Presentation
ITEM NO: ___Supp_1___ DATE OF MEETING: June 13, 2017 2018 Budget Work Session June 13, 2017 Agenda 2018 Budget Process Overview Industry/Business Context Aviation Division Budget Preview Maritime Division Budget Preview Economic Development Budget Preview Tax Levy Forecast Commission Budget Priorities 2 2018 Budget Process Overview 06/13 2018 Budget Work Session 06/27 2018 Budget Work Session 07/11 2018 Budget Development Session 07/25 2018 Budget Development Session 08/08 Long Range Plan Commission Approval 08/22 2018 budget assumptions memo to the Commission 09/26 Commission briefing on the proposed Corporate budget 10/10 Commission briefing on the proposed operating division's budgets?? 10/17 All operating budget issues resolved by the Commission 10/24 2018 Preliminary Budget document available to the Commission 10/24 Commission briefing on Tax levy & Draft Plan of Finance 10/25 Publish first public notice on the 2018 budget public hearing 10/26 Public release of 2018 Preliminary Budget document 11/14 Approval of the ILA/Service Directives (POS & NWSA) 11/14 First reading of budget resolution and public hearing 11/28 Second reading and final passage of the 2018 budget 12/01 File the 2018 statutory budget with King county 12/15 Release the 2018 Final Budget & Draft Plan of Finance Document Commission Meetings Highlighted in Blue 3 Aviation Industry/Business Context U.S. Airline industry continues to be profitable U.S. airline industry profitable each year 2010-2016 Passenger Growth Rate Benefits of consolidation Actual Security threats impacting aviation industry 2013 4.8% worldwide 2014 7.7% U.S. economy growing, but for how long? History suggests there will be a downturn at some point 2015 12.9% 2016 8.0% Airline competition and strength of regional economy driving demand for air service at Sea-Tac 2017 3.0% Est. Sea-Tac: two strong hub airlines (Alaska and 2018 5.0% Est. Delta), continued growth in international service and cargo Regional economy driving growth at Sea-Tac 4 Maritime Industry/Business Context Alaska Cruise - forecast 7% increase in passenger volumes Building or buying space needs for North Pacific Fishing Fleet are changing Recreational boating industry demand for Destination Marina model with new amenities and services Grain holding steady / impacted by international politics Maintenance time for Collective Bargaining Agreement negotiations / impacted by market, shifting business needs Port and Local commitment to Sustainability and recognition of locally underserved communities Growth and Opportunity 5 EDD Industry/Business Context Strong real estate market expected to continue through 2018 Current favorable market conditions aids in new leases and renewals Strong demand for new development Continued expansion of Chinese tourism Substantial growth in Cruise industry new Cruise Ship investment Substantial lodging inventory growth New transportation options causing disruption Continued challenges of contracting with women & minority owned businesses (WMBE) Assistance is needed to help businesses be successful and competitive for Port projects Attracting, retaining & developing talent a significant concern March unemployment rate in Seattle at 2.8% Growth Continues Real Estate to Cycle in 2-3 years 6 2018 Budget Preview Aviation Division June 13, 2017 2018 Key Initiatives--Operating Drivers: Initiatives: Enhancing security Phase II of security master plan Improving customer service Customer service department Asset condition assessments Mitigating construction Environmental review of Sustainable impacts Airport Master Plan (SAMP) Maintaining assets Advance planning for SAMP projects Delivering capital program Image processing, facial recognition, smart dynamic signage Planning future capacity Innovation/technology Manage growth, plan capacity improvements 8 2018 Key Initiatives--Capital Existing Projects: Concourse D Hardstand Terminal construction NSATconstruction IAFconstruction BaggageOptimization construction South Satellite Renovation project planning New Projects: Automated screening lanes Main Terminal (north) renovation ConcourseA extension to add additional gates Ongoing renewal and replacement Need to add gate capacity 9 2018 Budget Preview Maritime Division June 13, 2017 2018 Key Initiatives--Operating Drivers: Initiatives: Growth in Cruise/stability in Plan for demand, engage new players, offer other businesses new programs Changes in workforce, Engagement with labor, implement Vessel technology & regulations Mgmt System, Environ & Sustainability programs Improving customer service Cruise valet program, more large vessel moorage, traffic congestion mgmt Maintaining assets Asset condition assessments, key project completion, avoid deferring maintenance Manage growth, plan capacity improvements 11 2018 Key Initiatives--Capital P66 Modernization Project Conference Center & Building Faade Alaskan Way Street Improvements at P66 must be completed by April 2018 Fishermen's Terminal Redevelopment Net Net Shed Roof Replacement Light industrial building development Terminal 90/91 Pier 90 Berth 6 & 8 redevelopment Pier 91 Fender Pile replacement , IT connectivity improvements and Dolphin asset stabilization Shilshole Bay Marina Construction of new restrooms and potential Green Boat Wash system Investment in energy and Stormwater infrastructure Investment & Commitment to Businesses & Environment 12 2018 Budget Preview Economic Development Division June 13, 2017 Key Business Drivers Real Estate: Maintain high occupancy despite approximately 25% of existing lease agreements turning over Strong demand for light industrial space Workforce Development & Small Business: Construction boom creating a shortage of skilled labor Need to address equity issues with workforce development Tourism: High growth in both personal and business travel from China New technologies continue to cause disruption in transportation Facilities: Addressing greater use of mobile technology and challenges of an open work environment Maintaining and enhancing work environment for employee satisfaction Region will continue to boom and spur growth related challenges 14 2018 Key Budget Initiatives Operating Budget Capital Budget 1. Development of new Small Pier 66 Modernization Conference Business policy and related Center & Exterior faade program changes Fishermen's Terminal development of 2. Expansion of small business new/existing buildings assistance and incubator programs Potential property acquisitions and 3. Implementation of the Priority Hire Program development Salmon Bay Marina 4. Workforce Development Initiatives Continue to Grow & Mature Pier Two & CEM 5. Real Estate Plan implementation Pre-development/infrastructure for T-91 i. Development of existing properties Uplands and potential acquisitions P-69 enhancements lobby, Commission Chambers, and exterior enhancements Promoting Equity Will Require Resources Implementing RE Plan will Drive Capital Requests 15 Major Capital Projects Pier 66 Modernization Conference Center & Exterior faade Potential property acquisitions and development Salmon Bay Marina Pier Two & CEM T106Redevelopment Aviation: AOB and SAMP implementation Pre-development/infrastructure for T-91 Uplands Dependent on results of ongoing study P-69 enhancements lobby, Commission Chambers, and exterior enhancements Implementing Real Estate Strategic Plan 16 Current Plan of Finance Tax Levy Baseline Forecast SOURCES ($ million) 2017 2017-2021 2017 Beginning Fund Balance 60.5 60.5 Annual Tax Levy 72.0 360.0 Bond Proceeds - reimbursement of SR99 payment 65.0 65.0 Additional G.O. bonds to Grants & Other Reimbursements 6.7 6.7 reimburse the $65 million Total Sources 204.2 492.2 SR99 cash payment; USES ($ million) provides low cost funding General Obligation Debt Service (Existing) 34.5 164.0 for projects beyond the General Obligation Debt Service (New) 10.2 50.8 baseline Environmental Remediation Liability 9.4 47.4 Regional Transportation 2.2 8.0 Highline Schools Noise Mitigation - 3.5 Baseline Capital Expenditures 28.4 138.2 EDD: Workforce Development & Partnership Program 2.6 13.8 Total Uses 87.3 425.6 Estimated Ending Tax Levy Fund Balance 116.9 66.6 Totals may not add due to rounding The baseline levy projects can be funded with a $72 million levy 17 Plan of Finance Tax Levy Forecast with T-5 SOURCES ($ million) 2017 2017-2021 2017 Beginning Fund Balance 60.5 60.5 Annual Tax Levy 72.0 380.0 Bond Proceeds - reimbursement of SR99 payment 65.0 65.0 Bond Proceeds - capital expenditure - 78.0 Grants & Other Reimbursements 6.7 6.7 Total Sources 204.2 590.2 USES ($ million) General Obligation Debt Service (Existing) 34.5 164.0 General Obligation Debt Service (New) 10.2 68.6 Environmental Remediation Liability 9.4 47.4 Regional Transportation 2.2 8.0 Highline Schools Noise Mitigation - 3.5 Baseline Capital Expenditures 28.4 138.2 Capital Expenditure - Terminal 5 15.6 146.6 EDD: Workforce Development & Partnership Program 2.6 13.8 Total Uses 102.9 590.0 Estimated Ending Tax Levy Fund Balance 101.3 0.2 Totals may not add due to rounding Funding baseline levy projects plus T-5 requires a ~$77 million annual levy beginning in 2018 18 2018 Budget Commission Priority Issues June 13, 2017 2017 Commission Work-Program Expand and Improve Small, Minority and Women Business Programs Optimize Port Role in Regional Economic Prosperity Improve Port Related Job Quality Define and Establish Next Steps for Equity Policy Enhance Port Environmental Leadership Strengthen Collaborative Engagement with Governments and Communities Other Priorities 20
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