2016 REVISED PRELIMINARY BUDGET Public Hearing Port of Port Angeles November 10,

AGENDA Operating Budget – Changes from Preliminary Budget – Personnel Summary (Org Chart) – Overview of Revenues & Expenses – One-Time Costs – Non-Operating – Follow-Up Items 5-Year Projected Cash Based Fund Balance Property Taxes Capital Budget Next Steps 2

Changes from Preliminary Budget $ Adjustments – EDC support increased from $15k to $30k – Reduced FM labor by $93k for LY Ops and capital projects – Increased AAPA dues by $1,173 – Added $30k executive search firm; $10k relocation Supplemental Section – Added LOB Operating Statements – Added allocation method calculation 3

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Where Does the Money Come From? $8.80 Million Operating Revenues Budget 6

REVENUES ACROSS ALL DEPARTMENTS Over (Under)%Comments Budget2015 Budget Dockage, Wharfage, & Other MT Svc 2,530,810 (138,959)-5%Lower projected cargo volumes Log Yard Handling Services & Staging 1,414, ,98515%Higher inbound Canadian logs via barge & addtl handling volume from new venture Marina Moorage & Yard Fees 2,095,300 74,1004%Modest increase in moorage rates Airport Hangar Rentals & Fees 107,600 5,1005%Commercial air service returns Q1, landing fee waiver continues Rental of Structures, Land & Equipment 2,019,796 (420,294)-17%Log yard related & Westport lease cancellations Pass-Thru & Sales 587,709 (46,810)-7%Log yard related lease cancellations Other Fees 50,400 (3,661)-10%Port labor fees, scale fees, late fees, other 8,806,598(347,539)-4%

Where Does the Money Go? $8.22 Million Operating Expense Budget $584k Net Surplus (before Depr) 8 Includes special CRTC economic development services

EXPENSES ACROSS ALL DEPARTMENTS Over (Under)%Comments Budget2015 Budget Salaries, Wages & Benefits for Ops 3,232,411 77,3072%Merit pool/step, CPI%, airport janitorial, medical benefits Maint Labor & Benefits 833,194 88,93212%Lower capitalized labor, higher labor to Log Yard, change in allocations, FM increase Q3 Maint Svc & Materials 404,938 48,97814%Warehouse repairs, mooring hardware at Marine Terminal Outside Svc & Agent Fees 1,620, ,13957%CRTC economic services contract Supplies 305,700 (46,590)-13%Fluctuations across departments Public Info, Mkt, Community, Dues 240,591 85,66310%Marketing & public info increase for Marinas, MTIP and Airport Promo Hosting 14,300 (400)-3%No real increase Travel & Training 143,017 2,8054%Bus Dev effort across LOB Admin (insurance, utilities) & Other 863,437 (14,962)-2%Small decrease in Property insurance Pass-Thru & COGS 414,549 (115,081)-2%Log yard related lease cancellations Contingency 150, %Approx 2% of op expenses 8,222,475716,79010%

ONE-TIME OPERATING COSTS 10 Dept One-Time Expenses2015 BUDGET 2015 PROJECTED 2016 BUDGET MTTerminal 3 Dredging Analysis75,00013,05950,000 MTCompletion of T3 Condition Assessment0039,000 LYAquatic storage inspection/assessment for DNR25,00010,0000 AirportAir service demand study (contingency fund)048,3000 AirportMarketing compaign new air service100,000 Airport RPCivil Air Patrol building demollition15,00000 RPPMA Survey Maps15,00000 TechCybersecurity plan (Port share of cost)019,15029,691 AdminProcess Improvement Analyst (temp position)103,30051,650105,281 Total One-Time Expenses233,300142,159323,972 DeptAdditional Operating Funding 2015 BUDGET 2015 PROJECTED 2016 BUDGET TechnologyCybersecurity plan (grant funding at 75%)057,45089,073 Business Dev CRTC economic development services (funded by Capital Reserves) 097,500615,000 Total Additional Funding0154,950704,073

Funding Depreciation 11

NON-OPERATING Small Communities Program – $65k funding for local economic development One-Time Costs – Chip tower removal ($100k) Legacy Environmental – Litigation for insurance coverage decision – K-Ply pursue insurance/PLPs – MTA complete Ecology review, then cleanup – Harbor investigation covered by defense insurance 12

Follow-Up Items SBDC request for $23k cash support Increase timber/sustainable harvest advocacy from $15k to $50k Other items? 13

5-YEAR PROJECTED - OPERATIONS CASH BASED FUND BALANCE 14 (Assumptions: Revenues remain steady. Increases in costs are offset by increases in revenues.) GENERAL FUND Beginning Fund Balance 8,222,475 8,387,000 Op Surplus (before Depreciation) 584, ,000 1,500,000 1,750,000 2,250,000 1 Net Non-Operating Surplus (124,927) 200,000 Projected Ending Fund Balance 8,681,671 9,187,000 10,087,000 10,337,000 10,837,000 TRANSFER EXCESS TO CAPITAL FUND (294,671) (800,000) (1,700,000) (1,950,000) (2,450,000) Estimated Ending Fund Balance 8,387, & 2017 includes a total of $1.3 million local support for CRTC grant funding. Explanation of Reserves General Reserve for Adverse Conditions & to obtain strong bond rating Res : Next Yr Op Budget (2% increase) 8,387,000 8,554,740 8,725,835 8,900,351 9,078,359 Includes Self-insurance reserves 7,500 2 Target Reserve Balance 8,387,000 Estimated Over (Under) Target Unemployment.

5-YEAR– CAPITAL Plan (Committed Projects) CASH BASED FUND BALANCE 15

5-YEAR PROJECTED – DEBT FUND CASH BASED FUND BALANCE DEBT SERVICE FUND Beginning Fund Balance 200,000 Property Tax Levy: 1% in ,454,000 1,468,540 1,483,225 1,498,058 1,513,038 Increase new Construction ($53 mil) + Refunds included above 8,000 Less: Debt Service (1,073,584) (691,496) (694,734) (693,009) (695,646) Projected Ending Fund Balance 580, , ,491 1,013,049 1,025,392 TRANSFER EXCESS TO CAPITAL FUND (380,416) (785,044) (796,491) (813,049) (825,392) Estimated Ending Fund Balance 200,000 Explanation of Reserves Cushion for fluctuations in property taxes Target Reserve Balance 200,000 Estimated Over (Under) Target New Debt using "Excess" Prop Tax (20 yr at 3.45%) $ 5,480,000 $ 11,310,000 $ 11,470,000 $ 11,710,000 $ 11,890,000

Proposed Use of 2016 Tax Levy 17

Historical Use of General Tax Levy %Banked 1%Banked1%Banked1% History of 1% Property Tax Increase Banked Capacity is $40,314

Your Tax Levy at Work Debt service used to fund capital projects Direct funding of capital improvements Community Partner Program Legacy environmental projects Property acquisition Economic development projects 19

Property Tax Resolutions (see revised resolutions) Resolution Authorizing a Property Tax Limit Factor of 101% –.251% is IPD (Implicit Price Deflator) limit factor – 101% is maximum limit factor Finding of substantial need (5-yr capital plan) Resolution Authorizing the Property Tax Levy – 1% increase is $14,271 – plus $10,719 on $53 million of new construction 20

Capital Projects $7.2 million of grants + $8.3 million Port funds = $15.5 million of improvements and expansion of facilities 21

Questions? 22 Anything else? If not, then...

Next Steps Take public testimony – 2016 Budget – 2016 Property Tax Levy Close Public Hearing Introduce Budget & Property Tax Resolutions Adjust budget based on Commission review November 24 Commission Meeting – Adopt Property Tax Levy (by November 30) – Adopt budget ( by December 1) 23