ITEM NO.   _7a_Supp________
Revised:     August 17, 2011
DATE OF
MEETING: August 16, 2011

Aviation Division
2012-16 Business Plan
August 16, 2011

Outline
State of Economy and Aviation Industry
State of Seattle Market and Sea-Tac Airport
Environmental Scan
Strategic Goals
Objectives for 2012-2016, Key Initiatives
Capital Program Overview
Summary of 2012 Budget Implications

2

Airline Industry
Industry was profitable in 2010
Heading towards profitable year in 2011:
High load factors; ancillary fee structure
Recent global economic worries, European debt
crisis, and slow down in U.S. economy cast doubt
on strength of recovery
Increased chance of double dip recession
Airlines focused on "smart" growth
Focus on high yield routes
Cuts in many small markets
Locally, Alaska Air Group reported record second
quarter earnings
3

2011 Airline Activity at Sea-Tac
2011 Enplanements:
Domestic  Int'l    Total
June        3.6%   4.7%   3.7%
June YTD     4.7%   6.3%   4.9%
Growth fueled by increased capacity & high load factors
Available      Load Factor
Seats      2011     2010
Q1     3.5%    79.4%   78.5%
Q2     2.8%    83.8%   81.9%
June     1.8%    86.6%   84.7%
Alaska Air Group:
Enplanements YTD: +5.8%
Market Share YTD: 50.8%
4

State of Sea-Tac Airport
Strong growth in enplanements first half of 2011, but
likely will decline in 3rd and 4th quarters
Forecasting 2011 growth of 3.5%
Seeing "bounce back" a year earlier than forecasted
last year (1% in 2011, 3% in 2012)
Seeing solid growth in non-airline revenues, but
parking and rental car revenues lower than
budgeted
Recent global economic worries, and slow down in
U.S. economy cast doubt on strength of recovery
Enplanement growth of 1.5% forecasted for 2012
5

Enplaned Passengers
Traffic dropped 3%
19,000
in recent recession,
18,000
pointing out
17,000                                                                          resiliency of market

16,000                                                                          demand

15,000                                                                         Faster recovery
than after 2001
14,000
Assumptions:
13,000
2011: 3.5%
12,000
2012: 1.5%
11,000
2013: 2.2%
10,000                                                                             2014+: 2.2%
2007   2008   2009   2010   2011   2012   2013   2014   2015   2016


6

Financial Trends at Sea-Tac
Following slides show Sea-Tac's performance
since 2006 for key performance measures
Overall, Sea-Tac has faired well in a deep
recession, reflecting the resiliency of the
demand for air service in this market, and the
ability of the Port to manage through challenging
economic circumstances


7

Operating Costs
O&M Costs in $ millions
250.0                                                                         Significant budget cuts in 2009 &
2010:
200.0
Furloughs
150.0
For 2010 budget, eliminated over 10% of
100.0                                                                                   FTEs from 2009 level
For 2011:
50.0
Restored some unsustainable cuts
-
2006       2007       2008       2009       2010      2011 Fcst                      Full year of back-up power costs
Terminal realignment costs
O&M Costs Per Enplaned Passenger
$13.00                                                                                Initial expense items relating to rental car

$12.00                                                                                   facility and busing operations

$11.00

$10.00

$9.00

$8.00

$7.00

$6.00
2006       2007       2008       2009       2010      2011 Fcst

8

Non-Aero NOI
Non-Aero NOI in $ Millions
$95.0                                                                               Recovery of revenues and
92.94

$90.0                                                                                NOI is evident in 2011
87.71
86.47
$85.0                                                                               Economic downturn and
82.78
81.16
$80.0                                                                                increased competition from
78.20
off-airport lots had large
$75.0
impact on public parking
$70.0
2006       2007       2008       2009       2010      2011 Fcst
Rental car transactions are
Non-Aero Revenue per Enplanement
10.00                                                                                growing, but pricing is down,
9.44
9.50                          9.36
9.19                                                        hurting Port's concession
9.00                                    8.80                 8.88
8.61
8.50                                                                                revenues

8.00

7.50                                                                              Concessions has remained

7.00                                                                                stable and is now growing

6.50

6.00
2006       2007       2008       2009       2010      2011 Fcst

9

Net Operating Income
NOI
180                                                                         NOI is traditional measure

175                                                                                 Good indicator of cash flow, but

170
aeronautical cost-recovery
165

160                                                                                   business model can make NOI

155                                                                                   misleading

150
Increased debt service generates
145
higher NOI
140
2006       2007       2008       2009       2010      2011 Fcst
Debt service savings produces
NOI
lower NOI
NOI after debt service & interest income
60.00                                                                             NOI after debt service and

50.00                                                                               interest income is better

40.00                                                                               indicator of net cash flow

30.00                                                                               available to invest

20.00
Both indicators pointing up in
10.00

-
2011
2006       2007       2008       2009       2010      2011 Fcst

10

Airline Costs - CPE
Capital Spending in $ Millions
$400

$350                                                                            Capital spending is major

$300                                                                              driver of CPE

$250

$200                                                                            Use of PFCs to offset

$150                                                                              revenue bond debt service

$100

$50                                                                              mitigated rise in CPE

$0
2006       2007       2008       2009       2010      2011 Fcst                    Red line shows CPE

$16.00
15.47
14.87                                  forecast in 2005 when
$15.00
14.15
$14.00
13.41                                                   airline agreement (SLOA)
$13.00                     12.64
11.95                                                                     was signed
$12.00
12.20
11.79              11.89
11.10              11.73                       11.63
$11.00
11.10
10.92                                         CPE has been lower than
$10.00                                                                                     2005 forecast in every year

$9.00

$8.00
2005     2006     2007     2008     2009     2010    2011 Fcst
Cost Per Enplanement (CPE)     CPE - 2005 Forecast (SLOA)

11

Cash, Debt Service Coverage
600.00

505.29      507.75
500.00               482.12
454.33                        Port policies and management
411.59
400.00
349.25                                                                             decisions allowed STIA to

300.00                                                                                      contribute to Port's strong

200.00                                                                                      credit standing.

100.00                                                                                    Unrestricted cash has been
managed to exceed target of
-
2006       2007       2008       2009       2010      2011 Fcst
Cash balance: Days of O&M     Target: 10 months                                        10 months of O&M costs each

1.55
1.51                                                                    year.
1.50
1.46                                                  1.45
1.45                                                                                     In spite of deep recession,
1.41
1.40                  1.39
1.40                                                                                       STIA has maintained debt
1.35
1.30                                                                                       service coverage well above
1.25
1.25        1.25        1.25        1.25        1.25        1.25
1.20                                                                                       1.25x target.
1.15
1.10
1.05
1.00
2006       2007       2008       2009       2010      2011 Fcst
Aviation Debt Serv Coverage     Aviation Min Target

12

Environment: Key Considerations
Strong finances: O&D airport; cash flow/reserves; low competition;
airline agreement
Anticipate continued growth in international travel, especially Asia
Cargo growth an opportunity
Economic uncertainty: slow recovery, or double dip recessions, or?
Non-aeronautical NOI increasing, needed for future investments
Major capital requirements: vertical circulation, terminal reallocation,
FIS upgrade/replacement
Long-term throughput/efficiency/cost effectiveness of terminal
investments
Technology utilization deployments
Long-term planning issues: airport capacity, drives capacity, hotel,
south access, cargo development, off airport property development
Threats to Port control relating to business strategy and investments
13

Business Plan Framework
Built around Aviation's seven strategic goals
Enduring, long-term
For each goal, five-year objectives
Measurable
Incorporates Century Agenda objectives
For each objective, multiple initiatives
Capital projects
Programs, action plans


14

Strategic Goals
1. Operate a world-class international airport by:
Ensuring safe and secure operations
Meeting needs of our tenants, passengers and the
region's economy
Managing our assets to minimize the long-term total
cost of ownership
2. Become one of the top ten customer service airports in
the world by 2015 (measured by the ACI ASQ index)
3. Lead the airport industry in environmental innovation
and minimize the airport's environmental impacts
4. Reduce airline costs (CPE) as far as possible without
compromising operational and capital needs
1515

Strategic Goals
5. Maximize non-aeronautical net operating income (NOI)
consistent with current contracts, appropriate use of
airport properties and market demand
6. Continually invest in a culture of employee
development, organizational improvement, and
business agility
7. Develop valued community partnerships based on
mutual understanding and socially responsible
practices


1616

5 Year Objectives & Key Initiatives
1. a) World class international airport - safe and secure
operations:
Comply with emerging FAA safety management system
requirements by 2014
Additional staff, data systems, training
Reduce runway incursions by 30% by 2015
Foreign object debris radar: $3.5 million new CIP
Increase airfield's runway availability during snow event from
33% to 55% by 2013
Capital equipment costs totaling $8.4 million



1717

5 Year Objectives & Key Initiatives
1. b) World class international airport - Capacity
Complete terminal realignment by 2014
$23+ million in expense costs through 2014, $8.2 million in 2012
Capital projects totaling $ 33 million
Meet all critical path milestones through 2016 to achieve 2020
capacity:
Initiate Master Plan in 2012 (expense)
Terminal wide copper/fiber/wifi - $3 million
Renovate NSAT and Concourse C - $10 million +
Modify Checkpoints 2-5 - $15 million
Mid-term FIS improvements by 2013 - $32 million
Aircraft Remain Overnight (RON) parking by 2014 - $44 million
Rebuild runway 16C in 2016 - $90 million
Garage retrofit floors 1 & 2 in 2013 - $7.6 million
Long-term FIS solution ~ 2013 - 2017
NSAT Expansion - 2017+

1818

5 Year Objectives & Key Initiatives
1. b. World Class international airport  Capacity (cont.)
Increase total air cargo to 340,000 metric tons and international
cargo to 127,000 metric tons by 2016
Cargo VI enhancements by 2013 - $5.5 million
Cargo II expansion of ready yard by 2013 - $1.5 million
Cargo II hardstand expansion by 2014 - $13.3 million
Cargo III infrastructure for expanded Federal Express warehouse by 2014 
budget TBD
Develop 3 new international routes by 2016. Develop additional
service in 2 existing markets by 2016.
Joint marketing funds in accordance with incentive policy



1919

5 Year Objectives & Key Initiatives
1. c. World Class international airport  asset management
Develop asset management system by 2016
Annual cost for asset inspections
80% of maintenance work is proactively planned
Develop system reliability metrics for baggage systems, STS
and elevators & escalators by 2013
2. Customer Service
Complete comprehensive signage upgrade by 2014
New $ 5 million capital project
Complete elevator & escalator refurbishments by 2014
$55 million escalator project ongoing
$30 million in new elevator renovation projects


2020

5 Year Objectives & Key Initiatives
2. Customer Service
Increase self-service passenger check-in and bag-drop to
industry leading level by 2015
Ten new CUSS units in zone 1 ticketing in 2012  existing CIP, $550K
Common use self-bag-drop - $1M new CIP
Implement integrated cruise service to passengers by 2015
Pre-paid bag transfer from aircraft to ship by 2013 - $300K expense
Fully implement TSA automated wait time and communications
systems in 2012
Create single wheelchair service system in 2012
Complete deployment of electric appliance charging system at
gates by 2013
New CIP - $3.0 million
Identify needed restroom upgrades in 2012  future CIP $ TBD

21

5 Year Objectives & Key Initiatives
3. Environmental Innovation
Reduce airport owned and controlled greenhouse gas emissions
by 15% below 2005 levels by
PC Air project - $43.5 million
EGSE project - $50 million
Meet all future electricity load growth through conservation
measures and renewable energy
[initiatives listed under Reduce Airline Costs]
Increase solid waste recycling rate to 50% by 2014
Expand recycling into garage in 2012- $150K
Expand recycling into underserved areas of terminal in 2012 - $400K
Reduce potable water consumption rate 5% below 2008 level by
2015
Evaluate feasibility of rainwater recapture in the garage in 2012 - $30K

22

5 Year Objectives & Key Initiatives
4. Reduce airline costs
Maintain CPE under $14.00 through 2016
2011 business plan forecast for 2016 = $15.12
Next airline agreement preserves Port's ability to generate and retain NOI to
use towards Port's strategic goals
Use PFCs to pay debt service as much as possible
Evaluate General Aviation expansion  revenue offsets airfield costs
By 2016, achieve $1 million in savings from Continuous Process
Improvements
FTE and consultant engaged in 2011
Meet all future electricity load growth through conservation
measures and renewable energy
Develop utilities management, tracking and reporting system
Evaluate security exit technology in 2012
Existing CIP for $1.0 million, future CIPs? or TSA funding?

23

5 Year Objectives & Key Initiatives
5. Maximize Non-Aero NOI
Concessions: grow sales per enplanement by 3-5% CAGR
through 2016
Major concessions program transition and leasing
Commence work with leasing consultant in 2012 - $500K
Initiate terminal space and infrastructure improvements
Complete freight elevator replacement - $6.6 million
New unit direct leasing and small business concessions opportunities
Marketing innovations to increase sales
Parking: grow revenues by 5% CAGR through 2016
Implement Park Smart programs in 2012, $165K expense
Marketing and branding ; parking reservations system in 2012
Valet parking in 2013
Significant Threat: Off-airport parking additions

24

5 Year Objectives & Key Initiatives
5. Maximize Non-Aero NOI
Real Estate: Grow annual revenues by $1.3 million by 2016
Des Moines Creek Business Park  prepare and submit entitlement
applications - $300K expense + $700K existing CIP
Cargo logistics support:
Northeast Redevelopment Area  infrastructure projects - $1.3 million new CIP
L-Shape property  prepare property for development in 2012 - $800K new CIP
Grow other non-aeronautical revenues of $1.2 million by 2016
Relocate and expand shared lounge on SSAT
Introduce loyalty program for parking and concessions in 2012




25

5 Year Objectives & Key Initiatives
6. Employee development, organizational improvement,
and business agility
Increase internal candidate promotion rate (TBD)
2012 internal internship program  Aviation division
2013 internal internship program  Port-wide
Reduce average hire time (TBD) for Aviation division positions
Address all FEMA exercise improvements by 2014
Training
Standardized radio and notification systems
Emergency power at all facilities  develop recommendation



26

5 Year Objectives & Key Initiatives
7. Community Partnerships
Implement Commission and FAA approved FAR Part 150
recommendations by 2016
Install new remote noise monitors
Possible new ground run-up enclosure  potential new CIP $8  40 million
Other new programs?
Through 2016, Port, local cities and/or businesses will be
successful in implementing solutions to land development and
other issues
Achieve 2012 small business goal of 10% for goods and
services
Expand limited-English outreach program


27

Capital Program Overview
Figures in $ millions      2011    2012    2013    2014    2015    2016    Total
Committed Projects:
Authorized         184   259   116    40     4    10   613
Other Projects         1    11     5  - - - 17 
Subtotal           185    270    121    40     4    10    630
Bus. Plan Prospective:
Specific projects        7    109     64     34      7     93    314
Allowance CIPs        3    33    67    66    79   160   408
Subtotal            10    142    131    100    86    253    722
Total               195    412    252    140    90    263  1,352

Authorized does not mean entire project budget has been authorized
Table shows CIP before 2012 budget decisions
CPE impact of "Allowance" CIPs built into forecast, indicates available
budget for new projects

28

Future Capital Investments
Significant likely investments are not included in 2012 
2016 capital plan:
Landside
South access
Terminal drives
Non-aeronautical
Land development infrastructure  invest to support cargo,
generate future revenues
Hotel infrastructure
Aeronautical
Long-term solution to FIS capacity needs
North Satellite expansion
Environmental initiatives?
29

Financial Forecast Summary
2011    2012    2013    2014    2015    2016
Non-Airline Revenues    144,904  149,285  156,390  163,009  170,512  180,134
NOI            169,523  170,409  192,487  209,169  220,443  230,083
Debt Service Coverage      1.45    1.35    1.31    1.31    1.35    1.35
CPE              12.20   12.88   13.69   14.33   14.58   14.86
Enplanement Growth      3.5%    1.5%    2.2%    2.2%    2.2%    2.2%

Preliminary forecast, does not reflect 2012 budget decisions
Stated objective of keeping CPE below $14.00 through 2016 will be
challenging

30

2012 Budget Implications
Moderate enplanement growth: 1.5%
Non-airline revenues  growth in core business,
yet lose $7 million garage rent from rental cars
Partially offset by new land rent, loss of $4.7M
Significant new operating costs ($7+ million) to
operate rental car busing (100 new FTEs)
Paid by Customer Facility Charges, NOI neutral
Second year of terminal realignment - $8+
million operating costs
Recovered through airline rents, NOI neutral

31

Airport Cost Comparison
(Prepared by Dallas-Fort Worth Airport)

Seaport Division
2012 Business Plan Overview
Commission Presentation
August 16, 2011

2012 SEAPORT BUSINESSS PLAN
I. Seaport Strategies
A. Commercial Business
1. Container
2. Cruise
3. Grain
4. Industrial Properties
5. Fishing & Other Maritime
B. Asset Stewardship
C. Green Gateway
II. Financials & Financial Outlook
III. Risks
IV. Recap
34

Terminal 91
Pier 86
Pier 66

Terminal 46
T-18 On-Dock Rail
BNSF (SIG - North)

Terminal
30
T-5 On-Dock Rail
Terminal 18
BNSF (SIG - South)

Terminal 25 S
Terminal 5


UPRR (ARGO)


35

2012 SEAPORT KEY STRATEGIES
In 2011, the Seaport's three Strategic Initiative
Teams developed long term Seaport Strategies:
1. Commercial Business
2. Asset Stewardship
3. Green Gateway
For 2012, Seaport will advance these strategies in
alignment with the Commission's Century Agenda,
the CEO's Goals and Key Corporate Initiatives.

36

Seaport Commercial Business
Business Development     Financial Sustainability      Port Advocacy
Growing the Seaport's Business       Maintaining Financial Independence    Building public & community support
Strategic Goal             Strategic Goal             Strategic Goal
Enhance regional economic       Improve the Seaport's income     Maintain and support
development by increasing cargo    from operations              relationships that cultivate
freight & passengers moving                               overall Port goals for freight
through the Port's Terminals                                 movement and economic
development in Washington
Guiding Principles           Guiding Principles          Guiding Principles
Retain existing customers        Prioritize projects that generate    Maintain a business-friendly
Develop & maintain relationships    sustainable rates of return        environment
with strategic partners            Maximize asset utilization to       Ensure efficient freight mobility
Capitalize on opportunities to       increase returns on investments    within the Harbor and on-ward
secure new business           Maintain market lease rates      to inland destinations
Maintain freight and passenger     Maximize efficiency of dollars     Reinforce the Seaport's
mobility                      spent and resources used         economic and environmental
benefit story
Overarching Objective        Overarching Objective
Increase container volume and     Maintain the Seaport's financial    Overarching Objective
cruise activity to meet Century      independence                 Manage/maintain advocacy for
Agenda 5 & 25 year objectives                          Port issues with Stakeholders

37

Container Capacity Growth Plan
2M    3M      3.5M      4M   5M
Work
Work Package #1    Work Package #2     Work Package #3
Package #4
TERMINALS        TERMINALS          TERMINALS
T-30 Reactivation         T-5 increase internal CY         T-5 RTG Ops
T-25 expansion to 16 acres                                                    Terminals
RAILYARDS           RAILYARDS           T-5 18 acre expansion
RAILYARDS         Wide span gantry cranes at Main   On-dock IY at T-18 or 16th Ave    T-46 additional RTG ops
SIG North Expansion       SIG                     conversion to IY.
T-5 IY second shift                                   SIG Stacy Yard conversion.       RAILYARDS
MAINLINE            ARGO domestic relocation     SIG South expansion
OFF-DOCK        Sound Transit/BNSF new track   ARGO re-designed for high density  New remote railyard
20 acre third party container    agreement Seattle to Tacoma      operations                     shared with POT
support                 Crown Stampede Pass
Duwamish Corridor Project        MAINLINE                 MAINLINE
TRAFFIC                            Tukwila-Tacoma track.       Could be constrained?
SR-519              OFF-DOCK               Sumner Connection
T-5 surface street           20 acre 3rd party container support    Vancouver bypass
OFF-DOCK
intersection                                            Ellensburg/Lind cutoff
T25/30 off-site yard
EMW grade separation     TRAFFIC                 Point Defiance bypass
40-acre 3rd party support
Continuous day gate hours    1st Ave S. & E. Marginal Way
Spokane Street Viaduct     Increase use of night gates.       OFF-DOCK
20 acre 3rd party support          TRAFFIC
Viaduct Construction
accommodates freight.                                                   Steady night gates.
TRAFFIC
SR-509
More night gates
38

Seaport Asset Stewardship
Condition Assessment       Asset Maintenance       Capacity Growth
Understand Existing Assets            Maintain Existing Assets          Invest in New Assets When Warranted
Strategic Goal             Strategic Goal             Strategic Goal
Assess and document existing     Reduce total cost of ownership of   Align asset investments to
condition of major assets          seaport assets                support long term market
demand
Guiding Principles           Guiding Principles          Guiding Principles
Maintain complete asset register    Manage assets in a financially     Enhance existing assets to
Perform condition assessments    sustainable manner            support long term growth
Align asset maintenance with long  Invest in new assets to support
term strategies                commercial strategy

Overarching Objective        Overarching Objective       Overarching Objective
Steward assets to retain
Maintain a condition assessment    Prioritize and execute asset
existing business and support
program that sustains or extends    maintenance program that
sustains our assets            future growth
the life of our assets


39

Seaport Green Gateway
Compliance Management     Commercial Support    Community Commitment
Programs we have to do            Programs that help support       Initiatives that reflect our commitment
our business advantage
Strategic Goal             Strategic Goal             Strategic Goal
Meet local, state and federal        Collaborate with industry to reduce   Engage stakeholders to build
regulations as effectively as        impacts while enhancing our       understanding and support for
possible                    competitive advantage          environmental initiatives
Guiding Principles           Guiding Principles          Guiding Principles
Meet legal obligations           Develop environmental initiatives to   Communicate that the Port is an
Use scientific knowledge and      enhance the Port's economic       environmental leader and vital
programmatic approaches to use    competitiveness              economic engine.
Maintain collaborative approach to
resources most efficiently                                    Inform and collaborate with
environmental problem solving
Partner with internal/external                                  community stakeholders to
support economic and
stakeholders for effective
environmental sustainability
environmental management
Overarching Objective        Overarching Objective        Overarching Objective
Inform and engage stakeholders
Minimize the % of environmental    Implement programs that reduce
resource use, emissions and the      to aid in understanding and
budget spent on compliance to     Port's carbon footprint, while        support of the Port's focus on
maximize resources available for    increasing our competitive advantage  balancing economic and
other environmental strategies                               environmental sustainability

40

COMMERCIAL BUSINESS


Seaport Lines of Business


41

CONTAINER
Market Outlook:
Transpacific volume projected at 3.7% growth
U.S. Economy and Consumer demand uncertain
Revenue Assumption:
Seattle Harbor volume forecast of 2.0M TEUs
Major Work:
Support terminal operators to retain/grow business
Advance Export and Northern Corridor initiatives
Joint market FTZ, Green Gateway, air cargo
Work with stakeholders to facilitate freight mobility
& minimize business impacts during construction
42

CONTAINER
Major Work (cont'd)
Continue major asset condition assessments
Repair pile caps (assuming no major DEF problem)
Monitor performance of Clean Truck Program
Implement Radio Frequency Identification
(RFID) system for Clean Truck Program
Develop T25S for revenue generating use
Evaluate feasibility of intermodal logistics park
Pursue long term lease of Terminal 46
Initiate program to deepen fed'l channel to -50'ft
Assess tenant storm water infrastructure needs
43

CONTAINER
Financial Overview
Containers           2008     2009    2010    2011
$'s in 000's              Actual    Actual    Actual   Budget
Revenue              52,838   56,665   61,332   62,054
Direct Expenses            7,190    7,866    5,576    7,911
Income from Operations    45,648   48,799   55,756   54,144
Divisional Allocations          5,679     5,043     4,782     4,757
Corp Allocations             6,533    6,506    6,463    8,524
Net Operating Income      33,436   37,250   44,511   40,863
Depreciation              16,964   18,259   19,063   19,258
Net Income            16,473   18,990   25,448   21,605

44

CONTAINER
Financial Overview By Facility
2008    2009    2010    2011
$'s in 000's                    Actual    Actual   Actual   Budget
Income From Operations
Terminal 18**                 14,184   15,322   16,097   15,999
Terminal 5                   20,692   21,268   22,640   21,998
Terminal 46                  10,395   11,107   11,840   12,613
Terminal 30 (25/28)              2,035    3,088    7,646    7,900
Terminal 106 West                (3)      (2)      0      0
Terminal 3                     (28)     (32)     (32)      (9)
Container Management          (1,628)   (1,951)   (2,434)   (4,357)
Total Income From Operations    45,648   48,799   55,756   54,144
Allocations
Divisional Allocations              (5,679)   (5,043)   (4,782)   (4,757)
Corporate Allocations             (6,533)   (6,506)   (6,463)   (8,524)
Total Allocations             (12,212)  (11,549)  (11,245)  (13,281)
Net Operating Income         33,436   37,250   44,511   40,863
Note**: Terminal 18 IFO is net of debt service related to special facility revenue bonds.
Income from Operations (IFO) = Revenue  Direct Expense Charges
45

CRUISE
Market Outlook:
Global cruise market projection at 7% growth
Alaska Cruises remain very desirable domestically
Assumptions:
204 vessel calls and 878,600 passengers
Cruise revenue projection at 15% growth
Major Work:
Pursue long term agreement with add'l cruise line
Market mid-week and shoulder season itineraries (Cruise+)
Make recommendations for P66 shore power
Evaluate cruise management agreement models
Complete Fender System Improvements at T91
46

CRUISE
Financial Overview
Cruise                2008     2009    2010    2011
$'s in 000's              Actual    Actual    Actual   Budget
Revenue               9,375   10,744   11,862   10,215
Direct Expenses            2,133    2,827    1,536    1,828
Income from Operations     7,243    7,917   10,326    8,387
Divisional Allocations           976      972     1,201     1,067
Corp Allocations             1,558    1,605    2,138    2,606
Net Operating Income      4,709    5,340    6,987    4,714
Depreciation               3,749    4,199    5,144    5,289
Net Income              959    1,141    1,842    (575)


47

GRAIN
Market Outlook:
Export corn/soybean market forecast is strong
Outlook could vary depending on mid-west weather
Revenue Assumptions:
Similar grain volume and revenue as 2011
New grain facilities will not draw cargo from T-86
Major Work:
Negotiate a new long term agreement for T-86

48

GRAIN
Financial Overview
Grain               2008     2009    2010    2011
$'s in 000's              Actual    Actual    Actual   Budget
Revenue               7,053    6,049    6,035    6,087
Direct Expenses             702     322     242     381
Income from Operations     6,351    5,727    5,793    5,706
Divisional Allocations           307      234      183      203
Corp Allocations              986      744      655      872
Net Operating Income      5,058    4,748    4,955    4,631
Depreciation                508     531     554     621
Net Income             4,550    4,217    4,401    4,010


49

INDUSTRIAL PROPERTIES
Market Outlook:
Occupancy to remain constant except for T-106
Revenue Assumptions:
Revenue forecast to increase by 8%
T-106 leased to the State commencing Fall 2011
Major Work:
T-104 site improvements
T-108 paving overlay
T-115 rail spur upgrades
50
50

INDUSTRIAL PROPERTIES
Financial Overview
Industrial Properties      2008     2009     2010     2011
$'s in 000's              Actual    Actual    Actual   Budget
Revenue              12,747   12,675   13,219   13,481
Direct Expenses            2,971    5,027    3,804    4,841
Income from Operations     9,776    7,648    9,415    8,639
Divisional Allocations          1,646     1,220     1,492     1,483
Corp Allocations             2,445    2,234    2,362    3,037
Net Operating Income      5,685    4,194    5,561    4,119
Depreciation               2,546    2,957    3,029    3,156
Net Income             3,139    1,237    2,532     963


51

INDUSTRIAL PROPERTIES
2008    2009    2010    2011
$'s in 000's                   Actual    Actual    Actual   Budget
Income From Operations
Terminal 115                 4,222    4,300    4,150    4,307
Terminal 91 Seaport Industrial       1,961    1,969    2,352    2,249
Terminal 108                  861     875     755     643
Terminal 18 Bulk Terminals         901     874     930     919
Terminal 106 Container Related       602     635     590     616
Terminal 104                  550     (176)     (21)     77
Financial Terminal 103          511   484   557   503
Pier 16/17                    469     475     474     484
Overview Terminal 107         178  147  204  210
Harbor Island Central              166     171     187     208
By   Terminal 106 Bulk Terminals    90   96   83   82
Terminal 46 Industrial                0      62      125      121
Terminal 25 South               18   (1,392)     (47)     (92)
Facility  Terminal 117             0    (30)   (25)   (20)
Terminal 10                   (46)     (72)     (57)     (59)
Terminal 5 Container Support          0       0       4     (126)
Terminal 106 Bldgs. 1 & 2          (71)    (260)    (208)     (54)
Other (former T30 property)           (137)     (93)       0       0
Industrial Properties Admin         (497)    (417)    (637)   (1,427)
Total Income From Operations   9,776   7,648   9,415   8,639
Allocations
Divisional Allocations             (1,646)   (1,220)   (1,492)   (1,483)
Corporate Allocations            (2,445)   (2,234)   (2,362)   (3,037)
Total Allocations            (4,091)   (3,454)   (3,854)   (4,521)
Net Operating Income         5,685   4,194   5,561   4,119
Income from Operations (IFO) = Revenue  Direct Expense Charges
52

FISHING & OTHER MARITIME
Market Outlook:
Commercial Fishing in Alaska expected to remain strong
Factory trawler moorage demand expected to remain strong
Historical demand is expected for other commercial vessels
Revenue Assumptions:
Facility use fees at market rates & vessel calls remain flat
Major Work:
Increase commercial moorage business harbor wide
Evaluate models for increasing third party business activity
Complete P90/91 mooring bollards & other planned projects
Advance maritime operations training and development
53

FISHING & OTHER MARITIME
Financial Overview
Docks             2008    2009    2010    2011
$'s in 000's              Actual    Actual    Actual   Budget
Revenue               3,361    3,663    3,611    3,135
Direct Expenses            2,244    2,216    2,742    2,556
Income from Operations     1,118    1,448     869     580
Divisional Allocations           695      677      778      809
Corp Allocations              870      826      928    1,152
Net Operating Income       (448)     (56)    (837)   (1,382)
Depreciation               2,845    3,110    3,191    3,398
Net Income            (3,293)   (3,166)   (4,028)   (4,780)


54

FISHING & OTHER MARITIME
2008    2009    2010    2011
$'s in 000's                    Actual    Actual    Actual   Budget
Income From Operations
Terminal 91 Fishing Related         1,991    2,723    2,562    2,196
Terminal 91 Vessel Operations       1,032     464     436     298
Terminal 91 Operations Overhead     (2,078)   (1,973)   (2,425)   (2,452)
Financial Terminal 25 Vessel Operations     77   141   295   300
Pier 2 Docks                    50      31      51      46
Overview
Pier 34 Docks                   22      (7)      0      0
By  Terminal 46 Fishing Related     18   47  (19)  11
Pier 69 Vessel Operations             7      (2)      (1)      (1)
Facility  Pier 28 Docks             0    24   (29)   78
Terminal 18 North-Mooring Dolphins       0       0       0     103
Total Income From Operations     1,118   1,448     869     580
Allocations
Divisional Allocations               (695)     (677)     (778)     (809)
Corporate Allocations              (870)    (826)    (928)   (1,152)
Total Allocations              (1,566)   (1,503)   (1,706)   (1,961)
Net Operating Income           (448)    (56)    (837)   (1,382)
Income from Operations (IFO) = Revenue  Direct Expense Charges
55

SEAPORT SECURITY &
EMERGENCY PREPAREDNESS
Seaport Security:
Maintain compliance with Federal security regulations
Conduct security awareness training and exercising
Perform security risk assessments and improvements
Seek & pilot emerging security screening technology
Emergency Preparedness (EP):
Execute FEMA IEMC* action plan items for Seaport
Develop joint EP Program with Real Estate/Corporate
Develop and conduct EP training and exercising
Review and strengthen departmental COOP# plans

* Integrated Emergency Management Course  #Continuity of Operations Plan
56

SEAPORT SECURITY GRANTS
Financial Overview
In $ Thousands         2008    2009    2010    2011    2011    2011 Bud Var
Actual   Actual   Actual  Forecast  Budget    $ %
Security Grants                850     847    1,791     423    3,415  (2,992)  -88%
Total Revenue             850    847   1,791    423   3,415  (2,992)  -88%
Direct Expenses               794     780     798     755     755     0    0%
Security Grant Expense          921     860    1,983         459       3,451       2,992   87%
Corporate Allocations            343     515     486     374     374      0    0%
Total Expense            2,058    2,154    3,267    1,588    4,580  2,992   65%
Net Operating Income (NOI)    (1,208)   (1,307)   (1,477)   (1,165)   (1,165)    0   0%




57

SEAPORT ASSET STEWARDSHIP
Major Asset Categories:
1.Dock Systems  including crane
2.Building Systems  including utilities
3.Yard Systems  including paving
4.Dredging  including annual surveys
Major Work:
Condition assessments        T-18 Pile Cap Repairs*
Inspect Dock Systems/Cranes      Complete pilot repairs
Inventory utilities              Start major repairs
Develop a system to manage   Complete DEF assessment
(inventory) asset condition data
*Assuming DEF is not a major problem                       58

SEAPORT ASSET STEWARDSHIP

Projects
&
Capital Budget

PROJECT             CIP STATUS      2012 2012-2016 2017-2021    TOTAL
T-5 Completion           Committed    $ 813    $ 903    $ - $ 903 
Terminal
T-5 New Cranes (4)         BP Prospective  $ - $ 45,000      $ - $ 45,000 
5    T-5 Dredge Phase 2    EXPENSE  $ - $ 3,500   $ - $ 3,500 
TOTAL Committed/Bplan Prospective:       $ 813     $ 49,403      $ - $ 49,403 
Note - Excludes Prospective Items
60

PROJECT             CIP STATUS      2012 2012-2016 2017-2021    TOTAL
T-18 Fender Replacement     Committed    $ 1,378     $ 1,378     $ -    $ 1,378 
T-18 Rail Crossings          BP Prospective  $ -    $ -     $ 1,000      $ 1,000 
Terminal  T-18 Pile Cap Pilot    EXPENSE  $ 700  $ 700  $ -  $ 700 
18    T-18 Pile Cap Repair Project EXPENSE  $ 500  $ 30,000   $ -  $ 30,000 
T-18 Remove IHI Cranes      EXPENSE     $ 1,000     $ 1,000     $ -    $ 1,000 
TOTAL Committed/Bplan Prospective:       $ 3,578      $ 33,078      $ 1,000      $ 34,078 
Note - Excludes Prospective Items
61

PROJECT             CIP STATUS      2012 2012-2016 2017-2021    TOTAL
Terminal T-25/30 South Container Yard Committed  $ 12,200   $ 12,200   $ -  $ 12,200 
25/30  P-33-35 Public Access   Committed  $ 1,300   $ 5,800   $ -  $ 5,800 
TOTAL Committed/Bplan Prospective:       $ 13,500      $ 18,000      $ -    $ 18,000 
Note - Excludes Prospective Items
62

PROJECT             CIP STATUS      2012 2012-2016 2017-2021    TOTAL
T-46 North Dock Replacement  BP Prospective  $ -    $ 20,000      $ -    $ 20,000 
T-46 Development                   $ -    $ 25,000      $ 15,000      $ 40,000 
Terminal
T-46 Demo Crane 54       EXPENSE     $ -    $ 450    $ -    $ 450 
46   T-46 Pile Cap Repairs   EXPENSE  $ -  $ -  $ -  $ - 
TOTAL Committed/Bplan Prospective:       $ -    $ 45,450      $ 15,000      $ 60,450 
Note - Excludes Prospective Items
63

PROJECT                CIP STATUS         2012   2012-2016  2017-2021     TOTAL
P-66 Shore Power             BP Prospective   $ - $ 13,700   $ - $ 13,700
Pier 66  P-66 Pile Wraps     Expense   $ 115 $ 575 $ 575 $ 1,150
TOTAL Committed/Bplan Prospective:            $ 115   $ 14,275   $ 575   $ 14,850
Note - Excludes Prospective Items
64

PROJECT                 CIP STATUS          2012   2012-2016   2017-2021     TOTAL
Terminal T-86 Grain Term Modernization  Committed  $ 107 $ 107 $ - $ 107
T-86 Grain Term Cathodic Protection  BP Prospective    $ 900   $ 1,000   $ - $ 1,000
86   P-86 Fishing Pier Replacement  BP Prospective $ - $ 1,300 $ 4,750 $ 6,050
TOTAL Committed/Bplan Prospective:             $ 1,007   $ 2,407   $ 4,750   $ 7,157
Note - Excludes Prospective Items
65

Terminals 104 and 115

PROJECT            CIP STATUS     2012 2012-2016 2017-2021   TOTAL
T-104 Site Improvements   BP Prospective $ 1,000     $ 3,000      $ -    $ 3,000 
TOTAL Committed/Bplan Prospective:      $ 1,000     $ 3,000     $ -    $ 3,000 
T-115 Rail Spur Upgrades    BP Prospective $ -    $ 1,050      $ -    $ 1,050 
TOTAL Committed/Bplan Prospective:      $ -    $ 1,050     $ -    $ 1,050 
Note - Excludes Prospective Items

66

PROJECT            CIP STATUS     2012 2012-2016 2017-2021   TOTAL
Terminal T-108 Paving Overlay   BP Prospective$ -  $ 3,190   $ -  $ 3,190 
TOTAL Committed/Bplan Prospective:      $ -    $ 3,190     $ -    $ 3,190 
108
Note - Excludes Prospective Items
67

Terminal
91
68

Terminal 91
PROJECT            CIP STATUS     2012 2012-2016 2017-2021   TOTAL
P-90 C-175 Roof Replacement Committed   $ 2,005     $ 2,005      $ -    $ 2,005 
P-90 Dredge East Waterway  BP Prospective $ -    $ -    $ 6,000     $ 6,000 
P-90 Berth 6 & 8 Redev Ph 1  BP Prospective $ -    $ 24,500       $ -    $ 24,500 
P-90 Berth 6 & 8 Redev Ph 2  BP Prospective $ -    $ 13,000       $ 12,500       $ 25,500 
T-91 Water Main Replacement Committed   $ 565    $ 565    $ -    $ 565 
P-91 Fender System Upgrade Committed   $ 1,875     $ 1,875     $ -    $ 1,875 
P-91 2nd Gangway per Berth  BP Prospective $ -    $ 4,500      $ 5,000     $ 9,500 
T-91 Industrial Whse & Office BP Prospective $ -     $ -    $ 23,700       $ 23,700 
T-91 Substation Upgrades   BP Prospective $ -    $ 2,500      $ -    $ 2,500 
T-91 New Whse @ Tank Farm BP Prospective $ -    $ 21,900      $ -    $ 21,900 
T-91 Rail Spur Upgrades     BP Prospective $ -    $ 1,110      $ -    $ 1,110 
TOTAL Committed/Bplan Prospective:      $ 4,445     $ 71,955      $ 47,200      $ 119,155 
Note - Excludes Prospective Items
69

Other Seaport Projects

PROJECT            CIP STATUS     2012 2012-2016 2017-2021   TOTAL
Seaport Small Projects     Committed   $ 575    $ 2,975      $ 2,500      $ 5,475 
Cont Supp Yd - 3.5 m TEU #1  BP Prospective $ -    $ 30,000       $ -    $ 30,000 
Cont Supp Yd - 3.5 m TEU #2  BP Prospective $ -    $ -    $ 35,000       $ 35,000 
Cont Term Storm Water Pilot BP Prospective $ 1,000      $ 1,300      $ -    $ 1,300 
Contingency Renew/Replace BP Prospective $ -    $ 38,500      $ 120,000       $ 158,500 
Maint Dredge All Terminals  EXPENSE     $ -    $ 3,000      $ 4,000     $ 7,000 
Condition Assessments    EXPENSE     $ 1,000     $ 1,000     $ -    $ 1,000 
TOTAL Committed/Bplan Prospective:      $ 2,575     $ 76,775      $ 161,500       $ 238,275 
Note - Excludes Prospective Items



70

Seaport Project Plan Summary
Draft as of 08/05/2011
$'s in 000's                      2012    2012-2016  2017-2021    Total

Committed               24,606   40,644   18,204   58,848
Bus Plan Prospective           5,188   252,838   222,950   475,788
Total Capital Committed & BPP   29,794   293,482   241,154   534,636
Major Expense Projects         3,315    40,225    4,575    44,800
Total Projects                33,109   333,707   245,729   579,436

Other
Prospective Capital Projects         0   450,355   271,897   722,252
71

SEAPORT FINANCIAL OUTLOOK
Operating Revenue (excluding grants)
is projected to increase by 2.5%
compared to 2011 Budget

Primary components of revenue:
In place leases
Forecasted future leases
Volume: cruise, grain, crane rent
Grants
72

SEAPORT FINANCIAL OUTLOOK

Expense Trends and Risks:
Comprehensive asset condition assessments
Maintenance dredging
Repair costs
Crane removal
Storm water infrastructure
NW Clean Air Strategy
Environmental Remediation Liability Expense
Tribal fishing coordination
73

SEAPORT FINANCIAL OUTLOOK

In $ Thousands         2008    2009    2010    2011    2011    2011 Bud Var
Actual   Actual   Actual  Forecast  Budget    $ %
Operating Revenue           85,404   89,844   96,060   95,772   94,972    800   1%
Security Grants                850     847    1,791     423    3,415  (2,992)  -88%
Total Revenue            86,254   90,691   97,850   96,195   98,387  (2,192)  -2%
Direct Expenses             23,031   25,108   20,780   25,293   24,081  (1,212)   -5%
Security Grant Expense          921     860    1,983         459       3,451       2,992   87%
Envir Remediation Liability Exp       866       24    1,439      500      500      0    0%
Divisional Allocations             2,335     2,123     2,354     1,461     2,511   1,050   42%
Corporate Allocations           12,734   12,430   13,033   16,285   16,565    280    2%
Total Expense            39,887   40,545   39,590   43,998   47,108  3,110   7%
Net Operating Income (NOI)    46,367   50,145   58,261   52,198   51,280   918   2%

74

2012 SEAPORT BUSINESS PLAN
RISKS
Competitive threats (i.e. B.C., Panama Canal, HMT*)
U.S. economic recovery stalls or contracts
Loss of business due to construction congestion
Loss of business due to lower cost competitive ports
Escalating liability, project and overhead costs
Increased taxes/fees due to State budgetary
pressures
Legislation/regulation that impedes port
competitiveness
* HMT  Harbor Maintenance Tax                      75

2012 SEAPORT BUSINESS PLAN
KEY HIGHLIGHTS:
Overall business outlook is uncertain in Seattle; mirroring
uncertain U.S. economy and global outlook
Revenue streams remain solid & looking for new opportunities
Seaport building upon "Green Gateway" brand and successes
Capital Projects closely tied to Business Plans
Asset Stewardship is a critical area of work
Develop/advance Northern Transportation Corridor
Continue business-friendly, collaborative approach
Advance strategic marketing efforts to retain business
Business Plan aligns with Century Agenda & CEO goals
76

Real Estate Division
2012 Business Plan
August 16, 2011

Division Objectives
Provide for NOI consistent with 2011 levels,
notwithstanding recognition of deferred maintenance
costs
Continue execution of deferred maintenance obligations
Provide for amended real estate policies as necessary
with regard to:
Purchase and sale of properties
Competitive process requirements
Establishment of asset ranking system
Respond to recommendations from Century Agenda planning


78

Real Estate 2012 Budget Preview
Operating Revenues expected to be favorable
by approximately 2% relative to 2011 Budget
Positive trailing indicators:
Third party revenue forecasted slight increase as the hospitality
market continues to strengthen.
Market conditions continue to tighten, albeit with aggressive owner
contributions
Exposures/ risks:
Potential higher vacancies in commercial properties and
recreational marinas
Eastside Rail Corridor
Deferred maintenance costs
Tenant improvement allowances
Competition for capital
Pending debt re-payment challenge looms
79

Real Estate Revenue Bonds
1998 Series refunded bonds issued to pay for P-69
2007 A bonds issued as "governmental bonds"
funded public uses at Shilshole
2007 B bonds issued as "private activity bonds"
funded
Seaport  primarily T30/T91 project
Real Estate  Shilshole leased areas
Real Estate net income does not support payment of debt service.
Debt service is paid from Real Estate's General Fund balance.

80

Level debt service in aggregate, but
increase in Real Estate debt service in 2016



81

RE Revenue Bond Debt Service Payments

12,000
661    661
10,000
661
8,000
8,539   8,536
6,000                                                        908

4,000   1,264   1,264   1,264   1,264   1,264                8,540
1,384   1,384   1,384   1,384   1,384                       5,601
2,000
2,197   2,199   2,198   2,201   2,194   2,194   2,200
1,381
0
2011   2012   2013   2014   2015   2016   2017   2018   2019   2020
1998 Sub Lien     2007A     2007B


82

RE General Fund Balance (Cash) Available
60,000

50,000

40,000

30,000

20,000

10,000

0

-10,000

-20,000
2010 YE    2011 YE    2012 YE    2013 YE    2014 YE    2015 YE    2016 YE    2017 YE
Min Required Cash     Avail Cash Balance     Total Cash


83

Real Estate Division Financial Overview

In $ Thousands       2008    2009    2010    2011    2011    2011 Bud Var
Actual   Actual   Actual  Forecast  Budget    $ %
Operating Revenue        34,797   30,132   29,820   30,795   30,707     88   0.3%
Total Revenue            34,797   30,132   29,820   30,795   30,707     88   0.3%
Direct Expenses           36,355   27,525   29,502   31,765   33,221    1,456    4%
Divisional Allocations         (3,413)   (3,200)   (3,485)   (2,375)   (3,787)   (1,412)   -37%
Corporate Allocations         5,253    5,244    5,481    6,550    6,645      95    1%
Total Expense            38,195   29,569   31,499   35,940   36,079     139   0.4%
Net Operating Income (NOI)  (3,398)    563   (1,678)   (5,145)   (5,372)    227    4%




84

Financial Overview
Harbor Services

Harbor Services        2008    2009    2010    2011
$'s in 000's             Actual    Actual    Actual   Budget
Revenue           10,491   11,402   11,548   11,456
Direct Expenses        5,694    6,077    6,627    7,060
Income from Operations    4,797    5,324    4,921    4,396
Divisional Allocations       1,589     1,937     2,412     2,477
Corp Allocations         2,904     3,089     3,174     3,833
Net Operating Income      304     298     (664)   (1,915)
Depreciation            5,187    5,423    5,578    5,855
Net Income           (4,883)   (5,124)   (6,242)   (7,770)


85

Financial Overview
Portfolio Management

Portfolio Mgmt Group    2008    2009    2010    2011
$'s in 000's             Actual    Actual    Actual   Budget
Revenue           22,720   17,646   17,300   18,479
Direct Expenses        14,849   12,826   13,234   14,951
Income from Operations    7,871    4,820    4,066    3,527
Divisional Allocations       2,478     2,193     1,786     2,729
Corp Allocations         2,157     1,966     2,068     2,543
Net Operating Income     3,235     661     212    (1,745)
Depreciation            4,323    4,299    4,216    4,090
Net Income           (1,088)   (3,638)   (4,003)   (5,835)


86

Financial Overview
RE Development & Planning

Real Estate Dev & Plann   2008    2009    2010    2011
$'s in 000's             Actual    Actual    Actual   Budget
Revenue            1,270     807     756     724
Direct Expenses         7,902     727     820    1,201
Income from Operations    (6,632)      80      (64)     (478)
Divisional Allocations        161      207      287      317
Corp Allocations           191      190      239      268
Net Operating Income     (6,985)     (318)     (591)   (1,063)
Depreciation             523      227      231      221
Net Income           (7,508)    (545)    (822)   (1,284)


87

Financial Overview
Eastside Rail Corridor

Eastside Rail Corridor     2008     2009     2010     2011
$'s in 000's             Actual    Actual    Actual   Budget
Revenue              0      0     114      45
Direct Expenses           0      79     751     694
Income from Operations       0      (79)     (637)     (649)
Divisional Allocations          0        0        0        0
Corp Allocations            0       0       0       0
Net Operating Income        0      (79)     (637)     (649)
Depreciation              0       0       0       0
Net Income              0     (79)    (637)    (649)


88

Draft 2012 Capital Plan

Total Real Estate Division $ 000's
TOTAL REAL ESTATE DIVISION    2012    2012-16 Total
Committed                11,406       23,410
Business Plan Prospective         6,050        42,820
TOTAL                17,456      66,230




89

Draft 2012 Capital Plan By Location
Fishermen's Terminal $ 000's
FISHERMEN'S TERMINAL                  2012    2012-16 Total
FT Waterside Projects Capital Projects
Status    Description
Committed  FT Waterside Small Capital Projects          70        220
BPP    FT Net Shed Solution             2,500      7,500
BPP    FT Net Shed 9 Roof Replace           450       450
BPP    FT NW Dock Improvements             0       100
BPP    FT S Wall W End Pile Repl & Corr Protect      0      1,250
BPP    FT W Wall N Fender Sys Replace         200      2,625
BPP    FT W Wall N Sheet Pile Corr Protect         0      2,600
BPP    FT Docks 3 Fixed Pier Improvements        0      2,800
BPP    FT Docks 4 Fixed Pier Improvements        0      3,300
BPP    FT S Wall Ctrl Fender Repl & Corr Protect      0        0
BPP    FT W Wall South Sheet Pile Corr Protect       0        0
Total FT Waterside                        3,220       20,845
FT Upland Projects Capital Projects
Status    Description
Committed  FT C15 HVAC Improvements             3,572       3,602
Committed  FT Uplands Small Capital Projects            0       1,255
BPP    FT Paving/Storm Upgrades             0      1,650
BPP    FT C15 Bldg Roof Replacement           0      2,400
BPP    FT C14 (Downey) Bldg Imp             0       950
BPP    FT C-2 Bldg Roof & HVAC Rplmnt          0      1,150
BPP    FT C-15 Bldg East Sewer Line          850       850
BPP    FT C-15 Bldg Subsidence Imp          250      2,750
Total FT Landside                         4,672       14,607
TOTAL FISHERMEN'S TERMINAL               7,892      35,452

90

Draft 2012 Capital Plan By Location
Shilshole Bay Marina $ 000's
SHILSHOLE BAY MARINA                  2012    2012-16 Total
Shilshole Bay Marina Recreational Boating
Committed  Small Projects                      70         165
BPP    SBM Fuel Floats Improve             0      1,000
BPP    Central Seawall Replacement            0       915
Total SBM Recreational Boating                 70        2,080
Shilshole Bay Marina Commercial Prop
BPP    SBM: Seaview Bldg A5 Rehab            0       300
Total SBM Commercial Prop                   0        300
TOTAL SHILSHOLE BAY MARINA                 70       2,380




91

Draft 2012 Capital Plan By Location
Central Waterfront $ 000's
CENTRAL WATERFRONT                 2012   2012-16 Total
Central Waterfront- Bell Harbor Marina
BPP    BHM Standpipe Upgrade             500       500
Total BHM Recreational Boating                 500         500
Central Waterfront Commercial Bldgs
Committed  Bell Harb Lighting Ctrl Upgrade             513        513
Committed  Small Projects                      150        535
BPP    P66 Chiller Upgrades              300       300
Total Central Waterfront Commerical Bldgs          963        1,348
TOTAL CENTRAL WATERFRONT               1,463      1,848




92

Draft 2012 Capital Plan By Location

Other Commercial Properties $ 000's
OTHER COMMERCIAL PROPERTIES            2012   2012-16 Total
Other Commercial Properties
Committed  Tenant Improvements -Capital             1,052       3,434
Committed  Other Commercial Props Small Capital          0        475
BPP    T102 Bldg Roof Replacement            0      2,430
Total Other Commercial Buildings              1,052        6,339
TOTAL OTHER COMMERCIAL PROPERTIES         1,052      6,339





93

Draft 2012 Capital Plan By Location

Pier 69 and Other Projects $ 000's
PIER 69 AND OTHER PROJECTS               2012    2012-16 Total
Other
Committed  P69 N Apron Piling Cathodic Protection       3,923       3,923
Committed  P69 Built Up Roof Replace               300       1,992
Committed  Pier 69 Small Projects                  525        525
Committed  RE Div: Green Port Initiative              225       1,653
Committed  RE Fleet Replacement                 506       2,403
Committed  RE Preliminary Planning                250       1,250
Committed  RE Technology Projects                 250       1,250
Committed  Unspecified Small Projects                0        215
BPP    RE: Contingency Renew.&Replace       1,000      7,000
Total Other                              6,979       20,211
TOTAL P69 AND OTHER PROJECTS              6,979      20,211



94

Real Estate Development and
Planning
Master planning and land development:
North Bay
Complete development options study
Initiate the environmental review process
Engage the City and other stakeholders in the planning
process
Des Moines Creek
Complete new development agreement with City
Finalize possible retail option agreement with City
Finalize possible industrial development agreement with
Puget Sound Energy

95

Real Estate Development and
Planning
Other Projects:
Respond as appropriate to the GSA/FAA office requirement for
SeaTac and Des Moines sites
Continue collaboration City of Burien on the Northeast
Redevelopment Area
Continue collaboration City of SeaTac on the 28th Avenue S.
area
Complete second land swap with WSDOT

96

Portfolio Management and Leasing
Property management
Achieve net operating income and occupancy targets
Fishermen's Terminal
Complete asset condition examination and adopt 20 year asset plan
Complete FVO lease renewal and seawall replacement
Conduct due diligence and prepare to receive title to Downey building
Examine alternatives for energy conservation measures utilizing
utility company incentive plans
Publish RFQ/RFP for Bell Harbor International Conference
Center



97

Harbor Services
Financial performance:
Achieve net operating income target
Fishermen's Terminal:
Complete asset condition examination and adopt 20 year asset
plan
Implement net locker solution
Complete NW Dock East Fender Pile Replacement
Shilshole Bay Marina:
Revise long term master plan
Examine implications of revised Shoreline regulations


98

P69 Facilities Management
Achieve flat utility consumption over 2011
Perform space planning forecast for 2013
Continue improvement of emergency operations &
business continuity program
Conduct three communication drills and one tabletop
exercise


99

Marine Maintenance
Manage expense budgets within 2%
Continue Green & Sustainability Initiatives
Zero increase in landfill waste
Stormwater compliance
Energy Conservation
Parks and public access24 sites, 63 acres
Deferred maintenance
Multiple projects underway


100

Port of Seattle
2012 Budget Planning Assumptions
August 16, 2011

Agenda
Background
Overall Budget Assumptions
Key Payroll Assumptions
Corporate Costs
Key Dates for 2012 budget
Q & A's

102

Background
2009 - Took early and proactive steps to reduce
costs; O&M expense $28M below budget.
2010 Budget - Reduced $11 million of additional
costs relative to 2009 budget through Zero Based
Budgeting and implemented a voluntary
separation program; eliminated 110 positions
(6.2% of the workforce).
2011 Budget  Matched expenses to revenues to
maintain NOI.
103

Historical Port Financial Performance



104

Overall Budget Assumptions
Economic outlook uncertain
Process will incorporate Commission guidance
on budget.
Continued focus on managing overall O&M costs
and Corporate costs.
Reduce Corporate expense as a % of total Port
operating revenues.
Revenue assumptions yet to be finalized.
Tax levy discussion as part of Plan of Finance
105

Preliminary Payroll Assumptions*
Average merit pay of 3.0% based on preliminary
market survey data (may be revised based on
final data and overall budget considerations).
Port-sponsored medical cost increase of 2%
with minor plan design changes (compared to
8% national trend).
Total Rewards philosophy development
continuesminimal 2012 budget impact
expected
* For non-represented employees
106

Preliminary Payroll Assumptions
2012 Employer PERS contribution rate not yet
finalized
2011 rate was less than projected:
Budgeted rate: 7% (blended rate of 5.3% and 8.7%)
Actual rate: 6.25% (blended rate of 5.3%, 7.07%,
7.25%)
2012 Preliminary budget based on 7.25%; will
be reviewed as new information becomes
available
107

Corporate Costs
2009 Budget: Cut 2% ($1.5M) out of $75M
2010: Adopted Zero-Based Budgeting.
2011: Non-payroll costs held flat.
2012: Focus on sustainable costs measured as a
percent of total Port revenue/expenses.

108

Corporate Cost Trends
2005  2006  2007  2008  2009  2010  2011 2005-11 6-Year
$ in 000's               Actual  Actual  Actual  Actual  Actual  Actual   Fcst  Change CAGR
Total Corporate Expenses  58,828  60,294  65,072  69,329  65,340  67,338  73,969  15,140  3.9%
Total Port Revenues     416,525       448,449       457,888       478,523       449,435       470,490       495,630       79,105  2.9%
Total Port Expenses     226,195       223,564       236,897       274,619       245,767       253,464       278,547       52,352  3.5%
% of Total Revenue      14.1%  13.4%  14.2%  14.5%  14.5%  14.3%  14.9%
% of Total O&M       26.0%  27.0%  27.5%  25.2%  26.6%  26.6%  26.6%
*Costs adjusted to reflect certain ICT cost transfers from operating divisions
During this period Internal Audit and OSR departments were expanded; Corporate received
transfer of Airport Jobs, PLA and ORCA program from the Airport; ICT took on several service
support functions from the operating divisions. Excluding the one-time Port Centennial and AAPA
Convention expense in 2011, Corporate Costs as a percentage of Total Revenues and Total
Expenses are 14.6% and 26.0%, respectively.
109

2012 Budget Calendar
August
Budget user/refresher training
2012 Budget Guidelines released
Commission meeting on division business and
capital plans
Commission meeting on budget assumptions

110

2012 Budget Calendar
September
Prepare preliminary operating & capital budgets
Internal budget reviews by each dept & division
Executive preliminary budget reviews (9/19  9/22)
Commission capital budgets meeting on 9/27

111

2012 Budget Calendar
October
Operating budget Commission meeting on 10/4
Preliminary budget document available to the
Commission on 10/18
Draft Plan of Finance Commission meeting on
10/25
Release 2012 Preliminary Budget and Draft Plan
of Finance Document to the public on 10/27
112

2012 Budget Calendar
November
First reading of budget resolution on 11/8
Second reading of budget resolution on 11/22
December
File statutory budget on 12/1
Release 2012 Final Budget and Draft Plan of
Finance Document to the public by 12/15
113

Port of Seattle
2012 Budget Planning Assumptions
August 16, 2011