7b supp 2
ITEM NO: 7b_Supp_2__ DATE OF MEETING: April 2, 2013 2013-2017 Draft Plan of Finance April 2, 2013 Topics Background and Assumptions 2013-2017 Capital Funding Forecasted Debt Service Coverage Finance Activity for 2013 2 Draft Plan of Finance 2013-2017 Each year at the end of the budget process, staff provides a summary five-year Port-wide capital funding plan (The Draft Plan of Finance). The 2013-2017 Plan is based on: Division capital improvement plans (CIPs) Division operating budgets Airport is a self-funding operation Seaport operating income supports its CIP Real Estate is supported by the tax levy A Draft Plan of Finance was presented on October 23, 2012 This presentation provides a update of that Plan to reflect changes in business assumptions 3 Debt Service Coverage The Plan is developed to adhere to the Port's financial management policies for prudent cash reserves and leverage Operating funds maintain a minimum of 9 months O&M: 6 months operating & maintenance (O&M) expenses in the general fund 10 months O&M expenses in the airport development fund Maximum 75% of tax levy used to pay General Obligation bonds debt service Net income provides Revenue bonds coverage of: 1.50x debt service for Seaport debt 1.25 1.30x debt service for Airport debt The Port's forecast of aggregate coverage in excess of 1.40x supports strong credit ratings Tax levy is sufficient to fund levy planned levy uses 4 The Updated Draft Plan of Finance Changes to Seaport Revenue forecast reflects container terminal lease changes CIP modified to maintain Seaport's coverage target Changes to Airport Revenue forecast reflects Adjustment to non-airline revenues included in the final budget Airline rates and charges per a proposed resolution CIP reflects lower forecasted costs for the Federal Inspection Service project Real Estate and Corporate assumptions are unchanged The CIP adjustments were made to the Plan of Finance CIP 5 Funding Sources The Draft Plan of Finance includes funding from: Net operating income Operating fund balances (above minimum requirement) Existing and future revenue bond proceeds Passenger Facility Charges Customer Facility Charges Grants Tax levy 6 Aviation Capital Funding 2013-2017 The Airport funding plan assumes aeronautical revenues based on a rates and charges resolution As of Oct. 2012 As of March 2013 Aviation Funding Sources ($ mil.) ($ mil.) Net income 243 196 Operating funds 49 47 (1) Tax levy 10 10 Grants 102 102 Passenger Facility Charge 106 106 Existing revenue bond proceeds 72 72 Future bond proceeds 872 762 TOTAL 1,454 1,295 Aviation CIP Committed 597 597 Business Plan Prospective 857 699 TOTAL 1,454 1,295 (1) Highline capital spending (excludes public expense spending by tax levy) 7 Seaport Capital Funding 2013-2017 As of Oct. 2012 As of March 2013 ($ mil.) ($ mil.) Seaport Funding Sources Net income 120 77 Operating funds 74 74 Grants 3 3 (1) Tax levy 2 2 Existing revenue bond proceeds 12 12 Future revenue bond proceeds 85 4 TOTAL 296 171 Seaport CIP Committed 56 56 Business Plan Prospective 240 115 TOTAL 296 171 (1) Argo Yard Roadway capital spending (excludes public expense spending by tax levy) 8 Real Estate Capital Funding 2013-2017 2013-2017 ($mil.) Real Estate Funding Source Tax levy 68 Existing revenue bond proceeds 1 TOTAL 69 Real Estate CIP Committed 37 Business Plan Prospective 32 TOTAL 69 9 Corporate Capital Funding 2013-2017 2013-2017 ($mil.) Corporate Funding Sources Airport Net Income 30 Seaport Net Income 12 Real Estate General Fund 2 (1) Tax levy 1 TOTAL 45 Corporate CIP Committed 26 Business Plan Prospective 19 TOTAL 45 (1) Corporate capital spending allocated to the Real Estate division after the Real Estate general fund no longer meets minimum fund balance requirement. 10 Port-wide Revenue Bond Debt Service Coverage 2013-2017 Forecast 6.00 5.29 5.13 5.00 4.97 4.43 4.99 4.00 3.45 3.49 4.11 3.00 3.10 3.11 2.00 1.57 1.56 1.63 1.54 1.47 1.00 1.39 1.48 1.43 1.44 1.41 0.00 2013 2014 2015 2016 2017 First Lien - March 2013 First Lien - Oct. 2012 All Revenue Bond Debt - March 2013 All Revenue Bond Debt - Oct. 2012 11 2013 Finance Activity Update Activity Status Update Bond Refundings: 2004 G.O. Bonds Completed 2003 Special Facility (fuel hydrant) bonds Underway 2003 Revenue Bonds Pending Airport new issue for project spending Pending, likely in 2014 Letters of Credit for variable rate bonds 2008 Bonds expires June, 2013 Extending until Oct, negotiating a replacement 1997 Bonds Fee reduced Commercial paper Fee reduced 12 2012 Tax Levy Update Tax Levy - 2012 ($'000) Primary Variances Budget Actual Variance Sources Sound Transit rail corridor Prior Year Levy Fund Balance 41,618 39,789 (1,829) payment budgeted in 2011, Tax Levy Collection 73,000 72,619 (381) received in 2012 Eastside Rail Corridor Reimbursement 5,000 18,746 13,746 Grants and Other Reimbursements - 3,680 3,680 Capital spending Total Projected Sources 119,618 134,834 15,216 Fishermen's Terminal costs lower than budget Uses Lower than budget tenant G.O. Bond Debt Service 40,353 40,353 - improvement requirements in Capital Expenditures (1) 14,524 1,931 12,593 new leases Public Expense: Seaport Freight Mobility 3,954 2,269 1,685 Delays in other projects Transportation & Infrastructure Fund 23,000 23,000 - Environmental Environmental Remediation Liability 15,889 6,188 9,701 remediation Portion of Real Estate Operating Expense 4,922 4,461 461 Port Jobs & Apprenticeship Program 126 95 31 spending delays for T-91 and Aviation High School 650 650 - T-117 Total Uses 103,418 78,947 24,471 Reimbursements from grants and insurance are not budgeted Ending Fund Balance 16,200 55,887 39,687 (1) Per Draft Plan of Finance, does not reflect Approved Capital Budget 13
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