Item 11a Supp
Port of Seattle 2009 Preliminary Budget 1st Reading/Public Hearing November 11, 2008 1 Today's Agenda Background Operating Budget Capital Budget Tax Levy Public Hearing 2 2009 Budget Process Jun. 24: Budget Process Briefing Aug 5: Budget Process, Key Assumptions Aug. 12: Seaport and Real Estate Business Plan Aug. 26: Aviation Business Plan Sept. 2: Preliminary Tax Levy Oct. 9: Capital Development and Corporate Operating and Capital Budget Oct. 14: Tax Levy Discussion Oct. 21: Aviation Operating and Capital Budget, Seaport Operating Budget Oct. 27: Seaport Capital Budget, Real Estate Operating and Capital Budget, and Portwide Rollup Oct. 28: Draft Plan of Finance & Tax Levy Discussion Nov. 4: Draft Plan of Finance & Tax Levy Discussion Nov. 11: 1ST Reading & Public Hearing, Preliminary Budget Nov. 25: Final Reading & Public Hearing, Preliminary Budget Nov. 26: Statutory Budget Filed with King County 3 Aviation Enplaned Passengers Enplaned Passengers 18,000 16,000 14,000 12,000 In Thousands 10,000 8,000 6,000 4,000 2,000 - 2008 2008 2009 2001 2002 2003 2004 2005 2006 2007 Bud Fcst Bud Enplaned Passengers 13,50 13,36 13,35 14,36 14,63 14,98 15,66 16,04 16,28 15,80 4 Seaport TEU's TEU's 2,500 2,000 1,500 In Thousands 1,000 500 - 2008 2008 2009 2001 2002 2003 2004 2005 2006 2007 Bud Fcst Bud TEU's 1,315 1,439 1,486 1,776 2,088 1,987 1,938 1,900 1,723 1,700 5 Seaport Cruise Passengers Cruise Passengers 1,000 900 800 700 600 In Thousands 500 400 300 200 100 - 2008 2008 2009 2001 2002 2003 2004 2005 2006 2007 Bud Fcst Bud Cruise Passengers 170 245 345 562 686 751 781 828 886 797 6 Budget Changes Since 10/27/08 10/27/08 Current Change ($ in thousands) 2008 Bud 2009 Bud 2009 Bud from 10/27 Operating Revenue 476,477 489,905 487,028 (2,877) Operating Expense 265,391 281,936 277,232 (4,704) NOI Before Depreciation 211,086 207,969 209,797 1,828 Depreciation 147,070 157,036 157,036 - NOI After Depreciation 64,016 50,933 52,761 1,828 7 Major Budget Cuts Since 10/27/08 Budget Item ($ in '000) Division Amount Note Asbestos Aviation 565 Project Deferred Delay Hirings Aviation 115 4 positions deferred T18 Dredge Seaport 700 Bid came in lower Seaport Contingency Seaport 200 From $500K Environmental Reserve Real Estate 500 Reduced from $2.6 million Maritime Industrial Center Dredge Real Estate 700 Eliminated one FTE Capital Dev 106 Budget Manager position Contract Info Website Dev Capital Dev 75 Covered by ICT Delay Hirings Corporate 362 7 positions deferred Eliminated one FTE Corporate 109 Commission Office Police Workers Comp Corporate 131 Pay Merit Reduction Portwide 875 From 4.7% to 4.12% Other Portwide 266 TOTAL 4,704 8 2009 Major Budget Additions Items ($ in '000) 10/27/08 Reduction Current Aviation Asbestos Costs for Capital Projects 1,750 (565) 1,185 Expense Offset by Revenues 573 - 573 Subtotal 2,323 (565) 1,758 Seaport Dredging (T18, T5, Upland Dredge Disposal) 5,721 (700) 5,021 Expense Portion T30/T91 Project 525 - 525 Long Term Cruise Agreement Incentive Payment 750 - 750 Environmental Program (for Clean Air) 831 - 831 Environmental Reserve (Seaport & Real Estate) 2,600 (500) 2,100 Subtotal 10,427 (1,200) 9,227 Real Estate Eastside Rail Corridor 484 - 484 Capital Development Maritime Industrial Center Dredging 1,050 (700) 350 TOTAL 14,284 (2,465) 11,819 9 2009 Budget Resulted from SAO Audit # Initiatives/Items ($ in '000) Amount 1 Created the Capital Development Division 2 Created the Central Procurement Office 3 Changed the organizational reporting relationship for Internal Audit 4 Increased the resources for Internal Audit 452 5 Implement a new Project Management System 240 6 Create contract information website 75 7 Create procurement files & space 100 8 Hired three new FTEs for CDD 400 9 Added three new positions to the CPO office 347 10 Added a construction scheduler position for Engineering 116 11 Convert 7 consultant positions to FTEs - Total Costs 1,730 Charged to Capital (116) Total O&M Costs 1,614 10 Operating Budget Summary 2004 2005 2006 2007 2008 2009 ($ in thousands) Actual Actual Actual Actual Budget Budget Operating Revenues 377,202 416,525 448,449 461,146 476,477 487,028 Operating Expenses 223,464 226,195 223,564 241,800 265,391 277,232 Operating Income before Depreciation 153,738 190,330 224,884 219,346 211,086 209,796 Depreciation 110,175 129,788 140,190 141,588 147,070 157,036 Operating Income after Depreciation 43,563 60,542 84,694 77,758 64,016 52,761 111111 Operating Budget Summary (Excluding Aeronautical Revenue & Expense) ($ in thousands) 2004 2005 2006 2007 2008 Bud 2009 Bud Total Revenues 377,202 416,525 448,449 461,146 476,477 487,028 Aero Revenues 151,822 166,592 186,460 193,872 197,567 201,864 Total Revenues (excl. Aero) 225,380 249,933 261,989 267,274 278,910 285,164 Total Expenses 223,270 226,195 223,564 241,800 265,391 277,232 Aero Expenses 111,710 121,081 125,665 127,962 136,913 145,729 Total Expenses (excl. Aero) 111,560 105,114 97,899 113,838 128,478 131,503 NOI Before Depreciation 113,820 144,819 164,090 153,436 150,432 153,662 121212 Net Operating Income Net Operating Income 600,000 600,000 500,000 500,000 400,000 400,000 In Thousands 300,000 300,000 200,000 200,000 100,000 100,000 Operating Revenue - - Operating Expense 2001 2002 2003 2004 2005 2006 2007 2008 Bud 2009 Bud NOI Before Depreciation Year 1313 2009 Budget Summary $ in millions 2008 2009 Budget Budget Operating Revenues $476.5 $487.0 Operating Expenses $265.4 $277.2 Net Operating Income $211.1 $209.8 Depreciation $147.1 $157.0 Net Operating Income $ 64.0 $ 52.8 (after depreciation) Net Non-Ops Income (Expense) $ 81.1 $ 58.7 Increase in Net Assets $145.1 $111.5 14 Non-Ops Income Summary $ in millions 2008 Bud 2009 Bud Revenue Bond Interest Expense (118.9) (123.8) Interest Income & (Expense) 20.9 23.0 Other Non-Op Revenue (Expense) (11.3) (2.2) Ad Valorem Tax Revenue 75.9 84.0 Grants & Donations 80.0 71.3 Public Expense (21.6) (32.5) GO Bond Interest Income (Expense) (15.2) (29.2) PFC Interest Income (Expense) 62.4 62.5 CFC Interest Income (Expense) 20.3 16.6 PFC Bond Interest (11.4) (11.0) 81.1 58.7 15 Aviation: Summary of Budget Changes 2009 2009 '09-'08 Bud Var Budget Budget 10/21/08 11/04/08 $ % Revenues Landing Fees 62,218 59,836 (2,382) -3.8% Terminal Rental 130,962 128,834 (2,128) -1.6% Other Airline Revenues 12,811 13,194 383 3.0% Total Airline Revenues 205,991 201,864 (4,127) -2.0% Total Non-Airline Revenues 148,950 148,950 (0) 0.0% Operating Grant / Fuel Hydrant 8,704 9,853 1,149 13.2% Total Revenues 363,645 360,667 (2,978) -0.8% Expenses Airport Expenses 133,558 132,665 (893) -0.7% Corporate/CDD/Police/RE 57,908 56,858 (1,050) -1.8% Total O&M 191,466 189,522 (1,944) -1.0% Net Operating Income 172,179 171,145 (1,034) -0.6% Key Measures Passenger Airline CPE 12.18 11.91 (0.27) -2.2% Non-aeronautical NOI 87,521 87,154 (367) -0.4% 16 Changes of FTEs Since 10/27/08 10/27/08 Current Change 2009 Bud 2009 Bud from 10/27 2008 Approved FTE's 1770.2 1770.2 0.0 Mid Year Approval/Adj. 23.2 21.7 -1.5 Eliminated -2.8 -7.8 -5.0 Transfers 0 0 0.0 Adj. 2008 FTE's 1790.6 1784.1 -6.5 2009 Changes Eliminated -7.5 -11.5 -4.0 Contractor Conversions 7.0 7.0 0.0 New FTE's 13.1 11.4 -1.8 Total 2009 Changes 12.6 6.9 -5.8 Proposed 2009 FTE's 1803.2 1790.9 -12.3 17 Port-wide FTEs Summary Aviation Seaport Real Estate Capital Dev Corporate Totals 2008 Approved FTE's 886.2 81.8 139.8 0.0 662.4 1770.2 Mid Year Approval/Adj. 1.6 0.0 10.1 4.0 6.0 21.7 Eliminated 0.0 -0.5 -1.3 -5.0 -1.0 -7.8 Transfers -53.0 -16.8 -1.0 265.3 -194.5 0.0 Adj. 2008 FTE's 834.8 64.5 147.6 264.3 472.9 1784.1 2009 Changes Eliminated -5.0 -2.7 -1.5 -2.0 -0.3 -11.5 Contractor Conversions 0.0 0.0 0.0 7.0 0.0 7.0 New FTE's 3.3 0.0 4.0 2.0 2.1 11.4 Total 2009 Changes -1.8 -2.7 2.5 7.0 1.8 6.9 Proposed 2009 FTE's 833.0 61.8 150.1 271.3 474.7 1790.9 18 Aviation Proposed Budget Change Concessions Revenues Reduce assumed sales per enplanement on primary concessions to $10.19 from $10.50 Result: -$661,000 non-airline revenues 19 Unfunded Marine Maintenance Due to Budget Cuts Not Included in Operating Budget $'s 2009 2010 2011 2012 Recurring Budget $1,124,316 $1,143,338 $1,181,792 $1,251,917 One Time Catch-Up 1,607,000 1,774,500 2,264,500 822,000 Total $2,731,316 $2,917,838 $3,446,292 $2,073,917 20 5-Year Capital Plan 5-year plan is $2.13 billion Aviation Committed projects $776.4M Seaport Committed projects $161.3M Real Estate Committed projects $137.0M Corporate Committed projects $ 48.9M Total $1,123.6M Aviation Business Plan Prospective* $643.9M Seaport Business Plan Prospective* $310.9M Real Estate Business Plan Prospective* $ 47.8M P&TS General (ICT Business Services) $ 3.3M Total $1,005.9M * Preliminary, numbers may change pending outcome of tax Levy discussions 21 CIP History 2001 2009 Total Committed CIP 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 2008 2008 2009 2001 Act 2002 Act 2003 Act 2004 Act 2005 Act 2006 Act 2007 Act Bud Fcst Bud Total Committed CIP 400,000 471,000 467,300 490,400 514,100 470,105 393,035 619,670 504,000 603,984 22 2009 Capital Budget by Division Total Spending: Seaport Division Professional & 21.0% Tech. Services Div. $603,984 2.1% Real Estate Division 19.3% Aviation Division 57.7% Not including $112.8M of Business Plan Prospective Projects 23 Tax Levy Preliminary Budget includes a tax levy of $84 million based on: cent rate reduction to 21.9 cents per $1000 assessed value Preliminary assessed value of $384.3 billion (13% higher than 2008) Commission sets dollar amount of the levy for the final budget Final levy rate will be based on final assessed value set in 2009 24 Levy History $ Millions $84.01 $80 $0.70 $75.90 $68.81 $70 $0.60 $62.78 $62.79 $59.66 $60 $58.00 $0.50 $50 $0.40 $39.81 $40 $35.65 $35.65 $0.30 $0.26 $0.25 $0.25 $30 $0.23 $0.23 $0.22 $0.22 $0.22 $0.19 $0.19 $0.20 $20 $0.10 $10 $0 $0.00 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Tax Levy (Left Scale) Millage (Right Scale) 25 Tax Levy Maximum The maximum levy for 2009 is $85 million Calculated by the County based on statutory limitations Applicable limitation is the 1% limit factor Maximum levy equals prior year maximum plus 1% increase plus allowance for new construction 26 Port continues to levy below the statutory maximum levy Millions $90 $80 Maximum Allowable Levy $70 $60 $50 Cumulative foregone taxes = $295 million $40 $30 $20 Actual Tax Levy Collected $10 $0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 27 Tax Levy Use WA statute allows for broad use of levy Commission policy has focused use on General Obligation (G.O.) bond debt service Seaport and Real Estate capital projects Seaport and Real Estate environmental expense Public Expense projects Freight mobility Noise mitigation not funded with airport funds Port Jobs program 28 Summary of Levy Sources and Uses 2009 (in $ 000's) SOURCES Projected Tax Levy Collection 84,010 Prior Year Levy Fund Balance 36,800 Total Projected Sources 120,810 USES Existing G.O. Debt Service - Seaport 38,031 Existing G.O. Debt Service - Real Estate 2,391 Projected new G.O. D.S. - Seaport 6,764 Projected new G.O. D.S. - Real Estate 10,586 Total Projected G.O. Debt Service 57,772 Committed Capital Expenditures 32,476 Expenses Public Expense: Seaport Freight Mobility 6,705 Environmental Expense 4,232 Port Jobs 46 Aviation NOISE Projects 9,075 Total Expenses 20,058 Capital Expenditures: BP Prospective 4,000 Total Projected Uses 114,306 Projected Ending Balance 6,504 29 Levy and G.O. bond funded project spending 2009 (in $ 000's) Seaport Containers & Support Properties Terminal 5 Crane Improvements 2,370 Terminal 18 Improvement 1,500 Terminal 25 Improvements 17,943 Terminal 10 Upland 4,000 Container Support Yard 28,900 54,713 Cruise and Industrial Properties Terminal 86 Spout Improvement 1,303 Terminal 115 Improvements 5,800 Terminal 91 Improvements 99 7,202 Others Green Port Initiative 2,800 Contingency Renewal and Replacement 4,000 Total Seaport Projects 68,715 Real Estate Maritime Industrial Center 800 Rail Corridor 106,955 Fishermen's Terminal 1,200 Green Port Initiative 1,000 P-69 Renewal 1,060 Total Real Estate Projects 111,015 Total Levy and G.O. bond Projects 179,730 30 General Obligation Bonds Tax levy is pledged to pay G.O. bond debt service Maximum amount of G.O. bond debt is set by statute Port can issue an additional $582.7 mil. with no vote Port can issue an additional $2.5 bil. with a vote Port policy is to limit G.O. debt so that no more than 75% of the levy is used for G.O. bond debt service 31 Calculation of G.O. bond limits Value of Taxable Property $ 384,290,691,862 Debt Limit, Non-Voted General Obligation Bonds (.25% of Value of Taxable Property) $ 960,726,730 Less: Outstanding Non-Voted General Obligation Bonds as of 12/31/2008 $ 378,065,000 Less: Capital leases and other general obligations as of 9/30/2008 - Remaining Capacity of Non-Voted General Obligation Debt $ 582,661,730 Debt Limit, Total General Obligation Debt (.75% of Value of Taxable Property) $ 2,882,180,189 Less: Total Outstanding General Obligation as of 12/31/2008 $ 378,065,000 Less: Capital leases and other general obligations as of 9/30/2008 - Remaining Capacity of Total General Obligation Debt $ 2,504,115,189 32 Remaining Schedule Second Reading Nov. 25, 2008 Statutory Budget Filed with King County Nov. 26, 2008 33 Port of Seattle 2009 Preliminary Budget 1st Reading/Public Hearing November 11, 2008 34
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