9b EDD Perliminary Budget Briefing Presentation

Item No. 9b_supp_2
Economic Development Division        Meeting Date: October 8, 2019



2020 Preliminary Budget
October 8

2020 Economic Development Division Budget Timeline

2020 Business             Budget            Budget Briefing
Division                 Budget              First Reading &First Reading &           2nd2nd Reading &          Reading &
Plan and CIP            Business PlanDevelopment             Briefing             Public HearingPublic Hearing         Final Passage of               Final Passage of
Development                                                 for 2019 Budget         2019 Budget
BriefingBriefing                                       for 2019 Budget           2019 Budget
(May/June)                (July 10)                  (Oct 9)(Oct 8)              (Mid-November)(Nov 12)             (Late November)           (Nov 19)




2

Strategy to Budget Process
Century Agenda
Vision              5- 10 Years
Strategic Planning              SWOT
Strategies and
Objectives
(Long Range Plans)        3  5 Years
Implementation     2020 Business Plan
2020 Budget           Annual
2020 Performance
Plans
3

Economic Development Key 2020 Budget Drivers
Revenue Down $615K/3.1%:
Modest increases in existing leases.
$809K reduction In Conference Centers.
Expense Down $1,385K/4.5%
Better alignment of budgeted initiatives with spending.
Favorable allocations from shared facilities and Central Services.
Capital
Construction of Bell Harbor Conference Center.
Completing Design process for T91 light industrial buildings.
4

EDD P&L Summary
Incr (Decr)
2018     2018     2019     2019     2020     Budget Variance     Budget to Forecast
$ in 000's                                 Actual     Budget     Budget    Forecast    Budget         $          %              *Portion of 2020 EDD initiatives assigned to tax levy:
Revenue                             9,002      8,985      8,930      8,930      9,124       194        2%
Conf & Event Centers                    11,703      9,537     10,795     10,795      9,985       (810)        -7%
Total Revenue                         20,705     18,522     19,725     19,725     19,110       (615)       -3%          Workforce Development
Expenses                                                                                                                         Career Advancement Center - $300K
Portfolio Management                   3,571      3,778      4,128      3,894      4,008       (119)       -3%
Conf & Event Centers                   9,889      8,465      9,374      9,374      8,902       (472)        -5%                      Construction Trades - Pre - Apprentice - $650K
P69 Facilities Expenses                      235         289         225         225         195         (30)       -13%                        Airport Career Pathways - $100K
RE Dev & Planning                      149        211        216        166        208         (8)       -4%
EconDev Expenses Other                 785      1,227      1,262      1,062        932       (330)      -26%                     Engagement and Strategic Plan - $200K
Maintenance Expenses                 3,915      3,055      4,071      3,571      3,789       (282)       -7%                     Transportation / Bus Charters - $2.4K
Maritime Expenses (Excl Maint)             179        344        389        265        439          50        13%
Total EDD & Maritime Expenses     18,724     17,370     19,664     18,556     18,472     (1,191)      -6%                      Maritime Secondary Education - $100K
Diversity in Contracting                     132         140         199         199         197          (2)        -1%                        Youth Maritime Initiative - $150K
Workforce Development                 702      1,992      2,010      1,600      1,900       (110)       -5%
Tourism                            1,408      1,460      1,521      1,521      1,536        15        1%
EDD Grants                            838        960      1,160        900      1,110        (50)       -4%         Other
*Total EDD Initiatives                  3,080      4,552      4,890      4,220      4,743        (146)       -3%
Environmental & Sustainability             281         398         395         338         323         (73)       -18%                       EDD Partnership Grants - $960K
CDD Expenses                         283       329       235       247       341       106       45%                   Tourism Marketing Support Program - $200K
Police Expenses                            (76)        158        228        220           0        (228)      -100%
Other Central Services                     5,203       5,816       5,547       5,436       5,737         190          3%                        Port Gen Small Business Training - $50K
Aviation Division                          155        127        155        155        113         (42)       -27%                       Maritime Innovation Initiatives $150K
Total Central Services & Aviation     5,846      6,829      6,561      6,397      6,514        (47)       -1%
Envir Remed Liability                          0           0           0           0           0           0         NA
Total Expense                          27,651     28,751     31,114     29,172     29,730     (1,385)     -4.5%          Total = $2,762K
NOI Before Depreciation                (6,946)   (10,229)   (11,389)    (9,447)   (10,620)       769        7%
Depreciation                              3,992       4,156       3,819       3,819       3,392        (427)       -11%
NOI After Depreciation                (10,938)   (14,385)   (15,208)   (13,266)   (14,011)     1,196        8%

5

Economic Development Division Financial Trend
In 000s
40,000

35,000

30,000

25,000
Depreciation
20,000                                                                                                                                          Program Expense
Operating and Overhead Expense
15,000
Revenue
10,000

5,000

-
2014           2015           2016           2017           2018       2019 Forecast    2019 Budget     2020 Budget
Conference & Event Center construction driving 2019/2020 revenue decline (and
associated variable expense). Return to trend expected 2021 and beyond.

6

Portfolio Management Financial Trend
in 000s                                                                                                                                            Revenue down $617K/-3.1%
Expense       Depreciation       Revenue                                                 Expenses down $1,042K/-4.0%
35,000
30,000                                                                                                                                Opportunities:
25,000                                                                                                                                    T91 Development
20,000
15,000                                                                                                                                Risks/Challenges:
10,000                                                                                                                                    Potential downturn in real
5,000                                                                                                                                        estate and the economy
-                                                                                                                                                  Ongoing major projects on the
2016             2017          2018 Actual      2019 Forecast      2019 Budget       2020 Budget
waterfront.
Potential impact from newly
built convention centers.
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.


7

Real Estate Strategic Priorities
Complete Bell Harbor Conference Center
Modernization
Redevelop Terminal 106
Redevelop CEM and Des Moines Creek West
properties
Continue Terminal 91 Uplands
planning/development
Move Maritime Innovation Center forward
along with FT Gateway building
Manage and Operate Pier 69 Headquarters
Maintain 95% occupancy for Economic          New Light Industrial Facilities at Des Moines Creek North Business Park in
SeaTac.   Over the past five years, the Port has partnered with private
Development and Maritime properties           developers to build/lease over 2.2 Million square feet of light industrial space
near Sea-Tac international airport.


8

Real Estate Development 2020 Initiatives
'20-'19
$ in 000's                                                     2019 Budget    2020 Budget        Change
Appraisals                                                  50               50               0
Central Waterfront wayfinding plan/ideas                    0              50              50
Real Estate Strategic Plan/other consulting services          250              250                0
Total                                                         300              350               50




9

Pier 69 Facilities 2020 Initiatives
$ in 000's                                                                              '20-'19
2019 Budget    2020 Budget     Change

P69 Shuttle                                    200              0           (200)
Total                                              200               0           (200)





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Diversity in Contracting Strategic Priorities
1.  Increase WMBE contracting utilization
results, especially for African American and
Hispanic businesses
2.  Advance community engagement and
partnerships to support WMBE and DBE
programs
3.   Provide PortGen workshops/trainings to
interested WMBE and DBE businesses
4.   Implement communication and education
programs to build external and internal
support for WMBE utilization
5.  Work with Public Sector partners to advance            2019 Port Annual WMBE Utilization Goal = 12.4%
WMBE and DBE utilization                             2019 WMBE Utilization (end of Q2) = 13.8%

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Diversity in Contracting 2020 Initiatives
$ in 000's                                                                                          '20-'19
2019 Budget      2020 Budget        Change
Construction Incubator                                 60               50              (10)
Small Business Training                                 75                50              (25)
Marketing/ Communication/Design Services             5              10               5
OMWBE Certification                                15              15               0
WMBE Best Practice and Implementation               50               0             (50)
Champion of Inclusion                                 10               10               0
Procurement Technical Assistance                      15               15               0
Mentor Protege                                      0              80             80

Total                                                     230               230              -



12

Tourism Strategic Priorities
1.   Utilize Tourism Grant programs to increase the
awareness of Washington state's unique visitor
opportunities and attractions
2.  Expand cruise and stay options within
Washington state to enhance the cruise
industry's economic impacts to the region
3.  Conduct Familiarization tours (FAMS) for the
travel media and travel trade to generate
interest in King County and Washington state's
tourism amenities and attractions
4.  Partner with Visit Seattle and the Washington
Tourism Association to leverage the Port's
Spotlight Airport Advertising Program Highlights WA Destinations
tourism investments and grant programs

13

Tourism 2020 Initiatives
$ in 000's                                                                                          '20-'19
2019 Budget      2020 Budget        Change

Int. Representation & Work (Australia/China)         98               98                0
Adv/Marketing (WeChat, FT, Cruise)                133              133               0
Europe Representation & VS Sponsorship           275              275               0
Tourism Grants                                   200              200               0
London Trvl Show / Tourism Development           39              39               0
Fam Tours / New Service Inaugural Activity           83                83                0
Total                                                     828               828              -



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ED and Maritime Innovation Partnerships  Strategic Priorities
1.  Implement 2020 Economic Development
Grant Program in partnership with King
County Cities
2.  Support Greater Seattle Partners' regional
economic development initiatives
3.  Support Duwamish Community Equity
Partners' economic development initiatives
4.  Support maritime innovation initiatives to
discover, promote and help advance
promising maritime ventures and startups
Implement pilot maritime accelerator program
to support promising maritime startups
Build partnerships with other maritime
innovation centers/programs
Work across the Port to advance maritime                       ED Grant program touches cities across King County
innovation

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EDD Admin 2020 Initiatives
Economic Development Admin
'20-'19
$ in 000's                                                            2019 Budget     2020 Budget      Change
ED Partnership Grants                                             960            960             0
Workforce Dev. Pilot Program (Career Advancement Center)            200               0           (200)
Membership: Economic Dev Council                             100             0          (100)
Membership: Trade Dev Alliance                                  93              0           (93)
Membership: Greater Seattle Partners                              0            150           150
Promotional Hosting/Sponsorships                                60             60             0
Maritime Innovation Initiatives                                       0             150            150
Opportunity Fund                                             500           350          (150)
Total                                                                1,913           1,670           (243)


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Workforce Development Strategic Priorities
1.   Support new Port Commission workforce
policy
2.  Sustain construction industry training for
disadvantaged workers
3.  Support workers and employers at SeaTac
International airport by operating Airport
Employment Center and Career Support Center
4.   Implement aviation career pathway pilot
training initiative
5.  Sustain Maritime Youth Collaborative (MYC) &
Aviation career connected learning initiatives                 Ironworker's Preapprenticeship Graduates

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Workforce Development 2020 Initiatives
$ in 000's                                                                                                                '20-'19
2019 Budget        2020 Budget         Change
Contracted Initiatives
Airport Employment Center                                       500                500                  0
Airport Employment Center and Classroom                          350                419                 69
Employment Continuity Pool Program                               60                 60                  0
Construction Trades - Regional Partnership Services, Pre-Ap            710                 650                  (60)
Maritime (Youth Collaborative)                                       250                 150                (100)
Career Advancement Center (Originally WFD Pilot Program)           200                300                100
Airport Career Pathways Implementation                            250                100               (150)
Total Contracted Initiatives                                            2,070                2,079                    9
Developing Initiatives
Engagement and Strategic Plan                                        0                200                200
Maritime Secondary Education                                        0                100                100
K-12 Career Connected Learning                                     400                  0               (400)
Total Developing Initiatives                                            400         0       300                 (100)
Workforce Development Support                                  28                28                 0
Total Workforce Development                                  2,498              2,407                (91)

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Net Increase of 0.6 FTE
2019 Budget                                              36.0
2019 Changes
Disadvantaged Business Enterprise Specialist                       1.0
Diversity in Contracting Outreach & Training Manager                 1.0
P69 Front Desk Security (Transferred Departments)                (1.0)
Adjusted 2019                                              37.0
2020 Budget
Staff Additions (Subtractions):
Real Estate Analyst                                                0.6
Net Change 2020                                          0.6

Proposed 2020 Budget                                    37.6



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Economic Development Division
Commission Briefing - Appendix
2020 Preliminary Budget
October 8, 2019

Reductions from Zero-Based Approach
Business                       What                      Totals in '000  Description
Diversity in Contracting           Equipment Expense                      (2) Computer and Telephone expense for AOB office and staff
Diversity in Contracting           Travel/Training                           (5) Mainly reduction in Registration
Diversity in Contracting           Outside Services                        (11) Decrease in Outside Temp Clearical/Admin ($10K) and Other Contracted Services Trade Show Banner ($2K)
Diversity in Contracting           Initiatives                               (10) Construction Incubator
Diversity in Contracting           Initiatives                               (25) Small Business Training
Diversity in Contracting           Initiatives                               (50) WMBE Best Practice and Implementation
Workforce Development        Equipment Expense                  (4) Removed Laptop Replacment ($2K), Equipment Rental and A/V for Events ($2K)
Workforce Development        Travel/Training                      (8) Reductions in Registration ($4K), Local Transportation ($2K), and Air Fare ($2K)
Workforce Development        Other O&M                         (4) Burning Glass subscription
Workforce Development        Initiatives                         (250) Airport Career Pathways Implementation
Workforce Development        Initiatives                         (100) Youth Maritime Initiative
Workforce Development        Initiatives                          (60) Construction Trades - Regional Partnership Services, Pre-Ap
Workforce Development        Initiatives                         (400) K-12 Career Connected Learning
ED Portfolio Management        Equipment                          (25) Decreased in capital reserve
ED Portfolio Management        General Expenses                   (457) BHICC's 3rd Party Management Op Exp and their Management Fee
ED Portfolio Management        Initiatives                          (163) T-102 Tenant Improvements
ED Portfolio Management        Initiatives                          (110) T-102 Broker Fees
ED Portfolio Management        Initiatives                           (51) WTCW Broker Fees
ED Portfolio Management        Initiatives                           (69) WTCW Tenant Improvements
EDD Administration              Travel/Training                       (15) Reduction in line with historic actuals
Total                                                                   (1,819)
Note: There are additional reductions outside of this list, including service groups

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