Minutes Exh B
Port ofSeattle 2012 Budget and Business Plan A. TAX AT A GLANCE Exhibit '6 Port Commission chtw o The maximum allowable levy for 2012 is $90.1 million. MeetingMW 0 For 2012 the levy will be $73.0 million. 0 The millage rate is estimated to be $0.2313. o The 2012 levy will be used for: 0 General Obligation (G.O.) Bonds Debt Service 0 Public Asset Expense: Freight Mobility o Seaport and Real Estate Environmental Remediation Liability 0 A portion of Real Estate operating expenses 0 Real Estate Capital Improvements 0 Highline School District: Aviation High School 0 Ofce of Port Jobs 0 Additions to the Transportation Infrastructure Fund B. TAX LEVY SOURCES TYPES AND LIMITS OF LEVIES: Regular Tax Lexy The County Treasurer acts as an agent to collect property taxes levied in the County for all taxing authorities. Taxes are levied annually on January 1 on property value listed as ofthe prior year. Assessed values are established by the County Assessor at 100% of fair market value. A re-evaluation of all property is required annually. Taxes are due in two equal installments on. April 30 and October 31. Collections are distributed to the Port by the County Treasurer. The Port is permitted to levy up to $0.45 per $1,000 of Assessed Valuation for general Port purposes under Washington State law in Revised Code of Washington ("RCW") Chapter 53.36. The levy may go beyond the $0.45 limit to provide for GO. Bonds debt service. However, the rate may be reduced below the $0.45 limit for the following reason: RCW Chapter 84.55 limits the annual growth ofregular property taxes to the lesser of 1% or the ination rate, where ination is measured by the percentage change in the implicit price deator for personal consumption expenditures for the United States, after adjustments for new construction. This 1% limit factor was instituted by Initiative 747 that Washington State voters approved in November 2001. Prior to the passage of the Initiative, the growth limit was the lesser of 6% or the ination rate (for levy limit calculation see Section XII Statutory Budget). IX -1 Port ofSeattle 2012 Budget and Business Plan FIGUR_E D(-l shows the maximum levy permitted by law versus the actual levy levied by the Port from 1991 (the last year the Port levied the maximum) to 2012. In 1989, the law was changed whereby a port could have a levy at less than the maximum while preserving the ability to tax up to the maximum in the future if the need was justied. This allows a port to tax at the lower level in the years when the maximum levy is not required, but return'to the maximum level in years of need. Since 1991, on a cumulative basis, the Port has levied a total of $350 million less than it could have if it had levied the maximum allowable levy each year. FIGURE IXl: ACTUAL TAX LEVY VS. MAXIMUM ALLOWABLE LEVY: 1991-2012 SMllons $100 5" Maximum Allowable Levy $70 $50 $50 $30 $21) $10 $0 1991 I'll I"! I". 1995 19" 1'97 1". I"! 2000 IWI 2"! zoo: 2004 IM zoos 2N7 mo: 2" 2010 2011 1011 FIGURE lX-2 shows the historical millage rate from 2003 to 2012. The Port kept the tax levy at $73.5 million for 2010 and 2011. The levy amount has been reduced to $73.0 million for 2012. FIGURE IX-2: TAX LEVY VS. MILLAGE RATE 2003-2012 S Mllllons SIG " 575.90 50'" 575.90 57350 573.50 573.00 $68.81 57 , - $0.60 $62.78 $62.79 S59.66 560 : 553.00 - $0.50 S50 1 > 9' 540 ' ".3. $30 . ".10 $20 ' * 50.") SW so - - , ' -- - --l- -+ ~ moo 2003 2004 2005 2006 2007 2008 2009 1010 20" 1" luITIX Lny (Len Sale) *Mllllgklul Selle) IX -2 Port ofSeattle 2012 Budget and Business Plan Special Tax Levies Special levies approved by the voters are not subject to the same limitations as the regular levy. The Port can levy property taxes for dredging, canal construction, leveling or lling upon approval of the majority of voters within the Port District, not to exceed $0.45 per $1,000 of Assessed Value oftaxable property within the Port District. Industrial Development District Tax Levies The Port may also levy property taxes for Industrial Development Districts (under a comprehensive scheme of harbor improvements), for twelve years only, not to exceed $0.45 per $1,000 of Assessed Value oftaxable property within the Port District. The Port of Seattle levied the tax for a six-year period between 1963 and 1968 for property acquisition and development ofthe lower Duwamish River. Ifthe Port intends to levy this tax for a second six years (or the seventh through twelfth year period), the Port must publish notice of intent to impose such a levy and if signatures of at least eight percent (8%) of the voters protest the levy, a special election must be held with majority approval required. The Industrial Development Levy could be imposed at up to $0.45 per $1,000 in the rst year and the lesser of $0.45 per $1,000 or the 1% limit factor described above in subsequent years. The Port has not levied the seventh through twelfth year period but if the Port were to Levy under this law, Port may levy up to an estimated $874 million over the six year period. C. TAX LEVY USES Each year as part of the budget process, the Commission reviews and approves the use of the tax levy. While the levy, by statute, may be used broadly for general Port purposes, the Port has used the levy to fund capital investments in critical Seaport and Real Estate infrastructure and other expenditures providing community benets such as environmental mitigation in the Seattle Harbor and the Port's regional freight mobility initiative. In 2009, the Port used tax levy funds to purchase the Eastside Rail Corridor. Per a memorandum of understanding, portions of and easements on the corridor are being sold to other entities; the proceeds of those sales are reected as sources of tax levy funds. The Port also uses the levy to fund a small annual contribution to PortJobs, a non-prot organization that helps develop Port and Airport-related career opportunities. The levy has not traditionally been used to fund improvements at Sea-Tac International Airport, which is exclusively supported by user fees; however, the Commission approved the use of levy funds for noise mitigation projects for the Highline School District and improvements at the Aviation High School which are not eligible for Airport funding. For 2012, the Port plans to use the regular levy for the debt service on GO. Bonds, Real Estate capital improvements, FAST Corridor, Seaport and Real Estate environmental costs, the Aviation High School project, and Port JOBS. Similar to 2011, no Seaport capital projects will be funded with the levy, and on an interim basis, a portion ofReal Estate operating expenses will be levy funded. TABLE IX-l shows how the Port plans to spend the levy in 2012. Additional details are provided in Tables D(-2 and D(-3. In 2010, the Port used $13 million of tax levy to fund a Transportation & Infrastructure reserve fund (TIF) to set aside resources for certain regional transportation projects, including the Port's contribution to the SR99 tunnel. The 2012 budget includes making an additional $23 million contribution to TIF from the tax levy fund, and anticipates using $2.5 million from the TIF as payment toward the South Park Bridge project. Expenditures from the TIF are not included in Table IX-l. IX -3 Part ofSeattle 2012 Budget and Business Plan TABLE IX-l: SOURCES AND USES OF TAX LEVY TABLE IX-l shows how the Port plans to spend the levy in 2012. SOURCFS Prior Year Levy Fund Balance Projected Tax Levy Collection Eastside Rail Corridor Partner Reimbursement Total Projected Sources 119,618 EELS. G.O. Bonds Debt Service - Seaport G.O. Bonds Debt Service - Real Estate Total Projected 60. Debt Service Committed Capital Expenditures - Real Estate Expenses: Public Expense: Seaport Freight Mobility Transportation & Infrastructure Reserve Fund Environmental Remediation Liability (Seaport & Real Estate) Portion of Real Estate Operating Port Jobs & Apprenticeship Program Aviation High School Total Expenses Capital Expenditures: BP Prospective - Real Estate Total Projected Uses 103,418 Pro'ected Endin Balance Notes: 1) Net of grant receipts. 2) Includes project cashows for environmental projects already or expected to be expensed and liabilities booked. 3) Includes Seaport non-operating ERL and Real Estate non-perating and operating ERL . IX -4 Port ofSeattle 2012 Budget and Business Plan TABLE IX-2 provides the estimated 2012 project spending that the Port expects to md with the tax levy. In addition, any Real Estate Business Plan Prospective projects that are advanced in 2012 may be eligible for levy funding. TABLE IX2: LEVY FUNDED COMMITTED PROJECTS TABLE 1X-2 provides the committed projects that the Port expects to fund with a portion ofthe tax levy proceeds. 2012 ($ in 000's) Real Estate Pier 69 Renewal Projects 4,223 Fishermen's Terminal 3,572 Technology, Small and Other Projects 1,315 Tenant Improvements 1,148 Fleet Replacement Bell Harbor Lighting Control Upgrade Total Real Estate Projects LevySources&Uses Tables IX- 1 and Ix-2 and lX-3 fnal doc.xls IX -5 Port ofSeattle 2012 Budget andBusiness Plan TABLE IX-3: EXISTING G.O. BONDS DEBT SERVICE BY PROJECTS AND GROUP TABLE D(-3 provides the allocation of existing G.O. bonds debt service to the projects that were funded by G.O. bonds issued in 1994, 2000, 2004, 2006 and 2011. Containers Stage II Dredge- Phase I T-5 Expansion & Upgrades T-46 Expansion Redevelopment T-l8 Expansion & Upgrade Total Containers Docks and Commercial Properties T-91 Apron & Infrastructure Improvements Pier 17 Dock Replacement T-86 Terminal Upgrades Total Docks and Commercial Properties Commercial Properties World Trade Center Garage Fishing Fishermen's Terminal Docks & Seawall Renewal Special Item Eastside Trail Total G.O. Bond Debt Service $ 40,353 LevySources&Uses Tables IX- 1 and lx-2 and Ix-3 fnaldomds IX -6 Port ofSeattle 2012 Budget and Business Plan D. GENERAL OBLIGATION CAPACITY Non-Voted and Voted General Obligation Debt Limitations Under Washington State law the Port may incur indebtedness payable from ad valorem taxes in an amount not exceeding one-fourth of one percent of the value ofthe taxable property in the District without a vote of the people. With the assent ofthree-hs of the voters voting thereon, the District may incur additional G.O. indebtedness provided the total indebtedness of the Port at any time shall not exceed three-fourths of one percent ofthe value ofthe taxable property in the District. For the Port, the following estimates the 2012 debt limit: Value of Taxable Property $ 31525889522233 Debt Limit, Non-Voted General Obligation Bonds (25% of Value of Taxable Property) $ 788,970,881 Less: Outstanding Non-Voted General Obligation Bonds as of 12/31/2011 $ 336,120,000 Less: Capital leases and other general obligations as of 9/30/2011 - Remaining Capacity of Non-Voted General Obligation Debt $ 45228502881 Debt Limit, Total General Obligation Debt (.75% of Vahie of Taxable Property) $ 2,366,912,642 Less: Total Outstanding General Obligation as of 12/31/2011 $ 336,120,000 Less: Capital leases and other general obligations as of 9/30/2011 Remaining Capacity of Total General Obligation Debt 3 2203027922642 The Port may levy property taxes sufcient for the payment of principal ofand interest on voted G.O. indebtedness. The existing limitation provides that unless a higher rate is approved by a majority of the voters at an election, the increase in regular total property taxes payable in the following year shall not exceed the lesser of ination or one percent of the amount of regular property taxes lawfully levied for such district in the highest of the three most recent years in which such taxes were levied for such district, plus an additional dollar amount calculated by multiplying the increase in assessed value in that district resulting from new construction and improvements to property by the regular property tax levy rate of that district for the preceding year. With a super majority vote, the Port Commission can increase the levy by 1% if ination is less than 1%. Interaction between General Purpose Lexy and General Obligation Debt Capacity Since the 101% levy limitation applies to the total levy for GO. debt service and for general Port purposes, an increase in the tax levy for G0. bonds may result in a decrease in the amount which could be levied for general Port purposes, unless a higher aggregate tax levy was approved by the voters. Beginning with the 2001 Budget, the Port established a target to use no more than 75% of the levy for debt service and retain at least 25% for general purposes. IX -7 Port ofSeattle 2012 Budget and Business Plan E. TAXPAYER EFFECT ' FIGURE 1X-3 shows the assessed valuation as compared to the millage rate from 2003 to 2012. The graph shows that the assessed value has increased from $225 billion in 2003 to an estimated $316 billion in 2011, while millage (the rate paid per $1,000 Assessed Value) has decreased from $02590 in 2003, to the 2012 rate of $0.2313. Assessed value for 2011 is estimated to be $315,588,352,233. (The 2011 assessed valuation is used for 2012 tax collection). FIGURE IX3: KING COUNTY ASSESSED VALUATION VS. PORT MILLAGE RATE 2003-2012 SBllons Rite/$1,000 420 $1.00 4m . 3w ' - $0.90 , 360 ' 340 ' - $0.80 320 - 3CD - ~ $0.70 280 > .4 260 ' $0160 Value 240 A 220 . 1- Amulet! $0.50 zoo ' 1w - 160 ' $0.40 _ 140 ' - 1 20 ' $0.30 100 , 80 > ' $0.20 60 . . 40 - V 50.10 20 ' 0 -~ ' $0100 03 04 05 06 07 08 09 10 1 1 12 *AsmycdVine (Le Sce) tMillqc (Right Scale) F. COUNTY PROPERTY TAX COMPARISON For 2011, the Port accounted for 2.1% of the total property taxes collected by the County. FIGURE IX4: 2011 PERCENTAGE OF TAX LEVIES BY TAXING DISTRICT Port State Schools 21% . LA.-;~1.t,"d.mj.)t E' V: IX -8
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