ITEM NO.    9a Supp-1
DATE OF
MEETING October 20, 2009

Seaport and Real Estate Funding Plans

October 20, 2009

Topics
Background  Re-cap of prior meeting
Preliminary levy scenario
Updated scenario
Preliminary Assessor Information
Draft Levy Policy
Seaport Self-Sufficiency



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Preliminary Levy Discussion

On September 17, 2009 staff provided a preliminary briefing on the
tax levy
Reviewed historical uses and levy policy
Reviewed Century Agenda guidelines from funding panel
Outlined a revised approach to levy use based on those
guidelines
No additional levy support for Seaport
Interim levy support for Real Estate capital and operations
until longer-term plan developed
Provided a preliminary levy scenario for discussion


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Preliminary Levy Scenario  Presented 9/17/2009
$'000                      2010    2011    2012    2013    2014
Possible levy scenario     LEVY USES
G.O. DS                 40,426  40,438  40,442  40,444  40,442
based on preliminary
information              Other uses
Sea Pub Exp FAST/mobility     21,644   1,509
Levy is maintained at
AV Pub Exp - Highline Noise     9,075   7,650    650   4,880
2009 levy until 2013        Sea Environmental Reserved   5,466  2,630  1,407   500   264
$5 mil. Project deferral      PortJobs               46    46    46    46    46
Subtotal Other            36,231   11,835   2,103   5,426    310
No new G.O. debt
Real Estate Support
RE Capital                 44,307   26,575   21,686   20,200   10,756
Assumptions           RE Operating Subsidy     3,119  2,790  2,130  2,951  2,930
Subtotal RE Support         47,426   29,365   23,816   23,151   13,686
Port participation in
waterfront tunnel has not     Total Uses          124,083  81,638  66,361  69,021  54,438
been included in the
calculations            LEVY SOURCES
Available Balance           48,000    (184)  (5,923)        3,615    (406)
Environmental cash       Annual levy          75,899  75,899  75,899  65,000  55,000
flows are based on         Total Sources        123,899  75,715  69,976  68,615  54,594
current reserved amounts
Projected Ending Fund Balance    (184)  (5,923)        3,615    (406)    156

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Changes
Updated Environmental Reserve cash flows
Updated cash flows for projects currently reserved
Added cash flows for projects that will be added to the reserve as
part of the 2010 budget
Updated Real Estate Division forecast
Operating deficit including deferred maintenance needs
Capital budget update




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Updated Levy Scenario  Base Case
Levy is Sufficient to Meet Existing Needs
Base Case  2010 levy of $75.9 million
Environmental expenses:
Cash expenditures for liabilities      $'000                   2010    2011    2012   2013   2014
LEVY USES
reserved for through 2010
G.O. DS                      40,426   40,438   40,442   40,444       40,442 
Does not include any future
liabilities                           Other uses
Sea Pub Exp FAST/mobility          21,644    2,509         400
AV Pub Exp - Highline Noise           9,075        7,650         650    4,880
Public Expense:               Sea & RE Environmental Reserved     8,712      5,587     13,894   4,362  1,589
Includes existing FAST           PortJobs                  46      46      46      46    46
projects and Highline Noise         Subtotal Other             39,477  15,792  14,990   9,288   1,635
mitigation
Real Estate Support
Does not include any            RE Capital                20,966  28,300  21,661  19,925      10,781 
participation in the SR99 tunnel      RE Operating Subsidy            3,450      3,166      2,988      3,583   3,611
Subtotal RE Support              24,416   31,466   24,649   23,508        14,392 
Real Estate Support:
Total Uses                    104,319   87,696   80,081   73,240        56,469 
Assumes existing businesses
and facilities continue to         LEVY SOURCES
operate under their current         Available Balance             48,000   19,580   7,783       702      462 
business models and are         Annual levy              75,899  75,899  73,000  73,000      57,000 
Total Sources                  123,899   95,479   80,783   73,702        57,462 
adequately maintained and
renewed                 Projected Ending Fund Balance     19,580  7,783      702   462     993 
Rate per 2010 assessed value (cents)      22.3     22.3     21.4     21.4    16.7
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Alternative Scenarios  Lower Levy Option
Base Case: Levy remains at $75.9 million
Levy decreases beginning 2013, no need to defer projects
Levy to $67 mil. (estimated flat levy rate)
Need to increase levy in 2011 and 2012 to $79 million
Tax Levy Scenarios
95.0
90.0
85.0
80.0
$ million  75.0
70.0
65.0
60.0
55.0
50.0
2010     2011     2012     2013     2014

maximum levy    base case: sufficient levy    flat rate 2010

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King County Assessor  Preliminary Information
County-wide assessed value decreased 11.5%
Methodology changed from 3-yr average to 1-yr decline
Preliminary assessed value is $340.8 billion
Assessed value on existing property decreased 12.8%
New construction equaled $4.7 billion compared to nearly $8 billion in 2009
Maximum levy similar to 2009 - $85.5 million
Maximum calculation: prior year maximum increased by the lesser of 1%
or inflation plus new construction
Negative inflation causes maximum levy to decrease
Modest new construction off-sets the decrease
Port Commission can set the maximum levy based on 1% increase with a
super majority vote (RCW 84.55)
This would set the maximum at $87.1 million
Preserve $1.6 million of annual levy capacity levy
But would not increase the actual levy amount

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Impact on Home Owners
Amount of Port Tax for homeowners depends on the dollar amount of the Port's
levy
Dollar amount is divided by County-wide assessed value to derive a levy rate
Levy rate is only a tool used to calculate an individual's amount
Examples: Value of existing home decreased 12.8%
At 2009 levy - home owner's payment to Port declines due to new construction

2009    2010 - $75.9 mil 2010 - $67 mil
Base Case levy    levy
House assessed value    $400,000     $350,000     $350,000
Levy calculation rate (1)    19.7 cents     22.3 cents      19.7 cents
Home Owner pays Port     $79        $78        $69

(1) Amount paid per $1000 of assessed value
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Century Agenda: Funding Policy & Strategy Principles
The Port should be primarily funded through the self-sustaining enterprises that
are at the core of its mission. Revenues from the Port's tax levy should be used
for activities that are not fully self-sustaining and cannot be funded in another
manner. These activities should directly support the Port's core mission,
provide for critical infrastructure investments, or provide environmental
mitigation that cannot be funded through its enterprises.
The Port should demonstrate to the public that it has managed its financial
resources as a disciplined steward of the public interest, guided by priorities set
forth in its strategic plan
The Port should foster a culture of partnership and collaboration in pursuing
public and private funding partnerships for investments that reap shared
benefits to all its partners, and that no single entity can achieve independently.
Adopted August 4, 2009

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Draft Levy Policy  For Discussion
Based on Century Agenda Guidelines, staff began drafting a levy policy
Levy Uses:
Public Good
Supports a core business, but does not provide a subsidy to a specific customer
or tenant
Provides a community benefit, and
Generates little or no enterprise funding
E.g. freight mobility/FAST, environmental expenses
Business Support
Business is not financially self-sustaining
Business is deemed important to the community  jobs or other benefits or long-
term strategic benefits
E.g. Fishermen's Terminal, certain industrial properties
Issues for continued discussion:
Which environmental costs to include  expense, capital
How is a business defined  function/facility, aggregated
How is self-sustaining calculated  long-term strategy for Real Estate

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Seaport  Self Sufficient
Seaport capital plan (CIP) presented to Commission on 10/6/2009
5-yr CIP is $342 million
Seaport business can sustain a CIP of $192 million
Funded with operating cash flow and revenue bonds
Requires $150 million of projects deferred until (2015-2019)
Assumes no need for levy support for new projects 2010-2014
Seaport Capital Plan and Funding (2010-2014)
400
350       -
300                  76
Operating cash flow
250
$ million              247                            Revenue bonds
200                  116
Spending deferal
150
BP Prospective CIP
100
150        Committed CIP
50       95
- -
CIP           Funding
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Conclusions and Next Steps
Conclusions
Seaport self sufficient
Income can support its critical new investments
No additional tax levy needed
Real Estate will receive interim levy support
Port will develop long-term financial strategy
Next Steps
Staff will incorporate Commission direction on levy into 2010
Budget and the Draft Plan of Finance
Staff will draft a resolution to set the maximum levy based on 1%
increase for Commission consideration on November 11, 2009

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