9c. 2018 Financial Performance presentation
Item No: 9c_supp Meeting Date: March 12, 2019 Port of Seattle 2018 Financial Performance Report Portwide Financial Highlights 2018 Actual vs. 2018 Budget: o Operating Revenues $18.9M favorable to budget. o The Non-Airport Revenues $15.8M favorable to budget. o Operating Expenses $25.2M favorable to budget. o Net Operating Income before depreciation $44.2M favorable to budget. o Total capital spending was $617.7M, 70.6% of the budget. 2018 Actual vs. 2017 Actual: o Operating Revenues $57.4M higher than 2017. o Operating Expenses $24.7M higher than 2017. o NOI before depreciation $32.7M higher than 2017. A record year of operating revenues and net operating income for 2018 2 Portwide Net Operating Income Performance Other Operating Revenues Aeronautical Revenues Total Operating Expenses NOI In 000s Operating Revenues are $18.9M higher than budget due to higher 800,000 revenues in: 700,000 o Public Parking o Rental Cars 600,000 o ADR o Ground Transportation 500,000 o Fishing & Operations 400,000 o Conference & Event Centers 300,000 Total Operating expenses are $25.2M below budget due to: 200,000 o Staffing vacancies o DRS Pension True-up credit 100,000 o Project delays 0 2014 2015 2016 2017 2018 2018 Actual Budget Steady revenue growth since 2014 3 Non-Airport Net Operating Income Performance Total Operating Revenues Total Operating Expenses NOI Non-Airport Operating Revenue In 000s exceeded budget by $15.8M due to: 160,000 o Higher tariff rates o More cruise passengers 140,000 o Increased activity in Conference and Event Centers 120,000 o Higher NWSA Distributable 100,000 Revenue Expenses are $9.2M lower than budget 80,000 due to: o Staffing vacancies 60,000 o Project delays 40,000 Expense growth in 2018 compared to 2017 was driven by adding staff and 20,000 resources to support Port priorities. - 2014 2015 2016 2017 2018 Actual 2018 Budget 2018 NOI exceeded budget and 2017 actuals 4 Aviation Division 2018 Financial Performance Report Aviation Business Events Record number of passengers: 49.8 million, +6.2% over 2017 Sea-Tac is now 8th busiest U.S. airport Welcomed three new international carriers: Aer Lingus to Dublin, Ireland Air France to Paris, France Thomas Cook Airlines to Manchester, England Record capital spending of $579 million Completed and opened Concourse D Hardstand Terminal Record Operating Revenues: $549 million, +10.3% Achieved budget targets for Non-Aero NOI and airline cost management (CPE) Growth at Sea-Tac Continues 6 Business Highlights: 2018 Goals Safety: Below targets: 2018 Airfield Composite Safety Score of 12 vs. goal of 29 2018 Occupational injury rate of 5.9 vs. goal of 4.6 2018 days away severity rate of 90.8 vs. goal of 65.1 Innovation & Efficiency: Achieved goal of at least 2 in each department. Highlights include: SEA Visitor Pass pilot program implemented in Q4 Installed dynamic ticket counter signage in Zone 1 Completed Lean Lift for traffic congestion, resulting in 41% reduction in stop and go traffic conditions at 0600 on departure drive. Asset Management: Completed asset management gap assessment in Q3 Challenges with Safety in 2018 7 Business Highlights: 2018 Goals Social Responsibility: Mixed results: Achieved Disadvantaged Business Enterprise (DBE) share of total Airport Improvement Project (AIP) funded construction contracts of 15.43% vs. goal of 8% Achieved ACDBE share of ADR gross sales of 19.9% vs. goal of 22% Customer Service: Below targets. Airport Service Quality scores below 2017 in all 6 categories as result of rapid growth and construction. Environment and Sustainability: SAF: Commission approved sustainable aviation fuel strategic plan in Q3 Sound insulation: 20 homes not insulated, but gained FAA grant to fund work in 2019 Stormwater: Completed regional stormwater assessment in Q4 Passenger growth and construction made achievement of customer service targets difficult 8 Business Highlights: 2018 Goals Financial Performance: Achieved both goals 2018 Non-aero NOI of $150 million vs. budget of $127 million 2018 CPE of $10.79 vs. adjusted budget of $11.63 Capital Project, Planning & SAMP: Achieved most milestones: Completed SAMP near term projects scoping for Environmental Review in Q3 IAF: Completed design, sterile corridor Pod A, structural steel, bridge foundations NSAT: On track to achieve opening of phase 1A in January 2019 Baggage Optimization: Phase 1: completed 74% of construction; Phase 2 completed 90% of design SSAT Renovation: On hold Concourse D Hardstand Terminal: Facility completed, activated and operational Restroom Upgrades: Phase 1 enabling work in construction Progress on major project milestones 9 Airport Activity Passengers Growth rate 60,000 12.9% 14.0% 49,850 49,308 50,000 45,737 46,935 12.0% Int'l 42,341 Int'l 10.0% 40,000 37,498 Int'l Int'l Int'l Year-to-date Q4: Int'l 8.0% Passengers +6.2% 30,000 7.7% 8.0% Landed weight +6.8% 6.2% 6.0% Cargo metric tons 5.1% +6.3% 20,000 Airline Passenger Growth: 4.0% Delta +10.5% 10,000 2.6% Alaska +4.6% Domestic Domestic Domestic Domestic Domestic Domestic 2.0% 0 0.0% 2014 2015 2016 2017 2018 Actual 2018 Budget Passenger growth ended with 6.2% growth at year end 10 Airline Cost Management (CPE) CPE CPE Revenue Sharing ($000s) 12.00 42,310 11.63 11.48 37,395 36,863 11.50 35,799 2018 CPE Actual: 29,436 11.00 Adjusted for SLOA IV 40% 10.79 revenue sharing 10.52 10.50 CPE Actual is below adjusted budget - primarily 17,034 10.12 10.10 driven by increased non- 10.00 airline revenues generating more revenue sharing, and year-end pension credit 9.50 adjustment. 9.00 2014 2015 2016 2017 2018 Actual 2018 Budget CPE below budget driven by increased non-airline revenues generating more revenue sharing 11 Non-Aeronautical Performance In 000s Non-Aero NOI ($000s) Non-Aero Revenue per Enplanement 180,000 10.35 160,000 10.11 9.66 9.70 9.33 149,959 9.93 140,000 133,101 128,727 126,861 YTD 2018 vs. 2017: 120,000 112,618 Revenues +8.8% 100,386 100,000 Expenses +3.9% NOI +12.7% 80,000 Revenue growth: Rental car CFC 60,000 Public parking ADR 40,000 GT 20,000 - - - - - - - 2014 2015 2016 2017 2018 Actual 2018 Budget ADR, parking and TNCs performed better than expected in 2018 12 Total Operating Expense Performance Total O&M Expense ($000s) O&M Expense per Enplanement In 000s 450,000 2018 Actual to 2018 Budget 400,000 12.77 12.81 13.58 12.19 Operating Expenses favorable $16M due to: 11.46 Total Airport Expenses higher by ($3.7M) 11.28 350,000 334,856 primarily due to the following Expense 318,849 Exceptions: 299,114 300,000 Increase in ERL expense ($2.2M) 261,226 primarily due to remediation required 250,000 238,140 for IAF& NSAT mega projects 228,172 Capital to Expense write-offs ($6.9M) 200,000 Partially offset by impact of Pension Credit to Airport $5.5M. 150,000 Savings from other divisions $19.7M including schedule delays for planned 100,000 expense projects. Note: Impact of Pension Credit to Corporate and other divisions 50,000 was $7.2M - - 2014 2015 2016 2017 2018 Actual 2018 Budget 2018 savings/deferrals covering most unplanned expenditures 13 Capital Spending In 000s 900,000 795,883 800,000 700,000 2018 Year-End Actual: 579,135 600,000 IAF = $224M NSAT = $169M 500,000 Other = $186M 400,000 Major 2018 Variances: 294,497 IAF = $101M 300,000 Automated Security Lane = $15.2M 200,000 155,970 164,931 153,887 NSAT = ($28.2M) 100,000 - 2014 2015 2016 2017 2018 Actual 2018 Budget 2018 spending variances primarily due to delayed spending, not project savings 14 Maritime Division 2018 Financial Performance Report Business Highlights 216 Homeport Cruise sailings. 1,114,888 Cruise passengers served. 1,643 recreational moorage slips. 4,378,796 metric tons of grain exported. 2,829,294 linear feet of berth occupied by working Maritime Vessels. 10,000 people attended Fishermen's Fall Festival. Dynamic and complex operations 16 Business Highlights 2,300 creosote pilings removed 6,000 pounds of oysters installed 33.3 miles of stormwater lines assessed 6 tide gates installed, 8 college interns, 15 high school interns 9 apprentices at Marine Maintenance. 1 Veterans Fellow 2 CPI certified Lean Specialists, 10 Leaders trained in CPI Idea Generation. Environmental and Workforce Development are significant efforts 17 Maritime Financial Highlights Maritime 2018 NOI is $8,848K favorable to budget and $2,303K or 19% higher than 2017 Revenue favorable to budget by $2,522K and $3,391K or 6% greater than 2017 with significant increases seen in all lines of businesses. Expenses favorable to budget by $6,326K and $1,088K higher than 2017. Y/Y increase driven primarily by Maintenance, both hourly rates and heavier workload. Including Depreciation 2018 Operating Loss ($3.7M), down from ($5.4M) in 2017 putting the division on track for 2024 profitability goal. Fav (UnFav) Incr (Decr) 2016 2017 2018 2018 Budget Variance Change from 2017 2018 Capital at 54% of budget driven by $ in 000's Actual Actual Actual Budget $ % $ % Total Revenues 50,810 54,183 57,575 55,053 2,522 5% 3,391 6% restroom and paving projects at Shilshole Total Operating Expenses 40,384 42,164 43,252 49,578 6,326 13% 1,088 3% Bay moving spending to 2019. Net Operating Income 10,426 12,020 14,323 5,475 8,848 162% 2,303 19% Depreciation 17,351 17,410 18,022 17,868 (154) -1% 612 4% Stormwater Utility NOI is $339K favorable Net Income (6,924) (5,390) (3,699) (12,394) 8,695 70% 1,691 31% to budget. Capital Expenditures 5,746 20,489 25,091 46,449 21,358 46% 4,602 22% Maintaining Port properties while growing Net Income 18 Maritime Division Financial Trends In 000s 80,000 Growth from 2017: 70,000 Revenue $3,391K, 6.3% Expenses $1,088K, 2.6% 60,000 Budget Variance Fav./(Unfav.): 50,000 Revenue $2,522K, 4.6% Depreciation Expenses $6,326K, 12.8% 40,000 Allocation Operating Expense Revenue - Growth strong in every 30,000 business except grain terminal. Revenue 20,000 Expenses - Down Y/Y when backing out Salmon Bay Marina 10,000 and annual pay increases. - 2014 2015 2016 2017 2018 Actual 2018 Budget Trending to profitability in 2024 19 Cruise Financial Trends In 000s 25,000 Growth from 2017: Revenue $1,284K, 7.3% Expenses $854K, 9.5% 20,000 Budget Variance Fav./(Unfav.): Revenue $730K, 4% 15,000 Depreciation Expenses $2,967K, 23.1% Allocation Revenue - Growth from tariff 10,000 Operating Expense increases and bigger ships. Revenue Expenses - Growth from Port 5,000 Valet Service. Under budget due to lower Port Valet cost and deferred marketing spending. - 2016 2017 2018 Actual 2018 Budget Cruise continues to be profitable 20 Recreational Boating Financial Trends In 000s 16,000 Growth from 2017: Revenue $1,443K, 13% 14,000 Expenses $486K, 5% 12,000 Budget Variance Fav./(Unfav.): Revenue $362K, 3% 10,000 Expenses $1,394K, 12% Depreciation 8,000 Allocation Revenue - Growth from tariff increases and efficiencies improving Operating Expense 6,000 vacancy rates. Revenue Expenses - Growth driven by 4,000 Maintenance and Police cost. Recreational boating staff cost lower 2,000 Y/Y and against budget due to deferred hiring. - 2016 2017 2018 Actual 2018 Budget Improved efficiency, improved net income 21 Fishing & Operations Trends In 000s 20,000 18,000 Growth from 2017: Revenue $465K, 5% 16,000 Expenses $600K, 5.6% 14,000 Budget Variance Fav./(Unfav.): 12,000 Depreciation Revenue $1,375K, 7.3% Allocation Expenses $338K, 9.5% 10,000 Operating Expense 8,000 Revenues Improved higher backfill Revenue of recreational vessels at 6,000 Fishermen's Terminal in the summer 4,000 while fishing boats at sea. 2,000 Expenses Growth driven by higher Maintenance expenses. - 2016 2017 2018 Actual 2018 Budget Strong financials during Fishermen's Terminal redevelopment 22 Maritime Portfolio Management Trends In 000s 16,000 14,000 Growth from 2017: Revenue $518K, 4.8% 12,000 Expenses ($413K), -3.9% 10,000 Depreciation Budget Variance Fav./(Unfav.): Revenue $136K, 1.2% 8,000 Allocation Expenses $683K, 6.3% Operating Expense 6,000 Revenue Revenue Growth from lease renewals and CPI increases. 4,000 2,000 Expenses Lower Maintenance and Corporate Allocations than - budget and prior year. 2016 2017 2018 Actual 2018 Budget Includes uplands of Shilshole Bay Marina, Terminal 91 (Industrial), Fishermen's Terminal, Maritime Industrial Center, Salmon Bay Marina, T-115, T-108, and T-106 Leasing closer to market and managing costs 23 Grain Terminal Goal: Net Income Maximized In 000s 6,000 Growth from 2017: 5,000 Revenue ($260K), -4.8% Expenses $340K, 24.4% 4,000 Budget Variance Fav./(Unfav.): Revenue $4K, 0.1% 3,000 Depreciation Expenses $102K, 5.5% Allocation 2,000 Revenues Down Y/Y due to Operating Expense tariffs in the 2nd half of the year Revenue impacting soybean shipments. 1,000 - 2016 2017 2018 Actual 2018 Budget Exceeding budget while navigating tariffs 24 Economic Development Division 2018 Financial Performance Report Economic Development Division Business Highlights 26 Workforce Development Participated in Joint RFP for construction worker training and retention services The first Port-funded Ironworkers pre-apprenticeship cohort graduated. Partnered with the Regional Public Owners group to complete a construction workforce supply demand study Planned and held a highly successful Project LIFT event to highlight aviation career opportunities Launched an Airport Career Connected Learning partnership with King County International Airport to increase awareness of airport-related career pathways in middle and high schools Workforce Development initiatives underway 27 Small Business / Diversity in Contracting Established new Diversity in Contracting program by helping divisions establish 2019 WMBE utilization goals and finalizing 2019 internal/external outreach plans Offered six PortGen training sessions over 300 disadvantaged businesses and prime contractors attended these events to learn about Port opportunities Staged outreach event at Airport Minority Advisory Council (AMAC) Conference where over 200 primes and WMBE businesses speed dated and discussed partnership opportunities Established first ever Disadvantaged Business Enterprise (DBE) race conscious goal airport runway project and achieved 19% DBE utilization Development of new Small Business policy and related program changes 28 Tourism Conducted 34 travel/media FAMS tours which resulted in $550K in-kind contributions and $7.5 million earned media value Approved 34 applicants and awarded $200K to 26 recipients of the 2018 Tourism Marketing Support Program which offers marketing organizations partnering to promote their Washington State destination to out-of-state visitors while promoting the use of Port facilities Awarded 72 recipients of the Spotlight Advertising Program which reserves 18 advertising locations at Sea-Tac airport to promote their destinations to 49 million travelers Coordinated a China Sales Mission with Holland America Line to promote Alaska cruising and pre/post experiences to cruise tour operators and media Promoting local destinations and gateway facilities 29 EDD Partnership Program Facilitated 2017-2018 Economic Development Partnership (EDP) Grants and allocated $950K to 30 cities in King County. $839K of allocated funds* were used by Cities to support their projects: Approximately $657K was spent in total match funds* by the 30 participating cities in the 2017-2018 EDP program year, which represents 19% more than the funds allocated initially. Half of the participating cities implemented wayfinding projects or projects that support tourism; 12 cities completed marketing projects; 11 cities implemented business assistance, recruitment, or retention projects; and 7 cities conducted planning/feasibility studies. The City of Kenmore won the Association of Washington Cities 2018 Municipal Excellence Award in Economic Development for the Kenmore Business Incubator and Business Accelerator training. * "Allocated funds" and "total match funds" are based on city final reports that were submitted by December 1, 2018. 4 cities still have outstanding invoices that will be submitted to the Port of Seattle for reimbursement. Continued Economic Development Partnership Program 30 Real Estate Development Broke ground on the Des Moines Creek North development in SeaTac (460,000 sf building) Issued RFP for Pier 2 and working with King County water taxi on possible development Took possession of Salmon Bay Marina Completed study on proposed Maritime Innovation Center Prepped several properties for future development: Terminal 106 ground lease Terminal 91 Uplands infrastructure study Plan for future development projects 31 Portfolio Management With one third of leases rolling over in EDD and Maritime portfolios in 2018, we maintained 94% occupancy with average 11% increase in rates Successfully concluded the market rate reset negotiations with Cityice/Lineage Logistics total 9% increase in lease revenue. 4.4 million metric tons of grain moved through Terminal 86 in calendar year Completed critical Central Waterfront capital and maintenance projects (elevators and HVAC) Completed 90% design and submitted permits for Bell Harbor Modernization Continued high demand for commercial properties 32 Economic Development Financial Highlights 2018 NOI $3,283K favorable to budget and $659K greater than 2017 Revenue favorable to budget by $2,182K and $2,914K greater than 2017 driven by favorable volumes at the Conference and Event Centers. Expenses favorable to budget by $1,101K, with underspend in Workforce Development, Police, and Corporate cost offset by increases in Maintenance and Conference and Event Center volume related variable costs. Y/Y expenses up $2,255K primarily due to increased Conference and Event Center volume. Fav (UnFav) Incr (Decr) 2016 2017 2018 2018 Budget Variance Change from 2017 EDD spent 34% of capital budget as $ in 000's Actual Actual Actual Budget $ % $ % the P69 solar panels and Bell Harbor Total Revenues 15,902 17,791 20,705 18,522 2,182 12% 2,914 16% Total Operating Expenses 20,983 25,396 27,651 28,751 1,101 4% 2,255 9% International Conference Center Net Operating Income (5,080) (7,605) (6,946) (10,229) 3,283 32% 659 9% modernization project costs moved Depreciation 3,682 3,863 3,992 4,156 164 4% 129 3% into 2019. Net Income (8,763) (11,469) (10,938) (14,385) 3,447 24% 531 5% Capital Expenditures 4,757 3,739 2,066 6,099 4,033 66% (1,673) -45% Growth in Conference and Event Center volumes 33 Economic Development Division In 000s Financial Trends 35,000 Growth from 2017: Revenue $2,914K, 16.4% 30,000 Expenses $2,255K, 8.9% 25,000 Budget Variance Fav./(Unfav.): Depreciation Revenue $2,182K, 11.8% 20,000 Allocation Expenses $1,101K, 3.8% 15,000 *Program Expense Revenue Growth and budget **Operating Expense 10,000 favorability driven by Conference Revenue & Event Center volumes. 5,000 Expenses Underspend in - Program Expense offset by 2014 2015 2016 2017 2018 Actual 2018 Budget volume related CEC cost. (5,000) * Includes Small Business, Tourism, Workforce Development, Real Estate Development, and Economic Development Grants. ** Includes Portfolio Management, Division Management, Facilities, and Other. Growth in the Conference and Event Center (CEC) 34 Portfolio Management Trends Growth from 2017: in 000s Revenue $2,959K, 16.6% 30,000 Expenses $2,181K, 9.8% 25,000 Budget Variance Fav./(Unfav.): Revenue $2,242K, 12.1% 20,000 Expenses ($431K), -1.8% Depreciation Allocation Conference and Event Center - volumes 15,000 driving favorable with revenues and Operating Expense unfavorable expenses. Gross Operating 10,000 Revenue Margin $920K higher than budget at $2.6M (23% vs. budget of 18%). 5,000 Expenses Maintenance cost at Pier 66 - higher than expected from HVAC updates. 2016 2017 2018 Actual 2018 Budget Includes non-alliance & upland real-estate at Tsubota, T-91 (General), T-86, P-69, Bell Street Garage, Smith Cove Conference Center, Bell Harbor Conference Center, World Trade Center, Foreign Trade Zone, Pier 2, T-34, and T-102 Increasing margins 35 Central Services 2018 Financial Performance Report Central Services Business Highlights The Port Commission approved funds to address the shortage of local construction workers and to broaden access to training and jobs for underrepresented populations in the industry. The Port Commission established policy directives on Diversity in Contracting, Priority Hire, Construction Labor Practices in 2018. Obtained Congressional authorization for Seattle Harbor Deepening Project with the U.S. Army Corps of Engineers. Hosted event to celebrate 10 year anniversary of the Port's Veteran Fellow Program. Completed another successful summer High School internship program. Began to develop year-round High School internship program. Issued Intermediate Lien Revenue Bonds of $555,564,000 to finance or refinance capital improvements to aviation facilities. Received a regional Food Recovery Challenge Award from the U.S. Environmental Protection Agency for outstanding accomplishments in preventing and diverting wasted food. Achieved a number of accomplishments in 2018 37 Central Services Financial Summary Expense growth in 2018 compared In 000s Core Central Support Services Police Capital Development Environment & Sustainability to 2017 was driven by: 160,000 o Rent and moving costs to SeaTac Office Center. 140,000 o Higher payroll costs due to merit increase and new 120,000 FTEs. 100,000 o Other expenses to support Port goals and initiatives 80,000 and division priorities. 60,000 2018 Expenses are lower than budget due to: 40,000 o Staffing vacancies o DRS pension true-up credit 20,000 o Projects delay and actual savings 0 2014 2015 2016 2017 2018 Actual 2018 Budget Expenses came in $23.5M favorable to the budget in 2018 38 Appendix 2018 Financial Performance Report Portwide Financial Summary Fav (UnFav) Incr (Decr) 2016 2017 2018 2018 Budget Variance Change from 2017 $ in 000's Actual Actual Actual Budget $ % $ % Aeronautical Revenues 244,235 264,114 291,268 301,082 (9,814) -3.3% 27,154 10.3% Airport Non-Aero Revenues 221,021 236,803 257,707 244,786 12,921 5.3% 20,904 8.8% Other Port Operating Revenues 133,211 131,114 140,415 124,612 15,803 12.7% 9,301 7.1% Total Operating Revenues 598,467 632,031 689,390 670,479 18,910 2.8% 57,359 9.1% Total Operating Expenses 325,285 372,982 397,638 422,885 25,247 6.0% 24,656 6.6% NOI before Depreciation 273,182 259,049 291,752 247,594 44,158 17.8% 32,703 12.6% Depreciation 164,336 165,021 164,362 163,309 (1,053) -0.6% (659) -0.4% NOI after Depreciation 108,846 94,028 127,390 84,285 43,105 51.1% 33,362 35.5% Strong financial performance for the Port 40 Non-Airport Financial Summary Fav (UnFav) Incr (Decr) 2016 2017 2018 2018 Budget Variance Change from 2017 $ in 000's Actual Actual Actual Budget $ % $ % NWSA Distributable Revenue 61,584 54,925 55,992 46,647 9,345 20.0% 1,067 1.9% Maritime Revenues 50,810 54,183 57,575 55,053 2,522 4.6% 3,391 6.3% EDD Revenues 15,903 17,791 20,705 18,522 2,182 11.8% 2,913 16.4% SWU & Other 4,914 4,214 6,143 4,390 1,753 39.9% 1,929 45.8% Total Operating Revenues 133,211 131,114 140,415 124,612 15,803 12.7% 9,301 7.1% Total Operating Expenses 64,059 73,868 78,789 88,029 9,240 10.5% 4,921 6.7% NOI before Depreciation 69,152 57,246 61,626 36,583 25,043 68.5% 4,380 7.7% Depreciation 41,837 40,619 40,159 40,480 320 0.8% (459) -1.1% NOI after Depreciation 27,315 16,628 21,467 (3,897) 25,364 -650.9% 4,839 29.1% Strong financial performance for the Non-Aviation businesses 41 Portwide Operating Revenues Summary Fav (UnFav) Incr (Decr) 2016 2017 2018 2018 Budget Variance Change from 2017 $ in 000's Actual Actual Actual Budget $ % $ % Aeronautical Revenues 244,235 264,114 291,268 301,082 (9,814) -3.3% 27,154 10.3% Public Parking 69,540 75,106 80,212 78,572 1,640 2.1% 5,106 6.8% Rental Cars - Operations 37,082 35,051 37,306 35,294 2,012 5.7% 2,255 6.4% Rental Cars - Operating CFC 12,122 10,641 16,263 15,563 700 4.5% 5,622 52.8% Rental Cars - Total 49,203 45,691 53,569 50,857 2,713 5.3% 7,878 17.2% ADR & Terminal Leased Space 57,253 58,980 64,323 59,087 5,236 8.9% 5,343 9.1% Ground Transportation 12,803 15,684 18,772 16,884 1,888 11.2% 3,088 19.7% Employee Parking 9,329 9,617 10,269 9,457 813 8.6% 652 6.8% Airport Commercial Properties 9,992 18,042 15,434 14,706 727 4.9% (2,608) -14.5% Airport Utilities 7,233 7,018 7,206 7,556 (350) -4.6% 189 2.7% Clubs and Lounges 3,028 5,041 6,802 5,630 1,171 20.8% 1,761 34.9% Cruise 15,422 17,596 18,880 18,150 730 4.0% 1,284 7.3% Recreational Boating 10,255 11,086 12,529 12,166 362 3.0% 1,443 13.0% Fishing & Operations 9,108 9,297 9,763 8,388 1,375 16.4% 465 5.0% Grain 5,382 5,427 5,167 5,163 4 0.1% (260) -4.8% Maritime Portfolio Management 10,255 10,787 11,305 11,169 136 1.2% 518 4.8% Central Harbor Management 6,920 8,634 9,018 8,951 66 0.7% 384 4.4% Conference & Event Centers 8,022 9,133 11,703 9,537 2,166 22.7% 2,570 28.1% NWSA Distributable Revenue 61,584 54,925 55,992 46,647 9,345 20.0% 1,067 1.9% Other 8,902 5,854 7,177 6,477 700 10.8% 1,324 22.6% Total Operating Revenues (w/o Aero) 354,232 367,917 398,122 369,398 28,724 7.8% 30,205 8.2% TOTAL 598,467 632,031 689,390 670,479 18,910 2.8% 57,359 9.1% Operating revenues exceeded budget by $18.9M 42 Portwide Operating Expense Summary Payroll expenses were Fav (UnFav) Incr (Decr) $22.5M below budget due to 2016 2017 2018 2018 Budget Variance Change from 2017 staffing vacancies and a $ in 000's Actual Actual Actual Budget $ % $ % $15.6M DRS Pension True- Salaries & Benefits 102,873 112,837 127,575 135,982 8,407 6.2% 14,738 13.1% up credit. Wages & Benefits 99,917 108,041 108,381 122,544 14,163 11.6% 340 0.3% Outside Services were Payroll to Capital Projects 21,744 25,708 28,329 28,964 635 2.2% 2,621 10.2% $12.4M favorable to budget Equipment Expense 7,106 11,118 10,622 8,212 (2,411) -29.4% (495) -4.5% due to timing of spending, Supplies & Stock 8,792 10,238 10,781 8,800 (1,981) -22.5% 542 5.3% project delays, and some Outside Services 70,116 83,603 99,885 112,292 12,407 11.0% 16,282 19.5% actual savings. Utilities 21,123 23,529 25,552 24,219 (1,334) -5.5% 2,024 8.6% Equipment Expense was Travel & Other Employee Expenses 4,200 4,767 4,848 6,398 1,550 24.2% 81 1.7% $2.4M over budget due to Promotional Expenses 1,178 1,408 1,956 2,341 385 16.4% 548 38.9% more equipment rental and Other Expenses 25,118 36,483 31,911 28,045 (3,867) -13.8% (4,572) -12.5% office move. Charges to Capital Projects (36,880) (44,750) (52,203) (54,910) (2,707) 4.9% (7,453) 16.7% TOTAL 325,285 372,982 397,638 422,885 25,247 6.0% 24,656 6.6% Utilities Expense was $1.3M over budget mainly due to higher Surface Water Utility cost. Operating expenses were $25.2M below budget 43 Comprehensive Financial Summary Fav (UnFav) 2016 2017 2018 2018 Budget Variance ($ in 000's) Actual Actual Actual Budget $ % Explanation Revenues 1. Operating Revenues 598,467 632,031 689,390 670,479 18,910 2.8% See details in the previous slides 2. Tax Levy 71,678 71,702 71,771 72,000 (229) -0.3% In line with budget 3. PFCs 85,570 88,389 94,070 91,787 2,283 2.5% Higher enplanements and PFC eligible enplanements 4. CFCs 24,715 25,790 21,802 22,161 (359) -1.6% In line with budget 5. Fuel Hydrant 6,992 7,000 6,942 7,023 (82) -1.2% In line with budget 6. Non-Capital Grants & Donations 6,284 6,705 1,573 5,504 (3,931) -71.4% Less DOE grants than budgeted 7. Capital Contributions 18,108 30,112 43,650 41,379 2,271 5.5% Tiger grant construction spending was lower than anticipated 8. Interest Income 8,448 12,174 26,287 15,713 10,573 67.3% Budget did not include interest earnings on new bond proceeds Total 820,262 873,902 955,484 926,047 29,438 3.2% Expenses 1. O&M Expense 325,285 372,982 397,638 422,885 25,247 6.0% See details in the previous slides 2. Depreciation 164,336 165,021 164,362 163,309 (1,053) -0.6% More new assets came into services 3. Revenue Bond Interest Expense 105,567 97,748 100,432 122,544 22,111 18.0% Savings from new bonds and lower cost of issuance than budgeted 4. GO Bond Interest Expense 9,765 13,891 13,414 13,501 88 0.6% In line with budget 5. PFC Bond Interest Expense 5,251 4,931 4,368 4,437 69 1.5% In line with budget 6. Public Expense 8,560 4,588 5,269 10,794 5,525 51.2% Safe & Swift and Heavy Haul did not take place as budgeted 7. Non-Op Environmental Expense 280 4,464 10,600 2,250 (8,350) -371.1% ERL increase primarily from T91 and Lower Duwamish Superfund 8. Other Non-Op Rev/Expense 12,087 10,441 3,217 473 (2,744) -580.5% Mainly due to loss sale of assets Total 631,131 674,066 699,299 740,193 40,893 5.5% Special Item 147,700 - 34,923 - (34,923) 0.0% T25 NRD restoration project Retro Adjustment to Net Position - - 2,736 - (2,736) 0.0% GASB 75 Retro Adj to OPEB Life Increase In Net Position 41,431 199,836 218,526 185,854 32,673 17.6% Strong financial performance for the Port 44 Capital Spending by Division 2017 2018 2018 Budget Variance $ in 000's Actual Actual Budget $ % Aviation 294,497 579,135 795,883 216,748 27.2% Maritime 20,489 25,091 46,449 21,358 46.0% Economic Development 3,739 2,066 6,099 4,033 66.1% Central Services & Other (note 1) 5,798 11,456 26,779 15,323 57.2% TOTAL 324,523 617,748 875,210 257,462 29.4% Note: (1) "Other" includes $1.7M Stormwater Utility capital projects. 2018 capital spending was $617.7M 45 Aviation Division Appendix Airport Activity Passenger Activity Change 2018 Market Airline 2017 v. 2018 Share Alaska 4.6% 48.9% Delta 10.5% 23.1% % Change United 6.0% 6.4% 2016 2017 2018 from 2017 Southwest 2.3% 6.4% Total Passengers (000's) American 1.7% 5.6% Domestic 40,871 41,804 44,422 6.3% International 4,866 5,130 5,428 5.8% Total 45,737 46,935 49,850 6.2% Q4 2018: Operations 412,170 416,124 438,391 5.4% Landed Weight (In Millions of lbs.) Passengers Cargo 1,888 2,323 2,471 6.4% YTD passenger growth of All other 25,387 26,107 27,879 6.8% 6.2% tracking well ahead Total 27,276 28,431 30,350 6.8% of 2018 budget based on Cargo - Metric Tons 5.0% growth. Domestic freight 194,754 242,271 241,397 -0.4% Top five carriers all International freight 114,350 123,934 133,274 7.5% growing vs. 2017 Mail 57,326 59,651 57,644 -3.4% Total 366,430 425,856 432,315 1.5% 2018 total passenger growth of 6.2% 47 Aviation Financial Summary Fav (UnFav) Incr (Decr) 2016 2017 2018 2018 Budget Variance Change from 2017 $ in 000's Actual Actual Actual Budget $ % $ % Operating Revenues: Gross Aeronautical Revenues 247,811 267,690 291,268 301,082 (9,814) -3.3% 23,578 8.8% SLOA III Incentive Straight Line Adj (1) (3,576) (3,576) - - - 0.0% 3,576 -100.0% Aeronautical Revenues 244,235 264,114 291,268 301,082 (9,814) -3.3% 27,154 10.3% Non-Aeronautical Revenues 221,021 236,803 257,707 244,786 12,921 5.3% 20,904 8.8% Total Operating Revenues 465,256 500,916 548,975 545,867 3,107 0.6% 48,058 9.6% Total Operating Expense 261,226 299,114 318,849 334,856 16,007 4.8% 19,735 6.6% Net Operating Income 204,030 201,802 230,126 211,011 19,114 9.1% 28,324 14.0% Capital Expenditures 153,887 293,785 579,135 796,200 217,065 27.3% 285,350 97.1% (1) Annual non-cash amortization of $17.9M lease incentive related to the 5 year SLOA III agreement which ended in 2017. 2018 Actual NOI $19.1M favorable to budget 48 Key Performance Measures 2018 Actual vs. 2018 Budget Fav (UnFav) Incr (Decr) Key Performance Metrics 2016 2017 2018 2018 Budget Vairance Change from 2017 CPE: Actual Actual Actual Budget $ % $ % CPE Impacted by SLOA IV Key Performance Metrics reduction in Revenue Sharing to Cost per Enplanement (CPE) 10.10 10.52 10.79 11.63 0.84 7.2% 0.26 2.5% 40% from 50% Non-Aeronautical NOI (in 000's) 128,727 133,101 149,959 126,607 23,352 18.4% 16,858 12.7% 2018 Actual CPE of 10.79 is Other Performance Metrics favorable to Adjusted Budget O&M Cost per Enplanement 11.46 12.77 12.81 13.58 0.77 5.7% 0.03 0.3% CPE of $11.63 (Original budget Non-Aero Revenue per Enplanement 9.70 10.11 10.35 9.93 0.42 4.3% 0.24 2.4% $11.35, adjusted consistent with Debt per Enplanement (in $) 104 114 133 116 (17) -14.8% 19 16.3% revenue sharing from SLOA IV) Debt Service Coverage 1.53 1.57 1.66 1.51 0.15 9.7% 0.08 5.3% driven by increased non -airline Days cash on hand (10 months = 304 days) 416 379 235 304 -69 -22.6% (144) -37.9% revenues generating more Aeronautical Revenue Sharing ($ in 000's) (37,395) (42,311) (36,863) (35,799) (1,065) -3.0% 5,447 12.9% revenue sharing Activity (in 000's) Enplanements 22,796 23,416 24,894 24,654 240 1.0% 1,479 6.3% Non- Aero NOI: Non- Aero NOI growth due to both higher Non-Aero Revenue and lower Operating Expenses primarily due to schedule delays Positive: Non-aero NOI above budget. CPE below adjusted budget. 49 Aviation Expense YE Summary 2018 Actual to 2018 Budget Fav (UnFav) Incr (Decr) 2016 2017 2018 2018 Budget Variance Change from 2017 $ in 000's Actual Actual Actual Budget $ % $ % Operating Expenses favorable Operating Expenses: $16M due to: Payroll 101,879 114,463 125,341 132,156 6,815 5.2% 10,878 9.5% Total Airport Expenses higher by Outside Services 37,863 41,055 47,638 52,532 4,895 9.3% 6,583 16.0% ($3.7M) primarily due to the Utilities 14,690 16,374 18,237 17,320 (918) -5.3% 1,864 11.4% following Expense Exceptions: Other Airport Expenses 20,655 28,292 25,125 19,776 (5,349) -27.0% (3,168) -11.2% Total Airport Direct Charges 175,087 200,184 216,341 221,784 5,443 2.5% 16,157 8.1% Increase in ERL expense ($2.2M) primarily due to Environmental Remediation Liability 4,463 8,812 6,233 4,030 (2,203) -54.7% (2,579) -29.3% remediation required for Capital to Expense 129 2,856 6,891 - (6,891) 0.0% 4,035 141.3% IAF& NSAT mega projects Total Exceptions 4,592 11,668 13,124 4,030 (9,094) -225.7% 1,456 12.5% Capital to Expense write - Total Airport Expenses 179,679 211,852 229,465 225,814 (3,651) -1.6% 17,613 8.3% offs ($6.9M) Police Costs 18,183 17,652 19,231 22,174 2,944 13.3% 1,579 8.9% Partially offset by impact of Capital Development 9,319 14,701 12,607 23,092 10,485 45.4% (2,094) -14.2% Other Central Services 50,099 51,004 53,121 58,265 5,144 8.8% 2,117 4.1% Pension Credit to Airport Maritime/Economic Development 3,946 3,904 4,425 5,511 1,086 19.7% 520 13.3% $5.5M. Total Charges from Other Divisions 81,547 87,262 89,384 109,042 19,658 18.0% 2,122 2.4% Savings from other divisions Total Operating Expense 261,226 299,114 318,849 334,856 16,007 4.8% 19,735 6.6% $19.7M including schedule Net Operating Income 204,030 201,802 230,126 211,011 19,114 9.1% 28,324 14.0% delays for planned expense projects. Note: Impact of Pension Credit to Corporate and other divisions was $7.2M Unplanned expenses mostly absorbed by cost savings 50 Impact of 2018 Special Items The following items impacted the CPE and Non-Aero NOI: Year-End Credit Pension Adjustment for $12.7M which impacted the CPE lower by approximately $0.40 Capital to Expense Write-offs for $5.2M which impacted the CPE higher by approximately $0.24 IAF RMM (Soil & Asbestos) for $3.8M which impacted the CPE higher by approximately $0.13 In other words, without the impact of these Special Items the CPE is estimated to be at 10.81 vs 10.79 Breakdown of the impact of 2018 Special Items 51 Aeronautical Business YE Fav (UnFav) Incr (Decr) 2016 2017 2018 2018 Budget Variance Change from 2017 2018 Actual to Budget $ in 000's Actual Actual Actual Budget $ % $ % Revenue - $8.8M unfavorable Revenues: Rate based revenue $8.8 M Movement Area 94,725 108,638 116,703 125,422 (8,720) -7.0% 8,064 7.4% lowerdriven primary by Apron Area 14,028 16,771 15,627 15,979 (352) -2.2% (1,144) -6.8% decreases in Debt Service Terminal Rents 155,852 155,431 169,318 171,854 (2,536) -1.5% 13,888 8.9% flowing through Rates in the Federal Inspection Services (FIS) 11,227 18,612 16,226 13,413 2,813 21.0% (2,386) -12.8% Movement and Terminal Rents Total Rate Base Revenues 275,832 299,452 317,874 326,668 (8,794) -2.7% 18,422 6.2% areas. -3.0% Revenue sharing $1M higher Commercial Area 9,379 10,574 10,257 10,212 45 0.4% (317) primarily driven by lower Subtotal before Revenue Sharing 285,211 310,026 328,131 336,880 (8,749) -2.6% 18,106 5.8% revenue requirement as a Revenue Sharing (37,395) (42,311) (36,863) (35,799) (1,065) -3.0% 5,447 12.9% result of pension credit Other Prior Year Revenues (5) (26) - - - 0.0% 26 100.0% Expenses $5.8M favorable Total Aeronautical Revenues 247,811 267,690 291,268 301,082 (9,814) -3.3% 23,578 8.8% Driven primarily by the $12.7 M Pension Year End credit Total Aeronautical Expenses 168,932 195,414 211,101 216,931 5,830 2.7% 15,688 8.0% adjustment, which absorbed Net Operating Income 78,879 72,276 80,167 84,151 (3,984) -4.7% 7,891 10.9% increased costs in Capital to Expenses. Debt Service (1) (89,130) (86,564) (91,673) (90,323) (1,350) -1.5% (5,109) -5.9% Net Cash Flow (10,251) (14,288) (11,506) (6,173) (5,333) -86.4% 2,782 19.5% (1) 2018 Budget debt service amount inadvertently understated by the $2.1M debt service exclusion adjustment which impacts Aero Rate Based Revenues only. Total 2018 Aeronautical debt service obligation is reflected in the 2018 Forecast column. Higher Aeronautical revenues due to lower revenue sharing percentage 52 Aero Cost Drivers 2018 Actual to 2018 Budget O&M cost driver of overage Fav (UnFav) Incr (Decr) is due to Environmental 2016 2017 2018 2018 Budget Variance Change from 2017 Remediation Liability $ in 000's Actual Actual Actual Budget $ % $ % ($3.1M) Debt Service - $5.1M lower O&M 165,427 192,188 206,076 210,433 (4,357) -2.1% 13,888 7.2% due to increased debt Debt Service Gross 118,641 113,832 115,419 120,555 (5,135) -4.3% 1,588 1.4% service exclusions from Debt Service PFC Offset (32,831) (33,057) (32,987) (33,015) 28 -0.1% 70 -0.2% rate base due to project Amortization 28,215 29,654 32,371 32,373 (2) 0.0% 2,717 9.2% delays NS NSAT Renov ($1.1M), Concourse D Space Vacancy (2,638) (2,264) (2,132) (2,650) 518 -19.5% 132 -5.8% Hardstand Holdroom TSA Operating Grant and Other (982) (901) (873) (1,028) 155 -15.1% 28 -3.1% ($940K), Holdroom Rate Base Revenues 275,832 299,452 317,874 326,668 (8,794) -2.7% 18,422 6.2% Seatings for Con. B & C ($312K), Terminal Security Commercial area 9,379 10,574 10,257 10,212 45 0.4% (317) -3.0% Enhancements ($201K) Total Aero Revenues 285,211 310,026 328,131 336,880 (8,749) -2.6% 18,106 5.8% and increased interest on (1) O&M, Debt Service Gross, and Amortization do not include commercial area costs or the international incentive expenses reserve fund ($574K) and savings from commercial paper interest ($687K) Aero rate base revenues based on cost recovery formulas 53 Aero Revenue Sharing Fav (UnFav) Incr (Decr) 2016 2017 2018 2018 Budget Variance Change from 2017 $ in 000's Actual Actual Actual Budget $ % $ % Aero Revenues (incl' commercial) 285,211 310,026 328,131 336,880 (8,749) -2.6% 18,106 5.8% Non-Aeronautical Revenues 221,021 236,803 257,707 244,786 12,921 5.3% 20,904 8.8% Total O&M Expenses (261,226) (299,114) (318,849) (334,612) 15,763 -4.7% (19,735) 6.6% Net Operating Income 245,006 247,714 266,989 247,054 19,935 8.1% 19,275 7.8% ADF Interest Income 3,725 4,242 3,752 4,127 (375) -9.1% (490) -11.5% Security Checkpoint TSA Grant 916 1,039 1,001 1,028 (27) -2.6% (38) -3.6% Misc. Non-Operating Expenses (2,481) (1,799) (1,586) (750) (837) 111.7% 213 -11.8% CFC Excess (4,899) (2,750) (7,724) (7,142) (582) 8.1% (4,974) 180.9% Available for Debt Service [a] 242,267 248,446 262,433 244,318 18,114 7.4% 13,987 5.6% Debt Service 133,982 131,060 136,218 138,177 (1,958) -1.4% 5,159 3.9% Debt Service x 1.25 [b] 167,477 163,825 170,273 172,721 (2,448) -1.4% 6,448 3.9% Available for revenue sharing [c]=[a]-[b] 74,790 84,621 92,159 71,597 20,562 28.7% 7,539 8.9% Revenue Sharing [d]=[c]*0.5 37,395 (1) 42,310 36,864 35,799 1,065 3.0% (5,447) -12.9% Lower revenue sharing percentage due to SLOA IV (40%) 54 Non-Aeronautical Business YE Fav (UnFav) Incr (Decr) 2018 Actual to 2018 Budget 2016 2017 2018 2018 Budget Variance Change from 2017 Revenue favorable $12.9M $ in 000's Actual Actual Actual Budget $ % $ % Airport Dining & Retail strong Non-Aero Revenues performance despite unit closures for Rental Cars - Operations 37,082 35,051 37,306 35,294 2,012 5.7% 2,255 6.4% lease transition. Rental Cars - Operating CFC 12,122 10,641 16,263 15,563 700 4.5% 5,622 52.8% Ground Transportation continued Public Parking 69,540 75,106 80,212 78,572 1,640 2.1% 5,106 6.8% strong growth in TNC activity Ground Transportation 12,803 15,684 18,772 16,884 1,888 11.2% 3,088 19.7% Airport Dining & Retail & Leased Space 57,253 58,980 64,323 59,087 5,236 8.9% 5,343 9.1% Public Parking strong growth in 1+ Commercial Properties 9,992 18,042 15,434 14,706 727 4.9% (2,608) -14.5% day transactions Utilities 7,233 7,018 7,206 7,556 (350) -4.6% 189 2.7% Expenses favorable $11.5M Employee Parking 9,329 9,617 10,269 9,457 813 8.6% 652 6.8% Savings from other Divisions - Delays Clubs and Lounges 3,028 5,041 6,802 5,630 1,171 20.8% 1,761 34.9% for ADR tenant buildouts and other Other 2,639 1,624 1,119 2,036 (917) -45.0% (505) -31.1% Terminal projects Total Non-Aero Revenues 221,021 236,803 257,707 244,786 12,921 5.3% 20,904 8.8% Payroll savings due to Non-Aero Total Non-Aero Expenses 92,294 103,702 107,748 117,925 10,177 8.6% 4,046 3.9% share of pension credit, in addition to Net Operating Income 128,727 133,101 149,959 126,861 23,098 18.2% 16,858 12.7% savings from staffing vacancies. Less: CFC (Surplus) / Deficit (1) (4,899) (2,750) (7,724) (7,142) (582) -8.1% (4,974) -180.9% Unplanned expenses absorbed by Adjusted Non-Aero NOI 123,828 130,351 142,235 119,719 22,516 18.8% 11,884 9.1% above savings include peak contract Debt Service (1) (43,984) (44,495) (44,545) (45,752) 1,207 2.6% (50) -0.1% staffing support, SP Plus taxi curbside service Landside honey bucket cost, Net Cash Flow 79,844 85,856 97,690 73,967 23,723 32.1% 11,834 13.8% and lower payroll charges to capital. (1) CFC excess and Debit service are forecasted/budgeted on an annual basis only. Thus, quarterly data is not available. $24.4M NOI growth due to both higher revenues and deferred expenses 55 Public Parking Performance YE Public Parking - Revenue Detail Fav / (UnFav) Incr / (Decr) Key message: 2016 2017 2018 2018 Budget Variance Change from 2017 $ in 000's Actual Actual Actual Budget $ % $ % Parking revenue growth Parking Garage Revenue to Port primarily driven by rate increase. Gross Sales - Parking Garage 73,707 81,404 86,974 87,112 (139) -0.2% 5,569 6.8% Overall growth in parking less - WA Sales Tax (6,081) (6,818) (7,248) (7,102) (145) 2.0% (430) 6.3% transactions is slower than less - SeaTac Parking Tax (4,212) (6,563) (7,251) (7,196) (55) 0.8% (688) 10.5% growth in O&D enplanements. Revenue to Port - General Parking 63,414 68,024 72,476 71,022 1,454 2.0% 4,452 6.5% Other Garage Revenue Programs Corporate Premier Parking Program 594 958 1,225 976 250 25.6% 268 28.0% 2018 Actuals vs. 2017 Actuals Passport Parking Program 2,749 2,990 3,219 3,356 (137) -4.1% 229 7.7% Revenue - Increase compared Revenue to Port - Parking Programs 3,344 3,947 4,444 4,331 113 2.6% 497 12.6% Total Parking Garage Revenue 66,758 71,971 76,920 75,353 1,567 2.1% 4,949 6.9% to prior year, primarily due to Other Parking Revenue tariff rate increase in effect Concession Rent - Doug Fox off-site parking 2,751 3,109 3,238 3,200 38 1.2% 129 4.2% full year 2018 (rate increase Space Rent and Other Parking Revenue 32 25 53 19 35 182.1% 28 111.2% effective April 2017). Total Parking Revenue 69,540 75,106 80,212 78,572 1,640 2.1% 5,106 6.8% Transactions - Increase in total parking transactions Parking Transactions by duration Fav / (UnFav) Incr / (Decr) reflects slower growth rate 2016 2017 2018 2018 Budget Variance Change from 2017 in 000's Actual Actual Actual Budget $ % $ % than the growth in O&D Parking < 1 day 1,646 1,623 1,612 1,639 (26) -1.6% (11) -0.7% enplanements, and reflects Parking 1+ days 677 684 734 690 44 6.4% 51 7.4% impact of increasing number Total Parking Transactions 2,323 2,307 2,346 2,329 18 0.8% 40 1.7% of transportation alternatives Total Enplanements 22,796 23,416 24,894 24,654 240 1.0% 1,479 6.3% available to passengers. O&D % 69.4% 70.3% 70.3% 69.2% 1.1% 1.6% - 0.0% O&D Enplanements 15,821 16,461 17,501 17,061 440 2.6% 1,040 6.3% Garage Revenue per O&D Enplanement $ 4.22 $ 4.37 $ 4.40 $ 4.42 $ (0.02) -0.5% $ 0.02 0.5% Slower growth in parking transactions reflects increasing transportation alternatives 56 Rental Car Performance YE Rental Car - Revenue Detail Fav / (UnFav) Incr / (Decr) Key message: 2014 2015 2016 2017 2018 2018 Budget Variance Change from 2017 Rental Car revenue reflects strong growth in # and $ in 000's Actual Actual Actual Actual Actual Budget $ % $ % average ticket price during 2018, which offsets RCF Concession Revenue to Port 28,955 30,662 33,465 31,352 33,474 31,508 1,965 6.2% 2,122 6.8% continued decline in 1 day car rentals impacted by Total Enplanements 18,717 21,109 22,796 23,416 24,894 24,654 240 1.0% 1,479 6.3% availability of other transportation alternatives O&D % 73.8% 69.8% 69.4% 70.3% 70.3% 69.2% 1.1% 1.6% - 0.0% (TNCs, car-sharing, light rail, etc.) O&D Enplanements 13,813 14,734 15,821 16,461 17,501 17,061 440 2.6% 1,040 6.3% 2018 Actuals vs. 2017 Actuals Gross Sales by Operators 281,884 302,372 310,987 313,654 334,355 315,083 19,271 6.1% 20,700 6.6% Total Transactions 1,218 1,289 1,390 1,411 1,416 1,437 (21) -1.5% 5 0.4% Rental Car Concession revenue - . Concession Average Ticket $231.34 $234.53 $223.70 $222.32 $ 236.08 $219.22 16.86 7.7% $13.76 6.2% Revenue is impacted by (3) key indicators: Average Length of Stay 4.23 4.10 4.00 4.28 4.44 4.37 0.06 1.5% 0.16 3.7% Transactions/O&D Enplanements 7.70% 8.75% 8.79% 8.57% 8.09% 8.42% -0.33% -3.9% -0.48% -5.6% Decline in Transactions per O&D Enplanement reflects trend in passenger preference shifting CFC Revenue Summary to other transportation options Total Transaction Days 5,150 5,292 5,554 6,039 6,286 6,287 (1) 0.0% 247 4.1% CFC Rate per Transaction Day $6.00 $6.00 $6.00 $6.00 $6.00 $6.00 $0.00 0.0% $0.00 0.0% Total Transactions almost flat, which reflects Total CFC Revenue Earned 33,554 36,206 36,830 36,261 37,716 37,723 (7) 0.0% 1,455 4.0% net impact of decline in 1 day rentals offset by Reserve for debt service and CP interest: (19,946) (20,543) (21,708) (22,621) (21,802) (22,161) 359 -1.6% 819 -3.6% some growth in longer term rentals. Reserve for CP principal payment: - (3,000) (3,000) (3,000) - - - NA 3,000 -100.0% Average ticket price is a function of rental car Debt Service Reserve Requirement (19,946) (23,543) (24,708) (25,621) (21,802) (22,161) 359 -1.6% 3,819 -14.9% pricing and customer demand, and can vary Residual - CFC Operating Revenue: 13,608 12,663 12,122 10,641 16,263 15,563 700 4.5% 5,622 52.8% significantly. Higher average ticket price in Rental Car - Revenue Summary Fav / (UnFav) Incr / (Decr) 2018 reflects both decline in 1 day rentals and 2016 2016 2016 2017 2018 2018 Budget Variance Change from 2017 strong pricing in current market . # and $ in 000's Actual Actual Actual Actual Actual Budget $ % $ % CFC Operating Revenue - Increase due to RCF Concession Revenue to Port 28,955 30,662 33,465 31,352 33,474 31,508 1,965 6.2% 2,122 6.8% increase in Transaction Days for 2018 and lower Residual - CFC Operating Revenue: 13,608 12,663 12,122 10,641 16,263 15,563 700 4.5% 5,622 52.8% debt service in 2018, primarily driven by final Land Rent/Space Rent/Other 3,541 3,189 3,617 3,699 3,833 3,786 47 1.2% 133 3.6% payment on outstanding Commercial Paper Total Rental Cars Oper Revenue 46,104 46,515 49,203 45,691 53,569 50,857 2,713 5.3% 7,878 17.2% balance ($3.0M) paid last year. Rental Car revenue strong despite increasing transportation alternatives 57 Ground Transportation YE Revenue to Port Fav / (UnFav) Incr / (Decr) Key message: 2016 2017 2018 2018 Budget Variance Change from 2017 Strong growth in demand for TNCs continues in $ in 000's Actual Actual Actual Budget $ % $ % 2018. Significant changes in customer preferred Ground Transportation Revenues ground transportation alternatives are reflected in both revenue and trip activity between GT operator Transportation Network Companies 3,222 6,940 10,349 8,122 2,228 27.4% 3,410 49.1% categories. On Demand Taxis 5,045 5,199 4,475 4,591 (115) -2.5% (724) -13.9% 2018 Actuals vs. 2017 Actuals On Demand Limos 869 858 853 855 (2) -0.2% (5) -0.6% GT Revenue compared to prior year: Belled In Taxis (Annual Permit) 159 45 35 108 (73) -67.6% (10) -22.3% TNC revenue in 2018 reflects continued shift in Pre-Arranged Limos (Annual Permit) 496 626 635 603 32 5.3% 9 1.4% customer preference and the impact of the rate Courtesy Cars (cost recovery) 2,039 1,319 1,660 1,909 (249) -13.0% 341 25.9% increase (to $6/trip) effective for the full year All other Operators (cost recovery) 669 360 300 433 (133) -30.7% (60) -16.7% Taxi revenue decline partially due to rate Other Misc Revenues 305 337 465 264 201 76.0% 127 37.8% decrease (to $6/trip) effective all year in 2018, Total GT Revenue 12,803 15,684 18,772 16,884 1,888 11.2% 3,088 19.7% compared to $7/trip in effect for the first 9 months of 2017 Trip Activity Fav / (UnFav) Incr / (Decr) Courtesy car revenue increase reflects rate 2016 2017 2018 2018 Budget Variance Change from 2017 correction in 2018 Budget in 000's Actual Actual Actual Budget # % # % Ground Transportation Trips GT Trip Activity forecast compared to prior year: Transportation Network Companies 602 1,277 1,715 1,354 362 26.7% 438 34.3% On Demand Taxis 827 750 723 765 (42) -5.4% (27) -3.6% TNC trip volume continued to grow at a rate On Demand Limos 74 72 69 71 (1) -2.0% (2) -3.0% faster than the growth in enplaned passengers, Belled In Taxis (Annual Permit) 195 56 18 52 (34) -64.8% (38) -67.2% driven by shift in customer preference Pre-Arranged Limos (Annual Permit) 369 337 347 325 22 6.9% 10 3.0% Taxi trip decline slowed in 2018. Future Courtesy Cars (cost recovery) 1,221 1,200 1,209 1,211 (2) -0.2% 9 0.7% demand still uncertain. All other Operators (cost recovery) 95 79 63 78 (16) -20.0% (16) -20.5% Declines in other operator categories reflects Total GT Trip Activity 3,383 3,771 4,145 3,856 290 7.5% 374 9.9% the changing GT operating environment TNC growth expected to continue to outpace enplanement growth 58 Airport Dining & Retail/Terminal Leased Space YE Airport Dining & Retail and Terminal Fav / (Unfav) Budget Incr / (Decr) 2018 Actuals vs. 2018 Budget Leased Space 2016 2017 2018 2018 Variance Change from 2017 Org Basis (in 000's) Actual Actual Actual Budget $ % $ % Strong ADR sales despite planned ADR Revenue unit closures Food & Beverage 1 21,314 21,579 23,132 21,700 1,433 6.6% 1,553 7.2% Retail 1 13,496 13,989 17,005 14,344 2,661 18.6% 3,016 21.6% Revenue favorable $3.3M Duty Free 1 6,265 6,912 7,026 7,251 (225) -3.1% 114 1.6% Food & Beverage Sales lost from closure of Central Terminal were Personal Services 1 3,657 3,728 3,951 3,809 142 3.7% 223 6.0% captured by temporary Advertising 6,725 6,662 6,432 6,021 410 6.8% (231) -3.5% concessions as well as permanent Space Rental - Terminal 5,190 5,641 6,415 5,664 751 13.3% 774 13.7% tenants. All other revenue 605 469 363 300 63 21.0% (106) -22.6% Retail strong performance due to Total ADR & Terminal Lease Revenue 57,252 58,980 64,323 59,087 5,236 8.9% 5,343 9.1% Convenience Retail offering Expenses increased "grab'n'go" food ADR & Terminal Leased Space 2,241 1,962 2,778 2,423 (355) -14.6% 816 41.6% options, and Specialty Retail Income from Operations 55,010 57,018 61,545 56,664 4,881 8.6% 4,527 7.9% located away from Central Sales per Enplanement Terminal experiencing increased SPE - Food & Beverage $7.23 $7.18 $7.34 $6.93 $0.41 5.9% $0.16 2.2% traffic during peak times due to SPE - Retail Sales $3.86 $4.07 $4.37 $4.03 $0.34 8.4% $0.30 7.3% crowding in holding areas SPE - Duty Free $0.89 $0.91 $0.83 $0.90 ($0.06) -7.2% ($0.07) -8.1% Duty Free - flat sales most of the SPE - Personal Services $1.00 $0.95 $0.94 $0.95 ($0.01) -0.8% ($0.01) -1.1% year primarily due to China SPE - Airport Dining & Retail $12.98 $13.12 $13.49 $12.82 $0.68 5.3% $0.37 2.8% increased enforcement of duty free limitations. Strong dollar to Yaun Concession Revenue 1 in second half of year also per Enplanement $1.96 $1.97 $2.05 $1.91 $0.14 7.5% $0.08 4.0% contributed to restrained sales (1) Concession Revenue is composed of revenue from concession agreements for the sales of Food & Beverage, Retail, Duty Free, and Personal Services only. Strong ADR sales in 2018, despite unit closures for planned lease transition 59 Commercial Properties YE Fav / (Unfav) Budget Incr / (Decr) from Key message: Non-Aero Commercial Properties 2016 2017 2018 2018 Variance 2017 2018 Actuals vs. 2017 Actuals Org Basis (in 000's) Actual Actual Actual Budget $ % $ % Growth in revenue from new real estate New Development Revenue development and In-flight Kitchen revenue, Option Area Rent 29 27 - - 0.0% (27) n/a more than offset by one-time lump sum Phase I - Base Rent 372 674 593 593 0 0.0% (81) -12.0% payment for DMCBP Phase II frontage fees Phase I - In-lieu Fees 221 239 259 259 (0) 0.0% 20 8.3% received in prior year Phase II - Base Rent 17 29 377 29 348 1172.8% 348 1199.4% Phase II - In-lieu Fees - 5,434 - 0.0% (5,434) n/a Phase III - Base Rent 30 349 586 582 4 0.0% 237 67.8% 2018 Budget vs. 2018 Actuals Phase III - In-lieu Fees 69 206 223 223 0 0.0% 17 8.5% Revenue $0.7M Favorable 208th St. Rent Credit (Phase I) (450) - - - 0.0% - n/a DMCBP Phase II construction completed DMCBP Owner's Liaison Reimb - - - - 0.0% - n/a earlier than expected. NERA 2 Land Rent - 15 248 248 (0) 0.0% 233 1525.8% In-flight Kitchen revenue growth NERA 3 Land Rent - 42 687 678 9 0.0% 646 1547.4% continued in 2018 Subtotal - New Development Revenue 288 7,015 2,973 2,611 364 13.9% (4,042) -57.6% NERA grant completed in 2018, partially In-flight Kitchen Revenue 7,025 7,827 8,705 8,054 651 6.2% 878 11.2% offset by higher than anticipated work NERA 3 Grant Revenue 908 completed in prior year. - 1,402 - 1,807 2,070 - (263) - -11.2% 405 - 28.8%n/a All other Non-Aero Commercial Properties revenue 1,771 1,798 1,949 1,972 (23) 0.0% 151 8.4% Non-Aero Commercial Properties Revenue 9,992 18,042 15,433 14,706 663 4.5% (2,609) -14.5% Expenses $0.6M Favorable NERA grant expenses lower than DMCBP Expenses expected due to increased work Phase I prepaid frontage fee amort. 179 179 179 179 - 0.0% - 0.0% completed in prior year. Phase II prepaid frontage fee amort. 3,578 - 0.0% (3,578) n/a Airport appraisals completed at lower Phase III prepaid frontage fee amort. 167 167 167 - 0.0% - 0.0% cost Subtotal - New Development Expenses 179 3,924 346 346 - 7.2% (3,578) -91.2% Savings in landscaping costs and other NERA 3 Grant expenses 987 1,598 2,105 2,300 - 195 - -11.2% 507 - 31.7%n/a small expenses All other Commercial Properties expenses 434 406 209 614 405 -20.2% (197) -48.4% Non-Aero Commercial Properties Expenses 1,692 5,928 2,661 3,260 600 -11.0% (3,267) -55.1% Income from Operations 8,300 12,114 12,773 11,446 1,327 8.9% 658 5.4% Revenue growth from new development & In-flight Kitchen, offset by $5.4M lump sum for DMCBP II frontage fees in received 2017 60 2018 Capital Expenditures (1) Foundations and structural steel delayed and then $ in 000's 2018 2018 Budget Variance proceeded at a slower pace than expected. (2) $8.7M of capital budget deemed to be public Description Actual Budget $ % expense as the equipment will be transferred to International Arrivals Facility (1) 223,714 324,221 100,507 31.0% TSA. 1 of 3 lanes have been installed; remaining lanes pushed out to Q4 2019. ASL Conversion at Checkpoints (2) 1,593 16,800 15,207 90.5% (3) 2018 Budget included a reclass of $8.7M to non- NS NSAT Renov NSTS Lobbies (3) 169,018 140,738 (28,280) -20.1% operating public expense for the non-Port owned N. Terminals Utilities Upgrade (4) 417 8,200 7,783 94.9% equipment to be turned over to the TSA. When Add'l Baggage Makeup Space IAF (5) 1,187 15,998 14,811 92.6% Baseline was set in early 2018, Construction was lagging. Construction level of effort is now Additional STS Cars (6) 3 6,525 6,522 100.0% matching and exceeding initial expectations as 2018 Taxiway Improvement Project (7) 30,495 36,250 5,755 15.9% schedule end dates have not slipped. SSAT Infrastructure HVAC 819 4,910 4,091 83.3% (4) Early works construction cancelled and combined with main construction phase due to better Concourse D Hardstand Holdroom 25,757 27,986 2,229 8.0% coordination with adjacent projects. Holdroom Seatings for Conc B&C 1,115 6,950 5,835 84.0% (5) Foundations and structural steel delayed and then Terminal Security Enhancements 1,888 5,925 4,037 68.1% proceeded at a slower pace than expected. Additionally, a major payment (~$9M) scheduled All Other 123,128 201,380 78,252 38.9% for Dec-18 was delayed one month by GMP Total Spending 579,135 795,883 216,748 27.2% negotiation and settlement and will apply in Jan- 19. (6) Project has been delayed until 2020. (7) Favorable bids on the project. Actual spending was 72.8% of budget 61 SAMP Overview Fav (Unfav) Inc (Decr) 2016 2017 2018 2018 2018 Budget Variance Change from 2017 $ in 000's Actual Actual Actual Budget $ % $ % SAMP Completion & Transition to Env Review 1,591 1,335 462 500 38 7.6% (873) -54.9% Adv Planning IDIQ - Master Plan 0 1,141 3,905 2,500 (1,405) -56.2% 2,764 N/A Environmental Review - Master Plan 208 169 521 1,700 1,179 69.4% 352 169.2% SAMP Utilities Master Plan 0 276 459 500 41 8.3% 183 N/A Total SAMP-Related Spending 1,799 2,921 5,347 5,200 (147) -2.8% 2,426 134.8% Accelerated pace in advance planning offsets timing delay in Environmental Review 62 Maritime Division Appendix Maritime 2018 Financial Summary Fav (UnFav) Incr (Decr) 2016 2017 2018 2018 Budget Variance Change from 2017 $ in 000's Actual Actual Actual Budget $ % $ % Fishing & Operations 9,108 9,297 9,763 8,388 1,375 16% 465 5% Recreational Boating 10,255 11,086 12,529 12,166 362 3% 1,443 13% Cruise 15,422 17,596 18,880 18,150 730 4% 1,284 7% Bulk 5,382 5,427 5,167 5,163 4 0% (260) -5% Maritime Portfolio Management 10,255 10,787 11,305 11,169 136 1% 518 5% Other 388 (9) (69) 17 (86) -502% (60) -692% Total Revenue 50,810 54,183 57,575 55,053 2,522 5% 3,391 6% Expenses Fishing & Operations 4,308 4,599 4,702 4,641 (61) -1% 104 2% Rec Boating 3,164 3,813 3,688 4,595 907 20% (126) -3% Cruise 2,600 2,674 2,677 4,748 2,071 44% 3 0% Other Maritime 781 462 259 1,399 1,140 81% (203) -44% Maintenance Expenses 9,900 10,420 11,416 11,261 (156) -1% 996 10% Portfolio Management 3,367 3,507 3,726 3,750 23 1% 219 6% Other ED Expenses 420 665 621 833 212 25% (44) -7% Total Maritime & EDD expenses 24,540 26,140 27,089 31,226 4,137 13% 949 4% Enviromental & Sustainability 1,358 1,125 1,588 2,168 580 27% 463 41% CDD Expenses 1,010 748 823 1,212 389 32% 75 10% Police Expenses 3,921 3,756 4,041 4,209 168 4% 285 8% Other Central Services 9,300 9,869 9,564 10,641 1,077 10% (305) -3% Aviation Division 139 138 148 123 (24) -20% 10 7% Total Central Services & Aviation 15,728 15,635 16,163 18,352 2,189 12% 528 3% Envir Remed Liability 115 389 0 0 0 NA (389) -100% Total Expense 40,384 42,164 43,252 49,578 6,326 13% 1,088 3% NOI Before Depreciation 10,426 12,020 14,323 5,475 8,848 162% 2,303 19% Depreciation 17,351 17,410 18,022 17,868 (154) -1% 612 4% NOI After Depreciation (6,924) (5,390) (3,699) (12,394) 8,695 70% 1,691 31% Successful revenue growth and expense management so far 64 Maritime Capital 2018 2018 2018 Budget Variance $ in 000's Actual Budget $ % Shilshole Bay Marina restroom and Salmon Bay Marina ACQ 15,724 15,804 80 1% paving projects moved to 2019 SBM Restrms/Service Bldgs Rep 221 7,162 6,941 97% following scope change. FT Gateway Building 868 2,700 1,832 68% Cruise Tenant Improvements pushed P91 South End Fender 2,056 2,202 146 7% to 2019 due to lease conditions. Maritime Fleet Replacement 1,422 2,158 736 34% Contingency was used for $850 Port Contingency Renewal & Replace. 0 2,000 2,000 100% wide Radio System upgrade and $250K for Shilshole Bay Marina SBM Paving 136 1,673 1,537 92% Charging station. Cruise Terminal Tenant Improv 343 1,531 1,188 78% Salmon Bay Marina Uplands 46 1,505 1,459 97% FT Docs 3,4,5 Fixed Pie 174 1,424 1,250 88% Restoration 109 1,140 1,031 90% All Other Projects 3,992 7,150 3,158 44% Total Maritime 25,091 46,449 21,358 46% SBM restrooms and paving delayed due to bidding and permit schedule 65 Stormwater Utility Fav (UnFav) Incr (Decr) 2017 2018 2018 Budget Variance Change from 2017 $ in 000's Actual Actual Budget $ % $ % StormWater Utility NWSA 3,392 3,698 3,692 6 0% 306 9% Tenants Revenue 404 399 453 (53) -12% (4) -1% Non-tenants Revenue 1,189 1,187 1,189 (2) 0% (2) 0% Total Revenues 4,985 5,285 5,333 (49) -1% 300 6% SWU Direct 905 841 1,159 317 27% (64) -7% Maintenance Expenses 2,380 3,317 3,413 97 3% 937 39% EDD Expenses 20 7 18 10 58% (12) -62% Environmental & Sustainability 375 326 237 (89) -38% (49) -13% Capital Development Expenses 41 28 51 24 46% (13) -32% Other Central Service Expenses 389 690 723 33 5% 301 78% Total Expenses 4,109 5,210 5,601 392 7% 1,100 27% NOI Before Depreciation 875 75 (268) 343 128% (800) -91% Depreciation 1,008 1,117 1,221 104 8% 109 11% NOI After Depreciation (133) (1,042) (1,489) 447 30% (909) -683% SWU tracking to budget 66 Economic Development Division Appendix EDD 2018 Financial Detail Fav (UnFav) Incr (Decr) 2016 2017 2018 2018 Budget Variance Change from 2017 $ in 000's Actual Actual Actual Budget $ % $ % Revenue 7,880 8,658 9,002 8,985 17 0% 344 4% Conf & Event Centers 8,022 9,133 11,703 9,537 2,166 23% 2,570 28% Total Revenue 15,902 17,791 20,705 18,522 2,182 12% 2,914 16% Expenses Portfolio Management 3,425 3,875 3,571 3,778 207 5% (304) -8% Conf & Event Centers 6,932 7,639 9,889 8,465 (1,424) -17% 2,251 29% P69 Facilities Expenses 180 206 235 289 54 19% 30 14% RE Dev & Planning 595 214 149 211 62 29% (65) -30% EconDev Expenses Other 620 776 785 1,227 442 36% 9 1% Maintenance Expenses 2,783 3,666 3,915 3,055 (860) -28% 249 7% Maritime Expenses (Excl Maint) 31 52 166 344 178 52% 114 217% Total EDD & Maritime Expenses 14,566 16,427 18,711 17,370 (1,341) -8% 2,283 14% Small Business 21 64 132 140 8 6% 68 105% Workforce Development 522 850 702 1,992 1,290 65% (148) -17% Tourism 1,093 1,234 1,408 1,460 51 4% 174 14% EDD Grants 20 751 838 960 122 13% 87 12% Total EDD Initiatives 1,656 2,900 3,080 4,552 1,472 32% 180 6% Environmental & Sustainability 62 260 281 398 117 29% 21 8% CDD Expenses 212 387 283 329 46 14% (104) -27% Police Expenses 157 51 (76) 158 234 148% (127) -248% Other Central Services 4,222 5,257 5,259 5,816 557 10% 1 0% Aviation Division 107 113 113 127 14 11% 1 1% Total Central Services & Aviation 4,761 6,068 5,860 6,829 969 14% (209) -3% Envir Remed Liability 0 0 0 0 0 NA 0 NA Total Expense 20,983 25,396 27,651 28,751 1,101 4% 2,255 9% NOI Before Depreciation (5,080) (7,605) (6,946) (10,229) 3,283 32% 659 9% Depreciation 3,682 3,863 3,992 4,156 164 4% 129 3% NOI After Depreciation (8,763) (11,469) (10,938) (14,385) 3,447 24% 531 5% Better than expected conference and event center volumes 68 EDD Capital 2018 Budget Variance 2018 2018 Actual Budget $ % Project costs moved to 2019 and $ in 000's Contingency applied to Port wide P66 Elevator 2,3,4 Upgrades 1,043 1,175 132 11% radio system. RE: Contingency Renew.&Replace 0 1,000 1,000 100% BHICC Interior Modernization 283 710 427 60% Small Projects 195 516 321 62% Tenant Improvements -Capital 23 532 509 96% P69 Solar Panel System 202 502 300 60% T-102 Outdoor Lighting 30 437 407 93% T91 Upland PreDevelopment 15 425 410 96% CW Elevator Modernization 0 325 325 100% All Other projects 275 477 2020 42%NA Total Economic Development 2,066 6,099 4,033 66% Prioritization and project delays 69 Central Services Appendix Central Services Financial Summary Fav (UnFav) Incr (Decr) 2016 2017 2018 2018 Budget Variance Change from 2017 $ in 000's Actual Actual Actual Budget $ % $ % Total Operating Revenues 1,330 68 (500) 182 (682) -375.4% (569) -832.8% Core Central Support Services 69,196 71,071 73,576 80,367 6,791 8.4% 2,505 3.5% Police 23,045 22,095 23,908 27,065 3,157 11.7% 1,813 8.2% Capital Development 12,218 17,370 15,501 26,289 10,788 41.0% (1,869) -10.8% Environment & Sustainability 8,824 6,975 8,770 11,504 2,735 23.8% 1,795 25.7% Total Operating Expenses 113,284 117,511 121,755 145,225 23,470 16.2% 4,244 3.6% Operating expenses were $23.5M favorable to budget in 2018 71 Central Services Expense by Category Fav (UnFav) Incr (Decr) 2016 2017 2018 2018 Budget Variance Change from 2017 $ in 000's Actual Actual Actual Budget $ % $ % Payroll savings due to staff vacancies. Salaries & Benefits 64,835 69,448 78,529 82,549 4,020 4.9% 9,081 13.1% Outside Services Wages & Benefits 21,943 20,517 15,858 26,793 10,935 40.8% (4,659) -22.7% favorable budget Payroll to Capital Projects 19,060 21,859 22,781 23,159 378 1.6% 923 4.2% variance mainly came Equipment Expense 1,920 3,109 4,107 3,077 (1,030) -33.5% 998 32.1% from lower spending Supplies & Stock 1,280 1,446 1,399 1,454 55 3.8% (48) -3.3% and project delays. Outside Services 30,262 34,053 39,009 46,975 7,966 17.0% 4,956 14.6% Charge to Capital was Travel & Other Employee Exps 2,510 2,568 2,574 3,722 1,148 30.8% 6 0.2% lower than budget due Insurance Expense 2,349 2,223 2,145 2,320 175 7.5% (78) -3.5% to delay of some Litigated Injuries & Damages 279 435 (82) - 82 0.0% (517) -118.9% capital projects. Other 2,554 2,152 2,798 3,494 695 19.9% 647 30.1% Charge to Capital (33,708) (40,299) (47,363) (48,317) (955) 2.0% 7,063 17.5% Total 113,284 117,511 121,755 145,225 23,470 16.2% 4,244 3.6% Most of the budget savings came from payroll and outside services 72 Central Services Capital Spending 2018 2018 Budget Variance $ in 000's Actual Budget $ % Infrastructure - Small Cap 786 1,500 714 47.6% Services Tech - Small Cap 225 1,150 925 80.4% Project Cost Mgmt System 430 600 170 28.3% Supplier Database System 349 450 101 22.4% Corporate Firewall 66 922 856 92.8% PeopleSoft Financials Upgrade 2,025 3,100 1,075 34.7% Radio System Upgrade 3,866 12,000 8,134 67.8% Police Records Mgmt System 0 700 700 100.0% CDD Fleet Replacement 768 1,210 442 36.5% Corporate Fleet Replacement 726 1,180 454 38.5% Other (note 1) 466 1,526 1,060 69.5% TOTAL 9,707 24,338 14,631 60.1% Note: (1) "Other" includes remaining ICT projects and small capital projects/acquisitions. 2018 capital spending was $9.7M for Central Services 73
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