7d attach
ITEM NO: 7d_Attach_1__
DATE OF MEETING: Sept. 8, 2015
PORT OF SEATTLE
2015 FINANCIAL & PERFORMANCE REPORT
AS OF JUNE 30, 2015
TABLE OF CONTENTS
Page
I. Portwide Performance Report 3-5
II. Aviation Division Report 6-14
III. Seaport Division Report 15-21
IV. Real Estate Division Report 22-28
V. Capital Development Division Report 29-31
VI. Corporate Report 32-35
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I. PORTWIDE FINANCIAL & PERFORMANCE REPORT 06/30/15
EXECUTIVE SUMMARY
Financial Summary
The Port's overall operating revenues for the first half of 2015 were $268.4M, which is $1.7M above budget and
$8.8M higher than the same period in 2014. Excluding Aeronautical revenues, which are based on cost recovery,
other operating revenues were $698K above budget and $6.1M over the same period last year mainly due to
higher revenues from Public Parking, Airport Dining and Retail, and unbudgeted Stormwater Utility; partially
offset by lower revenue from Container. Total operating expenses were $146.1M, $17.6M below budget mainly
due to vacancies, hiring delays, timing of spending, and actual budget savings. Operating income before
depreciation was $122.3M, $19.3M above budget. For the full year, we are anticipating operating revenues to be
$554.9M, $3.1M over budget and operating expenses to be $329.2M, $3.7M below budget. The Port-wide
capital spending is forecasted to be $214.8M for the year, $56.1M below the budgeted $270.8M.
Operating Summary
At the Airport, enplanements for the first two quarters were 13.3% higher and landed weight was 10.8% higher
than the same period in 2014. The enplanements growth for international and domestic was 15.6% and 13.0%,
respectively. International cargo metric tons are up 17.9% over Q2 2014. For the Seaport division, TEUs were
up 6.6% and Grain volumes were up 3.6% from Q2 2014. For the Real Estate division, occupancy levels at
Commercial Properties were at 91%, below the target of 94% and Seattle market average of 92%. Fishermen's
Terminal and Maritime Industrial Center were at 86% average occupancy, above target of 80%. Recreational
Marinas was at 96% occupancy, above target occupancy rate of 95%. Conference and Event Center revenue
exceeded budget by 7% and 2014 actual by 10%.
Key Business Events
The Port participated as presenting sponsor of Seattle Maritime Festival and celebrated 30 years of tourism
promotion in the UK with a delegation from Washington State. The Commission launched 90 day review of
scope, cost, and funding for the International Arrivals Facility. We finalized both leasing/redevelopment plan
and schedule for the Airport Dining & Retail program and continued to work on Airfield modeling portion of the
Sustainable Airport Master Plan (SAMP). New international services were added from Seattle to Shanghai (by
Hainan) and Dubai (by Emirates). The 2015 cruise season began on May 2. The federal General Services
Administration (GSA) selected the Des Moines Creek Business Park site for the FAA's new regional offices.
The Port met with the Sound Transit, City of Seattle, King County to collaborate on apprenticeship utilization
and construction workforce issues and continued to reach out to the community to educate small businesses on
contracting opportunities and the Small Contractors and Suppliers Program.
Major Capital Projects
We issued Beneficial Occupancy for the South Satellite Interior Renovation Carpet Replacement and Cargo 6
Hardstand Improvement projects. Substantial Completion was issued for Doug Fox Service Upgrades, C60/61
Baggage Handling Systems (BHS) Modifications, East Marginal Way Phase II and Argo Yard Truck Roadway,
Terminal 46 Storm Water Improvements, Pier 34 Dolphin Replacement, and Mezzanine Tenant Relocation
projects. We also completed 60% design for North Satellite Renovation/Expansion, 70% design for Baggage
Optimization, and 60% design for Terminal 5 Berth Modernization projects. We selected the winning
International Arrivals Facility design-build team (Clark/SOM) and executed the $300M GC/CM contract for the
North Satellite (NSAT) Renovation & Expansion project. Construction is underway on the first phase of the Des
Moines Creek Business Park project after closing on the first phase ground lease in April. For the Alaskan Way
Viaduct Bored Tunnel project, the Port transferred $120M to Washington State Department of Transportation
(WSDOT) on May 1 to cover the first installment of the contribution.
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I. PORTWIDE FINANCIAL & PERFORMANCE REPORT 06/30/15
INCOME STATEMENT
Report: Income Statement
As of Date: 2015-06-30
Fav (UnFav) Incr (Decr)
2014 YTD 2015 Year-to-Date Budget Variance Change from 2014
$ in 000's Actual Actual Budget $ % $ %
Revenues:
Aviation 195,143 204,578 206,745 (2,167) -1.0% 9,435 4.8%
Seaport 48,393 45,509 43,898 1,611 3.7% (2,885) -6.0%
Real Estate 15,899 16,840 15,941 898 5.6% 941 5.9%
Storm Water Utility - 2,189 - 2,189 0.0% 2,189 n/a
Eliminations - (798) - (798) 0.0% (798) n/a
Capital Development 19 1 - 1 0.0% (18) -93.9%
Corporate 190 112 170 (58) -34.3% (79) -41.3%
Total Revenues 259,644 268,430 266,754 1,677 0.6% 8,787 3.4%
Operating & Maintenance:
Aviation 72,448 78,243 82,622 4,379 5.3% 5,795 8.0%
Seaport 7,714 8,204 10,718 2,515 23.5% 490 6.3%
Real Estate 18,287 17,783 20,401 2,618 12.8% (504) -2.8%
Storm Water Utility - 21 - (21) 0.0% 21 n/a
Eliminations - (798) - 798 0.0% (798) n/a
Capital Development 7,215 5,436 9,242 3,806 41.2% (1,779) -24.7%
Corporate 36,868 37,221 40,723 3,502 8.6% 353 1.0%
Total O&M Costs 142,532 146,110 163,706 17,596 10.7% 3,578 2.5%
Operating Income Before Depreciation 117,111 122,320 103,047 19,273 18.7% 5,209 4.4%
Depreciation 84,005 81,861 80,984 (878) -1.1% (2,143) -2.6%
Operating Income after Depreciation 33,107 40,459 22,064 18,395 83.4% 7,352 22.2%
IMPORTANT NOTE:
All the numbers in the table above are on an Org basis while the actual numbers for the operating divisions are
on a Subclass basis. This table also includes revenues and expenses from Storm Water Utility and Eliminations.
PORTWIDE FINANCIAL SUMMARY
Fav (UnFav) Fav (UnFav)
2014 YTD 2015 Year-to-Date Budget Variance Yea-End Projection Budget Variance
$ in 000's Actual Actual Budget $ % Forecast Budget $ %
Aeronautical Revenues 115,304 117,973 116,995 979 0.8% 235,941 242,352 (6,411) -2.6%
SLOA III Incentive (1,788) (1,788) (1,788) () 0.0% (3,576) (3,576) 0 0.0%
Other Operating Revenues 146,128 152,245 151,547 698 0.5% 322,502 312,989 9,513 3.0%
Total Operating Revenues 259,644 268,430 266,754 1,677 0.6% 554,868 551,766 3,102 0.6%
Total Operating Expenses 142,532 146,110 163,706 17,596 10.7% 329,214 332,914 3,700 1.1%
NOI before Depreciation 117,111 122,320 103,047 19,273 18.7% 225,654 218,852 6,802 3.1%
Depreciation 84,005 81,861 80,984 (878) -1.1% 163,838 162,082 (1,756) -1.1%
NOI after Depreciation 33,107 40,459 22,064 18,395 83.4% 61,816 56,770 5,046 8.9%
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I. PORTWIDE FINANCIAL & PERFORMANCE REPORT 06/30/15
KEY PERFORMANCE METRICS
Fav (UnFav) Incr (Decr)
2014 YTD 2015 YTD 2014 2015 2015 Forecast/Budget Change from 2014
Actual Actual Actual Forecast Budget Chg. % Chg. %
Enplanements (in 000's) 8,589 9,051 18,717 20,776 19,354 1,421 7.3% 2,059 11.0%
Landed Weight (lbs. in 000's) 10,443 11,568 22,500 22,484 22,484 - 0.0% (17) -0.1%
Passenger CPE (in $) n/a n/a 11.48 10.62 11.78 1.16 9.8% (0.9) -7.5%
Container Volume (TEU's in 000's) 713 760 1,388 1,429 1,291 138 10.7% 41 3.0%
Grain Volume (metric tons in 000's) 1,948 2,019 3,618 4,000 4,000 - 0.0% 382 10.5%
Cruise Passenger (in 000's) 316 340 824 895 895 - 0.0% 71 8.7%
Commercial Property Occupancy 90% 91% 93% 93% 95% -2% -2.1% 0.0% 0.0%
Shilshole Bay Marina Occupancy 96.3% 96.6% 96.6% 96.6% 95.8% 0.8% 0.8% 0.0% 0.0%
Fishermen's Terminal Occupancy 83.0% 87.4% 83.5% 82.8% 79.4% 3.5% 4.4% -0.7% -0.8%
CAPITAL SPENDING RESULTS
2015 YTD 2015 2015 Budget Variance
$ in 000's Actual Forecast Budget $ %
Aviation 59,964 173,913 225,435 51,522 22.9%
Seaport 7,585 20,036 20,068 32 0.2%
Real Estate 2,133 9,920 12,194 2,274 18.6%
Corporate & CDD 3,661 10,902 13,133 2,231 17.0%
TOTAL 73,343 214,771 270,830 56,059 20.7%
PORTWIDE INVESTMENT PORTFOLIO
During the second quarter of 2015, the investment portfolio earned 0.79% versus the benchmark's (the Bank of
America Merrill Lynch 1-3 Year US Treasury & Agency Index) 0.64%. Over the last twelve months the
portfolio and the benchmark have earned 0.79% and 0.62%, respectively. Since the Port became its own
Treasurer in 2002, the life-to-date earnings of the Port's portfolio and the benchmark are 2.73% and 1.91%,
respectively.
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II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 06/30/15
FINANCIAL SUMMARY
Fav (UnFav) Incr (Decr)
2014 2015 2015 Budget Variance Change from 2014
$ in 000's Actual Forecast Budget $ % $ %
Operating Revenues:
Aeronautical Revenues 228,864 235,941 242,352 (6,411) -2.6% 7,077 3.1%
SLOA III Incentive Straight Line Adj (1) (3,576) (3,576) (3,576) - 0.0% 0 0.0%
Non-Aeronautical Revenues 180,791 194,144 188,465 5,678 3.0% 13,353 7.4%
Total Operating Revenues 406,079 426,509 427,242 (733) -0.2% 20,430 5.0%
Total Operating Expense 230,704 243,007 248,141 5,134 2.1% 12,303 5.3%
Net Operating Income 175,375 183,502 179,101 4,401 2.5% 8,127 4.6%
Capital Expenditures 155,970 173,913 225,435 51,522 22.9% 17,943 11.5%
(1) For Accounting purposes, the 2013 reduction in the airline revenue requirement of $17.9 million was treated as a lease incentive and is being
amortized over five years.
Division Summary 2015 Forecast vs 2015 Budget
Net Operating Income for 2015 is forecasted to be $4.4M higher than budget (2.5% favorable)
o Operating Revenue is expected to be $0.7M lower than budget (0.2% unfavorable) primarily due to
lower Aeronautical revenue from rate base cost savings and higher revenue sharing. The reduction in
Aeronautical revenue is mostly offset by higher Non-Aero revenue ($5.7M) driven by increased
passenger volumes with resulting strong performance in public parking, airport dining & retail, and
rental cars.
o Operating Expenses are expected to be $5.1M lower than budget (2.1% favorable) due to lower
baseline expenses primarily from net payroll savings ($2.7M) due to vacancies and hiring delays
partially offset by new positions added in 2015 and additional labor hours to support increased
operational demands, lower forecasted utility expense ($1.0M), and lower charges from Corporate and
other divisions ($5.8M). These expense savings are partially offset by higher forecasted environmental
remediation liability costs ($2.0M), and higher expenses due to increased passenger volumes and related
operational demands ($2.2M).
Division Summary 2015 Forecast vs 2014 Actuals
2015 Net Operating Income is forecasted to be $8.1M higher than prior year (4.6% higher NOI)
o 2015 Operating Revenues is expected to be $20.4M higher than prior year (5.0% higher) due to Non-
Aero revenue ($13.4M) driven by increased passenger volumes with resulting strong performance in
public parking and airport dining & retail, higher Aero rate based revenue ($12.8M) due to cost recovery
on new assets placed in service and higher operating expenses to support increased airline activity.
Increased revenue is partially offset by higher revenue sharing in 2015 ($7.3M).
o 2015 Operating Expenses are expected to be $12.3M higher than prior year (5.3% higher) due to
higher baseline expenses ($9.6M) particularly in payroll and outside services, higher environmental
remediation liability charges in 2015 ($2.7M), and higher forecasted charges in 2015 from Corporate
($2.2M), and Police ($0.8M). These 2015 cost increases are partially offset by ($3.1M) lower capital to
expense charges compared to prior year.
A. BUSINESS EVENTS
Enplanement forecast for 2015 updated - 11% growth over prior year expected
Sustainable Airport Master Plan (SAMP) working on Airfield modeling
International Arrivals Facility Commission launched 90 day review of scope, cost, and funding
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II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 06/30/15
Airport Dining & Retail program finalized both leasing/redevelopment plan and schedule
New international services to Shanghai (Hainan) and Dubai (Emirates)
New TSA security requirements resulted in (14) FTE staffing increase
B. KEY PERFORMANCE METRICS
YTD 2014 YTD 2015 % Change
Enplaned Passengers (000's)
Domestic 7,709 8,714 13.0%
International 880 1,018 15.6%
Total 8,589 9,731 13.3%
Operations 158,790 177,649 11.9%
Landed Weight (million lbs.)
Cargo 771 799 3.7%
All other 9,672 10,769 11.3%
Total 10,443 11,568 10.8%
Cargo - metric tons
Domestic freight 80,580 79,418 -1.4%
International freight 50,718 59,804 17.9%
Mail 24,910 26,021 4.5%
Total 156,208 165,243 5.8%
Key Performance Measures
Fav (UnFav) Incr (Decr)
2014 2015 2015 Budget Variance Change from 2014
Actual Forecast Budget $ % $ %
Performance Metrics
Cost per Enplanement (CPE) 11.48 10.62 11.78 1.16 9.8% (0.86) -7.5%
O&M Cost per Enplanement 12.33 11.70 12.82 1.12 8.8% (0.63) -5.1%
Non-Aero Revenue per Enplanement 9.66 9.34 9.74 (0.39) -4.0% (0.31) -3.3%
Debt per Enplanement 126 119 129 10 8.1% (7) -5.5%
Debt Service Coverage 1.38 1.44 1.40 0.04 2.8% 0.06 4.1%
Days cash on hand (10 months = 304 days) 405 393 305 89 29.1% (12) -2.9%
Aeronautical Revenue Sharing ($ in 000's) 17,031 24,342 19,488 (4,854) -24.9% 7,311 42.9%
Activity (in 000's)
Enplanements 18,717 20,776 19,354 1,421 7.3% 2,059 11.0%
Notes:
Reduction in CPE reflects lower airline costs due to higher revenue sharing (driven by increased non-airline
revenues), and increased enplaned passengers.
Improved debt service coverage compared to budget reflects increased cash flow from growth in enplanements.
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II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 06/30/15
C. OPERATING RESULTS
Division Summary
Fav (UnFav) Fav (UnFav)
2014 YTD 2015 Year-to-Date Budget Variance Year-End Projection Budget Variance
$ in 000's Actual Actual Budget $ % Forecast Budget $ %
Operating Revenues:
Aeronautical Revenues 115,304 117,973 116,995 979 0.8% 235,941 242,352 (6,411) -2.6%
SLOA III Incentive Straight Line Adj (1) (1,788) (1,788) (1,788) (0) 0.0% (3,576) (3,576) - 0.0%
Non-Aeronautical Revenues 81,635 88,401 91,538 (3,137) -3.4% 194,144 188,465 5,678 3.0%
Total Operating Revenues 195,151 204,586 206,745 (2,159) -1.0% 426,509 427,242 (733) -0.2%
Operating Expenses:
Payroll 46,032 47,383 50,984 3,601 7.1% 101,507 104,181 2,674 2.6%
Outside Services 12,781 13,582 15,584 2,002 12.8% 33,321 32,534 (788) -2.4%
Utilities 7,254 6,822 7,898 1,076 13.6% 13,762 14,796 1,034 7.5%
Other Airport Expenses 6,236 7,412 7,238 (174) -2.4% 17,134 15,698 (1,436) -8.4%
Baseline Airport Expenses 72,302 75,199 81,704 6,505 8.0% 165,724 167,208 1,484 0.9%
Airline Realignment (2) 452 31 2 (28) -1187.4% 31 5 (26) -84.5%
Environmental Remediation Liability (77) 2,844 842 (2,002) -237.8% 4,669 2,642 (2,027) -43.4%
Capital to Expense - 61 - (61) n/a 61 - (61) -100.0%
Total Exceptions to Baseline 375 2,936 844 (2,092) -247.7% 4,761 2,647 (2,114) -44.4%
Total Airport Expenses 72,677 78,135 82,548 4,413 5.3% 170,485 169,855 (630) -0.4%
Corporate 19,191 19,247 21,586 2,339 10.8% 42,958 43,981 1,023 2.4%
Police Costs 8,170 8,305 8,547 242 2.8% 17,344 17,413 69 0.4%
Capital Development/Other Expenses 6,159 4,984 8,611 3,628 42.1% 12,221 16,892 4,671 38.2%
Total Charges from Other Divisions 33,520 32,535 38,744 6,209 16.0% 72,522 78,286 5,764 7.9%
Total Operating Expense 106,198 110,671 121,293 10,622 8.8% 243,007 248,141 5,134 2.1%
Net Operating Income 88,953 93,915 85,452 8,463 9.9% 183,502 179,101 4,401 2.5%
CFC Surplus (5,067) (4,760) (308) -93.5%
Net Non-Operating Items in / out from ADF (3) 1,431 1,504 (73) 5.1%
SLOA III Incentive Straight Line Adj 3,576 3,576 - 0.0%
Debt Service (127,296) (128,343) 1,047 0.8%
Adjusted Net Cash Flow (4) 56,145 51,078 5,067 9.9%
(1) For Accounting purposes, the 2013 reduction in the airline revenue requirement of $17.9 million was treated as a lease incentive and is being amortized over five years.
(2) Includes Airline Realignment costs incurred by other Divisions
(3) Per SLOA III definition of Net Revenues
(4) Cash flow available for revenue bond debt service
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II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 06/30/15
Operating Expenses 2015 YTD Actuals compared to 2015 YTD Budget:
Total Operating Expenses are lower than the 2015 budget by $10.6M due to the net of the following:
YTD Baseline Operating Expenses are lower than budget by $6.5M due to the following:
Positive Variance of $6.7M Negative Variance of $0.2M
Payroll Savings $3.6M Other Aviation Divisional expenses $0.2M
Vacancies & delayed hiring 3.4M
Budget FTE's on hold 0.2M
Outside Services $2.0M
Delayed start on planned work 1.7M
Deferred to future years 0.3M
Utilities (lower usage due to mild weather) $1.1M
Surface Water 0.7M
Natural Gas 0.3M
YTD Operating Expense Exceptions are higher than budget by $2.1M due to the following:
Positive Variance of $1.5M Negative Variance of $3.6M
Environmental Remediation Liability $1.5M Environmental Remediation Liability $3.5M
PY RMM adjustments 0.9M Lora Lake (Lake parcel) 1.4M
RMM deferred to future years 0.4M Delta build-out 1.2M
RMM project savings 0.2M NSAT - Phase I 0.3M
Other RMM not anticipated 0.6M
Capital Projects to Operating Expense $0.1M
YTD Operating Expense charges from Corporate and other divisions are lower than budget by $6.2M due to
the following:
Positive Variance of $6.2M Negative Variance - no material variance
Corporate Savings $2.3M
ICT 0.5M
HR 0.4M
AFR 0.4M
Public Affairs 0.3M
All other - Corp 0.7M
Police savings $0.2M
CDD & other $3.6M
Project Controls 1.6M
Engineering 0.8M
PCS 0.5M
CPO 0.4M
All other - CDD 0.3M
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II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 06/30/15
Operating Expenses 2015 YTD Actuals compared to YTD 2014:
Total Operating Expenses increased in YTD 2015 by $4.5M due to the net of the following:
YTD Baseline Operating Expenses increased in 2015 by $2.9M due to the following:
Increase of $4.0M Decrease of $1.1M
Payroll $1.3M Outside Services $0.7M
Outside Services $1.5M Credit card fees (new account) 0.7M
Janitorial contract 0.1M Utilities (2015 lower usage due to mild weather) $0.4M
Centralized FIS operations 0.3M
Sustainable Airport Master Plan 0.6M
ADR master plan consulting 0.2M
Outside Services (other) 0.3M
General expenses $1.1M
Credit card fees (new account) 0.8M
Clubs & Lounges (3rd party mgmt 0.2M
B&O Tax (on higher revenue) 0.1M
Other Aviation expenses $0.1M
YTD Operating Expense Exceptions increased in 2015 by $2.6M due to the following:
Increase of $3.0M Decrease of $0.4M
Environmental Remediation Liability $2.9M Airline Realignment (Aero) $0.4M
Lora Lake (Lake parcel) 1.4M
Delta build-out 1.2M
All other RMM adjustments 0.3M
Capital Projects to Operating Expense $0.1M
YTD Operating Expense charges from Corporate and other divisions decreased by $1.0M in 2015 due to the
following:
Increase of $0.2M Decrease of $1.2M
Corporate savings $0.1M CDD & other $1.2M
Police savings $0.1M
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II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 06/30/15
Operating Expenses 2015 Forecast compared to 2015 Budget:
Total Operating Expenses are forecasted to be lower than the 2015 budget by $5.1M due to the net of the
following:
Baseline Operating Expenses are forecasted to be lower than budget by $1.5M due to the following:
Positive Variance of $5.6M Negative Variance of $4.0M
Payroll Savings $4.5M Payroll unbudgeted spending $1.8M
Budget FTE's on hold 0.6M FTE separations/buyout 0.3M
Vacancies & delayed hiring 3.6M New FTE's approved in 2015 0.6M
FTE transfers & other adj's 0.3M Increased operational demands 0.9M
Utilities (lower usage due to mild weather) $1.1M Outside Services $0.8M
Janitorial - increased scope 0.8M
Other Aviation Divisional expenses $1.4M
Equipment & Supplies 0.5M
Clubs & Lounges (3rd party mgmt) 0.4M
Tenant Mktg (on higher revenue) 0.2M
B&O Tax (on higher revenue) 0.1M
Other general expenses 0.2M
Operating Expense Exceptions are forecasted to be higher than budget by $2.1M due to the following:
Positive Variance of $2.2M Negative Variance of $4.3M
Environmental Remediation Liability $2.2M Environmental Remediation Liability $4.2M
PY RMM adjustments 1.3M Lora Lake (Lake parcel) 1.4M
RMM deferred to future years 0.7M Delta build-out 1.2M
RMM project savings 0.2M US Airways ticketing & ATO 0.8M
NSAT - Phase I 0.3M
Other RMM not anticipated 0.5M
Capital Projects to Operating Expense $0.1M
Operating Expense charges from Corporate and other divisions are forecasted to be lower than budget by
$5.8M due to the following:
Positive Variance of $6.1M Negative Variance of $0.3M
Corporate Savings $1.3M Corporate - Office of Strategic Initiatives $0.3M
ICT 0.1M
Public Affairs 0.2M
HR 0.4M
AFR 0.2M
Contingency 0.2M
All other - Corp 0.2M
Police savings $0.1M
CDD & other $4.7M
AV Project Mgmt 3.0M
Engineering 1.1M
PCS 0.6M
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II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 06/30/15
Aeronautical Business Unit Summary
Fav (UnFav) Fav (UnFav)
2014 YTD 2015 Year-to-Date Budget Variance Year-End Projection Budget Variance
$ in 000's Actual Actual Budget $ % Forecast Budget $ %
Revenues:
Movement Area 36,898 36,678 36,774 (97) -0.3% 79,567 78,635 932 1.2%
Apron Area 4,495 6,159 5,317 842 15.8% 10,571 11,233 (663) -5.9%
Terminal Rents 70,110 76,384 75,647 737 1.0% 151,013 153,167 (2,154) -1.4%
Federal Inspection Services (FIS) 2,549 5,820 4,778 1,042 21.8% 10,177 10,360 (183) -1.8%
Total Rate Base Revenues 114,051 125,041 122,516 2,524 2.1% 251,327 253,395 (2,068) -0.8%
Commercial Area 4,192 4,811 4,223 589 13.9% 8,955 8,445 510 6.0%
Subtotal before Revenue Sharing 118,244 129,852 126,739 3,113 2.5% 260,283 261,840 (1,558) -0.6%
Revenue Sharing (2,939) (11,878) (9,744) (2,134) -21.9% (24,342) (19,488) (4,854) -24.9%
Total Aeronautical Revenues 115,304 117,973 116,995 979 0.8% 235,941 242,352 (6,411) -2.6%
Total Baseline 50,650 52,524 56,569 4,045 7.1% 115,063 115,602 539 0.5%
Total Exceptions to Baseline 410 2,560 651 (1,909) -293.3% 3,934 2,039 (1,894) -48.2%
Total Charges from Other Divisions 18,065 16,358 19,345 2,987 15.4% 36,233 39,020 2,788 7.7%
Total Aeronautical Expenses 69,125 71,442 76,565 5,123 6.7% 155,229 156,662 1,433 0.9%
Net Operating Income 46,179 46,531 40,430 6,101 15.1% 80,712 85,690 (4,979) -5.8%
Debt Service (1) (83,802) (84,496) (694) -0.8%
Net Cash Flow (3,091) 1,194 (4,285) -358.8%
NOTE: (1) Debt service is forecasted/budgeted on an annual basis only. Thus, quarterly data is not available.
Aeronautical YTD Budget Variance
Aeronautical YTD net operating income is $6.1M higher than budget
o Aeronautical revenue is $1.0M higher than budget partially due to a timing difference in rate based
billing related to higher volume/activity ($2.5M). This increased activity is billed at the 2015 budget
rate and is expected to reverse out in the year-end reconciliation due to forecasted budget savings for
annual 2015 rate base costs. Increased aeronautical activity will not generate incremental revenue unless
the underlying rate based costs increase. Higher revenue in the Commercial Area ($0.6M) includes a
prior year adjustment from cargo volume billing. Aeronautical revenue is reduced by higher revenue
sharing ($2.1M) due to growth in non-aeronautical revenue.
o Aeronautical operating expenses are $5.1M lower than YTD budget:
Baseline expenses - $4.0M lower than budget due to lower than anticipated divisional allocations
($1.4M), savings in payroll ($1.1M), delayed Outside Services spending ($0.7M), and internal
department transfers ($0.6M)
Exceptions to Baseline - $1.9M higher than budget due to higher environmental remediation liability
costs
Charges from other divisions - $3.0M savings identified by Corporate & CDD departments
Aeronautical Year Over Year YTD Changes
Aeronautical net operating income is $0.4M higher than YTD 2014
o Aeronautical revenues in YTD 2015 are $2.7M higher than YTD 2014:
Higher rate based revenue ($11.0M) in YTD 2015 due to cost recovery on new assets placed in
service and higher operating expenses to support increased airline activity.
Higher Aero revenue is partially offset by higher revenue sharing in 2015 ($8.9M) due to increase in
Non-Aero revenue.
o Aeronautical operating expenses in YTD 2015 are $2.3M higher than YTD 2014:
Baseline expenses - $1.9M higher than prior year due to higher divisional allocations ($0.9M),
higher outside services spending ($0.6M), and expected payroll increases ($0.4M)
12
II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 06/30/15
Exceptions to Baseline costs increased by $2.1M in 2015 due to higher environmental remediation
liability costs ($2.6M), offset by lower airline realignment costs ($0.4M)
Charges from other divisions - $1.7M lower than YTD 2014.
Non-Aero Business Unit Summary
Fav (UnFav) Fav (UnFav)
2014 YTD 2015 Year-to-Date Budget Variance Year-End Projection Budget Variance
$ in 000's Actual Actual Budget $ % Forecast Budget $ %
Non-Aero Revenues
Rental Cars - Operations 13,190 13,756 15,235 (1,479) -9.7% 33,629 32,772 857 6.5%
Rental Cars - Operating CFC 3,921 3,576 6,582 (3,007) -45.7% 12,271 12,172 99 2.5%
Public Parking 28,244 30,766 29,781 986 3.3% 62,120 58,925 3,195 5.4%
Ground Transportation 4,139 3,974 3,981 (6) -0.2% 8,309 8,244 65 0.8%
Airport Dining & Retail 21,682 24,061 23,460 601 2.6% 51,688 49,883 1,805 3.6%
Other 10,458 12,267 12,498 (231) -1.9% 26,128 26,469 (341) -1.3%
Total Non-Aero Revenues 81,635 88,401 91,538 (3,137) -3.4% 194,144 188,465 5,678 3.0%
Non-Aero Expenses
Total Baseline 21,653 22,675 25,135 2,460 9.8% 50,661 51,606 945 1.9%
Total Exceptions to Baseline (35) 376 194 (182) -94.3% 827 607 (220) -26.6%
Total Charges from Other Divisions 15,455 16,177 19,399 3,222 16.6% 36,289 39,265 2,976 8.2%
Total Non-Aero Expenses 37,073 39,228 44,728 5,499 12.3% 87,778 91,479 3,701 4.2%
Net Operating Income 44,562 49,172 46,810 2,362 5.0% 106,366 96,986 9,380 9.7%
Less: CFC Surplus (2,311) (757) (3,511) (2,754) -78.4% (5,067) (4,760) 308 6.5%
Adjusted Non-Aero NOI 42,251 48,415 43,299 5,116 11.8% 101,299 92,227 9,072 9.8%
Debt Service (1) (43,493) (43,847) (353) -0.8%
Net Cash Flow 57,805 48,380 9,425 19.5%
Note: (1) Debt service is forecasted/budgeted on an annual basis only. Thus, quarterly data is not available.
Non-Aero YTD Budget Variance
Non-Aeronautical net operating income is $2.4M higher than YTD budget
o Non-Aeronautical revenues are $3.1M lower than budget:
Strong performance in Public Parking ($1.0M) and ADR ($0.6M)
Offset by timing difference in rental car budget ($4.5M) expected to clear by year-end
o Non-Aeronautical operating expenses are $5.5M lower than YTD budget:
Baseline expenses - $2.5M lower than budget due to savings in payroll ($1.8M), delayed Outside
Services spending ($1.2M), lower utility costs ($1.0M), partially offset by higher than anticipated
divisional allocations ($1.4M)
Exceptions to Baseline - $0.2M higher than budget due to environmental remediation liability costs
($0.1M) and capital projects expensed ($0.1M)
Charges from other divisions - $3.2M savings identified by Corporate & CDD departments
Non-Aero Year over Year Changes
Non-Aeronautical net operating income is $4.6M higher than YTD 2014.
o Non-Aeronautical revenues in YTD 2015 are $6.8M higher than YTD 2014 due to strong performance
in Airport Dining & Retail, Public Parking, and Rental Cars
o Non-Aeronautical operating expenses in YTD 2015 are $2.2M higher than YTD 2014:
Baseline expenses - $1.0M higher than prior year due to lower divisional allocations ($0.9M) and
lower utility expense ($0.5M). Savings are partially offset by general expenses ($1.4M), expected
payroll increases ($0.8M), and Outside Services spending ($0.2M)
13
II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 06/30/15
Exceptions to Baseline - $0.4M higher than prior year due to increased environmental remediation
liability in 2015
Charges from other divisions - $0.7M higher than YTD 2014
D. CAPITAL RESULTS
Capital Variance
$ in 000's 2015 2015 2015 Budget Variance
Description YTD Actual Forecast Budget $ %
RW16C-34C Design and Reconst (1) 7,513 38,513 52,850 14,337 27.1%
2014-2015 Roof Replacement (2) 79 229 3,875 3,646 94.1%
NS NSAT Renov NSTS Lobbies (3) 4,840 15,411 18,076 2,665 14.7%
CCTV Camera/Data Improvements (4) 53 653 3,065 2,412 78.7%
C4 UPS System Improvements (5) 18 668 3,025 2,357 77.9%
Checked Bag Recap/Optimization 3,384 8,384 8,800 416 4.7%
International Arrivals Fac-IAF 2,773 11,983 12,088 105 0.9%
NS Refurbish Baggage Systems 9,551 12,899 12,966 67 0.5%
All Other 31,753 85,173 110,689 25,516 23.1%
Total Spending 59,964 173,913 225,435 51,522 23%
(1) Lowest bid was 25% below the engineer's estimate. Recognized $11.7M in actual savings
(2) Reduction in scope and delay due to SAMP evaluation
(3) Spending slow down due to design decision gyrations, delays in HP billings, and invoice lags
(4) Delay in design procurement (6 months) will push out construction work and billing
(5) Changes in procurement strategy impacted timeliness of obtaining Commission authorization and getting contract executed
14
III. SEAPORT DIVISION FINANCIAL & PERFORMANCE REPORT 06/30/15
FINANCIAL SUMMARY
Fav (UnFav) Incr (Decr)
2014 2015 2015 Budget Variance Change from 2014
$ in 000's Actual Forecast Budget $ % $ %
Revenues:
Operating Revenue 96,157 95,135 91,635 3,500 4% (1,022) -1%
Security Grants 0 0 0 0 NA 0 NA
Total Revenues 96,157 95,135 91,635 3,500 4% (1,022) -1%
Total Operating Expenses 37,490 44,303 43,603 (700) -2% 6,813 18%
Net Operating Income 58,667 50,831 48,031 2,800 6% (7,836) -13%
Capital Expenditures 10,489 20,036 20,068 32 0% 9,547 91%
Total Seaport Division Revenues were $1,876K favorable as a result of a favorable variance in Container
revenues of $2,513K due to unbudgeted revenue at Terminal 5, most significantly interim revenue from a
new lease with Foss Maritime, partially offset by unfavorable Surface Water Utility Revenue of ($794K).
With the new Stormwater Utility, revenue from tenant is paid directly to the Utility. For the full year,
Seaport is forecasting revenue to be favorable to budget by $3,500K primarily due to the Foss Lease partially
offset by the Surface Water Revenue.
Total Operating Expenses were $3,262K favorable mainly due to favorable utility expenses $1,222K
primarily relating to surface water utility expenses for tenant occupied sites which will be paid by and
expensed to the new Stormwater Utility as well as due to Seaport Outside Service costs associated with the
Terminal 91 Maintenance Dredge project, and favorable Corporate expenses due to less use of a Seaport
Alliance related Contingency than budgeted. For the full year, Seaport is forecasting expenses to be ($700K)
unfavorable to budget due to unbudgeted cost of removing cranes at Terminals 18, 5 and 46.
Net Operating Income year-to-date for 2015 was $5,138K favorable to budget and ($3,692K) below 2014
Actual. For the full year, Seaport is forecasting Net Operating Income to come in $2,800K favorable to
budget.
At the end of the second quarter, capital spending for 2015 is forecasted to be $20.0M or about 100% of the
Approved Annual Budget amount of $20.1M.
A. BUSINESS EVENTS
TEU volumes for the Seattle Harbor were up 6.6% year-to-date June 2015 compared to year-to-date June
2014 levels. Year-to-date June 2015 volume was 759,869 TEUs. Full inbound TEUs were up 13.2%, full
outbound TEUs were down (6.7%), empty inbound TEUs were down (2.0%), and empty outbound TEUs
were up 73.0%.
Consolidated West Coast Port results through the 2nd Quarter of 2015 are not available pending Metro
Vancouver publishing results which is scheduled for August 13th. On a regional basis, LA/Long Beach was
down (2.0%) and Seattle/Tacoma was up 3.0%.
TEU Volume (in 000's) YTD Q2 2015 YTD Q2 2015 TEU Change % Change
Long Beach 3,306 3,303 3 0.1%
Los Angeles 3,904 4,052 (149) -3.7%
Oakland 1,087 1,177 (90) -7.6%
Portland 21 84 (63) -75.0%
Prince Rupert 392 281 111 39.5%
Seattle 760 713 47 6.6%
Tacoma 1,018 1,013 5 0.5%
Vancouver not available 1,403 not available not available
West Coast - Totals: not available 12,026 not available not available
15
III. SEAPORT DIVISION FINANCIAL & PERFORMANCE REPORT 06/30/15
Commissioners from the ports of Seattle and Tacoma voted to submit a final agreement to form the
Northwest Seaport Alliance to the Federal Maritime for approval.
Considerable work underway to form the Seaport Alliance.
Grain vessels shipped 2.019M metric tons of grain (yellow soybeans and yellow corn) through Terminal 86
for June year-to-date 2015. Amount was 4% greater than for the same period in 2014 and (5%) unfavorable
to 2015 Budget volume.
The 2015 cruise season commenced on Saturday, May 2nd.
Cruise passengers for May and June totaled 339,873 which was about 8% above the results for the same
period in 2014 and approximately equal to budget.
Since the launch in May 2014, 120 drayage trucks have been replaced with model-year 2007 or newer
engines under the Seaport Truck Scrappage and Replacements for Air in Puget Sound (ScRAPS) 2 program.
$1.066M in clean-up project costs were recovered from grants and insurance through 2nd quarter 2015.
16
III. SEAPORT DIVISION FINANCIAL & PERFORMANCE REPORT 06/30/15
B. KEY INDICATORS
Container Volume TEU's in 000's
1,600
1,400
1,200
1,000 2014 Actuals
800
2015 Budget
600
400 2015 Actuals
200
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Grain Volume Metric Tons in 000's
5,000
4,000
3,000 2014 Actuals
2015 Budget
2,000
2015 Actuals
1,000
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Cruise Passengers in 000's
1,000
800
2014 Actuals
600
2015 Budget
400
2015 Actuals
200
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Net Operating Income before Depreciation by Business
Fav (UnFav) Incr (Decr)
2014 YTD 2015 YTD 2015 YTD 2015 Bud Var Change from 2014
$ in 000's Actual Actual Budget $ % $ %
Containers 23,321 18,683 14,762 3,922 27% (4,637) -20%
Grain 1,599 2,174 2,311 (137) -6% 575 36%
Seaport Industrial Props 4,623 4,810 4,230 580 14% 187 4%
Cruise 2,055 2,324 1,715 609 -36% 269 13%
Maritime Operations (261) (233) (530) 297 56% 28 11%
Security (275) 0 0 (0) NA 275 100%
Env Grants/Remed Liab/Oth 130 (258) (125) (133) -107% (388) 299%
Total Seaport 31,193 27,501 22,363 5,138 23% (3,692) -12%
17
III. SEAPORT DIVISION FINANCIAL & PERFORMANCE REPORT 06/30/15
C. OPERATING RESULTS
Fav (UnFav) Fav (UnFav)
2014 YTD 2015 Year-to-Date Budget Variance Year End Projections Budget Variance
$ in 000's Actual Actual Budget $ % Forecast Budget $ %
Operating Revenue 48,617 45,899 44,022 1,876 4% 95,135 91,635 3,500 4%
Security Grants 0 0 0 0 NA 0 0 0 NA
Total Revenues 48,617 45,899 44,022 1,876 4% 95,135 91,635 3,500 4%
Seaport Expenses (excl env srvs) 6,535 6,321 8,900 2,579 29% 19,022 18,165 (857) -5%
Environmental Services 820 1,041 1,067 26 2% 2,452 2,452 0 0%
Maintenance Expenses 2,959 3,544 3,532 (13) 0% 7,067 7,067 0 0%
P69 Facilities Expenses 204 184 228 43 19% 446 446 0 0%
Other RE Expenses 151 184 220 36 17% 433 433 0 0%
CDD Expenses 1,058 673 924 251 27% 1,740 1,847 108 6%
Police Expenses 2,059 1,910 1,959 49 2% 3,990 3,990 0 0%
Corporate Expenses 3,768 4,283 4,705 422 9% 8,653 8,953 300 3%
Security Grant Expense 0 0 0 0 NA 0 0 0 NA
Envir Remed Liability (130) 258 125 (133) -107% 500 250 (250) -100%
Total Expenses 17,424 18,398 21,659 3,262 15% 44,303 43,603 (700) -2%
NOI Before Depreciation 31,193 27,501 22,363 5,138 23% 50,831 48,031 2,800 6%
Depreciation 16,594 15,844 16,343 499 3% 32,754 32,754 0 0%
NOI After Depreciation 14,599 11,657 6,020 5,637 94% 18,078 15,278 2,800 18%
Seaport Division Revenues were $1,876K favorable to budget. Key variances are as follows:
Seaport Lease & Asset Management - favorable $1,952K
Containers were $2,513K favorable. Terminal 5 favorable variance of $3,259K due to unbudgeted interim
uses at the terminal including space rent and other revenue related to the Foss Lease of $2,859K. The Foss
lease will provide monthly space rent of $549K going forward. This favorable variance was partially offset
by ($794K) unfavorable variance due to Surface Water Utility revenue that was budgeted in Containers, but
actually recognized in the new Stormwater Utility.
Grain was ($216K) unfavorable primarily due to volume coming in (5%) unfavorable to budget.
Seaport Industrial Properties were ($345K) unfavorable due primarily to Surface Water Utility revenue that
was budgeted to Industrial Properties but was actually recognized in the new Stormwater Utility ($382K).
Cruise and Maritime Operations - unfavorable $76K
Cruise was ($135K) unfavorable due to slight shortfall in year-to-date passenger counts ($72K) as well as
due to lower Sales of Utilities than budgeted ($53K) with ($14K) relating to surface water which is now
being recognized in the new Stormwater Utility.
Maritime Operations were $59K favorable primarily due to higher usage of yard and facilities than budgeted
and revenue from Alaska Marine Line at Kellogg Island that was budgeted in Industrial Properties.
Total Seaport Division Expenses were $3,262K favorable to budget. Key variances are as follows:
Seaport Expenses (excluding Environmental Services) were $2,579K favorable to budget. Major variances
were as follows:
Salaries & Benefits were $339K favorable due to open positions in Commercial Strategy, Containers,
Division Admin, and Finance.
Utilities are favorable to budget by $1,222K due to the Surface Water Utility expenses $1,233K
favorable relating to tenant occupied facilities where expense that will be paid to the City will be
recognized through the new Stormwater Utility. This favorable variance is an offset to corresponding
unfavorable variance in Sales of Utilities-Surface Water.
Outside Services were $893K favorable due to favorable variances associated with the Terminal 91
Maintenance Dredging $537K project, the Terminal 18 Maintenance Dredging Project $60K, and the
removal of IHI Cranes at Terminal 18 $74K. Design and construction work on the Terminal 91 project
has been delayed due to permitting issues. It is uncertain when these will be resolved.
18
III. SEAPORT DIVISION FINANCIAL & PERFORMANCE REPORT 06/30/15
Crane removal at Terminal 18 has been delayed until late 2015 and continuing into early 2016 and the
Terminal 18 Maintenance Dredge design work commenced later than expected. Additional variances
relate to amounts budgeted for security services at Terminal 5 $60K favorable year-to-date, amounts
budgeted for outreach and training by Division Admin $100K, and work for appraisal and condition
assessment at Terminal 106 $50K.
Travel & Other Employee Expenses were $151K favorable due to reduced travel by Commercial
Strategy and Division Administration as a result of reorganization associated with formation of the
Northwest Seaport Alliance and related open positions.
Promotional Expenses were $42K favorable due primarily to underutilization of amounts budgeted by
Cruise and Maritime Operations $28K.
General Expenses were ($58K) unfavorable primarily due to permit fees that were paid in 2014, but
are being amortized over 12 months contributing to a ($88) unfavorable variance through the second
quarter of 2015. This change in accounting was not known at budget time so the unfavorable variance
will continue to grow until the 4th quarter when the full year expense was budgeted. Unanticipated
litigation contributed an additional ($25K) unfavorable expense variance. These amounts were partially
offset by underutilization of amounts budgeted for advertising $51K which was partially impacted by
the reorganization associated with the Northwest Seaport Alliance.
Environmental Services was favorable $26K primarily due to an open position in Environmental Services.
CDD costs, direct and allocated, were favorable $251K due to lower charges year-to-date from Engineering
$199K and from Seaport Project Management $119K partially offset by higher project related charges from
Port Construction Services ($71K).
Police Expenses are favorable $49K, due to less than budgeted expenses incurred by the Police department
thus far in the year.
Corporate Costs direct and allocated were favorable $422K due to lower direct charges and allocations from
most corporate groups. The most significant variance of $308K is from Contingency which reflects $500K
budgeted in the first quarter for consultant costs to support the setup of the Seaport Alliance, but only $180K
has been expensed year-to-date. An additional $103K favorable variance is from Executive and Internal
Audit with most significant variance $69K relating to the WPPA membership budgeted in January but actual
expense is being realized ratably over the year. Additional favorable variances from Public Affairs $85K,
Information and Communication Technology $63K and Human Resources $55K reflects open positions and
lower overall spending by those groups. Favorable variances are partially offset by an unfavorable variance
from Legal of ($213K) relating to the establishment of the Northwest Seaport Alliance and issues related to
the interim use at Terminal 5.
Environmental Remediation Liability expense unfavorable ($133K), due to unanticipated additional
environmental testing associated with the Terminal 91 Maintenance Dredge project.
All other variances net to favorable $68K or .3 % of budget.
NOI before Depreciation was $5,138K favorable to budget.
Depreciation was $499K favorable, primarily due to impairment of crane assets at Terminal 5 at year end 2014,
resulting in lower depreciation expense in 2015. The need to impair these assets was not apparent when the
budget was created.
NOI after Depreciation was $5,637K favorable to budget.
19
III. SEAPORT DIVISION FINANCIAL & PERFORMANCE REPORT 06/30/15
2015 Full Year Forecast
As of the end of the 2nd Quarter 2015, Seaport anticipates ending the year $2.8M favorable to budget for Net
Operating Income (NOI) Before Depreciation. The variance reflects above budget revenue of $3,500K and an
unfavorable expense variance of ($700K).
The forecasted favorable revenue variance is the result of unbudgeted interim revenue at Terminal 5 from a new
lease with Foss Maritime $5.9M partially offset by unfavorable Surface Water Utility Revenue ($2.4M). Surface
Water Utility Revenue is now paid directly by tenants to the new Stormwater Utility, but was budgeted to be
credited to the Seaport Business Groups (see offsetting favorable expense variance described below).
The unfavorable expense variance of ($700K) is due to unbudgeted costs to remove the 3 IHI cranes from
Terminal 18, a 50 gauge crane from Terminal 46, and to begin design and planning to remove all 5 cranes from
Terminal 5. In the Budget, the Terminal 18 cranes were expected to be removed in 2014, the Terminal 5 cranes
were expected to be sold and removed from the terminal by the buyer, and the Terminal 46 cranes was expected
to be removed in 2016. Labor issues delayed the removal of the Terminal 18 cranes and no buyers were found
for the Terminal 5 cranes. Additional unfavorable variances relate to the Terminal 18 Maintenance Dredge
project for which current cost estimates exceed budget and operating Environmental Remediation Liability
expense which is also expected to be impacted by the maintenance dredge projects. Unfavorable variances are
partially offset by favorable full year Surface Water Expense of $2.4M as a result of tenant related expenses that
will now be paid out of and expensed to the new Stormwater Utility and by favorable expense variance
associated with delays in the Terminal 91 Maintenance Dredge project. Full year Corporate and CDD related
costs are also expected to be favorable to budget.
Change from 2014 YTD Actual
Net Operating Income (NOI) before Depreciation for 2015 decreased by ($3,692K) from 2014 due to lower
revenues and higher expenses.
Revenue decreased by ($2,718K) from the prior year partly due to the elimination of revenue from Sales of
Utilities-Surface Water ($1,434K) which is now paid directly by tenants to the Stormwater Utility, but were
budgeted to be credited to the Seaport Business Groups. Excluding impact of Sales of Utilities-Surface Water,
Container revenue decreased ($2,760K) due to the closure of Terminal 5 at the end of July 2014. Space rent and
preferential use fees related to the former tenant, Eagle Marine, decreased by ($9,580K) and crane rent and
intermodal revenue decreased by ($1,083K) and ($207K), respectively. The decreases were partly offset by 6
months of termination revenue from Eagle Marine of $4,500K, by new revenue from interim tenant, Foss
Maritime $2,876K, and by an increase in the Minimum Annual Guarantee lease rate at the other container
terminals $369K. Lower revenues in Containers were partially offset by higher Grain revenue $516K resulting
from higher volumes in 2015 as well as to a new lease agreement, higher Cruise revenue $519 due to higher
passenger volumes and increased rates, by higher Seaport Industrial Properties revenue of $309K because of
higher occupancies and year-over-year rate increases, and higher Maritime Operations revenue $132K resulting
from higher occupancies and new agreement with Seattle Fire Department.
Expenses, direct and allocated, increased by a net of $974K. The increase reflects higher Maintenance expense
$585K primarily driven by work related to Terminal 5, higher charges from Corporate $515K primarily related
to the establishment of the Northwest Seaport Alliance, an increase in Operating Environmental Remediation
Liability $388K primarily relating to the Terminal 91 Maintenance Dredge Project, and higher charges from
Environmental Services $221K resulting from more work related to stormwater and less charging to nonoperating
environmental projects. Overall Seaport Division originated expenses decreased ($214K) due to a
reduction in utility expenses of ($890K) primarily reflecting surface water expense for tenant occupied sites
which, for 2015, will be paid to the City and expensed through the new Stormwater Utility as well as due to
lower salaries and benefits due to open positions ($113K). These decreases were largely offset by an increase in
Outside Services costs of $392K due to an increase in Contract Watchman costs at Terminal 5 $191K because
without an individual tenant at the facility, the Port is now required to cover those costs and bill back to new
tenants on a pro-rata basis and costs associated with U.S. Army Corp of Engineers Feasibility Study $214K.
General Expenses increased $433K due primarily to a payment for the Vessel Coordination Agreement with the
Muckleshoots was made in Q1 2015, but not until Q3 in 2014.
20
III. SEAPORT DIVISION FINANCIAL & PERFORMANCE REPORT 06/30/15
D. CAPITAL SPENDING RESULTS
Budget Variance
2015 YTD 2015 2015
Actual Forecast Budget $ %
$ in 000's
Contingency Renewal & Replace. 0 2,500 6,000 3,500 58%
T5 Berth Modernization 2,306 6,806 4,000 (2,806) -70%
Argo Yard Roadway Element I 1,640 1,715 1,654 (61) -4%
P34 Mooring Dolphins 1,364 1,438 1,351 (87) -6%
T18 Stormwater Infrastructure 0 1,250 1,250 0 0%
Terminal 46 1,199 2,262 988 (1,274) -129%
SEA SEC R13 P66 TWIC & T91GATE 267 711 731 20 3%
T91 Substation Upgrades 252 725 725 0 0%
Small projects 119 749 617 (132) -21%
P90 C175 Roof Replacement 108 308 341 33 10%
All Other 330 1,572 2,411 839 35%
Total Seaport 7,585 20,036 20,068 32 0%
Comments on Key Projects:
Through the 2nd quarter of 2015, Seaport spent 38% of the annual approved budget. Full year is
estimated to be on budget.
Projects with significant changes in spending were:
Terminal 5: Variance reflects amounts approved to continue design and permitting of Berth Modernization
project.
Terminal 46: Variance relates to T46 Development
o Crane Rail & Berth Extension- Design schedule has been accelerated to accommodate customer's
request.
o Stormwater Improvement - Q4 2014 construction activities were delayed and are proceeding in 2015;
additional costs were added for change order in 2015.
o Lighting Control - Project is delayed to 2016.
Contingency Renewal & Replace: Variance reflects adjustment of amounts available in 2015 to reflect
utilization of funds for Terminal 5 Modernization project and Terminal 46 Development.
Small projects Primarily due to postponement on the progress of the Pier 91 Bullrail Domestic Water Line
Replacement.
All Other Primarily due to Terminal 18 South Gate Rail Spur Westway project that was postponed while
waiting to finalize the associated lease and later start date for Bell Street Cruise Terminal Roof Fall
Protection system.
21
IV. REAL ESTATE DIVISION FINANCIAL & PERFORMANCE REPORT 06/30/15
FINANCIAL SUMMARY
Fav (UnFav) Incr (Decr)
2014 2015 2015 Budget Variance Change from 2014
$ in 000's Actual Forecast Budget $ % $ %
Revenues:
Operating Revenue 32,313 32,884 32,550 334 1% 570 2%
Total Revenues 32,313 32,884 32,550 334 1% 570 2%
Total Operating Expenses 39,810 38,541 39,407 866 2% (1,268) -3%
Net Operating Income (7,496) (5,658) (6,858) 1,200 17% 1,839 25%
Capital Expenditures 10,922 9,920 12,194 2,274 19% (1,002) -9%
Total Real Estate Division Revenues were $639K or about 4% favorable to budget through the second
quarter primarily due to stronger Conference and Event Center revenues and Bell Street Garage revenues
than budgeted. Favorable variances were partially offset by unfavorable Surface Water Utility Revenue of
($77K). Surface Water Utility revenue is now paid directly by tenants to the Stormwater Utility, but was
budgeted to be credited to the Real Estate Businesses. For the full year, revenue is expected to be $334K
favorable to budget also due to favorable Conference and Event Centers' revenue.
Total Operating Expenses were $2,683K or 14% favorable due to lower spending than budgeted across all
groups except for unfavorable Conference and Event Center expenses driven by higher activity (see revenue
variance discussed above). For the full year, Real Estate is forecasting Operating Expenses to be $866K
favorable to budget.
Net Operating Income year-to-date for 2015 was $3,322K favorable to budget and $1,924K above 2014
Actual. For the full year, Real Estate is forecasting Net Operating Income to come in $1,200K favorable to
budget.
At the end of the second quarter, capital spending for 2015 is forecasted to be $9.9M or 81% of the
Approved Annual Budget amount of $12.2M.
A. BUSINESS EVENTS
This report reflects the reorganization of the Real Estate Division initiated in third quarter 2014. Under that
reorganization, the Harbor Services group was combined with the Portfolio and Asset Management group
enabling the combined management and reporting of the water and landsides of key facilities such as
Fishermen's Terminal and Shilshole Bay Marina. In February 2015, a new reorganization was initiated by
the CEO under which the North Harbor Management group within the former Real Estate Division will
report to a new Maritime Division and the Real Estate Division will become the Economic Development
Division. The implementation of reporting for the CEO reorganization will come in the 2016 Budget and for
actuals effective January 1, 2016.
Overall occupancy level of Commercial Buildings was at 91% at the end of the second quarter of 2015,
which was below the 94% target for the 2015 Budget and below the comparable statistics for the local
market of 92%.
Conference and Event Center activity exceeded budget year-to-date due to a strong sales team and healthy
regional economy.
Recreational marinas averaged 96% moorage occupancy through the second quarter which was above the
target of 95% and matched results achieved for the same period in 2014.
Fishermen's Terminal and Maritime Industrial Center averaged 86% moorage occupancy through the second
quarter which was above the target of 80% and above 2014 results for the same period of 82%.
22
IV. REAL ESTATE DIVISION FINANCIAL & PERFORMANCE REPORT 06/30/15
Real Estate Development and Planning
Construction is underway on the first phase of the Des Moines Creek Business Park (DMCBP) project
after closing on the first phase ground lease occurred in April. Construction is scheduled for completion
in late Q4 2015 or early Q1 2016.
In April, the federal General Services Administration (GSA) selected the DMCBP site for the FAA's
new regional offices, which will be built as phase two of the DMCBP project. In May, the Commission
approved a revised option agreement and form of ground lease to accommodate the FAA's offices.
Eastside Rail Corridor
Sale of 2.6 miles of the Eastside Rail Corridor (Rail Corridor) in King County to the City of Woodinville
is expected to close some time in late 2015. Discussions are ongoing with Eastside Community Rail
LLC ("ERC"), who currently holds the freight easement on the rail corridor, regarding the sale of the
remaining 12 mile portion of the Corridor in Snohomish County.
Port is currently undertaking permanent repairs to a broken culvert in Maltby area. The culvert break
endangered rail bed and a buried fiber optic line.
23
IV. REAL ESTATE DIVISION FINANCIAL & PERFORMANCE REPORT 06/30/15
B. KEY INDICATORS
Shilshole Bay Marina Moorage Occupancy
120.0%
100.0%
2014 Actual
Occupied 80.0% 2015 Budget
Percent Linear Footage 60.0% 2015 Actual
40.0%
20.0%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Fishermen's Terminal Moorage Occupancy
120.0%
100.0%
2014 Actual
80.0%
Occupied 2015 Budget
Percent Linear Footage 60.0% 2015 Actual
40.0%
20.0%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Commercial Buildings
100%
96%
94% 95%
90% 93% 92% 93%
90% 90% 91% 90%
2014 Actual
80%
Percent Occupied 2015 Target
70%
2015 Actual
60%
Qtr 1 Qtr 2 Qtr 3 Qtr 4
Net Operating Income before Depreciation by Business
Fav (UnFav) Incr (Decr)
2014 YTD 2015 YTD 2015 YTD 2015 Bud Var Change from 2014
$ in 000's Actual Actual Budget $ % $ %
North Harbor Facilities (64) (302) (1,725) 1,423 82% (238) -370%
Central Waterfront (1,630) (206) (1,816) 1,611 89% 1,424 87%
Conference & Event Centers 473 330 302 28 9% (143) NM
Eastside Rail (1,163) (143) (160) 18 11% 1,021 88%
RE Development & Plan (186) (326) (444) 117 26% (140) NM
Envir Grants/Remed Liab/Oth (0) (0) (125) 125 -100% 0 -53%
Total Real Estate (2,571) (646) (3,968) 3,322 84% 1,924 75%
24
IV. REAL ESTATE DIVISION FINANCIAL & PERFORMANCE REPORT 06/30/15
C. OPERATING RESULTS
Fav (UnFav) Fav (UnFav)
2014 YTD 2015 Year-to-Date Budget Variance Year End Projections Budget Variance
$ in 000's Actual Actual Budget $ % Forecast Budget $ %
Revenue 11,637 12,003 11,658 345 3% 23,971 23,970 1 0%
Conf & Event Ctr Revenue 4,047 4,453 4,159 294 7% 8,913 8,580 333 4%
Total Revenue 15,684 16,456 15,817 639 4% 32,884 32,550 334 1%
Real Estate Exp (excl Conf,Maint,P69) 5,296 5,011 6,255 1,244 20% 11,487 11,967 480 4%
Conf & Event Ctr Expense 3,312 3,823 3,654 (169) -5% 7,679 7,504 (175) -2%
Eastside Rail Corridor 1,048 13 120 107 89% 210 210 0 0%
Maintenance Expenses 4,057 3,950 5,018 1,068 21% 9,576 9,976 400 4%
P69 Facilities Expenses 63 55 68 13 19% 133 133 0 0%
Seaport Expenses 479 576 623 47 8% 1,377 1,377 0 0%
CDD Expenses 862 776 889 112 13% 1,699 1,777 78 4%
Police Expenses 669 620 634 13 2% 1,291 1,291 0 0%
Corporate Expenses 2,468 2,278 2,399 121 5% 4,838 4,921 83 2%
Envir Remed Liability 0 0 125 125 100% 250 250 0 0%
Total Expense 18,255 17,102 19,785 2,683 14% 38,541 39,407 866 2%
NOI Before Depreciation (2,571) (646) (3,968) 3,322 84% (5,658) (6,858) 1,200 17%
Depreciation 4,778 4,981 5,042 62 1% 10,120 10,120 0 0%
NOI After Depreciation (7,349) (5,627) (9,010) 3,383 38% (15,777) (16,977) 1,200 7%
Total Real Estate Division Revenue was $639K favorable to budget. Key variances are as follows:
Portfolio Management: favorable $695K
North Harbor Facilities were $58K favorable:
Fishermen's Terminal $83K favorable mainly due to Northwest Farm Credit Services lump sum early
lease termination payment of $72K and favorable recreational boating moorage occupancy $42K.
Favorable amounts were partially offset by unfavorable Sales of Utilities-Surface Water ($23K) that was
budgeted in North Harbor Facilities, but was actually recognized in the new Storm Water Utility.
Other Marinas $19K favorable because Bell Harbor guest moorage occupancy was higher than budget.
Maritime Industrial Center ($15K) unfavorable due to lower moorage occupancy than budgeted (65%
Actual vs 74% Budget).
Shilshole Bay Marina ($29K) unfavorable due to budget timing error for guest moorage as well as delay
in implementing rate increase from May 1st to June 1st.
Central Waterfront was $343K favorable mainly due to favorable space rental revenue from Bell Street
Garage $128K resulting from increased volume of overnight parkers, Harbor Marina Corporate Center $87K
due to coding error to be reversed next quarter, World Trade Center West $68K due to higher occupancy,
Terminal 34 General Industrial $38K due to retroactive lease payment from prior year, and Tsubota $26K
due to continued ownership of the property that was assumed to be sold in budget.
Conference & Event Centers favorable $294K primarily due to higher than budgeted activity at Bell Harbor
International Conference Center, especially for Audio Visual, Food and Beverage revenues.
Eastside Rail Corridor: favorable $5K
Eastside Rail Corridor revenue was favorable due to unbudgeted rental revenue.
Real Estate Development and Planning: unfavorable ($64K)
Terminal 91 General Industrial was unfavorable ($64K) mainly due to below budget occupancy ($27K) as
well as due to Surface Water Utility revenue ($27K) that was budgeted to Real Estate Development and
Planning but actually recognized in the new Stormwater Utility.
Marine Maintenance: favorable $3K
Marine Maintenance was favorable $2K due to unbudgeted recycling revenue.
25
IV. REAL ESTATE DIVISION FINANCIAL & PERFORMANCE REPORT 06/30/15
Total Real Estate Division Expenses were $2,683K favorable to budget. Key variances:
Real Estate Expenses (excluding Maintenance, P69 Facilities, and Conference & Event Centers Expense)
were favorable $1,244K. Major account variances were as follows:
Salaries & Benefits were favorable $176K primarily due to open positions in North Harbor Facilities
and Central Harbor Management.
Utilities were favorable $352K primarily due to favorable Electricity $148K, Sewer $109K, Surface
Water $43K and Water $40K expenses. The favorable variances associated with Electricity and Sewer
appear to be caused by an understatement of actual expenses and by a credit recognized in the 2nd
quarter. These variances will be further researched and reconciled in 3rd Quarter. The Surface Water
Utility variance reflects implementation of the Stormwater Utility in 2015. The budget for Surface
Water included all expenses historically paid to the City for tenant occupied properties as well as Port
occupied vacant properties. Actual costs reflect only expenses related to Port common/vacant areas, as
tenants are now making payments directly to the new Stormwater Utility.
Outside Services were favorable $599K primarily due to tenant improvements expenses that were
budgeted as expense, but have qualified for capitalization $198K and a tenant improvement that was
budgeted for 2015 but was expensed in 2014 $127K. Additional tenant improvement expense variances
of $218K are expected to be timing related subject to the lease up of vacant space.
Equipment Expense and Supplies & Stock were $52K favorable primarily due to underutilization of
amounts budgeted at Shilshole Bay Marina and Bell Harbor Marina $39K and Fishermen's Terminal
$6K.
Travel & Other Employee Expenses were $48K favorable due to slower spending than budgeted.
General Expenses were ($33K) unfavorable due to bad debt expense relating to Fishermen's Terminal
waterside. It is expected that these accounts will be brought current when the fleet returns in the fall.
Real Estate Conference & Event Centers were unfavorable ($169K) due to higher operating expenses for
Bell Harbor International Conference Center related to the increase in sales volume partially offset by
favorable permit expense variance $86K due to delays by City in finalizing permit.
Eastside Rail Corridor expenses were favorable $107K due to not yet used expenses related to closing out
expected sales of the corridor. Remaining portions of the rail corridor were budgeted to be sold in 2015.
Maintenance expenses were $1,068K favorable due to later start than expected on planned maintenance
work at virtually all facilities with exception of at World Trade Center Seattle where there was unbudgeted
project work related to expansion of the premises under the management agreement ($114K). The most
significant favorable variances were for Shilshole Bay Marina $245K, multiple Bell Street properties $142K,
Harbor Marina Corporate Center $125K, Maritime Industrial Center $130K, Terminal 91 General Industrial
$68K, and Fishermen's Terminal $22K. Additional favorable variances in Divisional Allocations of $356K
reflect delays in Maintenance Overhead projects including the delay in demolition of the W50 building at
Terminal 91.
Seaport originated expenses were $47K favorable due to lower allocations from Environmental and Finance
than budgeted.
CDD costs, direct and allocated, were favorable $112K due primarily to below budget spending by Seaport
Project Management $68K.
Police costs, direct and allocated were favorable $13K due to overall lower spending by Police than
budgeted.
Corporate costs, direct and allocated, were favorable $121K primarily due to lower than anticipated direct
charges and allocations from most Corporate groups including Accounting & Financial Reporting $75K,
Human Resources $54K, and Public Affairs $25K partially offset by unfavorable allocation from Portwide
Contingency ($50K).
Environmental Remediation Liability was $125K favorable to budget due to, thus far in the year, no
facility projects involving disposal of dirty dirt or removal of asbestos. The delay in the demolition of the
W50 building is a project contributing to this variance.
All other variances net to a favorable variance of $15K.
26
IV. REAL ESTATE DIVISION FINANCIAL & PERFORMANCE REPORT 06/30/15
NOI before Depreciation was $3,322K favorable to budget.
Depreciation was $62K or 1% favorable to budget.
NOI after Depreciation was $3,383K favorable to budget.
2015 Full Year Forecast
As of the end of the 2nd Quarter 2015, Real Estate anticipates ending the year $1,200K favorable to budget for
Net Operating Income (NOI) Before Depreciation. The variance reflects above budget revenue of $334K and a
favorable expense variance of $866K.
Revenue is forecasted to be $334K favorable due to expected favorable revenue results for the Conference &
Event Centers $333K and a lease termination fee related to Fishermen's Terminal office space. Favorable
variances are partially offset by unfavorable Surface Water Utility Revenue of ($156K). Surface Water Utility
revenue is now paid directly by tenants to the Stormwater Utility, but was budgeted to be credited to the Real
Estate Business Groups.
The favorable expense variance of $866K is due to expected below budget tenant improvement expenses of
$358K as more tenant improvements will qualify for capitalization than budgeted, favorable Maintenance
expenses of $400K due to work that will not be performed in 2015, and due to favorable Surface Water Utility
expense as tenant related expenses will be paid out of and expensed by the new Surface Water Utility. Favorable
variance is partially offset by unfavorable Conference & Event Center expenses ($175K) resulting from
increased activity.
Change from 2014 Actual
Net Operating Income before Depreciation increased by $1,924K between 2015 and 2014 as a result of higher
revenue $771K and lower expenses ($1,153K).
Revenues increased by $771K due to higher revenue from most business groups. Conference and Event Center
revenue increased $406K due to a strong sales team and regional economy. Shilshole Bay Marina revenue
increased $172K mainly due to higher monthly moorage occupancy and a May 2014 and June 2015 rate increase
while Fishermen's Terminal revenue increased $136K partially due to the early termination lump sum payment
from an office tenant and higher moorage revenue due to higher occupancy and rates. Commercial Properties'
revenue increased $218K due to increased activity at the Bell Street Garage and increased rent rolls at Harbor
Marina Corporate Center and retroactive rental payment at Terminal 34. Real Estate Development and Planning
saw revenues decline ($158K) with the departure of several Terminal 91 uplands tenants including First Student.
Expenses decreased by ($1,153K). Eastside Rail Corridor expenses decreased ($1,035K) due to litigation
reserve established in 2014. Real Estate expenses decreased ($285K) primarily due to lower Salaries & Benefits
due to open positions and lower utility expenses ($205K) likely due to understatement of 2015 amounts. The
utility change will be researched and reconciled in 3rd Quarter. These expense reductions were partially offset by
higher tenant improvement costs associated with World Trade Center West and Harbor Marina Corporate Center.
Conference and Event Center Expenses had a net increase of $510K driven primarily by increased activity (see
revenue change described above). Maintenance expenses decreased ($108K) due to lower Divisional Allocations
reflecting slightly lower expenses attributed to overhead. Expenses from Seaport groups increased $97K
primarily due to higher charges related to stormwater initiatives from Environmental Services. CDD expenses
decreased ($86K) due to work in 2014 on Shilshole Bay Marina condition assessments. Police expenses
decreased ($49K) due to lower allocation percentage to Real Estate in 2015 relative to 2014. Corporate expenses
decreased ($190K) mainly due to lower allocations from Accounting, Information & Communication
Technology, and Legal.
27
IV. REAL ESTATE DIVISION FINANCIAL & PERFORMANCE REPORT 06/30/15
D. CAPITAL SPENDING RESULTS
Budget Variance
2015 YTD 2015 2015
Actual Forecast Budget $ %
$ in 000's
Small Projects 283 3,405 3,284 (121) -4%
Fleet Replacement 145 934 1,231 297 24%
SBM Central Seawall Replacemnt 113 559 790 231 29%
C15 Building Tunnel Improvmnt 0 0 700 700 100%
P69 Roof Beam Rehabilitation 84 185 550 365 66%
Tenant Improvements - Capital 300 790 420 (370) -88%
FT C-2 (Nordby) Roof & HVAC 368 679 400 (279) -70%
P69 Built-Up Roof Replacement 201 533 180 (353) -196%
All Other 639 2,835 4,639 1,804 39%
Total Real Estate 2,133 9,920 12,194 2,274 19%
Comments on Key Projects:
Through the 2nd quarter of 2015, Real Estate spent 17% of the annual approved capital budget. Full year
spending is estimated to be 81% of budget.
Projects with significant changes in spending were:
Small Projects Primarily due to higher cost than expected for Fishermen's Terminal East Sewer Line
and Sidewalk subsidence mostly offset by lower spending on other projects.
Fleet Replacement Due to delays associated with vehicles being purchased on state contract.
C15 Building Tunnel Improvement Project pushed back to 2016.
Pier 69 Roof Beam Rehabilitation Project is moving slower than expected due to delay in design and
contractor schedule conflict. Project is expected to be completed in Q3 2016.
Tenant Improvements Capital Spending is expected to exceed budget due to more tenant
improvements that qualify for capitalization than anticipated in 2015 Budget. There is an offsetting
favorable operating expense variance related to tenant improvements.
Fishermen's Terminal C-2 (Nordby) Roof & HVAC Pier 69 Built-Up Roof Replacement 2015
Budget was understated as variances reflects payments related to 2014 work not paid until 2015.
All Other:
Harbor Island Marina East Dock favorable - Schedule is delayed due to higher priority for other
projects.
Fishermen's Terminal C14 (Downie) Roof & HVAC - Project is on hold while waiting for further
direction from the Fishermen's Terminal long term plan.
28
V. CAPITAL DEVELOPMENT DIVISION FINANCIAL & PERFORMANCE REPORT 06/30/15
A. BUSINESS EVENTS
Completion of North Satellite renovation/expansion 60% design and baggage optimization 70% design.
Completion & opening of three new Concourse C vertical circulation passenger ramps and two of four new
elevators.
Completion of North Satellite baggage system modifications.
Selection of winning International Arrivals Facility design-build team (Clark/SOM).
North Satellite (NSAT) Renovation & Expansion GC/CM contract executed - $300,000,000.
Completed revisions and provided training for POS construction specifications General Conditions.
Completed 60% design submittal for Terminal 5 Berth Modernization project.
Runway 16C closure implemented with construction underway to October completion date. Engineering and
PMG resources collocated at West side Office facility.
Notice to Proceed issued for the following Major construction projects:
o S4/S6 International Corridor Connection and Passenger Loading Bridges (PLB) Modifications.
o Phase 1 Runway 16C-34C Reconstruction.
Beneficial Occupancy issued for the following Major construction projects:
o South Satellite Interior Renovation Carpet Replacement.
o Cargo 6 Hardstand Improvement.
Substantial Completion issued for the following Major construction projects:
o Doug Fox Service Upgrades.
o C60/61 Baggage Handling Systems (BHS) Modifications.
o East Marginal Way Phase II and Argo Yard.
o Terminal 46 Storm Water Improvements.
o Pier 34 Dolphin Replacement.
o Mezzanine Tenant Relocation.
Resident Engineer Completion memo issued for Wall 14 project.
During the first and second quarter of 2015 PCS construction project hard costs totaled approximately $5.9M
dollars.
PCS worked on 272 projects, processed 145 work authorizations/ service directives and utilized 28 small
works/ professional contracts.
PCS second quarter project work increased 68% compared to the first quarter of 2015.
PCS provided Small Works project management services for 19 Work Projects.
Argo Yard Truck Roadway & East Marginal Way Project celebration with project partners occurred on
June 18. Contract close-out with Gary Merlino Construction.
Terminal 5 Berth Modernization Washington Department of Fish & Wildlife (DFW) issued the Hydraulic
Project Approval on June 10. United States Army of Corps Engineers (USACE) published notice of
application for in-water work on May 19.
Terminal 91 Tank Farm Remediation .Completed: Asphalt paving and fence work West of Building M28
and Storm drainage system and block wall foundation installation. Issue Beneficial Occupancy once
required paperwork is submitted and approved by the Port.
Commission Authorized:
o The change order to increase budget and schedule to remove cranes (IHI Crane Suspension project at
Terminal 18).
o Design funds for the Terminal 18 South Gate Rail Spur on June 9.
Pier 34 Dolphins substantial completion issued. Dolphins occupied by AML and in use.
Terminal 91 Substation Upgrade Notice of Intent to Award major contract issued to VECA on May 28 and
contract executed on June 16.
Alaskan Way Viaduct Bored Tunnel Port transferred $120M to Washington State Department of
Transportation (WSDOT) on May 1 to cover the 1st installment of Alaskan Way program contribution.
29
V. CAPITAL DEVELOPMENT DIVISION FINANCIAL & PERFORMANCE REPORT 06/30/15
B. KEY PERFORMANCE METRICS
Key Performance Metrics 2015 2014/Notes
A. Implement Century Agenda Strategies Goals Goals
1. Small Business Participation - Annual (port-wide) 35% 32.0% 30%
2. Small Business Participation - Annual / Small Works (port-wide) 90% 73.06% 90%
3. Small Business Participation - Annual / Major Construction (portwide
) 50% 39.93% 50%
4. Small Business Participation - Annual / Goods & Services 12% 26.41% 12%
5. Small Business Participation - Annual / Service Agreements 30% 29.53% 30%
B. Consistently Live by Our Values Through Our Actions and Priorities
1a. Safety (Annual only) 97% 91% 90%
1b. Construction contractor recordable accident rate, goal = 4 4 1.36 5
1c. Construction contractor lost-time accident rate, goal = 2 2 0.0 2
1d. Port employee OIR (Occupational Incident Rate), goal = 2 2 2.1 3
2. Environment - Annual (Annual only) 100% 100% 100%
3. PREP Timeliness 60.2% 98% 75.2% 98%
C. Manage Our Finances Responsibly
1. Construction Soft Costs - Total Soft Costs (36 mos avg) Max. 25%
31% 29% capital costs
2. Construction Soft Costs - Total Construction Costs (36 mos avg) Min. 75%
69% 71% capital costs
D. Exceed Customer Expectations
1. Customer Score Card - Annual (Annual only) 85% 91.9% 85%
Procurement Schedule (Average # of Days):
2. Major Construction (RTB Execution) 62 70 67 Avg # days
3. Small Works (RTB - Execution) 40 45 44 Avg # days
4. Goods & Services: Invitation to Bid (Final Specs Execution) 60 66 N/A Avg # days
5. Goods & Services: Request for Procurement (Final Specs N/A
Execution) 141 149 Avg # days
6. Service Agreements: IDIQ (Final Scope - Execution) 192 141 N/A Avg # days
7. Service Agreements: Project Specific (Final Scope - Execution) 156 190 N/A Avg # days
8. Service Agreements: CAT I (Final Scope - Execution) 16 30 N/A Avg # days
9. Service Agreements: CAT II (Final Scope - Execution) 50 46 N/A Avg # days
E. Support Port Mission with Implementation of Port Divisions' Business Plan
Max. 5%
construction
1. Construction Cost Growth - Discretionary Change 0% -4.1% contract award
Max. 5%
construction
2. Construction Cost Growth - Mandatory Change 3% 6% contract award
Max. 10% of
originally
3. Project Schedule Growth - Design 28% 53% allotted duration
Max. 10% of
originally
4. Project Schedule Growth - Construction 10% 18% allotted duration
5. Project Status - On Schedule / On Budget (Q1 2015) 63.7% 61.8% 60%
6. Project Status - Either Schedule or Budget Off (Q1 2015) 35.2% 37.1% 40%
7. Project Status - Both Schedule and Budget Off (Q1 2015) 1.1% 1.1% 0%
30
V. CAPITAL DEVELOPMENT DIVISION FINANCIAL & PERFORMANCE REPORT 06/30/15
C. OPERATING RESULTS
Fav (UnFav) Fav (UnFav)
2014 YTD 2015 Year-to-Date Budget Variance Year-End Projections Budget Variance
$ in 000's Notes Actual Actual Budget $ % Forecast Budget $ %
Total Revenues 19 1 - 1 0.0% 1 - 1 0.0%
Expenses Before Charges To Cap/Govt/Envrs Propects
Capital Development Administration 189 196 206 9 4.6% 416 419 3 0.6%
Engineering 7,096 6,840 8,509 1,668 19.6% 16,254 17,524 1,270 7.2%
Port Construction Services 4,191 3,032 4,086 1,054 25.8% 7,337 8,165 828 10.1%
Central Procurement Office 2,197 2,224 2,972 748 25.2% 5,574 5,604 30 0.5%
Aviation Project Management 5,334 5,834 8,134 2,300 28.3% 13,397 16,350 2,952 18.1%
Seaport Project Management 1,380 884 1,271 387 30.5% 2,418 2,550 133 5.2%
Total Before Charges to Capital Projects 20,387 19,009 25,177 6,168 24.5% 45,397 50,612 5,215 10.3%
Charges To Capital/Govt/Envrs Projects
Capital Development Administration - - - - - - -
Engineering (4,558) (5,198) (5,709) (511) 9.0% (11,537) (11,887) (350) 2.9%
Port Construction Services (2,331) (1,636) (2,278) (642) 28.2% (4,157) (4,557) (400) 8.8%
Central Procurement Office (838) (925) (1,241) (316) 25.4% (2,312) (2,485) (173) 7.0%
Aviation Project Management (4,583) (5,159) (5,856) (697) 11.9% (10,767) (11,767) (1,000) 8.5%
Seaport Project Management (863) (654) (851) (196) 23.1% (1,722) (1,722) - 0.0%
Total Charges to Capital/Govt/Envrs Projects (13,172) (13,573) (15,935) (2,362) 14.8% (30,495) (32,418) (1,923) 5.9%
Operating & Maintenance Expense
Capital Development Administration 189 196 206 9 4.6% 416 419 3 0.6%
Engineering 2,538 1,642 2,799 1,157 41.3% 4,717 5,637 0.0%
Port Construction Services 1,860 1,395 1,807 412 22.8% 3,181 3,609 428 11.9%
Central Procurement Office 1,359 1,298 1,731 432 25.0% 3,262 3,119 (143) -4.6%
Aviation Project Management 751 674 2,278 1,604 70.4% 2,630 4,583 1,952 42.6%
Seaport Project Management 517 229 421 191 45.5% 696 828 133 16.0%
Total Expenses 7,215 5,436 9,242 3,806 41.2% 14,902 18,194 3,292 18.1%
Variance Summary and other notes:
Vacancies: 31.75 FTEs = $2.28M Salaries & Benefit savings from unfilled (and delayed) positions.
Absorption OH Clearing $47K represents costs allocated as overhead below the total actual overhead costs.
Actual capital, expensed and net operating costs will decrease to account for the over absorption value. YTD
budget variance will decrease by the Absorption value. Expect to balance out in Q4.
Total Operating Expense to be adjusted over 2015 to offset 2014 Overhead Carryover amount of $468,136.
CDD Admin $9K. Favorable variance due to savings in Equipment, Supplies, and Salary expense, offset by
unfavorable variance in Travel (expense budgeted in future period).
ENG $1.2M. Favorable variances in Salaries & Benefits, Equipment, Supplies, Utilities, Outside Services,
Telecommunications and Travel due to proactive cost saving measures coupled with project delays. Offset
by unfavorable variances from unexpected Workers Comp (2014 injury) and reduced Charges to Capital due
to delayed capital projects.
PCS $412K. Favorable variances in Salaries & Benefits, Supplies, Equipment, Outside Services, General
Expenses, Telecommunications, Utilities and Travel were offset by unfavorable variances in Workers Comp
(2014 injury) and reduced Charges to Capital (less than expected capital project work).
CPO $432K. Favorable variances primarily due to Salaries & Benefits, Equipment, Utilities, Supplies,
Outside Services (delayed Air/Ops Panel Replacement expense and Janitorial invoices not yet received), and
Travel. Unfavorable variance in Charges to Capital due to project delays.
AVPMG $1.6M. Favorable variances in Salaries & Benefits, Equipment (delayed IAF purchases), Outside
Services (delayed IAF consultant expense), Utilities and Property Rentals (IAF expenses to be capitalized)
and Travel offset by unfavorable variances in Supplies, General Services (unbudgeted new employee
relocation expenses) and reduced Charges to Capital (due to IAF delays ).
SPM $191K. Favorable variances in Salary & Benefits, Supplies, Equipment, and Travel were offset by
unfavorable variances in Outside Services (software license budgeted in Equipment) and reduced Charges to
Capital.
31
VI. CORPORATE FINANCIAL & PERFORMANCE REPORT 06/30/15
A. BUSINESS EVENTS
Participated as presenting sponsor of Seattle Maritime Festival including Maritime Career Day, Stories of the
Sea at Fishermen's Terminal, Family Fun Day, and Maritime Festival Luncheon aboard Holland America
cruise ship (300 community, industry and elected officials).
Provided a range of consultation, information and review coordinating with Port of Tacoma and continue to
proactively work through accounting/financial reporting set-up and scenarios for the Northwest Seaport
Alliance (NWSA).
Celebrated 30 years of tourism promotion in the UK with a delegation from Washington State, including
Port Commissioners from Seattle and Walla Walla, regional destination marketing and hotel key staff.
Developed and distributed news releases regarding the hiring of three new executives; environmental
programs; 2015 cruise season; Northwest Seaport Alliance; $23M investment in new air cargo expansion
projects to accommodate growth; new poster art exhibit with EMP Museum as part of the Sea-Tac Airport
Experience the City of Music Program and record passenger numbers at Sea-Tac Airport.
Organized 5 teams around 3 of the Century Agenda Strategic Objectives and High Performance teams.
Health completion for employees and spouse/dependent was June 30 with approximately 90% participation.
Implemented Origami enhancements with a Near Miss reporting component that will allow all Port
employees to report near misses when they occur in real time.
Prepared, negotiated and implemented collective bargaining agreements and provided consultation on
administration of collective bargaining agreements to Port divisions and oversight committees.
Received the Driver Training Award for the Pier 69 Fleet Users from the Public Risk and Insurance
Management Association (PRIMA).
Upgraded the banking interfaces used by several revenue generating systems which was critical to the full
cut-over to Wells Fargo from Bank of America, which included additional functionality to improve our
ability to process customer credit cards securely.
Installed an automated system for detecting foreign objects on the center runway.
Provided easy access to valuable information on Airport baggage processing including metrics and baggage
progress by consolidating data from disparate systems into a baggage information dashboard.
The Port received a clean, unqualified independent Certified Public Accountant (CPA) audit opinion on the
Port's 2014 financial statements from the Certified Public Accounting (CPA) firm, Moss Adams.
Hosted the Port of Seattle and Finance team meet and greet reception.
Presented the First Reading and Second Reading and Final Passage of Bond Resolution 3709 to the Port
Commission. Resolution 3709 authorizes the issuance and sale of intermediate lien revenue and refunding
bonds in the aggregate principal amount of not to exceed $675M.
Provided debt service model information to the internal auditor for the SLOA III rates and settlement audit.
Continued good progress toward improving the Port's accounting policies and ensuring their continued
alignment with evolving prescribed Generally Accepted Accounting Principles (GAAP).
Held in partnership with Sound Transit and the City of Seattle a "Succeeding in a Project Labor Agreement
Environment (PLA training)" forum to provide information and technical assistance support to small
contractor participation in public works contracts, attended by nearly 40 small contractors and individuals.
Continued to reach out to the community to educate small businesses on contracting opportunities and the
Small Contractors and Suppliers Program (SCS).
Continued to develop partnerships with important stakeholders who are part of the workforce development
community.
Met with the Sound Transit, City of Seattle, King County to collaborate on apprenticeship utilization and
construction workforce issues.
Police continued to conduct Customer Service Surveys and have improved process to an electronic version
that will allow contacting a larger number of customers.
Police initiated training for the electronic ticketing process (Sector) that will reduce the amount of time and
resources required to issue traffic citations and accident reports.
32
VI. CORPORATE FINANCIAL & PERFORMANCE REPORT 06/30/15
B. KEY PERFORMANCE METRICS
Key Performance Indicators/Measures YTD 2015 YTD 2014/Notes
A. Implement Century Agenda Strategies
1. Percentage of eligible dollars spent with small businesses 53.98% 44.2% increased
by 10%
2. Small businesses registered on the Procurement Roster 92 86, increased by 6
Management System (PRMS)
3. Percentage of craft hours worked by apprentices on projects over 15.82% N/A
$1M (or PLA)
4. Community members gaining employment through Airport Jobs 644 682, decreased by
Center 38
5. Apprenticeship Opportunity Project Placements 46 50, decreased by 4
6. Small business and Workforce development outreach events and 7 17, decreased by
workshops 10
B. Consistently Live by Our Values Through Our Actions and Priorities
8 classes, 50 6 classes, 26
1. MIS and Clarity Training
attendees attendees
425 233, increased by
2. Employee Development Class Attendees/Structured Learning
192
3. Required Safety Training 79% 93%
4. Request of information and guidelines for integrity & business 114 79, increased by
conduct 35
4.26 6.1, decreased by
5. Occupational Injury Rate
30%
374 891, decreased by
6. Total Lost work days
517 days
C. Manage Our Finances Responsibly
1. Corporate costs as a % of Total Operating Expenses 25.5% 25.9%
2. Clean independent CPA audits involving AFR yes yes
3. Timely process disbursement payment requests 4 days 3 days
4. Keep receivables collections 85% current (within 30 days) 90% 93%
5. Investment Portfolio Yield 0.79% 0.90%
6. Litigation and Claim Reserves (in $ thousand) $2.8 $1.5
D. Exceed Customer Expectations
1. Respond to Public Disclosure Requests 220 174, increased by
46
2. Information and Communication Technology System Availability 99.6% 99.8%
3. IT Network Availability 99.9% 99.9%
4. Service Desk % First Call Resolution 42% 56%
5. Customer Survey for Police Service Excellent or Very Good 87% 92%
E. Support Port Mission with Implementation of Port Divisions' Business Plan
1. Oversee Implementation and Administration of CBAs agreements 90 32
2. Number of Jobs Openings 181 156
3. Percent of annual audit work plan completed each year 28% 28%
33
VI. CORPORATE FINANCIAL & PERFORMANCE REPORT 06/30/15
C. OPERATING RESULTS
Fav (UnFav) Fav (UnFav)
2014 YTD 2015 Year-to-Date Budget Variance Year-End Projections Budget Variance
$ in 000's Notes Actual Actual Budget $ % Forecast Budget $ %
Total Revenues 190 112 170 (58) -34.3% 340 340 - 0.0%
Executive 808 954 1,066 113 10.6% 1,798 1,798 - 0.0%
Commission 604 680 797 117 14.6% 1,440 1,545 105 6.8%
Legal 1,519 1,648 1,627 (21) -1.3% 3,195 3,156 (39) -1.2%
Risk Services 1,441 1,536 1,627 91 5.6% 3,244 3,249 5 0.2%
Health & Safety Services 513 550 580 30 5.3% 1,153 1,190 37 3.1%
Public Affairs 2,659 2,437 3,069 631 20.6% 5,707 5,937 231 3.9%
Human Resources & Development 2,547 2,459 2,873 414 14.4% 5,489 5,958 469 7.9%
Labor Relations 409 433 522 89 17.0% 963 1,024 61 6.0%
Information & Communications Technology 9,649 9,515 10,173 658 6.5% 21,285 21,435 150 0.7%
Finance & Budget 884 786 829 43 5.1% 1,708 1,713 5 0.3%
Accounting & Financial Reporting Services 3,062 3,272 3,712 440 11.9% 7,057 7,350 293 4.0%
Internal Audit 738 614 802 188 23.4% 1,459 1,552 93 6.0%
Office of Social Responsibility 947 923 1,165 242 20.8% 2,271 2,312 41 1.8%
Office of Strategic Initiatives - 75 - (75) 0.0% 378 - (378) 0.0%
Police 11,001 10,924 11,231 308 2.7% 22,789 22,879 90 0.4%
Contingency 88 417 650 233 35.8% 800 1,050 250 23.8%
Total Expenses 36,868 37,221 40,723 3,502 8.6% 80,736 82,149 1,413 1.7%
Corporate revenues were $58K unfavorable compared to budget due to timing in receiving the reimbursement
from King County who collects the 911 call system tax and who then reimburses the Port.
Corporate expenses for the first six months of 2015 were $37.2M, $3.5M or 8.6% favorable compared to the
approved budget and $353K or 1.0% higher than the same period a year ago. The $3.5M favorable variance is
due primarily to cost savings in vacant positions, delay hiring, and timing of spending.
All corporate departments have a favorable variance except for:
Legal - unfavorable variance of $21K is due to unanticipated outside legal and litigation costs for the
Seaport Alliance and T-5 Interim Use.
Office of Strategic Initiative - unfavorable variance of $75K is due to start- up costs for new
department.
Year-end spending is projected to be $1.4M under budget due primarily to:
Executive plans on being on budget.
Commission - savings due to a vacant position, Outside Services and General Expenses.
Legal overspending is due to unanticipated outside legal and litigation costs for the Seaport Alliance
and T-5 Interim Use.
Risk Services - savings due to lower Broker Fees.
Health and Safety - savings in Payroll, Outside Services and Travel Expenses.
Public Affairs - savings due to vacant positions, Outside Services and Travel Expenses.
Human Resources and Development - savings due to vacant positions.
Labor Relations - savings due to vacant positions.
ICT- due to lower Telecommunication Expenses.
Finance & Budget - savings in Travel Expenses and Internal Transfers.
Accounting and Financial Reporting Services savings due to vacant positions, Outside
Services,Travel and Charges to Capital Projects.
Internal Audit - savings due to vacant positions and Travel Expenses.
Office of Social Responsibility - savings in Outside Services, Travel and General Expenses.
Office of Strategic Initiative overspending is due to start- up costs for new department.
Police - savings in Outside Services due to delayed traffic control costs.
Contingency anticipate not using all funds.
34
VI. CORPORATE FINANCIAL & PERFORMANCE REPORT 06/30/15
D. CAPITAL SPENDING RESULTS
2015 YTD 2015 2015 Budget Variance
$ in 000's Actual Forecast Budget $ %
PeopleSoft HCM Upgrade 229 1,400 1,500 100 6.7%
ID Badge System Replacement 462 826 826 0 0.0%
Constr Doc Mgmt Sys Repl. 94 853 853 0 0.0%
Infrastructure - Small Cap 817 1,500 1,500 0 0.0%
Service Tech - Small Cap 346 1,000 1,384 384 27.7%
Maximo Upgrade 0 200 850 650 76.5%
Storage Array Network 0 500 500 0 0.0%
CDD Fleet Replacement 138 895 854 (41) -4.8%
All Other 1,575 3,728 4,866 1,138 23.4%
TOTAL 3,661 10,902 13,133 2,231 17.0%
Note:
"All Other" includes remaining ICT projects, plus CDD and Corp. fleet and small cap.
35
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