9a Maritime Business Plan presentation
Item No. . 9a_supp Meeting Date: July 10, 2018 Maritime Division 2019 Business Plan and Budget Development July 10, 2018 Outline Strategy to Budget Process Strategic Priorities Anticipated 2019 Budget needs: Capital Focus 2019 Milestones 2 2019 Maritime Division Budget Timeline 2019 Business BudgetBudget Budget BriefingBudget First Reading &First Reading & 2nd Reading &2nd Reading & Plan and CIP DevelopmentDevelopment Briefing Public HearingPublic Hearing Final Passage ofFinal Passage of Development Briefing Briefing for 2019 Budget for 2019 Budget 2019 Budget 2019 Budget (May/June) (July 10) (July 10) (Oct 9) (Oct 9) (Mid-November) (Mid-November) (Late November) (Late November) Note: Detailed schedule in appendix 3 Strategy To Budget Process Century Agenda Century Agenda and LRP underway: focus on creating Vision 5- 10 Years jobs of the Future in the Ocean Strategic Planning Cross Functional Economy. Evaluation Strong Demand of facilities in Gap all business lines: Vessel size Strategies and Objectives growing. 3 5 Years (Long Range Plans) Matrix organization requires cross-functional work and Implementation close collaboration 2019 Business Plan Developing strategies and Annual 2019 Budget actions to position Maritime 2019 Performance Plans Division and Industry for the future. 2019 Budget will reflect resources needed to move towards CA Objectives 4 Maritime Priorities 2019 5 Maritime Priorities Maritime Priorities Century Agenda/LRP Financial Stability CA/LRP (S1-Obj 2) Making prudent infrastructure investments. Customer Service CA/LRP (S2-Obj 9, PA2) Improving convenience and efficiency for cruise passengers. LRP/HPO (S1-Obj 1, PA1,2,3) Making the NWSA an attractive West Coast gateway. Economic Impact CA/LRP (S1-Obj 5 PA 1,2,4); (S2-Obj 9 PA 1,3,4); (S3-Obj 10 PA1,3); (Obj 12, PA1,2). Fostering family wage jobs and workforce development. Safety, Security, Preparedness LRP/HPO S2-Obj 3 PA1,2,3); (Obj 4, PA1,2,3); (Obj 6, PA2) Continuous improvement in safety, security, and preparedness. Sustainability CA/LRP (S4-Obj 13, PA1,2,3,4); (Obj 14, PA1,2,3); (Obj 15, PA2,3,4); (Obj 16, PA1,2,3); (Obj 17, PA1,2,3,4) Becoming North America's Greenest, Most Energy Efficient Port. Innovation, Process CA/LRP (S1-Obj 5, PA3); Improvement LRP/HPO (S1-Obj 2, PA 1,2,3); (Obj 6, PA1) Innovating in the maritime cluster as well in our own organization. Equity, Inclusion LRP/HPO (S4-Obj 7, PA1); (Obj 8, PA1); (Obj 9, PA1) Demonstrate our leadership in equity, equity, and inclusion. Asset Management CA/LRP (S1-Obj 5, PA 1, 2); (Obj 8, PA3) LRP/HPO (S1-Obj 1, PA2,3); (Obj 2, PA 1) Building a framework for maintaining our maritime assets. 6 Cruise Industry/Business Context 7 Worldwide cruise passengers 25,000 US CRISIS CONCORIDA SARS ECONOMIC 20,000 11 9- Passengers ('000) 15,000 10,000 5,000 0 Asia Europe North America 8 8 Seattle's Cruise Passenger Growth 1999 2018 1,000,000 Seattle Ranks #1 - West Coast Cruise Ports 900,000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 2018: 216 cruise vessel calls scheduled - Est revenue passengers 1,100,600 Seattle Ranks #1 - West Coast Cruise Ports 9 Additional Industry Capacity Planned Through 2026 Year 2018 2019 2020 2021 2022 2023 2024 2025 2026 # of New 16 23 16 13 14 5 4 2 1 Ships +94 New Ships by 2026 *Source: Cruise Industry News New Ships On Order To Meet Demand 10 Cruise Ships are Getting Larger Norwegian Bliss 11 Fishing Industry/Business Context 12 Ocean Economy critical to the Region's Economy *Information taken from Maritime Federation "Economic Impact of the Maritime Industry in Washington State" Important family wage jobs: ecosystem of Maritime services 13 Fishing Vessels: moorage shortage for larger vessels Recapitalization underway 14 Industry/Business Context Recreational Boating: Strong Demand for moorage: occupancy high! Trend expected to continue Our marinas provide direct access to the water for many King County Residents We are involved in transacting directly with the public Water access for community members 15 Industry/Business Context Grain: Volumes have increased an average of 7% per year, for last 3 years. The YTD 2018 volumes are down by 6%. Portfolio Management: The local industrial real estate market remains strong with record lease rates. Occupancy rate around 98.3%. Higher than average growth projected. 16 Challenges Larger Vessels: finding space Traffic congestion Capital Capacity: continuing to steward and maintain our assets given capacity and resource availability Construction cost escalation Changing land use in Seattle Terminal 86 is an export-only facility: trade wars could impact. 17 Strengths Robust Maritime Cluster and legacy Proximity to Alaska Strong Team Track Record in Sustainability 18 Financial Goals: 2019 is year 1 of a 5 year plan 2019: Positive Net Operating Income including Allocations and Depreciation Cruise Grain Terminal 2019: take steps to reach Positive Net Operating Income Maritime Portfolio Management Recreational Boating 2019 take steps to cover expenses Fishing and Operations Maritime Goal: Positive NOI after Depreciation by 2024 19 Financial Strategic Plans 1.) Find / expand 2.) Maximize existing 3.) Limit spending new revenue sources revenue streams increases 4th Cruise berth Guest moorage Push process Habitat banking Lease renewals improvement Dry stack moorage Increase recreational Use technology to reduce workload Industrial moorage during development fishing season @ FT Leverage existing Diversified fleet Align rates to market overhead demand Optimize predictive maintenance Cost sharing 20 Advance Environmental Sustainability Complete stormwater system assessment and develop framework for repairs and green stormwater infrastructure. Restore and maintain habitat sites. Develop a Habitat Mitigation Banking Agreement. Greenhouse gas reduction plan. Track and reduce solid waste generation. 21 Other Priorities: Resiliency, Innovation, Equity All employees go home safely Implement systematic approach to behavior based safety. Be better prepared to respond to emergencies. Enhance Incident Command Systems qualifications for staff. Lead Maritime Industry in Innovation Train leaders in Continuous Process Improvement. Encourage innovation at every level. Maritime Blue Partner with others to bring more diverse workforce to Maritime Industry Mentoring youth and increasing support for Internships and pre apprentices STRATEGY 22 Preliminary 2019 to 2023 Capital Program Capital Spending Breakdown New Projects Proposed (> $5M): EDD and Maritime in $M T117 Restoration Projects Small FT Docks 3,4,5 Upgrade Underway, $8.2 Projects/Fleet, $12.8 T91 Berths 6 and 8 "On the bubble" Salmon Bay Uplands Development Contingency, Harbor Island Marina Dock E Rehab $30 FT Redevelopment Phase I Shore power at P66 New Projects, $149 Not Included: Additional Cruise Facility $200 Million Total Note: Assumes current revenue and levy projections 23 Appendix Slide #1 Maritime Division - 2017 Actual Fishing & Rec. Portfolio Grain Other / Total in $000s Cruise Ops Boating Mgmt. Terminal Habitat Maritime Revenue 17,596 9,297 11,086 10,787 5,427 (9) 54,184 Direct Operating Exp. 2,674 4,599 3,813 3,682 - - 14,768 Maintenance Exp. 2,048 2,295 2,483 3,290 277 27 10,420 Central Services 3,645 3,148 3,010 3,052 867 - 13,722 Other External Exp. 629 707 474 596 253 594 3,253 Total Operating Exp. 8,996 10,749 9,780 10,620 1,397 621 42,163 NOI before Depreciation 8,600 (1,452) 1,306 167 4,030 (630) 12,021 Depreciation 5,924 5,119 3,122 2,681 558 6 17,410 NOI after Depreciation 2,676 (6,571) (1,816) (2,514) 3,472 (636) (5,389) 24 Detail 2019 Budget Schedule 07/24 2019 EDD Business Plan and Budget Development Preview briefing 09/11 Commission Budget Priorities Budget Discussion 09/25 Central Services budget Commission briefing 10/09 Operating division budgets Commission briefing 10/23 Tax Levy & Draft Plan of Finance Commission briefing 10/23 2019 Preliminary Budget document available to Commission 10/25 2019 Preliminary Budget document available to the public 10/30 NWSA Budget study session by Managing Members 11/13 NWSA Budget adoption by Managing Members 11/13 First reading of budget resolution and public hearing 11/27 Second reading and final passage of 2019 Budget 12/03 File the 2019 statutory budget with King county 12/14 Publish the 2019 Final Budget to the public 25
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