7b Presentation Tax Levy Draft Plan of Finance 2021-225

Item No. 7b_supp
Meeting Date: October 27, 2020
Draft Plan of Finance 2021-2025
and Tax Levy Briefing
October 27, 2020


1

Topics
Financial Policy Recommendations
Draft Plan of Finance
Capital Planning and Funding: Airport
Capital Planning and Funding: Non-Airport
Tax Levy Background and Update
Appendix

2

Financial Management Policy
Recommendations for Changes
to Minimum Operating Fund
Balance Targets

Purpose of Financial Policies
The primary purpose is prudent financial management
Provides for financial sustainability to achieve Port's objectives
Promotes stewardship of public resources
Provides flexibility to withstand adverse circumstances
Manages risk
A secondary purpose is to maintain the Port's access to
capital
Policies support the Port's strong credit ratings
Enables the Port to get competitive rates on debt (lower costs)

4

Minimum Operating Fund Balance Targets
The Port has two primary operating funds that receive and
disburse cash:
General Fund: any Port purpose, primarily for Non-Airport businesses
Airport Development Fund (ADF): restricted for Airport purposes only
Minimum balance targets provide a cushion to protect against
adverse business events causing negative cash flows
Work in tandem with targeted cash flow margins
Obligations that cannot be paid from cash flow can be paid from cash balances
Cash flow margins are the same as revenue bond debt service coverage ratios

5

Existing Minimum Fund Balance Target
Existing Policy
Developed in 2005 to provide a cushion against unanticipated
financial stress
Port-wide minimum of nine months of operating and maintenance
(O&M) expense in the two primary operating funds combined
Achieved by maintaining a minimum balance of:
Six months O&M in the General Fund
Ten months O&M in the ADF
Difference reflects the different cash flow margins (debt service coverage
targets): 1.25x for the Airport, 1.80x for the Non - Airport businesses

6

Lessons From the Pandemic
Existing policy did not anticipate a downturn as severe as the pandemic
Analysis of "what if" hypothetical balances shows they would have significantly
impaired the Port's cash position




(1) Includes $25 million environmental settlement

7

Cash Balance Supports O&M and Debt Service
Operating cash balance
supports debt service as well as
O&M obligations
Debt service has grown more
than O&M, resulting in an
existing target that provides
less cushion
2004: 9 months of O&M provided
6.2 months of combined
obligations
2019: 9 months of O&M provided
only 5.5 months                           (1) Excludes depreciation expense

8

Policy Development
Metrics                         Development Approach
Most common metric is days or months       Review industry best
cash based on O&M                         practices
Easy to understand and to calculate               Research
Provides transparency to public and                   Investor reports
investors; Port reports O&M every quarter
Peer airports and seaports
Investors and rating agencies also            Analyze of Port data
focus on cash coverage
Cash on hand divided by debt service


9

Recommended Changes
Staff recommends the following fund balance target changes:
General Fund
Increase minimum balance target to twelve months O&M effective
immediately, since surplus cash is available
ADF
Increase minimum balance to eighteen months O&M and allow for gradual
build up by 2025

10

Draft Plan of Finance 2021-2025
2021 Preliminary Budget
October 27, 2020

The Draft Plan of Finance
Provided annually to the Commission to inform the budget
process and long-term capital investment decisions
Developed based on a sustainable financial model
Detailed five-year business forecasts
Financial targets that allow the Port to manage downside risk and
maintain strong access to financial markets

12

2020 Approach
Operating forecast has a high degree of uncertainty
Forecast based on an adverse outcome  slow economic and financial
recovery
Risk of over optimism is greater than risk of pessimism
Financial targets provide resiliency
Based on recommended changes
Revenue Bond Coverage     Minimum Fund Balance
Airport              1.25x debt service              18 months (1)
Non-Airport        1.80x debt service              12 months
(1) To be achieved by 2025

13

Airport and Non-Airport Capital Are Funded Separately
Airport                                Non-Airport
Relies on its own operating cash        Includes Northwest Seaport Alliance
flow from airline cost recovery and        (NWSA), Maritime and Economic
non-aeronautical businesses             Development (EDD)
Unique funding sources:               Relies on a combination of:
Airport grants                            Operating cash flow and revenue
Passenger Facility Charge (PFC)             bonds paid from operating cash flow
Customer Facility Charge (CFC)           Tax levy (after payment of other tax
levy uses) and general obligation
bonds paid from the tax levy
Funds can only be used for Airport
purposes

14

Capital Improvement Plan (CIP) and
Funding: Airport
2021 Preliminary Budget
October 27, 2020

Airport CIP 2021-2025 $3.3 billion
Two major projects are
winding down
CIP includes:
Sustainable Airport Master
Plan (SAMP) planning
Proposed new investments
Allocated Central Services

16

Airport Funding 2021-2025
2021-2025            Revenue bonds will provide
Aviation Funding Sources                           ($ million)
Operating Cash (1)                             $      186.5                       90% of Airport funding
Tax levy (2)                                                      1.0 
Grants                                         128.7 
Passenger Facility Charge (PFC)                      10.0                  Other funding includes:
Customer Facility Charge (CFC)                      24.2 
Existing revenue bond proceeds                    184.5                       Passenger Facility and
Future bond proceeds                           2,803.6                           Customer Facility Charges
Total Airport Funding                               $    3,338.6                                Mostly used to pay debt
service
Aviation CIP                                             3,308.6 
Allocated Central Services CIP                               30.0                             Table reflects only amounts
Total Aviation Funded CIP                          $     3,338.6                         used to cash fund projects
(1) Includes airport income available after payment of revenue bond debt service.                                 Tax levy funding for Highline
(2) Highline Schools noise insulation.                                                                                   School noise mitigation
Note: totals may not add due to rounding

17

Capital Improvement Plan (CIP) and
Funding: Non-Airport
2021 Preliminary Budget
October 27, 2020

Non-Airport CIP 2021-2025: $550 million
2021-2025      Maritime and EDD total $312
Non-Airport CIP                                        ($ million)         million after deferral of some
Maritime & Economic Development CIP          $      312.4        major investments
NWSA - 50% Share (North & South Harbor)              177.4 
NWSA - Reserve & Port Projects (1)                          52.4
TOTAL                                 $      542.2     NWSA CIP will be reviewed on
Allocated Central Services CIP                                      7.2         Oct. 28
Total Non-Airport Funded CIP                          $       549.5
(1) Includes North Harbor channel deepening and other 100% Port legacy costs in North Harbor.
Note: totals may not add due to rounding                                                          Port is responsible for certain
legacy projects related to NWSA
facilities, e.g. channel deepening

19

Maritime & EDD CIP Developed Based on Reduced Funding
2021-25 CIP Total
CIP goes through an iterative      $600
process                               $531M
$500                                    ($144M)
June: Initial 2021-25 CIP $531                      $387M
$400                                                                      ($75M)
million                                                           $312M
$300
Preliminary funding analysis in $200
August: $378 million           $100
Updated analysis in September: $0
June Initial                       August Revision                   September Revision
$312 million                         In Construction     Large Projects      Mid-Cap Projects
Small Projects              Fleet/Technology/TIs       Reserve Funding


20

Non-Airport Capital Funding 2021-2025
2021-2025         80% is from tax levy related
Non-Airport Funding Sources                           ($ million)             sources:
Operating Cash (1)                                 $         94.7                Tax levy cash
Grants                                                15.0              Harbor Development (for T5)
Harbor Development Fund                              57.4             G.O. bonds paid by the tax levy
Tax levy (2)                                                           99.3
Future G.O. bond proceeds                              283.0               Operating cash is after the
Total Non-Airport Funding                              $       549.5            payment of revenue bond debt
(1) Includes non-airport income available after payment of revenue bond debt service.                            service
(2) Assumes 3% annual levy increase from 2021-2023.
Note: totals may not add due to rounding
NWSA and Port anticipate
grants for certain investments

21

Change in Funding from Prior Plan
Overall capacity has declined by $130 million
Funding has shifted to levy resources
($ million)                              2020-2024   2021-2025
Operating Cash                            214          95     Pandemic reduced revenue forecast
Grants                                      3          15     NWSA and new Port grants added to TIGER
Revenue Bonds                           115          0     Reduced revenues eliminate bonding capacity
Sub total - Revenue based Funding          332         110
Tax Levy Cash                                55          99     Anticipated environmental spending shifted later
Harbor Development Fund                   96         57     Spend-down due to T5 construction
G.O. Bonds                                197         283     Near maximization of bonding capacity
Sub total - levy based funding               348          440
TOTAL Funding                           679        549

22

Non-Airport Capital Funding Capacity
Operating Revenue  Highly Uncertain    Tax levy Provides Funding Stability
Based on the current adverse economic forecast       Tax Levy and G.O. bonds fund 80% of investments
in this Plan
Capital funding from revenue is limited
$303 million investments included in levy/G.O. bond
No capacity for new revenue bonds                               funding
The Maritime and EDD CIP requires significant            $57 million Harbor Development Fund
deferrals of some investments
$79 million of General Fund investment to be paid
NWSA CIP is fully funded                                from levy/G.O. bonds in the future
By next year the revenue forecast may be             Plan assumes maximization of G.O. bonds
significantly different                                   A drop in G.O. debt service in 2026 provides future
bond capacity for deferred projects

23

Port-wide Revenue Bond Debt Service Coverage Forecast
Represents net income from Airport and Non - Airport businesses divided by all revenue bond debt service
Provides a measure of financial sustainability and is critical to investors and rating agencies






Port-wide funding plan supports the Port's access to credit markets             24

2021 Finance Initiatives
Issue Revenue bonds as needed to fund a portion of the
Airport CIP
Refund bonds for debt service savings
2010 Revenue Bonds are currently candidates
Monitor other potential candidates
Manage variable rate debt credit renewals

25

Tax Levy Background and Update
2021 Preliminary Budget
October 27, 2020

Tax Levy
Washington State ports are permitted to levy a tax on property within the
port's district
The levy dollar amount must be approved annually by the Commission and
is part of the budget process
The Port may approve a levy amount up to the maximum allowable within
statutory limits
The maximum levy for 2021 is $108.2 million
The 2020 levy is $76.4 million
Proposed 2021 levy is $78.7 million (a 3% increase)
The 2021 proposed tax levy is consistent with the plan adopted in 2018 to
retain purchasing power needed to invest in the waterfront and maritime
industries
27

Tax levy Uses
Investments in maritime infrastructure
Environmental sustainability
Regional transportation mobility
Community: workforce development, partnership grants,
Airport communities and tourism




28

Tax Levy Plan
Catch-up on purchasing power: Over
the prior decade, inflation
significantly reduced the
purchasing value of the levy
Last year CPI = 2.2%, construction
inflation = 5.5%
Adopted for 2019: Five-years 2019-
2023, annual 3% inflationary levy
increase to support investments in
the Waterfront Strategy
Reviewed annually
2021 represents the third year of
the plan; proposed levy of $78.7M in
2021
$105 mil. lost purchasing power 2008-2020

29

Taxpayer Impact of Proposed 2021 Tax Levy
2020     2021 preliminary
Tax Levy ($ million)                                76.4              78.7
Estimated millage rate ($/1000)                 0.119            0.122
Median home value ($) (1)                       600,000          600,000
Estimated median home Port tax ($)             71.67           73.24
(1)  2018-2020 per King County Assessor; 2020 assumes no additional growth in assessed value

Preliminary estimate indicates that the median homeowner will see an
annual increased Port levy payment of $1.58 in 2021.

30

Overall Taxpayer Impact - 2020
Only 1.2% of King County taxes go to the
Of the $5.6 billion of                                 Port
property taxes paid in                                             30.4%
King County, 1.2% goes                                  26.8%
to the Port
In 2020, the median                                15.2%
13.9%
homeowner paid $5,961                 12.5%
in total property tax with
$72 going to the Port
1.2%
Port    County  All Other Municipal   Local     State
Schools   Schools

31

2020 Tax Levy Update
($ million)                                                                   Current estimate: $8 million of levy
SOURCES OF TAX LEVY FUNDS                 2020            available for future investments
2020 Beginning Levy Fund Balance               $    15.1
Annual Tax Levy                                      76.4           In addition to the tax levy,
Reimbursements                                  0.9          Commission established:
Investment Income                                   0.2             Harbor Development fund
Total Sources                   $    92.6
(HDF) for T - 5 redevelopment
USES OF TAX LEVY FUNDS                                      Transportation Infrastructure
G.O. bond debt service (Existing)                   $    39.8                  fund (TIF) for regional mobility
Environmental Remediation Expense                    7.9                participation
Community Programs                             13.0
NWSA Membership Interest Contribution - net           5.5             Further details on TIF and HDF
Non-Airport Capital Investments                       18.3                 can be found in Appendix
Total Uses                    $    84.5
Ending balance rolls forward as
Projected Ending 2020 Levy Fund Balance     $    8.1               part of 5- year funding plan

32

Tax Levy Fund Sources and Uses 2021-2025
($ million)
Tax Levy Fund - Assumptions
SOURCES OF TAX LEVY FUNDS     2021-2025
Beginning Balance                  $       8.1            Continuation of planned 3% increase
Tax Levy Collection                          410.1            2021-2023, 0% in 2024 and beyond
Environmental Receipts                     26.8         Future insurance recoveries for
Transfer from TIF                             30.0            environmental remediation
Total Sources          $      475.0         $30 million moved from TIF to levy 
repay post 2025
USES OF TAX LEVY FUNDS
G.O. Bond Debt Service              $      252.4         Additional G.O. bond debt service
Non-Capital Uses                         121.9           payments
Capital Investments                        100.3         G.O. bonds can fund $283 million of
Total Uses           $      474.6            investments in addition to the $99
million paid by tax levy cash
2025 Projected Ending Balance   $        0.4

33

Tax Levy and G.O. Bond Uses  Capital Investments
($ million)                                     2021-2025     Funding from both tax levy cash and
Tax Levy Cash                                $    100.3        G.O. bond proceeds
G.O. Bond Proceeds                               283.0     Investments focus on Maritime
TOTAL                              $   383.3      Industries
Supports investments in
Capital Investments:
T91 and Fishermen's Terminal
Environment and Community                $     28.8
T5 and North Harbor container terminals and
Fishing and Maritime Industries                    140.6            channel deepening
T5 and North Harbor                              130.9          Habitat restoration, shore power, central
waterfront amenities
Unspecified investments to change funding         79.4 
CIP Reserves                                        3.5     Funding forecast requires $79 million
TOTAL CAPITAL TAX LEVY USES            $    383.3       investments moved from General
Fund to tax levy/G.O. bonds beginning
2022

34

2021-2025 Tax Levy Uses  Non Capital Investments
($ million)                                                      2021-2025
G.O. bond debt service (Existing)                               $     173.3         G.O. Bond Debt Service -
G.O. bond debt service (New)                                         79.1           $252M
Total G.O. bond debt service                                $     252.4
Environmental Remediation
Non-Airport Environmental Expense                         $      69.9           and Improvements
Pier 86 - Public Expense                                                1.0
NWSA Membership Interest Contribution - net                       10.5        Membership Interest
Workforce Development                                          6.3          Contribution to the NWSA
EDD Grants/Programs                                           8.1
Environmental Grants (ACE) and Energy and Sustainability             0.6        Port Community Programs
Duwamish Valley Community Equity Program                        1.4            Levy funded portion
Sustainable Aviation Fuels and Air Emissions Program                  5.0             Included in 2021 operating and
South King County Fund                                            8.5               non - op budget
City of SeaTac Safety Enhancements                                  7.0
Local Community Advertising Program (Spotlight)                     3.6
Total Other Non-Capital Uses                              $     121.9
TOTAL NON-CAPITAL TAX LEVY USES                      $     374.3

35

Tax levy Summary
Important resource for achieving the Port's goals
Provides financial stability during a time of unprecedented
uncertainty
Lost revenues require greater use of the levy in order to
support the Port's mission
Modest increases help maintain purchasing power

36

Appendix
2021 Preliminary Budget
October 27, 2020

Contents
Pages
39-40      Policy Research
41-50      Additional Tax Levy Information
51-53      Industrial Development District Levy Information
54        Credit Ratings




38

General Fund Minimum Balance Policy
Research              Recommended General Fund Target
Based on standards for Seaports     Twelve months O&M
Wide range of O&M targets:           Within the range, but above average
Six to twenty months of O&M           Equates to 2.7x cash coverage
Average is ten plus                        Within range, but at the lower end
Wide range of cash coverage:
1.4x  22.4x
Average 8.2x

39

Airport Development Fund Minimum Balance Policy
Research                    Recommended ADF Target
Wide range of balances:               Eighteen months O&M 
Eight to seventy two months of O&M          Within range of peer airports
Average is twenty four months             Equates to 2.5x debt service in
Recent survey of large airports           2024
Average target of fifteen months O&M
Up from nine months in 2015
Narrower range of cash coverage:
1.5x  4.0x
Average 2.7x

40

Port's Taxing Authority
Port taxing limitations: Port is limited by the most restrictive  currently the 1% limit
1% limit
The maximum levy is increased each year by the 1% limit factor
Based on prior year's maximum
Increased by the lessor of 1% or inflation plus an addition for new construction
The maximum levy for 2021 is estimated to be ~$108.2 million
45 cent limit
The amount of the tax levy in any given year is limited to 45 cents per $1000 of
assessed value
(Port 2021 rate is estimated to be 12 cents based on a $78.7 million levy)
For 2021, this limit is ~$290.0 million
Excludes the amount needed to pay G.O. bond debt service of $38.5 million

41

2020 Levy Status
SOURCES AND USES OF TAX LEVY ($ million)
2020       2020      Budget
SOURCES                                      Budget    Est./Act   Variance
2020 Beginning Fund Balance                              $      12.6  $      15.1  $       2.5
Annual Tax Levy                                                   76.4          76.4           -
Environmental Grants & Other Reimbursements                     13.3          0.9        (12.5)
Investment Income                                               -            0.2          0.2
Total Sources                          $     102.3  $       92.6  $      (9.7) 

USES
G.O. bond debt service (Existing)                              $       39.8  $       39.8  $       - 
Environmental Remediation Expense                                8.2          7.9          0.3
Capital Expenditures - Maritime                                       3.3           2.4           0.8
Capital Expenditures - EDD                                          11.3           8.2           3.1
NWSA North Harbor Spending                                   12.1          7.6          4.5
NWSA Membership Interest Contribution                            5.5          5.5          -
Airport Community Ecology (ACE) Fund                              0.5           0.5          (0.0)
Energy and Sustainability Policy Directives                             0.3           0.1           0.1
Workforce Development                                          1.4          2.9          (1.5)
Economic Development Partnership Program                        1.0          1.0          -
Tourism Grants                                                    0.2          0.5          (0.3)
Local Community Advertising Program                              1.1          1.1          -
Workforce Development Pilot Program - Airport                       0.3           0.2           0.1
Duwamish Valley Community Equity Program                       0.3          0.3          -
South King County Fund                                            1.5          1.5          -
City of SeaTac Safety Enhancements                                  1.4           1.4           -
Highline Schools Noise Projects                                       3.5           3.5           -
Total Uses                            $      91.5       $      84.5       $        7.1
Estimated Ending 2020 Tax Levy Fund Balance          $     10.8       $       8.1
Totals may not foot due to rounding
42

2009-2021 Tax Levy & Millage Rate (1)



(1) Millage rate represents the amount per every $1,000 of assessed valuation

43

Actual vs. Maximum Allowable Levy



44

Transportation and Infrastructure Fund (TIF)
TIF ($ million)                                        2021-2025   Post 2025
Beginning Balance                             $     70.2  $       5.3
Transportation Investments (below)                    (34.9)       (22.8)
Transfer (to) from Tax Levy                               (30.0)        17.4 
Ending Balance                                $       5.3         - 

Transportation Investments ($ million)     2021      2022       2023       2024       2025    2021-2025  Post 2025
Seattle Heavy Haul Network                 $      0.1  $       4.0  $       4.0  $       2.0  $       2.0  $       12.1  $       7.8
Fast Corridor I                                          0.2          -              -              -              -                 0.2           -
Fast Corridor II                                          0.3          -               -                0.7            0.1             1.1            -
N Argo Express Access - Pub Ex                      0.2         -             -             -             -                0.2          -
East Marginal Way Phase 2                         0.3         -             -             -             -               0.3          -
Safe and Swift                                       3.5           2.5          -             -             -                6.0           -
Puget Sound Gateway (SR 509)                    -            -            -           15.0             -             15.0             15.0
TOTAL                               $     4.6  $      6.5  $      4.0  $     17.7  $      2.1  $      34.9  $     22.8


45

Harbor Development Fund (HDF)
SOURCES AND USES OF HARBOR DEVELOPMENT FUND             HDF created in 2017 in anticipation of
($ million)                                                                        investment in T5
SOURCES                          2020     2021-2025        $57 million projected balance available
Beginning Balance                        $   109.6     $     57.4              to continue funding
Investment Earnings                             2.0            -
Port's share of remaining (2021-2025) T-
Total Sources               $    111.6     $      57.4                    5 modernization costs is ~$81.5 million
USES                                                            HDF projected to be depleted in 2022.
T-5 Modernization (Port 50% share)        $    (54.2)    $     (57.4)
Additional amounts not funded with HDF
will be paid from tax levy cash or G.O.
Ending HDF Balance           $    57.4    $      -
Bonds



46

Tax Levy Cash Flows for Non-Capital Uses
($ million)                                                            2021          2022          2023          2024          2025          TOTAL
G.O Bond Debt Service                                    $       38.5  $       59.1  $       59.1  $       47.8  $       47.8  $       252.4
NWSA Membership Interest Contribution                           5.5              -              5.0              -              -              10.5
Environmental Remediation Expense                             11.4               6.7             13.8              24.3              13.8               69.9
Pier 86 - Public Expense                                                -                1.0               -                -                -                 1.0
Energy and Sustainability Fund                                       0.4               -               -               -               -                0.4
Airport Community Ecology Fund                                   0.2              -              -              -              -               0.2
Economic Development Programs                                2.5             1.3             1.4             1.4             1.5              8.1
Workforce Development                                       1.3             1.3             1.3             1.3             1.3              6.3
Duwamish Valley Community Equity Program                       0.3              0.3              0.3              0.3              0.3               1.4
Local Community Advertising Program                              0.7              0.7              0.7              0.7              0.8               3.6
South King County Fund                                            1.5              2.3              2.3              2.3              -               8.5
Sustainable Aviation Fuels and Air Emissions Programs                -               1.7               1.7               1.7               -                5.0
City of SeaTac Safety Enhancements                                 1.4               1.4               1.4               1.4               1.4                7.0
Total Non-Capital Tax Levy Uses                             $       63.6  $       75.8  $       86.9  $       81.2  $       66.7  $      374.3 




47

Levy & G.O. Bond Funded Capital Investments
($ million)
Status                       CIP Description                        2021      2022      2023      2024     2025     Total
Maritime and Economic Development Projects                                                                                               Projects identified for
5     T117 Restoration (1)                                       3.3       4.7       0.3       0.3       0.3       8.8
5     P66 BHICC Interior Modernize                               0.1       -         -         -        -         0.1                 levy/G.O. bond funding
5     T91 Northwest Fender                                     7.7       0.2       -         -        -         7.9
4     T91 Uplands Development                                  0.8      17.0      26.0       3.9      -        47.7
4     T91 Berth 6 & 8 Redevelopment                             1.2       1.0      11.7      26.0      -        39.9            Additional projects
4     FT Maritime Innovation Center                              0.5       5.0       4.0       0.8      -        10.3
4     P66 Shore Power (2)                                       1.0      12.6       -         -        -        13.5                 appropriate for tax
4     FT Gateway Building                                      1.0       -         -         -        -         1.0
4     Central Waterfront Bridge Elevator Modernization               1.3       0.4       -         -        -         1.7                 levy/G.O. bonds:
3     Jack Block Park Pier Replacement                            0.4       0.2       1.5       1.7      -         3.8
3     T91 P91W Slope Stabilization                              -          -         -         1.0      -         1.0
3     T46 Replace N Pier Structure                               -          -         1.0       5.2     20.0      26.2                    T46 North Pier
3     Salmon Bay Fire Suppression                                0.2       0.5       -         -        -         0.7
2     FT C-14 Downey Bldg Improv                                0.5       2.5       0.1       -        -         3.1                    T91 NW Fender
2     FT ADA Compliance Project                                 0.9       0.5       0.0       -        -         1.4
2     FT C15 Bldg Misc Improv                                  -          -         -         0.1       1.2       1.3                    Jack Block Park Pier
2     Maritime/Economic Development CIP Reserve                 -          1.5       2.0       -        -         3.5
Subtotal - Levy Funding MD & EDD CIP                         18.7       46.2       46.6       39.0      21.5      171.9              An additional $79
NWSA North Harbor and POS-related (JV) Projects
Terminal 5 Modernization (3)                                      -           14.6         9.4         -          -          24.0                     million of projects will
Other North Harbor Projects (4)                                     4.3         7.0       12.0       16.5      27.0       66.9
Channel Deepening and other POS-related Projects (JV)            3.5        0.8       13.3       19.3        3.0       40.0                    be moved from General
Subtotal - NWSA North Harbor and POS-related (JV) CIP         7.9          22.4       34.8       35.8      30.0      130.9
Aviation - Highline School Insulation                                           -           -           -           -          1.0         1.0                     Fund to levy/G.O.
Total Levy & G.O. Bond Funding of Non-Airport CIP (5)                        26.6       68.6       81.4       74.8      52.5      303.8                    bonds beginning in
(1) Net of existing environmental funds                                                                                                                           2022
(2) Net of capital grant funding
(3) Net of funding from Harbor Development Fund
(4) Net of NWSA capital grants (Port share)
(5) Additional tax levy/G.O. bond funding capacity identified in the 2021-2025 Draft Plan of Finance; currently general funded but may need levy funding.

48

Non-Airport Operating Cash Flow Available for Capital

($ million)                                                    2021          2022          2023          2024          2025          TOTAL
Cash Flow from NWSA                           $       42.9  $       45.7  $       49.4  $       49.1  $       48.2  $      235.3
Maritime net income                                      (5.1)           3.3            2.3            2.5            8.1          11.2 
EDD net income                                         (8.1)          (6.4)          (6.7)          (6.5)          (5.4)         (33.1)
Revenue bond debt service and adjustments (1)               (36.4)         (38.5)         (28.5)         (28.2)         (28.1)        (159.6)
TOTAL                                   $      (6.5) $       4.2  $      16.6  $      16.9  $      22.8  $      53.9
(1) Adjustments include certain non-operating revenues and expenses and reimbursements for tax levy & other funded EDD and Corporate expenses






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Commission Established Levy Use Criteria for
Capital Investments
Uses: Established in 2015, updated in 2018
Operating Cash                  Tax Levy
Asset Renewal          Business income sufficient to        Economic benefit
support investments
Strategic Initiatives               Short payback/                No or long payback
Self funding
Location                       South Harbor                 North Harbor

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IDD Levy - Background
Port can levy property tax within an Industrial Development District (IDD)
In addition to regular property tax
A port can form multiple districts
Coextensive with port district, or
Smaller area within the Port district
The Port already has two Industrial Development Districts
Port can implement the levy twice - Port of Seattle implemented first round in 1963
Purpose is to provide for harbor improvements or industrial development of marginal lands
Broadly defined
Includes areas of poor planning or declining tax receipts

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IDD Levy - Implementation
Port may implement a second round based on a new formula
Maximum of $1.8 billion over a period of up to 20 years
Average amount = $89 million (for 20 years)
Maximum annual amount = $287 million (45 cents for 6 years)
Port can establish a smaller IDD or collect a lesser amount, but cannot bank the
unused capacity
Process to implement
Publish notice by April 1 to begin collecting the next year
If within 90 days a petition of 8% of voters (voting in the most recent gubernatorial
election) opposes, the Port must hold a special election to approve the levy

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IDD Levy Information: "Marginal lands" are defined to include property
subject to the following (RCW 53.25.030) conditions:
1.  An economic dislocation, deterioration, or disuse resulting from faulty planning.
2.  The subdividing and sale of lots of irregular form and shape and inadequate size for proper usefulness and development.
3.  The laying out of lots in disregard of the contours and other physical characteristics of the ground and surrounding
conditions.
4.  The existence of inadequate streets, open spaces and utilities.
5.  The existence of lots or other areas which are subject to being submerged by water.
6.  By a prevalence of depreciated values, impaired investments, and social and economic maladjustment to such an extent
that the capacity to pay taxes is reduced and tax receipts are inadequate for the cost of public services rendered.
7.  In some parts of marginal lands, a growing or total lack of proper utilization of areas, resulting in a stagnant and
unproductive condition of land potentially useful and valuable for contributing to the public health, safety and welfare.
8.  In other parts of marginal lands, a loss of population and reduction of proper utilization of the area, resulting in its
further deterioration and added costs to the taxpayer for the creation of new public facilities and services elsewhere.
9.  Property of an assessed valuation of insufficient amount to permit the establishment of a local improvement district for
the construction and installation of streets, walks, sewers, water and other utilities.
10. Lands within an industrial area which are not devoted to industrial use but which are necessary to industrial
development within the industrial area.

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Current Credit Ratings
Noted Credit Strengths:
Diverse asset and revenue base
Moody's    S&P      Fitch      Airport's market position and
General Obligation Bonds                      Aaa       AAA       AA-         enplanement levels
First Lien Revenue Bonds                       Aa2       AA-       AA
Intermediate Lien Revenue Bonds               A1        A+       AA-       Strong balance-sheet liquidity levels
Subordinate Lien Revenue Bonds               A2        A+       AA-       Conservative debt structure and healthy
Passenger Facility Charge Revenue Bonds        A1        A+        A+          debt service coverage ratios
Fuel Hydrant Special Facility Bonds              A1         A-                   Strong governance and management
Long-range strategic and sustainability
plans
Vibrant and resilient area economy

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