7a supp tax levy
ITEM NO. 7a Supp DATE OF MEETING October 25, 2011 Preliminary Tax Levy Funding Plan for 2012 Budget and Draft Plan of Finance October 25, 2011 Topics Tax Levy Overview 2011 Tax Levy update Preliminary Tax Levy 5-year funding plan 2 Tax Levy Overview Tax Levy Amount Levy amount established by the Commission each year as part of the budget process Statutory limitations on annual collection Port may set Levy at any amount up to the statutory maximum Maximum increases each year by the lesser of inflation or 1% plus a factor for new construction Tax levy may legally be used for general Port purposes, actual use has been guided by Commission policy Payment of General Obligation bond debt service Port policy debt service is no more than 75% of annual levy 3 Annual Levy vs. Statutory Max Annual levy is well below statutory maximum Commission guidance has been to maintain flat dollar amount for planning purposes Tax Levy Levy Amount vs. Estimated Maximum Actual 2006-2011, Preliminary 2012, Projections 2013-2016 100.0 95.7 94.2 95.0 92.7 91.3 90.1 88.7 90.0 87.2 85.4 85.0 82.6 80.4 $ million 80.0 78.1 75.9 75.9 73.5 73.5 73.5 73.5 73.5 73.5 73.5 75.0 68.8 70.0 65.0 62.8 60.0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Maximum levy Tax levy 4 2011 Tax Levy, Actual vs. Budget Budget Est./Act. $'000 2011 2011 Projected ending balance LEVY SOURCES Beginning Tax Levy Fund Balance 26,634 26,322 exceeds budget 2011 G.O. Bond Proceeds 30,007 less repayment of General Fund loan (30,766) Significant variances Environmental Remediation Grants & Revenues Reimbursements 6,459 Eastside Rail Corridor Partners Reimbursements 13,700 Receipt of environmental Tax Levy Fund Investment Earnings 842 reimbursements Annual levy 73,500 73,500 Total Sources: 100,634 120,064 Expected receipt of rail corridor payment from Sound LEVY USES General Obligation (G.O.) Bonds Debt Service (DS) Transit G.O. Bonds DS - existing debt 40,438 40,165 Lower Real Estate capital Other uses spending Roads and Transportation Projects 9,100 7,694 Aviation School, and Highline & other Schools NOISE Insulation 650 650 Spending deferred from (2) Environmental Remediation Liabilities, Seaport & Real Estate - prelim. 11,559 11,211 2011 PortJobs 46 140 Subtotal Other 21,355 19,695 Real Estate Support (3) RE Capital Total 20,357 13,214 RE Operating Subsidy 5,372 5,372 Subtotal RE Support 25,729 18,586 Total Uses: 87,522 78,446 Projected Ending Tax Levy Fund Balance 13,112 41,618 Notes: (2) Includes project cash flows for environmental projects already or expected to be expensed and liabilities booked (3) Includes Committed and BP Prospective projects 5 2012-16 Funding Plan - Revenues Flat Levy at $73.5 million annually Receipt of $31 million of additional Eastside Rail Corridor partner reimbursements ($30 million of short term G.O. notes issued in February, 2011 for rail corridor acquisition mature 2014-15) Does not include some potential reimbursements for environmental costs too uncertain to budget Grants Insurance/litigation payments 6 2012-16 Funding Plan - Uses Existing General Obligation bond debt service $20.5 million for substantial completion of FAST Corridor initiative & Highline Schools noise mitigation program Funding of Seaport/Real Estate environmental remediation costs (non- operating): $67.6 million of projected cleanup costs over five years Includes Lower Duwamish/East Waterway early action itemsbulk of cleanup costs projected to occur after 2016 Costs are net of payments by potentially liable parties; excludes potential recoveries from grants, insurance or litigation 7 2012-16 Funding Plan Plan sets aside an additional $42 million of levy funds into the Transportation and Infrastructure Fund Commission priority to build reserves for critical future projects $13 million set aside in 2010 Proposed $23 million addition in 2012 made possible by unbudgeted reimbursements received in 2011 $5 million for South Park Bridge contribution 2012-13 Fund balance grows to $55 million by 2016, proposed to partially fund SR99 tunnel contribution to reduce borrowing needs Est./Act. 5 Years Projected TIF Balance ($' 000) 2011 2012 2013 2014 2015 2016 2012-2016 Beginning of year 13,250 13,498 34,236 32,068 52,588 54,189 13,498 Transfer from Tax Levy Fund 23,000 0 19,250 0 0 42,250 Fund Investment Earnings 248 239 332 1,270 1,602 813 4,255 South Park Bridge (2,500) (2,500) (5,000) SR 99 Tunnel (55,000) (55,000) End of year 13,498 34,236 32,068 52,588 54,189 2 2 8 2012-16 Funding Plan Levy continues to fund annual Real Estate Division NOI shortfall and 100% of capital expenditures Projected Real Estate support increases from 2016-2019 due to temporary spike in revenue bond debt service Proposed new funding of $54 thousand for non-Airport share of Port Jobs apprenticeship program in 2012 (total program in is $150 thousand, formerly funded through $0.20/hour contractor fees) Proposed SR99 Funding $300 million total commitment to be funded 2016-18 per MOA with State $19 million credit for in-kind contributions towards freight mobility projects $55 million cash reserves from Transportation & Infrastructure Fund $226 million of long-term G.O. bonds issued in 2016 9 Preliminary Tax Levy 5-Yr Funding Plan 5 Years $'000 2012 2012-2016 LEVY SOURCES Beginning Tax Levy Fund Balance 41,618 41,618 Eastside Rail Corridor Partners Reimbursements 5,000 31,000 Annual levy 73,500 367,500 Total Sources: 120,118 440,118 LEVY USES General Obligation (G.O.) Bonds Debt Service (DS) G.O. Bonds DS - existing debt 40,353 211,437 (1) G.O.Bonds DS - new (SR99 Tunnel) 17,944 Subtotal G.O. Bonds DS 40,353 229,381 Other uses Roads and Transportation Projects 3,954 9,189 Aviation School, and Highline & other Schools NOISE Insulation 7,160 11,282 (2) Environmental Remediation Liabilities, Seaport & Real Estate - prelim. 15,889 67,597 Funding of Transportation & Infrastructure Fund 23,000 42,250 PortJobs 72 486 Port Jobs Apprenticeship Program 54 342 Subtotal Other 50,129 131,146 Real Estate Support (3) RE Capital Total 14,524 54,031 RE Operating Subsidy 4,922 22,355 Subtotal RE Support 19,446 76,386 Total Uses: 109,927 436,913 Projected Ending Tax Levy Fund Balance 10,190 3,204 Notes: (1) Assumes bond issue of $226 million for 25 yrs at 6%. (2) Includes project cash flows for environmental projects already or expected to be expensed and liabilities booked (3) Includes Committed and BP Prospective projects 10 Key Considerations Eastside Rail Corridor partner reimbursements uncertain of amounts and timing of receipts Environmental Costs Total amount and timing of Lower Duwamish/East Waterway cleanup costs after 2016 remain uncertainPOS, King County and City of Seattle discussing a range of options with EPA Other potential environmental liabilities exist Depending on the above, funding shortfalls may exist after 2016 under current flat levy assumption 11
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