ITEM NO:       7b 
DATE OF MEETING: October 24,2017 
Tax Levy and Preliminary Funding
Discussion 
2018-2022 
October 24, 2017 

1

Agenda 
Background and Process 
Tax Levy 
Preliminary Funding 
Airport Plan of Finance 
Non-Airport Funding and Project Prioritization 
Next Steps and 2018 Finance Initiatives 
Appendix 
2

Capital Funding Background 
Capital funding comes primarily from the free cash flow of the
operating divisions 
Free cash flow is equivalent to net income after debt service 
The Airport is self funding 
Maritime, Economic Development (EDD) and the Northwest
Seaport Alliance (NWSA) share funding primarily from: 
Operating free cash flow 
Tax levy after payment of General Obligation (G.O.) bond debt service 

Tax levy supports Non-Airport capital funding 
3

Process Overview 
Capital funding was discussed with the Commission at the retreat on
September, 12 
The operating divisions presented their capital improvement plans
(CIP) on October 10 
Preliminary analysis indicates that there is a shortfall in funding
available for the Maritime, EDD and NWSA full CIPs 
A tolerable gap was identified in the 2017-2021 funding plan 
A larger forecasted 5-year CIP has widened the gap for 2018-2022 
Staff has prioritized projects to close the gap and is providing a
recommendation to the Commission 
Port establishes funding priorities 
4

TAX LEVY 
5

Port Taxing Authority 
Washington State Ports have authority to
levy taxes on property within the Port
District (King County) 
2017 levy is $72 million ($77 per year based on
median home value) 
2018 levy can be any amount up to $101.6
million based on statutory limitations 
Port has a track record of levying below the maximum 
6

Uses of the Tax levy 
State law allows the levy to be used for any Port
purpose 
Except for the direct payment of Revenue Bond debt
service 
Commission direction establishes actual use 
First claim on the levy is payment of G.O. Bond debt
service (e.g., recent G.O. Bonds for SR99 Tunnel
project) 
Commission sets the policy on tax levy use 
7

Traditional Uses of the Tax Levy 
Legacy environmental liability 
Regional transportation 
Highline Schools noise mitigation 
Economic Development initiatives 
Workforce Development 
Economic Development Partnership and tourism programs 
Capital projects that meet levy funding criteria 
The Commission has used the levy for these strategic purposes 
8

Criteria for Levy Funding Projects 
Criteria were updated in 2015 for funding projects
with the tax levy; consistent with historical practice 
Operating Cash         Tax Levy 
Asset Renewal & Replacement  Positive net income from   Economic benefit 
business unit 
Strategic Initiatives             Short payback/       No or long payback 
Self funding 
Location                    South Harbor         North Harbor 
Levy funding criteria supports Century Agenda 
9

Criteria Clarification for Tax Levy 
Asset Renewal and Replacement 
Projects for businesses that may have a positive
cash flow, but insufficient to support significant
re-investment 

Levy supports key operations 
10

Transportation and Infrastructure Fund 
In addition to the tax levy, the Port has a Transportation and
Infrastructure Fund (TIF) 
Tax levy funds are set aside to meet the Port's transportation obligations 
Currently has funds for the Heavy Haul Corridor obligations 
Staff recommends adding funds to meet other obligations, e.g. Safe & Swift 
Transportation & Infrastructure Fund Summary
($ million)                                        2017     2017    Budget
Budget  Est./Act  Variance
2017 Beginning Balance                          19.3    19.3     -
Deposits from Tax Levy                              -      22.4     22.4
Investment earnings                              -       0.1      0.1
Transportation Investments                          (0.1)    (0.2)     (0.1)
Estimated Ending TIF Balance              19.2    41.6
TIF ensures funding for Port transportation commitments 
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Harbor Development Fund 
As part of the 2017 tax levy
discussion, staff recommended     Staff recommends using the
issuing G.O. bonds to make the final   $65 million to establish a
payment for the SR99 Tunnel
Project and reimbursing the Port for   fund for Harbor Development
its initial cash payment 
SR99 Project qualified for the lowest    Harbor Development Fund ($ million)
cost debt                        Beginning Balance 2017 - 
This additional $65 million would be    Deposit from Tax Levy in 2017         65.0
available to fund Terminal 5          Future Deposit(s) from Tax Levy        82.3
redevelopment which has a higher     T-5 Modernization 2018-2022 (1)      (147.3)
cost of debt 
Ending Balance 2022                0.0 
Bonds were sold in Feb. 2017 and
$65 million deposited into the tax    (1) includes initial costs for channel depending
levy fund 
Harbor Development Fund provides funding for T-5 
12

2017 Levy Status 
SOURCES AND USES OF TAX LEVY
2017   2017   Budget
SOURCES ($ million)                    Budget  Est./Act Variance
2017 Beginning Fund Balance                       60.5    88.4     27.9
Annual Tax Levy                                72.0    72.0      -
Bond Proceeds - Reimbursement for SR99 payment          65.0    65.1      0.1
Grants & Other Reimbursements                      6.7     4.7     (2.0)
Investment Income during current year                   -       0.7      0.7
Total Sources                   204.2    230.9     26.7     $65 million
reimbursement with
USES ($ million)
bond proceeds to be set
General Obligation Debt Service (Existing)                 34.5     34.5      -
General Obligation Debt Service (New)                   10.2     2.0      8.1     aside for Harbor
Environmental Remediation Liability                     9.4     11.7     (2.3)    Development 
Transportation & Infrastructure Reserve Fund deposit          -      22.4     (22.4)
Regional Transportation                            2.2     0.6      1.6
Capital Expenditures - Maritime                        23.4     22.4      1.0     Additional funds to be
Capital Expenditures - EDD                           5.0     0.8      4.2     deposited in the TIF to
Deposit to Harbor Development Fund                    -      65.0    (65.0)
Airport Community Ecology (ACE) Fund                   1.0     0.2      0.8    meet Safe & Swift
Energy and Sustainability Policy Directives                  1.0     -        1.0     Corridor obligations 
Workforce Development                          1.7     0.6     1.1
Economic Development Partnership Program               1.0     1.0     (0.0)
Total Uses                     89.4    161.4     (72.0)
Estimated Ending Tax Levy Fund Balance          114.8    69.5
Totals may not add due to rounding
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2018-2022 Tax Levy 
Continue levy support for: 
Environmental remediation and other
environmental initiatives 
Regional transportation investments 
Highline Schools current noise mitigation 
Workforce development, tourism and Economic
Development partnership programs 
Capital projects based on levy policy 
Tax levy continues to support the King County community 
14

2018-2022 Tax Levy Projects 
Investments that support the fishing industry 
Fishermen's Terminal 
Terminal 91 
Replacement of the P66 heating and ventilation system 
Bell Harbor Conference Center interior improvements 
Public elevators on the central waterfront 
NWSA North Harbor investments in T-46 and T-18 storm
water 
Capital investments support economic development 
15

PRELIMINARY FUNDING PLAN 
16

Funding Assumptions 
Airport is primarily self-funding (exception is Highline School noise
mitigation) 
Maritime, Economic Development and Northwest Seaport Alliance share
non-Airport funding resources 
The Port maintains financial planning targets in support of the Port's credit
ratings 
Revenue bond debt service coverage: 1.25x Airport, 1.50x non-Airport 
Minimum fund balance based on O&M: 10 months Airport, 6 months non-
Airport 
Borrowing against the tax levy is limited  G.O. bond debt service no more than
75% of annual tax levy 
Staff provides a draft funding plan to inform Commission decisions 
17

Funding Resources - Airport 
Operating funds and operating cash flow  from both aeronautical and
non-aeronautical businesses 
Revenue bonds paid from net income 
Tax levy  a portion used to benefit communities near the Airport for
costs that are ineligible for Airport funding per FAA restrictions 
Capital grants  restricted to specific projects 
Passenger Facility Charges (PFCs) restricted to FAA approved
projects 
Customer Facility Charges (CFCs)  restricted to consolidated rental
car facility uses 
Many funding sources are restricted in use 
18

Airport Funding Plan 
2018-2022
Aviation Funding Sources             ($ million)
Operating Cash Flow              284.4 
(1)
Tax levy                          4.5 
Grants                      174.3 
Passenger Facility Charge            238.0 
Customer Facility Charge             17.3 
Existing revenue bond proceeds        274.1 
Future revenue bond proceeds       1,866.9 
TOTAL                  2,859.6 
Aviation CIP                        2,818.7 
Allocated Central Services CIP              40.9 
Total Aviation Funded CIP              2,859.6 
(1) Highline Schools noise insulation.
Note: totals may not add due to rounding
Airport is self-funding 
19

Funding Resources  Non-Airport 
Operating funds and operating cash flow  from NWSA,
Maritime 
Revenue bonds - paid from net income  cash flows do not
accommodate new revenue bonds during this 2018-2022 period 
Tax levy  funds capital per levy policy 
G.O. bonds - paid from tax levy 
Grants  restricted to specific projects 

Operating cash flow and tax levy are the primary funding sources 
20

Funding Resources 
General Fund includes
operating cash-on-hand    Funding Source    2018-2022 
$ mil. 
and free cash flow 
General Fund           161 
Tax Levy Fund includes
Tax Levy Fund           342 
cash-on-hand, annual
Grants                 10 
levy at $72 million and
TOTAL              513 
G.O. bond proceeds 
TIGER grant for T-46 
Maximizing the use of G.O. bonds adds to funding capacity 
21

Funding Process 
Staff reviewed the Non-Airport CIP and
recommends that the following projects are
assumed to be funded 
NWSA  Port's 50% share: $250 million 
Port projects: $89 million 
Channel deepening 
Projects under construction or required 
Projects under $1 million 
Contingency and small capital 
Prioritization efforts focused on other projects 
22

CIP Prioritization Criteria 
The remaining Maritime and EDD projects were reviewed
for funding priority 
Projects were scored based on the following criteria: 
Contributes to Century Agenda goals 
Provides other community benefits not included in the
Century Agenda, e.g. preservation of public amenities 
Provides new operating cash flow 
Is a renewal and replacement project critical to preserving an
existing asset or revenues 
Criteria balances doing good and doing well 
23

CIP Funding Principles 
Identify projects that can be deferred - based
on the Port's asset management assessment
program, a number of renewal and replacement
projects were deferred to the future 
Prioritize project based on scoring criteria 
Keep 10% of funding capacity as a strategic
reserve  dry powder for the future 
Balances near-term investments and future flexibility 
24

Prioritization Results 
An additional $134 million of projects are
recommended for funding in 2018-2022 
We will revisit the prioritization annually 
Preserves nearly 8% of funding capacity
approximately $40 million 
Other projects can be deferred 
Plan can fund top priority projects 
25

Projects Recommended for Funding 
2018-2022
Division                Project                 $'000   Score Rank  Notes
MT   C800525 FT Strategic Plan            33,995  10  1 Fishing industry support and produces new cash flow
MT   C800995 Restoration              18,848  10  1 Environmental remediation and produces new cash flow
MT   C800675 P91 South End Fender          3,425  10  1 Fishing asset and income preservation
MT   C800129 New Cruise Gangway at T91        4,490  10  1 Increases cruise traffic and cruise revenues
MT   C800531 FT Dock 3,4,5 Fixed Pier Improvement    6,239   9  4 Supports the fishing industry and preserves revenue generating assets
MT   C800356 SBM Restrms/Service Bldgs Rep, paving   8,390   9  4 Critical asset renewal and supports new revenues
EDD   C801006 P66 HVAC Systems Upgrade        17,800   8  6 Supports cruise industry key asset renewal
EDD   C801016 CW Elevator Modernizations        2,750   8  6 Public amenity asset renewal
EDD   C800199 WTC HVAC Replacement          1,600   8  6 Asset renewal and revenue preservation
EDD   C800889 BHICC Interior Modernization        6,681   8  6 Asset renewal and revenue preservation and growth
EDD   C800158 T91 Uplands Development         30,000   7  10 Supports maritime industry and produces cash flow
TOTAL                         134,218 

Projects include new initiatives and asset stewardship 
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Next Steps 
Revise CIP to reflect Commission guidance
on prioritization 
Update the Draft Plan of Finance to include
non-Airport funding analysis 
Provide updated details on the 2018 tax levy
sources and uses 
27

2018 Finance Initiatives 
Issue Revenue bonds as needed to fund a portion
of the Airport CIP 
Manage variable rate debt renewals 
Monitor opportunities to refund bonds for savings 
Evaluate innovative funding strategies 
Including Public Private Partnerships (P3) for future
projects 
Finance initiatives support the operating businesses and the Century Agenda 
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APPENDIX 
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Appendix 
Transportation and Infrastructure Fund 
Tax Levy authority 
Industrial Development District (IDD) levy
information 
Bond ratings 
30

Transportation and Infrastructure Fund (TIF) 
TIF ($ million)                        2018-2022
Beginning Balance 2018                  41.6
Transportation Investments 2018-2022          32.4
Ending Balance 2022                     9.2 
Project Description ($'000)         2018    2019    2020    2021   2022  2018-2022
Seattle Heavy Haul Network          2000    2000    2000   2000   2000
Fast Corridor I                      15                                         15
Fast Corridor II                     250      250       95       730                1,325
N Argo Express Access - Pub Ex         230    -                              230 
East Marginal Way Phase 2           280                                 280 
Safe and Swift                  6,000    6,000    8,000                 20,000
P66 Alaskan Way St Improvement       564                                564 
TOTAL                  9,339   8,250  10,095  2,730  2,000       32,414
Ending balance is earmarked for future Heavy Haul Corridor commitments 
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Port's Taxing Authority 
45 cent limit 
The amount of the tax levy in any given year is limited to 45 cents per $1000 of
assessed value 
Port 2017 rate was only 15.3 cents 
For 2018, this limit is $237.9 million 
Excludes the amount needed to pay G.O. bond debt service of $43.4 million 
1% limit 
The maximum levy is increased each year by the 1% limit factor 
Based on prior year's maximum 
Increased by the lessor of 1% or inflation plus an addition for new construction 
The maximum levy for 2017 would have been ~$99.0 million 
The more restrictive 1% limit applies 
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2018 Information 
King County preliminary assessed value for
2018 is $530 billion  an increase of 12.8% 
A $72 million levy equals a 13.6 cent millage
rate 
A decline from the 2017 rate of 15.3 cents 
An estimated $75 per medial home 
The Port's levy rate declines as assessed value increases 
33

IDD Levy - Background 
Port can levy property tax within an Industrial Development District (IDD) 
In addition to regular property tax 
A port can form multiple districts 
Coextensive with port district, or 
Smaller area within the Port district 
The Port already has two Industrial Development Districts 
Port can implement the levy twice - Port of Seattle implemented first round in 1963 
Purpose is to provide for harbor improvements or industrial development of marginal
lands 
Broadly defined 
Includes areas of poor planning or declining tax receipts 
The IDD levy provides a potential additional funding source 
34

IDD Levy - Implementation 
Port may implement a second round based on a new formula 
Maximum of $1.47 billion over a period of up to 20 years 
Average amount = $74 million (13.8 cents for 20 years) 
Maximum annual amount = $245 million (45 cents for 6 years) 
Port can establish a smaller IDD or collect a lesser amount 
Process to implement 
Publish notice by April 1 to begin collecting the next year 
If within 90 days a petition of 8% of voters (voting in the most
recent gubernatorial election) opposes, the Port must hold a
special election to approve the levy 
Implementation may require voter approval 
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IDD Levy Information: "Marginal lands" are defined to include property
subject to the following (RCW 53.25.030) conditions: 
1. An economic dislocation, deterioration, or disuse resulting from faulty planning. 
2. The subdividing and sale of lots of irregular form and shape and inadequate size for proper usefulness and
development. 
3. The laying out of lots in disregard of the contours and other physical characteristics of the ground and surrounding
conditions. 
4. The existence of inadequate streets, open spaces and utilities. 
5. The existence of lots or other areas which are subject to being submerged by water. 
6. By a prevalence of depreciated values, impaired investments, and social and economic maladjustment to such an
extent that the capacity to pay taxes is reduced and tax receipts are inadequate for the cost of public services rendered. 
7. In some parts of marginal lands, a growing or total lack of proper utilization of areas, resulting in a stagnant and
unproductive condition of land potentially useful and valuable for contributing to the public health, safety and welfare. 
8. In other parts of marginal lands, a loss of population and reduction of proper utilization of the area, resulting in its
further deterioration and added costs to the taxpayer for the creation of new public facilities and services elsewhere. 
9. Property of an assessed valuation of insufficient amount to permit the establishment of a local improvement district
for the construction and installation of streets, walks, sewers, water and other utilities. 
10. Lands within an industrial area which are not devoted to industrial use but which are necessary to industrial
development within the industrial area. 

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Current Bond Ratings 
Noted Credit Strengths: 
Moody's    S&P    Fitch         Diverse asset and revenue base 
General Obligation Bonds              Aaa     AAA     AA-
Airport's market position and
First Lien Revenue Bonds              Aa2      AA-      AA
enplanement levels 
Intermediate Lien Revenue Bonds         A1      A+      AASubordinate
Lien Revenue Bonds         A2      A+     AA-          Solid coverage and liquidity levels 
Passenger Facility Charge Revenue Bonds    A1      A+      A+
Conservative debt structure 
Fuel Hydrant Special Facility Bonds         A2       A-
Pro-active Port Commission and deep
and experienced staff 
Vibrant and resilient area economy 

A solid capital funding plan is critical to investors and for strong credit ratings 
37