11b. Presentation - 2022 Maritime and EDD Operating and CIP Budgets Briefin
Maritime Division Item no. 11b_supp Meeting date: October 12,2021 2022 Preliminary Budget October 12, 2021 2022 Maritime Division Budget Timeline 2022 Business CommissionBudget Budget BriefingOperating First Reading &First Reading & 2nd Read2nd Read ing &ing & Plan G uidance DevelopmentBudget Budget Public HearingPublic Hearing Final Pass Final Pass age ofage of an d CIP BriefingRetreat for 2022 Budgetfor 2019 Budget 2019 Bu 2022 Bu dgetdget Devel opment Briefing (July 10) (Oct 9) (Mid-November) (Late Nove mber) (Ju ne 3) (July 29) (Oct 12) (Nov 9) (Nov 1 6) 2 Century Agenda Drives Division Plans and Budgets CENTURY AGENDA OBJECTIVES Position the Puget Sound Region as a Premier International Logistics Hub Advance this Region as a Leading Tourism Destination and Business Gateway Responsibly Invest in the Economic Growth of the Region and all its Communities Be the Greenest and Most Energy Efficient Port in North America Become a Model for Equity, Diversity and Inclusion Be a Highly Effective Public Agency Century Agenda Drives Division Plans and Budgets CA Goal Department & Initiatives Key Metrics Waterfront Project Management Advance maritime industries through Progress of completion on Maritime Invest responsibly in the economic growth innovation. Innovation Center. of the region and all its communities. Strategic investment/management of % projects on time, within budget. Port facilities. Invest responsibly in the economic growth Cruise Operations & Development Outreach: number of business reached of the region and all its communities. Expand benefits of Cruise. through cruise marketing efforts. Preserve industrial lands. % of Shorepower installed at P66. Maritime Environment & Sustainability Meet increased energy needs. Percentage of renewable energy. Be the greenest and most energy efficient Meet requirements for stormwater. Percentage of agency requirements port in North America. Reduce carbon emissions. met. Percentage of GHG to 2005 baseline. 4 Maritime Priorities 2022 FOCUS ON EQUITABLE RECOVERY Focus in 2022 on Sustainabili ty & Equity 5 Summary SWOT: Maritime OPPORTUNITIES THREATS Cruise opportunity to move forward Equity and Lingering public health concerns and additional Sustainability priorities. cruise operational requirements and protocols. Take advantage of grants to fund capital projects. High variability in construction pricing and supplychain disruption impacting projects. Increase awareness of trends, market shifts, technological advancements in Maritime Operations. Climate change is impacting fisheries. Continue to look for CPI opportunities in times of Increased concerns on impact of Cruise. change. Sensitivity to public opinion can impact Port Maritime innovation initiatives can generate demand efficiency. for space and bring new energy to our properties. Significant delays in permitting related to changes in Opportunity to realize ROI from our investments in Endangered Species Act. sustainability and environmental initiatives. In recovery, but not recovered. 6 Summary SWOT: Maritime STRENGTHS WEAKNESSES Strong delivery of cruise operation at premium rate Expense and capital budgets limited until cruise (moorage/passenger fees). revenue rebounds. Project team has strong organizational Lack of planning resources creates inefficiencies in understanding of Port policies, fundamentals & projects. processes. Aging infrastructure. Competitive advantage of physical assets. Adapting workforce to ongoing change and transition. Diverse, full life cycle in house maintenance Work depends on external contracts, cumbersome services with favorable customer satisfaction. process. Strong and well-integrated Maritime Organizational Capacity constraints on growth. Environmental team. Diverse and desirable properties for maritime/industrial. 7 Maritime Budget: Bottom Line Up Front Budget Drivers Top and Bottom Line Supporting growing Capital Plan Revenue at $59.1M Combined NWSA and POS Capital Plans Up $13.9M from 2021, down $3.8M at Record High from the 2020 (pre-Covid) budget. Projects of Increased Complexity Expenses at $57.9M Maintaining our Assets Up 6% (3% annually) from last Backlog of work orders from COVID-19 "normal" budget in 2020. Sustainability Net Operating Income at $1.3M Supporting Sustainability Framework Incorporating Sustainability more broadly Evaluating a longer term NOI target Planning for a gradual re covery 8 Maritime Revenues Overall planning a $13.9M annual increase, Recreational Marinas & Commercial Operations. $3.8M below 2020 budget. Moorage, Service, Equipment, Storage rate increases: Cruise budgeted at 75% occupancy and risk- Active Commercial Fishing: 3% adjusted sailings. Non-Active Commercial Fishing: 3% Promising year at the grain terminal. Increases Recreational Boating: 5% from Louis Dreyfuss rates taking effect. Commercial Maritime: 5% In $000s MARITIME REVENUE BY BUSINESS GROUP $60,000 $50,000 Cruise Operations $40,000 Grain Terminal $30,000 Maritime Portfolio $20,000 Management $10,000 Recreational Marinas & Commercial Ops $- 2017 Actual 2018 Actual 2019 Actual 2020 Actual 2021 Budget 2022 Budget Revenue returning to pre-pan demic levels 9 Maritime Expenses Compared to 2020 Approved Budget Central services up $2.2M from increased property insurance rates, higher allocation rate, increased Direct Expenses down $.3M, top-level FTE vacancy police deployment, and general inflation. factor, elimination of 2 positions, and reductions in travel. Overall Expenses up $3.5M or 6%. Support Services up $1.8M - Increased FTE's and FTE's Seventeen New (Maintenance 8, Project higher pay rates in Maintenance. Management - 7). Two positions eliminated. *2019 2020 2021 2021 2022 Incr (Decr) Proposed Change from 2020 $ in 000's Actual Budge t Budge t Fore cas t Budge t $ % Expenses Total Direct 18,776 22,637 20,904 20,554 22,087 (284) -1% Total Support Services 15,446 17,162 15,028 14,428 18,971 1,809 11% Total Central Services / Other 14,423 14,598 14,311 14,041 16,804 2,206 15% Total Expense 48,644 54,396 50,243 49,023 57,861 3,465 6% *Note 2019 Actual does not include $2M payment to the alliance and includes $1.9M favorable pension adjustment Expenses reflect long-term trend 10 2022 Maritime Budget Summary Inclusive of Direct Charges & Allocations from Corporate, & Other Divisions *2019 2020 2021 2021 2022 Incr (Decr) Proposed Change from 2020 Net Operating Income: $ in 000's Actual Budge t Budge t Fore cas t Budge t $ % Ship Canal Fishing & Operations 3,929 4,264 4,135 4,123 4,211 (53) -1% Up $6.2M from 2021. Elliott Bay Fishing & Commercial Operations 6,095 5,123 4,509 4,882 4,717 (406) -8% Recreational Boating 12,484 13,361 12,915 12,838 13,731 370 3% Down $7.3M from 2020 Budget. Cruis e 22,410 26,261 8,558 9,000 20,574 (5,687) -22% Gra in 4,266 3,490 4,903 5,779 5,900 2,410 69% Maritime Portfolio Management 10,108 10,428 10,259 10,034 9,986 (443) -4% Other (3) 11 0 0 19 8 79% Net Operating Income Target Total Revenue 59,289 62,938 45,280 46,656 59,137 (3,801) -6% Expenses Historically NOI Covered 50-80% of Maritime (Excl. Maint) 13,789 16,881 15,539 15,439 16,022 (859) -5% Economic Development 4,987 5,756 5,365 5,115 6,065 309 5% Depreciation (Investment Costs). Total Direct 18,776 22,637 20,904 20,554 22,087 (551) -2% Maintenance Expenses 12,186 13,073 11,595 11,095 14,624 1,552 12% In 2020 added annual $2M Envir Services & Planning 2,250 2,681 2,140 1,940 2,542 (139) -5% Seaport Finance & Cost Recovery 835 1,052 977 977 1,096 44 4% Payment for T46. Waterfront Project Management 175 356 316 416 708 352 99% Total Support Services 15,446 17,162 15,028 14,428 18,971 1,809 11% In 2022 Budget: IT 2,685 2,906 2,853 2,838 3,349 444 15% Police Expenses 4,086 3,382 3,118 3,059 3,495 112 3% Covering 7% of Depreciation. External Relations 1,564 1,635 1,347 1,013 1,648 12 1% Other Central Services 5,810 6,429 6,749 6,887 8,027 1,598 25% A full Cruise season would Aviation Division / Other 278 245 243 243 285 40 16% Total Central Services / Other 14,423 14,598 14,311 14,041 16,804 2,206 15% cover ~75% of depreciation. Total Expense 48,644 54,396 50,243 49,023 57,861 3,465 6% Cruise supports division-wide NOI Before Depreciation 10,644 8,541 (4,963) (2,367) 1,276 (7,265) -85% Depreciation 17,627 17,244 16,899 16,899 17,510 265 2% investments. NOI After Depreciation (6,982) (8,703) (21,862) (19,266) (16,234) (7,531) -87% *Note 2019 Actual does not include $2M payment to the alliance and includes $1.9M favorable pension adjustment On the path to recovery 11 Maritime Division Financial Trends In 000s Depreciation Central Services / Other 80,000 Support Services 70,000 Direct Revenue 60,000 50,000 40,000 30,000 20,000 10,000 - 2014 2015 2016 2017 2018 2019 2020 Act 2021 Budget 2021 Forecast 2022 Budget Revenue budgeted just below 2019 level, even with risk-adjusted cruise schedule. After austerity measures in 2020 and 2021, expenses return to trend. Expec t revenue to fully return to trend follo wing pandemic 12 Cruise Sailings and Passengers Budgeted COVID risk reserve in passengers and sailings. Adj usting Cruise passengers and sailings f or COVID risk 13 Cruise Operations In 000s Depreciation 25,000 Central Services / Other Support Services Direct 20,000 Revenue 15,000 10,000 5,000 - 2016 2017 2018 2019 2020 Act 2021 Budget 2022 Budget Includes Terminal 91 and Pier 66 Cruise Terminals. Terminal 91 is managed by a terminal operator and Pier 66 is on a long-term lease with Norwegian Cruise Line Holdings. Even with COVID risk reserve, Cruise is profitable. Return of Cruise profitability 14 Recreational Marinas and Commercial Ops Recreational boating driving marina revenues. In $000's SHIP CANAL FISHIN G & OPERATIONS REVENUE TR END 5,000 4,500 4,000 872 3,500 926 885 861 617 3,000 494 599 650 2,500 - 470 494 554 2,000 1,500 2,970 1,000 2,227 2,349 2,322 2,448 2,474 500 - 2017 Act 2018 Act 2019 Act 2020 Act 2021 Bud 2022 Bud Fishermen's Terminal Fishing Fishermen's Terminal Recreational Salmon Bay Marina Maritime Industrial Center Continued Demand for Commercial and Recreational Facilities 15 Recreational Boating In 000s Depreciation 18,000 Central Services / Other 16,000 Support Services Direct 14,000 12,000 10,000 8,000 6,000 4,000 2,000 - 2016 2017 2018 2019 2020 Act 2021 Budget 2022 Budget Includes Shilshole Bay Marina, Bell Harbor Marina, Harbor Island Marina Planned 5% rate increases in 2022. 16 Elliott Bay Fishing & Commercial Operations In 000s Depreciation Central Services / Other 12,000 Support Services Direct 10,000 8,000 6,000 4,000 2,000 - 2016 2017 2018 2019 2020 Act 2021 Budget 2022 Budget Includes waterside Terminal 91, Terminal 25, Kellogg Island, Terminal 18 North Dolphins, Pier 34 Dolphins, Terminal 46 North Docks, Terminal 28, Pier 2, Pier 69. Incremental revenue down from West Seattle Bridge Closure at Pier 2 and reduced business activities from COVID at P69 and T91. High number of jobs supported by this business line. 17 Ship Canal Fishing & Operations In 000s Depreciation Central Services / Other 12,000 Support Services Direct Revenue 10,000 8,000 6,000 4,000 2,000 - 2016 2017 2018 2019 2020 Act 2021 Budget 2022 Budget Includes waterside of Fishermen's Terminal, Salmon Bay Marina, Maritime Industrial Center Planned rate increases in 2022: Fishing 3%, Recreation and Commercial Moorage 5% . 18 Maritime Portfolio Management In 000s Depreciation Central Services / Other 18,000 Support Services Direct 16,000 Revenue 14,000 12,000 10,000 8,000 6,000 4,000 2,000 - 2016 2017 2018 2019 2020 Act 2021 Budget 2022 Budget Includes uplands of Shilshole Bay Marina, Terminal 91 (Industrial), Fishermen's Terminal, Maritime Industrial Center, Salmon Bay Marina, T-115, T-108, and T-106. Trammell Crow ground lease revenue at T-106 to phase in from 2023 to 2025. Flat Revenue in 2022 with 30%+ grow th expected by 2025 19 Grain Terminal Goal In 000s Depreciation Central Services / Other 7,000 Support Services Direct Revenue 6,000 5,000 4,000 3,000 2,000 1,000 - 2016 2017 2018 2019 2020 Act 2021 Budget 2022 Budget Positioned at Terminal 86, Grain Terminal is on a long-term lease with Louis Dreyfus Company. After Tariff challenges 2019 to mid-2020, significant increase in demand. Continues to strong p erformance 20 Maritime Division Service Group Summary 2022 Preliminary Budget October 12, 2022 Marine Maintenance Total Department Expenses 2019 2020 2021 2022 Incr (Decr) Maintenance Expense by MD/EDD Business ($millions) Before charges and allocations Proposed Change from 2020 $ in 000's Actual Budge t Budge t Budge t $ % Conference & Event Centers Facilities Mgt Payroll 19,705 19,234 19,966 23,063 3,829 20% Central Harbor Properties Outside Services 1,756 3,184 927 1,739 (1,445) -45% Bulk Terminal Other 4,348 3,864 3,557 4,506 641 17% Maritime Industrial Properties Capital / Non Operational (1,420) (1,473) (1,391) (1,343) 130 -9% Elliott Bay Fishing & Commercial Operations Total Expenses 24,390 24,809 23,059 27,964 3,155 13% Ship Canal Fishing & Operations Cruise Services Maintenance expenses up $3.2M or 13% from 2020 Approved Budget Marina Office & Retail Recreational Boating Payroll expenses primary driver: - 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 Assumes increases of 5.2% to 6% Represented and Non-Rep Labor from 2021 wage rates. Maintenance Expense by Division ($millions) Five additional represented FTEs (pipe fitter, plumber, clean team, stormwater). Aviation* Five temporary craft positions. Stormwater Reductions in Outside Services, due to lower expected project work than 2020 but in-line with historical spending. Economic Development Dev NWSA Maritime - 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 COVID driven b acklog and high demand for represen ted labor driving increase 22 Waterfront Project Management Total Department Expenses 2019 2020 2021 2022 Incr (Decr) 5 Year Mid-Large Capital Plan (plus historical) Before charges and allocations Proposed Change from 2020 $ in 000's Actual Budge t Budge t Budge t X $1,000,000 $ % Payroll 2,938 3,820 3,576 6,039 2,218 58% Preliminary Outside Services 13 7 10 25 18 246% 200 Other 80 94 35 147 53 56% Capital / Non Operational (2,091) (2,881) (2,674) (4,437) (1,556) 54% 180 Total Expenses 940 1,041 947 1,774 733 70% 160 Payroll & FTE Growth Drivers: 140 120 Integration of Seaport and Marine Maintenance Project 100 Management. 80 Growth in capital program to consistently over $100M 60 per year. 40 20 PM pipeline backfill due to actual and anticipated 0 retirements. 2019 2020 2021 2022 2023 2024 2025 2026 POS NWSA Heavy workloads in 2020 and 2021 have stretched staff. Does not include small cap, tech, fleet, reserves, etc. Does not account for 'pop ups or unplanned needs R ecord capital plan driving increased ca pacity needs 23 Maritime Environment and Sustainability 2022 Proposed Budget and Comparisons Total Department Expenses 2019 2020 2021 2022 Incr (Decr) Before charges and allocations Proposed Change from 2020 $ in 000's Actual Budge t Budge t Budge t $ % Payroll 2,787 3,429 3,313 4,024 595 17% Outside Services 1,366 1,129 927 1,235 106 9% Other 349 366 46 94 (271) -74% Capital / Non Operational (1,228) (1,504) (1,245) (1,685) (182) 12% Total Expenses 3,275 3,420 3,041 3,668 248 7% Overall increased $248K/7% compared to 2020 original budget Salary & Benefits Other Increased $595K/17% from 2020 approved budget Decreased $(271K)/7% from 2020 approved budget The unfroze two positions for Sustainability Framework and Permitting, Reductions in Travel/Training and other discretionary expenses added Habitat position. Capital/ Non-Operational Outside Services Decreased $(182K)/12% from 2020 approved budget Increased $106K/9% from 2020 approved budget Higher percentage of project work Returned to historical average F ocus on Capital delivery and Century Agenda goals 24 Security Total Department Expenses 2019 2020 2021 2022 Incr (Decr) Before charges and allocations Proposed Change from 2020 Highlights $ in 000's Actual Budge t Budge t Budge t $ % Equipment expenses up due Payroll 224 321 306 325 5 1% Outside Services 580 2,447 1,873 1,926 (520) -21% to new batteries and chargers Other 7 44 16 75 31 71% for security radios, 6 ID badge Total Expenses 811 2,811 2,194 2,327 (484) -17% readers, and cameras. Contracted services in 2022 assumes all business back to normal (2018 and 2019 level). o For special events, used 2018 list as a baseline to calculate the 2022 security expense with rate increases year over year, like Cruise, NW Trend Event, Fleet Week, etc. 25 New and Unfrozen FTEs Category Description Total 8 New: Fleet Asset Specialist, Material Inventory Specialist, Facility Maintenance Manager - North Properties, Plumber , Sprinkler Fitter, Clean Team (2), Stormwater Maintaining Port Assets Team 9.0 Unfreeze 1: Maintenance and Asset Analyst 7 New: Assistant Project Manager, Cost Estimator, Project Controller, System Analyst, Supporting Growing Capital Plan Project Manager III - NWSA, Project Manager I - NWSA, Project Manager I - EDD 13.0 Unfreeze 6: Project Manager III, Project Assistant, Capital Project Scheduler, Senior Planner, Planner, Sr Environmental Management Specialist - Permitting 1 New: Environmental Program Manager - Habitat Sustainability 2.0 Unfreeze 1: Environmental Program Manager - Sustainability Framework Organizational Effectiveness and 1 New: Seasonal half-time Specialists at Shilshole Bay Marina (2) 2.0 Revenue Generation Unfreeze 1: Maintenance and Asset Analyst, Cruise Operations Specialist Total 26.0 Focus on maintaining and improv ing Port assets. 26 Full Time Equivalent Employees (FTEs) 2022 Maritime FTEs Summary Description FTEs Notes 2021 Approved Budget 262.5 Changes in 2021: Mid-Year Approvals 1.0 Environmental Program Mgr - Habitat Eliminated -2.0 Carpenter and Sign Shop Transfer 0.0 2021 Baseline 261.5 2022 Budget Changes: Transfer 0.0 Eliminated -2.0 New FTEs Approved 16.0 Net Change 14.0 2022 Proposed FTEs 275.5 Frozen FTEs Summary Frozen FTEs as of Jan 2021 11.0 Mid-Yr Exemptions from HF 0.0 2022 Apprv'd to Unfreeze -9.0 Frzn FTEs to be eliminated -2.0 TTL remaining Fzn FTEs 0.0 Total Employees = 27 5.5 27 Stormwater Utility Summary 2021 Preliminary Budget October 12, 2022 Stormwater Utility Budget Year 2 of the SWU Strategic Plan: Deploying a mobile field inspection software Creating a dashboard for real-time analysis of infrastructure asset management, Evaluating and implementing innovative green stormwater infrastructure, Creating a scoring matrix incorporating equity, diversity and inclusion to prioritize infrastructure work. 4.6 Percent Rate Increase Adopted Capital Plan for 5 years is total of $4.3 M for system renewal and repairs 29 Stormwater Utility Capital Budget Summary 30 Maritime Appendix 2022 Preliminary Budget October 12, 2022 Cruise Operations Compared to 2021 Budget Revenue up $12M / 140% Assumes 75% occupancy and risk-adjusted schedule at T91 based on CDC Framework for Conditional Sailings (FCS) Direct Expenses up $453K / 8% Port Valet costs budgeted higher due to increased participation assumed in 2022 Includes NWSA payment escalated at 2% per agreement 32 Recreational Boating 2020 2021 2022 Incr (Decr) Proposed Change from 2021 Compared to 2021 Budget $ in 000's Budge t Budge t Budge t $ % Berthage and Moorage & Concession Services 12,331 11,891 12,621 730 6% Utility Sales Revenue 498 477 506 29 6% Revenue up $800K / 6.2% Other Service Revenue 402 439 495 56 13% Other 102 108 92 (16) -14% Shilshole Bay Marina rates will Total Revenue 13,333 12,915 13,714 800 6% Expenses increase 5%, and we are expecting Maritime (excl Maint) 5,334 4,777 5,369 592 12% Economic Development 304 295 354 59 20% the occupancy will increase 1% in Total Direct 5,639 5,072 5,723 651 13% 2022. Maintenance Expenses 2,403 2,823 3,331 509 18% Envir Services & Planning 32 24 26 2 10% Direct Expenses up $651K / 13% Seaport Finance & Cost Recovery 221 227 253 26 12% Seaport Project Management 70 67 182 115 172% Two additional half-time seasonal Total Suport Service 2,726 3,141 3,793 653 21% hires budgeted in 2022. IT 774 768 975 207 27% Police Expenses 745 768 860 92 12% Increase in Utility rates. External Relations 330 329 403 74 23% Other Central Services 1,407 1,680 1,970 289 17% Support Services up $653K / 20.8% Aviation Division/Other 50 51 61 9 18% Total Central Services/Other 3,307 3,597 4,269 672 19% Central Services up $672K / 18.7% Total Expense 11,671 11,809 13,785 1,976 17% Depreciation up $545K / 24.0% NOI Before Depreciation 1,662 1,106 (71) (1,176) -106% Depreciation 2,546 2,268 2,813 545 24% NOI After Depreciation (884) (1,162) (2,883) (1,721) 148% 33 Elliott Bay Fishing & Commercial Operations 2020 2021 2022 Incr (Decr) Proposed Change from 2021 Compared to 2021 Budget $ in 000's Budge t Budge t Budge t $ % Berthage and Moorage & Dockage 2,518 2,328 2,411 83 4% Revenue up $199K / 4.4% Space Rental 1,776 1,523 1,531 8 1% Utility Sales Revenue 511 503 521 18 4% Expecting 5% rate increase for Other 258 135 224 89 66% Total Revenue 5,064 4,489 4,688 199 4% moorage, service, equipment rental Expenses Maritime (excl Maint) 3,101 2,886 3,186 301 10% and storage, 3% tariff rate increase Economic Development 184 316 149 (168) -53% Total Direct 3,284 3,202 3,335 133 4% 2022. Maintenance Expenses 1,803 1,146 1,832 686 60% Envir Services & Planning 17 12 15 3 24% Direct Expenses up $133K / 4.2% Seaport Finance & Cost Recovery 145 133 152 19 14% Seaport Project Management 38 39 87 48 121% Travel & other employee expenses Total Suport Service 2,004 1,331 2,086 755 57% up $31K. IT 378 380 411 31 8% Police Expenses 410 377 431 55 15% Support Services up $755K / 56.8% External Relations 180 164 200 35 21% Other Central Services 776 833 971 139 17% Central Services up $264K / 14.9% Aviation Division/Other 21 20 24 4 20% Total Central Services/Other 1,766 1,774 2,037 264 15% Depreciation Flat Total Expense 7,054 6,306 7,459 1,153 18% NOI Before Depreciation (1,990) (1,817) (2,771) (954) 52% Depreciation 2,988 2,972 2,970 (2) 0% NOI After Depreciation (4,978) (4,790) (5,741) (952) 20% 34 Ship Canal Fishing & Operations 2020 2021 2022 Incr (Decr) Compared to 2021 Budget Proposed Change from 2021 $ in 000's Budge t Budge t Budge t $ % Berthage and Moorage & Dockage 3,708 3,736 3,815 79 2% Revenue up $71K / 1.7% Space Rental 250 192 171 (21) -11% Utility Sales Revenue 83 84 97 13 15% Includes a 3% rate increase for Other 170 123 123 0 0% Total Revenue 4,211 4,135 4,206 71 2% commercial fishing, 5% for others. Expenses Small decrease in Maritime Maritime (excl Maint) 3,368 2,732 2,965 234 9% Economic Development 67 70 72 2 2% Industrial Center moorage. Total Direct 3,435 2,802 3,037 235 8% Maintenance Expenses 1,922 1,633 2,570 937 57% Envir Services & Planning 13 11 12 1 12% Direct Expenses up $235K / 8.4% Seaport Finance & Cost Recovery 89 101 113 12 12% Seaport Project Management 50 33 103 70 209% Payroll expenses up $64K / 5.0%. Total Suport Service 2,074 1,778 2,798 1,020 57% Utilities expenses up $50K / 6.8%. IT 357 419 458 40 9% Police Expenses 292 343 379 36 11% Travel expenses up $29K. External Relations 130 146 180 33 23% Offset by $62K down in Bad Debt. Other Central Services 576 740 878 138 19% Aviation Division/Other 16 18 22 3 18% Total Central Services/Other 1,370 1,667 1,917 251 15% Support Services up $1,020K / 57.3% Total Expense 6,879 6,247 7,753 1,506 24% NOI Before Depreciation (2,668) (2,112) (3,546) (1,435) 68% Central Services up $251K / 15.1% Depreciation 1,975 2,138 2,146 9 0% NOI After Depreciation (4,643) (4,249) (5,693) (1,443) 34% Depreciation Flat 35 Maritime Portfolio Management 2020 2021 2022 Incr (Decr) Compared to 2021 Budget Proposed Change from 2021 Revenue down $273K / -2.7% $ in 000's Budget Budget Budget $ % Maritime Portfolio Management Space Rental Revenue at MIC $233K below Marina Office & Retail 3,933 4,006 3,359 (648) -16% 2021 budget. Maritime Industrial 3,959 4,225 4,191 (34) -1% Utilities 2,536 2,028 2,436 408 20% Decreased Space Rental Revenue at FT $368K Total Revenue 10,428 10,259 9,986 (273) -3% from FVO winding down their operations PM Direct 3,940 3,762 4,201 439 12% EDD PM Direct 351 314 389 75 24% $238K and inability to raise rents on rent EDD Other 394 175 376 201 115% renewals during the pandemic $130K. MD Direct 497 341 440 99 29% Total Direct 5,182 4,592 5,406 815 18% Decreased Space Rental Revenue at T91 Maintenance Expenses 3,334 3,116 3,944 828 27% Industrial $248K due to Lineage surrendering Enviromental & Sustainability 377 254 323 69 27% Seaport Finance & Cost Recovery 244 237 268 30 13% building 28 & 39. This is partially offset by Seaport Project Management 64 63 137 73 116% increased Space Rental Revenue at T106 Total Support Services 4,019 3,670 4,671 1,001 27% Police Expenses 699 689 771 82 12% $176K. Other Corp Expenses 2,275 2,411 2,930 519 22% Utility up $408K mainly electricity. Total Central Services/Other 2,974 3,100 3,701 601 19% Total Expense 12,175 11,363 13,778 2,416 21% Direct Expenses up $815K / 17.7% NOI Before Depreciation (1,746) (1,103) (3,793) (2,689) -244% T91 Other Contracted Services up $280K Depreciation 2,479 2,446 2,481 36 1% NOI After Depreciation (4,225) (3,549) (6,274) (2,725) -77% MIC Tenant Improvements up $102K Support Services up $1,001K / 27.3% Central Services up $601K / 19.4% Depreciation up $36K / 1.5% 36 Grain Terminal 2020 2021 2022 Incr (Decr) Compared to 2021 Budget Proposed Change from 2021 $ in 000's Budge t Budge t Budge t $ % Revenue up $997K / 20% Leasing Revenue 3,490 4,903 5,900 997 20% Total Revenue 3,490 4,903 5,900 997 20% Consistent with strong performance Expenses 2021 YTD (up 32% vs 2021 budget). Maritime (Excl. Maint) 234 191 245 54 28% Economic Development 55 46 46 (0) 0% Total Direct 289 237 291 54 23% Direct Expenses up $54K / 23% Maintenance Expenses 642 748 323 (426) -57% Envir Services & Planning 107 58 76 18 31% Higher insurance costs. Seaport Finance & Cost Recovery 54 48 53 5 11% Waterfront Project Management 11 10 24 13 131% Total Support Services 814 864 475 (389) -45% Support Services down $389K / -45% IT 103 80 92 12 15% Central Services up $107K / 16% Police Expenses 196 162 181 19 12% External Relations 86 69 85 16 23% Depreciation Down $16K / -5% Other Central Services 380 341 400 59 17% Aviation Division / Other 10 8 10 2 22% Total Central Services / Other 774 659 767 107 16% Total Expense 1,877 1,761 1,533 (228) -13% NOI Before Depreciation 1,614 3,143 4,367 1,224 39% Depreciation 525 311 294 (16) -5% NOI After Depreciation 1,088 2,832 4,073 1,241 44% 37 Maritime Environment and Sustainability 2022 Business Plan Highlights Continuing core services Increased service levels for Sustainable Evaluation Framework Policy Directive. Continue habitat work: PORTfolio mitigation bank (T117, T25, Auburn), Quiet Sound program, Smith Cove, Alternative Bankline Stabilization Program, OA Action Plan, Duwamish Valley Community Benefits Commitment, tree canopy management. Implement NW Ports Clean Air Strategy, GHG reductions, shore power, Seattle Waterfront Clean Energy Strategy, new energy software platform. Continue strong permitting and planning support for capital and expense project delivery, including programmatic permitting approaches and regulatory advocacy. Continue dangerous waste compliance, spill response, and derelict vessel abatement. Progress remediation and cleanups on LDW, EWW, T91, T115 and other sites. Innovative Financing Strategy for seeking cost recovery (3rd parties, grants, insurance and settlements, selling mitigation offsets. Grant money ear marked in the Biannual State legislature budget for LDW, EWW, T91 and T115. 38 Maritime Division FTE Rollup 2021 2021 2021 2021 2021 2022 2022 2022 2022 Mid Approved Year Eliminate d/ Internal Revised Internal Eliminated Proposed Proposed FTE % DEPARTMENT Budget Approval Layoff Transfer Total Transfer FTEs New FTEs Budget Change Change By Departments: Waterfront Project Management 23.00 - - - 23.00 8.00 - 7.00 38.00 15.00 65.2% Cruise Operations 4.00 - - - 4.00 - - - 4.00 0.00 0.0% Marine Maintenance 147.00 - (2.00) - 145.00 (8.00) - 8.00 145.00 0.00 0.0% Maritime Division Management 5.00 - - - 5.00 - (1.00) - 4.00 -1.00 -20.0% Maritime Marketing 3.00 - - - 3.00 - - - 3.00 0.00 0.0% Recreational Marinas & Commercial Oper a 41.50 - - - 41.50 - (1.00) 1.00 41.50 0.00 0.0% Elliott Bay Fishing & Commercial Operat 4.00 - - - 4.00 - - - 4.00 0.00 0.0% Fishing & Operations Admin 2.00 - - - 2.00 - - - 2.00 0.00 0.0% Maritime Security 3.00 - - - 3.00 - - - 3.00 0.00 0.0% Recreational Boating 20.50 - - - 20.50 - - 1.00 21.50 1.00 4.9% Ship Canal Fishing & Operations 12.00 - - - 12.00 - (1.00) - 11.00 -1.00 -8.3% Maritime Environment & Sustainability 22.00 1.00 - - 23.00 - - - 23.00 0.00 0.0% Seaport Finance 14.00 - - - 14.00 - - - 14.00 0.00 0.0% Stormwater Utility 3.00 - - - 3.00 - - - 3.00 0.00 0.0% Total Maritime 262.50 1.00 (2.00) - 261.50 - (2.00) 16.00 275.50 14.00 5.4% Note: Frozen FTEs included in 2021 count 39 Economic Development Division 2022 Preliminary Budget October 12 2022 Economic Development Division Budget Timeline 2022 Business CommissionBudget Budget BriefingOperating First Reading &First Reading & 2nd Read2nd Read ing &ing & Plan G uidance DevelopmentBudget Budget Public HearingPublic Hearing Final Pass Final Pass age ofage of an d CIP BriefingRetreat for 2022 Budgetfor 2019 Budget 2019 Bu 2022 Bu dgetdget Devel opment Briefing (July 10) (Oct 9) (Mid-November) (Late Nove mber) (Ju ne 3) (July 29) (Oct 12) (Nov 9) (Nov 1 6) 2 Century Agenda Drives Division Plans and Budgets Position the Puget Sound Region as a Premier International Logistics Hub Advance this Region as a Leading Tourism Destination and Business Gateway Responsibly Invest in the Economic Growth of the Region and all its Communities Be the Greenest and Most Energy Efficient Port in North America Become a Model for Equity, Diversity and Inclusion Be a Highly Effective Public Agency Century Agenda Goal Department & Initiatives Key Metrics Advance this Region as a Leading EDD Tourism Department Tourism Destination and Business Tourism Recovery Initiative Passenger enplanement Gateway Promote Air Travel and Cruise/Stay increases Tourism grant programs EDD Diversity in Contracting Become a Model for Equity, Diversity in Contracting WMBE/DBE % Utilization Diversity and Inclusion WMBE/DBE Outreach # WMBE/DBE firms utilized WBE/DBE Technical Assistance EDD Real Estate Be a Highly Effective Public Maritime/EDD property and lease Property acquired/redeveloped management Agency Exceed energy efficiency goals Real Estate Development Pier 69 HQ Management # small biz receiving recovery Responsibly Invest in the EDD Partnerships & Innovation support through partners Economic Growth of the Region City ED Partnership Grants Duwamish partnership # of emerging maritime and all its Communities Innovation Initiatives companies assisted 4 EDD SWOT Analysis Port Commission committed to Economic, Equitable & RE Development Strengths Grant programs advance Port priorities and partnerships Talented, connected and respected team Diverse attractive properties Policy and regulations impacts efficiency and competitiveness Weaknesses Capital and Staffing constraints Challenging Properties Disruptive Port Work Patterns impacts Facilities Washington can be global leader in maritime innovation Opportunities Expansion of regional small businesses (WMBE) initiatives Hot industrial market supports RE Development opportunities Tourism recovery including Cruise Fragmentation of recovery efforts regional collaboration/scaling challenging Threats Economic uncertainty impacts RE market, labor availability, WMBE availability Pandemic still impacts retail, office and conferences Worsening Homelessness/public safety issues 5 5 EDD Up-Front Summary *2019 2020 2021 2021 2022 Incr (Decr) Top and Bottom Line Proposed Change from 2020 Revenue $18.8M; down $341K or 2% $ in 000's Actual Budge t Budge t Fore cas t Budge t $ % Revenue 8,912 9,124 8,313 7,913 8,470 (654) -7% from 2020 Budget Conf & Event Centers 12,239 9,985 5,035 4,135 10,299 314 3% Expenses $28.3M; down $1.1M or 4% Total Revenue 21,151 19,110 13,348 12,048 18,769 (341) -2% from 2020 budget Expenses Portfolio Management 3,732 4,008 3,401 3,301 3,905 (103) -3% Net Operating Loss $9.5M; $.7M Conf & Event Centers 10,218 8,902 4,920 4,420 9,018 116 1% favorable to 2020 budget P69 Facilities Expenses 215 230 222 177 228 (2) -1% RE Dev & Planning 136 208 154 154 246 39 19% EconDev Expenses Other 930 932 835 695 842 (90) -10% Maintenance Expenses 3,145 3,819 2,537 3,037 4,201 382 10% Budget Drivers: Maritime Expenses (Excl Maint) 253 1,317 1,060 1,060 1,279 (39) -3% Economic Recovery Total EDD & Maritime Expenses 18,630 19,417 13,128 12,843 19,719 302 2% Diversity in Contracting 152 197 142 122 168 (29) -15% Conference & Event Centers at about Tourism 1,337 1,536 2,481 2,181 1,750 214 14% 75% historic volumes EDD Grants & Innovation 785 1,110 1,060 1,060 1,500 390 35% Total EDD Initiatives 2,274 2,843 3,683 3,363 3,418 575 20% Increasing Equity, Diversity, and Environmental & Sustainability 344 44 31 23 59 9 19% Inclusion Police Expenses 61 233 209 205 229 (4) -2% Increasing WMBE utilization in port-wide Other Central Services 5,732 6,708 4,242 4,051 4,749 (1,964) -29% Aviation Division 114 123 120 120 128 5 4% capital plan Total Central Services & Aviation 6,251 7,108 4,603 4,400 5,164 (1,954) -27% Supporting impacted small businesses Total Expense 27,156 29,368 21,413 20,605 28,301 (1,077) -4% Targeted funding to help restart NOI Before Depreciation (6,005) (10,258) (8,065) (8,557) (9,532) 736 7% Regional Tourism Depreciation 3,647 3,389 3,216 3,216 3,741 352 10% Moving forward Maritime Innovation NOI After Depreciation (9,651) (13,647) (11,281) (11,773) (13,273) 385 3% *Note 2019 Actual includes a $708K favorable pension adjustment Driving economic recovery while st abilizing income 6 Economic Development Revenues 2019 2020 2021 2021 2022 Incr (Decr) Overall, up $5.4M or 40.5% Proposed Change from 2020 $ in 000's Actual Budge t Budge t Fore cas t Budge t $ % compared to 2021 budget and Bell Street Garage 1,899 2,150 1,454 1,054 1,463 (686) -32% just under 2020 budget. Conf & Event Centers 12,239 9,985 5,035 4,135 10,299 314 3% Leasing Revenue 7,035 6,973 6,859 6,859 6,998 25 0% Conference & Event Centers Other Revenue (21) 2 0 0 9 7 380% anticipating return to about 75% Total Revenue 21,151 19,110 13,348 12,048 18,769 (341) -2% of pre-COVID revenue level in In $000s 2022. ECONOMIC DEVELOPMENT REVENUE BY BUSINESS GROUP $25,000 Bell Street Garage continues to $20,000 see lower demand but beginning to recoup some concession $15,000 revenue. $10,000 Leasing portfolio experiencing flat $5,000 revenue related tied to COVID restrictions. $- 2017 Actual 2018 Actual 2019 Actual 2020 Actual 2021 Budget 2022 Budget Leasing and Foreign Trade Zone Bell Street Garage Conference and Event Centers 7 Economic Development Expenses *2019 2020 2021 2021 2022 Incr (Decr) Compared to 2020 Budget Proposed Change from 2020 EDD & Maritime Expenses up $302K or 2% $ in 000's Actual Budge t Budge t Fore cas t Budge t $ % Expenses Increased volumes and labor costs at Portfolio Management 3,732 4,008 3,401 3,301 3,905 (103) -3% Conference & Event Centers. Conf & Event Centers 10,218 8,902 4,920 4,420 9,018 116 1% P69 Facilities Expenses 215 230 222 177 228 (2) -1% Increased Maintenance Wage rates. RE Dev & Planning 136 208 154 154 246 39 19% EconDev Expenses Other 930 932 835 695 842 (90) -10% Maintenance Expenses 3,145 3,819 2,537 3,037 4,201 382 10% Economic Development Initiatives up Maritime Expenses (Excl Maint) 253 1,317 1,060 1,060 1,279 (39) -3% $575K or 20% Total EDD & Maritime Expenses 18,630 19,417 13,128 12,843 19,719 302 2% Diversity in Contracting 152 197 142 122 168 (29) -15% EDD Initiatives up $575K due to Tourism 1,337 1,536 2,481 2,181 1,750 214 14% remaining $350K Washington Tourism EDD Grants & Innovation 785 1,110 1,060 1,060 1,500 390 35% Alliance Program along with increased Total EDD Initiatives 2,274 2,843 3,683 3,363 3,418 575 20% investments in economic recovery. Total Central Services & Aviation 6,251 7,108 4,603 4,400 5,164 (1,954) -27% Central services down $2M (27%) Total Expense 27,156 29,368 21,413 20,605 28,301 (1,077) -4% *Note 2019 Actual includes $708K favorable pension adjustment Reduction in Conference & Event volumes driving down allocation rate. FTE Net decrease 1 Investments in Economic R ecovery 8 Economic Development Division Financial Trend In 000s Depreciation 35,000 *Program Expense **Operating Expense 30,000 Revenue 25,000 20,000 15,000 10,000 5,000 - 2014 2015 2016 2017 2018 2019 2020 Act 2021 Budget 2021 Forecast 2022 Budget Conference & Event Center bookings progressively declined in 2020 and 2021. Expecting return to ~75% capacity in 2022. Co nference and Event centers driving re venues and expenses 9 Portfolio Management Financial Trend In 000s Depreciation 35,000 Central Services / Other Support Services Revenue Direct 30,000 Revenue Conference & Event Centers anticipating a 25,000 return to pre-COVID 20,000 revenue level. 15,000 Direct Expenses 10,000 Variable Conference Expenses follow revenue 5,000 trend. - 2016 2017 2018 2019 2020 Act 2021 Budget 2022 Budget Includes non-alliance & upland real-estate at Tsubota, T-91 (General), T-86, P-69, Bell Street Garage, Smith Cove Conference Center, Bell Harbor Conference Center, World Trade Center, Foreign Trade Zone, Pier 2, T-34, and T-102. 10 Diversity in Contracting 1. Increase WMBE contracting utilization results to reduce disparities in Port contracting processes 2. Complete study of potential barriers to WMBE In $000s 2021 Budget 2022 Budget difference utilization and identify/implement improvement *Personnel 1,022 1,045 23 recommendations Outside Service 335 563 228 3. Provide PortGen workshops/trainings to interested WMBE and DBE businesses Promo Expenses 68 98 30 4. Implement communication and education General Expenses 53 83 30 programs to build external and internal support for *Transferred out EDD Grant position WMBE utilization Outside services and promotions on following page 5. Work with Public Sector partners to advance WMBE and DBE utilization Become a Diversity in Contracting WMBE/DBE % ED D Model for WMBE/DBE Outreach K ey CA Goal Utilization Divers ity in Equity, Diversity and Inclusion Contra cting WBE/DBE Technical Me trics # WMBE/DBE firms Assistance utilized 11 Diversity in Contracting Investments Diversity in Contracting Investments 2020 2021 2022 22-'21 Change in $000s Budget Budget Budget $ Business Accelerator (SKCF) - - 150 150 Highline Small Business Development Center ILA (SKCF) - 50 50 - WMBE/DBE Advanced Training (SKCF) 50 50 50 - Airport DBE Workshop - FAA (Mini Conference/AAAE) - - 60 60 Barrier Study - - 80 80 Outreach / Technical Assitance 145 60 105 45 Marketing/ Communication/Design Services/Technical Writing Co 10 10 50 40 Tabor 100 Resource Center - 50 60 10 Government and Community Partnerships 25 45 50 5 Total 230 265 655 390 12 Tourism 1. Implement Tourism Recovery initiative in partnership with WA Tourism Alliance In $000s 2021 Budget 2022 Budget difference 2. Utilize Tourism Grants to advance sustainable Personnel 527 546 19 and equitable tourism events and destinations Outside Service 1,789 938 (851) 3. Organize/Sponsor Statewide Conference on Promo Expenses 68 130 62 Sustainable Tourism 4. Promote Cruise and Stay options in select General Expenses 49 48 (1) domestic and international markets Includes $350K Tourism Recovery Initiative; Europe/Australia 5. Partner with Visit Seattle and South Sound promotions 234k, Sustainable Tourism Conference $75K, and Regional Tourism Authority to leverage Port Tourism grants 200k. tourism investments and grant programs Advance this Tourism Recovery Initiative CA Region as a EDD Key Passenger enplanement Promote Air Travel and Goal Leading Tourism Touris m increases Destination and Cruise/Stay Departm ent M etrics $ value of promotions, etc. Business Gateway Tourism grant programs 13 Real Estate Development & Management Redevelop Port properties (ex. Des Moines Creek W, CEM) Total Real Estate Development & Management Expenses Maintain 94% Occupancy within In $000s 2021 Budget 2022 Budget difference EDD/Maritime RE portfolio RE Development 633 755 122 Continue Terminal 91 Uplands P69 Facilities 1,578 1,733 155 planning/development Portfolio Leasing 13,143 18,279 5,136 Move Maritime Innovation Center forward Evaluate Acquisition/Partnership RE Development and P69, service Seaport and Airport. development opportunities in partnership Portfolio Leasing services entire Seaport. with the Northwest Seaport Alliance Manage, Operate & Maintain Pier 69 Headquarters CA Responsibly Invest in the EDD Real Estate Development Key Green buildings Economic Growth of the Goal Real Estat e & Industrial Lands Region and all its Property Communities Admin Duwamish partnership M etrics redeveloped/acquired 14 Economic Development and Innovation Partnerships 1. Support Regional Economic Recovery via financial partnerships with cities, Chambers, Small Business Development Centers and other partners In $000s 2021 Budget 2022 Budget difference 2. Support Greater Seattle Partners' regional *Personnel 595 788 193 economic recovery plan finalization and Outside Service 1,060 1,500 440 implementation 3. Support Duwamish Community Equity Promo Expenses 31 31 0 Partners' economic development initiatives General Expenses 150 150 0 4. Support maritime innovation initiatives to *Transferred in EDD Grant Position discover, promote and help advance promising Includes funding for City ED Partnership grants $1.2M; maritime ventures and startups Regional Small Business Partnerships $150K, 5. Advance and coordinate Port innovation Greater Seattle Partners $130k, and Maritime Blue $150k initiatives Green buildings CA Responsibly Invest in E DD City ED Partnership Grants the Economic Growth K ey Goal Rea l Estate Duwamish partnership Property of the Region and all Me trics redeveloped or its Communities & A dmin Innovation Initiatives acquired 15 Net Decrease of 1 FTE 2022 Economic Development FTEs Summary Description FTEs Notes 2021 Approved Budget 36.0 Changes in 2021: Mid-Year Approvals 0.0 Eliminated 0.0 Transfer 0.0 2021 Baseline 36.0 2022 Budget Changes: Transfer 0.0 Eliminated -1.0 Business Development Director New FTEs Approved 0.0 Net Change -1.0 2022 Proposed FTEs 35.0 Eliminated Business Development Director 16 EDD Budget: Impacts on Equity, Diversity and Inclusion (EDI) EDD Budget tangibly advances equitable economic development Diversity in Contracting program advances utilization of Women, Minority Business Enterprises and Disadvantaged Business Enterprises South King County fund investments support small business recovery especially for minority, immigrant and refugee owned firms Tourism grants that support ethnic events and destinations Real estate development projects support apprenticeship utilization and priority hire 17 EDD Budget Advances Century Agenda EDI Goals Diversity in Contracting Department budget includes funding for staff/program that supports WMBE and DBE utilization. Real estate development projects help advance Port workforce initiatives that provide equitable access to careers in Port-related industries Working to establish equity lens for other key economic development programs (ex. Tourism and City partnership grants) 18 EDD Budget Request To Advance Equity 2022 Budget includes an additional 240k to support a regional small business assistance initiative designed to help BIPOC businesses Helps fund expanded partnership with Cities, Chambers and Small Business Development Centers to support aggressive outreach to BIPOC businesses and other businesses in underserved communities. 19 Training on Equitable Budgeting EDD team members doing well in terms of applying equity lens to budgets and programs More training for staff/leaders on community engagement and program design could be helpful as new or existing programs are considered in terms of equity Training on best practices in equitable economic development could be helpful (WMBE accelerator models, regional procurement initiatives, etc.) 20 Economic Development Division Commission Briefing - Appendix 2022 Preliminary Budget Portfolio Management 2020 2021 2022 Incr (Decr) Compared to 2021 Budget Proposed Change from 2021 $ in 000's Budget Budget Budget $ % Revenue up $5,412K / 40.5% Portfolio Management Conference & Event Centers anticipating Central Harbor 7,581 6,752 7,243 492 7% a return to pre-COVID T-91 Uplands 1,512 1,526 1,188 (338) -22% Conference & Events Centers 9,985 5,035 10,299 5,264 105% Direct Expenses up $4,944K / 49.1% Foreign Trade Zone 30 35 30 (5) -14% Variable Conference Expenses in follow Total Revenue 19,108 13,348 18,760 5,412 41% PM Outside Services 810 522 782 260 50% revenue trend (food, labor). PM Direct 12,101 7,798 12,141 4,343 56% Increased Capital Reserves EDD Other 1,704 1,450 1,798 348 24% MD Direct 447 307 300 (7) -2% Tenant Improvements & Broker Fees Total Direct 15,062 10,078 15,021 4,944 49% WTCW Suite 130 & 230 Maintenance Expenses 3,817 2,534 4,201 1,667 66% Energy Management Consulting Services Enviromental & Sustainability 278 267 261 (5) -2% Seaport Finance & Cost Recovery 515 420 533 113 27% Support Services up $1,893K / 57.6% Waterfront Project Management 77 66 184 118 179% Central Services up $546K / 11.9% Total Support Services 4,687 3,286 5,179 1,893 58% Police Expenses 233 209 229 20 9% Depreciation up $525K / 16.3% Other Corp Expenses 5,350 4,366 4,893 527 12% Total Central Services/Other 5,583 4,576 5,122 546 12% Total Expense 25,332 17,940 25,322 7,382 41% NOI Before Depreciation (6,224) (4,591) (6,562) (1,970) -43% Depreciation 3,386 3,213 3,738 525 16% NOI After Depreciation (9,610) (7,805) (10,300) (2,495) -32% 22 Net Decrease of 1 FTE 2021 2021 2021 2021 2021 2022 2022 2022 2022 Approved Mid Year Eliminated/ Internal Revised Internal Eliminated Proposed Proposed FTE % DEPARTMENT Budget Approval Layoff Transfer Total Transfer FTEs New FTEs Budget Change Change By Departments: EDD Mgt 4.00 - - - 4.00 1.00 (1.00) - 4.00 0.00 0.0% Facilities Mgt 5.00 - - - 5.00 - - - 5.00 0.00 0.0% Maritime Portfolio Mgmt 3.00 - - - 3.00 - - - 3.00 0.00 0.0% Portfolio Management 11.00 - - - 11.00 - - - 11.00 0.00 0.0% Re Dev Planning 2.00 - - - 2.00 - - - 2.00 0.00 0.0% Diversity in Contracting 8.00 - - - 8.00 (1.00) - - 7.00 -1.00 -12.5% Tourism 3.00 - - - 3.00 - - - 3.00 0.00 0.0% Total EDD 36.00 - - - 36.00 - (1.00) - 35.00 -1.00 -2.8% Eliminated Business Development Director Transferred EDD Grants role from Diversity & Contracting to EDD Management 23 Maritime and Economic Development Draft 2022-26 Capital Improvement Plan (CIP) October 12, 2021 1 Agenda Priorities going forward Economic Recovery Improving Capital Project Delivery Draft 2022-2026 CIP Key projects discussion Project Delivery Recommendation Additional resources 2 CIP Timeline Review Initial 2022-2026 CIP Preliminary Continue to Refine 2022 Tax Levy & Planning and CIP, Funding MD/EDD Budget Draft Plan of Approval of Development MD/EDD Capacity and Briefings Finance Presented 2022 Budget 2022-2026 CIP & Budget to Commission Funding October 12 November May/June August/Sept. October 26 July 29 3 Capital Improvement Plan Priorities Asset Financial Community and Stewardship: Sustainability: Environment: Maintaining the Port's capital Making investments that support Stewarding our environment assets and preserving Seattle's maritime industries and the Port's responsibly, partnering with iconic working waterfront long term funding capacity surrounding communities, and promoting social responsibility 4 Capital Improvement Plan Status & Certainty Degree of Uncertainty Projects > $5M Port historically delivers 80 percent of CIP over a five-year period 5 Draft 2022 to 2026 CIP: $378M $ millions Total Project Cost Project Group/Name Status 2022 2023 2024 2025 2026 5Y Total Current Previous Change Large 14.9 47.9 81.0 67.5 44.6 255.9 528.6 452.7 75.8 Duwamish River People's Park (T117 Restoration) 5 In Construction 2.5 0.3 0.3 0.3 0.3 3.6 19.8 23.6 (3.7) Terminal 91 Berth 6 & 8 Redevelopment 4 In Design 1.3 20.7 39.0 0.8 - 61.8 65.2 40.0 25.2 Terminal 91 Uplands Development Phase I 4 In Design 1.5 2.1 23.1 22.4 - 49.1 50.3 48.5 1.8 Maritime Innovation Center 4 In Design 1.3 6.0 11.1 - - 18.4 19.9 16.0 3.9 Pier 66 Shore Power 4 In Design 7.5 8.8 0.0 - - 16.3 17.0 16.7 0.2 Terminal 46 Replace North Pier Structure 3 Pre-design - 2.5 2.5 30.0 25.0 60.0 60.2 49.5 10.7 Jack Block Park Pier Replacement 3 Pre-design 0.3 0.7 3.5 3.5 - 8.0 8.3 4.0 4.3 Terminal 91 New Cruise Gangways 3 Pre-design 0.5 6.5 0.0 - - 6.9 7.0 6.9 0.1 Terminal 91 Uplands Phase 2 Buildings 2 Bus Plan Prospective - - - 0.6 1.7 2.3 166.0 144.0 22.0 Fishermen's Terminal Gateway Building 2 Bus Plan Prospective - - - - 1.9 1.9 53.1 53.4 (0.3) Fishermen's Terminal Northwest Dock Improvements 2 Bus Plan Prospective - 0.5 1.5 10.0 15.0 27.0 52.0 42.5 9.5 Terminal 91 Uplands Phase 2 Utility Infrastructure 2 Bus Plan Prospective - - - - 0.6 0.6 9.8 7.7 2.1 Mid-Cap 20.8 19.1 13.6 6.8 6.0 66.3 Small 5.1 1.9 1.0 1.1 2.0 11.1 Fleet/Technology 2.7 2.8 2.6 2.3 1.7 12.2 Tenant Improvements 0.8 0.6 0.6 0.6 0.6 3.0 Management Reserve Cash Flow Adjustment (10.3) 12.1 10.3 7.0 11.0 30.0 Total $33.9 $84.3 $109.0 $85.3 $65.9 $378.4 Also includes non-material spending in 2022 on large projects at/near completion (BHICC Modernization, SBM Service Buildings, T91 NW Fender) Moved into capital plan this year - condition assessment to be completed in 2022 Total estimated project cost as of 2021 Capital Plan (Q3 2020) Project Categories: Large >$5M, Mid $1M to $5M, Small <$1M * Fourth Cruise Berth ($137M) has been moved to status 1 (Prospective) and is not funded 6 Large Projects Moving Forward T46 North Pier Structure: $60M T91 Berth 6&8: $65M Preliminary assessment suggests At 30% design replacement with in-kind structure Cost estimate increased due to seismic Multi-use, such as fishing or research vessels issues Design/permitting anticipated to start in Construction anticipated in 2023 2023 To be validated by upcoming risk assessment P66 Shore Power: $17M SEPA process complete T91 Uplands: $225M At approx. 40% design Phase I: $50M 10% design MOU with City Light on cost share in Phase II: $175M negotiation Pre-planning beginning 2025 Utility infrastructure + Building Development 7 Large Projects Moving Forward (2) In Construction Duwamish River People's Park (T117 Restoration) T91 NW Fender - completion in 2021 In Design P66 Shore Power Maritime Innovation Center Pre-design work underway FT NW Dock Improvements Jack Block Park Pier Replacement Gateway Park South/Shoreline Restoration Joint Venture (not included in MD/EDD CIP) West Waterway Deepening ($28M) 8 Project Delivery Capacity 5 Year Mid-Large Capital Plan (plus historical) X $1,000,000 Assessment of delivery improvements Preliminary Additional project managers 200 180 Improving career pathways 160 Revised reporting structure 140 120 Additional resources required to deliver 100 Internal, Port-wide departments: 80 60 Commission, executive, business managers, PMs, 40 CPO, engineering, legal, finance, external relations, 20 etc. 0 2019 2020 2021 2022 2023 2024 2025 2026 Many resources shared with Aviation and NWSA POS NWSA Total WPM Potential operating budget impacts External e.g., permitting, environmental Shift of NWSA projects from South Harbor to North Harbor Port CIP picks up as NWSA starts completion process review 9 Appendix 10 Capital Planning Guidelines Maintain construction to help stimulate recovery across the region. Capital planning should incorporate potential changes to facilities in the wake of COVID-19. New Projects should be: prioritized according to the CIP Priorities and Budget Guiding Principles timing of new construction should consider updated demand forecasts, funding availability and project delivery capacity. Project designs and environmental reviews should generally continue to advance on top priority projects to preserve the option to proceed if grant funding becomes available or the Port's financial outlook improves sooner than expected. Cost estimates should factor in cost escalation and the local bidding environment in preparing and updating project budgets. 11
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