Item No: 9a_supp
Meeting Date: June 25, 2019

Maritime Division
2020 Business Plan and
Budget Development
June 25, 2019

Outline
• Strategy to Budget Process
• Strategic Priorities
• Anticipated 2020 Budget needs: Capital Focus
• 2020 Milestones

2

2020 Maritime Division Budget Timeline

2020 Business
Plan and CIP
Development

Budget
Budget
Development
Development
Briefing
Briefing

Budget
Briefing
Budget
Briefing

First
First Reading
Reading &
&
Public Hearing
for 2019 Budget

nd Reading &
22nd Reading
&
Final Passage of
2019 Budget

(May/June)

(July
(Jun 10)
25)

(Oct 9)
8)

(Mid-November)
(Nov 12)

(Late(Nov
November)
19)

Note: Detailed schedule in appendix

3

Strategy To Budget Process

Implementation

Strategic Planning

Century Agenda
Vision

5- 10 Years

Cross Functional
Evaluation
Gap
Strategies and Objectives
(Long Range Plans)

3 – 5 Years

2020 Business Plan
2020 Budget

Annual

2020 Performance Plans

4

Maritime Priorities 2020

5

Comparing the Statewide Economic Impact of Major Clusters
Total Jobs

Total Jobs Per Direct Job

300000

3

250000

2.5

200000

2

150000

1.5

100000

1

50000

0.5

0

0

Maritime Agriculture Aerospace
& Food
Processing

Maritime

Agriculture &
Food
Processing

Aerospace

Sources: Each study by Community Attributes, Inc.: Washington Aerospace Partnership, “Washington
State Aerospace Economic Impacts 2016 Update,” October 2016; Washington Farm Bureau,
“Washington State Agriculture & Food Processing Economic/Fiscal Impact Study,” January 2015;
Washington Maritime Federation, “Washington State Maritime Sector Economic Impact Study,” April
2017.

6

Ocean Economy Critical to the Region’s Economy

Source: Port of Seattle, Port of Tacoma, and the NW Seaport Alliance
Economic Impact Analysis, Community Attributes, March 2019

7

SWOT: Industry/Business Context
Strengths:
•
•
•
•

Robust Maritime Cluster.
Deep expertise and operational excellence.
Track record in Sustainability.
Commitment to infrastructure upgrades

Weaknesses:
• Aging infrastructure in some areas.
• Port Facilities not meeting demand for berth space and new vessels.
• Legal, financial, regulatory compliance can result in less competitive edge for real
estate.
• Competing demands for resources
8

SWOT: Industry/Business Context
Opportunities:
• Investments in new vessels in all key sectors
• Technology and Innovation opportunities with infrastructure upgrades
• Proximity to Alaska
• Focus on sustainability

Threats:
• Urban pressures and traffic congestion
• Trade war affecting Terminal 86
• Construction cost escalation
• Effects of climate change: warming ocean

9

Cruise
Industry/Business Context

10

11

124 new cruise ships on order

12

Industry changes - Small to Large

13

The future: Hybrid and Electric

14

Terminal 46

Shared Space with the Northwest Seaport Alliance Operations
15

Fishing
Industry/Business Context

16

New Vessels in the Fleet
Mavrik Marine’s
Sternpicker 32
Improvements:
• Stability
• Capacity
• Speed
Length | 32 ft
Beam | 12 ft

Draft | 22 ft
Built in Washington State

Crew | 4

17

Fleet Modernization
Underway

• Average vessel is 40 years old in
the North Pacific Fishing Fleet
• New vessels are safer and more
environmentally sound

• New technology:
• Data Needs

18

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

19

Industry/Business Context
• Grain:
– Volumes will likely decrease given the ongoing tariff impact on export
volumes.
– The YTD volumes 2019 (through April 2019) are down by 17.8%.

• Portfolio Management:
– The local industrial real estate market remains strong and rates are
stable.
– Current occupancy rate of industrial property is 98%.

20

Financial Goals: 2020 is year two of a five-year plan
Maritime Division Financial Goal in $000s
Positive NOI after Depreciation by 2024

Goal
0(2,000)

(4,000)

Actual

*2020 Expected
NOI Budget Range

(6,000)

– Smaller Variance.

(8,000)
(10,000)

• 2018 Actual NOI above
goal.
• Budget guidance
including zero-based
approach.

Budget

(12,000)
(14,000)
2017

2018

2019

2020

2021

2022

2023

2024

*Note: Does not include Terminal 46 payment or revenue

Maritime Goal: Positive NOI after Depreciation by 2024

21

Financial Goals: 2020 is year two of a five-year plan
Positive Net Operating Income including Allocations and Depreciation
• Cruise
• Grain Terminal
Take steps to reach Positive Net Operating Income
• Recreational Boating

Cover all expenses and make inroads on depreciation
• Maritime Portfolio Management
• Elliott Bay Fishing & Commercial Operations
Take steps to cover maintenance and direct expenses
• Ship Canal Fishing & Operations

Maritime Goal: Building on 2019 achievements

22

Financial Strategic Plans
1.) Find / expand
new revenue sources

2.) Maximize existing
revenue streams

3.) Limit spending
increases

• 4th Cruise berth
• Habitat banking
• Industrial
development
• Diversified fleet
• Moorage Dolphins

• Align rates to market
demand
• Guest moorage
• Lease renewals
• Increase recreational
moorage during
fishing season @ FT

• Push process
improvement
• Use technology to
reduce workload
• Leverage existing
overhead
• Optimize predictive
maintenance
• Cost sharing

Levers to achieve financial goal

23

Advance Environmental Sustainability
• Stormwater: develop framework for repair and build green
infrastructure
• Habitat: restore and maintain habitat/ develop banking
agreement
• Greenhouse gas: implement reduction plan
• Solid waste: track and reduce
• Orca: contribute to recovery actions

24

Additional 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

25

Preliminary Maritime 2020 Capital Plan Highlights
• Continued pre-construction work toward:
– T46 Cruise Terminal
– Pier 66 Shore Power
– Terminal 91 Berths 6 & 8

– Harbor Mooring Dolphins

• Prospective projects (asset preservation, moorage enhancements & public
access):
– Terminal 46 North Pier
– Terminal 91 Northwest Fender Replacement
– Jack Block Park Pier Replacement
Note: prospective projects subject to funding availability
26

Staffing Resource Needs
• Visionary Capital Plan
• Growing demand for facility
• Staffing needs in the following areas:
– Planning
– Continuous Process Improvement
– Cruise

• Offsets: will pursue first

27

Appendix

28

Appendix Slide #1
2018 Maritime Division
in $000s
Revenue
Direct Operating Exp.
Maintenance Exp.
Central Services / Police
Other External Exp.
Total Operating Exp.
NOI before Depreciation
Depreciation
NOI after Depreciation

Cruise
18,880
2,659
2,407
4,548
237
9,850
9,029
6,517
2,513

Elliott Bay
Ship Canal
Rec.
Portfolio Grain
Other /
Fishing & Ops Fishing & Ops Boating Mgmt. * Terminal Habitat Total Maritime
6,755
3,502
12,035
11,305
5,167
(69)
57,575
2,575
2,265
3,672
3,904
165
15,239
1,557
1,523
3,350
2,739
428
79
12,082
1,898
1,717
2,447
3,234
994
14,838
100
70
440
331
151
(237)
1,092
6,130
5,575
9,910
10,208
1,737
(159)
43,252
624
3,421
(2,797)

(2,073)
1,908
(3,981)

2,125
2,872
(747)

1,098
2,693
(1,596)

3,430
597
2,833

90
14
77

14,323
18,022
(3,699)

*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.

29

Detail 2020 Budget Schedule
06/25 – 2020 Maritime Business Plan and Budget Development Preview briefing

07/23 – EDD/Maritime CIP and Funding Discussion
09/24 – Central Services budget Commission briefing

10/08 – Operating division budgets Commission briefing
10/22 – Tax Levy & Draft Plan of Finance Commission briefing

10/22 – 2020 Preliminary Budget document available to Commission
10/24 – 2020 Preliminary Budget document available to the public
10/29 – NWSA Budget study session by Managing Members
11/13 – First reading of budget resolution and public hearing
11/14 – NWSA Budget adoption by Managing Members

11/13 – First reading of budget resolution and public hearing
11/19 – Second reading and final passage of 2020 Budget

12/02 – File the 2020 statutory budget with King county
12/13 – Publish the 2020 Final Budget to the public
30