9c Economic Development Operating Budget Presentation
Item No. 9c Meeting Date: October 23, 2018 Economic Development Division 2019 Preliminary Operating Budget Commission Briefing October 23, 2018 1 Division Priorities Driven by Century Agenda Century Agenda Vision Division Priorities 5- 10 Cross Functional Years Promote international travel Strategic Planning Evaluation and cruise adventures Gap Promote women and minority business enterprise (WMBE) Strategies and Objectives 3 5 and small business growth (Long Range Plans) Years Advance equitable workforce Implementation training within key Port 2019 Business Plan industries 2019 Budget Annual Develop port properties to support aviation, fishing and 2019 Performance Plans maritime industries 2 Key Budget Assumptions Maintain zero base budgets for nonrevenue generating departments Commercial Properties target 95% occupancy at year-end 2019. Conference and Event Center revenue up 13% from 2018 budget*. Economic Development Partnership Grants continued. Continued funding of Workforce Development. Tourism initiatives continued. *Based on draft 2019 budget from Columbia Hospitality Inc. Near full occupancy, continued Workforce Development and Grant initiatives 3 EDD P&L Summary Incr (Decr) Incr (Decr) 2017 2018 2018 2019 Budget Variance Budget to Forecast $ in 000's Actual Budget Forecast Budget $ % $ % Revenue 8,658 8,985 9,097 8,930 (55) -1% (167) -2% Conf & Event Centers 9,133 9,537 9,949 10,795 1,258 13% 846 9% Total Revenue 17,791 18,522 19,046 19,725 1,203 6% 679 4% Expenses Portfolio Management 3,875 3,778 3,778 4,128 350 9% 350 9% Conf & Event Centers 7,639 8,465 8,465 9,374 908 11% 908 11% P69 Facilities Expenses 206 289 289 225 (65) -22% (65) -22% RE Dev & Planning 214 211 211 216 5 2% 5 2% EconDev Expenses Other 763 1,227 1,227 1,262 35 3% 35 3% Maintenance Expenses 3,657 3,055 3,055 4,071 1,017 33% 1,017 33% Maritime Expenses (Excl Maint) 52 344 344 389 45 13% 45 13% Total EDD & Maritime Expenses 16,406 17,370 17,370 19,664 2,294 13% 2,294 13% Small Business 64 140 140 199 59 42% 59 42% Workforce Development 850 1,992 1,292 2,010 18 1% 718 56% Tourism 1,234 1,460 1,460 1,463 3 0% 3 0% EDD Grants 751 960 960 960 0 0% 0 NA *Total EDD Initiatives 2,900 4,552 3,852 4,632 80 2% 780 20% *Portion of 2019 EDD initiatives Environmental & Sustainability 260 398 363 395 (2) -1% 33 9% CDD Expenses 387 329 264 235 (94) -29% (29) -11% assigned to tax levy: Police Expenses 51 158 156 228 70 44% 72 46% Other Central Services 5,269 5,816 5,700 5,533 (283) -5% (167) -3% Aviation Division 113 127 127 155 28 22% 28 22% Small Business - $88K Total Central Services & Aviation 6,080 6,829 6,611 6,547 (281) -4% (63) -1% Envir Remed Liability 0 0 0 0 0 NA 0 NA Workforce Dev. - $1,624K Total Expense 25,387 28,751 27,833 30,844 2,093 7% 3,011 11% NOI Before Depreciation (7,596) (10,229) (8,787) (11,119) (890) 9% (2,332) 27% EDD Grants - $960K Depreciation 3,863 4,156 4,156 3,819 (337) -8% (337) -8% NOI After Depreciation (11,459) (14,385) (12,943) (14,937) (553) 4% (1,994) 15% Near full occupancy, continued Workforce Development and Grant initiatives 4 Portfolio Management Financial Trend Revenue up $1.2M/6.5% Expenses up $2.0M/8.3% Opportunities: T91 Development Pier 2 and CEM ground leases Risks/Challenges: Allocation Structure Aging facilities expensive to maintain Takes years to generate higher revenues from existing leases Conference and Events Center growing revenues and associated costs 5 Portfolio Management Key Strategies and Initiatives Grow and promote Conference and Event Center facilities while working to increase gross margin Migrate tenant billing system for NWSA Maximize Parking Revenues Negotiate Step up leases across for both Maritime & Economic Development Divisions Focus on improved security and customer service 6 Diversity in Contracting/Small Business Assistance Implement Diversity in Contracting Policy/Program Provide greater access to Port opportunities through education, events, and assistance Expand supplier diversity Develop tools and conduct assessments to measure and monitor inclusion in contracting Support construction business incubator in partnership with other public and private stakeholders Promoting opportunity for Disadvantaged Businesses 7 Small Business 2019 Initiatives $ in 000's '19-'18 2018 Budget 2019 Budget Change Technical Assistance/Outreach Construction Business Incubator 150 60 (90) Port Gen/Mentoring/Contractor Assistance 75 75 0 Procurement Technical Assistance Center Support 15 15 0 Marketing/ Communication/Design Services 15 5 (10) Champion of Inclusion Recognition Event 20 10 (10) Supplier Diversity and Program Evaluation OMWBE Certification 15 15 0 WMBE Best Practice and Implementation 50 50 0 Total 340 230 (110) Balanced efforts in Small Business 8 Workforce Development Manage airport employment office in partnership with PortJobs Implement and Strengthen Regional Construction Trades Partnership Advance aviation career pathway training initiative Invest in regional Career Connected Learning initiative Pedro Reynaga, Harbor Operations Intern Advancing Workforce Development with an equity lens 9 Workforce Development 2019 Initiatives $ in 000's '19-'18 2018 Budget 2019 Budget Change Contracted Initiatives Airport Employment Center (contracted) 500 500 0 Airport Employment Center and Classroom 350 350 0 Employment Continuity Pool Program 75 60 (15) Construction Trades - Regional Partnership Services, Pre-Ap 710 710 0 Total Contracted Initiatives 1,635 1,620 (15) Developing Initiatives Airport Career Pathways Implementation 250 250 0 Maritime Career Exploration Initiative 250 250 0 K-12 Career Connected Learning 400 400 0 Total Developing Initiatives 900 900 0 Workforce Development Support 25 28 3 Total Workforce Development 2,560 2,548 (13) Continued efforts in Workforce Development 10 Tourism Promote the cruise industry through outreach to travel influencers (trade and media) both domestically and in priority international markets (UK, Germany, China & Australia). Increase the value of tourism throughout Washington Increase reach of Tourism Marketing Support Program Enhance Airport Spotlight program Use WeChat airport site to serve as portal Norwegian Bliss Marks Arrival of Larger Cruise Ships for destinations in Washington. Promoting Cruise, Extended Stays & Use of our Maritime and Aviation Facilities 11 Tourism 2019 Initiatives $ in 000's '19-'18 2018 Budget 2019 Budget Change New Requests Int. Representation & Work (Australia/China) 98 98 Continuing Adv/Marketing (WeChat, FT, Cruise) 142 133 (9) Europe Representation & VS Sponsorship 410 275 (135) Tourism Grants 200 200 0 London Trvl Show / Tourism Development 65 39 (26) Fam Tours / New Service Inaugural Activity 62 83 21 Total 879 828 (51) Focused on Increasing International and US Tourists to Region & State 12 Real Estate Management and Development Ground lease Des Moines Creek West, Pier 2, CEM A and Terminal 106 properties Initiate Bell Harbor Conference Center Modernization Manage real estate portfolio to generate positive NOI after depreciation and corporate allocations by year-end 2024. Complete design work on new light industrial facilities at Terminal 91 and Fishermen's Terminal Develop a "second 25 years" renewal, replacement, and modernization strategy for P69 HQ facility. Pier Two Using our Real Estate & Capital Assets to Advance the Century Agenda 13 Real Estate Development 2019 Initiatives '19-'18 $ in 000's 2018 Budget 2019 Budget Change Ongoing Appraisals 50 50 0 Development Advisory Consulting 250 250 0 Total 300 300 0 Initiatives centered on executing Real Estate Strategic Plan 14 EDD Admin 2019 Initiatives '19-'18 $ in 000's 2018 Budget 2019 Budget Change Ongoing ED Partnership Grants 960 960 0 Membership: Economic Dev Council 100 100 0 Membership: Trade Dev Alliance 0 93 93 Promotional Hosting/Sponsorships 60 60 0 Opportunity Fund 500 500 0 Total 1,620 1,713 93 Continuation of ED Partnership Grants & additional public partnerships 15 Pier 69 Facilities 2019 Initiatives $ in 000's '19-'18 2018 Budget 2019 Budget Change P69 Lobby Refresh expense portion 200 0 (200) P69 Shuttle 0 200 200 Total 200 200 - Managing changes in congestion 16 Full-Time Equivalents (FTEs) 2018 Budget 36.0 2018 Changes Elimination of Business Analyst, Small Business (1.0) Elimination of Manager, Small Business (1.0) Addition of Sr Administrative Assistant, Small Business 1.0 Adjusted 2018 35.0 2019 Budget Staff Additions: WMBE Manager 1.0 Net Change 2019 1.0 Proposed 2019 Budget 36.0 No Change in FTE 17 2019 Operating Divisions' Budget Timeline 2019 Business Budget Budget First Reading & 2nd Reading & Plan and CIP Development Public Hearing Final Passage of Development Briefing Briefing for 2019 Budget 2019 Budget (May/June) (June) (October 9th) (Mid-November) (Late November) Will cover operating budget and capital budget 18
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