11a. Attachment
2021 Financial Performance Briefing
Item No. 11a_attach1 Meeting Date: March 8, 2022 PORT OF SEATTLE 2021 FINANCIAL PERFORMANCE REPORT AS OF DECEMBER 31, 2021 2021 FINANCIAL & PERFORMANCE REPORT 12/31/21 TABLE OF CONTENTS PAGE I. Portwide Performance Report 3-8 II. Aviation Division Report 9-16 III. Maritime Division Report 17-20 IV. Economic Development Division Report 21-24 V. Central Services Division Report 25-29 2 I. PORTWIDE FINANCIAL & PERFORMANCE REPORT 12/31/21 I. PORTWIDE EXECUTIVE SUMMARY Prudent budgeting and careful cost management has positioned the Port well for 2021 despite the major disruption caused by the pandemic. Federal relief funds have improved the financial outlook of the airport and allowed the Port to reduce concessions billings and airlines rates and charges. While the revenue from most lines of businesses came in below budget, both Public Parking and Rental Cars performed well above budget. Through collaboration with the cruise lines, health officials, and timely congressional action, the Port successfully and safely hosted 82 cruise ship calls with approximately 229,000 revenue passengers between July and October which was higher than expected. Grain volumes also exceeded budget due to increased demand for corn, soybeans, and sorghum. Resumption of activity in fishing and commercial operations increased revenue which was offset by lower revenues in Conference & Event Centers due to event cancellations. The Port received a $57.7M state Pension Credit, which drives the operating expenses significantly under budget. Without the Pension Credit, which is non-cash, operating expenses were just $1.0M under budget. PORTWIDE FINANCIAL SUMMARY Fav (UnFav) Incr (Decr) 2019 2020 2021 2021 Actual vs. Budget Change from 2020 Variance $ in 000's Actual Actual Actual Budge t $ % $ % Aeronautical Revenues 357,598 297,909 317,513 386,668 (69,155) -17.9% 19,604 6.6% Airport Non-Aero Revenues 269,037 116,473 183,819 189,548 (5,729) -3.0% 67,346 57.8% Non-Airport Revenues 137,538 96,446 120,423 104,645 15,778 15.1% 23,978 24.9% Total Operating Revenues 764,174 510,828 621,755 680,861 (59,106) -8.7% 110,927 21.7% Total Operating Expenses 458,112 425,904 422,372 423,412 1,040 0.2% (3,532) -0.8% NOI before Depreciation 306,062 84,923 199,383 257,448 (58,065) -22.6% 114,459 134.8% Depreciation 174,903 180,086 190,683 176,509 (14,173) -8.0% 10,597 5.9% NOI before Depreciation w/o DRS Pension True-up 131,159 (95,163) 8,700 80,939 72,239 89.3% 103,863 -109.1% DRS Pension True-up Credit (16,412) (17,223) (57,716) - 57,716 0.0% (40,493) 235.1% NOI after Depreciation w/ DRS Pension True-up 147,571 (77,939) 66,416 80,939 (14,523) -17.9% 144,355 -185.2% 2021 Actuals vs. 2021 Budget Total Operating Revenues: $59.1M lower than budget mainly due to applying Federal Relief grants to offset Aero revenue requirements. Airport Non-Aero Revenues: $5.7M lower than budget due to lower revenues from ADR & Terminal Leased Space, Ground Transportation, Clubs and Lounges; partially offset by higher Rental Cars and Public Parking revenues. Total Operating Expenses: $1.0M favorable to the budget mainly due to delay in Outside Services spending, vacant positions, and lower Utilities and Third-Party Management Operating Expense. 2021 Actuals vs. 2020 Actuals Total operating revenues were up $110.9M due to higher revenues in Non-Aeronautical lines of businesses (Public Parking, Rental Cars, ADR & Terminal Leased Space, and Ground Transportation), Cruise, Grain, and NWSA Distributable Revenue. Total operating expenses were $3.5M lower compared to 2020 because of lower payroll, less contract spending, and lower Equipment expense. 3 I. PORTWIDE FINANCIAL & PERFORMANCE REPORT 12/31/21 NON-AIRPORT FINANCIAL SUMMARY Fav (UnFav) Incr (Decr) 2019 2020 2021 2021 Actual vs. Budget Change from 2020 Variance $ in 000's Actual Actual Actual Budge t $ % $ % NWSA Distributable Revenue 47,979 38,782 55,732 42,273 13,459 31.8% 16,951 43.7% Maritime Revenues 59,289 42,111 48,331 45,280 3,051 6.7% 6,219 14.8% EDD Revenues 21,151 9,470 9,294 13,348 (4,054) -30.4% (176) -1.9% SWU & Other 9,119 6,083 7,066 3,744 3,322 88.7% 983 16.2% Total Operating Revenues 137,538 96,446 120,423 104,645 15,778 15.1% 23,978 24.9% Total Operating Expenses 89,266 82,117 80,693 83,505 2,812 3.4% (1,424) -1.7% NOI before Depreciation 48,272 14,328 39,730 21,140 18,590 87.9% 25,402 177.3% Depreciation 38,737 37,674 37,841 36,496 (1,345) -3.7% 166 0.4% NOI before Depreciation w/o DRS Pension True-up 9,536 (23,346) 1,890 (15,355) (17,245) 112.3% 25,236 -108.1% DRS Pension True-up Credit (2,811) (3,116) (10,254) - 10,254 0.0% (7,137) 229.0% NOI after Depreciation w/ DRS Pension True-up 12,347 (20,230) 12,143 (15,355) 27,499 -179.1% 32,373 -160.0% 2021 Actuals vs. 2021 Budget Total non-airport operating revenues were up $15.8M compared to budget due to higher NWSA Distributable Revenue, Fishing & Operations, Grain, Cruise, and unbudgeted police forfeitures; partially offset by lower revenues from Conference and Event Center. Total non-airport operating expenses were $2.8M lower than budget because of delays in hiring, project spending delays, timing of tenant improvements, and lower utility expenses. 2021 Actuals vs. 2020 Actuals Non-airport operating revenues were $24.0M higher compared to 2020 because of higher revenues from Cruise, Grain, NWSA Distributable Revenue, and unbudgeted police forfeitures offset by lower Fishing & Operations and Central Harbor Management. Non-airport expenses were $1.4M lower than 2020 due to lower charges to Capital Projects offset by less contract spending, lower payroll, Equipment Expense, and Travel & Other Employee Expenses. 4 I. PORTWIDE FINANCIAL & PERFORMANCE REPORT 12/31/21 MAJOR OPERATING REVENUES SUMMARY Fav (UnFav) Incr (Decr) 2019 2020 2021 2021 Actual vs. Budget Variance Change from 2020 $ in 000's Actual Actual Actual Budge t $ % $ % Aeronautical Revenues 357,598 297,909 317,513 386,668 (69,155) -17.9% 19,604 6.6% Public Parking 82,125 34,502 64,104 59,597 4,507 7.6% 29,602 85.8% Rental Cars - Operations 36,793 16,637 32,722 24,379 8,343 34.2% 16,086 96.7% Rental Cars - Operating CFC 15,773 - 2,018 2,501 (483) -19.3% 2,018 0.0% ADR & Terminal Leased Space 68,013 31,234 41,607 51,184 (9,576) -18.7% 10,373 33.2% Ground Transportation 20,765 6,557 11,947 13,628 (1,681) -12.3% 5,389 82.2% Employee Parking 10,438 8,848 9,006 9,688 (682) -7.0% 158 1.8% Airport Commercial Properties 15,773 10,766 12,520 13,713 (1,193) -8.7% 1,754 16.3% Airport Utilities 7,431 5,672 6,350 7,568 (1,218) -16.1% 678 12.0% Clubs and Lounges 10,274 2,043 3,478 6,221 (2,743) -44.1% 1,435 70.2% Cruise 22,410 3,824 9,517 8,558 959 11.2% 5,693 148.9% Recreational Boating 12,484 12,611 12,851 12,915 (64) -0.5% 240 1.9% Fishing & Operations 10,024 10,456 9,859 8,644 1,215 14.1% (597) -5.7% Gra in 4,266 5,142 6,112 4,903 1,209 24.7% 970 18.9% Maritime Portfolio Management 10,108 10,074 10,392 10,259 133 1.3% 318 3.2% Central Harbor Management 8,899 7,791 7,561 8,278 (717) -8.7% (230) -3.0% Conference & Event Centers 12,239 1,662 1,910 5,035 (3,125) -62.1% 248 14.9% NWSA Distributable Revenue 47,979 38,782 55,732 42,273 13,459 31.8% 16,951 43.7% Other 10,783 6,318 6,555 4,848 1,706 35.2% 237 3.8% Total Operating Revenues (w/o Aero) 406,576 212,919 304,242 294,193 10,049 3.4% 91,323 42.9% TOTAL 764,174 510,828 621,755 680,861 (59,106) -8.7% 110,927 21.7% MAJOR OPERATING EXPENSES SUMMARY Fav (UnFav) Incr (Decr) 2019 2020 2021 2021 Actual vs. Budget Variance Change from 2020 $ in 000's Actual Actual Actual Budge t $ % $ % Salaries & Benefits 135,913 147,623 144,953 147,358 2,405 1.6% (2,671) -1.8% Wages & Benefits 136,451 137,054 134,738 130,225 (4,513) -3.5% (2,316) -1.7% Payroll to Capital Projects 25,832 29,759 28,979 33,110 4,131 12.5% (780) -2.6% Outside Services 106,463 103,637 99,482 103,959 4,477 4.3% (4,154) -4.0% Utilitie s 25,838 22,017 26,236 28,000 1,765 6.3% 4,218 19.2% Equipment Expense 11,865 10,331 6,863 6,758 (105) -1.6% (3,468) -33.6% Supplies & Stock 11,197 9,894 9,368 8,591 (777) -9.0% (526) -5.3% Travel & Other Employee Expenses 5,449 2,764 2,031 2,409 378 15.7% (733) -26.5% Third Party Mgmt Op Exp 13,329 5,201 4,994 7,709 2,715 35.2% (207) -4.0% B&O Taxes 4,859 3,332 4,120 4,509 389 8.6% 788 23.6% Other Expenses 33,553 11,806 15,640 13,618 (2,022) -14.8% 3,834 32.5% Charges to Capital Projects/Overhead Alloc (52,636) (57,515) (55,031) (62,834) (7,803) 12.4% 2,483 -4.3% TOTAL w/o DRS Pension True-up Credit 458,112 425,904 422,372 423,412 1,040 0.2% (3,532) -0.8% DRS Pension True-up Credit (16,412) (17,223) (57,716) - 57,716 0.0% (40,493) 235.1% TOTAL w/ DRS Pension True-up Credit 441,700 408,681 364,656 423,412 58,756 13.9% (44,025) -10.8% 5 I. PORTWIDE FINANCIAL & PERFORMANCE REPORT 12/31/21 PORTWIDE COMPREHENSIVE FINANCIAL SUMMARY Fav (UnFav) 2019 2020 2021 2021 Actual vs. Budget Variance ($ in 000's) Actual Actual Actual Budget $ % Explanation Revenues 1. Operating Revenues 764,174 510,828 621,755 680,861 (59,106) -8.7% Lower Aero revenues due to federal relief grants 2. Tax Levy 73,801 76,196 78,311 78,676 (365) -0.5% In line with budget 3. PFCs 100,004 34,637 72,845 67,990 4,855 7.1% Actual included true-up from 2020 4. CFCs 22,355 15,429 24,271 24,168 103 0.4% In line with budget 5. Fuel Hydrant 6,742 6,886 7,010 7,022 (12) -0.2% In line with budget 6. Non-Capital Grants & Donations 2,880 149,913 105,988 40,908 65,080 159.1% More federal relief grants 7. Capital Contributions 17,736 20,909 47,632 74,911 (27,278) -36.4% Less TSA OTA grants 8. Interest Income 54,078 41,406 (5,386) 13,158 (18,544) -140.9% Unrealized loss on investments Total 1,041,771 856,203 952,428 987,694 (35,266) -3.6% Expenses 1. O&M Expense (w/o Pension Credit) 458,112 425,904 422,372 423,412 1,040 0.2% In line with budget 2. DRS Pension True-up Credit (16,412) (17,223) (57,716) - 57,716 0.0% Unbudgeted DRS pension credit 3. Depreciation 174,903 180,086 190,683 176,509 (14,173) -8.0% More new assets came into service 4. Revenue Bond Interest Expense 105,601 133,149 132,925 155,990 23,066 14.8% Lower rates and issuance costs than budgeted 5. GO Bond Interest Expense 12,493 11,850 11,004 11,268 264 2.3% In line with budget 6. PFC Bond Interest Expense 3,547 2,670 1,041 2,539 1,498 59.0% Lower rates than budgeted 7. Public Expense 12,986 6,658 9,769 10,144 375 3.7% In line with budget 8. Non-Op Environmental Expense 118 5,971 7,495 10,200 2,705 26.5% Due to project delay 9. Other Non-Op Rev/Expense 19,536 22,033 19,469 2,413 (17,056) -707.0% Retired C1 Baggage System & Water Systems Total 1,212,585 1,179,779 1,101,699 1,215,887 114,189 9.4% Special Item - - 34,907 - (34,907) 0.0% Env Reserve for T-25 Clean-up & Habitat Restoration Change In Net Assets (170,814) (323,576) (184,178) (228,193) 44,016 -19.3% KEY PERFORMANCE METRICS Fav (UnFav) Incr (Decr) 2020 2021 2021 Fcst vs. Budget Change from 2020 Variance Actual Actual Budge t Chg. % Chg. % Total Passengers (in 000's) 20,045 36,154 36,432 (278) -0.8% 16,109 80.4% Landed Weight (lbs. in millions) 20,198 26,584 26,233 351 1.3% 6,386 31.6% Passenger CPE (in $) 26.50 15.93 19.62 3.68 18.8% (10.57) -39.9% Grain Volume (metric tons in 000's) 4,240 4,720 4,219 501 11.9% 480 11.3% Cruise Passenger (in 000's) * - 229 N/A - 0.0% - 0.0% Shilshole Bay Marina Occupancy 94.1% 94.3% 96.1% -1.9% -1.9% 0.2% 0.2% * Note: Due to CDC COVID-19 Cruise restrictions, we were unable to Budget for Cruise Passengers for 2021. 6 I. PORTWIDE FINANCIAL & PERFORMANCE REPORT 12/31/21 KEY BUSINESS EVENTS The Port of Seattle presented the Fly Quiet Awards to Frontier Airlines, SkyWest Airlines, and British Airways for making significant contribution to reducing noise at Seattle-Tacoma International Airport (SEA) in 2020. Airlines are judged based on four criteria: the sound levels of their operations; success at flying within the noise abatement flight procedures; limiting late-night noise; and adhering to the airport's ground maintenance engine run-up regulations. To add to travelers' experience, the airport continues to feature rotating exhibits of museum-quality artwork and artifacts that reflect the history, culture, or trade of the Pacific Northwest. The most recent temporary art exhibit featured six glass artworks and a vinyl that chronicles Pilchuck Glass School's milestones over the last half century and the evolution of the Studio Glass Movement in the Pacific Northwest. The Commission authorized $149M for construction to fund the first phase of the terminal modernization project. The Port will partner with Alaska Airlines to manage this phase of the project which include plans to reconfigure the 40-year-old main terminal north end ticketing area, expand the security checkpoint and upgrade facility systems to meet new technology and building standards. Alaska Airlines is the main tenant for the area, and their design expertise will help mitigate impacts to employees and flyers during the three-year construction project. The Port will reimburse Alaska Airlines for project cost. This partnership will allow the Port to focus on more than 150 other construction projects. The Port, along with Forterra, hosted tree planting events in SeaTac, Burien, and Des Moines. This is part of the multi-year collaborative project to establish and support long-term community-based forest stewardship programs. The Port also adopted the Maritime Climate and Air Action Plan to implement the 2020 Northwest Ports Clean Air Strategy vision to phase out emissions from seaport-related sources as well as meet Century Agenda greenhouse gas (GHG) reduction targets. Feedback from the community as well as key industry, government, and nongovernment stakeholders were incorporated into the final draft. As part of the long-term waterfront clean energy strategy, the Port will procure a proprietary shore power system and collaborate with Seattle City Light to supply shore power to cruise ships berthed at Pier 66. A submarine cable will be installed from Terminal 46 to Pier 66 instead of bringing power through the congested City right-of-way which will significantly reduce costs and avoid construction-related impacts to the waterfront. Two of the Port's three cruise berths are already equipped with shore power. Over the next five years, the Port will contribute $5M to the Seattle Aquarium Ocean Pavilion project and expansion of the current facility. This partnership will pave the way for current and future collaboration in maritime environmental programs, tourism promotion, as well as maritime innovation and career opportunities. Additionally, the Port will execute a Memorandum of Understanding with the City of Seattle contributing $9M to fund the West Seattle Bridge Program. This will allow the West Seattle Bridge to reopen in mid-2022 and provide for improvements to the Spokane Street Swing Bridge. This program will support freight mobility, ensure good access to Port of Seattle terminals, and mitigate traffic impacts to West Seattle and drayage effects on Duwamish Valley neighborhoods. The launch of the Port's Equity Index tool will help the Port achieve the goal of becoming an equitable and antiracist organization. This tool is an interactive and data-driven map that displays a visual representation of social and environmental disparities in King County. This will illustrate the degree to which different communities experience pollution burdens and social inequities which will help the Port focus resources to those in need. The annual State of the Port event was held virtually in December. The Port accomplished several initiatives in 2021 despite the pandemic which include completing major construction on the airport's North Satellite and International Arrivals Facility, adding resources to the South King County Community Impact Fund to mitigate the impacts of the pandemic on the community and support regional economic recovery, funding of the Youth Opportunity Initiative, achieving greenhouse gas emission reduction goals ten years early through the purchase of renewable natural gas, and launching a new study with King County to examine the feasibility of converting municipal solid waste to renewable fuels, including sustainable aviation fuel. 7 I. PORTWIDE FINANCIAL & PERFORMANCE REPORT 12/31/21 CAPITAL SPENDING SUMMARY 2021 2021 Budget Variance $ in 000's Actual Budge t $ % Aviation 389,051 491,202 102,151 20.8% Maritime 18,924 26,195 7,271 27.8% Economic Development 4,311 5,647 1,336 23.7% Central Services & Other (note 1) 8,019 13,605 5,586 41.1% TOTAL 420,305 536,649 116,344 21.7% Note: (1) "Other" includes 100% Port legacy projects in the North Harbor and Storm Water Utility Small Capital projects. PORTWIDE INVESTMENT PORTFOLIO During the fourth quarter of 2021, the investment portfolio earned 0.67% versus the benchmark's (the Bank of America Merrill Lynch 1-3 Year US Treasury & Agency Index) of 0.69%. Over the last twelve months, the portfolio and the benchmark have earned 0.94% and 0.35%, respectively. Since the Port became its own Treasurer in 2002, the life-to-date earnings of the Port's portfolio and the benchmark are 2.34% and 1.68%, respectively. 8 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 12/31/21 II. AVIATION DIVISION FINANCIAL SUMMARY Fav(UnFav) Actual vs. Budget Incr/(Decr) Financial Summary 2019 2020 2021 2021 Variance Change erom 2020 ($ in 000's) Actual Actual Actual Budget $ % $ % Operating Revenue Aeronautical Revenues 357,598 297,909 317,513 386,668 (69,155) -17.9% 19,604 6.6% Non-Aeronautical Revenues 269,037 116,473 183,819 189,548 (5,729) -3.0% 67,346 57.8% Total Operating Revenues 626,636 414,382 501,332 576,215 (74,884) -13.0% 86,950 21.0% Total Operating Expenses 355,245 329,680 294,217 339,908 45,691 13.4% (35,463) -10.8% Net Operating Income 271,390 84,702 207,114 236,308 (29,193) -12.4% 122,412 144.5% Federal Relief 147,148 95,065 37,899 57,166 150.8% (52,083) -35.4% Federal Relief (Concessions) 5,355 5,355 5,355 NOI (After Federal Relief) 271,390 231,850 307,534 274,207 33,327 12.2% 75,684 32.6% CPE 12.86 26.50 15.94 19.62 3.67 0.19 (10.56) -39.8% Non-Aero NOI ($ in 000s) 6,671 93,175 92,132 82,742 9,390 11.3% (1,043) -1.1% Enplaned passengers (in 000s) 25,874 10,044 18,073 18,216 (143) -0.8% 8,029 79.9% - Capital Expenditures (in 000s) 573,598 573,598 389,051 491,202 102,151 20.8% (184,547) -32.2% 2021 Actual vs. 2021 Budget Net Operating Income (NOI) is ($33.3M or 12.2%) favorable to the budget, driven by: o Lower Aeronautical revenue (-$69.2M or -17.9%) due to grants of $59M and a pension credit of approximately $28M which offset Aeronautical costs in 2021. o Non-Aeronautical revenue is (-$5.7M or -3.0%) unfavorable. Although improvement is seen in Landside operations, Concessions still required Federal Relief of $5.4M. o Total Operating Expenses are ($45.7M or 13.4%) favorable driven primarily by the pension credit of $47.5M to Aviation. Without the pension credit, an over-run of approximately $1.8M is primarily due to snow removal costs and payroll over-runs within the Fire and Maintenance departments. 2021 Actuals vs. 2020 Actuals Net Operating Income for 2021 is ($75.7M or 32.6%) higher than prior year before Federal Relief primarily driven by: o Higher Operating Revenue ($86.9M or 21%) compared to prior year due to passenger levels improving with enplanements down 29.6% compared to 2019 vs. 61% down in 2020 compared to 2019. o Lower Operating Expenses (-$35.5M or -18.8%) compared to prior year were primarily driven by higher pension credit received in 2021 compared to 2020. 9 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 12/31/21 A. BUSINESS EVENTS Q4 passenger growth reduced due to delta variant: 30% lower than 2019 Achieved primary financial goals Two factors greatly impacted 2021: o Additional federal relief o Pension net credit of $42.7 million: Expense credit of $47.5 million Contra revenue (subsidy) of -$4.8 million Due to pension credit, shifted some federal relief grants to 2022 (or 2023) ARPA concession pass through grant will be claimed in 2022 Achieved Skytrax 4-star rating for customer service B. KEY PERFORMANCE METRICS % Change 2019 2020 2021 from 2020 Total Passengers (000's) Domestic 46,101 18,689 34,485 84.5% International 5,728 1,357 1,669 23.0% Total 51,829 20,045 36,154 80.4% Operations 450,487 296,048 374,510 26.5% Landed Weight (In Millions of lbs.) Cargo 2,485 2,713 2,920 7.6% All other 29,078 17,485 23,664 35.3% Total 31,562 20,198 26,584 31.6% Cargo - Metric Tons Domestic freight 306,669 351,339 366,312 4.3% International & Mail freight 146,879 101,157 132,428 30.9% Total 453,548 452,496 498,740 10.2% *Mail weight for 2021 forward is incorporated in freight 10 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 12/31/21 Key Performance Measures Fav(UnFav) 2019 2020 2021 2021 Actual vs. Budget Incr/(Decr) Variance Change from 2020 Actual Actual Actual Budget $ % $ % Key Performance Metrics Cost per Enplanement (CPE) 12.86 26.50 15.93 19.62 3.68 18.8% (10.57) -39.9% Non-Aeronautical NOI (in 000's)1 143,917 6,671 93,175 82,742 10,433 12.6% 86,504 1296.8% Other Performance Metrics O&M Cost per Enplanement 13.73 32.82 16.28 18.66 2.38 12.8% (16.55) -50.4% Non-Aero Revenue per Enplanement 10.40 11.60 10.17 10.41 (0.23) -2.3% (1.43) -12.3% Debt per Enplanement (in $) 133 326 198 171 (27) -16.1% (128) -39.3% Debt Service Coverage 1.68 1.40 1.69 1.36 0.33 24.7% 0.29 20.7% Days cash on hand (10 months = 304 days) 314 327 423 369 54 14.7% 96 29.5% Aeronautical Revenue Sharing ($ in 000's) (17,146) 1 - - - 0.0% (1) 100.0% Activity (in 000's) Enplanements 25,874 10,044 18,073 18,216 (143) -0.8% 8,029 79.9% Total Passengers 51,748 20,087 36,146 36,432 (286) -0.8% 16,058 79.9% Key Performance Metrics 2021 Actual vs. 2021 Budget Cost per Enplanement (CPE): o CPE is ($3.68 or 18.8%) favorable driven primarily by the Federal Relief to help lower the Aeronautical costs to recover. o Non-Aero NOI is ($10.4M or 12.6%) favorable to budget due to the improved revenues in the Landside operations and due to the Federal Relief grant of $5.4M. 2021 Actual vs. 2020 Actuals CPE is $10.57 lower compared to prior year due to a combination of Federal Relief grants and Pension Credit offsetting the costs to recover for Aeronautical Revenues compared to prior year. Non-Aero NOI is $86.5M higher than prior year due to improved revenues in the Landside operations and due to Federal Relief. 11 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 12/31/21 C. OPERATING RESULTS Division Summary Actuals Fav(UnFav) Actual vs. Budget Incr/(Decr) Total Airport Expense Summary 2019 2020 2021 2021 Variance Change from 2020 ($ in 000's) Actual Actual Actual Budget $ % $ % Operating Expenses Payroll 144,051 152,895 134,567 153,293 18,726 12.2% (18,328) -12.0% Outside Services 68,162 63,922 62,382 65,174 2,792 4.3% (1,540) -2.4% Utilities 18,180 15,695 20,175 20,244 69 0.3% 4,480 28.5% Other Expenses 14,721 3,341 1,519 1,359 (160) -11.7% (1,822) -54.5% Total Airport Direct Charges 245,114 235,854 218,644 240,071 21,427 8.9% (17,210) -7.3% Environmental Remediation Liability 15,900 (2,361) 1,583 2,001 418 20.9% 3,943 -167.0% Capital to Expense 2,089 2,588 1,254 - (1,254) (1,334) -51.5% Total Exceptions 17,989 227 2,837 2,001 (836) -41.8% 2,610 1150.9% Total Airport Expenses 263,104 236,081 221,481 242,072 20,591 8.5% (14,600) -6.2% Corporate 65,729 68,316 56,711 69,767 13,057 18.7% (11,605) -17.0% Police 22,290 22,150 13,916 23,964 10,047 41.9% (8,233) -37.2% Maritime/Economic Development/Other 4,123 3,134 2,110 4,105 1,995 48.6% (1,024) -32.7% Total Charges from Other Divisions 92,141 93,599 72,736 97,836 25,099 25.7% (20,863) -22.3% - Total Operating Expenses 355,245 329,680 294,217 339,908 45,691 13.4% (35,463) -10.8% Operating Expenses 2021 Actuals vs. 2021 Budget ($45.7M or 13.4% favorable) Total Operating Expenses are ($45.7M or 13.4%) favorable driven primarily by the pension credit of $47.5M to Aviation. Without the pension credit, an over-run of approximately $1.8M is primarily due to snow removal costs and payroll over-runs within the Fire and Maintenance departments. 12 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 12/31/21 Aeronautical Business Unit Summary Actuals Fav(UnFav) Actual vs. Budget Incr/(Decr) Aeronautical NOI 2019 2020 2021 2021 Variance Change from 2020 ($ in 000's) Actual Actual Actual Budget $ % $ % Rate Base Revenues Airfield Movement Area 123,436 84,906 88,061 115,037 (26,976) -23.4% 3,155 3.7% Airfield Apron Area 22,016 15,146 17,146 21,418 (4,272) -19.9% 2,000 13.2% Terminal Rents 205,283 171,607 184,625 213,147 (28,522) -13.4% 13,018 7.6% Federal Inspection Services (FIS) 12,321 8,616 10,978 21,454 (10,475) -48.8% 2,362 27.4% Total Rate Base Revenues 363,057 280,275 300,810 371,056 (70,245) -18.9% 20,536 7.3% Airfield Commercial Area 11,687 17,633 16,702 15,612 1,090 7.0% (931) -5.3% Subtotal before Revenue Sharing 374,744 297,908 317,513 386,668 (69,155) -17.9% 19,605 6.6% Revenue Sharing (17,146) 1 - - - (1) -100.0% Total Aeronautical Revenues 357,598 297,909 317,513 386,668 (69,155) -17.9% 19,604 6.6% Total Aeronautical Expenses 236,959 219,878 203,573 233,102 29,528 12.7% (16,304) -7.4% Aeronautical NOI 120,639 78,031 113,940 153,566 (39,626) -25.8% 35,908 46.0% Debt Service (110,945) (62,607) (80,554) (125,747) 45,193 -35.9% (17,947) 28.7% Net Cash Flow 9,694 15,424 33,385 27,819 5,567 20.0% 17,962 116.5% Aeronautical 2021 Actuals vs. 2021 Budget Net Operating Income is (-$39.6M or -25.8%) unfavorable to budget due to $70M in lower Aeronautical revenues driven by a combination of Federal Relief grants of $59M and the pension credit of approximately $28M allocated to the Aeronautical business lowering the costs for recovery. Aeronautical 2021 Actuals vs. 2020 Actuals Net Operating Income is (35.9M or 46%) higher than 2020 due to a combination of improved enplanement levels at the airport compared to the first year of the pandemic and lower expenses in 2021 due to a larger pension credit than in prior years. 13 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 12/31/21 Airline Rate Base Cost Drivers Impact on Aero Revenues 2020 2021 2021 Budget vs Actual $ in 000's Actual Budget Actual $ % O&M (1) 213,775 227,420 198,065 (29,356)-12.9% Federal Relief Grants O&M (22,507) (3,500) (2,571) 929 -26.6% Net O&M 191,268 223,920 195,494 (28,426)-12.7% Debt Service Before Offsets 166,848 193,302 187,134 (6,168)-3.2% Debt Service PFC Offset (36,390) (47,549) (54,076) (6,527)13.7% Federal Relief Grants Debt Service (71,763) (29,399) (58,878) (29,478)100.3% Net Debt Service 58,694 116,354 74,180 (42,173)-36.2% Amortization 32,359 32,681 32,511 (170)-0.5% Space Vacancy (1,083) (1,141) (1,102) 40 -3.5% TSA Operating Grant and Other (960) (758) (687) 71 -9.4% Rate Base Revenues 280,279 371,056 300,397 (70,659)-19% Commercial area 17,633 15,612 16,702 1,090 7% Total Aero Revenues 297,912 386,668 317,099 (69,569)-18% 2021 Actuals vs. 2021 Budget O&M $29M lower due to Aero portion of pension credit (Movement, Terminal, Apron, Baggage & FIS) plus additional FIS savings due IAF opening delay offset by small variances in other areas. If not for Pension Credit, O&M amount would be very close to budget. Debt Service before Offsets: 3rd runway PFC debt was refunded with revenue bond which increased debt service and offset with refunding savings. PFC Offset $7M higher due to refunding of PFC debt with revenue bond which allows more capacity to use PFC collections for debt service offset. Federal Relief Grants Aero Portion: o O&M Impact - Reducing $2.6M from Rate Base o Debt Service Impact Reducing $59M from Rate Base 14 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 12/31/21 Non-Aero Business Unit Summary Actuals Fav(UnFav) Actual vs. Budget Incr/(De cr) Non-Aeronautical NOI 2019 2020 2021 2021 Variance Change from 2020 ($ in 000's) Actual Actual Actual Budge t $ % $ % Non-Aeronautical Revenues Public Parking 82,125 34,502 64,104 59,597 4,507 7.6% 29,602 85.8% Rental Cars 52,567 16,637 34,740 26,880 7,860 29.2% 18,104 108.8% Ground Transportation 20,765 6,557 11,947 13,628 (1,681) -12.3% 5,389 82.2% Airport Dining & Retail 61,615 25,418 35,565 45,936 (10,371) -22.6% 10,147 39.9% Other 51,966 33,359 37,463 43,506 (6,043) -13.9% 4,104 12.3% Total Non-Aeronautical Revenues 269,037 116,473 183,819 189,548 (5,729) -3.0% 67,346 57.8% Total Non-Aeronautical Expenses 118,286 109,802 90,644 106,806 16,162 15.1% (19,159) -17.4% Non-Aeronautical NOI 150,752 6,671 93,175 82,742 10,433 12.6% 86,504 1296.8% Less: CFC Surplus (6,834) - - - - - Adjusted Non-Aeronautical NOI 143,917 6,671 93,175 82,742 10,433 12.6% 86,504 1296.8% Non-Aeronautical 2021 Actuals vs. 2021 Budget Net Operating Income was ($10.4M or 12.6%) favorable to budget driven by: o Slower recovery in passenger demand for services in Airport Dining & Retail and Clubs & Lounges. These businesses brought in $13M in lower revenues. o The slower recovery in the Commercial Management operations is partially offset by the improving recovery of passenger levels that result in more demand for services in the Public Parking and Rental Cars businesses. The Landside operations have brought in approximately $10.7M in higher revenues compared to budget. o Non-Aeronautical operating expenses were ($16.2M or 15.1%) favorable driven primarily by the pension credit of approximately $19M. Non-Aeronautical 2021 Actuals vs. 2020 Actuals Net Operating Income was ($86.5M or 1,296.8%) higher than 2020 driven by: o Increasing passenger levels and activity reflected in the non-aeronautical revenues in the first recovering year of 2021 compared to 2020 when the COVID-19 impact began. o Lower expenses driven by the pension credit in 2021 of approximately $19M allocated to non-aeronautical expenses. 15 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 12/31/21 D. CAPITAL RESULTS Capital Variance 2021 2021 Budget Variance Actual Budget $ % $ in 000's International Arrivals Facility (1) 57,017 86,500 29,483 34.1% NSAT Renovation (2) 72,452 96,408 23,956 24.8% Checked Baggage (3) 97,633 86,100 (11,533) -13.4% Restroom Upgrades Conc B,C,D (4) 2,210 9,899 7,689 77.7% North MT Redevelopment (5) 576 6,744 6,168 91.5% 2021-25 AFLD Pvmnt (6) 24,271 29,560 5,289 17.9% Concourse A Expansion (7) 392 5,215 4,823 92.5% RCF Security Improvements (8) 976 4,934 3,958 80.2% SSAT Infrastructure HVAC (9) 8,086 11,505 3,419 29.7% C Concourse Expansion (10) 5,634 8,763 3,129 35.7% Terminal Security Enhancements Phase 2 (11) 469 3,479 3,010 86.5% Electric Utility SCADA (12) 727 3,441 2,714 78.9% All Other 118,608 180,632 62,024 34.3% Subtotal 389,051 533,180 144,129 27.0% CIP Cashflow Mgmt Reserve - (41,978) (41,978) 100.0% Total Spending 389,051 491,202 102,151 20.8% (1) IAF was expected to hit substantial completion in Q3 2021 with a summer opening. Challenges on the pedestrian walkway, issues with low voltage systems, smoke control, commissioning, and general issues with the design builder have yielded ongoing delays. (2) Variance due to construction costs that were pulled forward in 2020 that would have been performed in 2021 (Operation Silver Cloud) and project savings. (3) Accelerated schedule for SSAT Temp Maintenance Shop (4) Underspent due to close-out of earlier phases and the money remaining will be spent in later phases. (5) Underspent due to the delay in executing TRA 1, which was not fully executed until December 2021 (6) Bid result for 2021 pavement project came lower than Engineer's estimates by $4.7M. (7) 2021 baseline was set previous to Notebook approval (03/05/21), whereas the project budget went from $60M to 71.4M (8) The Construction Bid came in lower than Engineer's estimate (9) Returned $5M savings in Q1 and design delays have caused underspending (10) Commission Authorization delays, due to re-evaluating financial impacts with COVID-19. (11) Cash flow based upon previous procurement that was cancelled, revised cash flow was based on DB procurement and did not being include 3-month delay to request Best and Final Offers (BAFO) from DB teams and execute contract. (12) SCADA Bid Opening Delayed and additional delay in NTP; Bids significantly under Engineers Estimate, returned savings last quarter 16 III. MARITIME DIVISION FINANCIAL & PERFORMANCE REPORT 12/31/21 III. MARITIME DIVISION FINANCIAL SUMMARY Incr (Decr) 2019 2020 2021 2021 Change from 2020 $ in 000's Actual Actual Actual B udg e t $ % Total Revenues 59,289 42,111 48,331 45,280 6,219 15% Total Operating Expenses 48,644 50,228 40,714 50,243 (9,514) -19% Net Operating Income 10,644 (8,117) 7,616 (4,963) 15,733 194% Capital Expenditures 7,887 19,698 18,923 26,195 (775) -4% 2021 Actuals vs. 2021 Budget Operating Revenues are $3.1M above budget driven by higher volumes at the Grain Terminal, better than anticipated Cruise passengers, and unplanned moorage at T91. Operating Expenses $9.5M lower than budget from a change in maintenance allocation method, open FTEs, and a $7.1M pension credit. Net Operating Income $12.6M favorable to budget. Capital Spending at 72% of $26M budget. 2021 Actuals vs. 2020 Actuals Operating Revenues $6.2M higher than 2020 due to higher grain volumes and resumption of cruise business. Operating Expenses forecasted $9.5M lower than 2020 actual driven by lower support service costs, higher pension credit, partially offset by increased central services from allocation changes. Net Operating Income forecasted $15.7M above 2020 actual. Net Operating Income before Depreciation by Business Fav (UnFav) Incr (Decr) 2020 2021 2021 Actual vs. Budget Change from 2020 Variance $ in 000's Actual Actual B udg e t $ % $ % Ship Canal Fishing & Operations (1,886) (2,144) (2,112) (32) -2% (258) -14% Elliott Bay Fishing & Commercial Operations (47) 26 (1,797) 1,823 101% 72 NA Recreational Boating 1,458 2,050 1,106 944 85% 592 41% Cruis e (10,575) (1,153) (3,668) 2,515 69% 9,422 89% Gra in 3,700 4,789 3,143 1,646 52% 1,089 29% Maritime Portfolio (1,294) 927 (1,103) 2,030 184% 2,221 172% All Other 526 3,121 (531) 3,652 688% 2,595 493% Total Maritime (8,117) 7,616 (4,963) 12,580 253% 15,733 194% 17 III. MARITIME DIVISION FINANCIAL & PERFORMANCE REPORT 12/31/21 A. BUSINESS EVENTS Recreational Boating Bell Harbor Marina hosted the return of Classic Weekend, an annual public event sponsored by the Classic Yacht Association with a full marina buyout as evidence of Guest moorage rebounding from pandemic. Moorage deferral program ended after helping 33 customers maintain their monthly moorage. Elliott Bay Fishing and Commercial Operations Welcomed the newly built 261' fishing vessel North Star to Terminal 91. Cruise Re-started the cruise business after a year off. Cruise lines agreed not to discharge wash water from their exhaust gas cleaning systems un the Puget Sound. Ship Canal Successful summer boating program bought in 88 monthly recreational customers to Fishermen's Terminal to use docks while fishing customers are out working Grain Terminal Demand for corn, soybeans, and sorghum generated decade high volumes of over 4.7M metric tons. B. KEY PERFORMANCE METRICS Grain Volume Metric Tons in 000's 700 600 2020 Actual 500 400 2021 Budget 300 2021 Actual 200 100 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Cruise Passengers in 000's 350 300 2019 Actual 250 200 2021 Estimated 150 2021 Actual 100 50 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 18 III. MARITIME DIVISION FINANCIAL & PERFORMANCE REPORT 12/31/21 C. OPERATING RESULTS Fav (UnFav) Incr (Decr) 2019 2020 2021 2021 Actual vs. Budget Change from 2020 Variance $ in 000's Actual Actual Actual B udg e t $ % $ % Ship Canal Fishing & Operations 3,929 4,704 4,240 4,135 105 3% (464) -10% Elliott Bay Fishing & Commercial Operations 6,095 5,752 5,618 4,509 1,110 25% (133) -2% Recreational Boating 12,484 12,611 12,851 12,915 (64) 0% 240 2% Cruis e 22,410 3,824 9,517 8,558 959 11% 5,693 149% Gra in 4,266 5,142 6,112 4,903 1,209 25% 970 19% Maritime Portfolio Management 10,108 10,074 10,392 10,259 133 1% 318 3% Other (3) 4 7 0 7 NA 3 65% Pension Revenue Adjustment 0 0 (408) 0 (408) NA (408) NA Total Revenue 59,289 42,111 48,331 45,280 3,051 7% 6,219 15% Expenses Maritime (Excl. Maint) 14,179 16,676 13,951 15,539 1,588 10% (2,725) -16% Economic Development 5,032 4,549 4,559 5,365 806 15% 10 0% Total Direct 19,211 21,225 18,510 20,904 2,394 11% (2,715) -13% Maintenance Expenses 12,458 12,353 11,326 11,595 268 2% (1,027) -8% Envir Services & Planning 2,443 2,947 2,018 2,140 123 6% (930) -32% Seaport Finance & Cost Recovery 953 1,072 1,163 977 (186) -19% 91 8% Seaport Project Management 236 1,144 342 316 (26) -8% (803) -70% Total Support Services 16,090 17,518 14,849 15,028 180 1% (2,669) -15% IT 2,850 2,888 2,695 2,853 159 6% (193) -7% Police Expenses 4,387 3,131 3,064 3,118 54 2% (68) -2% External Relations 1,604 1,242 1,222 1,347 125 9% (20) -2% Other Central Services 6,189 6,035 7,109 6,749 (360) -5% 1,074 18% Aviation Division / Other 279 318 336 243 (93) -38% 19 6% Total Central Services / Other 15,309 13,614 14,426 14,311 (115) -1% 811 6% Total Expense before Pension Adjustment 50,609 52,357 47,784 50,243 2,458 5% (4,573) -9% Pension Expense Adjustment (1,965) (2,129) (7,070) 0 7,070 NA (4,941) 232% Total Expense 48,644 50,228 40,714 50,243 9,529 19% (9,514) -19% NOI excluding Pension Adjustments 8,680 (10,246) 954 (4,963) 5,917 119% 11,200 109% NOI Before Depreciation 10,644 (8,117) 7,616 (4,963) 12,580 253% 15,733 194% Depreciation 17,627 17,624 17,718 16,899 (819) -5% 94 1% NOI After Depreciation (6,982) (25,741) (10,101) (21,862) 11,761 54% 15,639 61% 2021 Actuals vs. 2021 Budget Operating Revenues were $3,051K higher than budget driven by: 1) Elliott Bay Fishing & Operations higher by $1,110K from small cruise, research vessels restarting in 2021, new customer North Star in 2021, as well as utility sales. 2) Cruise $959K higher from high passenger volumes than budgeted. 3) Grain $1,209K higher from increase in annual volumes. 4) Received an unfavorable pension adjustment related to Police for $408K 5) All other variances add up to $181K higher. Operating Expenses were $9,529K lower than budget: 1) Direct Expenses were $2,394K lower than budget Rec Boating $78K lower than budget due to open FTEs. Ship Canal Fishing $253K higher from litigation costs Elliot Bay Fishing and Commercial $487K under from lower Utilities. Cruise $1,085K under from timing of Port Valet costs and Consulting. Maritime Security $91K lower than budget due to less cruise sailings. Maritime Marketing $252K below budget from event cancellations. Portfolio Management $861K favorable from lower utility expense and tenant improvements. 19 III. MARITIME DIVISION FINANCIAL & PERFORMANCE REPORT 12/31/21 Environmental remediation was $21K unfavorable to budget. All other Direct Expenses net to $139K over budget. 2) Total Support Services were $180K favorable to budget. Maintenance $268K favorable due to reduced wage expenses and favorable allocation change. Environmental Services and Planning were $123K lower than budget due to open position. Seaport Finance $186K unfavorable from higher operating/non-operating mix than budget. 3) Total Central Services / Other were $115K unfavorable to budget. 4) Pension Adjustment $7,070 favorable to budget. Net Operating Income was $12,580K favorable to budget. 2021 Actuals vs. 2020 Actuals Operating Revenues were $6.2M higher than 2020 due to increased volumes at the Grain terminal and resumption of the Cruise business. Operating Expenses were $9.5M lower than 2020 actual driven by favorable maintenance allocation, pension adjustment, and open FTEs. Net Operating Income was $15.7M better than 2020 actual. D. CAPITAL RESULTS 2021 YTD 2021 Budget Variance $ in 000's Actual Budge t $ % T117 Restoration 7,959 8,809 850 10% T91 Northwest Fender 5,402 7,761 2,359 30% MD Small Projects 668 3,383 2,715 80% MD Fleet 484 3,201 2,717 85% FT Maritime Innovation Center 464 1,475 1,011 69% T91 Berth 6&8 Redev 1,139 1,025 (114) -11% P91 Pass Term Upgrade COV 0 1,000 1,000 100% P66 Shore Power 483 765 282 37% SBM Restrms/Service Bldgs Rep 380 665 285 43% FT Gateway Building 316 600 284 47% All Other Projects 1,628 (2,489) (4,117) 165% Total Maritime 18,923 26,195 7,272 28% Comments on Key Projects T91 Northwest Fender Construction bid well under Engineer's Estimate. Have reduced forecast Construction bid well under Engineer's Estimate. Have reduced forecast accordingly. FT Maritime Innovation Center Budget increase due to unexpected increased design costs, risk mitigation measures, and recent wage inflation. Spending has been delayed due to limited availability of geothermal drilling for site testing. MD Fleet - Supply chain issues related to materials, electronics, and manufacturing have delayed nearly all new purchases. MD Small Projects Projects moved to large capital (T91 Lighting, EV charging stations, T91 waterline, Energy Smart Metering). Cruise COVID Updates Implemented signage in 2020, other modifications were completed under expense budget. 20 IV. ECONOMIC DEVELOPMENT DIVISION FINANCIAL & PERFORMANCE REPORT 12/31/21 IV. ECONOMIC DEVELOPMENT DIVISION FINANCIAL SUMMARY Fav (UnFav) Incr (Decr) 2019 2020 2021 2021 Actual vs. Budget Change from 2020 Variance $ in 000's Actual Actual Actual B udg e t $ % $ % Total Revenues 21,151 9,470 9,294 13,348 (4,054) -30% (176) -2% Total Operating Expenses 27,137 20,611 18,164 21,413 3,249 15% (2,447) -12% Net Operating Income (5,986) (11,141) (8,870) (8,065) (805) -10% 2,271 20% Capital Expenditures 3,121 9,314 4,311 5,647 1,336 24% (5,003) -54% 2021 Actuals vs. 2021 Budget Operating Revenues are $4.1M unfavorable to budget due to lower volumes at the Conference & Event Center related COVID-19 cancellations and variable revenue at parking facilities. Operating Expenses $3.2M favorable to budget due to variable cost impact of conference cancellations, delayed hiring, pension credit, and Washington Tourism Alliance expenses moving to 2022, offset by change in Maintenance allocation. Net Operating Income is $0.8M below budget. Capital spending at 76% of $5.6M budget. 2021 Actuals vs. 2020 Actuals Operating Revenues $0.2M lower than 2020. Operating Expenses $2.4M lower than 2020 with higher Maintenance and Washington Tourism Alliance expenses, offset by favorable Central Services costs and increased pension credit. Net Operating Income $2.3M better than 2020 actual. Net Operating Income before Depreciation by Business Fav (UnFav) Incr (Decr) 2020 2021 2021 Actual vs. Budget Change from 2020 Variance $ in 000's Actual Actual B udg e t $ % $ % Portfolio Management (3,212) (3,460) (2,116) (1,344) -64% (248) -8% Conference & Event Centers (5,497) (4,061) (2,476) (1,586) -64% 1,435 26% Tourism (873) (826) (1,111) 285 26% 47 5% EDD Grants (778) (889) (1,060) 171 16% (112) -14% *Env Grants/Remed Liab/ERC (782) 366 (1,303) 1,669 128% 1,148 147% Total Econ Dev (11,141) (8,870) (8,065) (805) -10% 2,271 20% *Includes Pension Credit Adjustment 21 IV. ECONOMIC DEVELOPMENT DIVISION FINANCIAL & PERFORMANCE REPORT 12/31/21 A. BUSINESS EVENTS Diversity in Contracting Invested 11.2 percent of total Port spend in WMBE businesses and utilized 285 WMBE enterprises (through Q3 2022). Economic Development and Innovation City grant partners helped over 1000 pandemic impacted businesses. Worked with Maritime Blue to support 2nd and 3rd Innovation Accelerator cohorts. Portfolio Management Maintained 95 percent occupancy across portfolio of economic development and maritime properties. Real Estate Development Executed ground lease for T-106 redevelopment. Tourism International marketing efforts generated $1.9+ million in earned media. Created webinars in collaboration with U.S. Commercial Service, Visit USA Committees, CLIA, tour operators and travel trade publications to broadcast Washington tourism opportunities. B. KEY PERFORMANCE METRICS Building Occupancy by Location: 22 IV. ECONOMIC DEVELOPMENT DIVISION FINANCIAL & PERFORMANCE REPORT 12/31/21 C. OPERATING RESULTS Fav (UnFav) Incr (Decr) 2019 2020 2021 2021 Actual vs. Budget Change from 2020 Variance $ in 000's Actual Actual Actual B udg e t $ % $ % Revenue 8,912 7,808 7,384 8,313 (929) -11% (424) -5% Conf & Event Centers 12,239 1,662 1,910 5,035 (3,125) -62% 248 15% Total Revenue 21,151 9,470 9,294 13,348 (4,054) -30% (176) -2% Expenses Portfolio Management 3,806 3,143 3,737 3,401 (336) -10% 594 19% Conf & Event Centers 10,218 4,440 3,124 4,920 1,796 37% (1,316) -30% P69 Facilities Expenses 249 268 268 222 (46) -21% (0) 0% RE Dev & Planning 152 230 231 154 (77) -50% 1 1% EconDev Expenses Other 963 974 736 835 99 12% (238) -24% Maintenance Expenses 3,155 3,055 3,769 2,537 (1,232) -49% 714 23% Maritime Expenses (Excl Maint) 1,088 1,117 862 1,060 198 19% (255) -23% Total EDD & Maritime Expenses 19,631 13,227 12,727 13,128 401 3% (500) -4% Diversity in Contracting 198 162 253 142 (111) -78% 91 56% Tourism 1,374 991 1,877 2,481 603 24% 886 89% EDD Grants 785 778 889 1,060 171 16% 112 14% Total EDD Initiatives 2,357 1,931 3,019 3,683 663 18% 1,089 56% Environmental & Sustainability 29 33 24 31 7 23% (9) -26% Police Expenses 224 215 205 209 4 2% (10) -5% Other Central Services 5,486 5,815 4,408 4,242 (166) -4% (1,408) -24% Aviation Division 114 161 177 120 (57) -47% 16 10% Total Central Services & Aviation 5,853 6,225 4,814 4,603 (211) -5% (1,411) -23% Total Expense before Pension Adjustment 27,841 21,382 20,560 21,413 853 4% (822) -4% Pension Expense Adjustment (703) (771) (2,396) 0 2,396 NA (1,625) 211% Total Expense 27,137 20,611 18,164 21,413 3,249 15% (2,447) -12% NOI Before Depreciation (5,986) (11,141) (8,870) (8,065) (805) -10% 2,271 20% Depreciation 3,647 3,611 3,841 3,216 (625) -19% 229 6% NOI After Depreciation (9,633) (14,752) (12,711) (11,281) (1,430) -13% 2,041 14% 2021 Actuals vs. 2021 Budget Operating revenue were $4,054K unfavorable to budget due primarily to lower than anticipated Conference and Event Center volumes from on-going COVID-19 restrictions on meetings and events. Operating Expenses were $3,249K favorable to budget: 1) Conference and Event Center $1,796K favorable from lower activity due to the on-going COVID-19 restrictions on meetings and events. 2) Maintenance Expenses $1,232K unfavorable due to change in Maintenance allocation methodology. 3) EDD Initiatives $663K favorable due to timing of spending ($350K of Washington Tourism Alliance costs to be spent in 2022). 4) Pension Expense Adjustment $2,396 favorable to budget. Net Operating Income was $805K below budget. 2021 Actuals vs. 2020 Actuals Operating Revenues were $176K lower than 2020 actual Operating Expenses were $2,447K lower than 2020 actual: 1) Conference and Event Centers $1,316K lower than 2020 due to variable costs associated with lower Conference and Event Center volumes due to the on-going COVID-19 restrictions on meetings and events. 2) Maintenance Expenses $714K higher than 2020 due to change in Maintenance allocation methodology. 3) Central Services $1,411K lower than 2020. 4) All other Expenses net to $434K lower than 2020. Net Operating Income was $2,271K above 2020 actual. 23 IV. ECONOMIC DEVELOPMENT DIVISION FINANCIAL & PERFORMANCE REPORT 12/31/21 D. CAPITAL RESULTS 2021 2021 Budget Variance Actual Budge t $ in 000's $ % BHICC Interior Modernization 514 1,990 1,476 74% P69 Underdock Utility Rpl 205 1,028 823 80% CW Bridge Elev Modernization 539 943 404 43% WTC HVAC Replacement 2,200 848 (1,352) -159% T91 Uplands Dev Phase 1 438 800 362 45% P66 Roof Upgrades 213 544 331 61% EDD Small Projects 45 522 477 91% Tenant Improvements -Capital 0 289 289 100% EDD Technology Projects 0 250 250 100% P66 HVAC Systems Upgrade 0 185 185 100% All Other Projects 157 (1,752) (1,909) 109% Total Economic Development 4,311 5,647 1,336 24% Comments on Key Projects BHICC Modernization Approved annual 2021 budget is erroneously showing expense portion and is showing it twice. P69 Under Dock Utility Replacement City of Seattle permitting approval process is taking a lot longer and the Corps permit is expected to take longer. T -91 Upland Development Lower 2021 spending due to the need to procure new Service Agreement for Professional Design Services, after terminating contract with former design consultant. WTC HVAC Replacement Work accelerated work to compensate for future weather delays. 24 V. CENTRAL SERVICES DIVISION FINANCIAL & PERFORMANCE REPORT 12/31/21 V. CENTRAL SERVICES DIVISION FINANCIAL SUMMARY Fav (UnFav) Incr (Decr) 2019 2020 2021 2021 Actual vs. Budget Change from 2020 Variance $ in 000's Actual Actual Actual Budge t $ % $ % Operating Revenues 1,282 2,512 3,432 181 3,251 1797.1% 920 36.6% Pension Contra Revenue - - (3,665) - (3,665) 0.0% (3,665) 0.0% Total Revenues 1,282 2,512 (233) 181 (414) -229.0% (2,745) -109.3% Core Central Support Services 80,217 85,386 87,451 85,678 (1,773) -2.1% 2,065 2.4% P olic e 30,555 30,071 28,678 28,317 (361) -1.3% (1,393) -4.6% Engineering/PCS 11,408 10,606 9,391 9,199 (192) -2.1% (1,215) -11.5% TOTAL w/o DRS Pension True-up Credit 122,181 126,063 125,521 123,194 (2,327) -1.9% (542) -0.4% DRS Pension True-up Credit (8,290) (8,588) (29,768) - 29,768 0.0% (21,180) 246.6% TOTAL w/ DRS Pension True-up Credit 113,891 117,476 95,753 123,194 27,441 22.3% (21,722) -18.5% 2021 Actuals vs. 2021 Budget Operating Revenues unfavorable due primarily to the ($3.7M) Pension Contra Revenue for the Law Enforcement Officers' pension, partially offset by Police forfeiture seizures of $3.3M. Without the $29.8M Pension Credit, Operating Expenses ($2.3M) unfavorable to budget mainly due to savings staffing vacancies, project spending delays, and delayed Outside Services costs were offset by mid-year approval of additional funds for Opportunity Youth Initiative. 2021 Actuals vs. 2020 Actuals Operating Revenues ($2.7M) below 2020 mainly due to the ($3.7M) state's reduced contribution to the Law Enforcement Officers' pension in 2021 offsetting $850K higher Police forfeiture seizures. Operating Expenses $542K lower than 2020 mainly due to lower Payroll, Outside Services, Equipment, and Travel offset by lower charges to Capital Projects and higher Insurance Expense. A. BUSINESS EVENTS Announced new partnership with the Seattle Aquarium, committing $5M over five years for the development of the Aquarium's Ocean Pavilion project. This partnership will support marine conservation efforts and promote tourism. Held tree planting events in SeaTac, Burien, and Des Moines as part of the Green City Partnerships and began contract negotiations with eighteen firms selected to receive South King County Fund Environmental Grants. Acquired a new cybersecurity awareness platform and defense solution by transitioning to artificial intelligence integrated anti-phishing, spam filtering, and cybersecurity training tool. Conducted two sessions of the Supervisors' Racial Equity Orientation. Held a Police Assessment Town Hall with staff from the Task Force on Port Policing and Civil Rights presented the findings of the assessment and its recommendations. Hosted Eastside Business SEA Access Workshop with the Bellevue Downtown Association and gathered input from the Kirkland Chamber Transportation Committee and Eastside Transportation Forum as part of the Ground Transportation Access Plan goals. Implemented the GASB No. 87, Lease Accounting. Accounting and Financial Reporting (AFR) reviewed and vetted over 180 leases against this new accounting standard. Presented the Port's implementation process at the Airport Council International North America webinar. Amended to HR-8, Talent Acquisition to allow employees who resigned due to the vaccine requirement to be rehired without a competitive hiring process if they are fully vaccinated. Held the Q4 Disruption event "Making Waves in Innovation" presenting an AI assisted camera system that can track the movement of boats at the inner harbor. 25 V. CENTRAL SERVICES DIVISION FINANCIAL & PERFORMANCE REPORT 12/31/21 B. KEY PERFORMANCE METRICS Century Agenda Strategic Objectives 2019 2020 2021 Responsibly Invest in the Economic Growth of the Region and all its Communities A. Job seekers placed in jobs at SEA Airport through the Employment Center 2239 857 1211 B. Number of SEA Airport tenants supported in finding employees 102 79 80 C. Employment Center training completions 441 211 254 D. K-12 Career Connected Learning: WFD engagement with teachers/faculty 450 9,070 1600 E. Community members entering employment in construction, maritime and 190 72 84 environmental sustainability F. Number of Job Openings created 578 360 441 G. Job applications received 12,959 7,024 10,355 H. Number of job interviews conducted 1,718 813 1,533 I. Number of new employees hired 498 202 317 J. Number of interns 155 84 114 K. Number of Veteran Fellows 6 0 5 L. Number of employees participating in Tuition Reimbursement 34 27 37 Become a Model for Equity, Diversity, and Inclusion A. Employee participation in OEDI programming (Caucuses, Book Clubs, N/A 496 1,279 Town Halls, etc.) B. Port employees and supervisors completing required racial equity N/A N/A 882 orientations/trainings. Be a Highly Effective Public Agency A. Central Services costs as a % of Total Operating Expenses 25.2% 28.1% 25.5% B. Investment portfolio earnings versus the benchmark (the Bank of America 2.12%/ 1.44%/ 0.67%/ Merrill Lynch 1-3 Year US Treasury & Agency Index) 1.60% 0.13% 0.69% C. Comply with Public Disclosure Act and respond in a timely manner 608 503 637 D. Litigation and Claim Reserves $2.9M $1.3M $501K E. Claims/Injury Damages Reserves $494K $304K $600K F. Percent of annual audit work plan completed each year 100% 100% 100% G. Employee Development Class Attendees/Structured Learning 2,201 7,457 2,423 H. Total Recordable Incident Rate (previous Occupational Injury Rate) 5.01 4.04 4.80 I. Lost Workday Rate (previously Days Away Severity Rate) 18.81 66.81 62.5 J. Customer Survey for Police Service Excellent or Above Average 83% 84% 92% 26 V. CENTRAL SERVICES DIVISION FINANCIAL & PERFORMANCE REPORT 12/31/21 C. OPERATING RESULTS Financial Summary Fav (UnFav) Incr (Decr) 2019 2020 2021 2021 Actual vs. Budget Variance Change from 2020 $ in 000's Notes Actual Actual Actual Budge t $ % $ % Total Revenues 1,282 2,512 (233) 181 (414) -229.0% (2,745) -109.3% Executive 2,152 2,404 2,472 2,285 (188) -8.2% 68 2.8% Commission 2,121 1,851 2,093 2,169 76 3.5% 242 13.1% Legal 5,184 6,522 7,718 3,919 (3,799) -96.9% 1,196 18.3% External Relations 8,123 7,882 8,037 9,878 1,841 18.6% 155 2.0% Equity Diversity and Inclusion 2,362 4,740 5,180 3,743 (1,436) -38.4% 440 9.3% Human Resources 9,664 8,916 10,335 11,385 1,050 9.2% 1,419 15.9% Labor Relations 1,323 1,380 1,373 1,346 (27) -2.0% (7) -0.5% Internal Audit 1,547 1,652 1,646 1,637 (9) -0.5% (6) -0.4% Accounting & Financial Reporting Services 7,867 8,698 8,699 8,724 25 0.3% 1 0.0% Information & Communication Technology 24,356 26,173 24,162 24,427 265 1.1% (2,011) -7.7% Information Security 1,270 1,745 1,636 1,913 278 14.5% (109) -6.3% Finance & Budget 2,181 2,337 2,292 2,292 () 0.0% (44) -1.9% Business Intelligence 1,368 1,264 1,130 1,523 392 25.8% (134) -10.6% Risk Services 3,194 3,394 4,165 3,939 (225) -5.7% 771 22.7% Office of Strategic Initiatives 1,512 1,001 893 1,059 166 15.7% (108) -10.8% Central Procurement Office 4,837 4,708 4,986 5,532 546 9.9% 278 5.9% Contingency 39 (190) (123) (1,502) (1,379) 91.8% 67 -35.3% Core Central Support Services 79,101 84,476 86,694 84,270 (2,424) -2.9% 2,217 2.6% P olic e 30,555 30,071 28,678 28,317 (361) -1.3% (1,393) -4.6% Total Before Cap Dev & Environment 109,657 114,547 115,372 112,587 (2,785) -2.5% 824 0.7% Capital Development Engineering 6,866 6,237 5,403 5,580 177 3.2% (834) -13.4% Port Construction Services 4,543 4,369 3,988 3,619 (369) -10.2% (381) -8.7% Sub-Total 11,408 10,606 9,391 9,199 (192) -2.1% (1,215) -11.5% Environment & Sustainability Environment & Sustainability 999 717 758 1,408 650 46.2% 41 5.7% Sub-Total 999 717 758 1,408 732 52.0% 41 5.7% Industrial Development Corporation 1 - - - - 0.0% - 0.0% Capital to Expense 117 193 - - - 0.0% (193) -100.0% TOTAL w/o DRS Pension True-up Credit 122,181 126,063 125,521 123,194 (2,327) -1.9% (542) -0.4% DRS Pension True-up Credit (8,290) (8,588) (29,768) - 29,768 0.0% (21,180) 246.6% TOTAL w/ DRS Pension True-up Credit 113,891 117,476 95,753 123,194 27,441 22.3% (21,722) -18.5% 27 V. CENTRAL SERVICES DIVISION FINANCIAL & PERFORMANCE REPORT 12/31/21 2021 Actuals vs. 2021 Budget Excluding the DRS Pension Credit, Operating Expenses for 2021 are ($2.3M) above Approved Budget due primarily to: o Executive unfavorable variance of ($188K) due to higher Payroll of ($160K) and Outside Services ($41K). o Commission favorable variance of $76K due to lower Payroll of $15K, Travel of $52K, and Promo Expenses of $14K offset by higher Outside Services of ($7K) and Equipment of ($5K). o Legal unfavorable variance of ($3.8M) is due to higher than budgeted Outside Services ($3.7M), higher Payroll due to mid-year approval of new FTE ($69K), and lower charges to Capital Projects of ($55K). o External Relations favorable variance of $1.8M primarily due to reduced Outside Services of $1.5M, Payroll of $187K, Travel of $66K, Promo Expenses of $97K, and General Expenses of $34K. o Equity, Diversity, and Inclusion unfavorable variance of ($1.4M) primarily due to the increase of Outside Services of ($1.6M) from $2M increase for Opportunity Youth Initiative offset by lower Payroll of $116K and Property Rentals of $58K. o Human Resources favorable variance of $1.1M primarily due to lower Payroll of $821K and General Expenses (primarily Employee Commuter Benefits) of $289K. o Labor Relations unfavorable variance of ($27K) due to higher Payroll of ($28K) and Telecommunications of ($3K) offset by lower Travel of $4K and Promotional Expenses of $1K. o Internal Audit unfavorable variance of ($9K) primarily due to higher Payroll from job refresh of ($12K) offset by lower Travel of $3K and Telecommunications of $1K. o Accounting and Financial Reporting Services favorable variance of $25K primarily due to lower Outside Services of $24K, Travel of $7K, Supplies & Stock of $6K, and Equipment of $2K offset by higher General Expenses of ($46K). o Information & Communication Technology favorable variance of $265K primarily due to lower Payroll of $428K, Equipment of $257K, and Outside Services of $96K offset by lower charges to Capital Projects of ($525K). o Information Security favorable variance of $278K primarily due to lower Outside Services of $302K offset by higher Payroll of ($18K) and lower charges to Capital Projects ($11K). o Corporate Finance & Budget was on target. o Business Intelligence favorable variance of $392K due to lower Payroll of $190K and Outside Services of $198K. o Risk Services unfavorable variance of ($225K) due to higher Insurance Expenses of ($322K) offset by lower Payroll of $66K and Outside Services of $36K. o Office of Strategic Initiative favorable variance of $166K due to lower Payroll of $186K offset by higher Outside Services of ($16K) and Travel of ($5K). o Central Procurement Office favorable variance of $546K primarily due to lower Payroll of $414K, higher General Expenses of $60K, Supplies & Stock of $58K and charges to Capital Projects of $81K offset by higher Equipment of ($62K). o Police unfavorable variance of ($361K) primarily due to higher Forfeitures Expenses of ($544K) and Supplies & Stock of ($58K) offset by lower Payroll of $88K, Travel of $81K, Worker's Comp of $49K, and Equipment of $21K. o Engineering favorable variance of $177K primarily due to lower Outside Services of $1.5M, Payroll of $805K, and Property Rentals of $361K offset by less charges to Capital Projects of ($2.3M), higher General Expenses of ($296K) and Equipment of ($46K). o PCS unfavorable variance of ($369K) primarily due to lower charges to Capital Projects of ($834K) and unplanned Worker's Compensation of ($80K) offset by lower Outside Services of $170K, Payroll of $228K, Supplies & Stock of $33K, Equipment of $75K, and General Expenses of $40K. o Environment & Sustainability Admin favorable variance of $650K due to delayed Outside Services of $668K offset by higher Payroll of ($16K) and Travel of ($4K). 28 V. CENTRAL SERVICES DIVISION FINANCIAL & PERFORMANCE REPORT 12/31/21 2021 Actuals vs. 2020 Actuals Operating Expenses without DRS Pension True-up for 2021 are $542K lower than 2020 actuals mainly due to: o Core Central Support Services $2.1M higher than 2020 primarily due to higher payroll in 2021 due to planned new hires, full year salaries of people hired in 2020, higher Outside Services from mid-year approvals, and higher Insurance Expenses o Police $1.4M less than 2020 due to vacancies in 2021, lower Worker's Comp in 2021, and higher General Expenses in 2020. o Capital Development $1.2M lower than 2020 primarily due to lower payroll due to vacancies in 2021, lower than planned Outside Services offset by lower charges to Capital Projects. o Environment & Sustainability $41K higher than 2020 due to increases to Outside Services to support key initiatives. D. CAPITAL RESULTS 2021 2021 Budget Variance Actual Budget $ % $ in 000's Infrastructure - Small Cap 805 1,911 1,106 57.9% Services Tech - Small Cap 1,242 1,226 (16) -1.3% Radio System Upgrade 2,062 2,955 893 30.2% Office Wi-Fi Refresh 32 1,350 1,318 97.6% Phone System Upgrade 426 840 414 49.3% Environmental MIS projects 4 600 596 99.3% CDD Fleet Replacement 230 1,123 893 79.5% Corporate Fleet Replacement 247 685 438 63.9% Other (note 1) 388 1,968 1,580 80.3% Subtotal 5,436 12,658 7,222 57.1% CIP Cashflow Adjustment - (3,000) (3,000) 100.0% TOTAL 5,436 9,658 4,222 43.7% Note: (1) "Other" includes remaining ICT projects and small capital projects/acquisitions. 29
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