11a Attachment Q3 Financial Performance Report
Item No. 11a_attach Meeting Date: November 10, 2020 PORT OF SEATTLE Q3 2020 FINANCIAL PERFORMANCE REPORT AS OF SEPTEMBER 30, 2020 Q3 2020 FINANCIAL & PERFORMANCE REPORT 09/30/20 TABLE OF CONTENTS PAGE I. Portwide Performance Report 3-7 II. Aviation Division Report 8-16 III. Maritime Division Report 17-21 IV. Economic Development Division Report 22-26 V. Central Services Division Report 27-31 2 I. PORTWIDE FINANCIAL & PERFORMANCE REPORT 09/30/20 I. PORTWIDE EXECUTIVE SUMMARY The COVID-19 pandemic continues to have a significant impact on the Port operations. The passenger levels at the Airport dropped 60.2% in the first three quarters of 2020 compared to the same period last year and the 2020 cruise season has been cancelled due to the COVID-19. Operating revenues were lower than 2020 across the board, except Fishing and Operations. The Port reacted proactively and responsibly by cutting $30M in operating expenses through hiring freeze and other cost saving measures, in addition to deferring about $40M in capital spending. While the Port is reducing operating expenses to preserve cash in the short term, we are taking a strategic longterm view for capital and other community investments. We reviewed and re-prioritized our capital projects and are accelerating some of them this year. As a result, we expect our 2020 capital spending will exceed our revised budget for the first time in many years. We also added $1.5M to support Youth Opportunity Initiative and another $1.5M to promote tourism for the region and state this year. The Port expects to receive $192M in CARES Act funding that will be used for Airport debt service and operating costs. Additionally, the Port is applying for FEMA Reimbursement for all eligible costs related to COVID-19 response. Finally, the Port also secured a $150M letter of credit to ensure we have adequate cash to meet our business needs. PORTWIDE FINANCIAL SUMMARY Fav (UnFav) Incr (Decr) 2018 YTD 2019 YTD 2020 YTD 2020 YTD 2020 YTD Actual vs. Revised Change from 2019 Revised Approved Budget Variance $ in 000's Actual Actual Actual Budget Budget $ % $ % Aeronautical Revenues 232,689 274,002 220,058 303,958 303,958 (83,900) -27.6% (53,944) -19.7% Airport Non-Aero Revenues 196,338 205,283 90,106 91,901 215,596 (1,794) -2.0% (115,177) -56.1% Non-Airport Revenues 99,439 109,261 74,173 79,142 99,611 (4,970) -6.3% (35,088) -32.1% Total Operating Revenues 528,466 588,546 384,337 475,001 619,165 (90,664) -19.1% (204,208) -34.7% Total Operating Expenses 293,158 322,948 299,766 326,788 350,702 27,022 8.3% (23,182) -7.2% NOI before Depreciation 235,308 265,597 84,571 148,213 268,462 (63,642) -42.9% (181,026) -68.2% Depreciation 122,757 130,820 131,955 134,716 134,716 2,762 2.0% 1,135 0.9% NOI after Depreciation 112,551 134,777 (47,383) 13,497 133,746 (60,880) -451.1% (182,161) -135.2% 2020 YTD Actuals vs. 2020 YTD Revised Budget: Total Operating Revenues for Q3 were down $90.7M compared to the revised budget due to reduced operations and lower airline passenger traffic. To mitigate the financial impacts of COVID-19, the Port instituted Portwide cost reduction measures which included cutting initiatives and discretionary spending and implementing a hiring freeze. The combination of delay in project/initiative spending and cost savings resulted in a lower total operating expense of $27M compared to the revised budget. 2020 YTD Actuals vs. 2019 YTD Actuals: Compared to the same period in 2019, the Port's Total Operating Revenues for Q3 2020 were down $204.2M primarily due to lower revenues in Public Parking, ADR & Terminal Leased Space, Ground Transportation, Rental Cars, Cruise, Conference & Event Centers, Grain, and NWSA Distributable Revenues. Total operating expenses for Q3 2020 was $23.2M lower due to cost reduction measures implemented in response to the COVID-19 pandemic. 3 I. PORTWIDE FINANCIAL & PERFORMANCE REPORT 09/30/20 NON-AIRPORT FINANCIAL SUMMARY Fav (UnFav) Incr (Decr) 2018 YTD 2019 YTD 2020 YTD 2020 YTD 2020 YTD Actual vs. Revised Change from 2019 Revised Approved Budget Variance $ in 000's Actual Actual Actual Budget Budget $ % $ % NWSA Distributable Revenue 34,007 37,678 30,545 31,451 31,451 (906) -2.9% (7,133) -18.9% Maritime Revenues 47,446 49,843 31,284 35,482 53,051 (4,198) -11.8% (18,559) -37.2% EDD Revenues 14,590 14,815 7,678 9,866 12,766 (2,188) -22.2% (7,137) -48.2% SWU & Other 3,395 6,925 4,665 2,342 2,342 2,323 99.2% (2,259) -32.6% Total Operating Revenues 99,439 109,261 74,173 79,142 99,611 (4,970) -6.3% (35,088) -32.1% Total Operating Expenses 57,028 61,896 54,895 65,376 69,153 10,481 16.0% (7,000) -11.3% NOI before Depreciation 42,411 47,365 19,278 13,766 30,458 5,511 40.0% (28,088) -59.3% Depreciation 30,011 29,242 28,105 27,840 27,865 (264) -1.0% (1,138) -3.9% NOI after Depreciation 12,399 18,123 (8,827) (14,074) 2,592 5,247 -37.3% (26,950) -148.7% 2020 YTD Actuals vs. 2020 YTD Revised Budget: Non-Airport Operating Revenues were below the revised budget by $5.0M mainly due to lower revenues from Cruise, Conference & Event Centers, and NWSA Distributable Income; partially offset by unbudgeted Forfeitures Revenue from Police. Total operating expenses were $10.5M lower than the revised budget because of spending delays and COVID-19 cost reduction measures. 2020 YTD Actuals vs. 2019 YTD Actuals: Non-Airport Operating Revenues were $35.1M less compared to the same period in 2019 because of the cancellation of the cruise season, lower Conference and Event Center revenue, and NWSA Distributable revenue. The decline in NWSA Distributable Revenue was driven by lower container volumes and breakbulk tonnage as a result of tariff issues and COVID-19 disruptions. MAJOR OPERATING REVENUES SUMMARY Fav (UnFav) Incr (Decr) 2018 YTD 2019 YTD 2020 Year-to-Date Act/Rvsd Bud Var Change from 2019 $ in 000's Actual Actual Actual Rvsd Bud Appr. Bud $ % $ % Aeronautical Revenues 232,689 274,002 220,058 303,958 303,958 (83,900) -27.6% (53,944) -19.7% Public Parking 59,245 60,839 26,591 28,001 66,524 (1,409) -5.0% (34,248) -56.3% Rental Cars - Operations 30,025 29,982 12,318 12,125 30,185 193 1.6% (17,664) -58.9% Rental Cars - Operating CFC 13,407 12,295 - - 11,793 - 0.0% (12,295) -100.0% ADR & Terminal Leased Space 48,196 52,283 24,487 21,841 53,678 2,646 12.1% (27,795) -53.2% Ground Transportation 13,910 15,685 5,426 7,326 16,907 (1,900) -25.9% (10,259) -65.4% Employee Parking 7,744 7,803 6,751 4,198 7,601 2,554 60.8% (1,051) -13.5% Airport Commercial Properties 11,804 11,444 8,195 8,523 12,586 (328) -3.8% (3,249) -28.4% Airport Utilities 5,464 5,518 4,043 6,623 6,623 (2,580) -39.0% (1,474) -26.7% Clubs and Lounges 4,801 7,598 1,866 2,597 8,012 (731) -28.1% (5,732) -75.4% Cruise 19,025 22,666 4,028 8,170 25,738 (4,142) -50.7% (18,638) -82.2% Recreational Boating 9,075 9,445 9,449 10,085 10,085 (636) -6.3% 4 0.0% Fishing & Operations 6,735 7,021 7,246 6,962 6,962 284 4.1% 225 3.2% Grain 4,043 3,187 3,101 2,451 2,451 651 26.5% (85) -2.7% Maritime Portfolio Management 8,551 7,500 7,434 7,806 7,806 (372) -4.8% (66) -0.9% Central Harbor Management 6,924 6,643 6,054 6,563 6,863 (509) -7.8% (589) -8.9% Conference & Event Centers 7,636 8,147 1,599 3,277 5,877 (1,678) -51.2% (6,548) -80.4% NWSA Distributable Revenue 34,007 37,678 30,545 31,451 31,451 (906) -2.9% (7,133) -18.9% Other 5,184 8,811 5,145 3,044 4,063 2,100 69.0% (3,667) -41.6% Total Operating Revenues (w/o Aero) 295,776 314,544 164,279 171,043 315,207 (6,764) -4.0% (150,265) -47.8% TOTAL 528,466 588,546 384,337 475,001 619,165 (90,664) -19.1% (204,208) -34.7% 4 I. PORTWIDE FINANCIAL & PERFORMANCE REPORT 09/30/20 MAJOR OPERATING EXPENSES SUMMARY Fav (UnFav) Incr (Decr) 2018 YTD 2019 YTD 2020 Year-to-Date Act/Rvsd Bud Change from 2019 $ in 000's Actual Actual Actual Rvsd Bud Appr. Bud $ % $ % Salaries & Benefits 95,520 101,403 108,303 110,702 113,789 2,399 2.2% 6,900 6.8% Wages & Benefits 91,655 97,838 100,407 100,121 100,021 (286) -0.3% 2,570 2.6% Payroll to Capital Projects 20,049 19,991 21,408 26,214 27,786 4,805 18.3% 1,418 7.1% Outside Services 62,048 66,743 68,660 84,969 93,185 16,309 19.2% 1,917 2.9% Utilities 19,805 19,955 16,297 22,488 22,853 6,191 27.5% (3,657) -18.3% Equipment Expense 5,882 7,520 6,925 6,159 7,790 (765) -12.4% (596) -7.9% Supplies & Stock 7,178 7,763 7,093 7,473 6,896 380 5.1% (670) -8.6% Travel & Other Employee Expenses 3,377 3,860 2,053 3,031 5,557 978 32.3% (1,807) -46.8% Third Party Mgmt Op Exp 8,061 9,569 4,343 5,238 8,851 895 17.1% (5,226) -54.6% B&O Taxes 3,629 3,805 2,448 2,916 3,823 468 16.1% (1,358) -35.7% Other Expenses 13,515 23,042 5,258 8,267 12,399 3,009 36.4% (17,783) -77.2% Charges to Capital Projects/Overhead Alloc (37,561) (38,541) (43,429) (50,790) (52,248) (7,361) 14.5% (4,888) 12.7% TOTAL 293,158 322,948 299,766 326,788 350,702 27,022 8.3% (23,182) -7.2% PORTWIDE FINANCIAL YEAR-END FORECAST SUMMARY Fav (UnFav) Incr (Decr) 2018 2019 2020 2020 2020 Fcst vs. Revised Change from 2019 Revised Approved Budget Variance $ in 000's Actual Actual Forecast Budget Budget $ % $ % Aeronautical Revenues 291,268 357,598 293,683 401,342 401,342 (107,660) -26.8% (63,915) -17.9% Airport Non-Aero Revenues 257,707 269,037 118,060 135,074 283,167 (17,014) -12.6% (150,978) -56.1% Non-Airport Revenues 140,415 137,538 96,935 103,302 127,106 (6,367) -6.2% (40,603) -29.5% Total Operating Revenues 689,390 764,174 508,677 639,717 811,616 (131,040) -20.5% (255,497) -33.4% Total Operating Expenses 397,638 443,089 418,870 438,081 469,769 19,210 4.4% (24,219) -5.5% NOI before Depreciation 291,752 321,085 89,807 201,637 341,847 (111,830) -55.5% (231,278) -72.0% Depreciation 164,362 174,971 179,054 179,056 179,056 2 0.0% 4,083 2.3% NOI after Depreciation 127,390 146,114 (89,247) 22,581 162,791 (111,828) -495.2% (235,361) -161.1% Year-End Forecast: Operating Revenues are forecasted to be $131.0M lower than the revised budget mainly due reduced airline activity, cancellation of the cruise season, and lower volumes in Recreational Boating and Conference & Events Center. Operating Expenses are expected to be $19.2M lower than the revised budget due to project delays, less program spending and hiring freeze due to COVID-19 pandemic. NOI before Depreciation is forecasted to be $111.8M below the revised budget due to significant reduction in revenues, partially offset by lower operating costs. KEY PERFORMANCE METRICS Fav (UnFav) Incr (Decr) 2019 YTD 2020 YTD 2019 2020 2020 2020 Fcst vs. Revised Change from 2019 Revised Approved Budget Variance Actual Actual Actual Forecast Budget Budget Chg. % Chg. % Total Passengers (in 000's) 39,323 15,640 51,829 20,345 25,554 53,334 (5,209) -20.4% (31,484) -60.7% Landed Weight (lbs. in 000's) 23,772 14,852 31,562 18,185 23,630 31,413 (5,445) -23.0% (13,377) -42.4% Passenger CPE (in $) n/a n/a 12.86 25.81 13.92 13.92 11.89 85.5% 12.95 100.6% Grain Volume (metric tons in 000's) 2,449 2,612 3,404 3,537 3,004 3,004 533 17.7% 133 3.9% Cruise Passenger (in 000's) 1,196 - 1,211 - 264 1,309 (264) -100.0% (1,211) -100.0% Shilshole Bay Marina Occupancy 95.0% 93.9% 94.7% 94.0% 95.8% 95.8% -1.8% -1.8% -0.7% -0.7% 5 I. PORTWIDE FINANCIAL & PERFORMANCE REPORT 09/30/20 KEY BUSINESS EVENTS The Port of Seattle presented Environmental Excellence Awards and Fly Quiet Awards to twelve commercial and non-profit partners for their key initiatives that help the Port achieve its environmental goals. Award recipients implemented programs that include support for local food banks, shoreline restoration, waste reduction, efforts to reduce energy consumption and greenhouse gas emission, and research and coalition building to better understand underwater stresses of our Puget Sound orcas. Moreover, the sixth and final round of funding under the Port of Seattle's Airport Community Ecology (ACE) Fund will be awarded to nine organizations (with eight contracts already signed), serving the near-airport communities of Burien, Des Moines and SeaTac. The Port Commission also approved the interlocal agreement to restore a segment of Miller Creek in Burien and SeaTac. Miller Creek supports Coho Salmon hatchery and the restoration project will contribute to regional efforts to recover resident orcas. The Port's contribution of $800,000 out of the $3.5 million joint project will help fund the replacement of a deteriorating culvert with a new and larger culvert to create a continuous stream that will help restore the natural channel, improve stormwater infrastructure, and create 450 feet of new salmon habitat. Building on the goal to create a healthy environment, the Port also broke ground on T117 which is expected to be completed in the fall of 2021. Upon project completion, the park will include a 185 feet long viewpoint pier, 1000 linear feet of barrier-free shoreline pathways, elevated viewpoints, and a pathway opportunity to enter restored habitat in the north portion of the site. One of the ways the Port is helping jumpstart economic recovery is by investing in organizations that support the creation of local jobs. The Port Commission has recently authorized another two years of funding for Washington Maritime Blue which will help advance maritime innovation initiatives. The Port has collaborated with Maritime Blue on the launch of the successful Accelerator program and development of greenhouse gas reduction strategies. The Port has launched the first grant cycle of the South King County Fund to mitigate the impacts of the pandemic on the community and support regional recovery. In addition to these grants, the South King County fund will also be used to fund the three-year agreement with Highline College Small Business Development Center (SBDC) to provide small, woman and minority business enterprises (WMBE) with training and assistance for those interested in doing business with the Port. The Port is also partnering with four local non-profit organizations that include Seattle Goodwill, Seattle Parks Foundation, Partner in Employment (PIE), and Urban League of Metropolitan Seattle to provide valuable training and earning opportunities for youths in underserved communities under the Youth Opportunity Program. This program delivered nearly 200 jobs during the summer and will continue through the fall. The pandemic may have caused the cancellation of the Airport's Charity Golf Tournament to benefit Highline Public Schools, however, this did not stop volunteer employees from the Port, HMS Host, and the Hudson group in finding other ways to support to hard-working students who would never be able to attend college without financial help. Local Highline families were provided with funding to purchase groceries and four scholarships were awarded to students pursuing a STEM (science, technology, engineering, and mathematics) education. To ensure that the Port of Seattle's Police Department is aligned with the highest national standards and best practices related to policing and civil rights, the Port Commission launched an agency-wide task force to lead a comprehensive assessment of department practices. It is important to note that this action is not in any way related to an incident or complaint. Areas of focus will include diversity in recruitment, training, use of force, oversight, accountability, racial equity and civil rights, union participation, budget, mutual aid, and advocacy. The task force will be comprised of internal and external participants and will be supported by a national consulting firm formed as an offshoot of President Obama's Task Force on 21st Century Policing committed to helping communities and organizations address public safety challenges. The task force will provide the Commission with sound policy recommendations to be delivered in three phases starting in February and continuing through July 2021. 6 I. PORTWIDE FINANCIAL & PERFORMANCE REPORT 09/30/20 CAPITAL SPENDING SUMMARY 2020 2020 2020 Fcst/Rvsd Budget YTD Year-End Revised $ % $ in 000's Actual Forecast Budget Aviation 375,286 501,720 489,182 (12,538) -2.6% Maritime 13,817 21,875 19,712 (2,163) -11.0% Economic Development 8,645 10,167 10,699 532 5.0% Central Services & Other (note 1) 5,456 9,925 15,991 6,066 37.9% TOTAL 403,204 543,687 535,584 (8,103) -1.5% Note: (1) "Other" includes 100% Port legacy projects in the North Harbor and Storm Water Utility Small Capital projects. Total capital spending forecast is $543.7M, $8.1M above the revised budget mainly due to the acceleration of North Satellite projects and Baggage Optimization projects and the T117 Restoration project. PORTWIDE INVESTMENT PORTFOLIO During the third quarter of 2020, the investment portfolio earned 1.93% versus the benchmark's (the Bank of America Merrill Lynch 1-3 Year US Treasury & Agency Index) of 0.14%. Over the last twelve months, the portfolio and the benchmark have earned 2.04% and 0.53%, respectively. Since the Port became its own Treasurer in 2002, the life-to-date earnings of the Port's portfolio and the benchmark are 2.43% and 1.77%, respectively. 7 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 09/30/20 II. AVIATION DIVISION FINANCIAL SUMMARY Fav(UnFav) Rev. Budget Incr/(Decr) Change from Financial Summary 2018 2019 2020 2020 2020 Variance 2019 ($ in 000's) Revised Approved Actual Actual Forecast Budget Budget $ % $ % Operating Revenue Aeronautical Revenues 291,268 357,598 293,683 401,342 401,342 (107,660) -26.8% (63,915) -17.9% Non-Aeronautical Revenues 257,707 269,037 118,060 135,074 283,167 (17,014) -12.6% (150,978) -56.1% Total Operating Revenues 548,975 626,636 411,742 536,416 684,510 (124,673) -23.2% (214,893) -34.3% Total Operating Expenses 318,849 356,635 337,502 348,826 377,306 11,325 3.2% (19,133) -5.4% Net Operating Income 230,126 270,001 74,241 187,589 307,203 (113,349) -60.4% (195,760) -72.5% CPE 10.79 12.85 25.81 13.92 13.92 (11.89) (0.85) 12.95 100.8% Non-Aero NOI ($ in 000s) 149,959 150,752 8,658 21,443 154,660 (12,785) -59.6% (142,093) -94.3% Enplaned passengers (in 000s) 24,894 25,874 10,172 26,667 26,667 (16,495) -61.9% (15,702) -60.7% - Capital Expenditures (in 000s) 579,135 573,598 501,720 489,182 513,131 (12,538) -2.6% (71,878) -12.5% 2020 Forecast vs. 2020 Revised Budget Net Operating Income (NOI) for 2020 is forecasted to be (-$113.3M or -60.4%) unfavorable to revised budget, driven by: o Aeronautical revenue is (-$107.6M or -26.8%) unfavorable. Due to timing issues, there was not an official revised budget for Aeronautical revenue to compare against. Therefore, the variance is against the original Approved Budget which did not account for revisions to the budget to account for cost recovery with COVID-19 impact based on 61% decline in passengers. Nevertheless, Aeronautical revenues are down due to cost reductions across all the Aeronautical business units in response to the COVID-19 impact. See the Aeronautical tables for more details. o Non-Aeronautical revenue (-$17M or -12.6%) is unfavorable due to the COVID-19 impact affecting all Non-Aeronautical business lines, increased downturn in passenger expectations since revised budget. The revenue year-end forecast is based on a 61% decline in passengers. See the Non-Aeronautical tables for more details. o Total Operating Expenses are forecasted to be ($11.3M or 3.2%) favorable to revised budget driven by forecasted cost savings of $1.8M in Payroll, $4.0M in Utilities, $3.3M ERL, and $1.7M in allocations from other divisions. These cost savings are partially offset by increases in Other Airport Expenses ($4.3M). The additional cost savings are primarily a direct result of the COVID-19 impact that prompted the airport to adjust operational expenses based on the changing environment and latest assumptions current forecast passenger assumptions are lower than original revised budget assumptions. 2020 Forecast vs. 2019 Actuals Net Operating Income for 2020 is forecasted to be (-$196M or -72.5%) lower than prior year primarily driven by: o Lower Operating Revenue (-$214.8M or -34.3%) compared to prior year due to: Lower Aeronautical revenue (-$63.9M lower) due to decreased rate-based costs associated with COVID-19 and the elimination of revenue sharing for the remainder of SLOA IV. Drastically lower projection of Non-Aeronautical revenue performance ($150.9M lower) for all non- airline business such as Port Clubs and Lounges, Ground Transportation, Non-Arline Terminal Lease Spaces, Public Parking, Commercial Properties, and Airport Dining & Retail. o Lower Operating Expenses ($-19.1M or -5.4%) compared to prior year is primarily driven by $18.3M in lower Environmental Remediation Liability costs in 2020, $6.5M lower Airport Direct Charges, partially offset by higher projection of charges from other divisions of $7.7M. 8 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 09/30/20 A. BUSINESS EVENTS Covid-19 pandemic has dramatically reduced operations and passenger traffic, impacting all businesses at the airport. Currently projecting a 61% reduction in passengers in 2020 compared to 2019, although forecasts are periodically updated. Forecast reflects receipt of $192 million in CARES grant (non-operating). CPE and Non-aeronautical NOI goals for 2020 will likely not be met. B. KEY PERFORMANCE METRICS % Change YTD 2018 YTD 2019 YTD 2020 from 2019 Total Passengers (000's) Domestic 33,835 34,951 14,465 -58.6% International 4,215 4,372 1,174 -73.1% Total 38,050 39,323 15,640 -60.2% Landed Weight (In Millions of lbs.) Cargo 1,821 1,838 1,967 7.0% All other 21,233 21,934 12,885 -41.3% Total 23,054 23,772 14,852 -37.5% Cargo - Metric Tons Domestic freight 179,806 184,782 253,738 37.3% International freight 104,423 110,461 77,833 -29.5% Mail 42,011 41,309 - -100.0% Total 326,240 336,552 331,571 -1.5% *Mail weight for 2020 forward is incorporated in freight Key Performance Measures Fav (UnFav) Incr (Decr) 2018 2019 2020 2020 2020 Rev. Budget Vairance Change from 2019 Revised Approved Actual Actual Forecast $ % $ % Budget Budget Key Performance Metrics Cost per Enplanement (CPE) 10.79 12.86 25.81 13.92 13.92 (11.89) -85.5% 12.95 100.7% Non-Aeronautical NOI (in 000's) 149,959 150,752 8,658 21,443 154,660 (12,785) -59.6% (142,093) -94.3% Other Performance Metrics O&M Cost per Enplanement 12.81 13.78 16.59 13.08 14.15 (3.51) -26.8% 2.81 20.4% Non-Aero Revenue per Enplanement 10.35 10.40 5.80 5.07 10.62 0.74 14.6% (4.60) -44.2% Debt per Enplanement (in $) 133 133 161 123 123 (38) -31.1% 28 21.2% Debt Service Coverage 1.66 1.68 1.35 1.80 1.80 (0.45) -24.9% (0.33) -19.6% Days cash on hand (10 months = 304 days) 235 314 302 332 332 -29 -8.8% (12) -3.8% Aeronautical Revenue Sharing ($ in 000's) (36,863) (17,146) - - - - 0.0% 17,146 100.0% Activity (in 000's) Enplanements 24,894 25,874 10,172 26,667 26,667 (16,495) -61.9% (15,702) -60.7% Total Passengers 49,789 51,748 20,345 53,334 53,334 (32,989) -61.9% (31,403) -60.7% 9 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 09/30/20 Key Performance Metrics 2020 Forecast vs. 2020 Budget: Cost per Enplanement (CPE) Forecast: o Forecasted CPE is ($-11.89, or -85.5%) unfavorable driven primarily by lower airline activity that started in March impacted by COVID-19, and 61% lower passenger activity assumptions for the year. o Non-Aero NOI forecast is expected to be ($-146M or -94.4%) unfavorable) to original approved budget due to lower revenues across all Non-Aeronautical business lines based on current enplanement forecast of -61% decline in passenger volumes compared to prior year. See the Non-Aeronautical tables for more details. 2020 Forecast vs. 2019 Actuals: Forecasted CPE is $12.95 higher compared to prior year due to lower airline activity due to COVID-19 impact and the elimination of revenue sharing under SLOA IV. Non-Aero NOI forecast is expected to be $142.1M lower than prior year due to drastically lower non-airline revenues as a result of the COVID-19 impact. C. OPERATING RESULTS Division Summary YTD Fav(UnFav) Rev. Budget Incr/(Decr) Change from Total Airport Expense Summary 2018 2019 2020 2020 2020 Variance 2019 YTD YTD ($ in 000's) Revised Approved YTD Actual YTD Actual YTD Actual Budget Budget $ % $ % Operating Revenue Aeronautical Revenues 232,689 274,002 220,058 303,958 303,958 (83,900) -27.6% (83,900) -27.6% Non-Aeronautical Revenues 196,338 205,283 90,106 91,901 215,596 (1,794) -2.0% (125,490) -58.2% Total Operating Revenues 429,027 479,285 310,165 395,858 519,554 (85,694) -21.6% (209,389) -40.3% Operating Expenses Payroll 101,351 108,751 117,090 116,610 119,153 (481) -0.4% 8,339 7.7% Outside Services 42,124 42,394 43,872 52,128 58,735 8,256 15.8% 1,479 3.5% Utilities 14,330 14,212 11,692 16,349 16,708 4,657 28.5% (2,520) -17.7% Other Expenses 6,453 12,547 1,904 (1,205) 4,795 (3,109) 258.0% (10,644) -84.8% Total Airport Direct Charges 164,257 177,904 174,559 183,882 199,391 9,324 5.1% (3,346) -1.9% Environmental Remediation Liability 4,484 12,543 (2,776) 286 1,581 3,062 1070.8% (15,319) -122.1% Capital to Expense 8 113 32 - - (32) (81) -71.5% Total Exceptions 4,492 12,656 (2,743) 286 1,581 3,029 1059.6% (15,400) -121.7% Total Airport Expenses 168,748 190,561 171,815 184,168 200,972 12,353 6.7% (18,745) -9.8% Corporate 46,653 49,716 52,791 54,804 57,752 2,012 3.7% 3,075 6.2% Police 16,161 16,535 17,807 19,342 19,435 1,535 7.9% 1,272 7.7% Maritime/Economic Development/Other 2,618 2,956 2,457 3,098 3,391 641 20.7% (499) -16.9% Total Charges from Other Divisions 65,432 69,207 73,056 77,244 80,578 4,188 5.4% 3,849 5.6% Total Operating Expenses 234,181 259,767 244,871 261,412 281,549 16,541 6.3% (14,897) -5.7% Net Operating Income 194,846 219,517 65,294 134,447 238,004 (69,153) -51.4% (172,711) -72.6% Operating Expenses 2020 YTD Actuals vs. 2020 YTD Revised Budget ($16.5M or 6.3% favorable): YTD Airport Expenses under-run ($12.3M or 6.7%) favorable was driven by cost reductions and underspending in Outside Services on consultants and other contracted services, Utilities, and Environmental Remediation expenses. 10 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 09/30/20 Division Summary YE Forecast Fav(UnFav) Rev. Incr/(Decr) Change Total Airport Expense Summary 2018 2019 2020 2020 2020 Budget Variance from 2019 ($ in 000's) Revised Approved Actual Actual Forecast Budget Budget $ % $ % Operating Revenue Aeronautical Revenues 291,268 357,598 293,683 401,342 401,342 (107,660) -26.8% (63,915) -17.9% Non-Aeronautical Revenues 257,707 269,037 118,060 135,074 283,167 (17,014) -12.6% (150,978) -56.1% Total Operating Revenues 548,975 626,636 411,742 536,416 684,510 (124,673) -23.2% (214,893) -34.3% Operating Expenses Payroll 133,999 147,076 155,016 156,826 160,340 1,810 1.2% 7,940 5.4% Outside Services 65,475 68,801 65,538 70,401 79,889 4,863 6.9% (3,263) -4.7% Utilities 18,306 18,180 16,627 20,642 21,180 4,016 19.5% (1,554) -8.5% Other Expenses 3,966 12,272 2,644 (1,682) 5,224 (4,325) 257.2% (9,629) -78.5% Total Airport Direct Charges 221,746 246,329 239,824 246,187 266,634 6,364 2.6% (6,505) -2.6% Environmental Remediation Liability 6,233 15,900 (2,406) 878 2,648 3,284 374.0% (18,306) -115.1% Capital to Expense 6,891 2,089 62 - - (62) (2,028) -97.1% Total Exceptions 13,124 17,989 (2,344) 878 2,648 3,222 367.0% (20,333) -113.0% Total Airport Expenses 234,870 264,318 237,480 247,065 269,282 9,586 3.9% (26,838) -10.2% Corporate 60,659 65,671 70,915 71,646 77,460 731 1.0% 5,244 8.0% Police 19,231 22,290 25,114 26,122 26,233 1,008 3.9% 2,824 12.7% Maritime/Economic Development/Other 4,088 4,355 3,994 3,994 4,332 (0) 0.0% (362) -8.3% Total Charges from Other Divisions 83,979 92,316 100,022 101,761 108,025 1,739 1.7% 7,706 8.3% - Total Operating Expenses 318,849 356,635 337,502 348,826 377,306 11,325 3.2% (19,133) -5.4% Net Operating Income 230,126 270,001 74,241 187,589 307,203 (113,349) -60.4% (195,760) -72.5% Operating Expenses 2020 Forecast vs. 2020 Revised Budget ($11.3M or 3.2% favorable): Total Operating Expenses are forecasted to under-run Revised Budget by $11.3M, which reflects additional cost savings due to the COVID-19 impact based on enplanement decrease assumptions since revised budget impacting the business environment. The majority of the savings come from underspending in Utility commodities that are tied to usage and demand from the business areas in the Terminal, lowered forecast in Environmental Remediation Liability expenses, and from less charges coming through to the Aviation division from other divisions. The areas forecasted for cost savings are: $1.8M in Payroll, $4.8M in Utilities, $3.2M ERL, and $1.7M in allocations from other divisions. These cost savings are partially offset by increases in Other Airport Expenses $4.3M. 11 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 09/30/20 Aeronautical Business Unit Summary - YTD Fav(UnFav) Rev. Budget Incr/(Decr) Change from Aeronautical NOI 2018 2019 2020 2020 2020 Variance 2019 YTD YTD ($ in 000's) Revised Approved YTD Actual YTD Actual YTD Actual Budget Budget $ % $ % Rate Base Revenues Airfield Movement Area 95,501 97,759 58,087 100,415 100,415 (42,328) -42.2% (39,672) -40.6% Airfield Apron Area 13,055 15,458 13,546 16,638 16,638 (3,091) -18.6% (1,912) -12.4% Terminal Rents 129,248 153,616 132,237 160,580 160,580 (28,343) -17.7% (21,378) -13.9% Federal Inspection Services (FIS) 11,143 11,325 3,374 14,252 14,252 (10,878) -76.3% (7,950) -70.2% Total Rate Base Revenues 248,947 278,157 207,245 291,885 291,885 (84,640) -29.0% (70,912) -25.5% - Airfield Commercial Area 7,549 8,405 12,812 12,073 12,073 739 6.1% 4,407 52.4% Subtotal before Revenue Sharing 256,496 286,563 220,057 303,958 303,958 (83,901) -27.6% (66,505) -23.2% Revenue Sharing (23,806) (12,561) 1 - - 1 12,562 -100.0% Total Aeronautical Revenues 232,689 274,002 220,058 303,958 303,958 (83,900) -27.6% (53,944) -19.7% - Total Aeronautical Expenses 169,735 173,836 163,655 175,286 184,360 11,631 6.6% (10,181) -5.9% Aeronautical NOI 62,955 100,166 56,403 128,672 119,598 (72,269) -56.2% (43,763) -43.7% Aeronautical 2020 YTD Actuals vs. 2020 YTD Revised Budget Net Operating Income for Q3 2020 was (-$72.3M or -56.2%) unfavorable to revised budget primarily due to lower aeronautical costs to recover driven by a large drop in airline activity starting in March due to the COVID-19 impact. All areas were lower than revised budget, with the exception of increases in FIS driven primarily by reduction in PFC offset hitting this cost center. Aeronautical 2020 YTD Actuals vs. 2019 YTD Actuals Net Operating Income for Q3 2020 was ($43.7 or 43.7%) lower than Q3 2019 due to lower aeronautical costs to recover driven by cost reductions in response to the COVID-19 impact. 12 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 09/30/20 Aeronautical Business Unit Summary - YE Forecast Fav(UnFav) Rev. Budget Incr/(Decr) Change from Aeronautical NOI 2018 2019 2020 2020 2020 Variance 2019 ($ in 000's) Revised Approved Actual Actual Forecast Budget Budget $ % $ % Rate Base Revenues Airfield Movement Area 116,703 123,436 83,775 132,128 132,128 (48,354) -36.6% (39,661) -32.1% Airfield Apron Area 15,627 22,016 12,910 22,011 22,011 (9,101) -41.3% (9,106) -41.4% Terminal Rents 169,318 205,283 175,540 212,943 212,943 (37,403) -17.6% (29,744) -14.5% Federal Inspection Services (FIS) 16,226 12,321 4,799 18,162 18,162 (13,364) -73.6% (7,523) -61.1% Total Rate Base Revenues 317,874 363,057 277,024 385,245 385,245 (108,222) -28.1% (86,033) -23.7% Airfield Commercial Area 10,257 11,687 16,659 16,097 16,097 562 3.5% 4,972 42.5% Subtotal before Revenue Sharing 328,131 374,744 293,683 401,342 401,342 (107,660) -26.8% (81,061) -21.6% Revenue Sharing (36,863) (17,146) - - - - 17,146 -100.0% Total Aeronautical Revenues 291,268 357,598 293,683 401,342 401,342 (107,660) -26.8% (63,915) -17.9% Total Aeronautical Expenses 236,630 238,349 228,100 235,196 248,799 7,095 3.0% (10,248) -4.3% Aeronautical NOI 54,638 119,249 65,582 166,147 152,544 (100,564) -60.5% (53,667) -45.0% Airline Rate Base Cost Drivers Aeronautical 2020 Forecast vs. 2020 Budget Aeronautical net operating income is forecasted to be (-$100.1M or -60.5%) unfavorable to budget driven by lower Aeronautical revenues to be collected based on lower airline activity due to the COVID-19 impact coupled with projected cost savings in O&M and debt service that will be potentially lowered due to the CARES grant. Aeronautical 2020 Forecast vs. 2019 Actuals Net Operating Income for 2020 is forecasted to be (-$53.6M or -45.0%) lower than prior year due to: o $86M lower revenue from rate-based costs to recover decreased airline activity. 13 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 09/30/20 Non-Aero Business Unit Summary YTD Fav(UnFav) Rev. Budget Incr/(Decr) Change from Non-Aeronautical NOI 2018 2019 2020 2020 2020 Variance 2019 YTD ($ in 000's) YTD Revised Approved YTD Actual YTD Actual YTD Actual Budget Budget $ % $ % Non-Aeronautical Revenues Public Parking 59,245 60,839 26,591 28,001 66,524 (1,409) -5.0% (34,248) -56.3% Rental Cars 43,433 42,277 12,318 12,125 41,978 193 1.6% (29,960) -70.9% Ground Transportation 13,910 15,685 5,426 7,326 16,907 (1,900) -25.9% (10,259) -65.4% Airport Dining & Retail 44,353 47,541 20,063 17,931 49,382 2,132 11.9% (27,478) -57.8% Other 35,397 38,941 25,708 26,518 40,804 (810) -3.1% (13,232) -34.0% Total Non-Aeronautical Revenues 196,338 205,283 90,106 91,901 215,596 (1,794) -2.0% (115,177) -56.1% Total Non-Aeronautical Expenses 38,545 85,923 81,216 86,126 97,190 4,910 5.7% (4,707) -5.5% Non-Aeronautical NOI 157,793 119,360 8,890 5,775 118,406 3,116 54.0% (110,470) -92.6% Less: CFC Surplus - - - - - - - Adjusted Non-Aeronautical NOI 157,793 119,360 8,890 5,775 118,406 3,116 54.0% (110,470) -92.6% Non-Aeronautical 2020 YTD Actuals vs. 2020 YTD Revised Budget Net Operating Income for Q3 2020 was ($3.1M or 54%) favorable to revised budget driven by: o COVID-19 impact to Non-Aero Revenue, slightly improved performance in ADR. o Non-Aeronautical operating expenses was ($4.9M or 5.7%) favorable due to overall underspending in Outside Services on consultants and other contracted services, utilities, and charges from other divisions. Non-Aeronautical 2020 YTD Actuals vs. 2019 YTD Actuals Net Operating Income for Q3 2020 was (-$110M or -92.6%) lower than Q3 2019 driven by: o A dramatic impact to Non-Aero Revenue from COVID-19 evident starting in March and continuing through September with a 61% forecasted decline in enplanements for the remainder of the year compared to the same time in the prior year. Many Non -Aero tenants have closed operations until passenger volume begins to recover. Although ADR and Parking businesses have started to open back up in May and June on a limited basis, tenants continue to report drastic decline in activity compared to last year. 14 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 09/30/20 Non-Aero Business Unit Summary - YE Forecast Fav(UnFav) Rev. Incr/(Decr) Change Non-Aeronautical NOI 2018 2019 2020 2020 2020 Budget Variance from 2019 ($ in 000's) Revised Approved Actual Actual Forecast Budget Budget $ % $ % Non-Aeronautical Revenues Public Parking 80,212 82,125 35,728 40,813 89,485 (5,085) -12.5% (46,397) -56.5% Rental Cars 53,569 52,567 15,363 19,209 51,149 (3,846) -20.0% (37,204) -70.8% Ground Transportation 18,772 20,765 7,701 11,092 22,299 (3,391) -30.6% (13,064) -62.9% Airport Dining & Retail 59,021 61,615 25,545 27,753 66,145 (2,208) -8.0% (36,070) -58.5% Other 46,132 51,966 33,723 36,207 54,089 (2,485) -6.9% (18,244) -35.1% Total Non-Aeronautical Revenues 257,707 269,037 118,060 135,074 283,167 (17,014) -12.6% (150,978) -56.1% Total Non-Aeronautical Expenses 82,219 118,286 109,401 113,631 128,508 4,229 3.7% (8,884) -7.5% Non-Aeronautical NOI 175,488 150,752 8,658 21,443 154,660 (12,785) -59.6% (142,093) -94.3% Less: CFC Surplus (7,724) (6,834) - - - - 6,834 -100.0% Adjusted Non-Aeronautical NOI 167,764 143,917 8,658 21,443 154,660 (12,785) -59.6% (135,259) -94.0% Non-Aeronautical 2020 Forecast vs. 2020 Revised Budget Non-Aeronautical net operating income is forecasted to be (-$12.8M or -59.6%) unfavorable to revised budget. All non-airlines businesses are impacted by COVID-19. There is force majeure language in many nonaeronautical concession agreements (tied to reduction in passenger volume) that provides contractual relief of a minimum annual guaranteed rent. Revenue forecast is based on 61% decline in passenger volume scenario compared to prior year. Lower planned spending ($4.2M or 3.7%) favorable reflects additional cost cutting measures in response to COVID-19. Non-Aeronautical 2020 Forecast vs. 2019 Actuals Net Operating Income for 2020 is forecasted to be ($142M or 94.3%) lower compared to prior year for the reasons mentioned above. 15 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 09/30/20 D. CAPITAL RESULTS Capital Variance 2020 2020 2020 Fcst/Rvsd Budget YTD Year-End Revised $ % $ in 000's Actual Forecast Budget International Arrivals Facility (1) 141,103 171,403 215,000 43,597 20.3% NS NSAT Renov NSTS Lobbies (2) 117,594 158,956 134,528 (24,428) -18.2% Checked Bag Recap/Optimization (3) 25,419 33,184 14,500 (18,684) -128.9% Terminal Security Enhancements Ph 2 (4) 344 383 6,916 6,533 94.5% AFLD Pvmnt Program 2016-2020 (5) 13,766 18,872 13,133 (5,739) -43.7% Remote Aircraft Deicing (6) 2,680 10,778 15,058 4,280 28.4% Restroom Upgrades Conc B, C, D (7) 8,254 8,978 5,400 (3,578) -66.3% ARC Flash Hazard Mitgation (8) 90 181 3,405 3,223 94.7% PLB Renew & Replace Phase 2 (9) 635 2,536 5,654 3,118 55.1% RCF Pavement Remediation (10) 2,995 3,330 6,198 2,868 46.3% Main Terminal Low Voltage Upgrade (11) 935 1,185 3,961 2,776 70.1% Central Terminal Infrastructure & HVAC (12) 3,968 4,968 7,250 2,282 31.5% Safedock Upgrade & Expansion (13) 1,495 4,008 6,209 2,201 35.5% Highline School Insulation (14) - 6,273 13,734 7,461 54.3% All Other 56,008 88,001 110,237 22,236 20.2% Subtotal 375,286 513,037 561,182 48,145 8.6% CIP Cashflow Mgmt Reserve (15) - (11,317) (72,000) (60,683) 84.3% Total Spending 375,286 501,720 489,182 (12,538) -2.6% 1. Substantial completion delayed from May 2020 to Feb 2021 for IAF Apr 21 for ped bridge/POD D. Primarily related to pedestrian walkway scope 2. $24.4M Increase due to added construction costs associated with work pulled forward (Operation Silver Cloud) that would have been performed in 2021, plus processing a significant amount of construction change orders for work already executed. 3. MII Rejection at the beginning of the year led to uncertainty whether the project would be rebid, so the spending was pushed out of the baseline. The contract has been executed and spending was accelerated. 4. Cancellation of bollard purchase and major works contract have deferred work. 5. Construction is expedited to take advantage of downturn in air traffic operation, and transfer of scope from 2025 Pavement Improvement program. 6. New estimate has significant reduction as a result of value engineering and bid came in lower than engineering estimate. 7. Bid overage for Phase 3 construction, increased construction costs for phase 2 with impacts from COVID-19 as a factor contributed to higher than anticipated costs for 2020. 8. Constructability reviews caused design delays, which pushed construction into next year. 9. New estimate has significant reduction as a result of value engineering and bid came in lower than engineering estimate. 10. Construction suspended and delayed one year due to Covid-19. 11. 1 year behind schedule due to delays in getting designer and general contractor onboard. 12. Project is coming in under budget. 13. The variance is mostly due to a favorable bid. 14. Commission directed acceleration of the sound insulation projects in Q1 2020. Highline insulation is funded by 67% AIP grants, 16% tax levy, and 17% airport funds. 15. Reduced the negative amount to $11,317(original was $72,000) as some projects were accelerated in YTD spending and there is greater certainty in Q4 spending forecast. 16 II. MARITIME DIVISION FINANCIAL & PERFORMANCE REPORT 09/30/20 III. MARITIME DIVISION FINANCIAL SUMMARY Fav (UnFav) Incr (Decr) 2018 2019 2020 2020 2020 Fcst vs. Revised Change from 2019 Revised Approved Budget Variance $ in 000's Actual Actual Forecast Budget Budget $ % $ % Total Revenues 57,575 59,289 40,629 42,585 62,938 (1,956) -5% (18,660) -31% Total Operating Expenses 43,252 48,644 50,210 52,191 54,396 1,981 4% 1,566 3% Net Operating Income 14,323 10,644 (9,582) (9,606) 8,541 25 0% (20,226) -190% Capital Expenditures 20,489 7,887 21,875 19,712 (2,163) -11% 13,988 177% 2020 Forecast vs. 2020 Revised Budget Operating Revenues are $2M lower than revised budget driven by Cruise moving from delay to cancellation for the 2020 season. Operating Expenses forecasted $2M lower than budget from additional reductions in Port Valet (cruise bag handling service) expenses. Net Operating Income planned flat to budget. Capital Spending forecasted at 111% of $19.7M revised budget driven by expedited schedule of T117 habitat restoration project. 2020 Forecast vs. 2019 Actuals Operating Revenues expected $18.7M lower than 2019 due to COVID-19 impacts in Cruise. Increases in Recreational boating moorage both at Shilshole Marina and Fishermen's Terminal is offset by reductions in Maritime Portfolio Management and Elliott Bay Fishing and Commercial. Operating Expenses forecasted $1.6M higher than 2019 actual driven primarily by $1.9M ILA payment NWSA, $1.9M favorable one-time pension adjustment in 2019, offset by favorable police allocations and COVID-19 related cost cutting initiatives. Net Operating Income forecasted $20.2M below 2019 actual. Net Operating Income before Depreciation by Business Fav (UnFav) Incr (Decr) 2019 YTD 2020 YTD 2020 YTD 2020 YTD Actual vs. Revised Change from 2019 Revised Approved Budget Variance $ in 000's Actual Actual Budget Budget $ % $ % Ship Canal Fishing & Operations (1,493) (1,086) (1,924) (2,114) 837 44% 407 27% Elliott Bay Fishing & Commercial Operations 134 (865) (1,298) (1,478) 433 33% (998) NA Recreational Boating 1,443 1,223 1,632 1,245 (409) 25% (220) -15% Cruise 14,225 (4,762) (2,174) 14,621 (2,587) -119% (18,987) -133% Grain 1,913 2,049 1,100 1,053 949 -86% 136 7% Maritime Portfolio (667) (332) (1,135) (1,442) 802 71% 334 -50% All Other (342) (305) (424) (33) 119 28% 37 11% Total Maritime 15,213 (4,078) (4,222) 11,852 144 3% (19,292) -127% 17 II. MARITIME DIVISION FINANCIAL & PERFORMANCE REPORT 09/30/20 A. BUSINESS EVENTS Recreational Boating First of 3 customer facilities opened at Shilshole Bay Marina. The two larger facilities scheduled to open in November. Elliott Bay Fishing and Commercial Operations - Executed Agreement with Arrow Launch to provide moorage space north of West Seattle Bridge as failure back up plan. Continue to add process improvements to ensure safe operations upon return of fleet in Q4. Ship Canal Fishing & Operations Summer Recreational Boating exceeded expectations, generating a 21% annual revenue increase. Cruise The Cruise team is working with cruise lines, CLIA, AAPA, CDC, and other stakeholders to plan for and implement new health protocols at T91 and P66, as well as developing a strategy and community communication plan in preparation of recommencing cruise operations for the 2021 cruise season.\ Stormwater Utility T46 pipe replacement complete and five-year rate plan vetted with advisory committee. B. KEY PERFORMANCE METRICS Grain Volume Metric Tons in 000's Cruise Passengers in 000's 18 II. MARITIME DIVISION FINANCIAL & PERFORMANCE REPORT 09/30/20 C. OPERATING RESULTS Fav (UnFav) Incr (Decr) 2018 YTD 2019 YTD 2020 YTD 2020 YTD 2020 YTD Actual vs. Revised Change from 2019 Revised Approved Budget Variance $ in 000's Actual Actual Actual Budget Budget $ % $ % Ship Canal Fishing & Operations 2,504 2,913 3,516 3,127 3,127 389 12% 604 21% Elliott Bay Fishing & Commercial Operations 4,231 4,108 3,729 3,831 3,835 (102) -3% (379) -9% Recreational Boating 9,075 9,445 9,449 10,085 10,085 (636) -6% 4 0% Cruise 19,025 22,666 4,028 8,170 25,738 (4,142) -51% (18,638) -82% Grain 4,043 3,187 3,101 2,451 2,451 651 27% (85) -3% Maritime Portfolio Management 8,551 7,500 7,434 7,806 7,806 (372) -5% (66) -1% Other 17 25 26 8 8 18 231% 2 7% Total Revenue 47,446 49,843 31,284 35,478 53,051 (4,194) -12% (18,559) -37% Expenses Maritime (Excl. Maint) 9,184 9,474 10,903 12,625 12,941 1,722 14% 1,429 15% Economic Development 3,357 3,552 3,409 4,290 4,386 881 21% (143) -4% Total Direct 12,542 13,026 14,312 16,914 17,327 2,603 15% 1,286 10% Maintenance Expenses 8,362 8,350 8,638 9,506 9,928 868 9% 288 3% Envir Services & Planning 856 1,666 1,760 1,725 1,991 (35) -2% 94 6% Seaport Project Management 233 180 280 246 268 (34) -14% 100 55% Total Support Services 9,452 10,196 10,677 11,477 12,187 800 7% 482 5% IT 1,984 2,027 2,099 2,141 2,149 42 2% 72 4% Police Expenses 3,252 2,953 2,298 2,494 2,506 196 8% (655) -22% External Relations 964 1,145 906 1,117 1,240 212 19% (239) -21% Other Central Services 4,704 5,075 4,849 5,292 5,607 443 8% (226) -4% Aviation Division / Other 159 209 221 264 183 42 16% 13 6% Total Central Services / Other 11,062 11,409 10,374 11,309 11,685 935 8% (1,035) -9% Total Expense 33,055 34,630 35,363 39,700 41,198 4,338 11% 732 2% NOI Before Depreciation 14,391 15,213 (4,078) (4,222) 11,852 144 3% (19,292) -127% Depreciation 13,313 13,267 13,131 12,963 12,959 (168) -1% (136) -1% NOI After Depreciation 1,078 1,946 (17,209) (17,185) (1,107) (25) 0% (19,156) 984% 2020 Actuals vs. 2020 Revised Budget Operating Revenues were $4,194K lower than budget: 1) Ship Canal Fishing & Operations were $389K favorable due to higher summer recreational moorage at Fishermen's terminal. 2) Elliott Bay Fishing & Commercial Operations $102K below from COVID-19 driven elimination of event staging at T91, offset by benefits of the closure to the Ballard Locks. 3) Recreational Boating lower $636K due to COVID-19 guest moorage transition delays and event cancellations. 4) Cruise $4,142K unfavorable due to full cancellation of cruise season instead of late July start. 5) Grain $651K higher driven by September volumes (second highest month in past 12 years). 6) Maritime Portfolio Management $372K lower due to vacancy at Maritime Industrial Center. Operating Expenses were $4,338K lower than budget: 1) Direct Expenses were $2,603K lower than budget Recreational Marinas and Commercial Operations $849K under from lower utilities and outside security services. Maritime Marketing $381K below budget from event cancellations. Cruise Operations $727K under from Port Valet Savings. Division Management was $146K under budget due to open planning positions. Portfolio Management $1,012K favorable from salaries, open headcount, tenant improvements. Capital to expense unbudgeted $644K related to Fishermen's terminal. Received $186K benefit in Environmental Remediation liability All other Direct Expenses net to $54K over budget. 19 II. MARITIME DIVISION FINANCIAL & PERFORMANCE REPORT 09/30/20 2) Total Support Services were $800K favorable to budget. Maintenance $868K favorable due to project spend. Environmental Services and Planning were $35K higher than budget due to unplanned derelict vessel. Seaport Project management $34K unfavorable to budget. 3) Total Central Services / Other were $935K favorable to budget. Net Operating Income was $144K favorable to budget. 2020 Actuals vs. 2019 Actuals Operating Revenues were $18.6M lower than 2019 due to cancellation of the Cruise season. Operating Expenses were up $732K or 2% to 2019: 1) First year of ILA Payments to NWSA at T46, $1,434K higher. 2) Changing in Maintenance Allocation, $288K higher. 3) Central services were lower by $1,035K. Net Operating Income was $19.3M below 2019 actual. Fav (UnFav) Incr (Decr) 2018 2019 2020 2020 2020 Fcst vs. Revised Change from 2019 Revised Approved Budget Variance $ in 000's Actual Actual Forecast Budget Budget $ % $ % Ship Canal Fishing & Operations 3,502 3,929 4,653 4,264 4,264 389 9% 724 18% Elliott Bay Fishing & Commercial Operations 6,755 6,095 5,021 5,123 5,123 (102) -2% (1,075) -18% Recreational Boating 12,035 12,484 12,725 13,361 13,361 (636) -5% 241 2% Cruise 18,880 22,410 4,150 5,909 26,261 (1,758) -30% (18,259) -81% Grain 5,167 4,266 4,141 3,490 3,490 651 19% (125) -3% Maritime Portfolio Management 11,305 10,108 9,928 10,428 10,428 (500) -5% (179) -2% Other (69) (3) 11 11 11 (0) 0% 14 -462% Total Revenue 57,575 59,289 40,629 42,585 62,938 (1,956) -5% (18,660) -31% Expenses Maritime (Excl. Maint) 11,326 13,789 15,408 16,408 16,881 1,000 6% 1,620 12% Economic Development 4,347 4,987 5,186 5,626 5,756 440 8% 199 4% Total Direct 15,673 18,776 20,595 22,035 22,637 1,440 7% 1,819 10% Maintenance Expenses 11,416 12,186 12,076 12,426 13,073 350 3% (110) -1% Envir Services & Planning 1,553 2,250 2,537 2,295 2,681 (242) -11% 287 13% Seaport Project Management 295 175 390 330 356 (60) -18% 215 123% Total Support Services 13,265 14,611 15,003 15,051 16,110 48 0% 392 3% IT 2,558 2,685 2,875 2,895 2,906 20 1% 189 7% Police Expenses 4,041 4,086 3,238 3,368 3,382 130 4% (848) -21% External Relations 1,379 1,564 1,032 1,501 1,635 469 31% (532) -34% Other Central Services 6,117 6,645 7,100 6,974 7,481 (126) -2% 455 7% Aviation Division / Other 220 278 368 368 245 0 0% 90 32% Total Central Services / Other 14,315 15,258 14,613 15,106 15,650 493 3% (645) -4% Total Expense 43,252 48,644 50,210 52,191 54,396 1,981 4% 1,566 3% NOI Before Depreciation 14,323 10,644 (9,582) (9,606) 8,541 25 0% (20,226) -190% Depreciation 18,022 17,627 17,249 17,249 17,244 0 0% (378) -2% NOI After Depreciation (3,699) (6,982) (26,830) (26,855) (8,703) 25 0% (19,848) -284% 2020 Forecast vs. 2020 Revised Budget Operating Revenues are $2M lower than revised budget driven by Cruise moving from delay to cancellation for the 2020 season. Operating Expenses forecasted $2M lower than budget from additional reductions in Port Valet (cruise bag handling service) expenses. Net Operating Income Planned flat to budget. 20 II. MARITIME DIVISION FINANCIAL & PERFORMANCE REPORT 09/30/20 2020 Forecast vs. 2019 Actuals Operating Revenues expected $18.7M lower than 2019 due COVID-19 impacts in Cruise. Cruise is forecasted down $18.3 M and all other groups are forecasted down $400K. Operating Expenses forecasted $1.5M higher than 2019 actual driven primarily by $1.9M ILA payment NWSA, $1.9M favorable one-time pension adjustment in 2019, offset by favorable police allocations and COVID-19 related cost cutting initiatives. Net Operating Income forecasted $20.2M below 2019 actual. D. CAPITAL RESULTS Budget Variance 2020 YTD 2020 2020 Revised Actual Forecast Budget $ % $ in 000's New Cruise Terminal 1,472 1,472 1,259 (213) -17% FT Gateway Building (44) 520 700 180 26% T91 Berth 6&8 Redev 50 95 460 365 79% FT Maritime Innovation Center 204 330 700 370 53% T117 Restoration 1,339 6,339 5,000 (1,339) -27% SBM Restrms/Service Bldgs Rep 7,432 8,310 9,400 1,090 12% T91 New Cruise Gangway 1 16 30 14 47% T91 Northwest Fender 59 85 785 700 89% T102 HIM E Dock 19 39 110 71 65% SBM Paving 1,010 1,580 1,810 230 13% FT Docs 3,4,5 Fixed Pier 528 528 510 (18) -4% All Other 1,747 4,459 6,448 1,989 31% Subtotal 13,817 23,773 27,212 3,439 13% CIP Cashflow Mgmt Reserve 0 (1,898) (7,500) 5,602 75% Total Maritime 13,817 21,875 19,712 (2,163) -11% Comments on Key Projects: T117 Restoration costs moved forward with expedited schedule from contactor. SBM Restrooms/Bldgs Foundation work completed, reducing amount of project contingency. T91 Northwest Fender construction spending delayed to Q1 2021. FT MD Innovation Center Project delays due to COVID 19. T91 Berth 6&8 Updated CPO estimate that design contract will be executed by end of Oct instead of Jun. New Cruise Terminal project placed on hold. Will be evaluating post-COVID-19 effects on cruise. 21 IV. ECONOMIC DEVELOPMENT DIVISION FINANCIAL & PERFORMANCE REPORT 09/30/20 IV. ECONOMIC DEVELOPMENT DIVISION FINANCIAL SUMMARY Fav (UnFav) Incr (Decr) 2018 2019 2020 2020 2020 Fcst vs. Revised Change from 2019 Revised Approved Budget Variance $ in 000's Actual Actual Forecast Budget Budget $ % $ % Total Revenues 20,705 21,151 10,024 15,658 19,110 (5,633) -36% (11,127) -53% Total Operating Expenses 27,028 27,156 21,890 27,222 29,368 5,332 20% (5,265) -19% Net Operating Income (6,323) (6,005) (11,866) (11,564) (10,258) (302) -3% (5,861) -98% Capital Expenditures 2,066 3,121 10,167 10,699 532 5% 7,046 226% 2020 Forecast vs. 2020 Revised Budget Operating Revenues forecasted to $5.6M unfavorable to revised budget due to deeper cuts in volumes at the Conference & Event Center related to COVID-19 cancellations and variable revenue at restaurants and parking facilities. Operating Expenses $5.3M favorable to budget due to cost impact of conference cancellations and port-wide cost cutting initiatives. Net Operating Income forecasted at $302K below budget. Capital spending forecasted to 95% of $10.7M revised budget. 2020 Forecast vs. 2019 Actuals Operating Revenues forecasted to $11.1M below 2019 due to lower volumes at the Conference & Event Center related to both Bell Harbor Modernization construction and COVID-19 cancellations. Operating Expenses $5.3M lower than 2019 with lower variable conference and event center costs and the port-wide cost cutting initiatives offset by a 2019 favorable pension adjustment. Net Operating Income forecasted $5.9M below 2019 actual. Net Operating Income before Depreciation by Business Fav (UnFav) Incr (Decr) 2019 YTD 2020 YTD 2020 YTD 2020 YTD Actual vs. Revised Change from 2019 Revised Approved Budget Variance $ in 000's Actual Actual Budget Budget $ % $ % Portfolio Management (1,862) (1,901) (2,738) (2,950) 837 31% (39) -2% Conference & Event Centers (719) (4,003) (3,117) (2,574) (886) -28% (3,284) -456% Tourism (837) (602) (903) (1,057) 301 33% 235 28% EDD Grants 12 26 (1,093) (1,110) 1,119 102% 14 NA Env Grants/Remed Liab/ERC (432) (730) (1,646) (1,109) 916 56% (298) 69% Total Econ Dev (3,838) (7,211) (9,497) (8,800) 2,286 24% (3,373) -88% 22 IV. ECONOMIC DEVELOPMENT DIVISION FINANCIAL & PERFORMANCE REPORT 09/30/20 A. BUSINESS EVENTS Portfolio Management is managing rent relief efforts. Forty-seven tenants are receiving relief, and most began repayment plans on Oct 1st. With few exceptions, tenants are on track and paying rent again. Real Estate Development is midway through updating the Port's Real Estate Strategic Plan. Recommendations on development of Port properties are being shared with Commission at an October Study session. Staff is also advancing design work on the Maritime Innovation Center, the FT Gateway building and T91 Uplands light industrial facilities. Diversity in Contracting executed a contract with Highline College's Small Business Development Center (and related Startzone program) to provide small businesses resources to recover and pivot operations in the face of pandemic challenges. Tourism staff is working to execute contract with WA Tourism Alliance to support tourism recovery. Implementation of recovery initiative will start in Q4. Economic Development and Innovation Staff is supporting Greater Seattle Partners' Economic Recovery plan development. We also executed a contract with WA Maritime Blue to support the 2nd Maritime Blue innovation accelerator. B. KEY PERFORMANCE METRICS Building Occupancy by Location: 23 IV. ECONOMIC DEVELOPMENT DIVISION FINANCIAL & PERFORMANCE REPORT 09/30/20 C. OPERATING RESULTS Fav (UnFav) Incr (Decr) 2018 YTD 2019 YTD 2020 YTD 2020 YTD 2020 YTD Fcst vs. Revised Change from 2019 Revised Approved Budget Variance $ in 000's Actual Actual Actual Budget Budget $ % $ % Revenue 6,954 6,668 6,079 6,589 6,889 (510) -8% (589) -9% Conf & Event Centers 7,636 8,147 1,599 3,277 5,877 (1,678) -51% (6,548) -80% Total Revenue 14,590 14,815 7,678 9,866 12,766 (2,188) -22% (7,137) -48% Expenses Portfolio Management 2,856 2,791 2,291 3,144 3,159 853 27% (499) -18% Conf & Event Centers 6,479 6,867 3,632 4,002 5,815 369 9% (3,234) -47% P69 Facilities Expenses 173 153 176 171 175 (5) -3% 24 16% RE Dev & Planning 110 79 157 100 148 (57) -57% 78 100% EconDev Expenses Other 648 584 704 484 709 (220) -46% 120 21% Maintenance Expenses 2,948 2,264 2,042 2,645 2,866 603 23% (222) -10% Maritime Expenses (Excl Maint) 188 193 354 384 393 30 8% 161 83% Total EDD & Maritime Expenses 13,402 12,930 9,357 10,930 13,265 1,573 14% (3,573) -28% Diversity in Contracting 84 130 75 120 148 45 37% (55) -42% Tourism 942 868 600 1,597 1,150 997 62% (268) -31% EDD Grants 65 (12) (26) 1,073 1,073 1,099 102% (14) 111% Total EDD Initiatives 1,091 986 649 2,789 2,371 2,140 77% (337) -34% Environmental & Sustainability 178 268 145 193 239 48 25% (123) -46% Police Expenses 122 150 158 172 173 14 8% 7 5% Other Central Services 3,944 4,248 4,464 5,142 5,428 678 13% 216 5% Aviation Division 118 83 115 138 91 22 16% 33 40% Total Central Services & Aviation 4,361 4,749 4,882 5,644 5,931 761 13% 133 3% Envir Remed Liability 0 0 0 0 0 0 NA 0 NA Total Expense 18,854 18,665 14,889 19,363 21,566 4,474 23% (3,776) -20% NOI Before Depreciation (4,264) (3,850) (7,211) (9,497) (8,800) 2,286 24% (3,361) -87% Depreciation 2,977 2,747 2,631 2,553 2,551 (78) -3% (116) -4% NOI After Depreciation (7,241) (6,597) (9,842) (12,050) (11,351) 2,209 18% (3,244) -49% 2020 Actuals vs. 2020 Revised Budget Operating revenue were $2,188K unfavorable to budget due primarily to additional event cancellations at the Conference and Event Centers as a result of government mandates caused by COVID-19 pandemic. Operating Expenses were $4,474K favorable to budget: 1) Portfolio Management $853K favorable from open FTE and deferral of fire, electrical, and signage upgrades and enhancements. 2) Conference and Event Center $369K favorable from lower activity related to cancelled events. 3) Maintenance Expenses $603K favorable due to either cancelled or delayed expense projects. 4) EDD Initiatives $2,140K favorable due to timing of spending related to COVID-19. 5) Central Services $761K below budget. 6) All other expenses net to $252K above budget. Net Operating Income was $2,286K above budget. 2020 Actuals vs. 2019 Actuals Operating Revenues were $7,137K lower than 2019 actual due to reduced volumes at the Conference and Event Centers as well as Bell Street Garage Operating Expenses were $3,776K lower than 2019 actual: 1) Portfolio Management $499K lower due to hiring freeze on open headcounts 2) Conference and Event Centers $3,234K lower than 2019 due to variable costs associated with lower Conference and Event Center volumes as a result of government mandates caused by COVID-19 pandemic. 3) Maintenance Expenses $222K lower than 2019. 4) All other Expenses net to $179K above 2019. Net Operating Income was $3,361K below 2019 actual. 24 IV. ECONOMIC DEVELOPMENT DIVISION FINANCIAL & PERFORMANCE REPORT 09/30/20 Fav (UnFav) Incr (Decr) 2018 2019 2020 2020 2020 Fcst vs. Revised Change from 2019 Revised Approved Budget Variance $ in 000's Actual Actual Forecast Budget Budget $ % $ % Revenue 9,002 8,912 8,324 8,824 9,124 (500) -6% (588) -7% Conf & Event Centers 11,703 12,239 1,700 6,833 9,985 (5,133) -75% (10,539) -86% Total Revenue 20,705 21,151 10,024 15,658 19,110 (5,633) -36% (11,127) -53% Expenses Portfolio Management 3,571 3,732 3,608 3,988 4,008 380 10% (123) -3% Conf & Event Centers 9,889 10,218 3,750 6,703 8,902 2,953 44% (6,468) -63% P69 Facilities Expenses 235 215 226 226 230 0 0% 11 5% RE Dev & Planning 149 136 145 145 208 0 0% 9 6% EconDev Expenses Other 785 930 632 632 932 0 0% (298) -32% Maintenance Expenses 3,914 3,145 3,276 3,476 3,819 200 6% 130 4% Maritime Expenses (Excl Maint) 281 253 512 512 524 0 0% 259 103% Total EDD & Maritime Expenses 18,824 18,630 12,149 15,682 18,624 3,533 23% (6,481) -35% Diversity in Contracting 132 152 151 151 197 0 0% (1) -1% Tourism 1,408 1,337 1,642 2,842 1,536 1,200 42% 305 23% EDD Grants 838 785 810 1,110 1,110 300 27% 25 3% Total EDD Initiatives 2,378 2,274 2,603 4,103 2,843 1,500 37% 329 14% Environmental & Sustainability 281 344 297 260 323 (37) -14% (47) -14% Police Expenses (76) 61 223 232 233 9 4% 162 267% Other Central Services 5,466 5,732 6,425 6,752 7,223 327 5% 693 12% Aviation Division 155 114 193 193 123 0 0% 78 69% Total Central Services & Aviation 5,825 6,251 7,138 7,437 7,901 299 4% 886 14% Envir Remed Liability 0 0 0 0 0 0 NA 0 NA Total Expense 27,028 27,156 21,890 27,222 29,368 5,332 20% (5,265) -19% NOI Before Depreciation (6,323) (6,005) (11,866) (11,564) (10,258) (302) -3% (5,861) -98% Depreciation 3,948 3,647 3,389 3,392 3,389 2 0% (258) -7% NOI After Depreciation (10,271) (9,651) (15,255) (14,956) (13,647) (299) -2% (5,604) -58% 2020 Forecast vs. 2020 Revised Budget Operating Revenues forecasted to $5.6M unfavorable to revised budget due to deeper cuts in volumes at the Conference & Event Center related to COVID-19 cancellations and variable revenue at restaurants and parking facilities. Operating Expenses $5.3M favorable to budget due to cost impact of conference cancellations and port-wide cost cutting initiatives. Net Operating Income forecasted at $302K below budget. 2020 Forecast vs. 2019 Actuals Operating Revenues forecasted to $11.1M below 2019 due to lower volumes at the Conference & Event Center related to both Bell Harbor Modernization construction and COVID-19 cancellations. Operating Expenses $5.9M lower than 2019 with lower variable conference and event center costs and the port-wide cost cutting initiatives offset by a 2019 favorable pension adjustment and increased central services allocation. Net Operating Income forecasted $5.9M below 2019 actual. 25 IV. ECONOMIC DEVELOPMENT DIVISION FINANCIAL & PERFORMANCE REPORT 09/30/20 D. CAPITAL RESULTS Budget Variance 2020 YTD 2020 Year- 2020 Revised Actual End Forecast Budget $ % $ in 000's T91 Upland Development 122 226 1,000 774 77% BHICC Interior Modernization 7,301 8,401 8,358 (43) -1% WTC HVAC Replacement 226 251 260 9 3% P66 HVAC Systems Upgrade 380 385 912 527 58% P66 Roof Upgrades 24 54 50 (4) -8% CW Bridge Elev Modernization 96 121 350 229 65% All Other Projects 496 1,152 1,769 617 35% Subtotal 8,645 10,590 12,699 2,109 17% Cash Flow Mgt 0 (423) (2,000) 1,577 79% Total Economic Development 8,645 10,167 10,699 532 5% Comments on Key Projects: T-91 Upland Industrial Unanticipated delays in the finalization of the design contract. BHICC Modernization Project complete. P66 HVAC Costs shifted to future due to delay in projected hand over from MM to PMG. 26 V. CENTRAL SERVICES DIVISION FINANCIAL & PERFORMANCE REPORT 09/30/20 V. CENTRAL SERVICES DIVISION FINANCIAL SUMMARY Fav (UnFav) Incr (Decr) 2018 YTD 2019 YTD 2020 YTD 2020 YTD 2020 YTD Actual vs. Revised Change from 2019 Revised Approved Budget Variance $ in 000's Actual Actual Actual Budget Budget $ % $ % Total Operating Revenues 237 1,045 2,445 30 30 2,415 8050.0% 1,400 134.0% Core Central Support Services 56,535 59,741 63,871 67,398 69,796 3,527 5.2% 4,130 6.9% Police 20,023 21,882 21,967 23,188 23,298 1,222 5.3% 85 0.4% Capital Development 6,736 7,547 7,284 8,175 9,357 891 10.9% (263) -3.5% Environment & Sustainability 4,932 7,064 7,244 7,741 9,419 496 6.4% 181 2.6% Total Operating Expenses 88,225 96,234 100,366 106,502 111,870 6,136 5.8% 4,132 4.3% 2020 YTD Actuals vs. 2020 YTD Budget Operating Revenues favorable due primarily to Police forfeiture seizures of $2M. Operating Expenses $6.1M favorable to budget mainly due to delays in contract spending, cutting/reducing discretionary spending, and implementing hiring freeze for all new and backfill vacant positions as part of the COVID-19 cost reduction measures. 2020 YTD Actuals vs. 2019 YTD Actuals Operating Revenues $1.4M above 2019 mainly due to higher Police forfeiture seizures in 2020 of $1.1M. Operating Expenses $4.1M higher than 2019 mainly due to higher payroll and increases to Outside Services. A. BUSINESS EVENTS Replaced the Port's primary employee communication tool, Compass, to match the technology and flexibility recently adopted for the Port's public-facing website. Upgraded the Law Enforcement Records Management System (LERMS) to enable continued Port police access to FBI-managed sensitive criminal justice information databases (CJIS). Implemented security changes to achieve full compliance with payment card industry (PCI) guidance for transmitting credit card data, fully meeting audit requirements while reducing risk for related fines. Applications which handle credit card data, including eBilling, Marina Management, Taxi, Port Parking, and Parking Revenue Control, are now fully PCI compliant. Established a new partnership with the African Chamber of Commerce and local partners (Youth Maritime Collaborative, Airport Jobs and ANEW), to promote port-related careers with immigrant and refugee youth. Established a new partnership with the El Centro de la Raza and the Youth Maritime Collaborative to promote maritime careers with Latinx youth. Held teacher curriculum workshops to support the Port's connections with Washington Association for Better Schools Held Groundbreaking Ceremony for Terminal 117 Habitat Restoration/Shoreline Public Access and Park. Delivered POS 38 Cities presentation to Mercer Island Rotary, Renton Rotary, Kent Chamber of Commerce, Redmond Rotary, Snoqualmie Valley Chamber of Commerce, Kirkland Chamber, Bellevue Rotary, Sound Cities Association. POS High School Internship Program included students from the Duwamish Valley and the Muckleshoot and Suquamish Tribes. Awarded ACE Fund grants to nine non-profit organizations. The program shifted to be a part of the South King County Fund Environmental Grants Program and expanded to the six Highline Cities. Launched Incredible Parks want Incredible Names Campaign to rename six Port public access sites/parks through community voting and review panels. Executed Contracts for Community Capacity Building, the Green Jobs Initiative and Racial Equity as part of the Duwamish Valley Community Equity Program. 27 V. CENTRAL SERVICES DIVISION FINANCIAL & PERFORMANCE REPORT 09/30/20 B. KEY PERFORMANCE METRICS Key Performance Indicators/Measures 2018 2019 2020 A. Century Agenda Strategies 1. Prepare and negotiate the agreements for the Port's 22 bargaining units 293 329 123 2. Oversee Implementation/Administration of CBAs agreements 122 98 182 B. High Performance Organization - Customer Satisfaction 1. Respond to Public Disclosure Requests 492 480 426 2. Information Communication Technology Network Availability N/A 99.8 99.7% 3. Customer Survey for Police Service Excellent or Above Average 90% 83% 84% 4. Number of Job Openings Created 458 488 265 5. Percent of annual audit work plan completed each year 100% 100% N/A C. High Performance Organization - Talent Development & Safety 1. MIS and Clarity Training Classes 6 6 7 2. MIS and Clarity Training Attendees 52 46 140 3. Employee Development Class Attendees/Structured Learning 1278 1714 3809 4. Total Recordable Incident Rate - TRIR (prev Occupational Injury Rate) 5.50 4.97 3.57 5. Lost Work Day Rate (previously Days Away Severity Rate) 58.03 34.56 65.76 D. Financial Performance 1. Corporate costs as a % of Total Operating Expenses 29.6% 29.3% 32.7% 2. Clean independent CPA audits involving AFR Yes Yes Yes 3. Timely process disbursement payment requests 4 days 3 days 3 days 4. Keep receivables collections current (within 30 days) 96% 80% 26% 5. Investment Portfolio Yield 1.95% 2.18% 1.93 6. Litigation and Claim Reserves $1.38M $2.17M $2.89M 7. Claims/Injury Damages Reserves $707K $957K $494K 28 V. CENTRAL SERVICES DIVISION FINANCIAL & PERFORMANCE REPORT 09/30/20 C. OPERATING RESULTS Financial Summary (Year-End Forecast) Fav (UnFav) Incr (Decr) 2018 2019 2020 Budget Variance Change from 2019 $ in 000's Actual Actual Forecast Rvsd Bud Appr. Bud $ % $ % Total Revenues (500) 1,282 2,462 40 40 2,422 6056.1% 1,181 92.1% Executive 2,136 2,018 2,309 2,253 2,355 (56) -2.5% 291 14.4% Commission 1,848 2,022 1,929 2,014 2,292 85 4.2% (93) -4.6% Legal 3,948 4,987 6,441 3,948 4,001 (2,492) -63.1% 1,454 29.1% External Relations 7,362 7,760 7,674 10,274 11,070 2,600 25.3% (86) -1.1% Equity Diversity and Inclusion 1,561 2,337 5,003 5,328 4,465 325 6.1% 2,666 114.1% Human Resources 8,430 9,187 8,959 10,191 11,690 1,232 12.1% (228) -2.5% Labor Relations 1,079 1,230 1,359 1,336 1,386 (23) -1.7% 129 10.4% Internal Audit 1,521 1,450 1,637 1,589 1,749 (47) -3.0% 186 12.9% Accounting & Financial Reporting Services 6,842 7,341 8,660 8,810 9,024 150 1.7% 1,319 18.0% Information & Communication Technology 21,961 23,014 25,645 25,695 26,013 50 0.2% 2,631 11.4% Information Security 934 1,203 1,787 1,915 1,968 128 6.7% 583 48.5% Finance & Budget 5,593 6,230 7,143 6,959 7,039 (184) -2.6% 913 14.7% Maritime Finance 1,445 1,605 1,871 1,870 1,942 (2) -0.1% 266 16.6% Finance & Budget 1,843 2,037 2,266 2,211 2,219 (55) -2.5% 229 11.3% Aviation Finance & Budget 2,305 2,587 3,005 2,878 2,878 (127) -4.4% 418 16.1% Business Intelligence 1,323 1,302 1,458 1,516 2,209 58 3.8% 156 12.0% Risk Services 3,095 3,137 3,425 3,380 3,438 (45) -1.3% 288 9.2% Office of Strategic Initiatives 1,596 1,448 1,064 1,197 1,619 133 11.2% (385) -26.6% Central Procurement Office 4,630 4,453 5,369 5,289 5,988 (80) -1.5% 916 20.6% Contingency 185 39 (100) (100) (2,702) - 0.0% (139) -354.7% Core Central Support Services 74,419 79,159 89,761 91,594 93,604 1,833 2.0% 10,602 13.4% Police 23,908 27,793 30,118 31,312 31,444 1,194 3.8% 2,325 8.4% Total Before Cap Dev & Environment 98,327 106,952 119,879 122,906 125,048 3,027 2.5% 12,927 12.1% Capital Development Engineering 5,478 5,696 5,203 5,143 8,765 (61) -1.2% (493) -8.7% Port Construction Services 3,522 4,341 3,601 3,468 3,748 (133) -3.8% (740) -17.0% Sub-Total 8,999 10,038 8,804 8,611 12,513 (194) -2.2% (1,233) -12.3% Environment & Sustainability Aviation Environmental 5,006 5,680 5,683 5,465 6,895 (218) -4.0% 3 0.1% Maritime Environmental & Planning 2,418 3,275 3,310 2,908 3,420 (403) -13.8% 35 1.1% Noise Programs 722 817 694 813 1,012 119 14.6% (123) -15.1% Environment & Sustainability 624 976 786 1,214 1,538 428 35.3% (191) -19.5% Sub-Total 8,770 10,748 10,473 10,399 12,866 (74) -0.7% (275) -2.6% Industrial Development Corporation - 1 - - - - 0.0% (1) -100.0% Capital to Expense - 117 185 - - (185) 0.0% 68 58.1% Total Expenses 116,097 127,855 139,341 141,916 150,427 2,575 1.8% 11,486 9.0% 29 V. CENTRAL SERVICES DIVISION FINANCIAL & PERFORMANCE REPORT 09/30/20 2020 Forecast vs. 2020 Revised Budget Operating Expenses for 2020 are $2.6M under the revised budget due primarily to: Executive unfavorable variance of ($56K) mainly due to extension of Outside Services contracts. Commission favorable variance of $85K is mainly due to $60K Payroll savings from vacant positions and lower planned Travel of $25K. Legal unfavorable variance of ($2.5M) is primarily due to unpredictable Legal Expenses. External Relations favorable variance of $2.6M due to reduced Outside Services of $2.2M, lower Payroll from vacant positions of $300K, Promotional Expenses of $160K, and reduced Travel of $55K offset by unplanned Property Rentals of ($26K) and lower charges to Capital Projects of ($104K). Equity, Diversity and Inclusion favorable variance of $325K primarily due to lower Payroll of $180K due to delayed hiring, lower Property Rental of $100K, and Promo Expenses reduction of $39K. Human Resources favorable variance of $1.2M primarily due to vacancies, lower High School interns and Veteran Fellows of $800K, reduced Travel of $150K, Outside Services of $120K, and General Expenses of $150K from reduced Advertising and planned credits from King County Metro. Labor Relations unfavorable variance of ($23K) due to unplanned job refresh and retroactive pay adjustment. Internal Audit unfavorable variance of ($47K) from higher Payroll for unplanned job refresh in 2020. Accounting and Financial Reporting Services favorable variance of $150K from lower Outside Services of $135K, $3K in lower Telecommunications, $5K lower Supplies & Stock, and $7K unplanned charges to Capital Projects. Information & Communication Technology favorable variance of $50K primarily due to lower Payroll of $140K, lower Travel of $35K, Telecommunications of $35K, and higher charges to Capital Projects of $230K which are offset by higher Outside Services of ($400K). Information Security favorable variance of $128K due to lower Outside Services of $173K and lower Travel of $14K offset by higher Payroll from job refresh and retroactive pay of ($57K) and unplanned spending in General Expenses of ($7K). Finance & Budget unfavorable variance of ($184K) is primarily from AV F&B's unbudgeted consultants in Outside Services of ($153K), and Corp F&B's unplanned FTE causing an increase of ($54K) in Payroll. Business Intelligence favorable variance of $58K primarily due to savings in Outside Services. Risk Services unfavorable variance of ($45K) due to ($140K) expected increase on Property Insurance renewal and unexpected temporary Outside Services of ($33K) offset by Payroll savings from vacancies of $128K. Office of Strategic Initiative favorable variance of $133K is due to delay in hiring two vacant positions of $119K and reductions in Outside services of $15K. Central Procurement Office unfavorable variance of ($80K) due to lower planned Charges to Capital Projects ($420K) and increase of Equipment Rental rate of ($65K) offset by lower Payroll of $393K and Travel of $14K. Police $1.2M favorable variance primarily due to lower Payroll of $1.5M Travel of $120K offset by unbudgeted higher Worker's Compensation of ($300K) and higher costs for Forfeiture Expenditures of ($161K). Engineering unfavorable variance of ($61K) is primarily due to ($681K) lower than planned charges to Capital Projects and lower Intra-department Allocations of ($65K) offset by lower Payroll of $314K, Equipment of $81K, Supplies & Stock of $58K, Travel of $30K, and Outside Services of $178K. PCS unfavorable variance of ($133K) primarily due to lower than planned charges to Capital Projects of ($900K), higher Equipment of ($100K) for unbudgeted AV Capital to Expense project, and higher Workers Compensation Claims of ($90K) which were offset by overall cuts to Payroll of $550K, Supplies and Stock of $70K, Outside Services of $225K, General Expenses of $60K, and lower Overhead Allocations of $50K. Environment & Sustainability unfavorable variance of ($74K): o AV Environmental: Increase of Outside Services of ($188K) mainly due to acceleration of the SAMP EA, unplanned Permitting, Ultrafine Particles Study, NPDES and Living Wall. o Maritime Environmental: Unplanned Outside Services of ($430K) due to salvage costs at Fisherman's Terminal and lower Payroll of $27K. 30 V. CENTRAL SERVICES DIVISION FINANCIAL & PERFORMANCE REPORT 09/30/20 o Noise: Outside Services lower by $92K due to reduced operations. o Environment & Sustainability: Outside Services lower by $491K due to project/program delays. Contingency plans to be on target. Capital to Expense unfavorable variance of ($185K) due to Surface Hubs Expansion project being changed to an expense project. 2020 Forecast vs. 2019 Actuals Operating Expenses for 2020 are forecasted to be $11.5M higher than 2019 actuals mainly due to: o Core Central Support Services $10.6M higher than 2019 primarily due to a DRS Pension Plan True-up credit of $9.9M in 2019 and higher Legal expenses. o Police $2.3M above 2019 due to the following: Received a DRS Pension Plan True-up credit of $2.8M in 2019. Holiday payout of $304K in January 2020 that were expected in December 2019. Higher than expected Worker's comp in 2020 of $290K. o Capital Development $1.2M lower than 2019 primarily due to planned reductions in hiring in 2020 and multiple delays to Capital projects. o Environment & Sustainability $275K below 2019 due to planned reductions in hiring in 2020 and multiple delays in projects in Outside Services. D. CAPITAL RESULTS 2020 2020 2020 Fcst/Rvsd Budget YTD Year-End Revised $ % $ in 000's Actual Forecast Budget Infrastructure - Small Cap 937 1,590 2,100 510 24.3% Services Tech - Small Cap 1,446 1,947 1,350 (597) -44.2% Radio System Upgrade 430 3,018 3,687 669 18.1% New Budget System 223 293 583 290 49.7% Regional Workforce Tracking - - 500 500 100.0% Learning Management System - - 400 400 100.0% Maximo Upgrade 283 283 462 179 38.7% Phone System Upgrade 43 63 900 837 93.0% Customer Relationship Mgmt 833 1,098 1,400 302 21.6% CDD Fleet Replacement 211 721 1,644 923 56.1% Corporate Fleet Replacement 239 259 1,065 806 75.7% CIP Cashflow Adjustment - (1,000) (3,000) (2,000) 66.7% Other (note 1) 418 704 1,600 896 56.0% TOTAL 5,063 8,976 12,691 3,715 29.3% Note: (1) "Other" includes remaining ICT projects and small capital projects/acquisitions. 31
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