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Item No. 3 _supp Meeting Date: July 26, 2016 Long Range Plan Management Update Commission Study Session July 26, 2016 Long Range Plan (LRP) Presentation Overview Introduction to the Long Range Plan example integration with 1. Intro budgeting and resourcing Receive feedback the LRP Official Document structure plan for 2. LRP Official Document review and approval on August 9, 2016 3. Century Agenda Dashboard Share the LRP Century Agenda Dashboard plan 4. Strategic Positioning for Growth Provide an update on the Strategic Positioning for Growth Brief update of 2017 budget plans for Aviation, Maritime, and 5. Budget Considerations Beyond LRP Economic Development Five Part LRP Presentation 2 Long Range Plans Integrated with Budget and Metrics Premier Premier Tourism & BusinessTourism & Business Small Business &Small Business & Greenest, EnergyGreenest, Energy 1. Strategies 1. Strategies Logistics Hub Logistics Hub Gateway Gateway Workforce Development Workforce Development Efficient Port Efficient Port 2. Objectives 2. Objectives 1-5 1-5 6-9 6-9 10-11 10-11 12-16 12-16 3. Example 3. Example 10. Increase small 3. Triple Air Cargo 3. Triple Air Cargo 7. Double # of Int.7. Double # of Int. 10. Increase small 16. Restore 40 additional16. Restore 40 additional flights business to 40% business to 40% acres of habitat Objectives Objectives flights acres of habitat 4. Budget 4. Budget Work plan, resources, and timeline Work plan, resources, and timeline 5. Metrics Staff accomplishment targets, key performance indicators, etc. 6. Dashboards Progress updates to staff, executives, commission, and public. LRPs drive budgets that in turn drive staff activity 3 LRP OFFICIAL DOCUMENT FOR DISCUSSION (2 OF 5) LRP Formal Document for Commission Adoption on August 9, 2016 Commission Memo Action Item 2017 2021 LRP Document + Seeking Commission feedback draft of LRP Document structure prior to official review & approval 5 LRP Official Document for Commission Adoption on August 9, 2016 (Example 1 of 14) 6 LRP Official Document for Commission Adoption on August 9, 2016 Intentionally Left Blank for Signatures (Example 2 of 14) 7 LRP Official Document for Commission Adoption on August 9, 2016 -1- (Example 3 of 14) 8 LRP Official Document for Commission Adoption on August 9, 2016 -2- (Example 4 of 14) 9 LRP Official Document for Commission Adoption on August 9, 2016 -3- (Example 5 of 14) 10 LRP Official Document for Commission Adoption on August 9, 2016 -4- (Example 6 of 14) 11 LRP Official Document for Commission Adoption on August 9, 2016 -5- (Example 7 of 14) 12 LRP Official Document for Commission Adoption on August 9, 2016 -8- (Example 8 of 14) 13 LRP Official Document for Commission Adoption on August 9, 2016 -18- (Example 9 of 14) 14 LRP Official Document for Commission Adoption on August 9, 2016 -21- (Example 10 of 14) 15 LRP Official Document for Commission Adoption on August 9, 2016 -22- (Example 11 of 14) 16 LRP Official Document for Commission Adoption on August 9, 2016 -32- (Example 12 of 14) 17 LRP Official Document for Commission Adoption on August 9, 2016 -34- (Example 13 of 14) 18 LRP Official Document for Commission Adoption on August 9, 2016 LRP CA Dashboard Commission Review February and August each year (starting in 2017) -35- (Example 14 of 14) 19 LRP CENTURY AGENDA DASHBOARD (3 OF 5) LRP Century Agenda Dashboard Overview Reviewed by Commission twice per year to report progress on Century Agenda commitment Accessible online by staff to also monitor progress In-House Dashboard solution implemented this year Dashboard + Integrated Project Management functionality implement in 2017 to improve efficiency and effectiveness Demonstrates progress and strengthens accountability 21 LRP Century Agenda Scorecard Measures Port of Seattle Economic Performance Measures Economic Impact Key Metrics Targets Aviation Jobs, Income, Revenue, Local Purchases & Taxes Baselines established; Analysis underway to determine targets Maritime Jobs, Income, Revenue, Local Purchases & Taxes Baselines established; Analysis underway to determine targets Other (i.e. Real Estate) Jobs, Income, Revenue, Local Purchases & Taxes Baselines established; Analysis underway to determine targets Strategy 1: Logistics Hub Key Metric Enabling Metric 5-YR Target (2021) 10-YR Target (2026) CA Obj. 1 Grow seaport annual container volume to more than 3.5 million TEUs NWSA Container N/A TBD TBD Volume CA Obj. 2 Optimize infrastructure investments & financial returns w/ Washington Ports NWSA ROA N/A TBD TBD Obj. 3 Triple air cargo volume to 750,000 metric tons Air Cargo Volume Space Utilization TBD 750K Metric Tons (Metric Tons) CA Obj. 4 Triple the value of our outbound cargo to over $50 billion NWSA Cargo Value N/A TBD Air Cargo Value Obj. 5 Double the economic value of the fishing and maritime cluster Maritime & Fishing N/A Determining baseline TBD Revenue Strategy 2: Tourism & Business Gateway Obj. 6 Make Sea-Tac Airport the West Coast "Gateway of Choice" for international travel Market Share N/A Determining baseline TBD Obj. 7 Double the number of international flights and destinations # of air services N/A 25 - # of air services 27 - # of air services # of intl. destinations 18 - # of intl. destinations 21 - # of intl. destinations Obj. 8 Meet the region's air transportation needs at the Airport for the next 25 years & Cost per enplanement N/A TBD TBD encourage the cost-effective expansion of domestic and int'l PAX & cargo service Million annual PAX Obj. 9 Double the economic value of cruise traffic to Washington state Cruise Economic Value N/A Determining baseline TBD CA Consider to update this objective of the Century Agenda 22 LRP Century Agenda Scorecard Measures Strategy 3: Small Business and Workforce Development Key Metric Enabling Metric 5-YR Target (2021) 10-YR Target (2026) IPP Obj. 10 Increase the proportion of funds spent by the Port Funds Spent on SBE WMBE Spending 40% SBE 40% SBE w/ qualified small business firms on construction, consulting, goods and services to 40 percent of the eligible dollars spent Obj. 11 Increase workforce training, job and business Placements in jobs Training Completions TBD TBD opportunities for local communities in maritime, trade, travel and logistics Strategy 4: Greenest & Most Energy Efficient Port Obj. 12 Meet all increased energy needs through Energy Use Reduction Energy Conservation TBD TBD IPP conservation and renewable sources (MMBTU) Renewable Energy Obj. 13 Meet or exceed agency requirements for storm Airport treatment (% acres) N/A 100% each year - Airport 100% each year Airport IPP water Maritime Conveyance 75% - Maritime 75% - Maritime Rehabilitation (% Linear Feet completed) IPP Obj. 14 Reduce air pollutants and carbon emissions Carbon Emissions PM 2.5 (metric tons)/(% reduced) TBD PM 2.5 & DPM 50% - Particulate Matter (PM) 2.5 DPM (metric tons)/(% reduced) Reduction - Diesel PM (DPM) GHG (metric tons)/(% reduced) - Port Greenhouse Gas (GHG) IPP Obj. 15 Anchor the Puget Sound urban industrial land use to Remediation of TBD TBD 2,395 Acres by 2025 prevent sprawl contaminated sites Industrial land (acres) Obj. 16 Restore, create, & enhance 40 additional acres of Habitat Restoration (acres) N/A 20 total acres by 2020 40 total acres by 2025 IPP habitat in the Green/Duwamish watershed and Elliott Bay IPP Linked Incentive Pay Program 23 LRP Century Agenda Example Web-based Dashboard *EXAMPLE DATA FOR ILLUSTRATIVE PURPOSES ONLY* *EXAMPLE DATA FOR ILLUSTRATIVE PURPOSES ONLY* 24 LRP Century Agenda Example Web-based Dashboard *EXAMPLE DATA FOR ILLUSTRATIVE PURPOSES ONLY* *EXAMPLE DATA FOR ILLUSTRATIVE PURPOSES ONLY* 25 STRATEGIC POSITIONING FOR GROWTH (4 OF 5) Process Overview Commission - Relationship between CA, LRP, Century Agenda Bus Plans, & SPG Project Long Range Plan (LRP) Division Business Plans - Strategies and Objectives Long Range Plan (LRP) Departments Operating Plans Departments Operating Plans Strategies, Objectives, Actions and $$ SPG Project Departments Operating Plans Strategies, Objectives, Actions and $$ Long Range operationalized Strategies, Objectives, Actions and $$ Plan (LRP) CA at Dept level via the LRP 27 SPG Century Agenda Alignment 1.2.2. Double the number of international flights and destinations C.A. 10-25 yrs Aviation Division Economic Development Division Goal Anticipate and meet the needs of our tenants, passengers, and Develop a promotional plan that will increase the number of DIV 3-5 yrs the region's economy. international flights and destinations by 50% Strategy Achieve 28 medium and long-haul international flights Promote Seattle and Washington as a desirable year-round tourism DIV 12-18 mo. destination in identified international markets that provide visitors to Sea- Tac airport. Objective Increase the number of medium & long-haul flights from FY16 Increase international tour products featuring a Seattle/Washington DIV FY17 (21) to (23) by Q417 destination in the UK by 10% over 2016 KPI % FY17 attainment = FY17 actual no. medium & long-haul (Actual No. of FY17 Tour products / No. of FY16 Tour Products) 1 DIV FY17 flights / 23 % Media Increase = (FY17 Actual Ad Equivalency / FY16 Ad Equivalency) - 1 Action DIV FY17 Implement international air service development marketing Aggressively pursue product development; trade show plan to achieve 23 medium and long-haul int'l flights. promotion (10); representation at World Travel Market in London in 4Q17 Activity Develop new air services (A) Dept FY17 Marketing & sales Process Overview of Century Agenda to Division's Strategies/Actions 28 Strategic Positioning for Growth Century Agenda Alignment Century Primary LRP Operational Alignment DIVISION GOAL DIVISION STRATEGY DIVISION OBJECTIVE KPI DIVISION ACTION Describe Activitiy Agenda Category Reference Century Aviation 1.2.2. Double the number of Anticipate and meet the Achieve 28 medium and long- Increase the number of medium FY17 actual number of medium Implement international air Develop new air services (A) Agenda - international flights and needs of our tenants, haul international flights & long-haul flights from FY16 & long-haul flights = 23 NLT service development marketing Tourism and destinations passengers, and the (21) to (23) by Q417 12/31/17 plan to achieve 23 medium and Business region's economy. '% FY17 attainment = FY17 long-haul int'l flights. Gateway actual no. medium & long-haul flights / 23 Century Aviation 1.2.2. Double the number of Anticipate and meet the Achieve 22 international Increase the number of FY17 actual number of Implement international air Develop new air services (B) Agenda - international flights and needs of our tenants, destinations international destinations from international destinations = 16 service development marketing Tourism and destinations passengers, and the FY16 amount of 15 to 16 in FY17 NLT 12/31/17 plan to achieve 16 int'l Business region's economy. by Q417 '% FY17 attainment = FY17 destinations. Gateway actual no. international destinations / 23 Century Aviation 1.2.2. Double the number of Achieve Top 5 ranking Achieve international minimum Increase airline utilization of % Attainment in FY17 - Actual Achieve full enrollment of air Federal Inspection Service (FIS) Regulatory Agenda - international flights and among 25 selected North connect time of 75 minutes by Express Connect passengers passenger use of Express carriers in CBP Express Connect Tourism and destinations American peers in 2020 2019 from 3% to 4% outside the noon Connect / Total number of Program Business ACI Airport Service Quality peak by Q417 passengers Gateway (ASQ) survey Century Aviation 1.2.2. Double the number of Anticipate and meet the Achieve 28 medium and long- Increase the number of medium FY17 actual number of medium Implement international air Promote airport and its air service (A) Agenda - international flights and needs of our tenants, haul international flights & long-haul flights from FY16 & long-haul flights = 23 NLT service development marketing Tourism and destinations passengers, and the (21) to (23) by Q417 12/31/17 plan to achieve 23 medium and Business region's economy. '% FY17 attainment = FY17 long-haul int'l flights. Gateway actual no. medium & long-haul flights / 23 Century Aviation 1.2.2. Double the number of Anticipate and meet the Achieve 22 international Increase the number of FY17 actual number of Implement international air Promote airport and its air service (B) Agenda - international flights and needs of our tenants, destinations international destinations from international destinations = 16 service development marketing Tourism and destinations passengers, and the FY16 amount of 15 to 16 in FY17 NLT 12/31/17 plan to achieve 16 int'l Business region's economy. by Q417 '% FY17 attainment = FY17 destinations. Gateway actual no. international destinations / 23 Aligning Century Agenda to Division's Strategies/Actions 29 Strategic Positioning for Growth Century Agenda Alignment Century Primary LRP Operational Alignment DIVISION GOAL DIVISION STRATEGY DIVISION OBJECTIVE KPI DIVISION ACTION Describe Activitiy Agenda Category Reference Century EDD 1.2.2. Double the number of Develop a promotional Promote Seattle and Increase international tour (Actual No. of FY17 Tour In concert with POS Marketing & Sales Agenda - international flights and plan that will increase the Washington as a desirable year- products featuring a products / No. of FY16 Tour International Representative Tourism and destinations number of international round tourism destination in Seattle/Washington destination Products) - 1 firm, product development with Business flights and destinations by identified international markets in the UK by 10% over 2016 UK outbound tour operators, 10 Gateway 50% that provide visitors to Sea-Tac trade tours to PNW, World airport. Travel Market Century EDD 1.2.2. Double the number of Develop a promotional Promote Seattle and Increase media coverage % Media Increase = (FY17 In concert with POS Marketing & Sales Agenda - international flights and plan that will increase the Washington as a desirable year- (advertising equivalency) by Actual Ad Equivalency / FY16 Ad International Representative Tourism and destinations number of international round tourism destination in 10% over 2016. Equivalency) - 1 firm, media coverage in UK, Business flights and destinations by identified international markets print organizations and writers Gateway 50% that provide visitors to Sea-Tac in the UK, 5 media travel tours airport. to the PNW Aligning Century Agenda to Division's Strategies/Actions 30 Strategic Positioning for Growth Century Agenda Alignment 2017 Baseline Budget Operational Alignment Primary 2017 Baseline Budget Operational Alignment Aviation EDD Maritime Grand Total % of Strategy Division Division Total/Subtot al Century Agenda XXX XXX XXX XXX XX% HPO XXX XXX XXX XXX XX% Subtotal Century Agenda and HPO XXX XXX XXX XXX XX% Div Only Strategy XXX XXX XXX XXX XX% Total XXX XXX XXX XXX XX% % Related to Century Agenda and HPO XXX XXX XXX XXX XX% 1.1. Position the Puget Sound region as a premier XXX XXX XXX XXX XX% international logistics hub % Related to Century Agenda and HPO XXX XXX XXX XXX XX% 1.2. Advance this region as a leading tourism destination and XXX XXX XXX XXX XX% business gateway % Related to Century Agenda and HPO XXX XXX XXX XXX XX% 1.3. Use our influence as an institution to promote small XXX XXX XXX XXX XX% business growth and workforce development % Related to Century Agenda and HPO XXX XXX XXX XXX XX% 1.4. Be the greenest and most energy efficient port in North XXX XXX XXX XXX XX% America % Related to Century Agenda and HPO XXX XXX XXX XXX XX% Total XXX XXX XXX XXX XX% % Related to Century Agenda and HPO XXX XXX XXX XXX XX% Primary Strategy 2017 Baseline Budget Operational Alignment Aviation Division EDD Maritime Grand Total % of Division Total/Subtotal 1.2. Advance this region as a leading tourism destination and XXX XXX XXX XXX XX% business gateway 1.2.1. Make Sea-Tac Airport the West Coast XXX XXX XXX XXX XX% "Gateway of Choice" for international travel 1.2.2. Double the number of international XXX XXX XXX XXX XX% flights and destinations Driving Century Agenda Division's Strategies/Actions to Budget $s 31 BUDGET CONSIDERATIONS BEYOND LRP (5 OF 5) Aviation: Industry & Business Trends Airline industry continues to be profitable U.S. airline industry profitable each year 2010-2015 Low fuel cost, efficiencies from consolidation, drove record profits in 2015 Alaska and Delta have been particularly profitable National and international economic uncertainties, but regional economy continues to grow, fueling travel demand Population and income growth for Puget Sound area exceed national averages Competitive airline environment: Alaska Air Group in midst of acquiring Virgin America Delta continuing to grow hub at Sea-Tac Growth at Sea-Tac in all areas: new domestic, international and cargo carriers initiated service in 2016 Regional economy and airline competition driving growth at Sea-Tac 33 Aviation: Major Challenges Growth at Sea-Tac continues to exceed anticipated levels Passenger Growth Rate O&D Sea-Tac among fastest growing airports in U.S. Will exceed 45 million passengers in 2016 Actual Percent Connecting traffic grew faster than originating traffic in 2015 2013 4.8% 74% Connecting traffic accounted for 61% of growth in 2015 2014 7.7% 74% 2015 12.9% 70% 35%+ growth in 4 years creating near-term facilities and 2016 9.0% Est. customer service challenges Need/desire to provide facilities that meet growing demands in environmentally friendly way 2017 Budget will reflect plans to address challenges of growth 34 Aviation: 2017 Budget Preview 2017 operating and capital budgets will reflect resource needs to implement long range plans and to meet near-term operational and facility needs Operating Budget Needs Capital Budget Needs Improve customer service Shortage of gates: Concourse D Ramp Operations terminal; Concourse B gate reconfiguration Improve facility cleanliness Baggage system capacity: C-61 Enhance security Terminal space shortage: C-1 building expansion Complete SAMP & environmental review Roadway congestion: widen arrivals approach Next phase of flight corridor safety program Aging infrastructure: renewal & replacement 2017 budget will reflect strategic and operational priorities 35 Maritime: Industry & Business Trends Cruise market continues to grow, Terminal 91 receives the two largest vessels on the west coast, expect continued vessel growth Alaska commercial fishing industry remains strong Current economy boosting interest in boating and boat sales Seattle/Puget Sound maritime industrial market has been consistent and steady Development of Tug Business, Shoulder Season Cruises, Fish Process Expansion Offer Promise 36 Maritime: Major Challenges Overcoming limitations to expansion of cruise & fishing operations Retaining customers during capital improvement projects Balancing Port initiatives with operational work and requirements Adapting facilities & operations to meet dynamic regulatory environment Shifting vessel mix - decline of small fishing boat fleet (<40') - empty slips too small for growing larger vessel fleet Variability/weakening demand in world grain markets Aging of recreational boating community Many capital & expense projects in the plan Growth and On-going Maintenance Needs will be reflected in 2017 Budget 37 Maritime: 2017 Budget Preview Operating Budget Needs Capital Budget Needs On-going Maintenance Activities Replace Net Shed Roofs Customer Service Surveys Pier 91 South Fender System FT Strategic Plan Implementation FT Strategic Plan Capital Construction Energy Conservation Projects Rehabilitation at Harbor Island Marina Docks Cruise Passenger Experience Improvements Cruise Terminal Tenant Upgrades Stormwater Utility Implementation Stormwater System Expenditures Organizational Growth and Century Agenda Demands Fueling Need for Resources 38 Economic Development: Industry & Business Trends Real Estate and Business Development Strong regional economy drives land development and business expansion Real Estate Portfolio Management Overall vacancy rates are down in Puget Sound, but increases industrial rate per sq. ft. are lagging Increasing costs and reduced availability for craft labor driving up tenant improvement costs Tourism - Growth in both domestic and international travel Workforce Development - Increasing demand for aviation workforce driven by SeaTac growth Low employment rates puts premium on talent acquisition and development Small Business Construction boom drives opportunities for small contractors and service providers Access to capital and good management still critical to business survival King County Economic Growth Provides Expansion and Development Opportunities 39 Economic Development: Major Challenges Hot real estate market and rising rents impacting small manufacturers (and other sectors). Affordable space especially difficult to find in Seattle Aging facilities require updating in order to effectively compete Highly competitive market for commercial leasing and conference facilities Ongoing transportation projects limiting access to properties and creating uncertainty in the market Lack of statewide tourism marketing program puts Washington State at disadvantage in highly competitive travel market Ethnic communities and businesses face barriers to participate and benefit from strong economic tide Growth Creating Issues for Property Owners, Small Business and Ethnic Communities Users 40 Economic Development: 2017 Budget Preview Budget based on managing Port real estate needs and supporting regional economic growth Operating Budget Needs Capital Budget Needs Implementation support for RE Strategic Plan RE Strategic Plan pre-development work at T91 , FT, and/or other locations Oversight and maintenance of aging facilities Improvements at Bell Harbor International Conf. Center Expansion of Workforce Development programs P69 lobby updates Small business programs such as Incubators and PortGen Tenant improvements of which many are expensive Tourism expansion programs Structural building/facility work such as T102 roof replacement P66 elevators 2017 budget will reflect strategic and operational priorities 41
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