Item 9a Supp2
Item No. :______9a_Supp2______ Date of Meeting: ___October 6, 2009_____ Seaport Division 2010 Preliminary Budget Commission Presentation October 6, 2009 Pier 90/91 Pier 86 Pier 66 Terminal 46 BNSF (SIG - North) Terminal 30 Terminal 5 On-Dock Rail BNSF (SIG - South) Terminal 25 Terminal 5 Terminal 18 UPRR (ARGO) 2 2010 SEAPORT STRATEGIES 1. Protect our Current Business 2. Position Ourselves for Recovery and Change in the Container Shipping Market 3. Collaborate with Others to Advance our Key Initiatives 3 CRITICAL 2010 WORK 1. Maintain High Performance Levels for Critical Functions 2. Deliver on Commitments: NW Ports Clean Air Strategy Clean truck plan Container Terminal Customer Support Plan 3. Continue Transition and Development of Terminal 91 into a Multi-Use Facility 4. Adjust and Align our Resources to Meet our Business Strategies 4 Key Revenue Assumptions TEU volume 6% decrease from 2009 budget Eagle Rate increase in July Container Terminal Customer Support Plan T25/30 lease full year of lease payments in 2010 Cruise forecast 6% increase in passengers Grain volume remains stable Properties in transition 5 Expense Issues Asset Condition Assessments Repair Costs Environmental Reserves Stormwater Implementation of NW Ports Clean Air Strategy Maintenance Dredging Fender Piling Expense Project 6 Asset Evaluation and Repairs/Improvements Focus on critical long term assets: Docks Pilings Overwater structures Underwater slopes & walls Cranes Periodic inspection followed by repairs/improvements as warranted 77 Asset Evaluation and Repairs/Improvements 2009 work Slope stability analysis T91 Begin long term maintenance dredging plan Permitting T5 maintenance dredging T18 maintenance dredging Develop long term monitoring plan Comprehensive evaluation T86 2010 work Slope stability analysis T91 T5 maintenance dredging Structural dock improvements T18 Complete long term maintenance dredging plan Comprehensive inspection T46 Comprehensive evaluation T103 8 Asset Evaluation and Repairs/Improvements Priorities Get permits for ongoing maintenance dredging at container berths Monitor container berth depths Dredging as necessary to maintain depths Develop dock maintenance system Establish baseline conditions for all major docks Repair as necessary Develop dock maintenance plan Potential replacement of oldest cranes 9 Key Revenue Assumptions TEU volume 6% decrease from 2009 budget Eagle Rate increase in July Container Terminal Customer Support Plan T25/30 lease full year of lease payments in 2010 Cruise forecast 6% increase in passengers Grain volume remains stable Properties in transition 10 Org Revenues By Group Seaport Division Only 2007 2008 2009 2010 09-10 Change $'s Thousands Actual Actual Budget Budget $ % Revenue Containers & Support Prop 52,919 56,293 62,938 59,526 (3,412) -5.4% Cruise & Industrial Prop 24,700 28,757 27,086 28,883 1,797 6.6% Operating Revenue 77,619 85,050 90,025 88,409 (1,615) -1.9% Security Grants 1,258 850 3,955 2,535 (1,420) -35.9% Environmental Grants 1,504 8,911 850 2,300 1,450 170.6% Total Revenues 80,382 94,811 94,829 93,244 (1,585) -1.7% 11 Org Revenues Containers & Support Properties 2007 2008 2009 2010 09-10 Change $'s Thousands Actual Actual Budget Budget $ % Revenue Containers Operating 49,087 52,645 57,042 56,370 (672) -1.2% Containers-Upland Dredge Reim 0 0 1,807 0 (1,807) -100.0% Containers- RFID Grant 0 0 500 0 (500) -100.0% Support Properties 3,832 3,648 3,590 3,156 (433) -12.1% Operating Revenue 52,919 56,293 62,938 59,526 (3,412) -5.4% 12 Org Revenues Cruise & Industrial Properties 2007 2008 2009 2010 09-10 Change $'s Thousands Actual Actual Budget Budget $ % Revenue Cruise 7,448 9,261 9,146 10,503 1,356 14.8% Bulk 5,939 7,053 5,533 5,533 0 0.0% Docks 3,012 3,331 2,830 2,936 106 3.7% Industrial Props 8,301 9,112 9,577 9,912 335 3.5% Operating Revenue 24,700 28,757 27,086 28,883 1,797 6.6% 13 Seaport Org Expense Budget Seaport Division Expenses Only 2009 2010 09-'10 Change $'s Thousands Budget Budget $ % Baseline Budget Salaries & Benefits 6,913 6,899 (14) -0.2% Wages & Benefits 0 0 0 NA OPEB 189 212 22 11.8% Salaries & Wages to Capital 773 826 53 6.9% Total Payroll Costs 7,875 7,936 61 0.8% Net Payroll Expense (net of to capital) 7,102 7,111 8 0.1% Utilities 4,090 4,387 298 7.3% Other O&M 4,286 4,426 140 3.3%NA Total Baseline Budget 15,478 15,924 446 2.9% Initiatives Transfer Foreign Liaison 0 525 525 NA Maintenance Dredging 1,407 450 (957) -68.0% T30/T91 Expense Items 4,139 0 (4,139) -100.0% Cruise Incentive Payment 750 250 (500) -66.7% Environmental Programs 0 458 458 NA Reclassify ABC Fuels/CHE 600 0 (600) -100.0% Significant Repairs & Other 1,981 350 (1,631) -82.3% Contingency 300 500 200 66.7% Total Initiatives 9,177 2,533 (6,644) -72.4% Total Operating Expenses 24,655 18,457 (6,198) -25.1% Security Grant Expenses 4,286 2,689 (1,596) -37.3% Environmental Reserve 3,375 14,500 11,125 329.6% Total Expenses 32,315 35,646 3,331 10.3% 14 Initiatives Initiatives - Proposed for 2010 Budget Transfer Foreign Liaison Japan Representative Relocates to Seaport 525 Maintenance Dredging Terminal 5 Maintenance Dredge 450 Long Term Cruise Agreement Long Term Agreement Incentive Payment 250 Environmental Increased Program Costs Environmental-Stormwater 155 Environmental-Air 136 Environmental-Compliance Programs 93 Environmental-Permit Support, Other 74 458 Other Required Work Containers - Potential Repair Costs T46 ZPMC Cranes 150 Dock Ops - Bollard Installation 200 350 Contingency Contingency 500 Total 2010 One-Time Expenses 2,533 15 Northwest Ports Clean Air Initiatives Classified as Non-Operating Expense $'s Thousands 2010 Budget ABC FUELS 300 PSCAA: Cargo Handling Equip 250 Clean Truck Program 1,150 Total 1,700 16 Full-Time Equivalents (FTEs) FTE's 2009 Budget 61.8 Staff Addition: Sea RE Specialist (Ltd Duration) 0.6 T91 Docks Operations 1.0 Staff Reductions: Container Ops -1.0 Environmental Services -2.0 Seaport Marketing -2.0 Seaport Admin -1.0 Adjusted 2009 57.4 2010 Budget Transfer - Japan Representative 1.0 Staff Addition - Eastern WA Rep 1.0 Staff Addition - Envir Services Remediation 1.0 Subtotal 3.0 Proposed FTE's for 2010 60.4 17 Org Expenses By Group Seaport Division Expenses Only 2007 2008 2009 2010 09-'10 Bud Change $'s Thousands Actual Actual Budget Budget $ % Expenses Containers & Support Prop 3,948 5,524 10,401 4,259 (6,141) -59.0% Cruise & Industrial Prop 2,496 3,975 5,702 5,180 (521) -9.1% Seaport Marketing 0 1,247 1,169 1,066 (103) -8.8% Environmental Services 1,975 2,882 3,626 3,419 (207) -5.7% Prof & Tech Services 1,649 1,951 2,214 2,286 72 3.3% Division Admin 1,240 1,354 1,244 1,221 (22) -1.8% Foreign Liaison 0 0 0 525 525 NA Contingency 0 0 300 500 200 66.7% Capital to Expense 1,439 0 0 0 0 NA Total Operating Expenses 12,747 16,933 24,655 18,457 (6,198) -25.1% Security Grant Expenses 1,287 920 4,286 2,689 (1,596) -37.3% Environmental Reserve 4,991 5,872 3,375 14,500 11,125 329.6% Total 19,025 23,725 32,315 35,646 3,331 10.3% 18 Seaport Budget Summary Inclusive of Direct Charges & Allocations from Corporate, CDD, & Other Divisions 2007 2008 2009 2010 09-'10 Bud Change $'s Thousands Actual Actual Budget Budget $ % Revenues Operating Revenues 77,662 85,453 90,131 88,534 (1,596) -1.8% Security Grants 1,292 850 3,955 2,535 (1,420) -35.9% Environmental Grants 1,340 8,833 850 2,300 1,450 170.6% Total Revenues 80,294 95,136 94,935 93,369 (1,566) -1.7% Expenses Direct Expenses 18,325 23,060 28,380 22,878 5,501 19.4% Security Grant Expenses 1,287 920 4,286 2,689 1,596 37.3% Environmental Reserves 4,414 5,872 3,375 14,500 (11,125) -329.6% Divisional Allocations 1,733 2,335 2,378 2,585 (207) -8.7% Corporate Allocations 9,701 12,734 13,510 14,182 (672) -5.0% Operating Expenses 35,459 44,921 51,928 56,834 (4,906) -9.4% Net Operating Income 44,835 50,215 43,007 36,535 (6,473) -15.1% NOI Excl Envir Grants/Reserve 47,909 47,254 45,532 48,735 3,202 7.0% 19 Containers Budget Summary Inclusive of Direct Charges & Allocations from Corporate, CDD, & Other Divisions Containers & Support Properties 2007 2008 2009 2010 09-'10 Bud Change $'s Thousands Actual Actual Budget Budget $ % Revenues Operating Revenues 52,919 56,515 62,938 59,651 (3,287) -5.2% Security Grants 0 0 0 0 0 NA Environmental Grants 116 0 0 0 0 NA Total Revenues 53,035 56,515 62,938 59,651 (3,287) -5.2% Expenses Direct Expenses 7,594 8,720 13,254 7,397 5,857 44.2% Security Grant Expenses 0 0 0 0 0 NA Environmental Reserves 3,821 0 0 0 0 NA Divisional Allocations 3,663 5,789 5,879 5,839 40 0.7% Corporate Allocations 5,101 7,314 7,823 8,036 (213) -2.7% Operating Expenses 20,179 21,823 26,957 21,272 5,684 21.1% Net Operating Income 32,856 34,692 35,982 38,379 2,397 6.7% NOI Excl Envir Grants/Reserve 36,561 34,692 35,982 38,379 2,397 6.7% 20 Cruise Budget Summary Inclusive of Direct Charges & Allocations from Corporate, CDD, & Other Divisions Cruise 2007 2008 2009 2010 09-'10 Bud Change $'s Thousands Actual Actual Budget Budget $ % Revenues Operating Revenues 7,448 9,375 9,252 10,503 1,250 13.5% Security Grants 0 0 0 0 0 NA Environmental Grants 0 0 0 0 0 NA Total Revenues 7,448 9,375 9,252 10,503 1,250 13.5% Expenses Direct Expenses 1,079 2,133 2,561 1,820 741 28.9% Security Grant Expenses 0 0 0 0 0 NA Environmental Reserves 0 0 0 0 0 NA Divisional Allocations 945 976 1,051 1,345 (293) -27.9% Corporate Allocations 1,133 1,558 1,845 2,313 (468) -25.4% Operating Expenses 3,157 4,667 5,457 5,478 (20) -0.4% Net Operating Income 4,291 4,709 3,795 5,025 1,230 32.4% NOI Excl Envir Grants/Reserve 4,291 4,709 3,795 5,025 1,230 32.4% 21 Industrial Docks & Properties Budget Summary Inclusive of Direct Charges & Allocations from Corporate, CDD, & Other Divisions Bulk, Docks, & Industrial 2007 2008 2009 2010 09-'10 Bud Change $'s Thousands Actual Actual Budget Budget $ % Revenues Operating Revenues 17,295 19,563 17,940 18,381 441 2.5% Security Grants 0 0 0 0 0 NA Environmental Grants 1,225 0 0 0 0 NA Total Revenues 18,520 19,563 17,940 18,381 441 2.5% Expenses Direct Expenses 3,139 4,736 5,021 5,743 (722) -14.4% Security Grant Expenses 0 0 0 0 0 NA Environmental Reserves 568 0 0 0 0 NA Divisional Allocations 2,694 2,246 1,845 2,235 (390) -21.1% Corporate Allocations 3,057 3,520 3,331 3,427 (96) -2.9% Operating Expenses 9,458 10,502 10,198 11,406 (1,208) -11.8% Net Operating Income 9,062 9,061 7,742 6,975 (768) -9.9% NOI Excl Envir Grants/Reserve 8,405 9,061 7,742 6,975 (768) -9.9% 22 Risks U.S. and Global Economic Uncertainities - Potential Impact on Seaport Container and Cruise Volumes Container Competitive Pressures All Water Services Intermodal Pricing Issues Prince Rupert's Continued Growth Timing of Implementation of Customer Support Plan Unexpected Repairs Electrical Rate Increase Classification of "Capital Improvements" Environmental Reserves Performance Audit Implications 23 Seaport Division 2010 Preliminary Capital Budget October 6, 2009 24 Capital Budget Review Capital Budget reviewed by cross functional teams Reviewed all existing projects and identified new projects as driven by: 2010 Seaport Strategies New developments and information from customers and tenants Continuing effort to identify specific renewal and replacement projects 2525 Seaport Capital Plan Summary $'s in 000's 2010 2010-2014 2015-2019 Total Committed 30,618 94,690 17,784 112,474 Bus Plan Prospective 18,150 247,200 214,000 461,200 48,768 341,890 231,784 573,674 Other Prospective 0 107,300 298,500 405,800 Total 48,768 449,190 530,284 979,474 26 Seaport Committed Capital Plan $'s in 000's 2010 2010-2014 2015-2019 Total Under Contract 7,847 14,357 0 14,357 Commission Auth 8,677 8,913 0 8,913 Division Pending 14,094 71,420 17,784 89,204 Total 30,618 94,690 17,784 112,474 27 Seaport Committed Capital Under Contract $'s in 000's 2010 2010-2014 2015-2019 Total T-5 Completion 2,468 2,868 0 2,868 T-115 Dock Reconstru Berth 1,2 1,841 1,841 0 1,841 Alaskan Way Street Vacation 1,144 5,594 0 5,594 T-18 Open Issues 944 944 0 944 P24/T25 Habitat Restoration 300 1,800 0 1,800 Other (Project Closeouts) 1,150 1,310 0 1,310 Total 7,847 14,357 0 14,357 28 Seaport Committed Capital Commission Authorized $'s in 000's 2010 2010-2014 2015-2019 Total T-10 Interim Development 4,412 4,412 0 4,412 T-18 S. End Fendering 1,875 1,875 0 1,875 N. Harbor Island Mooring Dolphins 1,600 1,600 0 1,600 T46 Upgrade Yard Lighting 640 640 0 640 Cruise TI Allowance 150 386 0 386 Total 8,677 8,913 0 8,913 29 Seaport Committed Capital Division Pending $'s in 000's 2010 2010-2014 2015-2019 Total T5 Crane Cable Reels 4,000 4,000 0 4,000 T104 Site improvements 3,000 3,000 0 3,000 T91 Water Main Repl N of Bridg 2,100 4,100 0 4,100 P91 Fender System Upgrade 1,500 5,500 0 5,500 Small Projects 875 3,510 2,500 6,010 Seaport Green Port Initiative (E) 750 2,250 12,500 14,750 Container Support Yd 3.5 MM TEU's 0 28,900 0 28,900 T18 Pile Cap Improvements 500 8,500 0 8,500 T108 Stormwater Upgrade & Paving (E) 0 7,000 0 7,000 T91 Pave Entry & Guardshack Area 100 500 0 500 Other 1,269 4,160 2,784 6,944 Total 14,094 71,420 17,784 89,204 Note (E): Environmental Project 30 Seaport Capital Business Plan Prospective $'s in 000's 2010 2010-2014 2015-2019 Total Renewal/Enhancement 14,900 187,050 174,000 361,050 Revenue/Capacity Growth 3,100 52,150 40,000 92,150 Environmental/Safety 150 8,000 0 8,000 Total 18,150 247,200 214,000 461,200 31 Seaport Business Plan Prospective Revenue/Capacity Growth $'s in 000's 2010 2010-2014 2015-2019 Total Carnitech (new bldg) 1,900 6,900 0 6,900 T106 Whse Bldg - Site Infrastructure 1,000 1,000 0 1,000 Widen T91 West Cruise Vessel Berth 200 2,000 0 2,000 South T25 Container Yard - Phase 2 0 15,250 0 15,250 Land Acquisitions -Industrial 0 15,000 0 15,000 Deepen Berth at T18 0 12,000 5,000 17,000 Container Support Yd-3.5M T #2 0 0 35,000 35,000 Total 3,100 52,150 40,000 92,150 32 Seaport Business Plan Prospective Renewal/Enhancement $'s in 000's 2010 2010-2014 2015-2019 Total Contingency Renewal & Replace. 4,000 41,000 94,000 135,000 P-91 Slope Stablization 3,300 6,300 0 6,300 Seaport Viaduct Mitigation 2,000 25,000 0 25,000 T103 Dock Replacement 1,700 9,700 0 9,700 T-91 Berth 8 Reconstruction 1,000 26,000 0 26,000 Upgrade Yard Lighting 1,000 3,000 0 3,000 T86 Grain Facility Modernization 500 9,900 0 9,900 P34 Dolphins & Catwalk for Barges (4) 500 3,000 0 3,000 Cruise 1st Yr. Upgrades at T91 500 750 0 750 T 90/91 Additional Bollards 400 400 0 400 T46 Replace S Timber Pier Structure 0 33,000 0 33,000 T-46 Development 0 15,000 20,000 35,000 Container Dock Upgrades (T5,T30,T46) 0 10,000 10,000 20,000 T46 PACECO Crane Drive Upgrade 0 3,000 0 3,000 T18 Rail Crossings 0 1,000 0 1,000 T-5 4 New Cranes 0 0 50,000 50,000 Total 14,900 187,050 174,000 361,050 33 Seaport Business Plan Prospective Environmental/Safety $'s in 000's 2010 2010-2014 2015-2019 Total P66 Shore Power (E) 150 8,000 0 8,000 Total 150 8,000 0 8,000 Note (E): Environmental Project 34 Summary of Seaport Environmental Projects (As Noted on Previous Slides) $'s in 000's 2010 2010-2014 2015-2019 Total Committed Seaport Green Port Initiative (E) 750 2,250 12,500 14,750 T108 Stormwater Upgrade & Paving (E) 0 7,000 0 7,000 Business Plan Prospective P66 Shore Power (E) 150 8,000 0 8,000 Total 900 17,250 12,500 29,750 Note (E): Environmental Project 35 Seaport Division 2010 Preliminary Budget Commission Presentation October 6, 2009 36
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