7b supp CORRECTED
ITEM NO.: 7b_Supp DATE OF MEETING: Aug 2, 2011 Q2 2011 Financial Performance Port of Seattle August 2, 2011 Q2 Operating Income Summary 2010 YTD 2011 YTD 2011 YTD 2011 Act vs. Bud $ in 000's Actual Actual Budget Var $ Var % Aeronautical Revenues 100,452 107,521 108,578 (1,057) -1.0% Other Operating Revenues 129,326 135,759 139,076 (3,317) -2.4% Total Operating Revenues 229,778 243,280 247,655 (4,375) -1.8% Total Operating Expenses 117,553 125,507 143,509 18,002 12.5% Income before Depreciation 112,225 117,773 104,145 13,628 13.1% Depreciation 79,773 79,569 80,217 648 0.8% Income after Depreciation 32,453 38,204 23,928 14,276 59.7% Aeronautical Revenues were $1.0M lower than budget but $7.1M higher than Q2 2010. Other Operating Revenues were $3.3M below budget but $6.4M higher than Q2 2010. Total Operating Expenses were $18.0M lower than budget but $8.0M higher than Q2 2010 (mainly due to capital policy change, Port Centennial/AAPA Convention, spending requested by airlines, RCF, and deferred maintenance). Income before Depreciation was $13.6M higher than budget and $5.6M higher than Q2 2010. 2 Q2 Major Revenue Variances Major Revenues ($ in '000) Bud Var. Aero Revenues (1,057) Seaport Security Grants (3,364) Aero Revenues are based on cost Public Parking (1,160) recovery - lower revenue means lower Rental Cars (1,265) CPE. Concessions 885 Lower Seaport Security Grants are offset Ground Transportation 234 by lower related expenses, thus have no impact on NOI. Container 973 Other Operating Revenues were $47K Seaport Industrial Properties (266) above budget. Cruise 203 Public Parking and Rental Cars were Grain 244 under budget, but they were $1M higher Real Estate Third Party Mgmt (616) and just $92K lower than Q2 2010, respectively. Other 814 Subtotal 47 TOTAL (4,375) 3 Q2 Major Expense Variances Actual/Budget Operating Expenses ($ in '000) Var. $ Var. % Salaries & Benefits 2,567 5.9% Wages & Benefits 1,770 4.2% Utilities (562) -5.2% Outside Services 7,105 25.6% Travel & Other Employee Exps 1,240 41.3% Promotional Expenses 510 72.5% Pass-through Grant Expenses 3,375 98.8% Other 1,997 16.3% Total 18,002 12.5% All major accounts were under budget, except Utilities. Payroll costs were $4.3M below budget . Outside Services were $7.1M lower than budget mainly due to delay on some projects (Terminal Realignment, Part 150, PeopleSoft Financials Upgrade, etc.) 4 Port-wide 2011 Year-End Forecast 2010 2011 2011 2011 Bud vs. Fcst $ in 000's Actual Forecast Budget Var $ Var % Aeronautical Revenues 198,329 214,181 217,200 (3,019) -1.4% Other Operating Revenues 272,161 281,449 283,436 (1,987) -0.7% Total Operating Revenues 470,490 495,630 500,636 (5,006) -1.0% Total Operating Expenses 253,464 278,547 285,844 7,297 2.6% Income before Depreciation 217,026 217,083 214,792 2,291 1.1% Depreciation 160,775 160,491 160,491 0 0.0% Income after Depreciation 56,251 56,592 54,301 2,291 4.2% Aeronautical Revenues are forecasting to be $3.0M lower than budget but $15.9M higher than 2010 due to higher in both capital costs and operating expenses. Other Operating Revenues are forecasting to be $2.0M lower than budget (mainly due to $3.0M unfavorable variance in Seaport Security Grants) but still $9.3M above 2010. Total Operating Expenses are forecasting to be $7.3M below budget but $25.0M above 2010. 5 Comprehensive Summary ($ in '000) 2010 YTD 2011 YTD 2011 YTD Actual/Budget Revenues Actual Actual Budget Var. $ Var. % Explanations 1. Aeronautical Revenues 100,452 107,521 108,578 (1,057) -1.0% Cost recovery 2. Other Operating Revenues 129,326 135,759 139,077 (3,318) -2.4% Seaport Security Grants 3. Tax Levy 36,552 36,804 36,750 54 0.1% 4. PFCs 30,672 31,683 31,375 308 1.0% Higher ticket sales 5. CFCs 9,854 10,074 9,067 1,007 11.1% Higher transaction days 6. Non-Capital Contributions 633 2,557 4,097 (1,540) -37.6% Difference in timing 7. Interest Income 10,086 9,476 6,827 2,649 38.8% Higher fund balance 8. Capital Contributions 2,735 9,386 7,978 1,408 17.6% Earlier LOI drawdown Total 320,309 343,259 343,749 (490) -0.1% Expenses 1. O&M Expense 117,553 125,507 143,509 18,002 12.5% See slide #4 for details 2. Depreciation 79,773 79,569 80,217 648 0.8% 3. Revenue Bond Interest Expense 66,213 64,160 73,664 9,504 12.9% Lower variable rates 4. PFC Bond Interest Expense 5,249 3,379 5,205 1,826 35.1% Savings in refunded bonds 5. GO Bond Interest Expense 8,835 8,033 7,079 (954) -13.5% Issued $30M new GO bond 6. Public Expense 15,851 5,289 8,278 2,988 36.1% Projects delay 7. Non-Op Environmental Expense 18,907 1,190 3,100 1,910 61.6% Projects delay 8. Misc. Non-Op Expense 509 2,657 1,260 (1,397) -110.8% Asset inventory write-offs Total 312,890 289,785 322,312 32,528 10.1% Change In Net Assets 7,419 53,475 21,436 32,038 149.5% Total Revenues were $490K below budget but $23.4M higher than Q2 2010. Total Expenses were $32.5M less than budget and $23.1M below Q2 2010. Change in Net Assets were $32.0M above budget and $46.1M higher than Q2 2010. 6 Total Port 2011 Capital Spending 2011 2011 Budget Plan of Division Forecast Budget Variance Finance ($ in millions) Aviation 185.6 223.7 38.2 231.4 Seaport 27.7 34.0 6.3 29.5 Real Estate 14.1 16.3 2.2 15.4 Corporate & CDD 9.7 12.9 3.2 12.1 Total 237.1 286.9 49.8 288.3 Capital spending for each division is expected to come in below budget in 2011. Total capital spending is forecasting to be $237.1M for 2011, $49.8M lower than budget. 7 Aviation Division Financial Performance Q2 2011 Aviation Business Highlights Airline activity: June YTD enplanements up 4.9% from 2010 2011 enplanements are forecast to grow 3.5% from 2010 Operating Expenses: Total O&M expenses are 9.1% below budget YTD Forecasting savings of $3.0M Non-airline NOI: YTD Revenues up 6.4% over 2010, but down 1.5% vs. budget Forecasting positive NOI vs. Budget at year-end Airline Costs: Forecasting airline cost per enplanement (CPE) of $12.20 vs. budget of $12.76 9 Activity Enplanements vs. Prior Year Landed Weight vs. Prior Year 10% 5% Growth Rate 3.62% 3.91% 4% 3.11% 6.10% 2.63% 3% 3.44% 3.72% 6.54% 5% 3.91% Growth Rate 2% 5.27% 1% 1.11% 1.53% 0% 0% Jan Feb Mar Apr May Jun Jan Feb Mar Apr May Jun 2010 2011 % 2010 2011 % Figures in 000's YTD YTD Variance Actual Forecast Variance Enplanements 7,322 7,678 4.9% 15,773 16,325 3.5% Landed Weight 9,404 9,648 2.6% 19,786 20,089 1.5% International enplaned passengers saw greater year-over-year growth (8.3% vs. Q2 2010) than domestic enplanements (4.9% vs. Q1 2010). There was an overall growth of 2.6% in landed weight from compared to YTD 2010. 10 YTD Operating Revenue 2009 YTD 2010 YTD 2011 YTD 2011 YTD Actual/Budget $ in 000's Actual Actual Actual Budget Var $ Var % Revenues Landing Fees 27,917 26,815 29,388 30,600 (1,212) -4.0% Terminal Rental 65,517 66,595 70,921 70,643 278 0.4% Other Aero Revenues 6,353 7,043 7,213 7,336 (123) -1.7% Total Aeronautical 99,787 100,452 107,521 108,578 (1,057) -1.0% Public Parking 25,626 24,149 25,160 26,320 (1,160) -4.4% Rental Cars 16,250 14,083 13,991 15,255 (1,265) -8.3% Concessions 16,410 16,235 16,910 16,025 885 5.5% Other Non-airline 10,420 10,268 12,801 12,308 494 4.0% Total Non-Aeronautical 68,706 64,734 68,862 69,908 (1,046) -1.5% Other 4,177 4,234 4,217 4,177 40 1.0% Total Revenues 172,669 169,421 180,600 182,663 (2,063) -1.1% Landing Fee and Terminal Rent revenues are less than budgeted due to seasonality differences from budget. Public Parking: 1.3% growth in long-term (1+ day) transactions 2011 YTD through June compared to prior year. YTD budget assumed 5.6% growth from 2010 projected transactions. Rental Cars: May YTD transactions were 5.8% higher than prior year, but industry revenues are down. Transaction days are up 7.3% from 2010. Concessions: Improved concession sales per enplaned passenger and higher enplanements. 11 YTD Operating Expense & NOI 2009 YTD 2010 YTD 2011 YTD 2011 YTD Actual/Budget $ in 000's Actual Actual Actual Budget Var $ Var % Revenues Aeronautical 99,787 100,452 107,521 108,578 (1,057) -1.0% Non-Aeronautical 68,706 64,734 68,862 69,908 (1,046) -1.5% Other 4,177 4,234 4,217 4,177 40 1.0% Revenues 172,669 169,421 180,600 182,663 (2,063) -1.1% Expenses Salaries & Benefits 39,428 37,952 38,822 40,345 1,523 3.8% Outside Services 8,688 9,062 11,185 13,786 2,601 18.9% Utilities 6,784 5,832 7,294 6,756 (538) -8.0% Supplies & Stock 2,135 1,772 2,444 2,056 (389) -18.9% Other 1,212 3,277 4,079 5,022 942 18.8% Total Airport Expenses 58,248 57,895 63,824 67,965 4,141 6.1% Corporate 14,291 15,196 15,307 16,836 1,530 9.1% Police Costs 6,445 6,811 7,885 8,221 336 4.1% Capital Development/Other Expenses 2,114 2,837 3,155 5,500 2,345 42.6% Total Operating Expenses (excl. Env Liab) 81,098 82,738 90,171 98,522 8,351 8.5% Environmental Remediation - 1,278 (210) 392 602 153.6% Total Operating Expenses 81,098 84,016 89,961 98,914 8,953 9.1% Net Operating Income 91,572 85,405 90,638 83,748 6,890 8.2% 12 June YTD Variances June YTD Var ($ in Account Category 000's) Variance Explanations Vacant FTEs (LEAN, $130K unemployment, ADM $48K, FIS ADM, Planning $100K, Assistant Fire Chief $48K, F&B $23k, Env $32K, Maint $112K, Rental Car $42K, F&I $15K, Exempt & Non-exempt payroll Concession Manager $28K, salaries and benefits to capital and benefits 689 projects $76K Firefighters OPEB $142K, Public Parking $76K, Employee Parking $121K, classroom proctor, wages & benefits to capital Wages and benefits 834 projects $258K Increased expenses in surface water sewage due to longer Utilities (538) winter Supplies & Stock (339) De-icer Terminal realignment late start $500K, LEAN consultant $158K, Biz Dev $125K (28th Ave, Doug Fox), parking program & ESP Outside services 2,602 $137K, SMS $200K, lounge exp $121K, Part 150 $330K Registration, travel & training 468 Training & development contingency not utilized $310K Promotional Expenses 203 Joint airline marketing program for new intl air service $125K Advertising 348 Delay of advertisments for tenant marketing fund Environmental Remediation Liab 602 Reduced remediation liability for Delta Sky Club Business & Occupation taxes (248) Negative variance due to incorrect budgeted rate Misc exp: RCF & div contingency 667 RCF activation $127K, div contingency $540K Overhead allocations (113) Building dept under charge capital overhead to projects Capital Projects Overhead (336) Less overhead charged to capital projects than anticipated Other (97) Total Variance 4,742 13 Aviation Division Forecast 2009 2010 2011 2011 Forecast/Budget $ in 000's Actual Actual Forecast Budget Var $ Var % Total Operating Revenues 328,241 342,173 367,438 370,517 (3,079) -0.8% Operating Expenses Salaries, Benefits & Wages 80,804 76,036 81,431 82,363 932 1.1% Outside Services 21,509 22,519 26,007 26,758 751 2.8% Utilities 13,209 11,381 12,669 12,576 (93) -0.7% VSP, HR10 & Unemployment Savings 1,196 - - - - n/a OPEB Reversal (4,016) - - - - n/a Environmental Remediation Liability 1,991 3,271 452 1,771 1,319 74.5% Other Expenses 8,183 13,275 16,561 16,107 (454) -2.8% Baseline Airport Expenses 122,877 126,481 137,119 139,575 2,455 1.8% Corporate Expenses 31,181 32,558 33,317 34,043 726 2.1% Police Expenses 14,461 14,317 16,382 16,389 7 0.0% Capital Development/Other Expenses 6,135 7,785 11,096 10,944 (152) -1.4% Total Operating Expenses 174,654 181,142 197,915 200,951 3,036 1.5% Net Operating Income 153,587 161,031 169,523 169,567 (43) 0.0% 14 Forecast Savings YE Savings: in 000's June YTD Forecast Payroll 1,523 Org Node Variance Variance Terminal realignment 1,913 $ in 000's $ in 000's LEAN consultant 43 3700 Aeronautical 1,345 1,925 Concession: delay of RFPs 385 3400 Landside 835 174 Environ: Delay in planting & supplies 92 3500 Business Dev 531 94 Environmental Remediation - delay of projects 1,319 3905 Utilities (461) (93) Other 151 4100 Director's Office 169 131 5,426 4150 AV Contingency 391 - Overspending: 4170 Training Contingency 132 - More de-icer used due to weather 368 4400 Fire Dept 279 42 Elevator/escalator increased coverage 291 4530 Planning 507 (182) Kone contract increase 550 4540 AV F&B 44 25 Website, signage 259 4560 F&I 32 12 Terminal Dev Strategy/realignment 344 4561 Sign Shop (15) (69) B&O taxes 500 4570 Building Dept 108 (11) Capital to Expense, prior year litigated claim 193 4572 Airport Office Bldg (19) (46) Utility surface water 466 4580 Environmental 362 178 2,971 4590 AV Maint (129) (826) 4600 Community Dev 98 34 Total Savings 2,455 4800 Security 124 (59) Potential risk: 4998 Environmental Remed. 602 1,319 Unbudgeted SLOA Security Deposits 1,291 4999 AV Cap to Exp (193) (193) Total 4,742 2,455 1,291 15 Aeronautical Business 2009 2010 2011 2011 Forecast/Budget $ in 000's Actual Actual Forecast Budget Var $ Var % Revenues requirement: Capital Costs 72,013 82,083 85,554 87,111 (1,557) -1.8% Operating Costs net Non-Aero 118,456 122,985 135,793 137,195 (1,401) -1.0% Total Costs 190,469 205,067 221,348 224,305 (2,958) -1.3% FIS Offset (5,250) (7,000) (7,000) (7,000) - 0.0% Other Offsets (16,441) (14,825) (14,882) (14,821) (61) 0.4% Net Revenue Requirement 168,778 183,243 199,466 202,485 (3,019) -1.5% Other Aero Revenues 13,757 15,087 14,715 14,715 - 0.0% Total Aero Revenues 182,534 198,329 214,181 217,200 (3,019) -1.4% Less: Non-passenger Airline Costs 12,074 14,885 15,066 15,066 - 0.0% Net Passenger Airline Costs 170,460 183,444 199,114 202,133 (3,019) -1.5% 2009 2010 2011 2011 Forecast/Budget Actual Actual Forecast Budget Var $ Var % Cost Per Enplanement: Capital Costs / Enpl 4.61 5.20 5.24 5.50 (0.26) -4.7% Operating Costs / Enpl 7.59 7.80 8.32 8.66 (0.34) -3.9% Offsets (1.39) (1.38) (1.34) (1.38) 0.04 -2.7% Other Aero Revenues 0.88 0.96 0.90 0.93 (0.03) -2.9% Non-passenger Airline Costs (0.77) (0.94) (0.92) (0.95) 0.03 -2.9% Passenger Airline CPE 10.92 11.63 12.20 12.76 (0.56) -4.4% 16 Non Aeronautical Business 2009 2010 2011 2011 Forecast/Budget $ in 000's Actual Actual Forecast Budget Var $ Var % Revenues: Public Parking 49,689 49,416 51,542 52,847 (1,305) -2.5% Rental Cars 33,320 30,309 32,178 33,833 (1,655) -4.9% Concessions 33,473 33,765 34,366 32,640 1,726 5.3% Other 20,865 21,929 26,818 25,644 1,174 4.6% Total Revenues 137,348 135,418 144,904 144,965 (60) 0.0% Operating Expense 55,916 54,743 63,025 64,397 1,372 2.1% Share of terminal O&M 17,011 16,935 17,467 17,729 262 1.5% Less utility internal billing (16,738) (14,464) (18,370) (18,370) - 0.0% Net Operating & Maint 56,189 57,215 62,122 63,756 1,634 2.6% Net Operating Income 81,159 78,203 82,782 81,209 1,573 1.9% Public Parking: Positive trends seen in long term transactions over the past six months. Rental Cars: Forecast assumes 3% less of 2010 average ticket price of $216 vs. budgeted average price of $226. Concessions: Forecast is better than expected due to primary concessions sales; forecast SPE of $10.24 vs. budgeted SPE of $10.12 17 Net Cash Flow: NOI After Debt Service & Interest Income 2009 2010 2011 2011 Forecast/Budget $ in 000's Actual Actual Forecast Budget Var $ Var % Aeronautical Net Operating Income (NOI) 65,915 74,402 77,105 78,661 (1,557) -2.0% Debt Service 68,767 73,080 75,143 76,700 1,557 2.0% NOI After Debt Service (2,851) 1,323 1,961 1,961 (0) 0.0% Non-Aeronautical Net Operating Income (NOI) 81,159 78,203 82,782 81,209 1,573 1.9% Debt Service 39,241 41,752 41,808 42,469 661 1.6% NOI After Debt Service 41,917 36,451 40,974 38,739 2,235 5.8% Fuel Hydrant Revenue 8,359 8,426 8,353 8,353 - 0.0% Total Aviation NOI 155,433 161,031 168,240 168,223 17 0.0% Debt Service 108,008 114,831 116,951 119,169 2,218 1.9% NOI After Debt Service 47,425 46,200 51,288 49,054 2,235 4.6% Add ADF Interest Income 8,853 6,297 5,916 4,167 1,749 42.0% Less Non-Cash Fuel Hydrant Revenue (7,845) (7,912) (7,839) (7,839) - 0.0% Net Cash Flow after D/S & Interest Inc. 48,433 44,585 49,366 45,382 3,983 8.8% 18 Capital Spending 2011 2011 2011 Forecast/Budget Plan of $ in 000's YTD Actual Forecast Budget Var ($) Var (%) Finance Rental Car Facility Construction 46,336 78,092 97,488 19,396 19.9% 98,616 Central Plant Preconditioned Air 5,078 15,078 20,000 4,922 24.6% 8,000 Airfield Pavement Replacement 236 4,611 10,500 5,889 56.1% 10,500 Parking System Replacement 311 7,573 9,137 1,564 17.1% 8,994 Terminal Escalators Modernization 419 7,419 8,955 1,536 17.2% 10,000 South Satellite Delta Sky Club Expansion 408 8,739 5,250 (3,489) -66.5% 5,038 Aircraft RON Parking USPS Site 117 467 5,050 4,583 90.8% 5,661 All Other 11,164 63,581 67,366 3,785 5.6% 84,599 Total 64,069 185,560 223,746 38,186 17.1% 231,408 1. Off-site Road Improvements and Bus Maintenance Facility contractors had slow start. Soft costs are also running below forecast. Unused contingency funds have been pushed out. 2. The contractor has gotten off to a slower start than had been forecasted. Project completion date is not expected to be impacted. Amount originally budgeted was not needed for the scope of the 2011 pavement replacement. A portion of the project was shifted from 4th quarter 2011 to the 1st quarter of 2012 to avoid rolling out a new system during the holiday season. Projected cash flows were based on a higher construction estimate relative to actual bid. Additional budget was authorized by Commission to reimburse Delta due to increased Port scope. RON Parking @ USPS: Hazardous materials evaluation has pushed the project start to later in the year with completion in 2012. 19 Seaport Division Performance Report Q2 2011 Seaport Business Goals TEU volume was 1,008K, approximately level to Q2 YTD 2010. Full inbound TEU's were down 8.8% and full outbound up 10.6%. Grain volume at 2.8 million metric tons down 2% from 2010 and 10% over 2011 Q2 YTD budget. Cruise passengers through Q2 are 16% favorable to budget. North Harbor Island Mooring Dolphins were ready for occupancy on April 1st and are 50% leased. 21 Seaport Organizational Goals Environmental Stewardship 67% of frequent calls meeting Northwest Ports Clean Air Standards target. Environmental Awards AAPA - Stakeholder Awareness, Education and Involvement Award for T117. Comprehensive Environmental Management Award for implementation of NWPCA strategy. Puget Sound Regional Council - 2011 VISION 2040 Award for NWPCA strategy. Regional Transportation Closely engaged in mobility management for south harbor road construction projects and detour routes. 22 Seaport Q2 YTD Operating Results In $ Thousands 2010 YTD 2011 YTD 2011 YTD 2011 Bud Var Actual Actual Budget $ % Operating Revenue 44,508 47,330 46,014 1,315 3% Security Grants 682 51 3,415 (3,364) -99% Total Revenue 45,190 47,380 49,429 (2,049) -4% Direct Expenses 9,250 10,593 12,513 1,920 15% Security Grant Expense 710 61 3,451 3,390 98% Envir Remediation Liability Exp 855 (18) 250 268 107% Divisional Allocations 1,210 673 1,246 573 46% Corporate Allocations 6,198 7,025 7,976 951 12% Total Expense 18,223 18,335 25,436 7,101 28% Net Operating Income (NOI) 26,967 29,045 23,993 5,053 21% 23 Seaport Division Key Variances Revenue Detail ($'s in Thousands) Q2 YTD Business Unit Variance to Budget Better (Worse) Containers $973 Grain $244 Industrial Properties ($266) Cruise $203 Docks $161 Security Grants ($3,364) Total ($2,049) 24 Seaport Division Key Variances Expense Detail ($'s in Thousands) Q2 YTD Expenses Variance to Budget Better (Worse) Security Grant Expense $3,390 Outside Services $1,259 Corporate $875 Overhead Allocations $521 Envir Remediation Liability Exp $268 All Other $788 Total Expense $7,101 25 Seaport Business Groups NOI Before Depreciation ($'s in Millions) Q2 YTD Variance to Budget Actual NOI Better (Worse) Containers $23.3 $2.7 Grain $2.5 $ .5 Sea Industrial Properties $2.7 $.6 Cruise $1.4 $.6 Docks ($ .5) $.1 Security ($ .4) $.2 Envir Grants/Liability Exp $ .0 $ .3 Total Seaport $29.0 $5.1 26 Seaport Full Year Operating Forecast 2010 2011 2011 2011 Bud Var $'s 000 Actual Forecast Budget $ % Operating Revenue 96,060 95,772 94,972 800 1% Security Grants 1,791 423 3,415 (2,992) -88% Total Revenue 97,850 96,195 98,387 (2,192) -2% Direct Expenses 20,780 25,293 24,081 (1,212) -5% Security Grant Expense 1,983 459 3,451 2,992 87% Envir Remediation Liability Exp 1,170 500 500 0 0% Divisional Allocations 2,354 1,461 2,511 1,050 42% Corporate Allocations 13,033 16,285 16,565 280 2% Total Expense 39,321 43,997 47,108 3,110 7% Net Operating Income (NOI) 58,530 52,198 51,280 918 2% 27 Seaport Capital 2011 Estimated Approved Variance Est. Act. Plan of Actual Budget to as % of Finance Budget App. Bud $27.7 $34.0 $6.3 81% $29.5 28 Real Estate Division Performance Report Q2 2011 Real Estate 2nd Quarter Key Events Full Year Net Operating Income forecasted to exceed budget. FT NW dock fender replacement and MIC sheet pile replacement projects complete, FT south wall replacement project delayed to Q3. Results of RFP issued for Tsubota Steel site in February. No proposals accepted. 30 Real Estate 2nd Quarter Key Events Eastside Rail Corridor Continuing to develop streamlined procedures and standard to handle volume of incoming requests. Marine Maintenance Continuation of Deferred Maintenance reduction program. 31 Real Estate Business Goals Provide Compelling Value and Asset Utilization Occupancy Rates: Commercial property at 90% occupancy, at target and above 2011 Q2 Seattle market average of 84%. Activity at Bell Harbor International Conference Center below Budget. FT/Marina Occupancy: Fishermen's Terminal and Maritime Industrial Center at 81% YTD occupancy, below target of 86%. Recreational Marinas at 94%, above target of 93%. 32 Real Estate Division Qtr 2 Operating Results In $ Thousands 2010 YTD 2011 YTD 2011 YTD 2011 Bud Var Actual Actual Budget $ % Operating Revenue 14,857 14,667 15,133 (467) -3.1% Total Revenue 14,857 14,667 15,133 (467) -3.1% Direct Expenses 13,861 14,477 16,803 2,326 14% Envir Remediation Liability (0) 0 0 0 NA Divisional Allocations (1,733) (1,225) (1,865) (641) -34% Corporate Allocations 2,579 2,968 3,315 347 10% Total Expense 14,706 16,220 18,253 2,033 11% Net Operating Income (NOI) 151 (1,553) (3,119) 1,566 50% 33 Real Estate Division Q2 Key Variances Revenue Detail ($'s in Thousands) 2011 Year to Date Variance to Budget Business Unit Better (Worse) Recreational Boating $61 Fishing & Commercial ($83) Commercial Properties $67 Third Party Management ($616) RE Development & Planning $78 Eastside Rail ($9) Facilities/Maintenance $35 Total ($467) 34 Real Estate Division Q2 Key Variances Expense Detail ($'s in Thousands) 2011 Year to Date Variance to Budget Expense Better (Worse) Maintenance 1,309 Third Party Management $610 Corporate $369 Outside Services $297 Litigated Damages ($778) All Other $226 Total Expense $2,033 35 Real Estate Business Groups NOI Before Depreciation ($'s in Thousands) Q2 YTD Variance to Budget Actual NOI Better (Worse) Recreational Boating $914 $570 Fishing & Commercial ($1,037) $251 Commercial & Third Party ($147) $1,114 RE Development & Planning ($330) $260 Eastside Rail ($944) ($619) Envir Grant/Remed Liability ($9) ( $9) Total Real Estate ($1,553) $1,566 36 Real Estate Division Full Year Forecast In $ Thousands 2010 2011 2011 2011 Bud Var Actual Forecast Budget $ % Operating Revenue 29,820 30,795 30,707 88 0% Total Revenue 29,820 30,795 30,707 88 0% Direct Expenses 29,503 31,765 33,221 1,456 4% Envir Remediation Liability (2) 0 0 0 NA Divisional Allocations (3,485) (2,375) (3,787) (1,412) -37% Corporate Allocations 5,481 6,550 6,645 95 1% Total Expense 31,499 35,940 36,079 139 0% Net Operating Income (NOI) (1,678) (5,145) (5,372) 227 4% 37 Real Estate Capital 2011 Estimated Approved Variance Est. Act. Plan of Actual Budget to as % of Finance Budget App. Bud $14.1 $16.3 $2.2 86% $15.4 38 Capital Development Division Performance Report Q2 2011 Capital Development Division Q2 2011 Business Events Construction has started on the following projects airfield pavement/slot drains replacement near south satellite, FIS booths, PC air. Construction complete & facility in use C1-C88 baggage system, new security checkpoint. On March 31, 2011, the expanded P-Card program was implemented. CPO Service Agreement Section kicked off compliance reviews and is in process of reviewing 8 contracts. PCS projects include the installation of the FIS Primary Inspection Booths at the south satellite, T-91 Waterline & Paving, Noise Remedy Mitigation, and Gate B3 Loading Bridge. Projects in construction: Terminal 91 Waterline, Terminal 86 Tower Strengthening, Maritime Industrial Center central seawall, Fishermen's Terminal Phase 4 South Wall, East Marginal Way Grade Separation. Continued underdock inspections at Terminal 18 and 46 and began Terminal18 Pile Caps Pilot Project design. 40 CDD Dashboard 01762668 Capital Development Division Key Indicators CDD Construction Soft Costs % 100% 90% 21% 20% 19% 19% 19% 80% 70% 60% 50% Total Soft Costs 40% 79% 80% 81% 81% 81% Total Construction Costs 30% 20% 10% 0% Q4 2009 - Q3 Q1 2010 - Q4 Q2 2010 - Q1 Q3 2010 - Q2 Q3 2008 - Q2 2010 2010 2011 2011 2011 (36 month average) 42 Capital Development Division Key Indicators Cost Growth During Construction 43 Capital Development Division Key Indicators continued Information not reported in the initial Commission Authorization for these projects. Design Schedule Growth Initial Commission Planned Construction Actual Construction Design Project Authorized Start Contract Award Contract Award Schedule of Design (Execution) (Execution) Growth 2nd Quarter 2011 Emergency Concrete Panel Replacement Project N/A - Emergency N/A - Emergency 16-Feb-11 N/A T-18 North Harbor Island Mooring Dolphins 11-Aug-09 * 3-Nov-10 * Terminal 5 Maintenance Dredging 9-Sep-08 * 4-Oct-10 * * Information not reported in the initial Commission Authorization for all projects 44 Capital Development Division Key Indicators continued Construction Schedule Growth Actual Construction Planned Substantial Actual Substantial Construction Project Contract Award Completion of Completion of Schedule Growth (Execution) Construction Construction 2nd Quarter 2011 Emergency Concrete Panel Replacement Project 16-Feb-11 3-Mar-11 21-Feb-11 -66.7% T-18 North Harbor Island Mooring Dolphins 3-Nov-10 31-Mar-11 25-Mar-11 -4.1% Terminal 5 Maintenance Dredging 4-Oct-10 15-Feb-11 15-Feb-11 0.0% 45 CDD Key Indicators continued Procurement Schedule: Total Time RFS to Execution (Avg # Days) 2010 Q2 2011 Goods & Services 81 days 69 days Major Public Works 62 days 84 days Small Works 56 days 50 days Service Agreements 256 days 214 days 46 Capital Development Division Gross Operating Results 2011 Bud 2010 YTD2011 YTD Var. Year-End Projections Varianc $ in 000's Notes Actual Actual Budget $ % Budget Forecast e Total Revenues - 76 - 76 0.0% - - - EXPENSES BEFORE CHARGES TO CAPITAL PROJECTS Capital Development Administration 197 171 181 10 5.4% 359 359 - Engineering 4,716 5,479 7,694 2,215 28.8% 15,225 13,103 2,122 Port Construction Services 3,448 2,947 3,778 831 22.0% 7,554 7,236 318 Central Procurement Office 1,572 1,598 2,189 591 27.0% 4,394 4,403 (9) Aviation Project Management 2,338 2,561 4,324 1,763 40.8% 8,637 8,637 - Seaport Project Management 1,219 983 1,258 275 21.9% 2,493 2,371 122 Total Before Charges to Capital Projects 13,490 13,739 19,424 5,685 29.3% 38,662 36,108 2,554 47 Capital Development Division Key Variances to Net Budget Q2 2011 Expenses Variance to Budget YTD Var. F/(UNF) $ in 000's Better (Worse) % Salaries and Benefits 1,852 13.1% Outside Services 1,935 48.1% Travel and Other 166 64.3% Telecommunications 17 25.2% Property Rentals 3 7.5% General Expenses 43 165.0% All Other 873 191.1% Charges to Capital Projects (2,797) 22.9% Total 2,888 40.0% 48 Corporate Performance Report Q2 2011 Corporate Key Events for Q2 Held several centennial celebration events: Centennial Video Contest, Centennial Park Dedication, Centennial "Get to Know Your Port by Bike", Beach Access Opening Centennial Community Celebration, and Centennial Display at STIA. Set preliminary goal of increasing jobs related to the Port by 100K over 25 years. Finished building the Port's new website and began content migration for the third quarter deployment. Offered Ethics Survey to all Port employees. Installed TeamMate as the internal audit management system. Received the Distinguished Budget Presentation Award for 2011 from GFOA. 50 Corporate Key Metrics for Q2 Responded to 144 public disclosure requests. 30 employees participating in REALeadership Program. Created 132 job openings and received 6,210 job applications. Provided orientation to 23 new employees. Completed 42 individual job evaluations. Completed 10 internal audits. Handled 30 litigation and claims. Received 27,246 calls for Police services. 1,215 small businesses registered on the roster (an increase of 93 from Q2 2010). 51 Corporate Q2 Operating Results 2010 YTD 2011 YTD 2011 Bud Var. $ in 000's Actual Actual Budget $ % Total Revenues 309 620 430 190 44.1% Executive 697 694 793 99 12.4% Commission 404 336 465 129 27.8% Legal 1,603 1,529 1,667 138 8.3% Risk Services 1,259 1,249 1,383 134 9.7% Health & Safety Services 499 542 574 32 5.6% External Affairs 2,644 2,990 3,395 404 11.9% Human Resources & Development 1,741 2,271 2,709 439 16.2% Labor Relations 294 515 462 (53) -11.6% Information & Communications Technology 8,696 8,951 9,170 219 2.4% Finance & Budget 729 707 762 54 7.1% Accounting & Financial Reporting Services 2,946 2,789 3,293 504 15.3% Internal Audit 494 507 621 114 18.3% Office of Social Responsibility 576 531 835 305 36.5% Police 9,204 10,535 10,760 225 2.1% Contingency 17 48 350 302 86.3% Total Expenses 31,802 34,195 37,240 3,045 8.2% All Corporate departments were under budget, except Labor Relations. Total Expenses were $3.0M below budget but $2.4M higher than Q2 2010 mainly due to Port Centennial/AAPA Convention, filling the vacant positions in HR&D, higher ICT costs, and filling vacant positions and contractual increase in Police Dept. 52 Corp Q2 Major Expense Variances Actual/Budget Operating Expenses ($ in '000) Var. $ Var. % Salaries & Benefits 648 3.7% Wages & Benefits 219 2.3% Payroll to Capital Projects 273 18.4% Outside Services 773 14.0% Travel & Other Employee Exps 443 31.2% Promotional Expenses 223 76.8% Miscellaneous Expense 494 86.8% Other 402 15.5% Charges to Capital Projects (432) 26.3% Total 3,045 12.7% Total payroll costs were $1.1M under budget. Miscellaneous Expenses include all expenses in the Contingency. 53 Corporate Year End Forecast 2010 Year-End Projections $ in 000's Actual Forecast Budget Variance Explanations Total Revenues 610 1,202 1,025 177 Unbudgeted police grants Executive 1,356 1,460 1,500 40 Commission 831 862 931 70 Travel and other savings Legal 3,475 3,055 2,906 (149) Due to several litigations Risk Services 2,618 2,722 2,789 67 Savings from property insurance costs Health & Safety Services 1,001 1,124 1,129 5 External Affairs 5,553 6,795 7,012 217 Vacant positions and other savings Human Resources & Development 4,107 5,063 5,285 222 Vacant positions and credit from state Labor Relations 675 922 922 - Information & Communications Technology 18,765 19,511 19,511 - Finance & Budget 1,455 1,483 1,493 11 Accounting & Financial Reporting Services 5,939 6,415 6,596 181 Vacant positions and bank rebate Internal Audit 990 1,204 1,215 11 Office of Social Responsibility 1,280 1,560 1,567 6 Police 19,273 21,443 21,452 9 Contingency 21 350 700 350 Do not anticipate to use all Total Expenses 67,391 73,969 75,008 1,039 Total Revenues are forecasting to be $177K higher than budget. Total Expenses are forecasting to be $1.0M lower than budget. 54
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