9c Economic Development Operating Budget Presentation

Item No. 9c 
Meeting Date: October 23, 2018 
Economic Development Division 
2019 Preliminary Operating Budget 
Commission Briefing 
October 23, 2018 


1

Division Priorities Driven by Century Agenda 
Century Agenda 
Vision                                           Division Priorities 
5- 10
Cross Functional            Years            Promote international travel
Strategic   Planning            Evaluation                               and cruise adventures 
Gap                                 Promote women and minority
business enterprise (WMBE)
Strategies and Objectives           3  5            and small business growth 
(Long Range Plans)              Years          Advance equitable workforce
Implementation                                                            training within key Port
2019 Business Plan                               industries 
2019 Budget               Annual        Develop port properties to
support aviation, fishing and
2019 Performance Plans                           maritime industries 

2

Key Budget Assumptions 
Maintain zero base budgets for nonrevenue
generating departments 
Commercial Properties target 95% occupancy
at year-end 2019. 
Conference and Event Center revenue up 13%
from 2018 budget*. 
Economic Development Partnership Grants
continued. 
Continued funding of Workforce Development. 
Tourism initiatives continued. 
*Based on draft 2019 budget from Columbia Hospitality Inc. 
Near full occupancy, continued Workforce Development and Grant initiatives 
3

EDD P&L Summary 
Incr (Decr)         Incr (Decr)
2017     2018     2018     2019     Budget Variance    Budget to Forecast
$ in 000's                       Actual   Budget   Forecast   Budget      $ %       $ %
Revenue                         8,658     8,985     9,097     8,930      (55)      -1%     (167)      -2%
Conf & Event Centers                9,133     9,537     9,949    10,795     1,258      13%      846       9%
Total Revenue                    17,791    18,522    19,046    19,725     1,203      6%      679      4%
Expenses
Portfolio Management               3,875     3,778     3,778     4,128      350       9%      350       9%
Conf & Event Centers               7,639     8,465     8,465     9,374      908      11%      908      11%
P69 Facilities Expenses               206      289      289      225       (65)     -22%      (65)     -22%
RE Dev & Planning                  214      211      211      216        5       2%       5       2%
EconDev Expenses Other              763     1,227     1,227     1,262       35       3%       35       3%
Maintenance Expenses              3,657     3,055     3,055     4,071     1,017      33%     1,017      33%
Maritime Expenses (Excl Maint)          52      344      344      389       45      13%       45      13%
Total EDD & Maritime Expenses    16,406    17,370    17,370    19,664     2,294     13%    2,294     13%
Small Business                      64      140      140      199       59      42%       59      42%
Workforce Development              850     1,992     1,292     2,010       18       1%      718      56%
Tourism                        1,234     1,460     1,460     1,463        3       0%       3       0%
EDD Grants                       751      960      960      960        0       0%       0       NA
*Total EDD Initiatives             2,900     4,552     3,852     4,632       80      2%      780     20%      *Portion of 2019 EDD initiatives
Environmental & Sustainability          260      398      363      395       (2)      -1%       33       9%
CDD Expenses                     387      329      264      235       (94)     -29%      (29)     -11%      assigned to tax levy: 
Police Expenses                     51      158      156      228       70      44%       72      46%
Other Central Services               5,269     5,816     5,700     5,533      (283)      -5%     (167)      -3%
Aviation Division                   113      127      127      155       28      22%       28      22%                Small Business - $88K 
Total Central Services & Aviation    6,080     6,829     6,611     6,547     (281)     -4%      (63)     -1%
Envir Remed Liability                  0        0        0        0        0       NA       0       NA                Workforce Dev. - $1,624K 
Total Expense                    25,387    28,751    27,833    30,844     2,093      7%    3,011     11%
NOI Before Depreciation            (7,596)  (10,229)   (8,787)  (11,119)     (890)      9%    (2,332)      27%                EDD Grants - $960K 
Depreciation                       3,863     4,156     4,156     3,819      (337)      -8%     (337)      -8%
NOI After Depreciation             (11,459)   (14,385)   (12,943)  (14,937)     (553)      4%    (1,994)     15%
Near full occupancy, continued Workforce Development and Grant initiatives 
4

Portfolio Management Financial Trend 
Revenue up $1.2M/6.5% 
Expenses up $2.0M/8.3% 
Opportunities: 
T91 Development 
Pier 2 and CEM ground
leases 
Risks/Challenges: 
Allocation Structure 
Aging facilities  
expensive to maintain 
Takes years to generate
higher revenues from
existing leases 
Conference and Events Center growing revenues and associated costs 
5

Portfolio Management Key Strategies and Initiatives 

Grow and promote Conference and Event Center facilities
while working to increase gross margin 
Migrate tenant billing system for NWSA 
Maximize Parking Revenues 
Negotiate Step up leases across for both Maritime &
Economic Development Divisions 

Focus on improved security and customer service 
6

Diversity in Contracting/Small Business Assistance 
Implement Diversity in
Contracting Policy/Program 
Provide greater access to Port
opportunities through
education, events, and
assistance 
Expand supplier diversity 
Develop tools and conduct
assessments to measure and
monitor inclusion in contracting 
Support construction business
incubator in partnership with
other public and private
stakeholders 
Promoting opportunity for Disadvantaged Businesses 
7

Small Business 2019 Initiatives 
$ in 000's '19-'18
2018 Budget      2019 Budget        Change
Technical Assistance/Outreach
Construction Business Incubator                       150               60              (90)
Port Gen/Mentoring/Contractor Assistance             75               75               0
Procurement Technical Assistance Center Support       15               15               0
Marketing/ Communication/Design Services            15               5             (10)
Champion of Inclusion Recognition Event               20               10             (10)
Supplier Diversity and Program Evaluation
OMWBE Certification                                15              15               0
WMBE Best Practice and Implementation               50              50               0

Total                                                     340               230             (110)

Balanced efforts in Small Business 
8

Workforce Development 
Manage airport employment
office in partnership with
PortJobs 
Implement and Strengthen
Regional Construction Trades
Partnership 
Advance aviation career
pathway training initiative 
Invest in regional Career
Connected Learning initiative 
Pedro Reynaga, Harbor Operations Intern 

Advancing Workforce Development with an equity lens 
9

Workforce Development 2019 Initiatives 
$ in 000's '19-'18
2018 Budget        2019 Budget         Change
Contracted Initiatives
Airport Employment Center (contracted)                             500                500                  0
Airport Employment Center and Classroom                          350                350                  0
Employment Continuity Pool Program                               75                 60                (15)
Construction Trades - Regional Partnership Services, Pre-Ap            710                 710                    0
Total Contracted Initiatives                                            1,635                1,620                  (15)
Developing Initiatives
Airport Career Pathways Implementation                            250                250                  0
Maritime Career Exploration Initiative                                  250                 250                    0
K-12 Career Connected Learning                                     400                400                  0
Total Developing Initiatives                                            900                  900                    0
Workforce Development Support                                  25                28                 3
Total Workforce Development                                  2,560              2,548                (13)
Continued efforts in Workforce Development 
10

Tourism 
Promote the cruise industry through
outreach to travel influencers (trade
and media) both domestically and in
priority international markets (UK,
Germany, China & Australia). 
Increase the value of tourism
throughout Washington 
Increase reach of Tourism Marketing
Support Program 
Enhance Airport Spotlight program 
Use WeChat airport site to serve as portal                   Norwegian Bliss Marks Arrival of Larger Cruise Ships 
for destinations  in Washington. 

Promoting Cruise, Extended Stays & Use of our Maritime and Aviation Facilities 
11

Tourism 2019 Initiatives 
$ in 000's '19-'18
2018 Budget      2019 Budget        Change
New Requests
Int. Representation & Work (Australia/China)                           98               98

Continuing
Adv/Marketing (WeChat, FT, Cruise)                142              133              (9)
Europe Representation & VS Sponsorship           410              275            (135)
Tourism Grants                                   200              200               0
London Trvl Show / Tourism Development           65              39             (26)
Fam Tours / New Service Inaugural Activity           62                83               21
Total                                                     879               828              (51)

Focused on Increasing International and US Tourists to Region & State 
12

Real Estate Management and Development 
Ground lease Des Moines Creek West,
Pier 2, CEM A and Terminal 106
properties 
Initiate Bell Harbor Conference Center
Modernization 
Manage real estate portfolio to generate
positive NOI after depreciation and corporate
allocations by year-end 2024. 
Complete design work on new light
industrial facilities at Terminal 91 and
Fishermen's Terminal 
Develop a "second 25 years" renewal,
replacement, and modernization
strategy for P69 HQ facility.                                       Pier Two 
Using our Real Estate & Capital Assets to Advance the Century Agenda 
13

Real Estate Development 2019 Initiatives 
'19-'18
$ in 000's                                                2018 Budget      2019 Budget        Change
Ongoing
Appraisals                                               50               50               0
Development Advisory Consulting                     250             250              0
Total                                                      300              300                0


Initiatives centered on executing Real Estate Strategic Plan 
14

EDD Admin 2019 Initiatives 
'19-'18
$ in 000's                                     2018 Budget      2019 Budget        Change
Ongoing
ED Partnership Grants                        960              960               0
Membership: Economic Dev Council         100             100              0
Membership: Trade Dev Alliance               0              93             93
Promotional Hosting/Sponsorships           60              60              0
Opportunity Fund                         500             500              0
Total                                          1,620            1,713               93

Continuation of ED Partnership Grants & additional public partnerships 
15

Pier 69 Facilities 2019 Initiatives 
$ in 000's '19-'18
2018 Budget    2019 Budget     Change

P69 Lobby Refresh expense portion            200              0          (200)
P69 Shuttle                                      0            200           200
Total                                              200            200 - 



Managing changes in congestion 
16

Full-Time Equivalents (FTEs) 
2018 Budget                                              36.0
2018 Changes
Elimination of Business Analyst, Small Business                   (1.0)
Elimination of Manager, Small Business                            (1.0)
Addition of Sr Administrative Assistant, Small Business              1.0
Adjusted 2018                                              35.0
2019 Budget
Staff Additions:
WMBE Manager                                       1.0
Net Change 2019                                          1.0

Proposed 2019 Budget                                    36.0
No Change in FTE 
17

2019 Operating Divisions' Budget Timeline 

2019 Business           Budget              Budget           First Reading &       2nd Reading &
Plan and CIP         Development                              Public Hearing       Final Passage of
Development           Briefing             Briefing          for 2019 Budget        2019 Budget 
(May/June)                (June)               (October 9th)          (Mid-November)         (Late November) 


Will cover operating budget and capital budget 
18

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