Cruise Terminal Financing Options A Presentation and Discussion April 19, 2007

2 Capital costs  Vary widely by location  Pier costs are $137.5M; debt service would be over $9.7M annually for 30 years  Pier 27 costs are $34.7M; debt service would be $2.3M annually for 30 years  Pier 35 costs are $44.9M; debt service would be over $3.2M annually for 30 years

3 Possible Project Revenues  Rental payments  Other user payments  Tax increment from project  Will these be adequate to support operating costs?  Will there be funds remaining after operations to support capital?

4 Port Balance Sheet  The Port is currently burdened by an excess of capital needs as compared to its revenues  The Port’s strategy to meet its capital needs depends on the ability of individual projects to support themselves  Over time, this approach will spin off additional debt capacity  In the near term, Port must use debt capacity for projects that create additional revenues

5 City Financing Options  Hotel tax revenue bonds  Asset-backed bonds  General obligation bonds  These can be used on a stand-alone basis, or with other alternatives

6 Hotel Tax Bonds  Analogous to convention center debt  Economic benefits are similar to those of a convention center  Would engage range of political interests currently benefiting from hotel tax

7 Asset-Backed Bonds  City is very cautious in their use due to self- imposed legal restrictions  May need to locate asset of comparable value that is unencumbered  City has substantial capacity  Benefits accruing from facility enhance city tax revenues that would repay the debt  Supported by general fund

8 General Obligation bonds  Necessary level of support (two-thirds majority) appears unlikely  Least expensive form of debt; no impact on general fund  May affect other city capital investment decisions

9 State and Federal Sources  No existing grant programs  Require special earmarks  No U.S. ports have received federal or state funds  If available, these sources would be helpful but are likely to be inadequate on their own

10 Putting the Pieces Together  Some combination of these alternatives is likely to be the optimal solution  Given the port’s financial capacity and limitations of project based revenues, city support will be necessary  Core city support can be supplemented with available project revenues