The Study Session meeting scheduled for 2023-10-10 at Pier 69

Transcript

The Study Session meeting scheduled for 2023-10-10 at Pier 69

ALL RIGHT
THIS IS COMMISSION PRESIDENT
EXCUSE ME
THERE WE GO
THIS IS COMMISSION PRESIDENT SAM, CHO
I HAVEN'T BEEN DOING THAT FOR THE PAST COUPLE OF WEEKS
CONVENING THE SPECIAL MEETING OF OCTOBER 10, 2023RD 2023
WOW
I'M TIRED
THE TIME IS 9:07 A
M
WE'RE MEETING IN PERSON TODAY AT THE PORT OF SEATTLE HEADQUARTERS BUILDING COMMISSION CHAMBERS AND VIRTUALLY VIA MICROSOFT TEAMS CALL IN LINE
PRESENT WITH ME TODAY ARE COMMISSIONERS CALKINS, FELLEMAN AND MOHAMMED
COMMISSIONER HASEGAWA IS EXPECTED TO JOIN US SHORTLY
WE ARE MEETING TODAY TO CONDUCT A STUDY SESSION REGARDING THE 2024 AVIATION DIVISION OPERATING AND CAPITAL BUDGETS BEFORE WE GO INTO THE REPRESENTATION
EXECUTIVE DIRECTOR METRUCK, DO YOU HAVE ANY OPENING COMMENTS YOU WOULD LIKE TO MAKE AT THIS TIME? YES
GOOD MORNING, COMMISSIONERS
COMMISSIONERS, THIS STUDY SESSION MARKS THE THIRD TIME SO FAR THIS YEAR THAT WE FOCUSED ON BUDGET ISSUES OUTSIDE THE REGULAR PUBLIC COMMISSION MEETING SCHEDULE
SO I WANT TO THANK YOU BY THANK YOU FOR TAKING SO MUCH TIME OUT OF YOUR SCHEDULES TO WORK TOWARD THE COMPLETION OF FINAL PASSAGE OF THE PORT'S 2024 BUDGET
AT YOUR LAST COMMISSION MEETING, YOU HEARD A BRIEFING ON THE 2024 CENTRAL SERVICES PRELIMINARY BUDGET, AS WELL AS A PORTWIDE ROLL UP BRIEFING
PORTWIDE BUDGET ROLL UP BRIEFING THIS MORNING WE'LL FOCUS ON THE AVIATION BUDGET, AND THEN YOU'LL HEAR A PRESENTATION ON THE DRAFT MARITIME AND ECONOMIC DEVELOPMENT DIVISION BUDGETS DURING YOUR REGULAR MEETING THIS AFTERNOON
I THINK YOU'RE MAKING GOOD PROGRESS ON YOUR CPA AND YOUR FINANCIAL MANAGEMENT QUALIFICATIONS GOING FORWARD
THAT'S A LOT OF TIME TODAY, AND I REALLY APPRECIATE THAT FOCUSED ON THIS
OF COURSE, THE REASON THAT WE TAKE EXTRA TIME TO FOCUS ON THE AVIATION BUDGET IS ITS SIZE AND COMPLEXITY
THE AIRPORT IS APPROXIMATELY THREE QUARTERS OF THE PORT'S REVENUES, AND ALMOST ALL OF ITS FUNDING AND ACTIVITIES ARE GOVERNED BY STRICT REGULATION AND OVERSIGHT
FOR EXAMPLE, UNDER FAA RULES, DOLLARS GENERATED AT THE AIRPORT MUST STAY AT THE AIRPORT OTHER THAN COSTS PAID TO CENTRAL SERVICES FOR SUPPORT SERVICES
SO THAT THE AIRPORT'S REVENUES AND EXPENDITURES ARE TRULY A STANDALONE PART OF OUR OVERALL BUDGET
LET ME START WITH THE GOOD NEWS
WE PROJECT THAT AIR TRAVEL WILL HAVE FULLY RECOVERED NEXT YEAR AND THAT BOTH PASSENGER NUMBERS AND REVENUES WILL EXCEED 2019 LEVELS
NOW FOR THE MORE CHALLENGING NEWS
WE PROJECT THAT THE AIR TRAVELER WILL HAVE FULLY RECOVERED NEXT YEAR AND THAT THE PASSENGER NUMBERS WILL EXCEED 2019 LEVELS
SO THIS IS OBVIOUSLY THE BEST TIMES AND HARDER TIMES
I'M OBVIOUSLY SPEAKING TONGUE IN CHEEK, BUT AS YOU KNOW WELL, THEN, OUR AIRPORT IS STRETCHED TO ACCOMMODATE THIS LEVEL OF DEMAND WITHIN OUR CONSTRAINED FACILITIES, ESPECIALLY BECAUSE OF THE SIGNIFICANT CONSTRUCTION TAKING PLACE OVER THE NEXT FEW YEARS TO CREATE THE KIND OF FACILITIES AND CUSTOMER EXPERIENCE THAT WE WANT TO OFFER OUR TRAVELERS
SO WE HAVE TO BUILD AS WE'RE OPERATING
THE AIRPORT'S CAPITAL PROGRAM IS GOING TO BE A MAJOR THEME FOR TODAY'S PRESENTATION, INCLUDING ITS KEY OBJECTIVES AND AN OVERALL OVERVIEW OF THE MAJOR PROJECTS AND PROGRAMS DELIVERING THE CAPITAL PROGRAM WILL BE AN INCREDIBLE CHALLENGE, BUT ALSO AN AMAZING OPPORTUNITY TO UPGRADE SEA INTO A WORLD CLASS FACILITY WE ALL WANT IT TO BE
SECOND, YOU'LL HEAR A LOT OF DISCUSSION ABOUT THE WAYS IN WHICH THE PROPOSED AVIATION BUDGET IS FOCUSED ON ACHIEVING MANY OTHER GOALS BEYOND CUSTOMER EXPERIENCE, INCLUDING ENVIRONMENTAL SUSTAINABILITY, EQUITY, AND JUST AS IMPORTANTLY, TAKING CARE OF OUR WORKFORCE AND ENSURING STRONG RECRUITMENT AND RETENTION OF OUR STAFF
I BELIEVE YOU'LL FIND THAT TODAY'S PRESENTATION IS FULLY ALIGNED WITH OUR MISSION, VALUES AND GOALS
BEFORE I TURN THINGS OVER TO LANCE AND AYE
TEAM TO WALK US THROUGH TODAY'S PRESENTATION, MANAGING DIRECTOR LANCE LITTLE FROM AVIATION
I WANT TO GIVE A SPECIAL ACKNOWLEDGEMENT TO HEIDI PUPCHOC WHO IS GOING THROUGH THIS PROCESS FOR THE VERY FIRST TIME
AND SHE'S DONE A FANTASTIC JOB
AND KUDOS TO HER AND HER TEAM IN AVIATION FINANCE FOR THEIR EXCEPTIONAL WORK SO FAR
SO WITH THAT, I LOOK FORWARD TO TODAY'S CONVERSATION
AND WITH THAT, I'LL NOW TURN IT OVER TO MANAGING DIRECTOR OF AVIATION LANCE LITTLE, WHO WILL KICK US OFF
LANCE, BEFORE WE GET STARTED REAL QUICK, I THINK COMMISSIONER FELLEMAN HAD A QUICK QUESTION
I GREATLY APPRECIATE LANCE'S REMOTE, I TAKE IT
YEAH
THANK YOU
I THOUGHT STEVE WAS GOING TO GO THROUGH A LITTLE BIT OF JUST MORE OF THE GENERIC STRATEGIC BUDGET PROCESS WHICH ARE THE NEXT THREE PAGES BEFORE LANCE GOT INTO IT
BUT IN GOING THROUGH THE DISCUSSION THAT WE'RE GOING TO HAVE TODAY, I'M JUST INTERESTED TO SEE HOW IF YOU LOOK AT THE SECOND PAGE INTO THIS DISCUSSION, WE HAVE JUST THE BROAD CENTURY AGENDA DRIVES, DIVISION PLANS AND BUDGETS, WHICH IS STEVE, WHAT I THOUGHT YOU WERE GOING TO GO THROUGH
BUT THE THING THAT I DON'T SEE HERE, WHERE WE HAVE JUST, IF YOU LOOK AT THE THIRD BUCKET DOWN, EXECUTIVE DIRECTOR PRIORITIES, WE HAVE THE ANNUAL PRIORITIES IDENTIFIED BY THE ELT AND APPROVED BY THE ED
AT NO PLACE DO I SEE COMMISSIONER PRIORITIES INTEGRATED INTO THE FIRST THREE GOALS
I MEAN, IT JUST STRIKES ME THAT THE PROCESS THAT WE NORMALLY GO THROUGH IS COMMISSIONERS
WE HAVE A PROCESS BY WHICH COMMISSION INPUT IS DONE, BUT IT'S NOT EVEN RECOGNIZED, AS I CAN SEE IT, IN THE DEVELOPMENT OF THE STRATEGIC AGENDA FOR THE PLAN
AND I JUST THINK THAT IT'S IMPORTANT BECAUSE WHEN WE COME UP TO THEN DISCUSSIONS OF WHAT THE KPIS ARE, THESE SHOULD REFLECT AN INTEGRATION OF COMMISSION PRIORITIES
AND I DON'T REALLY UNDERSTAND AFTER GOING THROUGH THIS WHAT A BUDGET AMENDMENT PROCESS MIGHT LOOK LIKE
AND THEN WHEN WE TALK ABOUT AND I'LL GET INTO THAT ONCE LANCE GETS GOING
BUT THERE ARE QUESTIONS THAT I HAVE ABOUT THE SETTING OF THE KPIS, BUT ALSO THE TOOLS THAT WE USE TO MEASURE
AND THE QUESTION I ALWAYS HAVE IS THE QUESTION ABOUT WHY IS SKYTRACKS AND JD
POWERS SO DIFFERENT? BUT THAT WAS SOMETHING MUCH MORE DETAILED TO GET INTO, BUT PERHAPS YOU CAN JUST SHOW ME HOW YOU SEE
AND I THINK THIS HAS BEEN A FLUID PROCESS
THAT'S WHY I'M ASKING FOR IT TO BE BETTER DEFINED
WELL, I THINK WE SET UP THE PROCESS AND RATHER THAN GOING THROUGH WE'VE DISCUSSED THIS BEFORE WHEN WE AMENDED THE CENTURY AGENDA, BEFORE WE SET UP THIS PROCESS, WHERE THAT'S WHERE THE HIGH LEVEL GUIDANCE COMES IN AND THEN WE BREAK IT DOWN INTO THE BUSINESS PLANNING THAT ACCOMPLISHES TOWARDS THOSE SENSORY AGENDA GOALS
AND SPECIFICALLY THOSE ARE IN ALIGNMENT WITH THOSE AND THAT'S WHY THE STAFF DEVELOPS THOSE
SO I DON'T THINK THOSE ARE DIFFERENT
THE COMMISSION PRIORITIES COME IN AS THE DIRECTION IS OF THE NORTH STAR THAT WE'RE DRIVING TOWARDS
IN ORDER TO DO THAT, I DON'T KNOW IF THERE'S SOMETIMES WELL, ANNUALLY WE GET SOME SPECIFIC THINGS, BUDGET PRIORITIES FOR COMMISSIONERS THAT COMMISSIONERS ARE INTERESTED IN
BUT IN NORMAL WE'RE IN TOTAL ALIGNMENT
I'M DRIVING TOWARDS THOSE LARGER GOALS
AND SO THAT'S HOW WE ENVISION THE PROCESSES SET UP TO DO THAT
NOT ON THE ANNUAL GOALS, NOT FOR THE COMMISSION TO HAVE ANNUAL GOALS FOR US TO DRIVE TOWARDS THAT
THEY WOULD BE MORE ON THE STRATEGIC GOALS THAT WE'RE TRYING TO ACHIEVE WITHIN THAT
WELL, AS IS ALWAYS STATED THAT THE BUDGET IS THE MORAL DOCUMENT AND THAT WHILE THE CENTURY AGENDA GOALS ARE SO BROAD, THEY'RE KIND OF HARD TO AND THEIR GOALS ARE SET
BUT THE AGENDA OBJECTIVES WOULD BE STILL WITHIN THE FIVE YEAR PRIORITIES, WHERE I THINK COMMISSIONER INPUT ON THE FIVE YEAR PRIORITIES MAKES SENSE, BUT IN ANY GIVEN YEAR AND I THINK LANCE DOES A GOOD JOB IN CALLING OUT SOME OF THE COMMISSION PRIORITIES THAT ARE IN THERE SPECIFICALLY
BUT I JUST THINK THAT IF WE'RE TALKING ABOUT HOW A PORT WIDE BUDGET IS GENERATED, I WOULD LIKE TO SEE DESCRIBED HERE THAT COMMISSION INPUT IS DIRECTLY INTEGRATED
AND I REALLY DO BELIEVE THAT THIS IS WHY WE'RE GOING THROUGH THIS PROCESS
WE HAVE EXHAUSTIVE BUDGET DISCUSSIONS ON EACH LIAISON AND I THINK WHETHER IT BE THE TUNNEY REPORT OR WHATEVER HUGO FOUR REFERRED TO AS, I JUST THINK IT'S MISSING
SO THANK YOU FOR YOUR COMMENTS
LET IT BE KNOWN HERE FORTH THAT IT'S CALLED THE TINY REPORT
LANCE, TAKE IT AWAY
YEAH
GOOD MORNING, STEVE
AND GOOD MORNING, COMMISSIONER
COMMISSIONER FELLEMAN, I HOPE WE'LL ANSWER YOUR QUESTION IN THE NEXT FEW SLIDES COMING UP AND HOPEFULLY YOU'LL FEEL A LITTLE BIT MORE COMFORTABLE
THE PROCESS, HOWEVER, HEIDI IS GOING TO KICK US OFF AND THEN HEIDI IS GOING TO HAND OVER TO ME
AND I MUST ALSO JUST REITERATE WHAT STEVE SAID
THIS IS THE FIRST TIME HEIDI'S GOING THROUGH THIS PROCESS AND I JUST THINK SHE'S DONE A TREMENDOUS JOB
SO HEIDI, IF YOU COULD KICK US OFF AND THEN YOU CAN HAND OVER TO ME AND I'LL TAKE IT THROUGH THE FEW SLIDES AND THEN HAND BACK OVER TO YOU
YES, SOUNDS GOOD
GOOD MORNING
HEIDI PAPACHOK, DIRECTOR OF AVIATION FINANCE AND BUDGET
TODAY WE WILL PROVIDE YOU WITH OUR 2023 PRELIMINARY BUDGET
AN OUTLINE
TODAY, MANAGING DIRECTOR LITTLE WILL DESCRIBE OUR STRATEGY TO BUDGET, ALSO STRATEGIC PRIORITIES
AND THEN I WILL WALK YOU THROUGH OUR BUDGET OVERVIEW AS WELL AS OUR OPERATING BUDGET AND ALSO LOOKING AT OUR FIVE YEAR CAPITAL FORECAST, OUR FIVE YEAR FINANCIAL FORECAST, AS WELL AS AN OVERVIEW OF OUR EQUITY SPENDING FOR 2024
AND PLEASE NOTE, WE DO HAVE A NUMBER OF SLIDES IN THE APPENDIX FOR YOUR REFERENCE
AND WITH THAT, I'LL GO AHEAD AND TURN THAT OVER TO MANAGING DIRECTOR LITTLE TO WALK US THROUGH THE STRATEGY TO THANK YOU, HEIDI, I REALLY, REALLY APPRECIATE
SO COMMISSIONERS, THE PROCESS THAT WE GO THROUGH AND I GUESS MAYBE TO ADDRESS SOME OF THE THINGS THAT COMMISSIONER FELLEMAN OR SOME OF THE QUESTIONS COMMISSIONER FELLEMAN JUST ASKED
IT'S A TOP DOWN, BOTTOM UP APPROACH THAT WE HAVE
AS YOU CAN SEE FROM THIS DIAGRAM, THE CENTURY AGENDA AND THE PRIORITIES OF THE COMMISSIONERS ARE THE KEY MAIN DRIVER FOR OUR BUDGET AND OF COURSE, THE EXECUTIVE DIRECTOR'S PRIORITIES AS OUTLINED HERE
EVERYTHING THAT WE DO AS PART OF THE BUDGET, THE EXPECTATION IS THAT IT'S IN ALIGNMENT WITH THE GOALS, PRIORITIES OF THE ORGANIZATION
AND THOSE GOALS AND PRIORITIES ARE ESTABLISHED BY THE COMMISSIONER AND THE EXECUTIVE DIRECTOR
SO THIS MAY NOT HAVE EVERY SINGLE DETAIL OF THE PROCESS AND I'M HOPING WE'LL GET INTO SOME MORE OF IT ON THE NEXT SLIDE
BUT IT IS DRIVEN BY THE PRIORITIES OF THE COMMISSIONERS AND THE EXECUTIVE DIRECTOR
AND WE IN THE VARIOUS DIFFERENT DIVISIONS ESTABLISH OUR LONG TERM GOALS TO SUPPORT THOSE OBJECTIVES
AND OF COURSE, THE BUDGET IS THE RESOURCE OR THE RESOURCES THAT WE NEED IN ORDER TO EXECUTE ON THAT
AND I'M GOING TO SPEAK A WHOLE LOT MORE ON THAT ON THE NEXT SLIDE
SO COMMISSIONER FELLEMAN AND OTHER COMMISSIONERS, I'M HOPING WE'LL ANSWER THAT QUESTION BY THE TIME WE GET THROUGH THE REST OF THIS PRESENTATION
NEXT SLIDE, PLEASE
SO, SINCE COMMISSIONER FELLEMAN RAISED IT, I WILL MAYBE SPEND A LITTLE MORE TIME GOING THROUGH THIS
AS YOU CAN SEE ON THIS DIAGRAM, WE SPECIFICALLY HAVE THE CENTURY AGENDA AT THE TOP BECAUSE THAT'S WHERE THE COMMISSION PRIORITIES ARE HELD AND EVERYTHING THAT WE DO ALL THE WAY DOWN TO OUR PERFORMANCE PLANS AND THE BUDGET IS IN ALIGNMENT WITH THAT
THIS IS A PROCESS THAT HAD STARTED MANY, MANY YEARS AGO
WE HAVE TWEAKED IT AND REFINED IT OVER THE YEARS
IT'S GREAT TO SEE THAT THE ORGANIZATION HAS ADOPTED THIS
BUT LET ME JUST WALK YOU THROUGH REAL QUICK
AGAIN, WE START WITH THE CENTRAL AGENDA
WE LOOK AT WHAT IS THE LONG TERM GOALS, VISION, OBJECTIVE, MISSION THAT'S ESTABLISHED THERE
THEN WE ESTABLISH THE LONG TERM GOALS FOR THE AIRPORT THAT'S IN ALIGNMENT WITH THE CENTRAL AGENDA
AND THOSE ARE TYPICAL IN A FIVE TO TEN YEAR BASIS
AND WE HAVE A VISION IN SESSION THAT WE GO THROUGH AT THE AIRPORT AND WE LOOK AT WHAT DO WE WANT THE AIRPORT TO LOOK, FEEL LIKE AND OPERATE OVER THE NEXT FIVE TO TEN YEARS
NOW, ONCE WE HAVE ESTABLISHED THAT, WE DO A SWOT ANALYSIS AND THE REASON WE DO THE SWOT ANALYSIS IS THAT WE KNOW THAT WE'RE NOT OPERATING IN A VACUUM
WE'RE TRYING TO GET TO THESE GOALS, WE'RE TRYING TO GET TO THIS MISSION
BUT WE HAVE WEAKNESSES WITHIN THE ORGANIZATION THAT WE HAVE TO OVERCOME
WE HAVE STRENGTH THAT WE HAVE TO LEVERAGE
THERE ARE OPPORTUNITIES OUTSIDE THE ORGANIZATION THAT WE HAVE TO TAKE ADVANTAGE OF AND THERE ARE THREATS OUTSIDE THE ORGANIZATION THAT WE HAVE TO MITIGATE
AND SO WE DO WHAT'S CALLED A SWOT ANALYSIS, A DETAILED SWOT ANALYSIS, AND THEN WE SUMMARIZE THAT IN THE FORM OF A SWOT PROFILE AND I'LL SPEAK ABOUT THAT A LITTLE BIT MORE IN THE NEXT SLIDE
NOW, ONCE WE HAVE DONE THAT, WE DO WHAT'S CALLED A GAP ANALYSIS
WE LOOK AT WHERE WE'RE TRYING TO GET TO VERSUS WHERE WE ARE RIGHT NOW
AS AN EXAMPLE, WE'RE TRYING TO GET TO MINIMUM CONNECT TIME OF 75 MINUTES, RIGHT? WE'RE WELL OVER 90 MINUTES
WE WERE WELL OVER 90 MINUTES BEFORE WE BUILD THE INTERNATIONAL ARRIVAL FACILITY AS AN EXAMPLE
WE'RE STILL NOT THERE AT THAT 75 MCT OR MINIMUM CONNECT TIME AS YET
BUT THAT'S A GOAL THAT WE'RE TRYING TO GET TO
ANOTHER ONE IS WE'RE TRYING TO GET TO A FIVE STAR RATED AIRPORT
WE HAD FOUR STAR, RIGHT? SO THERE'S A GAP THAT EXISTS
AND SO ONCE WE LOOK AT THESE GAP AS PART OF THE GAP ANALYSIS, THEN WE LOOK AT WHAT ARE THE ACTIVITIES THAT WE MUST DO IN ORDER TO REDUCE THOSE GAPS OR ELIMINATE THOSE GAPS TO GET US TO OUR LONG TERM GOAL
TAKING INTO CONSIDERATION ALL THE THINGS THAT WE LOOKED AT AS PART OF THE SWOT ANALYSIS
AND THOSE ACTIVITIES ARE THE KEY PART OF OUR STRATEGIC PLAN, WHICH IS OUR THREE TO FIVE YEAR STRATEGIC PLAN
AND AS PART OF THAT PROCESS, WE ALSO SET WHAT ARE THE STRATEGIC OBJECTIVES AND THE KPIS THAT WE'RE GOING TO USE TO CLOSE THOSE GAPS TO GET US TO OUR LONG TERM GOAL
THAT IS THE STRATEGIC PLANNING PART OF THE PROCESS
THERE'S TWO PARTS OF THE PROCESS, THE PLANNING PART AND THE IMPLEMENTATION PART
SO THAT IS A STRATEGIC PLANNING PART OF THE PROCESS THAT WE GO THROUGH AND THAT'S ON A THREE TO FIVE YEAR BASIS
AND ONCE WE HAVE DONE THAT NOW THIS IS WHERE THE RUBBER MEETS THE ROAD
WE DO THE ANNUAL BUSINESS PLAN
SO EACH YEAR WE'LL HAVE A 2023, 2024
THEN WE'LL HAVE A 2025 BUSINESS PLAN
AND THIS IS WHERE THE RUBBER MEETS THE ROAD
THIS IS WHERE WE LOOK AT ALL THE SPECIFIC ACTIVITIES THAT WE MUST DO EACH YEAR IN ORDER TO ACHIEVE THE STRATEGIC OR THREE TO FIVE YEAR GOALS THAT WE HAVE
AND OF COURSE THAT'S ALIGNED WITH THE LONG TERM VISION THAT WE HAVE, WHICH IS IN ALIGNMENT WITH THE CENTURY AGENDA
SO YOU CAN SEE THAT ALIGNMENT
AND ONCE WE HAVE LOOKED AT ALL THE ACTIVITIES THAT WE NEED TO GET DONE AND WE PRIORITIZE THEM, THEN WE LOOK AT WHAT RESOURCES DO WE NEED IN TERMS OF PEOPLE, IN TERMS OF EQUIPMENT, AND IN TERMS OF MONEY
AND THAT'S HOW THE BUDGET IS CREATED
SO THE BUDGET, AS OF YOU MIGHT HAVE HEARD ME SAY BEFORE, IS A MEANS TO AN END
IT'S NOT THE END
THE END IS THE VISION, THE MISSION, THE LONG TERM GOALS THAT WE'RE TRYING TO ESTABLISH
THE BUDGET IS THE RESOURCES THAT WE NEED EACH YEAR TO GET US THERE
ALSO, ONCE WE HAVE COMPLETED OUR 2024, 2025, OUR ANNUAL BUSINESS PLAN, THAT ALSO FORMS A BASIS FOR THE PERFORMANCE PLAN FOR EACH OF THE TEAM MEMBERS WITHIN THE ORGANIZATION
SO THAT IS THE PROCESS THAT WE GO THROUGH
THERE ARE OTHER WAYS TO DO IT
WE'RE NOT SAYING THIS IS THE ONLY WAY, BUT THIS IS THE ONE THAT WE USE
AND IT TYPICALLY WORKS REALLY WELL BECAUSE IT ALIGNED THE BUDGET RESOURCES THAT WE'RE ASKING FOR WITH OUR LONG TERM STRATEGIC PLAN
IT REDUCES THE GAP THAT WE HAVE IDENTIFIED IN OUR GAP ANALYSIS
IT TAKES INTO CONSIDERATION ALL THE THINGS THAT WE CONSIDER AS PART OF OUR SWOT ANALYSIS
AND EVENTUALLY THE EXPECTATION IS THAT IT WILL GET US TO THE CENTURY AGENDA GOALS AND THE VISION MISSION OF THE ORGANIZATION AS ESTABLISHED BY THE COMMISSIONERS AND THE EXECUTIVE DIRECTOR
SO THAT'S THE OVERALL STRATEGY TO PUGET PROCESS
I'M NOT SURE IF WE'RE DOING QUESTIONS DURING OR WAIT UNTIL THE END TO DO QUESTIONS
EXCUSE ME, LANCE, THANK YOU FOR THAT CLARIFICATION, BUT I DID SAY AT THE BEGINNING THAT YOU DID A GOOD JOB
AGAIN, IF YOU LOOK AT PAGE 33, YOU CALL OUT COMMISSION 2024 PRIORITIES
SO SPECIFICALLY, THE CENTURY AGENDA WAS SET YEARS AGO
I'M THE ONLY ONE IN THE ORGANIZATION PROBABLY UP HERE THAT HAD ANY INPUT WHATSOEVER
BUT IT WAS NOT THIS COMMISSION'S GOALS
AND WE TALKED ABOUT WE HAD, LIKE, DOUBLING AIR CARGO OR WHATEVER
IT MAY BE AN IMPORTANT GOAL STILL, BUT THAT WAS ONE OF THEM THAT WE LOOKED AT POTENTIALLY
IS THAT STILL THE RELEVANT QUESTION FOR OUR KPIS TO MEASURE? SO I ONLY TAKE EXCEPTION OF THE FACT THAT THE CENTURY AGENDA GOALS ARE SOMETHING WE'VE ADOPTED, BUT IT WASN'T SOMETHING SPECIFICALLY THAT THIS COMMISSION IMPLEMENTED
HOW THESE GOALS CONSISTENTLY ARE IMPLEMENTED IS THIS COMMISSION'S PURVIEW
AND I APPRECIATE YOU ACKNOWLEDGING AT LEAST SOME OF THE ONES THAT ARE FOR 2024, WHICH IS MORE SPECIFIC THAN THE FIVE YEAR PLAN OF THE HIGHER LEVEL STUFF
SO I JUST WANT TO MAKE SURE I CONCUR WITH WHAT YOU SAID AND I APPRECIATE THE FACT THAT YOU DRILLED DOWN IN THE COURSE OF THIS PRESENTATION, AND NOW I'LL LET YOU MAKE THE PRESENTATION
YEAH
AND KUDOS AGAIN TO HEIDI AND THE TEAM BECAUSE THEY DO A LOT OF THE DETAILED WORK THERE
AND YOU'RE RIGHT, COMMISSIONER
EVEN OUR FIVE TO TEN YEAR GOALS
THEY WERE ESTABLISHED A LONG TIME AGO
WE ESTABLISHED THEM SEVERAL YEARS AGO
BUT EACH YEAR WE LOOK AT WHAT ACTIVITIES THAT WE NEED TO DO
AND EACH YEAR AS PART OF THIS PROCESS, REMEMBER, WE HAVE THE COMMISSION SESSION WHERE THE COMMISSIONERS ESTABLISH THOSE PRIORITIES
SO STEVE AND THE ELT TEAM AND THE AIRPORT TEAM, WE ALSO LOOK AT WHAT THE PRIORITIES ARE THAT YOU GUYS ARE SETTING EACH YEAR
AND AS MUCH AS WE CAN, WE INCLUDE THOSE AS PART OF THE ANNUAL BUDGETING PROCESS
AND THE ONES THAT YOU SEE ARE JUST SOME IT'S NOT EVEN ALL, IT'S SOME OF THE COMMISSIONER PRIORITIES THAT WE HAVE ESTABLISHED
BECAUSE WE'RE NOT SHOWING EVERYTHING IN THIS PRESENTATION, IT WOULD MAYBE TAKE FIVE TIMES THE AMOUNT OF TIME THAT WE HAVE TODAY
ALL RIGHT, NEXT SLIDE, PLEASE
OKAY, SO THIS JUST TO GET JUST GOING TO JUST A LITTLE BIT MORE
AS I MENTIONED ON THE PREVIOUS SLIDE, WE DO A SWOT ANALYSIS
AND WITH THE SWOT ANALYSIS, WE LOOK AT OUR INTERNAL STRENGTH AND WEAKNESSES
WE LOOK AT EXTERNAL OPPORTUNITIES AND THREATS, AND WE COME UP WITH A DETAILED SWOT ANALYSIS
HOWEVER, WE REALLY CAN'T FOCUS ON EVERYTHING THAT WAS IN THE SWOT ANALYSIS
SO WHAT WE DO IS SUMMARIZE IT INTO WHAT WE CALL A SWOT PROFILE
AND WHAT'S IN THE SWOT PROFILE IS WE PRIORITIZE WHICH ARE THE STRENGTHS THAT WE'RE REALLY GOING TO FOCUS ON DURING THIS PUGET CYCLE OR DURING THIS STRATEGIC PLANNING CYCLE, WHICH ARE THE WEAKNESSES THAT WE'RE GOING TO FOCUS IN ON OVERCOMING? WHAT OPPORTUNITIES ARE WE GOING TO TAKE ADVANTAGE OF THAT'S EXTERNAL TO OUR ORGANIZATION AND WHAT ARE THE EXTERNAL THREATS THAT WE REALLY NEED TO FOCUS ON MITIGATING? WE CAN'T FOCUS ON TEN OR 15 THINGS, RIGHT? WE CAN FOCUS ON MAYBE THREE TO FIVE THINGS
AND THAT'S HOW WE COME UP WITH A SWOT PROFILE
AND THESE, AGAIN, ARE THE THINGS THAT WE'RE GOING TO EITHER LEVERAGE TO GET US TO OUR GOALS OR WE NEED TO MITIGATE IN ORDER TO GET US TO OUR GOALS
SO THAT'S WHAT THE UTILIZATION OF THE SWOT PROFILE FOR US
NEXT SLIDE, PLEASE
SO THESE ARE THE TEN PRIMARY AREAS THAT WE'RE FOCUSING ON
MOST ORGANIZATION CEO OR MANAGING DIRECTOR WILL SAY, HOW CAN YOU HAVE TEN GOALS? YOU CAN'T REALLY FOCUS ON MORE THAN, SAY, THREE PRIMARY GOALS AT A TIME
AND THAT'S TYPICALLY CORRECT
HOWEVER, AIRPORTS ARE SOMEWHAT OF A DIFFERENT BEAST
WE HAVE SO MANY DIFFERENT BUSINESSES WITHIN AN AIRPORT
WE RUN A MALL, WE RUN GROUND TRANSPORTATION, WE RUN AIRLINES OPERATION
WE HAVE A CONSTRUCTION BUSINESS
WE HAVE SO MANY DIFFERENT BUSINESSES
WE HAVE COMMUNITY ENGAGEMENT, WILDLIFE MANAGEMENT, WATER RESTORATION
YOU NAME IT, WE HAVE IT
WITHIN AN AIRPORT, IT'S LIKE RUNNING A CITY, BUT A LITTLE BIT MORE COMPLICATED
AND SO THAT'S ONE OF THE REASON WHY WE HAVE SO MANY DIFFERENT STRATEGIC FOCUS AREAS
NOW, EACH OF THE DIVISION OR THE DEPARTMENT DIRECTORS WITHIN THE ORGANIZATION MAY BE FOCUSING ON THREE OR FOUR GOALS
SO THAT WORKS WITHIN EACH OF THOSE BUSINESS
BUT AS A DIVISION ITSELF, IT'S VERY HARD TO JUST FOCUS ON THREE PRIMARY GOALS JUST BECAUSE OF HOW COMPLEX AND COMPLICATED AIRPORTS ARE
SO THESE ARE THE TEN PRIORITIES THAT WE ARE STRATEGIC FOCUS AREAS THAT WE FOCUS ON
AND YOU'LL SEE HOW THE BUDGET REQUEST THAT WE HAVE ALIGNS WITH EACH OF THESE AREAS IN A FEW MORE SLIDES
NEXT SLIDE, PLEASE, COMMISSIONER
THEN STEVE, YOU HAVE SEEN THIS BEFORE, AND THIS IS REALLY, TO REITERATE, A COUPLE OF THINGS
ONE, THE BUDGET IS THE MEANS TO THE END
IT'S NOT THE END STATE, IT'S THE MEANS TO THE END
WE'RE ASKING FOR MONEY, FOR PEOPLE, FOR EQUIPMENT, TO ACTUALLY TRY TO GET US TO THESE GOALS THAT WE HAVE ESTABLISHED, WHETHER IT'S FIVE STAR SKYTRACK RATING, 75 MCT, GREENEST AIRPORT IN THE UNITED STATES, MOST ACCESSIBLE AIRPORTS IN NORTH AMERICA, ET CETERA
THE BUDGET REQUEST THAT WE'RE ASKING FOR IS TO ACTUALLY GET US TO THESE GOALS, GET US FROM FOUR STAR TO FIVE STAR RATED AIRPORT, AND HOPEFULLY HAVE US CONTINUE BEING THE BEST AIRPORT IN NORTH AMERICA
AND ONE, HOPEFULLY DOWN THE ROAD, WE'LL START GETTING IN THE WORLD RANKING A FEW YEARS FROM NOW AS WELL
NEXT SLIDE
ALL RIGHT, SO HOW DO WE ESTABLISH AND SET THE PRIORITIES? AS I SAID BEFORE WE GO BACK, WE LOOK AT OUR MISSION, LONG TERM GOALS, WE DO A GOOD PROVISION
ARE WE GOING TO CHANGE ANYTHING MAJOR? IF WE ARE, WE MAKE THE CHANGES
IF NOT, WE DO SOME SMALL TWEAKS
AND THEN WE LOOK AT WHAT ARE THE 2024 OBJECTIVES THAT WE NEED TO COME UP WITH AS PART OF OUR BUSINESS PLAN IN ORDER FOR US TO CONTINUE MOVING TOWARDS THIS GOAL
THERE ARE THREE PRIMARY AREAS THAT WE CATEGORIZE OUR REQUEST IN
THE THINGS THAT WE MUST DO OR THE THINGS THAT ARE REGULATORY AND COMMISSION
THE THINGS THAT THE COMMISSIONERS HAVE DIRECTED US TO DO FALLS IN THIS CATEGORY
SO DURING THE BUDGET PROCESS, WE DON'T ARGUE OF WHETHER WE'RE GOING TO DO THIS, WHETHER WE'RE GOING TO SUPPORT THIS
IT IS JUST A DONE DEAL
THESE ARE MUST DO REGULATORY
THEN WE HAVE WHAT WE CALL THE WILDLY IMPORTANT GOALS
SO, FOR EXAMPLE, IF WE HAVE TEN GOALS THAT WE HAVE ESTABLISHED, THE QUESTION IS WHAT ARE THE TOP THREE THAT WE MUST GET DONE NO MATTER WHAT? IF THERE IS SOMETHING HAPPENS DURING THE YEAR AND WE END UP NOT HAVING ENOUGH MONEY AND WE CAN'T DO ALL TEN OF THESE ACTIVITIES, WELL, WHAT ARE THE TOP THREE ONES THAT WE MUST GET DONE? AND THOSE ARE THE WILD IMPORTANT GOALS
AND THEN THE PIGS ARE PRETTY IMPORTANT GOALS, OR JUST ALL THE OTHER GOALS, IMPORTANT GOALS THAT WE HAVE ESTABLISHED
SO THOSE ARE THE THREE CATEGORIES THAT WE HAVE WHEN WE USE FOR OUR BUDGET REQUEST
NEXT SLIDE, PLEASE
AND SO THESE ARE JUST SOME, JUST AN EXAMPLE
THERE'S A WHOLE LOT MORE THAN WE'RE SHOWING ON THESE SCREENS
BUT THESE ARE JUST SOME EXAMPLES JUST TO GIVE YOU A FLAVOR OF WHAT FITS INTO WHAT CATEGORY
FOR EXAMPLE, OUR PART 139 CERTIFICATION
WE MUST DO THAT
IF WE DON'T PASS THE PART 139 CERTIFICATION, WE CAN'T RUN THE AIRPORT
SO THIS IS JUST MANDATORY
WE HAVE TO DO THAT
A LOT OF THE SECURITY DIRECTIVES THAT WE HAVE, WE DON'T HAVE ANY CHOICE
THESE ARE REGULATORY
WE MUST DO THEM
AND THUS SOME OF THE EXAMPLES WE ARE SHOWING HERE OF SOME OF THE GOALS THAT WE HAVE OR WEEKS THAT WE HAVE AS PART OF THE SECURITY GOALS
NEXT SLIDE, PLEASE
COMMUNITY VERY IMPORTANT TO US
COMPLETING 23% OF THE 2014 APPROVED PART 150 STUDY REMEDY PROGRAM BY THE END OF THE THIRD QUARTER
THAT'S ONE OF THE REGULATORY OR MUST DO GOALS THAT WE HAVE
AND THERE ARE SEVERAL GOALS THAT WE HAVE AS PART OF OUR ENVIRONMENT AND SUSTAINABILITY
WE HAVE TO MEET AND EXCEED ALL PERMIT CONDITION, WASTEWATER, LAND STEWARDSHIP, STORMWATER, ET CETERA
SO THESE ARE EXAMPLES AGAIN OF MUST DO STAT REGULATORY GOAL
NEXT SLIDE
AND THEN SOME EXAMPLES OF WILDLY IMPORTANT GOAL
SAFETY IS EXTREMELY IMPORTANT TO US, AND WE WANT TO ACHIEVE A REDUCTION FROM THE PREVIOUS YEAR ON SAFETY MANAGEMENT SYSTEM OF MAJOR INCIDENTS
5% REDUCTION
WE REALLY CAN'T GET ANYTHING DONE
ALL THE GOALS THAT YOU'RE GOING TO HEAR US TALK ABOUT OR YOU'VE SEEN SO FAR IN THE PRESENTATION, WE CAN'T GET THEM DONE UNLESS WE HAVE AN ENGAGED EMPLOYEE POPULATION HERE AT AIRPORTS
AND SO IT IS IMPORTANT THAT WE REVIEW THE EMPLOYEE ENGAGEMENT SURVEY RESULTS THAT WE HAVE AND WE ACTUALLY PUT THE ACTION PLANS IN PLACE, AND THAT'S A PRIORITY FOR US IN 2024
SECURITY CHECKPOINT STILL IS A MAJOR CHALLENGE TO US, AND WE HAVE ESTABLISHED A GOAL OF 80% OF THE PEOPLE EXPERIENCING THE TSA LINE WILL WAIT 30 MINUTES OR LESS
NEXT SLIDE
OTHER GOALS THAT WE HAVE OR WEEKS THAT WE HAVE IS AROUND THE CUSTOMER EXPERIENCE
THAT'S WHY WE'RE HERE
WE'RE HERE TO SERVE THE CUSTOMER
THE PRIMARY CUSTOMER, OF COURSE, IS THE PASSENGERS THAT COME THROUGH THE PORT, AND THAT NUMBER THAT WE HAVE, THAT 3.97 AS PART OF THE ASQ OR AIRPORT SERVICE QUALITY, IT INCLUDES A WHOLE LOT OF THINGS
IT INCLUDES RESTROOM, IT INCLUDES SECURITY CHECKPOINT, THE TIME IT TAKES TO COME THROUGH CUSTOMS AND IMMIGRATION, THE CLEANLINESS OF THE FACILITY
THERE'S SEVERAL THINGS THAT'S INCLUDED IN HERE
SO EVEN THOUGH IT'S ONE METRUCK, IT INCLUDES NUMEROUS THINGS THAT WE HAVE TO DO TO SATISFY THE CUSTOMER, MEET OR EXCEED THE CUSTOMER EXPECTATION
AND OF COURSE, AS WE DO ALL OF THIS, WE HAVE TO DO IT IN A FISCALLY RESPONSIBLE MANNER
WE HAVE A DEBT SERVICE COVERAGE AT 1.4
HAMDI IS GOING TO SPEAK A LITTLE BIT MORE ABOUT THAT IN FUTURE SLIDES
AND YOU'LL SEE YEARS THAT WE ARE GOING TO EXCEED THIS, AND THERE ARE A FEW YEARS THAT WE MIGHT FALL BELOW IT IN OUR FUTURE PROJECTIONS
NEXT SLIDE, PLEASE
AND THEN A PRETTY IMPORTANT GOAL
I MEAN, THE EXPECTATION IS THAT WE'RE GOING TO GET CALL THE ROLL DONE
THE DIFFERENCE BETWEEN THE WIGS AND THE PIGS IS IF WE COME TO THE POINT WHERE WE HAVE TO PRIORITIZE, WE HAVE TO MAKE A DECISION, THEN THE WIGS TAKES PRIORITY
BUT THE EXPECTATION IS ALL OF THESE PIGS ARE PRETTY IMPORTANT GOALS
THEY ALL GET DONE BASED ON THE REQUEST THAT WE HAVE WITHIN THE BUDGET
SO WE'RE REQUESTING PEOPLE, FTES, CONSULTANT SERVICES, EQUIPMENT, DOLLARS, ET CETERA, TO ACTUALLY EXECUTE ALL OF THESE PIGS AS WELL
AND THESE ARE JUST SOME EXAMPLES THAT WE'RE SHOWING HERE
I'M NOT GOING TO GO THROUGH ALL OF THEM BECAUSE I WANT TO GET OVER TO HEIDI SOON TO GET INTO THE DETAILS OF THE BUDGET
AND I'M SURE WE'LL HAVE A LOT OF QUESTIONS ON THOSE NUMBERS, BUT THESE ARE THE FOUNDATION FOR THE REQUEST THAT WE HAVE IN THE BUDGET
SO WE THINK IT'S IMPORTANT FOR US TO TALK ABOUT IT AT THE FRONT OF THE PRESENTATION
NEXT SLIDE, PLEASE
AND THESE ARE JUST SOME OTHER GOALS
THESE ARE ON THE INNOVATION AND OPERATIONAL EFFICIENCY SIDE OF THE TEN CATEGORIES THAT WE HAD OUTLINED EARLIER
WE CAN GET INTO SOME OF THE DETAILS OF THESE IF YOU WANT, COMMISSIONER, BUT AS I SAID, I WANT TO GET TO HEIDI ON THE NUMBERS
NEXT SLIDE
SIMILAR THING HERE
ECONOMIC OPPORTUNITIES, SOCIAL RESPONSIBILITY, EXTREMELY IMPORTANT TO US
OUR ACDBE PROGRAM HAS BEEN SUCCESSFUL IN THE PAST
WE WANT TO MAKE SURE WE CONTINUE BEING SUCCESSFUL
THE DBE PARTICIPATION, WE STRUGGLE WITH THAT IN THE PAST
WE WANT TO MAKE SURE WE PROVIDE MORE OPPORTUNITIES TO OUR UNDERSERVED COMMUNITY WHERE SMALL MINORITY OWNED BUSINESSES, ET CETERA
AND NEXT SLIDE
NOW, IN ORDER FOR US TO ACHIEVE ALL OF THIS, WE HAVE TO GENERATE THE REVENUES TO GET THERE
I'D IS GOING TO SPEAK ABOUT THIS
OUR COMMERCIAL MANAGEMENT TEAM HAS THIS HUGE TASK TO GENERATE A LOT OF NON EURO NAUTICAL REVENUES
BUT THE ENTIRE ORGANIZATION ALSO HAVE A RESPONSIBILITY TO CONTAIN THAT COST BECAUSE REMEMBER, WE HAVE THAT 1.4 DEBT SERVICE COVERAGE GOAL THAT WE'RE TRYING TO ACHIEVE
SO EVERYBODY WITHIN THE ORGANIZATION HAS TO PARTICIPATE TOWARDS THIS
AND OF COURSE, AS WE DO THIS, WE HAVE TO DO IT IN A RESPONSIBLE MANNER
WE HAVE OUR GREENHOUSE GAS EMISSION GOALS, CENTRAL AGENDA GOALS THAT WE HAVE TO MAKE SURE THAT WE MEET AS WELL
SO WE HAVE SEVERAL GOALS IN THERE, OUR OBJECTIVES IN THERE, AND SEVERAL REQUESTS IN THE BUDGET TO ACTUALLY MEET THESE ENVIRONMENTAL AND SUSTAINABILITY GOALS THAT WE'LL GET INTO
A FEW SLIDES DOWN IN THE PRESENTATION
NEXT SLIDE, PLEASE
AND WE HAVE TO BUILD ALL THESE FACILITIES THAT WE NEED TO KEEP PACE WITH THE TREMENDOUS GROWTH THAT'S TAKING PLACE WITHIN THE REGION
WE HAVE AN OBJECTIVE TO ACHIEVE 75% OF THE CAPITAL PROGRAM SCHEDULED MILESTONES AND ALSO 75% OF THE PLANNED EXPENDITURE FOR A HUGE PROGRAM SUCH AS OURS
AND HEIDI IS GOING TO SPEAK ABOUT THAT
YOU'LL
SEE, WE'LL BE SPENDING OVER A BILLION DOLLARS IN CERTAIN YEARS COMING UP
SO IT'S A HUGE UNDERTAKING FOR US TO ACHIEVE
AND WE THINK 75% IS REALLY A STRETCH GOAL FOR OUR TEAM THAT'S WORKING ON THESE PROJECTS
NEXT SLIDE
SO BEFORE HANDING OVER TO HAMDI, COMMISSIONER, I JUST WANT TO POINT SOMETHING OUT, AND I HOPE HEIDI REITERATES IT AGAIN
THE BUDGET REQUEST THAT WE HAVE, WE TOOK INTO CONSIDERATION ALL THE NEW FACILITIES THAT WE CURRENTLY HAVE, THE NEW SQUARE FOOTAGE THAT WE CURRENTLY HAVE, ALL THESE HUGE CAPITAL DEVELOPMENT PROJECTS THAT WE HAVE TO GET DONE, ALL THE OPERATIONAL GOALS, EVERYTHING
HOWEVER, EVEN AFTER ALL OF THAT, THE REQUEST THAT THE INCREASE IN OUR BUDGET VERSUS 2023 IS STILL WITHIN SINGLE DIGITS, AND I THINK THAT'S SOMETHING WE REALLY NEED TO HIGHLIGHT BECAUSE I THINK IT'S IMPORTANT NOT ONLY FOR THE COMMISSIONERS, BUT ALSO TO OUR EXTERNAL STAKEHOLDERS SUCH AS THE AIRLINE
WE ARE ABLE TO MAKE A REQUEST TO ACHIEVE ALL OF THESE THINGS THAT WE HAVE WITH ALL THE NEW FACILITIES, EVERYTHING, AND STILL STAY WITHIN SINGLE DIGITS RELATIVE TO LAST YEAR
AND I THINK THAT IS EXTREMELY IMPORTANT
SO WITH THAT SAID, I'M GOING TO HAND OVER TO HEIDI UNLESS THERE ARE ANY QUESTIONS ON THIS SECTION FROM STEVE AND COMMISSIONERS
IF NOT, I'LL HAND OVER TO HEIDI, WHICH WILL TAKE THE PRESENTATION OVER FROM HERE
ALL RIGHT, THANK YOU
LANCE
REAL QUICK, BEFORE WE MOVE ON, ANY QUESTIONS? YEAH, PLEASE
YEAH, COMMISSIONER FELLEMAN, I JUST THINK IT'S REALLY IMPORTANT TO JUST MAKE SURE WE UNDERSTAND THE GUIDANCE THAT WE WILL THEN BE SHOWN HOW YOU'RE MEETING THAT GUIDANCE THROUGHOUT THE REST OF THIS PRESENTATION
SO I PROMISE I WON'T TAKE UP MUCH MORE TIME
BUT I WAS SURPRISED AT THE 23% IMPLEMENTATION OF THE PART 150 BY 2014 GOAL THAT YOU CHARACTERIZE THIS AS REGULATORY, BECAUSE I RECALL SOME COMMISSIONER AGO THAT WE JUST SAID WE SHOULD ACCELERATE IT
BUT IS THAT ACTUALLY A REGULATORY GOAL? IT'S PART OF THE PART 150 STUDY THAT WE HAVE, AND I THINK WE HAVE SARAH COX ONLINE TO HELP TO ANSWER THAT QUESTION, BUT IT'S PART OF THE EXISTING ONE PART 150 STUDY, SO WE CONSIDER THAT REGULATORY
SARAH, CORRECT ME IF I'M WRONG, PLEASE
IS SHE ON? SHE'S IN THE CHAMBERS
OKAY
I WAS WALKING UP
YES, BECAUSE WE JUST INTRODUCE YOURSELF REAL QUICK
THANK YOU
SARAH COX, DIRECTOR OF ENVIRONMENT AND SUSTAINABILITY FOR AVIATION PART 150
BECAUSE IT'S A REGULATORY REQUIREMENT THAT WE HAVE COMMITTED THIS OBLIGATION WITH THE FAA TO MEET THIS ACCELERATED AND THEN THROUGH THE COMMISSION TO MEET THIS ACCELERATED SCHEDULE, THAT IT IS A REGULATORY COMMITMENT FOR US TO FULFILL OUR GRANT OBLIGATIONS
WE'VE SUBMITTED GRANTS TO PERFORM THE SOUND INSULATION PACKAGES WITH FAA
AND SO THROUGH THOSE VARIOUS OBLIGATIONS, IT TRIGGERS US INTO A REGULATORY THRESHOLD
IT DOESN'T COMPARE FOR A STORMWATER PERMIT WHERE YOU HAVE A SAMPLING PERMIT CONDITION
IT'S JUST IN A LITTLE DIFFERENT CONTEXT THAN THAT
OKAY, SO FOR CLARIFICATION, ONCE WE'VE ASKED TO DO IT
WE'RE OBLIGATED TO DO IT
CORRECT
BUT THE RATE AT WHICH WE'RE DOING IT IS ACCELERATED
IT'S ACCELERATED ONLY BECAUSE WE WERE LAGGING BEHIND BEFORE, AND IT'S COMMISSIONER IS ASKING TO DO IT
SO MY QUESTION IS, IS THE RATE AT WHICH WE DO IT REGULATORY OR ONLY ONCE WE OBLIGATE OURSELVES TO DO SOME PORTION OF IT? THE RATE IS NOT OBLIGATORY
WE'RE NOT REQUIRED ON THE RATE
HOWEVER, AS WE MOVE FORWARD INTO OUR NEXT PART 150, THAT WILL HAVE A DIFFERENT SET OF OR POTENTIALLY HAVE A DIFFERENT SET OF BOUNDARIES
SO UNDER OUR CURRENT PART 150, WE WANT TO ACHIEVE AS MUCH AS POSSIBLE UNDER THE CURRENT BOUNDARY NOISE REMEDY BOUNDARY TO BE ABLE TO INSULATE THE VARIOUS RESIDENTS AND FACILITIES
THANK YOU FOR THAT, COMMISSIONER, IF I COULD ASSIST THIS REAL QUICK
THE FACT THAT WE HAVE TO DO IT IS REGULATORY
THE RATE AND THE SPEED OF WHICH WE DO IT IS COMMISSION DIRECTED
CORRECT
AND THAT'S WHY THE ACCELERATION
THAT'S WHY THE ACCELERATION
BUT THEN IT EXPIRES ONCE WE ADOPT A NEW PART 150 STANDARD
ALL RIGHT, THANK YOU
AND JUST LANCE AT ANOTHER TIME, IT SEEMS TO ME WE HAVE VARIOUS DIFFERENT WAYS OF MEASURING CUSTOMER SATISFACTION
RIGHT
THERE IS THE SKYTRACK'S GOAL, WHICH IS THE SPECIFIC ONE, THE ASQ JD
POWERS PET SURVEY
I NEVER EVEN HEARD OF THE PET SURVEY
IS THAT HOW WELL WE TREAT OUR PETS, WHICH WE DO HAVE RELIEF CENTERS AND ALL THAT, BUT I'M JUST WONDERING AT ANOTHER TIME, IT JUST SEEMS TO BE IMPORTANT TO UNDERSTAND BECAUSE WE SET OUR KPIS TO THE SKY TRACKS, BUT WE MEASURE VARIOUS OTHER THINGS
SO I DON'T WANT TO TOUCH ON IT REAL QUICKLY
COMMISSIONER, I CAN TOUCH ON IT REAL QUICKLY
THE PETS IS AN INTERNAL SURETY THAT'S DONE BY A LOCAL SURVEY
JULIE CAN SPEAK MORE ABOUT IT
ALL THE SURVEYS THAT WE HAVE HAVE DEFICIENCIES IN THEM
FOR EXAMPLE, THE ASQ SURETY WILL PROBABLY NOT LOOK AT OUR SECURITY CHECKPOINTS OR THE DRIVES COMING IN
ON THE DRIVES COMING IN
IT'S PROBABLY IN THE HOLD ROOM AREAS, THE ARRIVALS PROCESS, ET CETERA
RIGHT
SO EACH OF THESE HAVE GAPS IN THEM
SO WE TRY TO DO MULTIPLE SURVEYS BECAUSE WE WANT TO MAKE SURE WE CAPTURE THE CUSTOMER EXPERIENCE THROUGHOUT THE ENTIRE AIRPORT
WE CAN GO INTO IT A WHOLE LOT MORE DETAIL, BUT JUST ON THE VERY HIGH LEVEL
EACH OF THE SURVEYS HAVE GAPS
THEY DON'T LOOK AT THE ENTIRE CUSTOMER EXPERIENCE
SO DOING TWO OR THREE FOCUSING ON TWO OR THREE SURVEYS WILL BE ABLE TO CAPTURE THE ENTIRE CUSTOMER EXPERIENCE
SO MAYBE ANOTHER TIME WE CAN GET A PRESENTATION OF THAT
JULIE EATS, SLEEPS, AND DRINK THIS
SO, YEAH, YOU CAN BRING JULIE IN AT A TIME APPROPRIATE TO GO THROUGH THE DETAILS OF THESE
GREAT
YEAH
AND NOW OVER TO HAMDI HOLD
SORRY, SORRY
GO AHEAD, PRESIDENT CHO, HOW ARE WE WITH TIME? I JUST WANT TO BE MINDFUL
WE'RE DOING OKAY, BUT IF WE CAN KEEP IT BRIEF, THAT WOULD BE GREAT
KEEP OUR COMMENTS TO A MINIMUM
SO IN THE SWOT ANALYSIS PROFILE SECTION, I NOTICED THAT THE DEMAND FOR TRAVEL IS IN OUR OPPORTUNITY SECTION, AND OBVIOUSLY WE WANT PEOPLE TO COME TO OUR REGION
BUT AT THE SAME TIME, I SEE THAT AS ALSO AN ISSUE, RIGHT
WITH THE SURGE OF PASSENGERS, CONSIDERING THE SIGNIFICANT CHALLENGES AROUND THE CONSTRUCTION PROJECTS THAT WE HAVE
AND SO HOW WE WILL BE ADDRESSING THOSE POTENTIAL CHALLENGES, I'M IMAGINING WILL COME THROUGH THESE SLIDES
BUT I JUST WANTED TO POINT THAT OUT THAT WHILE THAT'S AN OPPORTUNITY, I ALSO SEE THAT AS A CHALLENGE AND IN SOME CASES A THREAT WHEN IT COMES TO SECURITY LINES AND PASSENGER ISSUES, AND THEY CAN'T GET THROUGH OUR CHECKPOINTS QUICK ENOUGH
COMMISSIONER, YOU AYE
THE NAIL ON THE HEAD
THERE ARE MANY THINGS THAT WE COULD HAVE IN BOTH CATEGORIES OPPORTUNITIES AND THE SIZE OF OUR AIRPORT IS ONE OF OUR BIGGEST DISADVANTAGE
THE SIZE OF OUR AIRPORT IS ONE OF OUR BIGGEST ADVANTAGE
RIGHT
DEPENDING ON WHAT YOU'RE LOOKING AT FOR CONNECTING PASSENGERS, IT'S GREAT BECAUSE IT'S SMALL, BUT BECAUSE OF EVERYTHING ELSE THAT WE NEED TO DO, WE JUST DON'T HAVE ENOUGH SPACE
SO YOU'RE EXACTLY RIGHT IN TERMS OF THE DEMAND FOR TRAVEL IS AN OPPORTUNITY, BUT IT ALSO CREATES A LOT OF PROBLEMS AND CHALLENGES THAT WE HAVE AS WELL
AND YOU'LL SEE IN THE REQUEST, FOR EXAMPLE, THE EMPHASIS ON GETTING PEOPLE THROUGH THE SECURITY CHECKPOINT WITHIN A CERTAIN TIME FRAME, ACTUALLY BUILDING THE AIRPORT, DINING AND RETAIL THE DUE TO FREE FACILITIES THAT WE NEED, LOUNGES, ET CETERA, ALL OF THESE ARE CHALLENGES THAT WE FACE BECAUSE OF THE DEMAND FOR TRAVEL
SO WE HAVE A LOT OF THINGS IN THE BUDGET TO ADDRESS TO ADDRESS THOSE
SO YOU'LL SEE A LOT OF THEM AS HEIDI GOES THROUGH THE REST OF THE PRESENTATION
THANK YOU
ALL RIGHT, HEIDI, TAKE IT AWAY
OKAY, THANK YOU
THANK YOU, COMMISSIONER
SO, NEXT SLIDE, PLEASE
SO THIS SLIDE PROVIDES OVERVIEW OF THE PUGET CONTEXT FOR THE 2024 AVIATION DIVISION
AND THE FIVE KEY THEMES ARE NOTED ON THE SLIDE
AND EXECUTIVE METRUCK MENTIONED IN AYE
OPENING REMARKS ABOUT TOTAL PASSENGER VOLUME FORECAST THAT WE ARE RECOVERING TO EXCEED 2019 PASSENGER LEVELS
AND WE'LL TALK MORE ABOUT THAT IN THE NEXT SLIDE
SECONDLY, OUR NON AERONAUTICAL REVENUES ARE STRONG
THEY ARE WELL ABOVE OUR 2019 LEVELS, WHICH IS OUR NON AERONAUTICAL REVENUES ARE MORE OF OUR PUBLIC PARKING AND GROUND TRANSPORTATION REVENUE STREAMS AND THIRDLY, WE HAVE A GROWING CAPITAL PROGRAM WHERE OVER THE NEXT FIVE TO TEN YEARS, AND WE HAVE SOME DETAIL ASSOCIATED WITH THAT GROWTH
AND AS MANAGING DIRECTOR LITTLE MENTIONED, A BILLION DOLLARS IN THE FORECAST TO DELIVER ON THE CAPITAL PROGRAM AS WELL AS WITH THE FOURTH ITEM, THERE THE HIGH INFLATION OF BASELINE COSTS, PAYROLL GROWING
THIS IS SOMETHING THAT IS VERY SIMILAR
AS YOU HEARD IN THE CENTRAL SERVICES PRESENTATION, THE AIRPORT IS NOT IMMUNE FROM THAT AS WELL
AND ALSO, LASTLY, THE RISK OF ECONOMIC RECESSION
WE'RE MONITORING THE ECONOMY AND THE MARKETS JUST TO BE MINDFUL OF THAT AND TO HAVE OUR CONSERVATIVE FORECAST ASSUMPTIONS
NEXT SLIDE, PLEASE
SO THIS SLIDE ILLUSTRATES OUR TOTAL PASSENGER RECOVERY FORECAST
AS YOU CAN SEE IN BLUE, THOSE ARE OUR FIGURES FOR PASSENGERS, THE ACTUAL PASSENGERS THAT WE HAVE FOR THOSE RESPECTIVE YEARS
AND YELLOW IS OUR 2023 BUDGET THAT THE COMMISSION SAW AND WE USED TO INFORM THE 2023 BUDGET PROCESS
THE GREEN ILLUSTRATES OUR PASSENGER FORECAST FOR 2023 24 AND 25
AS YOU CAN SEE, FOR 2024, WE'RE ANTICIPATING A 2.1% INCREASE ON 2019 LEVELS OF PASSENGERS FOR THE AIRPORT
AND ALSO THAT JUST LOOKING AT OUR IT'S A STRONG RECOVERY
ESSENTIALLY THE STORY WE'RE TRYING TO TELL WITH THIS SLIDE
NEXT SLIDE, PLEASE
SO THEN JUST LOOKING AT OUR STRONG OPERATING REVENUE RECOVERY, AS YOU CAN SEE BY THE GREEN BLOCK THERE, THAT RELATES TO OUR AERONAUTICAL REVENUE, THE BLUE RELATES TO OUR NON AERONAUTICAL REVENUE
AND WE'RE ANTICIPATING A 7.5% INCREASE WHEN COMPARED TO THE 2023 BUDGET
THE AERONAUTICAL REVENUES REPRESENT ABOUT 61% OF OUR TOTAL REVENUE AND THEN NON AERO, ABOUT 39%
IN ADDITION, WITH THE AERONAUTICAL REVENUES, IT'S PRIMARILY COST RECOVERY AND WE HAVE EXHAUSTED A NUMBER OF OUR RELIEF GRANTS
SO IN 2024, YOU'LL SEE IN THE SUBSEQUENT SLIDES THAT THAT FULL AMOUNT HAS BEEN EXHAUSTED FROM CONCESSIONAIRE GRANTS
NEXT SLIDE, PLEASE
AND AS I NOTED, WE HAVE A GROWING CAPITAL PROGRAM
AND AS YOU CAN SEE IN THE FORECAST, IN 2025 YOU SEE THAT PEAK
THAT'S GOING TO BE OUR HIGHEST SPENDING OF APPROXIMATELY $1.25 BILLION
AND ALSO RECOGNIZING THAT WE HAVE ADDED ADDITIONAL RESOURCES IN THE OPERATING BUDGET TO SUPPORT THAT
ONE THING OF NOTE IS JUST THAT THE FORECAST DOES NOT INCLUDE ANY SAMP OR OUR SUSTAINABLE AIRPORT MASTER PLAN NEAR TERM PROJECTS
NEXT SLIDE, PLEASE
SO THIS SLIDE PROVIDES A HIGH LEVEL OVERVIEW OF OUR OPERATING REVENUES, ALSO OUR OPERATING EXPENSES, AND SOME KEY INDICATORS THAT WE TRACK FOR FINANCIAL PERFORMANCE
AS YOU CAN SEE ON THE TOP THERE, THE TOP ROW AERONAUTICAL REVENUES IS BUDGETED TO GROW AT 4.6%, NON AERONAUTICAL REVENUES ROUGHLY 12.4%
AND IN TOTAL IT WOULD INCREASE ABOUT 7.5%
AND THEN LOOKING AT OUR TOTAL OPERATING EXPENSES AS MANAGING DIRECTOR, LITTLE ALLUDED TO WE HAVE A LOT OF WORK TO DO AND WE MANAGED TO KEEP IT UNDER THE SINGLE DIGITS OF 9.1% OF AN INCREASE
SO THEN, LOOKING DOWN, BELOW ARE SOME OF OUR KEY FINANCIAL INDICATORS LOOKING AT OUR DEBT SERVICE COVERAGE, WHICH ESSENTIALLY MEANS THAT HOW MANY TIMES CAN WE PAY OUR DEBT SERVICE PAYMENTS ANNUALLY EACH YEAR? AND SO WE WANT TO HAVE A REASONABLE AMOUNT OF DEBT SERVICE COVERAGE OR RATIO IN ORDER TO MEET THE TARGETS THAT ARE OUTLINED IN OUR BUSINESS PLAN AND ALSO FOR OUR RATING AGENCIES
SO, AS YOU CAN SEE FOR 2024, OUR DEBT SERVICE COVERAGE IS AT 1.88
THE NEXT ROW ASSOCIATES WITH OUR AIRPORT DEVELOPMENT FUND, WHICH IS OUR CASH ON HAND
WE HAVE A TARGET OF 18 MONTHS
AND FOR 2024 WE SHOW THAT WE'LL REACH 17 MONTHS AND BY 2025 WE'LL REACH THAT 18 MONTH TARGET
THE NEXT ROW HAS THE COST PER EMPLOYMENT, WHICH IS A KEY METRUCK FOR OUR AIRLINE PARTNERS, JUST TO SHOW HOW MUCH OF THE EXPENSES RELATED TO THE AIRLINES ARE ALLOCATED ACROSS THE PASSENGER TOTALS
SO FOR 2024 WE SEE EIGHTEEN POINT SIXTY ONE CENTS
AND AS YOU CAN SEE, THERE'S A REDUCTION THERE WHEN COMPARED TO 2023 OF THREE AND A HALF PERCENT
AND THEN WE GO INTO OUR NON AERONAUTICAL NET OPERATING INCOME
WE'RE SEEING AN INCREASE IN THAT AS WELL AS IN PLANE PASSENGERS ARE RECOVERING, BUT ARE NOT EXCEEDING AT A RAPIDLY RATE
WE ARE JUST RETURNING TO 2019 LEVELS A LITTLE BIT OVER 2019 LEVELS
NEXT SLIDE, PLEASE
NOW WE'LL MOVE ON TO DELVING MORE INTO THE PRELIMINARY OPERATING BUDGET COMPONENTS
SO, THERE ARE A LOT OF NUMBERS HERE, BUT ESSENTIALLY IT ILLUSTRATES A DRILL DOWN OF SOME OF OUR OPERATING EXPENSES
AS YOU CAN SEE, PAYROLL CONSUMES A SIGNIFICANT PORTION OF THAT, ABOUT 210,000,000
AND THAT'S BECAUSE AS YOU HEARD IN THE CENTRAL SERVICES PRESENTATION THAT WE HAVE REPRESENTED STAFF CONTRACT INCREASES, WE HAVE AN ASSUMPTION OF 7% FOR NON REPRESENTED STAFF AVERAGE FOR COLA AND PAY FOR PERFORMANCE
ALSO THERE'S A 5% PAYROLL VACANCY AND ALSO WE INCLUDED 39 NEW FTES, WHICH YOU'LL HEAR MORE ABOUT LATER
THE REMAINDER IS APPROXIMATELY 148,000,000 FOR NON PAYROLL, THEN THAT'S ASSOCIATED DIRECTLY WITH THE AIRPORT CHARGES
AND THEN WE HAVE APPROXIMATELY A 12.4% INCREASE RELATED TO CENTRAL SERVICES TO HELP US CONTINUE TO SUPPORT AND OPERATE THE AIRPORT
NEXT SLIDE PLEASE
SO THIS IS OUR WATERFALL SLIDE, WHICH IS ESSENTIALLY OUR CROSSWALK TO HOW WE GOT TO THE 2023 BUDGET, THEN TO THE 2024 PRELIMINARY PUGET
AS YOU CAN SEE ON THE SLIDE, THE YELLOW, THERE WERE A NUMBER OF BUDGET ADJUSTMENTS THAT WE PERFORMED IN ORDER TO GET TO THE 2024 BASELINE BUDGET
AND THEN WE ADDED THOSE COST INCREASES ASSOCIATED WITH THE PAYROLL PIECES
THAT'S AROUND 70 MILLION
CONTRACT INCREASES ABOUT 4 MILLION, AND THEN COSTS TIED TO REVENUES 2 MILLION
AND THEN SOME ADDITIONAL NON PAYROLL ITEMS ABOUT 4 MILLION
SO WE STARTED WITH APPROXIMATELY 324,000,000 FOR BASELINE FOR THE 2024 BUDGET
AND THEN WE TOOK AND REVIEWED A NUMBER OF PUGET REQUESTS THAT I WILL GO INTO LATER, BUT A NUMBER OF BUDGET REQUESTS THAT WERE ADDED, THAT CAME UP TO THE AMOUNT OF 358,000,000, AROUND 359,000,000, WHICH IS APPROXIMATELY THE BUDGET THAT YOU SEE TODAY FOR THE AVIATION PRELIMINARY BUDGET
NEXT SLIDE, PLEASE
SO, AS MANAGING DIRECTOR LITTLE MENTIONED AND WALKED US THROUGH OUR STRATEGIC FOCUS AREAS, THIS IS HOW THOSE NEW BUDGET REQUESTS ALIGNED WITH THOSE FOCUS AREAS
AS YOU CAN SEE AT THE BOTTOM, IN PARTICULAR THE ASSET MANAGEMENT AND CAPITAL DEVELOPMENT AND DELIVERY FOCUS AREA, APPROXIMATELY 16.6 MILLION OF OUR NEW BUDGET REQUESTS ALIGN WITH THAT FOCUS AREA
AND THEN WE HAVE OUR CUSTOMER EXPERIENCE FOCUS AREA, WHICH WE PROPOSE TO HAVE 7.1 MILLION INVESTMENTS DEDICATED TO THAT AND ALSO YOU'LL SEE THAT HAS THE LARGEST NUMBER OF OUR NEW FTE REQUESTS OF 29 OF THE 39 THAT WE'VE REQUESTED IN THE PUGET
AND THEN LASTLY, JUST KIND OF THE BIG TICKET ITEMS, ENVIRONMENT AND SUSTAINABILITY
WE HAVE APPROXIMATELY 6.5 MILLION OF NEW BUDGET REQUESTS ASSOCIATED WITH THAT AND PRIMARILY TIED WITH THAT MUST DO REGULATORY PRIORITIZATION THAT MANAGING DIRECTOR LITTLE OUTLINED EARLIER
NEXT SLIDE, PLEASE
SO THIS IS A SUMMARY OF THE BUDGET REQUEST
WE RECEIVED 210 HIGH QUALITY, WELL THOUGHT OUT BUDGET REQUESTS FROM AVIATION DIVISION STAFF
THEY HAD VERY STRONG BUSINESS CASES AND DEFINITELY OUR NEEDS OF THE AIRPORT AND THAT EQUATED TO ABOUT $53 MILLION
AND RECOGNIZING WE ARE LIMITED TO OUR OPERATING EXPENSE GROWTH, WE HAMDI TO MAKE SOME VERY DIFFICULT DECISIONS AND APPROVE ABOUT 35 MILLION OF THOSE ADS
SO RECOGNIZING WE HAVE A NUMBER OF GOALS TO ACHIEVE AT THE AIRPORT, WE DID LIMIT OURSELVES TO THAT 9.1% INCREASE TO OUR BUDGET AND THAT EQUATES TO ABOUT 39 FTES AND $35 MILLION OF NEW INVESTMENTS
AND THEN TO THE TABLE TO THE RIGHT, YOU'LL SEE HOW WE PRIORITIZE THOSE NEW INVESTMENTS BY OUR MUST DO REGULATORY WIGS AND PIGS
AND I'LL TALK MORE ABOUT AIRLINE REALIGNMENT IN THE SUBSEQUENT SLIDE, BUT JUST WANTED TO ILLUSTRATE THAT WE MAKE SURE THAT WE HAVE ALIGNMENT IN OUR STRATEGIC GOALS, OUR BUSINESS PLAN, AND AS WELL AS PRIORITIZING THOSE BUDGET REQUESTS BY OUR MUST DO REGULATORY AND WIGS AND PIGS
NEXT SLIDE, PLEASE
SO THIS SLIDE PROVIDES AN OVERVIEW OF SOME OF OUR LARGEST APPROVED BUDGET REQUESTS
SO AS YOU CAN SEE AT THE TOP THERE, AIRLINE REALIGNMENT IS ROUGHLY $7.1 MILLION
AND THAT'S ESSENTIALLY COSTS ASSOCIATED WITH RELOCATING AN AIRLINE CARRIER THEIR SPACE TO ANOTHER SPACE BECAUSE THERE IS A CAPITAL PROJECT THAT WILL BE UNDERWAY IN THAT INITIAL SPACE
AND SO WE ARE WORKING WITH OUR ACCOUNTING AND FINANCIAL REPORTING PARTNERS HERE AT THE PORT TO POSSIBLY RECLASSIFY SOME OF THOSE COSTS FROM OPERATING EXPENSE TO CAPITAL BASED ON OUR PORTS CAPITALIZATION POLICY
SO WE ARE DILIGENTLY WORKING WITH THEM NOW AND WILL REPORT BACK TO YOU ON THAT WORK TO DETERMINE IF WE ARE ABLE TO SHIFT SOME OF THOSE COSTS TO CAPITAL
THE OTHER ELEMENT IS WITH WORKING WITH OUR PLANNING GROUP TO SUPPORT OUR GROWING CAPITAL PROGRAM AND SO EXPENSES TIED TO THAT, IT'S ROUGHLY THE PORT, 4 MILLION
CAN I ASK JUST A QUICK QUESTION? SURE
IF WE SHIFT IT FROM EXPENSE TO CAPITAL, DOES THAT ALLOW US A SORT OF LONGER PAYBACK PERIOD FOR IT? CORRECT? YEAH
SO IT WILL BE AMORTIZED FOR PART OF OUR DEBT SERVICE
RIGHT
BECAUSE WE'LL TAKE OUT BONDS TO PAY FOR IT
GREAT, THANK YOU
CAN I ALSO JUST SINCE I HAVE TWO QUESTIONS
ONE IS WHEN WE TALK ABOUT AND I THINK I ASKED DAN THIS QUESTION A FEW WEEKS AGO WHEN WE GOT AN OVERVIEW, BUT MAYBE YOU CAN PROVIDE A LITTLE MORE DETAIL
IT'S INTERESTING TO ME THAT OUR NON AERONAUTICAL REVENUES ARE GOING UP DESPITE THE FACT THAT OUR PASSENGER VOLUMES HAVE NOT QUITE RECOVERED TO 2019 LEVELS
AND I THINK I ASKED DAN WHAT ACCOUNTS FOR THE INCREASE IN NON AERONAUTICAL REVENUES DESPITE THE FACT THAT WE DON'T HAVE AS MANY PEOPLE GOING THROUGH THE AIRPORT
AND I THREW UP MAYBE PARKING RATES GOING UP AS AN EXAMPLE
BUT CURIOUS IF YOU CAN SHED LIGHT ON ANYTHING ELSE, THAT IS IT BECAUSE WE'VE ADDED ADR TENANTS
I'M JUST CURIOUS TO UNDERSTAND WHAT THAT IS
WE HAVE A SLIDE FOR THAT
PERFECT
OKAY
THERE IS A LINE GRAPH THAT ILLUSTRATES OUR INFLAMEMENT AS WELL AS THE NON AERONAUTICAL REVENUE STREAMS AND HOW THEY'VE INCREASED, SPECIFICALLY PUBLIC PARKING AND RENTAL CARS AND GROUND TRANSPORTATION ASSOCIATED WITH THAT
WE'LL ILLUSTRATE THAT LINE GRAPH TO SHARE WITH YOU KIND OF WHAT ARE SOME OF THOSE DRIVERS, BUT IT'S PRIMARILY PUBLIC PARKING
AND WITH THAT RATE INCREASE IN 2023, THAT'S NOW REFLECTED IN 2024
BUT WE'VE ALSO SEEN SUSPECT THAT PASSENGERS ARE WANTING TO LIMIT THEIR INTERACTIONS WITH FOLKS DUE TO THIS POST PANDEMIC PHASE WHERE THEY WANT TO DRIVE INTO USE OUR GARAGE SPACE BEFORE THEY TRAVEL
THERE IS A LINE GRAPH THERE JUST TO KIND OF SHOW THE REVENUE STREAMS AND HOW THEY'VE INCREASED
AND THEN YOU'LL SEE EMPLOYMENTS ARE PRETTY MUCH STABLE AND JUST RECOVERING BASED TO 2019 LEVELS
BUT IT'S REALLY PASSENGER BEHAVIOR
CLUBS AND LOUNGES FOLKS ARE TAKING ADVANTAGE OF THOSE AMENITIES HERE AT THE AIRPORT
SO THERE'S ADDITIONAL INFORMATION THAT I CAN POINT YOU TO IN THE SLIDE
EXCELLENT
AND THEN MY SECOND QUESTION WAS REGARDS TO FTES
COMMISSIONER HASEGAWA AND I RECENTLY HAD AN OPPORTUNITY TO MEET WITH THE ILW LOCAL NINE
AND ONE OF MY QUESTIONS WAS HOW DO WE ACCOUNT FOR WHAT MIGHT BE IN THE NEXT COLLECTIVE BARGAINING AGREEMENT WHEN IT COMES TO BUDGETING AND INCREASED COSTS FOR US? IS THAT FACTORED IN HERE IN OUR 24 24 FORECAST? AND THEN SECONDLY, I THINK ONE OF THE THINGS THAT WAS FLAGGED FOR US AS A CONCERN IS THAT THERE'S A PERSONNEL SHORTAGE
AND SO WHEN WE TALK ABOUT WE ONLY RAISED 9.1%, WE HAD TO MAKE A CHOICE ON HOW MANY FTES WE'RE GOING TO HIRE
AND MAYBE THIS IS A LANCE QUESTION MORE, BUT WHAT IS THE PROCESS THROUGH WHICH WE MAKE THOSE HIRING NFT DECISIONS, SPECIFICALLY AT THE AIRPORT? HAMDI, DO YOU WANT ME TO JUMP IN HERE? YES, THAT'D BE GREAT
WANT TO START? OKAY
YES
COMMISSIONER, THE PROCESS THAT I JUST WENT THROUGH, THE BUDGET, AS I SAID, IS NOT THE END
IT'S A MEANS TO THE END
SO WE ACTUALLY START WITH A BUSINESS PLAN
AND WITH A BUSINESS PLAN, WE LOOK AT WHAT ARE THE ACTIVITIES THAT WE ARE GOING TO GET DONE IN 2024? AND WE HAVE THOSE CATEGORIZED IN THE MANDATORY THE WAKES, THE PIGS
THEN WE LOOK AT WHAT ARE THE RESOURCES THAT WE ABSOLUTELY NEED IN ORDER TO GET THOSE DONE, WHAT ARE THE FTES THAT WE NEED, CONSULTANTS THAT WE NEED, MONEY THAT WE NEED, EQUIPMENT THAT WE NEED THAT'S HOW WE COME UP WITH THE FTES
AND WE HAVE TO MAKE SOME TOUGH DECISIONS
WE HAVE A LOT OF PEOPLE THAT WERE DISAPPOINTED BECAUSE THEY DID NOT GET EITHER THE MONEY OR SOME OF THE FTE REQUESTS THAT THEY ASKED FOR
BUT IT'S SOME TOUGH DECISION THAT WE HAVE TO MAKE, AND WE HAVE TO KIND OF MAKE THAT BALANCE
WE DON'T WANT TO GO OVERBOARD AND HAVE A FAT BUDGET AND A FAT ORGANIZATION
AND THEN IF ANYTHING HAPPENS, REMEMBER, ONE OF THE FIRST SLIDES HAMDI POINTED OUT IS THERE ARE A LOT OF UNKNOWNS OUT THERE
INFLATION, IT COULD BE ANOTHER PANDEMIC
THERE'S A WHOLE LOT OF UNKNOWNS
SO WE WANT TO MAKE SURE THAT WE HAVE A LEAN ENOUGH BUDGET THAT IN THE EVENTUALITY THAT WE HAVE ANY OF THESE ISSUES POPPING UP, WE DON'T HAVE TOO MANY FTES ON BOARD, BUT WE HAVE THE RIGHT AMOUNT OF FTES THAT WE NEED IN ORDER TO EXECUTE WHAT'S IN OUR BUSINESS PLAN
SO IT'S PART SCIENCE, IT'S PART ART
THERE IS NO PERFECT WAY TO MAKE THE DECISION
BUT WE ALSO THINK WE HAVE A FISCAL RESPONSIBILITY TO THE ORGANIZATION TO REQUEST JUST THE RESOURCES THAT WE NEED TO EXECUTE WHAT'S IN THE 2024 BUSINESS PLAN
THAT'S WHAT THE DRIVER FOR THE FTES AND ALL THE OTHER REQUESTS THAT YOU SEE HERE THAT WE'RE ASKING FOR APPROVAL
CAN YOU QUICKLY SPEAK TO MY FIRST QUESTION ABOUT HOW WE FACTOR IN ANY COST INCREASES FROM LABOR NEGOTIATIONS THAT ARE PENDING IN RECOGNIZING THE PENDING CONTRACTS ARE IN NEGOTIATIONS? SO FOR THE BUDGET PROCESS, WE JUST HAVE A GLOBAL ASSUMPTION
AND THAT'S SOMETHING THAT WE JUST PUT IN THE PUGET, BUT RECOGNIZING THAT THE OUTCOMES OF THOSE REPRESENTATIVE GROUPS AND THOSE LABOR CONTRACTS WILL SUPERSEDE THAT
RIGHT
SO WE HAVE TO PUT AN ASSUMPTION, BUT WE RECOGNIZE THAT THOSE CONTRACTS WILL PREVAIL AND WE'LL UPDATE THE BUDGET TO ACCOMMODATE THAT
SO IS IT FAIR TO SAY THAT WE WOULD JUST PUT IN A BENCHMARK ASSUMPTION ON LABOR COSTS IN GENERAL, AS OPPOSED TO DIVING INTO THE SPECIFICS OF THIS DIVISION, THESE WORKERS WE'RE EXPECTING? I GUESS I'M CURIOUS ABOUT HOW GRANULAR DO WE GET WHEN WE FORECAST OR WE MAKE THESE ASSUMPTIONS? IT SOUNDS LIKE WE JUST KIND OF MAKE A GENERAL ASSUMPTION ABOUT INCREASE IN LABOR COSTS
SO FOR THE 2024 BUDGET, WE HAD A GLOBAL ASSUMPTION FOR NON REPRESENTED AND THEN JUST PUT REPRESENTED AS THAT SAME ASSUMPTION, RECOGNIZING THAT THOSE CONTRACTS ARE IN NEGOTIATION
I SEE
AND SO THAT'S THE APPROACH WE TOOK
OKAY, THANK YOU
COMMISSIONER MOHAMED HAS A QUESTION
GO AHEAD
I HAVE A QUICK QUESTION
ON SLIDE 27 TO THE FTE POINT, I NOTICED THE SECURITY
I WOULD HAVE ASSUMED THE SECURITY NUMBERS WOULD BE HIGHER
HOW IS OUR SECURITY DIVIDED AMONG PORT POLICE, TSA AND AVIATION SECURITY? AND CONSIDERING SOME OF THE TSA WORKFORCE CHALLENGES, DO WE ACCOUNT FOR THAT WHEN WE'RE ALLOCATING DOLLARS TOWARDS SECURITY, OR DO WE CONSIDER THAT? YES
AND I'LL PROBABLY DEFER TO MANAGING DIRECTOR LITTLE TO SPEAK TO MORE OF THAT
YEAH
AGAIN, AS I SAID, THE REQUEST FOR FTES, FOR MONEY, FOR EQUIPMENT IS BASED ON THE ACTIVITIES THAT WE HAVE IN OUR BUSINESS PLAN
SO WHAT WE'RE ASKING FOR IS ACTUALLY WHAT WE NEED TO EXECUTE WHAT'S IN OUR BUSINESS PLAN
IN ADDITION TO THAT, WE ARE ACTUALLY CONDUCTING WHAT WE CALL AN EFFICIENCY AND EFFECTIVENESS STUDY, WHERE I THINK WE'RE GOING TO TRY TO START IT MAYBE BEFORE THE END OF THE YEAR, BUT IT'S NOT GOING TO BE COMPLETED UNTIL NEXT YEAR
WE DO THIS EVERY FOUR, FIVE YEARS
THE LAST TIME WE DID IT WAS ABOUT FIVE YEARS AGO OR SIX YEARS AGO
AND WE LOOK AT THE ENTIRE ORGANIZATION
WE BENCHMARK AGAINST OTHER AIRPORTS IN THE NATION AND THE CONSULTANTS COME UP WITH A RECOMMENDATION IN TERMS OF HOW EACH DIVISION SHOULD BE STAFFED IN ORDER FOR US TO GET TO OUR LONG TERM GOALS
SO WE'RE GOING THROUGH THAT EXERCISE AS WELL
AND ONCE THAT'S FINISHED, WE WILL HAVE MORE INFORMATION TO COME BACK TO SAY, OKAY, MAYBE WE NEED MORE FTES IN THE SECURITY DEPARTMENT, IN OPERATIONS, IN COMMERCIAL MANAGEMENT, YOU NAME IT
BUT FOR NOW, THE BUDGET REQUEST THAT WE'RE MAKING HERE IS THE FTES THAT WE NEED IN ORDER TO EXECUTE THE SPECIFIC THINGS THAT'S IN THE 2024 BUSINESS PLAN
THANK YOU
AS A POINT OF CLARIFICATION, THE POLICE DEPARTMENT IS NOT UNDER THE AVIATION BUDGET, CORRECT? CORRECT
COMMISSIONER, PHONE
I SEE
WE HAVE A GOAL WITH TSA PROCESSING, BUT IT IS TSA THAT DOES THE WORK
AND I SEEM TO RECALL IN FOLLOWING UP ON COMMISSIONER MOHAMMED'S QUESTION, THAT WE COULD SUPPLEMENT WELL, WE COULD TAKE ON THE SECURITY CHECKING, BUT YOU CAN'T JUST SUPPLEMENT IT
YOU'RE EITHER ALL IN OR YOU'RE NOT
IS THAT TRUE? HAMDI? LET ME MAYBE JUMP IN HERE AGAIN
THE IRONIC THING ABOUT OUR BUSINESS IS THAT WE HAVE MANY GOALS THAT WE ESTABLISH, THAT WE HAVE NO CONTROL OVER, BUT WE HAVE INFLUENCE BECAUSE WE DEPEND ON TSA, WE DEPEND ON THE AIRLINE, WE DEPEND ON CBP TO GET A LOT OF STUFF THAT WE'RE TRYING TO GET DONE ACCOMPLISHED
WE, HOWEVER, ASSIST US AND THE AIRLINES
WE ASSIST THE TSA
WE ASSIST CDP DURING PEAK PERIODS, FOR EXAMPLE, TO DO EXIT CONTROL
SO YOU DON'T HAVE A A TRANSPORTATION SECURITY OFFICER DOING THAT VERSUS ACTUALLY OPENING AN ADDITIONAL LANE AND DO MORE SCREENING
SO WE ASSIST
HOWEVER, THIS IS NOT SOMETHING THAT WE WANT TO DO ON A PERMANENT
IT'S VERY, VERY EXPENSIVE
AND WE THINK THAT'S THE ROLE OF THE TSA
SO WE ARE WORKING THROUGH ACI, THROUGH AAAE TO ACTUALLY LOBBY TO MAKE SURE THAT THE TSA GETS THE RESOURCES THAT THEY NEED TO PERFORM THIS FUNCTION EFFECTIVELY AND EFFICIENTLY AND NOT HAVE AIRLINES OR AIRPORT DO IT BECAUSE IT'S NOT OUR FUNCTION, IT'S NOT SUSTAINABLE
WE CAN'T DO IT CONTINUOUSLY, WE DO IT DURING PEAK PERIOD, BUT IT'S A VERY EXPENSIVE UNDERTAKING
THANK YOU
THANKS
NOTE, SIR
HEY, HOW DO YOU GO AHEAD
THANK YOU SO THE REMAINDER REQUEST ON THIS SLIDE ARE KEY INITIATIVES THAT WE'RE CONTINUING INTO 2024
AND THEN WE HAVE ALL OTHER ABOUT 6.2 MILLION THAT ARE NOT LISTED BECAUSE THEY ARE IN AGGREGATE
SO THAT COMPLETES THIS SLIDE
SO NEXT SLIDE PLEASE
SO THESE ARE SOME SMALLER PUGET REQUESTS THAT ARE ESSENTIALLY UNDER 500,000
JUST WANTED TO GIVE YOU A FLAVOR OF SOME OF THOSE REQUESTS UNDER THOSE STRATEGIC AREA FOCUS FOR THE PORT
AND YOU'LL SEE THAT IT'S SPRINKLED OUT IN THIS SLIDE SOME OF THE COMMISSIONER BUDGET PRIORITIES, WHICH WE'LL ALSO TALK ABOUT IN A SUBSEQUENT SLIDE
NEXT SLIDE PLEASE
OKAY, SO THIS TABLE JUST ILLUSTRATES THE DIFFERENT CLASSIFICATIONS FOR THE NEW FTE REQUESTS THAT WE HAVE PROPOSED, THE 39, AND AS I MENTIONED EARLIER, 29 OF THOSE FTS ARE IN THE CUSTOMER EXPERIENCE FOCUS AREA
AND THEN WE HAVE THE OTHERS IN HEALTH AND SAFETY
SECURITY, INNOVATION AND OPERATIONAL EFFICIENCIES
AND THEN LASTLY IN THE ASSET MANAGEMENT CATEGORY
NEXT SLIDE PLEASE
SO HERE'S JUST AGAIN, SOME KEY ELEMENTS TO KEEP IN MIND AS WE DEVELOP THE 2024 BUDGET IS THAT, AS I SAID EARLIER, THE RISK OF A RECESSION, HIGH INFLATION, WE KEEP THAT TOP OF MIND
AS WELL AS LOOKING AT OUR PRELIMINARY BUDGET, SOME OF THOSE FACTORS THAT WE'VE INCORPORATED PAYROLL VACANCY RATE OF 5%
WE HAVE THOSE INCREASED MEDICAL BENEFIT COSTS
WE KNOW THAT THE HR COMPENSATION PROJECT IS YET TO BE COMPLETE
SO WE FACTORED IN JUST AN ESTIMATE OUR POTENTIAL NEW AIR SERVICE INCENTIVES, WE DO HAVE PUGET IN FOR THAT, AS WELL AS THE POTENTIAL IMPACTS OF PFAS, AS WELL AS ENVIRONMENTAL REMEDIATION LIABILITY COSTS
I DO WANT TO NOTE THAT WE DID NOT INCLUDE ANY BUDGET RELATED TO EMPLOYEE PARKING AND SNOW EVENTS
EMPLOYEE PARKING MEANING KIND OF THE NEW INCREASE IN VALUE FOR EMPLOYEE PARKING PASSES
AND SO THERE'S SOME ASSOCIATED TAX IMPLICATIONS THAT WE'RE STUDYING HERE AT THE AIRPORT AND THEN SNOW EVENTS
WE DON'T HAVE THE CRYSTAL BALL, RIGHT? SO WE WILL PROBABLY ABSORB THOSE COSTS AS THEY HAPPEN THIS YEAR OR FOR 2024
NEXT SLIDE PLEASE
SORRY TO ONE MORE QUESTION FROM COMMISSIONER FELLEMAN
WELL, MAYBE NOT
SO WITH REGARDS TO PFAS, I SEE ON PAGE 25, WE ACTUALLY HAVE A SIGNIFICANT REDUCTION IN ENVIRONMENTAL EXPOSURE, BUT IN FACT THERE IS THIS ENVIRONMENTAL REMEDIATION LIABILITY IS -97.8%, BUT THERE IS A HUGE UNCERTAINTY ASSOCIATED WITH PFAS, RIGHT? SO WE ARE ASSUMING THE WHOLE BUDGET, WE HAVE LIKE A PROPOSED BUDGET, WE DON'T HAVE ASSUMING THAT LABOR COSTS WILL BE MORE OR WE DON'T HAVE AN ASSUMPTION THAT ALL THESE ENVIRONMENTAL LOBBY LIABILITIES COME IN
WE'RE JUST KNOW THIS IS WHAT WE THINK, RIGHT? IT'S A SINGULAR, IT'S A SNAPSHOT IN TIME, RIGHT
AND SO I THINK THAT'S SOMETHING THAT WITH OUR DIRECTOR SARAH COX AND ENVIRONMENTAL FOR AVIATION CAN SPEAK MORE TO
BUT AS FAR AS I JUST USE THAT AS AN EXAMPLE, RIGHT, BUT FOR THE BUDGET PURPOSE, IT IS A SNAPSHOT IN TIME FOR THE ENVIRONMENTAL REMEDIATION LIABILITY
BUT SPEAKING TO PFAS, I CAN DEFER
TO MS COX
THANK YOU AGAIN
SARAH COX WITH AVIATION ENVIRONMENT SUSTAINABILITY WITH RESPECT TO PFAS AND THE ENVIRONMENTAL REMEDIATION LIABILITY
WE ARE CURRENTLY DOING SITE ASSESSMENTS AND HAVE JUST INITIATED ENGAGEMENT WITH THE DEPARTMENT OF ECOLOGY
SO ONCE WE DEFINE WHAT AN OBLIGATING EVENT UNDER THAT REGULATORY FRAMEWORK LOOKS LIKE, WE WILL THEN INCORPORATE THAT INTO THE ERL
BUT AT THIS POINT IN TIME, IT'S EXPENSE RELATED FUNDING FOR OUR INVESTIGATION FOR PFAS
SO YOU DON'T EXPECT A CLEANUP BILL UNTIL THE FOLLOWING YEAR OR LATER, DEPENDING ON RIGHT, BUT THIS IS JUST TO STUDY THEN
SO WHILE I HAVE YOU THERE SO I SEE THE DECARBONIZATION STUDY, CORRECT
IS GRANT FUNDED? YES, IT'S THE MONEY IN HAND
2024
WE HAVE AN FAA GRANT UP TO $900,000 TO EVALUATE DECARBONIZING, OUR CENTRAL MECHANICAL PLANT
SO THAT GRANT FUNDING IS ACTUALLY HARD MONEY? YES
ALL RIGHT, I'M SORRY
AND IT'S A PERCENTAGE WE REALLY NEED TO 1015
WE GOT 45 MINUTES LEFT
WE GOT TO GET THROUGH UNCERTAINTIES IN OUR BUDGET
WE'RE AT DO THAT AND WE'LL HAVE A CHANCE AT THE END
THANK YOU
GO AHEAD
OKAY, I'M NOT GOING TO TAKE ANY MORE QUESTIONS UNTIL THE END OF HEIDI'S PRESENTATION
THANK YOU
AND WE CAN NEXT SLIDE, PLEASE
SO WE WANTED TO HIGHLIGHT THE COMMISSIONER 2024 BUDGET PRIORITIES
AND AS MANAGING DIRECTOR LITTLE MENTIONED EARLIER THAT THIS IS JUST A FEW OF THEM
IT'S NOT THE WHOLE INVENTORY OF PRIORITIES THAT WE'RE WORKING ON WITH THE COMMISSION AT THE AIRPORT, BUT JUST SOME OF THE NOTABLE ONES THAT WE WANTED TO ILLUSTRATE HERE THAT OUR INCREASE IN BUDGET FOR 2024 WILL CONTINUE TO WORK IN PRECONDITIONED AIR, ANTI HUMAN TRAFFICKING, ACCESS TO AFFORDABLE, HIGH QUALITY CHILDCARE FOR AIRPORT WORKERS
AND LASTLY, HYGIENE PRODUCT VENDING MACHINES
NEXT SLIDE, PLEASE
OKAY, SO THIS SLIDE ILLUSTRATES OUR NET OPERATING INCOME FOR AERONAUTICAL
AND AS I MENTIONED EARLIER, AERONAUTICAL REVENUES ARE BASED, ARE COST RECOVERY AND ARE REGULATED BY THE FAA
AND SO, AS YOU CAN SEE HERE, TOTAL BASE REVENUES HAVE A MODEST INCREASE FOR 2024 OF 4.3%, AS WELL AS THE AERONAUTICAL AERONAUTICAL EXPENSES, ROUGHLY ABOUT 8.9%
NEXT SLIDE, PLEASE
THIS SLIDE ILLUSTRATES OUR NON AERONAUTICAL NET OPERATING INCOME
IT IS A LOT OF NUMBERS, BUT TO YOUR POINT, COMMISSIONER CHO, AS I MENTIONED, PUBLIC PARKING IS INCREASING IN REVENUE BECAUSE IT CAPTURES THAT RATE INCREASE IN 2023, BUT ALSO PASSENGER BEHAVIOR
SO WE SEE A 14.7% INCREASE IN REVENUES FOR PUBLIC PARKING WHEN COMPARED TO 2023
AND ALSO RENTAL CARS, WE SEE A 14.4% INCREASE
AND THEN THE OTHER LINE ITEMS ASSOCIATED WITH NON AERONAUTICAL REVENUE STREAMS, AIRPORT DINING AND RETAIL CLUBS AND LOUNGES AND UTILITIES
AND THEN AGAIN, JUST WANT TO HIGHLIGHT THAT IN THE LESS CONCESSION RELIEF GRANTS ROW
AS YOU CAN SEE, WE'VE EXHAUSTED ALL OF THOSE GRANTS IN 2024
SO JUST WANTED TO POINT THAT OUT THAT WE'VE DRAWN DOWN ON ALL OF THOSE GRANTS
NEXT SLIDE, PLEASE
NOW, COMMISSIONER TRO, THIS IS THE SLIDE I WAS ALLUDING TO EARLIER
SO THIS ILLUSTRATES THE NON AERONAUTICAL REVENUES IN COMPARED TO EMPLOYMENTS
AS YOU CAN SEE, THE EMPLOYMENTS ARE RECOVERING FROM 2019, BUT YOU SEE THE PASSENGER BEHAVIOR OF UTILIZING NON AERONAUTICAL REVENUES
PUBLIC PARKING, GROUND TRANSPORTATION HAS INCREASED MORE AND WE ASSUME THAT IT IS ASSOCIATED WITH FOLKS TAKING ADVANTAGE OF MORE ADVANTAGE OF CLUBS AND LOUNGES AND THE PARKING AT THE AIRPORT GARAGE
NEXT SLIDE, PLEASE
SO NOW WE'LL TRANSITION TO TALK TO REVIEW OUR FIVE YEAR PRELIMINARY CAPITAL FORECAST
NEXT SLIDE
AND SO WITH THIS SLIDE, WE WANT TO PROVIDE KIND OF AN OVERVIEW OF OUR CAPITAL PROGRAM OBJECTIVES
WE WANT TO PROVIDE FACILITIES THAT MEET OR EXCEED OUR STRATEGIC AND BUSINESS PLAN OBJECTIVES
AS MANAGING DIRECTOR LITTLE MENTIONED EARLIER, FIVE STAR TRACKS RATING AND TOP 25 AIRPORT SERVICE QUALITY
WE WANT TO MAKE SURE WE'RE THE MOST ACCESSIBLE AIRPORT AND THE GREENEST AIRPORT
AND SOME OF THOSE EXAMPLE PROJECTS THAT ARE HELPING US GET THERE OR WILL HELP US GET THERE, IS OUR SEA GATEWAY NORTH MAIN TERMINAL REDEVELOPMENT PROJECT, OUR C CONCOURSE EXPANSION PROJECT, AND ALSO OUR BAGGAGE OPTIMIZATION PROJECT
AND THESE ARE CONSIDERED THREE OF OUR MEGAPROJECTS, WHICH ARE OVER $300 MILLION
NEXT SLIDE, PLEASE
SO, AS YOU CAN SEE HERE, THIS IS A LOOK AHEAD OF OUR CAPITAL PROGRAM FORECAST
ON THE TOP THERE TO THE LEFT, YOU'LL SEE OUR MEGA PROJECTS
AS I MENTIONED JUST MOMENTS AGO, BAGGAGE OPTIMIZATION, C CONCOURSE, SEA GATEWAY, S CONCOURSE, EVOLUTION, AND THE MAIN TERMINAL IMPROVEMENT PROJECTS ARE SOME OF OUR LARGER PROJECTS THAT WE HAVE AT THE AIRPORT
AND WITH JUST THOSE MEGAPROJECTS, WE ANTICIPATE IN THE FIVE YEAR FORECAST, ROUGHLY $2.3 BILLION OF CASH FLOWS
AND THEN DOWN BELOW YOU'LL SEE THAT WE HAVE A LINE ITEM FOR OTHER CAPITAL PROJECTS, OUR SAMP PRELIMINARY PLANNING AND DESIGN FORECAST, AND CIP RESERVES
NEXT SLIDE, PLEASE
SO THIS SLIDE ILLUSTRATES IN A BAR CHART FORM THAT WITH OUR MEGAPROJECTS, WHICH ARE THE DARK BLUE, WE ANTICIPATE OUR PEAK SPENDING IN 2025 AT ROUGHLY 1.25 BILLION
AND SO IN THE GREEN, YOU SHOULD SEE THE 100 TO 300 MILLION DOLLAR PROJECTS
AND THEN THE LIGHTER BLUE, YOU SEE THE 20 TO 100 MILLION DOLLAR PROJECTS
AND THEN THE ORANGE IS SOME OF OUR LOWER UNDER $20 MILLION PROJECTS
AND THEN THE GRAY IS OUR CIP RESERVES
SO OVER THE FIVE YEAR PERIOD, WE'RE FORECASTING TO SPEND APPROXIMATELY $5 BILLION
AND THIS WILL HELP US BE READY FOR THE FIFA WORLD CUP IN 2026
SO WE WANT TO MAKE SURE WE GET THOSE PROJECTS UNDERWAY TO ACCOMMODATE PASSENGERS AND TRAVELERS DURING THAT TIME
NEXT SLIDE, PLEASE
SO, AS WE PRIORITIZE OUR BUDGET REQUEST, WE ALSO PRIORITIZE AND CATEGORIZE OUR CAPITAL PROJECTS
SO THIS IS A TABLE THAT ILLUSTRATES THE VARIOUS CATEGORIES OF OUR CAPITAL PROJECTS
AS YOU CAN SEE, THE PURPLE IS OUR MEGAPROJECTS, AS I MENTIONED EARLIER, BUT ALSO LOOKING AT OUR RENEWAL REPLACEMENT FORECAST, APPROXIMATELY $700 MILLION
WE'RE STAYING ON TOP OF RENEWAL AND REPLACEMENT
ONE EXAMPLE PROJECT IS OUR INDUSTRIAL WASTE TREATMENT PLANT
WE'RE DOING EXPANSION THERE OR RENOVATIONS THERE
ALSO, WE HAVE OUR BUSINESS NEEDS OF ROUGHLY 770,000,000
AND AN EXAMPLE PROJECT IS OUR POST INTERNATIONAL ARRIVALS FACILITY, AIRLINE REALIGNMENT
AND THEN WE HAVE NOISE, OUR SAMP DESIGN, PRE APPROVAL AND SLOWER AGREEMENT AS WELL AS RESERVES AND ALLOWANCES
SO, JUST WANTED TO ILLUSTRATE THIS IN A WAY LIKE A PIE CHART, AS WELL AS SHOW THE CATEGORY COSTS
NEXT SLIDE, PLEASE
SO, WE HAVE INCLUDED TWO NEW PROJECTS IN THE 2024 BUDGET
ONE IS A GATE MODIFICATION PROJECT, ROUGHLY 115,000,000
AND THE SECOND PROJECT IS A SMALL JOBS PROJECT OF $10 MILLION, WHICH IS TO DO WORK AT THE AIRPORT FOR JOBS THAT ARE UNDER $300,000
SO THAT'S JUST SIMPLY JUST TWO PROJECTS THAT WE'VE ADDED FOR 2024
NEXT SLIDE, PLEASE
SO NOW WE'LL TRANSITION TO THE LOOK AHEAD AND THE PRELIMINARY FINANCIAL FORECAST, LOOKING AT REVENUES AND EXPENDITURES IN TOTAL
NEXT SLIDE, PLEASE
AND LOOKING AT OUR FINANCIAL FORECAST OBJECTIVES
IT'S REALLY TO ENSURE THAT THE AIRPORT'S FIVE YEAR FINANCIAL LOOK MEETS OR EXCEEDS OUR FINANCIAL PERFORMANCE
AND WE HAVE THOSE KEY FINANCIAL TARGETS THAT I'VE MENTIONED EARLIER ABOUT ACHIEVING GREATER THAN 1.4 TIMES OF OUR DEBT SERVICE COVERAGE IN THE 18 MONTHS OF CASH ON HAND FOR OUR AIRPORT DEVELOPMENT FUND
AND ALSO JUST CONSISTENTLY GROWING OUR NON AERONAUTICAL REVENUES
NEXT SLIDE, PLEASE
SO WITH THIS TABLE, IT IS A LOOK AHEAD AND WE INCLUDED SOME VERY CONSERVATIVE FINANCIAL ASSUMPTIONS FOR OUR AERONAUTICAL REVENUES AND NON AERONAUTICAL REVENUES, AS WELL AS OUR OPERATING EXPENSES
WE DO SEE AN AVAILABILITY FOR DEBT SERVICE OVER THE FORECAST THAT ROW, AS WELL AS LOOKING AT OUR CFC, WHICH IS OUR CUSTOMER FACILITY CHARGE OFFSETS
THOSE ARE COSTS THAT ARE PAID BY THE RENTAL CAR COMPANIES AND THEN OUR PASSENGER FACILITY CHARGE OFFSETS INCREASE MODESTLY THROUGH THE FORECAST
NEXT SLIDE, PLEASE
SO, CONSIDERING OUR FINANCIAL FORECAST, WE ALSO HAVE THE FORECAST METRICS THAT I'VE BEEN ALLUDING TO AGAIN, DEBT SERVICE COVERAGE
THIS IS THE LOOK AHEAD AS WELL AS LOOKING AT CASH ON HAND, OUR COST PER EMPLOYMENT FORECAST AND THE OTHER ITEMS, I DON'T WANT TO GO THROUGH THEM ALL, BUT JUST TO KNOW THAT THOSE ARE SOME OF THE FINANCIAL FORECAST METRUCK THAT WE MONITOR AND TRY TO TARGET AT THE AIRPORT
NEXT SLIDE
OUR NEXT SECTION WILL GO INTO EQUITY AND SPENDING
AND FOR THE AIRPORT, WE HAVE THREE ITEMS THAT ARE NEW IN THE 2024 BUDGET
FOR EQUITY AND SPENDING, WE HAVE OUR CELEBRATIONS AND CULTURAL CONNECTION EVENTS FOR SEA'S 75TH ANNIVERSARY
THAT'S GOING TO BE A COST SHARE BETWEEN OUR CONCESSIONAIRE TENANT MARKETING FUND AND WITH THE AIRPORT
ALSO, WE'RE SPONSORING OUR OPEN DOORS ORGANIZATION AND CO HOSTING UNIVERSAL ACCESS AND AVIATION CONFERENCE, AS WELL AS INCREASING OUR ENGAGEMENT WITH THE AIRPORT MINORITY ADVISORY COUNCIL
NEXT SLIDE
THIS CHART ILLUSTRATES KIND OF OUR OVERALL SPENDING
SO IT INCLUDES OUR NEW EQUITY AND SPENDING REQUEST FOR 2024, AS WELL AS OUR EXISTING EQUITY AND SPENDING ELEMENTS
AND SO FOR ENGAGEMENT, WE SEE IN THE GREEN THERE 650,000 FOR 2024, SUPPLIER DIVERSITY, 205,000, AND REMOVING SYSTEMIC BARRIERS, 163,000 AND THEN COMMUNITY INVESTMENTS, 100,000, TOTALING 1.1 MILLION
NEXT SLIDE, PLEASE
AND THEN THIS IS JUST ILLUSTRATING IT BY YEAR AND SOME DETAIL ON THOSE NON RECURRING INVESTMENTS OF SOME OF THE NEW INVESTMENTS THAT WE ADDED FOR 2024 AND SOME OF OUR ONGOING INVESTMENTS IN EQUITY AND SPENDING AT THE AIRPORT
NEXT SLIDE
SO WITH THAT PRESENTATION OF ALL THOSE ELEMENTS, WE WANTED TO MAKE SURE YOU HAVE SOME KEY BUDGET TAKEAWAYS FOR THE AVIATION PRELIMINARY BUDGET AND SO LOOKING AT REVENUES AGAIN, ONLY LIMITING IT OR INCREASING AT 7.5%
ALSO SOME OF THE EXPENSE COMPONENTS TO KEEP IN MIND AND LOOKING AT OUR FINANCIAL FORECAST, SOME OF THE TARGETS THAT WE ANTICIPATE MEETING AND BEING MINDFUL OF THE BUDGET UNCERTAINTIES THAT WE ARE KEEPING TOP OF MIND AS WE GO THROUGH, PREPARE THE BUDGET AND GO INTO 2024
AND WITH THAT NEXT SLIDE, PLEASE
THAT CONCLUDES THE PRESENTATION
HAPPY TO TAKE QUESTIONS
EXCELLENT
THANK YOU SO MUCH, HEIDI
I REALLY APPRECIATE IT
WE'RE GOING TO START WITH COMMISSIONER HASEGAWA
GOOD MORNING, HEIDI
GOOD MORNING
THANK YOU FOR THE PRESENTATION
I JUST HAVE A COUPLE OF CLARIFYING QUESTIONS
SURE
SO ON SLIDE 32, WHEN YOU SAID THAT YOU EARMARKED SPACE FOR THE HR COMPENSATION PROJECT PENDING COMPLETION, DID YOU CALCULATE THAT BY THE NUMBER OF IMPACTED PERSONNEL? SO I WILL DEFER TO OUR EXECUTIVE ON THAT QUESTION
YEAH, WE JUST HAVE A NUMBER THERE
WE'RE NOT SURE EXACTLY WHERE WE'LL LAND WHEN WE COMPLETE THE WORK
SO IT'S BASICALLY A NUMBER THAT WE CAME UP WITH SIMILAR A PLUG TO DO THAT
IF IT WAS ABOVE OR BELOW THAT, WE CAN ADJUST TO THAT
AND THE NUMBER WAS 6 MILLION
I BELIEVE THAT WE PLUGGED IN THERE FOR THAT
IS IT LIKE A RANDOM EARMARKED NUMBER OR HOW IS THAT NUMBER CALCULATED? IT'S PRETTY CLOSE BECAUSE WE'RE STILL NOT FINISHED OF WHAT THE TOTAL IMPACT IS
BUT WE WANTED TO HAVE SOMETHING THAT WE COULD ADJUST TO RATHER THAN LEAVING IT BLANK AND KNOWING BECAUSE WE DIDN'T HAVE A NUMBER
SO IT'S OUR BEST GUESS OF WHAT WITHIN A PERCENTAGE PLUS OR MINUS A PERCENTAGE THAT WE THINK IT'S GOING TO
IT MIGHT BE A FOLLOW UP QUESTION FOR DIRECTOR GERARD, BUT I'M WONDERING IF WE HAVE AN ESTIMATE OF HOW MANY PERSONNEL MIGHT BE IMPACTED BY THE COMMISSIONER
THANK YOU
THAT'S WHAT WE'RE WORKING ON NOW
WE CAN REPORT BACK ON THAT ON THE WHOLE PROCESS OF HOW WE'RE GOING
AND THEN ON PAGE SLIDE 35, JUST OH, I'M SO SORRY
SLIDE 33
I AM SO PLEASED TO SEE THAT YOU'VE EARMARKED AND PULLED OUT FOR US THESE COMMISSIONER 2024 BUDGET PRIORITIES
IN PARTICULAR, CONTINUING THE EFFORT TO COMBAT HUMAN TRAFFICKING, TO DEVELOP A REQUEST FOR A PROPOSAL TO CONTINUE THE EFFORT TO ESTABLISH AFFORDABLE, QUALITY, ACCESSIBLE CHILDCARE FOR AIRPORT WORKERS AND ALSO FOR HYGIENE PRODUCTS
THE VISION WAS THAT THE HYGIENE PRODUCTS WOULD BE FREE, INCLUDING FOR TRAVELING MEMBERS OF THE PUBLIC
SO I'M JUST WONDERING ABOUT THE NOMENCLATURE HERE
HYGIENE PRODUCT, VENDING MACHINE OR IS IT SOMETHING THAT FOLKS WILL HAVE TO PAY IN ORDER TO ACCESS? OR IS IT ACTUALLY JUST A DISPENSER WHERE YOU PUSH AND IT COMES OUT? AS I UNDERSTAND IT, IT'S A DISPENSER, NOT SOMETHING
IT IS THE LATTER, COMMISSIONER
RIGHT
OKAY
I THOUGHT SO
THANK YOU SO MUCH FOR THAT DISTINCTION
NO FURTHER QUESTIONS
THANK YOU, PRESIDENT CHO
EXCELLENT
ANY OTHER QUESTIONS? YES, I'M GOING TO GO WITH RYAN FIRST
THANK YOU FOR THE PRESENTATION
JUST A FEW THOUGHTS AND QUESTIONS THAT I WROTE UP
SO I GET THIS PRESENTATION
WE RECEIVED IT IN ADVANCE AND I READ THROUGH IT
AND MY VERY FIRST THOUGHT WAS IF THIS WERE A TYPICAL BUSINESS, EVERYBODY WOULD WANT TO GET INTO IT
IT'S INCREDIBLY GOOD CASH FLOW COMING OUT OF THIS ENTITY
JUST EXTRAORDINARY WHEN YOU LOOK AT THE OVERALL NUMBERS THAT OUR NET OPERATING INCOME IS $360,000,000
WE ALSO HAVE AN ENTITY THAT HAS A RAVENOUS APPETITE FOR CAPITAL CONSTRUCTION
AND SO WE TAKE ALL THAT NET CASH FLOW EACH YEAR AND WE IMMEDIATELY PUT IN TO BUILDING NEW BUILDINGS, TO, OBVIOUSLY SOME MAINTENANCE PROJECTS AND REFURBISHMENT
IT'S JUST AN ENORMOUS AMOUNT OF ECONOMIC ACTIVITY IN THIS ONE PLACE
AND I THINK A FEW THINGS THAT COME OUT OF THAT IS IT IS IN THIS NEXT FIVE YEAR CYCLE WHERE YOU SHOW THAT WE'RE PLANNING TO SPEND $4.9 BILLION
IF WE MEET ALL OF THIS, AS YOU POINT OUT, OUR DEBT SERVICE COVERAGE IS GOING TO DROP SIGNIFICANTLY FROM 1.8 TO, I THINK 1.5, YOU SAID
CORRECT? THOSE NUMBERS ARE BASED ON US MEETING THE CAPITAL BUDGET TARGETS
WHAT IS OUR RECORD FOR IF WE BUDGET, LET'S SAY, A BILLION DOLLARS FOR ANY GIVEN YEAR, HOW FREQUENTLY DO WE ACTUALLY SPEND ABOUT A BILLION DOLLARS? OR IS IT NORMALLY MORE THAN THAT OR NORMALLY LESS THAN THAT? THAT'S A GREAT QUESTION
I'LL BE GLAD TO JUMP IN BECAUSE COMMISSIONER, I GO BACK TO THE STUDY, IF THAT'S OKAY
OF COURSE, A FEW YEARS AGO, AND LANCE WOULD BE GLAD TO CHIME IN TOO, THAT WE DID THAT STUDY OF SAYING OVER
IT MAY NOT BE PERFECT WITH A GIVEN YEAR BECAUSE PROJECTS MAY SLIDE WITHIN A GIVEN YEAR, BUT OUR TRACK RECORD IS ABOUT HIGHER THAN 60%
I'M LOOKING ON YOUR 75
75% ACCOMPLISHING IT WITHIN A FIVE YEAR PERIOD
SO LET'S SAY WE STICK TO THAT TREND OF 75%
THEN BY THE TIME WE GET TO 2028, WE WON'T HAVE SPENT NEARLY AS MUCH ON CAPITAL AS WE HAD BUDGETED AND QUITE HONESTLY, HAD HOPED TO BECAUSE WE WANT TO BE ABLE TO SPEND ALL THIS MONEY AND GET ALL THESE PROJECTS DONE
BUT IF WE DON'T, OUR DEBT SERVICE COVERAGE WILL BE SIGNIFICANTLY LOWER
WOULDN'T IT BE, IN THAT CASE, IF WE SPEND LESS AND OUR REVENUES ARE RELATIVELY CLOSE TO WHAT WE ME, I HAVE MY COLLEAGUE HAN, IF YOU WANT TO COME SPEAK TO THIS
HAN WYNN, SENIOR MANAGER AT AVIATION FINANCE
SO OUR PLAN, THE FIVE YEAR PLAN, IF WE DON'T SPEND ANY FURTHER PROJECTS BEYOND 2028, THEN OUR DEBT SERVICE WILL INCREASE BECAUSE WE'RE NOT PAYING FOR THE DEBT
BUT RIGHT NOW WE HAVE A BIGGER CAPITAL PROGRAM
AND SO WHAT YOU'RE SEEING RIGHT NOW IS FIVE YEAR, BUT WE DO HAVE A TEN YEAR PROGRAM THAT'S UPCOMING
OKAY, GREAT
WE'RE DOING GREAT BASED ON THE NUMBERS, PARTICULARLY COMING OUT OF COVID AND WE'RE SEEING LOTS OF POSITIVE SIGNS HERE
I WANT TO DIG IN A LITTLE BIT TO THE WHOLE AIRPORT ECOSYSTEM AND ASK THE QUESTION, IS IT THAT WE'RE DOING WELL, BUT OUR VENDORS, CARRIERS, ET CETERA, ARE NOT DOING WELL? OR IS IT THAT GENERALLY, THE FINANCES OF THE AIRPORT, ITS VENDORS, ITS CARRIERS, THE SMALL BUSINESSES, IS IT GENERALLY POSITIVE NEWS? I WOULD SAY SO
GENERALLY POSITIVE
I CAN JUMP INTO THAT
AND IF KELLY IS IN THE ROOM OR JEFF WOLF OR THEY'RE ONLINE, THEY CAN JUMP INTO THAT
GENERALLY, WE ARE DOING GOOD
GENERALLY, THERE ARE SOME, OF COURSE, SOME VENDORS THAT ARE DOING BETTER THAN OTHERS
MANY OF OUR TENANTS, THOUGH, COMMISSIONER, THEY FACE THE CHALLENGE OF NOT BEING ABLE TO STAFF THEIR BUSINESS APPROPRIATELY
SO SOME OF THEM THAT WOULD LIKE TO OPEN LONGER OR TO HAVE MORE SEATS AVAILABLE, I THINK SOME OF THEM ARE STILL STRUGGLING BECAUSE THEY JUST DON'T HAVE THE STAFF AT HAND
BUT I WOULD SAY THAT GENERALLY THEY'RE DOING REALLY WELL
AND I DON'T KNOW IF KALIA OR JEFF WOLF IS ONLINE TO MAYBE BACK ME UP ON THAT ONE, BUT THAT'S A CONVERSATION THAT I'VE HAD WITH KALIA MOORE
OKAY, YEAH, I THINK THAT'S A PARTICULARLY IMPORTANT THING FOR US TO THINK ABOUT AS WE MOVE BACK IN AGAIN TO THE CONVERSATION AROUND THE NEXT SLOA, TOO, IS JUST TO SORT OF UNDERSTAND THE HEALTH OF EVERYONE INVOLVED
LAST QUESTION ON THE BUDGET ITSELF IS I'M TRYING TO THINK AS COMMISSIONER, WE'RE TRYING TO THINK LONG TERM
AND EVEN IN SIX YEARS HERE, I REALLY HAVEN'T BEEN LOOKING AT A BUDGET WHERE CAPITAL SPEND IS DECREASING OR IS RELATIVELY MINIMAL
AND YET THERE HAVE BEEN PERIODS IN PORT HISTORY WHEN WE DIDN'T INVEST ALL THAT MUCH IN THE AIRPORT, EITHER BECAUSE OF A PROLONGED ECONOMIC SLOWDOWN OR TROUBLE IN THE AVIATION INDUSTRY
AND IN FACT, PERIODS LIKE THIS ARE SOMEWHAT ATYPICAL
WE'RE IN THE MIDDLE OF A GENERATION OR EVEN MAYBE A HALF CENTURY SPEND ON THE AIRPORT
IT SEEMS TO ME THAT I REMEMBER ONE OF THE EARLIEST PRESENTATIONS ON THE NORTH AND SOUTH SATELLITES THAT I RECEIVED WAS ABOUT HOW THESE ARE FACILITIES FROM THE 1970S
NO REAL SIGNIFICANT INVESTMENT HAS BEEN MADE IN THEM
AND NOW, OVER THE COURSE OF THE TEN YEARS BEGINNING, FROM THE NORTH SATELLITE PROJECT THROUGH TO WHEN WE COMPLETE THE SOUTH SATELLITE PROJECT, WE'RE GOING TO SPEND $2 BILLION ON THOSE TWO FACILITIES, AN EXTRAORDINARY AMOUNT OF MONEY
AND AS YOU MENTIONED, WE'RE NOT EVEN TALKING ABOUT SAMP HERE, WHICH WILL BE, IF IT COMES TO PASS, WILL BE A HUGE AMOUNT OF MONEY
AND SO THESE KINDS OF CAPITAL CAMPAIGNS THAT WE'RE IN THE MIDST OF RIGHT NOW ARE REALLY MAYBE ONLY THEY HAPPEN ONCE IN A GENERATION OR EVEN MAYBE ONCE AND A HALF CENTURY
AND KNOWING THAT WE'RE IN A CONSTRAINED FOOTPRINT, THIS MAY BE THE LAST BIG PUSH FOR EXPANSION OF THE FOOTPRINT AT SEATAC
AND SO I THINK FOR ME, OUR EFFORTS TO SHORE UP OUR INTERNAL CAPACITY TO TAKE ON THESE PROJECTS IS REALLY, REALLY IMPORTANT
AND SO WE TALKED ABOUT THIS, I THINK, AT THE LAST MEETING, ABOUT THE NEED TO HAVE NOT JUST WE SORT OF CENTERED ON ENGINEERING, BUT ALL OF THE CPO AND AUDIT TEAM AND EVERYONE THAT NEEDS TO COME AROUND
AND MAKE SURE THAT IN THESE BILLION DOLLAR BUDGETS, WE'RE MANAGING THAT MONEY WELL AND DOING THOSE PROJECTS IN SUCH A WAY THAT WE'RE KEEPING ON SCHEDULE AND BUDGET AS BEST AS POSSIBLE WITHOUT A LOT OF WASTE
OR INEFFICIENCY THE LAST QUESTION I HAD IS I JUST COMMENT, I JUST WANT TO GO BACK TO SOMETHING THAT WE WERE TALKING ABOUT AT THE VERY START OF THIS CONVERSATION
AND I JUST WANT TO SAY TO YOU, STEVE, I THINK ON SLIDE THREE, WE COULD GO TO SLIDE THREE
SORRY, IT GOES WAY, WAY BACK
THIS DIAGRAM OF HOW WE MAKE DECISIONS WITHIN THE ORGANIZATION HAS BEEN A REAL POINT OF CLARITY FOR ME UNDER YOUR LEADERSHIP AS EXECUTIVE DIRECTOR, THAT IT HELPS US TO UNDERSTAND IN THE ORGANIZATION WHO'S DECIDING WHAT, WHO'S DECIDING THE TACTICS AND THE DETAILS AND WHO'S SETTING THE LONG TERM VISION AND ESSENTIALLY THE CENTURY AGENDA GOALS
AND IN FACT, IN 2020, THE COMMISSION DID UPDATE THE CENTURY AGENDA GOALS
IN JUNE OF 2020
WE UPDATED THEM WITH INPUT FROM MULTIPLE PEOPLE ON THE DIASPORA TODAY
AND SO WE DO OWN THOSE GOALS
THEY ARE OUR GOALS
AND I APPRECIATE THAT THROUGH THE DELEGATION OF AUTHORITY, WE HAVE GIVEN YOU THE AUTHORITY TO MAKE DECISIONS AROUND THE TACTICS AND THE DETAIL ORIENTED STUFF
AND SO I THINK IT'S A GOOD SYSTEM
THERE ARE TIMES WHEN I, AS A COMMISSIONER, WANT TO KNOW SOME OF THE DETAILS AROUND THAT STUFF
BUT AN EXAMPLE I OFTEN THINK OF IS, AND I'M NOT TRYING TO BRAG HERE, BUT THERE WAS A POINT IN MY CAREER WHERE I WAS AN EXPERT ON CERAMIC TILE AND MY SIX YEARS AT THE PORT OF SEATTLE, LITERALLY, I WAS ON THE TECHNICAL ADVISORY COMMITTEE FOR THE NATIONAL COUNCIL THAT DETERMINED WHERE TILE COULD BE USED
NOT ONCE AS A COMMISSIONER HAVE I EVER BEEN ASKED ABOUT CERAMIC TILE, EVEN THOUGH WE BUY A LOT OF IT AT THE PORT OF SALE, PARTICULARLY AT THE AIRPORT
AND THAT IS PERFECTLY APPROPRIATE
IF ANYBODY EVER WANTED TO ASK, THEY COULD
BUT I DON'T THINK THAT'S MY ROLE HERE
IN FACT, I THINK I NEED TO STAY MUCH HIGHER LEVEL
AND SO I REALLY APPRECIATE THIS BREAKDOWN OF AUTHORITY, AND I'M GOING TO CONTINUE TO SUPPORT THAT METHOD FOR MAKING DECISIONS AT THE PORT
THANK YOU
COMMISSIONER FELLEMAN, I STILL BELIEVE IT'S OBVIOUSLY NECESSARY TO SHOW COMMISSION INPUT IN THIS PROCESS AT A HIGHER LEVEL
I'M NOT TALKING ABOUT PRACTICAL MANAGEMENT ISSUES ON A DAY TO DAY BASIS
THERE'S NO WORD COMMISSION IN THIS STRUCTURE
WE'RE HIRED BY THE PUBLIC
WE HIRE YOU
WE SHOULD BE REFLECTED SOMEPLACE IN HERE
I'LL STAND BEHIND THAT
I DON'T WANT TO GET INTO A DEBATE WITH RYAN
ONE OF THE THINGS I SAW WAS INTERESTING WAS THAT CPE IS DOWN FOR 2024, BUT A CIP PEAK IS IN 2025
SO I ASSUME THE DECREASE IN THE CIP CPE IT'S EASY FOR YOU TO SAY IS DUE TO THE FACT THAT WE HAVE THESE OTHER NON AERONAUTICAL REVENUES GOING INTO WELL, SO FOR CPE, WHY IT'S GOING DOWN IS THAT WHERE THOSE CAPITAL PROJECTS WHILE THEY'RE IN CONSTRUCTION, THE AIRLINES AREN'T CHARGED THE DEBT SERVICE ASSOCIATED WITH IT UNTIL IT'S COMPLETED
SO THERE'S GOING TO BE A DELAY
AND YOU'LL SEE IT IN THE OUT YEARS, IT INCREASES VERSUS KIND OF THE NEAR TERM 2025
THANK YOU
GETTING BACK TO THAT OVERALL FIVE YEAR LOOK AT THINGS AND I'M JUST WONDERING, IN THE COURSE OF EACH ONE OF THESE PROJECTS, THERE'S ALL THESE UNCERTAINTIES WHETHER LABOR OR WHATEVER, AND YOU SAY, WELL, WE'RE DOING OUR BEST GUESS AND I APPRECIATE THAT, AND YOU'RE THE ONES THAT ARE THE POSITION TO MAKE THE BEST GUESS
BUT IT WOULD BE INTERESTING TO KNOW WHEN WE TALK ABOUT THESE UNCERTAINTIES, WHETHER WE'RE BEING OPTIMISTIC OR PESSIMISTIC, IS THE UNCERTAINTY OF THE RECESSION, HOW HEAVY IS THAT WEIGHING ON YOU IN TERMS OF JUST TO GET A SENSE OF IS THIS A TOTALLY CONSERVATIVE BUDGET OR ARE THERE PLACES WHERE WE'RE REALLY KIND OF LIKE PUSHING IT? AND SO I NEVER GET THAT SENSE IN TERMS OF WHEN YOU SAY WE MADE OUR BEST JUDGMENT, DOES THAT MEAN THAT YOU'RE BULLISH OR NOT? SO OVERALL IT'S IMPORTANT TO KNOW
BUT I'M JUST WONDERING, IT SEEMS TO ME IN CERTAIN AREAS THERE'S VARYING LEVELS OF UNCERTAINTY
THERE IS
AND I WILL SAY WE HAVE IN THE APPENDIX SECTION KIND OF SOME OF OUR CONSERVATIVE FINANCIAL FORECAST ASSUMPTIONS, RIGHT? LOOKING AT TAKING A LOOK BACK, WHAT HAS THE EXPERIENCE HAVE BEEN AND THEN INCLUDING A FORECAST ASSUMPTION FOR THE LOOK AHEAD AND ALSO WORKING WITH OUR CENTRAL SERVICE PARTNERS TO INFORM OUR ASSUMPTIONS AS WELL
SO IT'S NOT THIS KIND OF ARBITRARY NUMBER THAT WE'RE DROPPING IN
WE ARE MONITORING THE ECONOMY, THE MARKET, AND ALSO THE INDUSTRY, WHAT'S HAPPENING ACROSS THE NATION TO INFORM OUR ASSUMPTIONS TO BE MORE CONSERVATIVE
HOPEFULLY THAT OVERALL IT'S CONSERVATIVE ESTIMATES, AND I ASSUME THAT WOULD BE THE CASE
BUT THERE ARE CERTAIN PLACES
AND THE ONLY OTHER THING WAS CLEARLY THAT WE'RE INVESTING MONEY IN SAMP TO DO SOME DEVELOPMENT OF IDEAS, BUT PLANNING AND YOU DON'T THINK ANY CONSTRUCTION IS LIKELY TO BE GOING ON WITHIN THE FIVE YEAR BECAUSE WE KEEP ON TALKING ABOUT SAMP IS EXCLUDED, BUT IT'S THIS ELEPHANT IN THE CLOSET, OR IT IS IN THE ROOM
THE FORECAST EXCLUDES THE SAMP NEAR TERM PROJECT SO THAT WAS JUST LIKE ONE OF THE THINGS IS KNOW THIS BUDGET WITH SAMP
THIS BUDGET WITHOUT SAMP IN TERMS OF HAVING SOME PROJECTION OF WHETHER ONE OF THE UNCERTAINTIES WE'RE DEALING WITH
YEAH
WHAT'S INCLUDED COMMISSIONER, IN THE BUDGET FOR SAMP IS ACTUALLY GETTING THROUGH THE ENVIRONMENTAL REVIEW PROCESS, WHICH IS KIND OF THE FOCUS FOR US RIGHT NOW FOR SAMP IS TO TRY TO GET THROUGH THAT PROCESS BETWEEN NOW AND THE END OF 2024
I APPRECIATE THAT
I WAS JUST THINKING, LIKE, IN THE FIVE YEAR PLAN, THE POTENTIAL INCREASE IN BUDGET FOR CIP COULD BE SIGNIFICANT EVEN ABOVE AND BEYOND WHAT'S SO SIGNIFICANT IN FRONT OF US
SO, ANYWAY, I APPRECIATE SEEING THAT
AND WITH REGARDS TO THE ENVIRONMENTAL PRIORITIES AND STUFF LIKE THAT, WE'D LOVE TO SEE THE STAFF GOALS OF THE COMMISSION
WE'D MADE PROBABLY 10%, TEN YEARS
IT'S A HIGH REACH, BUT WE CONTINUE TO LOOK FOR STAFF RECOMMENDATIONS FOR HOW TO CONTINUING TO ADVANCE THAT GOAL
THANK YOU
GREAT
COMMISSIONER HASEGAWA, THE THING ABOUT BEING SEVEN MONTHS PREGNANT IS THE BIGGER YOU GET, THE FURTHER AWAY YOUR BUTTON GETS
THANKS FOR THE DELAY
I JUST WANTED TO ACKNOWLEDGE THAT THE WORK THAT YOU'RE DOING, BUDGETING FOR THE AIRPORT IS HARD WORK AND IT'S GOOD WORK
WE HAVE SEEN THROUGH THIS PRESENTATION THAT THE DEMAND FOR TRAVEL AT SEA IS CONTINUING TO GROW AND THAT IT HAS OFFICIALLY OUTSIZED PRE PANDEMIC LEVELS AND THAT THIS BUDGET DEMONSTRATES WE'RE DOING AS MUCH AS WE CAN TO BE
ABLE TO ACCOMMODATE THE DEMAND FOR TRAVEL WHILE BALANCING THAT WITH MAXIMIZING THE SPACE THAT WE ALREADY HAVE WITH BEST PRACTICES AND SUSTAINABILITY AND BALANCING THE CUSTOMER EXPERIENCE WITH EVOLVING NEEDS TO BEING ABLE TO PROMOTE SAFETY AS WELL AS A CULTURE OF INCLUSION
I THINK IT REALLY IS A CELEBRATION THAT, IN YOUR WORDS, THIS IS A MOSTLY GOOD NEWS PRESENTATION
RIGHT? BUT IT ALSO HIGHLIGHTS FOR ME, AS COMMISSIONER CALKINS MENTIONED, THE NEED TO BE ABLE TO THINK LONG TERM AND OUTSIDE OF OURSELVES
WE ARE DOING THE BEST WE CAN, GIVEN THE CIRCUMSTANCES
AND SO JUST LIFTING UP THAT ALL OF US HAVE TO BE THINKING REGIONALLY ABOUT THIS AND WHAT WE'RE DOING TO LEND OUR VOICE TOWARDS MAKING SURE THAT GROWTH CAN OCCUR OUTSIDE OF KING COUNTY PROPER
WE'RE DOING THE BEST WE CAN
AND SO I WANT TO COMMEND YOU ON ALL OF THAT, AND WE LOOK FORWARD TO SUBSEQUENT PRESENTATIONS WHERE WE'RE GOING TO BE TALKING MORE ABOUT WHAT WE'RE DOING FOR COMMUNITY INVESTMENTS, FOR SUSTAINABILITY, FOR RESILIENCY, TO PROMOTE HEALTH AND ECONOMIC OPPORTUNITIES, AND IN THE CONTEXT OF THE AVIATION BUDGET EXCLUSIVELY
YEAH, MOSTLY GOOD NEWS
AND THANK YOU
THANK COMMISSIONER MOHAMMED, I JUST HAVE A QUICK QUESTION ON SLIDE 33
THE COMMISSIONER 2024 BUDGET PRIORITIES FOR THE PRECONDITIONED AIR, THAT 100,000
THAT WAS BUDGETED FOR THIS YEAR, AND IT'S SHOWING UP AGAIN ON 2024
SO I WANT TO KNOW WHAT THE STATUS IS ON THAT
DID SOME OF THOSE PLANS AND IMPLEMENTATION HAPPEN THIS YEAR? DID THAT GET PUT ON PAUSE AND IS IT MOVING OVER TO NEXT YEAR? I JUST WANT TO UNDERSTAND THAT BETTER
YOU MIGHT AS WELL HAVE JUST STAYED UP HERE
I LIKE HEARING FROM YOU
THANK YOU AGAIN
SARAH COX WITH ENVIRONMENT SUSTAINABILITY
WITH RESPECT TO PRECONDITIONED AIR, WE HAVE MOVED FORWARD
WE'RE CONTINUING TO CONDUCT ASSESSMENTS ON THE PERFORMANCE
WE HAVE LOOKED AT IN PARTNERSHIP WITH THE AIRLINES, DIFFERENT MATERIALS THAT ARE NEEDED TO REPLACE SOME OF THE CURRENT HOSES
AND SO THIS IS JUST A CONTINUATION
WE HAVE COMPLETED WORK THIS YEAR, AND IT'S JUST A CONTINUATION OF THE WORK TO IMPLEMENT THE PROGRAM
SOME OF THE ITEMS WERE LONGER LEAD TIMES, BUT WE ARE CONTINUING TO MOVE FORWARD AND HAVE IMPLEMENTED IMPROVEMENTS
SO DOES THAT MEAN IN 2024 THERE'LL BE ADDITIONAL COSTS BEING INCURRED, OR IS THAT YES, WE STILL HAVE DOLLARS LEFT OVER FROM THIS YEAR, ADDITIONAL COSTS INCURRED IN 2024
WE'LL BE SPENDING OUR 2023 ALLOCATED BUDGET AND THEN ADDITIONAL IN 2024
THAT'S REALLY HELPFUL
THANK YOU
SORRY TO CALL YOU UP, BUT I APPRECIATE YOU
THAT CONCLUDES MY QUESTIONS
AND ALSO I WANT TO EXPRESS GRATITUDE TO THE ENTIRE AVIATION TEAM
THANK YOU FOR THE WORK THAT YOU GUYS DO EVERY DAY
THANK YOU
EXCELLENT
ALL RIGHT, ONE LAST QUESTION
COMMISSIONER PHONE
SO I ASKED ABOUT THE SAF IMPLEMENTATION
SO WE HAVE ONGOING GOALS
YOU GUYS CONTINUE TO MAKE GREAT WORK
TO THAT END, CAN YOU GIVE US A SENSE OF WHAT IS THE BUDGET ASK YOU'RE MAKING FOR SAF? AND IT'S A HIGH PRIORITY FOR THE ORGANIZATION AND THE COMMUNITIES AROUND US
YEAH
SO IN ADDITION TO JUST OUR GENERAL STAFF TIME THAT WE DO ON INTEGRATING WITH OUR AIRLINE PARTNERS, PRODUCERS, SUPPLIERS, AND BRINGING STAFF TO OUR REGION FOR 2024, WE HAVE INCLUDED OUR SAF PILOT PROJECT TO BRING SAF TO SEA
IT'S HELPING US UNDERSTAND JUST THE LOGISTICS THAT ARE NEEDED TO DO THAT
SO THIS IS A REALLY BIG MILESTONE FOR VARIOUS PARTS OF THE SAF INDUSTRY TO UNDERSTAND WHAT IT WILL TAKE TO BRING SAF TO SEA
THANK YOU
GREAT
WELL, THANK YOU BOTH, LANCE AND HEIDI
IF THERE ARE NO ADDITIONAL QUESTIONS FROM COMMISSIONERS AT THIS TIME, EXECUTIVE DIRECTOR METRUCK, DO YOU HAVE ANY CLOSING COMMENTS BEFORE WE RETURN TO OUR MORNING SESSION? THANKS
COMMISSIONER, THANKS FOR YOUR QUESTIONS AND YOUR FEEDBACK ON THE DIFFERENT PROGRAMS I GO BACK TO WHAT I SAID INITIALLY, WHICH KNOW IT'S KIND OF LIKE FROM THE TALE OF TWO CITIES
THE BEST OF TIMES, WORST OF TIMES, CHALLENGING TIMES, GREAT OPPORTUNITIES FOR US, BUT CHALLENGES
AS WE WERE DISCUSSING THE SWOT ANALYSIS, ONE THING CAN BE BOTH AN OPPORTUNITY AND A THREAT
AND AS WE LOOK AT THAT IN THE TEAM, AVIATION TEAM, UNDER MANAGING DIRECTOR LITTLE'S EFFORTS IS REALLY, REALLY BALANCING ALL THOSE THINGS AS WE GO FORWARD
AND I DO WANT TO SAY ON SOME THINGS ON THE I'LL BE GLAD TO GO BACK
WE LAID OUT THE PROCESS IN 2020, BUT I'LL BE GLAD TO GO BACK
AND LAY THAT PROCESS OUT AGAIN AND HOW WE GET COMMISSIONER FEEDBACK AND HOW THAT'S FED IN, FOR ONE EXAMPLE, ON EVEN THOUGH THEY'RE LABELED MY PRIORITIES ON ED PRIORITIES, JUST TO SPEND 1 SECOND ON THAT, BECAUSE I HAVE 33 PRIORITIES
BUT THOSE AREN'T MY PRIORITIES
THOSE ARE ROLL UP ONES THAT WE'VE ESTABLISHED OBJECTIVES FOR THE INSTITUTION
I JUST WANT TO REPORT BACK TO YOU, AS I DO SEMIANNUALLY, THEN AT THE END OF THE YEAR, PROGRESS TOWARDS THOSE
AND THOSE HAVE 75 INITIATIVES ROLLED UP INTO THOSE, AND THOSE ARE ONLY ONE SLICE
AS MANAGING DIRECTOR LITTLE WAS SAYING, HE TRIES TO CUT AYE
DOWN
I'VE NARROWS THOSE DOWN TO MY 33 TOP ONES THAT I THINK YOU NEED TO KNOW ABOUT TO REPORT ABOUT THE PROGRESS ACROSS THE PORT
SO THAT'S THE CHALLENGE OF GETTING THE INFORMATION AND THEN REPORTING BACK ON THAT DASHBOARD INDICATOR THAT YOU CAN SEE HOW WE'RE PROGRESSING ON THINGS THAT ARE INDICATION OF PROGRESS ACROSS ALL OF OUR OBJECTIVES IN A GIVEN YEAR
SO I'LL BE GLAD TO PROVIDE MORE INFORMATION ON THE PROCESS AND THE THOUGHT BEHIND THAT AND LOOK FOR ANY IMPROVEMENTS AS WELL AS WE GO FORWARD
THANK YOU
GREAT
THANK YOU, EXECUTIVE DIRECTOR METRUCK
LET ME JUST CONCLUDE WITH SOME COMMENTS OF MY OWN
I WANT TO EXPRESS MY SINCERE THANKS TO YOU, HEIDI, TO LANCE AND THE ENTIRE AVIATION TEAM
AS YOU CAN IMAGINE, AS COMMISSIONERS, WE GET THE MOST FEEDBACK ABOUT THE AIRPORT
IT'S NOT EVEN CLOSE, HONESTLY
AND SO FOR US TO BE UNDERGOING THIS VERY AMBITIOUS AND AS COMMISSIONER CALKINS SAID, MAYBE ONCE IN A GENERATION TRANSFORMATION, ALL AYES ARE ON HOW WE HANDLE THIS, HOW WE'RE PRUDENT WITH REALLY TAXPAYER MONEY
ALTHOUGH WE LIKE TO SAY THAT WE DON'T USE TAXPAYER DOLLARS, AT THE END OF THE DAY, IT'S THE TAXPAYERS WHO PAY TO GO ON THESE FLIGHTS FOR FACILITIES, EVEN IF IT'S NOT DIRECTLY THROUGH A LEVY OR A TAX
AND SO I THINK BEING GOOD STEWARDS OF TAXPAYER MONEY IS OF PARAMOUNT IMPORTANCE TO US
AND SO I HOPE YOU DON'T MIND ALL THE VERY DETAILED QUESTIONS THAT WE WERE ASKING
IT'S JUST STUFF THAT WE HEAR IN THE COMMUNITY AND OUR ENGAGEMENT WITH STAKEHOLDERS THAT WE JUST WANT TO PUT OUT THERE
A LOT OF THE TIMES, IT'S ACTUALLY SO THAT THE PUBLIC CAN HEAR THE ANSWERS TO THE QUESTIONS THAT THEY HAVE
RIGHT? AND SO I REALLY APPRECIATE YOU ALL TAKING THAT IN STRIDE
I'M VERY EXCITED FOR WHAT'S AHEAD
I LOVE TALKING ABOUT OUR AIRPORT
MAYBE I TALK ABOUT A LITTLE TOO MUCH, BUT I BRAG ABOUT OUR AIRPORT ALL THE TIME, RIGHT? OUR RECENT UPGRADES, THE NEW FACILITIES
I LITERALLY HAVE THE PICTURES OF SEA CONCOURSE SAVED ON MY PHONE
SO I CAN BE LIKE, THIS IS WHAT WE'RE DOING
RIGHT? IT'S MY DIVERSION TACTIC
WHENEVER SOMEONE COMPLAINS ABOUT THE AIRPORT, I'M JUST LIKE, HEY, THIS IS WHAT WE'RE DOING, RIGHT? AND SO, IN ANY CASE, REALLY APPRECIATE THE GREAT WORK
THIS IS REALLY COMPLICATED STUFF
AND I DON'T THINK ANY OF US PRETEND TO BE EXPERTS AT THE FINANCES AROUND THE AIRPORT
I LEARNED SOMETHING EVERY TIME YOU GUYS COME UP HERE AND GIVE US A PRESENTATION
AND SO THANK YOU FOR EDUCATING US
ANY OTHER COMMENTS FROM FELLOW COMMISSIONERS? BEFORE WE ADJOURN, I'D LIKE TO ALSO EXPRESS MY APPRECIATION AND YOUR ABILITY TO SYNTHESIZE ALL THIS STUFF IN THIS AMOUNT OF TIME
AND I ALSO JUST WANT TO CLARIFY THAT MY SUGGESTION ABOUT THIS GRAPHIC DOES NOT REFLECT THE FACT THAT YOU DON'T DO THIS
I MEAN, I'M SAYING THAT IT SHOULD JUST BE SEEN IN THE GRAPHIC
OF COURSE, THIS IS AN ITERATIVE PROCESS, AND WE APPRECIATE WORKING WITH YOU ON THIS
IT JUST SAYS IN THE DOCUMENT THAT YOU'RE GETTING INPUT FROM ELT, AND I JUST THINK THAT'S NOT TRUE, AND SO THE GRAPHICS SHOULD REPRESENT THAT
THANK YOU
COMMISSIONER, HOW'S IT GOING? I'M GETTING MY BATHROOM REMODELED RIGHT NOW
I HAVE SOME QUESTIONS ABOUT KYLE, WE DO HAVE A COUPLE OF MINUTES HERE I'M JUST KIDDING
THAT I MIGHT CHARGE FOR
IF ANYONE CARES TO KNOW
MY FIRST JOB AT HIGH SCHOOL IS TO SELL WOMEN'S SHOES AT NORDSTROM
SO IF YOU EVER NEED TIPS ON WOMEN'S SHOES ALL RIGHT
WITH THAT, IF THERE ARE NO OBJECTIONS, THE MEETING IS ADJOURNED
OUR REGULAR BUSINESS MEETING WILL COMMENCE AT NOON
THANK YOU VERY MUCH
THANK YOU.

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