ITEM NO 7a-Attach 5
DATE OF
MEETING 8/02/2011

Terminal 91 Today




2

Guiding Principles
Driven by Century Agenda Guidelines
Attract expansion of "core mission" customers

Attract "broader types of economic activity" that comply with the
existing industrial zoning
Incorporate revenue streams expected from full, fair market value
leases into the financial analysis in order to test the financial
sustainability of total site development
Explore models of sustainable growth

3

Policy Questions
What is the appropriate level of Port investment in new
infrastructure?
What is the optimal balance between:
Economic vitality/Jobs
Environmental stewardship
Financial goals

How should any new investment be funded?

4

Completed Work
Identification of existing core mission tenant needs
Industrial market assessment
Site planning of Development Zones and Options
Construction cost estimates for anticipated Port projects
Financial analysis
Economic benefits analysis
5

Planning Strategy
Six zones
Accommodate existing
tenants expressed expansion
needs
Consolidate footprints and/or
relocate activity south of the
bridge

Free up land available for new
tenants

6

Utility improvements
north of bridge
New road network
Integrated storm water system
Upgraded electrical
Water and Sewer
Other
Cost: $20  $24 million

7

Zone Review
North of Bridge
Key Messages
Investments in utilities at best break
even
Tank Farm is not ideal for new
buildings
Positive NPV results from Port
constructed industrial buildings are
unlikely
Ground leasing as alternative means
to meet existing tenant expansion
should be considered

8

Zone Review
North of Bridge - Continued
Key Messages
Investments in utilities cannot be
recovered
A garage may be worthy of consideration
to efficiently use land and maximize
economic benefits

Key Issues
Expected financial targets?
Seek public partners for cost sharing of
utilities?
Invest in utilities or leave this to a 3rd party
developer?
Timing of investments?
9

Zone Review South of Bridge - West Yard
Key Messages
Demand for new office space not
anticipated for several years
Non-accessory office development
requires zoning modification
Ground leasing may provide a
positive NPV
Key Issue
Exploring potential land swap and
CSO placement with City / County

10

Zone Review South of Bridge - Shortfill
Key Messages

The existing use and configuration
provides a positive NPV

Opening up additional land north of the
bridge for new tenants by investing
south of the bridge may be costly to
pursue


11

Zone Review South of Bridge  Pier 90
Key Messages
Positive NPV results from Port
constructed industrial buildings are
unlikely
Rebuilding berths 6 / 8 has
significantly negative impact on
financial results

Key Issue
Consider berth construction as an
asset management investment and
remove from financial results

12

Option #1
Economic
Benefits
Option 1
Jobs
Direct                    388
Induced                323
Indirect                   218
Total                    929
Income ($1000)
Direct                 $22,797
Induced              $11,676
Indirect                 $9,947
Total                 $44,420

Direct Business Revenue ($1000)      $75,064

State and Local Taxes ($1000)         $4,131

13

Option #2
Economic
Benefits
Option 2
Jobs
Direct                    506
Induced                437
Indirect                    295
Total                    1,238
Income ($1000)
Direct                  $30,746
Induced              $15,804
Indirect                 $13,568
Total                  $60,118

Direct Business Revenue ($1000)     $103,049

State and Local Taxes ($1000)         $5,591


14

Option #3
Economic
Benefits
Option 3
Jobs
Direct                    783
Induced                648
Indirect                   458
Total                   1,890
Income ($1000)
Direct                  $44,367
Induced              $23,431
Indirect                 $21,351
Total                  $89,149

Direct Business Revenue ($1000)     $157,231

State and Local Taxes ($1000)         $8,291


15

Option #4
Economic
Benefits
Option 4
Jobs
Direct                     3,198
Induced                 3,936
Indirect                    3,050
Total                    10,185
Income ($1000)
Direct                  $241,422
Induced               $142,611
Indirect                  $159,580
Total                   $543,613

Direct Business Revenue ($1000)     $1,191,319

State and Local Taxes ($1000)         $50,556

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FINANCIAL RESULTS
Zone               Option 1        Option 2        Option 3        Option 4
Pier 90    Scenario        Berth & Buildings     Berth & Buildings      Berth & Buildings      Berth & Buildings
Port Investment        $73.9             $73.9              $73.9             $73.9
NPV          ($40.4)        ($40.4)        ($40.4)        ($40.4)

Shortfill     Scenario           Yard with No Fill       Yard with No Fill    Apron Extension - Notches  Full Apron with Garage
Port Investment         $0.0              $0.0               $8.8              $111.3
NPV          $3.3         $3.3         ($4.3)        ($67.8)

NW Yard   Scenario     Existing Cruise Parking Existing Cruise Parking   Garage & Leases    Development & Yard
Port Investment         $0.4              $0.4              $33.6              $0.5
NPV          $2.6         $2.6          $0.8         $10.1

Tank Farm  Scenario         Warehouse     Warehouse & Office    Warehouse & Office      Warehouse
Port Investment        $22.0             $26.7              $26.7             $22.0
NPV          ($9.7)        ($10.4)        ($10.4)        ($9.7)

West Yard  Scenario       Development & Yard   Development & Yard    Development & Yard   Development & Yard
Port Investment         $0.5              $0.5               $0.5              $0.5
NPV          $3.3         $3.3          $3.3         $3.3

Uplands   Scenario       Development & Yard   Development & Yard      Development        Development
Port Investment         $0.9              $0.9               $0.9              $0.9
NPV          $15.1        $15.1         $13.4         $13.4

Utilities     Scenario
Port Investment        $22.7             $23.4              $25.3             $26.6
NPV          ($17.4)        ($17.9)        ($19.4)        ($20.4)

Total     Port Investment      $120.4           $125.8            $169.7            $235.6
NPV         ($43.2)       ($44.4)        ($56.9)        ($111.5)
IRR            5.8%          6.0%           6.5%           4.5%
Note: $ (000,000's)
17

Status Quo
Key Messages
Investments in berth reconstruction and
storm water management systems are
likely to be needed
Removing estimated asset management
costs significantly improves financial
results but projected return remains
negative
If no significant investment is authorized,
staff will likely seek longer term leases for
open storage
Key Issue: What is optimal balance
between economic benefits and financial
goals?

18

FINANCIAL RESULTS - Continued
The financial results excluding costs associated with asset management issues are
shown below. Though results improve significantly, all options retain a negative
NPV.

Option 1            Option 2             Option 3             Option 4
Total          Port Investment      $68.0            $73.4            $117.7            $183.8
(excluding Berth &  NPV               ($4.5)             ($5.6)             ($18.5)             ($73.3)
Stormwater costs)  IRR               10.3%            10.1%             9.0%             5.8%
Note: $ (000,000's)



19

NEXT STEPS
Outreach to current tenants and the public
Additional analysis
Prepare recommended development option
Commission briefing this fall on recommended option

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