1. Port Commission Revenue, Expense, & Capital Plan
Greg Englin
Director, Operations & Business Development
January 4-5, 2017

2. Yearly Goals (2017) Increase revenue to $6.0M Increase NOI by $500K
Eliminate bad debt (=$135K –no new bad debt)
Comprehensive approach to all grant fund programs with goal of achieving $500K in new funding
Improve the Port’s operating margin by 3%
Complete capital projects on time and under budget
Control all expenses focusing on utilities
Establish robust long term capital plan
Build out fundamental business practices
Build organizational understanding of Port business

3. Asset Inventory & Capital Demands
Based on the current asset inventory valuation, the Port controls $45M in assets
The actual value of those assets is probably far less due to their advanced age
The actual replacement value is far greater however, possibly even $60M or more
We are looking at a very distinctive front load in terms of demand on capital – just to keep these assets operable
Reinvestment of much of this capital is not currently earmarked for “growth” efforts – but instead for maintaining existing capacity and environmental compliance
Capital demands are easily close to $20M just for the “Capital Repair and Replacement” program within the next 5-10 years
Demand for “Growth” projects can easily approach another $10-$15M

4. Assets & Capital Demands Revenue & NOI
Current Description Future $45M Asset Valuation $60M $20M* Capital Repair & Replacement $25M $10-$20M Growth Projects $20M $5.4M Operating Revenue $8-$12M $0.8M Net Operating Income $2-$4M $135K Bad Debt = $1M O/R $0 $0.8M Cash Reserve $4-5M $9-$12M IDD (one time) $0.5-$1M Grant Funding $1-$4M
*NOTE: CRRP identified $16.15M in Dec 2015.

5. Asset Inventory & Capital Demands
Another way of looking at what is required of the organization financially: $60M in assets requires a minimum of $3M NOI per year, every year, for 20 years PLUS $4M+ annually to cover operating expenses PLUS funding to improve or build new capacity Magic number is minimum $8-$12M annually

6. NOTE: Thanks to Jim Darling of Maul Foster Alongi
MISSION vs MARGIN
NOTE: Thanks to Jim Darling of Maul Foster Alongi
Full Return
MARGIN 2 1
Generates Revenue
Optimal Revenue
& Benefit
Break Even 4 3
Worst Positioning
Common Use of Taxes
Losing Money
Large Public Benefit
No Public Benefit
MISSION

7. Facilities JCAI Hangars Restaurant Aero Museum Land Fueling Station
Boat Haven Yard & Moorage
Moorage
Hoist
3% Fee Replaced
Utilities
Yard
Leases
Quilcene
Coast Seafood
RV parking
Boat Ramp
Commercial Basin
Moorage
Leases
Cell Tower
City Dock
Union Wharf
Boat Ramps – Gardiner, Mats Mats
Point Hudson
Buildings
RV Parking
Yard
Sea Marine
Hoist
Parking

8. 2 1 4 3 MISSION vs MARGIN MARGIN MISSION Full Return Generates Revenue
Optimal Revenue
& Benefit
Point Hudson RV
Break Even
Quilcene Marina
JCI Airport
Boat Yard
Boat Haven Marina
City Dock Union Wharf
Point Hudson Bldgs
Point Hudson Marina
Boat Ramps 4 3
Worst Positioning
Common Use of Taxes
Losing Money
Large Public Benefit
No Public Benefit
MISSION

9. 2 1 4 3 MISSION vs MARGIN MARGIN MISSION Full Return Optimal Revenue
Generates Revenue
Optimal Revenue
& Benefit
Point Hudson RV
Break Even
Boat Yard
City Dock Union Wharf
Boat Haven Marina
JCI Airport
Quilcene Marina
Point Hudson Bldgs
Point Hudson Marina
Boat Ramps 4 3
Worst Positioning
Common Use of Taxes
Losing Money
Large Public Benefit
No Public Benefit
MISSION

10. Leases
Past lease terms have created significant barriers to increasing revenue; within next 4 years only 40% of total lease revenue available due to normal lease renegotiations
60% of revenue extends to 2021 or beyond creating inelasticity
Lease premises have not reflected actual use for years
Likely requires forced renegotiation creating tension
Must build in escalators and costs must be passed through
Reduce risk by increasing security, insurance requirements
Maximize cash flow and interest income
Establish portfolio turnover goals (20%+)
Align revenue with operating costs and capital exposure
Attract and retain stronger tenants that create layered sources of revenue
Build out lease templates, lease processes, real estate metrics, lease terms and develop parameters

11. Building Business
Retain & Expand Existing Business with Current Customers
Secure our customers’ participation for the long term
Expand our customers’ business by offering additional by goods & services and creating demand
Understand and be involved in their business and respond to their needs; know their 1 and 5 year business plans and long term strategic plan
Increase organic demand of excess capacity
Target Growth Industries & Growing Companies
Focus heavily on emerging technologies and companies that are expanding
Take advantage of unique characteristics of Port assets
Develop broader customer base with targeted market segments
Acquisitions or Mergers or Assemblages
Establish Strategic Partnerships
Identify key partners (especially private sector)
Develop new partnerships (with fleets for example)

12. Yearly Goals (2017) Increase revenue to $6.0M Increase NOI by $500K
Eliminate bad debt (=$135K –no new bad debt)
Comprehensive approach to all grant fund programs with goal of achieving $500K in new funding
Improve the Port’s operating margin by 3%
Complete capital projects on time and under budget
Control all expenses focusing on utilities
Establish robust long term capital plan
Build out fundamental business practices
Build organizational understanding of Port business

13. Director, Operations & Business Development
Thank you
Greg Englin
Director, Operations & Business Development
January 4-5, 2017