PORT OF SEATTLE 2018 FINANCIAL & PERFORMANCE REPORT

Transcription

1 PORT OF SEATTLE 2018 FINANCIAL & PERFORMANCE REPORT AS OF MARCH 31, 2018

2 TABLE OF CONTENTS I. Portwide Performance Report 3-5 Page II. Aviation Division Report 6-18 III. Maritime Division Report IV. Economic Development Division Report V. Central Services Division Report

3 I. PORTWIDE FINANCIAL & PERFORMANCE REPORT 03/31/18 EXECUTIVE SUMMARY Financial Summary The Port s operating revenues for the first quarter of 2018 were $151.2M, which is $6.0M above budget and $9.3M higher than the same period in Excluding Aeronautical revenues, which are based on cost recovery, other operating revenues were $81.0M, $3.7M above budget but $1.0M lower than the 2017 actuals mainly due to a $5.4M one-time lump sum frontage fee reimbursement received in 2017, which is partially offset by higher revenues from Public Parking, Rental Cars, ADR & Terminal Leased Space, Employee Parking, Recreational Boating, Maritime Portfolio Management, and Conference & Event Centers. Total operating expenses were $89.6M, $8.6M below budget mainly due to vacancies, hiring delays, and outside services. Operating income before depreciation was $61.5M, $14.6M above budget and $1.7M higher than the 2017 actuals. The Portwide capital spending is forecasted to be $766.8M for Operating Summary At the Airport, the total enplanement growth for the first quarter of 2018 was 5.0% compared to the same period in This number is comprised of enplanement growth rate of 5.2% for domestic passengers and 3.5% for international passengers. The total landed weight for the first quarter of 2018 was 6.6% higher than the same period last year. Total cargo metric tons were 5.6% above the first quarter For the Maritime division, we are expecting another strong cruise season for the Port. Fishermen s Terminal occupancy level was at 89.0%, same as the first quarter of Grain volumes were 10.2% higher than expected, and the occupancy rate at Shilshole Bay Marina increased to 96%. For the Economic Development division, the overall occupancy of buildings managed by Portfolio Management was at 98% for the first quarter of Key Business Events The Port approved a resolution instituting a new port-wide initiative to address human-tracking at Port facilities and throughout the region. The Port reached an agreement with airlines on a five-year signatory lease and operating agreement (SLOA IV) and the Airport Dining and Retail program awarded Lease Group 4 in February. The 90 th annual Blessing of the Fleet at Fishermen s Terminal had a great turnout. The Port entered into a new management agreement contract with Kidder Mathews for the World Trade Center West building. The Port also launched the 2018 Tourism Marketing Support program application process and expanded the Spotlight program to allow Washington State-based tourism marketing organizations to submit proposals for terminal advertising space at the Airport. In addition to the approval of the new Diversity in Contracting Policy, the Port Commission approved to execute contracts worth $3M for construction worker outreach, assessment and referral; preapprenticeship training; and retention services. In line with its environmental stewardship and habitat restoration objectives, the Port Commission established the 2018 Environmental Priorities and the Port also completed the removal of over 2,000 creosote-treated pilings at Terminal 5 in the first quarter. Major Capital Projects The Port s capital spending is likely to be at an all-time high in 2018 as a number of major projects are under construction. The construction for the International Arrivals Facility (IAF) is ongoing with structure foundations and enclosures completed for Pod A (Gates A6 & A7). The North Satellite (NSAT) Expansion project is 21% complete, including the completion of structural building frame. Phase 1 of the Baggage Optimization project continues while bid documents are being developed for phase 2 with an expected advertisement date in early The construction contract has been executed for the South Satellite (SSAT) Structural Improvements, and the notice to proceed with construction has been issued. Central Terminal food court has been closed and erection of the construction wall has been completed while demolition of tenant spaces continues. The shoreline permit has been issued for the T-5 Berth Modernization project. Grant agreement was executed with WA State Department of Commerce for the Pier 69 Solar project. The roof replacement project for Fishermen Terminals Net Sheds 3, 4, 5, and 6 is substantially completed. The Port also substantially completed or placed into closeout 50 projects. 3

4 I. PORTWIDE FINANCIAL & PERFORMANCE REPORT 03/31/18 PORTWIDE FINANCIAL SUMMARY Fav (UnFav) Incr (Decr) 2016 YTD 2017 YTD 2018 Year-to-Date Budget Variance Change from 2017 $ in 000's Actual Actual Actual Budget $ % $ % Aeronautical Revenues 55,903 59,873 70,134 67,828 2, % 10, % Airport Non-Aero Revenues 44,871 54,006 52,372 51,122 1, % (1,635) -3.0% Other Port Operating Revenues 28,563 28,020 28,663 26,196 2, % % Total Operating Revenues 129, , , ,147 6, % 9, % Total Operating Expenses 69,740 82,008 89,623 98,209 8, % 7, % NOI before Depreciation 59,597 59,891 61,546 46,938 14, % 1, % Depreciation 41,085 40,817 40,892 40,689 (204) -0.5% % NOI after Depreciation 18,512 19,074 20,653 6,249 14, % 1, % NON-AIRPORT FINANCIAL SUMMARY Fav (UnFav) Incr (Decr) 2016 YTD 2017 YTD 2018 Year-to-Date Budget Variance Change from 2017 $ in 000's Actual Actual Actual Budget $ % $ % NWSA Distributable Revenue 15,241 14,852 13,419 11,662 1, % (1,434) -9.7% Maritime Revenues 8,725 9,053 9,670 9, % % EDD Revenues 3,672 3,127 4,497 4, % 1, % SWU & Other ,077 1, % % Total Operating Revenues 28,563 28,020 28,663 26,196 2, % % Total Operating Expenses 13,464 15,246 18,548 20,915 2, % 3, % NOI before Depreciation 15,098 12,774 10,114 5,281 4, % (2,660) -20.8% Depreciation 10,527 10,163 9,984 10, % (180) -1.8% NOI after Depreciation 4,571 2, (4,731) 4, % (2,480) -95.0% MAJOR OPERATING REVENUES SUMMARY Fav (UnFav) Incr (Decr) 2016 YTD 2017 YTD 2018 Year-to-Date Budget Variance Change from 2017 $ in 000's Actual Actual Actual Budget $ % $ % Aeronautical Revenues 55,903 59,873-70,134-67,828 2, % 10, % Public Parking 16,286 17,456 18,668 18,705 (37) -0.2% 1, % Rental Cars - Operations 6,159 6,129 6,009 5, % (121) -2.0% Rental Cars - Operating CFC ,293 1,503 (210) -14.0% 1, % ADR & Terminal Leased Space 12,177 13,346 13,887 12,742 1, % % Ground Transportation 2,582 3,613 3,707 3,714 (7) -0.2% % Employee Parking 2,298 2,302 2,565 2, % % Airport Commercial Properties 1,904 7,810 2,894 2, % (4,916) -62.9% Airport Utilities 1,812 1,750 1,759 1,889 (130) -6.9% 9 0.5% Cruise (54) -63.0% (39) -55.1% Recreational Boating 2,528 2,592 3,005 2, % % Fishing & Operations 2,100 2,166 2,224 2, % % Grain 1,486 1,606 1,556 1, % (51) -3.1% Maritime Portfolio Management 2,560 2,610 2,845 2, % % Central Harbor Management 1,585 2,014 2,162 2, % % Conference & Event Centers 1,895 1,107 2,330 2, % 1, % NWSA Distributable Revenue 15,241 14,852 13,419 11,662 1, % (1,434) -9.7% Other 2,157 2,311 2,680 2,718 (38) -1.4% % Total Operating Revenues (w/o Aero) 73,434 82,027 81,034 77,318 3, % (992) -1.2% TOTAL 129, , , ,147 6, % 9, % 4

5 I. PORTWIDE FINANCIAL & PERFORMANCE REPORT 03/31/18 MAJOR OPERATING EXPENSES SUMMARY Fav (UnFav) Incr (Decr) 2016 YTD 2017 YTD 2018 Year-to-Date Budget Variance Change from 2017 $ in 000's Actual Actual Actual Budget $ % $ % Salaries & Benefits 25,674 28,142 31,239 32,489 1, % 3, % Wages & Benefits 23,554 25,539 29,627 29,571 (55) -0.2% 4, % Payroll to Capital Projects 4,712 5,604 5,901 7,027 1, % % Equipment Expense 1,324 1,795 1,850 2, % % Supplies & Stock 1,705 2,329 2,353 2,224 (129) -5.8% % Outside Services 9,779 13,801 16,139 23,733 7, % 2, % Utilities 5,280 5,276 6,976 5,832 (1,143) -19.6% 1, % Travel & Other Employee Expenses 746 1,021 1,037 1, % % Promotional Expenses % % Other Expenses 3,576 7,515 4,484 5,610 1, % (3,031) -40.3% Charges to Capital Projects (6,786) (9,213) (10,343) (12,465) (2,122) 17.0% (1,130) 12.3% TOTAL 69,740 82,008 89,623 98,209 8, % 7, % KEY PERFORMANCE METRICS CAPITAL SPENDING RESULTS PORTWIDE INVESTMENT PORTFOLIO Fav (UnFav) Incr (Decr) 2017 YTD 2018 YTD Budget Variance Change from 2017 Actual Actual Actual Forecast Budget Chg. % Chg. % Enplanements (in 000's) 4,998 5,246 23,416 24,654 24, % 1, % Landed Weight (lbs. in 000's) 6,216 6,627 28,431 29,203 29, % % Passenger CPE (in $) n/a n/a (0.28) -2.5% % Grain Volume (metric tons in 000's) 1,387 1,339 4,363 4,318 4, % (44) -1.0% Cruise Passenger (in 000's) - - 1,072 1,081 1, % 9 0.8% Shilshole Bay Marina Occupancy 93.3% 95.9% 94.9% 95.9% 95.9% 0.0% 0.0% 1.0% 1.1% Fishermen's Terminal Occupancy 89.0% 89.0% 81.9% 86.0% 86.0% 0.0% 0.0% 4.1% 5.0% 2018 YTD Budget Variance $ in 000's Actual Forecast Budget $ % Aviation 92, , ,200 97, % Maritime 3,747 37,705 46,749 9, % Economic Development 824 6,473 6,149 (324) -5.3% Corporate & Other (note 1) ,730 26,669 2, % TOTAL 97, , , , % Note: (1) "Other" includes Street Vacation projects and Storm Water Utility Small Capital projects. During the first quarter of 2018, the investment portfolio earned 1.60% versus the benchmark s (the Bank of America Merrill Lynch 1-3 Year US Treasury & Agency Index) 2.29%. Over the last twelve months the portfolio and the benchmark have earned 1.49% and 1.77%, respectively. Since the Port became its own Treasurer in 2002, the life-to-date earnings of the Port s portfolio and the benchmark are 2.48% and 1.79%, respectively. 5

6 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 03/31/18 FINANCIAL SUMMARY Fav (UnFav) Incr (Decr) Budget Variance Change from 2017 $ in 000's Actual Actual Forecast Budget $ % $ % Operating Revenues: Gross Aeronautical Revenues 247, , , ,082 7, % 41, % SLOA III Incentive Straight Line Adj (1) (3,576) (3,576) % 3, % Aeronautical Revenues 244, , , ,082 7, % 44, % Non-Aeronautical Revenues 221, , , ,786 (749) -0.3% 7, % Total Operating Revenues 465, , , ,867 7, % 52, % Total Operating Expense 261, , , ,856 1, % 34, % Net Operating Income 204, , , ,011 8, % 17, % Capital Expenditures 153, , , ,200 97, % 405, % (1) Annual non-cash amortization of $17.9M lease incentive related to the SLOA III agreement for the 5 year period from Division Summary 2018 Forecast vs Budget Net Operating Income for 2018 is forecasted to be $8.5M higher than budget (4.0% favorable) o Operating Revenue is expected to be $7.2M higher than budget (1.3% favorable) from higher Aeronautical revenue primarily due to the decrease in revenue sharing percentage (from 50% down to 40%) negotiated in the new airline lease agreement which was not known when the 2018 Budget was approved. Overall non-aero revenue is currently forecasted to align with the 2018 Budget. o Operating Expenses are expected to be $1.3M lower than budget (0.4% favorable) primarily due to lower charges from other divisions ($2.9M) which includes some planned spending deferred to future years rather than actual cost savings, as well as payroll costs expected to be lower than budget due to vacancies and hiring delays. These expected savings are partially offset by lower payroll charges to capital projects and other unplanned expenses such as peak staffing support ($1.5M). Division Summary 2018 Forecast vs Actuals Net Operating Income for 2018 is forecasted to be $17.7M higher than prior year (8.8% favorable) o Operating Revenue is expected to be $52.2M higher than prior year (10.4% favorable) primarily due to higher Aeronautical revenue from higher rate based costs and lower revenue sharing. In addition, revenues will be higher this year due to the SLOA III incentive amortization which ended in 2017 ($3.6M). Non- Aero revenue is also expected to be $7.2M higher in 2018 from Landside business activities, which more than offset the ($5.4M) one-time lump sum frontage fee reimbursement received in Commercial Properties in o Operating Expenses are expected to be $34.5M higher than prior year (11.5% variance) due to higher payroll related to increased staffing ($15.8M), higher outside services expense ($13.5M) primarily due to non-recurring expenses focused on addressing strategic initiatives throughout the airport, and higher charges from other divisions ($18.9M). These planned 2018 increases in expenses are partially offset by the one-time amortization for prepaid frontage fees in 2017 ($3.6M) and lower expected costs in Environmental Liability Expense ($4.8M), and Capital to Expense costs ($2.9M). 6

7 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 03/31/18 A. BUSINESS EVENTS Activity: Passenger growth in Q1 tracking with budgeted growth of 5.0% Customer Service: below target through Q1 - Airport Service Quality scores exceeding 2017 in only 2 of the 6 categories Business: o Airport dining and retail program awarded lease group 4 in February 2018 o Reached agreement with airlines on five-year signatory lease and operating agreement (SLOA IV, )in February Community: Implemented Inter-local agreement with City of SeaTac Capital Program: Major projects under construction, spending in 2018 will likely be all-time high for airport Planning for future: Sustainable Airport Master Plan anticipate moving into environmental review by end of Q2 B. KEY PERFORMANCE METRICS YTD 2016 YTD 2017 YTD 2018 % Change from 2017 Enplaned Passengers (000's) Domestic 4,272 4,416 4, % International % Total 4,783 4,998 5, % Operations 91,480 93,398 98, % Landed Weight (In Millions of lbs.) Cargo % All other 5,477 5,748 6, % Total 5,847 6,216 6, % Cargo - Metric Tons Domestic freight 36,293 50,381 55, % International freight 22,341 25,626 24, % Mail 14,396 14,158 14, % Total 73,030 90,165 95, % 7

8 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 03/31/18 Key Performance Measures Fav (UnFav) Incr (Decr) Budget Vairance Change from 2017 Actual Actual Forecast Budget $ % $ % Key Performance Metrics Cost per Enplanement (CPE) (0.28) -2.4% % Non-Aeronautical NOI (in 000's) 128, , , , % (5,647) -4.2% Other Performance Metrics O&M Cost per Enplanement % % Non-Aero Revenue per Enplanement (0.03) -0.3% (0.21) -2.1% Debt per Enplanement (in $) % 2 1.3% Debt Service Coverage % (0.01) -0.6% Days cash on hand (10 months = 304 days) % (72) -19.0% Aeronautical Revenue Sharing ($ in 000's) (37,395) (42,329) (28,833) (35,799) 6, % 13, % Activity (in 000's) Enplanements 22,796 23,416 24,654 24, % 1, % Key Performance Metrics 2018 Forecast compared to 2018 Budget: Cost per Enplanement (CPE) Forecast: o CPE $0.28 unfavorable to budget Budget assumed 50% Revenue Sharing. The 2018 Forecast reflects 40% Revenue Sharing as negotiated in the SLOA IV agreement, which was not known when the 2018 Budget was approved. o CPE increase of $1.10 compared to prior year due to increase in rate base costs and decrease in revenue sharing percentage under SLOA IV. Non-Aero NOI: o Non-Aero NOI 2018 Forecast expected to align with 2018 Budget variance not material o Non-Aero NOI 2018 Forecast expected to be $5.6M lower than prior year incremental growth in Non- Aero revenue outpaced by incremental growth in Non-Aero expenses due to higher staffing costs to address operational growth, Terminal building expense projects including ADR tenant transition projects, and higher charges from other divisions. 8

9 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 03/31/18 C. OPERATING RESULTS Division Summary YTD Fav (UnFav) Incr (Decr) 2016 YTD 2017 YTD 2018 Year-to-Date Budget Variance Change from 2017 $ in 000's Actual Actual Actual Budget $ % $ % Operating Revenues: Gross Aeronautical Revenues (1) 56,797 60,767 70,134 67,828 2, % 9, % SLOA III Incentive Straight Line Adj (2) (894) (894) N/A % Aeronautical Revenues 55,903 59,873 70,134 67,828 2, % 10, % Non-Aeronautical Revenues 44,871 54,006 52,372 51,122 1, % (1,635) -3.0% Total Operating Revenues 100, , , ,950 3, % 8, % Operating Expenses: Payroll 24,196 27,344 31,119 31, % 3, % Outside Services 6,548 7,751 8,391 11,248 2, % % Utilities 3,646 3,599 4,909 3,916 (993) -25.4% 1, % Other Airport Expenses 4,570 8,296 4,544 4,451 (93) -2.1% (3,753) -45.2% Total Airport Direct Charges 38,960 46,990 48,963 51,068 2, % 1, % Environmental Remediation Liability N/A - n/a Capital to Expense N/A - N/A Total Exceptions N/A - n/a Total Airport Expenses 38,960 46,990 48,963 51,068 2, % 1, % Police Costs 4,294 4,195 5,318 5, % 1, % Capital Development 1,461 2,480 2,694 5,641 2, % % Other Central Services 11,012 12,130 13,128 14,155 1, % % Maritime/Economic Development , % 5 0.5% Total Charges from Other Divisions 17,315 19,772 22,112 26,226 4, % 2, % Total Operating Expense 56,275 66,762 71,074 77,294 6, % 4,312 Net Operating Income 44,498 47,117 51,432 41,656 9, % 4, % (1) Aero revenues are net of revenue sharing. (2) Annual non-cash amortization of $17.9M lease incentive related to the SLOA III agreement for the 5 year period from % Operating Expenses 2018 YTD Actuals compared to 2018 YTD Budget: Total Operating Expenses are lower than the YTD 2018 Budget by $6.2 million due to the net of the following: YTD Aviation Direct Operating Expenses are lower than budget by $2.1 million due to the following: Positive Variance of $3.2M Negative Variance of $1.1M Payroll - vacancies & hiring delays $0.3M Utilities $1.0M Outside Services (savings & work deferred to future year) $2.9M Other Aviation Expenses $0.1M NERA 3 grant (FAA pilot program) 1.1M AV Planning temporary spending delays 0.4M Executive Program Management contract delay 0.1M AV Maintenance temporary timing issues 0.6M All other Outside Services 0.7M YTD Operating Expenses Exceptions no variance compared to YTD 2018 Budget 9

10 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 03/31/18 Operating Expenses 2018 YTD Actuals compared to 2018 YTD Budget - continued: YTD Operating Expense charges from Central Services and other divisions are lower than budget by $4.1M million due to the following: Positive Variance of $4.1M Other Central Services savings Police savings CDD savings Aviation PMG (projects delayed/deferred) 1.5M PCS 1.0M Engineering 0.4M $1.0M $0.1M $2.9M Negative Variance - none Operating Expenses 2018 YTD Actuals compared to 2017 YTD Actuals: Total Operating Expenses are higher than YTD 2017 Actuals by $4.3 million due to the net of the following: YTD Aviation Direct Operating Expenses are higher than YTD 2017 Actuals by $2.0 million due to the following: Increase of $5.7M Decrease of $3.8M Payroll - increased staffing $3.8M Other Aviation Expenses $3.8M Outside Services $0.6M One-time amortization frontage fees $3.6M Utilities $1.3M All other Aviation Expenses $0.2M YTD Operating Expenses Exceptions no variance compared to YTD 2017 Actuals YTD Operating Expense charges from Central Services and other divisions are higher than YTD 2017 Actuals by $2.3 million due to the following: Increase of $2.3M Other Central Services savings Police savings CDD savings $1.0M $1.1M $0.2M Decrease - no material amount 10

11 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 03/31/18 Division Summary YE Forecast Fav (UnFav) Incr (Decr) Budget Variance Change from 2017 $ in 000's Actual Actual Forecast Budget $ % $ % Operating Revenues: Gross Aeronautical Revenues (1) 247, , , ,082 7, % 41, % SLOA III Incentive Straight Line Adj (2) (3,576) (3,576) % 3, % Aeronautical Revenues 244, , , ,082 7,960 44, % Non-Aeronautical Revenues 221, , , ,786 (749) -0.3% 7, % Total Operating Revenues 465, , , ,867 7, % 52, % Operating Expenses: n/a Payroll 94, , , ,156 1, % 15, % Outside Services 31,636 41,055 54,520 52,532 (1,988) -3.8% 13, % Utilities 14,667 16,374 17,786 17,320 (466) -2.7% 1, % Other Airport Expenses 21,934 28,292 20,904 19,776 (1,128) -5.7% (7,388) -26.1% Total Airport Direct Charges 162, , , ,784 (1,668) -0.8% 23, % Environmental Remediation Liability - 8,812 4,030 4, % (4,782) -54.3% Capital to Expense - 2, % (2,856) % Total Exceptions - 11,668 4,030 4, % (7,638) -65.5% Total Airport Expenses 162, , , ,814 (1,668) -0.7% 15, % Police Costs 18,183 17,652 22,174 22, % 4, % Capital Development 9,319 14,701 20,575 23,092 2, % 5, % Other Central Services 58,617 51,004 57,847 58, % 6, % Maritime/Economic Development 12,310 3,904 5,511 5, % 1, % Total Charges from Other Divisions 98,429 87, , ,042 2, % 18, % Total Operating Expense 261, , , ,856 1, % 34, % Net Operating Income 204, , , ,011 8, % 17, % CFC Surplus (4,899) (2,750) (7,077) (7,142) % (4,328) % Net Non-Operating Items in / out from ADF (3) 2,160 3,481 4,406 4, % % SLOA III Incentive Straight Line Adj 3,576 3, % (3,576) % Debt Service (133,982) (131,060) (138,177) (138,177) - 0.0% (7,117) -5.4% Adjusted Net Cash Flow 70,885 75,050 78,641 70,099 8, % 3, % (1) Aero revenues are net of revenue sharing. (2) Annual non-cash amortization of $17.9M lease incentive related to the SLOA III agreement for the 5 year period from (3) Per SLOA III definition of Net Revenues. 11

12 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 03/31/18 Operating Expenses 2018 YE Forecast compared to 2018 YE Budget: Total Operating Expenses are forecasted to be lower than the 2018 Budget by $1.3 million due to the net of the following: Aviation Direct Operating Expenses are forecasted to be higher than the 2018 Budget by $1.7 million due to the following: Positive Variance of $1.9M Negative Variance of $3.6M Payroll - vacancies & hiring delays $1.9M Outside Services $2.0M Peak staffing support 1.5M Lost & Found staffing increase 0.3M All other Outside Services 0.2M Utilities $0.5M IWTP overflow event 0.4M All other Utilities 0.1M Other Aviation Expenses $1.1M Charges to capital lower than expected 0.6M Honey Bucket (Landside) higher demand 0.3M All other Aviation Expense 0.2M Aviation Operating Expense Exceptions no variance currently forecasted to the 2018 Budget Operating Expense charges from Central Services and other divisions are forecasted to be lower than budget by $2.9M million due to the following: Positive Variance of $2.9M Other Central Services savings CDD savings Aviation PMG (projects delayed/deferred) 2.2M PCS 0.1M Engineering 0.2M $0.4M $2.5M Negative Variance - none 12

13 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 03/31/18 Operating Expenses 2018 YE Forecast compared to 2017 YE Actuals: Total Operating Expenses are forecasted to be higher than 2017 Actuals by $34.5 million due to the net of the following: Aviation Direct Operating Expenses are forecasted to be higher than 2017 Actuals by $23.3 million due to the following: Increase of $30.7M Decrease of $7.4M Payroll - increased staffing $15.8M Other Aviation Expenses $7.4M Outside Services $13.5M One-time amortization frontage fees 3.6M SAMP related costs 2.3M Litigated & Non-litigated damages 1.5M Janitorial contract(s) increase 2.3M All other Aviation Expenses 2.3M Peak staffing support 1.5M Executive Program Management contract 1.2M NERA grant spending (FAA pilot program) 0.7M CBP reimbursable services program 0.5M Hwy 518 Corridor study 0.4M Parking consultant for pre-booking program 0.4M Lost & Found staffing contract 0.3M Eastside remote bag check feasibility study 0.2M All other Outside Services increases 3.7M Utilities $1.4M Operating Expense Exceptions are forecasted to be lower than 2017 Actuals by $7.6M due to the following: Increase - none Decrease of $7.6M Environmental Remediation Liability IAF soils 4.5M All other ERL expense 0.3M Capital to Expense Obsolete exit lane equipment 1.9M SSAT - HVAC equipment 0.7M Cellphone lot - temporary traffic signal 0.1M All other Capital to Expense items 0.2M $4.8M $2.9M Operating Expense charges from Central Services and other divisions are forecasted to be higher than 2017 Actuals by $18.8 million due to the following: Increase of $18.8M Police CDD Other Central Services Maritime/Economic Development divisions $4.5M $5.9M $6.8M $1.6M Decrease - no material amount 13

14 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 03/31/18 Aeronautical Business Unit Summary - YTD Fav (UnFav) 2016 YTD 2017 YTD 2018 Year-to-Date Budget Variance Incr (Decr) Change from 2017 $ in 000's Actual Actual Actual Budget $ % $ % Revenues: Movement Area 21,004 23,133 26,941 26,942 (2) 0.0% 3, % Apron Area 2,464 3,506 3,934 3, % % Terminal Rents 36,634 37,274 40,761 40, % 3, % Federal Inspection Services (FIS) 2,284 3,079 3,071 3, % (8) -0.3% Total Rate Base Revenues 62,385 66,992 74,706 74, % 7, % Commercial Area 2,154 2,471 2,637 2, % % Subtotal before Revenue Sharing 64,539 69,463 77,343 76, % 7, % Revenue Sharing (7,742) (8,696) (7,208) (8,950) 1, % 1, % Total Aeronautical Revenues 56,797 60,767 70,134 67,828 2, % 9, % Total Aeronautical Expenses 36,737 42,822 47,132 50,044 2, % 4, % Net Operating Income 20,060 17,945 23,002 17,785 5, % 5, % Aeronautical Q Actuals vs. Q Budget Net Operating Income for Q is $5.2M higher than budget (29.3% favorable) o Operating Revenue is $2.3M higher than budget (3.4% favorable) primarily due to the decrease in revenue sharing percentage (from 50% down to 40%) negotiated in the new airline lease agreement which was not known when the 2018 Budget was approved. o Operating Expenses are $2.9M lower than budget (5.8% favorable) primarily due to timing delays in Outside Services spending and lower charges from other divisions. Aeronautical Q Actual vs. Q Actual Net Operating Income for Q is $5.1M higher than Q (28.2% favorable) o Operating Revenue is $9.4M higher than Q (15.4% favorable) due to higher rate based costs to support increased airline activity and lower revenue sharing due to reduction in revenue sharing percentage under new airline agreement. o Operating Expenses are $4.3M higher than Q (10.1% variance) due to higher airport direct operating expenses to support increased airline activity and higher charges from other divisions. 14

15 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 03/31/18 Aeronautical Business Unit Summary - YE Forecast Fav (UnFav) Budget Variance $ in 000's Actual Actual Forecast Budget $ % $ % Revenues: Movement Area 94, , , , % 17, % Apron Area 14,028 16,771 16,023 15, % (748) -4.5% Terminal Rents 155, , , , % 16, % Federal Inspection Services (FIS) 11,227 18,612 13,634 13, % (4,978) -26.7% Total Rate Base Revenues 275, , , , % 28, % Commercial Area 9,379 10,574 10,212 10, % (362) -3.4% Subtotal before Revenue Sharing 285, , , , % 27, % Revenue Sharing (37,395) (42,311) (28,833) (35,799) 6, % 13, % Other Prior Year Revenues (5) (26) % Total Aeronautical Revenues 247, , , ,082 7, % 41, % Total Aeronautical Expenses 168, , , ,931 (75) 0.0% 21, % Net Operating Income 78,879 72,276 92,036 84,151 7, % 19, % Debt Service (1) (89,130) (86,564) (92,425) (90,323) (2,102) -2.3% (5,861) -6.8% Net Cash Flow (10,251) (14,288) (389) (6,173) 5, % 13, % (1) Debt service is forecasted/budgeted on an annual basis only. Thus, quarterly data is not available. Incr (Decr) Change from 2017 Airline Rate Base Cost Drivers $ in 000's Actual Actual Forecast Budget $ % $ % O&M (1) 165, , , , % 19, % Debt Service Gross 118, , , , % 6, % Debt Service PFC Offset (32,831) (33,057) (33,015) (33,015) - 0.0% % Amortization 28,215 29,654 32,373 32, % 2, % Space Vacancy (2,638) (2,264) (2,654) (2,650) (5) 0.2% (390) 17.2% TSA Operating Grant and Other (982) (901) (935) (1,028) % (34) 3.8% Rate Base Revenues 275, , , , % 28, % Commercial area 9,379 10,574 10,212 10, % (362) -3.4% Total Aero Revenues 285, , , , % 27, % (1) O&M, Debt Service Gross, and Amortization do not include commercial area costs or the international incentive expenses Fav (UnFav) Budget Variance Incr (Decr) Change from 2017 Aeronautical 2018 YE Forecast vs YE Budget Aeronautical net operating income is forecasted to be $7.9M higher than budget (9.4% favorable). o Aeronautical revenues are forecasted to be $8.0M higher than budget (2.6% favorable) primarily due to the decrease in revenue sharing percentage (from 50% down to 40%) negotiated in the new airline lease agreement which was not known when the 2018 Budget was approved. o Aeronautical operating expenses are forecasted to be closely aligned with the 2018 Budget. 15

16 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 03/31/18 Aeronautical 2018 YE Forecast vs YE Actuals Net Operating Income for 2018 is expected to be $19.8M higher than prior year (27.3% favorable) o Operating Revenue is expected to be $41.4M higher than prior year (15.4% favorable) due to higher rate based costs to support increased airline activity ($28.2M) and lower revenue sharing due to reduction in revenue sharing percentage ($13.5M) under new airline agreement. o Operating Expenses are expected to be $21.6M higher than prior year (11.0% variance) due to higher airport direct operating expenses to support increased airline activity and higher charges from other divisions. Non-Aero Business Unit Summary - YTD Fav (UnFav) Incr (Decr) 2016 YTD 2017 YTD 2018 Year-to-Date Budget Variance Change from 2017 $ in 000's Actual Actual Actual Budget $ % $ % Non-Aero Revenues Rental Cars - Operations 6,159 6,129 6,009 5, % (121) -2.0% Rental Cars - Operating CFC ,293 1,503 (210) -14.0% 1, % Public Parking 16,286 17,456 18,668 18,705 (37) -0.2% 1, % Ground Transportation 2,582 3,613 3,707 3,714 (7) -0.2% % Airport Dining & Retail & Leased Space 12,382 13,346 13,887 12,742 1, % % Commercial Properties 1,904 7,810 2,894 2, % (4,916) -62.9% Utilities 1,812 1,750 1,759 1,889 (130) -6.9% 9 0.5% Employee Parking 2,298 2,302 2,565 2, % % Clubs and Lounges ,202 1,231 (28) -2.3% % Other (28) -6.8% (62) -13.9% Total Non-Aero Revenues 44,871 54,006 52,372 51,122 1, % (1,635) -3.0% Total Non-Aero Expenses 19,538 23,940 23,943 27,250 3, % 3 0.0% Net Operating Income 25,333 30,066 28,429 23,872 4, % (1,637) -5.4% Non-Aeronautical Q Actuals vs. Q Budget Net Operating Income for Q is $4.6M higher than budget (19.1% favorable) o Operating Revenue is $1.3M higher than budget (2.4% favorable) primarily due to Airport Dining & Retail revenue stronger than expected in Q1 due to schedule delays in quick-serve restaurant units remaining open into Feb 2018 which were expected to close in late In addition, Employee Parking continues to experience strong demand driven growth. o Operating Expenses are $3.3M lower than budget (12.1% favorable) primarily due to slower than anticipated grant spending on NERA 3 FAA pilot program and schedule delays on ADR tenant buildout projects. Non-Aeronautical Q Actual vs. Q Actual Net Operating Income for Q is $1.6M lower than Q (5.4% unfavorable) o Operating Revenue is $1.6M lower than Q (3.0% unfavorable) primarily due to the one-time lump sum frontage fee reimbursement ($5.4M) received in Commercial Properties in 2017, which is partially offset by higher Rental Car operating CFC revenue due to lower debt service costs, and higher Public Parking revenue due to higher rates in effect in Q1 compared to the prior year. o Operating Expenses no variance compared to YTD 2017 Actuals. 16

17 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 03/31/18 Non-Aero Business Unit Summary - YE Forecast Budget Variance Change from 2017 $ in 000's Actual Actual Forecast Budget $ % $ % Non-Aero Revenues Rental Cars - Operations 37,082 35,051 35,294 35, % % Rental Cars - Operating CFC 12,122 10,641 15,563 15, % 4, % Public Parking 69,540 75,106 78,572 78, % 3, % Ground Transportation 12,803 15,684 16,884 16, % 1, % Airport Dining & Retail & Leased Space 58,405 58,980 58,354 59,087 (734) -1.2% (627) -1.1% Commercial Properties 9,992 18,042 15,000 14, % (3,043) -16.9% Utilities 7,233 7,018 7,317 7,556 (239) -3.2% % Employee Parking 9,329 9,617 9,457 9, % (160) -1.7% Clubs and Lounges 3,028 5,041 5,630 5, % % Other 1,487 1,624 1,966 2,036 (70) -3.4% % Total Non-Aero Revenues 221, , , ,786 (749) -0.3% 7, % Total Non-Aero Expenses 92, , , ,925 1, % 12, % Net Operating Income 128, , , , % (5,647) -4.2% Less: CFC (Surplus) / Deficit (1) (4,899) (2,750) (7,077) (7,142) % (4,328) % Adjusted Non-Aero NOI 123, , , , % (9,975) -7.7% Debt Service (1) (43,984) (44,495) (45,752) (45,752) - 0.0% (1,257) -2.8% Net Cash Flow 79,844 85,856 74,624 73, % (11,231) -13.1% (1) CFC excess and Debt service are forecasted/budgeted on an annual basis only. Thus, quarterly data is not available. Fav (UnFav) Incr (Decr) Non-Aeronautical 2018 Forecast vs Budget Non-Aeronautical net operating income is forecasted to be $0.6M higher than budget (0.5% favorable). o Non-Aeronautical revenues are forecasted to be $0.7M lower than budget (0.3% unfavorable): Airport Dining & Retail - unfavorable ($0.7M) forecast reflects timing impact of transitions to new leases, partially offset by increased revenue from advertising. Commercial Properties favorable $0.3M due to earlier than anticipated occupancy of DMCBP Phase II building. Utilities unfavorable ($0.2M) due to reduced tenant billings while garbage program undergoes process improvement planning. o Non-Aeronautical operating expenses are forecasted to be $1.3M lower than budget (1.1% favorable) primarily due to lower than anticipated charges from other divisions due to AVPMG terminal project delays. Non-Aeronautical 2018 Forecast vs Actuals Net Operating Income for 2018 is expected to be $5.7M lower than prior year (4.2% unfavorable) o Operating Revenue is expected to be $7.2M higher than prior year (3.1% favorable) primarily due to increased Landside business activity, which more than offsets the ($5.4M) one-time lump sum frontage fee reimbursement received in Commercial Properties in o Operating Expenses are expected to be $12.9M higher than prior year (12.4% variance) due to higher payroll costs related to increased staffing, higher outside services expense primarily due to non-recurring expenses focused on addressing strategic initiatives throughout the airport, and higher charges from other divisions. 17

18 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 03/31/18 D. CAPITAL RESULTS Capital Variance $ in 000's Budget Variance Description YTD Actual Forecast Budget $ % International Arrivals Fac-IAF (1) 24, , ,221 34, % NS NSAT Renov NSTS Lobbies (2) 24, , ,738 18, % A (3) ASL Conversion at Checkpoints 229 4,329 16,800 12, % N. Terminals Utilities Upgrade (4) ,200 7, % SSAT Infrastructure HVAC (5) ,910 4, % Holdroom Seatings for Conc B& C (6) 200 3,520 6,950 3, % Add'l Baggage Makeup Space IAF (7) ,998 15,998 2, % Electric Utility SCADA (8) ,861 1, % Service Tunnel Renewal/Replace 3,209 15,409 16, % Alternate Utility Facility 15,573 17,852 18, % Checked Bag Recap/Optimization 7,260 37,760 38, % All Other 15, , ,172 10, % Total Spending 92, , ,200 97, % (1) Delays in design-build progress, consultant billings/purchases for construction and project/construction management services. (2) Actual projected billings as provided by contractor have been less than anticipated. (3) $8.7M of capital budget deemed to be public expense, as the equipment will be transferred to TSA. Additionally, equipment supply and integration issues with airlines and TSA are causing delays. (4) Early works construction cancelled and combined with main construction phase due to better coordination with adjacent projects. (5) Bid bust has resulted in one year delay of project. Currently re-evaluating options for additional scope to be added. (6) Delays in design-build performance and IAF building foundations/steel. (7) Lack of resources and increased requirements delayed project start date. Requirements have changed since the original estimate, thus delaying construction. (8) Lack of resources and increased requirements delayed project start date. Requirements have changed since the original estimate, thus delaying construction. 18

19 III. MARITIME DIVISION FINANCIAL & PERFORMANCE REPORT 03/31/18 FINANCIAL SUMMARY Fav (UnFav) Incr (Decr) Budget Variance Change from 2017 $ in 000's Actual Actual Forecast Budget $ % $ % Revenues: Operating Revenue 50,810 54,183 54,653 55,053 (400) -1% 469 1% Total Revenues 50,810 54,183 54,653 55,053 (400) -1% 469 1% Total Operating Expenses 40,283 42,164 49,278 49, % 7,115 17% Net Operating Income 10,526 12,020 5,375 5,475 (100) 2% (6,645) 55% Capital Expenditures 5,746 20,489 37,705 46,749 9,044 19% 17,216 84% Division Summary 2018 Forecast vs Budget Operating Revenues are forecasted to be $400K below budget due to earlier termination of lease at T106. Operating Expenses are forecasted to be $300K below budget primarily due to movement of tenant improvements at the Maritime Industrial Center to capital. Net Operating Income forecasted to be $100K below budget. At the end of the first quarter, capital spending for full year 2018 is forecasted to be $37.7 million or 81% of the approved budget of $46.7 million. Division Summary 2018 Forecast vs Actuals Operating Revenues are expected to be $469K above 2017 primarily due to higher rates in Cruise and Recreational Boating. Operating Expenses are expected to be $7,115K greater than 2017 primarily Cruise Port Valet and acquisition of Salmon Bay Marina. Net Operating Income is forecasted to be $6,645K less than Net Operating Income before Depreciation by Business Fav (UnFav) Incr (Decr) 2016 YTD 2017 YTD 2018 Year-to-Date Budget Variance Change from 2017 $ in 000's Actual Actual Actual Budget $ % $ % Fishing & Operations (848) (396) (461) (838) % (65) -16% Recreational Boating (176) % 44-10% Cruise (1,232) (1,518) (2,121) (2,481) % (603) -40% Bulk 1,200 1,318 1, % (169) 13% Maritime Portfolio (76) % (52) NA All Other (15) (48) (22) (124) % 26-55% Total Maritime (161) (11) (829) (2,726) 1,896 70% (819) -7677% 19

20 III. MARITIME DIVISION FINANCIAL & PERFORMANCE REPORT 03/31/18 A. BUSINESS EVENTS Cruise Alaskan Way Street Widening project is demobilizing and will allow for reduced congestion during cruise days. Marketing efforts to cruise lines produced positive results including confirmed berth reservations for Royal Caribbean's Ovation of the Seas in Recreational Boating Despite a 6% increase in moorage rates, occupancy rates increased 3% y/y to 96% at Shilshole Bay Marina due to process improvements in completing advance work on the waitlist. Bell Harbor Marina successfully participated in the Seattle Boat show, exceeding revenue targets. Fishing and Commercial Operations Great turnout for 90 th annual Blessing of the Fleet at Fishermen s Terminal and barge moorage on Eliot Bay properties continue to be fully utilized. Maritime Portfolio Management The first amendment to the ground lease with Duke s Chowderhouse was approved for a bigger footprint. Design development will continue through mid Stormwater Utility Assessed 10 miles of stormwater lines and repaired 1 mile in Q1. On track to repair another 4.5 miles for the remainder of B. KEY PERFORMANCE METRICS Grain Volume Metric Tons in 000 s Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2017 Actuals 2018 Budget 2018 Actuals Cruise Passengers in 000 s Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2017 Actuals 2018 Budget 2018 Actuals 20

21 III. MARITIME DIVISION FINANCIAL & PERFORMANCE REPORT 03/31/18 C. OPERATING RESULTS Fav (UnFav) Incr (Decr) 2016 YTD 2017 YTD 2018 Year-to-Date Budget Variance Change from 2017 $ in 000's Actual Actual Actual Budget $ % $ % Fishing & Operations 2,100 2,166 2,224 2, % 58 3% Recreational Boating 2,528 2,592 3,005 2, % % Cruise (54) -63% (39) -55% Bulk 1,486 1,606 1,556 1, % (51) -3% Maritime Portfolio Management 2,560 2,610 2,845 2, % 234 9% Other % 1 10% Total Revenue 8,725 9,053 9,670 9, % 617 7% Expenses Fishing & Operations 1,122 1,125 1,221 1,179 (41) -3% 96 8% Rec Boating ,017 1, % 53 6% Cruise % % Other Maritime % 49 52% Maintenance Expenses 2,146 2,029 2,535 2, % % Portfolio Management ,059 1, % % Other ED Expenses % (6) -3% Total Maritime & EDD expenses 5,358 5,451 6,690 7, % 1,239 23% Enviromental & Sustainability % (75) -33% CDD Expenses % 37 20% Police Expenses ,088 1,028 (61) -6% % Other Central Services 2,119 2,301 2,325 2, % 24 1% Aviation Division % (2) -7% Total Central Services & Aviation 3,528 3,613 3,809 4, % 196 5% Envir Remed Liability NA 0 NA Total Expense 8,886 9,064 10,499 11,874 1,375 12% 1,435 16% NOI Before Depreciation (161) (11) (829) (2,726) 1,896-70% (819) 7677% Depreciation 4,336 4,251 4,399 4,370 (29) -1% 148 3% NOI After Depreciation (4,497) (4,262) (5,229) (7,096) 1,867-26% (967) 23% 2018 YTD Actuals vs. Budget Operating Revenues were $521K higher than budget favorable occupancy rates in Recreational Boating and Fishing & Operations. Operating Expenses were $1,375K lower than budget: o Marine Maintenance $374K lower than budget due to project timing. o Rec Boating $192K lower than budget due to open positions. o Other Maritime $156K lower than budget from Habitat Initiatives applied in Environment & Sustainability. o Environment & Sustainability $274K lower than budget due to vacant positions. o Other Central Services $272K lower than budget primarily due to lower charges from Public Affairs $61K, Human Resources $44K, Exec $57K, and Finance $32K. o All other expenses net to $46K lower than budget. Net Operating Income was $1,896K above budget YTD Actuals vs YTD Actuals Operating Revenues were $617K higher than 2017 actual due to increased rates, improved occupancy at Shilshole Bay Marina, and longer than anticipated occupancy by fishing vessels at Terminal 91. Operating Expenses were $1,435K higher than 2017 actual: o Cruise $301K greater than 2017 due to property rental at P66. o Marine Maintenance $506K greater than 2017 due to increased mix of Maritime projects. o Portfolio Management $240K greater than 2017 due to higher utility expense. 21

22 III. MARITIME DIVISION FINANCIAL & PERFORMANCE REPORT 03/31/18 o Central Services $196K increase from 2017 related to Police allocation. o All other Expenses net to $192K above Net Operating Income was $819K below 2017 actual. Fav (UnFav) Incr (Decr) Budget Variance Change from 2017 $ in 000's Actual Actual Forecast Budget $ % $ % Fishing & Operations 9,108 9,297 8,388 8, % (910) -10% Recreational Boating 10,255 11,086 12,166 12, % 1,081 10% Cruise 15,422 17,596 18,150 18, % 554 3% Bulk 5,382 5,427 5,163 5, % (263) -5% Maritime Portfolio Management 10,255 10,787 10,769 11,169 (400) -4% (18) 0% Other 388 (9) % % Total Revenue 50,810 54,183 54,653 55,053 (400) -1% 469 1% Expenses Fishing & Operations 4,308 4,599 4,641 4, % 42 1% Rec Boating 3,164 3,813 4,595 4, % % Cruise 2,600 2,674 4,748 4, % 2,074 78% Other Maritime ,399 1, % % Maintenance Expenses 9,900 10,420 11,261 11, % 840 8% Portfolio Management 3,367 3,507 3,550 3, % 43 1% Other ED Expenses % % Total Maritime & EDD expenses 24,425 26,140 31,026 31, % 4,886 19% Enviromental & Sustainability 1,358 1,125 2,168 2, % 1,043 93% CDD Expenses 1, ,177 1, % % Police Expenses 3,921 3,756 4,209 4, % % Other Central Services 9,315 9,869 10,576 10, % 707 7% Aviation Division % (15) -11% Total Central Services & Aviation 15,743 15,635 18,252 18, % 2,617 17% Envir Remed Liability NA (389) -100% Total Expense 40,283 42,164 49,278 49, % 7,115 17% NOI Before Depreciation 10,526 12,020 5,375 5,475 (100) -2% (6,645) -55% Depreciation 17,351 17,410 17,868 17, % 459 3% NOI After Depreciation (6,824) (5,390) (12,494) (12,394) (100) 1% (7,104) 132% 2018 Forecast vs Budget Operating Revenues are forecasted to be $400K lower than budget: o Earlier than expected termination of WSDOT lease at Terminal 106. Operating Expenses are forecasted to be $300K lower than budget: o Tenant improvements at the Maritime Industrial Center capitalized rather than expensed. o Favorable payroll savings from Central Services. Net Operating Income is forecasted to be $100K below budget Forecast vs Actuals Operating Revenues are forecasted to be $.5M higher than 2017 actual: o Increased rates were offset by loss of net shed revenue. Operating Expenses are forecasted to be $7.1M higher than 2017 actual with increases seen in: o Cruise $2.1M due to Port Valet service. o Other Maritime $.9M from Habitat Initiatives. o Rec Boating $.8M due to new headcount in 2018 and open headcount in o Central Services $2.6M driven by increased projects and FTE in Environment & Sustainability along with Police. o All Other Cost $.7M. Net Operating Income is forecasted to be $6.6M below 2017 actual. 22

23 III. MARITIME DIVISION FINANCIAL & PERFORMANCE REPORT 03/31/18 D. CAPITAL RESULTS 2018 YTD Actual 2018 Forecast 2018 Budget Budget Variance $ % $ in 000's Salmon Bay Marina ACQ 11 15,849 15,804 (45) 0% SBM Restrms/Service Bldgs Rep 44 1,843 7,162 5,319 74% FT Re Development Phase I 430 3,480 2,700 (780) -29% P91 South End Fender 1,175 2,056 2, % Maritime Fleet Replacement 67 2,105 2, % Contingency Renewal & Replace. 0 1,150 2, % SBM Paving ,673 1,033 62% Cruise Terminal Tenant Improv 261 1,562 1,531 (31) -2% Salmon Bay Marina Uplands 0 1,504 1, % FT Docs 3,4,5 Fixed Pie ,424 1,156 81% Restoration ,140 1,100 96% All Other Projects 1,663 7,208 7, % Total Maritime 3,747 37,705 46,749 9,044 19% Comments on Key Projects: Through the 1st quarter of 2018, Maritime spent 8% of the annual approved capital budget. Full year spending is estimated to be 81% of budget. Projects with significant changes in spending were: SBM Restrms/Service Bldgs Rep Construction Delay. Work schedule to begin Q FT Re Development Phase I Increase in project cost due to updated construction estimates. Contingency Renewal & Replace - $850k used for Portwide Radio System Upgrade. SBM Paving Construction Delay. Moved to Q FT Docs 3,4,5 Fixed Pie Design phase extended to Q Restoration Project delayed until

24 IV. ECONOMIC DEVELOPMENT DIVISION FINANCIAL & PERFORMANCE REPORT 03/31/18 FINANCIAL SUMMARY Fav (UnFav) Incr (Decr) Budget Variance Change from 2017 $ in 000's Actual Actual Forecast Budget $ % $ % Revenues: Operating Revenue 15,903 17,791 18,816 18, % 1,025 6% Total Revenues 15,903 17,791 18,816 18, % 1,025 6% Total Operating Expenses 21,135 25,397 28,903 28,751 (151) -1% 3,505 14% Net Operating Income (5,232) (7,606) (10,087) (10,229) 142 1% (2,481) -33% Capital Expenditures 4,757 3,739 6,473 6,149 (324) -5% 2,734 73% Division Summary 2018 Forecast vs Budget Operating Revenues are forecasted to be $294K above budget primarily due to higher than expected occupancy. Operating Expenses are forecasted to be $151K above budget primarily due to Pier 66 HVAC. Net Operating Income forecasted to be $142K above budget. At the end of the first quarter, capital spending for full year 2018 is forecasted to be $6.5 million or 105% of the approved budget of $6.1 million. Division Summary 2018 Forecast vs Actuals Operating Revenues are expected to be $1,025K above 2017 primarily due to higher occupancies and stronger sales at Bell Harbor Conference Center. Operating Expenses are expected to be $3,505K greater than 2017 primarily due to increased spending for Workforce Development $1,142K, Conference and Event Centers $836K, Other Central Services $508K, and Economic Development Expenses other $454K. Net Operating Income is expected to be $2,481K less than A. BUSINESS EVENTS Portfolio Management Occupancy for commercial buildings remained at 98%. The Port entered into a new management agreement contract with Kidder Mathews for the World Trade Center West building. Tourism Expanded the economic development program to include tourism destination marketing organizations (DMOs) statewide for Q2-Q Launched 2018 Tourism Marketing Support Program application process. Pier 69 Facilities: Scoping out Commission Chamber refresh (carpet & ceiling). Remodeled Legal Library. Moved Commission Clerks office. 24