1. City of Long Beach Harbor Department FY 2020 Proposed Budget Study Session
This is a study session – no board action is requested
I will cover
Sources of funds
Uses of funds &
10-year cash flow forecast
March 25, 2019 | Board of Harbor Commissioners
Sam Joumblat
Managing Director, Finance & Administration

2. SOURCES OF FUNDS

3. OPERATING REVENUE HIGHLIGHTS
Projecting FY 2019 operating revenue estimate to be in-line with the FY 2019 budget
Budgeted FY 2020 operating revenue is flat compared with FY 2019
FY 2019 container volume projected at 7,728,000 TEUs, 3% lower than FY 2018 actual
Budgeted FY 2020 container volume at 7,632,000 TEUs, 1% lower than FY 2019 estimate

4. bond Issuance
We are planning a $200 million net proceeds from bonds issuance in FY 2019, which is lower than the $326 budgeted
No new debt issuance projected in FY 2020
We will refund the 2010 A&B bond series in FY 2020 which should result in savings and elimination of debt service reserve fund
We are evaluating whether to refund the 2010 A&B at the same time of the 2019A issuance
We are in the process of renewing our line of credit with Union Bank with the same credit limit of $200 million

5. FY 2020 SOURCES OF FUNDS ($000) 399,605 402,712 402,438 0.7% 86,007
FY 2019 ADOPTED BUDGET
FY 2019
ESTIMATED ACTUAL
FY 2020 PROPOSED BUDGET
% CHANGE vs FY19 BUDGET
OPERATING REVENUES
399,605
402,712
402,438
0.7%
NON-OPERATING REVENUES
86,007
116,716
94,975
10.4%
CASH THROUGH NEW DEBT
326,250
200,000 -
CASH THROUGH EXISTING DEBT
31,871
133,934
48,430
FROM FUND BALANCE
138,539
131,600
TOTAL SOURCES OF FUNDS
$982,272
$853,361
$677,444
(31%)

6. FY 2020 Sources OF FUNDS 6

7. USES OF FUNDS

8. Expenditure HIGHLIGHTS
Current budget includes the addition of one SBE analyst, offset by a reduction of one headcount elsewhere
We will propose adding two Grants positions and currently evaluating existing vacancies to offset the addition
Operating expense budgeted to increase 2%, mainly due to the new Port Headquarters at the Civic Center and interdepartmental charges
Capital program budget is proposed at $391 million
Tidelands transfer highest ever at $20.1 million

9. FY 2020 uses OF FUNDS ($000)
FY 2019 ADOPTED BUDGET
FY 2019 ESTIMATED ACTUAL
FY 2020 PROPOSED BUDGET
% CHANGE vs FY19 BUDGET
PERSONNEL SERVICES
70,705
66,987
72,456
2.5%
NON-PERSONNEL SERVICES
102,779
99,837
104,875
2.0%
TIDELANDS TRANSFERS
19,960
20,084
20,136
0.9%
DEBT SERVICE
93,602
89,408
(4.5%)
PORT CIVIC CENTER HEADQUARTERS
214,696
215,188
787
CAPITAL EXPENDITURES
480,530
318,277
389,783
(18.9%)
TO FUND BALANCE -
39,387
TOTAL USES OF FUNDS
$982,272
$853,361
$677,444
(31%)

10. FY 2020 uses OF FUNDS 10

11. CAPITAL PROGRAM BUDGET
PROPOSED $390.6 MILLION
CAPITAL PROGRAM BUDGET 11

12. CASH FLOW FORECAST

13. Cash Flow highlights – base case
Middle Harbor Phase 3 incremental revenue forecasted for FY
Sale of WTC parking lot and the IAO building to occur in FY 2019 and FY 2020, respectively
TIFIA existing loan commitment of $325 million will be drawn in FY to repay the 2018A Bond Anticipation Notes
Potential new TIFIA loan of $175 million being pursued for FY 2021
Operating Expense projected at an escalation rate of 3%
Debt Service reflects all the amortization of new borrowings and TIFIA loans

14. BASE CASE CAPITAL SPENDING
Tier
FY 2019
FY 2020
FY 2021
FY 2022
FY 2023
FY 2024
FY 2025
FY 2026
FY 2027
FY 2028 1
498,093
318,650
243,792
32,836
8,514
9,273
4,494
3,626
4,100
3,600 2
28,500
46,569
113,100
118,884
74,239
87,465
88,671
115,467
139,672
134,844 3
4,173
11,128
14,851
15,530
8,109
7,223
6,705
4,552
225 - 4
2,700
14,223
32,277
28,305
20,104
26,787
12,385
15,697
2,091
1,000
Grand Total
533,465
390,570
404,021
195,555
110,966
130,748
112,255
139,343
146,088
139,444 14

15. CASH FLOW FORECAST – BASE CASE15

16. Economic outlook US economy has been expanding for 10 years
Downturn will happen at a point in time. Without a catalyst, most economists expect a mild v-shaped recession when we get one
The Federal Reserve signaled no interest rate hikes in 2019 and maybe one in They also signaled an end to quantitative tightening in September.
Global demand for US goods seems to be softening
The rush to import and avoid higher tariffs on Chinese goods could result in soft volumes in the coming months
We could see a US-China trade agreement by the end of April

17. Cash Flow – stress test case
Applied the Great Recession trends to the Operating Revenue to start in FY 2021
Scaled back the escalation rate of the Operating Expense to 1% and 2%
Applied the Capital Resiliency Plan and deferred capital spending to the latter years
Engineering has developed two scenarios of capital resiliency:
First scenario categorizes projects into tiers and defers these projects accordingly, with tier 1 not impacted
A second scenario of resiliency defers parts of tier 1 projects where no firm commitments are in place

18. CAPITAL RESILIENCY PLAN
Tier
FY 2019
FY 2020
FY 2021
FY 2022
FY 2023
FY 2024
FY 2025
FY 2026
FY 2027
FY 2028 1
498,093
318,650
243,792
32,836
8,514
9,273
4,494
3,626
4,100
3,600 2
28,500
46,569
113,100
118,884
74,239
87,465
88,671
115,467
139,672 3
4,173
11,128
14,851
15,530
8,109
7,223
6,705
4,552 4
2,700
14,223
32,277
28,305
20,104
26,787
12,385
Cost Escalation (3.5%)
N/A
3,959
4,681
4,272
4,336
4,060
5,214
5,481
Grand Total
533,465
390,570
149,895
146,930
135,591
132,708
123,684
158,272
165,690 18

19. CASH FLOW FORECAST – STRESS CASE19

20. CAPITAL RESILIENCY PLAN
Tier
FY 2019
FY 2020
FY 2021
FY 2022
FY 2023
FY 2024
FY 2025
FY 2026
FY 2027
FY 2028 1a
483,155
283,444
130,889
3,807
4,100
3,600 1b
14,938
35,207
112,903
29,029
4,414
5,673
394 26 - 2
28,500
46,569
113,100
118,884
74,239
87,465
88,671
115,467
139,672 3
4,173
11,128
14,851
15,530
8,109
7,223
6,705
4,552 4
2,700
14,223
32,277
28,305
20,104
26,787
12,385
Cost Escalation (3.5%)
N/A
3,959
4,681
4,272
4,336
4,060
5,214
5,481
Grand Total
533,465
390,570
243,792
149,895
146,930
135,591
132,708
123,684
158,272
165,690 20

21. REMAINING BUDGET TIMELINE
Milestone
Estimated Timing
Board of Harbor Commissioners Study Session
Today
Budget subcommittee briefing
April 11
Board of Harbor Commissioners considers budget adoption
May 27
Board-adopted budget submitted to the Mayor and City Manager
Mid/late June
Briefings with the Mayor, City Councilmembers and City Manager
July - Aug
Mayor submits the budget to the City Council along with recommendations
Early August
City Council approves Board adopted budget
Early September 21

22. QUESTIONS? 22