9d 2017 Financial Performance presentation
Item No. 9d_supp . Meeting Date: March 13, 2018 Port of Seattle 2017 Financial Performance Report Portwide Financial Highlights Total Operating Revenues were $630.4M, $10.1M above budget and $31.9M higher than 2016. Excluding Aeronautical Revenues, which are based on cost recovery, other operating revenues were $367.9M, $22.5M above budget and $13.7M higher than 2016. NWSA Distributable Revenue was $54.9M, $8.2M over budget but $6.7M lower than 2016. Total Operating Expenses were $371.3M, $13.3M under budget but $46.0M over 2016. Net Operating Income before Depreciation was $259.1M, $23.5M above budget but $14.1M lower than 2016. Total capital spending was $324.5M, $283.2M or 46.6% below budget. Strong financial performance results for the Port 2 Aviation Business Highlights Passenger growth slowed in 2017, still up 2.7% over prior year, international passenger growth of 5.9% New air service: Aeromexico started service to Mexico City in November 2017 Air France announced new service to Paris, France beginning March 25, 2018 Cargo metric tons up 16% for year Customer Service: achieved Airport Service Quality (ASQ) targets for 2017 Airport dining and retail program awarded lease group 3 in June 2017 and awarded lease group 4 in February 2018 Sustainable Airport Master Plan - progressing towards preferred alternative Capital program: proceeding with construction on major projects: IAF, NSAT, Baggage Optimization, Concourse D Hardstand Terminal and Alternative Utility Facility. Inter-local agreement executed with City of SeaTac Airline lease agreement (SLOA) negotiations continued into early 2018, with agreement on key terms reached in February 2018. Major accomplishments on Aviation Division priorities 3 Aviation Financial Highlights Cost per Enplanement (CPE) Forecast $0.43 favorable to budget Due to lower airline rate base costs and higher revenue sharing (driven by Non-Aero NOI growth) Non-Aeronautical NOI - $14.6M higher than budget $1.8M incremental NOI - DMCBP phase II lump sum pre-paid frontage fee $4.8M all other incremental Non-Aero Revenue growth $8.0M all other incremental Non-Aero Expense savings Spent $294 million, or 53% of capital budget Primarily due to delays in start of construction on major projects such as International Arrivals Facility and the Concourse D Hardstand Terminal. Eight projects with largest variances accounted for 65% of underspending Strong operating results; capital spending short of budget 4 Maritime Business Highlights Cruise Broke the million passenger mark for the first time in 2017. Grand reopening of Pier 66 Cruise Terminal with NCL. Successful launch of Port Valet Service. Grain Volumes 17% higher than expected. Fishing & Commercial Operations Continued to advance work on FT redevelopment. USCGC Munro held its commissioning Ceremony at T91. Event was well attended by high ranking officers and senators. Recreational Boating - New liveaboard authorization agreement finalized with Shilshole Liveaboard Association. Vessel Management System selected and contract signed. MD Portfolio Management - Negotiated long-term ground lease for Duke's restaurant at Shilshole Bay Marina. Maintained 97% occupancy. Marine Maintenance - Leading the organization in small business utilization with 38.92% of goods, services, and small works conducted by small businesses. Storm Water Utility Exceeded assessment goal by 11% and achieved 88% of rehabilitation goal. Maritime businesses setting milestones 5 Maritime Financial Highlights Maritime 2017 NOI $6.7M favorable to budget and $1.5M better than 2016 Revenue favorable to budget by $2.4M and $3.4M higher than 2016. Higher grain volumes, low vacancy rates, increased cruise passengers, and increased tariffs are key drivers. Expenses favorable to budget by $4.3M from port-wide open headcount along with delays in cruise initiatives and maintenance projects . Y/Y expenses up $1.9M related to cruise port valet program, increased maintenance work, and central services. Maritime spent 59% or $20.5M of capital budget. Stormwater Utility NOI $105K unfavorable to budget Revenue $30K favorable, expenses $134K unfavorable to budget. First Y/Y NOI growth in Maritime Division history 6 EDD Business Highlights Real Estate Development Finalized ground lease with Trammel Crow for development of Des Moines Creek North property in Seatac. Broke ground on NERA development in Burien. Leased Tsubota to support Tent Camp 5. Completed Salmon Bay Marina acquisition. Began design work for the Fishermen's Terminal redevelopment. Workforce Development Supported development and passage of Priority Hire resolution. Placed 1500+ jobseekers into employment through Airport Jobs office. Implemented Maritime Youth Collaborative initiative providing career exploration and learning opportunities for 400+ students. Small Business Facilitated community engagement and supported development of new Diversity in Contracting policy (passed 1/9/18). Conducted 35 training sessions on doing business with the Port (797 attendees). Doubled pool of available MWBE businesses in our Port database Portfolio Management properties at 98% occupancy at end of 2017, above target of 95%. Tourism Developed new spotlight advertising program at airport. Administered tourism grant program. Implemented marketing efforts that tout cruise and WA State tourism options. 2017 Initiatives Accomplished 7 EDD Financial Highlights EDD NOI $5.4M (42%) favorable to budget and $2.4M lower than 2016 Revenue favorable to budget by $1,761K and $1,888K greater than 2016. Conference and Event Center $1,190K favorable to budget, and $1,111K up from 2016 due to timing of construction at P66. Real Estate properties higher than budget from low vacancy rates. Expenses favorable to budget by $3.7M from Workforce Development, Central Services, and other initiatives. Y/Y expenses up $4.3M primarily due to increased Corporate allocations, Maintenance, EDD Grants, and Conference and Event Center. EDD spent 59% of capital budget. Strong Occupancy & P66 Construction Dynamics 8 Central Services Business Highlights The Port Commission took action on Climate Change and Sustainability. The Port became the first U.S. port with 10-year goal to transition to sustainable aviation fuels. The Port continued working with TSA on Enhanced Accessible Screening Program (EAPS) to improve passenger throughput . Discussed comprehensive data analytics strategy for WMBE program focusing on division level goal setting and tracking, department spending reports, and roles and responsibilities. Conducted events and tours to help build community awareness and support for the Port including near-Port communities and throughout King County. Continued working with stakeholders on Fishing Fleet Modernization priority and tourism. Conducted outreach and signage program to support Alaskan Way/Pier 66 transportation construction project. 27 projects were substantially completed or placed into closeout, including Bag Claim Wall Panels, Central Terminal Wi-Fi Expansion, Air Cargo 4 Fence, Variable Frequency Drive Motor Replacement. Achieved a number of accomplishment in 2017 9 Central Services Financial Highlights Operating expenses were $117.5M, $20.4M or 14.8% favorable to budget mainly due to: $10.0M in Payroll savings was largely due to delayed hiring, vacant positions, and project delays. $14.4M in Outside Services savings was mainly due to delayed spending on advanced planning for SAMP, environmental review for SAMP, Environmental Grant Program, other projects delay, and a large expense project being capitalized. o Capital Development was $10.4M below budget. o Environment & Sustainability was $4.9M below budget. All departments were under budget, except: Legal and Labor Relations - due to unanticipated legal expenses. Portwide Contingency - mainly due to unbudgeted radio systems consultant contract. Cost savings and project spending delays resulted in positive variance 10 Appendix 2017 Financial Performance Report Portwide Financial Summary Fav (UnFav) Incr (Decr) 2016 2017 2017 Budget Variance Change from 2016 $ in 000's Actual Actual Budget $ % $ % Aeronautical Revenues 244,235 262,451 274,799 (12,348) -4.5% 18,216 7.5% Other Operating Revenues 354,232 367,917 345,446 22,471 6.5% 13,685 3.9% Total Operating Revenues 598,467 630,368 620,245 10,123 1.6% 31,901 5.3% Total Operating Expenses 325,285 371,317 384,660 13,343 3.5% 46,032 14.2% NOI before Depreciation 273,182 259,051 235,585 23,466 10.0% (14,131) -5.2% Depreciation 164,336 165,021 166,300 1,279 0.8% 685 0.4% NOI after Depreciation 108,846 94,030 69,285 24,744 35.7% (14,817) -13.6% Total Operating Revenues were $630.4M, $10.1M or 1.6% above budget. Total Operating Expenses were $371.3M, $13.3M or 3.5% below budget. NOI before Depreciation was $259.1M, $23.5M or 10.0% above budget. Strong financial performance for 2017 12 Portwide Operating Revenues Summary 2016 2017 2017 Budget Change $ in 000's Actual Actual Budget Variance from 2016 Aeronautical Revenues 244,235 262,451 274,799 (12,348) 18,216 Public Parking 69,540 75,106 73,568 1,538 5,566 Rental Cars - Operations 37,082 35,051 37,815 (2,764) (2,031) Rental Cars - Operating CFC 12,122 10,641 12,931 (2,290) (1,481) Airport Dining and Retail 55,196 54,611 51,348 3,264 (584) Employee Parking 9,329 9,617 8,482 1,134 288 Ground Transportation 12,803 15,684 14,417 1,267 2,881 Non-Aero Commercial Properties 9,992 18,042 12,141 5,901 8,050 Airport Utilities 7,233 7,018 7,118 (101) (215) Fishing & Commercial Vessels 2,927 2,854 3,052 (198) (73) Maritime Operations 6,181 6,443 6,069 374 262 Recreational Boating 10,255 11,086 11,081 5 831 Cruise 15,422 17,596 16,502 1,093 2,174 Grain 5,382 5,427 4,508 919 45 Maritime Industrial 6,306 6,799 6,605 193 493 Marina Office & Retail 3,949 3,988 4,012 (24) 39 Central Harbor Management 7,827 8,634 8,055 579 807 Conference & Event Centers 8,022 9,133 7,943 1,190 1,111 NWSA Distributable Revenue 61,584 54,925 46,708 8,217 (6,659) Other 13,080 15,263 13,089 2,174 2,183 Total Operating Revenues (w/o Aero) 354,232 367,917 345,446 22,471 13,685 TOTAL 598,467 630,368 620,245 10,123 31,901 Record operating revenues in 2017 13 Portwide Operating Expense Summary Fav (UnFav) Incr (Decr) Payroll expenses: $17.0M 2016 2017 2017 Budget Variance Change from 2016 below budget due to vacant $ in 000's Actual Actual Budget $ % $ % positions and delay in hiring. Salaries & Benefits 102,873 112,837 125,263 12,426 9.9% 9,964 9.7% Outside Services: $17.5M Wages & Benefits 99,917 108,041 112,647 4,606 4.1% 8,124 8.1% favorable to budget due to Payroll to Capital Projects 21,744 25,708 27,327 1,618 5.9% 3,965 18.2% project delays, and cost Equipment Expense 7,106 11,118 7,438 (3,679) -49.5% 4,012 56.5% savings. Supplies & Stock 8,792 10,238 8,040 (2,199) -27.3% 1,447 16.5% Other Expenses: $10.4M over Outside Services 70,116 83,603 101,106 17,503 17.3% 13,487 19.2% budget mainly due to a $3.6M unbudgeted DBCBP Utilities 21,123 23,529 21,752 (1,777) -8.2% 2,406 11.4% Phase II frontage fees and Travel & Other Employee Expenses 4,200 4,767 6,203 1,436 23.1% 567 13.5% $3.9M unbudgeted Promotional Expenses 1,178 1,408 1,997 589 29.5% 230 19.5% Environmental Remediation Other Expenses 25,118 34,818 24,419 (10,399) -42.6% 9,700 38.6% costs. Charges to Capital Projects (36,880) (44,750) (51,532) (6,781) 13.2% (7,870) 21.3% Charge to Capital: $6.8M less TOTAL 325,285 371,317 384,660 13,343 3.5% 46,032 14.2% than budget due to delay in some capital projects. Operating expenses were $13.3M or 3.5% below budget 14 Portwide Comprehensive Financial Summary Fav (UnFav) 2016 2017 2017 Budget Variance ($ in 000's) Actual Actual Budget $ % Revenues Capital Contributions: 1. Operating Revenues 598,467 630,368 620,245 10,123 1.6% $14.9M above budget mainly 2. Tax Levy 71,678 71,702 72,000 (298) -0.4% due to contribution from NCL 3. PFCs 85,570 88,389 89,087 (698) -0.8% for the Pier 66 Cruise 4. CFCs 24,715 25,790 26,300 (511) -1.9% Terminal Improvement. 5. Fuel Hydrant 6,992 7,000 7,024 (24) -0.3% Interest Income: $1.4M 6. Non-Capital Grants & Donations 6,284 7,647 8,595 (947) -11.0% higher than budget mainly 7. Capital Contributions 18,108 29,983 15,000 14,983 99.9% 8. Interest Income 8,448 12,174 10,822 1,351 12.5% due to higher funds balance. Total 820,262 873,053 849,073 23,979 2.8% Revenue Bond Interest Expenses Expense: $24.3M favorable to 1. O&M Expense 325,285 371,317 384,660 13,343 3.5% budget mainly due to savings 2. Depreciation 164,336 165,021 166,300 1,279 0.8% from revenue bond re- 3. Revenue Bond Interest Expense 105,567 97,748 122,026 24,278 19.9% financing. 4. GO Bond Interest Expense 9,765 13,891 17,714 3,823 21.6% 5. PFC Bond Interest Expense 5,251 4,931 4,985 55 1.1% Other Non-Op Expense: 6. Public Expense 8,560 4,588 2,488 (2,100) -84.4% $13.0M higher than budget 7. Non-Op Environmental Expense 280 4,464 5,441 977 18.0% mainly due to earlier assets 8. Other Non-Op Rev/Expense 12,087 12,732 (257) (12,990) 5050.8% retirement resulted from new Total 631,131 674,693 703,357 28,665 4.1% project constructions at the Special Item 147,700 - - - 0.0% airport. Retro Adjustment to Net Position - - - 0.0% Increase In Net Position 41,431 198,360 145,716 52,644 36.1% $198.4M increase in net position in 2017 15 Aviation Net Operating Income Comparison Steady NOI growth for Aviation 16 Non-Aviation Net Operating Income Comparison Declining operating revenues over the past 5 years 17 Capital Spending by Division 2016 2017 2017 Budget Variance $ in 000's Actual Actual Budget $ % Aviation 153,889 294,497 554,717 260,220 46.9% Maritime 5,744 20,489 34,518 14,029 40.6% Economic Development 4,731 3,739 6,304 2,565 40.7% Central Services & Other (note 1) 5,097 5,798 12,147 6,349 52.3% TOTAL 169,461 324,523 607,686 283,163 46.6% Note: (1) "Other" includes Street Vacation projects and Storm Water Utility (SWU) capital projects. Capital spending was below budget due to project delays 18 Aviation Division 2017 Financial Performance Report Airport Activity 2016 2017 % Change Passenger Activity Enplaned Passengers (000's) Change 2017 Market Domestic 20,385 20,862 2.3% Airline 2016 v. 2017 Share International 2,411 2,554 5.9% Alaska + Virgin -0.1% 49.6% Total 22,796 23,416 2.7% Delta 11.1% 22.2% Southwest -9.4% 6.6% Operations 412,170 416,124 1.0% United 5.3% 6.5% Landed Weight (In Millions of lbs.) American -3.3% 5.6% Cargo 1,888 2,323 23.0% All other 25,387 26,107 2.8% 2017 Cargo metric tons: Total 27,276 28,431 4.2% Strong growth in cargo volume from existing Cargo - Metric Tons domestic and international carriers. 2017 reflects first full year of activity for new Domestic freight 194,754 242,470 24.5% air services that commenced mid-2016: International freight 114,350 123,735 8.2% o New Domestic Freight services - Prime Air/Amazon and DHL Mail 57,326 59,651 4.1% o New International Freight services Total 366,430 425,856 16.2% AeroLogic and AirBridge. 2017 enplaned passenger growth of 2.7% 20 Aviation Financial Summary Fav (UnFav) Incr (Decr) 2016 2017 2017 Budget Variance Change from 2016 $ in 000's Actual Actual Budget $ % $ % Operating Revenues: Gross Aeronautical Revenues 247,811 266,027 278,375 (12,348) -4.4% 18,216 7.4% SLOA III Incentive Straight Line Adj (3,576) (3,576) (3,576) (0) 0.0% (0) 0.0% Aeronautical Revenues 244,235 262,451 274,799 (12,348) -4.5% 18,216 7.5% Non-Aeronautical Revenues 221,021 236,803 226,645 10,157 4.5% 15,781 7.1% Total Operating Revenues 465,256 499,254 501,444 (2,191) -0.4% 33,997 7.3% Total Operating Expense 261,226 297,449 302,711 5,262 1.7% 36,223 13.9% Net Operating Income 204,030 201,804 198,733 3,071 1.5% (2,226) -1.1% 2017 NOI $3.1M favorable to budget 21 Key Performance Measures Fav (UnFav) Incr (Decr) 2017 Results 2016 2017 2017 Budget Vairance Change from 2016 Actual Actual Budget $ % $ % Key Performance Metrics Key Performance Metrics Reduced CPE due to lower Cost per Enplanement (CPE) 10.10 10.45 10.88 0.43 4.0% 0.35 3.4% airline rate base costs and higher revenue sharing Non-Aeronautical NOI (in 000's) 128,833 133,108 118,521 14,587 12.3% 4,275 3.3% (driven by Non-Aero NOI Other Performance Metrics growth) O&M Cost per Enplanement 11.46 12.70 12.65 (0.05) -0.4% 1.24 10.9% Non-Aero NOI growth due Non-Aero Revenue per Enplanement 9.70 10.11 9.47 0.64 6.8% 0.42 4.3% to DMCBP Phase II lump Debt per Enplanement (in $) 104 114 110 (4) -3.5% 10 9.4% sum ($1.8M NOI impact), Debt Service Coverage (After Rev Sharing) 1.53 1.57 1.50 0.08 5.1% 0.04 2.9% combined with other Non- Days cash on hand (10 months = 304 days) 416 381 304 77 25.4% (35) -8.4% Aero revenue growth and Aeronautical Revenue Sharing ($ in 000's) (37,395) (42,313) (33,093) (9,219) -27.9% 4,917 13.2% significant Non-Aero Activity (in 000's) expense savings. Enplanements 22,796 23,416 23,929 (513) -2.1% 619 2.7% Both key measures positive: CPE below budget; Non-aero NOI above budget 22 Aviation Expense Summary Fav (UnFav) Incr (Decr) 2017 Actuals to Budget 2016 2017 2017 Budget Variance Change from 2016 $ in 000's Actual Actual Budget $ % $ Unplanned expenses: % DMCBP Phase II pre-paid Operating Expenses: frontage fee expense ($3.6M) Payroll 101,879 114,463 119,886 5,423 4.5% 12,585 12.4% Snow removal ($1.4M) Additional kiosks for FIS Outside Services 37,863 41,055 45,279 4,224 9.3% 3,192 8.4% processing ($0.6M) Utilities 14,690 16,374 15,187 (1,187) -7.8% 1,684 11.5% Environmental Remediation Liability ($3.4M) primarily IAF Other Airport Expenses 20,655 28,292 18,004 (10,289) -57.1% 7,637 37.0% soils Total Airport Direct Charges 175,087 200,184 198,355 (1,829) -0.9% 25,098 14.3% Capital to expense ($2.9M) primarily exit lane equipment Environmental Remediation Liability 4,463 7,147 3,775 (3,372) -89.3% 2,684 60.1% write-off Capital to Expense 129 2,856 - (2,856) N/A 2,727 2114.7% Total Exceptions 4,592 10,003 3,775 (6,228) -165.0% 5,411 117.8% Offset by cost savings: AVPMG savings due to Terminal Total Airport Expenses 179,679 210,187 202,130 (8,056) -4.0% 30,508 17.0% project delays partially offset by lower charges to capital. Police Costs 18,183 17,652 19,173 1,521 7.9% (531) -2.9% SAMP-related spending delays Capital Development 9,319 14,701 22,378 7,677 34.3% 5,382 57.8% ($3.9) Payroll savings primarily due to Other Central Services 50,099 51,004 54,673 3,669 6.7% 905 1.8% vacancies and hiring delays Maritime/Economic Development 3,946 3,904 4,356 452 10.4% (41) -1.1% ($3.0M) Year-end pension savings Total Charges from Other Divisions 81,547 87,262 100,581 13,318 13.2% 5,715 7.0% adjustment ($2.4M) Total Operating Expense 261,226 297,449 302,711 5,262 1.7% 36,223 13.9% Unplanned expenses absorbed by cost savings 23 Aeronautical Business Fav (UnFav) Incr (Decr) 2017 Actuals to Budget 2016 2017 2017 Budget Variance Change from 2016 Revenue - $12.3M unfavorable Rate based revenue $4.0M lower $ in 000's Actual Actual Budget $ % $ % due to savings from project delays and lower debt service, partially Revenues: offset by higher environmental Movement Area 94,725 108,638 109,845 (1,206) -1.1% 13,913 14.7% remediation costs associated with new IAF project. Apron Area 14,028 16,771 15,957 814 5.1% 2,743 19.6% Commercial Area revenue $0.9 higher due to higher RON parking Terminal Rents 155,852 155,431 163,565 (8,134) -5.0% (421) -0.3% activity. Federal Inspection Services (FIS) 11,227 16,951 12,437 4,514 36.3% 5,724 51.0% Revenue sharing $9.2M higher due to Non-Aero NOI growth Total Rate Base Revenues 275,832 297,791 301,803 (4,012) -1.3% 21,958 8.0% Expenses $0.6M favorable Commercial Area 9,379 10,574 9,665 909 9.4% 1,195 12.7% AVPMG terminal projects delayed Payroll savings due to vacancies Subtotal before Revenue Sharing 285,211 308,365 311,468 (3,103) -1.0% 23,154 8.1% & hiring delays SAMP related spending delayed Revenue Sharing (37,395) (42,313) (33,093) (9,219) 27.9% (4,917) 13.2% Partially offset by unplanned cost Other Prior Year Revenues (5) (26) - (26) N/A (20) 384.0% for additional kiosks for FIS processing ($0.8M), IAF project Gross Aeronautical Revenues 247,811 266,027 278,375 (12,348) -4.4% 18,216 7.4% contaminated soils ($3.0M), and exit lane equipment write-off ($1.9M). Total Aeronautical Expenses 169,037 193,755 194,385 630 0.3% 24,717 14.6% Net Operating Income 78,774 72,272 83,990 (11,718) -14.0% (6,501) -8.3% Debt Service (89,997) (86,564) (88,740) 2,176 2.5% 3,433 3.8% Net Cash Flow (11,224) (14,292) (4,750) (9,542) -200.9% (3,068) -27.3% Lower rate based costs and higher revenue sharing 24 Aero Cost Drivers Fav (UnFav) Incr (Decr) 2017 Actuals to Budget 2016 2017 2017 O&M Expenses $351K lower Budget Variance 'Change from AVPMG terminal projects 2016 delayed $ in 000's Actual Actual Budget $ % $ % Payroll savings due to vacancies & hiring delays O&M (1) 165,427 190,523 190,645 (123) -0.1% 25,096 15.2% SAMP related spending Debt Service Gross 118,641 113,832 117,336 (3,504) -3.0% (4,809) -4.1% delayed These savings are largely Debt Service PFC Offset (32,831) (33,057) (33,099) 42 -0.1% (226) 0.7% offset by unplanned cost for additional kiosks for Amortization 28,215 29,654 29,637 18 0.1% 1,439 5.1% FIS processing ($0.8M), Space Vacancy (2,638) (2,264) (1,486) (778) 52.4% 374 -14.2% IAF project contaminated soils ($3.0M), and exit TSA Operating Grant and Other (982) (897) (1,230) 334 -27.1% 85 -8.7% lane equipment write-off ($1.9M) Rate Base Revenues 275,832 297,791 301,803 (4,012) -1.3% 21,958 8.0% Debt Service $3.5M lower due Commercial area 9,379 10,574 9,665 909 9.4% 1,195 12.7% to increased application of capitalized interest, savings from Total Aero Revenues 285,211 308,365 311,468 (3,103) -1.0% 23,154 8.1% Variable Rate Bond interest, higher debt service exclusion, O&M, Debt Service Gross, and Amortization do not include commercial area costs or the international incentive expenses and savings from commercial paper interest. Aero rate base revenues based on cost recovery formulas 25 Aero Revenue Sharing Fav (UnFav) Incr (Decr) 2016 2017 2017 Budget Variance 'Change from 2016 $ in 000's Actual Actual Budget $ % $ % Aero Revenues (incl' commercial) 285,211 308,365 311,468 (3,103) -1.0% 23,154 8.1% Non-Aeronautical Revenues 221,021 236,803 226,645 10,157 4.5% 15,781 7.1% Total O&M Expenses (261,226) (297,449) (302,711) 5,262 -1.7% (36,223) 13.9% Net Operating Income 245,006 247,718 235,403 12,316 5.2% 2,712 1.1% ADF Interest Income 3,725 4,242 3,299 943 28.6% 516 13.9% Security Checkpoint TSA Grant 916 1,039 1,230 (192) -15.6% 123 13.4% Misc. Non-Operating Expenses (2,481) (1,799) (838) (961) 114.7% 682 -27.5% CFC Excess (4,899) (2,750) (5,561) 2,812 -50.6% 2,149 -43.9% Available for Debt Service [a] 242,267 248,450 233,532 14,918 6.4% 6,183 2.6% Debt Service 133,982 131,060 133,876 (2,817) -2.1% (2,922) -2.2% Debt Service x 1.25 [b] 167,477 163,825 167,345 (3,521) -2.1% (3,652) -2.2% Available for revenue sharing [c]=[a]-[b] 74,790 84,625 66,187 18,438 27.9% 9,835 13.2% Revenue Sharing [d]=[c]*0.5 37,395 42,313 33,093 9,219 27.9% 4,917 13.2% Increased revenue sharing drives reduction in CPE 26 Non-Aeronautical Business Fav (UnFav) Incr (Decr) 2017 Actuals to Budget Change from 2016 2017 2017 Budget Variance 2016 Revenue - $10.2M favorable $ in 000's Actual Actual Budget $ % $ % Rental Car continues to be challenged, both concession fee and CFC collections declined in Non-Aero Revenues 2017. Rental Cars - Operations 37,082 35,051 37,815 (2,764) -7.3% (2,031) -5.5% Parking 2017 tariff rate increase, partially Rental Cars - Operating CFC 12,122 10,641 12,931 (2,290) -17.7% (1,481) -12.2% offset by City of SeaTac parking tax increase. Public Parking 69,540 75,106 73,568 1,538 2.1% 5,566 8.0% Ground Transportation overall growth, despite Ground Transportation 12,803 15,684 14,417 1,267 8.8% 2,881 22.5% major shifts between GT operator categories Airport Dining & Retail/Terminal Leased Space 56,348 58,980 55,635 3,345 6.0% 2,633 4.7% Airport Dining & Retail performance is steady Commercial Properties 9,992 18,042 12,141 5,901 48.6% 8,050 80.6% despite impact of transitions to new leases. Utilities 7,233 7,018 7,118 (101) -1.4% (215) -3.0% Commercial Properties - DMCBP Phase II lump Employee Parking 9,329 9,617 8,482 1,134 13.4% 288 3.1% sum payment ($5.4M) Clubs and Lounges 3,028 5,041 2,729 2,311 84.7% 2,013 66.5% Employee Parking demand driven growth Other 3,545 1,624 1,807 (184) -10.2% (1,921) -54.2% Clubs & Lounges demand driven growth Total Non-Aero Revenues 221,021 236,803 226,645 10,157 4.5% 15,781 7.1% Expenses - $4.4M favorable Savings from other Divisions include delays for Total Non-Aero Expenses 92,189 103,695 108,124 4,429 4.1% 11,506 12.5% ADR tenant buildouts and other Terminal projects. Net Operating Income 128,833 133,108 118,521 14,587 12.3% 4,275 3.3% Unplanned Aviation expenses absorbed in 2017: Less: CFC (Surplus) / Deficit (4,899) (2,750) (5,561) 2,812 50.6% 2,149 43.9% DMCBP Phase II frontage fee ($3.6M) Adjusted Non-Aero NOI 123,934 130,358 112,960 17,398 15.4% 6,425 5.2% Light rail electric cart service ($0.2M). Debt Service (43,984) (44,495) (45,136) 641 1.4% (511) -1.2% RCF curbside assistance ($0.3M) Net Cash Flow Honey bucket service increased ($0.3M) 79,949 85,863 67,824 18,039 26.6% 5,914 7.4% Non-Aero NOI $14.6M higher than budget 27 Public Parking Performance Public Parking - Revenue Detail Fav / (UnFav) Incr / (Decr) Key message: 2016 2017 2017 2018 2017 Budget Variance Change from 2016 Parking - strong performance outpaces $ in 000's Actual Actual Budget Budget $ % $ % growth in enplanements. 2017 increase to the parking tariff rate, partially offset Parking Garage Revenue to Port by City of SeaTac parking tax increase. Gross Sales - Parking Garage 74,301 82,362 n/a n/a n/a n/a 8,061 10.8% less - WA Sales Tax (6,081) (6,818) n/a n/a n/a n/a (737) 12.1% less - SeaTac Parking Tax (4,212) (6,563) n/a n/a n/a n/a (2,350) 55.8% 2017 Actuals vs. 2016 Actuals Revenue to Port - General Parking 64,008 68,981 67,996 71,997 986 1.4% 4,973 7.8% Revenue - $5.6M favorable General Parking revenue - Other Garage Revenue $5.0M favorable: Passport Parking Program 2,749 2,990 2,837 3,356 153 5.4% 240 8.7% o $7.3M favorable due net impact of Total Parking Garage Revenue 66,758 71,971 70,833 75,353 1,139 - 1.6% 5,213 - 7.8% rate increase in parking tariff and growth in parking transactions Other Parking Revenue longer than 1 day, partially offset Concession Rent - Doug Fox off-site parking 2,751 3,109 2,716 3,200 393 14.5% 358 13.0% by decrease in parking transactions less than 1 day and All Other Parking Revenue 32 25 19 19 6 33.6% (6) -20.0% incremental sales tax. Total Parking Revenue 69,540 75,106 73,568 78,572 1,538 2.1% 5,566 8.0% o ($2.4M) unfavorable due to increase in SeaTac Parking Tax. Parking Transactions by duration Fav / (UnFav) Incr / (Decr) Passport Parking Program - $0.2M favorable due to growth 2016 2017 2017 2018 2017 Budget Variance Change from 2016 in card sales. in 000's Actual Actual Budget Budget # % # % Parking < 1 day 1,646 1,540 n/a n/a n/a n/a (105) -6.4% Concession Rent (Doug Fox offsite parking) - $0.4M favorable Parking 1-4 days 496 499 n/a n/a n/a n/a 3 0.7% due to increased activity. Parking 4+ days 181 184 n/a n/a n/a n/a 3 1.5% Total Parking Transactions 2,323 2,224 n/a n/a n/a n/a (99) -4.3% Parking tariff rate increase more than offsets SeaTac parking tax increase 28 Rental Car Performance Rental Car - Revenue Detail Fav / (UnFav) Incr / (Decr) Key message: 2016 2017 2017 2018 2017 Budget Variance Change from 2016 Rental Car revenue continues to be impacted by $ in 000's Actual Actual Budget Budget $ % $ % availability of transportation alternatives (light rail , RCF Concession Revenue to Port 33,465 31,352 34,106 31,508 (2,754) -8.1% (2,113) -6.3% TNCs, car-sharing, etc.) Gross Sales by Operators (in 000's) 310,877 313,630 331,476 328,124 (17,846) -5.4% 2,753 0.9% Total Transactions 1,410,122 1,387,593 1,513,532 1,443,335 (125,939) -8.3% (22,529) -1.6% 2017 Actuals vs. 2016 Actuals O&D Enplanements 15,820,506 16,226,998 16,678,433 17,060,569 (451,435) -2.7% 406,492 2.6% Concession revenue decreased by 6.3% in 2017, Average Ticket $220.46 $226.02 $219.01 $227.34 $7.02 3.2% $5.56 2.5% due to decline in (2) out of (3) key indicators. Average Length of Stay 4.35 4.33 4.32 4.36 0.01 0.1% (0.02) -0.5% o 4.1% decline in Transactions per O&D Transactions/O&D Enplanements 8.91% 8.55% 9.07% 8.46% -0.52% -5.8% -0.36% -4.1% enplanement demonstrates passenger preference shifting to other modes of CFC Revenue Summary transportation. Total Transaction Days 6,128,538 6,002,520 6,538,457 6,287,242 (535,937) -8.2% (126,018) -2.1% o 1.6% decline in Total Transactions due to CFC Rate per Transaction Day $6.00 $6.00 $6.00 $6.00 $0.00 0.0% $0.00 0.0% decline in Transactions per O&D enplanement Total CFC Revenue Earned 36,837 36,430 39,231 37,723 (2,800) - -7.1% (407) - -1.1% percentage, which exceeded year-over-year growth in O&D enplanements. Reserve for debt service and CP interest: (21,715) (22,790) (23,300) (22,161) 511 -2.2% (1,074) -4.9% o Partially offset by 2.5% increase in Average Reserve for CP principal payment: (3,000) (3,000) (3,000) - - 0.0% - 0.0% Ticket price. Debt Service Reserve Requirement (24,715) (25,790) (26,300) (22,161) 511 4.3% (1,074) -4.3% CFC Operating Revenue decreased by 12.2% in Residual - CFC Operating Revenue: 12,122 10,641 12,931 15,563 (2,290) -17.7% (1,481) -12.2% 2017. o $0.4M decrease due to lower Transaction Rental Car - Revenue Summary Fav / (UnFav) Incr / (Decr) Days in 2017 is driven by declines in both 2016 2017 2017 2018 2017 Budget Variance Change from 2016 Total Transactions and Average Length of $ in 000's Actual Actual Budget Budget $ % $ % Stay. o Since CFC Operating Revenue is a residual of RCF Concession Revenue to Port 33,465 31,352 34,106 31,508 (2,754) -8.1% (2,113) -6.3% Total CFC Revenue Earned less debt service Residual - CFC Operating Revenue: 12,122 10,641 12,931 15,563 (2,290) -17.7% (1,481) -12.2% costs, $1.1M of the decrease is due to higher Land Rent/Space Rent/Other 3,617 3,699 3,709 3,786 (10) -0.3% 82 2.3% debt service costs in 2017. Commercial Paper balance related to the Rental Car Facility Total Rental Cars Oper Revenue 49,203 45,691 50,746 50,857 (5,054) -10.0% (3,512) -7.1% construction was paid in full in 2017. Total Enplanements 22,796,118 23,415,582 23,928,886 24,654,002 (513,304) -2.1% 619,464 2.7% Rental Car activity has slowed due to transportation alternatives 29 Ground Transportation Key message: Revenue to Port Fav / (UnFav) Incr / (Decr) Significant changes in customer preferred ground transportation 2016 2017 2017 2018 2017 Budget Variance Change from 2016 alternatives are reflected in both revenue and trip activity between GT operator categories. $ in 000's Actual Actual Budget Budget $ % $ % Ground Transportation Revenues GT Revenue compared to prior year: Transportation Network Companies 3,222 6,940 3,929 8,122 3,011 76.6% 3,718 115.4% TNC revenue in 2017 reflects full year of operations, dramatic increase in trip volume, and rate increase (to $6/trip) effective On Demand Taxis 5,045 5,199 6,399 4,591 (1,200) -18.7% 154 3.1% Nov 1, 2017. TNC operations commenced on March 31, 2016, and On Demand Limos 869 858 884 855 (26) -3.0% (11) -1.3% revenue in 2016 included activation fees ($210K). Taxi revenue relatively flat compared to 2016 is the net result of Belled In Taxis (Annual Permit) 159 45 376 108 (331) -88.0% (114) -71.7% very different operating conditions. Per trip fee significantly Pre-Arranged Limos (Annual Permit) 496 626 919 603 (293) -31.8% 130 26.2% higher in 2017 ($7/trip through Sept 2017, then reduced to $6/trip effective Oct 1, 2017), partially offset by 8.2% decline in taxi trip All other Operators (cost recovery) 2,735 1,713 1,698 2,392 15 0.9% (1,022) -37.4% volume. Other Misc Revenues 275 306 214 214 92 42.8% 30 11.0% Significant decline in Belled-in permit sales was a known risk factor in the 2017 Budget. Significant number of flat rate vehicles Total GT Revenue 12,801 15,686 14,417 16,884 1,269 8.8% 2,885 22.5% previously in this category migrated to ESFH fleet. Lower revenue from all other cost recovery operators primarily due to reduced 2017 rates which incorporated 2015 overpayment Trip Activity Fav / (UnFav) Incr / (Decr) by certain operator categories. 2016 2017 2017 2018 2017 Budget Variance Change from 2016 in 000's Actual Actual Budget Budget $ % $ % GT Trip Activity compared to prior year: Ground Transportation Trips TNC volume continued to build in 2017, driven by strong customer demand. Transportation Network Companies 602 1,277 786 1,354 491 62.5% 674 111.9% On Demand Taxis trips and On Demand Limo trips reflects the On Demand Taxis 827 759 903 771 (144) -15.9% (68) -8.2% different operating conditions in 2017 which include a full year of TNC activity. On Demand Limos 74 72 78 71 (7) -8.4% (3) -3.8% Dramatic decline in annual permit sales and associated trips from Belled In Taxis (Annual Permit) 195 56 243 52 (187) -76.9% (139) -71.3% Belled-in Taxis partially due to migration of some flat rate vehicles to ESFH fleet in late 2016, and changing GT operating Pre-Arranged Limos (Annual Permit) 369 337 382 325 (45) -11.8% (31) -8.5% environment. All other Operators (cost recovery) 1,315 1,279 1,297 1,289 (18) -1.4% (36) -2.8% Moderate decline in Pre-arranged Limousines sales was a known Total GT Trip Activity 3,383 3,780 3,689 3,861 90 2.5% 397 11.7% risk factor in the 2017 Budget, reflects changing GT operating environment. TNC growth drives 2017 Trip Activity up 11.7% over 2016 30 Airport Dining & Retail and Leased Space Airport Dining & Retail and Fav / (UnFav) Incr / (Decr) Key message: Non-Airline Terminal Leased Space 2016 2017 2017 Budget Variance change from 2016 Steady performance in Airport Dining & Retail despite (in 000's) Actual Actual Budget $ % $ % impact of transitions to new leases. Revenue and Revenue demand for Non-Airline Terminal Lease Space Food & Beverage 21,314 21,579 21,240 340 1.6% 265 1.2% continues to be stable . Retail 13,496 13,989 13,195 793 6.0% 493 3.7% 2017 Actuals vs. Budget Duty Free 6,265 6,912 6,080 832 13.7% 646 10.3% Revenue - $3.3M favorable Advertising 6,725 6,662 5,572 1,090 19.6% (63) -0.9% Food & Beverage - $0.3M favorable steady Space Rental - ADR tenant storage/office 1,143 1,292 909 384 42.2% 149 13.0% growth during year with significant units Space Rental - Non-Airline Terminal Leased Space 4,092 4,364 4,287 76 1.8% 272 6.6% transitioning to new leases. Retail - $0.8M favorable growth outpaces All Other Revenue 4,216 4,182 4,352 (169) -3.9% (34) -0.8% enplanements, as new retail operators come Total ADR & Terminal Leased Space Revenue 57,252 58,980 55,635 3,345 6.0% 1,728 3.0% online. Duty Free - $0.8M favorable strong growth despite ongoing challenge of mismatch between international departure gates and Duty Free store locations. Negative impact of China restrictions on Duty Free purchases is trending less than previously expected. Advertising - $1.1M favorable reflects strong sales under new lease agreement. Space Rent - $0.4M favorable primarily due to rate adjustment for ADR tenant office/storage to align with current terminal lease rates. Steady growth in ADR during lease transitions 31 Commercial Properties Non-Aero Commercial Properties Fav / (UnFav) Incr / (Decr) Key message: 2016 YTD 2017 YTD 2017 YTD Budget Variance change from 2016 Strong growth in land rent from new development. NERA 3 FAA grant Org Basis (in 000's) Actual Actual Budget $ % $ % nearing completion. In-flight Kitchen revenue growth outpaces DMCBP Revenue enplanement growth. Option Area Rent 29 - - - (29) -100.0% Phase I - Base Rent & In-lieu Fees 143 913 832 81 9.7% 770 539.7% 2017 Actuals to 2016 Actuals Phase II - Base Rent 17 29 29 (0) 0.0% 12 70.6% Revenue - $8.1M increase Phase II - In-lieu Fees - 5,434 - 5,434 5,434 n/a DMCBP Phase II - $5.4M increase due to lump sum in-lieu Phase III - Base Rent & In-lieu Fees 99 555 522 33 6.3% 456 460.9% revenue earned in Q1 2017 (budget expected payment in 2016) DMCBP Owner's Liaison Reimb - - 200 (200) -100.0% New leases executed in 2017 for NERA 2 & NERA 3 sites, under Subtotal - DMCBP Revenue 288 6,931 1,583 5,348 337.9% 6,643 2309.7% construction during 2017. Other Commercial Properties Revenue In-flight Kitchen - $0.8M increase primarily due to increased In-flight Kitchen Revenue 7,025 7,827 7,255 572 7.9% 802 11.4% demand from Alaska and Delta NERA 3 Grant Revenue 908 1,402 1,620 (218) -13.4% 495 54.5% NERA 3 Grant Reimbursement revenue - $0.5M increase driven All other Commercial Properties revenue 1,773 1,882 1,683 199 11.8% 110 6.2% by increase in project spending. Grant project will be Subtotal - Other Commercial Properties Revenue 9,705 11,112 10,558 553 5.2% 1,407 14.5% completed in mid-2018. Total Commercial Properties Revenue 9,992 18,042 12,141 5,901 48.6% 8,050 80.6% Expenses $3.8M increase DMCBP Phase II $3.6M increase due to lump sum expense DMCBP Expenses for amortization of pre-paid frontage fees Phase II prepaid frontage fee amort. - 3,578 - (3,578) 3,578 n/a NERA 3 Grant project spending - $0.6M increase in grant All other DMCBP expenses 270 454 546 92 184 68.0% project spending, as the project nears completion. Grant Subtotal - DMCBP Expenses 270 4,032 546 (3,486) -638.6% 3,762 1392.2% project will be completed in mid-2018. Other Commercial Properties Expenses NERA 3 Grant expenses 987 1,598 1,800 202 11.2% 611 61.9% NOI Impact from DMCBP Phase II All other Non-Aero Commercial Properties expenses 435 298 340 42 12.4% (137) -31.6% $5.4M lump sum in-lieu revenue earned in Q1 2017 (expected Subtotal - Other Commercial Properties Expenses 1,422 1,896 2,140 (244) -11.4% 474 33.3% in 2016) Total Commercial Properties Expense 1,692 5,928 2,686 (3,242) -120.7% 4,236 250.3% ($3.6M) lump sum expense for pre-paid frontage fees $1.8M incremental NOI NOI before Allocations 8,300 12,114 9,455 2,659 28.1% 3,814 46.0% $1.8M NOI impact from DMCBP Phase II lump sum in-lieu of fee 32 2017 Capital Expenditures $ in 000's 2017 2017 Budget Variance (1) Design-Build contractor delayed start of major construction due Description Actual Budget $ % to lag in obtaining permits and subsequent delay in starting (1) foundation work. International Arrivals Fac-IAF 100,198 202,598 102,400 50.5% (2) Phasing plan from Design-Build contractor was different than Concourse D Hardstand Holdroom (2) 7,149 22,163 15,014 67.7% what was originally forecasted by the project team. Add'l Baggage Makeup Space IAF (3) 1,938 13,475 11,537 85.6% (3) See Note 1. Checked Bag Recap/Optimization (4) (4) Delays in contracting efforts and issuance of notice to proceed 14,444 24,256 9,812 40.5% (NTP). Alternate Utility Facility (5) 14,635 23,998 9,364 39.0% (5) Contractor has been submitting invoices slower than NS NSAT Renov NSTS Lobbies (6) anticipated. 57,149 64,285 7,136 11.1% (6) Delays to the start of construction due to negotiation of N. Terminals Utilities Upgrade (7) 1,218 7,996 6,779 84.8% maximum allowance construction cost (MACC) agreement, market conditions, and scope changes. Additional STS Cars (8) - 6,525 6,525 100.0% (7) Half of the Early Works portion of the project was cancelled due GSE Electrical Chrg Stations (9) 635 5,390 4,755 88.2% to operational concerns from airlines. Service Tunnel Renewal/Replace (10) 3,359 8,000 4,641 58.0% (8) Spending deferred to 2018 to evaluate the impact of passenger Concourse B Roof Replacement (11) growth and capacity loads on existing STS trains. 1,716 5,995 4,279 71.4% (9) Delays in design due to coordination efforts with airlines, IAF, Fuel System Modifications (12) 7,456 11,600 4,144 35.7% SSAT Renovation, and Concourse B Gate Additions projects. SSAT Infrastructure HVAC (13) 613 4,748 4,134 87.1% (10) Irregular bid (higher than engineer's estimate) caused a delay in the start of the project. Concessions Infrastructure (14) 2,183 4,800 2,617 54.5% (11) Labor market conditions and subsequent weather changes Concourse B Gate Reconfigure (15) 7,215 9,819 2,604 26.5% delayed the construction work into 2018. (12) Returned approximately $4M in savings in 2017 due to All Other 74,589 139,069 64,480 46.4% favorable bids and unused construction contingency. Total Spending 294,497 554,717 260,220 46.9% (13) Design related to HVAC structural support was delayed. 2017 spending was 53% of budget 33 SAMP Overview Description Fav (Unfav) Inc (Decr) 2016 2017 2017 2017 Budget Variance Change from 2016 $ in 000's Actual Actual Budget $ % $ % SAMP Completion & Transition to Env Review 1,591 1,335 500 (835) -167.0% (256) -16.1% Adv Planning IDIQ - Master Plan 0 1,141 3,500 2,359 67.4% 1,141 n/a Environmental Review - Master Plan 208 169 2,300 2,131 92.7% (39) -18.8% SAMP Utilities Master Plan 0 276 500 224 44.8% 276 n/a Total SAMP-related Spending 1,799 2,921 6,800 3,879 57.0% 1,122 62.4% The budget assumed the Sustainable Aviation Master Plan would transition to environmental review in early 2017. Delays in completing SAMP delayed the intended spending on environmental review and advance planning on the SAMP projects Environmental review is now anticipated to start in Q2 2018. Positive variance reflects deferred spending rather than savings 34 Maritime Division 2017 Financial Performance Report Maritime 2017 Financial Summary Fav (UnFav) Incr (Decr) Budget Variance 2016 2017 2017 Budget Variance Change from 2016 Grain and Cruise driving $ in 000's Actual Actual Budget $ % $ % Operating Revenue 50,810 54,183 51,830 2,354 5% 3,374 7% favorable to budget Security Grants 0 0 0 0 NA 0 NA revenue. Total Revenues 50,810 54,183 51,830 2,354 5% 3,374 7% Operating expenses below Maritime Expenses (excl Maint) 10,722 11,548 12,791 1,243 10% 825 8% budget driven by Maintenance Expenses 9,900 10,420 11,439 1,019 9% 520 5% maintenance & payroll P69 Facilities Expenses 299 301 343 42 12% 2 1% savings. Other ED Expenses 3,488 3,871 4,262 391 9% 383 11% Variance from 2016 Environmental & Sustainability 1,358 1,125 1,701 576 34% (233) -17% Police Expenses 3,921 3,756 3,867 111 3% (165) -4% Revenue growth seen in Captial Development Expenses 1,010 748 1,177 429 36% (263) -26% Cruise (14%), Rec Boating Other Central Service Expenses 9,454 10,007 10,924 917 8% 553 6% (8%), Maritime Portfolio Envir Remed Liability 115 389 0 (389) NA 273 237% Management (5%), and Total Expenses 40,268 42,164 46,502 4,339 9% 1,896 5% Fishing & Operations NOI Before Depreciation 10,542 12,020 5,327 6,692 126% 1,478 14% (2%). Depreciation 17,351 17,410 16,672 (737) -4% 59 0% Expense growth driven by NOI After Depreciation (6,809) (5,390) (11,345) 5,955 52% 1,419 21% Central Services, EDD, Maintenance, and Cruise. Unfilled positions and project delays driving lower costs 36 Maritime Capital 2017 Budget Variance 2017 2017 Cruise Tenant Improvement: Actual Budget $ % Gangway design and fabrication $ in 000's Cruise Terminal Tenant Improv 13,545 15,228 1,683 11% delayed until 2018. P91 South End Fender 153 3,347 3,194 95% FT Net Shed 3,4,5 &6 Roof Rpl 1,711 2,837 1,126 40% Shilshole Bay Marina Restroom Small Projects 1,392 2,685 1,293 48% and Services Building Contingency Renewal & Replace. 0 2,000 2,000 100% SBM Restrms/Service Bldgs Rep 663 1,694 1,031 61% Replacement: Construction Maritime Fleet Replacement 584 1,586 1,002 63% delayed to summer 2018. T91 Building C-173 Roof Overl 969 1,321 352 27% T91 P91W Slope Stabilization 152 650 498 78% P91 South Fender: Permitting and FT Re Development Phase I 640 580 (60) 90% other delays. Work to begin Jan T91 Camel Replacements 30 0 (30) 100% All Other 650 2,590 1,940 75% 2018. Total Maritime 20,489 34,518 14,029 41% Maritime Division spent 59% of Capital Budget 37 Maritime Business Financials Part 1 Fav (UnFav) Incr (Decr) $ in 000's 2016 2017 2017 2017 Bud Var Change from 2016 Actual Actual Budget $ % $ % Cruise Revenue 15,422 17,596 16,502 1,094 7% 2,174 14% Expense 7,096 8,997 10,784 1,787 17% 1,901 27% NOI Before Depreciation 8,326 8,599 5,718 2,881 50% 273 3% Depreciation Expense 5,244 5,924 5,214 (710) -14% 680 13% NOI After Depreciation 3,082 2,675 504 2,171 431% (407) -13% Rec Boating Revenue 10,255 11,086 11,081 5 0% 831 8% Expense 9,239 9,780 10,439 659 6% 541 6% NOI Before Depreciation 1,016 1,306 642 664 103% 290 29% Depreciation Expense 3,401 3,122 3,097 (25) -1% (279) -8% NOI After Depreciation (2,385) (1,816) (2,455) 639 26% 569 24% Maritime Portfolio Revenue 10,255 10,787 10,618 169 2% 532 5% Expense 10,006 10,620 11,768 1,148 10% 614 6% NOI Before Depreciation 249 167 (1,150) 1,317 115% (82) -33% Depreciation Expense 2,653 2,681 2,645 (36) -1% 28 1% NOI After Depreciation (2,404) (2,514) (3,795) 1,281 34% (110) -5% Fishing & Operations Revenue 9,108 9,297 9,121 176 2% 189 2% Expense 12,257 10,748 11,455 707 6% (1,509) -12% NOI Before Depreciation (3,149) (1,451) (2,334) 883 38% 1,698 54% Depreciation Expense 5,518 5,119 5,149 30 1% (399) -7% NOI After Depreciation (8,667) (6,570) (7,483) 913 12% 2,097 24% NOI Growth in Recreational Boating and Fishing & Operations 38 Maritime Business Financials Part 2 Fav (UnFav) Incr (Decr) $ in 000's 2016 2017 2017 2017 Bud Var Change from 2016 Actual Actual Budget $ % $ % Bulk/Grain Terminal Revenue 5,382 5,427 4,508 919 20% 45 1% Expense 1,167 1,397 1,573 176 11% 230 20% NOI Before Depreciation 4,215 4,030 2,935 1,095 37% (185) -4% Depreciation Expense 535 558 561 3 1% 23 4% NOI After Depreciation 3,680 3,472 2,374 1,098 46% (208) -6% Other Revenue 388 (9) 0 (9) NA (397) -102% Expense 503 621 483 (138) -29% 118 23% NOI Before Depreciation (115) (630) (483) (147) -30% (515) -448% Depreciation Expense 0 6 6 0 0% 6 NOI After Depreciation (115) (636) (489) (147) -30% (521) -453% Total Maritime Revenue 50,810 54,183 51,830 2,353 5% 3,373 7% Expense 40,268 42,164 46,502 4,338 9% 1,896 5% NOI Before Depreciation 10,542 12,019 5,328 6,691 126% 1,477 14% Depreciation Expense 17,351 17,410 16,672 (738) -4% 59 0% NOI After Depreciation (6,809) (5,391) (11,344) 5,953 52% 1,418 21% NOI increase while absorbing Habitat line of business 39 Stormwater Utility 2017 Financial Summary Fav (UnFav) Incr (Decr) 2016 2017 2017 Budget Variance Change from 2016 Revenue: $30K favorable $ in 000's Actual Actual Budget $ % $ % Expenses: ($134K) unfavorable StormWater Utility NWSA 3,401 3,421 3,426 (5) 0% 20 1% Tenants Revenue 276 470 419 51 12% 194 70% The original budget for Non-tenants Revenue 1,074 1,094 1,110 (16) -1% 21 2% consultant services was split Total Revenues 4,751 4,985 4,955 30 1% 234 5% between the SWU and municipal SWU Direct 540 912 1,056 144 14% 372 69% stormwater work (MS4 Tenant Maintenance Expenses 1,032 2,380 2,260 (120) -5% 1,348 131% work) at 48.20% SWU and Other Maritime Expenses - 6 - (6) NA 6 NA 51.8% municipal stormwater EDD Expenses 0 20 32 12 37% 20 8516% permit. However, the actual Environmental & Sustainability 99 375 168 (207) -123% 276 279% Police Expenses - 0 - (0) NA 0 NA costs were all charged to the Capital Development Expenses 28 41 59 18 31% 12 44% SWU. Other Central Service Expenses 10 393 418 25 6% 383 3692% Total Expenses 1,710 4,127 3,993 (134) -3% 2,417 141% NOI Before Depreciation 3,041 858 963 (105) -11% (2,183) -72% Depreciation 879 1,008 967 (41) -4% 129 15% NOI After Depreciation 2,161 (151) (4) (146) 3385% (2,312) -107% Stormwater infrastructure work ahead of schedule 40 Economic Development Division 2017 Financial Performance Report EDD 2017 Financial Summary Fav (UnFav) Incr (Decr) 2016 2017 2017 Budget Variance Change from 2016 $ in 000's Actual Actual Budget $ % $ % Central Harbor Properties 7,881 8,658 8,088 571 7% 777 10% Conf & Events Centers 8,022 9,133 7,943 1,190 15% 1,111 14% Total Revenue 15,903 17,791 16,030 1,761 11% 1,888 NA 12% Central Harbor Properties 3,526 3,879 4,220 341 8% 353 10% Conf & Event Centers 6,932 7,639 7,935 296 4% 707 10% P69 Facilities Expenses 180 206 234 29 12% 26 14% Small Business 21 64 161 96 60% 43 204% Workforce Development 522 850 1,999 1,148 57% 329 63% Tourism 1,093 1,234 1,285 51 4% 141 13% RE Dev & Planning 595 214 303 89 29% (381) -64% EDD Grants 20 751 960 209 22% 731 3703% EconDev Expenses Other 628 773 1,354 581 43% 145 23% Maintenance Expenses 2,787 3,666 3,592 (74) -2% 879 32% Maritime Expenses (Excl Maint) 31 52 64 11 18% 21 66% Environmental & Sustainability 62 260 451 191 42% 198 323% CDD Expenses 250 387 439 52 12% 137 55% Police Expenses 157 51 173 122 70% (106) -67% Central Services 4,331 5,370 5,899 529 9% 1,039 24% Envir Remed Liability 0 0 0 (0) NA 0 NA Total Expense 21,135 25,397 29,069 3,672 13% 4,262 20% NOI Before Depreciation (5,232) (7,606) (13,039) 5,433 42% (2,374) 45% Depreciation 3,682 3,863 3,854 (9) 0% 181 5% NOI After Depreciation (8,914) (11,469) (16,893) 5,424 32% (2,555) 29% Strong Occupancy and Management of Expenses 42 Contribution to Maritime Division Fav (UnFav) Incr (Decr) 2016 2017 2017 2017 Bud Var Change from 2016 $ in 000's Actual Actual Budget $ % $ % Portfolio Management (3,925) (5,236) (7,551) 2,316 31% (1,310) -33% Conference & Event Centers 538 762 (848) 1,609 190% 224 -42% Tourism (1,117) (1,265) (1,312) 47 4% (148) -13% Workforce Development (517) (1,113) (2,269) 1,156 51% (596) -115% Small Business (2) (2) (100) 98 98% 1 NA EDD Grants (20) (751) (960) 209 22% (731) NA Env Grants/Remed Liab/ERC (188) (1) 0 (1) 187 -99% Total Econ Dev (5,232) (7,606) (13,039) 5,433 42% (2,374) -45% EDD makes significant contribution to Maritime Division 43 EDD Capital 2017 $ in 000's 2017 2017 Budget Variance Actual Budget $ % Econ Dev 3,739 6,304 2,565 41% Planned Capital Projects Moved Forward 44 Central Services 2017 Financial Performance Report Central Services Expense by Category Fav (UnFav) Incr (Decr) Payroll: $10.0M below 2016 2017 2017 Budget Variance Change from 2016 budget due to delay $ in 000's Actual Actual Budget $ % $ % hiring, vacant positions, and project Salaries & Benefits 64,454 69,448 77,349 7,901 10.2% 4,994 7.7% delays. Wages & Benefits 21,943 20,517 22,649 2,132 9.4% (1,426) -6.5% Outside Services: Payroll to Capital Projects 19,060 21,859 22,786 927 4.1% 2,798 14.7% $14.4M favorable to Equipment Expense 1,918 3,109 2,572 (537) -20.9% 1,191 62.1% budget mainly due to Supplies & Stock 1,276 1,446 1,375 (71) -5.2% 170 13.3% delay in environmental review for SAMP, ACE Outside Services 28,565 34,053 48,418 14,365 29.7% 5,489 19.2% Fund and Energy & Travel & Other Employee Exps 2,491 2,568 3,816 1,247 32.7% 78 3.1% Sustainability Fund Insurance Expense 2,349 2,223 2,500 277 11.1% (125) -5.3% spending, and other Litigated Injuries & Damages 279 435 - (435) 0.0% 156 55.7% project delays. Other 2,545 2,152 2,834 683 24.1% (394) -15.5% Charge to Capital: Charge to Capital (33,708) (40,299) (46,357) (6,057) 13.1% 6,591 19.6% $6.1M less than budget Total 111,172 117,511 137,942 20,431 14.8% 6,339 5.7% due to delay of some capital projects. Expenses were lower than budget due to project delays and hiring delays 46 Financial Summary by Dept. Fav (UnFav) Incr (Decr) 2016 2017 2017 Budget Variance Change from 2016 $ in 000's Notes Actual Actual Budget $ % $ % Total Revenues 1,186 68 367 (299) -81.4% (1,118) -94.2% Legal: $453K Executive 2,185 1,287 1,944 657 33.8% (898) -41.1% unfavorable to Commission 1,569 1,685 1,830 145 7.9% 116 7.4% Legal 3,365 3,741 3,288 (453) -13.8% budget due to 376 11.2% Public Affairs 6,033 7,112 7,847 735 9.4% 1,079 17.9% unanticipated legal Human Resources 7,001 8,418 9,035 618 6.8% 1,417 20.2% expenses. Labor Relations 1,268 1,678 1,313 (365) -27.8% 410 32.3% Internal Audit 1,455 1,603 1,770 167 9.4% 148 10.2% Labor Relations: Office of Strategic Initiatives 8,356 5,743 6,264 521 8.3% (2,614) -31.3% $365K unfavorable Security and Preparedness 1,420 1,754 2,065 310 15.0% 335 23.6% Contingency 369 381 250 (131) -52.4% 12 3.3% to budget due to Finance unanticipated legal Accounting & Financial Reporting Services 6,550 6,751 7,763 1,013 13.0% 201 3.1% Information & Communication Technology 20,158 21,633 22,420 787 3.5% 1,475 7.3% expenses. Finance & Budget 4,810 4,998 5,873 875 14.9% 188 3.9% Contingency: $131K Finance & Budget 1,647 1,871 2,181 309 14.2% 224 13.6% Aviation Finance & Budget 1,950 1,897 2,184 287 13.1% (53) -2.7% unfavorable mainly Maritime Finance & Budget 1,212 1,229 1,508 279 18.5% 17 1.4% due to the Business Intelligence 1,004 1,211 1,458 247 17.0% 207 20.6% Risk Services 3,202 3,077 3,470 393 11.3% (125) -3.9% unbudgeted radio Sub-Total 35,725 37,670 40,985 3,315 8.1% 1,945 5.4% systems consultant Core Support Services 68,745 71,071 76,591 5,519 7.2% 2,326 3.4% contract. Police 23,045 22,095 23,884 1,789 7.5% (950) -4.1% Total Before Cap Dev & Environment 91,790 93,166 100,475 7,309 7.3% 1,376 1.5% Most departments had favorable variances 47 Financial Summary by Dept. Cont. Fav (UnFav) Incr (Decr) 2016 2017 2017 Budget Variance Change from 2016 $ in 000's Notes Actual Actual Budget $ % $ % Capital Development Engineering 4,493 5,284 7,092 1,808 25.5% 791 17.6% Port Construction Services 3,488 3,709 4,079 370 9.1% 221 6.3% Aviation PMG 2,823 6,942 13,005 6,063 46.6% 4,119 145.9% Seaport PMG 999 1,007 912 (95) -10.4% 9 0.9% Capital Development Admin 416 428 447 19 4.3% 12 2.9% Sub-Total 12,218 17,370 25,535 8,165 32.0% 5,152 42.2% Environment & Sustainability Aviation Environmental Program Group 3,745 3,779 6,301 2,522 40.0% 34 0.9% Maritime Environmental & Planning 2,098 2,157 2,385 228 9.6% 59 2.8% Noise Programs 722 670 723 53 7.4% (52) -7.2% Environment & Sustainability Admin 148 368 2,523 2,154 85.4% 221 149.7% Sub-Total 6,712 6,975 11,932 4,958 41.5% 262 3.9% Total Expenses 111,172 117,511 137,942 20,431 14.8% 6,339 5.7% Operating expenses were $20.4M favorable to budget 48 Central Services Capital Spending 2017 2017 Budget Variance $ in 000's Actual Budget $ % Infrastructure - Small Cap 966 1,581 615 38.9% Services Tech - Small Cap 577 1,150 573 49.8% Enterprise GIS - Small Cap 32 400 368 92.0% Constr Doc Mgmt Sys Repl. 403 427 24 5.6% Maximo Upgrade 186 371 185 49.9% Project Cost Mgmt System 220 900 680 75.6% Remote Data Business Continuity 171 480 309 64.4% POS Website Redevelopment 717 796 79 9.9% Supplier Database System 41 700 659 94.1% Corporate Firewall 578 800 222 27.8% Cap Dev Fleet Replacement 282 589 307 52.1% Cap Dev Small Cap 168 340 172 50.6% Other (note 1) 447 789 342 43.3% TOTAL 4,788 9,323 4,535 48.6% Note: (1) "Other" includes remaining ICT projects, Central Services fleet replacement and small capital acquistion. Capital Spending was 4.8M or 51.4% of budget 49
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