7a supp
ITEM NO.: 7a_Supp____ DATE OF MEETING: March 12, 2013 2012 Financial Performance Port of Seattle Commission Briefing March 12, 2013 2012 Financial Highlights Total Operating Revenues were $521.6 million, $38.5 million, or 8.0%, over 2011 Total Operating Revenues were $4.8 million, or 0.9%, above budget Port wide Operating Expenses were $298.0 million, $11.9 million, or 3.8% below budget - all divisions' expenses were under budget for 2012 Net Operating Income Before Depreciation was $223.7 million, $16.6 million, or 8.0% above budget and 3.7% higher than 2011 Net Operating Income After Depreciation was $56.4 million, or 16.2% above budget 2 2012 Major Revenue Variances 2011 2012 2012 Budget Change Major Revenues (in $ '000) Actual Actual Budget Variance from 2011 Aero Revenues 207,763 233,112 236,221 (3,108) 25,349 Seaport Security Grants 394 2,226 1,598 628 1,831 Public Parking 49,996 49,781 52,480 (2,699) (215) Rental Cars 30,746 38,072 35,633 2,438 7,325 Concessions 35,404 37,974 35,659 2,315 2,570 Ground Transportation 7,704 7,900 7,519 380 196 Utilities 7,695 7,206 6,803 403 (488) Container 64,114 64,830 60,735 4,095 715 Seaport Industrial Properties 13,382 15,254 14,486 768 1,872 Cruise 12,287 13,041 11,815 1,226 753 Grain 5,613 3,749 6,089 (2,340) (1,864) Dock 3,513 4,740 3,856 883 1,227 Third Party Management 12,237 11,777 12,954 (1,177) (460) Other 32,323 31,992 31,036 957 (331) Subtotal 275,015 286,314 279,064 7,251 11,299 TOTAL 483,172 521,652 516,882 4,770 38,480 3 2012 Major Expense Variances 2011 2012 2012 Budget Change Major Expenses (In $ '000) Actual Actual Budget Variance from 2011 Salaries & Benefits 84,211 93,613 96,374 2,761 9,402 Wages & Benefits 82,254 87,874 91,254 3,380 5,621 Payroll to Capital Projects 19,150 18,527 22,481 3,954 (622) Equipment Expense 7,093 6,752 5,960 (792) (342) Supplies & Stock 7,277 8,477 6,740 (1,737) 1,200 Outside Services 47,385 50,115 62,397 12,282 2,730 Utilities 21,392 22,408 21,181 (1,228) 1,016 Travel & Other Employee Exps 3,863 4,171 5,521 1,350 308 Promotional Expenses 1,618 1,159 1,249 90 (458) Other Expenses 23,527 32,391 27,879 (4,512) 8,864 Charges to Capital Projects (30,354) (27,518) (31,191) (3,672) 2,836 TOTAL 267,416 297,970 309,844 11,873 30,554 4 Operating Income Summary 2011 2012 2012 2012 Act vs. Bud ($ in thousands) Actual Actual Budget Var $ Var % Aeronautical Revenues 207,763 233,112 236,221 (3,109) -1.3% Other Operating Revenues 275,409 288,540 280,661 7,879 2.8% Total Operating Revenues 483,172 521,652 516,882 4,770 0.9% Total Operating Expenses 267,416 297,970 309,844 11,874 3.8% Income before Depreciation 215,756 223,682 207,039 16,643 8.0% Depreciation 158,107 167,279 158,479 (8,800) -5.6% Income after Depreciation 57,649 56,403 48,560 7,843 16.2% Income before Depreciation was $223.7M, $16.6M higher than budget and $7.9M higher than 2011 actual. 5 Net Operating Income Comparison The Port generated a record $521.6M operating revenue in 2012. NOI before depreciation for 2012 was $223.7M, highest since 2008. 6 Comprehensive Financial Summary ($ in '000) 2011 2012 2012 Actual/Budget Revenues Actual Actual Budget Var. $ Var. % Explanations 1. Aeronautical Revenues 207,763 233,112 236,221 (3,108) -1.3% Cost recovery 2. Operating Revenues 275,410 288,540 280,662 7,878 2.8% See details from the previous slides 3. Tax Levy 73,179 72,678 73,000 (322) -0.4% 4. PFCs 62,358 62,385 63,448 (1,063) -1.7% Actual collection % lower than budget 5. CFCs 23,669 20,577 21,333 (756) -3.5% 6. Fuel Hydrant 7,683 8,123 7,839 284 3.6% 7. Non-Capital Grants and Donations 8,482 3,358 1,779 1,579 88.7% More state grants than budgeted 8. Capital Contributions 21,180 30,736 31,448 (712) -2.3% 9. Interest Income 18,884 8,172 5,748 2,424 42.2% Higher fund balance Total 698,608 727,681 721,477 6,205 0.9% Expenses 1. O&M Expense 267,416 297,970 309,844 11,873 3.8% See details from the previous slides 2. Depreciation 158,107 167,279 158,479 (8,801) -5.6% Additional assets & T18 refunding 3. Revenue Bond Interest Expense 127,579 122,170 135,806 13,636 10.0% Refunded $640 million revenue bonds 4. PFC Bond Interest Expense 6,758 6,778 6,826 48 0.7% 5. GO Bond Interest Expense 15,774 14,447 14,926 479 3.2% 6. Public Expense 18,703 23,049 7,722 (15,327) -198.5% Off-site roadway improvements 7. Non-Op Environmental Expense 4,335 14,490 5,290 (9,200) -173.9% Lora Lake clean-up 8. Other Non-Op Expense (7,814) 29,951 3,576 (26,375) -737.6% Retirement of C-22 baggage system Total 590,858 676,134 642,469 (33,665) -5.2% Change In Net Assets 107,750 51,547 79,008 (27,461) -34.8% 2012 Total Revenues were $727.7M, $6.2M higher than the budget. 2012 Total Expenses were $676.1M, $33.7M higher than the budget. Change in Net Assets for 2012 was $51.5M, $27.5M below the budget. 7 Capital Spending by Division 2011 2012 2012 Budget Division Actual Actual Budget Variance ($ in millions) Aviation 166.8 100.3 135.4 35.1 Seaport 18.8 10.8 15.5 4.7 Real Estate 10.1 2.4 7.3 4.9 Corporate & CDD 4.4 4.2 11.7 7.5 Total 200.1 117.8 169.9 52.1 Capital spending for each division came in below budget in 2012. Total capital spending was $117.8M for 2012, $52.1M lower than budget. 8 Aviation Division 2012 Financial Performance Commission Briefing March 12, 2013 Corporate 2012 Financial Performance Commission Briefing March 5, 2013 Aviation Business Highlights Business events: Opening of Rental Car Facility (RCF) and Bus Maintenance Facility (BMF) Airlines Realignment in progress Airline activity: 2012 enplanements up 1.2% from 2011 2012 landed weight down 1.1% from 2011 Operating expenses: Total O&M expenses were 3.8% below budget Lower operating costs of $8.5 million due to delays in airlines realignment, delays in hiring and vacancies and savings and delays in contracted services offset by litigated claims and environmental remediation liabilities Non-airline revenues: 2012 revenues up 7.0% over 2011 and 2.3% vs. 2012 budget Airline costs: 2012 CPE at $13.17 vs. budget of $13.25 Capital program: 2012 spending of $100.3 million, 74% of budget 10 Activity 2011 2012 % 2012 2012 % Figures in 000's Actual Actual Variance Actual Budget Variance Enplanements 16,397 16,597 1.2% 16,597 16,650 -0.3% Landed Weight 20,123 19,897 -1.1% 19,897 20,444 -2.7% International enplaned passengers saw greater 2012 year-over-year growth of 8.8% than domestic enplanements of 0.5% Cargo Landed Weight is down -5.4% vs. 2011 February statistics are skewed because of the leap day 11 Division Summary 2011 2012 2012 Budget Variance Change from 2011 $ in 000's Actual Actual Budget $ % $ % Operating Revenues Aeronautical 207,763 233,112 236,221 (3,108) - n/a -1.3% 25,350 12.2% Non-Aeronautical 142,959 152,960 149,531 3,429 - n/a 2.3% 10,001 7.0% Total Operating Revenues 350,722 386,072 385,751 321 0.1% 35,350 10.1% Expenses: Operating Expenses 190,442 211,235 221,981 10,746 4.8% 20,794 10.9% Environmental Remediation Liability 1,428 5,321 3,096 (2,224) -71.8% 3,893 272.7% Total Operating Expenses 191,869 216,556 225,078 8,522 3.8% 24,687 12.9% Net Operating Income 158,853 169,516 160,674 8,842 5.5% 10,663 6.7% Capital Spending 166,820 100,305 135,419 35,114 25.9% (66,515) -39.9% Key Measures: Non-Aero NOI less CFC Surplus ($ in 000's) 80,841 79,837 75,079 4,758 6.3% (1,005) -1.2% Passenger Airline CPE 11.76 13.17 13.25 0.08 0.6% 1.41 12.0% Debt / Enplaned Passenger 161.5 152.7 152.2 0.49 0.3% (8.80) -5.4% Debt Service Coverage 1.44 1.40 1.34 0.06 4.7% (0.04) -2.6% Aeronautical revenues are lower than budget due to delay in airline realignment expenses and lower operating costs, offset by unbudgeted litigated claims and increases in environmental remediation liabilities. Non-Aeronautical revenues are higher than budget due to strong concessions and in-flight meal service sales, unbudgeted rental car space rents due to delay in RCF opening and higher CFC operating revenues due to higher than anticipated transaction days, offset by public parking revenue decreases. Operating expenses lower than budget due to delays in airlines realignment project, delays in hiring and vacancies and savings and delays in contracted services, offset by litigated claims and environmental remediation liabilities. 12 Operating Revenues 2011 2012 2012 Budget Var Change from 2011 $ in 000's Actual Actual Budget $ % $ % Revenues: Landing Fees 59,607 72,550 70,198 2,352 3.4% 12,943 21.7% Terminal Rental 132,565 145,332 150,312 (4,979) -3.3% 12,767 9.6% Other Aero Revenues * 15,590 15,229 15,711 (481) -3.1% (361) -2.3% Total Aeronautical 207,763 233,112 236,221 (3,108) -1.3% 25,349 12.2% Rental Cars 29,969 28,288 26,580 1,708 6.4% (1,680) -5.6% RCF Reimbursable Revenue - 38 477 (439) -92.0% 38 n/a CFC Operating Revenues (RCF) 778 9,745 8,576 1,169 13.6% 8,967 1153.2% RCF Subtotal 30,746 38,072 35,633 2,438 6.8% 7,325 23.8% Public Parking 49,996 49,781 52,480 (2,699) -5.1% (215) -0.4% Ground Transportation 7,704 7,900 7,519 380 5.1% 196 2.5% Concessions 35,404 37,974 35,659 2,315 6.5% 2,570 7.3% Other Non-airline 19,109 19,234 18,240 994 5.5% 125 0.7% Total Non-Aeronautical 142,959 152,960 149,531 3,429 2.3% 10,001 7.0% Total Revenues 350,722 386,072 385,751 321 0.1% 35,350 10.1% Landing Fees are up 3.4% vs. budget due to higher debt service and operating costs. Terminal Rents are down $5.0 million due to lower debt service and operating costs from airline realignment. Public parking revenue is lower than budget due to total garage transactions lower than budget by 1.9% primarily from "1-4 days" transactions, which are lower than budget by 2.8%. In addition, there is $388.0K of lost revenue due to a credit card system data processing error. Rental car revenue is higher than budget due to unbudgeted rental car space rents in garage due to RCF delayed opening. 2012 lower than 2011 due to decrease of average ticket price to stay competitive. CFC operating revenue is higher than budget due to higher transaction days than anticipated. Concessions revenue is higher than budget due primarily to higher growth in primary concessions sales per enplaned passenger than anticipated of 4.7%. * 2011 non-cash Fuel Hydrant restated as non-operating revenues 13 Expense & NOI 2011 2012 2012 Budget Variance Change from 2011 $ in 000's Actual Actual Budget $ % $ % Expenses: Salaries & Benefits 80,012 89,749 93,871 4,122 4.4% 9,738 12.2% Outside Services 25,224 29,107 37,404 8,297 22.2% 3,884 15.4% Supplies & Stock 4,928 5,944 4,425 (1,519) -34.3% 1,016 20.6% Utilities 13,202 13,671 12,458 (1,213) -9.7% 470 3.6% Other 10,820 12,319 9,713 (2,606) -26.8% 1,500 13.9% Baseline Airport Expenses 134,185 150,791 157,873 7,081 4.5% 16,607 12.4% Environmental Remediation Liability 1,428 5,321 3,096 (2,224) -71.8% 3,893 272.7% Total Airport Expenses 135,612 156,112 160,969 4,857 3.0% 20,500 15.1% Corporate 32,407 34,244 35,566 1,322 3.7% 1,837 5.7% Police Costs 15,804 16,075 16,964 889 5.2% 271 1.7% Capital Development/Other Expenses 8,046 10,125 11,579 1,453 - 12.6%n/a 2,079 - 25.8% Total Operating Expenses 191,869 216,556 225,078 8,522 3.8% 24,687 12.9% Net Operating Income 158,853 169,516 160,674 8,842 5.5% 10,663 6.7% Major categories with positive variances: Major categories with negative variances: Delay in Outside and Contracted Services $3.7M Unbudgeted 2012 SLOA security fund true-up $2.0M Delays in airline realignment expenses $2.3M Environmental remediation liabilities $1.3M RCF delayed opening savings $2.0M Litigated injury claims $1.3M Salary, wage and benefit savings $2.0M Snow event materials, services and labor $1.3M Delayed hiring and vacant positions $1.0M Maintenance material supplies $755.6K Corporate/CDD/Police allocated expenses $3.7M Surface water discharge treatment $741.4K Division contingency funds not utilized $600.0K Equipment repair and maintenance $725.9K 14 Aeronautical Business 2011 2012 2012 Budget Variance Change from 2011 $ in 000's Actual Actual Budget $ % $ % Operating Costs Baseline 131,898 137,161 141,257 4,097 2.9% 5,262 4.0% Airline Realignment 61 5,934 8,200 2,266 27.6% 5,873 9677.1% Regulated Materials 1,124 4,040 2,072 (1,969) -95.0% 2,916 259.4% Total Operating Costs 133,083 147,135 151,529 4,394 2.9% 14,052 10.6% Capital Costs Amortization on new assets 1,400 2,147 2,147 - 0.0% 747 53.3% Debt service on new assets - 3,997 3,997 - 0.0% 3,997 n/a Existing amortization and debt service 80,106 85,928 85,732 (195) -0.2% 5,821 7.3% Total amortization and debt service 81,507 92,072 91,876 (195) -0.2% 10,565 13.0% Total Costs 214,590 239,207 243,405 4,198 1.7% 24,617 11.5% Other FIS Offset (7,000) (8,000) (8,000) - 0.0% (1,000) 14.3% Other Revenues 15,590 15,229 15,711 481 3.1% (361) -2.3% Other Offsets (15,417) (13,324) (14,895) (1,571) 10.6% 2,093 -13.6% Total Other Costs (6,827) (6,094) (7,184) (1,090) 15.2% 732 -10.7% Total Aero Revenues 207,763 233,112 236,221 3,108 1.3% 25,349 12.2% Less: Non-passenger Airline Costs 14,944 14,477 15,390 913 5.9% (467) -3.1% Net Passenger Airline Costs 192,819 218,635 220,831 2,196 1.0% 25,816 13.4% 2011 2012 2012 Budget Variance Change from 2011 Actual Actual Budget $ % $ % Cost Per Enplanement: Baseline Costs / Enpl 8.04 8.26 8.48 0.22 2.6% 0.22 2.7% Airline Realignment / Enpl 0.00 0.36 0.49 0.13 27.4% 0.35 9559.4% Regulated Materials / Enpl 0.07 0.24 0.12 (0.12) -95.7% 0.17 255.1% Capital Costs / Enpl 4.97 5.55 5.52 (0.03) -0.5% 0.58 11.6% Offsets / Enpl (1.37) (1.28) (1.38) (0.09) 6.7% 0.08 -6.0% Other Aero Revenues 0.95 0.92 0.94 0.02 2.2% (0.03) -3.5% Non-passenger Airline Costs (0.91) (0.87) (0.93) (0.05) 5.9% 0.04 -4.3% Passenger Airline CPE 11.76 13.17 13.25 0.08 0.6% 1.41 12.0% 15 Non Aeronautical Business 2011 2012 2012 Budget Variance Change from 2011 $ in 000's Actual Actual Budget $ % $ % Non-Aero Revenues Rental Cars 29,969 28,288 26,580 1,708 6.4% (1,680) -5.6% CFC Operating Revenues (RCF) i 778 ii. 9,745 8,576 1,169 13.6% 8,967 1153.2% RCF Reimbursable Revenue - 38 477 (439) -92.0% 38 n/a RCF Subtotal 30,746 38,072 35,633 2,438 6.8% 7,325 23.8% Public Parking 49,996 49,781 52,480 (2,699) -5.1% (215) -0.4% Ground Transportation 7,704 7,900 7,519 380 5.1% 196 2.5% Concessions 35,404 37,974 35,659 2,315 6.5% 2,570 7.3% Other 19,109 19,234 18,240 994 5.5% 126 0.7% Total Non-Aero Revenues 142,959 152,960 149,531 3,429 2.3% 10,001 7.0% RCF Operating Expense 852 6,196 8,150 (1,954) -24.0% 5,344 627.3% Operating Expense 58,692 64,742 66,490 1,748 2.6% 6,050 10.3% Share of terminal O&M 17,610 18,366 18,698 332 1.8% 756 4.3% Less utility internal billing (18,369) (19,883) (19,789) 94 -0.5% (1,514) 8.2% Net Operating & Maint 58,786 69,421 73,549 4,128 5.6% 10,635 18.1% Net Operating Income 84,173 83,539 75,982 7,557 9.9% (634) -0.8% Adjusted Net Operating Income: Non-Aeronautical NOI 84,173 83,539 75,982 7,557 9.9% (634) -0.8% Less: CFC Surplus (3,331) (3,702) (903) (2,799) 310.0% (371) 11.1% Adjusted Non-Aero NOI 80,841 79,837 75,079 4,758 6.3% (1,005) -1.2% 2011 2012 2012 Budget Variance Change from 2011 Actual Actual Budget $ % $ % Revenues Per Enplanement Parking 3.05 3.00 3.15 (0.15) -4.8% (0.05) -1.6% Rental Cars (excludes CFCs) 1.83 1.70 1.60 0.11 6.8% (0.12) -6.7% Ground Transportation 0.47 0.48 0.45 0.02 5.4% 0.01 1.3% Concessions 2.16 2.29 2.14 0.15 6.8% 0.13 6.0% Other 1.21 1.75 1.64 0.11 6.7% 0.54 44.2% Total Revenues 8.72 9.22 8.98 0.24 2.6% 0.50 5.7% Primary Concessions Sales / Enpl 10.30 10.91 10.42 0.49 4.7% 0.61 5.9% 16 Net Cash Flow: NOI After Debt Service & Interest Income 2011 2012 2012 Budget Variance Change from 2011 $ in 000's Actual Actual Budget $ % $ % Aeronautical Net Operating Income (NOI) 74,679 85,977 84,692 1,285 1.5% 11,298 15.1% Net Debt Service 71,096 77,922 77,726 (196) -0.3% 6,826 9.6% Aero NOI After Debt Service 3,584 8,056 6,966 1,090 15.6% 4,472 124.8% Non-Aeronautical Net Operating Income (NOI) 84,173 83,539 75,982 7,557 9.9% (634) -0.8% Net Debt Service 40,845 43,166 45,390 2,225 4.9% 2,321 5.7% Non-Aero NOI After Debt Service 43,328 40,373 30,592 9,782 32.0% (2,955) -6.8% Total Aviation NOI 158,853 169,516 160,674 8,842 5.5% 10,663 6.7% Net Debt Service 111,940 121,087 123,116 2,029 1.6% 9,147 8.2% NOI After Debt Service 46,912 48,429 37,557 10,872 28.9% 1,516 3.2% Add ADF Interest Income 4,771 3,215 3,771 (556) -14.7% (1,556) -32.6% Add Non-Operating TSA Grant 1,035 919 1,479 (560) -37.9% (116) -11.2% Net Cash Flow after D/S & Interest Inc. 52,718 52,563 42,808 9,755 22.8% (155) -0.3% 17 Capital Variance $ in 000's 2011 2012 2012 Actual/Budget Description Actual Actual Budget Variance % Rental Car Facility Construction 84,363 19,402 29,778 10,376 34.8% Gate Utilities Improvements - 195 5,750 5,555 96.6% FIMS Phase II - 2,210 6,450 4,240 65.7% GSE Electrical Chrg Stations - 2,331 6,025 3,694 61.3% All Other 82,457 76,167 87,416 11,249 12.9% Total Capital Spending 166,820 100,305 135,419 35,114 25.9% Less RCF Charged to Public Expense - 17,112 - (17,112) n/a Net Capital Spending 166,820 83,193 135,419 52,226 38.6% RCF savings are now being recognized as the project is closed. Includes approximately $17.1M related to off-site roadway improvements transferred to public expense. Gate utilities project was delayed due to addition of scope which moved construction and corresponding contractor payments out to 2013. FIMS Phase II has been delayed but is projected to be completed in 2013. GSE has been delayed due to a change in scope. 18 2013 Capital Authorization Requests Future 2013 Authorization Requests: South Access Property Acquisition Parking Garage Light Retrofit Replace Passenger Landing Bridges at B7, B9 & S8 Access Control System Refresh Purchase/Replacement of Passenger Landing Bridges at B6 ,B8, B14 Federal Inspection Services - Long Term Project Radio System Upgrade (800MHz) Air Cargo Rd Safety Imp D/C NS Main Terminal Improvements Fiber Infr to Gate Backstands Security Checkpoint Wayfinding Renew/Repl Emer Power Switches Concourse D Roof Replacement Part 150 (Airport Noise Compatibility Planning) 19 Seaport Division 2012 Performance Report Commission Briefing March 12, 2013 Seaport 2012 Key Events 2012 Net Operating Income exceeded budget by $7.2 million Revenue exceeded Budget by $5.3 million Expenses below budget by $1.9 Completed Major Work Port and BNSF Railway land exchange at Terminal 5 Dock condition assessments at Terminal 25, 30 and Pier 66 Terminal 18 Pile Cap Pilot project East Marginal Way Grade Separation Executed lease amendment with Total Terminals International at Terminal 46 to extend lease to 2025 Executed 7 year lease extension with Cruise Terminals of America for operation of cruise terminals 21 Seaport Business Goals Cruise season ended on September 30th. A new Seattle cruise passenger record was set with 934,900 passengers and 202 sailings TEU volume was 1.9 million, which was down 8% from 2011 due to the departure of the Grand Alliance in July. Grain volume at 3.16 million metric tons down 37% from 2011 and 43% under 2012 budget due to market conditions. 22 Seaport Organizational Goals Environmental Stewardship 2011 Puget Sound Maritime Emission Inventory was published showing an overall reduction in diesel particulate matter of 27% 57% of frequent vessel calls meeting Northwest Ports Clean Air Strategy target In 2012, $3.2 million in clean-up project costs have been recovered from grants and insurance Bids awarded for Superfund project clean-up at T-117 Regional Transportation Closely engaged in freight mobility management for south harbor road construction projects and detour routes. 23 Seaport 2012 Operating Results 2011 2012 2012 Budget Incr (Decr) $ in 000's Actual Actual Budget Variance from 2011 Operating Revenue 98,910 101,647 96,980 4,667 2,737 Security Grants 394 2,226 1,598 628 1,831 Total Revenues 99,304 103,872 98,578 5,294 4,568 Seaport Expenses (excl env srvs) 12,898 13,601 15,236 1,634 703 Environmental Services 2,127 2,212 2,289 77 85 Maintenance Expenses 4,608 6,049 5,817 (232) 1,441 P69 Facilities Expenses 506 532 531 (1) 25 Other RE Expenses 180 233 300 67 53 CDD Expenses 3,539 4,249 4,388 139 709 Police Expenses 3,578 3,949 4,167 218 371 Corporate Expenses 11,177 11,535 12,332 798 358 Security Grant Expense 481 2,227 1,476 (751) 1,745 Envir Remed Liability (633) 26 0 (26) 659 Total Expenses 38,463 44,613 46,536 1,923 6,150 Net Operating Income 60,842 59,260 52,042 7,217 (1,582) 24 Seaport Division Key Variances Revenue Detail ($'s in Thousands) 2012 Revenue Variance to Budget Business Unit Better (Worse) Containers T18 Bond Refunding $9,331 GAAP SL Rent Adj ($7,755) $4,094 Crane Rent & Other $2,518 Grain ($2,340) Industrial Properties $768 Cruise $1,226 Docks $883 Security Grants and Other $663 Total $5,294 25 Seaport Division Key Variances Expense Detail ($'s in Thousands) 2012 Expenses Variance to Budget Better (Worse) Outside Services (Seaport) $1,768 Litigation (Seaport) ($635) CDD $139 Corporate $1,016 Security Grant Expenses ($751) All Other $386 Total Expense $1,923 26 Seaport Business Groups NOI Before Depreciation ($'s in Millions) 2012 Variance to Budget Actual NOI Better (Worse) Containers $44.6 $5.8 Grain $2.5 ($2.3) Sea Industrial Properties $6.3 $1.0 Cruise $7.0 $1.6 Docks ($ .3) $ .9 Security ($ .8) $ .1 Envir Grants/Liability Exp $ .0 $ .0 Total Seaport $59.3 $7.2 27 Seaport Capital 2012 Approved Variance Actual as % of Actual Budget to Budget Approved Budget $10.8 $15.5 $4.7 70% Major changes to Approved Budget Pier 91 Fender System Upgrade cost estimate decrease and work delayed to 2013 $1.3 million T18 Street Vacation completion delayed $1.1 million Small Project delays $.9 million 28 Seaport Capital 2013 Future 2013 Commission Briefing and Authorization Requests Terminal 117 Pier Design Authorization (Mar 26th) Terminal 30 Clean-up Design Authorization (Mar 26th) Seaport Competitive Position Briefing (Mar 26th) Terminal 46 Design Funding (Q2) Duwamish Briefing (~ April) Northwest Ports Clean Air Strategy Update Briefing (~ May) Other TBD 29 Real Estate Division 2012 Performance Report Commission Briefing March 12, 2013 Real Estate 2012 Key Events Exceeded 2012 Net Operating Income Budget by $674 thousand: Revenue ($1,128K) unfavorable to budget Expenses $1,802K favorable to budget New Conference and Event Center Management Agreement was executed on April 4th and became effective on June 1st Portfolio Management executed 23 new leases, 29 lease renewals, and 10 agreements 5-year agreement executed between the Port of Seattle and the Shilshole Liveaboard Association 31 Real Estate 2012 Key Events Shilshole Bay Marina celebrated its 50th anniversary in September Eastside Rail Corridor Commission approved the sale of all non-freight areas to King County in August, sale closed in February 2013. Closed sale on 5.75 mile segment with City of Kirkland in April Real Estate Development & Planning: Executed a second development agreement with the City of Des Moines to facilitate development of the Des Moines Creek Business Park site King County initiated a condemnation action to acquire an interest in the Terminal 91 West Yard site for its CSO project 32 Real Estate 2012 Key Events Marine Maintenance: Completed 35 deferred maintenance projects. Program (in terms of number of projects) is 78% complete. Achieved their lowest Occupational Injury Rate ever at 9.87 in 2012. Received Environmental Special Recognition Award from WorkBoat.com for dock cleaning innovations. Continues to support the Port's workforce development goals by providing apprenticeships, internships, and by representing the Port on related boards and in programs around the community. 33 Marine Maintenance Workforce Development 34 Real Estate Business Goals Provide Compelling Value and Asset Utilization Occupancy Rates: Commercial property at 91% occupancy, above target of 90% and above 2012 Q4 Seattle market average of 88%. Activity at Bell Harbor International Conference Center and World Trade Center Seattle below budget, but net income of $2.06 million within $73K of budget. FT/Marina Occupancy: Fishermen's Terminal and Maritime Industrial Center at 74% YTD occupancy, below target of 84%. Recreational Marinas at 93%, slightly below target of 94%. 35 Real Estate Division 2012 Operating Results 2011 2012 2012 Budget Incr (Decr) $ in 000's Actual Actual Budget Variance from 2011 Revenue 22,071 22,456 22,389 67 384 BHICC & WTC Revenue 9,498 8,817 10,012 (1,195) (680) Total Revenue 31,569 31,273 32,401 (1,128) (296) Real Estate Exp(excl Maint,P69,Conf) 9,759 10,548 9,920 (628) 789 Real Estate BHICC & WTC 7,600 6,748 7,870 1,122 (852) Eastside Rail Corridor 1,585 293 203 (90) (1,293) Maintenance Expenses 7,192 9,106 9,687 581 1,914 P69 Facilities Expenses 150 198 198 1 48 Seaport Expenses 1,230 1,238 1,408 170 8 CDD Expenses 917 1,083 1,266 183 166 Police Expenses 1,301 1,367 1,442 75 66 Corporate Expenses 5,018 4,835 5,229 395 (183) Envir Remed Liability 7 6 0 (6) (0) Total Expense 34,758 35,422 37,224 1,802 664 Net Operating Income (3,189) (4,149) (4,823) 674 (960) 36 Real Estate Division 2012 Key Variances Revenue Detail ($'s in Thousands) 2012 Variance to Budget Business Unit Better (Worse) Recreational Boating ($5) Fishing & Commercial ($123) Commercial Properties ($46) Third Party Management ($1,177) RE Development & Planning $72 Eastside Rail $67 Facilities/Maintenance $83 Total ($1,128) 37 Real Estate Division 2012 Key Variances Expense Detail ($'s in Thousands) 2012 Variance to Budget Expense Better (Worse) Third Party Management (BHICC & WTC only) $1,122 Maintenance $581 Litigated Injuries & Damages ($631) Corporate $470 CDD $183 All Other $77 Total Expense $1,802 38 Real Estate Business Groups NOI Before Depreciation ($'s in Thousands) 2012 Variance to Budget Actual NOI Better (Worse) Recreational Boating $1,353 $460 Fishing & Commercial ($3,063) $66 Commercial & Third Party ($1,307) ($241) RE Development & Planning ($689) $233 Eastside Rail ($437) $162 Envir Remediation Liability Exp ($7) ($7) Total Real Estate ($4,149) $674 39 Real Estate Capital 2012 Actual Approved Variance Actual as % of Budget to Budget Approved Budget $2.4 $7.3 $4.9 33% Major changes to Approved Budget Small Project delays $1.9 million Tenant Improvements Capital most new leases and lease renewals have not required capital tenant improvement $1.1 million Fishermen's Terminal East Portion of S. Wall project budget overstated $.7 million Bell Harbor Lighting Upgrade project to be performed under Conference & Event Center Management Agreement $.6 million 40 Real Estate Capital 2013 Future 2013 Commission Briefings and Authorization Requests Maritime Industrial Center Building A-1 roof replacement construction funding (April) Fishermen's Terminal 25 Year Plan Update Briefing (May) Fishermen's Terminal Net Shed Option 1 construction funding (May) Fishermen's Terminal Building C-15 HVAC construction funding (May) Shilshole Bay Marina Seawall Replacement (May) 41 Capital Development Division 2012 Performance Report Commission Briefing March 12, 2013 Capital Development Division 2012 Business Events Completed and opened consolidated rental car facility. Reached agreement with Alaska Airlines on NorthSTAR project approach and procured program/project management and design consultants to begin project. Designed and completed multiple enabling projects for airline realignment in late 2012/early 2013. Buy American/America Act Training (December 2012). Participated with reauthorization committee for RCW 39.10 legislation (Alternative Public Works), drafted reauthorization legislation for introduction in 2013. Continued Terminal Escalator Project: Thirty-nine out of forty-four units turned over for beneficial occupancy in 2012, nine of which occurred in the fourth quarter of 2012. Completed Terminal 18 Pilot Pile Cap Repair Project. Completed Terminal 46 Transformer Project. Contract awarded for Terminal 117 Cleanup project. Pier 66 April Pile Wrap Army Corps of Engineers Nationwide permit received. 43 2012 Business Events continued Completed 2012 portion of 8th floor parking garage waterproofing project. Completed Memorandum of Agreement with Sound Transit for extension of light rail to South 200th Street. Commission approved design start and project acceleration for Cargo 2 and 6, with planned combined construction with Cargo 5. Provided assistance to Office of Social Responsibility to develop the Port of Seattle Disadvantaged Business Enterprise Program submitted to FAA. Alaska Viaduct (Bored Tunnel) - Contractor has possession of all non-Total Terminals International (TTI) areas at Terminal 46 and is ready to begin demolition of buildings and preparation for Tunnel Boring Machine (TBM) delivery. Common use lounge opened March 1 for first Emirates flight. Implemented Consensus Based Evaluation for Request For Proposal procurements. Ten homes in progress for the Noise Remedy Project. Completion Report for the Terminal 10 Interim Redevelopment issued to EPA. Cleanup Agreed Order for the Terminal 91 Tank Farm Clean-Up Project was signed by Ecology and the Port. 44 2012 Business Events continued Published Personal Services Terms and Conditions on 9/10/2012. Final claim for grant reimbursement was finalized and submitted for the Security Round 7 Project. Unifier is in production. Monitoring migrated and creation of new projects. Commission approved Terminal 5 and Terminal 18 Maintenance Dredging Design and Phase I Construction. Final construction on the Terminal 91 Water Main Replacement is complete. Zones 2 and 3 abatement for the Delta lobby/ Airline Ticket Office (ATO), Credential Center remodel, FIMS II (Flight Information Management Systems) installation, Airline realignment, Passenger Loading bridge replacement, Common use gate installations, Electrical Ground Support Equipment (EGSE) charging stations. East Marginal Way Grade Separation (EMWGS) lane configuration agreement reached with Seattle Department of Transportation. Participated in Procurement Card (P-Card) audit received positive results. The City Council passed the final ordinance to vacate streets at Terminal 105. 45 Project Hard/Soft Costs 46 Capital Development Division Key Indicators Cost Growth During Construction 47 Capital Development Division Key Indicators continued Design Schedule Growth Original Initial Planned Actual Design Construction Commission Construction Construction Project Schedule Contract Amount Authorized Start Contract Award Contract Award Growth of Design (Execution) (Execution) 4th Quarter 2012 $512,780.00 CRCF Small Operator Build Out 10-May-11 5-Oct-11 13-Dec-11 47% Aero Phase 1 Vert Conv $186,200.00 25-Oct-11 15-May-12 9-Jul-12 27% Upgrade 48 Capital Development Division Key Indicators continued Construction Schedule Growth Original Actual Planned Actual Construction Construction Construction Substantial Substantial Project Schedule Contract Amount Contract Award Completion of Completion of Growth (Execution) Construction Construction 4th Quarter 2012 CRCF Small Operator Build Out $512,780.00 13-Dec-11 3-Feb-12 18-Jun-12 261.5% Aero Phase 1 Vert Conv $186,200.00 9-Jul-12 12-Oct-12 3-Oct-12 -9.5% Upgrade 49 2012 Cost Growth Original Mandatory Discretionary Project Construction Change 1st Quarter 2012 FT NW Dock E. Fender System $1,330,375 5.1% 0.0% Repl. FT South Wall Recon Phase IV $2,148,544 10.9% 0.0% 2010 AIP Contract 2 $939,725 16.1% 0.0% 2011 AIP Contract 2 $4,522,750 6.6% 2.5% MT Southend Roof Replace $992,500 -1.2% 0.0% 2nd Quarter 2012 Common Use Lounge Renovation $400,000 0.3% 8% Marine Maintenance Shop Roof Rpl. $725,253 0.6% -2.2% T-10 Utility Infrastructure Upgrade $4,390,000 0.1% 8.1% USPS Airport Mail Facility Demo $856,684 -17.5% 0.0% POS Maint. Building #2 Demo $475,510 -22.4% 0.0% Wayfinding Signage & Curbside $738,000 1.8% 19.5% Mods Maritime Domain Awareness $913,900 6.7% 31.1% 3rd Quarter 2012 Tyee Golf Course Mitigation $319,999.17 -11.5% 0.0% Pier 91 Fender System Upgrade $2,083,000.00 -3.3% 0.0% 4th Quarter 2012 CRCF Small Operator Build Out $512,780.00 4.0% 0.0% Aero Phase 1 Vert Conv Upgrade $186,200.00 -21.7% 0.0% 50 2012 Schedule Growth Initial Planned Actual Planned Actual Design Construction Project Commission Substantial Substantial Construction Construction Schedule Schedule Authorized Start Completion of Completion of Contract Award Contract Award Growth Growth of Design Construction Construction 1st Quarter 2012 FT NW Dock E. Fender System 23-Mar-10 12-Sep-10 18-Oct-10 20.8% 14-Jun-11 27-May-11 -7.5% Repl. FT South Wall Recon Phase IV 11-Aug-09 24-Aug-10 19-Oct-10 14.8% 3-Aug-11 23-Aug-11 6.9% 2010 AIP Contract 2 28-Jul-09 16-Jul-10 16-Jul-10 0.0% 13-Dec-10 30-Nov-11 234.7% 2011 AIP Contract 2 11-Aug-10 28-Mar-11 12-May-11 19.7% 28-Oct-11 3-Feb-11 -158.0% MT Southend Roof Replace 27-Apr-10 20-Apr-11 5-May-11 4.2% 1-Nov-11 1-Nov-11 0.0% 2nd Quarter 2012 Common Use Lounge Renovation 1-Mar-11 21-Nov-11 15-Nov-11 -2.3% 13-Apr-12 8-Jun-12 37.3% Marine Maintenance Shop Roof Rpl. 4-May-10 13-Jul-11 8-Aug-11 6.0% 16-Nov-11 23-Feb-12 99.0% T-10 Utility Infrastructure Upgrade 14-Apr-09 9-May-11 12-May-11 0.4% 23-Nov-11 6-Dec-11 6.7% USPS Airport Mail Facility Demo 26-Aug-08 21-Sep-11 21-Oct-11 2.7% 2-Jun-12 31-May-12 -0.9% POS Maint. Building #2 Demo 14-Aug-06 21-Sep-11 31-Oct-11 2.1% 29-Mar-12 3-Apr-12 3.3% Wayfinding Signage & Curbside 15-Jun-09 15-Feb-10 20-Jul-11 212.2% 20-Apr-12 10-Apr-12 -3.6% Mods Maritime Domain Awareness 11-Dec-07 15-May-09 28-May-09 2.5% 23-Dec-09 27-Jan-10 16.7% 3rd Quarter 2012 Tyee Golf Course Mitigation 8-Feb-11 11-Nov-11 16-Dec-11 12.7% 20-Mar-12 19-Apr-12 31.6% Pier 91 Fender System Upgrade 3-Aug-10 5-Aug-11 5-Oct-11 16.6% 2-May-12 2-May-12 0.0% 4th Quarter 2012 CRCF Small Operator Build Out 10-May-11 5-Oct-11 13-Dec-11 46.6% 3-Feb-12 18-Jun-12 261.5% Aero Phase 1 Vert Conv Upgrade 25-Oct-11 15-May-12 9-Jul-12 27.1% 12-Oct-12 3-Oct-12 -9.5% 51 CPO Procurement Time Procurement Schedule Total Time Receipt of Scope to Execution (Avg # Days) 2011 2012 Goods & Services 84 days 125 days Major Public Works 75 days 61 days Small Works 58 days 50 days Service Agreements *211 days 202 days *Change in number reflects a data correction due to the removal of a procurement with an unusually protracted selection and contract execution process. 52 CDD Gross Operating Results 2011 2012 2012 Budget Variance Change from 2011 $ in 000's Notes Actual Actual Budget $ % $ % Total Revenues 79 32 - 32 0.0% (47) -59.1% Expenses Before Charges To Cap/Govt/Envrs Propects Capital Development Administration 351 362 374 13 3.4% 10 2.9% Engineering 12,638 12,615 14,217 1,602 11.3% (23) -0.2% Port Construction Services 7,262 7,061 6,791 (270) -4.0% (201) -2.8% Central Procurement Office 3,852 4,434 4,481 47 1.0% 581 15.1% Aviation Project Management 6,583 7,264 7,731 468 6.0% 681 10.3% Seaport Project Management 2,404 2,581 2,987 407 13.6% 177 7.4% Total Before Charges to Capital Projects 33,091 34,316 36,581 2,265 6.2% 1,225 3.7% 53 CDD Key Variances to Net Budget Variance to Q4 2012 Expenses Budget Budget YTD Var. F/(UNF) $ in 000's YTD Better (Worse) % Salaries and Benefits 29,511 1,768 6.0 Outside Services 5,215 759 14.6 Travel and Other 434 168 38.7 Telecommunications 127 11 8.7 Property Rentals 97 11 11.7 General Expenses 49 (453) (918.8) All Other 1,149 1 0.1 Charges to Capital Projects (21,066) (716) 3.4 Total 15,516 1,549 10.0 54 Corporate 2012 Financial Performance Commission Briefing March 12, 2013 Corporate Key Events Completed outreach to over 60 groups reaching about 1000 individuals for Century Agenda. Held the Leadership Conference - "Century Launch" with about 135 Port leaders in attendance. Completed contract negotiations with Cigna and Washington Dental Services, the Medical and Dental Claims Administrators. Received a number of awards in 2012, including 2012 Secretary of Defense Employer Support Freedom Award Internship Employer of the Year Award by Seattle University Certificate of Achievement for Excellence in Financial Reporting Award from GFOA Distinguished Budget Presentation Award from GFOA 56 Corporate Key Metrics Airport Jobs helped placed people into 1088 jobs with airport employers 125 Apprenticeship Opportunity Project Placements Conducted 29 small business outreach 445 small businesses were approved on the new Procurement Roster Management System (PRMS) Responded to 379 public disclosure requests Completed 21 internal audits Provided orientation to 179 new employees 25 employees participated in the Tuition Reimbursement Program Negotiated 27 labor contracts 57 Corporate Year End Variance 2011 2012 2012 Budget Variance Change from 2011 $ in 000's Actual Actual Budget $ % $ % Total Revenues 1,559 444 151 293 193.4% (1,115) -71.5% Executive 1,487 1,584 1,539 (45) -2.9% 97 6.5% Commission 738 799 980 181 18.5% 61 8.3% Legal 2,975 3,083 2,901 (182) -6.3% 108 3.6% Risk Services 2,614 2,648 2,959 312 10.5% 33 1.3% Health & Safety Services 1,053 1,008 1,060 51 4.8% (44) -4.2% Public Affairs 6,494 5,859 5,815 (44) -0.8% (635) -9.8% Human Resources & Development 4,921 5,226 5,484 258 4.7% 305 6.2% Labor Relations 941 1,093 961 (132) -13.8% 152 16.2% Information & Communications Technology 19,132 19,480 20,194 714 3.5% 348 1.8% Finance & Budget 1,435 1,466 1,543 77 5.0% 31 2.2% Accounting & Financial Reporting Services 5,776 6,053 6,853 800 11.7% 277 4.8% Internal Audit 1,080 1,333 1,496 163 10.9% 254 23.5% Office of Social Responsibility 1,349 1,448 1,476 28 1.9% 99 7.4% Police 21,154 21,684 22,574 890 3.9% 530 2.5% Contingency 105 367 700 333 47.6% 262 249.7% Total Expenses 71,418 73,140 76,535 3,395 4.4% 1,721 2.4% 58 Corporate Major Expense Variances 2011 2012 2012 Budget Change Major Expenses (In $ '000) Actual Actual Budget Variance from 2011 Salaries & Benefits 33,890 34,957 36,079 1,123 1,066 Wages & Benefits 18,504 19,065 20,183 1,118 562 Payroll to Capital Projects 2,407 2,453 3,320 867 46 Equipment Expense 1,409 1,580 1,219 (361) 171 Supplies & Stock 669 559 648 89 (110) Outside Services 10,194 10,673 10,930 257 479 Travel & Other Employee Exps 2,232 2,208 2,583 375 (24) Promotional Expenses 968 353 268 (86) (615) Other Expenses 3,552 3,687 4,624 937 136 Charges to Capital Projects (2,407) (2,397) (3,320) (924) 11 TOTAL 71,418 73,140 76,535 3,395 1,721 59 Corporate Cost Analysis 2010 2011 2012 2012 ($ in 000's) Actual Actual Actual Budget Corporate Cost 67,391 71,418 73,140 76,535 Total Revenue 462,579 483,172 521,652 516,882 Total Expense 253,464 267,416 297,970 309,844 Corporate Cost as % of Revenues* 14.6% 14.8% 14.0% 14.8% * Excluding the $1.2M expenses for Port Centennial and AAPA Conference, Corporate cost as % of revenues for 2011 remained at 14.6%, same as 2010. 60 Corporate 2012 Financial Performance Q&A's March 12, 2013
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