upgrade Maintain docks for industry Monitor plan and implement minor repairs at work at container docks use T18 Continue to update asset Updated list available in Have updated list of needed projects available management plan early May for budget process STRATEGY: CONSISTENTLY LIVE BY OUR VALUES THROUGH OUR ACTIONS AND PRIORITIES Objective: Align leadership, people and systems with strategic priorities and plans Performance Measures Performance Target Actions Alignment of Seaport Seaport Division staff have Seaport "All-Hands" meetings are held on a Division staff with been briefed on Seaport monthly basis where staff is briefed on current strategic priorities and strategic priorities and plans events including at least annually Seaport plans Strategic Plan. Objective: Strengthen a high integrity, continuous improvement culture Performance Measures Performance Target Actions Work process Staff is process Leadership reinforces need to continually look improvements improvement oriented for ways to do things more effectively and implementing small efficiently, even with small changes improvements as well as Celebrate successes in implementing process more significant items. improvements both big and small Objective: Increase organizational and individual ownership for safe and secure work practices and healthy living Performance Measures Performance Target Actions Seaport Security Program Provide support in Provide information and tools needed for each Manager supports Non- developing and maintaining department to develop COOP Aviation Departments COOP Information sharing for individuals to be with their Continuity of prepared at home and within their own work Operations Plans (COOP) environment Page 14 SEAPORT DIVISION 2015 BUSINESS PLAN Appendix containing 2015 Business Plan Documents for: Commercial Strategy Pages A1-A4 Seaport Lease & Asset Management Pages A5-A9 Cruise & Maritime Operations Pages A10-A15 Environmental Services & Planning Pages A16-A21 Seaport Finance Pages A22-A26 APPENDIX SEAPORT DIVISION BUSINESS AND SERVICE GROUPS This page is intentionally left blank APPENDIX SEAPORT DIVISION BUSINESS AND SERVICE GROUPS COMMERCIAL STRATEGY 2015 BUSINESS PLAN MISSION: Increase container business through Port of Seattle and increase the value of export cargo. Build relationships with key decision makers to influence routings through our port by providing expertise and solutions. Identify and inform about trends in the container business to create strategy for increasing future volume. DESCRIPTION: The Commercial Strategy team builds and manages Port relationships with key customer segments including Shipping Lines, Beneficial Cargo Owners & Logistics Providers, Terminal Operators and Railroads to increase volume through the Port of Seattle's container facilities. Commercial Strategy identifies and reports on trends in the industry, barriers to business, and performs competitive analysis to create strategy for increasing the container business. The team collaborates with other departments to implement policy, freight mobility, environmental programs and other initiatives with POS customers. STRATEGY: Focus on key customer segments to anchor and increase volume through Seattle. Increase the value of exports by looking for opportinites to increase volume and to also develop higher volumes of high-value exports. Support strategy by implementing a media outreach plan and by providing research and analysis on market trends and opportunities. INDUSTRY ASSESSMENTS: The container business is going through unprecedented changes with consolidation into three new "mega" alliances, deployment of large ships, terminal automation, and increased competition from Canadian and East Coast ports. Shipping lines are focused on cost reduction. Terminals are being rationalized and the future will favor larger, more cost effective operations, with high productivity rates to handle large ships and large volumes. The dominant railroad in the PNW, BNSF, is currently giving priority to energy products and allowing erosion of intermodal traffic to other gateways, impacting the competitiveness of Port of Seattle. BUSINESS ASSESSMENTS: The Port of Seattle is positioned close to North Asia and is a viable gateway to support a "4 corners" distribution strategy. The Port is served by two Class 1 railroads, with both on-dock and near-dock intermodal capacity, and easy access to the Interstate Highway system. The Port has made investments in habor infrastructure to create fully grade-separated access to all of the container terminals. The PNW has a large, diverse export market, including large volumes of high value refrigerated cargo. Three of the container terminals are big ship ready. USACE has received funding to complete a reconnaissance study to evaluate the need to deepen our navigation channels to accommodate the largest container ships and it is expected that USACE will follow up with a feasibility study to explore alternatives for deepening. CHALLENGES AND OPPORTUNITIES: Regional competitiveness Capacity for exports Import first port of call Terminal upgrade Port cooperation Page A-1 2015 STATEGIES AND OBJECTIVES STRATEGY: IMPLEMENT CENTURY AGENDA STRATEGIES POSITION THE PUGET SOUND REGION AS A PREMIER INTERNATIONAL LOGISTICS HUB Objective: Grow Seaport annual container volume to more than 3.5M TEU's (Big Ship Ready) Performance Measures Performance Target Actions Build base of accounts, Ocean Carrier Calls Manage account base of shipping lines and categorized by strategic Local: 1-2 x per year develop strategy to increase business through account segment, to POS National: 1-2 x per year understand business International: 1 x per year Set call frequency based on objectives with each trends, heighten customer. awareness of POS benefits, advance key Local & National Importer Manage local and national level Import initiatives, and to grow Calls accounts. existing business or Local: 1-2 x per year Creating target lists and call rotation plan based attract new business. National: 1 x per year on potential for increased business and around key port initiatives. Local & National Exporter Manage local and national level Export Calls accounts. Local: 1-2 x per year Creating target lists and call rotation plan based National: 1 x per year on potential for increased business and around key seaport initiatives. Terminal Operators Collaborate with POS T.O.'s to attract new POS: 1-2 x per year shipping lines, facilitate customer issues, and increase container business. Other: 1 x per year Maintain contact with other key TO's for industry benchmarking and to capitalize on opportunities for POS terminals. Railroads National and local meeings with RR's to Local: 1 -2 x per year advance regional competitiveness, match up business opportunities for domestic and National: 1 x per year international intermodal services, and to formulate strategy for terminal modernization project. Development of strategy Reports completed by Collect, analyze and report Seaport cargo for Seaport Container deadline statistics and metrics. business supported by competitive analysis, industry intelligence and Information updated & Maintain,update and create new intelligence compilation & analysis of stored on SharePoint. resources like Customer, Commodity and port and industry Competitor profiles and call reports. statistics. Research and report on competitive threats Perform trend analysis and prepare briefings Projects tracked Perform special business analysis projects for Seaport. Page A-2 Advance key initiatives Track FTZ promotion Expand economic value of FTZ thruput by with customer and other activities and calls developing target accounts. stakeholders that increase Collaborate with regional EDC's on FTZ business, support big ship promotion. ready infrastructure improvements, or are Track Transload & Promote transload & warehouse activities to aimed at reducing or Warehousing activities anchor business to Puget Sound. Match removing barriers to opportunities for business; collaborate with business through POS. Public Affairs on policy agenda. Freight Mobility Outreach Collaborate with Local & Regional Tracked transportation groups to inform customers, and encourage customer & stakeholder involvement SFAB Board Member in freight mobility issues. Promote expansion Heavy Haul corridor with stakeholders. Outreach tracked Collaborate with Government Affairs to facitate stakeholder involvement or awareness of key Port Policy initiatives like HMT, TIGER, Transportation Infrastructure, etc. Leverage trade organization relationships to advance policy initiatives. Monthly deepening team Coordinate and support forward movement of meetings USACE Feasibility Study for Harbor Meet data needs for the Deepening. study Pilotage meetings and other Improve Port competitiveness by working with related activities tracked Board of Pilotage Commissioners and stakeholders to reform PSP Pilotage Tariff and Policies. Multi-channel program to Number of ad placements Develop ad placement plan to advertise in promote the Seaport tracked per ad placement targeted trade publications with combination of container facilities and schedule print and digital media. increase awareness and business through Seaport. Projects tracked monthly Graphics creation for Seaport departmental Administed with support needs. of Public Affairs. Opportunities tracked Identify and engage in other media promotional Provide Graphics support monthly opportunities like press releases, interviews and for Seaport departments. editorial content. Distributed monthly Direct container customer outreach through monthly e-newsletter and monthly industry brief. Objective: Structure our relationships with Washington ports to optimize infrastructure investments and financial returns Performance Measures Performance Target Actions Collaborate with POT on 2 events Co-sponsorship and attendance at key customer commercial outreach for events Page A-3 the gateway Collaborate with POT on Pilotage rates Identify key issues and form workgroup teams key commercial issues Chassis evolution Railroads Objective: Triple the value of our outbound cargo to over $50 billion Performance Measures Performance Target Actions Complete research Study completed Q2 Analyze data to identify higher value project to identify high Commodity profiles commodities. value commodities and developed Q3 Develop commodity profiles that show major potential for increased shippers and supply chain for each commodity. volume through POS. Collaborate with Track meetings with Develop organization list that identifies key Government Affairs to organizations focus and priorties for each advance policy initiatives Quarterly meetings with GA team to develop that facilitate growth of policy agenda. PNW market & Implement iniatives with each organization. infrastructure. Leverage FTZ #5 to FTZ activity tracked Identify target FTZ market segments attract high value Develop list of target accounts manufacturing and export Work with City of Auburn to incorporate FTZ opportunities #5 into their Innovation Partership Zone. Work with shipping lines Track activity. Call on key reefer exporters. and exporters to increase Collaborate with reefer sales teams at shipping shipments of refrigerated lines to promote POS services commodities through POS. Promote a healthy Alaska Brochure developed Q2 Develop new domestic brochure and Hawaii trade. Activity tracked Promote domestic services with shippers Participate in Alaska Chamber events & meetings STRATEGY: IMPLEMENT CENTURY AGENDA STRATEGIES BE THE GREENEST AND MOST ENERGY EFFICIENT PORT IN NORTH AMERICA Objective: Collaborate with industry to reduce environmental impact while enhancing our competitive advantage Performance Measures Performance Target Actions Increase customer Track Events Participate in customer focused evironmental participation in air quality events. programs and awareness of POS Environmental Advantages Page A-4 SEAPORT LEASE & ASSET MANAGEMENT 2015 BUSINESS PLAN MISSION: Negotiate and manage Seaport leases, manage traffic issues related to key Seaport business, and manage assets to support the Port's overall goals and maintain a sustainable Seaport. DESCRIPTION: The major leases managed by this group include the container terminals at Terminal 5, Terminal 18, Terminal 30, Terminal 46 and Terminal 115; the grain facility at Terminal 86; and leases to support the fishing industry primarily at Terminal 91. The group also manages other industrial leases that support Seaport terminals and operations. Besides lease management, this team is also developing and will maintain an asset management system to track condition and projected investments in all Seaport assets. This team also coordinates Seaport traffic issues and cooperates with regional transportation planning. STRATEGY: Lease Management: Manage and lease the container terminals portfolio and enhance the value of the managed assets by increasing revenue and reducing expenses. As cargo volumes grow, we are also focused on trying to manage the impacts from that growth and anticipate future issues to allow for efficient growth to continue. As we move into the future, continued focus on technology issues at the terminals will help our port continue to be efficient. Asset Management: Through a number of major capital projects, the Seaport has enhanced its assets over the years. Now the focus is to develop and maintain a more comprehensive program of managing for the long term sustainability of the asset portfolio to the benefit of the Port mission and goals. We partner with our customers to ensure that their facilities, which are Port assets, are properly maintained to both preserve their value and help our customers to maximize their cargo throughput. We will focus on providing customer value through building and maintaining relationships with our key customers, and striving to understand and anticipate their needs. INDUSTRY ASSESSMENTS: Containers Steamship line consolidation ILWU contract renewal in 2014 Larger ships on TransPacific routes will need greater port infrastructure. Grain Global exports for soybeans are projected to be up 1.5 percent from 2013/14 due to an increase in protein meal consumption in China, which accounts for 30 percent of global protein consumption gains. Exports for corn are projected lower than 2013/14 as larger expected foreign supplies and lower import demand will limit U.S. shipments. Industrial Properties The region's industrial market has been consistent and steady. This trend is expected to continue in 2015. Employment growth in the region is also expected to be positive. With positive growth in both areas continuing to inch upward, absorption of industrial space has outpaced the delivery of new space which further supports the high occupancy and low vacancy numbers that we have seen in the Page A-5 industrial properties market. Rental rates will continue to be somewhat flat with the close in large industrial markets experiencing some modest increases. BUSINESS ASSESSMENTS: Containers Diminishing import cargo will hurt Washington exporters Chassis pooling in PNW still developing PNW terminal overcapacity and land rates are high Grain The Pier 86 Grain Terminal handles corn and soy beans from the upper Midwest states. Despite its age the terminal is still competitive for handling these commodities. The competition for this market includes the Tacoma facility and several of the facilities on the Columbia River. Capacity is increasing at these alternatives but the overall market projection is very strong and our terminal should remain competitive and productive for a long time. Grain volumes have been consistent in 2014, with soybeans and corn export activity close to the volumes prior to the 2012/2013 U.S. drought. This trend is expected to continue well into the 2015 harvest year, particularly for soybean exports. For 2015, the U.S. share of global trade is likely to remain at the 2014 level even with higher competition from South America. (US Department of Agriculture, Grains and Oilseeds Outlook, Feb 2014. Industrial Properties Consistent with the above regional figures, the forecast for the Seattle Close-In industrial market is for lease rates to hold steady, with slight upticks in rents possible. We expect demand for Seaport industrial properties to continue to be consistent. The Seaport Lease and Industrial properties staff will continue to manage the industrial portfolio for the purpose of maximizing revenue by balancing rental rates (demand) with fluctuating supply to match the performance of local Seattle Close in market. CHALLENGES AND OPPORTUNITIES: Potential to partner with Port of Tacoma on a regional Radio Frequency Identification (RFID) system Heavy Haul Network implementation Aging utilities on container terminals Grain volumes are at risk in the event of another drought in the mid-west. New opportunities for grain is a 10% increase in rates with the pending new lease and with the grain operator increasing activity driven by the grain discount incentive for higher volumes. Page A-6 2015 STRATEGIES AND OBJECTIVES STRATEGY: IMPLEMENT CENTURY AGENDA STRATEGIES POSITION THE PUGET SOUND REGION AS A PREMIER INTERNATIONAL LOGISTICS HUB Objective: Grow Seaport annual container volume to more than 3.5M TEU's (Big Ship Ready) Performance Measures Performance Target Actions T5 Modernization Complete design, permitting Continue oversight of design and permitting Program (Dock, Berth, and tenant selection process phase of program Power) in 2016 Commence tenant selection process Maintain and improve Seaport freight mobility Review project designs and special event plans freight mobility along the needs are integrated into for impacts to freight mobility Seaport's truck routes. project designs, construction traffic management, special event and other planning efforts with the City and State. Seaport stakeholders report Communicate construction and special event they get the information related traffic impacts to Seaport stakeholders. they need. Ensure that the City's and Plans and project designs Coordinate with City, State and Cruise team on State's design and address cruise needs, in street construction plans construction traffic particular P-66 cruise control plans for the terminal access. Central Waterfront, as well as special event traffic detour plans, accommodate cruise access needs. Terminal 46 development Meet Terminal 46 lease Complete storm water improvements program obligations Continue work on dock upgrade for big ship ready Continue work on other lease elements STRATEGY: IMPLEMENT CENTURY AGENDA STRATEGIES BE THE GREENEST AND MOST ENERGY EFFICIENT PORT IN NORTH AMERICA Objective: Reduce air pollutants and carbon emissions Performance Measures Performance Target Actions Maintain Radio RFID program runs Have a plan in place for handling first wave of Frequency Identification smoothly and data results RFID purchases reaching their maximum (RFID) program are accurate expected battery life Page A-7 STRATEGY: MANAGE OUR FINANCES RESPONSIBLY Objective: Meet 2015 financial targets Performance Measures Performance Target Actions Maintain and enhance Year-end occupancy rates Renew existing leases and/or attract new tenants Seaport Industrial meet targets: to occupy available properties Property Occupancy Industrial Rates and Budgeted Revenue Bldgs/Warehouses 93% Land, Improved Submerged 87% Renew expiring leases: Renew existing leases and/or attract new tenants Savanah Logistics LLC to occupy available properties Total Reclaim Incorporated Kinder Morgan Liquids Terminals LLC Seattle Tunnel Partners Olympic Tug and Barge Implement berth surveys Reduce survey costs Scale back terminal lead line surveys from yearly to every three years Objective: Grow Seaport revenue Performance Measures Performance Target Actions Pursue new Industrial Increase utilization of Market properties. Properties tenants for available properties (asset Enter into agreements to enhance utilization of available properties (asset impaired properties) such restricted use properties for purposes of impaired properties) as: increasing Seaport revenues Terminal 5 CFS Terminal 10 Terminal 25 South Proposal Plan to position Implement Plan during 2nd Develop Marketing Plan and or Request for Terminal 106-1 as a quarter of 2015 proposals Warehouse facility to continue and enhance Seaport revenues Complete Street Vacation Complete all T18 Reach agreement with City on Street Vacations obligations to the City of requirements by the end of conditions Seattle for Terminal 18 2015 Page A-8 Objective: Maintain existing assets and invest in new developments to sustain and enhance Seaport vitality Performance Measures Performance Target Actions Continue Dock Upgrade Maintain docks for industry Monitor plan and implement minor repairs at work at container docks use T18 Continue to update asset Updated list available in Have updated list of needed projects available management plan early May for budget process Page A-9 CRUISE & MARITIME OPERATIONS 2015 BUSINESS PLAN MISSION: Provide safe, secure and efficient cruise ship terminals and cargo handling maritime facilities which include large vessel berthing docks for moorage, working apron areas and related equipment, cruise passenger terminals, utilities and services to encourage current and new customers to move greater amounts of marine tonnage and cruise passengers through the Port of Seattle. Market and provide cruise ship services and facilities that maintain and grow the cruise business in the Seattle area. These facilities and services will enhance the economy of the region, protect jobs and provide a reasonable rate of return to the Port of Seattle and the citizens of King County while advancing the Port's Century Agenda Goals. DESCRIPTION: Cruise & Maritime Operations is made up of multiple deep water commercial moorage facilities in and around the harbor with over 17,000 lineal feet of large vessel berth moorage including two cruise passenger terminals. Maritime Facilities include: T91 piers 90 and 91, T46 North; plus vessel berths at P2, P17, 18N, P25, P28, P34, P69, and other maritime facilities. The two cruise terminals include a single cruise vessel berth facility at Pier 66, the Bell Street Pier Cruise Terminal, and a two berth facility at Terminal 91, the Smith Cove Cruise Terminal. Customers include cruise lines, cruise terminal operator, charter and excursion vessels, tug and barge companies, large fishing and commercial vessels, ships of state and other government vessels. Industry sectors served include cruise, marine transportation, staging and transport, stevedoring service providers, the commercial seafood industry, bunker and distillate fuel distribution, and tug and barge services. STRATEGY: Resource adjustments made in 2013 included staff realignment to our organizational structure necessary to accomplish our collective Port goals and objectives in the area of Maritime Operations, Maritime Business Development, Seaport Security and Emergency Preparedness. 2015 Business Strategy will focus on continued outreach to potential maritime business sectors in efforts to increase utilization levels of Seaport (noncontainer ) facilities. The new position of Seaport Client Manager a result of restructuring existing seaport staff will continue to seek opportunities to grow our port's market share of maritime business activity which aligns with the Century Agenda goals of supporting job growth in our region. Cruise: For the cruise business, our strategy is to market Seattle as a homeport and a port of call to cruise lines serving Alaska and the Pacific Northwest. Through this our goal is to maintain our market share, increase cruise passenger volumes and annual number of ship calls. We also create value for our customers by making our cruise terminals more efficient and cost effective; working with the Airport and logistic providers along with our cruise terminal operator to improve the operations and passenger experience at the Seaport and Airport; and working with the tourism and business community so that we maximize economic impact from visiting passengers and cruise ships. Maritime Operations: For docks/commercial moorage facilities, we work with the terminal operators, tugboat, fishing industry, stevedoring companies, vessel agents and other dock users to maximize the use of vessel berthing and dock facilities providing net income to the port. We focus on providing customer value through building and maintaining relationships with our key customers, and continually strive to better understand and anticipate their business needs. Retaining our current customers across all maritime sectors continues to be a key focus. We also invest in strategic capital improvements to maintain and improve facilities, accommodate current customers' needs, attract new business, and enhance revenue from our facilities. Page A-10 Focus for the coming year will be on retaining customers and growing core business, asset stewardship-- annual maintenance procedures and condition monitoring, advancing capital improvement programs that align with competing Seaport priorities, completing projects underway and expanding our green gateway strategy. This will include identifying storm water improvements needed at T91 along with seeking energy efficiencies and reducing operating costs through use of new technology in energy efficient yard lighting and security equipment. Seaport Security: The focus of Seaport Security will be to maintain compliance with regulations and policy, reduce security risks and to enhance business through identifying potential security technologies to improve the efficiency of our Port and customer operations and to reduce cost-of-investment when possible through the effective use of any available grants. Seaport Security will continue to provide security services to the Corporate, Real Estate and Seaport Divisions. Emergency Preparedness: In connection with the Airport Emergency Management program which covers the entire organization, Seaport will support Non-Aviation Departments in developing and maintaining their department Continuity of Operations Plans (COOP), Emergency Response Plans and Preparedness and assist in response to Non-Aviation emergencies. Updates will be made to the Seaport EP program, and information sharing and education will be provided to Non- Aviation staff to better prepare themselves for an emergency situation. INDUSTRY ASSESSMENTS: Cruise Global industry growth expected to continue in 2015. According to recent CLIA report, in the U.S. alone the cruise industry contributes $44 billion in positive economic benefits, including 363,000 jobs with direct and indirect employment paying more than$18 billion in wages. Market growth supported with global fleet expansion, larger ships with new product innovations to meet the high demands of consumers. Alaska Cruising market remains strong. Cruise lines presenting some of their best products here in the North West. 2015 vessel schedule for Seattle adds one additional homeport vessel sailing on Mondays and 3 larger newer ships to serve this market. Maritime Operations Heightened regulatory and environmental standards driving industry change. Requirement for cleaner fuel for ocean going vessels operating within the ECA in 2015. Supply of suitable and affordable marine terminals is growing increasingly scarce in the NW. Ongoing consolidation of the commercial fishing fleets will require changes in facilities and services to meet demand of larger homeport operations. BUSINESS ASSESSMENTS: Cruise Expecting moderate growth for Seattle in 2015. Increased number of vessel calls, including additional Holland America Line ship sailing on Monday. Revenue passenger counts expected to increase to just less than 900,000. Based on recent surveys Seattle cruise passengers level of satisfaction exceeds industry standards. Passengers surveyed express strong desire to return to Seattle again in the future. The number of pre and post cruise passenger visits is steadily increasing in the region. Maritime Operations Fishing fleet homeport demand is expected to remain stable in 2015. Fishing, tug and barge companies making significant investment in vessel improvements and system upgrades. Other marine industrial moorage is expected to remain stable with moderate growth overtime. Energy sector driving change in maritime facilities, as forward effort continues in oil exploration north Alaska and LNG for marine vessels becomes more prevalent in our region. Page A-11 CHALLENGES AND OPPORTUNITIES: Challenges Deteriorating berth fender systems. Controlling the cost of building, maintaining and operating marine terminals. Limited capital capacity for investment in cruise terminal modernization larger ships. LNG as vessel fuel infrastructure for terminal storage and harbor bunkering. Opportunities Increased demand for shorter cruise itineraries. Ability to set up short term TWIC berths. Opportunities for homeport bases supporting seafood and tug fleets. 2015 STRATEGIES AND OBJECTIVES STRATEGY: IMPLEMENT CENTURY AGENDA STRATEGIES POSITION THE PUGET SOUND REGION AS A PREMIER INTERNATIONAL LOGISTICS HUB Objective: Structure our relationships with Washington ports to optimize infrastructure investments and financial returns Performance Measures Performance Target Actions NWMTA/CAPA meeting Maintain engaged Provide POS representation from business group participation participation through and Legal department in all meetings of discussions with WA and NWMTA and CAPA/NWMTA regarding rates CA port authorities to and terminal investments advance common interests Objective: Triple the value of our outbound cargo to over $50 billion Performance Measures Performance Target Actions Increased frozen seafood Grow volume to over Partner with Seafood customers to attract more cargo volume 50,000 MT cargo through Port Facilities Objective: Double the economic value of the fishing and maritime cluster Performance Measures Performance Target Actions Grow existing seafood Increase/expand existing Support existing customer base efforts to grow value seafood customers Attract new seafood Attract new seafood Recruit new seafood companies to the Port value customers Additional dry storage Meet fishing and maritime Complete an analysis to develop a new portable facilities T91 customer on site dry storage dry storage facility at T91 by year end size and needs in support their placement location TBD operations at T91 Page A-12 Complete rehabilitation Rebuild berths 6 and 8 with Complete an analysis to make a decision of Pier 90 structure. adjacent uplands. regarding prioritization/funding plan for the design and permitting by year end STRATEGY: IMPLEMENT CENTURY AGENDA STRATEGIES ADVANCE THIS REGION AS A LEADING TOURISM DESTINATION AND BUSINESS GATEWAY Objective: Double the economic value of cruise traffic to Washington State Performance Measures Performance Target Actions Grow our market share in Commitment from Provide POS representation in the CLIA homeport cruise industry. customers for shorter Executive Partner Program at annual CLIA itineraries for 2016 and events including the Leadership Forum, beyond. Congressional Caucus and Cruise 3 Sixty tourism/ travel trade show. CLIA provides Commitment from new forum to influence positive outcomes through customer for homeport engaged participation of stakeholders , aligning vessel for 2016 and beyond messaging on critical issues to speak through one voice Support CSM- Seatrade MIAMI West coast port collaboration "Cruise the West Assoc CTW " Work with other ports in CTW to promote West Coast/ Alaska and Hawaii Cruise Markets at annual Industry Conference and Trade Show. Cost of booth shared with other Ports Work with other PNW ports on joint marketing efforts to promote shorter cruise itineraries. Prepare Port of Seattle for Identify operational Work with the airport staff to improve the changes occurring in improvements to increase passenger/bag efficiencies and logistics between the cruise Industry passenger terminal P66, SCCT and STIA Larger ships will efficiencies Work with CBP to improve passenger eventually be on the West Complete feasibility study, processing efficiencies (i.e. explore onboard Coast conceptual design clearance) at P66, SCCT and STIA development, estimate cost, Work with SPM, AV and consultants to schedule and permitting increase/optimize P66 passenger processing requirements for potential capacity and utilization cruise terminal expansion Seek long-term berthing commitment from cruise line for future large ship Increase per and post Increase the awareness of Participate with Visit Seattle, Washington cruise passenger stays in the travel industry and top Tourism Alliance and local business on Seattle and the region. selling cruise travel agents familiarization events and cruise line visits. on Seattle and the region. Page A-13 STRATEGY: IMPLEMENT CENTURY AGENDA STRATEGIES USE OUR INFLUENCE AS AN INSTITUTION TO PROMOTE SMALL BUSINESS GROWTH AND WORKFORCE DEVELOPMENT Objective: Increase the proportion of funds spent by the port with qualified small business firms on construction goods and services to 40% of eligible dollars spent Performance Measures Performance Target Actions Review maintenance and Identify small business Select small business contractors from CPO small cap work for small contractors business list when need for outside services is business opportunities necessary Objective: Increase work force training, job and business opportunities for local communities in maritime, trade, travel and logistics Performance Measures Performance Target Actions Veterans fellowship Hire one Veterans Fellow in Seek opportunites to hire a Veterans Fellow program 2015 STRATEGY: IMPLEMENT CENTURY AGENDA STRATEGIES BE THE GREENEST AND MOST ENERGY EFFICIENT PORT IN NORTH AMERICA Objective: Meet all increased energy needs through conservation and renewable sources Performance Measures Performance Target Actions Identify new greener Develop plans to provide LNG fuel identify when, where and how LNG fuels for vessels green fuels throughout can be stored and bunkered in our harbor harbor Meet with carriers, fuel distributors and Research conceptual plan to regulators re: LNG terminal development and offer LNG harbor wide bunkering protocols Identify energy efficient Scope and authorize new Complete work maintenance projects at LED lighting at SCCT Terminal 91 Objective: Collaborate with industry to reduce environmental impact while enhancing our competitive advantage Performance Measures Performance Target Actions LNG ready harbor Meet with ocean cargo and Meet with at least one cruise operator , one cruise operators and harbor cargo operator and two harbor operators operators Participate in the Reach agreement between Facilitate communication with all parties, Port amendment process for the three signatories of the Commission and staff and the cruise lines and the Memorandum of MOU on proposed participate in meetings and conference calls Understanding between amendments the Port of Seattle, CLIANWC and Ecology Page A-14 STRATEGY: MANAGE OUR FINANCES RESPONSIBLY Objective: Grow Seaport revenue Performance Measures Performance Target Actions Revenue growth Commerical moorage Complete construction and begin use of new increase moorage float for Seattle Fire Department lease of P90. 5 yr term SFD Fire Station No.5 Complete Construction of P34 Mooring Dolphins Open for barge moorage by Q2 Revenue growth Identify new business Attend major Breakbulk and LNG conferences prospects to identify new and or emerging markets in need of Port facilities in this region. Revenue growth Identify new business Dedicated resource of Seaport Client Manager prospects focused on seeking new revenue opportunities for Seaport non container facilities. STRATEGY: CONSISTENTLY LIVE BY OUR VALUES THROUGH OUR ACTIONS AND PRIORITIES Objective: Align leadership, people and systems with strategic priorities and plans Performance Measures Performance Target Actions PREPs aligned with Port 100% of CMOS annual Ensure all staff Performance Plans incorporate priorities PREPs include metrics tied at least one metric tied to Port Strategic to Port priorities Priorities and Plans Objective: Strengthen a high integrity, continuous improvement culture Performance Measures Performance Target Actions Continuous Process One new idea for CPI Identify and propose one new opportunity for Improvement (CPI) evauluation evauluation under the CPI process. Embrace CPI improvements CMOS aware of emerging new processes, and adopted by Seaport adopts when appropriate Objective: Increase organizational and individual ownership for safe and secure work practices and healthy living Performance Measures Performance Target Actions Support Non-Aviation Provide support in Provide information and tools needed for each Departments with their developing and maintaining department to develop COOP. Continuity of Operations COOP Information sharing for individuals to be Plans (COOP) prepared at home and within their own work environment Personal Protective 100% compliance CMOS staff utilizes appropriate PPE when on Equipment (PPE) on terminals/construction sites jobsites Page A-15 SEAPORT ENVIRONMENTAL SERVICES & PLANNING 2015 BUSINESS PLAN MISSION: Green Gateway Strategy is the Seaport's environmental strategy. This strategy seeks to enhance our competitive advantage and to be the global leader among ports in demonstrating stewardship and reduction of the environmental impact of our operations. DESCRIPTION: Seaport Environmental and Planning is comprised of teams of professionals working in Remediation, Air Quality, Permitting and Compliance and Facility and Land Use planning. We support both the Seaport and Real Estate Divisions and seek to demonstrate environmental stewardship and value to the business that we support and to the surrounding community. STRATEGY: Compliance Management: meet local, state and federal regulations as effectively and efficiently as possible. Commercial Support: collaborate with industry to reduce environmental impacts while enhancing our competitive advantage. Community Commitment: Engage stakeholders to build understanding and support for environmental initiatives. CHALLENGES AND OPPORTUNITIES: Washington State has increasingly stringent regulations, particularly in the area of stormwater, construction and sediment clean up, and these can add substantial costs and impediments to business and operations. Increasingly stringent regulations are creating a market for mitigation Funding is increasingly difficult to obtain for grant funded projects and funds available from business revenues are also increasingly constrained. However, proposed changes to MTCA grant rules may open up funding opportunities Clean up project and permitting schedules controlled by regulatory agencies and may move slowly City policies for densification can make maintaining industrial uses challenging Opportunities to further apply CPI principles to permitting Increasing controls on GHG could be both a challenge and an opportunity Page A-16 2015 STRATEGIES AND OBJECTIVES STRATEGY: IMPLEMENT CENTURY AGENDA STRATEGIES POSITION THE PUGET SOUND REGION AS A PREMIER INTERNATIONAL LOGISTICS HUB Objective: Grow Seaport annual container volume to more than 3.5M TEU's (Big Ship Ready) Performance Measures Performance Target Actions Co-manage Harbor-wide Work with ACE towards Contribute information as needed by USACE (East and West 2018 Feasibility completion Waterways): USACE/ Seattle Harbor Deepening Study Complete environmental Meet defined permit Prepare SEPA documents for comment review and prepare, schedule Prepare and submit permit documents submit and acquire Manage permitting process permits for Terminal 5 modifications Perform facility planning Planning services are Perform facility planning and analysis as needed and analysis related to completed expeditiously to by business units new business meet schedules established development proposals by the business units Planning services are performed at the appropriate level of conceptual development to ascertain initial assessment for developing a business case STRATEGY: IMPLEMENT CENTURY AGENDA STRATEGIES BE THE GREENEST AND MOST ENERGY EFFICIENT PORT IN NORTH AMERICA Objective: Meet all increased energy needs through conservation and renewable sources Performance Measures Performance Target Actions Reduce electrical energy Implement 2014 adopted Establish baseline use needs through energy performance plan conservation Conduct 1 to 3 energy Install SBM outdoor lighting upgrades studies at port or tenant- Energy audit FT, Jack Block Park and owned facilities possible one other Objective: Meet or exceed agency requirements for storm water leaving facilities owned or operated by the port Performance Measures Performance Target Actions Complete Lower Complete by Q3 2015 Finish terminal clean outs Duwamish line and catch Receive 100% Submit documentation for 100% Interagency basin clean out reimbursement Agreement reimbursement Page A-17 Meet conditions of Port 1. Manage stormwater 1. Implement programs to accomplish Phase I municipal program within budget necessary task within budget NPDES permit. Q4 2. Optimize review 2. Achieve 100% review of construction process for new projects by Q4. construction projects 3. No non-compliance 3. Prepare Annual report to Ecology to conditions demonstrate 2014 compliance. Track 2015 compliance for 2016 report. Facilitate Industrial Continue to work Participate in WPPA led process Permit Compliance collaboratively with Engage with Tenants as appropriate Tenants, WPPA, and Ecology to develop reasonable appraoches to permit compliance Objective: Reduce air pollutants and carbon emissions Performance Measures Performance Target Actions Continue to Implement OGV Port participation in Join 3rd party certification program Northwest Ports Clean 3rd party certification Encourage OGV partners to join 3rd party Air Strategy program by Q4; 10% of certification program vessels are in 3rd party certification program Q4 2015 CHE 50% of CHE meets Develop Port fuel efficieny plan (including anti- Tier 4i emission stds or idling and other operational measures) for CHE equiv. by Q4; Port and 50% and trucks of terminals have fuel- Encourage MTOs to develop anti-idling plan for efficiency plans by Q4 CHE and trucks Trucks 220 trucks Continue implementing ScRAPS 2 project scrapped and replaced by Encourage truck companies to develop fuel- Q4; 30% of trucks and 30% efficiency plans of trips meet 2015 target (have model year 2007 or newer engine) Port Administration Fuel Complete fuel efficiency (including anti-idling Efficiency plan (including and other operational measures) plan for Port anti-idling and other fleet operational measures) in place for Port vehicle fleet by Q4 Clean construction practices Work with CDD on procedure to include clean for Port-led constuction construction elements into project design and practices in place by Q4 construction using AAPA sustainability checklist Page A-18 Reduce carbon emissions Conduct 2014 The Climate Complete TCR inventory and submit to TCR from port operations Registry (TCR) inventory by Q3 2015 Downward trend in total Analyze results and trends in GHG emissions Green House Gases (GHG) Update energy performance plan to ensure emissions reported to The continued downward trend in GHG emissions Climate Registry Objective: Anchor the Puget Sound urban-industrial land use to prevent sprawl in less developed areas Performance Measures Performance Target Actions Strengthen industrial-land Replace 'IC' zoning with a Engage in in City public process associated with use regulations in City's new industrial zone concept land use studies and processes by Comprehensive Plan that better incentivizes advocating with City staff, update and in City land industrial development and use code. maritime-related writing comment letters as opportunities development arise, City's Comprehensive Plan providing public testimony at City Council Update process retains and meetings and /or improves preservation of collaborating with a wide range of Industrial land use policies stakeholders aligned with industrial and protects freight preservation and coordinate mutual actions corridors. as appropriate. City's arena triggered land use studies result in no residential or lodging uses in the stadium overlay district and that these studies result in enhanced industrial friendly land use regulations in the Duwamish MIC Objective: Restore, create and enhance 40 additional acres of habitat in the Green/Duwamish watershed and Elliot Bay Performance Measures Performance Target Actions Create 13 acres of habitat Construction underway by Bid and award Q1 at T117 by 2016 Q3 Start construction Q3 Generate revenue from Develop a wetland habitat Site selection - Q1 habitat sites mitigation bank and Prospectus approved by Interagency review evaluate other opportunities team Q2 for revenue generation Instrument approved Q4 Investigate potential of using habitat sites for city of Seattle ILF program mitigation Page A-19 Objective: Meet local, state and federal environmental regulations as effectively and efficiently as possible Performance Measures Performance Target Actions Implement CERCLA and 2. Complete Lower 1. Complete fisher study by Q4, Activated MTCA projects as Duwamish Agreed Carbon study design by Q2 and award efficiently and effectively Order work by end of construction contract by Q4 as possible 2017 2. T91 cleanup develop 2. Program approved by Q2 and and implement long implementation begun by Q3 term compliance monitoring and maintenance program 3. East Waterway 3. Draft final report to EPA by end of Q1. Feasibility Study Finalized by Q2 finalized by Q2 4. T115N Remedial 4. Complete Remedial Investigation field work Investigation and by Q3. Submit draft report by Q4 Feasibility Study. Submittal of draft Remedial Investigation by Q4 5. Design and implement 5. Complete design by Q4 the remedial action at T30 cleanup site by Q4 2016 Establish new Approved permit Q4 Application to regulatory agencies Q2 programmatic permit for Outreach/negotiation Q2/Q3 additional programmatic Approval Q4 permit Manage permit and Obtain Prepare and submit application, negotiate environmental approval permits/authorization and approval process, obtain approvals process that meets design environmental reviews Meet schedule and budget. schedule and budget when requested Comply with dangerous Zero non-compliance Track and manage hazardous and dangerous waste, derelict vessel, situations waste disposal records USts, spill prevention Maintain UST records control and Respond to and manage spill and illicit countermeasures (SPCC) discharge to regulations regulations Facilitate compliance by Conduct inspections in tenants through ECAP compliance with Phase 1 program municipal permits Page A-20 STRATEGY: MANAGE OUR FINANCES RESPONSIBLY OPTIMIZE SEAPORT FINANCIAL PERFORMANCE Objective: Reduce the Port's environmental liability through cost recovery Performance Measures Performance Target Actions Provide cost recovery Support the legal team in all Research and provide backup documents for support as needed to environmental related legal action other groups actions as needed in 2015 Provide information in a Provide information and system support for timely manner to other other departments as needed groups/departments in 2015 Provide support to legal for Provide technical and strategy support as needed the lower Duwamish cleanup allocation Continue to apply for Provide 10 year forecasts and grant proposals remedial action grants STRATEGY: CONSISTENTLY LIVE BY OUR VALUES THROUGH OUR ACTIONS AND PRIORITIES Objective: Strengthen a high integrity, continuous improvement culture Performance Measures Performance Target Actions Continue CPI progress Complete additional CPI Streamline ERL update process or ILA process. process Page A-21 SEAPORT FINANCE 2015 BUSINESS PLAN MISSION: To be a leading edge provider of quality financial management services and strategic support to the Port Commission, Executive, and Seaport and Real Estate Divisions and to play a fiduciary role in ensuring the most efficient and effective use of Port resources. To be viewed by our customers as strategic business partners who provide exceptional, value-added services that enable them to achieve their mission and goals. We assume personal responsibility for understanding our customers' needs and delivering services that consistently exceed their expectations. DESCRIPTION: The Seaport Finance group provides financial consulting services and expertise to the Seaport and Real Estate Divisions of the Port of Seattle. STRATEGY: Provide the Commission, Executive, Seaport and Real Estate leaders with the tools to make informed business and strategic decisions related to current and future financial performance of the two divisions and the Port overall. Ensure that the Seaport and Real Estate Divisions are in compliance with accounting policies and procedures, Generally Accepted Accounting Principles (GAAP) and Governmental Accounting Standards to support a clean opinion on the Port of Seattle's audited financial statements. Reduce the Port of Seattle's environmental liability through cost recovery from clean-up partners, grants and insurers. Attract, retain and develop a staff of financial experts with strong business sense and a customer service focus. Continuously seek out ways to improve processes to make them more effective and efficient. INDUSTRY ASSESSMENT: Not applicable BUSINESS ASSESSMENT: The Seaport Finance team is made up of a group of dedicated, resourceful, and professional team members. We support a diverse group of businesses and an equally diverse group of customers who have varying knowledge of financial concepts, goals for financial improvement and wants/needs for financial support. Unlike the private sector, the Port of Seattle's primary goal is not just about improving the bottom line, but about creating jobs and economic vitality for the region while being a responsible steward of the environment. This creates a challenge for Seaport Finance where the focus is on improving the bottom line. We reconcile this situation by ensuring that the decision makers are well informed about the financial aspects and implications of decisions so that the appropriate tradeoffs are taken into consideration. CHALLENGES AND OPPORTUNITIES: Seaport and Real Estate Divisions are made up of a relatively diverse group of businesses that require lead time for new staff members to fully understand. Page A-22 Seaport Finance supports a diverse group of customers who have varying knowledge of financial concepts, goals for financial improvement and wants/needs for financial support. The budgeting cycle has extended from an approximately 4 month cycle (July October) to effectively 6 month cycle (May October). Recent staff turnover (a transfer and a retirement) reduced the average years of Port experience staff members. Time sensitive nature of business decisions typically require near immediate turn-around of financial analyses and other work projects. Due to volume of unanticipated requests we often find ourselves in a reactive mode rather than position to make improvements and otherwise be proactive. 2015 STRATEGIES AND OBJECTIVES STRATEGY: IMPLEMENT CENTURY AGENDA STRATEGIES POSITION THE PUGET SOUND REGION AS A PREMIER INTERNATIONAL LOGISTICS HUB Objective: Structure our relationships with Washington ports to optimize infrastructure investments and financial returns Performance Measures Performance Target Actions Financial analysis and Financial analyses are Gain understanding of peer port's reporting insights to support insightful, thorough and structure understanding of timely Determine methodology for making Port of financial position of Seattle's and peer port's financial results Washington ports comparable Develop formats for showing relative results for each port STRATEGY: MANAGE OUR FINANCES RESPONSIBLY Objective: Meet 2015 financial targets Performance Measures Performance Target Actions Seaport Finance & Operating Expenses within Develop realistic Budget Budget 2015 Operating 5% of 2015 Budget Monitor expenses on an ongoing basis and make Expenses adjustments in spending as needed Objective: Reduce the Port's environmental liability through cost recovery Performance Measures Performance Target Actions Partner reimbursements Port partners are invoiced Timely preparation of partner billings invoiced and partners pay within 30 days after month- Monitor timeliness of partner payment with in a timely manner end follow-up on any deliquencies Department of Ecology Submissions are completed Proper set up of processes to to efficiently and Grants are processed and reviewed within 30 effectively comply with grant requirements quarterly days after quarter-end Timely preparation and review of grant submissions Page A-23 Insurance submittals are Submissions are completed Proper set up of processes to efficiently and completed monthly and reviewed within 45 effectively meet insurance requirements days after month-end. Timely preparation and review of insurance submissions Objective: Provide timely, accurate, and insightful financial information and analyses for the Commission, Executive and other leadership teams for decision-making Performance Measures Performance Target Actions Financial analyses Financial analyses are Provide analyses to evaluate existing and insightful, thorough, changing business opportunities including: accurate, and timely. Investments in major capital and expense projects Lease negotiations Customer financial operational issues Market rate analyses for marinas Real estate valuations Other business opportunities Financial reporting Reporting deadlines as Complete quarterly performance reports published by Corporate Monitor and update current year forecasts Finance & Budget are met 2016 Seaport and Real Budget deadlines as Facilitate the Seaport and Real Estate 2016 Estate Budgets and established by Corporate Business Planning process. financial capacity Finance & Budget and Manage the Seaport and Real Estate 2016 analysis Commission Office are met Capital Budget process Manage the Seaport and Real Estate 2016 Operating Budget process Manage the 10-Year Environmental Remediation forecast process Manage the process and develop the 10-Year Net Operating Income forecast Objective: Ensure Divisions are in compliance with Accounting policies and procedures, Generally Accepted Accounting Principles and Government Accounting Standards Performance Measures Performance Target Actions Bi-annual measurement Completed on time and with Establish calendars for bi-annual update of Environmental no audit findings Set up files and schedules in advance of start of Remediation Liabilities update Ensure proper training of project managers making update Perform thorough review of schedules with analyses of unexpected results Booking of new assets, Completed on time and with Team member are responsible for monitoring removal of demolished no audit findings asset changes within assigned business and Page A-24 assets and adjustment for service groups. impaired assets. Reports monitoring the status of capital projects are run on a quarterly basis with follow-up with project managers Detailed impairment review performed each January with interim reviews performed as circumstances arise. 2014 1/3 inventory of 100% complete by Initiate process including calendar of due dates fixed assets 11/30/2015 with Marine Maintenance by March 15, 2015 Meet interim deadlines Annual Environmental Key deadlines are met and Establish calendar and process for meeting Remediation Liability reports are accurate. deadlines spending authorization Perform process and quarterly spending Perform detailed as well "big picture" review of reports. authorization memo/quarterly spending reports. STRATEGY: CONSISTENTLY LIVE BY OUR VALUES THROUGH OUR ACTIONS AND PRIORITIES Objective: Align leadership, people and systems with strategic priorities and plans Performance Measures Performance Target Actions % Participation in 100% of staff Each staff member will attend or participate in diversity activities one diversity activity per year. % Participation as a 100% of staff Each staff member will volunteer in at least one volunteer in at least one Port sponsored event. Port sponsored event. % Personal Development 100% of staff Each staff member will include a personal Plan in PREP development plan in PREP. Completion of annual Complete PREP review Team members submit PREP self-reporting 2 PREP review on a timely within 1 week of review weeks prior to PREP review date. basis date. Manager completes input and holds review meeting within 1 week of review date. Objective: Strengthen a high integrity, continuous improvement culture Performance Measures Performance Target Actions Work process Restructure and repopulate Develop prototype structures and evaluate improvements libraries within the Seaport positives and negatives of each. Finance SharePoint site to Select and implement new structure make it easier (e.g. more Move files from other libraries and from intuitive) for all to find past M:Drive into new libraries. financial analyses, supporting workpapers, etc. Inform other relevant groups about new structure. Page A-25 Objective: Attract, retain, inspire, and develop a diverse workforce that will achieve the Port's vision Performance Measure Performance Target Actions Staffing utilization Department is appropriately Continuous monitoring of workload and staffed in that all members resources with adjustments as warranted are fully utilized, but have enough time to be able be proactive rather than reactive. Page A-26
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