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ITEM NO: ___7b_________ DATE OF MEETING: August 7, 2012 Q2 2012 Performance Report Port of Seattle Commission Briefing August 7, 2012 Q2 Financial Highlights Total Port Operating Revenues were $259.2 million, $15.9 million, or 6.5%, over Q2 2011 Operating Revenues were $8.7 million, or 3.5%, above budget Port wide Operating Expenses were $12.9 million, or 8.5% below budget - all divisions' expenses were under budget for the second quarter Net Income Before Depreciation was $128.7 million, or 21.8% above budget and 2.5% higher than Q2 2011 Net Income After Depreciation was $39.9 million, or 95.9% above budget and 4.3% higher than Q2 2011 2 Q2 Major Revenue Variances 2011 YTD 2012 YTD 2012 YTD Budget Change Major Revenues ($ in 000's) Actual Actual Budget Variance from 2011 Aero Revenues 111,738 114,547 113,274 1,272 2,809 Seaport Security Grants 51 1,848 920 927 1,797 Public Parking 25,160 25,205 26,133 (927) 46 Rental Cars 13,991 16,066 18,571 (2,505) 2,076 Concessions 16,910 17,652 16,779 874 742 Ground Transportation 3,739 3,931 3,802 129 192 Utilities 3,726 3,876 3,405 470 149 Container 32,417 38,126 30,414 7,712 5,709 Seaport Industrial Properties 6,536 7,756 7,156 600 1,220 Cruise 3,558 3,989 3,909 80 431 Grain 3,046 3,208 2,802 406 162 Third Party Management 5,175 5,578 6,326 (747) 403 Other 17,232 17,411 17,051 360 1,548 Subtotal 131,491 142,799 136,349 6,451 11,308 TOTAL 243,280 259,194 250,543 8,651 15,914 Excluding Aeronautical Revenues and Seaport Security Grants, Other Operating Revenues were $6.5M higher than budget and $11.3M higher than Q2 2011. 3 Q2 Major Expense Variances 2011 YTD 2012 YTD 2012 YTD Budget Change Major Expenses ($ in 000's) Actual Actual Budget Variance from 2011 %,FACCOUNT,TALL_ACCOUNTS2,NA5210Salaries & Benefits 41,280 46,024 47,761 1,737 4,744 %,FACCOUNT,TALL_ACCOUNTS2,NA5410Wages & Benefits 39,930 43,162 44,850 1,689 3,231 %,FACCOUNT,TALL_ACCOUNTS2,X,NA5990Payroll to Capital Projects 9,337 9,028 11,190 2,163 (309) %,FACCOUNT,TALL_ACCOUNTS2,NA6120Equipment Expense 3,072 2,896 2,936 40 (176) %,FACCOUNT,TALL_ACCOUNTS2,NA6310Supplies & Stock 3,300 3,735 3,341 (394) 435 %,FACCOUNT,TALL_ACCOUNTS2,NA6410Outside Services 20,672 20,164 28,857 8,694 (508) %,FACCOUNT,TALL_ACCOUNTS2,NA6210Utilities 11,418 11,351 10,708 (643) (67) %,FACCOUNT,TALL_ACCOUNTS2,NA6510Travel & Other Employee Exps 1,766 1,963 3,225 1,262 - %,FACCOUNT,TALL_ACCOUNTS2,NA6650,NA6670,NA6690,NA6710Other Expenses 8,292 13,934 14,339 404 5,643 %,FACCOUNT,TALL_ACCOUNTS2,NA6850Charges to Capital Projects (13,558) (13,743) (15,773) (2,030) (185) %,FACCOUNT,TALL_ACCOUNTS2,NA5000TOTAL 125,507 138,514 151,434 12,921 13,007 Operating Expenses were $12.9M lower than budget mainly due to some vacant positions and timing of spending. Operating Expenses were $13.0M higher than Q2 2011 mainly due to higher payroll costs, passthrough grants expense, environmental reserve expense, and unanticipated litigations. 4 Q2 Operating Income Summary 2011 YTD 2012 YTD 2012 YTD Budget Variance ($ in 000's) Actual Actual Budget $ % Aeronautical Revenues 111,738 114,547 113,274 1,272 1.1% Other Operating Revenues 131,542 144,647 137,269 7,378 5.4% Total Operating Revenues 243,280 259,194 250,543 8,651 3.5% Total Operating Expenses 125,507 138,514 151,434 12,921 8.5% NOI before Depreciation 117,773 120,680 99,109 21,571 21.8% Depreciation 79,569 80,829 78,763 (2,066) -2.6% NOI after Depreciation 38,204 39,851 20,345 19,505 95.9% Total Operating Revenues were $8.7M higher than budget. Total Operating Expenses were $12.9M lower than budget. NOI before Depreciation was $21.6M higher than budget. 5 2012 Year-End Forecast 2011 2012 2012 Budget Variance ($ in 000's) Actual Forecast Budget $ % Aeronautical Revenues 207,248 235,608 235,706 (98) 0.0% Other Operating Revenues 275,924 295,691 281,176 14,515 5.2% Total Operating Revenues 483,172 531,299 516,882 14,417 2.8% Total Operating Expenses 267,416 309,673 309,844 171 0.1% NOI before Depreciation 215,756 221,626 207,038 14,588 7.0% Depreciation 158,107 161,235 158,479 (2,756) -1.7% NOI after Depreciation 57,649 60,391 48,559 11,832 24.4% Total Revenues are forecasting to be $14.4M above budget mainly due to refunding of the T18 Special Facilities Bonds. Total Expenses are forecasting to be $171K below budget mainly due to some vacant positions. NOI before Depreciation is forecasting to be $14.6M over budget. 6 Comprehensive Summary 2011 YTD 2012 YTD 2012 YTD Budget ($ in 000's) Actual Actual Budget Var. $ Var. % Explanation Revenues 1. Aeronautical Revenues 111,738 114,547 113,274 1,272 1.1% 2. Operating Revenues 131,542 144,647 137,269 7,378 5.4% See details in the previous slides 3. Tax Levy 36,804 36,347 36,500 (153) -0.4% 4. PFCs 31,683 33,527 30,266 3,261 10.8% Due to higher enplanements 5. CFCs 10,074 10,109 9,224 886 9.6% 6. Fuel Hydrant - 4,026 3,919 107 2.7% 7. Non-Capital Grants & Donations 2,557 800 840 (39) -4.7% 8. Capital Contributions 9,386 12,030 9,712 2,318 23.9% Grants approved earlier than expected 9. Interest Income 9,476 5,620 2,874 2,746 95.5% Higher fund balance & higher return Total 343,259 361,653 343,878 17,775 5.2% Expenses 1. O&M Expense 125,507 138,514 151,434 12,921 8.5% See details in the previous slides 2. Depreciation 79,569 80,829 78,763 (2,066) -2.6% Bookings of additional assets 3. Revenue Bond Interest Expense 64,160 59,554 68,071 8,516 12.5% Refunded $640 million revenue bonds 4. GO Bond Interest Expense 8,033 7,305 7,459 154 2.1% 5. PFC Bond Interest Expense 3,379 3,402 3,405 3 0.1% 6. Public Expense 5,289 3,561 5,578 2,017 36.2% Timing of spending on public projects 7. Non-Op Environmental Expense 1,190 (301) 2,645 2,946 111.4% 8. Other Non-Op Rev/Expense 2,657 7,384 1,726 (5,658) -327.8% Retirement of C-22 Baggage System Total 289,785 300,249 319,082 18,833 5.9% Change In Net Assets 53,475 61,404 24,796 36,608 147.6% Total Revenues were $17.8M above budget and $18.4M higher than Q2 2011. Total Expenses were $18.8M less than budget and $10.5M higher than Q2 2011. Change in Net Assets were $36.6M above budget and $8.0M higher than Q2 2011. 7 Capital Spending by Division 2011 2012 2012 Budget Division Actual Forecast Budget Variance ($ in millions) Aviation 166.8 133.2 135.4 2.2 Seaport 18.8 13.3 15.5 2.2 Real Estate 10.1 4.2 7.3 3.1 Corporate & CDD 4.4 9.6 11.7 2.1 Total 200.1 160.3 169.9 9.6 Capital spending for each division is expected to come in below budget in 2012. Total capital spending is forecasting to be $160.3M for 2012, $9.6M lower than budget. 8 Aviation Division Q2 2012 Performance Report Commission Briefing August 7, 2012 Aviation Business Highlights Airline activity: 2012 YTD enplanements up 2.2% from 2011 2012 YTD landed weight down 1.4% from 2011 Operating Expenses: YTD 8.7% below budget Forecast 0.1% below budget Non-airline Revenues: YTD up 5.1% over 2011 YTD, but down 2.5% vs. YTD 2012 budget Forecast up 5.6% over 2011, and up 0.9% vs. 2012 budget Airline costs: Forecast 2012 CPE at $13.25 vs. budget of $13.26 Higher forecast of operating costs of $195.5k due to litigated claims and environmental remediation liabilities offset by delays in airlines realignment Lower variable rate interest on debt service resulted in capital costs savings of $2.2 million Capital program: 2012 capital spending 1.6% below budget 10 Activity 2011 2012 % 2011 2012 % Figures in 000's YTD YTD Variance Actual Budget Variance Enplanements 7,678 7,844 2.2% 16,397 16,650 1.5% Landed Weight 9,648 9,509 -1.4% 20,123 20,444 1.6% International enplaned passengers saw greater year-over-year growth of 5.2% vs. 2011 YTD than domestic enplanements of 1.8% vs. 2011 YTD Cargo Landed Weight is down -8.2% vs. 2011 YTD February statistics are skewed because of the leap day 11 Q2 Operating Revenues 2011 YTD 2012 YTD 2012 YTD Budget Variance Change from 2011 $ in 000's Actual Actual Budget $ % $ % Revenues: Landing Fees 29,388 32,704 33,973 (1,269) -3.7% 3,316 11.3% Terminal Rental 70,840 74,332 71,605 2,727 3.8% 3,492 4.9% Other Aero Revenues * 7,551 7,510 7,696 (186) -2.4% (40) -0.5% Total Aeronautical 107,778 114,547 113,274 1,272 1.1% 6,768 6.3% Public Parking 25,160 25,205 26,133 (927) -3.5% 46 0.2% Rental Cars 13,868 13,374 14,044 (670) -4.8% (494) -3.6% CFC Operating Revenues (RCF) - 2,692 4,527 (1,834) -40.5% 2,692 n/a Ground Transportation 3,739 3,931 3,802 129 3.4% 192 5.1% Concessions 16,910 17,652 16,779 874 5.2% 742 4.4% Other Non-airline 9,184 9,501 8,962 539 6.0% 317 3.5% Total Non-Aeronautical 68,862 72,357 74,246 (1,890) -2.5% 3,495 n/a 5.1% Total Revenues 176,640 186,903 187,521 (617) -0.3% 10,263 5.8% YTD Landing Fees are down 3.7% vs. budget due to lower landed weight. Terminal Rents are up $2.7 million or 3.8% due to budget seasonality error. Public Parking revenues under $927K or 3.5% mainly due to 1-4 day transactions down 2.4% vs. budget, and estimated $110K shortfall from parking system upgrade issue resulting in lost revenue. Rental car revenues are lower than budget by $670K due to monthly budget not spread based on seasonality, and gross industry revenues are lower than the revenues assumed in the budget by 1.2% even though transaction days are higher by 1.7% through May. CFC operating revenues are $1.8 million less than budget due to lower operating expenses from the delayed opening of the facility. Concessions is 5.2% or $874K greater than budget due to stronger primary concession sales per enplanement than budgeted. * 2011 non-cash Fuel Hydrant restated as non-operating revenues 12 Q2 Expense & NOI 2011 YTD 2012 YTD 2012 YTD Budget Variance Change from 2011 $ in 000's Actual Actual Budget $ % $ % Expenses: Salaries & Benefits 38,822 44,003 45,840 1,837 4.0% 5,182 13.3% Outside Services 11,185 11,177 17,053 5,876 34.5% (8) -0.1% Supplies & Stock 2,444 2,790 2,194 (596) -27.2% 346 14.2% Utilities 7,294 7,065 6,469 (596) -9.2% (229) -3.1% Other 4,079 5,182 4,766 (416) -8.7% 1,103 27.0% Baseline Airport Expenses 63,824 70,219 76,323 6,104 8.0% 6,394 10.0% Environmental Remediation Liability (210) 833 1,914 1,082 56.5% 1,043 -496.5% Total Airport Expenses 63,614 71,051 78,237 7,186 9.2% 7,437 11.7% Corporate 15,307 16,286 17,272 986 5.7% 980 6.4% Police Costs 7,885 7,733 8,530 797 9.3% (152) -1.9% Capital Development/Other Expenses 3,155 5,374 5,927 553- 9.3%n/a 2,219 - 70.3% Total Operating Expenses 89,961 100,445 109,967 9,522 8.7% 10,484 11.7% Net Operating Income 86,679 86,458 77,554 8,905 11.5% (221) -0.3% Categories with positive variances: Categories with negative variances: Rental Car Facility (RCF) Delayed Opening $1.1M Winter snow and ice control event materials and labor $1.3M Delay in Outside and Contracted Services $2.7M Higher utility surface water discharge from deicer $607.5k Delayed hiring and open positions $1.5M Litigated injury claims not budgeted $1.5M Environmental remediation abatement projects $1.1M Employee training and development $545.1k Airlines Realignment $2.5M Airlines Realignment expenses coded to CDD $922k 13 Division Summary 2011 2012 2012 Budget Variance Change from 2011 $ in 000's Actual Forecast Budget $ % $ % Operating Revenues: Aeronautical 207,763 236,123 236,221 (98)- n/a 0.0% 28,360 13.7% Non-Aeronautical 142,959 150,930 149,531 1,399 - n/a 0.9% 7,972 5.6% Total Operating Revenues 350,722 387,053 385,751 1,301 0.3% 36,331 10.4% Expenses: Operating Expenses 190,442 219,969 221,981 2,012 0.9% 29,528 15.5% Environmental Remediation Liability 1,428 4,913 3,096 (1,817) -58.7% 3,486 244.2% Total Operating Expenses 191,869 224,882 225,078 196 0.1% 33,013 17.2% Net Operating Income 158,853 162,171 160,674 1,497 0.9% 3,317 2.1% Capital Spending 166,820 133,196 135,419 2,223 1.6% (33,624) -20.2% Key Measures: Non-Aero NOI ($ in 000s) 84,173 79,170 75,982 3,188 4.2% (5,003) -5.9% Passenger Airline CPE 11.75 13.25 13.26 0.01 0.1% 1.50 12.8% Debt / Enplaned Passenger 161.46 152.2 152.2 - 0.0% (9.28) -5.7% Debt Service Coverage 1.47 1.39 1.34 0.05 3.7% (0.08) -5.5% Aeronautical revenues forecasted less than budget due to savings from lower variable rate interest, refunding of bonds and delays in airlines realignment expenses offset by litigated claims and environmental reserves. Non-Aeronautical revenues forecasted greater than budget due to better concessions performance than budgeted, higher energy and water sales from increased usage, and rental car space rents due to delay in RCF opening. Operating expenses forecasted less than budget due to delays in airlines realignment project. 14 Aeronautical Business 2011 2012 2012 Budget Variance Change from 2011 $ in 000's Actual Forecast Budget $ % $ % Revenues requirement: Capital Costs 81,507 89,720 91,876 2,157 2.3% 8,213 10.1% Operating Costs net Non-Aero 133,083 153,122 151,529 (1,593) -1.1% 20,039 15.1% Total Costs 214,590 242,842 243,405 564 0.2% 28,252 13.2% FIS Offset (7,000) (8,000) (8,000) - 0.0% (1,000) 14.3% Other Offsets (15,417) (14,461) (14,895) (435) 2.9% 956 -6.2% Net Revenue Requirement 192,173 220,381 220,510 129 0.1% 28,208 14.7% Other Aero Revenues 15,590 15,742 15,711 31 0.2% 152 1.0% Total Aero Revenues 207,763 236,123 236,221 98 0.0% 28,360 13.7% Less: Non-passenger Airline Costs 15,098 15,423 15,392 (31) -0.2% 325 2.2% Net Passenger Airline Costs 192,665 220,700 220,828 129 0.1% 28,035 14.6% 2012 actuals include lower variable rate debt service interest of $2.2M. 2011 2012 2012 Budget Variance Change from 2011 Actual Forecast Budget $ % $ % Cost Per Enplanement: Capital Costs / Enpl 4.97 5.39 5.52 0.13 2.3% 0.42 8.4% Operating Costs / Enpl 8.12 9.20 9.10 (0.10) -1.1% 1.08 13.3% Offsets (1.37) (1.35) (1.38) (0.03) 1.9% 0.02 -1.3% Other Aero Revenues 0.95 0.95 0.94 (0.00) -0.2% (0.01) -0.6% Non-passenger Airline Costs (0.92) (0.93) (0.92) 0.00 -0.2% (0.01) 0.6% Passenger Airline CPE 11.75 13.25 13.26 0.01 0.1% 1.51 12.8% 15 Non Aeronautical Business 2011 2012 2012 Budget Variance Change from 2011 $ in 000's Actual Forecast Budget $ % $ % Revenues: Public Parking 49,996 51,512 52,480 (968) -1.8% 1,516 3.0% Rental Cars 29,969 28,359 26,580 1,779 6.7% (1,610) -5.4% CFC Operating Revenues (RCF) 778 7,560 9,053 (1,493) -16.5% 6,783 872.3% Ground Transportation 7,704 7,419 7,519 (100) -1.3% (285) -3.7% Concessions 35,404 37,107 35,659 1,448 4.1% 1,702 4.8% Other 19,109 18,974 18,240 734 4.0% (135) -0.7% Total Revenues 142,959 150,930 149,531 1,399 0.9% 7,972 5.6% Operating Expense 59,544 72,643 74,639 1,996 2.7% 13,099 22.0% Share of terminal O&M 17,610 18,906 18,698 (208) -1.1% 1,295 7.4% Less utility internal billing (18,369) (19,789) (19,789) - 0.0% (1,420) 7.7% Net Operating & Maint 58,786 71,760 73,549 1,789 2.4% 12,975 22.1% Net Operating Income 84,173 79,170 75,982 3,188 4.2% (5,003) -5.9% 2011 2012 2012 Budget Variance Change from 2011 Actual Forecast Budget $ % $ % Revenues Per Enplanement Parking 3.05 3.09 3.15 (0.06) -1.8% 0.04 1.5% Rental Cars (excludes CFCs) 1.83 1.70 1.60 0.11 6.7% (0.12) -6.8% Ground Transportation 0.47 0.45 0.45 (0.01) -1.3% (0.02) -5.2% Concessions 2.16 2.23 2.14 0.09 4.1% 0.07 3.2% Other 1.21 1.59 1.64 (0.05) -2.8% 0.38 31.4% Total Revenues 8.72 9.06 8.98 0.08 0.9% 0.35 4.0% Primary Concessions Sales / Enpl 10.30 10.60 10.42 0.18 1.7% 0.30 2.9% 16 Net Cash Flow: NOI After Debt Service & Interest Income 2011 2012 2012 Budget Variance Change from 2011 $ in 000's Actual Forecast Budget $ % $ % Aeronautical Net Operating Income (NOI) 74,679 83,001 84,692 (1,691) -2.0% 8,322 11.1% Debt Service 71,096 75,570 77,726 2,156 2.8% 4,474 6.3% Aero NOI After Debt Service 3,584 7,431 6,966 465 6.7% 3,848 107.4% Non-Aeronautical Net Operating Income (NOI) 84,173 79,170 75,982 3,188 4.2% (5,003) -5.9% Debt Service 40,845 44,847 45,390 543 1.2% 4,003 9.8% Non-Aero NOI After Debt Service 43,328 34,323 30,592 3,731 12.2% (9,006) -20.8% Total Aviation NOI 158,852 162,171 160,674 1,497 0.9% 3,318 2.1% Debt Service 111,940 120,417 123,116 2,699 2.2% 8,477 7.6% NOI After Debt Service 46,912 41,754 37,557 4,196 11.2% (5,158) -11.0% Add ADF Interest Income 4,771 3,704 3,771 (67) -1.8% (1,067) -22.4% Add Non-Operating TSA Grant 1,035 1,479 1,479 - 0.0% 445 43.0% Net Cash Flow after D/S & Interest Inc. 52,717 46,937 42,808 4,129 9.6% (5,781) -11.0% 17 Capital Variance $ in 000's 2012 YTD 2012 2012 Forecast/Budget Description Actual Forecast Budget Variance % Loading Bridges Utilities 109 459 5,750 5,291 92.0% Rental Car Facility Construction 14,408 25,061 29,778 4,717 15.8% All Other 31,663 107,676 99,891 (7,785) -7.8% Total 46,180 133,196 135,419 2,223 1.6% Loading bridge utilities design phase was extended due to addition to scope and construction will begin later than anticipated. RCF savings have been identified as the project nears completion. Change orders have been submitted by the construction contractor and it is anticipated that many of these will be resolved in the Port's favor. 18 2012 - 2016 Capital and Funding Plan Future 2012-2016 Revenue $ in 000's Total Bonds Budget 1,051,463 501,000 Forecast 1,173,577 623,114 Increase 122,114 122,114 Change due to North Satellite 150,000 19 2012 Annual Budget Changes $ in 000's 2012 Description Spending SSAT HVAC,Lights,Ceiling Repl 1,177 Port-Owned Loading Bridge R&R 979 North Satellite 650 New Window Wall Ticket Zone 1 610 Rubber and Paint Removal Equip 600 Emergency Lighting - Parking 591 Other 2,843 Total 7,450 20 Future 2012 Authorization Requests Future 2012 Authorization Requests: - NorthSTAR Additional Components - Zone 3 Ticketing - Cargo 2 West Hardstand - Cargo 6 Enhancement - Service Tunnel Repair and Replacement - Vertical Conveyance Modernization Aero Phase II - Facility Monitoring System - Zone 2 Ticketing 21 Seaport Division Q2 2012 Performance Report Commission Briefing August 7, 2012 Seaport Business Goals TEU volume was at 1,007K, which was down slightly (.1%) from Q2 YTD 2011. Full year forecasted volume is for 1,750K TEU's compared to budget of 2,000K TEU's. Grain volume was at 2.9 million metric tons up 5.8% from 2011 YTD and 16% over 2012 YTD budget. Cruise season commenced on May 6th. Start -up operations for new ships in Seattle, Disney Cruise Line's Wonder and Norwegian Cruise Line's Jewell went well. 23 Seaport Organizational Goals Environmental Stewardship 58% of frequent vessel calls meeting Northwest Ports Clean Airs Standards target. Year-to-date $1.8 million in clean-up project costs have been recovered from grants and insurance. Regional Transportation Closely engaged in freight mobility management for south harbor road construction projects and detour routes. 24 Seaport Q2 YTD Operating Results 2011 YTD 2012 YTD 2012 YTD 2012 Bud Var $ in 000's Actual Actual Budget $ % Operating Revenue 47,330 55,114 45,972 9,142 20% Security Grants 51 1,848 920 927 101% Total Revenues 47,380 56,962 46,892 10,069 21% Seaport Expenses (excl env srvs) 6,604 6,238 7,222 984 14% Environmental Services 693 874 961 87 9% Maintenance Expenses 2,235 2,759 2,877 118 4% P69 Facilities Expenses 228 272 262 (11) -4% Other RE Expenses 92 145 160 15 9% CDD Expenses 1,435 1,969 2,260 292 13% Police Expenses 1,785 1,900 2,095 196 9% Corporate Expenses 5,221 5,494 6,018 524 9% Security Grant Expense 61 1,833 877 (956) -109% Envir Remed Liability (18) 32 0 (32) NA Total Expenses 18,335 21,514 22,731 1,217 5% Net Operating Income 29,045 35,447 24,161 11,286 47% Note: $6,037K of the revenue variance is the result of the refunding of the T18 Special Facility Bonds in December 2011. 25 Seaport Division Key Variances Revenue Detail ($'s in Thousands) Q2 YTD Business Unit Variance to Budget Better (Worse) Containers* $7,712 Grain $406 Industrial Properties $600 Cruise $80 Docks $345 Security Grants $927 Total $10,069 Note*: $6,037K of the Container revenue variance is the result of the refunding of the T18 Special Facility Bonds in December 2011 26 Seaport Division Key Variances Expense Detail ($'s in Thousands) Q2 YTD Expenses Variance to Budget Better (Worse) Outside Services (Seaport) $825 CDD $292 Corporate $720 Maintenance $118 Security Grant Expenses ($956) All Other $218 Total Expense $1,217 27 Seaport Business Groups NOI Before Depreciation ($'s in Millions) Q2 YTD Variance to Budget Actual NOI Better (Worse) Containers* $28.9 $9.1 Grain $2.6 $ .5 Sea Industrial Properties $3.7 $1.0 Cruise $1.0 $.1 Docks ($ .3) $ .6 Security ($ .4) $.0 Envir Grants/Liability Exp $ .0 $ .0 Total Seaport $35.4 $11.3 Note*: $6.0 million of the Containers variance is the result of the refunding of the T18 Special Facility Bonds in December 2011 28 Seaport Full Year Operating Forecast 2011 2012 2012 2012 Bud Var $ in 000's Actual Forecast Budget $ % Operating Revenue 98,910 110,361 96,980 13,381 14% Security Grants 394 2,603 1,598 1,005 63% Total Revenues 99,304 112,964 98,578 14,386 15% Seaport Expenses (excl env srvs) 12,898 14,476 15,236 760 5% Environmental Services 2,127 2,289 2,289 0 0% Maintenance Expenses 4,608 5,817 5,817 0 0% P69 Facilities Expenses 506 531 531 0 0% Other RE Expenses 180 300 300 0 0% CDD Expenses 3,539 5,588 4,388 (1,200) -27% Police Expenses 3,578 4,141 4,167 26 1% Corporate Expenses 11,177 12,176 12,332 156 1% Security Grant Expense 481 2,688 1,476 (1,212) -82% Envir Remed Liability (633) 0 0 0 NA Total Expenses 38,463 48,006 46,536 (1,470) -3% Net Operating Income 60,842 64,958 52,042 12,916 25% Note*: $12,127K of the forecasted revenue variance is the result of the refunding of the T18 Special Facility Bonds in December 2011. 29 Seaport Capital 2012 Estimated Approved Variance Est. Act. Actual Budget to as % of Budget App. Bud $13.3 $15.5 $2.2 86% Major changes to Approved Budget Pier 91 Fender System Upgrade cost estimate decrease and work delayed to 2013 $1.2 million Security Grants Rounds 9&10 projects authorized, but had not been included in Approved Budget ($.5) million T18 Street Vacation completion delayed $.8 million Small Project delays $.6 million 30 Seaport Capital 2012 Future 2012 Commission Authorization Requests Terminal 18 Pile Cap Pilot Program request for additional funds (Aug. 7th) Terminals 5/18 Maintenance Dredging expense project (~Aug 14th) Pier 66 Pile Wrap construction funding (~ Sept or Q4) East Marginal Way/Argo Express funding increase (~ Sept or Q4) Terminal 46 Dock Rehabilitation project (~Q4) 31 Real Estate Division Q2 2012 Performance Report Commission Briefing August 7, 2012 Real Estate 2nd Quarter Key Events Full Year Net Operating Income forecasted to be ($446K) below budget Revenue forecasted to be ($1,296K) unfavorable to budget Expenses forecasted to be $850K favorable to budget New Conference and Event Center Management Agreement was executed on April 4th and became effective on June 1st Closed sale on 5.75 mile segment of the Eastside Rail Corridor with City of Kirkland in April 5-year agreement executed between the Port of Seattle and the Shilshole Liveaboard Association 33 Real Estate Business Goals Provide Compelling Value and Asset Utilization Occupancy Rates: Commercial property at 91% occupancy, above target of 90% and above 2012 Q2 Seattle market average of 86%. Activity at Bell Harbor International Conference Center below budget. FT/Marina Occupancy: Fishermen's Terminal and Maritime Industrial Center at 75% YTD average occupancy, below target of 86%. Recreational Marinas at 92%, below target of 94%. 34 Real Estate Division Qtr 2 Operating Results 2011 YTD 2012 YTD 2012 YTD 2012 Bud Var $ in 000's Actual Actual Budget $ % Revenue 10,799 10,956 11,120 -164 -1% BHICC & WTC Revenue 3,867 4,207 4,935 -728 -15% Total Revenue 14,667 15,163 16,055 -892 -6% Real Estate Exp(excl Maint,P69,Conf) 4,904 4,967 4,960 -7 0% Real Estate BHICC & WTC 3,230 3,318 3,864 546 14% Eastside Rail Corridor 721 189 101 -88 -86% Maintenance Expenses 3,256 3,356 4,667 1,311 28% P69 Facilities Expenses 68 101 98 -4 -4% Seaport Expenses 462 557 639 82 13% CDD Expenses 467 501 636 135 21% Police Expenses 649 658 725 68 9% Corporate Expenses 2,454 2,246 2,531 284 11% Envir Remed Liability 7 97 0 -97 NA Total Expense 16,220 15,991 18,221 2,231 12% Net Operating Income -1,553 -828 -2,166 1,339 62% 35 Real Estate Division Q2 Key Variances Revenue Detail ($'s in Thousands) 2012 Year to Date Variance to Budget Business Unit Better (Worse) Recreational Boating ($89) Fishing & Commercial ($79) Commercial Properties ($68) Third Party Management ($747) RE Development & Planning $81 Eastside Rail ($6) Facilities/Maintenance $15 Total ($892) 36 Real Estate Division Q2 Key Variances Expense Detail ($'s in Thousands) 2012 Year to Date Variance to Budget Expense Better (Worse) Maintenance $1,311 Third Party Management (BHICC & WTC) $546 Corporate $352 CDD $135 Eastside Rail Corridor ($88) All Other ($25) Total Expense $2,231 37 Real Estate Business Groups NOI Before Depreciation ($'s in Thousands) Q2 YTD Variance to Budget Actual NOI Better (Worse) Recreational Boating $925 $414 Fishing & Commercial ($1,215) $240 Commercial & Third Party $60 $555 RE Development & Planning ($214) $239 Eastside Rail ($287) ($13) Envir Remediation Liability Exp ($96) ($96) Total Real Estate ($827) $1,339 38 Real Estate Division Full Year Forecast 2011 2012 2012 2012 Bud Var $ in 000's Actual Forecast Budget $ % Revenue 22,071 22,068 22,389 -321 -1% BHICC & WTC Revenue 9,498 9,037 10,012 -975 -10% Total Revenue 31,569 31,105 32,401 -1,296 -4% Real Estate Exp(excl Maint,P69,Conf) 9,759 9,920 9,920 0 0% Real Estate BHICC & WTC 7,600 7,109 7,870 761 10% Eastside Rail Corridor 1,585 203 203 0 0% Maintenance Expenses 7,192 9,562 9,687 125 1% P69 Facilities Expenses 150 198 198 0 0% Seaport Expenses 1,230 1,408 1,408 0 0% CDD Expenses 917 1,266 1,266 0 0% Police Expenses 1,301 1,433 1,442 9 1% Corporate Expenses 5,018 5,177 5,229 52 1% Envir Remed Liability 7 97 0 -97 NA Total Expense 34,758 36,374 37,224 850 2% Net Operating Income -3,189 -5,269 -4,823 -446 -9% 39 Real Estate Capital 2012 Estimated Approved Variance Est. Act. Actual Budget to as % of Budget App. Bud $4.2 $7.3 $3.1 57% Major changes to Approved Budget Fishermen's Terminal East Portion of S. Wall project budget overstated $.7 million Bell Harbor Lighting Upgrade project cancelled $.6 million Small Project delays $.7 million Tenant Improvements Capital less needed than estimated $.4 million 40 Real Estate Capital 2012 Future 2012 Commission Authorization Requests Fishermen's Terminal Building C-15 HVAC (~ Q4) Fishermen's Terminal Net Shed Compliance (~Q4) 41 Addendum Eastside Rail Corridor 42 Eastside Rail Corridor Issues Current open access requests/agreements: From other agencies: 20 From private entities: 22 Ongoing operational costs GNP Railway bankruptcy 43 Eastside Rail Corridor 2nd Quarter YTD and Full Year Forecast 2011 2012 Year-to-Date 2012 Bud Var Year-End Projections $ in 000's Actual Actual Budget $ % Budget Forecast Variance Eastside Rail 13 15 21 (6) -27% 22 22 0 Other 0 0 0 0 NA 0 0 0 Total Revenue 13 15 21 (6) -27% 22 22 0 Eastside Rail 721 189 101 (88) -86% 203 203 0 Maintenance Expenses 22 1 32 31 96% 64 64 0 Real Estate Other 89 71 93 22 24% 186 186 0 Seaport Expenses 1 32 22 (10) -43% 60 60 0 CDD Expenses 10 8 4 (4) -110% 8 8 0 Corporate Expenses 113 1 43 42 98% 101 101 0 Total Expense 957 302 295 (7) -2% 621 621 0 Net Operating Income (944) (287) (275) (13) 5% (599) (599) 0 Non-Op Interest Expense* 622 403 403 0 0% 805 805 0 Net after Interest (1,566) (690) (677) (13) 2% (1,404) (1,404) 0 Note: *Interest expense is presented on a cash basis Current debt outstanding is $30.2 million at interest rate of 2.83% rate. Principal is due in December 2014 and December 2015 . Principal due in 2015 has a call option in June 2014. 44 Capital Development Division Q2 2012 Performance Report Commission Briefing August 7, 2012 Capital Development Division Q2 2012 Business Events Rental Car Facility opened on May 19. The opening was very successful and startup and transition issues were minimal. Resolved issues with Alaska Air Group concerning the North Sea-Tac Airport Renovations program resulting in a final letter outlining the terms of Alaska's involvement. Issued requests for qualifications for design and program/project management consultants for this $250 mm + effort. Began installation of the new revenue control system for and waterproofing of the 8th floor of the parking garage. Participated in P-Card audit anticipate positive results. Key PCS projects for the second quarter were T-18 pile cap pilot program, airport checkpoint security cameras, miscellaneous work on the rental car facility, RMM oversight and compliance monitoring for the PC air and escalator, EGSE charging stations, noise remedy, and passenger jet bridges. Cleanup Agreed Order for the T-91 Tank Farm Clean-Up Project was signed by Ecology and the Port. The City Council passed the final ordinance to vacate streets at T-105. A preliminary agreement was reached with SDOT regarding the configuration of East Marginal Way traffic improvements required for the Argo Yard Access Road and East Marginal Way Grade Separation Phase II projects. Q2 2012 Project Hard/Soft Costs Q2 2012 Capital Development Division Key Indicators Cost Growth During Construction Q2 2012 Capital Development Division Key Indicators continued Design Schedule Growth Planned Initial Commission Construction Contract Actual Construction Original Construction Authorized Start Award Contract Award Design Schedule Contract Amount Project of Design (Execution) (Execution) Growth 2nd Quarter 2012 $400,000 Common Use Lounge Renovation 1-Mar-11 21-Nov-11 15-Nov-11 -2.3% $725,253 Marine Maintenance Shop Roof Rpl. 4-May-10 13-Jul-11 8-Aug-11 6.0% $4,390,000 T-10 Utility Infrastr.Upgrade 14-Apr-09 9-May-11 12-May-11 0.4% $856,684 USPS Airport Mail Facility Demolition 26-Aug-08 21-Sep-11 21-Oct-11 2.7% $475,510 POS Maintenance Building #2 Demo 14-Aug-06 21-Sep-11 31-Oct-11 2.1% $738,000 Wayfinding Signage/ Curbside Mods 15-Jun-09 15-Feb-10 20-Jul-11 212.2% $913,900 Maritime Domain Awareness 11-Dec-07 15-May-09 28-May-09 2.5% Q2 2012 Capital Development Division Key Indicators continued Construction Schedule Growth Actual Construction Planned Substantial Actual Substantial Original Construction Contract Award Completion of Completion of Construction Contract Amount Project (Execution) Construction Construction Schedule Growth 2nd Quarter 2012 $400,000 Common Use Lounge Renovation 15-Nov-11 13-Apr-12 8-Jun-12 37.3% $725,253 Marine Maintenance Shop Roof Rpl. 8-Aug-11 16-Nov-11 23-Feb-12 99.0% $4,390,000 T-10 Utility Infrastr.Upgrade 12-May-11 23-Nov-11 6-Dec-11 6.7% $856,684 USPS Airport Mail Facility Demolition 21-Oct-11 2-Jun-12 31-May-12 -0.9% $475,510 POS Maintenance Building #2 Demo 31-Oct-11 29-Mar-12 3-Apr-12 3.3% $738,000 Wayfinding Signage/ Curbside Mods 20-Jul-11 20-Apr-12 10-Apr-12 -3.6% $913,900 Maritime Domain Awareness 28-May-09 23-Dec-09 27-Jan-10 16.7% Q2 2012 CPO Procurement Time Procurement Schedule Total Time Receipt of Scope to Execution (Avg # Days) 2011 2012 Goods & Services 84 days 138 days Major Public Works 75 days 65 days Small Works 58 days 58 days Service Agreements *214 days 221days *Pulled out 1 non-urgent procurement that resulted in 2 contracts (averaged 450 days for each contract to be executed). Q2 2012 CDD Gross Operating Results 2011 YTD 2012 YTD 2012 Bud Var. Year-End Projections $ in 000's Actual Actual Budget $ % Budget Forecast Variance Total Revenues 76 12 - 12 0.0% - 12 12 Expenses Before Charges To Cap/Govt/Envrs Propects Capital Development Administration 171 181 188 7 3.5% 374 374 - Engineering 5,479 6,119 7,203 1,083 15.0% 14,217 13,700 516 Port Construction Services 2,947 3,216 3,397 181 5.3% 6,791 6,609 182 Central Procurement Office 1,598 2,292 2,223 (68) -3.1% 4,481 4,866 (385) Aviation Project Management 2,561 4,456 4,129 (327) -7.9% 7,731 7,731 - Seaport Project Management 983 1,073 1,576 503 31.9% 2,987 2,984 4 Total Before Charges to Capital Projects 13,739 17,338 18,717 1,379 7.4% 36,581 36,264 317 Q2 2012 CDD Key Variances to Net Budget Variance to Q2 2012 Expenses Budget Budget YTD Var. F/(UNF) $ in 000's YTD Better (Worse) % Salaries and Benefits 14,670 960 6.5 Outside Services 3,179 555 17.5 Travel and Other 239 131 54.9 Telecommunications 63 16 24.8 Property Rentals 49 6 11.8 General Expenses 25 (196) (791.3) All Other 492 (93) (18.9) Charges to Capital Projects (10,713) (472) 4.4 Total 8,004 907 11.3 Q2 2012 Corporate Q2 2012 Performance Report Commission Briefing August 7, 2012 Corporate Key Events Published Corporate Annual Report and Environmental Annual Report Received seven communications awards for centennial book and documentary, centennial community bike ride, annual report, centennial video contest and website redesign Launched Social Media pilot strategy project Produced "Choose Washington" ad for presence in Commerce Dept. magazine Issued a revised RFP for PeopleSoft Financials System Upgrade consultant services Completed and filed the annual bond disclosure 55 Corporate Key Metrics Conducted 21 Commission-led stakeholder presentations Airport Jobs helped placed people into 722 jobs with airport employers 61 Apprenticeship Opportunity Project Placements 253 small businesses were approved on the new Procurement Roster Management System (PRMS) Responded to 192 public disclosure requests Completed 10 internal audits Provided orientation to 122 new employees 25 employees participated in the Tuition Reimbursement Program 97% participation rate in the health assessment Negotiated 22 labor contracts 56 Q2 Corp Expense by Department 2011 YTD 2012 YTD Budget Variance Change from 2011 $ in 000's Actual Actual Budget $ % $ % Total Revenues 620 165 76 90 118.6% (454) -73.3% Executive 694 718 813 95 11.7% 24 3.4% Commission 336 425 473 47 10.0% 90 26.8% Legal 1,529 1,381 1,390 9 0.7% (148) -9.7% Risk Services 1,249 1,225 1,433 208 14.5% (25) -2.0% Health & Safety Services 542 486 549 63 11.5% (57) -10.4% Public Affairs 2,990 2,709 3,046 337 11.1% (282) -9.4% Human Resources & Development 2,271 2,402 2,710 308 11.4% 131 5.8% Labor Relations 515 492 482 (10) -2.1% (24) -4.6% Information & Communications Technology 8,951 9,359 9,478 119 1.3% 408 4.6% Finance & Budget 707 737 780 43 5.5% 30 4.2% Accounting & Financial Reporting Services 2,789 3,111 3,347 236 7.1% 323 11.6% Internal Audit 507 564 697 133 19.1% 57 11.1% Office of Social Responsibility 531 679 753 74 9.9% 148 27.9% Police 10,535 10,418 11,351 933 8.2% (117) -1.1% Contingency 48 53 300 247 82.2% 5 11.5% Total Expenses 34,195 34,760 37,602 2,842 7.6% 564 1.7% Total Expenses were $2.8M or 7.6% below budget mainly due to some vacant positions, unfinalized labor contracts, and timing of spending. 57 Q2 Corp Expense by Category 2011 YTD 2012 YTD Budget Variance Change from 2011 Operating Expenses ($ in '000) Actual Actual Budget $ % $ % Salaries & Benefits 16,792 17,397 18,026 630 3.5% 604 3.6% Wages & Benefits 9,355 9,165 10,124 959 9.5% (191) -2.0% Payroll to Capital Projects 1,210 1,057 1,660 603 36.3% (153) -12.6% Equipment Expense 295 571 334 (237) -70.9% 276 93.4% Supplies & Stock 262 235 339 104 30.6% (27) -10.5% Outside Services 4,742 4,349 5,053 704 13.9% (393) -8.3% Travel & Other Employee Exps 979 1,075 1,397 322 23.0% 96 9.8% Insurance Expense 925 1,016 1,062 47 4.4% 90 9.8% Litigated Injuries & Damages 132 187 - (187) n/a 55 n/a Other 973 1,000 1,605 606 37.7% 26 2.7% Charge to Capital (1,210) (1,057) (1,660) (603) 36.3% 153 -12.6% Total 34,195 34,760 37,602 2,842 7.6% 564 1.7% Total Expenses were $564K higher than Q2 2011 due to higher Payroll Costs, Equipment Expense, Travel & Other Employee Expenses, Insurance Expense, and Litigations. Other Expenses include Contingencies. 58 Corporate Year End Forecast 2011 Year-End Projections $ in 000's Actual Forecast Budget Variance Explanations Total Revenues 1,559 177 151 26 Unbudgeted Police grants Executive 1,487 1,539 1,539 - Commission 738 962 980 18 Miscellaneous savings Legal 2,975 2,928 2,901 (27) Unanticipated litigation Risk Services 2,614 2,809 2,959 150 Vacancies and lower insurance costs Health & Safety Services 1,053 1,040 1,060 20 Public Affairs 6,494 5,660 5,815 154 Vacant positions Human Resources & Development 4,921 5,388 5,484 96 Vacant positions and other savings Labor Relations 941 1,111 961 (150) Less charges to capital for PLA Information & Communications Technology 19,132 20,194 20,194 - Finance & Budget 1,435 1,533 1,543 10 Miscellaneous savings Accounting & Financial Reporting Services 5,776 6,797 6,853 56 Vacant position and other savings Internal Audit 1,080 1,491 1,496 6 Office of Social Responsibility 1,349 1,431 1,476 45 Vacant positions Police 21,154 22,478 22,574 96 Vacancies partially offset by litigation Contingency 105 500 700 200 Total Expenses 71,418 75,862 76,535 673 Total Revenues are forecasting to be $26K above budget. Total Expenses are forecasting to be $673K below budget mainly due to some vacant positions. 59
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